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8-K - FORM 8-K - RetailMeNot, Inc.d199614d8k.htm

Exhibit 99.1

RetailMeNot, Inc. Announces Third Quarter 2016 Financial Results

 

    Consolidated net revenues of $64.6 million

 

    GAAP net income of $0.1 million; non-GAAP net income of $4.8 million

 

    Adjusted EBITDA of $9.8 million; adjusted EBITDA margins of 15%

 

    GAAP EPS of $ 0.00; non-GAAP EPS of $0.10

AUSTIN, Texas, November 1, 2016 — RetailMeNot, Inc. (NASDAQ:SALE), a leading digital savings destination connecting consumers with retailers, restaurants and brands, both online and in-store, today announced its financial results for the third quarter ended September 30, 2016. In addition to this release, the company has also provided a prepared remarks document, each of which is available on the Investor Relations section of our website.

“In the third quarter, we made progress in executing on our strategy to deliver stable and profitable long-term growth, while delivering consolidated net revenues within our guidance range, and adjusted EBITDA coming in ahead of expectations,” said Cotter Cunningham, CEO & Founder, RetailMeNot, Inc. “We continue to educate the market and our consumers, while expanding upon our promotional savings content, which over time we believe will drive increased traffic to our websites and US mobile application.”

Third Quarter Financial Results Highlights and Key Operating Metrics

(All comparisons are made to the third quarter of 2015 unless otherwise noted. Amounts may not compute due to rounding.)

With the acquisition of GiftCard Zen completed in the second quarter of 2016, RetailMeNot, Inc. is providing financial and operating results for subsequent periods in two separate operating segments, with one representing the “core” RetailMeNot business and the other representing the “gift card” business.

For our core segment, in addition to total net revenues, we are providing segment operating income, or SOI, results and guidance, as we believe this to be an important financial metric to evaluate the operating performance of this business. SOI is defined as operating income of the core business segment plus depreciation, amortization of intangible assets, stock-based compensation expense, third-party acquisition-related costs and other operating expenses (including non-cash impairments and compensation arrangements entered into in connection with acquisitions).

For our gift card segment we are providing net revenue and gross profit results and guidance, as we believe these to be important financial metrics to evaluate the operating performance of this business. We define gift card segment net revenues as the gross market value of the gift cards sold, net of returns. Gross profit represents the difference between net revenues less the cost of the gift card sold, including adjustments for shipping and chargebacks.


We are also providing results and guidance combining the results of both segments on a consolidated basis.

 

    Core Segment

 

    Total net revenues $50.5 million, down 4%.

 

    In-store & advertising net revenues were up 28%, representing 30% of total net revenues.

 

    Mobile online transaction net revenues were up 13%, representing 11% of total net revenues.

 

    Desktop online transaction net revenues declined 17%, representing 59% of total net revenues.

 

    Segment operating income was $10.4 million, representing SOI margins of 21%.

 

    Total website visits were 146.0 million, down 9%.

 

    Mobile visits in the quarter increased 3% to 68.9 million, or 47% of total visits.

 

    Desktop visits in the quarter declined 17% to 77.1 million.

 

    Mobile unique visitors grew 3% to 19.2 million.

 

    Gift Card Segment

 

    Net revenues were $14.2 million.

 

    Gross profit was $0.9 million, representing gross profit margins of 6%.

 

    Consolidated Results (Core + Gift Card Segments)

 

    Net revenues grew 23% to $64.6 million.

 

    Net revenues from international markets were $10.3 million, with international net revenues representing 16% and 20% of consolidated and core segment total net revenues, respectively.

 

    GAAP net income was $0.1 million, compared to GAAP net income of $0.3 million.

 

    Non-GAAP net income was $4.8 million, compared to non-GAAP net income of $6.3 million.

 

    GAAP EPS was $0.00 per share, based on 49.9 million fully-diluted, weighted-average shares outstanding, compared to GAAP EPS of $0.01 per share, based on 53.7 million fully-diluted, weighted-average shares outstanding.

