- Second-quarter net revenue of $91 million
- Second-quarter net loss and Adjusted EBITDA of $12 million and
$3 million, respectively
- Second-quarter gross margin of 26% and Variable Marketing
Margin (VMM) of 33%
- Announced third quarter 2022 net revenue guidance of $87 – $90
million and Adjusted EBITDA guidance of $4 – $6 million
- Reduced full-year 2022 net revenue guidance to $390 – $400
million and Adjusted EBITDA guidance to $30 – $35 million
- Announces a multi-year strategic advertising partnership with
internet technology and content evaluation company Seekr.
Digital Media Solutions, Inc. (NYSE: DMS), a leading provider of
technology-enabled digital performance advertising solutions
connecting consumers and advertisers, today announced financial
results for the quarter ended June 30, 2022.
“We are pleased with the results we delivered despite the
challenges that resulted from macro-economic factors during the
quarter. We are seeing positive momentum in key areas of our
business such as growth in our independent agent base with an
increase of 9% quarter over quarter bringing the total agent count
to 7,026. Our data signals program also grew significantly on the
back of the Traverse acquisition and is a cornerstone to our future
growth. We remain optimistic that our dynamic diversification and
agility continue to position DMS with the resilience needed to
effectively weather industry instability successfully,'' said Joe
Marinucci, CEO of DMS.
The steadfast competitive advantage of DMS is a direct result of
the Company’s ability to harness the power of real-time consumer
intent to drive efficiency and higher yield through the expanding
DMS first-party data asset.
In the quarter, DMS continued to make a number of significant
investments in the business such as expanding the Company's base of
independent agents. Marinucci continued, “The growth of our agent
base provides greater predictability and diversification against
the volatility we are seeing in the current market with the
enterprise clients. Over the coming year, we see an opportunity to
grow and expand our agent base by up to 40% more agents as a result
of the investments we have made.”
The company has also focused on capitalizing on staffing
efficiencies that help accelerate the recovery of growth while
mitigating additional operating expenses. DMS remains committed to
its investment in people, process and technology, with a
significant emphasis on its data and technology assets.
“We believe 2022, specifically Q2, represents trough level
performance for us with momentum building back for us in Q3 and Q4.
This should set up 2023 as a year when we return to growth.” said
Rick Rodick, DMS CFO.
The Company’s next phases of growth will include continuing to
invest in the growth of independent agent operations along with
commercialized audience activation. The audience activation
initiatives lead to more efficient targeting and retargeting of
consumers across the DMS platforms where the Company can engage
consumers and deliver stronger advertising ROI to the Company's
advertiser clients, as can be seen in the newly announced
partnership with Seekr. For additional information, see the Seekr
partnership press release at
https://investors.digitalmediasolutions.com.
In August of last year, the Company announced plans to evaluate
strategic alternatives for DMS to further maximize shareholder
value. The process has not yet concluded, and the Company plans to
provide updates when they are available.
Second-Quarter 2022
Performance:
(All comparisons are relative to the second quarter of 2021)
- Net revenue of $91 million, down 13%
- Gross profit margin of 26%, a decrease of 6.4 PPTS
- Variable Marketing Margin of 33%, a decrease of 5.5 PPTS
- Operating expenses totaled $35 million, an increase of $7
million
- Net loss of $12 million compared to net income of $5
million
- Adjusted EBITDA of $3 million, compared to $16 million
- EPS of $(0.18) compared to $0.07
- Ended the quarter with $26 million in cash and cash
equivalents, and total debt of $217 million
Second-Quarter 2022 Segment Performance
(excluding intra-company revenue):
(All comparisons are relative to the second quarter of 2021)
- Brand-Direct Solutions generated revenue of $45 million, down
25%. Gross margin was 19%, down from 26%.
- Marketplace Solutions generated revenue of $54 million, down
6%. Gross margin was 23%, down from 29%.
- Technology Solutions, previously named "Other Solutions"
generated revenue of $3 million, up 33%. Gross margin was 84%, up
from 76%.
