UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 3, 2016 (March 2, 2016)
Tremor Video, Inc.
(Exact name of registrant as specified in its charter)
Delaware |
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001-35982 |
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20-5480343 |
(State or other jurisdiction |
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(Commission |
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(IRS Employer |
of incorporation) |
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File Number) |
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Identification No.) |
1501 Broadway, 8th Floor |
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New York, New York |
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10036 |
(Address of principal executive offices) |
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(Zip Code) |
Registrants telephone number, including area code: (646) 723-5300
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition.
On March 3, 2016, Tremor Video, Inc., or the Company, issued a press release announcing its financial results for the quarter and year ended December 31, 2015.
In addition, as more fully discussed below in Item 4.02, on March 2, 2016, the Company concluded that its previously filed interim financial statements as of and for the quarterly periods ending March 31, June 30, and September 30, 2015, or the Relevant Periods, should no longer be relied upon. The Companys press release includes restated financial results for the Relevant Periods. Following the restatement, previously reported gross profit, net loss and Adjusted EBITDA are unchanged for the Relevant Periods.
The Companys press release is furnished as Exhibit 99.1 to this report. The information included in this Item 2.02 and the Exhibit attached hereto shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing.
Item 4.02. Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review.
On March 2, 2016, management and the Audit Committee of the Board of Directors of the Company, or the Audit Committee, determined that the Companys interim financial statements previously issued by the Company with respect to the Relevant Periods should no longer be relied upon.
After receiving a comment letter from the Securities and Exchange Commission, or the Commission, in connection with standard periodic reviews by the Commission of the Companys Form 10-K for the Fiscal Year Ended March 31, 2014 and Form 10-Q for the Quarterly Period Ended September 30, 2015, the Company conducted a further review of its financial statements and engaged in discussions with the Commission and Ernst & Young LLP, the Companys auditors. In particular, the Company reviewed certain technical accounting guidance affecting the presentation of revenue and costs of revenue as they relate to the Companys supply side platform, or SSP, which was introduced to market in the first quarter of 2015.
Based on this review, and considering the evolution of the product offering during the course of the year, the Company concluded that revenue generated by its SSP should be reported net of inventory costs rather than on a gross basis, as had been previously reported. As a result, the Audit Committee determined that the Companys previously issued quarterly financial statements for the Relevant Periods should be restated to reflect the booking of revenue attributable to the Companys SSP on a net instead of a gross basis. The corrections have the effect of decreasing both revenue and cost of revenue in a like amount in the quarterly financial statements for each Relevant Period. Gross profit, net loss and Adjusted EBITDA remained unchanged for the Relevant Periods as a result of the restatement.
The Company intends to include restated income statements for the Relevant Periods in its upcoming 2015 Form 10-K, which will be filed as soon as practicable after the completion of the audit for the year ended December 31, 2015.
2
In connection with the restatement described above, the Companys Chief Executive Officer and Chief Financial Officer concluded that a material weakness in internal control over financial reporting existed as of the end of each of the Relevant Periods and as of December 31, 2015.
The Audit Committee has discussed the matters described in this Item 4.02 with Ernst & Young LLP, the Companys auditors.
Forward-Looking Statements
This Current Report contains forward-looking statements, including, but not limited to, statements regarding the Companys current expectations, which involve risks and uncertainties, including, but not limited to, risks and uncertainties relating to the changes in accounting treatment described above, and other risks detailed from time to time in the Companys filings with the Commission. The Company cautions the reader that these factors, as well as other factors described in the Companys filings with the Commission, are among the factors that could cause actual results to differ materially from the expectations described in the forward-looking statements. The Company also cautions the reader that undue reliance should not be placed on any of the forward-looking statements, which speak only as of the date of this Current Report. The Company undertakes no responsibility to update any of these forward-looking statements to reflect events or circumstances after the date of this Current Report or to reflect actual outcomes.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
The Company hereby furnishes the following exhibit:
99.1 Press release dated March 3, 2016.
3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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TREMOR VIDEO, INC. |
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Dated: March 3, 2016 |
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By: |
/S/ John Rego |
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John Rego |
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Chief Financial Officer |
4
INDEX TO EXHIBITS
Exhibit No. |
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Description |
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99.1 |
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Press release dated March 3, 2016. |
5
Exhibit 99.1
TREMOR VIDEO REPORTS FULL YEAR AND FOURTH QUARTER 2015 FINANCIAL RESULTS
Full year Total Spend increases 28% from prior year
New York, NY March 3, 2016 Tremor Video, Inc. (NYSE:TRMR), the premium video marketplace that provides buyers and sellers with software for video ad effectiveness, today announced financial results for the fourth quarter and full year ended December 31, 2015.
