The Meet Group, Inc. (NASDAQ: MEET), a public market leader in
the mobile meeting space, today reported financial results for its
third quarter ended September 30, 2018.
Third Quarter 2018 Financial Highlights
- Total revenue of $45.7 million, up 42%
year over year
- GAAP net income of $1.3 million, or
$0.02 per diluted share, compared to $2.2 million, or $0.03 per
diluted share in the prior year quarter
- Adjusted EBITDA of $8.7 million,
compared to adjusted EBITDA of $8.9 million in the prior year
quarter
- Non-GAAP net income of $7.6 million, or
$0.10 per diluted share, compared to $8.1 million or $0.11 per
diluted share in the prior year quarter
(See the important discussion about the presentation of non-GAAP
financial measures, and reconciliation to the most direct
comparable GAAP financial measures, below.)
“We continue to grow video revenue across all of our apps,” said
Geoff Cook, Chief Executive Officer. “In one year, we have
increased the annualized video revenue run rate from virtually zero
to $55 million for the month of October. Our successful Lovoo
acquisition and integration, together with the dramatic growth of
video revenue, have contributed to transforming our revenue mix. We
tripled user pay revenue from a year ago, with that portion of our
business now contributing 61% of our total revenue, up from 27% in
the third quarter of 2017. We believe we are in the early days of
the video opportunity and that livestreaming aligns perfectly with
our mission: to facilitate human connection.
“Traffic in the quarter was also strong. We grew mobile daily
active users 3% sequentially to 4.3 million and mobile monthly
active users 7% sequentially to 14.6 million, reflecting
quarter-over-quarter gains from each of MeetMe, Lovoo, Skout, and
Tagged. For the quarter, daily live video users averaged
approximately 870,000, up more than 36% sequentially. In addition,
we recently surpassed our 100 millionth gift sent since launching
Live monetization a year ago.”
“Advertising results were also solid,” continued Cook,
“increasing sequentially for the second consecutive quarter. We
continue to see evidence of a return to seasonal trends in
advertising and remain cautiously optimistic about the opportunity
to grow ad revenue in the fourth quarter.”
Third Quarter Financial Results
For the third quarter of 2018, the Company reported revenue of
$45.7 million, an increase of 42% from $32.2 million in the prior
year quarter.
GAAP net income was $1.3 million, or $0.02 per diluted share,
compared to $2.2 million, or $0.03 per diluted share, in the prior
year quarter. Adjusted EBITDA in the third quarter of 2018 was $8.7
million compared to $8.9 million in the prior year quarter,
reflecting the ongoing shift towards user pay revenue.
The Company ended the quarter with $21.8 million in cash and
cash equivalents.
Company Outlook
The Company is providing the following outlook for the fourth
quarter of 2018 and is increasing its outlook for the full year
2018.
Fourth quarter 2018:
- Revenue in the range of $47.8 million
to $48.8 million
- Adjusted EBITDA in the range of $8.7
million to $9.1 million
Full year 2018:
- Revenue in the range of $174 million to
$175 million
- Adjusted EBITDA in the range of $30.2
million to $30.6 million
THE MEET GROUP, INC. AND SUBSIDIARIES CONDENSED
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
September 30, 2018 December 31,
2017 ASSETS CURRENT ASSETS: Cash and cash equivalents
$ 21,822,387 $ 24,158,444 Accounts receivable, net of allowance of
$555,402 and $527,958 at September 30, 2018 and December 31, 2017,
respectively 24,575,376 26,443,675 Prepaid expenses and other
current assets 5,081,053 3,245,174
Total current assets 51,478,816 53,847,293 Restricted cash 500,000
894,551 Goodwill 148,863,242 150,694,135 Property and equipment,
net 3,253,213 4,524,118 Intangible assets, net 39,345,358
48,719,428 Deferred taxes 16,379,363 15,521,214 Other assets
1,972,799 1,144,032
Total assets
$ 261,792,791 $ 275,344,771
LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT
LIABILITIES: Accounts payable $ 6,054,937 $ 6,277,846 Accrued
liabilities 19,146,585 19,866,438 Current portion of long-term debt
15,000,000 15,000,000 Current portion of capital lease obligations
152,131 254,399 Deferred revenue 4,820,137
4,433,450 Total current liabilities 45,173,790 45,832,133
Long-term capital lease obligations, less current portion, net
74,408 192,137 Long-term debt, less current portion, net 25,338,637
40,637,106 Long-term derivative liability 1,822,202 2,995,657 Other
liabilities 114,627 147,178
Total
liabilities 72,523,664
89,804,211 STOCKHOLDERS’ EQUITY: Preferred
stock, $.001 par value; authorized - 5,000,000 shares; 0 shares
issued and outstanding at September 30, 2018 and December 31, 2017
— — Common stock, $.001 par value; authorized - 100,000,000 shares;
73,534,370 and 71,915,018 shares issued and outstanding at
