RICHMOND, Va., Nov. 11, 2020 (GLOBE NEWSWIRE) — Kinsale Capital Group, Inc. (Nasdaq: KNSL) today announced that its Board of Directors declared a cash dividend of $0.09 per share of common stock. This dividend is payable on December 11, 2020 to all stockholders of record as of the close of business on November 30, 2020.
About Kinsale Capital Group, Inc.
Kinsale Capital Group, Inc. is a specialty insurance group headquartered in Richmond, Virginia, focusing on the excess and surplus lines market.
Contact
Kinsale Capital Group, Inc. Bryan Petrucelli Executive Vice President, Chief Financial Officer and Treasurer 804-289-1272 ir@kinsalecapitalgroup.com
WESTLAKE VILLAGE, Calif., Nov. 11, 2020 (GLOBE NEWSWIRE) — Arcutis Biotherapeutics, Inc. (Nasdaq: ARQT), a late-stage biopharmaceutical company focused on developing and commercializing treatments for unmet needs in immune-mediated dermatological diseases and conditions, or immuno-dermatology, today announced that Frank Watanabe, President and CEO, will present a corporate overview during the Stifel 2020 Virtual Healthcare Conference taking place November 16-18, 2020.
Details for the presentation are as follows: Stifel 2020 Virtual Healthcare Conference Presentation Date: Wednesday, November 18, 2020 Presentation Time: 12:20 p.m. PST / 3:20 p.m. EST
The presentation will be webcast and may be accessed at the “Events & Presentations” section of the Company’s website at https://investors.arcutis.com/events-and-presentations. Arcutis will maintain an archived replay of the webcast on its website for 30 days after the conference.
About Arcutis – Bioscience, applied to the skin. Arcutis Biotherapeutics, Inc. (Nasdaq: ARQT) is a late-stage biopharmaceutical company focused on developing and commercializing treatments for unmet needs in immune-mediated dermatological diseases and conditions, or immuno-dermatology. The company is leveraging recent advances in immunology and inflammation to develop differentiated therapies against biologically validated targets to solve persistent treatment challenges in serious diseases of the skin. Arcutis’ robust pipeline includes four novel drug candidates currently in development for a range of inflammatory dermatological conditions. The company’s lead product candidate, topical roflumilast, has the potential to revitalize the standard of care for plaque psoriasis, atopic dermatitis, scalp psoriasis, and seborrheic dermatitis. For more information, visit www.arcutis.com or follow the company on LinkedIn and Twitter.
Represents Fourth Consecutive Annual Dividend Increase Delivered to Shareholders
ST. LOUIS, Nov. 11, 2020 (GLOBE NEWSWIRE) — Stifel Financial Corp. (NYSE: SF) today announced that its Board of Directors has approved a three-for-two stock split of the Company’s common stock, which will be made in the form of a 50% stock dividend. Shareholders of record at the close of business on December 2, 2020 will receive one additional share of Stifel Financial common stock for every two shares owned. These additional shares will be distributed beginning December 16, 2020. Cash will be distributed in lieu of fractional shares based on the closing price on the record date. The Company has approximately 68.7 million shares outstanding and, after the split, the Company will have approximately 103.0 million shares outstanding.
Following the stock split, the current quarterly dividend equates to $0.1133 per common share, which the firm intends to increase in 2021 to $0.15 per common share, subject to board approval. This action would represent Stifel’s fourth consecutive annual increase of its common stock dividend.
“Our stock split and the board’s intention to increase our common dividend are the result of our company’s strong market performance, continuing growth prospects, and our desire to reward existing and long-term investors. Additionally, these actions reflect the board’s confidence in our ability to drive long-term shareholder value by focusing on the fundamentals of our company,” commented Ronald J. Kruszewski, Chairman & Chief Executive Officer of Stifel Financial Corp.
Stifel Financial Corp. (NYSE: SF) is a financial services holding company headquartered in St. Louis, Missouri, that conducts its banking, securities, and financial services business through several wholly owned subsidiaries. Stifel’s broker-dealer clients are served in the United States through Stifel, Nicolaus & Company, Incorporated, including its Eaton Partners business division; Keefe, Bruyette & Woods, Inc.; Miller Buckfire & Co., LLC and Century Securities Associates, Inc. The Company’s broker-dealer affiliates provide securities brokerage, investment banking, trading, investment advisory, and related financial services to individual investors, professional money managers, businesses, and municipalities. Stifel Bank and Stifel Bank & Trust offer a full range of consumer and commercial lending solutions. Stifel Trust Company, N.A. and Stifel Trust Company Delaware, N.A. offer trust and related services. To learn more about Stifel, please visit the Company’s website at www.stifel.com. For global disclosures, please visit https://www.stifel.com/investor-relations/press-releases.
