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| 8-K - 8-K - Telaria, Inc. | tlraq220188-ker.htm |
TELARIA REPORTS SECOND QUARTER 2018 FINANCIAL RESULTS
Quarterly revenue of $12.4 million, up 25% year-over-year
NEW YORK, NY - August 8, 2018 - Telaria, Inc. (NYSE:TLRA), the complete software platform to manage video advertising for premium publishers, today announced financial results for the quarter ended June 30, 2018.
Second Quarter 2018 Highlights:
• | Revenue of $12.4 million, up 25% year-over-year |
• | Gross profit of $11.3 million, up 25% year-over-year |
• | Gross margin of 91% |
• | Adjusted EBITDA(1) of $(1.1) million, compared to $(3.2) million in the prior year period |
(1) | Adjusted EBITDA is a non-GAAP financial measure. Please see the discussion in the section called “Non-GAAP Financial Measures” and the reconciliation included at the end of this press release. |
“I am extremely proud of what we have been able to accomplish in year one as Telaria," said Mark Zagorski, Telaria CEO. "Our results through the first six months of this year included strong revenue growth and further improvements in EBITDA, as well as the addition of numerous key partners and the launch of our VMP. These advancements are the result of our leading team, innovative technology and forward-thinking strategy which is specifically tailored to take advantage of the exciting CTV opportunity."
Business Highlights:
• | Acquired SlimCut, adding outstream technology to the Company's VMP and providing access to new markets in Canada and France. |
• | CTV revenue growth continued in Q2, now 24% of total revenue. |
• | Launched a comprehensive fraud prevention program in partnership with WhiteOps, enhancing Telaria's commitment to a fraud free ecosystem. |
• | Closed deal with Nielsen to integrate their Digital Ad Ratings (DAR) into the Company's VMP, providing desktop video publishers with audience measurement metrics similar to TV to optimize their sales efforts. |
Second Quarter Results Summary
(in millions, except per share amounts), (unaudited)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
2018 | 2017 | % Change | 2018 | 2017 | % Change | |||||||
Revenue | $12.4 | $9.9 | 25% | $22.0 | $16.1 | 37% | ||||||
Gross profit | $11.3 | $9.0 | 25% | $19.9 | $14.4 | 38% | ||||||
Loss from continuing operations, net of income taxes | $(3.0) | $(6.8) | 56% | $(9.1) | $(16.4) | 45% | ||||||
Adjusted EBITDA | $(1.1) | $(3.2) | 66% | $(4.4) | $(10.0) | 56% | ||||||
Net loss from continuing operations, net of income taxes per share | $(0.06) | $(0.14) | 57% | $(0.18) | $(0.32) | 44% | ||||||
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Guidance
Based on information available as of August 8, 2018, the Company expects the following:
Third Quarter and Full Year 2018 Outlook
Q3 2018 | Full Year 2018 | |||
Revenue | $15.0 - $17.0 million | $58.0-$62.0 million | ||
Adjusted EBITDA | $0.0 - $2.0 million | $5.0-$8.0 million | ||
Q2 2018 Financial Results Webcast: The Company will host a conference call at 8:00 AM ET today to discuss its results. The conference call can be accessed toll-free at (855) 327-6837 or (631) 891-4304 (Toll/International). The call will also be broadcast simultaneously at https://telaria.com. Following completion of the call, a recorded replay of the webcast will be available on Telaria’s website. To listen to the telephone replay, call toll-free (844) 512-2921 or (412) 317-6671 (Toll/International), replay Pin #: 10005339. The telephone replay will be available from 11:00 AM ET August 8, 2018 through 11:59 PM ET August 15, 2018. Additional investor information can be accessed at https://investor.telaria.com.
About Telaria
Telaria (NYSE: TLRA) is a complete software platform to manage premium video advertising. We engineer the most robust suite of analytics, automated decisioning, and integrated programmatic and direct monetization tools in the industry. Global publishers require total command of their business; Telaria's independent solution empowers unbiased decisions for the best revenue outcomes.
