Tremor Video Reports Second Quarter 2014 Financial Results

Q2 2014 record revenue as growth tops 23%

  • Revenue for the three months ended June 30, 2014 grew 23.2% year-over-year to a record $43.7 million
  • Revenue for the six months ended June 30, 2014 grew 30.4% year-over-year to $78.6 million
  • Net loss of ($5.4) million; Non-GAAP Adjusted EBITDA of ($2.3) million
  • Net loss per share of ($0.11); Non-GAAP Adjusted EBITDA per share of ($0.05)
Wednesday, August 6, 2014 4:01 pm EDT

Dateline:

NEW YORK

Public Company Information:

NYSE:
TRMR
"Our second quarter results included record revenues as we continued to grow our business while increasing our investment in technology"

NEW YORK--(BUSINESS WIRE)--Tremor Video, Inc. (NYSE:TRMR), an advertising technology company elevating brand performance across all screens for the world’s leading brands and publishers, today announced financial results for the second quarter 2014.

“Our second quarter results included record revenues as we continued to grow our business while increasing our investment in technology,” said Bill Day, President and CEO of Tremor Video. “Our all screen product is gaining traction rapidly, with the number of advertisers using the product increasing steadily since its introduction at the beginning of the quarter. We’re looking to continue this momentum as we launch our SSP and move closer to our complete programmatic solution for brand advertisers and premium publishers.”

Q2 & YTD 2014 Financial Summary

Revenue: For the three months ended June 30, 2014, revenue was a record $43.7 million compared to $35.5 million for the three months ended June 30, 2013, representing a 23.2% increase over the same period one year ago.

For the six months ended June 30, 2014, revenue was $78.6 million compared to $60.2 million for the six months ended June 30, 2013, representing a 30.4% increase over the same period one year ago.

Gross Margin: For the three months ended June 30, 2014, gross margin was 33.9% compared to 46.5% for the same period one year ago.

For the six months ended June 30, 2014, gross margin was 34.0% compared to 45.5% for the same period one year ago.

Net Loss: For the three months ended June 30, 2014, net loss was ($5.4) million compared to a net loss of ($0.3) million for the same period one year ago.

For the six months ended June 30, 2014, net loss was ($12.6) million compared to a net loss of ($5.4) million for the same period one year ago.

Adjusted EBITDA: For the three months ended June 30, 2014, Adjusted EBITDA, a non-GAAP financial measure, was ($2.3) million compared to Adjusted EBITDA of $2.0 million for the same period one year ago.

For the six months ended June 30, 2014, Adjusted EBITDA, a non-GAAP financial measure, was ($6.9) million compared to Adjusted EBITDA of ($0.8) million for the same period one year ago.

EPS: For the three months ended June 30, 2014, basic and diluted net loss per share was ($0.11). Non-GAAP basic and diluted Adjusted EBITDA per share was ($0.05). Basic and diluted net loss per share and Non-GAAP basic and diluted Adjusted EBITDA per share are based on 50.4 million weighted average shares of common stock for the three months ended June 30, 2014.

For the six months ended June 30, 2014, basic and diluted net loss per share was ($0.25). Non-GAAP basic and diluted Adjusted EBITDA per share was ($0.14). Basic and diluted net loss per share and Non-GAAP basic and diluted Adjusted EBITDA per share are based on 50.4 million weighted average shares of common stock for the six months ended June 30, 2014.

A description of the non-GAAP calculations and reconciliation to comparable GAAP measures is provided in the accompanying tables entitled “Reconciliation of Non-GAAP Financial Information” and “Reconciliation of Non-GAAP Financial Information-Per Share.”

Business & Financial Highlights

As a percentage of total revenue, revenue attributable to performance-based pricing for the three months ended June 30, 2014 was 27% compared to 34% for the same period one year ago and for the six months ended June 30, 2014 was 25% compared to 35% for the same period one year ago.

