The Meet Group Reports Third Quarter 2019 Financial Results
Source: Business Wire
The Meet Group, Inc. (NASDAQ: MEET), a leading provider of interactive livestreaming solutions, today reported financial results for its third quarter ended September 30, 2019.
Third Quarter 2019 Financial Highlights
Total revenue of $52.6 million, up 15% from the prior year quarter.
GAAP net income of $3.0 million, or $0.04 per diluted share, compared to a GAAP net income of $1.3 million or $0.02 per diluted share in the prior year quarter.
Adjusted EBITDA of $11.0 million, compared to Adjusted EBITDA of $8.7 million in the prior year quarter.
Non-GAAP net income of $10.1 million, or $0.13 per diluted share, compared to $7.6 million, or $0.10 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.)
“We had a strong third quarter and we are off to a good start in the fourth quarter,” said Geoff Cook, Chief Executive Officer of The Meet Group. “Our product strategy and execution contributed to growing revenue and adjusted EBITDA, resulting in record-high free cash flow in the third quarter that we used to repurchase our stock. With the launch of Streamer Levels and one-on-one video chat, we are giving users even more reasons to engage in video. Just last week we further expanded our product portfolio with the launch of NextDate, our new livestreaming dating game. While early, in markets where NextDate is available, we’re seeing an approximately 20% increase in daily video users versus September, the month prior to launch.
“Video revenue for the third quarter grew approximately 85% from the prior year quarter to $20.3 million,” continued Cook. “Global average revenue per daily active video user was $0.27 cents in the quarter, and across our apps we had an average of 829,000 daily video users (20% of our total mobile daily active users where video is available). We expect to grow video revenue in the fourth quarter by 10-16% sequentially as new products and features contribute to increasing user engagement. Video revenue in October exceeded video revenue in every month of the third quarter. Furthermore the Company expects November and December video revenue to continue to increase from October.
“Advertising results for the quarter were also solid. Mobile ad revenue, which comprises approximately 90% of our total advertising revenue, grew year-over-year for the first time since the first quarter of 2017. We believe this progress sets the stage for continued positive momentum in the fourth quarter of 2019 and throughout 2020.
"In the third quarter we repurchased 3.4 million shares of our stock for $12 million, directing 100% of our free cash flow in the quarter toward repurchases. Since authorizing our share repurchase plan in June 2019, the Company has repurchased $17.7 million (4.8 million shares) through November 5, 2019. We expect to continue to repurchase shares pursuant to our share repurchase program.
“Looking to the fourth quarter and longer term, we believe we have compelling products that position us well for future growth. We remain confident that our product pipeline and capital allocation strategy will continue to deliver value to our shareholders.”
Third Quarter Financial Results
For the third quarter of 2019, the Company reported revenue of $52.6 million, an increase of $6.9 million, or 15%, from $45.7 million in the third quarter of 2018. GAAP net income for the third quarter of 2019 was $3.0 million, or $0.04 per diluted share, compared to GAAP net income of $1.3 million or $0.02 per diluted share in the third quarter of 2018. Adjusted EBITDA for the third quarter of 2019 was $11.0 million, compared to $8.7 million in the third quarter of 2018. Non-GAAP net income for the third quarter of 2019 was $10.1 million, or $0.13 per diluted share, compared to $7.6 million, or $0.10 per diluted share, in the third quarter of 2018.
The Company ended the quarter with $27.5 million in cash and cash equivalents.
Company Outlook
The Company is providing the following outlook for the fourth quarter and full year 2019.
Fourth quarter 2019:
Revenue in the range of $56.9 million to $58.4 million.
Adjusted EBITDA in the range of $12.6 million to $13.1 million.
Full year 2019:
Revenue in the range of $211.0 million to $212.5 million
Adjusted EBITDA in the range of $41.5 million to $42.0 million.
