The Meet Group, Inc. (NASDAQ: MEET), a leading provider of
interactive livestreaming solutions, today reported financial
results for its third quarter ended September 30, 2019.
Third Quarter 2019 Financial Highlights
- Total revenue of $52.6 million, up 15% from the prior year
quarter.
- GAAP net income of $3.0 million, or $0.04 per diluted share,
compared to a GAAP net income of $1.3 million or $0.02 per diluted
share in the prior year quarter.
- Adjusted EBITDA of $11.0 million, compared to Adjusted EBITDA
of $8.7 million in the prior year quarter.
- Non-GAAP net income of $10.1 million, or $0.13 per diluted
share, compared to $7.6 million, or $0.10 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 had a strong third quarter and we are off to a good start in
the fourth quarter,” said Geoff Cook, Chief Executive Officer of
The Meet Group. “Our product strategy and execution contributed to
growing revenue and adjusted EBITDA, resulting in record-high free
cash flow in the third quarter that we used to repurchase our
stock. With the launch of Streamer Levels and one-on-one video
chat, we are giving users even more reasons to engage in video.
Just last week we further expanded our product portfolio with the
launch of NextDate, our new livestreaming dating game. While early,
in markets where NextDate is available, we’re seeing an
approximately 20% increase in daily video users versus September,
the month prior to launch.
“Video revenue for the third quarter grew approximately 85% from
the prior year quarter to $20.3 million,” continued Cook. “Global
average revenue per daily active video user was $0.27 cents in the
quarter, and across our apps we had an average of 829,000 daily
video users (20% of our total mobile daily active users where video
is available). We expect to grow video revenue in the fourth
quarter by 10-16% sequentially as new products and features
contribute to increasing user engagement. Video revenue in October
exceeded video revenue in every month of the third quarter.
Furthermore the Company expects November and December video revenue
to continue to increase from October.
“Advertising results for the quarter were also solid. Mobile ad
revenue, which comprises approximately 90% of our total advertising
revenue, grew year-over-year for the first time since the first
quarter of 2017. We believe this progress sets the stage for
continued positive momentum in the fourth quarter of 2019 and
throughout 2020.
"In the third quarter we repurchased 3.4 million shares of our
stock for $12 million, directing 100% of our free cash flow in the
quarter toward repurchases. Since authorizing our share repurchase
plan in June 2019, the Company has repurchased $17.7 million (4.8
million shares) through November 5, 2019. We expect to continue to
repurchase shares pursuant to our share repurchase program.
“Looking to the fourth quarter and longer term, we believe we
have compelling products that position us well for future growth.
We remain confident that our product pipeline and capital
allocation strategy will continue to deliver value to our
shareholders.”
Third Quarter Financial Results
For the third quarter of 2019, the Company reported revenue of
$52.6 million, an increase of $6.9 million, or 15%, from $45.7
million in the third quarter of 2018. GAAP net income for the third
quarter of 2019 was $3.0 million, or $0.04 per diluted share,
compared to GAAP net income of $1.3 million or $0.02 per diluted
share in the third quarter of 2018. Adjusted EBITDA for the third
quarter of 2019 was $11.0 million, compared to $8.7 million in the
third quarter of 2018. Non-GAAP net income for the third quarter of
2019 was $10.1 million, or $0.13 per diluted share, compared to
$7.6 million, or $0.10 per diluted share, in the third quarter of
2018.
The Company ended the quarter with $27.5 million in cash and
cash equivalents.
Company Outlook
The Company is providing the following outlook for the fourth
quarter and full year 2019.
Fourth quarter 2019:
- Revenue in the range of $56.9 million to $58.4 million.
- Adjusted EBITDA in the range of $12.6 million to $13.1
million.
Full year 2019:
- Revenue in the range of $211.0 million to $212.5 million
- Adjusted EBITDA in the range of $41.5 million to $42.0
million.
