The Meet Group, Inc. (NASDAQ: MEET), a public market leader in the
mobile meeting space, today reported financial results for its first
quarter ended March 31, 2019.
First Quarter 2019 Financial Highlights
- Total revenue of $49.5 million, up 32% year over year.
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GAAP net income of $1.3 million, or $0.02 per diluted share, compared
to a GAAP net loss of $4.2 million, or a loss of $0.06 per diluted
share, in the prior year quarter. -
Adjusted EBITDA of $8.1 million, compared to Adjusted EBITDA of $5.2
million in the prior year quarter. -
Non-GAAP net income of $7.0 million, or $0.09 per diluted share,
compared to $4.1 million, or $0.05 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.)
“Our strong progress in video continued in the first quarter,” said
Geoff Cook, Chief Executive Officer of The Meet Group. “We grew video
revenue to more than $20 million, a more than four-fold increase from
the year ago quarter, and we set new records growing video revenue on
each of our apps. Average video revenue per daily active video user
increased to 26 cents, up from 18 cents in the fourth quarter of 2018,
while approximately 20% of users engaged in video every day.
“Operationally, we completed the rollout of Battles in the quarter, with
the launch on Tagged and Lovoo, and we made good progress integrating
our newly acquired Growlr app. We improved operating efficiency from the
year ago quarter, growing adjusted EBITDA margin by 250 basis points.
“We are excited at the many opportunities to drive video growth. Over
the coming quarters we expect to bring new features and interactive
video formats including 1×1 live video, a levels system to further
gamify our livestreams, interactive games, and new shows, all of which
we expect will contribute to engagement and monetization.
“In 2018 we drove growth by rolling out livestreaming video to new
communities. In 2019, we expect to drive growth by executing on our
product roadmap and enabling community and connection for our users.
With 80% of our users still to reach with our video features and with
new and interesting monetization projects on the horizon, we look
forward to delivering new products that drive meaningful connections for
our users.”
First Quarter Financial Results
For the first quarter of 2019, the Company reported revenue of $49.5
million, an increase of $11.9 million, or 32%, from $37.6 million in the
first quarter of 2018. GAAP net income for the first quarter of 2019 was
$1.3 million, or $0.02 per diluted share, compared to a GAAP net loss of
$4.2 million, or a loss of $0.06 per diluted share, in the first quarter
of 2018. Adjusted EBITDA for the first quarter of 2019 was $8.1 million,
compared to $5.2 million in the first quarter of 2018. Non-GAAP net
income for the first quarter of 2019 was $7.0 million, or $0.09 per
diluted share, compared to $4.1 million, or $0.05 per diluted share, in
the first quarter of 2018.
The Company ended the quarter with $19.8 million in cash and cash
equivalents.
Company Outlook
The Company is providing the following outlook for the second quarter of
2019 and is reiterating its previously issued guidance for the full year
2019.
Second quarter 2019:
- Revenue in the range of $50.3 million to $51.3 million
- Adjusted EBITDA in the range of $8.6 million to $9.1 million
Full year 2019:
- Revenue in the range of $210.0 million to $215.0 million
- Adjusted EBITDA in the range of $39.0 million to $42.0 million
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THE MEET GROUP, INC. AND SUBSIDIARIES |
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CONDENSED CONSOLIDATED BALANCE SHEETS |
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(UNAUDITED) |
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March 31, |
December 31, |
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| ASSETS | |||||||||||
| CURRENT ASSETS: | |||||||||||
| Cash and cash equivalents | $ | 19,811,733 | $ | 28,365,725 | |||||||
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Accounts receivable, net of allowance of $708,385 and $383,579 at March 31, 2019 and December 31, 2018, respectively |
26,082,600 | 27,148,484 | |||||||||
| Prepaid expenses and other current assets | 5,928,680 | 4,911,057 | |||||||||
| Total current assets | 51,823,013 | 60,425,266 | |||||||||
| Goodwill | 156,698,026 | 148,132,873 | |||||||||
| Property and equipment, net | 4,262,868 | 4,633,764 | |||||||||
| Operating lease right-of-use assets, net | 3,362,781 | — | |||||||||
| Intangible assets, net | 37,240,026 | 36,558,439 | |||||||||
