BBTV Holdings, Inc. (OTCQX:BBTVF) Q4 2021 Earnings Conference Call March 29, 2022 5:15 PM ET
Company Participants
Nancy Glaister – General Counsel
Shahrzad Rafati – CEO
Ben Groot – CFO
Conference Call Participants
Kevin Krishnaratne – Desjardins
Aravinda Galappatthige – Canaccord Genuity
Adhir Kadve – Eight Capital
Kris Thompson – PI Financial
Operator
Good afternoon. Thank you for attending today’s BBTV Q4 2021 and Fiscal Year 2021 Earnings Conference Call. My name is Hannah, and I will be your moderator for today’s call. [Operator Instructions]
I would now like to pass the conference over to our host, Nancy Glaister, with BBTV. Please go ahead.
Nancy Glaister
Welcome to BBTV’s fiscal 2021 fourth quarter and year end conference call. I’m Nancy Glaister, General Counsel for BBTV. During the course of this conference call, we may provide forward-looking information and make forward-looking statements within the meaning of applicable securities laws. These are statements regarding the company’s current expectations, goals and beliefs about future events. Forward-looking statements are statements about the future and are inherently uncertain. Such statements which may include certain financial outlooks are provided to aid in understanding management’s goals and expectations. These statements may not be appropriate for other purposes and may not be achieved. Any financial or other goals discussed are goals only and are not meant to be taken as future oriented financial information or guarantees of future results or performance.
All of our forward-looking statements are necessarily based on a number of assumptions and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those contained in our forward-looking statements. These include the risks that our assumptions may not be accurate as well as the risk factors contained in our press release and MD&A issued today. We undertake no obligation to update these forward-looking statements, except as required by law. You can read more about these assumptions, risks and uncertainties in our press release and MD&A issued earlier today as well as in our filings with Canadian securities regulators on SEDAR.
Also, our commentary today will include references to certain non-GAAP financial measures and key metrics. These do not have a standardize meaning under IFRS and might not be comparable to similar measures disclosed by other companies. They should be considered as a supplement to and not as substitute for IFRS financial measures. Reconciliations between our non-IFRS financial measures to the most directly comparable IFRS measure as well as further details regarding these measures and our key metrics can be found in our earnings press release and our MD&A, which are available on our website and on sedar.com.
I now turn the call over to BBTV’s Chief Executive Officer, Shahrzad Rafati.
Shahrzad Rafati
Hi, everyone, and welcome to BBTV’s fourth quarter and full year 2021 analyst call. We have press released some of our financial information earlier and posted our financial statements and MD&A to SEDAR. As a reminder to everyone on the call today, we’re a creator monetization company with a mission to help content creators succeed by increasing their viewership and making them more money. From individual content creators to global media companies, BBTV provides comprehensive end-to-end solutions powered by our innovative VISO platform, which helps creators make more money while allowing them to focus on their core competency, content creation.
In December 2021, BBTV had more than 600 million monthly unique viewers globally. We generated more than 35 billion views of video content every month. BBTV reaches more than 50% of adults in the U.S. ages 18 to 34, as well as 40% of total digital audience. This means that BBTV has significantly greater reach than household brand names in the U.S. This is incredibly valuable to brands and advertisers.
We are proud that cash flow from operations for the fourth quarter increased by 41% and free cash flow increased by 39% in comparison to the prior year, especially given the softness in our industry for the quarter. Free cash flow contributed $7 million to our balance sheet, which has now grown to $31 million. Overall for the fourth quarter, we achieved solid revenue and adjusted EBITDA performance. Both of each were within the range of analyst consensus and our ending cash balance significantly beat consensus.
BBTV’s focus is on signing creators who produce mainly in monetizable format, especially longer form videos that are more than 1 minute long, as this strategy has a direct impact on our overall revenue today. But we are actually seeing a growing trend of micro content from creators. In Q4 2021, about 20% of our views came from YouTube Shorts, which presents a significant upside for when that format becomes monetized. And we believe that this will begin soon. RPMs for monetizable content grew 17% compared to Q4 last year. The continued growth of our Base Solutions business alongside the changing consumption landscape presents a strong opportunity for RPM growth as monetization continues to mature across all key platforms. While market content like YouTube Shorts isn’t monetized today, once it becomes monetized across our entire library, it could represent incremental revenue of over $90 million annually across our Base Solutions at current market rates.
We will continue need to invest in our growing Plus Solutions revenue streams, because they consistently deliver higher gross margins than our Base Solutions revenue. And we’ll continue to strengthen our overall earnings profile as we scale. We made a decision to focus on creator monetization and our higher margin Plus Solutions, which makes us a lot less sensitive to the short-term volatility of views.
During the fourth quarter, we continued to focus on investing in our higher margin Plus Solutions and driving, improving margins. These results demonstrated progress on both those fronts. We are pleased that Plus Solutions revenue grew by 11.4% in challenging market conditions, specifically as it relates to supply chain impact on advertising spend globally. For fiscal 2021, we saw a solid 21% increase in Plus Solutions revenue.
Our Q1 2022 outlook for Plus Solutions is shaping up nicely with January revenue results growing by over 60% compared to previous year January. We are pleased to say that we expect to exceed previously guided Plus Solutions growth rates of 23% in Q1 2022. This helps to validate our strategy to expand our revenue streams for creators beyond our Base Solutions. Our revenue extensions in Plus Solutions have been a benefit to and have helped us to retain some of the most powerful and valuable creators around.