THE MEET GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30,
2019
December 31,
2018
Assets:
Current Assets:
Cash and cash equivalents
$
27,488,790
$
28,365,725
Accounts receivable, net of allowance of $600,070 and $383,579 as of September 30, 2019 and December 31, 2018, respectively
23,922,049
27,148,484
Prepaid expenses and other current assets
5,177,333
4,911,057
Total current assets
56,588,172
60,425,266
Goodwill
155,307,593
148,132,873
Property and equipment, net
3,832,875
4,633,764
Operating lease right-of-use assets
4,995,799
—
Intangible assets, net
31,444,141
36,558,439
Deferred taxes
15,380,576
15,648,572
Other assets
1,541,514
2,453,255
Total assets
$
269,090,670
$
267,852,169
Liabilities and Stockholders' Equity:
Current Liabilities:
Accounts payable
$
4,672,207
$
9,071,193
Accrued liabilities
20,070,961
19,112,303
Current portion of long-term debt, net
3,500,000
18,566,584
Current portion of finance lease obligations
12,913
134,067
Current portion of operating lease liabilities
2,138,029
—
Deferred revenue
4,071,239
4,620,690
Total current liabilities
34,465,349
51,504,837
Long-term finance lease obligations
8,323
58,683
Long-term debt, net
31,251,928
18,087,956
Long-term operating lease liabilities
2,900,105
—
Long-term derivative liability
636,612
940,216
Other liabilities
871,084
39,651
Total liabilities
70,133,401
70,631,343
Commitments and contingencies
Stockholders' Equity:
Preferred stock, $0.001 par value; authorized - 5,000,000 shares; no shares issued and outstanding as of September 30, 2019 and December 31, 2018
—
—
Common stock, $0.001 par value; authorized - 100,000,000 shares; 72,834,032 and 74,697,526 shares issued and outstanding as of September 30, 2019 and December 31, 2018, respectively
72,834
74,700
Additional paid-in capital
428,106,985
419,455,818
Accumulated deficit
(226,077,248
)
(220,276,025
)
Accumulated other comprehensive loss
(3,145,302
)
(2,033,667
)
Total stockholders’ equity
198,957,269
197,220,826
Total liabilities and stockholders’ equity
$
269,090,670
$
267,852,169
THE MEET GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2019
2018
2019
2018
Revenues
$
52,621,250
$
45,716,053
$
154,134,591
$
126,155,591
Operating costs and expenses:
Sales and marketing
8,748,021
8,753,156
25,648,417
23,554,635
Product development and content
30,573,574
26,134,682
91,846,746
72,647,507
General and administrative
5,320,424
4,938,844
16,140,643
15,562,125
Depreciation and amortization
3,451,197
3,423,929
10,079,319
10,558,712
Acquisition and restructuring
244,432
416,141
748,881
4,802,694
Total operating costs and expenses
48,337,648
43,666,752
144,464,006
127,125,673
Income (loss) from operations
4,283,602
2,049,301
9,670,585
(970,082
)
Other income (expense):
Interest income
28,752
3,823
88,746
13,773
Interest expense
(300,319
)
(559,345
)
(1,031,379
)
(1,838,325
)
(Loss) gain on foreign currency transactions
(27,051
)
(6,229
)
(94,640
)
101,030
Gain on disposal of assets
40,376
—
40,376
—
Other items of income, net
2,030
6,527
4,792
28,154
Total other expense
(256,212
)
(555,224
)
(992,105
)
(1,695,368
)
Income (loss) before income tax expense
4,027,390
1,494,077
8,678,480
(2,665,450
)
Income tax expense
(1,036,410
)
(196,146
)
(2,226,075
)
(484,552
)
Net income (loss)
$
2,990,980
$
1,297,931
$
6,452,405
$
(3,150,002
)
Basic and diluted net income (loss) per share:
Basic net income (loss) per share
$
0.04
$
0.02
$
0.09
$
(0.04
)
Diluted net income (loss) per share
$
0.04
$
0.02
$
0.08
$
(0.04
)
Weighted-average shares outstanding:
Basic
74,674,981
73,362,467
75,056,593
72,704,205
Diluted
76,205,022
79,365,576
77,836,975
72,704,205
THE MEET GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended
September 30,
2019
2018
Cash flows from operating activities:
Net income (loss)
$
6,452,405
$
(3,150,002
)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization
10,079,319
10,558,712
Amortization of right-of-use assets
1,902,760
—
Stock-based compensation expense
8,321,345
7,026,991
Deferred tax expense (benefit)
211,533
(694,951
)
Gain on disposal of assets
(40,376
)
—
Loss (gain) on foreign currency transactions
94,640
(101,030
)
Bad debt expense
1,661,987
408,998
Non-cash interest expense
214,063
261,373
Changes in derivative financial instruments
—
(18,412
)
Changes in contingent consideration obligations
111,417
—
Changes in operating assets and liabilities:
Accounts receivable
1,878,915
1,302,954
Prepaid expenses, other current assets and other assets
2,355,628
(2,326,004
)
Accounts payable and accrued liabilities
(6,080,069
)
4,414,400
Deferred revenue
(510,352
)
515,743
Net cash provided by operating activities
26,653,215
18,198,772
Cash flows from investing activities:
Purchases of property and equipment
(1,158,070
)
(404,446
)
Acquisition of business, net of cash acquired
(11,807,925
)
—
Net cash used in investing activities
(12,965,995
)
(404,446
)
Cash flows from financing activities:
Proceeds from exercise of stock options
702,717
824,307
Repurchases of common stock
(12,257,073
)
—
Payments of finance leases
(167,378
)
(211,290
)
Proceeds from revolving loan
7,000,000
—
Proceeds from term loan, net
34,954,373
—
Payments for restricted stock awards withheld for taxes
(371,316
)
(306,127
)
Payments of loan origination costs
(125,170
)
—
Payments of revolving loan
(7,000,000
)
—
Payments of contingent consideration
—
(5,000,000
)
Payments of term loan
(36,940,158
)
(15,559,842
)
Net cash used in financing activities
(14,204,005
)
(20,252,952
)
Change in cash and cash equivalents prior to effect of foreign currency exchange rate
(516,785
)
(2,458,626
)
Effect of foreign currency exchange rate
(360,150
)
(271,982
)
Net decrease in cash and cash equivalents
(876,935
)
(2,730,608
)
Cash and cash equivalents at beginning of period
28,365,725
25,052,995
Cash and cash equivalents at end of period
$
27,488,790
$
22,322,387
Supplemental disclosure of cash flow information:
Cash paid for interest
$
865,260
$
1,598,781
THE MEET GROUP, INC.
DISAGGREGATION OF REVENUES
(UNAUDITED)
Three Months Ended September 30,
Nine Months Ended September 30,
2019
2018
2019
2018
$
%
$
%
$
%
$
%
User pay revenue:
Video
$
20,333,310
38.6
%
$
10,968,643
24.0
%
$
61,841,899
