Leaf Group Announces Preliminary Third Quarter 2020 Results
October 05 2020 - 7:30AM
Leaf Group Ltd. (NYSE: LEAF), a diversified consumer internet
company, today provided a financial update. Leaf Group’s third
quarter 2020 revenue grew over 50% year-over-year, reflecting
strong Marketplaces growth through the end of September 2020,
partially offset by lower Media revenue. Leaf Group’s third quarter
2020 revenue was its highest since fiscal year 2013, driven by its
strongest year-over-year revenue growth rate since the Company went
public in 2011.
- Society6 Group Gross Transaction
Value (GTV) increased over 115% year-over-year in the third quarter
2020 driven by overall Direct-to-Consumer GTV growth of over 125%,
including over 140% growth in the US and over 50% growth
internationally. Society6 Group experienced strong eCommerce demand
across all its main categories of Wall Art, Home Décor, and
Technology and a record GTV quarter for Society6’s
Business-to-Business segment. In addition, Society6 Group delivered
record new customers in Q3 2020.
- Saatchi Art Group GTV increased
over 30% in Q3 2020 driven by strength in the Saatchi Art online
marketplace with GTV growth of over 70% and the recently-launched
The Other Art Fair Online Studios, offset by the postponement or
cancellation of its live fairs for the third quarter 2020. In
addition, Saatchi Art online marketplace set an all-time high for
quarterly GTV in Q3 2020.
- Media revenue
declined approximately 13% year-over-year in the third quarter
2020, driven by improving trends in direct advertising sales
compared to the second quarter of 2020.
- As of September 30, 2020, Leaf
Group had over $30 million in cash and cash
equivalents.
“We are very proud that Leaf Group delivered another record
quarter,” said Sean Moriarty, CEO of Leaf Group. “Our performance
in the third quarter of 2020 highlights the durability of our
portfolio strategy as we continue to deliver outstanding results in
a volatile macroeconomic environment. Consumer behavior is
continuing to shift online especially in our main categories of
Home, Art & Design and Fitness & Wellness, positioning the
Company for sustained growth and free cash flow generation. We
reiterate our 2022 Targets previously communicated in our Q2 2020
shareholder letter and earnings conference call of more than $250
million in revenue and $20 million in Adjusted EBITDA as guideposts
for investors based on increased confidence in the growth and
strength of our key brands and proven portfolio operating leverage.
We expect that selective, strategic tuck-in acquisitions would be
additive to these targets.”
Leaf Group expects to announce full third quarter financial
results in the ordinary course.
About Leaf Group
Leaf Group Ltd. (NYSE: LEAF) is a diversified consumer internet
company that builds enduring, digital first brands that reach
passionate audiences in large and growing lifestyle categories,
including Fitness & Wellness (Well+Good, Livestrong.com and
MyPlate App), and Home, Art & Design (Saatchi Art, Society6 and
Hunker). For more information about Leaf Group, visit
www.leafgroup.com.
Cautionary Information Regarding Forward-Looking
StatementsThis press release contains “forward-looking
statements” within the meaning of the safe harbor provisions of the
U.S. Private Securities Litigation Reform Act of 1995. The
forward-looking statements set forth in this press release include,
among other things, statements regarding the Company’s preliminary
financial results, the Company’s future financial performance, the
Company’s financial targets for future periods, and the Company’s
business and operational strategy. In addition, statements
containing words such as “may,” “believe,” “anticipate,” “expect,”
“intend,” “plan,” “project,” “projections,” “business outlook,”
“estimate,” “targets,” “guidance,” “guideposts,” or similar
expressions constitute forward-looking statements. Actual results
may differ materially from the results predicted, and reported
results should not be considered an indication of future
performance. These forward-looking statements involve risks and
uncertainties regarding the Company’s future financial performance;
could cause actual results or developments to differ materially
from those indicated due to a number of factors affecting Leaf
Group’s operations, markets, products and services; and are based
on current expectations, estimates and projections about the
Company’s industry, financial condition, operating performance and
results of operations, including certain assumptions related
thereto. Potential risks and uncertainties that could affect the
Company’s operating and financial results are described in Leaf
Group’s annual report on Form 10-K for the fiscal year ending
December 31, 2019 filed with the Securities and Exchange Commission
(http://www.sec.gov) on March 16, 2020, as such risks and
uncertainties may be updated from time to time in Leaf Group’s
quarterly reports on Form 10-Q filed with the Securities and
Exchange Commission, including, without limitation, information
under the captions “Risk Factors” and “Management's Discussion and
Analysis of Financial Condition and Results of Operations.” These
risks and uncertainties include, among others: risks associated
with political and economic instability domestically and
internationally including those resulting from the COVID-19
pandemic, which have and could lead to fluctuations in the
availability of credit, decreased business and consumer confidence
and increased unemployment; the Company’s ability to execute its
business plan to return to compliance with the continued listing
criteria of the New York Stock Exchange (“NYSE”); the Company’s
ability to continue to comply with applicable listing standards
within the available cure period; changes by the Small Business
Administration or other governmental authorities regarding the
Coronavirus Aid, Relief and Economic Security Act of 2020 (the
“CARES Act”), the Paycheck Protection Program (“PPP”) or related
administrative matters; the Company’s ability to comply with the
terms of the PPP loan and the CARES Act, including to use the
proceeds of the PPP loan; the Company’s ability to successfully
drive and increase traffic to its marketplaces and media
properties; changes in the methodologies of internet search
engines, including ongoing algorithmic changes made by Google, Bing
and Yahoo!; the Company’s ability to attract new and repeat
customers and artists to its marketplaces and successfully grow its
marketplace businesses; the potential impact on advertising-based
revenue from lower ad unit rates, a reduction in online advertising
spending, a loss of advertisers, lower advertising yields,
increased availability of ad blocking software, particularly on
mobile devices and/or ongoing changes in ad unit formats; the
Company’s dependence on various agreements with a specific business
partner for a significant portion of its advertising revenue; the
effects of shifting consumption of media content and online
shopping from desktop to mobile devices and/or social media
platforms; the Company’s history of incurring net operating losses;
the Company’s ability to obtain capital when desired on favorable
terms; potential write downs, reserves against or impairment of
assets including receivables, goodwill, intangibles (including
media content) or other assets; the Company’s ability to
effectively integrate, manage, operate and grow acquired
businesses; the Company’s ability to retain key personnel; the
Company’s ability to prevent any actual or perceived security
breaches; the Company’s ability to expand its business
internationally; the review of strategic alternatives; the
Company’s ability to generate long-term value for its stockholders;
and any future actions that may be taken by activist stockholders.
From time to time, the Company may consider acquisitions or
divestitures that, if consummated, could be material. Any
forward-looking statements regarding financial metrics are based
upon the assumption that no such acquisition or divestiture is
consummated during the relevant periods. If an acquisition or
divestiture were consummated, actual results could differ
materially from any forward-looking statements. Any forward-looking
statement made by the Company in this press release is based only
on information currently available to the Company and speaks only
as of the date on which it is made. The Company undertakes no
obligation to revise or update any forward-looking information,
whether written or oral, that may be made from time to time,
whether as a result of new information, future developments or
otherwise, except as required by law, and may not provide this type
of information in the future. Investor
ContactsShawn MilneInvestor
Relations415-264-3419shawn.milne@leafgroup.com
Media ContactsSharna DadukVP,
CommunicationsSharna.daduk@leafgroup.com
John Christiansen/Matt ReidSard Verbinnen &
Co415-618-8750/310-201-2040LeafGroup-SVC@sardverb.com
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