Our churn rates continue to be low amongst creators on the BBTV platform. For full year fiscal 2021, we retained 94% of our views amongst the creator base, and in Q4 in particular, our views retention was exceptional at 99%. We believe the inherent value of our service is clearly reflected in our retention performance. We have been able to retain more audience in comparison to the industry as viewership normalizes post COVID. Again, we are convinced that this is due to the quality of our solutions and our effectiveness in monetizing content.
For the full fiscal year 2021 revenue grew by 4%, despite the number of headwinds, especially in the second half of the year when post COVID viewership patterns began to normalize. In Q4 Base Solutions revenue declined year-over-year by 9.4% compared to the same period last year. Although, compared sequentially to the third quarter, Base Solutions revenue increased by 23%. This sequentially increase in Base Solutions revenue is higher than in pre-pandemic years like 2019. This is a data point that makes us believe that we are in a more normalized period of viewership consumption, exiting fiscal 2021.
For a longer-term trend perspective, if you compare our viewership today with that of 2019, viewership has increased at a normalized CAGR of 4%. In future quarters, RPMs should be amplified by the monetization of micro content, which I alluded to earlier, as we continue to onboard creators with content in these formats.
Starting last year, we have begun to invest more aggressively into Plus Solutions, including Web3. BBTV has been a driving force in Web2’s creator economy for the last 17 years, providing end-to-end solutions for creators to grow their audience and make more money. With our scale and expertise, we are uniquely positioned to empower the growth of Web3’s greater economy. With more than 2 billion users on some of the world’s largest Web2 platforms like YouTube, Facebook, TikTok, and Instagram, 5 million users on the largest Web3 platforms highlight a great opportunity to drive these platforms to mainstream level. We believe strongly that content creators will be absolutely a key to driving adoption of Web2’s users to Web3 and our leadership in the creator economy positions us uniquely to be integral to this shift. BBTV will be the one to help creators in their seamless transition from Web2 to Web3 by providing the solutions to eliminate any friction and for more equitable content framework. Creators are already coming to us as that one stop shop in Web2, so expansion to Web3 is really a natural and obvious growth area for our company. I’m excited to say that BBTV is building on its success in Web2 to pioneer Web3’s creator economy. This is reflected in the investment that we made in Web3 starting in Q1 2021.
We informed that we began building a Web3 division last year, and the time is now to expand on that foundation. Today, we announced our partnership with ConsenSys to further drive our Web3 initiatives forward. ConsenSys is a leader in Web3 Ethereum software development and selectively works with the major partners like Visa, MasterCard, and Microsoft. We will be minting our first group of NFTs featuring some major creators in the near future. Subsequent to quarter end, we have brought on some additional expertise with the onboarding of Erich Lochner as our SVP of Content Partnerships, as well as Thomas Hughes to more quickly expand our Plus Solutions reach to additional platforms and enterprise clients. We believe that this will allow us to capture more advertising revenue and to further entrench BBTV in the market.
I’ll now hand it over to Ben to speak to our financial overview.
Ben Groot
Thank you, Shahrzad, and good afternoon, everyone. Before I begin the review of our quarterly performance, I’d like to point out 2 notable presentation items to keep in mind when reviewing our results. Firstly, in keeping with the format we have used since our IPO, the comparable results for 2020 are included in the MD&A on a per forma basis. This includes the operations of BroadbandTV Corp., the main operating entity and BBTV Holdings. In our statutory financials, the 2020 figures in the income and cash flow statements only include the main BroadbandTV Corp. operating entity for the portion of the year after our IPO, which occurred in the fourth quarter of 2020. Secondly, our cost of revenue includes the amortization of the assets recorded as part of the Purchase Price Allocation or PPA associated with BBTV Holdings acquiring BroadbandTV Corp. as part of our IPO. Amortization associated with the PPA in the amount of $7.4 million was recorded in cost of revenue for Q4 of 2021. It should be noted that this is a non-recurring transaction and the amortization is non-cash. Accordingly, we will provide commentary on the company’s gross profit and gross margin as per the statutory filings without the PPA amortization and as introduced in Q1 of last year, the metrics of BBTV share and adjusted gross margin.
Now turning to our results, the highlights for the fourth quarter and full-year include overall our revenue and adjusted EBITDA performance was within the range of analyst consensus and our cash flow from operations and our ending cash balance significantly beat consensus. We also recorded solid performance for our Plus Solutions, despite some timing issues that delayed some revenue recognition into the subsequent quarter. Views remain below the record highs that we saw in 2020, during the COVID-related lockdowns. And despite this, we achieved growth across most key metrics on a full year basis in 2021.
And finally, our operating cash flow and free cash flow were both positive for Q4 and the full year. Total revenue for the fourth quarter was $138.8 million, a 23% increase from Q3, but still 8% below the same quarter last year. The decline reflects the pullback in viewership consumption after COVID related lockdowns came to an end as our total views of 107 billion were down by 6% from Q4 of 2020. Compared to a pre-pandemic period of Q4 2019, our views were actually up by 8% representing a CAGR of 4%.
