Announces Executive and Board Changes and
Restructuring Plan to Improve Profitability
Board of Directors’ Special Committee to
Explore Strategic Alternatives, Engages Deutsche Bank as Financial
Advisor
YuMe, Inc. (NYSE: YUME), the global audience technology company
powered by data-driven insights and cross-screen expertise, today
announced its financial results for the third quarter ended
September 30, 2016. The Company also announced the transition of
its CEO and Chairman of the Board roles, a restructuring plan to
improve profitability, and that its Board of Directors’ special
committee of independent directors will explore and evaluate a
range of strategic alternatives to enhance shareholder value.
Financial highlights for the third quarter of 2016 include:
- Revenue of $35.0 million, compared to
$38.9 million in the third quarter of 2015 (Q3 2015);
- Revenue from top 20 advertising
customers of $15.8 million, an increase of 7% from Q3 2015;
- Mobile and connected television
impressions accounted for 43% of revenue, compared to 32% of
revenue in Q3 2015;
- Gross margin of 48.4%, compared to
44.8% in Q3 2015;
- Net loss of $4.5 million, or $0.13 per
diluted share, compared to a net loss of $6.5 million, or $0.19 per
diluted share, in Q3 2015;
- Adjusted EBITDA1 loss of $0.7 million,
compared to an adjusted EBITDA loss of $2.8 million in Q3
2015;
- $63.7 million in cash, cash equivalents
and marketable securities and no debt as of September 30,
2016;
- Repurchased approximately 1.6 million
shares of its common stock to date for $5.8 million.
Executive and Board of Directors
Changes, Restructuring Plan Announced
The Company announced today that Jayant Kadambi will no longer
serve as YuMe’s Chairman of the Board and Chief Executive Officer,
effective immediately. Mr. Kadambi will remain on the Board.
Additionally, Jim Soss, Executive Vice President and General
Manager, North America, and Hardeep Bindra, Executive Vice
President, Operations, will no longer be employed at YuMe,
effectively immediately.
YuMe’s Board of Directors has named Paul Porrini to the role of
Interim CEO. Mr. Porrini most recently served as the Company’s
Executive Vice President, General Counsel and Secretary, and has
led YuMe’s legal and human resources functions since July 2012.
Prior to joining YuMe, Mr. Porrini served in leadership roles at
Hewlett-Packard Company and Bluestone Software, a web application
server company. Michael Hudes, a member of YuMe’s executive staff
since 2010, has been named Executive Vice President, Chief Revenue
Officer, and will lead the Company’s global sales, business
development and revenue operations teams. Ayyappan Sankaran, a
co-founder, will remain as Executive Vice President, Chief
Technology Officer, and will remain on the Board. Tony Carvalho
will remain as Executive Vice President, Chief Financial Officer.
Messrs. Carvalho, Hudes and Sankaran will report to Mr.
Porrini.
Additionally, the Board of Directors has appointed Eric Singer,
a current independent Board member and managing member of VIEX
Capital Advisors, the largest shareholder in the Company, to the
role of Chairman.
Mr. Singer commented, “We appreciate Jayant’s efforts and
passion for the business, and we wish him well in his new
endeavors. We also would like to thank Jim and Hardeep for their
service to the Company. The Board believes Paul has the leadership
skills to help YuMe reinvigorate growth, leverage its core software
and data management platform, and further improve operating
efficiencies. We look forward to working with him and his
team.”
Mr. Porrini commented, “I am honored to lead YuMe’s talented and
experienced team. In the third quarter, we exceeded our gross
margin and our operating expense improvement goals and grew our
programmatic channel revenue, but execution issues in the back-half
of the quarter resulted in lower-than-expected revenue and adjusted
EBITDA. Our strong gross margin performance illustrates the
strength of our platform, and our top priorities are to unlock the
value of this strategic asset by improving our business
fundamentals while exploring a range of strategic
alternatives.”
The Board of Directors also approved a restructuring plan to
further reduce costs and improve the Company’s profitability. The
plan includes the executive changes stated above, real estate
consolidation and other workforce changes. This plan, combined with
additional cost saving initiatives, is expected to reduce
incremental fourth quarter operating expenses by approximately $2.0
million compared to the third quarter of 2016. The Company expects
fourth quarter 2016 results to include a $1.5 million charge
related to the restructuring plan. The Company anticipates these
current initiatives to result in annual cost savings of
approximately $6.0 million in 2017, and expects to achieve
additional cost savings in 2017 from future initiatives.
Special Committee Update
On September 14, 2016, YuMe disclosed that its Board of
Directors had formed a special committee of independent directors,
and that it was in the process of selecting a financial advisor.
Today, the Company is announcing its Board has initiated a
strategic alternatives review process to enhance shareholder value
and has selected Deutsche Bank as the Company’s financial
advisor.
This review may result in the Company pursuing value-enhancing
initiatives as an independent company, a sale of the Company, a
merger with another party, or another strategic transaction
involving some or all of the assets of the Company. There can be no
assurance that this process will result in any strategic
alternatives being announced or consummated. The Company has not
set a timetable for completion of this review process, and it does
not intend to discuss or disclose further developments during this
process unless and until the Board has approved a specific action
or otherwise determined that further disclosure is appropriate or
required by law.