 

    Non-GAAP EPS was $0.10 per share, based on 49.9 million fully-diluted, weighted-average shares outstanding, compared to $0.12 per share, based on 53.7 million fully-diluted, weighted-average shares outstanding.

 

    Adjusted EBITDA was $9.8 million, representing adjusted EBITDA margins of 15%, inclusive of Gift Card Segment, compared to adjusted EBITDA of $11.8 million, or adjusted EBITDA margins of 23%.


BUSINESS OUTLOOK

(All comparisons are made to the fourth quarter or full year of 2015, respectively, unless otherwise noted. Amounts may not compute due to rounding.)

Fourth Quarter 2016 (ending December 31, 2016)

With respect to our core segment, we expect:

 

    Total net revenues to be in the range of $73.0 to $78.0 million, reflecting a decline of 9% at the mid-point.

 

    Segment operating income to be in the range of $25.5 to $30.5 million, representing SOI margins of 37.0% at the midpoint.

With respect to our gift card segment, we expect:

 

    Net revenues to be in the range of $17.0 to $20.0 million.

 

    Gross profit to be in the range of $0.9 million to $1.1 million, or gross profit margins of 5.5% at the midpoint.

On a consolidated basis (core + gift card segments), we expect:

 

    Net revenues to be in the range of $90.0 to $98.0 million.

 

    Adjusted EBITDA to be in the range of $25.0 to $30.0 million, or adjusted EBITDA margins of 29.3% at the midpoint.

Full Year 2016 (ending December 31, 2016)

With respect to the core segment, we expect:

 

    Total net revenues to be in the range of $231.7 to $236.6 million, reflecting a decline of 6% at the mid-point.

 

    Segment operating income to be in the range of $58.0 to $63.0 million, representing SOI margins of 26% at the midpoint.

With respect to the gift card segment, we expect:

 

    Net revenues to be in the range of $41.9 to $44.9 million.

 

    Gross profit to be in the range of $2.6 to $2.8 million, or gross profit margins of 6.2% at the midpoint.

On a consolidated basis, we expect:

 

    Net revenues to be in the range of $273.6 to $281.5 million.

 

    Adjusted EBITDA to be in the range of $56.6 to $61.6 million, or adjusted EBITDA margins of 21.3% at the midpoint.


The above statements are based on current expectations and actual results may differ materially as explained under the caption “Forward-looking Statements” below. Information about RetailMeNot’s use of non-GAAP financial measures, including adjusted EBITDA, non-GAAP net income (loss) and non-GAAP net income (loss) per share, is provided below under the caption “Use of Non-GAAP Financial Measures.”

Quarterly Conference Call

RetailMeNot will host a webcast to discuss its third quarter financial results and its fourth quarter and 2016 business outlook today at 7:00 a.m. Central Time (8:00 a.m. Eastern Time).

A live webcast of the conference call can be accessed within the investor relations section of the RetailMeNot website at http://investor.retailmenot.com. This webcast will contain forward-looking statements and other material information regarding the company’s financial and operating results.

Following completion of the call, a replay of the call will be available beginning at 9:30 a.m. Eastern Time on November 1, 2016. To listen to the telephone replay, call (877) 344-7529 within the US, or (412) 317-0088 if calling internationally. Access Code 10092292.

RetailMeNot uses its investor relations website (http://investor.retailmenot.com) as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD. Accordingly, investors should monitor the investor relations website, in addition to following press releases, SEC filings, public conference calls and webcasts.

About RetailMeNot, Inc.