RPMs were down by 5% in the quarter, compared to a year earlier due to the impact of YouTube Shorts viewership, which represented 20% of our views in the fourth quarter. Since YouTube Shorts is not presently being monetized, it artificially depresses the RPM figures. If we exclude YouTube Shorts viewership, our RPMs would’ve grown by 17% year-over-year in the quarter. As we discussed in the last call, we expect that Google will be one of the first platforms to enable monetization at scale for micro content. And we remain well-positioned to benefit. Where just based on our micro content viewership today, it could represent more than $90 million of recurring annual revenue based on market rates today. We expect our RPMs to grow particularly as YouTube Shorts monetization is activated and our Plus Solutions continue to scale.
On a full year basis, our 2021 revenue of $476.6 million was up 4% from 2020, despite the pullback in views. The breakdown of revenue for Q4 includes Base Solutions revenue of $127.3 million, a decrease of 9% from Q4 of 2020 for the reasons I just noted; and Plus Solutions revenue of $11.5 million, up 11% from a year earlier. Our growth in Plus Solutions was led by strong performance in content management and Q1 of this year is shaping up well where January Plus Solutions revenue growth rates are exceeding 60% when compared to the prior year, supporting our past guidance that our Q3 2021 Plus Solutions revenue growth rate of 23% is sustainable on an annual basis. While there will continue to be some lumpiness in its ramp up, Plus Solutions is expected to benefit from our investments over the last year, allowing us to grow our BBTV share and gross profit at a faster rate than our total revenue this year, as we continue to unlock the value of our existing content creators. We are focused on high margin Plus Solutions and becoming less sensitive to the short-term volatility of views.
Gross profit for Q4 was $10.4 million, excluding PPA amortization, representing a gross margin of 7.5%. For the full year, it was $38.1 million, up 6% from $35.9 million in 2020, representing an 8% margin, which is an improvement from the prior year of 7.8%. Gross margins improved for the year due to a higher revenue mix of Plus Solutions, illustrating our investment in Plus Solutions is working. BBTV share, which is revenue less content creator and third party platform fees, was $10.8 million for the fourth quarter, and our adjusted gross margin was 95.9%, up from 94.4% in Q4 of 2020.
Operating expenses were $13 million for the quarter, relatively consistent with Q3. They are up from $11.2 million in the fourth quarter of 2020, due to an increased selling and marketing expenses as part of our investments in Plus Solutions. Adjusted EBITDA was a loss of $0.8 million for Q4, down from positive $1.6 million in Q4 of 2020, due to the lower revenue coupled with higher operating expenses as a public company. However, it’s important to note that our adjusted EBITDA margins on an annual basis only dropped by 1% year-over-year, going from negative 1% in 2020 to negative 2% in 2021.
In terms of the balance sheet, we ended the year with $30.9 million in cash, which is up from $25.9 million at the end of September, as a result of cash flow from operations for Q4 2021 increasing by 41% and free cash flow increasing by 39% in comparison to the prior year.
Following our debt offering in June of last year, our long-term debt balance was $51.1 million as of December 31, 2021, and has a maturity to the year 2026.
I’ll now turn it back to Shahrzad.
Shahrzad Rafati
Thank you, Ben. We have been making some significant commercial progress in both our Base and Plus Solutions. During the quarter, our Content Management division, one of the key pillars of our Plus Solutions, saw some key successes. We renewed our partnership with the NBA, CMF, and TEGNA for additional terms. We also renewed and expanded our deal with Viacom, which will further increase the value of the account.
Internationally, we signed deals with Riot Games one of the largest gaming publishers in the world behind leading titles like League of Legends as part of our expansion into the APAC region, which will continue to be a focus in 2022, as well as Latin Media Corporation. We’re also focusing on expanding our Content Management services to include consumer brands as well as media and independent content creators. We have started testing our solutions with a select few brands including a recent deal with Shopify.
Our investment in direct sales for 2022 will grow and expand by increasing the size of the team by more than 30% and include an emphasis on brand awareness and brand presence in key strategic regions. With our direct advertising sales Plus Solutions, we brought on key advertising clients including a global automated OEM, another major studio clients and a new entry for us in the nonprofit public health space. So our sales team continues to increase average bookings as they strengthen their presence and expand revenue per order. For example, this quarter average order size increased by 23%. Looking forward, as it relates to direct advertising and what we’re doing, we are focused on signing the strategic deals with agencies to further increase order size and increase the volume of orders. With the depreciation of cookies announced by all major players, advertisers are looking to engage directly with players like BBTV that have the right to content and have richer and unique dataset and insights on their content. This is what we offer and it is our bread and butter. It’s a significant competitive advantage compared to other players.
Brands are also spending more with diverse media companies to reach multicultural audiences of all generations. Given BBTV’s dedicated offering for this audience, the company is very well positioned to benefit from this shift. When it comes to our Mobile Gaming Apps division, we had published 13 mobile apps as of Q4 with a combined 40 million downloads and an average rating of 4.6 out of 5 with negligible marketing spend.
To date, BBTV’s mobile apps have generated over 1 billion ad impressions with lifetime value metrics continuing to grow. In February, we launched our first mobile gaming app in partnership with a major media company Viacom for the launch of the Jackass Human Slingshot. In Q4 within the Base Solutions segment BBTV signed a number of prominent new creators that included long format micro content. While micro content like YouTube Shorts isn’t monetized today, as I mentioned earlier, once it becomes monetized across our entire library, it could represent incremental revenue of over $90 million annually across our Base Solutions at the current market rates.