PRISM Trial of Haduvio ™ for Severe Pruritus in Patients with Prurigo Nodularis
Exceeds Halfway Enrollment Milestone
Phase 2 Chronic Cough Trial in Patients with IPF Enrolled First New Subject Post- COVID -19 Restrictions
Cash Position Expected to Fund Operations into the First Half of 2022
NEW HAVEN, Conn., Nov. 11, 2020 (GLOBE NEWSWIRE) — Trevi Therapeutics, Inc. (Nasdaq: TRVI), a clinical-stage biopharmaceutical company focused on the development and commercialization of Haduvio™ (nalbuphine ER) to treat serious neurologically mediated conditions, today announced financial results for the quarter ended September 30, 2020, as well as business updates.
“We are pleased with the continued progress of our clinical development programs,” said Jennifer L. Good, President and CEO of Trevi Therapeutics. “We recently announced significant developments in both of our ongoing clinical trials by surpassing halfway enrollment in our PRISM trial and enrolling the first new subject in our chronic cough trial in IPF since the study resumed after pausing due to COVID restrictions. We are focused on completing enrollment in both trials and preparing for the next steps in the development of Haduvio.”
Key Business Updates
Phase 2b/3 PRISM trial of Haduvio for severe pruritus in patients with prurigo nodularis : The Company has enrolled approximately 190 subjects in the trial and reaffirms its guidance that it expects to complete enrollment in the third quarter of 2021 and to report top-line data in the fourth quarter of 2021.
Phase 2 trial of Haduvio for chronic cough in patients with idiopathic pulmonary fibrosis (IPF): The Company resumed screening and enrolling patients in the trial following the pause in the trial due to COVID-19. The Company amended the study protocol to require fewer in-person visits by subjects as well as fewer procedures in order to facilitate the completion of the trial in an at-risk patient population for COVID-19. Additionally, the Company is assessing additional study sites in Germany which could potentially accelerate enrollment and reduce the risks inherent with single-country recruitment during the COVID-19 pandemic.
Third Quarter 2020 Financial Highlights
Cash position: As of September 30, 2020, the Company had total cash and cash equivalents of $53.3 million, compared to $57.3 million as of December 31, 2019. During the third quarter of 2020, the Company received $14.0 million in proceeds from a term loan with Silicon Valley Bank and sold approximately $2.5 million of common stock under the Company’s ATM program. The Company expects its cash position will fund operations into the first half of 2022.
Research and development (R&D) expenses: R&D expenses for the third quarter of 2020 were $4.8 million compared to $5.7 million in the same period in 2019. The decrease was primarily due to decreased activity in the Company’s Phase 2 trial in chronic cough in patients with IPF due to the pausing of enrollment and treatment of patients as a result of the COVID-19 pandemic as well as decreased activity with the completion of the Company’s Phase 1b trial in patients with chronic liver disease.
General and administrative (G&A) expenses: G&A expenses for the third quarter of 2020 were $2.4 million compared to $2.0 million in the same period in 2019. The increase was primarily due to an increase in stock-based compensation expenses and an increase in consulting fees.
Net loss: For the third quarter of 2020, the Company reported a net loss of $7.4 million, compared to a net loss of $7.4 million in the same period in 2019.
Conference Call
As previously announced, the Company will host a conference call and webcast today, November 11, 2020 at 4:30 p.m. ET. To participate in the live conference call by phone, please dial (866) 360-5746 (domestic) or (602) 563-8605 (international) and provide access code 9375955. A live audio webcast will be accessible from the ‘Investors & News’ section on the Company’s website at www.trevitherapeutics.com. An archived replay of the webcast will also be available for 30 days on the Company’s website following the event.
About Trevi Therapeutics, Inc.