Third-Quarter and Full-Year 2022
Guidance:
Due to the macroeconomic risks and uncertainty ahead, the
Company is announcing guidance for its third quarter and revising
guidance for revenue and adjusted EBITDA for the full year 2022, as
follows:
Third-Quarter 2022:
- Net Revenue: $87 – $90 million
- Gross Margin: 28% – 31%
- Variable Marketing Margin: 32% – 36%
- Adjusted EBITDA: $4 – $6 million
Full-Year 2022:
- Net Revenue: $390 – $400 million
- Gross Margin: 28% – 31%
- Variable Marketing Margin: 32% – 36%
- Adjusted EBITDA: $30 – $35 million
Adjusted EBITDA and Variable Marketing Margin are non-GAAP
financial measures. Management believes that Adjusted EBITDA and
Variable Marketing Margin provide useful information to investors
and help explain and isolate the core operating performance of the
business — refer to the “Non-GAAP Financial Measures” section
below. For guidance purposes, the Company is not providing a
quantitative reconciliation of these non-GAAP measures in reliance
on the “unreasonable efforts” exception for forward-looking
non-GAAP measures set forth in SEC rules because certain financial
information, the probable significance of which cannot be
determined, is not available and cannot be reasonably estimated
without unreasonable effort and expense.
Conference Call and Webcast
Information:
The U.S. toll free dial-in for the conference call is
1-844-200-6205, and the international dial-in number is
1-646-904-5544. The access code is 763986. A live webcast of the
conference call will be available on the investor relations page of
the Company's website at
https://investors.digitalmediasolutions.com.
A replay will be available after the conclusion of the call on
August 9, 2022 through August 16, 2022. The U.S. toll-free replay
dial-in number is 1-866-813-9403, and the international replay
dial-in number is 1-929-458-6194. The replay access code is
072933.
Forward-Looking Statements:
This press release includes “forward-looking statements” within
the meaning of that term in Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of
1934, as amended (the “Exchange Act”), and are made in reliance
upon the "safe harbor" protections provided by such acts for
forward-looking statements. These forward looking statements are
often identified by words such as “expect,” “estimate,” “project,”
“budget,” “forecast,” “anticipate,” “intend,” “plan,” “may,”
“will,” “could,” “should,” “believes,” “predicts,” “potential,”
“continue,” and similar expressions. These forward-looking
statements include, without limitation, DMS’s expectations with
respect to its future performance and its ability to implement its
strategy, and are based on the beliefs and expectations of our
management team from the information available at the time such
statements are made. These forward-looking statements involve
significant risks and uncertainties that could cause the actual
results to differ materially from the expected results. Most of
these factors are outside DMS’s control and are difficult to
predict. Factors that may cause such differences include, but are
not limited to: (1) the COVID-19 pandemic or other public health
crises; (2) changes in client demand for our services and our
ability to adapt to such changes; (3) the entry of new competitors
in the market; (4) the ability to maintain and attract consumers
and advertisers in the face of changing economic or competitive
conditions; (5) the ability to maintain, grow and protect the data
DMS obtains from consumers and advertisers; (6) the performance of
DMS’s technology infrastructure; (7) the ability to protect DMS’s
intellectual property rights; (8) the ability to successfully
source and complete acquisitions and to integrate the operations of
companies DMS acquires, including Traverse Data, Inc., Aimtell,
Inc., PushPros, Inc. and Aramis Interactive, and the assets of
Crisp Marketing, LLC; (9) the ability to improve and maintain
adequate internal controls over financial and management systems,
and remediate the identified material weakness; (10) changes in
applicable laws or regulations and the ability to maintain
compliance; (11) our substantial levels of indebtedness; (12)
volatility in the trading price on the NYSE of our common stock and
warrants; (13) fluctuations in value of our private placement
warrants; and (14) other risks and uncertainties indicated from
time to time in DMS’s filings with the SEC, including those under
“Risk Factors” in DMS’s Annual Report on Form 10-K and its
subsequent filings with the SEC. There may be additional risks that
we consider immaterial or which are unknown, and it is not possible
to predict or identify all such risks. DMS cautions that the
foregoing list of factors is not exclusive. DMS cautions readers
not to place undue reliance upon any forward-looking statements,
which speak only as of the date made. DMS does not undertake or
accept any obligation or undertaking to release publicly any
updates or revisions to any forward-looking statements to reflect
any change in its expectations or any change in events, conditions
or circumstances on which any such statement is based.