As it relates to our fintech offering, we are expanding our Fast Pay program, as we plan on bringing factoring solutions provided by Spotter in house. We continue to look at expanding our value propositions for our creators. And over the last quarter, we have been negotiating deals with Spotter on behalf of our creators, and it became apparent that we could provide a stronger value proposition by offering this fintech solution in house and leveraging a third party factoring partner. The main reason for taking this program in house is because the Spotter’s business has recently evolved whereby they’re transitioning from a fintech business to an adtech business. When it comes to our direct advertising sales, our first party data is a key differentiator in providing targeted packages and content to advertisers. As a result, it’s clear an in-house solution is the best path forward as it improves our value proposition to our creators.
Now, I would like to speak in a little more detail regarding our Web3 strategy generally, and how we see our new Web3 division contributing to our strategic plans and our growth going forward. We will be providing creative marketing content management solutions and other tools to empower creators who lack the knowledge or expertise to expand their IP and presence in Web3. From conceptualizing and design to packaging and promotion across the right channels and audiences, our approach for creators will be comprehensive to drive the best results for them. With BBTVs end-to-end solutions, deep relationships, high performance teams, and expertise, we will apply our existing strengths to the Web3 creator economy. This will also further strengthen and deepen our relationship with content creators, very similar to what we’ve done through our Web2 Plus Solutions. Management believes that it is in the company’s best interest to make these investments to secure market share given the opportunity to unlock the value of its content creators in regards to the Web3 movement.
In January, we announced that we were introducing Pay to Crypto, a Base Solution that allows creators to choose to receive their BBTV payment in the form of major cryptocurrencies such as Bitcoin, Ethereum, and Stablecoin. Pulling our creators, we identified that more than 60% of BBTV creators are interested in Pay to Crypto and Web3. And we are already working with a number of creators for the rollout. Today, you saw our announcement with ConsenSys to further drive our Web3 initiatives forward. ConsenSys is a premier partner in the space, which highlights that we’re working with the top players in the world and we are building these capabilities now.
With respect to M&A, we remain engaged on several fronts. However, we are cognizant of our share price, and we’ll ensure that any transactions that we do in the future are accretive to the current share price levels.
I want to conclude by saying that we have a very strong business model that is really valuable to the creators and make us sticky. Our business model and technology are highly scalable and accessible. So we are able to continuously add new revenue streams at minimal expense. And we have proven that our business model delivers meaningful cash flow. We have the balance sheet and the operating cash flow available to us to establish BBTV on the forefront of the Web3 transition than many of our creators are looking for. And based on our recent announcements, we are already investing in it. This is an exciting time for BBTV and we believe that our core business and our Web3 expansion makes us a unique and valuable investment.
If I could leave you with one thing to think about regarding our stock, we have $31 million of cash on our balance sheet, are cash flow positive. And we have one of the most viewed libraries of creator content in the world, which according to comScore is nearly 2x that of Disney. Right now our stock is trading at 1.2x cash. Our enterprise value implies that our video asset is only worth $39 million. We’re excited about the future. Our business is strong and I believe that we’re allocating capital in a way that maximizes the value for our company and our shareholders.
We can now open it up for questions.
Question-and-Answer Session
Operator
[Operator Instructions] The first question is from the line of Kevin Krishnaratne with Desjardins.
Kevin Krishnaratne
Hey there, good afternoon. I first have a question just sort of on the core performance in views and RPMs excluding Shorts. So I think, 20% of the views in Q4 were Shorts. So that leaves 85 billion views that came from sort of the — anything other than Shorts, which is actually down from what you had last Q1 ’19. So I’m just wondering if you can — but however, your RPM, I think you’re indicating was up 17% year-over-year, $1.45 or higher than that. So I’m just wondering if you can talk to the dynamics there and sort of, how do we think about the modeling out sort of the core business, excluding Shorts over the next couple quarters? Because I think as you mentioned Shorts isn’t going to start folding in results until later on in that 2022.
Ben Groot
Yes, absolutely. Thanks, Kevin. Largely when we’re looking at the viewership while the non-Shorts viewership, it’s below 2019, it’s part of a continuing trend towards viewing more micro form content like YouTube Shorts. So we’re still pursuing YouTube Shorts viewership. However, a focus largely in the past year has been on monetizable views, which is non-YouTube Shorts content. So largely as it relates to YouTube Shorts and 20% of our viewership coming from it, it’s a significant upside for us, largely because as that format becomes monetized, which we believe will be soon, it can be a significant revenue opportunity in the future. If we just assume similar RPMs is what we were seeing in 2021 for non-Shorts content, it represents about a $90 million revenue opportunity into the future. So we think it’s a good sign for positive future performance in the upcoming quarters.
Kevin Krishnaratne
The RPM for Shorts is similar to non-Shorts?
Ben Groot
So it’s not presently being monetized. But when we look at the Shorts viewership that we have, it largely is based from U.S. audiences, which typically have about 3x the RPM than our average RPM. So, right now we are just assuming on average about $1 RPM, which is what we saw for 2021 overall for the year. But it could be higher if it’s based on similar monetization that we are seeing across non-Shorts content. U.S. audiences are 3x higher.
