Professional Diversity Network, Inc. (NASDAQ:IPDN), (“PDN” or
the “Company”), a global developer and operator of online and
in-person networks that provide access to networking, training,
educational and employment opportunities for diverse individuals,
today announced its fourth quarter and full year financial results
for the year ended December 31, 2017.
Highlights include:
- Fourth Quarter 2017 Net Loss of $4.62 million versus 2016 Net
Loss of $0.59 million and EBITDA profit of $0.41 million in 2017
versus an EBITDA Loss of $0.33 million in 2016
- Newly established China operations achieved profitability for
the year ended 2017
- Enhanced the value of our brands and network offerings to our
members and business partners
Michael Wang, Professional Diversity Network Chief Executive
Officer, stated, "For those who follow the company and our
releases, you will recall that when CFL purchased a control
interest in PDN we had the following objectives:
- Establish business operations in China and achieve
profitability in our China operations.
- Invest in US operations with the goal of maximizing the value
of the companies pre-existing business segments and becoming
profitable on an operating basis.
- Establish a global networking platform for professional and
personal development.
"I am pleased to announce that in our fourth quarter of 2017, we
posted a fourth quarter 2017 Net Loss of $4.62 million versus 2016
Net Loss of $0.59 million and EBITDA profit of $0.41 million in Q4
2017 versus an EBITDA Loss of $0.33 million in Q4 2016. We achieved
profitability in China, which in turn, resulted in the entire
company posting a quarterly EBITDA profit as a public company.
While the company sustained considerable losses, we have made
significant positive strides in our diversity recruitment and
women's networking segments. The improvements in these sectors in
the U.S. are very important to our global growth. Our women's
networking and employment services operations in the U.S. are very
complementary to our China expansion. The company was and remains
committed to providing our members with a network to enhance them
professionally and personally.”
Wang continued, “We have more work to do in China and the U.S.
in 2018 to enhance shareholder value. Our recruitment brand is very
strong and I am pleased with the progress made in 2017 to create
more value for our customers by launching new services to help
companies hire executive talent, especially in the digital
transformation sector. Early results to date in 2018 are favorable,
our recruitment business new revenue bookings at $704,000 in Q1
2018 as of March 29, 2018 versus new revenue bookings of $547,000
in all of Q1 2017. In 2017, we launched the International
Association of Women (IAW) and had a brand-establishing event in
Paris for our members. In January of 2018, we launched the new IAW
in the USA. This new brand has three basic principles. First,
enhanced value to our members, with an increase in our digital
platform member interaction, including an enhanced website, content
calendar and digital networking events. Second, transparent pricing
and a consultative approach towards new membership sales and
finally a global digital platform to use as a foundation for our
future expansion. Again, early results of the new membership
efforts are encouraging. We believe that our diversity recruitment
and women's networking segments, combined with our global
operations, have strong potential for upside value. In 2018, we
will remain vigilant on our cost controls and invest in growth
where and when we see opportunities to do so.
To be very clear, we are at an early stage of our development in
building a global network for our members to receive benefits from
our platform and from fellow members. While we have experienced
significant net losses as we seek to reposition our business, we
believe that China presents significant opportunity for our future
growth toward profitability and much of my time and the company’s
efforts will be in the China market. In the USA we have enhanced
the value of our network offering to our members and to our
business partners. We are dedicated to integrating our
resources in both China and the U.S., creating interactions and
synergy between our members in both countries, doing business in an
honest, sincere and creative manner, and ultimately enhancing our
value proposition by helping our members improve professionally and
find opportunities in the capital markets. We believe that we must
continue to invest in our products, our member benefits, and our
services.”
2017 Year-End Financial Results
For the year ended December 31, 2017, PDN reported total revenue
of $22.05 million, a 15.9% decrease from the year ended December
31, 2016, attributable primarily to reductions in our sales staff
and workforce in our NAPW segment. Total revenue for the fourth
quarter of 2017 was $6.73 million, compared to $5.67 million in the
same period one-year prior.
