CHICAGO, Nov. 20, 2018 (GLOBE NEWSWIRE) -- Professional Diversity Network, Inc. (NASDAQ:IPDN), (“IPDN” or the “Company”), a global developer and operator of online and in-person networks that provides access to networking, training, educational and employment opportunities for diverse individuals, today announced its third quarter 2018 financial results for the quarter ended September 30, 2018.

Third Quarter Highlights include:

  • Excluding goodwill impairment charge, the total costs and expense decreased by $1.5 million, or 27.5% for the quarter ended September 30, 2018.  This reduction is primarily the result of decrease in general and administrative expenses and sales and marketing expenses.
     
  • Revenue generated from PDN Network increased by 2.6% for the three months ended September 30, 2018. The increase was a result of improved operational efficiencies and improvement in concerted efforts in sales growth, client retention, and customer satisfaction.
     
  • Reduced Adjusted EBITDA loss to $1.0 million for the quarter ended September 30, 2018 compared to $1.5 million for the quarter ended September 30, 2017.

Michael Wang, CEO of IPDN, said, "While the Company continued to sustain losses, we have taken great strides in reducing our costs and overheads and consequently greatly reduced our losses. Our focus is to enhance our diversity recruitment and women's networking segments, with a focus on delivering superior performance to our clients and members.”

Mr. Wang continued, “We continue to have more work to do in China and the U.S. in 2018 and 2019 to enhance shareholder value. In the first three quarters of 2018, we have successfully reduced general and administrative expenses by 35.2% and sales and marketing expenses by 46.3%. We will continue to remain vigilant in watching our costs and will invest in growth when we see opportunities to do so. We continue to believe that China presents significant opportunity for our future growth toward profitability and much of my time and the Company’s efforts will be in the China market.” 

2018 Third Quarter Financial Results

For the quarter ended September 30, 2018, IPDN reported total revenue of approximately $1.9 million, a 37.9% decrease from the quarter ended September 30, 2017, due primarily to management’s focus on reduction in sales and operations workforce as a means to cost savings and rebranding the business.

Total operating expenses for the quarter ended September 30, 2018, increased by 66.6% to $9.3 million from $5.6 million for the quarter ended September 30, 2017. This increase is primarily the result of a $5.3 million goodwill impairment charge recorded in the NAPW segment in September 2018. Excluding goodwill impairment charge, the total costs and expenses were $4.0 million, a decrease of $1.5 million compared to the same period in the prior year. This decrease is primarily the result of a $0.9 million decrease in general and administrative expenses and a $0.6 million decrease in sales and marketing expenses.

The Company reported a net loss for the quarter ended September 30, 2018 of $7.2 million or $1.49 per share compared to a net loss of $2.5 million, or $0.63 per share, for the corresponding period ended September 30, 2017.

Loss from continuing operations during the quarter ended September 30, 2018 was $7.2 million compared to a loss of $2.3 million in the quarter ended September 30, 2017. During the third quarter of 2018, the Company reported an Adjusted EBITDA loss of $1.0 million compared to Adjusted EBITDA loss of $1.5 million during the same period of the prior year, a decrease of $0.5 million.

As of September 30, 2018, the Company had $1.7 million in cash and $2.9 million in current assets, which represent a decrease of $1.2 million in cash and $2.7 million in current assets from December 31, 2017. Accounts receivable as of September 30, 2018 was $0.5 million, 41.8% less than the $0.9 million as of December 31, 2017. Total assets as of September 30, 2018 were $8.7 million, a decrease of $10.3 million from $19.0 million as of December 31, 2017.