About DMS:
Digital Media Solutions, Inc. (NYSE: DMS) is a leading provider
of data-driven, technology-enabled digital performance advertising
solutions connecting consumers and advertisers within the auto,
home, health, and life insurance, plus a long list of top consumer
verticals. The DMS first-party data asset, proprietary advertising
technology, significant proprietary media distribution, and
data-driven processes help digital advertising clients de-risk
their advertising spend while scaling their customer bases. Learn
more at https://digitalmediasolutions.com.
DIGITAL MEDIA SOLUTIONS,
INC.
CONSOLIDATED BALANCE
SHEETS
(Unaudited)
(in thousands, except per
share data)
June 30, 2022
December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents
$
26,370
$
26,394
Accounts receivable, net of allowances of
$5,860 and $4,930, respectively
46,545
51,578
Prepaid and other current assets
1,188
3,698
Income tax receivable
1,537
2,078
Total current assets
75,640
83,748
Property and equipment, net
18,152
19,168
Goodwill
76,947
76,558
Intangible assets, net
58,888
66,228
Deferred tax assets
—
—
Other assets
858
889
Total assets
$
230,485
$
246,591
LIABILITIES AND
DEFICIT
Current liabilities:
Accounts payable
$
40,684
$
42,073
Accrued expenses and other current
liabilities
9,912
9,473
Current portion of long-term debt
2,250
2,250
Income taxes payable
193
103
Tax Receivable Agreement liability
1,310
1,310
Contingent consideration payable -
current
10,909
7,370
Deferred acquisitions consideration
payable - current
4,928
4,785
Total current liabilities
70,186
67,364
Long-term debt
215,089
215,505
Deferred tax liabilities
4,001
4,786
Private Placement Warrant liabilities
480
3,960
Contingent consideration payable -
non-current
494
1,069
Other non-current liabilities
1,754
1,725
Total liabilities
292,004
294,409
Stockholders' deficit:
Preferred stock, $0.0001 par value,
100,000 shares authorized; none issued and outstanding at June 30,
2022
—
—
Class A Common Stock, $0.0001 par value,
500,000 shares authorized; 36,564 issued and outstanding at June
30, 2022
3
3
Class B convertible common stock, $0.0001
par value, 60,000 shares authorized; 25,699 issued and 25,699
outstanding at June 30, 2022
3
3
Class C convertible common stock, $0.0001
par value, 40,000 authorized; none issued and outstanding at June
30, 2022
—
—
Additional paid-in capital
(22,313
)
(25,239
)
Cumulative deficit
(11,060
)
(944
)
Total stockholders' deficit
(33,367
)
(26,177
)
Non-controlling interest
(28,152
)
(21,641
)
Total deficit
(61,519
)
(47,818
)
Total liabilities and deficit
$
230,485
$
246,591
DIGITAL MEDIA SOLUTIONS,
INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
(in thousands, except per
share data)
Three Months Ended June
30,
Six Months Ended June
30,
2022
2021
2022
2021
Net revenue
$
91,197
$
105,079
$
200,307
$
201,882
Cost of revenue (exclusive of depreciation
and amortization shown separately below)
67,784
71,359
145,624
140,541
Salaries and related costs
13,237
11,708
26,945
21,977
General and administrative expenses
12,444
10,552
23,544
17,514
Depreciation and amortization
7,173
7,044
14,233
12,463
Acquisition costs
279
466
292
1,960
Change in fair value of contingent
consideration liabilities
(55
)
—
2,536
—
(Loss) income from operations
$
(9,665
)
$
3,950
$
(12,867
)
$
7,427
Interest expense
3,817
3,622
7,502
6,879
Change in fair value of warrant
liabilities
(1,640
)
(7,750
)
(3,480
)
(7,435
)
Loss on debt extinguishment
—
2,108
—
2,108
Net (loss) income before income taxes
$
(11,842
)
$
5,970
$
(16,889
)
$
5,875
Income tax expense
45
1,031
355
1,148
Net (loss) income
$
(11,887
)
$
4,939
$
(17,244
)
$
4,727
Net (loss) income attributable to
non-controlling interest
(4,905
)
2,411
(7,121
)
2,373
Net (loss) income attributable to Digital
Media Solutions, Inc.