Share Repurchase Program
Update
For the three month period ended September 30, 2016, the Company
acquired approximately 636,500 shares of its common stock for $2.25
million, at an average price per share of $3.53. From October 1,
2016 to date, the Company acquired approximately 213,000 shares of
its common stock for $0.8 million, at an average price per share of
$3.84. Since announcing its $10 million share repurchase program on
February 18, 2016 to date, the Company has acquired approximately
1.58 million shares of its common stock for $5.8 million, at an
average price per share of $3.67.
Business Outlook
Given its renewed focus on lowering its cost structure to
improve profitability, the Company is now only providing adjusted
EBITDA guidance. For the fourth quarter of 2016, the Company
expects adjusted EBITDA in the range of $3.0 million and $6.0
million. Adjusted EBITDA guidance includes the impact of the $2.0
million expected sequential cost saving from its restructuring plan
and other cost saving initiatives, and excludes the impact of an
associated $1.5 million charge the Company expects to take in the
fourth quarter.
Conference Call and Webcast
Information
Senior management will host a conference call at 5:00 p.m. ET
today to discuss the Company’s results. Investors may access the
live call by dialing (866) 393-4306 or (734) 385-2616. A replay
will be available through Wednesday, November 16 at (855) 859-2056
or (404) 537-3406. (Conference ID: 94737721). A live and archived
Webcast of the call will be available at
http://investors.yume.com.
About YuMe
YuMe, Inc. (NYSE: YUME) is a leading provider of global
audience technologies, curating relationships between brand
advertisers and consumers of premium video content across a growing
range of connected devices. Combining data-driven technologies with
deep insight into audience behavior, YuMe offers brand advertisers
end-to-end marketing software that establishes greater brand
resonance with engaged consumers. It is the evolution of brand
advertising for an ever-expanding video ecosystem. YuMe is
headquartered in Redwood City, CA., with additional offices
worldwide. For more information, visit YuMe.com/pr,
follow @YuMeVideo and
like YuMe on Facebook.
YuMe is a trademark of YuMe. All other brands, products or
service names are or may be trademarks or service marks of their
respective owners.
Forward-Looking
Statements
This press release contains forward-looking statements. All
statements other than statements of historical fact are statements
that could be forward-looking statements, including, but not
limited to our Business Outlook, statements about our growth
strategy, potential merger and acquisition activity, impact of
management changes, our operating results, market trends, and
quotations from management. These forward-looking statements are
subject to risks and uncertainties, assumptions and other factors
that could cause actual results and the timing of events to differ
materially from future results that are expressed or implied in our
forward-looking statements. Factors that could cause or contribute
to such differences include adaptation to new, changing and
competitive technologies and trends in a dynamic market, changes to
our management, our history of net losses and limited operating
history, which make it difficult to evaluate our prospects, our
fluctuating quarterly results of operations, and our dependence on
a limited number of customers in a highly competitive industry.
These and other risk factors are discussed under “Risk Factors” in
YuMe’s Quarterly Report on Form 10-Q for the quarter ended
September 30, 2016 that has been filed with the U.S. Securities and
Exchange Commission (the “SEC”), and in our future filings and
reports with the SEC. The forward-looking statements in this press
release are based on information available to YuMe as of the date
hereof, and YuMe assumes no obligation to update any
forward-looking statements.
Non-GAAP Financial
Measures
To supplement our consolidated financial statements, which are
prepared and presented in accordance with U.S. generally accepted
accounting principles (“GAAP”), we report adjusted EBITDA, which is
a non-GAAP financial measure. We calculate adjusted EBITDA as net
income (loss), excluding income taxes, interest, depreciation and
amortization, stock-based compensation and non-recurring proxy
contest and restructuring expenses. We believe that adjusted EBITDA
provides useful information to investors in understanding our
operating results in the same manner as management and the board of
directors. This non-GAAP information is not necessarily comparable
to non-GAAP information presented by other companies. Non-GAAP
financial information should not be viewed as a substitute for, or
superior to, financial information prepared in accordance with
GAAP. Users of this non-GAAP financial information should consider
the types of events and transactions for which adjustments have
been made.
We have included adjusted EBITDA in this release because it is a
key measure we use to understand and evaluate our core operating
performance and trends, to prepare and approve our annual budget
and to develop short- and long-term operational plans. In
particular, we believe that adjusted EBITDA can provide a useful
measure for period-to-period comparisons of our operating results
because it excludes some expenses that may mask underlying
trends.
In the table following the financial statements attached to this
press release, the non-GAAP financial measures used in this press
release are reconciled to the most directly comparable GAAP
financial measures. With respect to adjusted EBITDA expectations
provided under “Business Outlook” above, quantitative
reconciliation to the most directly comparable GAAP financial
measure is not feasible, because unpredictable fluctuations in our
stock price makes it difficult to estimate accurately future
stock-based compensation expenses that are excluded from these
non-GAAP financial measures. We expect that the variability of the
above charges may have a significant and unpredictable impact on
our future GAAP financial results.