       
Professional Diversity Network, Inc.      
CONDENSED CONSOLIDATED BALANCE SHEETS      
       
  September 30,  December 31, 
  2018  2017 
  (Unaudited)  (Adjusted) 
Current Assets:      
Cash and cash equivalents (Amounts related to variable interest entity of $907,590 and $1,671,378 as of September 30, 2018 and December 31, 2017, respectively) $1,653,149   $2,926,088 
Accounts receivable, net  527,565    905,723 
Incremental direct costs  21,158    145,292 
Prepaid expenses and other current assets  461,931    478,379 
Current assets from discontinued operations  194,209    1,180,099 
Total current assets  2,858,012    5,635,581 
         
Property and equipment, net  96,553    221,184 
Capitalized technology, net  187,258    153,381 
Goodwill  339,451    5,590,150 
Intangible assets, net  4,408,934    6,264,706 
Merchant reserve  760,849    760,849 
Security deposits  74,588    225,957 
Long-term assets from discontinued operations  -    137,114 
Total assets $8,725,645   $18,988,922 
         
Current Liabilities:        
Accounts payable $1,465,890   $1,120,444 
Accrued expenses  785,682    1,166,214 
Deferred revenue  2,440,998    4,004,015 
Customer deposits  14,563    - 
Current liabilities from discontinued operations  219,693    484,524 
Total current liabilities  4,926,826    6,775,197 
         
Deferred tax liability  1,206,098    1,803,519 
Deferred rent  45,800    56,082 
Other liabilities  -    52,321 
Long-term liabilities from discontinued operations  7,762    - 
Total liabilities  6,186,486    8,687,119 
         
Commitments and contingencies        
         
Stockholders' Equity        
Common stock, $0.01 par value; 45,000,000 shares authorized; 4,856,213 shares and 3,963,864
shares issued as of September 30, 2018 and December 31, 2017, respectively; and 4,855,165 shares
and 3,962,816 shares outstanding as of September 30, 2018 and December 31, 2017, respectively
  48,562    39,639 
Additional paid in capital  83,566,225    80,016,218 
Accumulated other comprehensive loss  (13,383)   28,848 
Accumulated deficit  (81,025,128)   (69,745,785)
Treasury stock, at cost; 1,048 shares at September 30, 2018 and December 31, 2017  (37,117)   (37,117)
Total stockholders' equity  2,539,159    10,301,803 
         
Total liabilities and stockholders' equity $8,725,645   $19,179,065 


       
Professional Diversity Network, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited)
       
  Three Months Ended September 30,  Nine Months Ended
September 30,
 
  2018  2017  2018  2017 
             
Revenues:            
Membership fees and related services $1,112,042  $2,204,909  $4,059,989  $7,465,202 
Recruitment services  705,040   694,454   2,018,832   1,977,101 
Product sales and other  3,180   18,285   13,197   91,226 
Education and training  -   68,890   16,048   898,584 
Consumer advertising and marketing solutions  74,360   65,188   218,637   189,217 
Total revenues  1,894,622   3,051,726   6,326,703   10,621,330 
                 
Costs and expenses:                
Cost of revenues  291,685   357,481   917,429   1,213,669 
Sales and marketing  977,148   1,598,530   3,093,798   5,759,849 
General and administrative  1,786,408   2,711,640   6,202,087   9,564,428 
Litigation settlement  342,472   155,216   342,472   155,216 
Goodwill impairment charge  5,250,699   -   5,250,699   9,920,305 
Depreciation and amortization  650,103   757,144   1,989,125   2,294,012 
Total costs and expenses  9,298,515   5,580,011   17,795,610   28,907,479 
                 
Loss from operations  (7,403,893)  (2,528,285)  (11,468,907)  (18,286,149)
                 
Other (expense) income                
Interest expense  29,549   -   29,549   (12,399)
Interest and other income  (4,368)  4,117   299   9,218 
Other finance costs  -   5,318   22,558   7,082 
Other income, net  25,181   9,435   52,406   3,901 
                 
Loss before income tax benefit  (7,378,712)  (2,518,850)  (11,416,501)  (18,282,248)
Income tax expense (benefit)  (189,950)  (201,123)  (562,415)  (1,126,220)
Loss from continuing operations  (7,188,762)  (2,317,727)  (10,854,086)  (17,156,028)
Loss from discontinued operations, net of tax, including gain on sale of $63,687  (40,735)  (170,358)  (425,258)  (508,582)
Net loss  (7,229,497)  (2,488,085)  (11,279,344)  (17,664,610)
                 
