Creatd, Inc. is a dynamic public holding company that has undergone a remarkable transformation, evolving from a niche digital media platform into a diversified technology and investment conglomerate. With a strategic focus on leveraging its proprietary technologies, data-driven insights, and disciplined acquisition strategy, Creatd has positioned itself at the forefront of the rapidly changing digital media and e-commerce sectors.

Business Overview and History

Creatd's journey began in 1999 when it was incorporated as LILM, Inc. under the laws of the State of Nevada. In 2013, the company underwent a significant change, renaming itself Great Plains Holdings, Inc. as part of a broader diversification strategy. However, the most pivotal moment in the company's history came in 2016 when it entered into an Agreement and Plan of Merger with GPH Merger Sub, Inc. and Jerrick Ventures, Inc., a privately-held Nevada corporation headquartered in New Jersey. This merger resulted in Creatd acquiring all of Jerrick Ventures' outstanding capital stock in exchange for 475,000 shares of Creatd's common stock issued to Jerrick's shareholders.

Following the merger, Creatd adopted Jerrick's business plan and became the parent company of Jerrick Ventures, LLC, its wholly-owned operating subsidiary. This strategic move set the stage for Creatd's transformation into a technology-driven digital media company, with a focus on developing and expanding its flagship platform, Vocal.

In the years that followed, Creatd continued to execute its growth strategy through a series of strategic acquisitions. In September 2019, the company acquired 100% of the membership interests in Sellers Choice, LLC, a digital e-commerce agency, further diversifying its offerings and strengthening its capabilities in the direct-to-consumer (DTC) space. The following year, on September 9, 2020, the company officially changed its name to Creatd, Inc., reflecting its evolving identity and focus.

Creatd's acquisition strategy continued to unfold between October 2020 and August 2021, with the company acquiring various membership interests in Dune, Inc. and Plant Camp, LLC (later rebranded as Camp). These acquisitions bolstered Creatd's consumer products portfolio, particularly in the health-conscious, DTC food and beverage industries. In March 2022, Creatd further expanded its reach by acquiring 100% of the membership interests in Denver Bodega, LLC, doing business as Basis.

Financial Performance and Ratios

Creatd's financial performance has seen significant fluctuations in recent years, reflecting the company's ongoing transformation and strategic initiatives. For the fiscal year ended December 31, 2022, Creatd reported total revenue of $4.80 million, a decrease of 11.63% compared to the previous year. Despite the revenue decline, the company has made substantial progress in improving its gross margin, which stood at -27.31% in 2022, compared to -23.31% in 2021.

The company's net loss for the fiscal year 2022 stood at $32.29 million, a slight improvement from the $37.38 million net loss reported in 2021. Creatd's cash position as of December 31, 2022, was $706,220, down from $3.79 million at the end of 2021, primarily due to the company's ongoing investments in its core business and strategic acquisitions.

For the nine months ended September 30, 2023, Creatd reported total revenue of $2.12 million, a 46.92% decrease compared to the same period in the prior year. The decrease was primarily driven by reductions in agency and subscription revenues, partially offset by growth in e-commerce. The company was able to improve its gross margin to 14.74% from 19.34% in the prior year period by optimizing its cost structure.

In the most recent quarter (Q3 2023), Creatd reported quarterly revenue of $437,860, representing a 57% decrease compared to Q3 2022. This decline was primarily attributed to a decrease in agency revenues in non-core business divisions and a small loss in subscription revenue, partially offset by an increase in revenue from the company's direct-to-consumer brands. The quarterly net loss for Q3 2023 was $3.88 million.

Liquidity

Creatd's liquidity position, as measured by its current ratio, stood at 0.02 as of Q3 2023, indicating a significant need for the company to improve its short-term solvency. The company's debt-to-equity ratio, a measure of its capital structure, was -0.36 at the end of Q3 2023, suggesting a continued reliance on debt financing.

As of Q3 2023, Creatd's cash position was $6,760, a significant decrease from the end of 2022. The company's quick ratio, which measures its ability to meet short-term obligations with its most liquid assets, also stood at 0.02, further highlighting the need for improved liquidity management.

It is worth noting that Creatd's financial performance during the COVID-19 pandemic was impacted by disruptions in its e-commerce and branded content businesses, leading to a decline in revenue and profitability. However, the company has demonstrated resilience, diversifying its revenue streams and streamlining its operations to navigate the challenging market conditions.