As a percentage of total revenue, revenue attributable to our all-screen product for the three months ended June 30, 2014 was 21%. Our all-screen product, which we introduced during the second quarter, optimizes delivery of video ad campaigns across screens, eliminating the need for advertisers to allocate campaign budgets to a specific device.

Guidance

Based on information available as of August 6, 2014, the Company expects the following:

Q3 2014: Third quarter revenue is expected to be in the range of $39 million to $41 million and Adjusted EBITDA is expected to be in the range of ($4.0) million to ($3.0) million.

Full Year 2014: Full year 2014 revenue is expected to be in the range of $158 million to $163 million and Adjusted EBITDA is expected to be in the range of ($11.0) million to ($8.0) million.

Q2 2014 Financial Results Conference Call: Tremor Video will host a conference call today at 4:30 p.m. ET to discuss its second quarter financial results with the investment community. A live webcast of the event will be available on the Tremor Video Investor Relations website at http://investor.tremorvideo.com. A live domestic dial-in is available at (877)407-9039 or internationally at (201)689-8470. Until August 20, 2014, a domestic replay will be available at (877)870-5176 or internationally at (858)384-5517, using passcode 13586367, and via webcast on the Tremor Video Investor Relations website.

About Tremor Video

Tremor Video (NYSE: TRMR) is transforming the video advertising experience across all screens for the world’s leading brands. Our proprietary technology, VideoHub®, offers advertisers and publishers a complete programmatic solution to reach and engage consumers while providing new insights into what drives the success of brand advertising performance across multiple devices. Tremor Video is based in New York with offices throughout the US and across the globe. For more information, visit tremorvideo.com and find Tremor Video on Twitter, Facebook and LinkedIn.

"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, but not limited to, statements related to Tremor Video’s future financial results or growth potential, including third quarter 2014 and 2014 full year financial guidance, and statements with respect to future revenue mix or the development or adoption of the company’s solutions. 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 limited operating history and the continuing development of its business model; 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 advertisers and increase spend from existing advertisers; the company’s ability to attract advertising spend from TV media buyers; adoption of brand-centric metrics, advanced ad formats and performance-based pricing models by advertisers; the company’s ability to effectively deliver video ad campaigns with demo guarantees; a delay in, or failure of advertisers or publishers to adopt, the company’s programmatic solutions; adoption of the company’s all-screen buying solution by advertisers; the company’s ability to acquire an adequate supply of premium video advertising inventory from publishers 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 video ads; the effect of regulatory developments and industry standards regarding internet privacy and other matters; 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 Tremor Video’s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2013 filed with the U.S. Securities and Exchange Commission on March 28, 2014, its Quarterly Report on Form 10-Q for the three months ended March 31, 2014 filed with the U.S. Securities and Exchange Commission on May 15, 2014, and future filings and reports by the company, including its Quarterly Report on Form 10-Q for the quarter ended June 30, 2014.

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, Tremor Video 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”), Tremor Video reports Adjusted EBITDA and basic and diluted Adjusted EBITDA per share which are non-GAAP financial measures. We define Adjusted EBITDA as net loss plus (minus): interest expense, net and other expense (income), income tax expense, depreciation and amortization expense, non-cash stock-based compensation expense, non-cash stock-based long-term incentive compensation, and litigation costs associated with pending class action securities litigation. We define Adjusted EBITDA per share as Adjusted EBITDA divided by weighted average common shares outstanding. We use these non-GAAP financial measures for financial and operational decision making and as a means to evaluate period-to-period comparisons. We believe that these measures provide useful information about our operating results, enhance the overall understanding of our past financial performance and future prospects, and allow for greater transparency with respect to key metrics 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. The non-GAAP financial measures included in this press release have been reconciled to the nearest GAAP measure in the table following the financial statements attached to this press release. With respect to our expectations under “Guidance” above, reconciliation of 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 charges excluded from these non-GAAP measures, 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 the above charges to have a significant, and potentially unpredictable, impact on our future GAAP financial results.

