The Meet Group, Inc. (NASDAQ: MEET), a leading provider of
interactive livestreaming solutions, today reported financial
results for its second quarter ended June 30, 2019.
Second Quarter 2019 Financial Highlights
- Total revenue of $52.0 million, up 22% from the prior year
quarter.
- GAAP net income of $2.2 million, or $0.03 per diluted share,
compared to a GAAP net loss of $0.2 million or $0.00 per diluted
share in the prior year quarter.
- Adjusted EBITDA of $9.8 million, compared to Adjusted EBITDA of
$7.6 million in the prior year quarter.
- Non-GAAP net income of $8.8 million, or $0.11 per diluted
share, compared to $6.4 million, or $0.08 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.)
“Strong execution in video continued to drive our business
growth,” said Geoff Cook, Chief Executive Officer of The Meet
Group. “We grew revenue 22% from the prior year quarter to a new
record high fueled by video revenue growth of 150% over the same
period. We increased adjusted EBITDA by 29% and we generated $10.2
million in free cash flow – the highest quarterly free cash flow in
our history.
“Our video results in the quarter were solid,” continued Cook.
“We grew daily active video users (“vDAU”) on our platform to
892,000, or roughly 21% of users on our apps where Live is
available. Average video revenue per daily active video user
(“vARPDAU”) was $0.26 in the quarter, up from $0.15 for the prior
year quarter and flat sequentially on higher video daily active
users.
“During the quarter we completed the development of several new
products including Levels and 1x1 video chat, and we launched those
products on our MeetMe app earlier this month. We also further
strengthened user safety on our platform with the introduction of
industry-first safety practices including: prominent abuse
reporting; an ongoing safety education pledge; and more stringent
content moderation standards. We now require streamers to review
and acknowledge our standards prior to initiating every new stream,
and we are developing a comprehensive safety pledge system to
educate users on dating and livestreaming safety.
“We believe these enhancements will set the foundation for the
successful launch of our first livestreaming dating game in the
fourth quarter of this year. We believe that continuous
improvements in our safety practices will provide a solid
foundation on which we can grow video revenue over the long term,
although we note that in the short-run we expect some pressure to
video revenue as we educate our community on our updated
processes.
“Looking to the opportunity ahead in video, we continue to
execute against our long-term plan to generate $200 million of
annualized video revenue by year end 2021. We believe we can grow
vDAU share to 25% and beyond by early 2020 on the back of the
successful launch of our livestreaming dating game and that we will
continue to grow vARPDAU with our recent launch of Levels and VIP
badges. As such, we expect to aggressively buyback our stock
throughout the second half of this year per our recently instituted
$30 million share repurchase authorization.”
Second Quarter Financial Results
For the second quarter of 2019, the Company reported revenue of
$52.0 million, an increase of $9.2 million, or 22%, from $42.8
million in the second quarter of 2018. GAAP net income for the
second quarter of 2019 was $2.2 million, or $0.03 per diluted
share, compared to a GAAP net loss of $0.2 million or $0.00 per
diluted share in the second quarter of 2018. Adjusted EBITDA for
the second quarter of 2019 was $9.8 million, compared to $7.6
million in the second quarter of 2018. Non-GAAP net income for the
second quarter of 2019 was $8.8 million, or $0.11 per diluted
share, compared to $6.4 million, or $0.08 per diluted share, in the
second quarter of 2018.
The Company ended the quarter with $26.1 million in cash and
cash equivalents.
Company Outlook
The Company is providing the following outlook for the third
quarter and full year 2019.
