Press Release

The Meet Group Reports Third Quarter 2018 Financial Results

Company Release - 11/7/2018 7:30 AM ET

NEW HOPE, Pa.--(BUSINESS WIRE)-- The Meet Group, Inc. (NASDAQ: MEET), a public market leader in the mobile meeting space, today reported financial results for its third quarter ended September 30, 2018.

Third Quarter 2018 Financial Highlights

  • Total revenue of $45.7 million, up 42% year over year
  • GAAP net income of $1.3 million, or $0.02 per diluted share, compared to $2.2 million, or $0.03 per diluted share in the prior year quarter
  • Adjusted EBITDA of $8.7 million, compared to adjusted EBITDA of $8.9 million in the prior year quarter
  • Non-GAAP net income of $7.6 million, or $0.10 per diluted share, compared to $8.1 million or $0.11 per diluted share in the prior year quarter

(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 grow video revenue across all of our apps,” said Geoff Cook, Chief Executive Officer. “In one year, we have increased the annualized video revenue run rate from virtually zero to $55 million for the month of October. Our successful Lovoo acquisition and integration, together with the dramatic growth of video revenue, have contributed to transforming our revenue mix. We tripled user pay revenue from a year ago, with that portion of our business now contributing 61% of our total revenue, up from 27% in the third quarter of 2017. We believe we are in the early days of the video opportunity and that livestreaming aligns perfectly with our mission: to facilitate human connection.

“Traffic in the quarter was also strong. We grew mobile daily active users 3% sequentially to 4.3 million and mobile monthly active users 7% sequentially to 14.6 million, reflecting quarter-over-quarter gains from each of MeetMe, Lovoo, Skout, and Tagged. For the quarter, daily live video users averaged approximately 870,000, up more than 36% sequentially. In addition, we recently surpassed our 100 millionth gift sent since launching Live monetization a year ago.”

“Advertising results were also solid,” continued Cook, “increasing sequentially for the second consecutive quarter. We continue to see evidence of a return to seasonal trends in advertising and remain cautiously optimistic about the opportunity to grow ad revenue in the fourth quarter.”

Third Quarter Financial Results

For the third quarter of 2018, the Company reported revenue of $45.7 million, an increase of 42% from $32.2 million in the prior year quarter.

GAAP net income was $1.3 million, or $0.02 per diluted share, compared to $2.2 million, or $0.03 per diluted share, in the prior year quarter. Adjusted EBITDA in the third quarter of 2018 was $8.7 million compared to $8.9 million in the prior year quarter, reflecting the ongoing shift towards user pay revenue.

The Company ended the quarter with $21.8 million in cash and cash equivalents.

Company Outlook

The Company is providing the following outlook for the fourth quarter of 2018 and is increasing its outlook for the full year 2018.

Fourth quarter 2018:

  • Revenue in the range of $47.8 million to $48.8 million
  • Adjusted EBITDA in the range of $8.7 million to $9.1 million

Full year 2018:

  • Revenue in the range of $174 million to $175 million
  • Adjusted EBITDA in the range of $30.2 million to $30.6 million
 
THE MEET GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
 
  September 30,
2018
  December 31,
2017
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 21,822,387 $ 24,158,444
Accounts receivable, net of allowance of $555,402 and $527,958 at September 30, 2018 and December 31, 2017, respectively 24,575,376 26,443,675
Prepaid expenses and other current assets   5,081,053     3,245,174  
Total current assets 51,478,816 53,847,293
Restricted cash 500,000 894,551
Goodwill 148,863,242 150,694,135
Property and equipment, net 3,253,213 4,524,118
Intangible assets, net 39,345,358 48,719,428
Deferred taxes 16,379,363 15,521,214
Other assets   1,972,799     1,144,032  
Total assets $ 261,792,791   $ 275,344,771  
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable $ 6,054,937 $ 6,277,846
Accrued liabilities 19,146,585 19,866,438
Current portion of long-term debt 15,000,000 15,000,000
Current portion of capital lease obligations 152,131 254,399
Deferred revenue   4,820,137     4,433,450  
Total current liabilities 45,173,790 45,832,133
Long-term capital lease obligations, less current portion, net 74,408 192,137
Long-term debt, less current portion, net 25,338,637 40,637,106
Long-term derivative liability 1,822,202 2,995,657
Other liabilities   114,627     147,178  
Total liabilities   72,523,664     89,804,211  
STOCKHOLDERS’ EQUITY:
Preferred stock, $.001 par value; authorized - 5,000,000 shares; 0 shares issued and outstanding at September 30, 2018 and December 31, 2017
Common stock, $.001 par value; authorized - 100,000,000 shares; 73,534,370 and 71,915,018 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively 73,534 71,918
Additional paid-in capital 415,572,623 408,029,068
Accumulated deficit (224,569,415 ) (221,435,888 )
Accumulated other comprehensive loss   (1,807,615 )   (1,124,538 )
Total stockholders’ equity   189,269,127     185,540,560  
Total liabilities and stockholders’ equity $ 261,792,791   $ 275,344,771  
 