 

Tremor Video, Inc.

Consolidated Balance Sheets

(in thousands)

      
  June 30,  December 31,
  2014  2013
  (unaudited)     
          
Assets         

Current assets:

         
Cash and cash equivalents $83,767   $92,691 
Accounts receivable, net  49,070    41,458 
Prepaid expenses and other current assets  1,778    1,912 
Total current assets  134,615    136,061 
Long-term assets:         

Restricted cash

  

600

    600 
Property and equipment, net  4,349    3,388 
Intangible assets, net  17,969    20,387 
Goodwill  29,719    29,719 
Deferred tax assets  189    189 
Other assets  252    216 
Total long-term assets  53,078    54,499 
Total assets $187,693   $190,560 
          
Liabilities and stockholders’ equity         
Current liabilities:         
Accounts payable and accrued expenses $39,246   $32,312 
Deferred rent and security deposits payable, short-term  10    14 
Deferred revenue  379    271 
Deferred tax liabilities, short-term  189    189 
Total current liabilities  39,824    32,786 
Deferred rent, long-term  745    742 
Total liabilities  40,569    33,528 
Stockholders’ equity:         
Common stock  5    5 
Additional paid-in capital  270,455    267,767 
Accumulated other comprehensive income  200    195 
Accumulated deficit  (123,536)   (110,935)
Total stockholders’ equity  147,124    157,032 
Total liabilities and stockholders’ equity $187,693   $190,560 
          

 

 

Tremor Video, Inc.

Consolidated Statements of Operations

(in thousands, except share and per share data)

                  
  Three Months Ended  Six Months Ended
  June 30,  June 30,
  2014 2013  2014 2013
  (unaudited)
Revenue $43,701  $35,465   $78,570  $60,230 
Cost of revenue  28,893   18,971    51,836   32,812 
Gross profit  14,808   16,494    26,734   27,418 
                  
Operating expenses:                 
Technology and development(1)  3,982   2,818    8,313   5,515 
Sales and marketing(1)  10,906   9,943    20,357   18,786 
General and administrative(1)  3,600   2,468    7,313   5,388 
Depreciation and amortization  1,643   1,493    3,229   2,995 
Total operating expenses  20,131   16,722    39,212   32,684 
                  
Loss from operations  (5,323)  (228)   (12,478)  (5,266)
                  
Interest and other (expense) income, net:                 
Interest expense, net  --   (57)   --   (113)
Other (expense) income, net  (28)  165    (23)  170 
Total interest and other (expense) income, net  (28)  108    (23)  57 
                  
Loss before income taxes  (5,351)  (120)   (12,501)  (5,209)
Income tax expense  21   153    100   223 
Net loss 

$

(5,372) 

$

(273)  

$

(12,601) 

$

(5,432)
                  
Net loss per share:                 
Basic and diluted $(0.11) $(0.04)  $(0.25) $(0.70)

 

                 

Weighted-average number of shares of common stock outstanding:

                 
Basic and diluted  50,403,168   7,760,494    50,350,749   7,744,943 
  
  

(1) Stock-based compensation expense included above:

              
  Three Months Ended  Six Months Ended
  June 30,  June 30,
  2014 2013  2014 2013
  (unaudited)
Technology and development $220  $134   $414  $249 
Sales and marketing  362   287    721   566 
General and administrative  557   341    971   686 
Total stock-based compensation expense $1,139  $762   $2,106  $1,501 
                  

 

 

Tremor Video, Inc.

