Press Release

The Meet Group Reports Second Quarter 2020 Financial Results

Company Release - 8/6/2020 7:00 AM ET

NEW HOPE, Pa.--(BUSINESS WIRE)-- The Meet Group, Inc. (NASDAQ: MEET), a leading provider of interactive dating solutions, today reported financial results for its second quarter ended June 30, 2020.

Second Quarter 2020 Highlights

  • Total revenue of $90.3 million, up 74% from the second quarter of 2019.
  • GAAP net income of $10.4 million, or $0.14 per diluted share, compared with GAAP net income of $2.2 million, or $0.03 per diluted share in the second quarter of 2019.
  • Adjusted EBITDA of $20.8 million, compared with $9.8 million in the second quarter of 2019.
  • Non-GAAP net income of $19.7 million, or $0.26 per diluted share, compared with $8.8 million, or $0.11 per diluted share, in the second quarter of 2019.
  • Transaction with ProSiebenSat.1’s and General Atlantic’s joint company NuCom Group expected to close in the second half of 2020.

(See the important discussion about the presentation of non-GAAP financial measures, and reconciliation to the most direct comparable GAAP financial measures, below.)

“We continue to expect to close our acquisition by ProSiebenSat.1 and General Atlantic by the end of this year,” said Geoff Cook, Chief Executive Officer of The Meet Group. “We have received antitrust clearance in the United States, Germany and Austria, and our stockholders have approved the transaction.”

Second Quarter Financial Results

For the second quarter of 2020, the Company reported revenue of $90.3 million, an increase of $38.3 million, or 74%, from $52.0 million in the second quarter of 2019. GAAP net income for the second quarter of 2020 was $10.4 million, or $0.14 per diluted share, compared with GAAP net income of $2.2 million, or $0.03 per diluted share, in the second quarter of 2019. Adjusted EBITDA for the second quarter of 2020 was $20.8 million, compared with $9.8 million in the second quarter of 2019. Non-GAAP net income for the second quarter of 2020 was $19.7 million, or $0.26 per diluted share, compared with $8.8 million, or $0.11 per diluted share, in the second quarter of 2019.

The Company ended the quarter with $47.6 million in cash and cash equivalents.

Outlook and Conference Call

Due to the pending acquisition by ProSiebenSat.1’s and General Atlantic’s joint company NuCom Group, the Company does not plan to host an earnings conference call or provide forward-looking guidance.

 

THE MEET GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except par value and share data)

 

 

(Unaudited)

 

 

 

June 30, 2020

 

December 31, 2019

Assets:

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

47,644

 

 

$

27,241

 

Accounts receivable, net

33,230

 

 

25,234

 

Prepaid expenses and other current assets

6,464

 

 

6,062

 

Total current assets

87,338

 

 

58,537

 

Deferred tax assets

13,616

 

 

16,233

 

Property and equipment, net

2,701

 

 

3,625

 

Operating lease right-of-use assets

6,550

 

 

7,034

 

Intangible assets, net

24,947

 

 

29,305

 

Goodwill

156,749

 

 

156,687

 

Other assets

700

 

 

1,300

 

Total assets

$

292,601

 

 

$

272,721

 

Liabilities and stockholders' equity:

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

8,610

 

 

$

5,346

 

Accrued liabilities

24,806

 

 

20,090

 

Current portion of long-term debt

3,500

 

 

3,500

 

Current portion of operating lease liabilities

2,464

 

 

2,081

 

Current portion of finance lease obligations

9

 

 

10

 

Deferred revenue

3,720

 

 

3,884

 

Total current liabilities

43,109

 

 

34,911

 

Long-term debt, net

28,672

 

 

30,375

 

Long-term operating lease liabilities

4,204

 

 

5,024

 

Long-term finance lease obligations

46

 

 

53

 

Long-term derivative liabilities

913

 

 

1,451

 

Deferred tax liabilities

2,616

 

 

2,773

 

Other liabilities

 

 

894

 

Total liabilities

79,560

 

 

75,481

 

Commitments and contingencies

 

 

 

Stockholders' equity:

 

 

 

Preferred stock, $0.001 par value; authorized - 5,000,000 shares; no shares issued and outstanding as of June 30, 2020 and December 31, 2019

 

 

 

Series A junior participating preferred stock, $0.001 par value; authorized - 200,000 shares; no shares issued and outstanding as of June 30, 2020 and December 31, 2019

 

 

 

Common stock, $0.001 par value; authorized - 100,000,000 shares; 72,792,571 and 70,756,013 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively

73

 

 

71

 

Additional paid-in capital

438,345

 

 

430,959

 

Accumulated deficit

(223,694

)

 

(231,441

)

Accumulated other comprehensive loss

(1,683

)

 

(2,349

)