RetailMeNot (http://www.retailmenot.com/corp/) is a leading digital savings destination connecting consumers with retailers, restaurants and brands, both online and in-store. The company enables consumers across the globe to find hundreds of thousands of digital offers to save money while they shop or dine out. During the 12 months ended September 30, 2016, RetailMeNot, Inc. experienced over 675 million visits to its websites. It also averaged 19.2 million mobile unique visitors per month during the three months ended September 30, 2016. RetailMeNot, Inc. estimates that approximately $4.8 billion in retailer sales were attributable to consumer transactions from paid digital offers in its marketplace in 2015, more than $600 million of which were attributable to its in-store solution. The RetailMeNot, Inc. portfolio of websites and mobile applications includes RetailMeNot.com in the United States; RetailMeNot.ca in Canada; VoucherCodes.co.uk in the United Kingdom; retailmenot.de in Germany; Actiepagina.nl in the Netherlands; ma-reduc.com and Poulpeo.com in France; RetailMeNot.es in Spain, RetailMeNot.it in Italy, RetailMeNot.pl in Poland and GiftCardZen.com and Deals2Buy.com in North America. RetailMeNot, Inc. is listed on the NASDAQ stock exchange under the ticker symbol “SALE.”


Key Operating Metrics

Visits. RetailMeNot defines a visit as a group of interactions that take place on one of RetailMeNot Inc.’s websites from computers, smartphones, tablets or other mobile devices within a given time frame as measured by Google Analytics, a product that provides digital marketing intelligence. A single visit can contain multiple page views, events, social interactions and e-commerce transactions. A single visitor can open multiple visits. Visits can occur on the same day, or over several days, weeks or months. As soon as one visit ends, there is then an opportunity to start a new visit. A visit ends either through the passage of time or a campaign change, with a campaign generally meaning arrival via search engine, referring site or campaign-tagged information. A visit ends through passage of time either after 30 minutes of inactivity or at midnight Pacific Time. A visit ends through a campaign change if a visitor arrives via one campaign or source, leaves the site, and then returns via another campaign or source. Visits for the period do not include interactions through our mobile applications or interactions with giftcardzen.com.

Mobile Unique Visitors. This amount represents the average number of mobile unique visitors per month for the three month period ended September 30, 2016. RetailMeNot counts each of the following as a mobile unique visitor: (i) the first time a specific mobile device accesses one of our mobile applications during a calendar month, and (ii) the first time a specific mobile device accesses one of our mobile websites using a specific web browser during a calendar month. If a mobile device accesses more than one of our mobile websites or mobile applications in a single calendar month, the first access to each such mobile website or mobile application is counted as a mobile unique visitor as they are tracked separately for each mobile domain. We measure mobile unique visitors with a combination of internal data sources and Google Analytics data.

Use of Non-GAAP Financial Measures

To provide investors with additional information regarding our financial results, this document includes references to adjusted EBITDA, non-GAAP net income (loss) and non-GAAP net income (loss) per share, each of which is a non-GAAP financial measure. For a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures, see the tables provided below in this release.

RetailMeNot has not reconciled adjusted EBITDA guidance to net income (loss) guidance because we do not provide guidance for third party acquisition-related costs or other operating expense, net interest income/expense, other non-operating income and expenses and income taxes, net of any foreign exchange income or expense. As these items cannot be reasonably predicted at this time, we are unable to provide such guidance. Accordingly a reconciliation to net income (loss) guidance is not available without unreasonable effort.

RetailMeNot defines adjusted EBITDA as net income (loss) plus depreciation, amortization of intangible assets, stock-based compensation expense, third-party acquisition-related costs, other operating expenses (including non-cash impairments and compensation arrangements entered into in connection with acquisitions), net interest expense, other non-operating income or expense (including net foreign exchange gains and losses) and income taxes.

RetailMeNot discloses adjusted EBITDA on a consolidated basis because it is a key measure used by RetailMeNot and its board of directors to understand and evaluate RetailMeNot’s financial and operating performance, establish budgets and operational goals and as an element in determining


compensation of certain of its executives. RetailMeNot believes adjusted EBITDA facilitates period-to-period comparisons of operations that could otherwise be masked by the effect of the expenses that RetailMeNot excludes in this non-GAAP financial measure and facilitates comparisons with other peer companies, many of which use similar non-GAAP financial measures to supplement their GAAP results.

