- Adjusted EBITDA increased 11 % for first six months of 2018 vs. 2017
- Gross margin increased to 78% for the second quarter
- Strengthened balance sheet with new $57 million term and revolver facility
- DeepIntent, the Company’s artificial intelligence platform, continued its strong growth trajectory
IRVINE, Calif., Aug. 14, 2018 (GLOBE NEWSWIRE) -- Propel Media, Inc. (OTCPink:PROM), a performance focused digital media and advertising company, today announced its financial results for the second quarter and six months ended June 30, 2018. Adjusted EBITDA for the quarter was $9.8 million, bringing the total for the first six months of 2018 to a record $19.0 million from $17.1 million in the same period a year ago. The improvement occurred despite revenues in the first half of 2018 improving only 2.6% to $41.2 million from $40.2 million in the same period a year ago.
Marv Tseu, Chief Executive Officer of Propel Media, commented: “The Company’s performance in the second quarter and first half of the year was outstanding. During the quarter, we focused on optimizing performance on our traditional direct response advertisers, and those efforts contributed to our improved Adjusted EBITDA on slightly lower revenues. As a result, we did not have to acquire as many new users to support our owned-and-operated network, thereby allowing us to grow gross margins significantly. Additionally, DeepIntent, our artificial intelligence and audience insights platform, is continuing to gain traction in the marketplace and showed meaningful month-over-month gains in the second quarter.”
Performance Highlights for the Second Quarter 2018:
- Revenue was $20.3 million in the second quarter of 2018 compared to $21.5 million in the second quarter of 2017
- Gross margin increased by 13% to 75% in the second quarter of 2018 from 65% in the second quarter of 2017
- Operating income was $8.7 million in the second quarter of 2018 compared to $8.9 million in the second quarter of 2017
- Adjusted EBITDA grew to $9.8 million in the second quarter of 2018 from $9.7 million in the second quarter of 2017
- Strengthened balance sheet with new $57 million, five-year credit facility, and eliminated $41.7 million in debt and other merger obligations since January 2015.
Mr. Tseu went on to say, “Yesterday, we announced our intention to deregister our common stock and suspend our reporting obligations with the SEC. We believe that there is great opportunity through DeepIntent and other diversification efforts to build shareholder value. We believe that being able to focus intently on these initiatives without the associated burdens of being an SEC reporting company will help us to maximize shareholder value in the future.”
Further details regarding the results of operations for the second quarter ended June 30, 2018 are included in the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 14, 2018.
About Propel Media
Propel Media connects digital marketers with unique audiences through intent-based technology that delivers superior performance with measurable results. We “Do Digital Differently” with a distinctive approach to digital powered by proprietary contextualization technology and a unique supply of ad inventory. Headquartered in Irvine, California, Propel Media is distinguished by its ability to deliver consistent results and its commitment to providing the highest level of client services to its partners.
For more information visit: www.propelmedia.com
Forward-Looking Statements:
This press release includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that are not statements of historical fact. Forward-looking statements herein include those statements regarding Propel Media’s capital structure, ability to execute its operating plan, anticipated financial flexibility and future financial performance and any other statements that are not statements of historical fact. These statements may be identified, without limitation, by the use of forward-looking terminology such as “anticipates”, “expects,” “will” or comparable terms or the negative thereof. Such statements are based on management’s current estimates, assumptions that management believes to be reasonable, and currently available competitive, financial, and economic data as of the date hereof. Forward-looking statements are inherently uncertain and subject to a variety of events, factors and conditions, many of which are beyond the control of Propel Media and not all of which are known to Propel Media, including, without limitation, Propel Media’s ability to realize anticipated cost savings from its deregistration, the ability to timely and effectively implement its deregistration plans, adverse effects on share price and liquidity following Propel Media’s deregistration, as well as more general business and financial risks such as those risk factors described from time to time in Propel Media’s reports filed with the SEC. Among the business and financial factors that could cause Propel Media’s actual results to differ materially are: loss of key advertising customers; inability to acquire new advertising customers; limitations on its ability to acquire new users profitably or at all, including, but not limited to, due to changing policies of Google, Facebook or another larger industry participant; inability to protect its intellectual property; inability to comply with the covenants in its credit facility; inability to obtain necessary financing or enter into equity arrangements with existing or new institutional shareholders; inability to execute its acquisition strategy; inability to effectively manage its growth; failure to effectively integrate the operations of acquired businesses; competition; loss of key personnel; increases in costs of operations; continued compliance with government regulations; and general economic conditions. Further, investors should keep in mind that Propel Media’s financial results in any particular period may not be indicative of future results. Propel Media is under no obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements, whether as a result of new information, future events, changes in assumptions or otherwise, except as required by law.