Full Year 2015 Highlights:
· Total Spend(1) of $203.9 million, up 28% year-over-year
· Revenue of $173.8 million, up 9% year-over-year
· Gross profit of $74.6 million, up 29% year-over-year
· Adjusted EBITDA(2) of ($4.6) million; Adjusted EBITDA per share(2) of ($0.09)
· Net loss of ($43.2) million, including ($22.7) million in non-cash impairment charges incurred in Q3
· Net loss per share of ($0.84), including ($0.44) per share in non-cash impairment charges incurred in Q3
Fourth Quarter 2015 Highlights:
· Total Spend(1) of $67.9 million, up over 62% year-over-year
· Revenue of $51.8 million, up 24% year-over-year
· Gross profit of $22.8 million, up 42% year-over-year
· Adjusted EBITDA(2) of $2.1 million; Adjusted EBITDA per share(2) of $0.04
· Net loss of ($2.4) million; net loss per share of ($0.05)
(1) We define Total Spend (formerly reported as our GAAP revenue) as the aggregate gross spend transacted through our platforms. Total Spend is a non-GAAP financial measure. Please see the discussion in the section called Non-GAAP Financial Measures and the reconciliations included at the end of this press release.
(2) Adjusted EBITDA and Adjusted EBITDA per share are non-GAAP financial measures. Please see the discussion in the section called Non-GAAP Financial Measures and the reconciliations included at the end of this press release.
Significant traction in our programmatic platforms and continued innovation in our higher function products drove our 2015 record results, said Bill Day, Tremor Video CEO. We believe that we are poised to deliver further success in 2016 based on our significant fourth quarter momentum.
As discussed further in the Companys Form 8-K filed concurrently with this release, we have concluded based on our consideration of relevant accounting guidance that revenue attributable to our supply side platform (SSP), which we introduced in 2015, should be booked net of inventory costs. In prior periods, we have reported SSP revenue on a gross basis. As a result, we have determined that our previously issued quarterly financial statements for the periods ending March 31, June 30, and September 30, 2015, should be restated to reflect the revenue attributable to our SSP on a net basis. This restatement has the effect of decreasing both revenue and cost of revenue in a like amount in our financial statements for each period. The restatement has no impact on our reported gross profit, net loss or Adjusted EBITDA for any period. Revenue from our buyer platform will continue to be reported on a gross basis. Our restated income
1
statements for the periods ended March 31, June 30, and September 30, 2015 are included in the financial tables at the back of this release.
We will now be reporting Total Spend (formerly reported as our GAAP revenue) to accompany our reporting of revenue. We define Total Spend as the aggregate gross spend transacted through our platforms.
The table below presents Total Spend, revenue, net loss, Adjusted EBITDA, net loss per share and Adjusted EBITDA per share for the three and twelve month periods ending December 31, 2015.
Fourth Quarter And Full Year Results Summary
(in millions, except per share amounts), (unaudited)
|
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Three Months Ended |
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Years Ended |
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|
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December 31, 2015 |
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December 31, 2014 |
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% Change |
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December 31, 2015 |
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December 31, 2014 |
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% Change |
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|
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Total Spend |
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$ |
67.9 |
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$ |
41.9 |
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62 |
% |
$ |
203.9 |
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$ |
159.5 |
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28 |
% |
Revenue |
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$ |
51.8 |
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$ |
41.9 |
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24 |
% |
$ |
173.8 |
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$ |
159.5 |
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9 |
% |
Gross profit |
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$ |
22.8 |
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$ |
16.1 |
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42 |
% |
$ |
74.6 |
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$ |
57.8 |
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29 |
% |
Net loss(1) |
|
$ |
(2.4 |
) |
$ |
(5.4 |
) |
55 |
% |
$ |
(43.2 |
) |
$ |
(23.5 |
) |
(84 |
)% |
Adjusted EBITDA |
|
$ |
2.1 |
|
$ |
(1.8 |
) |
NA |
|
$ |
(4.6 |
) |
$ |
(10.9 |
) |
58 |
% |
Net loss per share |
|
$ |
(0.05 |
) |
$ |
(0.11 |
) |
55 |
% |
$ |
(0.84 |
) |
$ |
(0.46 |
) |
(83 |
)% |
Adjusted EBITDA per share |
|
$ |
0.04 |
|
$ |
(0.03 |
) |
NA |
|
$ |
(0.09 |
) |
$ |
(0.22 |
) |
59 |
% |
(1) During the third quarter of 2015, as required under GAAP, the Company performed an interim impairment test on its assets based on a decrease in the Companys market capitalization below the carrying value of its assets. As a result of this test, the Company recorded a non-cash impairment charge of ($22.1) million related to its goodwill and certain intangible assets. In addition, the Company recorded a non-cash impairment charge of ($0.6) million relating to certain property and equipment maintained at its former headquarters.
