Tremor Video, Inc. (NYSE:TRMR), a provider of software for video
ad effectiveness, today announced financial results for the quarter
ended June 30, 2016.
Second Quarter 2016 Highlights:
- Revenue of $37.1 million, down 12%
year-over-year
- Total Spend1 of $54.7 million, up 19%
year-over-year
- Gross profit of $17.2 million, down 4%
year-over-year
- Net loss of ($5.9) million; net loss
per share of ($0.11)
- Adjusted EBITDA2 of ($1.2) million
- Repurchased 177,980 shares during the
quarter at an average price per share of $1.87
(1) We define Total Spend 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 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.
“This quarter we achieved a number of our strategic goals,
including signing several key agency partnerships on our buyer
platform,” said Bill Day, Tremor Video CEO. “Based on the continued
strength of our seller platform and Higher-Function buying
products, we are projecting strong guidance for spend growth and
EBITDA profitability in the second half of 2016.”
The table below presents revenue, Total Spend, gross profit, net
loss, Adjusted EBITDA, and net loss per share for the three month
and six month periods ended June 30, 2016 and June 30, 2015.
Second Quarter and
Year-to-Date Results Summary(1) (in millions, except per
share amounts), (unaudited)
Three Months
Ended Six Months Ended June 30,
2016
June 30,
2015
% Change June 30,
2016
June 30,
2015
% Change Revenue $37.1 $42.4 (12%) $71.7 $80.5
(11%) Total Spend $54.7 $46.1 19% $105.9 $86.7 22% Gross profit
$17.2 $18.0 (4%) $33.4 $34.2 (2%) Net loss ($5.9) ($5.2) (12%)
($16.9) ($12.2) (39%) Adjusted EBITDA ($1.2) ($1.3) 6% ($5.5)
($5.3) (4%) Net loss per share ($0.11) ($0.10) (9%) ($0.32) ($0.24)
(36%) (1) As discussed in our Form 10-K for the year
ended December 31, 2015, filed with the SEC on March 15, 2016, the
previously issued quarterly financial statements for the periods
ended March 31, 2015 and June 30, 2015 were restated to reflect the
reporting of revenue attributable to the Company’s seller platform
on a net instead of a gross basis. The restatement has the effect
of decreasing both revenue and cost of revenue in a like amount in
such quarterly financial statements, and has no impact on reported
gross profit, net loss or Adjusted EBITDA.
Second Quarter
and Year-to-Date Breakdown of Total Spend(1) (in
thousands), (unaudited)
Three Months
Ended Six Months Ended June 30,
2016
June 30,
2015
% Change June 30,
2016
June 30,
2015
% Change Programmatic $ 27,040 $ 13,945 94% $
53,177 $ 21,251 150% Non-programmatic higher function 22,833 20,084
14% 42,811 39,753
8%
Non-programmatic media network 4,796 12,043 (60%) 9,910 25,671
(61%) Total Spend $ 54,669 $ 46,072 19% $ 105,898 $ 86,675 22% (1)
Please see the discussion in the section called “Non-GAAP
Financial Measures”.
Guidance
Based on information available as of August 4, 2016, the Company
expects the following:
Q3 and Full Year 2016 Outlook
Q3 2016 Full Year 2016 Revenue $36.0 - $38.0
million $155.0 - $160.0 million Total Spend $63.0 - $65.0 million
$245.0 - $255.0 million Adjusted EBITDA ($0.5) - $0.5 million
($4.0) - $0.0 million
Q2 2016 Financial Results Webcast: Tremor Video will host
a conference call today at 4:30 p.m. ET to discuss its second
quarter financial results. A live webcast of the event will be
available on the Tremor Video Investor Relations website at
http://investor.tremorvideo.com. A live domestic dial-in is
available at (877) 407-9039 or internationally at (201) 689-8470.
Until August 18, 2016, a domestic replay will be available at (877)
870-5176 or internationally at (858) 384-5517, using passcode
13640247, and via webcast on the Tremor Video Investor Relations
website.
