News Column

Tremor Video Reports First Quarter 2014 Financial Results

May 6, 2014

Q1 2014 revenue growth tops 40%

  • Total revenue grew 40.8% year-over-year to $34.9 million
  • Net loss of ($7.2) million; Non-GAAP Adjusted EBITDA of ($4.6) million
  • Net loss per share of ($0.14); Non-GAAP Adjusted EBITDA per share of ($0.09)

    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 first quarter 2014.

    “Our first quarter top line growth of over 40% demonstrates our customer traction in delivering brand performance solutions across all screens,” said Bill Day, President and CEO of Tremor Video. “We’ve been a great strategic partner to the largest TV advertisers and as a result have grown revenue across our key verticals this quarter.”

    “We are also continuing to make great strides towards building a complete end-to-end programmatic offering. Our DSP goes live in the second quarter, and we expect to release a SSP for premium publishers later this year.”

    Q1 2014 Financial Summary

    Revenue: For the first quarter of 2014, total revenue was $34.9 million compared to $24.8 million for the first quarter of 2013, representing a 40.8% increase over the same period one year ago.

    Gross Margin: For the first quarter of 2014, gross margin was 34.2% compared to 44.1% for the same period one year ago.

    Net Loss: For the first quarter of 2014, net loss was ($7.2) million compared to a net loss of ($5.2) million for the same period one year ago.

    Adjusted EBITDA: For the first quarter of 2014, Adjusted EBITDA, a non-GAAP financial measure, was ($4.6) million compared to Adjusted EBITDA of ($2.8) million for the same period one year ago.

    EPS: For the first quarter of 2014, basic and diluted net loss per share was ($0.14). Non-GAAP basic and diluted Adjusted EBITDA per share was ($0.09). Basic and diluted net loss per share and Non-GAAP basic and diluted Adjusted EBITDA per share are based on 50.3 million weighted average shares of common stock for the quarter ended March 31, 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 first quarter of 2014 was 22.6% compared to 36.1% for the same period one year ago.

    As a percentage of total revenue, mobile revenue for the first quarter of 2014 was 13.2% compared to 9.3% for the same period one year ago.

    Guidance

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

    Q2 2014: Second 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 ($5.8) million to ($4.8) million.

    Full Year 2014: Full year 2014 revenue is expected to be in the range of $158 million to $163 million (updated from previous guidance in the range of $155 million to $160 million) and Adjusted EBITDA is expected to be in the range of ($11.0) million to ($8.0) million.

    Q1 2014 Financial Results Conference Call:Tremor Video will host a conference call today at 4:30 p.m. ET to discuss its first 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, using passcode 13580283. Until May 20, 2014, a domestic replay will be available at (877) 870-5176 or internationally at (858) 384-5517, using passcode 13580283, 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 second 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 Securities and Exchange Commission on March 28, 2014, and future filings and reports by the company, including its Quarterly Report on Form 10-Q for the quarter ended March 31, 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): net interest expense and other (income) expense, income tax (benefit) 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)

       
    March 31, December 31,

            2014        

    2013
     
    (unaudited)
    Assets
    Current assets:
    Cash and cash equivalents $87,288$92,691
    Accounts receivable, net 40,261 41,458
    Prepaid expenses and other current assets 1,680 1,912
    Total current assets 129,229 136,061
     
    Long-term assets:
    Restricted cash 600 600
    Property and equipment, net 3,967 3,388
    Intangible assets, net 19,178 20,387
    Goodwill 29,719 29,719
    Deferred tax assets 189 189

    Other assets

    266 216
    Total long-term assets 53,919 54,499
    Total assets $183,148$190,560
     
    Liabilities and stockholders’ equity
    Current liabilities:
    Accounts payable and accrued expenses $30,859$32,312
    Deferred rent and security deposits payable, short-term 35 14
    Deferred revenue 322 271
    Deferred tax liabilities, short-term 189 189
    Total current liabilities 31,405 32,786
    Deferred rent, long-term 717 742
    Total liabilities 32,122 33,528
     
     
    Stockholders’ equity:
    Common stock 5 5
    Additional paid-in capital 269,037 267,767
    Accumulated other comprehensive income 148 195
    Accumulated deficit (118,164) (110,935)
    Total stockholders’ equity 151,026 157,032
    Total liabilities and stockholders’

    equity

    $183,148$190,560
     


     
    Tremor Video, Inc.
    Consolidated Statements of Operations

    (in thousands, except share and per share data)

       
    Three Months Ended
    March 31,
    2014   2013
     
    (unaudited)
     