Fourth Quarter And Full Year Breakdown of Total Spend
(in thousands), (unaudited)
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Three Months Ended |
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Years Ended |
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December 31, 2015 |
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December 31, 2014 |
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% Change |
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December 31, 2015 |
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December 31, 2014 |
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% Change |
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Programmatic |
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$ |
32,118 |
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$ |
5,959 |
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439 |
% |
$ |
70,387 |
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$ |
14,070 |
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400 |
% |
Non-programmatic higher function |
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25,717 |
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21,137 |
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22 |
% |
87,842 |
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64,301 |
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37 |
% |
Non-programmatic media network |
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10,099 |
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14,782 |
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(32 |
)% |
45,653 |
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81,116 |
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(44 |
)% |
Total Spend |
|
$ |
67,934 |
|
$ |
41,878 |
|
62 |
% |
$ |
203,882 |
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$ |
159,487 |
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28 |
% |
Guidance
Based on information available as of March 3, 2016, the Company expects the following:
Q1 and Full Year 2016 Outlook
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Q1 2016 |
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Full Year 2016 |
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Total Spend |
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$48 - $50 million |
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$255 - $265 million |
Revenue |
|
$34 - $36 million |
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$180 - $190 million |
Adjusted EBITDA |
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($5) ($4) million |
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$0 - $5 million |
2
Q4 and Full Year 2015 Financial Results Webcast: Tremor Video will review its fourth quarter 2015 results and conduct an analyst and investor day on Thursday March 3, 2016 beginning at 1:00 PM EST. The event will be hosted by Tremor Video CEO, Bill Day and feature presentations from himself as well as other executives on the Companys performance, strategy and financial outlook. The event will be broadcast live and can be accessed on Tremor Videos Investor Relations website at http://investor.tremorvideo.com. Following completion of the event, a recorded replay of the webcast will be available on Tremor Videos website for a period of six months.
About Tremor Video
Tremor Video (NYSE:TRMR) provides software for video advertising effectiveness. Our buyer and seller platforms enable seamless transactions in a premium video marketplace by offering control and transparency to clients. We employ patented all-screen technology to make every advertising moment more relevant for consumers, and deliver maximum results for buyers and sellers.
Safe harbor Statement:
This press release contains forward-looking statements that involve risks, uncertainties, assumptions and other factors that could cause actual results and the timing of certain events to differ materially from those set forth in or implied by such forward-looking statements. All statements other than statements of historical fact are forward-looking statements, including, but not limited to, statements related to Tremor Videos future financial results or growth potential, including first quarter 2016 and 2016 full year financial guidance, and statements with respect to future revenue mix or the development or adoption of the companys solutions. Important factors that could cause actual results or the timing of events to differ materially from those set forth in or implied by any forward-looking statements include, without limitation, risks and uncertainties associated with: the companys limited operating history and the continuing development of its business model; unfavorable conditions in the global economy or reductions in digital advertising spend; the companys ability to effectively innovate and adapt to rapidly changing technology and client needs; increased competition as well as innovations by new and existing competitors; expansion of the online video advertising market; the companys ability to attract new advertisers and increase spend from existing advertisers; the companys ability to attract advertising spend from TV media buyers; risks of entering new markets in which we have limited or no experience and difficulty adapting our solutions for new markets; adoption of brand-centric metrics, advanced ad formats and performance-based pricing models by advertisers; the companys ability to effectively deliver video ad campaigns with demo guarantees; adoption of the companys programmatic solutions by advertisers and publishers; adoption of the companys All-Screen product by advertisers; the companys ability to acquire an adequate supply of premium video advertising inventory from publishers on terms that are favorable to it; the companys ability to detect fraudulent or malicious activity and ensure a high level of brand safety for its clients; identifying, attracting and retaining qualified personnel; defects, errors or interruptions in the companys solutions; the companys ability to collect and use data to deliver video ads; the impact of tools that block the display of video ads; the effect of regulatory developments and industry standards regarding internet privacy and other matters; maintaining, protecting and enhancing the companys intellectual property; costs associated with defending intellectual
3
property infringement, securities litigation and other claims; future opportunities and plans, including the uncertainty of expected future financial performance and results; as well as other risks and uncertainties detailed from time-to-time under the caption Risk Factors and elsewhere in Tremor Videos filings with the U.S. Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2014 filed with the U.S. Securities and Exchange Commission on March 16, 2015, its Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, filed on May 11, 2015, its Quarterly Report on Form 10-Q for the quarter ended June 30, 2015, filed on August 10, 2015, its Quarterly Report on Form 10-Q for the nine months ended September 30, 2015 filed with the U.S. Securities and Exchange Commission on November 9, 2015, and future filings and reports by the company, including its Annual Report on Form 10-K for the year ended December 31, 2015.
