SITO Reports Fourth Quarter and Full-Year 2018 Results 


JERSEY CITY, N.J., March 29, 2019 (GLOBE NEWSWIRE) -- SITO Mobile Ltd(NASDAQ: SITO), an insights-driven Consumer Behavior and Location Sciences™ company, announced today its financial results for the three months and full-year ended December 31, 2018.

Fourth Quarter Financial Overview

  • Revenue for the three months ended December 31, 2018 was $11.1 million
  • Net loss in the fourth quarter of 2018 was $1.1 million, compared to $6.8 million in the corresponding period of 2017. The year-over-year improvement reflects, among other things, a $2.2 million reduction in executive compensation, and $1.0 million in employee salary and commissions that were eliminated as part of a targeted restructuring initiative
  • Adjusted EBITDA* for the fourth quarter of 2018 was $145,000 compared to a loss of $2.0 million in the corresponding period of 2017
  • Detailed financial results for the fourth quarter and the full year ended December 31, 2018 are described in the financial summary sections below

Full-Year 2018 and Recent Operational Achievements

“The strategic actions we took in 2018 and the early part of 2019 to restructure and strengthen our organization were necessary to better position SITO to scale our operations augment our revenue model with transformative, multi-year, consumer insights and data-driven transactions and capitalize on the significant market opportunity in front of us,” commented Tom Pallack, SITO’s Chief Executive Officer.  “Over the past several months, we have revamped and enhanced every aspect of the organization, strengthened our product offering and the ability to leverage our proprietary and unique location-based, data-driven capabilities, while streamlining our corporate structure, lowering our overall head count, bolstering our balance sheet and reducing G&A expenses.”

"Our business and revenue mix continue to shift towards enterprise customers that are utilizing SITO consumer insights for data-driven transactions," Pallack added. "During the fourth quarter of 2018, sales to enterprise customers and recurring engagements leveraging our proprietary data represented 35% of our total sales.  We believe we now have the right management team in place and the necessary access to funds through our new factoring agreement to effectively drive our brand direct and channel partner strategy.”

Fourth Quarter Financial Summary

Total revenue for the three months ended December 31, 2018 decreased by $3.6 million, or 24%, to $11.1 million, compared to $14.7 million in the corresponding period of 2017. The decrease in total revenue was primarily due to a reduction in the average spending per customer, which we are actively working to offset with an increase of enterprise data-driven engagements with larger brands and agencies.

Gross profit for the three months ended December 31, 2018 was $5.6 million, or 50% of total revenue, compared to $6.8 million, or 46% of total revenue, for the corresponding period of 2017.  The increase in gross profit as a percentage of total revenue was due primarily to higher gross margins in new client engagements.

Loss from operations for the three months ended December 31, 2018 was $1.3 million, compared to a loss from operations of $6.9 million in the corresponding period of 2017. The decrease in loss from operations was primarily due to an overall decrease in office and employee compensation expense as part of management’s strategic restructuring efforts.

Net loss for the three months ended December 31, 2018 was $1.1 million, or ($0.04) per basic and diluted share, compared to a net loss of $6.7 million, or ($0.31) per basic and diluted share, for the corresponding period of 2017.

Adjusted EBITDA* for the three months ended December 31, 2018 was $145,000, compared to a loss of $2.0 million in the corresponding period of 2017.

* To supplement our financial results presented in accordance with generally accepted accounting principles in the United States (“GAAP”), SITO Mobile has presented Adjusted EBITDA, a non-GAAP financial measure, because many of our investors use these non-GAAP financial measures to monitor the Company's performance. Generally, a non-GAAP financial measure is a quantitative assessment of a company's performance, financial position or cash flow that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. Non-GAAP financial measures should not be considered as a substitute for, or superior to, the measures of financial performance prepared in accordance with GAAP. 

Full-Year Financial Summary

Total revenue for the year ended December 31, 2018 declined by $3.2 million, or 7%, to $39.7 million, compared to total revenue of $42.9 million for the year ended December 31, 2017.  The decrease in total revenue was primarily due to a reduction in the average spending per customer, which we are actively working to offset with an increase of enterprise data-driven engagements with larger brands and agencies.