Trevi Therapeutics, Inc. is a clinical-stage biopharmaceutical company focused on the development and commercialization of Haduvio to treat serious neurologically mediated conditions. Trevi is currently developing Haduvio for the treatment of chronic pruritus, chronic cough in patients with idiopathic pulmonary fibrosis (IPF) and levodopa-induced dyskinesia (LID) in patients with Parkinson’s disease. These conditions share a common pathophysiology that is mediated through opioid receptors in the central and peripheral nervous systems. Trevi is currently conducting a Phase 2b/3 clinical trial of Haduvio, referred to as the PRISM trial, in patients with severe pruritus associated with prurigo nodularis.
Founded in 2011, Trevi Therapeutics is headquartered in New Haven, CT.
About HADUVIO
Haduvio is an oral extended release formulation of nalbuphine. Nalbuphine is a mixed ĸ-opioid receptor agonist and µ-opioid receptor antagonist that has been approved and marketed as an injectable for pain indications for more than 20 years in the United States and Europe. The ĸ- and µ-opioid receptors are known to be critical mediators of itch, cough and certain movement disorders. Nalbuphine’s mechanism of action also mitigates the risk of abuse associated with µ-opioid agonists because it antagonizes, or blocks, µ-opioid receptors. Nalbuphine is currently the only opioid approved for marketing that is not classified as a controlled substance in the United States and most of Europe. Trevi intends to propose Haduvio as the trade name for the nalbuphine ER investigational product. Haduvio is an investigational drug product and its safety and efficacy have not been fully evaluated by any regulatory authority.
Forward-Looking Statements
Statements contained in this press release regarding matters that are not historical facts are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to risks and uncertainties and actual results may differ materially from those expressed or implied by such forward-looking statements. Such statements include, but are not limited to, statements regarding the impact of the COVID-19 pandemic on Trevi’s clinical trials, business and operations; the expected timing of enrollment and for reporting top-line data from, Trevi’s Phase 2b/3 PRISM trial of Haduvio in patients with prurigo nodularis; Trevi’s business plans and objectives, including future plans or expectations for Trevi’s product candidates and expectations regarding Trevi’s uses and sufficiency of capital; and other statements containing the words “believes,” “anticipates,” “plans,” “expects,” and similar expressions. Risks that contribute to the uncertain nature of the forward-looking statements include: uncertainties regarding the success, cost and timing of Trevi’s product candidate development activities and ongoing and planned clinical trials; uncertainties regarding the scope, timing and severity of the COVID-19 pandemic, the impact of the COVID-19 pandemic on Trevi’s clinical operations and actions taken in response to the pandemic; uncertainties regarding Trevi’s ability to execute on its strategy; the risk that positive results from a clinical trial may not necessarily be predictive of the results of future or ongoing clinical trials; potential regulatory developments in the United States and foreign countries; uncertainties inherent in estimating Trevi’s cash runway, future expenses and other financial results; as well as other risks and uncertainties set forth in the quarterly report on Form 10-Q for the quarter ended June 30, 2020 filed with the Securities and Exchange Commission and in subsequent filings with the Securities and Exchange Commission. All forward-looking statements contained in this press release speak only as of the date on which they were made. Trevi undertakes no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they were made.
NEWARK, Calif., Nov. 11, 2020 (GLOBE NEWSWIRE) — ShotSpotter, Inc. (NASDAQ: SSTI), the leader in acoustic gunshot detection and precision policing solutions that help law enforcement officials and security personnel prevent and reduce gun violence, is scheduled to participate at the following virtual financial conferences during November 2020:
Holding one-on-one meetings on Tuesday, November 17
To receive additional information or to schedule a one-on-one meeting, please contact ShotSpotter’s IR team at SSTI@gatewayir.com.
About ShotSpotter, Inc. ShotSpotter (NASDAQ: SSTI) provides acoustic gunshot detection and precision-policing solutions to help law enforcement officials and security personnel prevent and reduce gun violence and make communities, campuses and facilities safer. The company’s flagship product, ShotSpotter® Flex™, is the leading gunshot detection, location and forensic system trusted by over 100 cities. ShotSpotter® Connect™ (previously known as ShotSpotter Missions™) uses artificial intelligence-driven analysis to dynamically direct patrol resources to areas of greatest risk and helps to improve officer accountability and deter crime. ShotSpotter has been designated a Great Place to Work® Company.
SANTA MONICA, Calif., Nov. 11, 2020 (GLOBE NEWSWIRE) — Super League Gaming (Super League or the Company) (NASDAQ: SLGG), a leader in bringing live and digital esports entertainment directly to everyday gamers around the world, reported financial results for the third quarter ended September 30, 2020.