THE MEET GROUP, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited)
September 30,
2019
December 31,
2018
Assets:
Current Assets:
Cash and cash equivalents
$
27,488,790
$
28,365,725
Accounts receivable, net of allowance of
$600,070 and $383,579 as of September 30, 2019 and December 31,
2018, respectively
23,922,049
27,148,484
Prepaid expenses and other current
assets
5,177,333
4,911,057
Total current assets
56,588,172
60,425,266
Goodwill
155,307,593
148,132,873
Property and equipment, net
3,832,875
4,633,764
Operating lease right-of-use assets
4,995,799
—
Intangible assets, net
31,444,141
36,558,439
Deferred taxes
15,380,576
15,648,572
Other assets
1,541,514
2,453,255
Total assets
$
269,090,670
$
267,852,169
Liabilities and Stockholders'
Equity:
Current Liabilities:
Accounts payable
$
4,672,207
$
9,071,193
Accrued liabilities
20,070,961
19,112,303
Current portion of long-term debt, net
3,500,000
18,566,584
Current portion of finance lease
obligations
12,913
134,067
Current portion of operating lease
liabilities
2,138,029
—
Deferred revenue
4,071,239
4,620,690
Total current liabilities
34,465,349
51,504,837
Long-term finance lease obligations
8,323
58,683
Long-term debt, net
31,251,928
18,087,956
Long-term operating lease liabilities
2,900,105
—
Long-term derivative liability
636,612
940,216
Other liabilities
871,084
39,651
Total liabilities
70,133,401
70,631,343
Commitments and contingencies
Stockholders' Equity:
Preferred stock, $0.001 par value;
authorized - 5,000,000 shares; no shares issued and outstanding as
of September 30, 2019 and December 31, 2018
—
—
Common stock, $0.001 par value; authorized
- 100,000,000 shares; 72,834,032 and 74,697,526 shares issued and
outstanding as of September 30, 2019 and December 31, 2018,
respectively
72,834
74,700
Additional paid-in capital
428,106,985
419,455,818
Accumulated deficit
(226,077,248
)
(220,276,025
)
Accumulated other comprehensive loss
(3,145,302
)
(2,033,667
)
Total stockholders’ equity
198,957,269
197,220,826
Total liabilities and stockholders’
equity
$
269,090,670
$
267,852,169
THE MEET GROUP, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2019
2018
2019
2018
Revenues
$
52,621,250
$
45,716,053
$
154,134,591
$
126,155,591
Operating costs and expenses:
Sales and marketing
8,748,021
8,753,156
25,648,417
23,554,635
Product development and content
30,573,574
26,134,682
91,846,746
72,647,507
General and administrative
5,320,424
4,938,844
16,140,643
15,562,125
Depreciation and amortization
3,451,197
3,423,929
10,079,319
10,558,712
Acquisition and restructuring
244,432
416,141
748,881
4,802,694
Total operating costs and expenses
48,337,648
43,666,752
144,464,006
127,125,673
Income (loss) from operations
4,283,602
2,049,301
9,670,585
(970,082
)
Other income (expense):
Interest income
28,752
3,823
88,746
13,773
Interest expense
(300,319
)
(559,345
)
(1,031,379
)
(1,838,325
)
(Loss) gain on foreign currency
transactions
(27,051
)
(6,229
)
(94,640
)
101,030
Gain on disposal of assets
40,376
—
40,376
—
Other items of income, net
2,030
6,527
4,792
28,154
Total other expense
(256,212
)
(555,224
)
(992,105
)
(1,695,368
)
Income (loss) before income tax
expense
4,027,390
1,494,077
8,678,480
(2,665,450
)
Income tax expense
(1,036,410
)
(196,146
)
(2,226,075
)
(484,552
)
Net income (loss)
$
2,990,980
$
1,297,931
$
6,452,405
$
(3,150,002
)
Basic and diluted net income (loss) per
share:
Basic net income (loss) per share
$
0.04
$
0.02
$
0.09
$
(0.04
)
Diluted net income (loss) per share
$
0.04
$
0.02
$
0.08
$
(0.04
)
Weighted-average shares outstanding:
Basic
74,674,981
73,362,467
75,056,593
72,704,205
Diluted
76,205,022
79,365,576
77,836,975
72,704,205
THE MEET GROUP, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended
September 30,
2019
2018
Cash flows from operating
activities:
Net income (loss)