 
THE MEET GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
 
 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

2018   2017 2018   2017
Revenues $ 45,716,053   $ 32,246,472   $ 126,155,591   $ 83,634,737  
Operating costs and expenses:
Sales and marketing 8,753,156 4,600,148 23,554,635 14,305,498
Product development and content 26,134,682 16,021,977 72,647,507 41,006,376
General and administrative 4,938,844 5,021,739 15,562,125 13,044,965
Depreciation and amortization 3,423,929 2,969,570 10,558,712 7,619,584
Acquisition and restructuring   416,141     3,378,838     4,802,694     8,648,692  
Total operating costs and expenses   43,666,752     31,992,272     127,125,673     84,625,115  
Income (loss) from operations   2,049,301     254,200     (970,082 )   (990,378 )
Other income (expense):
Interest income 3,823 1,374 13,773 5,344
Interest expense (559,345 ) (244,361 ) (1,838,325 ) (421,947 )
Gain (loss) on foreign currency transactions (6,229 ) 9,357 101,030 (2,072 )
Other   6,527         28,154      
Total other expense   (555,224 )   (233,630 )   (1,695,368 )   (418,675 )
Income (loss) before income tax benefit (expense) 1,494,077 20,570 (2,665,450 ) (1,409,053 )
Income tax benefit (expense)   (196,146 )   2,202,152     (484,552 )   4,934,216  
Net income (loss) $ 1,297,931   $ 2,222,722   $ (3,150,002 ) $ 3,525,163  
 
Basic and diluted net income (loss) per common stockholder:
Basic net income (loss) per common stockholder $ 0.02   $ 0.03   $ (0.04 ) $ 0.05  
Diluted net income (loss) per common stockholder $ 0.02   $ 0.03   $ (0.04 ) $ 0.05  
 
Weighted average shares outstanding:
Basic   73,362,467     71,800,274     72,704,205     67,711,324  
Diluted   79,365,576     76,078,563     72,704,205     72,425,863  
 
 
THE MEET GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
 
 

