Tremor Video beats guidance across all three
metrics
First quarter revenue increased 20% from
prior year
Tremor Video, Inc. (NYSE:TRMR), a provider of software for video
ad effectiveness, today announced financial results for the first
quarter ended March 31, 2017 that exceeded expectations across all
metrics, including Total Spend, revenue and Adjusted EBITDA.
First Quarter 2017 Highlights:
- Revenue of $41.4 million, up 20%
year-over-year
- Total Spend(1) of $60.9 million, up 19%
year-over-year
- Gross profit of $19.4 million, up 19%
year-over-year
- Adjusted EBITDA(2) of ($2.4) million
compared to ($4.2) million in Q1 2016
- Raising full year 2017 financial
guidance
(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 had a very strong quarter, and I am incredibly proud of our
team’s ability to execute on our strategy, delivering results that
exceeded guidance across all metrics,” commented Interim Chief
Executive Officer Paul Caine. “We saw continued momentum in our
SSP, significantly expanding the depth and quality of our publisher
relationships. Our success this quarter and our positive outlook
for the remainder of the year enables us to increase our full year
guidance.”
First Quarter 2017 Financial Results
The table below presents revenue, Total Spend, gross profit, net
loss, Adjusted EBITDA and net loss per share for the three month
periods ended March 31, 2017 and March 31, 2016.
(in millions, except per share amounts), (unaudited)
Three Months Ended
March 31,
2017
March 31,
2016
% Change
Revenue $41.4 $34.6 20% Total Spend $60.9 $51.2 19% Gross
profit $19.4 $16.2 19% Net loss ($6.9) ($11.1) 38% Adjusted EBITDA
($2.4) ($4.2) 43% Net loss per share ($0.14) ($0.21) 35%
First Quarter 2017 Breakdown of Total
Spend(1)
(in millions), (unaudited)
Three
Months Ended
March 31,
2017
March 31,
2016
% Change
Programmatic
$ 29.1 $ 26.1 11% Non-programmatic higher function 27.4 20.0 37%
Non-programmatic media network 4.4 5.1 (14%) Total Spend $ 60.9 $
51.2 19% (1) Please see the discussion in the section
called “Non-GAAP Financial Measures.”
Guidance
Based on information available as of May 9, 2017, the Company
expects the following:
Q2 and Full Year 2017 Outlook
Q2 2017 Full Year 2017 Revenue
$38.0 – $42.0 million $182.0 – $192.0 million Total Spend $66.0 –
$70.0 million $320.0 – $330.0 million Adjusted EBITDA ($2.0) – $1.0
million $3.0 – $7.0 million
Q1 2017 Financial Results Webcast: Tremor Video will host
a conference call today at 8:00 a.m. ET to discuss its first
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 May 16, 2017, a domestic replay will be available at (844)
512-2921 or internationally at (412) 317-6671, using passcode
13659536, 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 second
quarter and 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, 2016, filed
with the U.S. Securities and Exchange Commission on March 10, 2017
and future filings and reports by the company, including its
Quarterly Report on Form 10-Q for the quarter ended March 31,
2017.
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 and retention
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)
March 31, December 31,
2017 2016 (unaudited)
Assets
Current assets:
Cash and cash equivalents $ 28,032 $ 43,160 Accounts receivable,
net 67,665 79,027 Prepaid expenses and other current assets
3,114 2,405 Total current assets
98,811 124,592 Long-term
assets: Restricted cash - 770 Property and equipment, net 9,209
9,656 Intangible assets, net 5,933 6,922 Goodwill 10,871 10,758
Other assets 1,596 1,527
Total long-term assets 27,609
29,633 Total assets $ 126,420 $ 154,225
Liabilities and stockholders' equity Current
liabilities: Accounts payable and accrued expenses $ 44,653 $
64,691 Deferred rent and security deposits payable 880 704
Contingent consideration on acquisition, short-term 3,517 2,483
Deferred revenue 27 5 Capital leases, current 352 362 Other current
liabilities 100 179 Total
current liabilities 49,529 68,424 Long-term liabilities: Deferred
rent, long-term 5,778 6,072 Deferred tax liabilities 446 447
Capital leases, long-term 668
760 Total liabilities 56,421
75,703 Stockholders' equity: Common stock 5 5
Treasury stock (8,443 ) (6,037 ) Additional paid-in capital 284,237
283,486 Accumulated other comprehensive loss (245 ) (331 )
Accumulated deficit (205,555 ) (198,601
) Total stockholders' equity 69,999
78,522 Total liabilities and stockholders' equity $
126,420 $ 154,225
Tremor Video, Inc. Consolidated Statements of
Operations (in thousands, except share and per share
data) Three Months Ended
March 31, 2017 2016
(unaudited) Revenue $ 41,400 $ 34,565
Cost of revenue 22,023 18,347
Gross profit 19,377
16,218 Operating Expenses: Technology and
development(1) 5,661 5,843 Sales and marketing(1) 13,053 12,664
General and administrative(1) 5,083 4,922 Depreciation and
amortization 2,349 2,239 Mark-to-market(2) 55
1,044 Total operating expenses 26,201
26,712 Loss from
operations (6,824 ) (10,494 )
Interest and other (expense) income, net: Interest expense (52 ) (2