Gross profit for the year ended December 31, 2018 was $18.4 million, or 46% of total revenue, compared to $20.7 million, or 48% of total revenue, for the year ended December 31, 2017.  The reduction in gross profit was primarily driven by lower revenues.  
                                                        
Loss from operations for the year ended December 31, 2018 was $18.5 million, compared to a loss from operations of $14.4 million for the year ended December 31, 2017, which reflects, among other things, a decrease in revenue of $3.2 million and an increase in sales and marketing expense of $4.7 million.

Net loss for the year ended December 31, 2018 was $17.0 million, or ($0.68) per basic and diluted share, compared to a net loss of $15.0 million, or $(0.69) per basic and diluted share, for the year ended December 31, 2017.
                                                                                                                                        
Adjusted EBITDA* for year ended December 31, 2018  was a loss of $10.1 million, compared to an Adjusted EBITDA loss of $2.6 million for the year ended December 31, 2017.

Balance Sheet Summary

The Company ended the year with $2.6 million in cash and cash equivalents, compared to cash and cash equivalents $3.6 million at December 31, 2017. Subsequent to December 31, 2018 the company entered into a new factoring and security agreement with Fast Pay Partners LLC that provides up to $9.5 million in accounts receivable financing, with an option to expand the facility by an additional $5.5 million dollars later this year.

Conference Call Information

Date: Friday, March 29, 2019
Time: 9:00 a.m. Eastern Time (ET)
Dial in Number for U.S. & Canadian Callers: 877-407-8293
Dial in Number for International Callers (Outside U.S. & Canada): 201-689-8349

The conference call will also be webcasted live on the Investor Relations section of SITO’s IR web site at http://ir.sitomobile.com/ir-calendar.

A replay will be available for 2 weeks starting on March 29, 2018 at approximately 11:00 a.m. ET. To access the replay, please dial 877-660-6853 in the U.S. and 201-612-7415 for international callers. The conference ID# is 13689171.

About SITO Mobile, Ltd. 

SITO delivers consumer location-based data-driven solutions for brands spanning strategic insights and media campaign delivery services. Through Consumer Behavior and Location Sciences™, SITO explores the consumer journey yielding a powerful strategic knowledge asset for executives and strategic decision makers delivering actionable insights to understand and influence consumer behaviors.

Our consumer location focused science reveals deep, real-time understandings of consumer movements, interests, actions, associations, and experiences providing increased clarity for brands navigating business decisions, developing advertising campaigns, and advancing business imperatives. The company is home to a proprietary location-data technology stack and has amassed a multi-year consumer behavioral, movement, location, and demographic database arming clients with a powerful resource for identifying real-time insights, longitudinal behavioral research, and delivery of successful media campaigns. SITO’s in-store targeting, proximity targeting, geo-conquesting and attribution data combine to create and optimize measurable hyper-targeted campaigns for brands. For more information regarding SITO’s science, technology and solutions spanning media and research, visit www.sitomobile.com.

About Non-GAAP Financial Measures

We present EBITDA and Adjusted EBITDA and in this press release to provide a supplemental measure of our operating performance. We define EBITDA as earnings before interest expense, income tax expense, depreciation and amortization expense, and Adjusted EBITDA, as EBITDA before stock based compensation, certain non-recurring professional expenses related to pending or threatened contested solicitations of the Company’s shareholders, investigations of former executives, defense of certain class action lawsuits, and implementation of a section 382 rights plan. We believe EBITDA and Adjusted EBITDA are useful performance measures used by us to facilitate a comparison of our operating performance and earnings on a consistent basis from period-to-period and to provide for a more complete understanding of factors and trends affecting our business than measures under generally accepted accounting principles in the United States of America (GAAP) can provide alone. The non-GAAP measures included in this release, however, should be considered in addition to, and not as a substitute for or superior to, operating income, cash flows, or other measures of financial performance prepared in accordance with GAAP. Please refer to the financial tables included below for a reconciliation of GAAP to non-GAAP measures.

