MEET Meet Group Inc

The Meet Group, Inc. (NASDAQ: MEET), a leading provider of interactive livestreaming solutions, today reported financial results for its first quarter ended March 31, 2020.

First Quarter 2020 Highlights

• Total revenue of $55.1 million, up 11% from the first quarter of 2019.
• GAAP net loss of $2.4 million, or $0.03 per diluted share, compared with GAAP net income of $1.3 million, or $0.02 per diluted share in the first quarter of 2019.
• Adjusted EBITDA of $7.9 million, compared with $8.1 million in the first quarter of 2019.
• Non-GAAP net income of $6.7 million, or $0.09 per diluted share, compared with $7.0 million, or $0.09 per diluted share, in the first quarter of 2019.
• Transaction with ProSiebenSat.1’s and General Atlantic’s joint company NuCom Group expected to close in the second half of 2020.

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

“The need to connect has never been greater and live video is helping to meet that need,” said Geoff Cook, Chief Executive Officer of The Meet Group. “We are seeing the impacts of COVID-19 across our business as video revenue and minutes increased to new highs, while advertising revenue declined from the year ago period due to the growing effect of the coronavirus on ad spend. Total daily active users were largely unchanged sequentially. Adjusted EBITDA for the quarter reflects the impact of higher flow-through advertising dollars being replaced by video revenue growth.

“We are pleased with our performance in the first quarter and we continue to progress toward closing the transaction with ProSiebenSat.1 and General Atlantic in the second half of 2020.”

First Quarter Financial Results

For the first quarter of 2020, the Company reported revenue of $55.1 million, an increase of $5.6 million, or 11%, from $49.5 million in the first quarter of 2019. GAAP net loss for the first quarter of 2020 was $2.4 million, or $0.03 per diluted share, compared with GAAP net income of $1.3 million or $0.02 per diluted share in the first quarter of 2019. Adjusted EBITDA for the first quarter of 2020 was $7.9 million, compared with $8.1 million in the first quarter of 2019. Non-GAAP net income for the first quarter of 2020 was $6.7 million, or $0.09 per diluted share, compared with $7.0 million, or $0.09 per diluted share, in the first quarter of 2019.

The Company ended the year with $32.1 million in cash and cash equivalents.

Outlook and Conference Call

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)

 

 

(Unaudited)

 

 

 

March 31, 2020

 

December 31, 2019

Assets:

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

32,110

 

 

$

27,241

 

Accounts receivable, net

23,966

 

 

25,234

 

Prepaid expenses and other current assets

5,820

 

 

6,062

 

Total current assets

61,896

 

 

58,537

 

Deferred tax assets

16,211

 

 

16,233

 

Property and equipment, net

3,047

 

 

3,625

 

Operating lease right-of-use assets

7,138

 

 

7,034

 

Intangible assets, net

26,945

 

 

29,305

 

Goodwill

155,693

 

 

156,687

 

Other assets

850

 

 

1,300

 

Total assets

$

271,780

 

 

$

272,721

 

Liabilities and stockholders' equity:

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

7,518

 

 

$

5,346

 

Accrued liabilities

18,915

 

 

20,090

 

Current portion of long-term debt

3,500

 

 

3,500

 

Current portion of operating lease liabilities

2,527

 

 

2,081

 

Current portion of finance lease obligations

9

 

 

10

 

Deferred revenue

3,563

 

 

3,884

 

Total current liabilities

36,032

 

 

34,911

 

Long-term debt, net

29,523

 

 

30,375

 

Long-term operating lease liabilities

4,723

 

 

5,024

 

Long-term finance lease obligations

48

 

 

53

 

Long-term derivative liabilities

477

 

 

1,451

 

Deferred tax liabilities

2,888

 

 

2,773

 

Other liabilities

—

 

 

894

 

Total liabilities

73,691

 

 

75,481

 

Commitments and contingencies

 

 

 

Stockholders' equity:

 

 

 

Preferred stock, $0.001 par value; authorized - 5,000,000 shares; no shares issued and outstanding as of March 31, 2020 and December 31, 2019

—

 

 

—

 

Series A junior participating preferred stock, $0.001 par value; authorized - 200,000 shares; no shares issued and outstanding as of March 31, 2020 and December 31, 2019

