SITO Mobile Reports Second Quarter 2016 Financial Results

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Q2 Revenue $9.9 Million, Up 168% Year-Over-Year; Led by Media Placement Revenue of $8.3 Million, Up 285% Year-Over-Year

Brent Rosenthal to join SITO Mobile's Board of Directors

JERSEY CITY, N.J., Aug. 15, 2016 (GLOBE NEWSWIRE) -- SITO Mobile Ltd. SITO, a leading mobile engagement platform, today announced its results for the second quarter ended June 30, 2016.

Second Quarter 2016 Business Highlights

  • TOTAL REVENUE: was $9.9 million, an increase of 168% year-over-year.
     
  • MEDIA PLACEMENT REVENUE: (SITO Mobile's programmatic advertising revenue) was $8.3 million, an increase of 285% year-over-year and 71% sequentially.
     
  • GROSS PROFIT: was $5.4 million (55% gross margin) in Q2 2016, up from $1.8 million (51% gross margin) in Q2 2015. (Please refer to the supplemental schedule below for calculation of Gross Profit and Gross Margin).
     
  • ADJUSTED EBITDA:  was $1.8 million for the quarter, up from $0.1 million in Q1 and ($0.2) million in Q2 of 2015.  (See attached schedule for reconciliation of Adjusted EBITDA to GAAP)
     
  • NET INCOME:  was $0.7 million, which equates to $0.04 earnings per share on total shares outstanding of 17.4 million.

"In the Second quarter, we produced early indications of the kind of consistent, solid revenue growth we're expecting as we work towards becoming a dominant player in location-based mobile advertising," said Jerry Hug, CEO of SITO Mobile. "The overall market for mobile advertising is already measured in $10's of billions and is growing rapidly.   Mobile Media is uniquely equipped to handle location-based ad campaigns and SITO Mobile is emerging as a leading player in this $18 billion segment of the mobile advertising market. SITO Mobile is creating higher levels of mobile consumer engagement – resulting in more clients, more campaigns and larger campaign spending commitments, as the largest global advertisers shift significant advertising dollars to mobile. On this foundation, we look forward to producing meaningful revenue growth for the balance of 2016 and beyond."

Commenting on SITO's new Board Member, Hug added, "We're excited to welcome Brent Rosenthal to our Board of Directors.  Brent is an accomplished investor and business professional with an outstanding 20+ year track record of creating shareholder value in cable, telecom, mobile, Out-of-Home and information companies.  Most recently, he spearheaded an investment in Rentrak Corporation RENT where he served on the Board of Directors from 2008 – 2016, including as the Non-Executive Chairman from 2011 – 2016.  He worked closely with management to pivot the Company which led to a dramatic increase in market capitalization,  culminating in a merger with comScore SCOR.  Brent's business acumen, professional network and extensive public company Board experience will be invaluable to our team."

Conference call information:

Date: Monday, August 15, 2016
Time: 4:30 P.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

Participating on the call will be SITO Mobile's Chief Executive Officer Jerry Hug and Chief Financial Officer Kurt Streams. To join the live conference call, please dial into the above referenced telephone numbers five to ten minutes prior to the scheduled conference call time.

A replay will be available for 2 weeks starting on August 15, 2016 at approximately 8:00 P.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 13642293.

About SITO Mobile Ltd.

SITO Mobile provides a mobile engagement platform that enables brands to increase awareness, loyalty, and ultimately sales. For more information, visit www.sitomobile.com

Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, sales growth, our reliance on brand owners and wireless carriers, the possible need for additional capital as well as other risks identified in our filings with the SEC. Any forward-looking statement made by us in this press release is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

[FINANCIAL TABLES TO FOLLOW]

SITO Mobile, Ltd.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

  For the Three Months Ended  For the Six Months Ended 
  June 30,  June 30, 
  2016  2015  2016  2015 
             
Revenue            
Media placement $8,297,880  $2,154,030  $13,159,380  $3,781,530 
Wireless applications  1,454,428   1,387,313   2,945,078   3,391,629 
Licensing and royalties  125,946   139,535   261,365   274,539 
Total revenue  9,878,254   3,680,878   16,365,823   7,447,698 
                 
Costs and Expenses                
Cost of revenue  4,430,522   1,807,237   7,487,118   3,423,210 
Sales and marketing  2,662,886   905,285   4,762,905   1,781,574 
General and administrative  1,454,056   1,474,156   3,351,324   2,638,908 
Depreciation and amortization  160,444   77,361   324,804   145,442 
                 
Total costs and expenses  8,707,908   4,264,039   15,926,151   7,989,134 
                 
Income (loss) from operations  1,170,346   (583,161)  439,672   (541,436)
                 
Other Income (Expense)                
Interest income  -   -   -   54,323 
Interest expense  (445,091)  (454,199)  (885,113)  (888,758)
                 
Net income (loss) before income taxes  725,255   (1,037,360)  (445,441)  (1,375,871)
                 
Provision for income taxes  -   -   -   - 
                 
Net income (loss) $725,255  $(1,037,360) $(445,441) $(1,375,871)
                 
Basic earnings (loss) per share $0.04  $(0.07) $(0.02) $(0.09)
Basic weighted average shares outstanding  17,355,478   15,404,817   17,288,445   15,385,645 
                 
Diluted earnings (loss) per share $0.04  $-  $-  $- 
Diluted weighted average shares outstanding  19,831,509   -   -   - 
                 

Non-GAAP Financial Measures

This press release uses Adjusted EBITDA, a non-GAAP financial measure. Adjusted EBITDA should not be considered a replacement for, and should be read together with, the most comparable GAAP financial measure, which is Operating Profit (Loss). A reconciliation of Adjusted EBITDA to Operating Profit (Loss) is included herein.