Highlights
Highest quarterly revenue in the Company’s history, up 105% over the prior year.
Gross margin of 54%, reflecting lower cost digital activations.
Operating expenses relatively flat versus prior year period.
Continued expansion of strategic partnerships including Topgolf, HIT PARADER, the Singleton Foundation and others.
Key Performance Indicators (KPIs) Through September 3 0 , 2020
Registered users up 144% to 2.4 million versus 1.0 million at year end 2019.
Engagement hours increased 218% to 47.7 million hours of gameplay versus 15.0 million hours for the full year 2019.
Viewer Impressions grew to 1.4 billion, nearly 12 times the level for the full year 2019.
Management Commentary
“In the third quarter, we saw many of the elements of our strategic and operating plans come together to produce our strongest quarterly revenues to date,” said Ann Hand, CEO of Super League. “We continue to track far ahead of our 2020 audience growth targets. In addition, we are selling more effectively against our growing ad inventory and expanding the breadth of our partnerships. We are pleased to have been able to produce this growth in the midst of a global pandemic, which continues to constrain the advertising market.”
Third Quarter 20 20 Financial Results
Revenues in the third quarter of 2020 increased 105% to $718,000 compared to $350,000 in the comparable prior year quarter. The increase was primarily driven by a significant increase in advertising and content sales revenues relative to the comparable prior year quarter, reflecting our continued focus on the acceleration of the monetization of our expanding advertising inventory and amateur gameplay content.
Third quarter 2020 cost of revenue increased 70% to $327,000 compared to $192,000 in the comparable prior year quarter, as compared to the 105% increase in related revenues for the same period. The decrease in cost of revenue as a percentage of revenue was driven by the significant increase in lower cost advertising and content sales revenues in the third quarter of 2020.
Total operating expenses in the third quarter of 2020 were $4.7 million compared to $4.6 million in the comparable prior year quarter. The variance reflects an increase in sales and marketing personnel costs related to the investment in our direct sales force since the end of the prior year quarter, and an increase in technology platform costs and corporate insurance costs. The increase was partially offset by a decrease in non-cash stock compensation costs.
On a GAAP-basis, net loss in the third quarter of 2020 was $4.3 million or $(0.36) per share, compared to a net loss of $4.4 million or $(0.52) per share in the comparable prior year quarter. Non-cash charges in the third quarter of 2020 included $0.5 million of stock-based compensation expenses, compared to $0.7 million in the comparable prior year period.
Proforma net loss for the third quarter of 2020 was $3.8 million compared to a proforma net loss of $3.7 million in the comparable prior year quarter.
At September 30, 2020, the Company’s cash position totaled $10.3 million compared to $8.4 million at December 31, 2019, including approximately $8.4 million in net proceeds from the sale of 4.98 million shares of common stock, pursuant to an underwritten public offering that closed in the third quarter of 2020.
Conference Call
The Company will hold a conference call today at 5:00 p.m. Eastern time to discuss its third quarter 2020 results and provide a business update.
Date: Wednesday, November 11, 2020 Time: 5:00 p.m. Eastern time (2:00 p.m. Pacific time) Toll-free dial-in number: (866) 987-6716 International dial-in number: (630) 652-5945 Conference ID: 3156519
Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Gateway Investor Relations at (949) 574-3860.
The conference call will be broadcast live and available for replay here and via the investor relations section of the Company’s website at www.SuperLeague.com.
A replay of the conference call will be available after 8:00 p.m. Eastern time on the same day through November 18, 2020.
Super League Gaming (Nasdaq: SLGG) is a leading gaming community and content platform that gives everyday gamers multiple ways to connect and engage with others while enjoying the video games they love. Powered by patented, proprietary technology systems, Super League offers players the ability to create gameplay-driven experiences they can share with friends, the opportunity to watch live streaming broadcasts and gameplay highlights across digital and social channels, and the chance to compete in events and challenges designed to celebrate victories and achievements across multiple skill levels. With gameplay and content offerings featuring more than a dozen of the top video game titles in the world, Super League is building a broadly inclusive, global brand at the intersection of gaming, experiences and entertainment. Whether to access its expanding direct audience or the Company’s unique content production and virtual event capabilities, third parties ranging from consumer brands, video game publishers, television companies, traditional sports organizations, concert promoters, and more, are turning to Super League to provide integrated solutions that drive business growth.
