Kubient, Inc. (NasdaqCM: KBNT, KBNTW) (“Kubient”
or the “Company”), a cloud-based software platform for digital
advertising, today reported financial results for the first quarter
ended March 31, 2022.
First Quarter 2022 and Recent Operational
Highlights
- Achieved 76% year-over-year increase in net revenues
- Partnered with PubMatic, an independent technology company
maximizing customer value by delivering advertising supply chain
solutions.
- Extended contract with Yahoo to become a Kubient demand side
partner (“DSP”), opening up Kubient’s pipeline to every global
brand that uses the Yahoo platform to buy media.
Management Commentary"We are proud to have
achieved strong first quarter revenues of $1.2 million, a 76%
increase year over year,” said Kubient Founder, Chairman, CEO, CSO,
and President, Paul Roberts. “Although we hit an encouraging
milestone, Q1 was also a period of strategic realignment as we face
macroeconomic headwinds with resilience and flexibility. In an
effort to maximize the ROI of our existing capital and conserve our
cash reserves, we are now actively in a mode of scaling back our
expenses, which include optimizing our general overhead and labor
force. Despite this event, we feel strongly that our proprietary
technology, optimized labor force, and new strategy will mitigate
the headwinds and help us effectively operate near a breakeven
level.
“In addition to cash conservation, we feel that lowering our
expenses will also optimize our on-going M&A strategy. Beyond
the inorganic growth method of M&A, we plan to stay the course
in efficiently executing against our organic growth strategy by
leveraging our technology and expanding base of partners. I trust
that the team we assembled, and the technology we engineered will
continue to carry forward Kubient's mission of delivering
advertising across all channels in an effective, transparent, and
fraud protected fashion.”
First Quarter 2022 Financial ResultsNet
revenues increased 76% to approximately $1.2 million compared to
approximately $708,000 in the same period last year. The increase
was particularly attributable to net revenues generated related to
customer contracts acquired in connection with the acquisition of
MediaCrossing in November 2021.
Earlier in the first quarter, the Company determined that it was
no longer probable to collect payment from a customer from which it
was entitled. Therefore, the Company ceased providing service to
the customer on April 6, 2022, while still pursuing collection of
payment for the work it had already performed. Kubient only
recognized net revenues of approximately $48,000 from this customer
in the first quarter, when in reality, it provided additional
services of approximately $1.1 million. As of the second quarter,
the Company received approximately $600,000 of payments and expects
to recognize revenue in future periods for any payments received in
excess of the loss accrual more fully described below.
Technology expenses increased to approximately $1.2 million from
approximately $520,000 in the same period last year. The
year-over-year increase was primarily due to an increase in
headcount costs, hosting fees, non-cash stock-based compensation,
amortization, and software expenses.
General and administrative expenses increased to approximately
$2.2 million compared to approximately $1.3 million in the same
period last year. The increase was primarily due to increases of
legal fees, including legal fees associated with the legal
settlement entered into in March 2022, non-cash stock-based
compensation, other professional fees, all partially offset by a
reduction in state taxes.
Regarding the additional line item, Kubient recognized a loss
accrual of $790,000 for media costs incurred in February and March
2022 which related to services performed from the aforementioned
customer.
GAAP net loss was approximately $3.6 million, or $(0.25) loss
per share, compared to a net loss of approximately $1.8 million, or
$(0.14) loss per share, in the same period last year.
Adjusted EBITDA loss, a non-GAAP measure, increased to
approximately $(3.6) million, compared to an adjusted EBITDA loss
of approximately $(1.5) million in the same period last year.
As of March 31, 2022, the Company had a cash balance of
approximately $20.7 million.
Conference CallKubient will hold a conference
call today (May 16, 2022) at 4:30 p.m. Eastern time (1:30 p.m.
Pacific time) to discuss these results.
Kubient management will host the conference call, followed by a
question and answer period.
Date: Monday, May 16, 2022Time: 4:30 p.m. Eastern time (1:30
p.m. Pacific time)U.S. dial-in: 1-877-407-9208International
dial-in: 1-201-493-6784
Please call the conference telephone number 10 minutes prior to
the start time. An operator will register your name and
organization. If you have any difficulty connecting with the
conference call, please contact Gateway Investor Relations at
949-574-3860.
The conference call will be broadcast live and available for
replay here and via the Investor Relations section of Kubient’s
website.
A telephonic replay of the conference call will be available
after 7:30 p.m. Eastern time on the same day through May 23,
2022.