Total stockholders’ equity

213,041

 

 

197,240

 

Total liabilities and stockholders’ equity

$

292,601

 

 

$

272,721

 

 

THE MEET GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(in thousands, except share and per share data)

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

2020

 

2019

 

2020

 

2019

Revenue

$

90,332

 

 

$

52,000

 

 

$

145,398

 

 

$

101,513

 

Operating costs and expenses:

 

 

 

 

 

 

 

Sales and marketing

8,089

 

 

9,060

 

 

15,803

 

 

16,900

 

Product development and content

57,627

 

 

30,151

 

 

95,298

 

 

61,273

 

General and administrative

6,663

 

 

5,892

 

 

11,693

 

 

10,820

 

Depreciation and amortization

2,689

 

 

3,430

 

 

5,509

 

 

6,628

 

Acquisition, restructuring and other

1,335

 

 

25

 

 

4,705

 

 

504

 

Total operating costs and expenses

76,403

 

 

48,558

 

 

133,008

 

 

96,125

 

Income from operations

13,929

 

 

3,442

 

 

12,390

 

 

5,388

 

Other income (expense):

 

 

 

 

 

 

 

Interest income

7

 

 

28

 

 

20

 

 

60

 

Interest expense

(554

)

 

(328

)

 

(950

)

 

(731

)

Gain (loss) on foreign currency transactions

3

 

 

(2

)

 

(4

)

 

(68

)

Loss on disposal of assets

 

 

 

 

(108

)

 

 

Other items of (expense) income, net

 

 

(1

)

 

2

 

 

3

 

Total other expense

(544

)

 

(303

)

 

(1,040

)

 

(736

)

Income before income tax expense

13,385

 

 

3,139

 

 

11,350

 

 

4,652

 

Income tax expense

(3,006

)

 

(935

)

 

(3,379

)

 

(1,190

)

Net income

$

10,379

 

 

$

2,204

 

 

$

7,971

 

 

$

3,462

 

 

 

 

 

 

 

 

 

Basic and diluted net income per share:

 

 

 

 

 

 

 

Basic net income per share

$

0.14

 

 

$

0.03

 

 

$

0.11

 

 

$

0.05

 

Diluted net income per share

$

0.14

 

 

$

0.03

 

 

$

0.10

 

 

$

0.04

 

 

 

 

 

 

 

 

 

Weighted-average shares outstanding:

 

 

 

 

 

 

 

Basic

72,030,143

 

 

75,648,621

 

 

71,516,532

 

 

75,250,562

 

Diluted

76,225,180

 

 

78,508,559

 

 

76,073,893

 

 

78,656,115

 

 

THE MEET GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)

 

 

Six Months Ended June 30,

 

2020

 

2019

Cash flows from operating activities:

 

 

 

Net income

$

7,971

 

 

$

3,462

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

Depreciation and amortization

5,509

 

 

6,628

 

Amortization of right-of-use assets

1,284

 

 

1,294

 

Stock-based compensation expense

6,035

 

 

5,290

 

Deferred tax expense

2,317

 

 

268

 

Loss on disposal of assets

108

 

 

 

Loss on foreign currency transactions

4

 

 

68

 

Provision for expected credit losses

989

 

 

909

 

Non-cash interest expense

452

 

 

94

 

Changes in derivatives

246

 

 

 

Changes in contingent consideration obligations

45

 

 

64

 

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

(9,137

)

 

2,414

 

Prepaid expenses, other current assets and other assets

47

 

 

(484

)

Accounts payable and accrued liabilities

5,399

 

 

(6,021

)

Deferred revenue

(164

)

 

(19

)

Net cash provided by operating activities

21,105

 

 

13,967

 

Cash flows from investing activities:

 

 

 

Purchases of property and equipment

(233

)

 

(688

)

Acquisition of business, net of cash acquired

 

 

(11,808

)

Net cash used in investing activities

(233

)

 

(12,496

)

Cash flows from financing activities:

 

 

 

Proceeds from exercise of stock options

1,987

 

 

703

 

Repurchases of common stock

(65

)

 

 

Payments of finance leases

(7

)

 

(78

)

Proceeds from revolving loan

 

 

7,000

 

Payments for restricted stock awards withheld for taxes

(636

)

 

(371

)

Payments of term loan

(1,750

)

 

(11,067

)

Net cash used in financing activities

(471

)

 

(3,813

)

Change in cash and cash equivalents prior to effect of foreign currency exchange rate

20,401

 

 

(2,342

)

Effect of foreign currency exchange rate

2

 

 

29

 

Net increase (decrease) in cash and cash equivalents

20,403

 

 

(2,313

)

Cash and cash equivalents as of beginning of period

27,241

 

 

28,366

 