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 Video’s future financial results or
growth potential, including third quarter 2016 and 2016 full year
financial guidance, and statements with respect to future revenue
mix or the development or adoption of the company’s 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 company’s continuing
development of its business model; unfavorable conditions in the
global economy or reductions in digital advertising spend; the
company’s 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 company’s ability to attract
new advertisers and increase spend from existing advertisers; the
company’s 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 company’s
ability to effectively deliver video ad campaigns with demo
guarantees; the rate of decline of the Company’s non-programmatic
media network; adoption of the company’s programmatic solutions by
advertisers and publishers; adoption of the company’s All-Screen
product and other higher-function buying products by advertisers;
the company’s ability to acquire an adequate supply of premium
video advertising inventory from publishers on terms that are
favorable to it; the company’s 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 company’s solutions; the
company’s 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 company’s intellectual property; costs associated with
defending intellectual 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 Video’s
filings with the U.S. Securities and Exchange Commission, including
its Annual Report on Form 10-K for the year ended December 31,
2015, filed with the U.S. Securities and Exchange Commission on
March 15, 2016, its Quarterly Report on Form 10-Q for the period
ended March 31, 2016, filed with the Security and Exchange
Commission on May 10, 2016 and future filings and reports by the
company, including its Quarterly Report on Form 10-Q for the
quarter ended June 30, 2016.
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 and Adjusted EBITDA,
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. Within total spend, we
closely monitor the percentage contributions among the following
operational metrics: programmatic; non-programmatic higher
function; and non-programmatic media. Programmatic includes all
spend attributable to the Tremor Video SSP, Tremor Video DSP and
agency trading desks. We define non-programmatic higher-function as
non-programmatic spend running through our buyer platform that
utilizes our higher-function products, including our all-screen
optimization solution and our proprietary outcome-based pricing
models. We define non-programmatic media as non-programmatic spend
running through our buyer platform that is purchased without any of
our higher-function products. We track these operational metrics in
order to better understand how our clients are transacting on our
platforms, which informs decisions as to the allocation of
resources and capital. We define Adjusted EBITDA as net loss plus
(minus): interest expense and other income (expense), net,
provision for income taxes, depreciation and amortization expense,
non-cash stock-based compensation expense, non-cash stock-based
long-term incentive compensation, executive severance costs,
acquisition related costs, litigation costs associated with class
action securities litigation, mark-to-market expense, and other
adjustments. 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 Total Spend and 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
costs and 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 these costs and charges to have a
significant, and potentially unpredictable, impact on our future
GAAP financial results.
Exhibit A
Tremor Video, Inc. Consolidated Balance Sheets
(in thousands) June 30, December 31,
2016 2015 (unaudited) Assets
Current assets: Cash and cash equivalents $ 49,977 $ 59,887
Accounts receivable, net 55,912 70,778 Prepaid expenses and other
current assets 4,311 3,721 Total
current assets 110,200 134,386
Long-term assets:
Restricted cash
770
600
Property and equipment, net
10,118
10,094
Intangible assets, net
9,208
11,469
Goodwill
10,815
10,781
Other assets
1,185
794
Total long-term assets
32,096
33,738
Total assets
$
142,296
$
168,124
Liabilities and stockholders' equity Current
liabilities: Accounts payable and accrued expenses $ 43,712 $
58,742 Deferred rent, short-term 375 401 Contingent consideration
on acquisition, short-term 3,711 987 Deferred revenue 61
108 Total current liabilities 47,859 60,238
Long-term liabilities: Deferred rent, long-term 6,383 5,237
Contingent consideration on acquisition, long-term 960 443 Deferred
tax liabilities 520 510 Other long-term liabilities 271
264 Total liabilities 55,993
66,692 Stockholders' equity: Common stock 5 5
Treasury stock (332 ) - Additional paid-in capital 281,271 279,136
Accumulated other comprehensive loss (58 ) (55 ) Accumulated
deficit (194,583 ) (177,654 ) Total stockholders'
equity 86,303 101,432 Total liabilities
and stockholders' equity $ 142,296 $ 168,124
Tremor Video, Inc.