Total operating expenses for the year ended December 31, 2017
increased by 54.6% to $46.09 million from $29.81 million for the
year ended December 31, 2016. This increase of 54.6% is primarily
the result of goodwill impairment charge of $14.61 million taken
during the year ended December 31, 2017, combined with $3.32
million total expenses that were incurred by our China operations
that we launched in Q1 2017. For the quarter ended December
31, 2017, total operating expenses were $11.94 million, an increase
of 132.4%, or $6.80 million, from $5.14 million in the fourth
quarter of 2016, mostly driven by $4.69 million goodwill impairment
charge and $2.02 million of operating expenses incurred by our
China operations that was launched in Q1 2017.
PDN reported a net loss for the year ended December 31, 2017 of
$22.29 million or $5.68 per share - compared to a net loss of $4.11
million, or $1.98 per share, in the year prior. Net loss for the
quarter ended December 31, 2017 was $4.62 million - compared to a
net loss in the same period of the prior year of $0.59 million.
Loss from operations during 2017 was $24.04 million compared to
a loss of $3.59 million in the prior year, representing a 570%
increase. During the fourth quarter of 2017, loss from operations
was $5.21 million, compared to a profit of $0.53 million during the
same period one-year prior.
During the fourth quarter of 2017, the Company achieved its
first EBITDA profit since the initial public offering. The fourth
quarter EBITDA profit was $0.41 million compared to EBITDA loss of
$0.33 million during the same period of the prior year, an increase
of $0.74 million.
As of December 31, 2017, the Company had $3.01 million in cash
and $5.64 million in current assets, which represents a decrease of
$3.06 million in cash and $3.98 million in current assets from the
period ended December 31, 2016. Accounts receivable as of December
31, 2017 was $2.00 million, 7.9% less than the $2.17 million as of
December 31, 2016. Total assets as of December 31, 2017 were $18.99
million, a decrease of $22.15 million from $41.14 million as of
December 31, 2016.
Professional Diversity Network, Inc. and
SubsidiariesCONSOLIDATED BALANCE
SHEETS |
|
|
December 31, |
|
|
|
2017 |
|
|
2016 |
|
Current Assets: |
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
3,013,927 |
|
|
$ |
6,068,973 |
|
Accounts
receivable, net |
|
|
1,997,983 |
|
|
|
2,170,529 |
|
Incremental direct costs |
|
|
145,292 |
|
|
|
423,023 |
|
Prepaid
expenses and other current assets |
|
|
478,379 |
|
|
|
957,140 |
|
Total
current assets |
|
|
5,635,581 |
|
|
|
9,619,665 |
|
|
|
|
|
|
|
|
|
|
Property
and equipment, net |
|
|
237,037 |
|
|
|
277,534 |
|
Capitalized technology, net |
|
|
158,142 |
|
|
|
173,368 |
|
Goodwill |
|
|
5,590,150 |
|
|
|
20,201,190 |
|
Intangible assets, net |
|
|
6,381,206 |
|
|
|
9,183,439 |
|
Merchant
reserve |
|
|
760,849 |
|
|
|
1,426,927 |
|
Security
deposits |
|
|
225,957 |
|
|
|
220,754 |
|
Other
assets |
|
|
- |
|
|
|
35,000 |
|
Total
assets |
|
$ |
18,988,922 |
|
|
$ |
41,137,877 |
|
|
|
|
|
|
|
|
|
|
Current
Liabilities: |
|
|
|
|
|
|
|
|
Accounts
payable |
|
$ |
1,524,066 |
|
|
$ |
2,172,332 |
|
Accrued
expenses |
|
|
1,247,116 |
|
|
|
962,172 |
|
Deferred
revenue |
|
|
4,004,015 |
|
|
|
5,485,599 |
|
Total
current liabilities |
|
|
6,775,197 |
|
|
|
8,620,103 |
|
|
|
|
|
|
|
|
|
|
Deferred
rent |
|
|
56,082 |
|
|
|
55,718 |
|
Deferred
tax liability |
|
|
1,803,519 |
|
|
|
3,653,274 |
|
Other
liabilities |
|
|
52,321 |
|
|
|
33,159 |
|
Total
liabilities |
|
|
8,687,119 |
|
|
|
12,362,254 |
|
|
|
|
|
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