To supplement our financial results and guidance presented in accordance with U.S. generally accepted accounting principles (GAAP), the Company uses certain non-GAAP financial measures in this press release, including EBITDA. The Company believes that non-GAAP financial measures are helpful in understanding its past financial performance and potential future results, particularly in light of the effect of various acquisition transactions effected by the Company. Non-GAAP financial measures are not meant to be considered in isolation or as a substitute for or superior to comparable GAAP measures and should be read in conjunction with the consolidated financial statements prepared in accordance with GAAP. 

Management excludes stock based compensation expense because they believe that the non-GAAP financial measures excluding this item provide meaningful supplemental information regarding operational performance. In particular, because of varying available valuation methodologies, subjective assumptions and the variety of award types that companies can use under FASB ASC 718, we believe that providing non-GAAP financial measures that exclude this expense allows investors to make more meaningful comparisons between our operating results and those of other companies. Accordingly, management believes that excluding this expense provides investors and management with greater visibility to the underlying performance of our business operations, facilitates comparison of our results with other periods, and may also facilitate comparison with the results of other companies in our industry.  Management uses Adjusted EBITDA in managing and analyzing its business and financial condition. Management believes that the presentation of non-GAAP financial measures provides investors greater transparency into ongoing results of operations allowing investors to better compare the Company's results from period to period.

  For the Three Months Ended June 30, For the Six Months Ended June 30,
  2016  2015   2016   2015 
         
Net Income (Loss)   725,255    (1,037,360)    (445,441)  (1,375,871)
Adjustments to reconcile net income (loss) to EBITDA:        
Depreciation and amortization expense included in costs and expenses:        
Amortization included in cost of revenue   271,198    175,001     523,693     326,412 
Depreciation and other amortization   160,444    77,361     324,804     145,442 
Total depreciation and amortization expense   431,642    252,362     848,497     471,854 
         
Interest Income          54,323 
Interest expense   445,091    454,199     885,113     888,758 
Provision for income taxes   -     -      -      -  
         
EBITDA   1,601,988    (330,799)    1,288,169     39,064 
         
Adjustments to reconcile EBITDA:        
Stock based compensation expense included in costs and expenses:        
Sales and marketing    75,327    22,808     149,361     45,923 
General and administrative   110,604    124,491     410,072     251,342 
Total stock based compensation expense   185,931    147,299     559,433     297,265 
         
Adjusted EBITDA   1,787,919    (183,500)    1,847,602     336,329 
               

SITO Mobile, Ltd.
CONDENSED CONSOLIDATED BALANCE SHEETS

  June 30,  December 31, 
  2016  2015 
  (Unaudited)    
Assets      
Current assets      
Cash and cash equivalents $1,682,785  $2,615,184 
Accounts receivable, net  8,819,725   6,167,816 
Other prepaid expenses  91,055   123,692 
         
Total current assets  10,593,565   8,906,692 
         
Property and equipment, net  492,010   585,356 
         
Other assets        
Capitalized software development costs, net  1,846,330   1,600,813 
Intangible assets:        
Patents  406,546   445,473 
Patent applications cost  928,969   897,087 
Other intangible assets, net  1,574,507   1,714,477 
Goodwill  6,444,225   6,444,225 
Deferred loan costs, net  56,520   78,116 
Other assets including security deposits  108,938   84,829 
         
Total other assets  11,366,035   11,265,020 
         
Total assets $22,451,610  $20,757,068 
         

CONDENSED CONSOLIDATED BALANCE SHEETS

  June 30,  December 31, 
  2016  2015 
  (Unaudited)    
       
Liabilities and Stockholders' Equity        
Current liabilities        
Accounts payable $6,837,561  $4,828,600 
Accrued expenses  1,795,234   1,277,896 
Deferred revenue  563,976   532,909 
Current obligations under capital lease  3,320   11,699 
Note payable, net - current portion  2,068,450   3,984,219 
         
Total current liabilities  11,268,541   10,635,323 
         
Long-term liabilities        
Obligations under capital lease  4,510   6,201 
Note payable  5,315,989   4,934,966 
         
Total long-term liabilities  5,320,499   4,941,167 
         
Total liabilities  16,589,040   15,576,490 
         
Commitments and contingencies - See notes 17        
         
Stockholders' Equity         
Preferred stock, $.0001 par value, 5,000,000 shares authorized; none outstanding  -   - 
Common stock, $.001 par value; 100,000,000 shares authorized, 17,357,520 shares issued and outstanding as of June 30, 2016 and $.001 par value; 300,000,000 shares authorized, 17,157,520 shares issued and outstanding as of December 31, 2015  17,3576   17,156 
Additional paid-in capital  145,665,480   144,538,247 
Accumulated deficit  (139,820,266)  (139,374,825)
         
