Tremor Video, Inc. (NYSE:TRMR), a provider of software for video
ad effectiveness, today announced financial results for the quarter
ended September 30, 2016.
Third Quarter 2016 Highlights:
- Revenue of $41.3 million, down 1%
year-over-year
- Total Spend1 of $63.5 million, up 29%
year-over-year
- Gross profit of $18.6 million, up 6%
year-over-year
- Net loss of ($3.6) million; net loss
per share of ($0.07)
- Adjusted EBITDA2 of $0.04 million
- Repurchased 621,528 shares during the
third quarter at an average price per share of $1.86
(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.
“In the third quarter we delivered profitable EBITDA and strong
growth in our Total Spend,” said Bill Day, Tremor Video CEO. “Our
platform continues to scale, with programmatic spend more than
doubling year-over-year. The growth of this predominantly
self-service business is enabling us to achieve meaningful
operating leverage.”
The table below presents revenue, Total Spend, gross profit, net
loss, Adjusted EBITDA, and net loss per share for the three month
and nine month periods ended September 30, 2016 and September 30,
2015.
Third Quarter and Year-to-Date Results
Summary(1) (in millions, except per share amounts),
(unaudited)
Three Months Ended
Nine Months Ended September 30,
2016
September 30,
2015
% Change September 30,
2016
September 30,
2015
% Change Revenue $41.3 $41.6 (1%) $113.0
$122.1 (7%) Total Spend $63.5 $49.3 29% $169.4 $135.9 25% Gross
profit $18.6 $17.6 6% $52.0 $51.8 0% Net loss ($3.6) ($28.6) 87%
($20.5) ($40.8) 50% Adjusted EBITDA $0.0 ($1.5) NM ($5.4) ($6.8)
20% Net loss per share ($0.07) ($0.55) 87% ($0.39) ($0.79) 51%
(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, June 30, 2015, and September 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.
Third Quarter and Year-to-Date Breakdown
of Total Spend(1) (in thousands), (unaudited)
Three Months Ended Nine Months
Ended September 30,
2016
September 30,
2015
% Change September 30,
2016
September 30,
2015
% Change Programmatic
$
35,490
$
17,019
109 %
$
88,667
$ 38,270 132 % Non-programmatic higher function 22,239 22,372 (1 %)
65,050 62,125 5 % Non-programmatic media network 5,745 9,882
(42 %) 15,656 35,553 (56 %) Total Spend
$
63,474
$
49,273
29 %
$
169,373
$ 135,948 25 %
(1) Please see the discussion
in the section called “Non-GAAP Financial Measures”.
Guidance
Based on information available as of November 3, 2016, the
Company expects the following:
Full Year 2016 Outlook Full
Year 2016 Revenue $155.0 - $160.0 million Total Spend
$245.0 - $255.0 million Adjusted EBITDA ($2.5) - $0.0 million
Q3 2016 Financial Results Webcast: Tremor Video will host
a conference call today at 4:30 p.m. ET to discuss its third
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 (800) 449-5865 or internationally at (719) 325-2475.