Nine Months Ended
September 30,

2018   2017
Cash flows from operating activities:
Net income (loss) $ (3,150,002 ) $ 3,525,163
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization 10,558,712 7,619,584
Stock-based compensation expense 7,026,991 5,802,046
Deferred taxes (694,951 ) (5,383,583 )
(Gain) loss on foreign currency transactions (101,030 ) 2,072
Bad debt expense 408,998 168,000
Amortization of loan origination costs 261,373 142,034
Change in derivatives (18,412 )
Changes in operating assets and liabilities:
Accounts receivable 1,302,954 3,850,379
Prepaid expenses, other current assets and other assets (2,326,004 ) 4,391,126
Accounts payable and accrued liabilities 4,414,400 2,669,471
Deferred revenue   515,743     (115,831 )
Net cash provided by (used in) operating activities   18,198,772     22,670,461  
Cash flows from investing activities:
Purchase of property and equipment (404,446 ) (1,055,020 )
Acquisition of business, net of cash and restricted cash acquired       (65,802,792 )
Net cash provided by (used in) investing activities   (404,446 )   (66,857,812 )
Cash flows from financing activities:
Proceeds from exercise of stock options 824,307 2,797,893
Proceeds from issuance of common stock 42,995,371
Proceeds from exercise of warrants 2,396,250
Payments of capital leases (211,290 ) (202,401 )
Proceeds from long-term debt 15,000,000
Payments for restricted stock awards withheld for taxes (306,127 ) (507,398 )
Payments of contingent consideration (5,000,000 )
Payments on long-term debt   (15,559,842 )   (15,000,000 )
Net cash provided by (used in) financing activities   (20,252,952 )   47,479,715  
Change in cash, cash equivalents, and restricted cash prior to effects of foreign currency exchange rate (2,458,626 ) 3,292,364
Effect of foreign currency exchange rate (translation)   (271,982 )   (2,072 )
Net (decrease) increase in cash, cash equivalents, and restricted cash   (2,730,608 )   3,290,292  
Cash, cash equivalents, and restricted cash at beginning of period   25,052,995     22,246,015  
Cash, cash equivalents, and restricted cash at end of period $ 22,322,387   $ 25,536,307  
Supplemental disclosure of cash flow information:
Cash paid for interest $ 1,598,781   $ 279,913  
 
 
THE MEET GROUP, INC. AND SUBSIDIARIES
RECONCILIATION OF TOTAL REVENUE
(UNAUDITED)
 
  Three Months Ended September 30,   Nine Months Ended September 30,
2018  

2017(1)

2018  

2017(1)

$

 

%

$

 

%

$

 

%

$

 

%

User pay revenue $ 28,058,843 61.4 % $ 8,582,700 26.6 % $ 76,034,926 60.3 % $ 18,342,865 21.9 %
Advertising   17,657,210 38.6 %   23,663,772 73.4 %   50,120,665 39.7 %   65,291,872 78.1 %
Total revenue $ 45,716,053 100.0 % $ 32,246,472 100.0 % $ 126,155,591 100.0 % $ 83,634,737 100.0 %
 

(1) Prior period amounts have not been adjusted under the modified retrospective adoption method.

 
 
THE MEET GROUP, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO ADJUSTED EBITDA
(UNAUDITED)
 
 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

2018   2017 2018   2017
Net income (loss) $ 1,297,931 $ 2,222,722 $ (3,150,002 ) $ 3,525,163
 
Interest expense 559,345 244,361 1,838,325 421,947
Income tax (benefit) expense 196,146 (2,202,152 ) 484,552 (4,934,216 )
Depreciation and amortization 3,423,929 2,969,570 10,558,712 7,619,584
Stock-based compensation expense 2,767,196 2,299,696 7,026,991 5,802,046
Acquisition and restructuring 416,141 3,378,838 4,802,694 8,648,692
(Gain) loss on foreign currency transactions   6,229   (9,357 )   (101,030 )   2,072  
Adjusted EBITDA $ 8,666,917 $ 8,903,678   $ 21,460,242   $ 21,085,288  
 
GAAP basic net income (loss) per common stockholder $ 0.02 $ 0.03   $ (0.04 ) $ 0.05  
GAAP diluted net income (loss) per common stockholder $ 0.02 $ 0.03   $ (0.04 ) $ 0.05  
Basic adjusted EBITDA per common stockholder $ 0.12 $ 0.12   $ 0.30   $ 0.31  
Diluted adjusted EBITDA per common stockholder $ 0.11 $ 0.12   $ 0.28   $ 0.29  
 
Weighted average shares outstanding:
Basic   73,362,467   71,800,274     72,704,205     67,711,324  
Diluted   79,365,576   76,078,563     77,831,545     72,425,863  
 
 
THE MEET GROUP, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME
(UNAUDITED)
 
 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

2018   2017 2018   2017
GAAP Net income (loss) $ 1,297,931 $ 2,222,722 $ (3,150,002 ) $ 3,525,163
 