Forward-Looking Statements
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995. Statements in this press release that are not strictly historical are “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements involve substantial risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed or implied by such statements. Forward-looking statements in this communication include, among other things, statements about our possible or assumed business strategies, potential growth opportunities, new products and potential market opportunities. Risks and uncertainties include, among other things, our ability to implement our plans, forecasts and other expectations with respect our business; our ability to realize the anticipated benefits of events that took place during and subsequent to the quarter ended September 30, 2020, including the possibility that the expected benefits will not be realized or will not be realized within the expected time period; unknown liabilities that may or may not be within our control; attracting new customers and maintaining and expanding our existing customer base; our ability to scale and update our platform to respond to customers’ needs and rapid technological change; increased competition on our market and our ability to compete effectively, and expansion of our operations and increased adoption of our platform internationally. Additional risks and uncertainties that could affect our financial results are included in the section titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-Q for the period ended September 30, 2019, our Annual Report on Form 10-K for the year ended December 31, 2019 and other filings that we make from time to time with the Securities and Exchange Commission which, once filed, are available on the SEC’s website at www.sec.gov. In addition, any forward-looking statements contained in this communication are based on assumptions that we believe to be reasonable as of this date. Except as required by law, we assume no obligation to update these forward-looking statements, or to update the reasons if actual results differ materially from those anticipated in the forward-looking statements.
I nformation About Non- GAAP Financial Measures
As used herein, “GAAP” refers to accounting principles generally accepted in the United States of America. To supplement our condensed financial statements included in our Quarterly Report on Form 10-Q for the period ended September 30, 2020, which financial statements were prepared and presented in accordance with GAAP, this earnings release includes proforma net loss, a financial measure that is considered a non-GAAP financial measure as defined in Rule 101 of Regulation G promulgated by the Securities and Exchange Commission. Generally, a non-GAAP financial measure is a numerical measure of a company’s historical or future performance, financial position, or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.
We use proforma net loss, proforma earnings per share (EPS) and other non-GAAP financial measures for internal financial and operational decision-making purposes and to evaluate period-to-period comparisons of the performance and results of operations of our business. Our management believes these non-GAAP financial measures provide meaningful supplemental information regarding the performance of our business by excluding non-cash stock compensation charges, non-cash interest charges on convertible debt, and non-cash prepaid in-kind advertising charges that may not be indicative of our recurring core business operating results. These non-GAAP financial measures also facilitate management’s internal planning and comparisons to our historical performance and liquidity. We believe these non-GAAP financial measures are useful to investors as they allow for greater transparency with respect to key metrics used by management in its financial and operational decision making and are used by our institutional investors and the analyst community to help them analyze the performance and operational results of our core business.
Proforma Net Loss and EPS . We define Proforma Net Loss as net loss calculated in accordance with GAAP, but excluding non-cash stock compensation charges, non-cash interest charges on convertible debt (including accrued periodic interest, periodic or accelerated amortization of debt discount charges and charges related to convertible debt related beneficial conversion features), and non-cash prepaid in-kind advertising charges. Proforma EPS is defined as Proforma net income divided by the weighted average outstanding shares, on a fully diluted basis, calculated in accordance with GAAP, for the respective reporting period.
Due to the inherent volatility in stock prices, the use of estimates and assumptions in connection with the valuation and expensing of share-based awards and the variety of award types that companies can issue under FASB ASC Topic 718, management believes that providing a non-GAAP financial measure that excludes non-cash stock compensation allows investors to make meaningful comparisons between our recurring core business operating results and those of other companies period to period, as well as providing our management with a critical tool for financial and operational decision making and for evaluating our own period-to-period recurring core business operating results.
Non-cash interest charges related to convertible debt outstanding, if any, including accrued periodic interest, periodic or accelerated amortization of debt discount charges and charges related to convertible debt related beneficial conversion features, primarily reflects the attribution of value to common stock purchase warrants and the beneficial conversion feature embedded in the convertible debt instruments, and the expensing of these amounts on a straight-line basis over the term of the convertible debt as additional interest cost related to the debt. These non-cash amounts are reflected in other expense and are not expenses associated with our core business operations. Management believes that providing a non-GAAP financial measure that excludes non-cash interest charges allows investors to make meaningful comparisons between our recurring core business operating results and those of other companies period to period, as well as providing our management with a critical tool for financial and operational decision making and for evaluating our own period-to-period recurring core business operating results.