Until November 17, 2016, a domestic replay will be available at
(844) 512-2921 or internationally at (412) 317-6671, using passcode
6750502, 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 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, its Quarterly Report on Form 10-Q for the period ended June
30, 2016, filed with the Security and Exchange Commission on August
9, 2016, and future filings and reports by the company, including
its Quarterly Report on Form 10-Q for the quarter ended September
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, our advanced data targeting solutions, 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, impairment
charges, 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) September 30, December
31, 2016 2015
(unaudited) Assets Current assets: Cash
and cash equivalents $ 47,552 $ 59,887 Accounts receivable, net
60,364 70,778 Prepaid expenses and other current assets
2,674 3,721 Total current assets
110,590 134,386 Long-term
assets: Restricted cash 770 600 Property and equipment, net 9,308
10,094 Intangible assets, net 8,128 11,469 Goodwill 10,863 10,781
Other assets 1,159 794
Total long-term assets 30,228
33,738 Total assets $ 140,818 $ 168,124
Liabilities and stockholders' equity Current
liabilities: Accounts payable and accrued expenses $ 49,053 $
58,742 Deferred rent 485 401 Contingent consideration on
acquisition, short-term 1,608 987 Deferred revenue 48
108 Total current liabilities 51,194
60,238 Long-term liabilities: Deferred rent, long-term 6,383 5,237
Contingent consideration on acquisition, long-term - 443 Deferred
tax liabilities 502 510 Other long-term liabilities -
264 Total liabilities 58,079
66,692 Stockholders' equity:
Common stock 5 5 Treasury stock (1,516 ) - Additional paid-in
capital 282,630 279,136 Accumulated other comprehensive loss (180 )
(55 ) Accumulated deficit (198,200 )
(177,654 ) Total stockholders' equity 82,739
101,432 Total liabilities and stockholders'
equity $ 140,818 $ 168,124
Tremor Video, Inc. Consolidated Statements of
Operations (in thousands, except share and per share
data) (unaudited)
Three Months Ended Nine Months Ended
September 30, September 30, 2016
2015(1)
2016
2015(1)
Revenue $ 41,281 $ 41,624 $ 112,953 $ 122,080 Cost of
revenue 22,698 24,024
60,952 70,277 Gross profit
18,583 17,600 52,001
51,803 Operating expenses: Technology
and development(2) 4,935 5,147 15,823 14,869 Sales and marketing(2)
11,403 12,112 35,409 35,780 General and administrative(2) 3,609
4,034 12,605 13,083 Depreciation and amortization 2,358 2,322 6,922
6,055 Mark-to-market(3) 6 - 1,095 - Impairment charges(4) -
22,665 -
22,665 Total operating expenses 22,311
46,280 71,854 92,452
Loss from operations (3,728 )
(28,680 ) (19,853 ) (40,649 ) Interest
and other income (expense), net: Interest expense (4 ) (2 ) (19 )
(7 ) Other income (expense), net 72 79
(213 ) 102 Total interest and
other income (expense), net 68 77
(232 ) 95 Loss before
provision for income taxes (3,660 ) (28,603 ) (20,085 ) (40,554 )
Provision for income taxes (43 ) 19 461 258
Net loss $ (3,617 ) $ (28,622 )
$ (20,546 ) $ (40,812 )
Net loss per share:
Basic and diluted $ (0.07 ) $ (0.55 ) $ (0.39 ) $
(0.79 )
Weighted-average number of shares of common stock
outstanding: Basic and diluted 52,473,601
51,875,785 52,493,099
51,515,285
____________
(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, June 30, 2015, and September 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
Nine Months Ended September 30,
September 30, 2016 2015
2016 2015 Technology and
development $ 237 $ 209 $ 699 $ 641 Sales and marketing 325 376
1,092 1,179 General and administrative 398 337
1,158 1,357 Total stock-based compensation
expense $ 960 $ 922 $ 2,949 $ 3,177 (3)
Reflects expense incurred based on the Company’s re-measurement, at
September 30, 2016, of the estimated fair value of earn-out
payments that have been paid 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. (4) Reflects $22.7
million of non-cash impairment charges to goodwill, and certain
intangible assets and property and equipment.
