Press release

The Meet Group Reports Fourth Quarter and Full Year 2019 Financial Results

0
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The Meet Group, Inc. (NASDAQ: MEET), a leading provider of interactive livestreaming solutions, today reported financial results for its fourth quarter and full year ended December 31, 2019.

Fourth Quarter 2019 Financial Highlights

  • Total revenue of $57.6 million, up 10% from the prior year quarter.
  • GAAP net income of $4.9 million, or $0.07 per diluted share, compared with $4.3 million, or $0.06 per diluted share in the prior year quarter.
  • Adjusted EBITDA of $13.3 million, compared with $10.6 million in the prior year quarter.
  • Non-GAAP net income of $12.4 million, or $0.17 per diluted share, compared with $9.4 million, or $0.12 per diluted share, in the prior year quarter.

Full Year 2019 Financial Highlights

  • Total revenue of $211.7 million, up 19% from the prior year.
  • GAAP net income of $11.3 million, or $0.15 per diluted share, compared with $1.1 million, or $0.02 per diluted share in the prior year.
  • Adjusted EBITDA of $42.2 million, compared with $32.0 million in the prior year.
  • Non-GAAP net income of $38.3 million, or $0.50 per diluted share, compared with $27.5 million, or $0.36 per diluted share, in the prior year.

(See the important discussion about the presentation of non-GAAP financial measures, and reconciliation to the most direct comparable GAAP financial measures, below.)

“This is an exciting time for The Meet Group,” said Geoff Cook, Chief Executive Officer of The Meet Group. “I believe the transaction with ProSiebenSat.1 is a tremendous validation of our strategy to marry livestreaming video with dating. The combination of our companies adds our strength in freemium dating to ProSieben’s existing premium services, resulting in a more dynamic and well-rounded dating portfolio. Further, the transaction will allow us to pursue new strategic opportunities and accelerate growth by leveraging our video platform and ProSieben’s experience with content and entertainment.

“We are pleased with our results in the fourth quarter, which capped a solid year in which we more than doubled video revenue, launched new growth initiatives and further strengthened our safety leadership through new products and partner collaboration. I am proud of our team and all that we have accomplished.”

Fourth Quarter and Full Year Financial Results

For the fourth quarter of 2019, the Company reported revenue of $57.6 million, an increase of $5.1 million, or 10%, from $52.5 million in the fourth quarter of 2018. GAAP net income for the fourth quarter of 2019 was $4.9 million, or $0.07 per diluted share, compared with $4.3 million, or $0.06 per diluted share in the fourth quarter of 2018. Adjusted EBITDA for the fourth quarter of 2019 was $13.3 million, compared with $10.6 million in the fourth quarter of 2018. Non-GAAP net income for the fourth quarter of 2019 was $12.4 million, or $0.17 per diluted share, compared with $9.4 million, or $0.12 per diluted share, in the fourth quarter of 2018.

For the year ended December 31, 2019, the Company reported revenue of $211.7 million, an increase of $33.1 million, or 19%, from $178.6 million for the year ended December 31, 2018. GAAP net income for the year ended December 31, 2019 was $11.3 million, or $0.15 per diluted share, compared with $1.1 million, or $0.02 per diluted share for the year ended December 31, 2018. Adjusted EBITDA for the year ended December 31, 2019 was $42.2 million, compared with $32.0 million for the year ended December 31, 2018. Non-GAAP net income for the year ended December 31, 2019 was $38.3 million, or $0.50 per diluted share, compared with $27.5 million, or $0.36 per diluted share, for the year ended December 31, 2018.

The Company ended the year with $27.2 million in cash and cash equivalents.

The Meet Group Acquisition by ProSiebenSat.1 and General Atlantic

On March 5, 2020, the Company announced that it had entered into a definitive agreement to be acquired by ProSiebenSat.1’s and General Atlantic’s joint company NuCom Group in an all cash transaction for $6.30 per fully diluted share representing an enterprise value of approximately $500 million. The transaction is expected to close in the second half of 2020. Due to the pending acquisition by ProSiebenSat.1`s and General Atlantic’s joint company NuCom Group, the Company does not plan to host an earnings conference call or provide forward-looking guidance.