    Revenue $34,869$24,765
    Cost of revenue 22,943 13,841
    Gross profit 11,926 10,924
     
    Operating expenses:
    Technology and development (1) 4,331 2,697
    Sales and marketing (1) 9,451 8,843
    General and administrative (1) 3,713 2,920
    Depreciation and amortization 1,586 1,502
    Total operating expenses 19,081 15,962
     
    Loss from operations (7,155) (5,038)
     
    Interest and other income (expense):
    Interest expense - (56)
    Other income 5 5
    Total interest and other income (expense), net 5 (51)
     
    Loss before income taxes (7,150) (5,089)
    Income tax expense 79 70
    Net loss $(7,229)$(5,159)
     
    Net loss per share:
    Basic and diluted $(0.14)$(0.67)
     
    Weighted average number of shares of common stock outstanding:
    Basic and diluted 50,297,747 7,729,218
     

    (1) Stock-based compensation expense included above:

     
    Three Months Ended
    March 31,
    2014 2013
     
    (unaudited)
     
    Technology and development $194$115
    Sales and marketing 359 279
    General and administrative 414 345
    Total stock-based compensation expense $967$739
     


     
    Tremor Video, Inc.
    Reconciliation of Non-GAAP Financial Information

    (in thousands)

     
    Three Months Ended
    March 31,
    2014   2013
     
    (unaudited)
     
    Net loss $(7,229)$(5,159)
    Adjustments:
    Depreciation and amortization expense 1,586 1,502
    Stock-based compensation expense 967 739
    Stock-based long-term incentive compensation (40) --
    Interest and other (income) expense, net (5) 51
    Income tax expense 79 70
    Litigation costs 69 --
    Total net adjustments 2,656 2,362
    Adjusted EBITDA $(4,573)$(2,797)
     
     
    Tremor Video, Inc.
    Reconciliation of Non-GAAP Financial Information-Per Share
     
    Three Months Ended
    March 31,
    2014   2013
     
    (unaudited)
     
    Net loss $(0.14)$(0.67)
    Adjustments:
    Depreciation and amortization expense 0.03 0.19
    Stock-based compensation expense 0.02 0.10
    Stock-based long-term incentive compensation -- --
    Interest and other (income) expense, net -- 0.01
    Income tax expense -- 0.01
    Litigation costs -- --
    Total net adjustments 0.05 0.31
    Adjusted EBITDA per share-basic and diluted $(0.09)$(0.36)
     
    Weighted average number of shares of common stock outstanding-basic and diluted 50,297,747 7,729,218
     


     
    Tremor Video, Inc.
    Consolidated Statements of Cash Flows

    (in thousands)

            Three Months Ended
    March 31,
    2014   2013
    (unaudited)
    Cash flows from operating activities
    Net loss $(7,229)$(5,159)
    Adjustments required to reconcile net loss to net cash used in operating activities:
    Depreciation of property and equipment 377 282
    Amortization of intangible assets 1,209 1,220
    Bad debt expense 18 25
    Mark-to-market income -- (5)
    Stock-based compensation expense 967 739
    Stock-based long-term incentive compensation (40) --
    Net changes in operating assets and liabilities:
    Decrease in accounts receivable 1,157 5,623
    Decrease (increase) in prepaid expenses, other current assets and other long-term

    assets

    182 (486)
    Decrease in accounts payable and accrued expenses (1,427) (3,278)
    (Decrease) increase in deferred rent and security deposits payable (4) 33
    Increase in deferred revenue 51 191
    Net cash used in operating activities (4,739) (815)
     
    Cash flows from investing activities
    Purchase of property and equipment (956) (137)
    Net cash used in investing activities (956) (137)
     
    Cash flows from financing activities
    Proceeds from the exercise of stock options 303 46
    Net cash provided by financing activities 303 46
     
    Net decrease in cash and cash equivalents (5,392) (906)
     
    Effect of exchange rate changes in cash and cash equivalents (11) (94)
     
    Cash and cash equivalents at beginning of period 92,691 32,533
    Cash and cash equivalents at end of period $87,288$31,533
     
    Supplemental disclosure of cash flow activities
    Cash paid for income taxes $-- $159
    Cash paid for interest expense $-- $56
     





    Tremor Video, Inc.

    Investor Relations:

    Andrew Posen, 212-792-2315

    Senior Director Investor Relations

    IR@TremorVideo.com

    or

    Public Relations:

    Billy Kenny, 646-421-6217

    Tremor Video Corporate Communications

    BKenny@TremorVideo.com

    Source: Tremor Video, Inc.


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