Equity |
|
|
|
|
|
|
|
|
Common
stock, $0.01 par value, 45,000,000 shares authorized,3,964,599
shares and 3,623,899 shares issued as of December 31,2017 and 2016,
respectively, and 3,962,816 and 3,619,338 sharesoutstanding as of
December 31, 2017 and 2016, respectively |
|
|
39,639 |
|
|
|
36,204 |
|
Additional paid in capital |
|
|
80,016,218 |
|
|
|
76,234,772 |
|
Accumulated other comprehensive income |
|
|
28,848 |
|
|
|
- |
|
Accumulated deficit |
|
|
(69,745,785 |
) |
|
|
(47,458,236 |
) |
Treasury
stock, at cost; 1,048 shares at December 31, 2017 and 2016 |
|
|
(37,117 |
) |
|
|
(37,117 |
) |
Total
stockholders' equity |
|
|
10,301,803 |
|
|
|
28,775,623 |
|
|
|
|
|
|
|
|
|
|
Total
liabilities and stockholders' equity |
|
$ |
18,988,922 |
|
|
$ |
41,137,877 |
|
Professional Diversity Network, Inc. and
SubsidiariesCONSOLIDATED STATEMENTS OF
OPERATIONS |
|
|
Year Ended December 31, |
|
|
|
2017 |
|
|
2016 |
|
Revenues: |
|
|
|
|
|
|
Membership fees and related services |
|
$ |
9,371,843 |
|
|
$ |
16,254,932 |
|
Lead
generation |
|
|
5,973,964 |
|
|
|
6,239,057 |
|
Recruitment services |
|
|
2,578,597 |
|
|
|
2,931,642 |
|
Product
sales and other |
|
|
100,289 |
|
|
|
578,466 |
|
Education
and training |
|
|
3,776,546 |
|
|
|
- |
|
Consumer
advertising and marketing solutions |
|
|
252,980 |
|
|
|
222,969 |
|
Total
revenues |
|
|
22,054,219 |
|
|
|
26,227,066 |
|
|
|
|
|
|
|
|
|
|
Costs and
expenses: |
|
|
|
|
|
|
|
|
Cost of
revenues |
|
|
3,967,881 |
|
|
|
3,082,467 |
|
Sales and
marketing |
|
|
10,285,411 |
|
|
|
13,315,008 |
|
General
and administrative |
|
|
13,874,730 |
|
|
|
11,332,640 |
|
Loss
(gain) on litigation settlement, net |
|
|
155,216 |
|
|
|
(1,240,297 |
) |
Goodwill
impairment expense |
|
|
14,611,040 |
|
|
|
- |
|
Depreciation and amortization |
|
|
3,197,191 |
|
|
|
3,323,711 |
|
Total
costs and expenses |
|
|
46,091,469 |
|
|
|
29,813,529 |
|
|
|
|
|
|
|
|
|
|
Loss from
operations |
|
|
(24,037,250 |
) |
|
|
(3,586,463 |
) |
|
|
|
|
|
|
|
|
|
Other income
(expense): |
|
|
|
|
|
|
|
|
Interest
expense |
|
|
(12,399 |
) |
|
|
(1,567,317 |
) |
Interest
and other income |
|
|
8,165 |
|
|
|
8,532 |
|
Gain on
settlement of debt |
|
|
- |
|
|
|
148,112 |
|
Other
finance costs |
|
|
8,421 |
|
|
|
- |
|
Other
expense, net |
|
|
4,187 |
|
|
|
(1,410,673 |
) |
|
|
|
|
|
|
|
|
|
Change in fair value of
warrant liability |
|
|
- |
|
|
|
(401,000 |
) |
|
|
|
|
|
|
|
|
|
Loss before income tax
expense (benefit) |
|
|
(24,033,063 |
) |
|
|
(5,398,136 |
) |
Income
tax expense (benefit) |
|
|
(1,745,514 |
) |
|
|
(1,289,634 |
) |
Net loss |
|
$ |
(22,287,549 |
) |
|
$ |
(4,108,502 |
) |
|
|
|
|
|
|
|
|
|
Other comprehensive
loss: |
|
|
|
|
|
|
|
|
Foreign
currency translation adjustment |
|
|
28,848 |
|
|
|
- |
|
Comprehensive loss |
|
$ |
(22,258,701 |
) |
|
$ |
(4,108,502 |
) |
|
|
|
|
|
|
|
|
|
Net loss per common
share, basic and diluted |
|
$ |
(5.68 |
) |
|
$ |
(1.98 |
) |
|
|
|
|
|
|
|
|
|
Weighted average
outstanding shares used in computing net loss per common
share: |
|
|
|
|
|
|
|
|
Basic and
diluted |
|
|
3,920,849 |
|
|
|
2,076,724 |
|
The following table provides a reconciliation of Adjusted EBITDA
to Net Loss, the most directly comparable GAAP measure reported in
our consolidated financial statements:
|
|
Three Months Ended |
|
Twelve Months Ended |
|
|
|
December 31, |
|
|
December 31, |
|
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
|
|
(in thousands) |
|
|
|
|
|
|
|
Net
loss |
|
$ |
(4,623 |
) |
|
$ |
(589 |
) |
|
$ |
(22,288 |
) |
|
$ |
(4,109 |
) |
Stock-based compensation expense |
|
|
169 |
|
|
|
47 |
|
|
