Tremor Video, Inc. (NYSE:TRMR), a provider of software for video
ad effectiveness, today announced record financial results for the
fourth quarter and full year ended December 31, 2016, meeting or
exceeding expectations across all metrics, including record
quarterly Total Spend, revenue, gross profit, and Adjusted
EBITDA.
The Company also announced that Bill Day, who has served as
Tremor Video’s CEO since 2008, has decided to resign from his
position, effective immediately. Mr. Day will continue to serve as
a special advisor to the Company and its Board of Directors through
June 1, 2017. Non-Executive Chairman of the Board and media
industry veteran Paul Caine has been appointed Interim Chief
Executive Officer, effective February 9, 2017, and will lead the
search along with the Board for the new CEO of the Company. Mr. Day
will also resign as a member of the Company’s Board, effective
March 1, 2017.
Full Year 2016 Highlights:
- Total revenue of $166.8 million, down
4% year-over-year
- Record Total Spend1 of $254.2 million,
up 25% year-over-year
- Record gross profit of $76.3 million,
up 2% year-over-year
- Adjusted EBITDA2 of ($2.0) million
Fourth Quarter 2016 Highlights:
- Record revenue of $53.8 million, up 4%
year-over-year
- Record Total Spend of $84.8 million, up
25% year-over-year
- Record gross profit of $24.3 million,
up 7% year-over-year
- Record Adjusted EBITDA of $3.5
million
- Repurchased 2,062,124 shares during the
fourth quarter
(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.
“We are proud to be closing the year strong with solid growth in
our Total Spend, and particularly programmatic spend, which
increased 96% in 2016. The scaling of our programmatic business,
combined with strong expense discipline, helped the Company deliver
profitable EBITDA results for the quarter,” said Interim CEO Paul
Caine. “We have a lot of momentum heading into 2017 and as we move
forward we’re poised to continue to build on our industry-leading
position as a provider of software for brand effectiveness."
Fourth Quarter and Full-Year Financial Results
The table below presents revenue, Total Spend, gross profit, net
loss, Adjusted EBITDA and net loss per share for the three month
and twelve month periods ended December 31, 2016 and December 31,
2015.
(in millions, except per share amounts), (unaudited)
Three Months Ended Twelve Months
Ended
December 31,2016
December 31,2015
% Change
December 31,2016
December 31,2015
% Change Revenue $53.8 $51.8 4% $166.8
$173.8 (4%) Total Spend $84.8 $67.9 25% $254.2 $203.9 25% Gross
profit $24.3 $22.8 7% $76.3 $74.6 2% Net loss ($0.4) ($2.4) 83%
($20.9) ($43.2) 52% Adjusted EBITDA $3.5 $2.1 63% ($2.0) ($4.6) 58%
Net loss per share ($0.01) ($0.05) 84% ($0.40) ($0.84) 52%
Fourth Quarter and Full Year Breakdown
of Total Spend(1)
(in millions), (unaudited)
Three Months Ended
Twelve Months Ended
December 31,2016
December 31,2015
% Change
December 31,2016
December 31,2015
% Change Programmatic
$ 49.6 $ 32.1 54% $ 138.3 $ 70.4 96% Non-programmatic higher
function 28.4 25.7 11% 93.5 87.8 6% Non-programmatic media network
6.8 10.1 (33%) 22.4 45.7 (51%) Total Spend $ 84.8 $ 67.9 25% $
254.2 $ 203.9 25% (1) Please see the discussion in the
section called “Non-GAAP Financial Measures”.
Guidance
Based on information available as of February 9, 2017, the
Company expects the following:
Q1 and Full Year 2017 Outlook
Q1 2017 Full Year 2017 Revenue $34.0 – $38.0
million $180.0 – $190.0 million Total Spend $56.0 – $60.0 million
$315.0 – $325.0 million Adjusted EBITDA ($6.0) – ($3.0) million
$2.0 – $6.0 million
CEO Transition
“On behalf of the board, we applaud Bill for his significant
contributions during his eight years of service with the Company,
and we are grateful for his efforts in building our leadership
position in the video advertising marketplace. We reached many
important milestones during Bill’s tenure and his expertise has
guided the Company to a position of strength while setting us on a
strong path for sustainable profitability and future growth,” said
Mr. Caine.
Paul Caine has deep industry experience and knowledge of Tremor
Video’s business, having served on the Board and as a member of its
Audit Committee since 2014, and as its Non-Executive Chairman since
July 2016. Mr. Caine has previously held positions as the Global
Chief Revenue and Client Partnerships Officer for Bloomberg Media
and as CEO of WestwoodOne as well as several executive roles at
Time Inc. While serving as Interim CEO, Mr. Caine will remain a
member of the Company’s Board, but will step down from his roles
with the Audit Committee and as Non-Executive Chairman.
The Company’s Board has engaged the executive search firm
Heidrick & Struggles to assist in the search for Mr. Day’s
replacement.
