MoviePass’ owner Helios & Matheson Analytics Inc. (NASDAQ: HMNY) reported its first quarter financial results and topped analysts’ estimates in earnings, but missed revenue estimates. Shares were up 6.4 percent midday on Wednesday.
For the first quarter, Helios & Matheson reported revenue of $49.4 million, increasing 3,532.4 percent year over year, but missing analysts’ estimates by $5.55 million. The company reported an EPS of 9 cents, surpassing analysts’ forecast of an EPS loss of $2.08.
“We are excited to report our biggest quarter in Helios and Matheson and MoviePass combined history. This growth surpassed our expectations,” said Ted Farnsworth, Chairman and CEO of Helios.
Wall Street has expressed its concerns regarding MoviePass and its profitability. The subscription service allows customers to watch a movie everyday for the month for just a flat monthly fee of $9.95.
Investors and analysts are concerned about the pricing of the subscription, considering the company was averaging a monthly net loss of $20 million.
After an 8-K filing, it was revealed that Helios & Matheson had "approximately $15.5 million in available cash and approximately $27.9 million on deposit with our merchant processors for a total of approximately $43.4 million.”
In order to cut losses and have some cash on hand, the company sold $30 million worth of shares at a price of $2.75 back in late April to cut its losses.
Despite the company’s struggle to profit, it has been gaining users at a rapid pace. MoviePass reported 2.7 million total active members, of which, 1.1 million joined within the first quarter.
Even with the strong user growth, investors still believe that the company will struggle to profit due to its low prices.
“If we are unable to obtain sufficient amounts of additional capital, whether through our Equity Distribution Agreement or otherwise, we may be required to reduce the scope of our planned growth or otherwise alter our business model, objectives and operations, which could harm our business, financial condition and operating results.” said Helios & Matheson CEO Theodore Farnsworth.
Helios and Matheson shares are down 89.3 percent this year.