Use of Non-GAAP Financial Information
In addition to the results presented in accordance with generally accepted accounting principles, or GAAP, we present Adjusted EBITDA, which is a non-GAAP measure. Adjusted EBITDA, which is based upon the adjusted EBITDA which we report to our lenders, is a key measurement monitored by management, and is determined by taking net (loss) income (the nearest GAAP measure) and adding interest, taxes, depreciation, amortization, impairment charges, stock based compensation, bank fees, losses from extraordinary, unusual or nonrecurring items, noncash items, merger and other onetime expenses and severance. We believe that this non-GAAP measure, viewed in addition to and not in lieu of our reported GAAP results, provides useful information to investors by providing a more focused measure of operating results, enhances the overall understanding of past financial performance and future prospects, and allows for greater transparency with respect to key metrics used by management in its financial and operational decision making. The non-GAAP measure presented herein may not be comparable to similarly titled measures presented by other companies. Adjusted EBITDA has been reconciled to the nearest GAAP measure in the table following the financial statements attached to this press release.
Press Contact:
David Shapiro
Propel Media
press@propelmedia.com
| Propel Media, Inc. and Subsidiaries | |||||||
| Condensed Consolidated Balance Sheets | |||||||
| As of | |||||||
| June 30, | December 31, | ||||||
| 2018 | 2017 | ||||||
| Assets | (unaudited) | ||||||
| Current assets | |||||||
| Cash | $ | 3,425,000 | $ | 5,081,000 | |||
| Accounts receivable, net | 6,841,000 | 9,502,000 | |||||
| Prepaid expenses & other current assets | 1,100,000 | 1,157,000 | |||||
| Total current assets | 11,366,000 | 15,740,000 | |||||
| Property and equipment, net | 3,931,000 | 3,315,000 | |||||
| Intangible assets | 1,069,000 | 1,201,000 | |||||
| Goodwill | 6,028,000 | 6,028,000 | |||||
| Deferred tax assets, net | 17,547,000 | 18,932,000 | |||||
| Other assets | 286,000 | 137,000 | |||||
| Total assets | $ | 40,227,000 | $ | 45,353,000 | |||
| Liabilities and Stockholders’ Deficit | |||||||
| Current liabilities | |||||||
| Accounts payable | $ | 3,050,000 | $ | 4,419,000 | |||
| Accrued expenses | 2,710,000 | 4,252,000 | |||||
| Advertiser deposits | 1,157,000 | 2,137,000 | |||||
| Current portion of long-term debt | 4,664,000 | 6,181,000 | |||||
| Revolving credit facility | 7,000,000 | - | |||||
| Total current liabilities | 18,581,000 | 16,989,000 | |||||
| Long-term debt, less current portion, net | 44,014,000 | 60,725,000 | |||||
| Obligations to transferors | 4,868,000 | 15,203,000 | |||||
| Total liabilities | 67,463,000 | 92,917,000 | |||||
| Stockholders' Deficit | |||||||
| Preferred Stock, $0.0001 par value, authorized 1,000,000 shares, | - | - | |||||
| no shares issued or outstanding | |||||||
| Common Stock, $0.0001 par value, authorized 500,000,000 shares, | |||||||
| issued and outstanding 250,010,162 | |||||||
| at June 30, 2018 and December 31, 2017 | 25,000 | 25,000 | |||||
| Additional paid-in capital | 8,346,000 | 3,717,000 | |||||
| Accumulated deficit | (35,609,000 | ) | (51,306,000 | ) | |||
| Accumulated other comprehensive income | 2,000 | - | |||||
| Total stockholders’ deficit | (27,236,000 | ) | (47,564,000 | ) | |||
| Total liabilities and stockholders' deficit | $ | 40,227,000 | $ | 45,353,000 | |||
| Propel Media, Inc. and Subsidiaries | |||||||||||||||