“Safe Harbor" Statement: This press release contains forward-looking statements that involve risks, uncertainties, assumptions and other factors that could cause actual results and the timing of certain events to differ materially from those set forth in or implied by such forward-looking statements. All statements other than statements of historical fact are forward-looking statements, including statements related to 2018 third quarter and full year financial guidance and long-term financial targets. Important factors that could cause actual results or the timing of events to differ materially from those set forth in or implied by any forward-looking statements include, without limitation, risks and uncertainties associated with: the company’s continuing development of its business model; the impact of the disposition of the company’s buyer platform on the company’s operations and financial results, including loss of synergies between the buyer platform and seller platform; unfavorable conditions in the global economy or reductions in digital advertising spend; the company’s ability to effectively innovate and adapt to rapidly changing technology and client needs; increased competition as well as innovations by new and existing competitors; expansion of the online video advertising market; the company’s ability to attract new demand partners and maintain relationships with current demand partners; the company’s ability to increase or maintain spend from existing demand partners, including the Tremor Video DSP buyer platform, which the company sold in August 2017; growth of OTT and connected TV markets; risks of entering new markets in which we have limited or no experience and difficulty adapting our solutions for new markets; the company’s ability to attract sellers of premium video advertising inventory to its platform and secure inventory on terms that are favorable to it; the company’s ability to detect fraudulent or malicious activity and ensure a high level of brand safety for its clients; identifying, attracting and retaining qualified personnel; defects, errors or interruptions in the company’s solutions; the company’s ability to collect and use data to deliver its solutions; the impact of tools that block the display of video ads; the effect of legal, regulatory developments and industry standards regarding internet privacy and other matters, including the EU General Data Protection Regulation; maintaining, protecting and enhancing the company’s intellectual property; costs associated with defending intellectual property infringement, securities litigation and other claims; future opportunities and plans, including the uncertainty of expected future financial performance and results; as well as other risks and uncertainties detailed from time-to-time under the caption “Risk Factors” and elsewhere in the company’s filings with the U.S. Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2017, filed with the U.S. Securities and Exchange Commission on March 2, 2018, its Quarterly Report on Form 10-Q for the period ended March 31, 2018, filed with the U.S. Securities and Exchange
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Commission on May 8, 2018 and future filings and reports by the company, including its Quarterly Report on Form 10-Q for the period ended June 30, 2018.
Forward-looking statements are based on current expectations and beliefs and are not guarantees of future performance or events. Investors are cautioned not to place undue reliance on any forward-looking statements. Furthermore, forward-looking statements speak only as of the date on which they are made, and, except as required by law, Telaria disclaims any obligation to update these forward-looking statements to reflect future events or circumstances.
Non-GAAP Financial Measures: To supplement its consolidated financial statements, which are prepared and presented in accordance with U.S. generally accepted accounting principles (“GAAP”), Telaria reports Adjusted EBITDA, which is a non-GAAP financial measure. We define Adjusted EBITDA as loss from continuing operations, net of income taxes before depreciation and amortization, total interest expense and other income (expense), net, provision for income taxes and adjusted to eliminate the impact of non-cash stock-based compensation expense, acquisition related costs, restructuring costs, mark-to-market expense, executive severance, retention and recruiting costs, disposition-related costs, expenses for transitional services and other adjustments. We use Adjusted EBITDA for financial and operational decision-making and as a means to evaluate period-to-period comparisons. We believe that the use of Adjusted EBITDA provides useful information about our operating results, enhances the overall understanding of our past financial performance and future prospects, and allows for greater transparency with respect to a key metric that is used by management in its financial and operational decision making. Non-GAAP financial measures should be considered in addition to results and guidance prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. With respect to our expectations under “Guidance” above, reconciliation Adjusted EBITDA guidance to the closest corresponding GAAP measure is not available without unreasonable efforts on a forward-looking basis due to the high variability, complexity and low visibility with respect to the costs and charges excluded from this non-GAAP measure, in particular, the measures and effects of stock-based compensation expense specific to equity compensation awards that are directly impacted by unpredictable fluctuations in our stock price. We expect the variability of these costs and charges to have a significant, and potentially unpredictable, impact on our future GAAP financial results.