RetailMeNot’s presentation of non-GAAP net income (loss) and non-GAAP net income (loss) per share excludes the impact of amortization of purchased intangible assets, stock-based compensation expense, third party acquisition-related costs, other non-cash operating expenses (including non-cash impairments and compensation arrangements entered into in connection with acquisitions) and income taxes, net of the tax effect of the adjustments above. These measures are not key metrics used by RetailMeNot or its board of directors to measure financial or operating performance or otherwise manage the business. However, RetailMeNot provides non-GAAP net income (loss) and non-GAAP net income (loss) per share as supplemental information for investors, as they facilitate period-to-period comparisons of operations that could otherwise be masked by the effect of the expenses that RetailMeNot excludes in these non-GAAP financial measures and facilitates comparisons with other peer companies, many of which use similar non-GAAP financial measures to supplement their GAAP results.

Adjusted EBITDA, non-GAAP net income (loss) and non-GAAP net income (loss) per share have limitations as analytical tools, and you should not consider these measures in isolation or as substitutes for analysis of RetailMeNot’s results as reported under GAAP. Because of these limitations, you should consider adjusted EBITDA, non-GAAP net income (loss) and non-GAAP net income (loss) per share alongside other financial performance measures, including various cash flow metrics, operating income (loss), net income (loss) and RetailMeNot’s other GAAP results.

Forward-looking Statements

This release contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, included herein regarding RetailMeNot’s strategy, future operations, future financial position, future net revenues, projected costs, prospects, plans and objectives of management are forward-looking statements. The words “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will,” “would” and similar expressions (or the negative of these terms) are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements include, among other things, statements about management’s estimates regarding future net revenues, adjusted EBITDA, segment operating income, gross profit and other financial performance, visits, mobile unique visitors, e-mail subscribers, other consumer engagement metrics, new product and content offerings and other statements about management’s beliefs, intentions or goals. RetailMeNot may not actually achieve the expectations disclosed in the forward-looking statements, and you should not place undue reliance on RetailMeNot’s forward-looking statements. These forward-looking statements involve risks and uncertainties that could cause actual results or events to differ materially from the expectations disclosed in the forward-looking statements, including, but not limited to, (1) RetailMeNot’s ability to attract visitors to its


websites from search engines, to attract and retain users and to maintain or increase users’ engagement with its solutions; (2) RetailMeNot’s ability to monetize digital offers through its mobile solutions; (3) RetailMeNot’s ability to attract and retain paid retailers and maintain its relationships with performance marketing networks and suppliers of gift cards; (4) the competitive environment for RetailMeNot’s business; (5) RetailMeNot’s ability to obtain and maintain high quality digital offer content and maintain the positive perception of its brands, including with respect to its gift card business; (6) RetailMeNot’s ability to have access to gift card inventory sufficient to meet consumer demand; (7) RetailMeNot’s ability to manage the growth in scope and complexity of its business, including accurately planning and forecasting its financial results; (8) consumer adoption of the electronic sale of discount gift cards or the continued attractiveness of discount gift cards; (9) RetailMeNot’s ability to retain its existing management team and other key employees; (10) RetailMeNot’s need to manage regulatory, tax and litigation risks, including regulations related to gift cards and imposing sales tax on e-commerce or m-commerce; (11) RetailMeNot’s ability to use and protect consumer data and to protect its intellectual property; (12) RetailMeNot’s ability to manage international business uncertainties; (13) the impact and integration of current and future acquisitions; and (14) other risks and potential factors that could affect RetailMeNot’s business and financial results identified in RetailMeNot’s filings with the Securities and Exchange Commission (the “SEC”), including its quarterly report on Form 10-Q filed with the SEC on August 2, 2016. Additional information will also be set forth in RetailMeNot’s future quarterly reports on Form 10-Q, annual reports on Form 10-K and other filings that RetailMeNot makes with the SEC. RetailMeNot does not intend or undertake any duty to release publicly any updates or revisions to any forward-looking statements contained herein.