Toll-free replay number: 1-844-512-2921International replay
number: 1-412-317-6671Replay ID: 13729301
About KubientKubient is a technology company
with a mission to transform the digital advertising industry to
audience-based marketing. Kubient’s next generation cloud-based
infrastructure enables efficient marketplace liquidity for buyers
and sellers of digital advertising. The Kubient Audience
Marketplace is a flexible open marketplace for advertisers and
publishers to reach, monetize and connect their audiences. The
Company’s platform provides a transparent programmatic environment
with proprietary artificial intelligence-powered pre-bid ad fraud
prevention, and proprietary real-time bidding (RTB) marketplace
automation for the digital out of home industry. The Audience
Marketplace is the solution for brands and publishers that demand
transparency and the ability to reach audiences across all channels
and ad formats. For additional information, please visit
https://kubient.com.
Forward-Looking StatementsThe information
contained herein includes forward-looking statements. These
statements relate to future events or to our future financial
performance, and involve known and unknown risks, uncertainties and
other factors that may cause our actual results, levels of
activity, performance, or achievements to be materially different
from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking
statements. You should not place undue reliance on forward-looking
statements since they involve known and unknown risks,
uncertainties and other factors which are, in some cases, beyond
our control and which could, and likely will, materially affect
actual results, levels of activity, performance or achievements.
Any forward-looking statement reflects our current views with
respect to future events and is subject to these and other risks,
uncertainties and assumptions relating to our operations, results
of operations, growth strategy and liquidity. We assume no
obligation to publicly update or revise these forward-looking
statements for any reason, or to update the reasons actual results
could differ materially from those anticipated in these
forward-looking statements, even if new information becomes
available in the future. The safe harbor for forward-looking
statements contained in the Securities Litigation Reform Act of
1995 protects companies from liability for their forward-looking
statements if they comply with the requirements of the Act.
Non-GAAP MeasuresThe Company defines EBITDA as
net income (loss) before interest (including non-cash interest),
taxes and depreciation and amortization. The Company defines
Adjusted EBITDA as EBITDA, further adjusted to eliminate the impact
of certain non-recurring items and other items that we do not
consider in our evaluation of our ongoing operating performance
from period to period. These items will include stock-based
compensation that the Company does not believe reflects the
underlying business performance.
EBITDA and Adjusted EBITDA are financial measures that are not
calculated in accordance with accounting principles generally
accepted in the United States of America (“U.S. GAAP”). Management
believes that because Adjusted EBITDA excludes (a) certain non-cash
expenses (such as depreciation, amortization and stock-based
compensation) and (b) expenses that are not reflective of the
Company’s core operating results over time (such as stock based
compensation expense), this measure provides investors with
additional useful information to measure the Company’s financial
performance, particularly with respect to changes in performance
from period to period. The Company’s management uses EBITDA and
Adjusted EBITDA (a) as a measure of operating performance, (b) for
planning and forecasting in future periods, and (c) in
communications with the Company’s board of directors concerning the
Company’s financial performance. The Company’s presentation of
EBITDA and Adjusted EBITDA are not necessarily comparable to other
similarly titled captions of other companies due to different
methods of calculation and should not be used by investors as a
substitute or alternative to net income or any measure of financial
performance calculated and presented in accordance with U.S. GAAP.
Instead, management believes EBITDA and Adjusted EBITDA should be
used to supplement the Company’s financial measures derived in
accordance with U.S. GAAP to provide a more complete understanding
of the trends affecting the business.
Although Adjusted EBITDA is frequently used by investors and
securities analysts in their evaluations of companies, Adjusted
EBITDA has limitations as an analytical tool, and investors should
not consider it in isolation or as a substitute for, or more
meaningful than, amounts determined in accordance with U.S. GAAP.
Some of the limitations to using non-GAAP measures as an analytical
tool are (a) they do not reflect the Company’s interest income and
expense, or the requirements necessary to service interest or
principal payments on the Company’s debt, (b) they do not reflect
future requirements for capital expenditures or contractual
commitments, and (c) although depreciation and amortization charges
are non-cash charges, the assets being depreciated and amortized
will often have to be replaced in the future, and non-GAAP measures
do not reflect any cash requirements for such replacements.