—

 

 

—

 

Common stock, $0.001 par value; authorized - 100,000,000 shares; 71,185,492 and 70,756,013 shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively

71

 

 

71

 

Additional paid-in capital

434,622

 

 

430,959

 

Accumulated deficit

(234,073

)

 

(231,441

)

Accumulated other comprehensive loss

(2,531

)

 

(2,349

)

Total stockholders’ equity

198,089

 

 

197,240

 

Total liabilities and stockholders’ equity

$

271,780

 

 

$

272,721

 

THE MEET GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(in thousands, except share and per share data)

 

 

 

 

 

Three Months Ended March 31,

 

 

2019

 

2018

Revenue

$

55,066

 

 

$

49,513

 

Operating costs and expenses:

 

 

 

Sales and marketing

7,714

 

 

7,841

 

Product development and content

37,671

 

 

31,123

 

General and administrative

5,030

 

 

4,928

 

Depreciation and amortization

2,820

 

 

3,198

 

Acquisition, restructuring and other

3,370

 

 

479

 

Total operating costs and expenses

56,605

 

 

47,569

 

(Loss) income from operations

(1,539

)

 

1,944

 

Other income (expense):

 

 

 

Interest income

13

 

 

32

 

Interest expense

(396

)

 

(403

)

Loss on foreign currency transactions

(7

)

 

(65

)

Loss on disposal of assets

(108

)

 

—

 

Other items of income, net

2

 

 

4

 

Total other expense

(496

)

 

(432

)

(Loss) income before income tax expense

(2,035

)

 

1,512

 

Income tax expense

(373

)

 

(254

)

Net (loss) income

$

(2,408

)

 

$

1,258

 

 

 

 

 

Basic and diluted net (loss) income per share:

 

 

 

Basic net (loss) income per share

$

(0.03

)

 

$

0.02

 

Diluted net (loss) income per share

$

(0.03

)

 

$

0.02

 

 

 

 

 

Weighted-average shares outstanding:

 

 

 

Basic

71,001,906

 

 

74,848,080

 

Diluted

71,001,906

 

 

78,799,248

 

THE MEET GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)

 

 

 

 

 

Three Months Ended March 31,

 

 

2020

 

2019

Cash flows from operating activities:

 

 

 

Net (loss) income

$

(2,408

)

 

$

1,258

 

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

 

 

 

Depreciation and amortization

2,820

 

 

3,198

 

Amortization of right-of-use assets

635

 

 

695

 

Stock-based compensation expense

3,185

 

 

2,425

 

Deferred tax expense (benefit)

9

 

 

(147

)

Loss on disposal of assets

108

 

 

—

 

Loss on foreign currency transactions

7

 

 

65

 

Provision for expected credit losses

82

 

 

325

 

Non-cash interest expense

120

 

 

38

 

Changes in derivative financial instruments

171

 

 

—

 

Changes in contingent consideration obligations

23

 

 

16

 

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

944

 

 

1,187

 

Prepaid expenses, other current assets and other assets

768

 

 

(774

)

Accounts payable and accrued liabilities

(638

)

 

(5,009

)

Deferred revenue

(275

)

 

85

 

Net cash provided by operating activities

5,551

 

 

3,362

 

Cash flows from investing activities:

 

 

 

Purchases of property and equipment

(87

)

 

(283

)

Acquisition of business, net of cash acquired

—

 

 

(11,808

)

Net cash used in investing activities

(87

)

 

(12,091

)

Cash flows from financing activities:

 

 

 

Proceeds from exercise of stock options

564

 

 

681

 

Repurchases of common stock

(65

)

 

—

 

Payments of finance leases

(5

)

 

(41

)

Proceeds from revolving loan

—

 

 

7,000

 

Payments for restricted stock awards withheld for taxes

(86

)

 

(89

)

Payments of term loan

(875

)

 

(7,317

)

Net cash (used in) provided by financing activities

(467

)

 

234

 

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

4,997

 

 

(8,495

)

Effect of foreign currency exchange rate

(128

)

 

(60

)

Net increase (decrease) in cash and cash equivalents

4,869

 

 

(8,555

)

Cash and cash equivalents as of beginning of period

27,241

 