Cash and cash equivalents as of end of period

$

47,644

 

 

$

26,053

 

Supplemental disclosure of cash flow information:

 

 

 

Cash paid for interest

$

245

 

 

$

630

 

Cash paid for income taxes

$

1,375

 

 

$

1,320

 

 

THE MEET GROUP, INC. AND SUBSIDIARIES

DISAGGREGATION OF REVENUE

(UNAUDITED)

(in thousands)

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

2020

 

2019

 

2020

 

2019

 

$

 

%

 

$

 

%

 

$

 

%

 

$

 

%

User pay revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Video

$

61,350

 

 

67.9

%

 

$

21,279

 

 

40.9

%

 

$

89,983

 

 

61.9

%

 

$

41,508

 

 

40.9

%

Subscription and other in-app products

20,031

 

 

22.2

%

 

15,642

 

 

30.1

%

 

34,426

 

 

23.7

%

 

31,238

 

 

30.8

%

Total user pay revenue

81,381

 

 

90.1

%

 

36,921

 

 

71.0

%

 

124,409

 

 

85.6

%

 

72,746

 

 

71.7

%

Advertising revenue

8,951

 

 

9.9

%

 

15,079

 

 

29.0

%

 

20,989

 

 

14.4

%

 

28,767

 

 

28.3

%

Total revenue

$

90,332

 

 

100.0

%

 

$

52,000

 

 

100.0

%

 

$

145,398

 

 

100.0

%

 

$

101,513

 

 

100.0

%

 

THE MEET GROUP, INC. AND SUBSIDIARIES

RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA

(UNAUDITED)

(in thousands)

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

2020

 

2019

 

2020

 

2019

Net income

$

10,379

 

 

$

2,204

 

 

$

7,971

 

 

$

3,462

 

Interest expense

554

 

 

328

 

 

950

 

 

731

 

Income tax expense

3,006

 

 

935

 

 

3,379

 

 

1,190

 

Depreciation and amortization expense

2,689

 

 

3,430

 

 

5,509

 

 

6,628

 

Stock-based compensation expense

2,850

 

 

2,865

 

 

6,035

 

 

5,290

 

Acquisition, restructuring and other

1,335

 

 

25

 

 

4,705

 

 

504

 

Loss on disposal of assets

 

 

 

 

108

 

 

 

(Gain) loss on foreign currency transactions

(3

)

 

2

 

 

4

 

 

68

 

Adjusted EBITDA

$

20,810

 

 

$

9,789

 

 

$

28,661

 

 

$

17,873

 

 

THE MEET GROUP, INC. AND SUBSIDIARIES

RECONCILIATION OF NET INCOME TO NON-GAAP NET INCOME

(UNAUDITED)

(in thousands, except share and per share data)

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

2020

 

2019

 

2020

 

2019

Net income

$

10,379

 

 

$

2,204

 

 

$

7,971

 

 

$

3,462

 

Stock-based compensation expense

2,850

 

 

2,865

 

 

6,035

 

 

5,290

 

Amortization of intangibles

2,176

 

 

2,778

 

 

4,353

 

 

5,340

 

Income tax expense

3,006

 

 

935

 

 

3,379

 

 

1,190

 

Acquisition, restructuring and other

1,335

 

 

25

 

 

4,705

 

 

504

 

Non-GAAP Net Income

$

19,746

 

 

$

8,807

 

 

$

26,443

 

 

$

15,786

 

 

 

 

 

 

 

 

 

GAAP basic net income per share

$

0.14

 

 

$

0.03

 

 

$

0.11

 

 

$

0.05

 

GAAP diluted net income per share

$

0.14

 

 

$

0.03

 

 

$

0.10

 

 

$

0.04

 

Basic Non-GAAP Net Income per share

$

0.27

 

 

$

0.12

 

 

$

0.37

 

 

$

0.21

 

Diluted Non-GAAP Net Income per share

$

0.26

 

 

$

0.11

 

 

$

0.35

 

 

$

0.20

 

 

 

 

 

 

 

 

 

Weighted-average shares outstanding:

 

 

 

 

 

 

 

Basic

72,030,143

 

 

75,648,621

 

 

71,516,532

 

 

75,250,562

 

Diluted

76,225,180

 

 

78,508,559

 

 

76,073,893

 

 

78,656,115

 

 

THE MEET GROUP, INC. AND SUBSIDIARIES

RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW

(UNAUDITED)

(in thousands)

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

2020

 

2019

 

2020

 

2019

Net cash provided by operating activities

$

15,554

 

 

$

10,605

 

 

$

21,105

 

 

$

13,967

 

Purchases of property and equipment

(146

)

 

(405

)

 

(233

)

 

(688

)

Free Cash Flow

$

15,408

 

 

$

10,200

 

 

