Chicken Soup for the Soul Reports Record Q2 2019 Revenue of $12.2 Million

Cos Cob, CT

Published on: August 14, 2019

Contribution of Crackle Plus for Approximately Half of the Quarter Drives Record Revenue, Increases in Ads Served, and Accelerating Advertising Rates

Pro Forma 2018 Annual Net Revenue of $92.6 Million for Combined Entity

Chicken Soup for the Soul Entertainment, Inc. (CSS Entertainment) (Nasdaq: CSSE), a growing media company building online video-on-demand (VOD) networks that provide video content for all screens, today announced its financial results for the second quarter ended June 30, 2019. 

Second Quarter 2019 and Recent Business Highlights

(Results reflect Crackle Plus joint venture closed on May 14, 2019)

·       Total revenue of $12.2 million

·       Net loss of $5.9 million; $5.1 million before preferred dividends

·       Adjusted EBITDA of $1.3 million

·       Crackle Plus streaming video joint venture launched

·       Release of The Man Who Killed Don Quixote, a much anticipated film directed by Terry Gilliam

·       Began production on Season 2 of Chicken Soup for the Soul’s Animal Tales

Total revenue for the quarter ended June 30, 2019 was $12.2 million compared to $3.1 million in the year-ago period. The year-over-year increase reflects 45 days of Crackle contribution.

·       Online networks, which includes Crackle, Popcornflix and Pivotshare, generated $10 million in revenue

·       Television and film distribution generated $2.0 million in revenue

·       Television and short-form video production generated $0.2 million in revenue

“In the second quarter total revenue was a record $12.2 million, reflecting only 45 days of our ownership of Crackle. Our increased scale is driving advertiser interest,” said William J. Rouhana Jr., chairman and chief executive officer of CSS Entertainment. “Our ads served on our owned-and-operated networks increased to 681 million in the second quarter, up from 33 million in the year ago quarter, validating the consolidation strategy. Crackle’s eCPM rate is 27% higher than Popcornflix’s and we expect to increase our ad rates across all of our online networks over time as we close the gap between Popcornflix and Crackle.  These results underscore our excitement for this joint venture.”

Gross profit for the quarter ended June 30, 2019 was $3.6 million, or 30% of total revenue, compared to $1.2 million, or 39% of total revenue for the year-ago period. The reduction in the percentage of gross profit was a result of an increase in online networks revenue which has a lower gross profit percentage.  

Operating loss for the quarter ended June 30, 2019 was $3.0 million compared to an operating loss of $1.6 million for the year-ago period. The quarterly operating loss reflects certain non-cash or one-time expenses including $0.7 million in non-cash amortization, $1.2 million of transitional expenses related to the Crackle Plus joint venture, and $1.6 million in film library amortization. If such expenses were excluded from SG&A or cost of revenue, the Company would have reported quarterly operating income of $0.5 million.  

Net loss was $5.9 million, or $0.49 per share, compared to a net loss of $1.7 million, or $0.14 per share in the prior-year second quarter. Excluding preferred dividends, the net loss in the second quarter of 2019 would have been $5.1 million, or approximately $0.42 per share, compared to a net loss of $1.7 million, or $0.14 per share last year.

Adjusted EBITDA for the quarter ended June 30, 2019 was $1.3 million compared to $0.2 million in the same period last year.

As of June 30, 2019, the company had $5.2 million of cash and cash equivalents compared to $7.2 million as of December 31, 2018, and outstanding debt of $7.1 million as of June 30, 2019 compared to $7.6 million as of December 31, 2018.

Crackle Plus Pro Forma Financial Information

CSS Entertainment completed the joint venture launching Crackle Plus on May 14, 2019 (Closing Date). Under generally accepted accounting principles (GAAP), Crackle’s financial results are only included in the combined company’s reported financial results from the Closing Date forward and are not reflected in the combined company’s reported financial results for any periods prior to the Closing Date.

In this release, to supplement and aid in an understanding of the combined company’s reported financial results, CSS Entertainment is also providing certain GAAP-based and non-GAAP pro forma financial information of the combined company that includes Crackle’s financial results for the relevant periods prior to the Closing Date, as if the acquisition occurred on January 1, 2018. See “Use of Non-GAAP Measures and Supplementary Information” below and the accompanying financial schedules for more information, including descriptions of any such pro forma measures that may be non-GAAP measures and reconciliations of those non-GAAP measures to their most directly comparable GAAP measures. Please refer to the Company’s recently filed Amendment No. 1 to the Current Report on Form 8-K/A filed with the Securities and Exchange Commission on July 30, 2019 for further details on pro forma results disclosed herein.

“This was an incredibly productive and busy quarter as we completed the joint venture creating Crackle Plus,” said Mr. Rouhana. “We are now one of the largest ad-supported networks in the industry and have solidified our position as a leader in the high-growth, advertising-supported VOD (AVOD) business. Before we entered into the joint venture agreement, we had identified a number of synergistic opportunities and cost reduction targets, which enabled a smooth integration. As a result, and as detailed in the recently filed Form 8-K/A, we have streamlined the organization, eliminating approximately $65.3 million in total annualized costs on an estimated pro forma combined 2018 net revenue of $92.6 million.”