Investor Contacts

Michael Magaro

RetailMeNot, Inc.

mmagaro@rmn.com

(512) 777-2899

Anne Bawden

RetailMeNot, Inc.

abawden@rmn.com

(415) 200-8654

Media Contact

Michelle Skupin

RetailMeNot, Inc.

mskupin@rmn.com

(808) 224-3215


RetailMeNot, Inc.

Condensed Consolidated Statements of Operations

(Unaudited, in thousands, except per share data)

 

     Three Months Ended September 30,     Nine Months Ended September 30,  
     2016     2015     2016     2015  

Net revenues

   $ 64,637      $ 52,412      $ 183,536      $ 165,976   

Cost of net revenues (1)

     18,241        4,511        38,346        15,033   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     46,396        47,901        145,190        150,943   

Operating expenses:

        

Product development (1)

     12,967        13,011        38,578        39,403   

Sales and marketing (1)

     22,744        21,930        70,234        66,207   

General and administrative (1)

     9,384        9,625        30,443        28,907   

Amortization of purchased intangible assets

     2,496        2,811        6,969        8,176   

Other operating expenses

     2,040        754        5,334        2,282   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     49,631        48,131        151,558        144,975   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from operations

     (3,235     (230     (6,368     5,968   

Other income (expense):

        

Interest expense, net

     (545     (536     (1,716     (1,449

Other income (expense), net

     68        96        632        (301
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income taxes

     (3,712     (670     (7,452     4,218   

Benefit from (provision for) income taxes

     3,826        1,013        7,059        (1,407
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ 114      $ 343      $ (393   $ 2,811   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) per share:

        

Basic

   $ 0.00      $ 0.01      $ (0.01   $ 0.05   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ 0.00      $ 0.01      $ (0.01   $ 0.05   
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average number of common shares used in computing net income (loss) per share:

        

Basic

     48,683        53,037        48,899        53,513   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     49,867        53,744        48,899        54,581   
  

 

 

   

 

 

   

 

 

   

 

 

 

RetailMeNot, Inc.

Condensed Consolidated Statements of Operations (continued)

(Unaudited, in thousands)

 

     Three Months Ended September 30,      Nine Months Ended September 30,  
     2016      2015      2016      2015  

(1) Includes stock-based compensation as follows:

           

Cost of net revenues

   $ 424       $ 524       $ 1,364       $ 1,643   

Product development

     2,037         2,134         6,066       $ 6,467   

Sales and marketing

     1,265         1,709         3,842       $ 4,656   

General and administrative

     2,567         2,367         7,656         7,325   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 6,293       $ 6,734       $ 18,928       $ 20,091   
  

 

 

    

 

 

    

 

 

    

 

 

 


RetailMeNot, Inc.

Reconciliation of Adjusted EBITDA

(Unaudited, in thousands)

 

     Three Months Ended September 30,     Nine Months Ended September 30,  
     2016     2015     2016     2015  

Net income (loss)

   $ 114      $ 343      $ (393   $ 2,811   

Depreciation and amortization

     4,731        4,563        13,238        12,742   

Stock-based compensation expense

     6,293        6,734        18,928        20,091   

Third party acquisition-related costs

     —          —          488        55   

Other operating expenses

     2,040        754        5,334        2,282   

Interest expense, net

     545        536        1,716        1,449   

Other (income) expense, net

     (68     (96     (632     301   

(Benefit from) provision for income taxes

     (3,826     (1,013     (7,059     1,407   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 9,829      $ 11,821      $ 31,620      $ 41,138   
  

 

 

   

 

 

   

 

 

   

 

 

 

RetailMeNot, Inc.