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Investor Relations Contact:
Andrew Posen
Vice President, Head of Investor Relations
212-792-2315
IR@telaria.com
Media Contact:
Lekha Rao
Vice President, Media Relations & Corporate Communications
646-226-0254
lrao@telaria.com
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Exhibit A
Telaria, Inc.
Consolidated Balance Sheets
(in thousands)
June 30, | December 31, | |||||||
2018 | 2017 | |||||||
(unaudited) | ||||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 64,950 | $ | 76,320 | ||||
Accounts receivable, net | 60,021 | 59,288 | ||||||
Prepaid expenses and other current assets | 3,541 | 2,499 | ||||||
Total current assets | 128,512 | 138,107 | ||||||
Long-term assets: | ||||||||
Property and equipment, net | 3,222 | 3,194 | ||||||
Intangible assets, net | 4,926 | 1,307 | ||||||
Goodwill | 9,658 | 6,320 | ||||||
Deferred tax assets | 332 | 332 | ||||||
Other assets | 938 | 1,168 | ||||||
Total long-term assets | 19,076 | 12,321 | ||||||
Total assets | $ | 147,588 | $ | 150,428 | ||||
Liabilities and stockholders’ equity | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued expenses | $ | 61,171 | $ | 59,419 | ||||
Deferred rent, short-term | 838 | 808 | ||||||
Contingent consideration on acquisition | 1,443 | — | ||||||
Deferred income | 31 | 674 | ||||||
Other current liabilities | 748 | 53 | ||||||
Total current liabilities | 64,231 | 60,954 | ||||||
Long-term liabilities: | ||||||||
Deferred rent | 5,990 | 5,260 | ||||||
Deferred tax liabilities | 1,385 | 338 | ||||||
Other non-current liabilities | 98 | 737 | ||||||
Total liabilities | 71,704 | 67,289 | ||||||
Commitments and contingencies | ||||||||
Stockholders’ equity: | ||||||||
Common stock | 5 | 5 | ||||||
Treasury stock | (8,443 | ) | (8,443 | ) | ||||
Additional paid-in capital | 290,516 | 288,277 | ||||||
Accumulated other comprehensive loss | (504 | ) | (232 | ) | ||||
Accumulated deficit | (205,690 | ) | (196,468 | ) | ||||
Total stockholders’ equity | 75,884 | 83,139 | ||||||
Total liabilities and stockholders’ equity | $ | 147,588 | $ | 150,428 | ||||
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Telaria, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except share and per share data)
(unaudited)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Revenue | $ | 12,430 | $ | 9,934 | $ | 22,031 | $ | 16,073 | ||||||||
Cost of revenue | 1,136 | 917 | 2,164 | 1,681 | ||||||||||||
Gross profit | 11,294 | 9,017 | 19,867 | 14,392 | ||||||||||||
Operating expenses: | ||||||||||||||||
Technology and development(1) | 2,305 | 2,109 | 4,613 | 4,534 | ||||||||||||
Sales and marketing(1) | 6,646 | 7,700 | 12,938 | 14,226 | ||||||||||||
General and administrative(1) | 5,365 | 4,774 | 10,363 | 9,647 | ||||||||||||
Restructuring costs | 117 | — | 117 | — | ||||||||||||
Depreciation and amortization | 874 | 990 | 2,675 | 2,011 | ||||||||||||
Mark-to-market | — | 93 | — | 148 | ||||||||||||
Total operating expenses | 15,307 | 15,666 | 30,706 | 30,566 | ||||||||||||
Loss from continuing operations | (4,013 | ) | (6,649 | ) | (10,839 | ) | (16,174 | ) | ||||||||
Interest and other income (expense), net: | ||||||||||||||||
Interest expense | (45 | ) | (33 | ) | (48 | ) | (67 | ) | ||||||||
Other income (expense), net | 1,127 | (45 | ) | 1,844 | (38 | ) | ||||||||||
Total interest and other income (expense), net | 1,082 | (78 | ) | 1,796 | (105 | ) | ||||||||||
Loss from continuing operations before income taxes | (2,931 | ) | (6,727 | ) | (9,043 | ) | (16,279 | ) | ||||||||
Provision for income taxes | 29 | 89 | 43 | 79 | ||||||||||||