|
900 |
|
|
|
264 |
|
Goodwill
impairment charge |
|
|
4,691 |
|
|
|
- |
|
|
|
14,611 |
|
|
|
- |
|
Litigation Settlement |
|
|
- |
|
|
|
(1,740 |
) |
|
|
155 |
|
|
|
(1,240 |
) |
Gain on
settlement of debt |
|
|
- |
|
|
|
(148 |
) |
|
|
- |
|
|
|
(148 |
) |
Gain on
lease cancellation |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(424 |
) |
Depreciation and amortization |
|
|
754 |
|
|
|
826 |
|
|
|
3,197 |
|
|
|
3,324 |
|
Change in
fair value of Warrant Liability |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
401 |
|
Interest
Expense |
|
|
- |
|
|
|
1,350 |
|
|
|
12 |
|
|
|
1,567 |
|
Interest
and other income |
|
|
1 |
|
|
|
(8 |
) |
|
|
(8 |
) |
|
|
(9 |
) |
Income
tax benefit |
|
|
(585 |
) |
|
|
(72 |
) |
|
|
(1,746 |
) |
|
|
(1,290 |
) |
Adjusted
EBITDA |
|
$ |
406 |
|
|
$ |
(334 |
) |
|
$ |
(5,165 |
) |
|
$ |
(1,664 |
) |
About Professional Diversity Network (PDN)
Professional Diversity Network, Inc. (PDN) is a
global developer and operator of online and in-person networks that
provides access to networking, training, educational and employment
opportunities for diverse professionals. We operate subsidiaries in
the United States and China including National Association of
Professional Women (NAPW), which is one of the largest, most
recognized networking organizations of professional women in the
country, spanning more than 200 industries and professions, and
Noble Voice, a career placement and career counseling call center.
Through an online platform and our relationship recruitment
affinity groups, we provide our employer clients a means to
identify and acquire diverse talent and assist them with their
efforts to comply with the Equal Employment Opportunity Office of
Federal Contract Compliance Program. Our mission is to utilize the
collective strength of our affiliate companies, members, partners
and unique proprietary platform to be the standard in
business diversity recruiting, networking and professional
development for women, minorities, veterans, LGBT and disabled
persons globally.
Forward-Looking Statements
This press release contains certain
forward-looking statements based on our current expectations,
forecasts and assumptions that involve risks and uncertainties.
This release does not constitute an offer to sell or a solicitation
of offers to buy any securities of any entity. Forward-looking
statements in this release are based on information available to us
as of the date hereof. Our actual results may differ materially
from those stated or implied in such forward-looking statements,
due to risks and uncertainties associated with our business, which
include the risk factors disclosed in our most recently filed
Annual Report on Form 10-K and in our subsequent filings with the
Securities and Exchange Commission. Forward-looking statements
include statements regarding our expectations, beliefs, intentions
or strategies regarding the future and can be identified by
forward-looking words such as "anticipate," "believe," "could,"
"estimate," "expect," "intend," "may," “plan,” "should," and
"would" or similar words. We assume no obligation to update the
information included in this press release, whether as a result of
new information, future events or otherwise. Our most recently
filed Annual Report on Form 10-K, together with this press release
and the financial information contained herein, are available on
our website, www.prodivnet.com. Please click on "Investor
Relations."
CONTACT: Professional Diversity Network, Inc.
Jason Assad – Investor
RelationsJassad@prodivnet.com678-570-6791
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