RTB Digital (RTB) Q2 2020 earnings summary

Executive summary

• Q2 revenue fell 30.7% YoY to $2.29M, but lower processing costs lifted gross profit to $881K from $269K; net income of $4.94M included major noncash gains from derivative revaluation and debt extinguishment.

• H1 revenue declined 42.0% to $2.48M and net loss narrowed to $300K from $2.64M; management described Q2 as a ramp into larger-scale operations after platform upgrades.

Financial highlights

• Q2 revenue was $2.29M, down 30.7% YoY; cost of revenue fell 53.6% to $1.41M, and gross profit rose to $881K from $269K.

• Q2 operating loss improved to $244K from $906K; net income was $4.94M versus a $1.34M loss, including $2.62M from derivative fair-value changes and $2.61M from debt extinguishment.

• H1 revenue decreased 42.0% to $2.48M; gross profit increased to $821K from $509K, while operating loss widened to $1.37M from $1.28M.

• H1 net loss narrowed to $300K from $2.64M, reflecting a $2.63M debt-extinguishment gain, partly offset by a $1.20M derivative fair-value loss.

Outlook and guidance

• Management targeted processing more than $1M/day in Q3 2020, ramping toward its $1B annual processing-volume goal in Q4; execution depended on opportunities in the U.S., Canada, and Europe.

• COVID-19 was expected to delay the annual processing-volume target by one or two quarters, while management said Q3 activity through August 12 was tracking expectations and full-year projections remained unchanged.

• Management planned to pursue a senior-exchange listing within 18 months and intended to grow organically rather than use a reverse split.