- Acquisition Creates Leading Global
Platform for Mobile Social Discovery With 8.5 Million Mobile
Monthly Active Users
- Expected to Contribute Approximately
$7.5 Million in Adjusted EBITDA and be Accretive to Earnings in
First 12 Months Post Closing
MeetMe, Inc. (NASDAQ: MEET), a public market leader for social
discovery, today announced it has executed a definitive agreement
to acquire Skout, a leading global mobile network for meeting new
people, for $28.5 million in cash and approximately 5.37 million
common shares of MeetMe, implying an enterprise value of $54.6
million based on MeetMe’s closing stock price on June 24, 2016.
This acquisition promotes MeetMe and Skout’s shared vision to
create the largest global service for meeting and chatting with new
people. The acquisition is expected to provide greater scale for
monetization and increased profitability for the combined
company.
Skout is a leading mobile application for meeting new people
with:
- 2015 revenue of $23.8 million;
- 3.5 million mobile monthly active users
(MAU) in May 2016;
- 28.0 million chats per day from June 1
– June 22, 2016;
- A community that spans over 100
countries, and an app that is available in 23 different
languages;
- 42,000 new registered users added each
day on average in 2016.
Key highlights of the expected scale of the new combined
company include:
- Mobile MAU of 8.5 million, an increase
of 69% from MeetMe’s 5.0 million in May 2016;
- Mobile daily active users (DAU) of 2.1
million, an increase of 73% from MeetMe’s 1.24 million in May
2016;
- Chats sent per day of 57.2 million, an
increase of 96% from MeetMe’s 29.2 million average in June
2016;
- Mobile new users per day of 107,000, an
increase of 65% from MeetMe’s 65,000 per day average in 2016.
Financial impact of acquisition:
- Expected to provide significantly
increased scale in user base and revenues, and exhibit strong
operating leverage.
- Assuming a potential closing date of
October 1, 2016, MeetMe would expect its 2016 financial results to
be Revenue of between $70.5 and $73.5 million and Adjusted EBITDA
of between $26.0 and $29.0 million.
- Expect Skout to contribute
approximately $7.5 million of Adjusted EBITDA and be accretive to
earnings in the first 12 months post-closing.
Geoff Cook, CEO of MeetMe, said, “We believe this combination
provides a pathway to $100 million in revenue in 2018 with adjusted
EBITDA margins approaching 45 percent. I am thrilled to bring two
of the largest mobile apps for meeting and chatting with new people
into the same portfolio. Skout is among the earliest mobile social
discovery services. I’ve known and tracked the company for more
than eight years. We share not only the same vision but also many
of the same key engagement metrics, including roughly the same
number of chats per user per day, as well as a familiar
advertising-driven business model. I am excited by the opportunity
to work closely with their talented team to accelerate growth and
engagement across both apps around the world.”
“What’s more,” Cook continued, “this announcement comes during a
period of strong growth for MeetMe, with May mobile DAU of 1.24
million, up 8% versus the Q1 average, and May mobile MAU exceeding
5.0 million for the first time in a calendar month, and up 14%
versus the Q1 average. We believe this acquisition will further
build on this momentum, dramatically increasing our scale, and
enabling continued improvements to our recommendation engine, chat,
and Discuss, to have an even greater impact and reach even more
users.”
We expect that Skout will remain a separate brand and standalone
mobile application following the closing of the acquisition and its
headquarters will remain in San Francisco, CA, and we have extended
offers of employment to its approximately 30 employees. Likewise,
Skout’s founders Christian Wiklund and Niklas Lindstrom have agreed
to assist with the transition for one year after the closing.
As studies have shown that users of social discovery apps often
use more than one at the same time, and given MeetMe and Skout
share less than 5% overlap among their monthly active user base, we
believe there is a clear cross-promotional benefit between apps.
The geographic mix is also complementary: while Skout’s largest
country, like MeetMe’s, is the United States, Skout is over 80%
international and skews more toward Asia, where MeetMe has
historically had little presence. MeetMe intends to accelerate the
monetization of its international audience based on Skout’s
successful track record in these markets.
David Clark, Chief Financial Officer of MeetMe, added, “We
expect the acquisition to close in October of this year and to be
accretive to earnings and to generate additional free cash flow for
MeetMe in the first twelve months following the closing and beyond.
Over time, we believe that through additional synergies from
combining our technology platforms, optimizing our monetization
engine, cross-promoting to each user base, and accelerating
MeetMe’s international monetization, we can generate additional
value from this acquisition.”
The Company expects to fund the cash portion of the acquisition
primarily from MeetMe cash on hand and cash from operations, and
potentially from other sources of financing available to
MeetMe.
Canaccord Genuity is serving as financial advisor and Morgan,
Lewis & Bockius LLP is serving as legal counsel to MeetMe.