Cautionary Statement Regarding Certain Forward-Looking Information

This announcement contains forward-looking statements. These statements are based on our management’s beliefs and assumptions and on information currently available to our management. Forward-looking statements include statements concerning the following: SITO’s plans and initiatives; our possible or assumed future results of operations; our ability to attract and retail customers; our ability to sell additional products and services to customers; our competitive position; our industry environment; and our potential growth opportunities. You should not place undue reliance on forward-looking statements, because they involve known and unknown risks, uncertainties and other factors, which are, in some cases, beyond our control and which could materially affect results. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under “Risk Factors” in our Annual Report on Form 10-K and the reports we file with the SEC.  Actual events or results may vary significantly from those implied or projected by the forward-looking statements due to these risk factors.  No forward-looking statement is a guarantee of future performance. You should read our Annual Report on Form 10-K and the documents that we reference in our Annual Report on Form 10-K and have filed as exhibits thereto with the Securities and Exchange Commission, or the SEC, with the understanding that our actual future results and circumstances may be materially different from what we expect, as described in this announcement. Forward-looking statements are made based on management’s beliefs, estimates and opinions on the date the statements are made and the Company undertakes no obligation to update forward-looking statements if these beliefs, estimates and opinions or other circumstances should change, except as may be required by applicable law. Although we believe that the expectations reflected in the forward-looking statements are reasonable, SITO is not guaranteeing, and cannot guarantee, future financial and operating results, levels of business activity, performance or achievements.

IR Contact:

Rob Fink
Hayden IR
646.415.8972
SITO@haydenir.com


SITO Mobile, Ltd.
CONSOLIDATED STATEMENTS OF OPERATIONS

         
    For the Three Months Ended For the Years Ended
    December 31, December 31,
    2018  2017  2018  2017 
           
Revenue        
 Media placement$  11,116,172 $  14,696,065 $  39,746,351 $  42,859,777 
 Licensing and royalties   -     -     -     130,653 
 Total revenue   11,116,172    14,696,065    39,746,351    42,990,430 
           
Cost of Revenue        
 Cost of revenue   5,525,155    7,878,174    21,343,912    22,242,286 
 Gross profit   5,591,017    6,817,891    18,402,439    20,748,144 
           
Operating Expenses        
 Sales and marketing   3,564,946    3,914,245    19,213,687    14,522,230 
 General and administrative   3,155,437    6,194,355    17,009,684    16,029,040 
 Legal settlement - See notes 16   -     3,500,000    -     3,500,000 
 Depreciation and amortization   146,584    141,395    647,680    1,137,985 
 Total operating expenses   6,866,967    13,749,995    36,871,051    35,189,255 
           
  Loss from operations   (1,275,950)   (6,932,104)   (18,468,612)   (14,441,111)
           
Other Income (Expense)        
 Earnings from joint venture   -     -     -     1,464,754 
 Gain (loss) on revaluation of warrant liability   207,136    158,646    1,364,704    (477,810)
 Other income   1,123    -     118,753    -  
 Interest income (expense), net   (6,467)   2,613    1,830    (1,296,436)
           
  Net loss before income taxes   (1,074,158)   (6,770,845)   (16,983,325)   (14,750,603)
           
  Income tax (expense) benefit   (1,886)   80,522    (82,282)   80,522 
           
  Net loss from continuing operations   (1,076,044)   (6,690,323)   (17,065,607)   (14,670,081)
           
Discontinued Operations        
 Income from operations of discontinued component   -     (56,013)   -     (368,857)
           
  Net income from discontinued operations   -     (56,013)   -     (368,857)
           
    Net loss$  (1,076,044)$  (6,746,336)$  (17,065,607)$  (15,038,938)
           
 Basic and diluted net (loss) per share        
  Continuing operations   (0.04)   (0.30)   (0.68)   (0.69)
  Discontinued operations   -     (0.00)   -     (0.02)
  Basic and diluted net (loss) per share$  (0.04)$  (0.31)$  (0.68)$  (0.71)
           
 Basic and diluted weighted average shares outstanding   25,453,327    22,009,540    24,926,197    21,249,985 
           
           

SITO Mobile, Ltd.
CONSOLIDATED BALANCE SHEETS

        
    December 31, 
    2018 2017 
        
Assets     
 Current assets     
  Cash and cash equivalents$  2,597,246$  3,611,438 
  Accounts receivable, net   10,206,664   13,005,718 
  Other prepaid expenses    469,041   374,380 
  Assets from discontinued operations   -    10,596 
        