There are several limitations related to the use of proforma net loss and EPS versus net loss EPS calculated in accordance with GAAP. For example, non-GAAP net loss excludes the impact of significant non-cash stock compensation and debt related interest charges that are or may be recurring, and that may or will continue to be recurring for the foreseeable future. In addition, non-cash stock compensation is a critical component of our employee compensation and retention programs and the cost associated with common stock purchase warrants and beneficial conversion features embedded in convertible debt outstanding is a critical component of the cost of debt financings. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from non-GAAP net loss and evaluating non-GAAP net loss in conjunction with net loss and EPS calculated in accordance with GAAP.
The accompanying table below titled “Reconciliation of GAAP to Non-GAAP Financial Information” provides a reconciliation of the non-GAAP financial measures presented to the most directly comparable financial measures prepared in accordance with GAAP.
Investor Relations :
Sean McGowan and Cody Slach Gateway Investor Relations (949) 574-3860 SLG@GatewayIR.com
Launched Two New Loyalty Programs Through Strategic Partnership with Amadeus
Strong Pipeline Positions Company Well for Industry Recovery
TORONTO, Nov. 11, 2020 (GLOBE NEWSWIRE) — Points International Ltd. (TSX: PTS) (Nasdaq: PCOM) (Points or the Company), the global leader in powering loyalty commerce, is reporting financial results for the third quarter ended September 30, 2020.
Unless otherwise noted, all comparisons are on a year-over-year basis and all amounts are in USD. The complete third quarter Condensed Consolidated Interim Financial Statements and Management’s Discussion & Analysis, including segmented results, are available at www.sedar.com and www.sec.gov.
Third Quarter 2020 Financial Summary
For the three months ended
(in millions of USD)
September 30, 2020
June 30, 2020
September 30, 2019
Total Revenue
$ 37.4
$40.9
$98.0
Gross Profit
$ 5.7
$7.0
$14.0
Net (Loss) Income
($ 2.5 )
($3.3)
$1.1
Adjusted EBITDA1
($ 1.1 )
$0.3
$4.4
Recent Operational Highlights
Expanded Partnerships:
Launched new Subscription service with United Airlines allowing select Mileage Plus members the opportunity to subscribe to a monthly ‘buy miles’ plan.
Expanded long-term partnership with Delta Air Lines with the launch of Delta Choice, a state-of-the-art customer service program that enhances the way customers are compensated for travel issues.
Deployed a new program between GetYourGuide, a leading tours and activity website, and Alaska Airlines’ Mileage Plan. Users can now earn miles when they shop at GetYourGuide.
Launched new capability with Chase Bank Ultimate Rewards that allows cardholders to double their points when they transfer bank-branded points into select travel program rewards currencies.
Launched new Transfer and Reinstate services for Air Canada’s new Aeroplan program, offering additional options for members to utilize their Aeroplan miles.
New Partnerships:
Launched Buy, Gift and Transfer services with Caribbean Airlines’ loyalty program, Caribbean Miles, to provide a personalized experience for members to become more engaged in their program. This new partnership, which was initiated by Amadeus, went live in early November.
Signed a new LCR contract with Ethiopian Airlines to take over the existing Buy, Gift and Transfer services currently managed by Amadeus, while adding new options that will generate both significant revenue and increased engagement for Ethiopian Airlines’ loyalty members.
Management Commentary
“During the third quarter, we continued to navigate a challenging market environment for travel and hospitality,” said Rob MacLean, CEO of Points. “As we have often stated, the timing of new loyalty program deployments and promotional activity can fluctuate quarter to quarter, and these fluctuations have only been exacerbated by the pandemic. As a result, our transaction volumes have remained down from pre-COVID levels. Despite these challenges, our teams have been active with business development to drive new programs and partnerships, and our pipeline remains even stronger now than it was before the pandemic. I am proud of our team’s dedication to driving these opportunities and supporting our partners across all three lines of business.