“The four key areas we identified to reduce costs and improve margins were in technology, marketing, content and SG&A,” continued Mr. Rouhana. “Estimated pro forma reductions of $29.6 million in Cost of Goods Sold (COGS) were primarily due to consolidating technology costs onto a shared platform and replacing fixed fee content agreements with revenue sharing agreements. On the SG&A front, duplicative roles in the operations teams were eliminated, and we streamlined allocated corporate overhead expenses. Our marketing spend was also significantly reduced by excluding certain marketing agreements from transferred assets and using our owned-and-operated networks and brand related social media. These measures resulted in estimated pro forma S&GA annual cost reductions of $35.6 million and $25.3 million in annual pro forma adjusted EBITDA.”

“Now that Crackle is fully integrated, we intend to focus on further acquisitions of online networks, adding to our ad partner network, and growing our film distribution activity,” said Mr. Rouhana. “We also plan to grow our television and short-form video production platform while reducing the risk capital allocated to these projects. We anticipate our proprietary content production contributing more significantly to revenue next year, demonstrating the potential synergies in our business.”

For a discussion of the financial measures presented herein which are not calculated or presented in accordance with U.S. generally accepted accounting principles (“GAAP”), see "Note Regarding Use of Non-GAAP Financial Measures" below and the schedules to this press release for additional information and reconciliations of non-GAAP financial measures.

The company presents non-GAAP measures such as Adjusted EBITDA and Pro Forma Adjusted EBITDA to assist in an analysis of its business. These non-GAAP measures should not be considered an alternative to GAAP measures as an indicator of the Company's operating performance.

Conference Call Information

·       Date, Time: Wednesday, August 14, 2019, 4:30 p.m. ET.

·       Toll-free: (833) 832-5128

·       International: (484) 747-6583

·       Conference ID: 2279818

·       A live webcast is available at under the “News & Events” tab

Conference Call Replay Information

·       Toll-free: (855) 859-2056

·       International: (404) 537-3406

·       Reference ID: 2279818


Chicken Soup for the Soul Entertainment, Inc. is a growing media company building and acquiring streaming VOD networks that provide content for all screens. CSS Entertainment has a majority stake in Crackle Plus, a joint venture with Sony Pictures Television, which owns and operates a variety of ad-supported and subscription-based VOD networks including Crackle, Popcornflix, Popcornflix Kids, Truli, Pivotshare, Españolflix and FrightPix. CSS Entertainment also acquires and distributes video content through its Screen Media subsidiary and produces long- and short-form content through its Chicken Soup for the Soul Originals division and through Chicken Soup for the Soul Entertainment is a subsidiary of Chicken Soup for the Soul, LLC, which publishes the famous book series and produces super-premium pet food under the Chicken Soup for the Soul brand name. 

Note Regarding Use of Non-GAAP Financial Measures

The company’s consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). It uses a non-GAAP financial measure to evaluate its results of operations and as a supplemental indicator of operating performance. The non-GAAP financial measure that is used is Adjusted EBITDA. Adjusted EBITDA (as defined below) is considered a non-GAAP financial measure as defined by Regulation G promulgated by the SEC under the Securities Act of 1933, as amended. Management believes this non-GAAP financial measure enhances the understanding of the company’s historical and current financial results and enables the board of directors and management to analyze and evaluate financial and strategic planning decisions that will directly affect operating decisions and investments. The presentation of Adjusted EBITDA should not be construed as an inference that future results will be unaffected by unusual or non-recurring items or by non-cash items. This non-GAAP financial measure should be considered in addition to, rather than as a substitute for, the company’s actual operating results included in its condensed consolidated financial statements.

“Adjusted EBITDA” means earnings before interest, taxes, depreciation, amortization and non-cash share-based compensation expense, and also includes the gain on bargain purchase of subsidiary and adjustments for other identified charges such as costs incurred to form the company and to prepare for the offering of its Class A common stock to the public, prior to its IPO. Identified charges also include the cost of maintaining a board of directors prior to being a publicly traded company. As the IPO has been completed, director fees will be deducted from Adjusted EBITDA going forward. Adjusted EBITDA is not an earnings measure recognized by GAAP and does not have a standardized meaning prescribed by GAAP; accordingly, Adjusted EBITDA may not be comparable to similar measures presented by other companies. Management believes Adjusted EBITDA to be a meaningful indicator of the company’s performance that provides useful information to investors regarding its financial condition and results of operations. The most comparable GAAP measure is operating income.

A reconciliation of net loss to Adjusted EBITDA is provided in the company’s Quarterly Report on Form 10-Q for the three months ended June 30, 2019 under “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Reconciliation of Unaudited Historical Results to Adjusted EBITDA.” 


This press release includes forward-looking statements that involve risks and uncertainties. Forward-looking statements are statements that are not historical facts. Such forward-looking statements are subject to risks (including those set forth in the Annual Report on Form 10-K, filed with the Securities and Exchange Commission on April 1, 2019, as amended April 30, 2019 and June 4, 2019) and uncertainties which could cause actual results to differ from the forward-looking statements. The company expressly disclaims any obligations or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the company’s expectations with respect thereto or any change in events, conditions or circumstances on which any statement is based. Investors should realize that if our underlying assumptions for the projections contained herein prove inaccurate or that known or unknown risks or uncertainties materialize, actual results could vary materially from our expectations and projections.

Investor Relations

Taylor Krafchik
Ellipsis IR

Media Contact

Kate Barrette
RooneyPartners LLC
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