    Total current assets   13,272,951   17,002,132 
        
 Property and equipment, net   343,572   449,949 
        
 Other assets     
  Capitalized software development costs, net   861,699   1,485,285 
  Intangible assets:     
    Patents, net   630,857   742,574 
    Other intangible assets, net   897,007   1,168,007 
  Goodwill   6,444,225   6,444,225 
  Other assets    114,101   92,420 
        
    Total other assets   8,947,889   9,932,511 
        
    Total assets$  22,564,412$  27,384,592 


Liabilities and Stockholders' Equity      
 Current liabilities     
  Accounts payable $  4,377,805 $  6,506,902  
  Accrued expenses   4,610,146    9,911,540  
  Deferred revenue   264,493    -  
  Current obligations under capital lease   3,571    2,756  
  Warrant liability   174,684    1,539,388  
  Liabilities from discontinued operations   -    210,789  
        
   Total current liabilities   9,430,699    18,171,375  
        
 Long-term liabilities     
  Obligations under capital lease   7,644    -  
        
   Total long-term liabilities   7,644    -  
        
   Total liabilities   9,438,343    18,171,375  
        
 Commitments and contingencies - See notes 16     
        
 Stockholders' Equity      
  Preferred stock, $.0001 par value, 5,000,000 shares authorized;     
    none outstanding   -    -  
  Common stock, $.001 par value; 100,000,000 shares authorized,     
  25,529,078 shares issued and outstanding as of December 31, 2018; and     
  22,039,529 shares issued and outstanding as of December 31, 2017   25,527    22,038  
  Additional paid-in capital   185,983,898    165,008,928  
  Accumulated deficit   (172,883,356)   (155,817,749) 
        
   Total stockholders' equity    13,126,069    9,213,217  
        
   Total liabilities and stockholders' equity $  22,564,412 $  27,384,592  
        
        

SITO Mobile, Ltd.
RECONCILIATION OF GAAP NET INCOME TO ADJUSTED EBITDA

  For the Three Months Ended  For the Years Ended 
  December 31,  December 31, 
  2018  2017   2018  2017  
           
Net (loss)$  (1,076,044)$  (6,746,336) $  (17,065,607)$  (15,038,938) 
Net income (loss) from discontinued operations   -     (56,013)    -     (368,857) 
Net (loss) from continuing operations   (1,076,044)   (6,690,323)    (17,065,607)   (14,670,081) 
Adjustments to reconcile net (loss) to EBITDA:          
Depreciation and amortization expense included in cost of revenue and operating expenses:          
Amortization included in cost of revenue   207,690    225,609     764,375    438,094  
Depreciation and other amortization   146,584    141,395     647,680    1,137,985  
Total depreciation and amortization expense   354,274    367,004     1,412,055    1,576,079  
Interest income (expense), net   (6,467)   2,613     1,830    (1,296,436) 
Income tax expense   (1,886)   80,522     (82,282)   80,522  
           
EBITDA   (713,417)   (6,406,454)    (15,573,100)   (11,878,088) 
           
Adjustments to reconcile EBITDA:          
Stock based compensation expense included in operating expenses:          
Sales and marketing   302,590    342,674     1,805,944    817,061  
General and administrative   728,661    560,941     4,377,613    1,348,333  
 Total stock based compensation expense   1,031,251    903,615     6,183,557    2,165,394  
           
Gain (loss) on warrant revaluation   207,136    158,646     1,364,704    (477,810) 
           
Certain non-recurring expenses          
Other litigation   (8,254)   3,526,760     509,421    3,526,935  
Investigations of former executives   42,603    66,447     86,674    741,360  
Class action lawsuits   -     893     35,991    235,062  
Section 382 rights plan   -     -      -     135,228  
Contested proxy solicitation pending of threatened against the Company   -     96,780     59,998    2,020,370  
Total non-recurring expenses   34,349    3,690,880     692,084    6,658,955  
           
Adjusted EBITDA$  145,047 $  (1,970,605) $  (10,062,163)$  (2,575,929)