September 30, 2018 and December 31, 2017, respectively 73,534
71,918 Additional paid-in capital 415,572,623 408,029,068
Accumulated deficit (224,569,415 ) (221,435,888 ) Accumulated other
comprehensive loss (1,807,615 ) (1,124,538 )
Total
stockholders’ equity 189,269,127
185,540,560 Total liabilities and stockholders’
equity $ 261,792,791 $
275,344,771 THE MEET GROUP, INC. AND
SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (UNAUDITED)
Three Months EndedSeptember
30,
Nine Months EndedSeptember
30,
2018 2017 2018 2017
Revenues $ 45,716,053 $ 32,246,472 $ 126,155,591
$ 83,634,737 Operating costs and expenses: Sales and
marketing 8,753,156 4,600,148 23,554,635 14,305,498 Product
development and content 26,134,682 16,021,977 72,647,507 41,006,376
General and administrative 4,938,844 5,021,739 15,562,125
13,044,965 Depreciation and amortization 3,423,929 2,969,570
10,558,712 7,619,584 Acquisition and restructuring 416,141
3,378,838 4,802,694
8,648,692 Total operating costs and expenses
43,666,752 31,992,272 127,125,673
84,625,115 Income (loss) from operations
2,049,301 254,200 (970,082 )
(990,378 ) Other income (expense): Interest income 3,823
1,374 13,773 5,344 Interest expense (559,345 ) (244,361 )
(1,838,325 ) (421,947 ) Gain (loss) on foreign currency
transactions (6,229 ) 9,357 101,030 (2,072 ) Other 6,527
— 28,154 — Total
other expense (555,224 ) (233,630 ) (1,695,368
) (418,675 ) Income (loss) before income tax benefit
(expense) 1,494,077 20,570 (2,665,450 ) (1,409,053 ) Income tax
benefit (expense) (196,146 ) 2,202,152
(484,552 ) 4,934,216 Net income (loss) $ 1,297,931
$ 2,222,722 $ (3,150,002 ) $ 3,525,163
Basic and diluted net income (loss) per common stockholder: Basic
net income (loss) per common stockholder $ 0.02 $ 0.03
$ (0.04 ) $ 0.05 Diluted net income (loss) per common
stockholder $ 0.02 $ 0.03 $ (0.04 ) $ 0.05
Weighted average shares outstanding: Basic 73,362,467
71,800,274 72,704,205
67,711,324 Diluted 79,365,576
76,078,563 72,704,205 72,425,863
THE MEET GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months EndedSeptember
30,
2018 2017 Cash flows from operating
activities: Net income (loss) $ (3,150,002 ) $ 3,525,163
Adjustments to reconcile net income (loss) to net cash provided by
operating activities: Depreciation and amortization 10,558,712
7,619,584 Stock-based compensation expense 7,026,991 5,802,046
Deferred taxes (694,951 ) (5,383,583 ) (Gain) loss on foreign
currency transactions (101,030 ) 2,072 Bad debt expense 408,998
168,000 Amortization of loan origination costs 261,373 142,034
Change in derivatives (18,412 ) — Changes in operating assets and
liabilities: Accounts receivable 1,302,954 3,850,379 Prepaid
expenses, other current assets and other assets (2,326,004 )
4,391,126 Accounts payable and accrued liabilities 4,414,400
2,669,471 Deferred revenue 515,743 (115,831 )
Net cash provided by (used in) operating activities
18,198,772 22,670,461 Cash
flows from investing activities: Purchase of property and
equipment (404,446 ) (1,055,020 ) Acquisition of business, net of
cash and restricted cash acquired —
(65,802,792 )
Net cash provided by (used in) investing
activities (404,446 )
(66,857,812 ) Cash flows from financing
activities: Proceeds from exercise of stock options 824,307
2,797,893 Proceeds from issuance of common stock — 42,995,371
Proceeds from exercise of warrants — 2,396,250 Payments of capital
leases (211,290 ) (202,401 ) Proceeds from long-term debt —
15,000,000 Payments for restricted stock awards withheld for taxes
(306,127 ) (507,398 ) Payments of contingent consideration
(5,000,000 ) — Payments on long-term debt (15,559,842 )
(15,000,000 )
Net cash provided by (used in) financing
activities (20,252,952 )
47,479,715 Change in cash, cash equivalents, and
restricted cash prior to effects of foreign currency exchange rate
(2,458,626 ) 3,292,364 Effect of foreign currency exchange rate
(translation) (271,982 ) (2,072 ) Net (decrease)
increase in cash, cash equivalents, and restricted cash
(2,730,608 ) 3,290,292
Cash, cash equivalents, and
restricted cash at beginning of period 25,052,995
22,246,015 Cash, cash equivalents,
and restricted cash at end of period $ 22,322,387
$ 25,536,307 Supplemental disclosure
of cash flow information: Cash paid for interest $ 1,598,781
$ 279,913
THE MEET GROUP, INC. AND
SUBSIDIARIES RECONCILIATION OF TOTAL REVENUE
(UNAUDITED) Three Months Ended September
30, Nine Months Ended September 30, 2018
2017(1)
2018
2017(1)
$
%
$
%
$
%
$
%
User pay revenue $ 28,058,843 61.4 % $ 8,582,700 26.6 % $
76,034,926 60.3 % $ 18,342,865 21.9 % Advertising 17,657,210
38.6 % 23,663,772 73.4 % 50,120,665 39.7 %
65,291,872 78.1 % Total revenue $ 45,716,053 100.0 % $ 32,246,472
100.0 % $ 126,155,591 100.0 % $ 83,634,737 100.0 %
(1) Prior period amounts have not been
adjusted under the modified retrospective adoption method.
