MoviePass owner says it's figured out how to cut losses by more than 35%, but it's low on cash

Business InsiderThe MoviePass app.
  • On Tuesday, MoviePass’ parent company, Helios and Matheson Analytics, said in a filing with the Securities and Exchange Commission that it had about $US43.4 million in cash or on deposit.
  • It also reported that after making a few tweaks to MoviePass, it reduced its cash deficit during the first week of May by more than 35%.

You might not like that MoviePass will no longer let you use its service to watch the same movie multiple times, but the measure might help the company stay in business.

On Tuesday, MoviePass’ parent company, Helios and Matheson Analytics, detailed its financial situation in a filing with the Securities and Exchange Commission.

The company said that as of April 30, it had about $US43.4 million ($US15.5 million in available cash and $US27.9 million on deposit with merchant processors) and that its average cash deficit – the amount of money it was losing – had been about $US21.7 million a month since September.

But the company also said that a few changes to MoviePass’ tech and terms of service could help reduce its monthly cash deficit “significantly.”

Helios and Matheson said that in late April, MoviePass changed its technology to prevent subscribers from sharing accounts with non-subscribers and stopped allowing subscribers to see a title more than once with the service. The company said it believed those actions led to a reduction in its cash deficit during the first week of May of “more than 35%.”

Many investors had been wary of MoviePass after its independent auditor last month raised “substantial doubt” about its ability to stay in business, and the company sold more shares to help offset its losses.

“MoviePass currently spends more to retain a subscriber than the revenue derived from that subscriber,” Helios and Matheson said in its annual report in April.

Controlling costs should help that, but will it be enough to sustain the business in the long run?

The update on its cash and deposits and losses doesn’t seem to have encouraged investors, and the stock plunged by more than 30% on Tuesday. AMC Theatres’ recent call with analysts most likely didn’t help either.

On late Monday night, according to the New York Post, AMC’s chief executive, Adam Aron, told analysts on a conference call that MoviePass paid an average of $US12.02 per ticket to the movie chain in April and that MoviePass users went to the movies an average of 2.75 times. MoviePass’ monthly subscription costs $US9.95.

“Now I took the calculator out, and I multiplied 2.75 times $US12.02, and I got to a number that was considerably larger than $US9.95,” Aron said on the call.

Have a tip about MoviePass or anything else? Email [email protected]

NOW WATCH: Briefing videos

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.