Kevin Krishnaratne
3x, yes. So that’s — the 90 million…
Shahrzad Rafati
And then maybe just to add to that — no, go for it, Kevin.
Kevin Krishnaratne
No, I was just going to say, so the 90 million is calculated using around $1 RPM and then maybe that sort of same assumption of 20% of your base watching Shorts.
Ben Groot
Yes.
Kevin Krishnaratne
Okay.
Shahrzad Rafati
And just one other point that I want to say about the non-Shorts content. Obviously, we are very excited about the potential monetization of micro content, which we believe will take place in several quarters. But at the same time, we are also seeing that we are entering a new normal when it comes to consumption rates. And if you were to compare specifically viewership to 2019 as we outlined, we know that, in prepared remarks, the views for 2022 are 8% higher than the views for 2019, prior to the pandemic. So, that’s also something to note that we are seeing that we are entering a new normal here, when it comes to consumption rates.
Ben Groot
And actually Shahrzad, that’s a good point. When also you look at the sequential change in our views from Q3 to Q4, you will notice that revenue was relatively stable at 107 billion in Q3 and Q4. Whereas when you look at a pre-pandemic period like 2019, there is typically a seasonal pullback in viewership. So, this data point as well makes us believe we are in more of a normalized period of viewership consumption as we exit 2021.
Kevin Krishnaratne
That’s a good point because on your last call you did talk about Shorts. Sorry, I have a bit of a cold. But in Q3 you would’ve had Shorts, but you didn’t break it out. So was it a similar sort of 20% level? And that’s what your — because if you were to look at core ex-Shorts here, you saw pretty much stability Q-over-Q. Is that what you’re indicating?
Ben Groot
Yes. It was slightly less from Shorts viewership, but substantially similar to Q4 in terms of the overall percentage of our views.
Kevin Krishnaratne
Okay. So, sorry to have the question on the views as I just think it’s important again for modeling. So, as we think about going forward, can you help us? So, obviously we will have Shorts that will remain at 20 million, whatever over the next couple quarters, not monetized, but then you have got sort of the new normal of views that we can use off of the Q4 base. Sort of how do we think about trends there, looking back at your previous year, you actually do see views going up into Q1?
Ben Groot
Yes, exactly. So we think for the next couple of quarters, we are still expecting a decline. But then we expect it to stabilize and start returning to more of the normalized growth trends that we have been seeing.
Kevin Krishnaratne
Okay. I’ll switch gears just to one last one then maybe on Plus. So I know you did just over $11 million in Q4. Are you talking about how much of that is direct at all? Oh, sorry, yes, is direct ad sales in the $11 million?
Ben Groot
We’re not yet — still not breaking that out separately. Although, certainly as Plus becomes the larger percentage of our overall revenue, that’ll be something that we will consider. But our Plus revenue growth rate certainly reflects direct sales, as it’s one of the larger components of it. And we are really excited so far with what we are seeing in Q1, January shaping up really well where the revenue growth rates for Plus overall are exceeding 60%, which is ahead of what we originally had seen when we were looking at a Q3 Plus revenue growth rate of 23% that’s sustainable on an annual basis. So, Q1 trends are really highlighting that our investments are paying off and we are certainly excited about how 2022 is shaping up for Plus.
Shahrzad Rafati
And just one point that I wanted to Kevin also add — sorry, Kevin, I wanted to add one other point on the viewership, which is also very much linked to Plus. We obviously made the decision to focus on creator monetization and our higher margin Plus Solutions, which makes a lot of obviously — makes us a lot less sensitive to the actual short-term volatility of views. So, I think this is really important that, as a company, we are very much focused on creator monetization. And as the company grows, obviously as you know the growth of Plus will have an a greater impact on BBTV share and the gross profit, and — which means that it makes us a lot less sensitive to the short term volatility of views, which as we get more of the market content be monetized, you would have that as Ben mentioned that 90 million opportunity on an annual basis for — based on our current library of content.
Kevin Krishnaratne
Got it, yes, no, thanks for that. Appreciate that, Shahrzad. I just want to close the loop on Plus here. So Ben, you mentioned the 60% growth. Just was there anything unique in last January that is meeting, that it does sound like it’s surprising you. Because if you just do straight extrapolation, it looks like your Q1 would be higher than Q4. And I don’t know if that is what you’re thinking could happen. And then just a second piece, if you could talk about how the biggest driver of Plus is going to be the direct sales. Can you talk about if we assume that a majority of the Plus revenue in the quarter came from direct sales and that sort of represents only a fraction, maybe it’s 5% of your inventory, even less than that. And you just talked about the opportunity in terms of just turning on inventory, and the ability to really crank up direct sales. How easy is that? And how do you think about doing that over the coming quarters?
Shahrzad Rafati
Ben, do you want me to take that question?
Ben Groot
Sure. Yes.
Shahrzad Rafati
So Kevin on Plus as you know we have three pillars under Plus, Content Management, ad sales and Mobile Gaming Apps. And I would say, as we talk about into the performance into January and bring more than 60%, it’s coming from all those three solutions. I think when you look at content management, we had a very strong quarter in terms of renewing partnership with the NBA, CMF, TEGNA, growing the partnership with Viacom, we all start further investing in Content Management. We’ve announced the onboarding of Thomas Hughes, which is really important. We expanded Content Management to live events as well as brands with the partnership with Shopify.