Business Segments and Operations

Creatd operates through four main business pillars: Creatd Labs, Creatd Partners, Creatd Ventures, and Creatd Studios.

Creatd Labs focuses on development initiatives, housing the company's proprietary technology, including its flagship platform, Vocal. This segment oversees content creation and management of digital communities, deriving revenues from creator subscriptions, platform processing fees, and technology licensing fees. For the nine months ended September 30, 2023, Creatd Labs generated $852,970 in revenue, a 25.22% decrease compared to the same period in the prior year.

Creatd Ventures builds, develops, and scales e-commerce brands, generating revenues through product sales of its two majority-owned direct-to-consumer brands, Camp and Dune Glow Remedy. For the nine months ended September 30, 2023, Creatd Ventures reported revenue of $646,750, a 47.87% decrease year-over-year, but managed to improve its gross margin to 38.46% from 37.75% in the prior year period.

Creatd Partners fosters relationships between brands and creators through its suite of agency services, including content marketing (Vocal for Brands), performance marketing (Sellers Choice), and influencer marketing (WHE Agency). For the nine months ended September 30, 2023, Creatd Partners generated $594,670 in revenue, a 63.26% decrease year-over-year, but significantly improved its gross margin to 69.11% from 29.25% in the prior year period.

Creatd Studios, while not currently an operating segment of focus, maintains high-quality capabilities for future growth in IP development and content production across multiple platforms.

Guidance and Outlook

In its latest financial reporting, Creatd provided guidance for the fiscal year 2023, anticipating total revenue of approximately $2 million. The company's management has expressed optimism about the potential for significant growth in the fiscal year 2024, subject to the successful execution of its strategic plan.

Creatd's core operational business is nearing cash flow positivity, indicating the company's progress in transitioning to a more sustainable and profitable model. The company has also extended the deadline for finalizing the TAMI Ventures/Bettaverse definitive agreements to April 2024, as it continues to focus on strengthening its balance sheet and positioning itself for future acquisitions.

Creatd's management team has emphasized the importance of compliance, transparency, and corporate governance, as evidenced by the successful completion of its 2023 audit and the submission of its application for reinstatement on the OTCQB Venture Market. These efforts are expected to increase investor accessibility and improve the company's overall financial standing.

Risks and Challenges

Like any growing technology and investment company, Creatd faces a range of risks and challenges that investors should consider. The company's heavy reliance on its Vocal platform and the broader digital media industry exposes it to potential shifts in consumer behavior, technological advancements, and changing regulatory environments.

Additionally, Creatd's acquisition-driven growth strategy carries inherent risks, including the successful integration of new businesses, the realization of anticipated synergies, and the effective management of integration costs. The company's limited operating history and evolving business model also introduce uncertainty around its ability to maintain profitability and generate sustainable cash flows.

Creatd's liquidity position and capital structure, as evidenced by its current ratio and debt-to-equity ratio, remain areas of concern that the company will need to address to enhance its financial flexibility and resilience. The significant decrease in cash position and the negative operating cash flow of $16.81 million for the fiscal year 2022 underscore the urgent need for improved financial management and capital allocation strategies.

It is also worth noting that in September 2022, the company's former CEO, Laurie Weisberg, resigned, which may have contributed to operational challenges and strategic shifts within the organization.

Conclusion

Creatd, Inc. has embarked on a remarkable transformation, evolving from a niche digital media platform into a diversified technology and investment conglomerate. Through strategic acquisitions, data-driven insights, and a relentless focus on innovation, the company has positioned itself at the forefront of the rapidly changing digital media and e-commerce landscape.

While Creatd's financial performance has experienced significant fluctuations in recent years, the company's management team has demonstrated its ability to navigate challenging market conditions and execute a well-defined growth strategy. With a renewed emphasis on compliance, transparency, and corporate governance, Creatd is poised to enhance investor confidence and unlock new opportunities for long-term value creation.

As Creatd continues to diversify its revenue streams, optimize its operations, and explore strategic partnerships and acquisitions, investors will be closely watching the company's ability to capitalize on the vast potential of the digital media and e-commerce sectors. With a solid foundation in place and a clear vision for the future, Creatd appears determined to overcome its current financial challenges and drive sustainable growth to deliver value to its shareholders in the long term.