Reconciliation of Non-GAAP Net Income and Non-GAAP Diluted EPS

(Unaudited, in thousands, except per share data and percentage rates)

 

     Three Months Ended September 30,     Nine Months Ended September 30,  
     2016     2015     2016     2015  

GAAP Income (loss) before income taxes

   $ (3,712   $ (670     (7,452     4,218   

GAAP Benefit from (provision for) income taxes

     3,826        1,013        7,059        (1,407
  

 

 

   

 

 

   

 

 

   

 

 

 

GAAP Net income (loss)

   $ 114      $ 343      $ (393   $ 2,811   

Non-GAAP adjustments to net income (loss):

        

Amortization of purchased intangibles

     2,496        2,811        6,969        8,176   

Stock-based compensation expense

     6,293        6,734        18,928        20,091   

Third party acquisition-related costs

     —          —          488        55   

Other operating expenses

     2,040        754        5,334        2,282   

Less: Tax effect of adjustments above

     (6,188     (4,314     (15,423     (11,325
  

 

 

   

 

 

   

 

 

   

 

 

 

Total non-GAAP net income

   $ 4,755      $ 6,328      $ 15,903      $ 22,090   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted net income (loss) per share:

        

GAAP

   $ 0.00      $ 0.01      $ (0.01   $ 0.05   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP

   $ 0.10      $ 0.12      $ 0.32      $ 0.40   
  

 

 

   

 

 

   

 

 

   

 

 

 

Shares used in non-GAAP diluted EPS calculation:

        

Weighted-average shares outstanding used in calculating GAAP diluted EPS

     49,867        53,744        48,899        54,581   

Additional dilutive securities for non-GAAP diluted EPS

     —          —          1,045        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted-average shares outstanding used in calculating non-GAAP diluted EPS

     49,867        53,744        49,944        54,581   
  

 

 

   

 

 

   

 

 

   

 

 

 

Reconciliation of non-GAAP effective tax rate:

        

GAAP Effective tax rate

     103.1     151.2     94.7     33.4

Tax effect of non-GAAP adjustments to net income

     (69.9 )%      (116.9 )%      (60.2 )%      3.2
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP effective tax rate

     33.2     34.3     34.5     36.6
  

 

 

   

 

 

   

 

 

   

 

 

 


RetailMeNot, Inc.

Segment Results

(Unaudited, in thousands)

 

     Three Months Ended September 30, 2016  
     Core      Gift Cards     Unallocated     Total  

Net revenues

   $ 50,455       $ 14,182      $ —        $ 64,637   

Cost of net revenues

     4,488         13,313        440        18,241   
  

 

 

    

 

 

   

 

 

   

 

 

 

Gross profit

     45,967         869        (440     46,396   

Operating expenses:

         

Product development

     9,554         291        3,122        12,967   

Sales and marketing

     21,019         439        1,286        22,744   

General and administrative

     5,036         668        3,680        9,384   

Amortization of purchased intangible assets

     —           —          2,496        2,496   

Other operating expenses

     —           —          2,040        2,040   
  

 

 

    

 

 

   

 

 

   

 

 

 

Total operating expenses

     35,609         1,398        12,624        49,631   
  

 

 

    

 

 

   

 

 

   

 

 

 

Income (loss) from operations

   $ 10,358       $ (529   $ (13,064   $ (3,235
  

 

 

    

 

 

   

 

 

   

 

 

 
     Three Months Ended September 30, 2015  
     Core      Gift Cards     Unallocated     Total  

Net revenues

   $ 52,412       $ —        $ —        $ 52,412   

Cost of net revenues

     3,856         —          655        4,511   
  

 

 

    

 

 

   

 

 

   

 

 

 

Gross profit

     48,556         —          (655     47,901   

Operating expenses:

         

Product development

     9,902         —          3,109        13,011   

Sales and marketing

     19,870         —          2,060        21,930   

General and administrative

     6,963         —          2,662        9,625   

Amortization of purchased intangible assets

     —           —          2,811        2,811   

Other operating expenses

     —           —          754        754   
  

 

 

    

 

 

   

 

 

   

 

 

 

Total operating expenses

     36,735         —          11,396        48,131   
  

 

 

    

 

 

   

 

 

   

 

 

 