As well as when it comes to direct advertising, of course, we’re in a very good position, not only because of the fact that we’re actually growing the average size for each campaign, which we saw a 22% increase in Q4 and we plan and obviously our goal is to continue build on that in finding partnerships that are more strategic with the larger campaign size, but also we are in a very good position, as you said, how do you plan on kind of — what is your strategy for direct sales? When it comes to our strategy with direct sales, specifically we have a few opportunities in front of us that as a company we’re going to be significantly benefiting from. And that goes from not only the demise of cookies with contextual targeting where BBTV is one of the very few partners that has access to that first party data as a very large publisher, that where we have access to richer and much more unique data and insights that the advertisers and the agencies are looking for, right? As this very much sort of mega smart publisher. And this is a greater example of that is, for example, what we’re seeing with multicultural audiences, which is what brands are spending more with diverse media and given our audience and our capability to target that audience, providing specific packages that gives us a very much a unique competitive advantage.
So those are two major trends that we’re going to be benefiting from. We are growing the size of the team. And as we saw with the 60%, more than 60% growth rate, so far what we experienced in January, that has given us confidence to further invest in Plus. And as we grow the size of the team, strategically, we’ll see that, that would increase the order size as I mentioned earlier. So that’s kind of how I would say as far as — and we’re building on of what we achieved in Q4.
And I’d like to also highlight Kevin is that we reach more than 50% of adults in the U.S. ages 18 to 34. And if you kind of look at the total digital audience, that’s about 40% of the total digital audience. So it’s much more than some the household brand names and that we’re aware of. And it gives us a great opportunity to be able to kind of work with more advertisers and agencies. Like there’s no shortage of inventory. There’s no shortage of in terms of the products, the diversity of the product, the targeting and the tech that we have. It’s just more so about the activation of that, which we are doing in terms of growing the team and increasing the overall specifically campaign size.
Kevin Krishnaratne
Thanks for all that, Shahrzad. Just because you mentioned that I’ll ask then. The 30% increase in the team, is that direct sales or is that just broadly? And are you still keeping your EBITDA positive target intact?
Shahrzad Rafati
Yes. So I was really speaking to the 30% growth in direct advertising as a team. Obviously the results when it comes to specifically Plus Solutions they have given us the confidence to really double down. I think one part of it is that. The other piece that is really important, Kevin, for us to highlight is really the timing of Web3. If you think about it, BBTV is a leader in creator economy. And given our reach, given our scale with 600 million monthly unique viewers, we’re in a very well position. We’re positioned really well in transitioning audiences from Web2 to Web3. And this is why we think that it’s a really good decision for the company to be able to — and seeing obviously kind of the numbers that we’ve seen for Plus Solutions growth rates that’s given us that confidence to continue to invest in Plus, and really with management we believe that — and it’s really in the company’s best interest to make these investments to really secure market share, given the opportunity to really unlock the value of our content creators in regards to the Web3 movement, because you see this that is happening across all the major players.
And again in terms of profitability, look with the continued ramp of our Plus Solutions revenue streams, we continue to expect that we will return to adjusted EBITDA profitability. And also, it’s important to keep in mind that BBTV has enormous view scale and a growing Plus Solutions program. So it’s still possible for us to be profitable if you were able to achieve enough premium monetization.
Operator
The next question is from the line of Aravinda Galappatthige with Canaccord Genuity.
Aravinda Galappatthige
A couple from me or maybe three, I think. I wanted to sort of flush out the monetization of the YouTube Shorts. So, what is the latest that you have in terms of an update as to what initiatives sort of Google and YouTube would drive to a love to facilitate that monetization? I know that there is currently a sort of a Shorts fund, but I know that’s very, very limited. Are you confident that maybe by Q4 or early ‘23, you would see some movement on that front?
Shahrzad Rafati
Yes, as it relates to YouTube Shorts — Aravinda, thank you so much for your question. We think that it will take several months. And I think when it comes to actual the production of YouTube Shorts, this is something that is very much so what the content creators are producing regardless of the YouTube Shorts. As you know, YouTube has invested in content, whether short or long form, and really that speaks to a fraction of the volume of actual content and videos that gets distributed on the platform. And we are seeing this — I mean, as Ben mentioned earlier, BBTV as a company, we’re very much focused on onboarding content that is monetized. And as a result of it, if you’re looking at our percentage of Shorts, which is sitting at 20%, it’s most likely a lower percentage of what you were seeing across the industry, given our focus on monetized content.
When it comes to the monetization opportunity of you YouTube Shorts, we think that it will take several months and the platforms from Google and Facebook, they have already started testing ad formats. And just like when with any new ad format, we saw the transition from basically online web consumption to mobile consumption, where we had 30 second ads, and then we saw 6 second bumper ads and 15 second ads, and stream ads for specifically mobile devices. Same thing is happening, we’re seeing obviously the platforms are testing already the monetization for micro content, which is less than 1 minute long. And based on our understanding, you will see that scalable monetization in several months.
Aravinda Galappatthige
Two clarifications, the first one on Spotter. So to be clear, that sort of arrangement no longer exists. And I just wanted to know if that was — that contributed to Q4 at all in any way in Q4 ‘21? And secondly, I wanted to clarify the — I guess the indication around Plus Solutions growth. Ben, did you say 23% — or at least 23% for Q1 or for several — or are you saying 23% for the year? I wasn’t — I may have missed that because of the audio on my end.