Loss from continuing operations, net of income taxes | (2,960 | ) | (6,816 | ) | (9,086 | ) | (16,358 | ) | ||||||||
Loss on sale of discontinued operations, net of income taxes | (161 | ) | — | (136 | ) | — | ||||||||||
Income from discontinued operations, net of income taxes | — | 4,516 | — | 7,198 | ||||||||||||
Total income (loss) from discontinued operations, net of income taxes(2) | (161 | ) | 4,516 | (136 | ) | 7,198 | ||||||||||
Net loss | $ | (3,121 | ) | $ | (2,300 | ) | $ | (9,222 | ) | $ | (9,160 | ) | ||||
Net income (loss) per share — basic and diluted: | ||||||||||||||||
Loss from continuing operations, net of income taxes | $ | (0.06 | ) | $ | (0.14 | ) | $ | (0.18 | ) | $ | (0.32 | ) | ||||
Income from discontinued operations, net of income taxes | $ | — | 0.09 | — | 0.14 | |||||||||||
Net loss | $ | (0.06 | ) | $ | (0.05 | ) | $ | (0.18 | ) | $ | (0.18 | ) | ||||
Weighted-average number of shares of common stock outstanding: | ||||||||||||||||
Basic and diluted | 52,241,605 | 50,205,913 | 52,035,788 | 50,102,803 | ||||||||||||
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Telaria, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except share and per share data)
(unaudited)
(1) Stock-based compensation expenses included above:
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Stock-based compensation expense: | ||||||||||||||||
Technology and development | $ | 124 | $ | 156 | $ | 253 | $ | 300 | ||||||||
Sales and marketing | 394 | 187 | 704 | 350 | ||||||||||||
General and administrative | 462 | 409 | 879 | 846 | ||||||||||||
Total stock-based compensation expense in continuing operations | $ | 980 | $ | 752 | $ | 1,836 | $ | 1,496 | ||||||||
(2) Reflects the sale of our buyer platform to an affiliate of Taptica on August 7, 2017.
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Telaria, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Six Months Ended June 30, | |||||||||
2018 | 2017 | ||||||||
Cash flows from operating activities: | |||||||||
Net loss from continuing operations | $ | (9,086 | ) | $ | (16,358 | ) | |||
Total income (loss) from discontinued operations | (136 | ) | 7,198 | ||||||
Adjustments required to reconcile net loss to net cash used in operating activities: | |||||||||
Depreciation and amortization expense | 2,675 | 4,706 | |||||||
Bad debt expense | 163 | 325 | |||||||
Mark-to-market expense | — | 148 | |||||||
Compensation expense related to the acquisition contingent consideration | — | 1,810 | |||||||
Deferred tax benefit | — | 40 | |||||||
Loss on disposal of property and equipment | 21 | — | |||||||
Stock-based compensation expense | 1,836 | 2,065 | |||||||
Net changes in operating assets and liabilities: | |||||||||
Decrease in accounts receivable | 709 | 4,742 | |||||||
(Increase)/decrease in prepaid expenses, other current assets and other long-term assets | (776 | ) | 161 | ||||||
Decrease in accounts payable and accrued expenses | 615 | (8,892 | ) | ||||||
Increase/(decrease) in other current liabilities | 243 | (79 | ) | ||||||
Increase/(decrease) in deferred rent and security deposits payable | 760 | (315 | ) | ||||||
(Decrease)/increase in deferred income | (657 | ) | 90 | ||||||
Decrease in other liabilities | (639 | ) | — | ||||||
Net cash used in operating activities | (4,272 | ) | (4,359 | ) | |||||
Cash flows from investing activities: | |||||||||
Purchase of property and equipment | (2,505 | ) | (895 | ) | |||||
Acquisition, net of cash acquired | (4,856 | ) | — | ||||||
Net cash used in investing activities | (7,361 | ) | (895 | ) | |||||
Cash flows from financing activities: | |||||||||
Proceeds from the exercise of stock options awards | 1,178 | 62 | |||||||