$
6,452,405
$
(3,150,002
)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization
10,079,319
10,558,712
Amortization of right-of-use assets
1,902,760
—
Stock-based compensation expense
8,321,345
7,026,991
Deferred tax expense (benefit)
211,533
(694,951
)
Gain on disposal of assets
(40,376
)
—
Loss (gain) on foreign currency
transactions
94,640
(101,030
)
Bad debt expense
1,661,987
408,998
Non-cash interest expense
214,063
261,373
Changes in derivative financial
instruments
—
(18,412
)
Changes in contingent consideration
obligations
111,417
—
Changes in operating assets and
liabilities:
Accounts receivable
1,878,915
1,302,954
Prepaid expenses, other current assets and
other assets
2,355,628
(2,326,004
)
Accounts payable and accrued
liabilities
(6,080,069
)
4,414,400
Deferred revenue
(510,352
)
515,743
Net cash provided by operating
activities
26,653,215
18,198,772
Cash flows from investing
activities:
Purchases of property and equipment
(1,158,070
)
(404,446
)
Acquisition of business, net of cash
acquired
(11,807,925
)
—
Net cash used in investing
activities
(12,965,995
)
(404,446
)
Cash flows from financing
activities:
Proceeds from exercise of stock
options
702,717
824,307
Repurchases of common stock
(12,257,073
)
—
Payments of finance leases
(167,378
)
(211,290
)
Proceeds from revolving loan
7,000,000
—
Proceeds from term loan, net
34,954,373
—
Payments for restricted stock awards
withheld for taxes
(371,316
)
(306,127
)
Payments of loan origination costs
(125,170
)
—
Payments of revolving loan
(7,000,000
)
—
Payments of contingent consideration
—
(5,000,000
)
Payments of term loan
(36,940,158
)
(15,559,842
)
Net cash used in financing
activities
(14,204,005
)
(20,252,952
)
Change in cash and cash equivalents prior
to effect of foreign currency exchange rate
(516,785
)
(2,458,626
)
Effect of foreign currency exchange
rate
(360,150
)
(271,982
)
Net decrease in cash and cash
equivalents
(876,935
)
(2,730,608
)
Cash and cash equivalents at beginning
of period
28,365,725
25,052,995
Cash and cash equivalents at end of
period
$
27,488,790
$
22,322,387
Supplemental disclosure of cash flow
information:
Cash paid for interest
$
865,260
$
1,598,781
THE MEET GROUP, INC.
DISAGGREGATION OF
REVENUES
(UNAUDITED)
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
$
%
$
%
$
%
$
%
User pay revenue:
Video
$
20,333,310
38.6
%
$
10,968,643
24.0
%
$
61,841,899
40.1
%
$
24,093,019
19.1
%
Subscription and other in-app products
15,532,335
29.5
%
17,090,200
37.4
%
46,770,156
30.4
%
51,941,907
41.2
%
Total user pay revenue
35,865,645
68.1
%
28,058,843
61.4
%
108,612,055
70.5
%
76,034,926
60.3
%
Advertising
16,755,605
31.9
%
17,657,210
38.6
%
45,522,536
29.5
%
50,120,665
39.7
%
Total revenues
$
52,621,250
100.0
%
$
45,716,053
100.0
%
$
154,134,591
100.0
%
$
126,155,591
100.0
%
THE MEET GROUP, INC. AND
SUBSIDIARIES
RECONCILIATION OF GAAP NET
INCOME TO ADJUSTED EBITDA
(UNAUDITED)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2019
2018
2019
2018
Net income (loss)
$
2,990,980
$
1,297,931
$
6,452,405
$
(3,150,002
)
Interest expense
300,319
559,345
1,031,379
1,838,325
Income tax expense
1,036,410
196,146
2,226,075
484,552
Depreciation and amortization
3,451,197
3,423,929
10,079,319
10,558,712
Stock-based compensation expense
3,031,292
2,767,196
8,321,345
7,026,991
Acquisition and restructuring
244,432
416,141
748,881
4,802,694
Gain on disposal of assets
(40,376
)
—
(40,376
)
—
Loss (gain) on foreign currency
transactions
27,051
6,229
94,640
(101,030
)
Adjusted EBITDA
$
11,041,305
$
8,666,917
$
28,913,668
$
21,460,242
THE MEET GROUP, INC. AND
SUBSIDIARIES
RECONCILIATION OF GAAP NET
INCOME TO NON-GAAP NET INCOME
(UNAUDITED)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2019
2018
2019
2018
GAAP Net income (loss)
$
2,990,980
$
1,297,931
$
6,452,405
$
(3,150,002