YuMe, Inc.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands)
(Unaudited)
As ofSeptember
30,2016
As ofDecember
31,2015
Assets (1) Current assets: Cash and cash equivalents $
31,169 $ 17,859 Marketable securities 31,280 30,600 Restricted cash
— 292 Accounts receivable, net 44,769 67,131 Prepaid expenses and
other current assets 4,848 3,978 Total current assets
112,046 119,860 Marketable securities, long-term 1,250 11,724
Property, equipment and software, net 13,015 12,110 Goodwill 3,902
3,902 Intangible assets, net 163 659 Restricted cash, non-current
728 403 Deposits and other assets 592 416 Total
assets $ 131,696 $ 149,074
Liabilities and stockholders’
equity Current liabilities: Accounts payable $ 9,039 $ 12,080
Accrued digital media property owner costs 14,219 17,155 Accrued
liabilities 12,956 16,767 Deferred revenue 214 214 Capital lease
8 — Total current liabilities 36,436
46,216 Capital lease, non-current 15 — Other long-term liabilities
675 77 Deferred tax liability 20 178 Total
liabilities 37,146 46,471 Stockholders’
equity: Common stock 36 34 Treasury stock (4,966 ) — Additional
paid-in-capital 157,445 150,001 Accumulated deficit (57,715 )
(47,167 ) Accumulated other comprehensive loss (250 )
(265 ) Total stockholders’ equity 94,550 102,603
Total liabilities and stockholders’ equity $ 131,696 $ 149,074
(1) The condensed consolidated balance
sheet as of December 31, 2015 was derived from audited financial
statements.
YuMe, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(In thousands, except per share
data)
(Unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2016 2015 2016 2015
Revenue $ 34,953 $ 38,870 $ 114,861 $ 119,418 Cost of revenue (1)
18,050 21,470 58,642 66,172 Gross
profit 16,903 17,400 56,219 53,246
Operating expenses: Sales and marketing (1) 12,730 14,888 40,144
45,423 Research and development (1) 2,850 2,961 8,462 8,104 General
and administrative (1) 5,877 5,901 17,954
17,772 Total operating expenses 21,457 23,750
66,560 71,299 Loss from operations (4,554 )
(6,350 ) (10,341 ) (18,053 ) Interest and
other income (expense), net Interest expense (1 ) (3 ) (6 ) (6 )
Other income (expense), net 26 (137 ) (146 )
(136 ) Total interest and other income (expense), net
25 (140 ) (152 ) (142 ) Loss before income
taxes (4,529 ) (6,490 ) (10,493 ) (18,195 ) Income tax expense
(benefit) (65 ) 44 55 170 Net loss $
(4,464 ) $ (6,534 ) $ (10,548 ) $ (18,365 ) Net loss per
share: Basic $ (0.13 ) $ (0.19 ) $ (0.31 ) $ (0.55 ) Diluted $
(0.13 ) $ (0.19 ) $ (0.31 ) $ (0.55 ) Weighted-average shares used
to compute net loss per share: Basic 34,314 34,071
34,524 33,626 Diluted 34,314 34,071
34,524 33,626
(1) Stock-based compensation included
above (in thousands, unaudited):
Three Months EndedSeptember 30,
Nine Months EndedSeptember 30,
2016
2015
2016
2015
Cost of revenue
$
49
$
64
$
144
$
245
Sales and marketing
706
729
2,152
2,655
Research and development
304
299
924
819
General and administrative
1,078
1,032
3,418
3,015
Total stock-based compensation
$
2,137
$
2,124
$
6,638
$
6,734
YuMe, Inc.
RECONCILIATION OF NON-GAAP FINANCIAL
INFORMATION
(In thousands)
(Unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2016 2015 2016 2015 Net
loss $ (4,464 ) $ (6,534 ) $ (10,548 ) $ (18,365 ) Adjustments:
Interest expense 1 3 6 6 Income tax expense (65 ) 44 55 170
Depreciation and amortization expense 1,682 1,567 5,090 4,294
Stock-based compensation expense 2,137 2,124 6,638 6,734 Proxy
contest expenses — — 815 — Total
Adjustments 3,755 3,738 12,604 11,204
Adjusted EBITDA $ (709) $ (2,796 ) $ 2,056 $ (7,161 )
1 Adjusted EBITDA is a non-GAAP financial measure that we
calculate as net income (loss), adjusted to exclude income taxes,
interest, depreciation and amortization, stock-based compensation
and non-recurring proxy contest and restructuring expenses. We
believe that adjusted EBITDA provides useful information to
investors in understanding and evaluating our operating results in
the same manner as management and the board of directors. This
non-GAAP information is not necessarily comparable to non-GAAP
information of other companies. Non-GAAP information should not be
viewed as a substitute for, or superior to, net income prepared in
accordance with GAAP as a measure of our profitability or
liquidity. Users of this financial information should consider the
types of events and transactions for which adjustments have been
made.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20161109006154/en/
Investor RelationsYuMe, Inc.Gary J. Fuges, CFA,
650-503-7875ir@yume.com
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