In another blow to MoviePass, the subscription service’s parent company has been forced to revise its financial disclosures and to acknowledge that its losses were more significant than it initially reported.
Helios & Matheson, the service’s owner, said it had net losses of $146.7 million over the quarter ending in September of 2018 as opposed to $137.2 million for that period. Losses from operations were $93 million instead of $86.4 million. The company also revised its losses for the first three fiscal quarters of 2018. It originally reported net losses of $246.9 million, but restated them as $256.4 million in net losses. Losses from operations were $327.4 million instead of the $320 million that Helios & Matheson originally reported.
Revenues were also weaker than initially stated. Total revenues were restated as $74.7 million for the quarter ending in September and revenues for the first three quarters of 2018 were restated as $198.3 million. Helios & Matheson originally reported third quarter revenues of $81.3 million and revenues of $204.9 million for the first three quarters of 2018.
In the revised filing, Helios & Matheson said the misstatements were the result of “the erroneous recognition of up to approximately $5.9 million of revenue from certain MoviePass subscriptions that were in a suspended state due to changes made to the MoviePass subscription service that had not yet been consented to by the applicable subscribers.” The company also included $700,000 in revenue from the sale of subscriptions by Costco, but those subscriptions were refunded — something MoviePass failed to factor into its earnings. Because of those factors, Helios & Matheson misreported its net losses by $6.6 million.
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MoviePass positioned itself as a Netflix-like service for movie-going. For just under $10 a month, customers could see an unlimited number of films. However, that model proved to be financially unsustainable. The company has changed its pricing and offerings in recent months as it has tried to find a way to make a profit. As MoviePass experimented with new pricing, there were outages and customer defections. The company is trying to move past the negative headlines with a new marketing campaign and a new suite of services.
The company has other hurdles to overcome. It is under investigation for fraud by the New York attorney general and its stock was de-listed from the Nasdaq in February. Shares of Helios & Matheson now trade over the counter.