Kubient Investor RelationsGateway Investor
RelationsMatt Glover and John YiT:
1-949-574-3860Kubient@gatewayir.com
Kubient,
Inc. |
Condensed
Consolidated Statements of Operations |
(unaudited) |
|
|
|
For the
Three Months Ended |
|
|
March 31, |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
Net Revenues |
$ |
1,245,304 |
|
|
$ |
707,757 |
|
|
|
|
|
|
Costs and Expenses: |
|
|
|
|
Sales and
marketing |
|
1,333,010 |
|
|
|
756,950 |
|
|
Technology |
|
1,155,699 |
|
|
|
519,755 |
|
|
General and
administrative |
|
2,182,549 |
|
|
|
1,255,572 |
|
|
Loss accrual
on customer contract |
|
789,605 |
|
|
|
- |
|
|
|
|
|
|
|
Total Costs and Expenses |
|
5,460,863 |
|
|
|
2,532,277 |
|
|
|
|
|
|
|
Loss From Operations |
|
(4,215,559 |
) |
|
|
(1,824,520 |
) |
|
|
|
|
|
Other (Expense) Income: |
|
|
|
|
Interest
expense |
|
(3,872 |
) |
|
|
(1,634 |
) |
|
Interest
income |
|
2,291 |
|
|
|
29,309 |
|
|
Change in
fair value of contingent consideration |
|
589,622 |
|
|
|
- |
|
|
Other
income |
|
26 |
|
|
|
233 |
|
|
|
|
|
|
|
Total Other Income |
|
588,067 |
|
|
|
27,908 |
|
|
|
|
|
|
|
Net Loss |
$ |
(3,627,492 |
) |
|
$ |
(1,796,612 |
) |
|
|
|
|
|
|
Net Loss Per Share - Basic and Diluted |
$ |
(0.25 |
) |
|
$ |
(0.14 |
) |
|
|
|
|
|
|
Weighted Average Common Shares Outstanding - |
|
|
|
|
Basic and Diluted |
|
14,256,159 |
|
|
|
12,617,171 |
|
|
|
|
|
|
Kubient,
Inc. |
Condensed
Consolidated Balance Sheets |
|
|
|
|
|
March
31, |
|
December
31, |
|
|
2022 |
|
|
|
2021 |
|
|
(unaudited) |
|
|
Assets |
|
|
|
|
|
|
|
Current
Assets: |
|
|
|
Cash and cash equivalents |
$ |
20,709,044 |
|
|
$ |
24,907,963 |
|
Accounts receivable, net |
|
2,352,463 |
|
|
|
2,291,533 |
|
Other receivables |
|
- |
|
|
|
526,070 |
|
Prepaid expenses and other current assets |
|
411,904 |
|
|
|
495,178 |
|
|
|
|
|
Total Current Assets |
|
23,473,411 |
|
|
|
28,220,744 |
|
Intangible
assets, net |
|
2,789,625 |
|
|
|
2,946,610 |
|
Goodwill |
|
463,000 |
|
|
|
463,000 |
|
Property and
equipment, net |
|
47,040 |
|
|
|
44,756 |
|
Deferred
offering costs |
|
10,000 |
|
|
|
10,000 |
|
|
|
|
|
Total Assets |
$ |
26,783,076 |
|
|
$ |
31,685,110 |
|
|
|
|
|
Liabilities and Stockholders' Equity |
|
|
|
|
|
|
|
Current
Liabilities: |
|
|
|
Accounts payable - suppliers |
$ |
2,474,570 |
|
|
$ |
1,844,544 |
|
Accounts payable - trade |
|
1,050,395 |
|
|
|
659,362 |
|
Accrued expenses and other current liabilities |
|
851,800 |
|
|
|
2,493,287 |
|
Deferred revenue |
|
26,719 |
|
|
|
395,914 |
|
Notes payable |
|
42,066 |
|
|
|
151,336 |
|
|
|
|
|
Total Current Liabilities |
|
4,445,550 |
|
|
|
5,544,443 |
|
Contingent
consideration |
|
23,378 |
|
|
|
613,000 |
|
Notes
payable, non-current portion |
|
77,407 |
|
|
|
77,407 |
|
|
|
|
|
Total Liabilities |
|
4,546,335 |
|
|
|
6,234,850 |
|
|
|
|
|
Commitments
and contingencies |
|
|
|
|
|
|
|
Stockholders' Equity: |
|
|
|
Preferred stock, $0.00001 par value; 5,000,000 shares
authorized; |
|
|
|
No shares issued and outstanding |
|
|
|
as of March 31, 2022 and December 31, 2021 |
|
- |
|
|
|
- |
|
Common stock, $0.00001 par value; 95,000,000 shares
authorized; |
|
|
|
14,303,743 and 14,253,948 shares issued and outstanding |
|
|
|
as of March 31, 2022 and December 31, 2021, respectively |
|
143 |
|
|
|
143 |
|
Additional paid-in capital |
|
52,444,880 |
|
|
|
52,030,907 |
|
Accumulated deficit |