Forward-looking statements are based on current expectations and beliefs and are not guarantees of future performance or events. Investors are cautioned not to place undue reliance on any forward-looking statements. Furthermore, forward-looking statements speak only as of the date on which they are made, and, except as required by law, Tremor Video disclaims any obligation to update these forward-looking statements to reflect future events or circumstances.
Non-GAAP Financial Measures
To supplement its consolidated financial statements, which are prepared and presented in accordance with U.S. generally accepted accounting principles (GAAP), Tremor Video reports Total Spend, Adjusted EBITDA, and basic and diluted Adjusted EBITDA per share, which are non-GAAP financial measures. We define Total Spend as the aggregate gross spend transacted through our platforms. Total Spend does not represent revenue earned by us. We define Adjusted EBITDA as net loss plus (minus): interest expense and other income (expense), net, income tax expense, depreciation and amortization expense, non-cash stock-based compensation expense, non-cash stock-based long-term incentive compensation, non-cash impairment charges, litigation costs associated with class action securities litigation, executive severance costs, and acquisition related costs. We define Adjusted EBITDA per share as Adjusted EBITDA divided by weighted average common shares outstanding. We use these non-GAAP financial measures for financial and operational decision making and as a means to evaluate period-to-period comparisons. We believe that these measures provide useful information about our operating results, enhance the overall understanding of our past financial performance and future prospects, and allow for greater transparency with respect to key metrics used by management in its financial and operational decision making. Non-GAAP financial measures should be considered in addition to results and guidance prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. The non-GAAP financial measures included in this press release have been reconciled to the nearest GAAP measure in the table following the financial statements attached to this press release. With respect to our expectations under Guidance above, reconciliation of Adjusted EBITDA guidance to the closest corresponding GAAP measure is not available without unreasonable efforts on a forward-looking basis due to the high variability, complexity and low visibility with respect to the charges excluded from these non-GAAP measures, in particular, the measures and effects of stock-based compensation expense specific to equity compensation awards that are directly impacted by unpredictable fluctuations in our stock price. We expect the variability of the above charges to have a significant, and potentially unpredictable, impact on our future GAAP financial results.
###
4
Investor Relations Contact:
Andrew Posen
Senior Director Investor Relations
212-792-2315
IR@TremorVideo.com
Public Relations Contact:
Mandy Robinson
Tremor Video Corporate Communications
646-278-7416
MRobinson@TremorVideo.com
5
Exhibit A
Tremor Video, Inc.
Consolidated Balance Sheets
(in thousands)
|
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December 31, |
|
|
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2015 |
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2014 |
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|
|
|
|
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Assets |
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Current assets: |
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|
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Cash and cash equivalents |
|
$ |
59,887 |
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$ |
77,787 |
|
Accounts receivable, net |
|
70,778 |
|
46,765 |
|
Prepaid expenses and other current assets |
|
3,721 |
|
1,571 |
|
Deferred tax assets, short-term |
|
|
|
194 |
|
Total current assets |
|
134,386 |
|
126,317 |
|
Long-term assets: |
|
|
|
|
|
Restricted cash |
|
600 |
|
600 |
|
Property and equipment, net |
|
10,094 |
|
5,574 |
|
Intangible assets, net |
|
11,469 |
|
15,552 |
|
Goodwill |
|
10,781 |
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29,719 |
|
Deferred tax assets |
|
4,077 |
|
|
|
Other assets |
|
794 |
|
243 |
|
Total long-term assets |
|
37,815 |
|
51,688 |
|
Total assets |
|
$ |
172,201 |
|
$ |
178,005 |
|
|
|
|
|
|
|
Liabilities and stockholders equity |
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
Accounts payable and accrued expenses |
|
$ |
58,742 |
|
$ |
37,258 |
|
Deferred rent, short-term |
|
401 |
|
20 |
|
Contingent consideration on acquisition, short-term |
|
987 |
|
|
|
Deferred revenue |
|
108 |
|
15 |
|
Total current liabilities |
|
60,238 |
|
37,293 |
|
Deferred rent, long-term |
|
5,237 |
|
745 |
|
Deferred tax liabilities |
|
4,587 |
|
194 |
|
Contingent consideration on acquisition, long-term |
|
443 |
|
|
|
Other long-term liabilities |
|
264 |
|
|
|
Total liabilities |
|
70,769 |
|
38,232 |
|
Stockholders equity: |
|
|
|
|
|
Common stock |
|
5 |
|
5 |
|
Additional paid-in capital |
|
279,136 |
|
274,094 |
|
Accumulated other comprehensive (loss) income |
|
(55 |
) |
98 |
|
Accumulated deficit |
|
(177,654 |
) |
(134,424 |
) |
Total stockholders equity |
|
101,432 |
|
139,773 |
|
Total liabilities and stockholders equity |
|
$ |
172,201 |
|
$ |
178,005 |
|
6
Tremor Video, Inc.