 

THE MEET GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except par value and share data)

 

 

 

 

 

 

 

2019

 

2018

 

 

(Unaudited)

 

 

Assets:

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

27,241

 

 

$

28,366

 

Accounts receivable, net of allowance for bad debts of $269 and $384 as of December 31, 2019 and 2018, respectively

25,234

 

 

27,148

 

Prepaid expenses and other current assets

6,062

 

 

4,911

 

Total current assets

58,537

 

 

60,425

 

Deferred tax assets

16,233

 

 

19,049

 

Property and equipment, net

3,625

 

 

4,634

 

Operating lease right-of-use assets

7,034

 

 

 

Intangible assets, net

29,305

 

 

36,558

 

Goodwill

156,687

 

 

148,133

 

Other assets

1,300

 

 

2,454

 

Total assets

$

272,721

 

 

$

271,253

 

Liabilities and stockholders’ equity:

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

5,346

 

 

$

9,071

 

Accrued liabilities

20,090

 

 

19,112

 

Current portion of long-term debt, net

3,500

 

 

18,567

 

Current portion of operating lease liabilities

2,081

 

 

 

Current portion of finance lease obligations

10

 

 

134

 

Deferred revenue

3,884

 

 

4,621

 

Total current liabilities

34,911

 

 

51,505

 

Long-term debt, net

30,375

 

 

18,088

 

Long-term operating lease liabilities

5,024

 

 

 

Long-term finance lease obligations

53

 

 

59

 

Long-term derivative liabilities

1,451

 

 

940

 

Deferred tax liabilities

2,773

 

 

3,400

 

Other liabilities

894

 

 

40

 

Total liabilities

75,481

 

 

74,032

 

Commitments and contingencies

 

 

 

Stockholders’ equity:

 

 

 

Preferred stock, $0.001 par value; authorized – 5,000,000 shares; no shares issued and outstanding as of December 31, 2019 and 2018

 

 

 

Series A junior participating preferred stock, $0.001 par value; authorized – 200,000 shares; no shares issued and outstanding as of December 31, 2019 and 2018

 

 

 

Common stock, $0.001 par value; authorized – 100,000,000 shares; 70,756,013 and 74,697,526 shares issued and outstanding as of December 31, 2019 and 2018, respectively

71

 

 

75

 

Additional paid-in capital

430,959

 

 

419,456

 

Accumulated deficit

(231,441

)

 

(220,276

)

Accumulated other comprehensive loss

(2,349

)

 

(2,034

)

Total stockholders’ equity

197,240

 

 

197,221

 

Total liabilities and stockholders’ equity

$

272,721

 

 

$

271,253

 

 
 

THE MEET GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share data)

 

 

Three Months Ended December 31,

 

Year Ended December 31,

 

2019

 

2018

 

2019

 

2018

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

 

Revenue

$

57,567

 

 

$

52,458

 

 

$

211,701

 

 

$

178,613

 

Operating costs and expenses:

 

 

 

 

 

 

 

Sales and marketing

8,683

 

 

8,531

 

 

34,332

 

 

32,086

 

Product development and content

32,578

 

 

30,110

 

 

124,425

 

 

102,757

 

General and administrative

5,791

 

 

5,532

 

 

21,931

 

 

21,094

 

Depreciation and amortization

3,052

 

 

3,217

 

 

13,131

 

 

13,776

 

Acquisition, restructuring and other

(334

)

 

236

 

 

414

 

 

5,038

 

Total operating costs and expenses

49,770

 

 

47,626

 

 

194,233

 

 

174,751

 

Income from operations

7,797

 

 

4,832

 

 

17,468

 

 

3,862

 

Other income (expense):

 

 

 

 

 

 

 

Interest income

18

 

 

11

 

 

107

 

 

24

 

Interest expense

(270

)

 

(484

)

 

(1,301

)

 

(2,322

)

(Loss) gain on disposal of assets

 

 

(95

)

 

41

 

 

(95

)

Gain (loss) on foreign currency transactions

43

 

 

(3

)

 

(51

)

 

97

 

Other items of (expense) income, net

(6

)

 

16

 

 

(1

)

 

44

 

Total other expense

(215

)

 

(555

)

 

(1,205

)

 

(2,252

)

Income before income tax (expense) benefit

7,582

 

 

4,277

 

 

16,263

 

 

1,610

 

Income tax (expense) benefit

(2,704

)

 

17

 

 

(4,929

)

 

(467

)

Net income

$

4,878

 

 

$

4,294

 

 

$

11,334

 

 

$

1,143

 

 

 

 

 

 

 

 

 

Basic and diluted net income per share:

 

 

 

 

 

 

 

Basic net income per share

$

0.07

 

 

$

0.06

 

 

$

0.15

 

 

$

0.02

 

Diluted net income per share

$

0.07

 

 

$

0.06

 

 

$

0.15

 

 

$

0.02

 

 

 

 

 

 

 

 

 

Weighted-average shares outstanding:

 

 

 

 

 

 

 

Basic

71,332,964

 

 

74,217,118

 

 

74,118,035

 

 

73,085,542

 

Diluted

74,233,459

 

 

76,863,201

 

 

76,921,420

 

 

75,616,439

 

 
 

THE MEET GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

 

 

 

 

 

Year Ended December 31,

 

 

2019

 

2018

 

(Unaudited)

 

 

Cash flows from operating activities:

 

 

 

Net income

$

11,334

 

 