|
(30,208,282 |
) |
|
|
(26,580,790 |
) |
|
|
|
|
Total Stockholders' Equity |
|
22,236,741 |
|
|
|
25,450,260 |
|
|
|
|
|
Total Liabilities and Stockholders' Equity |
$ |
26,783,076 |
|
|
$ |
31,685,110 |
|
|
|
|
|
Kubient,
Inc. |
Condensed
Consolidated Statements of Cash Flows |
(unaudited) |
|
|
|
|
|
For the
Three Months Ended |
|
March 31, |
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
Cash
Flows From Operating Activities: |
|
|
|
Net loss |
$ |
(3,627,492 |
) |
|
$ |
(1,796,612 |
) |
Adjustments to reconcile net loss to net cash used in operating
activities: |
|
|
Depreciation and amortization |
|
162,221 |
|
|
|
77,379 |
|
Change in fair value of contingent consideration |
|
(589,622 |
) |
|
|
- |
|
Stock-based compensation: |
|
|
|
Common stock |
|
429,811 |
|
|
|
2,576 |
|
Options |
|
2,295 |
|
|
|
238,638 |
|
Changes in operating assets and liabilities: |
|
|
|
Accounts receivable |
|
(60,930 |
) |
|
|
913,623 |
|
Other receivable |
|
507,387 |
|
|
|
- |
|
Prepaid expenses and other current assets |
|
83,274 |
|
|
|
(107,093 |
) |
Accounts payable - suppliers |
|
630,026 |
|
|
|
(2,523 |
) |
Accounts payable - trade |
|
391,034 |
|
|
|
(378,411 |
) |
Accrued expenses and other current liabilities |
|
(1,532,150 |
) |
|
|
(454,018 |
) |
Accrued interest |
|
- |
|
|
|
1,584 |
|
Deferred revenue |
|
(369,195 |
) |
|
|
- |
|
|
|
|
|
Net Cash Used In Operating Activities |
|
(3,973,341 |
) |
|
|
(1,504,857 |
) |
|
|
|
|
Cash
Flows From Investing Activities: |
|
|
|
Purchase of intangible assets |
|
- |
|
|
|
(64,072 |
) |
Purchase of property and equipment |
|
(7,520 |
) |
|
|
(1,882 |
) |
|
|
|
|
Net Cash Used In Investing Activities |
|
(7,520 |
) |
|
|
(65,954 |
) |
|
|
|
|
Cash
Flows From Financing Activities: |
|
|
|
Proceeds from exercise of warrants [1] |
|
- |
|
|
|
9,326,163 |
|
Repayment of PPP loan |
|
(109,270 |
) |
|
|
- |
|
Repayment of financed director and officer insurance premiums |
|
(108,788 |
) |
|
|
- |
|
|
|
|
|
Net Cash (Used In) Provided By Financing
Activities |
|
(218,058 |
) |
|
|
9,326,163 |
|
|
|
|
|
Net (Decrease) Increase In Cash and Cash
Equivalents |
|
(4,198,919 |
) |
|
|
7,755,352 |
|
|
|
|
|
Cash
and Cash Equivalents - Beginning of the Period |
|
24,907,963 |
|
|
|
24,782,128 |
|
|
|
|
|
Cash
and Cash Equivalents - End of the Period |
$ |
20,709,044 |
|
|
$ |
32,537,480 |
|
|
|
|
|
[1] Includes
gross proceeds of $9,708,038, less issuance costs of $381,875. |
|
|
|
Kubient,
Inc. |
Reconciliation of GAAP EBITDA to Non- GAAP Adjusted
EBITDA |
(Unaudited) |
|
|
|
For the
Three Months Ended |
|
March 31, |
|
|
2022 |
|
|
|
2021 |
|
Net
Loss |
$ |
(3,627,492 |
) |
|
$ |
(1,796,612 |
) |
Interest expense |
|
3,872 |
|
|
|
1,634 |
|
Interest income |
|
(2,291 |
) |
|
|
(29,309 |
) |
Depreciation and amortization |
|
162,221 |
|
|
|
77,379 |
|
EBITDA |
|
(3,463,690 |
) |
|
|
(1,746,908 |
) |
|
|
|
|
Adjustments: |
|
|
|
Stock-based compensation expense |
|
432,656 |
|
|
|
241,214 |
|
Change in fair value of contingent consideration |
|
(589,622 |
) |
|
|
- |
|
Adjusted EBITDA |
$ |
(3,620,656 |
) |
|
$ |
(1,505,694 |
) |
|
|
|
|
Adjusted Loss Per Share |
$ |
(0.25 |
) |
|
$ |
(0.12 |
) |
Weighted Average Common Shares Outstanding - |
|
|
|
Basic and Diluted |
|
14,256,159 |
|
|
|
12,617,171 |
|
|
|
|
|
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