Strong surge in system sales drives second best revenue quarter on record
D-BOX Technologies Inc. (“D-BOX” or the “Corporation”) (TSX: DBO) a world leader in haptic and immersive experiences, today reported financial results for the third quarter of fiscal 2023 ended December 31, 2022. All dollar amounts are expressed in Canadian currency.
“The third quarter was our second-best quarter ever in terms of revenue, building on our strong fiscal 2023 year-to-date performance,” said Sébastien Mailhot, President and Chief Executive Officer of D BOX. “System sales for the quarter were very strong and we achieved our sixth consecutive quarter of positive adjusted EBITDA. Importantly, our order book remains strong, and we have several highly anticipated movies being released with D-BOX’s haptic experience in the current quarter, including “Ant-Man and the Wasp: Quantumania”, “Shazam: Fury of the Gods”, “John Wick: Chapter 4”, and “Dungeons and Dragons: Honor Among Thieves”.”
“While we continue to build upon our leadership position in the theatrical market, we are much more than a great movie theatre partner. D-BOX is poised for growth across multiple key markets. During the quarter, Kindred Concepts opened its first state-of-the art F1 racing simulation center called F1 Arcade, featuring 60 D-BOX-equipped simulators in London, England, with 30 locations planned over the next five years; and we announced collaborations with leading sim racing equipment designers, manufacturers and marketers, RSEAT and Trak Racer. And last month, we announced our Mercedes-branded multipurpose haptic platform, which will be available for on-line purchase by the end of February. This product is compatible with most racing simulator chassis and can be retrofitted under static seats such as sofas and recliners, with multiple applications in the commercial and home entertainment markets,” Mr. Mailhot added.
“We’ve achieved a marked improvement in revenue and profitability for the quarter and for the first nine months of our fiscal 2023,” said David Montpetit, Chief Financial Officer of D-BOX. “Within the quarter, we’ve done our best to navigate sales market mix, supply chain costs challenges and manage expenses while continuing to collaborate with leading partners to develop and launch great products to position our business well for the future. Importantly, we exited the quarter with a strong overall balance sheet.”
Third Quarter Overview
Total revenues in the third quarter of fiscal 2023 were $10.5 million, compared to $5.6 million a year ago. Total revenues growth was attributable to a 143% increase in systems sales revenues, partially offset by a 4% decrease in rights for use, rental and maintenance revenues. Higher system sales in the quarter were driven by growth in commercial entertainment, which includes sales to theatrical exhibitors and themed entertainment.
Gross profit excluding amortization related to cost of goods sold increased to $5.0 million from $3.6 million for the same period last year. Gross margin excluding amortization decreased to 48% from 64%. The decrease in gross margin was due to a higher proportion (market mix) of sales to theatrical exhibitors and themed entertainment system sales in the third quarter of this year. Additionally, theatrical exhibitor and themed entertainment system sales were impacted by higher transportation costs. Theatrical exhibitor and themed entertainment system sales accounted for 54% of total system sales for the quarter compared to 29% for the same period last year.
Operating expenses for the quarter increased 36% to $4.6 million, or 44% of revenues, compared to $3.3 million, or 60% of revenues, in the third quarter of last year. Contributing to the variance was a $0.6 million increase in research and development expenses resulting from projects related to transitioning more of D-BOX’s product portfolio to the G5 haptic system and software development; a $0.5 million increase in selling and marketing expenses, as well as a higher headcount. The increase in selling and marketing expenses largely reflected the resumption of trade shows and travel as economies continued to recover from the COVID-19 pandemic.
Net loss for the quarter was $0.1 million compared with a loss of $0.3 million in the third quarter a year ago.
Adjusted EBITDA improved to $0.5 million from $0.4 million in the same quarter last year and represented the sixth consecutive quarter of positive adjusted EBITDA for the Corporation.
At quarter-end, D-BOX had a cash position and undrawn credit facilities totaling $6.8 million. For the full report, see here.
Additional Information Regarding the Third Quarter Ended December 31, 2022
The financial information relating to the third quarter ended December 31, 2022, should be read in conjunction with the Corporation’s audited consolidated financial statements and the Management’s Discussion and Analysis dated February 9, 2023. These documents are available at www.sedar.com.
D-BOX creates and redefines realistic, immersive entertainment experiences by moving the body and sparking the imagination through effects: motion, vibration and texture. D-BOX has collaborated with some of the best companies in the world to deliver new ways to enhance great stories. Whether it’s movies, video games, music, relaxation, virtual reality applications, metaverse experience, themed entertainment or professional simulation, D-BOX creates a feeling of presence that makes life resonate like never before. D-BOX Technologies Inc. (TSX: DBO) is headquartered in Montreal with offices in Los Angeles, USA and Beijing, China. Visit D BOX.com.