Other comprehensive loss:  (7,229,497)  (2,488,085)  (11,279,344)  (17,664,610)
Foreign currency translation adjustment  (28,480)  (3,056)  (42,231)  (1,435)
Comprehensive loss $(7,257,977) $(2,491,141) $(11,321,575) $(17,666,045)
                 
Basic and diluted loss per share:                
Continuing operations  (1.48)  (0.59)  (2.42)  (4.39)
Discontinued operations  (0.01)  (0.04)  (0.09)  (0.13)
Net loss $(1.49) $(0.63) $(2.51) $(4.52)
                 
Weighted average shares used in computing net
loss per common share:
                
Basic and diluted  4,856,044   3,932,886   4,485,358   3,912,282 



Professional Diversity Network, Inc.
ADJUSTED EBITDA (Unaudited)

We believe Adjusted EBITDA provides a meaningful representation of our operating performance that provides useful information to investors regarding our financial condition and results of operations. Adjusted EBITDA is commonly used by financial analysts and others to measure operating performance. Furthermore, management believes that this non-GAAP financial measure may provide investors with additional meaningful comparisons between current results and results of prior periods as they are expected to be reflective of our core ongoing business. However, while we consider Adjusted EBITDA to be an important measure of operating performance, Adjusted EBITDA and other non-GAAP financial measures have limitations, and investors should not consider them in isolation or as a substitute for analysis of our results as reported under GAAP. Further, Adjusted EBITDA, as we define it, may not be comparable to EBITDA, or similarly titled measures, as defined by other companies.

The following table provides a reconciliation of Net Loss from continuing operations to Adjusted EBITDA, the most directly comparable GAAP measure reported in our consolidated financial statements:

 Three Months Ended  Nine Months Ended 
 September 30,  September 30, 
 2018  2017  2018  2017 
         
 (in thousands)       
Loss from Continuing Operations$(7,189) $(2,318) $(10,854) $(17,156)
Stock-based compensation expense 171   146   637   731 
Goodwill impairment charge 5,251   -   5,251   9,920 
Depreciation and amortization 650   757   1,989   2,294 
Litigation settlement 342   155   342   155 
Interest Expense (30)  -   (30)  12 
Interest and other income 4   (4)  -   (9)
Income tax expense (benefit) (190)  (201)  (562)  (1,126)
Adjusted EBITDA$(991) $(1,465) $(3,227) $(5,179)
                

About Professional Diversity Network
Professional Diversity Network, Inc. (NASDAQ: IPDN) is a global developer and operator of online and in-person networks that provides access to networking, training, educational and employment opportunities for diverse professionals. We operate subsidiaries in the United States and China including National Association of Professional Women (NAPW), which is one of the largest, most recognized networking organizations of professional women in the country, spanning more than 200 industries and professions. Through an online platform and our relationship recruitment affinity groups, we provide our employer clients a means to identify and acquire diverse talent and assist them with their efforts to comply with the Equal Employment Opportunity Office of Federal Contract Compliance Program. Our mission is to utilize the collective strength of our affiliate companies, members, partners and unique proprietary platform to be the standard in business diversity recruiting, networking and professional development for women, minorities, veterans, LGBT and disabled persons globally.

Forward-Looking Statements
This press release contains certain forward-looking statements based on our current expectations, forecasts and assumptions that involve risks and uncertainties. This release does not constitute an offer to sell or a solicitation of offers to buy any securities of any entity. Forward-looking statements in this release are based on information available to us as of the date hereof. Our actual results may differ materially from those stated or implied in such forward-looking statements, due to risks and uncertainties associated with our business, which include the risk factors disclosed in our most recently filed Annual Report on Form 10-K and in our subsequent filings with the Securities and Exchange Commission. Forward-looking statements include statements regarding our expectations, beliefs, intentions or strategies regarding the future and can be identified by forward-looking words such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," “plan,” "should," and "would" or similar words. We assume no obligation to update the information included in this press release, whether as a result of new information, future events or otherwise. Our most recently filed Annual Report on Form 10-K, together with this press release and the financial information contained herein, are available on our website, www.prodivnet.com. Please click on "Investor Relations."

Contact:
Dragon Gate Investment Partners LLC

Tel: +1(646)-801-2803
Email: ipdn@dgipl.com