Income (loss) from operations

   $ 11,821       $ —        $ (12,051   $ (230
  

 

 

    

 

 

   

 

 

   

 

 

 
     Nine Months Ended September 30, 2016  
     Core      Gift Cards     Unallocated     Total  

Net revenues

   $ 158,613       $ 24,923      $ —        $ 183,536   

Cost of net revenues

     13,443         23,240        1,663        38,346   
  

 

 

    

 

 

   

 

 

   

 

 

 

Gross profit

     145,170         1,683        (1,663     145,190   

Operating expenses:

         

Product development

     28,401         545        9,632        38,578   

Sales and marketing

     64,912         794        4,528        70,234   

General and administrative

     19,399         1,182        9,862        30,443   

Amortization of purchased intangible assets

     —           —          6,969        6,969   

Other operating expenses

     —           —          5,334        5,334   
  

 

 

    

 

 

   

 

 

   

 

 

 

Total operating expenses

     112,712         2,521        36,325        151,558   
  

 

 

    

 

 

   

 

 

   

 

 

 

Income (loss) from operations

   $ 32,458       $ (838   $ (37,988   $ (6,368
  

 

 

    

 

 

   

 

 

   

 

 

 
     Nine Months Ended September 30, 2015  
     Core      Gift Cards     Unallocated     Total  

Net revenues

   $ 165,976       $ —        $ —        $ 165,976   

Cost of net revenues

     13,007         —          2,026        15,033   
  

 

 

    

 

 

   

 

 

   

 

 

 

Gross profit

     152,969         —          (2,026     150,943   

Operating expenses:

         

Product development

     30,506         —          8,897        39,403   

Sales and marketing

     60,562         —          5,645        66,207   

General and administrative

     20,763         —          8,144        28,907   

Amortization of purchased intangible assets

     —           —          8,176        8,176   

Other operating expenses

     —           —          2,282        2,282   
  

 

 

    

 

 

   

 

 

   

 

 

 

Total operating expenses

     111,831         —          33,144        144,975   
  

 

 

    

 

 

   

 

 

   

 

 

 

Income (loss) from operations

   $ 41,138       $ —        $ (35,170   $ 5,968   
  

 

 

    

 

 

   

 

 

   

 

 

 


RetailMeNot, Inc.

Reconciliation of Unallocated Expenses

(Unaudited, in thousands)

 

     Three Months Ended September 30,      Nine Months Ended September 30,  
     2016      2015      2016      2015  

Depreciation expense

   $ 2,235       $ 1,752       $ 6,269       $ 4,566   

Stock-based compensation expense

     6,293         6,734         18,928         20,091   

Third party acquisition-related costs

     —           —           488         55   

Amortization of purchased intangible assets

     2,496         2,811         6,969         8,176   

Other operating expenses

     2,040         754         5,334         2,282   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Unallocated expenses

   $ 13,064       $ 12,051       $ 37,988       $ 35,170   
  

 

 

    

 

 

    

 

 

    

 

 

 


RetailMeNot, Inc.

Condensed Consolidated Balance Sheets

(Unaudited, in thousands)

 

     As of September 30,
2016
    As of December 31,
2015
 

Assets

    

Current assets:

    

Cash and cash equivalents

   $ 235,267      $ 259,769   

Accounts receivable, net

     41,169        67,504   

Inventory

     3,166        —     

Prepaids and other current assets, net

     16,368        9,959   
  

 

 

   

 

 

 

Total current assets

     295,970        337,232   

Property and equipment, net

     23,870        21,382   

Intangible assets, net

     58,627        61,245   

Goodwill

     192,339        174,725   

Other assets, net

     6,672        8,040   
  

 

 

   

 

 

 

Total assets

   $ 577,478      $ 602,624   
  

 

 

   

 

 

 

Liabilities and Stockholders’ Equity

    

Current liabilities:

    

