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Clubhouse Media Group, Inc. (CMGR)·Q1 2023 Earnings Summary

Executive Summary

  • Q1 2023 net revenue rose 67% year over year to $1.36M, driven by The Reiman Agency, but gross margin compressed to 11.0% and net loss was $2.22M as a $1.38M non‑cash derivative liability mark-to-market expense weighed on results .
  • Operating expenses fell by ~48% YoY to $0.70M as the company continued to streamline, having terminated all leases and focused on brand deals and the HoneyDrip platform .
  • Liquidity remains tight with cash of $0.045M, negative working capital of $9.46M, $4.26M in convertible notes (several in default), and going‑concern uncertainty flagged by management .
  • No Q1 2023 earnings press release or call transcript were found; consensus estimates from S&P Global were unavailable, limiting “vs. estimates” analysis. Debt settlements in Q1 (Diagonal Lending) and shortly after the quarter (ONE44) are modestly positive de‑risking catalysts .

What Went Well and What Went Wrong

  • What Went Well

    • Revenue growth: Net revenue increased by $543,905 YoY to $1,357,382, “the result of increased sales from The Reiman Agency” .
    • Cost discipline: Operating expenses declined to $703,629 from $1,360,488 YoY as stock comp, salaries, production and professional fees fell; management has “terminated all leases since December 31, 2022, and focuses on brand deals and Honeydrip platform” .
    • Liability management: The company settled two Diagonal Lending notes on Feb 17, 2023 for $105,000 and terminated the notes, reducing overhang .

  • What Went Wrong

    • Margin pressure: Gross margin fell to 11.0% from 17.04% YoY despite revenue growth; management attributed mix to higher commissions tied to higher sales volume at The Reiman Agency .
    • Non‑cash charges: A $1,382,822 increase in fair value of derivative liabilities drove total other expense to $1,668,012 and the bottom‑line loss of $2,222,319 .
    • Balance sheet stress: Cash was $44,961; negative working capital was $9,457,692; stockholders’ deficit was $9,526,949; multiple convertible notes remained in default, and going‑concern uncertainty was reiterated .

Financial Results

MetricQ3 2022 (Last Reported)Q1 2022Q1 2023
Revenue ($)$2,159,135 $813,477 $1,357,382
Cost of Sales ($)$1,354,670 $671,148 $1,208,060
Gross Profit ($)$804,465 $142,329 $149,322
Gross Margin (%)37.2% 17.04% 11.00%
Operating Expenses ($)$1,058,708 $1,360,488 $703,629
Operating Income (Loss) ($)$(254,243) $(1,218,159) $(554,307)
Total Other (Income) Expense ($)$(1,089,662) $2,279,993 $1,668,012
Net Income (Loss) ($)$835,419 $(3,498,152) $(2,222,319)
Diluted EPS ($)0.00 $(0.0322) $(0.0003)
Diluted Shares (WASO)5,264,737,258 108,753,763 7,696,310,840

Notes:

  • “Prior quarter” Q4 2022 data were not disclosed separately; sequential comparison shown against the last reported quarter (Q3 2022). No Q1 2023 press release or call transcript found.

Balance sheet and liquidity snapshot

Metric (Period-End)Dec 31, 2022Mar 31, 2023
Cash and Equivalents ($)$57,713 $44,961
Accounts Receivable, net ($)$367,364 $568,593
Total Assets ($)$1,243,754 $1,412,890
Convertible Notes Payable, net ($)$4,504,103 $4,262,656
Derivative Liability ($)$799,988 $1,993,083
Accounts Payable & Accrued Liabilities ($)$2,565,806 $3,171,172
Total Liabilities ($)$8,921,990 $10,939,839
Stockholders’ Equity (Deficit) ($)$(7,678,236) $(9,526,949)

Segment breakdown / KPIs

  • The company does not report segment financials; management cites The Reiman Agency as the key driver of revenue growth; HoneyDrip subscription revenue is recognized on a gross basis since April 2022 .

Guidance Changes

No formal financial guidance was provided; no Q1 2023 guidance ranges were disclosed in filings or press releases.