Total stockholders' equity   5,862,570   5,180,578 
         
Total liabilities and stockholders' equity  $22,451,610  $20,757,068 
         

SITO Mobile, Ltd.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

  For the Three Months Ended 
  June 30, 
  2016  2015 
       
Cash Flows from Operating Activities        
Net income (loss)       $725,255  $(1,037,364)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:        
Depreciation expense    43,263   35,419 
Amortization expense - software development costs  271,199   175,001 
Amortization expense - patents  49,431   43,645 
Amortization expense - discount of debt  198,910   152,585 
Amortization expense - deferred costs  9,432   13,334 
Amortization expense - intangible assets  67,750   - 
Provision for bad debt    95,005   - 
Loss on disposition of assets  -   - 
Stock based compensation   185,931   147,299 
Changes in operating assets and liabilities:        
(Increase) in accounts receivable, net  (2,675,931)  (794,502)
Decrease (increase) in prepaid expenses  42,649   (134,211)
(Increase) decrease in other assets  (10,794)  (250 
Increase (decrease) in accounts payable  2,375,634   (1,032,077)
Increase (decrease) in accrued expenses  234,611   129,690)
Increase in deferred revenue  249,054   308,669 
Increase in accrued interest  60,474   83,513 
         
Net cash provided by (used in) operating activities    921,873   (1,909,249)
         
Cash Flows from Investing Activities          
Patents and patent applications costs    (41,449)  (74,148)
Purchase of property and equipment  (9,852)  (225,000)
Capitalized software development costs  (342,673)  (340,350)
         
Net cash used in investing activities   $(393,974) $(639,498)
         

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

  For the Three Months Ended 
  June 30, 
  2016  2015 
Cash Flows from Financing Activities      
Repayments on related party loans  -   525,000 
Principal reduction on obligation under capital lease   (3,564)  (4,911)
Principal reduction on repayment of debt  (525,000)  - 
         
Net cash (used in) provided by financing activities    (528,564)  520,089 
         
Net decrease in cash and cash equivalents    (665)  (2,028,658)
         
Cash and cash equivalents - beginning of period    1,683,450   4,815,907 
         
Cash and cash equivalents - ending of period   $1,682,785  $2,787,249 
         
Supplemental Information:         
         
Interest expense paid $115,812  $204,685 
Income taxes paid $17,729  $4,600 


SITO Mobile, Ltd.
Supplemental Schedule
Amounts in thousands except percentages


 June 30, 2015 September 30, 2015 December 31, 2015 Fiscal Year 2015 March 31, 2016 June 30, 2016
 Reported Adjusted Reported Adjusted Reported Reported Adjusted Reported Reported
Revenue                 
Media placement   2,154     2,154     3,023     3,023   5,345     12,150     12,150   4,862   8,298 
Wireless Applications   1,387     1,387     1,347     1,347   1,622     6,360     6,360   1,491   1,454 
Licensing and royalties   140     140     144     144   245     664     664   135   126 
Total Revenue   3,681     3,681     4,514     4,514   7,212     19,174     19,174   6,488   9,878 
                  
Cost of Revenue   1,445     1,807     1,513     2,164   3,449     7,987     9,064   3,057   4,431 
                  
Gross Profit   2,236     1,874     3,001     2,350   3,763     11,187     10,110   3,431   5,448 
Gross Margin 61%  51%  66%  52%  52%  58%  53%  53%  55%
Operating Expenses                 
General and administrative   1,459     1,474     2,241     2,254   1,584     6,439     6,476   1,897   1,454 
Sales & marketing   1,268     906     1,849     1,198   1,877     5,906     4,829   2,100   2,663 
Research and development   15     -      13     -    0     37     -    0   0 
Loss on impairment of long-lived asset   -      -      831     831   0     831     831   0   0 
Depreciation & amortization   77     77     209     209   219     573     573   164   160 
Total Operating Expenses   2,819     2,457     5,143     4,492   3,680     13,786     12,709   4,161   4,276 
                  
Income (Loss) from Operations (583)  (583)  (2,142)  (2,142)  83   (2,599)  (2,599)  (730)  1,171 
                                    

Note: Certain reclassifications have been made to conform the fiscal 2015 quarterly amounts to the fiscal 2016 classifications for comparative purposes. The Company is reporting a vendor cost in cost or revenue that had been previously reported in sales and marketing expense and is reporting research and development cost in general and administrative expense. The changes are only expense reclassifications and do not affect revenue, total costs and revenues, income (loss) from operations, net income or any balance sheet accounts. Amounts affected by the reclassification are shown in bold in the table above.

Contact: Investor Relations: Joseph Wilkinson SVP Investor Relations Joseph.Wilkinson@sitomobile.com Media Relations: Alexandra Levy Silicon Alley Media alex@siliconalley-media.com RELATED LINKS http://www.sitomobile.com

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