$
(6,982
)
$
2,528
$
(10,123
)
$
2,354
Weighted-average shares outstanding -
basic
39,553
35,377
37,969
34,315
Weighted-average shares outstanding -
diluted
65,252
36,522
63,682
34,325
Earnings (loss) per share attributable to
Digital Media Solutions, Inc.:
Basic - per common shares
$
(0.18
)
$
0.07
$
(0.27
)
$
0.07
Diluted - per common shares
$
(0.18
)
$
0.07
$
(0.27
)
$
(0.06
)
DIGITAL MEDIA SOLUTIONS,
INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited)
(in thousands)
Six Months Ended June
30,
2022
2021
Cash flows from operating
activities
Net (loss) income
$
(17,244
)
$
4,727
Adjustments to reconcile net income to net
cash provided by operating activities
Provision for bad debt
1,339
909
Depreciation and amortization
14,233
12,463
Lease restructuring charges
2
174
Loss on debt extinguishment
—
2,108
Stock-based compensation, net of amounts
capitalized
3,908
2,530
Amortization of debt issuance costs
938
528
Deferred income tax provision, net
(785
)
364
Change in fair value of contingent
consideration
2,536
560
Change in fair value of warrant
liability
(3,480
)
(7,435
)
Change in income tax receivable and
payable
631
(2,328
)
Change in accounts receivable
4,026
(4,330
)
Change in prepaid expenses and other
current assets
2,585
222
Change in accounts payable and accrued
expenses
(1,275
)
(6,768
)
Change in other liabilities
27
(190
)
Net cash provided by operating
activities
$
7,441
$
3,534
Cash flows from investing
activities
Additions to property and equipment
$
(3,197
)
$
(4,212
)
Acquisition of businesses, net of cash
acquired
(2,579
)
(24,830
)
Net cash used in investing activities
$
(5,776
)
$
(29,042
)
Cash flows from financing
activities
Proceeds from issuance of long-term
debt
—
220,840
Payments of long-term debt and notes
payable
$
(1,126
)
$
(199,851
)
Proceeds from borrowings on revolving
credit facilities
—
11,000
Payments of borrowings on revolving credit
facilities
—
(15,000
)
Payment of debt issuance costs
—
(3,565
)
Payment of equity issuance
—
(322
)
Payment of early termination
—
(188
)
Proceeds from warrants exercised
—
11
Distributions to non-controlling interest
holders
(563
)
—
Other
—
15
Net cash (used in) provided by financing
activities
$
(1,689
)
$
12,940
Net change in cash
$
(24
)
$
(12,568
)
Cash, beginning of period
26,394
31,397
Cash, end of period
$
26,370
$
18,829
Supplemental Disclosure of Cash Flow
Information
Cash Paid During the Period For
Interest
$
6,524
$
6,308
Income taxes
$
—
$
3,837
Non-Cash Investing and Financing
Transactions:
Contingent and deferred acquisition
consideration
$
2,964
$
14,890
Stock-based compensation capitalized in
property and equipment
$
208
$
229
Capital expenditures included in accounts
payable
$
269
$
1,144
Issuance of equity for
Aimtell/Aramis//PushPros, and Crisp Results
$
—
$
35,000
NON-GAAP FINANCIAL MEASURES
In addition to providing financial measurements based on
accounting principles generally accepted in the United States of
America (“GAAP”), this earnings release includes additional
financial measures that are not prepared in accordance with GAAP
(“non-GAAP”), including Variable Marketing Margin, Adjusted EBITDA,
Unlevered Free Cash Flow, Adjusted Net Income and Adjusted EPS. A
reconciliation of non-GAAP financial measures to the most directly
comparable GAAP financial measures can be found below.