| Condensed Consolidated Statements of Operations and Other Comprehensive Income | |||||||||||||||
| (unaudited) | |||||||||||||||
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||
| 2018 | 2017 | 2018 | 2017 | ||||||||||||
| Revenues | $ | 20,258,000 | $ | 21,515,000 | $ | 41,177,000 | $ | 40,147,000 | |||||||
| Cost of revenues | 4,486,000 | 7,423,000 | 10,048,000 | 14,356,000 | |||||||||||
| Gross profit | 15,772,000 | 14,092,000 | 31,129,000 | 25,791,000 | |||||||||||
| Operating expenses: | |||||||||||||||
| Salaries, commissions, benefits and related expenses | 4,185,000 | 3,334,000 | 8,430,000 | 6,419,000 | |||||||||||
| Technology, development and maintenance | 1,477,000 | 817,000 | 3,054,000 | 1,635,000 | |||||||||||
| Marketing and promotional | 71,000 | 12,000 | 160,000 | 29,000 | |||||||||||
| General and administrative | 620,000 | 325,000 | 1,130,000 | 677,000 | |||||||||||
| Professional services | 182,000 | 323,000 | 604,000 | 599,000 | |||||||||||
| Depreciation and amortization | 535,000 | 376,000 | 997,000 | 772,000 | |||||||||||
| Impairment of software and video library | - | - | - | 20,000 | |||||||||||
| Operating expenses | 7,070,000 | 5,187,000 | 14,375,000 | 10,151,000 | |||||||||||
| Operating income | 8,702,000 | 8,905,000 | 16,754,000 | 15,640,000 | |||||||||||
| Other income (expense): | |||||||||||||||
| Interest expense, net | (2,174,000 | ) | (3,612,000 | ) | (4,997,000 | ) | (6,522,000 | ) | |||||||
| Gain from extinguishment of debt | 6,861,000 | - | 6,861,000 | - | |||||||||||
| Other expense | - | - | - | (1,000 | ) | ||||||||||
| Total other income (expenses) | 4,687,000 | (3,612,000 | ) | 1,864,000 | (6,523,000 | ) | |||||||||
| Income before income tax expense | 13,389,000 | 5,293,000 | 18,618,000 | 9,117,000 | |||||||||||
| Income tax expense | (1,664,000 | ) | (1,938,000 | ) | (2,921,000 | ) | (3,364,000 | ) | |||||||
| Net income | 11,725,000 | 3,355,000 | 15,697,000 | 5,753,000 | |||||||||||
| Other comprehensive income | |||||||||||||||
| Foreign exchange gain | 2,000 | - | 2,000 | - | |||||||||||
| Comprehensive income | $ | 11,727,000 | $ | 3,355,000 | $ | 15,699,000 | $ | 5,753,000 | |||||||
| Net income per common share | $ | 0.05 | $ | 0.01 | $ | 0.06 | $ | 0.02 | |||||||
| Weighted average number of shares outstanding - basic and diluted | 250,010,162 | 250,010,162 | 250,010,162 | 250,010,162 | |||||||||||
| Propel Media, Inc. and Subsidiaries | ||||||||||||||
| Reconciliation of Non-GAAP Information | ||||||||||||||
| (Unaudited) | ||||||||||||||
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||
| Net income | $ | 11,725,000 | $ | 3,355,000 | $ | 15,697,000 | $ | 5,753,000 | ||||||
| Depreciation and amortization | 535,000 | 376,000 | 997,000 | 772,000 | ||||||||||
| Impairment charges | - | - | - | 20,000 | ||||||||||
| Interest expense, net | 2,174,000 | 3,612,000 | 4,997,000 | 6,522,000 | ||||||||||
| Stock-based compensation expense | 241,000 | 227,000 | 488,000 | 456,000 | ||||||||||
| Taxes | 1,670,000 | 1,940,000 | 2,934,000 | 3,368,000 | ||||||||||
| Bank fees | 30,000 | 26,000 | 57,000 | 52,000 | ||||||||||
| Amortization of DeepIntent deferred purchase price | 211,000 | - | 449,000 | - | ||||||||||
| Other one-time expenses | 14,000 | 206,000 | 175,000 | 206,000 | ||||||||||
| Severance | 83,000 | - | 83,000 | - | ||||||||||
| Gain on extinguishment of debt | (6,861,000 | ) | - | (6,861,000 | ) | - | ||||||||
| Adjusted EBITDA (a non-GAAP measure) | $ | 9,822,000 | $ | 9,742,000 | $ | 19,016,000 | $ | 17,149,000 | ||||||