Third quarter 2019:
- Revenue in the range of $50.5 million to $51.0 million
- Adjusted EBITDA in the range of $9.3 million to $9.5
million
Full year 2019:
- Revenue to be within the lower end of the previously issued
range of $210.0 million to $215.0 million
- Adjusted EBITDA to continue to be in the range of previously
issued guidance of $39.0 million to $42.0 million
THE MEET GROUP, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(UNAUDITED)
June 30, 2019
December 31, 2018
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$
26,052,704
$
28,365,725
Accounts receivable, net of allowance of
$1,363,319 and $383,579 at June 30, 2019 and December 31, 2018,
respectively
24,347,153
27,148,484
Prepaid expenses and other current
assets
6,063,452
4,911,057
Total current assets
56,463,309
60,425,266
Goodwill
157,388,320
148,132,873
Property and equipment, net
4,027,033
4,633,764
Operating lease right-of-use assets,
net
5,498,822
—
Intangible assets, net
34,648,534
36,558,439
Deferred taxes
15,318,336
15,648,572
Other assets
1,584,348
2,453,255
Total assets
$
274,928,702
$
267,852,169
LIABILITIES AND STOCKHOLDERS’
EQUITY
CURRENT LIABILITIES:
Accounts payable
$
5,402,910
$
9,071,193
Accrued liabilities
19,030,861
19,112,303
Current portion of long-term debt
15,000,000
18,566,584
Current portion of capital lease
obligations
101,446
134,067
Current portion of operating lease
liabilities
2,203,055
—
Deferred revenue
4,677,161
4,620,690
Total current liabilities
46,415,433
51,504,837
Long-term capital lease obligations, less
current portion
12,005
58,683
Long-term debt, less current portion,
net
17,681,962
18,087,956
Long-term operating lease liabilities,
less current portion
3,341,631
—
Long-term derivative liability
231,092
940,216
Other liabilities
848,334
39,651
Total liabilities
68,530,457
70,631,343
STOCKHOLDERS’ EQUITY:
Preferred stock, $.001 par value;
authorized - 5,000,000 shares; no shares issued and outstanding at
June 30, 2019 and December 31, 2018
—
—
Common stock, $.001 par value; authorized
- 100,000,000 shares; 76,227,583 and 74,697,526 shares issued and
outstanding at June 30, 2019 and December 31, 2018,
respectively
76,228
74,700
Additional paid-in capital
425,075,744
419,455,818
Accumulated deficit
(216,814,600
)
(220,276,025
)
Accumulated other comprehensive loss
(1,939,127
)
(2,033,667
)
Total stockholders’ equity
206,398,245
197,220,826
Total liabilities and stockholders’
equity
$
274,928,702
$
267,852,169
THE MEET GROUP, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended June
30,
Six Months Ended June
30,
2019
2018
2019
2018
Revenues
$
52,000,104
$
42,801,745
$
101,513,341
$
80,439,538
Operating costs and expenses:
Sales and marketing
9,059,530
7,753,486
16,900,396
14,801,479
Product development and content
30,149,797
24,411,288
61,273,172
46,512,825
General and administrative
5,892,437
5,154,103
10,820,219
10,623,281
Depreciation and amortization
3,430,018
3,505,180
6,628,122
7,134,783
Acquisition and restructuring
25,454
1,036,602
504,449
4,386,553
Total operating costs and expenses
48,557,236
41,860,659
96,126,358
83,458,921
Income (loss) from operations
3,442,868
941,086
5,386,983
(3,019,383
)
Other income (expense):
Interest income
27,605
2,742
59,994
9,950
Interest expense
(328,196
)
(671,294
)
(731,060
)
(1,278,980
)
Gain (loss) on foreign currency
transactions
(2,380
)
4,216
(67,589
)
107,259
Other
(787
)
28,571
2,762
21,627
Total other expense
(303,758
)
(635,765
)
(735,893
)
(1,140,144
)
Income (loss) before income tax
expense
3,139,110
305,321
4,651,090
(4,159,527
)
Income tax expense
(935,284
)
(540,593
)
(1,189,665
)
(288,406
)
Net income (loss)
$
2,203,826
$
(235,272
)
$
3,461,425
$
(4,447,933
)
Basic and diluted net income (loss) per
common stockholder:
Basic net income (loss) per common
stockholder
$
0.03
$
—
$
0.05
$
(0.06
)
Diluted net income (loss) per common
stockholder
$
0.03
$
—
$
0.04
$
(0.06
)
Weighted average shares outstanding:
Basic
75,648,621
72,753,487
75,250,562
72,369,619
Diluted
78,508,559
72,753,487
78,656,115
72,369,619
THE MEET GROUP, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended June
30,
2019
2018
Cash flows from operating
activities:
Net income (loss)
$
3,461,425
$
(4,447,933
)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization
6,628,122
7,134,783
Amortization right-of-use assets
1,293,657
—
Stock-based compensation expense
5,290,053
4,259,795
Deferred taxes
268,015
(441,417
)
(Gain) loss on foreign currency
transactions
67,589
(107,259
)
Bad debt expense
909,140
290,426
Amortization of loan origination costs
94,006
164,313
Change in contingent consideration
obligations
63,667
—
Changes in operating assets and
liabilities:
Accounts receivable
2,414,200
2,141,980
Prepaid expenses, other current assets and
other assets
(483,916
)
(2,426,711
)
Accounts payable and accrued
liabilities
(6,019,870
)
2,344,109
Deferred revenue
(19,276
)
686,332
Net cash provided by operating
activities
13,966,812
9,598,418
Cash flows from investing
activities:
Purchase of property and equipment
(687,725
)
(256,391
)
Acquisition of business, net of cash
acquired
(11,807,925
)
—
Net cash used in investing
activities
(12,495,650
)
(256,391
)
Cash flows from financing
activities:
Proceeds from exercise of stock
options
702,717
232,416
Payments of capital leases
(77,507
)
(142,043
)
Proceeds from borrowings of debt
7,000,000
—
Payments for restricted stock awards
withheld for taxes
(371,316
)
(306,120
)
Payments of contingent consideration
—
(5,000,000
)
Payments on long-term debt
(11,066,584
)
(7,500,000
)
Net cash used in financing
activities
(3,812,690
)
(12,715,747
)
Change in cash and cash equivalents prior
to effects of foreign currency exchange rate
(2,341,528
)
(3,373,720
)
Effect of foreign currency exchange rate
(translation)
28,507
(256,818
)
Net decrease in cash and cash
equivalents
(2,313,021
)
(3,630,538
)
Cash and cash equivalents at beginning
of period
28,365,725
25,052,995
Cash and cash equivalents at end of
period
$
26,052,704
$
21,422,457
Supplemental disclosure of cash flow
information:
Cash paid for interest
$
630,130
$
1,110,448
THE MEET GROUP, INC. AND
SUBSIDIARIES
RECONCILIATION OF TOTAL
REVENUE
(UNAUDITED)
Three Months Ended June
30,
Six Months Ended June
30,
2019
2018
2019
2018
$
%
$
%
$
%
$
%
User pay revenue
$
36,921,301
71.0
%
$
25,570,553
59.7
%
$
72,746,410
71.7
%
$
47,976,083
59.6
%
Advertising
15,078,803
29.0
%
17,231,192
40.3
%
28,766,931
28.3
%
32,463,455
40.4
%
Total revenue
$
52,000,104
100.0
%
$
42,801,745
100.0
%
$
101,513,341
100.0
%
$
80,439,538
100.0
%
THE MEET GROUP, INC. AND
SUBSIDIARIES
RECONCILIATION OF GAAP NET
INCOME TO ADJUSTED EBITDA
(UNAUDITED)
Three Months Ended June
30,
Six Months Ended June
30,
2019
2018
2019
2018
Net income (loss)
$
2,203,826
$
(235,272
)
$
3,461,425
$
(4,447,933
)
Interest expense
328,196
671,294
731,060
1,278,980
Income tax expense
935,284
540,593
1,189,665
288,406
Depreciation and amortization
3,430,018
3,505,180
6,628,122
7,134,783
Stock-based compensation expense
2,865,336
2,090,870
5,290,053
4,259,795
Acquisition and restructuring
25,454
1,036,602
504,449
4,386,553
(Gain) loss on foreign currency
transactions
2,380
(4,216
)
67,589
(107,259
)
Adjusted EBITDA
$
9,790,494
$
7,605,051
$
17,872,363
$
12,793,325
GAAP basic net income (loss) per common
stockholder
$
0.03
$
—
$
0.05
$
(0.06
)
GAAP diluted net income (loss) per common
stockholder
$
0.03
$
—
$
0.04
$
(0.06
)
Basic adjusted EBITDA per common
stockholder
$
0.13
$
0.10
$
0.24
$
0.18
Diluted adjusted EBITDA per common
stockholder
$
0.12
$
0.10
$
0.23
$
0.16
Weighted average shares outstanding:
Basic
75,648,621
72,753,487
75,250,562
72,369,619
Diluted
78,508,559
78,240,935
78,656,115
77,574,279
THE MEET GROUP, INC. AND
SUBSIDIARIES
RECONCILIATION OF GAAP NET
INCOME TO NON-GAAP NET INCOME
(UNAUDITED)
Three Months Ended June
30,
Six Months Ended June
30,
2019
2018
2019
2018
GAAP Net income (loss)
$
2,203,826
$
(235,272
)
$
3,461,425
$
(4,447,933
)
Stock-based compensation expense
2,865,336
2,090,870
5,290,053
4,259,795
Amortization of intangibles
2,777,661
2,954,485
5,339,564
6,011,094
Income tax expense
935,284
540,593
1,189,665
288,406
Acquisition and restructuring
25,454
1,036,602
504,449
4,386,553
Non-GAAP net income
$
8,807,561
$
6,387,278
$
15,785,156
$
10,497,915
GAAP basic net income (loss) per common
stockholder
$
0.03
$
—
$
0.05
$
(0.06
)
GAAP diluted net income (loss) per common
stockholder
$
0.03
$
—
$
0.04
$
(0.06
)
Basic Non-GAAP net income per common
stockholder
$
0.12
$
0.09
$
0.21
$
0.15
Diluted Non-GAAP net income per common
stockholder
$
0.11
$
0.08
$
0.20
$
0.14
Weighted average shares outstanding:
Basic
75,648,621
72,753,487
75,250,562
72,369,619
Diluted
78,508,559
78,240,935
78,656,115
77,574,279
THE MEET GROUP, INC. AND
SUBSIDIARIES
RECONCILIATION OF OPERATING
CASH FLOW TO FREE CASH FLOW
(UNAUDITED)
Three Months Ended June
30,
Six Months Ended June
30,
2019
2018
2019
2018
Net cash provided by operating
activities
$
10,603,897
$
2,162,946
$
13,966,812
$
9,598,418
Less: purchase of property and
equipment
405,084
83,749
687,725
256,391
Free cash flow
$
10,198,813
$
2,079,197
$
13,279,087
$
9,342,027
Webcast and Conference Call Details
Management will host a webcast and conference call to discuss
second quarter 2019 financial results today, July 31, 2019 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 7712889 to the operator. An audio replay
will be available at 855-859-2056 domestically or 404-537-3406
internationally, using passcode 7712889 through August 7,2019. 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 leading provider of
interactive livestreaming solutions designed to meet the universal
need for human connection. Our ecosystem of livestreaming apps
enables users around the world to interact through one-to-many
livestreaming broadcasts and text-based conversations. Our top
apps, MeetMe®, LOVOO®, Skout®, Tagged® and Growlr®, deliver live
interactions and meaningful connections to millions of users daily.