) Other (expense) income, net 25
(252 ) Total interest and other expense, net (27 )
(254 ) Loss before provision for income taxes
(6,851 ) (10,748 ) Provision for income taxes 9 326
Net loss $ (6,860 ) $ (11,074 )
Net loss per share: Basic and diluted $ (0.14 )
$ (0.21 )
Weighted-average number of shares
of common stock outstanding: Basic and diluted
49,998,547 52,372,857
(1) Stock-based compensation expense included above:
Three Months Ended March 31,
2017 2016 (unaudited)
Technology and development $ 211 $ 218 Sales and marketing
368 386 General and administrative 437
360 Total stock-based compensation expense $ 1,016 $
964 (2) Reflects expense incurred based on the Company’s
re-measurement, at March 31, 2017 and March 31, 2016, of the
estimated fair value of earn-out payments that 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)
Three Months Ended March 31,
2017 2016 Cash flows from
operating activities: Net loss $ (6,860 ) $ (11,074 ) Adjustments
required to reconcile net loss to net cash used in operating
activities: Depreciation and amortization expense 2,349 2,239 Loss
from sublease - 341 Bad debt expense (recovery) 296 (35 )
Stock-based compensation expense 1,016 964 Compensation expense
related to acquisition contingent consideration 825 1,206
Mark-to-market expense 55 1,049 Net changes in operating assets and
liabilities: Deferred tax benefit (27 ) - Decrease in accounts
receivable 11,262 17,966 Increase in prepaid expenses and other
assets (779 ) (137 ) Decrease in accounts payable and accrued
expenses (20,499 ) (14,932 ) Decrease in other current liabilities
(79 ) - Decrease (increase) in deferred rent (118 ) 245 Decrease
(increase) in restricted cash 770 (320 ) Increase in deferred
revenue 22 79 Net cash
used in operating activities (11,767 )
(2,409 ) Cash flows from investing activities: Purchase of
property and equipment (754 ) (854 )
Net cash used in investing activities (754 )
(854 ) Cash flows from financing activities: Proceeds
from common stock issuance 256 - Proceeds from the exercise of
stock options awards 38 - Principal portion of capital lease
payments (102 ) - Treasury stock - repurchase of stock (2,406 ) -
Tax withholdings related to net share settlements of restricted
stock units (654 ) (215 ) Net cash used
in financing activities (2,868 ) (215 )
Net decrease in cash and cash equivalents (15,389 ) (3,478 )
Effect of exchange rate changes in cash and cash equivalents
261 35 Cash and cash equivalents at beginning of period
43,160 59,887 Cash and
cash equivalents at end of period $ 28,032 $
56,444
Exhibit B Tremor
Video, Inc. Reconciliation of Total Spend to Revenue
(in thousands) (unaudited)
Three Months Ended March 31, 2017
2016 Total Spend $ 60,892 $
51,230 SSP inventory costs(1) 19,492
16,665 Revenue $ 41,400 $ 34,565 (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 March 31, 2017
2016 Net loss $ (6,860 ) $ (11,074 )
Adjustments: Depreciation and amortization expense 2,349 2,239
Stock-based compensation expense 1,016 964 Executive severance and
retention costs(1) 70 105 Acquisition-related costs(2) 825 1,219
Litigation expenses - 181 Provision for income taxes 9 326
Mark-to-market expense(3) 55 1,044 Interest and other (income)
expense, net 27 254 Other adjustments(4) 109
520 Total net adjustments 4,460
6,852 Adjusted EBITDA $ (2,400 )
$ (4,222 ) (1) Reflects severance costs related to the
termination of certain executives and the accrual of compensation
expense in connection with retention bonuses that may become
payable to certain executives. (2) Reflects
acquisition-related costs incurred in connection with the Company’s
acquisition of TVN. Includes $825 and $1,206 for the three months
ended March 31, 2017 and March 31, 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. (3) Reflects expense
incurred based on the Company’s re-measurement, at March 31, 2017
and March 31, 2016, of the estimated fair value of earn-out
payments that may become due in connection with the acquisition of
TVN and which are not conditioned on continued employment with the
Company. (4) 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
2016 Q2 2016 Q3 2016
Q4 2016 Q1 2017
Revenue $ 34,565 $
37,107 $ 41,281 $ 53,808 $ 41,400 Inventory costs 16,368
17,922 19,198 25,476 16,088 Other cost of revenue 1,979
1,985 3,500
4,060 5,935
Total cost of revenue 18,347 19,907 22,698 29,536 22,023
Gross Profit 16,218 17,200 18,583
24,272 19,377 Total operating expenses 26,712
22,831 22,311
24,998
26,201 Loss from operations (10,494 ) (5,631 ) (3,728
) (726 ) (6,824 ) Total interest and other (expense) income,
net (254 ) (46 )
68 (20 ) (27 )
Loss before provision for income taxes (10,748 ) (5,677 )
(3,660 ) (746 ) (6,851 ) Provision for income taxes 326 178
(43 ) (345 ) 9
Net loss $ (11,074 )
$ (5,855 ) $ (3,617 ) $
(401 ) $ (6,860 )
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Investor Relations:Tremor Video, Inc.Andrew Posen,
212-792-2315IR@TremorVideo.comorMedia:MWWPRIvy Chen,
415-580-6133ichen@mww.com
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