“In an environment that has placed unprecedented pressure on our travel partners, loyalty programs have proven to be a resilient source of value as our partners work to stabilize their businesses in the near-term and prepare for the return of strong consumer travel demand in the long-term. Several airlines have leveraged their frequent flyer program assets as collateral for debt financings, and operators across the industry have extended membership status and lowered redemption requirements to stimulate near-term travel activity. Our industry leading loyalty commerce solutions make our partners’ offerings more comprehensive and efficient, and this has enabled us to recently expand several key partnerships—such as United and Delta Airlines—while expanding our Amadeus relationship to sign new partnerships with operators like Caribbean Airlines and Ethiopian Airlines. This progress, in addition to important launches with Qatar and Air Canada earlier in the year, has continued the very strong trend of new business development during the pandemic that will help accelerate our performance as the industry recovers.
“Across our organization, our long-term growth drivers remain at the core of our strategy. We will continue to maximize the performance of our in-market services, cross-sell to existing partners and sign new partnerships across new verticals and geographies. As we look to the remainder of the year, we are expecting to see growth over the third quarter of 2020 and expect to generate positive Adjusted EBITDA1 for 2020, which demonstrates our continued organizational and financial strength. While we cannot predict the timing of recovery for travel and hospitality demand, we remain dedicated to helping our partners see through this challenging period.”
Third Quarter 2020 Financial Results
Total revenue in the third quarter was $37.4 million compared to $98.0 million in the prior year quarter. Principal revenue was $33.9 million compared to $92.0 million, and other partner revenue was $3.5 million compared to $6.0 million.
Gross profit in the third quarter was $5.7 million compared to $14.0 million in the prior year quarter. The decrease in gross profit was primarily driven by the continued impacts of COVID-19 across all three operating segments.
Adjusted operating expenses2 in the third quarter decreased to $6.9 million compared to $9.9 million in the prior year quarter. During the third quarter, Points recognized $1.8 million in wage subsidies under the Canada Emergency Wage Subsidy program, which was recorded as an offset to employment costs. The funds in respect of these wage subsidies were received after the quarter end. In addition, reduced discretionary spending and cost management in response to the pandemic also contributed to lower adjusted operating expenses2 during the quarter.
Net loss in the third quarter was $2.5 million or $(0.19) per share, compared to net income of $1.1 million or $0.08 per share in the prior year quarter.
Adjusted EBITDA1 in the third quarter was $(1.1) million compared to $4.4 million in the prior year quarter. The decline was primarily due to continued lower transaction volumes as a result of COVID-19.
At September 30, 2020, total funds available3 were $68.2 million compared to $86.8 million at December 31, 2019, with the decrease attributable to the impact of COVID-19 on overall sales activity, as well as the timing of promotional activity and partner payables. The Company elected to pay down $5 million on its credit facility during the third quarter, and the outstanding $30 million balance on the facility is reflected in the September 30, 2020 cash balance.
_____________________ 1 Adjusted EBITDA (Earnings before income tax expense, depreciation and amortization, foreign exchange, finance costs, equity-settled share-based compensation and other one-time costs or benefits such as impairment charges and a tax rebate related to prior periods) is considered by management to be a useful supplemental measure when assessing financial performance. Management also believes that Adjusted EBITDA is an important indicator of the Company’s ability to generate liquidity through operating cash flow to fund future capital expenditures and working capital needs. However, Adjusted EBITDA is not a measure of financial performance under IFRS and should not be considered a substitute for Net Income, which we believe to be the most directly comparable IFRS measure. See Performance Indicators and Non-GAAP Financial Measures section of Management’s Discussion and Analysis. 2 Adjusted operating expenses consist of employment expenses excluding equity-settled share-based compensation, marketing and communications, technology services and other operating expenses. Adjusted operating expense is not a measure of financial performance under IFRS and should not be considered a substitute for total operating expenses, which we believe to be the most directly comparable IFRS measure. See Non-GAAP Financial Measures. 3 Total funds available is defined as cash and cash equivalents, cash held in trust, and funds receivable from payment processors.
Conference Call
Points will hold a conference call today at 4:30 p.m. Eastern time to discuss its third quarter 2020 results, followed by a question-and-answer session.
Date: Wednesday, November 11, 2020 Time: 4:30 p.m. Eastern time (1:30 p.m. Pacific time) Toll-free dial-in number: 1-877-407-0784 International dial-in number: 1-201-689-8560 Conference ID: 13712315
Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Gateway Investor Relations at 1-949-574-3860.