| Deferred taxes | 15,825,171 | 15,648,572 | |||||||||
| Other assets | 2,172,713 | 2,453,255 | |||||||||
| Total assets | $ | 271,384,598 | $ | 267,852,169 | |||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| CURRENT LIABILITIES: | |||||||||||
| Accounts payable | $ | 5,414,478 | $ | 9,071,193 | |||||||
| Accrued liabilities | 19,250,505 | 19,112,303 | |||||||||
| Current portion of long-term debt | 15,000,000 | 18,566,584 | |||||||||
| Current portion of capital lease obligations | 133,442 | 134,067 | |||||||||
| Current portion of operating lease liabilities | 1,432,077 | — | |||||||||
| Deferred revenue | 4,736,808 | 4,620,690 | |||||||||
| Total current liabilities | 45,967,310 | 51,504,837 | |||||||||
| Long-term capital lease obligations, less current portion | 15,100 | 58,683 | |||||||||
| Long-term debt, less current portion, net | 21,375,996 | 18,087,956 | |||||||||
| Long-term operating lease liabilities, less current portion | 1,974,827 | — | |||||||||
| Long-term derivative liability | — | 940,216 | |||||||||
| Other liabilities | 825,584 | 39,651 | |||||||||
| Total liabilities | 70,158,817 | 70,631,343 | |||||||||
| STOCKHOLDERS’ EQUITY: | |||||||||||
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Preferred stock, $.001 par value; authorized – 5,000,000 shares; no shares issued and outstanding at March 31, 2019 and December 31, 2018 |
— | — | |||||||||
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Common stock, $.001 par value; authorized – 100,000,000 shares; 75,270,035 and 74,697,526 shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively |
75,272 | 74,700 | |||||||||
| Additional paid-in capital | 422,471,569 | 419,455,818 | |||||||||
| Accumulated deficit | (219,018,426 | ) | (220,276,025 | ) | |||||||
| Accumulated other comprehensive loss | (2,302,634 | ) | (2,033,667 | ) | |||||||
| Total stockholders’ equity | 201,225,781 | 197,220,826 | |||||||||
| Total liabilities and stockholders’ equity | $ | 271,384,598 | $ | 267,852,169 | |||||||
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THE MEET GROUP, INC. AND SUBSIDIARIES |
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
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(UNAUDITED) |
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Three Months Ended |
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| 2019 | 2018 | ||||||||||
| Revenues | $ | 49,513,237 | $ | 37,637,793 | |||||||
| Operating costs and expenses: | |||||||||||
| Sales and marketing | 7,840,866 | 7,047,993 | |||||||||
| Product development and content | 31,123,375 | 22,101,537 | |||||||||
| General and administrative | 4,927,782 | 5,469,178 | |||||||||
| Depreciation and amortization | 3,198,104 | 3,629,603 | |||||||||
| Acquisition and restructuring | 478,995 | 3,349,951 | |||||||||
| Total operating costs and expenses | 47,569,122 | 41,598,262 | |||||||||
| Income (loss) from operations | 1,944,115 | (3,960,469 | ) | ||||||||
| Other income (expense): | |||||||||||
| Interest income | 32,389 | 7,208 | |||||||||
| Interest expense | (402,864 | ) | (607,686 | ) | |||||||
| Gain (loss) on foreign currency transactions | (65,209 | ) | 103,043 | ||||||||
| Other | 3,549 | (6,944 | ) | ||||||||
| Total other expense | (432,135 | ) | (504,379 | ) | |||||||
| Income (loss) before income tax benefit (expense) | 1,511,980 | (4,464,848 | ) | ||||||||
| Income tax benefit (expense) | (254,381 | ) | 252,187 | ||||||||
| Net income (loss) | $ | 1,257,599 | $ | (4,212,661 | ) | ||||||
| Basic and diluted net income (loss) per common stockholder: | |||||||||||
| Basic net income (loss) per common stockholder | $ | 0.02 | $ | (0.06 | ) | ||||||
| Diluted net income (loss) per common stockholder | $ | 0.02 | $ | (0.06 | ) | ||||||
| Weighted average shares outstanding: | |||||||||||
| Basic | 74,848,080 | 71,981,487 | |||||||||
| Diluted | 78,799,248 | 71,981,487 | |||||||||
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THE MEET GROUP, INC. AND SUBSIDIARIES |
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
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(UNAUDITED) |
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Three Months Ended |
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| 2019 | 2018 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net income (loss) | $ | 1,257,599 | $ | (4,212,661 | ) | ||||||
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Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
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| Depreciation and amortization | 3,198,104 | 3,629,603 | |||||||||