Ben Groot
No problem. I’ll just speak to the second part. And then Shahrzad, maybe you take the update on Spotter. When it comes to our Plus Solutions growth rate back in Q3, we had a 23% growth rate, which we said we believe to be sustainable on an annual basis. And as you’ve seen over the past few quarters, there’s some lumpiness in terms of Plus Solutions growth rates. But the way Q1 is shaping up broadly across all of our Plus Solutions, we are comfortable that, reiterating that guidance that we expect on an annual basis, Plus Solutions to be at least growing by 23%.
Shahrzad Rafati
Great. Then I think on the question on Spotter. Spotter changed their business, as I mentioned in my earlier remarks from being fintech business, as we entered the deal with Spotter initially — we entered into a factoring arrangement with Spotter for them to deploy up to a certain dollar amount to BBTV creators to help them to fund their content production. And as Spotter has our business from being a fintech business to an asset business, as you know, when it comes to direct advertising, our first party data is really a key differentiator in providing those targeted packages to the advertisers. So as a result of this, we changed — we also — the other important note is here, we have been negotiating deals with Spotter on behalf of our creators, and it became very apparent that we could actually provide a stronger value proposition by offering fintech solutions in house and leveraging a third-party factoring partner. And this would also have preferred financial specifically outcome for BBTV as it relates to our revenue share.
So, that’s specifically speaking to the partnership with Spotter. We are already kind of looking at alternatives, as it relates to specifically, the parties that we are going to be working with in bringing the solution in house. And we are in discussions with those third-party financial partners. And again, as I mentioned, indicative terms would actually provide similar or better terms for BBTV and the creators.
Aravinda Galappatthige
Okay, great. Thank you, Shahrzad. Last question on — financial question, I guess for Ben on working capital. It does look like you sort of monetized a fair bit of your receivables in Q4. I know that there has been some up and down movement in working capital. I wanted to get a sense of how we should think about that. Would there be any kind of material lumpiness? I know that you are going to get natural movements up and down. But is that like similar to maybe what we saw in Q2 and Q3 and perhaps even Q4? Are you going to see that level of material lumpiness going forward or should — is the Q4 level the right level for us to kind of build a more normalized working capital movement off of?
Ben Groot
Right. Yes. Good question. Because, I guess one of the things to take away just from our working capital position generally is that, it’s a favorable position, being that it’s negative working capital because typically we collect our revenues within 30 to 40 days and pay our payables, which are mainly rev shares to our creators within 70 to 80 days. And because the receivables come within 30 to 40 days, it can sometimes overlap with a quarter end. And so, you get some of that volatility between quarters, less so on an annual basis. So, when it comes to future quarters, it’s a bit difficult just to predict on the quarter-end cutoff. But ultimately, what we have seen in Q4, you can probably expect that or slightly less as we go into 2022 in terms of the change in working capital.
Operator
The next question is from the line of Adhir Kadve with Eight Capital. You may proceed.
Adhir Kadve
Thank you, guys. Thanks for taking my question. My first question will be just on your investments for the year for fiscal 2022, obviously Plus Solutions remains one of the places where you guys are going to be investing. But maybe outside of Plus Solutions, can you maybe tell us where you would be investing maybe in Web3 and maybe your high level thinking of when, — I mean sort of your high level timing of when that those kinds of revenues or those kinds of NFT drops and stuff could be coming through, that we’d see?
Shahrzad Rafati
Yes. For sure. Adhir, thank you so much for your question. And when it comes to specifically, our investments are all focused around Plus Solutions, including Web3, because as you know, Web3 is also a Plus Solution. And as it relates to specifically, where we are with our efforts, obviously we signed this partnership with ConsenSys and as I mentioned in my opening remarks, they do work with select partners. They form actually a very handful of partnerships, like the ones with BBTV, and we already have a pipeline in terms of the launch of specifically NFTs for our content creators that we are working on. And you will be getting updates on that front very shortly. We believe that as I mentioned, this is really the right timing because when you look at BBTV’s high performance team, our end-to-end solutions and really the deep relationships and expertise that we have, we will be applying all of that and leveraging our existing strengths to the Web3 — applying it to the Web3 creator economy. And we’re very much confident in our ability to transition content creators to Web3, given not only the existing pipeline that we have and specifically the deals that we have in the pipeline, but as far as the scaling that even further across obviously our content creator base.
Adhir Kadve
Okay, great. And then just you provided some very good stats on your reach and your engagement, reaching more than 50% of adults, but do you see that given that reach and that — broad base reach that you guys have, do you see an opportunity to maybe expand beyond your core advertising verticals into a broader subset of clients or a broader set of clients?
Shahrzad Rafati
Yes. It’s a very good point. And as a matter of fact, if you look at kind of that what we did of course this past quarter, we actually onboarded our first not-for-profit public health partner. And again, as we’ve done, we do this very strategically. Auto is obviously one of the key verticals for BBTV, CPG, and obviously entertainment and I don’t want to go over all the categories, but not only we’re actually specifically deepening our partnerships with existing and new partners across the segments that we are operating, but we’re also expanding into new segments as we actually grow the team. And part of our strategy in terms of the growth of the team in the U.S. specifically is bringing expertise within the verticals from CPG to gaming, to entertainment that they can actually bring in those partnerships and relationships with them.