Bill Day commented, “Tremor Video’s innovative software
platforms strongly position it to capitalize on two of the largest
advertising growth trends, programmatic video buying and selling,
and the increasing flow of spend from linear TV into digital video.
As evident in today’s results, the Company is on a positive
trajectory towards combined growth and profitability. It’s been a
true team effort, and I fully expect that this team will continue
to deliver strong outcomes during this transition.
Q4 and Full Year 2016 Financial Results Webcast: Tremor
Video will host a conference call today at 8:00 a.m. ET to discuss
its fourth 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 February 16, 2017, a domestic replay will be available at
(844) 512-2921 or internationally at (412) 317-6671, using passcode
13652701, 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,
growth potential, or future profitability, including 2017 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,
including a successor CEO; 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 Reports on Form 10-Q for the periods ended March 31,
2016, June 30, 2016, and September 30, 2016, and future filings and
reports by the company, including its Annual Report on Form 10-K
for the year ended December 31, 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) December 31, 2016
2015 (unaudited) Assets
Current assets: Cash and cash equivalents $ 43,160 $ 59,887
Accounts receivable, net 79,027 70,778 Prepaid expenses and other
current assets 2,405 3,721 Total
current assets 124,592 134,386
Long-term assets: Restricted cash 770 600 Property and equipment,
net 9,656 10,094 Intangible assets, net 6,922 11,469 Goodwill
10,758 10,781 Other assets 1,527 794
Total long-term assets 29,633 33,738
Total assets $ 154,225 $ 168,124
Liabilities and stockholders' equity Current liabilities:
Accounts payable and accrued expenses $ 64,691 $ 58,742 Deferred
rent and security deposits payable 704 401 Contingent consideration
on acquisition, short-term 2,483 987 Deferred revenue 5 108 Capital
leases, current 362 - Other current liabilities 179
- Total current liabilities 68,424 60,238 Long-term
liabilities: Deferred rent, long-term 6,072 5,237 Contingent
consideration on acquisition, long-term - 443 Deferred tax
liabilities 447 510 Other long-term liabilities - 264 Capital
leases, long-term 760 - Total
liabilities 75,703 66,692 Stockholders'
equity: Common stock 5 5 Treasury stock (6,037 ) - Additional
paid-in capital 283,486 279,136 Accumulated other comprehensive
loss (331 ) (55 ) Accumulated deficit (198,601 )
(177,654 ) Total stockholders' equity 78,522
101,432 Total liabilities and stockholders' equity $ 154,225
$ 168,124
Tremor Video, Inc. Consolidated
Statements of Operations (in thousands, except share and per
share data) (unaudited) Three Months Ended
Years Ended December 31, December 31,
2016 2015 2016
2015 Revenue $ 53,808 $ 51,757 $
166,761 $ 173,837 Cost of revenue 29,536
28,989 90,488 99,266 Gross
profit 24,272 22,768 76,273
74,571 Operating expenses: Technology
and development(1) 5,222 5,312 21,045 20,171 Sales and marketing(1)
12,952 13,089 48,361 48,879 General and administrative(1) 4,405
4,196 17,010 17,279 Depreciation and amortization 2,251 2,289 9,173
8,344 Mark-to-market(2) 168 - 1,263 - Impairment charges(3)
- - - 22,665 Total
operating expenses 24,998 24,886
96,852 117,338 Loss from operations
(726 ) (2,118 ) (20,579 ) (42,767 )
Interest and other income (expense), net: Interest expense
(110 ) (3 ) (129 ) (10 ) Other income (expense), net 90
(72 ) (123 ) 30 Total interest
and other income (expense), net (20 ) (75 )
(252 ) 20 Loss before provision for income
taxes (746 ) (2,193 ) (20,831 ) (42,747 ) Provision for
income taxes (345 ) 225 116 483 Net
loss $ (401 ) $ (2,418 ) $ (20,947 ) $ (43,230 )
Net loss
per share: Basic and diluted $ (0.01 ) $ (0.05 ) $ (0.40 ) $
(0.84 )
Weighted-average number of shares of
common stockoutstanding:
Basic and diluted 51,644,295 52,186,221
52,279,738 51,684,397 (1)
Stock-based compensation expense included above:
Three
Months Ended Years Ended December 31, December
31, 2016 2015
2016 2015 Technology and
development $ 232 $ 213 $ 931 $ 854 Sales and marketing 323 266
1,415 1,445 General and administrative 396 351
1,554 1,708 Total stock-based
compensation expense $ 951 $ 830 $ 3,900 $
4,007 (2) Reflects expense incurred based on the
Company’s re-measurement, at December 31, 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.