 

28,366

 

Cash and cash equivalents as of end of period

$

32,110

 

 

$

19,811

 

Supplemental disclosure of cash flow information:

 

 

 

Cash paid for interest

$

123

 

 

$

361

 

Cash paid for income taxes

$

973

 

 

$

297

 

THE MEET GROUP, INC. AND SUBSIDIARIES

DISAGGREGATION OF REVENUE

(UNAUDITED)

(in thousands)

 

 

 

 

 

Three Months Ended March 31,

 

 

2020

 

2019

 

 

$

 

%

 

$

 

%

User pay revenue:

 

 

 

 

 

 

 

Video

$

28,633

 

 

52.0

%

 

$

20,229

 

 

40.9

%

Subscription and other in-app products

14,395

 

 

26.1

%

 

15,596

 

 

31.5

%

Total user pay revenue

43,028

 

 

78.1

%

 

35,825

 

 

72.4

%

Advertising revenue

12,038

 

 

21.9

%

 

13,688

 

 

27.6

%

Total revenue

$

55,066

 

 

100.0

%

 

$

49,513

 

 

100.0

%

THE MEET GROUP, INC. AND SUBSIDIARIES

RECONCILIATION OF NET (LOSS) INCOME TO ADJUSTED EBITDA

(UNAUDITED)

(in thousands)

 

 

 

 

 

Three Months Ended March 31,

 

 

2020

 

2019

Net (loss) income

$

(2,408

)

 

$

1,258

 

Interest expense

396

 

 

403

 

Income tax expense

373

 

 

254

 

Depreciation and amortization expense

2,820

 

 

3,198

 

Stock-based compensation expense

3,185

 

 

2,425

 

Acquisition, restructuring and other

3,370

 

 

479

 

Loss on disposal of assets

108

 

 

—

 

Loss on foreign currency transactions

7

 

 

65

 

Adjusted EBITDA

$

7,851

 

 

$

8,082

 

THE MEET GROUP, INC. AND SUBSIDIARIES

RECONCILIATION OF NET (LOSS) INCOME TO NON-GAAP NET INCOME

(UNAUDITED)

(in thousands, except share and per share data)

 

 

 

 

 

Three Months Ended March 31,

 

 

2020

 

2019

Net (loss) income

$

(2,408

)

 

$

1,258

 

Stock-based compensation expense

3,185

 

 

2,425

 

Amortization of intangibles

2,177

 

 

2,562

 

Income tax expense

373

 

 

254

 

Acquisition, restructuring and other

3,370

 

 

479

 

Non-GAAP Net Income

$

6,697

 

 

$

6,978

 

 

 

 

 

GAAP basic net (loss) income per share

$

(0.03

)

 

$

0.02

 

GAAP diluted net (loss) income per share

$

(0.03

)

 

$

0.02

 

Basic Non-GAAP Net Income per share

$

0.09

 

 

$

0.09

 

Diluted Non-GAAP Net Income per share

$

0.09

 

 

$

0.09

 

 

 

 

 

Weighted-average shares outstanding:

 

 

 

Basic

71,001,906

 

 

74,848,080

 

Diluted

75,921,590

 

 

78,799,248

 

THE MEET GROUP, INC. AND SUBSIDIARIES

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

(UNAUDITED)

(in thousands)

 

 

 

 

 

Three Months Ended March 31,

 

 

2020

 

2019

Net cash provided by operating activities

$

5,551

 

 

$

3,362

 

Purchases of property and equipment

(87

)

 

(283

)

Free Cash Flow

$

5,464

 

 

$

3,079

 

About The Meet Group

The Meet Group (NASDAQ: MEET) is a leading provider of interactive dating solutions designed to meet the universal need for human connection. Our ecosystem of dating 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 video revenue and minutes will continue to increase, and whether we will close our transaction with ProSiebenSat.1 and General Atlantic as anticipated. 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, 2019 filed with the SEC on March 12, 2020. 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 above for these historical non-GAAP financial measures to their directly comparable GAAP financial measures.

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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20200506005213/en/

Investor Contact: Leslie Arena larena@themeetgroup.com 267 714 6418

Media Contact: Brandyn Bissinger bbissinger@themeetgroup.com 267 446 7010