Stock-based compensation expense 2,767,196 2,299,696 7,026,991 5,802,046
Amortization of intangibles 2,904,120 2,378,152 8,915,214 5,982,459
Income tax (benefit) expense 196,146 (2,202,152 ) 484,552 (4,934,216 )
Acquisition and restructuring   416,141   3,378,838     4,802,694     8,648,692  
Non-GAAP net income $ 7,581,534 $ 8,077,256   $ 18,079,449   $ 19,024,144  
 
GAAP basic net income (loss) per common stockholder $ 0.02 $ 0.03   $ (0.04 ) $ 0.05  
GAAP diluted net income (loss) per common stockholder $ 0.02 $ 0.03   $ (0.04 ) $ 0.05  
Basic Non-GAAP net income per common stockholder $ 0.10 $ 0.11   $ 0.25   $ 0.28  
Diluted Non-GAAP net income per common stockholder $ 0.10 $ 0.11   $ 0.23   $ 0.26  
 
Weighted average shares outstanding:
Basic   73,362,467   71,800,274     72,704,205     67,711,324  
Diluted   79,365,576   76,078,563     77,831,545     72,425,863  
 

Webcast and Conference Call Details

Management will host a webcast and conference call to discuss third quarter 2018 financial results today, November 7, 2018 at 8:30 a.m. Eastern time. To access the call dial 866-572-9351 (US and Canada) or 703-736-7482 (International) and when prompted provide the participant passcode 3187279 to the operator. An audio replay will be available at 855-859-2056 domestically or 404-537-3406 internationally, using passcode 3187279 through November 14, 2018. In addition, a webcast of the conference call will be available live on the Investor Relations section of the Company’s website at www.themeetgroup.com and a replay of the webcast will be available for 90 days.

About The Meet Group

The Meet Group (NASDAQ: MEET) is a portfolio of mobile social entertainment apps designed to meet the universal need for human connection. We leverage a powerful live-streaming video platform, empowering our global community to forge meaningful connections. Our primary apps, MeetMe©, LOVOO©, Skout©, and Tagged©, keep millions of mobile daily active users entertained and engaged and originate untold numbers of casual chats, friendships, dates, and marriages. Our apps, available on iPhone, iPad, and Android in multiple languages, use innovative products and sophisticated data science to let our users stream live video, send gifts, chat, and share photos. The Meet Group has a diversified revenue mix consisting of in-app purchases, subscription, and advertising, and we have offices in New Hope, Philadelphia, San Francisco, Dresden, and Berlin. For more information, visit themeetgroup.com, and follow us on FacebookTwitter 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 fourth quarter 2018 and full year 2018 revenue and Adjusted EBITDA will be in the projected range, whether momentum will continue as expected, whether we have set the stage for sustainable long-term revenue growth as expected, whether our investment in livestreaming video will continue to yield strong results, whether there is a return to seasonal trends in advertising, whether there is an opportunity to grow ad revenue in the fourth quarter and whether the opportunity to continue to grow video engagement and revenue is significant. 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,” “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, 2017 filed with the SEC on March 16, 2018 and our Quarterly Report on Form 10-Q for the quarters ended March 31, 2018 and June 30, 2018 filed with the SEC on May 7, 2018 and August 2, 2018, respectively. 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 uses Adjusted EBITDA and Non-GAAP Net Income, which are not calculated and presented in accordance with U.S. generally accepted accounting principles (“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 below.

The Company defines Adjusted EBITDA as earnings (or loss) from operations before interest expense, benefit or provision for income taxes, depreciation and amortization, stock-based compensation, changes in warrant obligations, nonrecurring acquisition, restructuring or other expenses, gain or loss on foreign currency adjustment, and goodwill and long-lived asset impairment charges, if any. The Company excludes stock-based compensation because it is non-cash in nature. The Company defines Non-GAAP Net Income as earnings (or loss) before benefit or provision for income taxes, amortization on intangibles, non-recurring acquisition and restructuring costs, goodwill and long-lived asset impairment charges and non-cash stock-based compensation.

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.

The Meet Group, Inc.
Investor Contact:
Leslie Arena, 267-714-6418
larena@themeetgroup.com
or
Media Contact:
Brandyn Bissinger, 267-446-7010
bbissinger@themeetgroup.com

Source: The Meet Group, Inc.