As explained further below, we use these financial measures
internally to review the performance of our business units without
regard to certain accounting treatments, non-operational,
extraordinary or non-recurring items. We believe that presentation
of these non-GAAP financial measures provides useful information to
investors regarding our results of operations. Because of these
limitations, management relies primarily on its GAAP results and
uses non-GAAP measures only as a supplement.
Variable Marketing Margin
Variable Marketing Margin is a measure of the efficiency of the
Company’s revenue generation efforts, measuring revenue after
subtracting the variable marketing and direct media costs that are
directly associated with revenue generation. Variable Marketing
Margin and Variable Marketing Margin % of revenue are key reporting
metrics by which the Company measures the efficacy of its marketing
and media acquisition efforts.
Variable Marketing Margin is defined as revenue less variable
marketing expense. Variable marketing expense is defined as the
expense attributable to variable costs paid for direct marketing
and media acquisition costs, and includes only the portion of cost
of revenue attributable to costs paid for this direct marketing
activity and advertising acquired for resale to the Company’s
customers, and excludes overhead, fixed costs and personnel-related
expenses. The majority of these variable advertising costs are
expressly intended to drive traffic to our websites and to our
customers’ websites, and these variable advertising costs are
included in cost of revenue on the company's consolidated
statements of operations.
Below is a reconciliation of net loss to Variable Marketing
Margin and net loss % of revenue to Variable Marketing Margin % of
revenue.
The following table provides a reconciliation of Variable
Marketing Margin to net loss, the most directly comparable GAAP
measure (in thousands, except percentages):
Three Months Ended June
30,
Six Months Ended June
30,
2022
2021
2022
2021
Net (loss) income
$
(11,887
)
$
4,939
$
(17,244
)
$
4,727
Net (loss) income % of revenue
(13
)%
5
%
(9
)%
2
%
Adjustments to reconcile to variable
marketing
Cost of revenue adjustment (1)
$
6,400
$
6,392
$
13,177
$
9,705
Salaries and related costs
13,237
11,708
26,945
21,977
General and administrative expense
12,444
10,552
23,544
17,514
Acquisition costs
(2,312
)
(94
)
292
1,400
Depreciation and amortization
7,173
7,044
14,233
12,463
Change in fair value of contingent
2,536
560
2,536
560
Change in fair value of warrant
liabilities
(1,640
)
(7,750
)
(3,480
)
(7,435
)
Debt extinguishment
—
2,108
—
2,108
Interest expense, net
3,817
3,622
7,502
6,879
Income tax expense
45
1,031
355
1,148
Total adjustments
$
41,700
$
35,173
$
85,104
$
66,319
Variable marketing margin
$
29,813
$
40,112
$
67,860
$
71,046
Variable marketing margin % of revenue
33
%
38
%
34
%
35
%
(1) Represents amounts reported as cost of
revenue that are not direct media costs associated with lead sales,
which were added back for the purpose of the Variable Marketing
Margin (“VMM”).
Adjusted EBITDA, Unlevered Free Cash Flow and Unlevered Free
Cash Flow Conversion
Adjusted EBITDA is defined as net (loss) income, excluding (a)
interest expense, (b) income tax expense, (c) depreciation and
amortization, (d) change in fair value of warrant liabilities, (e)
debt extinguishment, (f) stock-based compensation, (g) change in
tax receivable agreement liability, (h) restructuring costs, (i)
acquisition costs, and (j) other expense.