| Amortization right-of-use assets | 695,327 | — | |||||||||
| Stock-based compensation expense | 2,424,717 | 2,168,925 | |||||||||
| Deferred taxes | (146,956 | ) | (539,231 | ) | |||||||
| (Gain) loss on foreign currency transactions | 65,209 | (103,043 | ) | ||||||||
| Bad debt expense | 325,045 | 213,598 | |||||||||
| Amortization of loan origination costs | 38,040 | 86,527 | |||||||||
| Change in derivatives | — | — | |||||||||
| Change in contingent consideration obligations | 15,915 | — | |||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Accounts receivable | 1,187,419 | 5,988,039 | |||||||||
| Prepaid expenses, other current assets and other assets | (773,988 | ) | (793,908 | ) | |||||||
| Accounts payable and accrued liabilities | (5,008,559 | ) | 273,716 | ||||||||
| Deferred revenue | 85,043 | 723,907 | |||||||||
| Net cash provided by operating activities | 3,362,915 | 7,435,472 | |||||||||
| Cash flows from investing activities: | |||||||||||
| Purchase of property and equipment | (282,641 | ) | (172,642 | ) | |||||||
| Acquisition of business, net of cash and restricted cash acquired | (11,807,925 | ) | — | ||||||||
| Net cash used in investing activities | (12,090,566 | ) | (172,642 | ) | |||||||
| Cash flows from financing activities: | |||||||||||
| Proceeds from exercise of stock options | 680,989 | — | |||||||||
| Payments of capital leases | (40,885 | ) | (73,317 | ) | |||||||
| Proceeds from borrowings of debt | 7,000,000 | — | |||||||||
| Payments for restricted stock awards withheld for taxes | (89,383 | ) | (92,600 | ) | |||||||
| Payments on long-term debt | (7,316,584 | ) | (3,750,000 | ) | |||||||
| Net cash provided by (used in) financing activities | 234,137 | (3,915,917 | ) | ||||||||
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Change in cash, cash equivalents, and restricted cash prior to effects of foreign currency exchange rate |
(8,493,514 | ) | 3,346,913 | ||||||||
| Effect of foreign currency exchange rate (translation) | (60,478 | ) | 69,548 | ||||||||
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Net increase (decrease) in cash, cash equivalents, and restricted cash |
(8,553,992 | ) | 3,416,461 | ||||||||
| Cash, cash equivalents, and restricted cash at beginning of period | 28,365,725 | 25,052,995 | |||||||||
| Cash, cash equivalents, and restricted cash at end of period | $ | 19,811,733 | $ | 28,469,456 | |||||||
| Supplemental disclosure of cash flow information: | |||||||||||
| Cash paid for interest | $ | 361,303 | $ | 516,940 | |||||||
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THE MEET GROUP, INC. AND SUBSIDIARIES |
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RECONCILIATION OF TOTAL REVENUE |
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(UNAUDITED) |
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| Three Months Ended March 31, | |||||||||||||||||||
| 2019 | 2018 | ||||||||||||||||||
| $ | % | $ | % | ||||||||||||||||
| User pay revenue | $ | 35,825,109 | 72.4 | % | $ | 22,405,530 | 59.5 | % | |||||||||||
| Advertising | 13,688,128 | 27.6 | % | 15,232,263 | 40.5 | % | |||||||||||||
| Total revenue | $ | 49,513,237 | 100.0 | % | $ | 37,637,793 | 100.0 | % | |||||||||||
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THE MEET GROUP, INC. AND SUBSIDIARIES |
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RECONCILIATION OF GAAP NET INCOME TO ADJUSTED EBITDA |
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(UNAUDITED) |
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Three Months Ended |
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| 2019 | 2018 | ||||||||||
| Net income (loss) | $ | 1,257,599 | $ | (4,212,661 | ) | ||||||
| Interest expense | 402,864 | 607,686 | |||||||||
| Income tax (benefit) expense | 254,381 | (252,187 | ) | ||||||||
| Depreciation and amortization | 3,198,104 | 3,629,603 | |||||||||
| Stock-based compensation expense | 2,424,717 | 2,168,925 | |||||||||
| Acquisition and restructuring | 478,995 | 3,349,951 | |||||||||
| (Gain) loss on foreign currency transactions | 65,209 | (103,043 | ) | ||||||||
| Adjusted EBITDA | $ | 8,081,869 | $ | 5,188,274 | |||||||
| GAAP basic net income (loss) per common stockholder | $ | 0.02 | $ | (0.06 | ) | ||||||
| GAAP diluted net income (loss) per common stockholder | $ | 0.02 | $ | (0.06 | ) | ||||||
| Basic adjusted EBITDA per common stockholder | $ | 0.11 | $ | 0.07 | |||||||
| Diluted adjusted EBITDA per common stockholder | $ | 0.10 | $ | 0.07 | |||||||