Consolidated Statements of Operations
(in thousands, except share and per share data)
|
|
Three Months Ended |
|
Years Ended |
|
|
|
December 31, |
|
December 31, |
|
|
|
2015 |
|
2014 |
|
2015 |
|
2014 |
|
|
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Revenue |
|
$ |
51,757 |
|
$ |
41,878 |
|
$ |
173,837 |
|
$ |
159,487 |
|
Cost of revenue |
|
28,989 |
|
25,791 |
|
99,266 |
|
101,673 |
|
Gross Profit |
|
22,768 |
|
16,087 |
|
74,571 |
|
57,814 |
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|
|
|
|
|
|
|
|
|
|
Operating Expenses: |
|
|
|
|
|
|
|
|
|
Technology and development(1) |
|
5,312 |
|
4,409 |
|
20,171 |
|
16,992 |
|
Sales and marketing(1) |
|
13,089 |
|
11,505 |
|
48,879 |
|
42,623 |
|
General and administrative(1) |
|
4,196 |
|
3,675 |
|
17,279 |
|
14,712 |
|
Depreciation and amortization |
|
2,289 |
|
1,773 |
|
8,344 |
|
6,675 |
|
Impairment charges |
|
|
|
|
|
22,665 |
|
|
|
Total operating expenses |
|
24,886 |
|
21,362 |
|
117,338 |
|
81,002 |
|
|
|
|
|
|
|
|
|
|
|
Loss from operations |
|
(2,118 |
) |
(5,275 |
) |
(42,767 |
) |
(23,188 |
) |
|
|
|
|
|
|
|
|
|
|
Interest and other (expense) income, net: |
|
|
|
|
|
|
|
|
|
Interest expense |
|
(3 |
) |
(1 |
) |
(10 |
) |
(4 |
) |
Other (expense) income, net |
|
(72 |
) |
61 |
|
30 |
|
46 |
|
Total interest and other (expense) income, net |
|
(75 |
) |
60 |
|
20 |
|
42 |
|
|
|
|
|
|
|
|
|
|
|
Loss before provision for income taxes |
|
(2,193 |
) |
(5,215 |
) |
(42,747 |
) |
(23,146 |
) |
|
|
|
|
|
|
|
|
|
|
Provision for income taxes |
|
225 |
|
199 |
|
483 |
|
343 |
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(2,418 |
) |
$ |
(5,414 |
) |
$ |
(43,230 |
) |
$ |
(23,489 |
) |
|
|
|
|
|
|
|
|
|
|
Net loss per share: |
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
$ |
(0.05 |
) |
$ |
(0.11 |
) |
$ |
(0.84 |
) |
$ |
(0.46 |
) |
|
|
|
|
|
|
|
|
|
|
Weighted-average number of shares of common stock outstanding: |
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
52,186,221 |
|
51,088,012 |
|
51,684,397 |
|
50,637,541 |
|
(1) Stock-based compensation expense included above:
|
|
Three Months Ended |
|
Years Ended |
|
|
|
December 31, |
|
December 31, |
|
|
|
2015 |
|
2014 |
|
2015 |
|
2014 |
|
|
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Technology and development |
|
$ |
213 |
|
$ |
254 |
|
$ |
854 |
|
$ |
907 |
|
Sales and marketing |
|
266 |
|
443 |
|
1,445 |
|
1,506 |
|
General and administrative |
|
351 |
|
631 |
|
1,708 |
|
2,209 |
|
Total stock-based compensation expense |
|
$ |
830 |
|
$ |
1,328 |
|
$ |
4,007 |
|
$ |
4,622 |
|
7
Tremor Video, Inc.