In addition, we adjust to take into account estimated cost
synergies related to our acquisitions. These adjustments are
estimated based on cost-savings that are expected to be realized
within our acquisitions over time as these acquisitions are fully
integrated into DMS. These cost-savings result from the removal of
cost and or service redundancies that already exist within DMS,
technology synergies as systems are consolidated and centralized,
headcount reductions based on redundancies, right-sized cost
structure of media and service costs utilizing the most beneficial
contracts within DMS and the acquired companies with external media
and service providers. We believe that these non-synergized costs
tend to overstate our expenses during the periods in which such
synergies are still being realized.
Furthermore, in order to review the performance of the combined
business over periods that extend prior to our ownership of the
acquired businesses, we include the pre-acquisition performance of
the businesses acquired. Management believes that doing so helps to
understand the combined operating performance and potential of the
business as a whole and makes it easier to compare performance of
the combined business over different periods.
Unlevered Free Cash Flow is defined as Adjusted EBITDA, less
capital expenditures, and Unlevered Free Cash Flow Conversion is
defined as Unlevered Free Cash Flow divided by Adjusted EBITDA.
The following table provides a reconciliation between Adjusted
net income and Adjusted EBITDA, and Unlevered Free Cash Flow, from
Net loss, the most directly comparable GAAP measure (in
thousands):
Three Months Ended June
30,
Six Months Ended June
30,
2022
2021
2022
2021
Net (loss) income
$
(11,887
)
$
4,939
$
(17,244
)
$
4,727
Adjustments
Interest expense
3,817
3,622
7,502
6,879
Income tax expense
45
1,031
355
1,148
Depreciation and amortization
7,173
7,044
14,233
12,463
Change in fair value of warrant
liabilities (1)
(1,640
)
(7,750
)
(3,480
)
(7,435
)
Loss on debt extinguishment
—
2,108
—
2,108
Stock-based compensation expense
2,066
1,273
3,908
2,530
Restructuring costs
1,784
432
2,178
81
Acquisition costs (2)
224
466
2,828
1,960
Other expense (3)
1,441
1,756
3,234
3,242
Adjusted net income
$
3,023
$
14,921
$
13,514
$
27,703
Additional adjustments
Pro forma cost savings - Reorganization
(4)
$
—
$
—
$
—
$
31
Pro forma cost savings - Acquisitions
(5)
—
1,030
—
1,800
Acquisitions EBITDA (6)
—
—
—
2,711
Adjusted EBITDA
$
3,023
$
15,951
$
13,514
$
32,245
Less: Capital Expenditures
1,580
1,821
3,197
4,212
Unlevered free cash flow
$
1,443
$
14,130
$
10,317
$
28,033
Unlevered free cash flow conversion
47.7
%
88.6
%
76.3
%
86.9
%
______________
(1)
Mark-to-market warrant liability
adjustments.
(2)
Balance includes business combination
transaction fees, acquisition incentive payments, contingent
consideration accretion, earnout payments and pre-acquisition
expenses.
(3)
Balance includes legal fees associated
with acquisitions and other extraordinary matters, costs related to
philanthropic initiatives, and private warrant transaction related
costs.
(4)
Costs savings as a result of the Company
reorganization initiated in Q2 2020.
(5)
Cost synergies expected as a result of the
full integration of the acquisitions.
(6)
Pre-acquisition Adjusted EBITDA results
from the AAP and Crisp Results acquisitions during the three and
six months ended June 30, 2021.