Tremor Video, Inc. Consolidated Statements of Cash
Flows (in thousands) (unaudited)
Nine Months Ended September 30, 2016
2015
Cash flows from operating activities: Net loss $ (20,546 ) $
(40,812 ) Adjustments required to reconcile net loss to net cash
used in operating activities: Depreciation and amortization expense
6,922 6,055 Bad debt recovery (61 ) (8 ) Mark-to-market expense
1,095 - Compensation expense related to the acquisition contingent
consideration 2,751 - Stock-based compensation expense 2,949 3,177
Stock-based long-term incentive compensation expense - 262 Loss
from sublease 341 - Loss on fixed asset disposal 23 - Impairment
Charges - 22,665 Net changes in operating assets and liabilities:
Decrease (increase) in accounts receivable 10,590 (5,476 ) Decrease
(increase) in prepaid expenses and other assets 682 (1,129 )
Increase (decrease) in accounts payable and accrued expenses (9,779
) 8,009 Increase in deferred rent and security deposits payable 889
3,763 Decrease in deferred tax benefit (8 ) - Increase in
restricted cash (170 ) - Increase (decrease) in deferred revenue
(60 ) 66 Net cash used in
operating activities
(4,382
) (3,428 ) Cash flows from investing
activities: Purchase of property and equipment (2,727 ) (7,154 )
Acquisition, net of cash acquired -
(1,191 ) Net cash used in investing activities (2,727
) (8,345 ) Cash flows from financing
activities:
Decrease in contingent consideration on
acquisition
(3,837
)
-
Proceeds from common stock issuance 500 - Proceeds from the
exercise of stock options awards 150 106 Treasury stock -
repurchase of stock (1,516 ) - Tax withholdings related to net
share settlements of restricted stock unit awards (RSUs)
(405 ) (463 ) Net cash used in financing
activities
(5,108
) (357 ) Net decrease in cash and cash
equivalents (12,217 ) (12,130 ) Effect of exchange rate
changes in cash and cash equivalents (118 ) (126 ) Cash and
cash equivalents at beginning of period 59,887
77,787 Cash and cash equivalents at end of
period $ 47,552 $ 65,531
Exhibit B
Tremor Video, Inc. Reconciliation of Total Spend to
Revenue (in thousands) (unaudited)
Three Months Ended Nine Months Ended September
30, September 30, 2016 2015 2016
2015 Total Spend $ 63,474 $ 49,273 $ 169,373 $
135,948 SSP inventory costs(1) 22,193 7,649
56,420 13,868 Revenue $ 41,281 $ 41,624 $ 112,953 $ 122,080
(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 Nine Months Ended
September 30, September 30, 2016
2015 2016
2015 Net loss $ (3,617 ) $ (28,622 ) $ (20,546
) $ (40,812 ) Adjustments: Depreciation and amortization expense
2,358 2,322 6,922 6,055 Stock-based compensation expense 960 922
2,949 3,177 Executive severance (9 ) 508 163 870
Acquisition-related costs(1) 616 337 2,764 559 Litigation expenses
13 226 194 294 Stock-based long-term incentive compensation expense
(183 ) 185 (183 ) 262 Provision for income taxes (43 ) 19 461 258
Mark-to-market expense(2) 6 - 1,095 - Interest and other (income)
expense, net (66 ) (77 ) 234 (95 ) Other adjustments(3) - - 520 -
Impairment Charges(4) - 22,665 -
22,665 Total net adjustments 3,652
27,107 15,119 34,045
Adjusted EBITDA $ 35 $ (1,515 ) $ (5,427 ) $ (6,767 )
(1) Reflects acquisition-related costs incurred in
connection with the Company’s acquisition of TVN. Includes $616 and
$2,751 for the three and nine months ended September 30, 2016,
respectively, of compensation-related expenses related to
contingent consideration payments that have been paid or 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 September 30, 2016, of the estimated fair value
of earn-out payments that have been paid 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. (4) Reflects $22.7 million of
non-cash impairment charges to goodwill, and certain intangible
assets and property and equipment.
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 Q3 2016 Revenue $ 38,052 $
42,404 $ 41,624 $ 51,757 $ 34,565 $ 37,107 $ 41,281
Inventory costs 20,317 22,991 22,494 27,206 16,368 17,922 19,198
Other cost of revenue 1,542 1,403
1,530 1,783 1,979
1,985 3,500 Total cost of revenue 21,859
24,394 24,024 28,989 18,347 19,907 22,698
Gross Profit 16,193 18,010
17,600 22,768 16,218 17,200 18,583 Total operating expenses
23,033 23,139 46,280
24,886 26,712 22,831
22,311 Loss from operations (6,840 )
(5,129 ) (28,680 ) (2,118 ) (10,494 ) (5,631 ) (3,728 )
Total interest and other (expense) income, net 12
6 77 (75 ) (254 )
(46 ) 68 Loss before provision
for income taxes (6,828 ) (5,123 ) (28,603 ) (2,193 ) (10,748 )
(5,677 ) (3,660 ) Provision for income taxes 122 117 19 225
326 178 (43 ) Net
loss $ (6,950 ) $ (5,240 ) $ (28,622 ) $ (2,418 ) $ (11,074 ) $
(5,855 ) $ (3,617 )
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version on businesswire.com: http://www.businesswire.com/news/home/20161103006596/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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