Consolidated Statements of Operations (in thousands,
except share and per share data) (unaudited)
Three Months Ended Six Months Ended June 30,
June 30, 2016
2015(1)
2016
2015(1) Revenue $ 37,107 $ 42,404 $ 71,672 $ 80,456
Cost of revenue 19,907 24,394 38,254
46,253 Gross profit 17,200 18,010
33,418 34,203 Operating
expenses: Technology and development(2) 5,045 4,761 10,888 9,722
Sales and marketing(2) 11,342 11,717 24,006 23,668 General and
administrative(2) 4,074 4,705 8,996 9,049 Depreciation and
amortization 2,325 1,956 4,564 3,733 Mark-to-market(3) 45
- 1,089 - Total operating
expenses 22,831 23,139 49,543
46,172 Loss from operations (5,631)
(5,129) (16,125) (11,969)
Interest and other income (expense), net: Interest expense (13) (3)
(15) (5) Other income (expense), net (33) 9
(285) 23 Total interest and other income
(expense), net (46) 6 (300)
18 Loss before provision for income taxes (5,677)
(5,123) (16,425) (11,951) Provision for income taxes 178 117
504 239
Net loss $ (5,855) $ (5,240)
$ (16,929) $ (12,190)
Net loss per
share: Basic and diluted $ (0.11) $ (0.10)
$ (0.32) $ (0.24)
Weighted-average
number of shares of common stock outstanding: Basic and diluted
52,633,054 51,445,613 52,502,955
51,332,047 (1) As discussed in our Form 10-K
for the year ended December 31, 2015, filed with the SEC on March
15, 2016, the previously issued quarterly financial statements for
the periods ended March 31, 2015 and June 30, 2015 have been
restated to reflect the reporting of revenue attributable to the
Company’s seller platform on a net instead of a gross basis. The
restatement has the effect of decreasing both revenue and cost of
revenue in a like amount in such quarterly financial statements,
and has no impact on reported gross profit, net loss or Adjusted
EBITDA. (2) Stock-based compensation expense included above:
Three Months
Ended Six Months Ended June 30,
June 30, 2016 2015
2016 2015
Technology and development $ 244 $ 218 $ 462 $ 432
Sales and marketing 381 394 767 803 General and administrative
400 535 760
1,020 Total stock-based compensation expense $ 1,025
$ 1,147 $ 1,989 $ 2,255
(3) Reflects expense incurred based on the Company’s
re-measurement, at June 30, 2016, of the estimated fair value of
earn-out payments that are or may become due in connection with the
acquisition of The Video Network Pty Ltd, an Australian proprietary
limited company (“TVN”), and which are not conditioned on continued
employment with the Company.
Tremor Video, Inc.
Consolidated Statements of Cash Flows (in thousands)
(unaudited) Six Months Ended June 30,
2016 2015 Cash flows from
operating activities: Net loss $ (16,929 ) $ (12,190 ) Adjustments
required to reconcile net loss to net cash used in operating
activities: Depreciation and amortization expense 4,564 3,733 Bad
debt (recovery) expense (61 ) 14 Mark-to-market expense 1,089 -
Compensation expense related to the acquisition contingent
consideration 2,142 - Stock-based compensation expense 1,989 2,255
Stock-based long-term incentive compensation expense - 77 Loss from
sublease 341 - Loss on fixed asset disposal 23 - Net changes in
operating assets and liabilities: Decrease (increase) in accounts
receivable 14,964 (4,549 ) Increase in prepaid expenses and other
assets (176 ) (783 ) Increase (decrease) in accounts payable and
accrued expenses (15,032 ) 5,304 Increase (decrease) in deferred
rent and security deposits payable (26 ) 3,248 Increase (decrease)
in deferred revenue (47 ) 30 Net cash used in
operating activities (7,159 ) (2,861 ) Cash
flows from investing activities: Purchase of property and equipment
(2,323 ) (6,180 ) Changes in restricted cash (170 ) -
Net cash used in investing activities (2,493 )
(6,180 ) Cash flows from financing activities: Proceeds from
common stock issuance 245 - Proceeds from the exercise of stock
options awards 153 39 Treasury stock - repurchase of stock (332 ) -
Tax withholdings related to net share settlements of restricted
stock unit awards (RSUs) (252 ) (153 ) Net cash used
in financing activities (186 ) (114 ) Net
decrease in cash and cash equivalents (9,838 ) (9,155 )
Effect of exchange rate changes in cash and cash equivalents (72 )
(19 ) Cash and cash equivalents at beginning of period
59,887 77,787 Cash and cash equivalents
at end of period $ 49,977 $ 68,613
Exhibit B Tremor Video,
Inc. Reconciliation of Total Spend to Revenue (in
thousands) (unaudited) Three Months Ended
Six Months Ended June 30, June
30, 2016 2015
2016 2015 Total Spend $ 54,669 $
46,072 $ 105,898 $ 86,675 SSP inventory costs(1) 17,562
3,668 34,226
6,219 Revenue $ 37,107 $ 42,404
$ 71,672 $ 80,456 (1) We record revenue
from our buyer platform on a gross basis, including costs of
inventory. Accordingly, for revenue generated from our buyer
platform, total spend is equivalent to revenue. We record revenue
from our seller platform, the Tremor Video SSP net of inventory
costs. Total spend through the Tremor Video SSP is equal to the
revenue generated from the Tremor Video SSP plus associated costs
of inventory.