A reconciliation of Unlevered Free Cash Flow to net cash
provided by operating activities, the most directly comparable GAAP
measure, is presented below (in thousands):
Three Months Ended June
30,
Six Months Ended June
30,
2022
2021
2022
2021
Unlevered free cash flow
$
1,443
$
14,130
$
10,317
$
28,033
Capital expenditures
1,580
1,821
3,197
4,212
Adjusted EBITDA
$
3,023
$
15,951
$
13,514
$
32,245
Acquisitions EBITDA (1)
—
—
—
2,711
Pro forma cost savings - Reorganization
(2)
—
—
—
31
Pro forma cost savings - Acquisitions
(3)
—
1,030
—
1,800
Adjusted net income
$
3,023
$
14,921
$
13,514
$
27,703
Acquisition costs (4)
224
466
2,828
1,960
Other expenses (5)
1,441
1,756
3,234
3,242
Stock-based compensation
2,066
1,273
3,908
2,530
Restructuring costs
1,784
432
2,178
81
Change in fair value of warrant
liabilities (6)
(1,640
)
(7,750
)
(3,480
)
(7,435
)
Loss on debt extinguishment
—
2,108
—
2,108
Subtotal before additional
adjustments
$
(852
)
$
16,636
$
4,846
$
25,217
Less: Interest expense
3,817
3,622
7,502
6,879
Less: Income tax expense
45
1,031
355
1,148
Provision for bad debt
1,339
909
1,339
909
Lease restructuring charges
2
174
2
174
Loss on debt extinguishment
—
2,108
—
2,108
Stock-based compensation, net of amounts
capitalized
3,908
2,530
3,908
2,530
Amortization of debt issuance costs
938
528
938
528
Deferred income tax provision, net
(785
)
364
(785
)
364
Change in fair value of contingent
consideration
2,536
560
2,536
560
Change in fair value of warrant
liability
(3,480
)
(7,435
)
(3,480
)
(7,435
)
Change in income tax receivable and
payable
631
(2,328
)
631
(2,328
)
Change in accounts receivable
4,026
(4,330
)
4,026
(4,330
)
Change in prepaid expenses and other
current assets
2,585
222
2,585
222
Change in accounts payable and accrued
expenses
(1,275
)
(6,768
)
(1,275
)
(6,768
)
Change in other liabilities
27
(190
)
27
(190
)
Net cash provided by operating
activities
$
5,738
$
(1,673
)
$
7,441
$
3,534
______________
(1)
Pre-acquisition Adjusted EBITDA results
from the AAP and Crisp Results, and acquisitions during the three
and six months ended June 30, 2021.
(2)
Costs savings as a result of the Company
reorganization initiated in Q2 2020.
(3)
Cost synergies expected as a result of the
full integration of the acquisitions.
(4)
Balance includes business combination
transaction fees, acquisition incentive payments, contingent
consideration accretion, earnout payments and pre-acquisition
expenses.
(5)
Balance includes legal fees associated
with acquisitions and other extraordinary matters, costs related to
philanthropic initiatives, and private warrant transaction related
costs.
(6)
Mark-to-market warrant liability
adjustments.
Adjusted Net Income and Adjusted EPS
We use the non-GAAP measures Adjusted Net Income and Adjusted
EPS to assess operating performance. Management believes that these
measures provide investors with useful information on
period-to-period performance as evaluated by management and
comparison with our past financial and operating performance.
Management also believes these non-GAAP financial measures are
useful in evaluating our operating performance compared to that of
other companies in our industry, as this metric generally
eliminates the effects of certain items that may vary from company
to company for reasons unrelated to overall operating performance.
We define Adjusted Net Income (Loss) as net loss attributable to
Digital Media Solutions, Inc. adjusted for (x) costs associated
with the change in fair value of warrant liabilities, debt
extinguishment, Business Combination, acquisition-related costs,
equity based compensation and lease restructuring charges and (y)
the reallocation of net income (loss) attributable to
non-controlling interests from the assumed acquisition by Digital
Media Solutions, Inc. of all units of Digital Media Solutions
Holdings, LLC (“DMSH LLC”) (other than units held by subsidiaries
of Digital Media Solutions, Inc.) for newly-issued shares of Class
A Common Stock of Digital Media Solutions, Inc. on a one-to-one
basis. We define adjusted pro forma net loss per share as adjusted
pro forma net loss divided by the weighted-average shares of Class
A Common Stock outstanding, assuming the acquisition by Digital
Media Solutions, Inc. of all outstanding DMSH LLC units (other than
units held by subsidiaries of Digital Media Solutions, Inc.) for
newly-issued shares of Class A Common Stock on a
one-to-one-basis.