$

1,143

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

Depreciation and amortization

13,131

 

 

13,776

 

Amortization of right-of-use assets

2,567

 

 

 

Stock-based compensation expense

11,107

 

 

9,286

 

Deferred tax expense (benefit)

2,213

 

 

(130

)

(Gain) loss on disposal of assets

(41

)

 

95

 

Loss (gain) on foreign currency transactions

51

 

 

(97

)

Bad debt expense

1,884

 

 

598

 

Non-cash interest expense

323

 

 

327

 

Changes in derivative financial instruments

 

 

28

 

Changes in contingent consideration obligations

1,059

 

 

 

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

489

 

 

(1,519

)

Prepaid expenses, other current assets and other assets

1,378

 

 

(2,773

)

Accounts payable and accrued liabilities

(7,114

)

 

7,495

 

Deferred revenue

(765

)

 

368

 

Net cash provided by operating activities

37,616

 

 

28,597

 

Cash flows from investing activities:

 

 

 

Purchases of property and equipment

(1,515

)

 

(2,507

)

Acquisition of business, net of cash acquired

(11,808

)

 

 

Net cash used in investing activities

(13,323

)

 

(2,507

)

Cash flows from financing activities:

 

 

 

Proceeds from exercise of stock options

770

 

 

2,562

 

Repurchases of common stock

(22,505

)

 

 

Payments of finance leases

(191

)

 

(241

)

Proceeds from revolving loan

7,000

 

 

 

Proceeds from term loan, net

34,907

 

 

 

Payments for restricted stock awards withheld for taxes

(372

)

 

(420

)

Payments of loan origination costs

(108

)

 

 

Payments of revolving loan

(7,000

)

 

 

Payments of contingent consideration

 

 

(5,000

)

Payments of term loan

(37,815

)

 

(19,310

)

Net cash used in financing activities

(25,314

)

 

(22,409

)

Change in cash and cash equivalents prior to effect of foreign currency exchange rate

(1,021

)

 

3,681

 

Effect of foreign currency exchange rate

(104

)

 

(368

)

Net (decrease) increase in cash and cash equivalents

(1,125

)

 

3,313

 

Cash and cash equivalents at beginning of period

28,366

 

 

25,053

 

Cash and cash equivalents at end of period

$

27,241

 

 

$

28,366

 

Supplemental disclosure of cash flow information:

 

 

 

Cash paid for interest

$

1,027

 

 

$

1,971

 

Cash paid for income taxes

$

2,723

 

 

$

 

 

 

THE MEET GROUP, INC.

DISAGGREGATION OF REVENUE

(UNAUDITED)

(In thousands)

 

 

 

 

 

Three Months Ended December 31,

 

Year Ended December 31,

 

2019

 

2018

 

2019

 

2018

 

$

 

%

 

$

 

%

 

$

 

%

 

$

 

%

User pay revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Video

$

22,272

 

 

38.7

%

 

$

15,189

 

 

29.0

%

 

$

84,113

 

 

39.7

%

 

$

39,282

 

 

22.0

%

Subscription and other in-app products

14,913

 

 

25.9

%

 

16,106

 

 

30.7

%

 

61,683

 

 

29.2

%

 

68,048

 

 

38.1

%

Total user pay revenue

37,185

 

 

64.6

%

 

31,295

 

 

59.7

%

 

145,796

 

 

68.9

%

 

107,330

 

 

60.1

%

Advertising

20,382

 

 

35.4

%

 

21,163

 

 

40.3

%

 

65,905

 

 

31.1

%

 

71,283

 

 

39.9

%

Total revenue

$

57,567

 

 

100.0

%

 

$

52,458

 

 

100.0

%

 

$

211,701

 

 

100.0

%

 

$

178,613

 

 

100.0

%

 
 

THE MEET GROUP, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP NET INCOME TO ADJUSTED EBITDA

(UNAUDITED)

(In thousands)

 

 

Three Months Ended

December 31,

 

Year Ended December 31,

 

2019

 

2018

 

2019

 

2018

Net income

$

4,878

 

 

$

4,294

 

 

$

11,334

 

 

$

1,143

 

Interest expense

270

 

 

484

 

 

1,301

 

 

2,322

 

Income tax expense (benefit)

2,704

 

 

(17

)

 

4,929

 

 

467

 

Depreciation and amortization expense

3,052

 

 

3,217

 

 

13,131

 

 

13,776

 

Stock-based compensation expense

2,786

 

 

2,259

 

 

11,107

 

 

9,286

 

Acquisition, restructuring and other

(334

)

 

236

 

 

414

 

 

5,038

 

Loss (gain) on disposal of assets

 

 

95

 

 

(41

)

 

95

 

(Gain) loss on foreign currency transactions

(43

)

 

3

 

 

51

 

 

(97

)

Adjusted EBITDA

$

13,313

 