Operator
Thank you. The next question is from the line of Kris Thompson with PI Financial. You may proceed.
Kris Thompson
Maybe, just a couple of clarifications if I could. I didn’t see in the MD&A delay of Plus revenue into Q1 Ben. Maybe, could you give us a little bit of color on what happened there?
Ben Groot
Yes. No problem. So in a couple of instances, largely to do with content management, direct sales, and mobile games across the board, actually some of the revenue spilled over into Q1. So for example we recently launched a Jackass game as part of our Mobile Games division. There was a couple of others that we recently launched in Q1 that originally were targeted in Q4. The pipeline is well when looking at content management, expanded quite a bit in Q1. And so as a result, some of what was expected to be signed in Q4 spilled over into Q4 as well. It was broadly though across all of the Plus Solutions where there was an acceleration in Q1 in January.
Shahrzad Rafati
Yes, and maybe Ben maybe to add to that, I think some of it is in our control. So for example, when you’re looking at mobile apps and games this is where actually when we’re testing the app and specifically the results for the app, we keep on tweaking it, and we want to make sure that we achieve great success. And I think as we mentioned, we already had [40 million] downloads within our apps and 1 billion ad impressions. And based on the latest app that we launched with Krew Eats live events, activations, we are also seeing significant growth as a result of it to the overall LTV. So the lifetime value of that.
And the second piece is on advertising, in direct advertising, and this was really when you look at Q4, it’s something that was industry wide specifically with challenges of supply chain. And as we see the challenges of supply chain and you are seeing across key categories and restrictions on COVID diminish, we obviously are seeing that strong momentum carrying in Q1 of 2022. So that’s really with respect to that. And with Content Management, as we mentioned, we had strong two digit growth rates with respect to our accounts and not for just signing up new accounts, but also renewing existing clients as well.
Kris Thompson
Okay. That’s helpful. Just to clarify on the BBTV fee Fast Pay, the Spotter. So originally it was US$120 million, we had [$18 million] deployed. Is that the final number, or did you deploy more? Is some of that going to be in Q1 before you close the books on that partnership?
Ben Groot
Yes, it was largely the portion that we utilized. It was business as usual going into Q4. It was in Q1 where we had made the decision to bring the solution in house. So, for 2022, in terms of contribution from the Spotter partnership, we’re not expecting it to be significant, although, in a few quarters from now as Shahrzad noted, we’ve already identified several partners to effectively plug into being the receivable factoring partner on the Spotter front, which we expect will contribute in a few quarters from now.
Kris Thompson
And would you guys get the similar economics or would you actually get better economics as you bring that in house?
Ben Groot
Yes, same or better.
Kris Thompson
And just out of curiosity, the Pay to Crypto solution that you launched on January 12th shows out — I think you mentioned 50% or 60% of your creators are interested in Web3. How many creators have been paid in crypto so far? Can you provide any quantitative information there?
Shahrzad Rafati
Kris, we don’t really provide the breakdown, but as you said correctly more than 60%, they were interested in crypto and they were interested in NFTs and now they have that option out. And we are kind of providing them a range of optionality within Bitcoin, Ethereum and US Stablecoin. And it’s very simple, right? Because what it is that it’s very much so, you provide a compatible crypto wallet address and you select your cryptocurrency of choice and BBTV pays it directly in your wallet. And we are definitely seeing more and more interest, and obviously very excited about having — obviously our creators having more of a diversified product portfolio as well.
Kris Thompson
And just last one for me, I thought this is really interesting, the appointment of Erich Lochner from Jellysmack, I think you implied that he is going to be targeting Instagram and TikTok and Facebook. Can you just give us a bit more color on how you see that strategy rolling out under Erich?
Shahrzad Rafati
Yes, for sure. A great question. When it comes to specifically with BBTV, as you know we have already acquired the rights to the content across all the key platforms digitally. And so when you’re looking at specifically the monetization opportunity associated with other platforms and the scaled monetization, as you know, we are already present on those platforms, but scaled monetization across those platforms, Facebook is obviously a very key platform that we’re looking at. And given that Erich was involved with starting at Outloud Media and from there move to Jellysmack as one of the VPs there, it was a great addition and he saw a great opportunity also in BBTV because we already have the existing content creator. We already have specifically the right and the tech to be able to make that a success. So we are very excited about growing those.
And I think one of the things that I would like to highlight is that the margins, the base margins for other platforms are higher than the base margins that we have for example, on platforms like YouTube. And with respect to the partnerships with content creators, and that’s really a standard across the industry as well.
Operator
There are no additional questions waiting in queue at this time. So I will pass the call over to the management team for any closing remarks.
Shahrzad Rafati
Thank you so much. Thank you everyone for your — all your questions and I do want to highlight as I mentioned, at the beginning of the call, I do want to leave you with one really important thought here that we have $31 million of cash on our balance sheet and we’re cash flow positive. And we have one of the most viewed libraries of creator content in the world and according to comScore, that’s nearly 2x of the Disney. So, really this is a great opportunity for investors to get involved. And we are very much excited about the future of our business, because this is — we’ve been performing very much so strongly. And I believe that we’re allocating capital in the way that maximizes value for the company and the shareholders. Thank you.
Operator
That concludes today’s conference call. Thank you for your participation. You may now disconnect your line.
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