)
Stock-based compensation expense
3,031,292
2,767,196
8,321,345
7,026,991
Amortization of intangibles
2,791,272
2,904,120
8,130,836
8,915,214
Income tax expense
1,036,410
196,146
2,226,075
484,552
Acquisition and restructuring
244,432
416,141
748,881
4,802,694
Non-GAAP net income
$
10,094,386
$
7,581,534
$
25,879,542
$
18,079,449
GAAP basic net income (loss) per share
$
0.04
$
0.02
$
0.09
$
(0.04
)
GAAP diluted net income (loss) per
share
$
0.04
$
0.02
$
0.08
$
(0.04
)
Basic Non-GAAP net income per share
$
0.14
$
0.10
$
0.34
$
0.25
Diluted Non-GAAP net income per share
$
0.13
$
0.10
$
0.33
$
0.23
Weighted-average shares outstanding:
Basic
74,674,981
73,362,467
75,056,593
72,704,205
Diluted
76,205,022
79,365,576
77,836,975
77,831,545
THE MEET GROUP, INC. AND
SUBSIDIARIES
RECONCILIATION OF NET CASH
FLOW PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW
(UNAUDITED)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2019
2018
2019
2018
Net cash provided by operating
activities
$
12,686,403
$
8,600,354
$
26,653,215
$
18,198,772
Less: Purchase of property and
equipment
470,345
148,055
1,158,070
404,446
Free cash flow
$
12,216,058
$
8,452,299
$
25,495,145
$
17,794,326
Webcast and Conference Call Details
Management will host a webcast and conference call to discuss
third quarter 2019 financial results today, November 7, 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 5917786 to the operator. An audio
replay will be available at 855-859-2056 domestically or
404-537-3406 internationally, using passcode 5917786 through
November 14, 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 the start of our fourth
quarter will be indicative of the rest of the quarter; the launch
of Streamer Levels and one-on-one video chat will give users more
reasons to engage in video; whether the increase in daily video
users following the release of NextDate will continue; whether we
will grow video revenue and daily active video users in the fourth
quarter as expected; whether our new products and features will
contribute to increasing user engagement as expected; whether
November and December video revenue to continue to increase from
October; whether video revenue in November and December 2019 will
continue to grow as expected; whether we will experience positive
ad momentum in the fourth quarter and throughout 2020; whether we
will continue our share repurchase program as expected; whether in
the fourth quarter and beyond our video products will position us
well for future growth; whether our product pipeline and capital
allocation strategy will continue to deliver value to our
shareholders; whether fourth quarter and full year 2019 revenue
will be within our predicted range; and whether fourth quarter and
full year 2019 adjusted EBITDA will be within our predicted range.
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 Reports on Form 10-Q for the quarters ended March 31,
2019 and June 30, 2019 filed with the SEC on May 9, 2019 and July
31, 2019, 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 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, Non-GAAP Net Income and Free
Cash Flow, 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,
non-recurring acquisition, restructuring or other expenses, gain or
loss on disposal of assets, gain or loss on foreign currency
transactions, bad debt expense outside the normal range, 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. The Company defines Free Cash Flow as net
cash provided by or used in its operating activities, minus
purchases of property and equipment, as shown in the consolidated
statements of cash flows.
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/20191107005472/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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