 

$

10,571

 

 

$

42,226

 

 

$

32,030

 

 
 

THE MEET GROUP, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME

(UNAUDITED)

(In thousands, except share and per share data)

 

 

 

 

 

Three Months Ended

December 31,

 

Year Ended December 31,

 

2019

 

2018

 

2019

 

2018

GAAP net income

$

4,878

 

 

$

4,294

 

 

$

11,334

 

 

$

1,143

 

Stock-based compensation expense

2,786

 

 

2,259

 

 

11,107

 

 

9,286

 

Amortization of intangibles

2,402

 

 

2,605

 

 

10,533

 

 

11,520

 

Income tax expense (benefit)

2,704

 

 

(17

)

 

4,929

 

 

467

 

Acquisition, restructuring and other

(334

)

 

236

 

 

414

 

 

5,038

 

Non-GAAP net income

$

12,436

 

 

$

9,377

 

 

$

38,317

 

 

$

27,454

 

 

 

 

 

 

 

 

 

GAAP basic net income per share

$

0.07

 

 

$

0.06

 

 

$

0.15

 

 

$

0.02

 

GAAP diluted net income per share

$

0.07

 

 

$

0.06

 

 

$

0.15

 

 

$

0.02

 

Basic Non-GAAP net income per share

$

0.17

 

 

$

0.13

 

 

$

0.52

 

 

$

0.38

 

Diluted Non-GAAP net income per share

$

0.17

 

 

$

0.12

 

 

$

0.50

 

 

$

0.36

 

 

 

 

 

 

 

 

 

Weighted-average shares outstanding:

 

 

 

 

 

 

 

Basic

71,332,964

 

 

74,217,118

 

 

74,118,035

 

 

73,085,542

 

Diluted

74,233,459

 

 

76,863,201

 

 

76,921,420

 

 

75,616,439

 

 
 

THE MEET GROUP, INC. AND SUBSIDIARIES

RECONCILIATION OF NET CASH FLOW PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW

(UNAUDITED)

(In thousands)

 

 

Three Months Ended

December 31,

 

Year Ended December 31,

 

2019

 

2018

 

2019

 

2018

Net cash provided by operating activities

$

10,963

 

 

$

10,398

 

 

$

37,616

 

 

$

28,597

 

Less: Purchases of property and equipment

(357

)

 

(2,103

)

 

(1,515

)

 

(2,507

)

Free cash flow

$

10,606

 

 

$

8,295

 

 

$

36,101

 

 

$

26,090

 

 

Webcast and Conference Call Details

Due to the pending acquisition by ProSiebenSat.1’s and General Atlantic’s joint company NuCom Group, the Company does not plan to host an earnings conference call.

About The Meet Group

The Meet Group (NASDAQ: MEET) is a leading provider of interactive livestreaming solutions designed to meet the universal need for human connection. Our ecosystem of livestreaming apps enables users around the world to interact through one-to-many livestreaming broadcasts and text-based conversations. Our top apps, MeetMe©, LOVOO©, Skout©, Tagged© and Growlr©, deliver live interactions and meaningful connections to millions of users daily. Headquartered in New Hope, PA, we have offices in Philadelphia, San Francisco, Dresden and Berlin. The Meet Group is committed to safety. You can find a description of current safety practices here: https://www.themeetgroup.com/safety-practices/. 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 the transaction with ProSiebenSat.1 is a validation of our business strategy; whether a combined company will add our strength in freemium dating to ProSieben’s existing premium services; whether a combined company will result in a more dynamic and well-rounded dating portfolio; whether the transaction will allow us to pursue new strategic opportunities and accelerate growth; whether our current levels of video revenue growth will continue; and whether and when our transaction with ProSieben will close. 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 and our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2019, June 30, 2019 and September 30, 2019 filed with the SEC on May 9, 2019, July 31, 2019 and November 8, 2019, 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 defines a 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 Daily Video Revenue per Daily Active User (vARPDAU) as the average daily video 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, Non-GAAP Net Income and Free Cash Flow, 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 net income (or loss) before interest expense, benefit from or provision for income taxes, depreciation and amortization expense, stock-based compensation expense, non-recurring acquisition, restructuring or other expenses, gain or loss on foreign currency transactions, gain or loss on sale or disposal of assets, bad debt expense outside the normal range, and goodwill and long-lived asset impairment charges. The Company excludes stock-based compensation expense because it is non-cash in nature. The Company defines Non-GAAP Net Income as net income (or loss) before benefit from or provision for income taxes, amortization on intangibles, non-recurring acquisition, restructuring and other expenses, goodwill and long-lived asset impairment charges and non-cash stock-based compensation expense. The Company defines Free Cash Flow as net cash provided by or used in its operating activities, minus purchases of property and equipment, as shown in the consolidated statements of cash flows.

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.