(3) 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) Years Ended December 31,
2016 2015 Cash flows from
operating activities: Net loss $ (20,947 ) $ (43,230 ) Adjustments
required to reconcile net loss to net cash used in operating
activities: Depreciation and amortization expense 9,173 8,344 Bad
debt recovery (66 ) (87 ) Mark-to-market expense 1,263 113 Deferred
tax benefit (63 ) (61 ) Compensation expense related to the
acquisition contingent consideration 3,570 - Stock-based
compensation expense 3,895 4,007 Stock-based long-term incentive
compensation expense (300 ) 436 Loss on sublease 246 - Loss on
fixed asset disposal 23 - Impairment Charges - 22,665 Net changes
in operating assets and liabilities: Increase in accounts
receivable (8,277 ) (22,675 ) Decrease (increase) in prepaid
expenses and other assets 583 (3,381 ) Increase in accounts payable
and accrued expenses 6,739 20,178 Increase in deferred rent and
security deposits payable 628 5,639 Increase in other current
liabilities 179 - Increase in restricted cash (170 ) - Increase
(decrease) in deferred revenue (103 ) 93 Decrease in contingent
consideration on acquisition (3,406 ) - Net
cash used in operating activities (7,033 ) (7,959 )
Cash flows from investing activities: Purchase of property
and equipment (2,978 ) (7,732 ) Acquisition, net of cash acquired
- (1,672 ) Net cash used in investing
activities (2,978 ) (9,404 ) Cash flows from
financing activities: Decrease in contingent consideration on
acquisition (431 ) - Proceeds from common stock issuance 499 -
Proceeds from the exercise of stock options awards 161 108
Principal portion of capital lease payments (19 ) - Treasury stock
- repurchase of stock (6,037 ) - Tax withholdings related to net
share settlements of restricted stock unit awards (RSUs)
(505 ) (494 ) Net cash used in financing activities
(6,332 ) (386 ) Net decrease in cash and cash
equivalents (16,343 ) (17,749 ) Effect of exchange rate
changes in cash and cash equivalents (384 ) (151 ) Cash and
cash equivalents at beginning of period 59,887
77,787 Cash and cash equivalents at end of period $ 43,160
$ 59,887
Exhibit B Tremor Video,
Inc. Reconciliation of Total Spend to Revenue (in
thousands) (unaudited) Three Months Ended
Years Ended December 31, December 31,
2016 2015 2016
2015 Total Spend $ 84,839 $ 67,934 $ 254,212 $
203,882 SSP inventory costs(1) 31,031 16,177
87,451 30,045 Revenue $ 53,808 $ 51,757 $ 166,761 $ 173,837
(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
Years Ended December 31, December 31,
2016 2015 2016
2015 Net loss $ (401 ) $ (2,418
) $ (20,947 ) $ (43,230 ) Adjustments: Depreciation and
amortization expense 2,251 2,289 9,173 8,344 Stock-based
compensation expense 951 830 3,900 4,007 Executive severance - 588
163 1,458 Acquisition-related costs(1) 819 333 3,583 892 Litigation
expenses - 34 194 328 Stock-based long-term incentive compensation
expense - 174 (183 ) 436 Provision for income taxes (345 ) 225 116
483 Mark-to-market expense(2) 168 - 1,263 - Interest and other
(income) expense, net 20 75 252 (20 ) Other adjustments(3) - - 520
- Impairment Charges(4) - - -
22,665 Total net adjustments 3,864
4,548 18,981 38,593
Adjusted EBITDA $ 3,463 $ 2,130 $ (1,966 ) $
(4,637 ) (1) Reflects acquisition-related costs incurred in
connection with the Company’s acquisition of TVN. Includes $819 and
$3,570 for the three months and year ended December 31, 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 December 31, 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 Q4 2016
Revenue $ 38,052 $ 42,404 $ 41,624 $ 51,757 $ 34,565 $ 37,107 $
41,281 $ 53,808 Inventory costs 20,317 22,991 22,494 27,206
16,368 17,922 19,198 25,476 Other cost of revenue 1,542
1,403 1,530 1,783
1,979 1,985 3,500
4,060 Total cost of revenue 21,859 24,394 24,024 28,989
18,347 19,907 22,698 29,536
Gross Profit 16,193 18,010 17,600 22,768
16,218 17,200 18,583 24,272 Total operating expenses
23,033 23,139 46,280
24,886 26,712 22,831
22,311 24,998 Loss from operations
(6,840 ) (5,129 ) (28,680 ) (2,118 ) (10,494 ) (5,631 ) (3,728 )
(726 ) Total interest and other (expense) income, net
12 6 77 (75 ) (254
) (46 ) 68 (20 ) Loss before
provision for income taxes (6,828 ) (5,123 ) (28,603 ) (2,193 )
(10,748 ) (5,677 ) (3,660 ) (746 ) Provision for income
taxes 122 117 19 225 326 178 (43 ) (345 )
Net loss $ (6,950 ) $ (5,240 ) $
(28,622 ) $ (2,418 ) $ (11,074 ) $ (5,855 ) $ (3,617 ) $ (401 )
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version on businesswire.com: http://www.businesswire.com/news/home/20170209005388/en/
Tremor Video, Inc.Investor Relations:Andrew Posen,
212-792-2315IR@TremorVideo.comorMedia:MWWPRJoe Calabrese,
212-827-3772jcalabrese@mww.com
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