Consolidated Statements of Cash Flows
(in thousands)
|
|
Years Ended |
|
|
|
December 31, |
|
|
|
2015 |
|
2014 |
|
|
|
|
|
|
|
Cash flows from operating activities: |
|
|
|
|
|
Net loss |
|
$ |
(43,230 |
) |
$ |
(23,489 |
) |
Adjustments required to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
Impairment charges |
|
22,665 |
|
|
|
Depreciation and amortization expense |
|
8,344 |
|
6,675 |
|
Bad debt recovery |
|
(87 |
) |
(16 |
) |
Stock-based compensation expense |
|
4,007 |
|
4,622 |
|
Stock-based long-term incentive compensation expense |
|
436 |
|
673 |
|
Deferred tax benefit |
|
(61 |
) |
|
|
Mark-to-market expense (income) |
|
113 |
|
(6 |
) |
Net changes in operating assets and liabilities: |
|
|
|
|
|
Increase in accounts receivable |
|
(22,675 |
) |
(5,394 |
) |
(Increase) decrease in prepaid expenses and other assets |
|
(3,381 |
) |
299 |
|
Increase in accounts payable and accrued expenses |
|
20,178 |
|
5,899 |
|
Increase in deferred rent and security deposits payable |
|
5,639 |
|
9 |
|
Increase (decrease) in deferred revenue |
|
93 |
|
(256 |
) |
Net cash used in operating activities |
|
(7,959 |
) |
(10,984 |
) |
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
Purchase of property and equipment |
|
(7,732 |
) |
(4,026 |
) |
Acquisition, net of cash acquired |
|
(1,672 |
) |
|
|
Net cash used in investing activities |
|
(9,404 |
) |
(4,026 |
) |
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
Proceeds from the exercise of stock option awards |
|
108 |
|
767 |
|
Tax withholdings related to net share settlements of restricted stock units |
|
(494 |
) |
(565 |
) |
Net cash (used in) provided by financing activities |
|
(386 |
) |
202 |
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents |
|
(17,749 |
) |
(14,808 |
) |
|
|
|
|
|
|
Effect of exchange rate changes in cash and cash equivalents |
|
(151 |
) |
(96 |
) |
|
|
|
|
|
|
Cash and cash equivalents at beginning of period |
|
77,787 |
|
92,691 |
|
Cash and cash equivalents at end of period |
|
$ |
59,887 |
|
$ |
77,787 |
|
8
Exhibit B
Tremor Video, Inc.
Reconciliation of Total Spend to Revenue
(in thousands)
(unaudited)
|
|
Three Months Ended |
|
Years Ended |
|
|
|
December 31, |
|
December 31, |
|
|
|
2015 |
|
2014 |
|
2015 |
|
2014 |
|
|
|
|
|
|
|
|
|
|
|
Total Spend |
|
$ |
67,934 |
|
$ |
41,878 |
|
$ |
203,882 |
|
$ |
159,487 |
|
SSP inventory costs |
|
16,177 |
|
|
|
30,045 |
|
|
|
Revenue |
|
$ |
51,757 |
|
$ |
41,878 |
|
$ |
173,837 |
|
$ |
159,487 |
|
Tremor Video, Inc.
Reconciliation of Net Loss to Adjusted EBITDA
(in thousands)
(unaudited)
|
|
Three Months Ended |
|
Years Ended |
|
|
|
December 31, |
|
December 31, |
|
|
|
2015 |
|
2014 |
|
2015 |
|
2014 |
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(2,418 |
) |
$ |
(5,414 |
) |
$ |
(43,230 |
) |
$ |
(23,489 |
) |
Adjustments: |
|
|
|
|
|
|
|
|
|
Non-cash impairment charges(1) |
|
|
|
|
|
22,665 |
|
|
|
Depreciation and amortization expense |
|
2,289 |
|
1,773 |
|
8,344 |
|
6,675 |
|
Stock-based compensation expense |
|
830 |
|
1,328 |
|
4,007 |
|
4,622 |
|
Executive severance |
|
588 |
|
|
|
1,458 |
|
|
|
Acquisition-related costs(2) |
|
333 |
|
|
|
892 |
|
|
|
Litigation expenses |
|
34 |
|
|
|
328 |
|
279 |
|
Stock-based long-term incentive compensation expense |
|
174 |
|
399 |
|
436 |
|
673 |
|
Provision for income taxes |
|
225 |
|
199 |
|
483 |
|
343 |
|
Interest and other expense (income), net |
|
75 |
|
(60 |
) |
(20 |
) |
(42 |
) |
Total net adjustments |
|
4,548 |
|
3,639 |
|
38,593 |
|
12,550 |
|
Adjusted EBITDA |
|
$ |
2,130 |
|
$ |
(1,775 |
) |
$ |
(4,637 |
) |
$ |
(10,939 |
) |
Tremor Video, Inc.