Proceeds from issuance of common stock under employee stock purchase plan | 239 | 255 | |||||||
Principal portion of capital lease payments | — | (187 | ) | ||||||
Treasury stock — repurchase of stock | — | (2,406 | ) | ||||||
Tax withholdings related to net share settlements of restricted stock unit awards (RSUs) | (1,014 | ) | (709 | ) | |||||
Net cash provided by (used in) financing activities | 403 | (2,985 | ) | ||||||
Net decrease in cash, cash equivalents and restricted cash | (11,230 | ) | (8,239 | ) | |||||
Effect of exchange rate changes in cash, cash equivalents and restricted cash | (140 | ) | 462 | ||||||
Cash, cash equivalents and restricted cash at beginning of period | 76,320 | 43,930 | |||||||
Cash, cash equivalents and restricted cash at end of period | $ | 64,950 | $ | 36,153 | |||||
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Exhibit B
Telaria, Inc.
Reconciliation of Net Loss from Continuing Operations, Net of Income Taxes to Adjusted EBITDA
(in thousands)
(unaudited)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Loss from continuing operations, net of income taxes | $ | (2,960 | ) | $ | (6,816 | ) | $ | (9,086 | ) | $ | (16,358 | ) | ||||
Adjustments: | ||||||||||||||||
Depreciation and amortization expense | 874 | 990 | 2,675 | 2,011 | ||||||||||||
Total interest and other income (expense), net(1) | (1,082 | ) | 78 | (1,796 | ) | 105 | ||||||||||
Provision for income taxes | 29 | 89 | 43 | 79 | ||||||||||||
Stock-based compensation expense | 980 | 752 | 1,836 | 1,496 | ||||||||||||
Acquisition-related costs(2) | 329 | 985 | 329 | 1,810 | ||||||||||||
Restructuring costs(3) | 117 | — | 117 | — | ||||||||||||
Mark-to-market expense(4) | — | 93 | — | 148 | ||||||||||||
Executive severance, retention and recruiting costs | 80 | 302 | 223 | 332 | ||||||||||||
Disposition-related costs(5) | 1 | 300 | 2 | 300 | ||||||||||||
Expenses for transitional services(6) | 308 | — | 697 | — | ||||||||||||
Other adjustments(7) | 250 | — | 563 | 102 | ||||||||||||
Total net adjustments | 1,886 | 3,589 | 4,689 | 6,383 | ||||||||||||
Adjusted EBITDA | $ | (1,074 | ) | $ | (3,227 | ) | $ | (4,397 | ) | $ | (9,975 | ) | ||||
(1) | Reflects sublease income for our two former corporate headquarters and former Santa Monica location net of rent expense for those same locations. In addition, includes income received from the sale of Tremor Video DSP trademark. |
(2) | For the three and six months ended June 30, 2018, reflects acquisition-related costs incurred in connection with our acquisition of SlimCut. For the three and six months ended June 30, 2017, reflects acquisition-related costs incurred in connection with the acquisition of TVN. |
(3) | Reflects the estimated fair value of costs related to the move of our Santa Monica location. |
(4) | Reflects expense incurred based on the re-measurement, at June 30, 2017, of the estimated fair value of earn-out payments that were paid in connection with the acquisition of TVN and which were not conditioned on continued employment. |
(5) | Reflects professional fees incurred in connection with the sale of the buyer platform in August 2017. |
(6) | Reflects costs incurred providing transitional services following the sale of our buyer platform. |
(7) | For the three and six months ended June 30, 2018, reflects rent expense for our current corporate headquarters during the period of time in which such space was unoccupied. For the six months ended June 30, 2017, reflects amounts accrued in connection with a one-time change in our employee vacation policy for the first quarter of 2017. |
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