The following table presents a reconciliation between GAAP
Earnings Per Share and Non-GAAP Adjusted Net Income and Adjusted
EPS (In thousands, except per share data):
Three Months Ended June
30,
Six Months Ended June
30,
2022
2021
2022
2021
Numerator:
Net (loss) income
$
(11,887
)
$
4,939
$
(17,244
)
$
4,727
Net (loss) income attributable to
non-controlling interest
(4,905
)
$
2,411
(7,121
)
2,373
Net (loss) income attributable to Digital
Media Solutions, Inc. - basic
$
(6,982
)
$
2,528
$
(10,123
)
$
2,354
Add: Income effects of Class B convertible
common stock
$
(4,903
)
$
—
$
(7,116
)
$
—
Less: dilutive effect of change in fair
value of warrant liabilities attributable to Digital Media
Solutions, Inc.
—
—
—
4,321
Net (loss) income attributable to Digital
Media Solutions, Inc. - basic
$
(11,885
)
$
2,528
$
(17,239
)
$
(1,967
)
Denominator:
Weighted average shares - basic
39,553
35,377
$
37,969
$
34,315
Add: dilutive effects of Class B
convertible common stock
25,699
—
$
25,713
$
—
Add: dilutive effects of employee equity
awards
—
628
—
—
Add: dilutive effects of private placement
warrants
—
—
—
10
Add: dilutive effects of deferred
consideration
—
517
—
—
Weighted average shares - diluted
65,252
36,522
63,682
34,325
Net earnings (loss) per common share:
Basic
$
(0.18
)
$
0.07
$
(0.27
)
$
0.07
Diluted
$
(0.18
)
$
0.07
$
(0.27
)
$
(0.06
)
Three Months Ended June
30,
Six Months Ended June
30,
2022
2021
2022
2021
Numerator:
Net (loss) income attributable to Digital
Media Solutions, Inc. - basic
$
(6,982
)
$
2,528
$
(10,123
)
$
2,354
Net (loss) income attributable to Digital
Media Solutions, Inc. - diluted
$
(11,885
)
$
2,528
$
(17,239
)
$
(1,967
)
Add adjustments:
Change in fair value of warrant
liabilities
$
(1,640
)
$
(7,750
)
$
(3,480
)
$
(7,435
)
Loss on debt extinguishment
—
2,108
—
2,108
Acquisition and related costs
224
466
2,828
1,960
Restructuring costs
1,784
432
2,178
81
Business combination expenses
—
1,030
—
1,800
Stock-based compensation expense
2,066
1,273
3,908
2,530
$
2,434
$
(2,441
)
$
5,434
$
1,044
Net income tax expense based on conversion
of units
—
(76
)
—
902
Adjusted net income (loss) attributable to
Digital Media Solutions, Inc. - basic
$
(4,548
)
$
11
$
(4,689
)
$
4,300
Adjusted net income (loss) attributable to
Digital Media Solutions, Inc. - diluted
$
(9,451
)
$
163
$
(11,805
)
$
(1,825
)
Denominator:
Weighted-average shares outstanding -
basic
39,553
35,377
37,969
34,315
Weighted-average LLC Units of DMSH, LLC
that are convertible into Class A common stock
25,728
36,522
25,699
34,325
65,281
71,899
63,668
68,640
Adjusted EPS - basic
$
(0.07
)
$
—
$
(0.07
)
$
0.06
Adjusted EPS - diluted
$
(0.14
)
$
—
$
(0.19
)
$
(0.03
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220809006050/en/
Media Contact:
Melissa Ledesma (201) 528-5272 press@dmsgroup.com
For inquiries related to investor relations, contact
investors@dmsgroup.com
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