Reconciliation of Net Loss to Adjusted EBITDA - Per Share
(unaudited)
|
|
Three Months Ended |
|
Years Ended |
|
|
|
December 31, |
|
December 31, |
|
|
|
2015 |
|
2014 |
|
2015 |
|
2014 |
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(0.05 |
) |
$ |
(0.11 |
) |
$ |
(0.84 |
) |
$ |
(0.46 |
) |
Adjustments: |
|
|
|
|
|
|
|
|
|
Non-cash impairment charges(1) |
|
|
|
|
|
0.44 |
|
|
|
Depreciation and amortization expense |
|
0.04 |
|
0.04 |
|
0.16 |
|
0.13 |
|
Stock-based compensation expense |
|
0.02 |
|
0.03 |
|
0.08 |
|
0.09 |
|
Executive severance |
|
0.01 |
|
|
|
0.03 |
|
|
|
Acquisition-related costs(2) |
|
0.01 |
|
|
|
0.02 |
|
|
|
Litigation expenses |
|
|
|
|
|
|
|
|
|
Stock-based long-term incentive compensation expense |
|
|
|
0.01 |
|
0.01 |
|
0.01 |
|
Provision for income taxes |
|
0.01 |
|
|
|
0.01 |
|
0.01 |
|
Interest and other expense (income), net |
|
|
|
|
|
|
|
|
|
Total net adjustments |
|
0.09 |
|
0.08 |
|
0.75 |
|
0.24 |
|
Adjusted EBITDA per share - basic and diluted |
|
$ |
0.04 |
|
$ |
(0.03 |
) |
$ |
(0.09 |
) |
$ |
(0.22 |
) |
|
|
|
|
|
|
|
|
|
|
Weighted-average number of shares of common stock outstanding: |
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
52,186,221 |
|
51,088,012 |
|
51,684,397 |
|
50,637,541 |
|
(1) During the third quarter of 2015, as required under GAAP, the Company performed an interim impairment test on its assets based on a decrease in the Companys market capitalization below the carrying value of its assets. As a result of this test, the Company recorded a non-cash impairment charge of ($22.1) million related to its goodwill and certain intangible assets. In addition, the Company recorded a non-cash impairment charge of ($0.6) million relating to certain property and equipment maintained at its former headquarters.
(2) Reflects acquisition-related costs incurred in connection with the Companys acquisition of The Video Network Pty Ltd, an Australian proprietary limited company (TVN). Includes $324 and $493, respectively, of compensation-related expenses, relating to certain earnout payments that are dependent on continued employment.
9
Exhibit C
Tremor Video, Inc.
Restated Consolidated Statement of Operations
(in thousands)
(unaudited)
|
|
Three Months Ended |
|
|
|
March 31, 2015 |
|
|
|
As Reported |
|
Adjustments |
|
As Restated |
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
40,603 |
|
$ |
(2,551 |
) |
$ |
38,052 |
|
Cost of revenue |
|
24,410 |
|
(2,551 |
) |
21,859 |
|
Gross Profit |
|
16,193 |
|
|
|
16,193 |
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
23,033 |
|
|
|
23,033 |
|
|
|
|
|
|
|
|
|
Loss from operations |
|
(6,840 |
) |
|
|
(6,840 |
) |
|
|
|
|
|
|
|
|
Total interest and other income, net |
|
12 |
|
|
|
12 |
|
|
|
|
|
|
|
|
|
Loss before provision for income taxes |
|
(6,828 |
) |
|
|
(6,828 |
) |
|
|
|
|
|
|
|
|
Provision for income taxes |
|
122 |
|
|
|
122 |
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(6,950 |
) |
$ |
|
|
$ |
(6,950 |
) |
Tremor Video, Inc.
Restated Consolidated Statement of Operations
(in thousands)
(unaudited)
|
|
Three Months Ended |
|
Six Months Ended |
|
|
|
June 30, 2015 |
|
June 30, 2015 |
|
|
|
As Reported |
|
Adjustments |
|
As Restated |
|
As Reported |
|
Adjustments |
|
As Restated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
46,072 |
|
$ |
(3,668 |
) |
$ |
42,404 |
|
$ |
86,675 |
|
$ |
(6,219 |
) |
$ |
80,456 |
|
Cost of revenue |
|
28,062 |
|
(3,668 |
) |
24,394 |
|
52,472 |
|
(6,219 |
) |
46,253 |
|
Gross Profit |
|
18,010 |
|
|
|
18,010 |
|
34,203 |
|
|
|
34,203 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
23,139 |
|
|
|
23,139 |
|
46,172 |
|
|
|
46,172 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations |
|
(5,129 |
) |
|
|
(5,129 |
) |
(11,969 |
) |
|
|
(11,969 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest and other income, net |
|
6 |
|
|
|
6 |
|
18 |
|
|
|
18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before provision for income taxes |
|
(5,123 |
) |
|
|
(5,123 |
) |
(11,951 |
) |
|
|
(11,951 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes |
|
117 |
|
|
|
117 |
|
239 |
|
|
|
239 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(5,240 |
) |
$ |
|
|
$ |
(5,240 |
) |
$ |
(12,190 |
) |
$ |
|
|
$ |
(12,190 |
) |
Tremor Video, Inc.