Reconciliation of Non-GAAP Financial Information

(in thousands)

                  
  Three Months Ended  Six Months Ended
  June 30,  June 30,
  2014 2013  2014 2013
  (unaudited)
Net loss $(5,372) $(273)  $(12,601) $(5,432)
Adjustments:                 
Depreciation and amortization expense  1,643   1,493    3,229   2,995 
Stock-based compensation expense  1,139   762    2,106   1,501 
Stock-based long-term incentive compensation  154   --    114   -- 
Interest and other expense (income), net  28   (108)   23   (57)
Income tax expense  21   153    100   223 
Litigation costs  78   --    147   -- 
Total net adjustments  3,063   2,300    5,719   4,662 
Adjusted EBITDA $(2,309) $2,027   $(6,882) $(770)
                  
                  

 Tremor Video, Inc.

Reconciliation of Non-GAAP Financial Information-Per Share

                  
  Three Months Ended  Six Months Ended
  June 30,  June 30,
  2014 2013  2014 2013
  (unaudited)
Net loss $(0.11) $(0.04)  $(0.25) $(0.70)
Adjustments:                 
Depreciation and amortization expense  0.03   0.19    0.06   0.39 
Stock-based compensation expense  0.02   0.10    0.04   0.19 
Stock-based long-term incentive compensation  0.01   --    --   -- 
Interest and other expense (income), net  --   (0.01)   --   (0.01)
Income tax expense  --   0.02    --   0.03 
Litigation costs  --   --    0.01   -- 
Total net adjustments  0.06   0.30    0.11   0.60 
Adjusted EBITDA per share - basic $(0.05) $0.26   $(0.14) $(0.10)
                  

Weighted-average number of shares of common stock outstanding:

                 
Basic  50,403,168   7,760,494    50,350,749   7,744,943 
                  
Adjusted EBITDA per share – diluted $(0.05) $0.05   $(0.14) $(0.10)
                  

Weighted-average number of shares of common stock outstanding:

                 
Diluted  50,403,168   44,598,832    50,350,749   7,744,943 
                  

 

 

Tremor Video, Inc.

Consolidated Statements of Cash Flows

(in thousands)

   
  Six Months Ended
  June 30,
  2014  2013
  (unaudited)
          
Cash flows from operating activities:         
Net loss $(12,601)  $(5,432)

Adjustments required to reconcile net loss to net cash (used in) provided by operating activities:

         
Depreciation of property and equipment  811    557 
Amortization of intangible assets  2,418    2,438 
Bad debt (recovery) expense  (5)   30 
Mark-to-market income  --    (177)
Contingent stock grant to third party vendor  24    -- 
Stock-based compensation expense  2,106    1,501 
Stock-based long-term incentive compensation  114    -- 
Net changes in operating assets and liabilities:         
Increase in accounts receivable  (7,572)   (3,232)

Decrease (increase) in prepaid expenses and other long-term assets

  98    (1,402)
Increase in accounts payable and accrued expenses  6,741    6,029 

(Decrease) increase in deferred rent and security deposits payable

  (1)   80 
Increase (decrease) in deferred revenue  108    (21)
Net cash (used in) provided by operating activities  (7,759)   371 
          
Cash flows from investing activities:         
Purchase of property and equipment  (1,772)   (1,404)
Changes in restricted cash  --    621 
Net cash used in investing activities  (1,772)   (783)
          
Cash flows from financing activities:         
Proceeds from the exercise of stock options  582    173 
Net cash provided by financing activities  582    173 
          
Net decrease in cash and cash equivalents  (8,949)   (239)
          
Effect of exchange rate changes in cash and cash equivalents  25    (150)
          
Cash and cash equivalents at beginning of period  92,691    32,533 
Cash and cash equivalents at end of period $83,767   $32,144 
          
Supplemental disclosure of cash flow activities:         
Cash paid for income taxes $--   $224 
Cash paid for interest expense $--   $113 

 

Contact:

Tremor Video, Inc.
Investor Relations:
Andrew Posen
Senior Director Investor Relations
212-792-2315
IR@TremorVideo.com
or
Public Relations:
Tremor Video Corporate Communications
Billy Kenny, 646-421-6217
BKenny@TremorVideo.com

Related Materials:

Investor Relations

Andrew Posen

VP, Investor Relations

212-792-2315

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