| Weighted average shares outstanding: | |||||||||||
| Basic | 74,848,080 | 71,981,487 | |||||||||
| Diluted | 78,799,248 | 75,849,484 | |||||||||
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THE MEET GROUP, INC. AND SUBSIDIARIES |
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RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME |
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(UNAUDITED) |
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Three Months Ended |
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| 2019 | 2018 | ||||||||||
| GAAP Net income (loss) | $ | 1,257,599 | $ | (4,212,661 | ) | ||||||
| Stock-based compensation expense | 2,424,717 | 2,168,925 | |||||||||
| Amortization of intangibles | 2,561,903 | 3,056,609 | |||||||||
| Income tax (benefit) expense | 254,381 | (252,187 | ) | ||||||||
| Acquisition and restructuring | 478,995 | 3,349,951 | |||||||||
| Non-GAAP net income | $ | 6,977,595 | $ | 4,110,637 | |||||||
| GAAP basic net income (loss) per common stockholder | $ | 0.02 | $ | (0.06 | ) | ||||||
| GAAP diluted net income (loss) per common stockholder | $ | 0.02 | $ | (0.06 | ) | ||||||
| Basic Non-GAAP net income per common stockholder | $ | 0.09 | $ | 0.06 | |||||||
| Diluted Non-GAAP net income per common stockholder | $ | 0.09 | $ | 0.05 | |||||||
| Weighted average shares outstanding: | |||||||||||
| Basic | 74,848,080 | 71,981,487 | |||||||||
| Diluted | 78,799,248 | 75,849,484 | |||||||||
Webcast and Conference Call Details
Management will host a webcast and conference call to discuss first
quarter and year end 2019 financial results today, May 8, 2019 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 2494226 to the operator. An audio replay will be
available at 855-859-2056 domestically or 404-537-3406 internationally,
using passcode 2494226 through May 15, 2019. 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©, Tagged©, and Growlr®, 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 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 second quarter 2019 and full year 2019 revenue
and Adjusted EBITDA will be in the projected outlook range, whether our
strong progress in video will continue as expected, whether we will
continue to set new records in growing video reveue on each of our apps,
whether will complete the integration of our Growlr app successfully,
whether we will continue to drive video growth, whether in the coming
quarters we will bring new features and interactive video formats
including 1×1 live video, a levels system to further gamify our
livestreams, interactive games and shows, and if so whether they will
contribute to engagement and monetization as expected, whether we will
drive growth by executing on our product roadmap and enabling community
and connection for our users as expected, whether we will execute on the
video features and monetization projects in our roadmap as expected, and
whether will successfully deliver new products that drive meaningful
connections for our users. 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, 2018 filed with the SEC on March 8, 2019. 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 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 Video Revenue per Daily Active
User (vARPDAU) as the average daily 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 and Non-GAAP Net Income, 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 below for
these historical non-GAAP financial measures to their directly
comparable GAAP financial measures. Information reconciling
forward-looking Adjusted EBITDA to GAAP financial measures is
unavailable to the Company without unreasonable effort. The Company is
not able to provide reconciliations of Adjusted EBITDA to GAAP financial
measures because certain items required for such reconciliations are
outside of the Company’s control and/or cannot be reasonably predicted,
such as the provision for income taxes. Preparation of such
reconciliations would require a forward-looking balance sheet, statement
of income and statement of cash flow, prepared in accordance with GAAP,
and such forward-looking financial statements are unavailable to the
Company without unreasonable effort. The Company provides a range for
its adjusted EBITDA outlook that it believes will be achieved, however
it cannot accurately predict all the components of the Adjusted EBITDA
calculation.
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 disposal of assets, 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.
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