$

20,872

 

 

$

13,279

 

About The Meet Group

The Meet Group (NASDAQ: MEET) is a leading provider of interactive dating solutions designed to meet the universal need for human connection. Our ecosystem of dating apps enables users around the world to interact through one-to-many livestreaming broadcasts and text-based conversations. Our top apps, MeetMe©, LOVOO©, Skout©, Tagged© and Growlr©, deliver live interactions and meaningful connections to millions of users daily. Headquartered in New Hope, PA, we have offices in Philadelphia, San Francisco, Dresden and Berlin. The Meet Group is committed to safety. You can find a description of current safety practices here: https://www.themeetgroup.com/safety-practices/. For more information, visit themeetgroup.com, and follow us on Facebook, Twitter or LinkedIn.

Forward-Looking Statements

Certain statements in this press release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including whether we will close our transaction with ProSiebenSat.1 and General Atlantic as anticipated. All statements other than statements of historical facts contained herein are forward-looking statements. The words “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “could,” “target,” “potential,” “project,” “outlook,” “is likely,” “expect” and similar expressions, as they relate to us, are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. Important factors that could cause actual results to differ from those in the forward-looking statements include the risk that our applications will not function easily or otherwise as anticipated, the risk that we will not launch additional features and upgrades as anticipated, the risk that unanticipated events affect the functionality of our applications with popular mobile operating systems, any changes in such operating systems that degrade our mobile applications’ functionality and other unexpected issues which could adversely affect usage on mobile devices. Further information on our risk factors is contained in our filings with the Securities and Exchange Commission (SEC), including the Form 10-K for the year ended December 31, 2019 filed with the SEC on March 12, 2020 and the Form 10-Q for the quarter ended March 31, 2020 filed with the SEC on May 6, 2020. Any forward-looking statement made by us herein speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

Regulation G – Non-GAAP Measures

The Company defines mobile traffic and engagement metrics (including MAU, DAU, chats per day, and new users per day) to include mobile app traffic for all properties and mobile web traffic for MeetMe, Skout and LOVOO. The Company defines a Video Daily Active User (vDAU) as a registered user of one of our platforms who has logged in and visited the Live feature, either as a broadcaster or viewer, on the day of measurement. The Company defines Average Daily Video Revenue per Video Daily Active User (vARPDAU) as the average daily video revenue per vDAU. The Company uses these user metrics for financial and operational decision-making and as a means to evaluate period-to-period comparisons. The Company presents user metrics because it believes them to be an important supplemental measure of performance that is commonly used by securities analysts, investors and other interested parties in the evaluation of companies in its industry and because it believes that these metrics provide useful information to investors regarding the Company’s financial condition and results of operations. There is no directly comparable U.S. generally accepted accounting principles (GAAP) measure to vARPDAU provided in the Company’s financial statements and therefore no reconciliation is provided.

The Company uses Adjusted EBITDA, Non-GAAP Net Income and Free Cash Flow, which are not calculated and presented in accordance with GAAP, in evaluating its financial and operational decision making and as a means to evaluate period-to period comparison. The Company uses these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. The Company presents these non-GAAP financial measures because it believes them to be an important supplemental measure of performance that is commonly used by securities analysts, investors and other interested parties in the evaluation of companies in our industry. We refer you to the reconciliations above for these historical non-GAAP financial measures to their directly comparable GAAP financial measures.

The Company defines Adjusted EBITDA as net income or loss before interest expense, benefit from or provision for income taxes, depreciation and amortization expense, stock-based compensation expense, non-recurring acquisition, restructuring and other expenses, gain or loss on foreign currency transactions, gain or loss on sale or disposal of assets, provision for expected credit losses outside the normal range and goodwill and long-lived asset impairment charges. The Company excludes stock-based compensation expense because it is non-cash in nature. The Company defines Non-GAAP Net Income as net income or loss before benefit from or provision for income taxes, amortization on intangibles, non-recurring acquisition, restructuring and other expenses, goodwill and long-lived asset impairment charges and non-cash stock-based compensation expense. The Company defines Free Cash Flow as net cash provided by or used in its operating activities, minus purchases of property and equipment, as shown in the consolidated statements of cash flows.

Non-GAAP financial measures should not be considered as an alternative to net income, operating income, cash flow from operating activities, as a measure of liquidity or any other financial measure. They may not be indicative of the historical operating results of the Company nor is it intended to be predictive of potential future results. Investors should not consider non-GAAP financial measures in isolation or as a substitute for performance measures calculated in accordance with GAAP.

Investor Contact:
Leslie Arena
larena@themeetgroup.com
267 714 6418

Media Contact:
Brandyn Bissinger
bbissinger@themeetgroup.com
267 446 7010

Source: The Meet Group, Inc.