Headquartered in New Hope, PA, we have offices in Philadelphia, San
Francisco, Dresden, and Berlin. The Meet Group is committed to
safety. You can find a description of current safety practices
here: https://www.themeetgroup.com/safety-practices/. 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 third quarter 2019 and full
year 2019 revenue and Adjusted EBITDA will be in the projected
outlook ranges; whether strong execution in video will continue to
drive our business growth; whether we will continue to require
streamers to review and acknowledge our standards prior to
initiating every new stream; whether we will develop a
comprehensive safety pledge system to educate users on dating and
livestreaming safety as anticipated; whether our safety
enhancements will set the foundation for the successful launch of
our first livestreaming dating game; whether we will launch our
livestreaming dating game in the fourth quarter as anticipated;
whether our safety enhancements will set the foundation for the
successful launch of our first livestreaming dating game in the
fourth quarter of this year; whether we will launch our
livestreaming dating game in the fourth quarter of this year;
whether we will continuously improve our safety practices as
anticipated and whether such improvements will provide a solid
foundation on which we can grow video revenue over the long term;
whether in the short-term there will be there will be pressure to
video revenue as we educate our community on our updated processes;
whether we will generate $200 million of annualized video revenue
by year end 2021; whether we will grow vDAU share to 25% and beyond
by early 2020 on the back of the successful launch of our dating
game; whether we will continue to grow vARPDAU with Levels and 1x1
video chat; and whether we will aggressively buyback our stock
throughout the second half of this year as anticipated. 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,” “outlook,” “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, 2018 filed with the SEC on March 8, 2019 and our
Quarterly Report on Form 10-Q for the quarter ended March 31, 2019
filed with the SEC on May 9, 2019. 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 defines Video
Daily Active User (vDAU) as a registered user of one of our
platforms who has logged in and visited the Live feature, either as
a broadcaster or viewer, on the day of measurement. The Company
defines Average Video Revenue per Daily Active User (vARPDAU) as
the average daily revenue per vDAU. The Company uses these user
metrics for financial and operational decision-making and as a
means to evaluate period-to-period comparisons. The Company
presents user metrics 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 its industry and because it believes
that these metrics provide useful information to investors
regarding the Company’s financial condition and results of
operations. There is no directly comparable U.S. generally accepted
accounting principles (GAAP) measure to vARPDAU provided in the
Company’s financial statements and therefore no reconciliation is
provided.
The Company uses Adjusted EBITDA and Non-GAAP Net Income, which
are not calculated and presented in accordance with 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 for these
historical non-GAAP financial measures to their directly comparable
GAAP financial measures. Information reconciling forward-looking
Adjusted EBITDA to GAAP financial measures is unavailable to the
Company without unreasonable effort. The Company is not able to
provide reconciliations of Adjusted EBITDA to GAAP financial
measures because certain items required for such reconciliations
are outside of the Company’s control and/or cannot be reasonably
predicted, such as the provision for income taxes. Preparation of
such reconciliations would require a forward-looking balance sheet,
statement of income and statement of cash flow, prepared in
accordance with GAAP, and such forward-looking financial statements
are unavailable to the Company without unreasonable effort. The
Company provides a range for its adjusted EBITDA outlook that it
believes will be achieved, however it cannot accurately predict all
the components of the Adjusted EBITDA calculation.
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 disposal of
assets, 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/20190731005496/en/
Investor Contact: Leslie Arena
larena@themeetgroup.com 267 714 6418
Media Contact: Brandyn Bissinger
bbissinger@themeetgroup.com 267 446 7010
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