MeetMe Chairman John C. Abbott announced his resignation,
effective immediately, to focus on his business interests in Mexico
and Brazil. “I am thrilled to see Skout join the MeetMe portfolio,"
Abbott said. "We have been tracking Skout for many years and are
excited by the scale and size created by this combination. Bringing
together two of the largest mobile apps for meeting new people is
exactly aligned with the Company’s long term strategy to build a
global leader in mobile social discovery. With a strong team in
place, I know the Company is in excellent hands, experiencing
strong growth and with bright prospects in front of it.”
Commenting on Abbott’s resignation, Cook said, “John’s original
vision of a public market leader for social discovery is something
we intend to continue to execute against with singular focus, and I
am thankful for his many contributions to MeetMe over the last nine
years.”
Webcast and Conference Call Details
Management will host a webcast and conference call on Tuesday,
June 28, 2016 at 8:30 a.m. Eastern time to discuss the acquisition.
To access the call dial 888-481-2877 (+1 719-325-2393 outside the
United States) and when prompted provide the participant passcode
7649062 to the operator. In addition, a webcast of the conference
call will be available live on the Investor Relations section of
the Company’s website at www.meetmecorp.com and a replay of the
webcast will be available for 90 days.
About MeetMe
MeetMe® is a leading social network for meeting new people in
the US and the public market leader for social discovery (NASDAQ:
MEET). MeetMe makes it easy to discover new people to chat with on
mobile devices. With approximately 90 percent of traffic coming
from mobile and more than one million total daily active users,
MeetMe is fast becoming the social gathering place for the mobile
generation. MeetMe is a leader in mobile monetization with a
diverse revenue model comprising advertising, native advertising,
virtual currency, and subscription. MeetMe apps are available on
iPhone, iPad, and Android in multiple languages, including English,
Spanish, Portuguese, French, Italian, German, Chinese (Traditional
and Simplified), Russian, Japanese, Dutch, Turkish, Korean, Hindi,
Bengali and Vietnamese. For more information, please
visit meetmecorp.com.
About Skout
Skout is a leading global, mobile network for meeting new
people. The Skout community spans more than 100 countries and is
available in 23 different languages. Skout is dedicated to
providing a platform that people can easily and safely connect on,
and hopefully change their lives. The company is headquartered in
San Francisco. Visit Skout.com to learn more and connect on Twitter
@Skoutapp.
Forward-Looking Statements
Certain statements in this press release are forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995, including whether the acquisition will be
completed and on the terms expected, the time frame in which this
will occur, the expected benefits to the MeetMe and Skout apps and
the combined company from completing the acquisition, the expected
financial and operating performance of MeetMe following completion
of the acquisition, the expected synergies from the combined
company, and the intention to accelerate the monetization of
MeetMe’s international audience after the acquisition. All
statements other than statements of historical facts contained
herein are forward-looking statements. The words “believe,” “may,”
“estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,”
“could,” “target,” “potential,” “project,” “is likely,” “expect”
and similar expressions, as they relate to us, are intended to
identify forward-looking statements. We have based these
forward-looking statements largely on our current expectations and
projections about the proposed acquisition and future events and
financial trends that we believe may affect our financial
condition, results of operations, business strategy and financial
needs. Important factors that could cause actual results to differ
from those in the forward-looking statements include Skout
shareholder approval of the proposed acquisition or that other
conditions to the closing of the acquisition may not be satisfied,
the potential impact on the business of MeetMe or Skout due to the
announcement of the acquisition, the occurrence of any event,
change or other circumstances that could give rise to the
termination of the definitive agreement, the risk that the expected
benefits and synergies of the acquisition are not achieved and
general economic conditions. Further information on our risk
factors is contained in our filings with the Securities and
Exchange Commission, including the Form 10-K for the year ended
December 31, 2015. Any forward-looking statement made by us herein
speaks only as of the date on which it is made. Factors or events
that could cause our actual results to differ may emerge from time
to time, and it is not possible for us to predict all of them. We
undertake no obligation to publicly update any forward-looking
statement, whether as a result of new information, future
developments or otherwise, except as may be required by law.
Regulation G – Non-GAAP Financial Measures
This press release includes a discussion of Adjusted EBITDA from
continuing operations which is a non-GAAP financial measure. For
completed fiscal periods, reconciliations to the most directly
comparable GAAP financial measures are provided in the Investors
section of our corporate website, www.meetmecorp.com.
The Company defines Adjusted EBITDA as earnings (or loss) from
continuing operations before interest expense, change in warrant
liability, income taxes, depreciation and amortization, non-cash
stockbased compensation, non-recurring acquisition and
restructuring expenses, loss on cumulative foreign currency
translation adjustment, gain on sale of asset, bad debt expense
outside the normal range, and the goodwill impairment charges. The
Company excludes stock based compensation because it is noncash in
nature.
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version on businesswire.com: http://www.businesswire.com/news/home/20160627006328/en/
MEET Investor Contact:MKR Group Inc.Todd
Kehrlimeet@mkr-group.com
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