THE MEET GROUP, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO ADJUSTED EBITDA
(UNAUDITED)
Three Months EndedSeptember
30,
Nine Months EndedSeptember
30,
2018 2017 2018 2017 Net
income (loss) $ 1,297,931 $ 2,222,722 $ (3,150,002 ) $ 3,525,163
Interest expense 559,345 244,361 1,838,325 421,947 Income
tax (benefit) expense 196,146 (2,202,152 ) 484,552 (4,934,216 )
Depreciation and amortization 3,423,929 2,969,570 10,558,712
7,619,584 Stock-based compensation expense 2,767,196 2,299,696
7,026,991 5,802,046 Acquisition and restructuring 416,141 3,378,838
4,802,694 8,648,692 (Gain) loss on foreign currency transactions
6,229 (9,357 ) (101,030 ) 2,072
Adjusted EBITDA $ 8,666,917 $ 8,903,678 $ 21,460,242
$ 21,085,288 GAAP basic net income (loss) per common
stockholder $ 0.02 $ 0.03 $ (0.04 ) $ 0.05 GAAP
diluted net income (loss) per common stockholder $ 0.02 $ 0.03
$ (0.04 ) $ 0.05 Basic adjusted EBITDA per common
stockholder $ 0.12 $ 0.12 $ 0.30 $ 0.31
Diluted adjusted EBITDA per common stockholder $ 0.11 $ 0.12
$ 0.28 $ 0.29 Weighted average shares
outstanding: Basic 73,362,467 71,800,274
72,704,205 67,711,324 Diluted
79,365,576 76,078,563 77,831,545
72,425,863
THE MEET GROUP, INC. AND
SUBSIDIARIES RECONCILIATION OF GAAP NET INCOME TO NON-GAAP
NET INCOME (UNAUDITED)
Three Months EndedSeptember
30,
Nine Months EndedSeptember
30,
2018 2017 2018 2017 GAAP
Net income (loss) $ 1,297,931 $ 2,222,722 $ (3,150,002 ) $
3,525,163 Stock-based compensation expense 2,767,196
2,299,696 7,026,991 5,802,046 Amortization of intangibles 2,904,120
2,378,152 8,915,214 5,982,459 Income tax (benefit) expense 196,146
(2,202,152 ) 484,552 (4,934,216 ) Acquisition and restructuring
416,141 3,378,838 4,802,694
8,648,692 Non-GAAP net income $ 7,581,534 $ 8,077,256
$ 18,079,449 $ 19,024,144 GAAP basic
net income (loss) per common stockholder $ 0.02 $ 0.03 $
(0.04 ) $ 0.05 GAAP diluted net income (loss) per common
stockholder $ 0.02 $ 0.03 $ (0.04 ) $ 0.05 Basic
Non-GAAP net income per common stockholder $ 0.10 $ 0.11 $
0.25 $ 0.28 Diluted Non-GAAP net income per common
stockholder $ 0.10 $ 0.11 $ 0.23 $ 0.26
Weighted average shares outstanding: Basic 73,362,467
71,800,274 72,704,205 67,711,324
Diluted 79,365,576 76,078,563
77,831,545 72,425,863
Webcast and Conference Call Details
Management will host a webcast and conference call to discuss
third quarter 2018 financial results today, November 7, 2018
at 8:30 a.m. Eastern time. To access the call dial 866-572-9351 (US
and Canada) or 703-736-7482 (International) and when prompted
provide the participant passcode 3187279 to the operator. An audio
replay will be available at 855-859-2056 domestically or
404-537-3406 internationally, using passcode 3187279 through
November 14, 2018. In addition, a webcast of the conference call
will be available live on the Investor Relations section of the
Company’s website at www.themeetgroup.com and a replay of the
webcast will be available for 90 days.