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY/Q1 2023N/ANone providedN/A
Gross MarginFY/Q1 2023N/ANone providedN/A
OpExFY/Q1 2023N/ANone providedN/A

(Management discussion provides qualitative focus: eliminate leases; focus on brand deals and HoneyDrip) .

Earnings Call Themes & Trends

No Q1 2023 earnings call transcript was found. Narrative evolution based on filings and prior press releases:

TopicPrevious Mentions (Q2 2022)Previous Mentions (Q3 2022)Current Period (Q1 2023)Trend
Revenue driversGrowth driven by more and larger brand/agency deals and HoneyDrip expansion .Continued revenue increase; CFO cited better‑than‑expected Q3 .Revenue up YoY driven by The Reiman Agency .Sustained shift to agency-led growth.
Cost structureSignificant OpEx reductions; shift away from expensive content houses .CEO reiterated shift to agency model and tech‑based creator platform; margin improved in Q3 .Leases terminated; focus on brand deals and HoneyDrip; OpEx down YoY .Leaner model maintained.
HoneyDrip monetizationGross recognition from April 2022 due to control over services .—Gross recognition policy reiterated in 10‑Q .Stable policy.
Liquidity/capital structureHigh derivative liability and convertibles; going concern; derivative liability at $4.79M (Q2) .Positive net income due to derivative liability mark‑to‑market benefit in Q3 .Derivative liability rose to $1.99M at Mar 31; $1.38M mark‑to‑market expense; going concern remains .Volatile non‑cash P&L; ongoing financing risk.
Debt actionsMultiple conversions/restructures; significant convertibles outstanding .—Settled two Diagonal Lending notes (Feb 17, 2023); ONE44 note settled May 10, 2023 .Gradual de‑risking steps.

Management Commentary

  • “Net revenue was $1,357,382 for the three months ended March 31, 2023... The increase of $543,905 was the result of increased sales from The Reiman Agency.” (Q1 MD&A) .
  • “Operating expenses for the three months ended March 31, 2023, were $703,629... The overall decrease in total operating expenses resulted from a decrease in the stock compensation to consultants and salaries & wages to the Company, and reduced advertising expenses.” (Q1 MD&A) .
  • Strategic focus: “The Company has terminated all leases since December 31, 2022, and focuses on brand deals and Honeydrip platform.” (Q1 10‑Q, Business) .
  • Prior context (FY22 PR): “We increased revenue, significantly decreased our expenses, and strengthened our balance sheet by eliminating more of our convertible debt.” – CFO Scott Hoey . “Our digital agency (The Reiman Agency) is working with new brands and talent every month and our creator platform has been growing in popularity.” – CEO Amir Ben‑Yohanan .

Q&A Highlights

No Q1 2023 earnings call transcript or Q&A was found.

Estimates Context

  • Wall Street consensus (S&P Global) for Q1 2023 EPS and revenue was unavailable for CMGR; therefore no “vs. estimates” comparison is provided.

Key Takeaways for Investors

  • Revenue growth but margin compression: The agency model is scaling revenue, but mix/commission dynamics compressed gross margin to 11.0%; operating efficiency gains partially offset this .
  • Non‑cash volatility dominates bottom line: Derivative liability remeasurements (linked to convertible notes) remain the primary swing factor for net income/loss; Q1 saw a $1.38M expense .
  • Balance sheet and going concern: Very low cash, high current obligations, and defaulted convertibles underscore refinancing risk; management continues to seek capital and settle debt where possible .
  • Execution focus: Continued pivot away from content houses and toward brand deals and HoneyDrip with gross revenue recognition supports top‑line scale; watch for margin and cash conversion improvement .
  • Near‑term catalysts: Incremental debt settlements (e.g., Diagonal in Q1; ONE44 in May) modestly reduce overhang; additional settlements or capital raises would be significant stock drivers given liquidity constraints .
  • Reporting cadence: Absence of a Q1 press release or call and lack of coverage/consensus can amplify volatility; filings remain the primary information source.

Sources: Q1 2023 Form 10‑Q (filed June 8, 2023) ; Q3 2022 press release (Nov 15, 2022) ; Q3 2022 Form 10‑Q (Nov 14, 2022) ; Q2 2022 Form 10‑Q (Aug 15, 2022) ; FY 2022 results press release (Apr 5, 2023) .