Accounts payable

   $ 6,543      $ 8,713   

Accrued compensation and benefits

     9,548        10,136   

Accrued expenses and other current liabilities

     7,573        7,155   

Income taxes payable

     2,515        5,109   

Current maturities of long term debt

     10,000        10,000   
  

 

 

   

 

 

 

Total current liabilities

     36,179        41,113   

Deferred tax liability—noncurrent

     2,960        1,498   

Long term debt

     53,490        60,872   

Other noncurrent liabilities

     9,308        7,752   
  

 

 

   

 

 

 

Total liabilities

     101,937        111,235   

Stockholders’ equity:

    

Common stock

     48        51   

Additional paid-in capital

     480,604        495,151   

Accumulated other comprehensive loss

     (5,788     (4,883

Retained earnings

     677        1,070   
  

 

 

   

 

 

 

Total stockholders’ equity

     475,541        491,389   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 577,478      $ 602,624   
  

 

 

   

 

 

 


RetailMeNot, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited, in thousands)

 

     Three Months Ended September 30,     Nine Months Ended September 30,  
     2016     2015     2016     2015  

Cash flows from operating activities:

        

Net income (loss)

   $ 114      $ 343      $ (393   $ 2,811   

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

        

Depreciation and amortization expense

     4,731        4,563        13,238        12,742   

Stock based compensation expense

     6,293        6,734        18,928        20,091   

Excess income tax benefit from stock-based compensation

     (102     (26     (135     (1,333

Deferred income tax expense (benefit)

     (411     (44     1,591        238   

Non-cash interest expense

     116        102        324        305   

Impairment of assets

     —          —          834        —     

Amortization of deferred compensation

     2,051        761        4,509        2,297   

Other non-cash (gains) losses, net

     293        (183     (1,716     969   

Provision for doubtful accounts receivable

     2        203        259        (84

Changes in operating assets and liabilities:

         —          —     

Accounts receivable, net

     850        (2,719     25,014        28,242   

Inventory

     (2,378     —          (2,433     —     

Prepaid expenses and other current assets, net

     (3,797     (3,216     (9,314     (4,946

Accounts payable

     (1,076     (2,002     (2,478     (846

Accrued expenses and other current liabilities

     (4,526     2,100        (6,034     (10,061

Other noncurrent assets and liabilities

     59        1,001        1,210        1,833   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by operating activities

     2,219        7,617        43,404        52,258   

Cash flows from investing activities:

        

Payments for acquisition of businesses, net of acquired cash

     311        —          (20,968     —     

Proceeds from sale of property and equipment

     12        9        22        14   

Purchase of other assets

     —          —          (44     (4,302

Purchase of non-marketable investment

     —          —          —          (4,000

Purchase of property and equipment

     (4,088     (2,418     (9,212     (8,741
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash used in investing activities

     (3,765     (2,409     (30,202     (17,029

Cash flows from financing activities:

        

Proceeds from notes payable, net of issuance costs

     —          —          —          29,950   

Payments on notes payable

     (2,500     (2,500     (7,500     (5,000

Payment of offering costs related to public offerings

     —          —          —          —     

Excess income tax benefit from stock-based compensation and other

     102        26        135        1,333   

Payments of principal on capital lease arrangements

     (67     —          (67     (7

Payments for repurchase of common stock

     (4,664     (11,616     (28,434     (38,808

Proceeds from issuance of common stock, net of tax payments related to net share settlement of equity awards

     (379     (136     (1,569     4,330   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash used in financing activities

     (7,508     (14,226     (37,435     (8,202

Effect of foreign currency exchange rate on cash

     (88     (94     (269     (804
  

 

 

   

 

 

   

 

 

   

 

 

 

Change in cash and cash equivalents

     (9,142     (9,112     (24,502     26,223   

Cash and cash equivalents, beginning of period

     244,409        279,817        259,769        244,482   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents, end of period

   $ 235,267      $ 270,705      $ 235,267      $ 270,705   
  

 

 

   

 

 

   

 

 

   

 

 

 

— RMNSALE-F —