About The Meet Group
The Meet Group (NASDAQ: MEET) is a portfolio of mobile social
entertainment apps designed to meet the universal need for human
connection. We leverage a powerful live-streaming video platform,
empowering our global community to forge meaningful connections.
Our primary apps, MeetMe©, LOVOO©, Skout©, and Tagged©, keep
millions of mobile daily active users entertained and engaged and
originate untold numbers of casual chats, friendships, dates, and
marriages. Our apps, available on iPhone, iPad, and Android in
multiple languages, use innovative products and sophisticated data
science to let our users stream live video, send gifts, chat, and
share photos. The Meet Group has a diversified revenue mix
consisting of in-app purchases, subscription, and advertising, and
we have offices in New Hope, Philadelphia, San Francisco, Dresden,
and Berlin. For more information, visit themeetgroup.com, and
follow us on Facebook, Twitter or LinkedIn.
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 fourth quarter 2018 and full
year 2018 revenue and Adjusted EBITDA will be in the projected
range, whether momentum will continue as expected, whether we have
set the stage for sustainable long-term revenue growth as expected,
whether our investment in livestreaming video will continue to
yield strong results, whether there is a return to seasonal trends
in advertising, whether there is an opportunity to grow ad revenue
in the fourth quarter and whether the opportunity to continue to
grow video engagement and revenue is significant. 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 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 the risk that our applications will not function easily or
otherwise as anticipated, the risk that we will not launch
additional features and upgrades as anticipated, the risk that
unanticipated events affect the functionality of our applications
with popular mobile operating systems, any changes in such
operating systems that degrade our mobile applications’
functionality and other unexpected issues which could adversely
affect usage on mobile devices. Further information on our risk
factors is contained in our filings with the Securities and
Exchange Commission (“SEC”), including the Form 10-K for the year
ended December 31, 2017 filed with the SEC on March 16,
2018 and our Quarterly Report on Form 10-Q for the quarters ended
March 31, 2018 and June 30, 2018 filed with the SEC on May 7, 2018
and August 2, 2018, respectively. 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 Measures
The Company defines mobile traffic and engagement metrics
(including MAU, DAU, chats per day, and new users per day) to
include mobile app traffic for all properties and mobile web
traffic for MeetMe, Skout and Lovoo.
The Company uses Adjusted EBITDA and Non-GAAP Net Income, which
are not calculated and presented in accordance with U.S. generally
accepted accounting principles (“GAAP”), in evaluating its
financial and operational decision making and as a means to
evaluate period-to period comparison. The Company uses these
non-GAAP financial measures for financial and operational
decision-making and as a means to evaluate period-to-period
comparisons. The Company presents these non-GAAP financial measures
because it believes them to be an important supplemental measure of
performance that is commonly used by securities analysts, investors
and other interested parties in the evaluation of companies in our
industry. We refer you to the reconciliations below.
The Company defines Adjusted EBITDA as earnings (or loss) from
operations before interest expense, benefit or provision for income
taxes, depreciation and amortization, stock-based compensation,
changes in warrant obligations, nonrecurring acquisition,
restructuring or other expenses, gain or loss on foreign currency
adjustment, and goodwill and long-lived asset impairment charges,
if any. The Company excludes stock-based compensation because it is
non-cash in nature. The Company defines Non-GAAP Net Income as
earnings (or loss) before benefit or provision for income taxes,
amortization on intangibles, non-recurring acquisition and
restructuring costs, goodwill and long-lived asset impairment
charges and non-cash stock-based compensation.
Non-GAAP financial measures should not be considered as an
alternative to net income, operating income, cash flow from
operating activities, as a measure of liquidity or any other
financial measure. They may not be indicative of the historical
operating results of the Company nor is it intended to be
predictive of potential future results. Investors should not
consider non-GAAP financial measures in isolation or as a
substitute for performance measures calculated in accordance with
GAAP.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20181107005450/en/
The Meet Group, Inc.Investor Contact:Leslie Arena,
267-714-6418larena@themeetgroup.comorMedia Contact:Brandyn
Bissinger, 267-446-7010bbissinger@themeetgroup.com
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