Tremor Video, Inc.
Reconciliation of Net Loss to Adjusted EBITDA (in
thousands) (unaudited) Three Months Ended
Six Months Ended June 30, June 30,
2016 2015 2016
2015 Net loss $ (5,855 ) $ (5,240 ) $ (16,929 ) $
(12,190 ) Adjustments: Depreciation and amortization expense 2,325
1,956 4,564 3,733 Stock-based compensation expense 1,025 1,147
1,989 2,255 Executive severance 67 362 172 362 Acquisition-related
costs(1) 929 222 2,148 222 Litigation expenses - 64 181 68
Stock-based long-term incentive compensation expense - 58 - 77
Provision for income taxes 178 117 504 239 Mark-to-market
expense(2) 45 - 1,089 - Interest and other (income) expense, net 46
(6 ) 300 (18 ) Other adjustments(3) - -
520 - Total net
adjustments 4,615 3,920
11,467 6,938 Adjusted EBITDA $
(1,240 ) $ (1,320 ) $ (5,462 ) $ (5,252 )
(1) Reflects acquisition-related costs incurred in
connection with the Company’s acquisition of TVN. Includes $924 and
$2,130 for the three and six months ended June 30, 2016,
respectively, of compensation-related expenses related to
contingent consideration payments that may become due to certain
TVN sellers that are subject to continued employment. (2)
Reflects expense incurred based on the Company’s re-measurement, at
June 30, 2016, of the estimated fair value of earn-out payments
that are or may become due in connection with the acquisition of
TVN and which are not conditioned on continued employment with the
Company. (3) Reflects amounts accrued in connection with a
one-time change in the Company’s employee vacation policy.
Exhibit C
Tremor
Video, Inc. Consolidated Quarterly Statement of
Operations (in thousands) (unaudited)
Q1 2015 Q2 2015 Q3 2015
Q4 2015 Q1 2016 Q2 2016
Revenue $ 38,052 $ 42,404 $ 41,624 $ 51,757 $ 34,565 $
37,107 Inventory costs 20,317 22,991 22,494 27,206 16,368
17,922 Other cost of revenue 1,542
1,403 1,530 1,783
1,979 1,985 Total cost of
revenue 21,859 24,394 24,024 28,989 18,347 19,907
Gross Profit 16,193 18,010 17,600 22,768 16,218 17,200 Total
operating expenses 23,033 23,139
46,280 24,886
26,712 22,831 Loss from
operations (6,840 ) (5,129 ) (28,680 ) (2,118 ) (10,494 ) (5,631 )
Total interest and other (expense) income, net 12
6 77
(75 ) (254 ) (46 ) Loss before
provision for income taxes (6,828 ) (5,123 ) (28,603 ) (2,193 )
(10,748 ) (5,677 ) Provision for income taxes 122 117 19 225
326 178
Net loss $ (6,950 ) $ (5,240 ) $
(28,622 ) $ (2,418 ) $ (11,074 ) $ (5,855 )
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version on businesswire.com: http://www.businesswire.com/news/home/20160804006348/en/
Tremor Video, Inc.Investor Relations:Andrew Posen,
212-792-2315Senior Director Investor
RelationsIR@TremorVideo.comorPublic Relations:Mandy Robinson,
646-278-7416Tremor Video Corporate
CommunicationsMRobinson@TremorVideo.com
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