Restated Consolidated Statement of Operations
(in thousands)
(unaudited)
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
|
September 30, 2015 |
|
September 30, 2015 |
|
|
|
As Reported |
|
Adjustments |
|
As Restated |
|
As Reported |
|
Adjustments |
|
As Restated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
49,273 |
|
$ |
(7,649 |
) |
$ |
41,624 |
|
$ |
135,948 |
|
$ |
(13,868 |
) |
$ |
122,080 |
|
Cost of revenue |
|
31,673 |
|
(7,649 |
) |
24,024 |
|
84,145 |
|
(13,868 |
) |
70,277 |
|
Gross Profit |
|
17,600 |
|
|
|
17,600 |
|
51,803 |
|
|
|
51,803 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
46,280 |
|
|
|
46,280 |
|
92,452 |
|
|
|
92,452 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations |
|
(28,680 |
) |
|
|
(28,680 |
) |
(40,649 |
) |
|
|
(40,649 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest and other income, net |
|
77 |
|
|
|
77 |
|
95 |
|
|
|
95 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before provision for income taxes |
|
(28,603 |
) |
|
|
(28,603 |
) |
(40,554 |
) |
|
|
(40,554 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes |
|
19 |
|
|
|
19 |
|
258 |
|
|
|
258 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(28,622 |
) |
$ |
|
|
$ |
(28,622 |
) |
$ |
(40,812 |
) |
$ |
|
|
$ |
(40,812 |
) |
10
Exhibit D
Tremor Video, Inc.
Consolidated Quarterly Statement of Operations
(in thousands)
(unaudited)
|
|
Q1 2014 |
|
Q2 2014 |
|
Q3 2014 |
|
Q4 2014 |
|
FY 2014 |
|
Q1 2015 |
|
Q2 2015 |
|
Q3 2015 |
|
Q4 2015 |
|
FY 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
34,869 |
|
$ |
43,701 |
|
$ |
39,039 |
|
$ |
41,878 |
|
$ |
159,487 |
|
$ |
38,052 |
|
$ |
42,404 |
|
$ |
41,624 |
|
$ |
51,757 |
|
$ |
173,837 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventory costs |
|
22,163 |
|
28,094 |
|
23,305 |
|
24,749 |
|
98,311 |
|
20,317 |
|
22,991 |
|
22,494 |
|
27,206 |
|
93,008 |
|
Other cost of revenue |
|
780 |
|
799 |
|
741 |
|
1,042 |
|
3,362 |
|
1,542 |
|
1,403 |
|
1,530 |
|
1,783 |
|
6,258 |
|
Total cost of revenue |
|
22,943 |
|
28,893 |
|
24,046 |
|
25,791 |
|
101,673 |
|
21,859 |
|
24,394 |
|
24,024 |
|
28,989 |
|
99,266 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit |
|
11,926 |
|
14,808 |
|
14,993 |
|
16,087 |
|
57,814 |
|
16,193 |
|
18,010 |
|
17,600 |
|
22,768 |
|
74,571 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
19,081 |
|
20,131 |
|
20,428 |
|
21,362 |
|
81,002 |
|
23,033 |
|
23,139 |
|
46,280 |
|
24,886 |
|
117,338 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations |
|
(7,155 |
) |
(5,323 |
) |
(5,435 |
) |
(5,275 |
) |
(23,188 |
) |
(6,840 |
) |
(5,129 |
) |
(28,680 |
) |
(2,118 |
) |
(42,767 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest and other (expense) income, net |
|
5 |
|
(28 |
) |
5 |
|
60 |
|
42 |
|
12 |
|
6 |
|
77 |
|
(75 |
) |
20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before provision for income taxes |
|
(7,150 |
) |
(5,351 |
) |
(5,430 |
) |
(5,215 |
) |
(23,146 |
) |
(6,828 |
) |
(5,123 |
) |
(28,603 |
) |
(2,193 |
) |
(42,747 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes |
|
79 |
|
21 |
|
44 |
|
199 |
|
343 |
|
122 |
|
117 |
|
19 |
|
225 |
|
483 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(7,229 |
) |
$ |
(5,372 |
) |
$ |
(5,474 |
) |
$ |
(5,414 |
) |
$ |
(23,489 |
) |
$ |
(6,950 |
) |
$ |
(5,240 |
) |
$ |
(28,622 |
) |
$ |
(2,418 |
) |
$ |
(43,230 |
) |
11
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