A replay of the conference call will be available after 7:30 p.m. Eastern time on the same day through November 25, 2020.
Points , (TSX: PTS) (Nasdaq: PCOM) is a trusted partner to the world’s leading loyalty programs, leveraging its unique Loyalty Commerce Platform to build, power, and grow a network of ways members can get and use their favourite loyalty currency. Our platform combines insights, technology, and resources to make the movement of loyalty currency simpler and more intelligent for nearly 60 reward programs worldwide. Founded in 2000, Points is headquartered in Toronto with teams operating around the globe.
This press release contains or incorporates forward-looking statements within the meaning of United States securities legislation, and forward-looking information within the meaning of Canadian securities legislation (collectively, “forward-looking statements”). These forward-looking statements include or relate to but are not limited to, among other things, our ability to be Adjusted EBITDA positive in fiscal 2020, our financial performance in Q4 2020, statements relating to plans we have implemented in response to the COVID-19 pandemic and its expected impact on us (including with respect to efforts to mitigate degradation in transaction volumes, our liquidity and capitalization and our cost mitigation efforts, our business pipeline and ability to sign and launch new loyalty program partnerships, our ability to sell additional products and services to existing loyalty program partners, and our growth strategies). These statements are not historical facts but instead represent only Points’ expectations, estimates and projections regarding future events.
Although Points believes the expectations reflected in such forward-looking statements are reasonable, such statements are not guarantees of future performance and are subject to important risks and uncertainties that are difficult to predict. Certain material assumptions or estimates are applied in making forward-looking statements, and actual results may differ materially from those expressed or implied in such statements. Undue reliance should not be placed on such statements. In particular, uncertainty around the duration and scope of the COVID-19 pandemic and the impact of the pandemic and actions taken in response on global and regional economies, economic activity, and all elements of the travel and hospitality industry may have a significant and materially adverse impact on our business. In addition, the risks, uncertainties and other factors that may impact the results expressed or implied in such forward-looking statements include, but are not limited to: (i) airline or travel industry disruptions, such as an airline insolvency and continued airline consolidation; (ii) our dependence on a limited number of large clients for a significant portion of our consolidated revenue; (iii) our reliance on contractual relationships with loyalty program partners that are subject to termination and renegotiation; (iv) our exposure to significant liquidity risk if we fail to meet contractual performance commitments; (v) our ability to convert our pipeline of prospective partners or launch new products with new or existing partners as expected or planned; (vi) our dependence on various third-parties that provide certain solutions in our Platform Partners segment that we market to loyalty program partners; (vii) the fact that our operations are conducted in multiple jurisdictions and in multiple currencies and as such dramatic fluctuations in exchange rates of the foreign currencies can have a dramatic effect on our financial results and (viii) the risk of an event of default under our senior secured credit facility. These and other important risk factors that could cause actual results to differ materially are discussed in Points’ annual information form, Form 40-F, annual and interim management’s discussion and analysis (“MD&A”), and annual and interim financial statements and the notes thereto. These documents are available at www.sedar.com and www.sec.gov.
The forward-looking statements contained in this press release are made as at the date of this release and, accordingly, are subject to change after such date. Except as required by law, Points does not undertake any obligation to update or revise any forward-looking statements made or incorporated in this press release, whether as a result of new information, future events or otherwise.
Non-GAAP Financial Measures
The Company’s financial statements are prepared in accordance with International Financial Reporting Standards (“IFRS”). Management uses certain non-GAAP measures, which are defined in the appropriate sections of this press release, to better assess the Company’s underlying performance. These measures are reviewed regularly by management and the Company’s Board of Directors in assessing the Company’s performance and in making decisions about ongoing operations. In addition, we use certain non-GAAP measures to determine the components of management compensation. We believe that these measures are also used by investors as an indicator of the Company’s operating performance. Readers are cautioned that these terms are not recognized GAAP measures and do not have a standardized GAAP meaning under IFRS and should not be construed as alternatives to IFRS terms, such as net income. Refer to “Performance Indicators and Non-GAAP Financial Measures” section of the Company’s Q3 2020 MD&A for reconciliation to, and description of the Company’s non-GAAP financial measures.
Investor Relations Contact
Sean Mansouri, CFA or Cody Slach Gateway Investor Relations 1-949-574-3860 IR@points.com
Points International Ltd.
Key Financial Measures and Schedule of Non-GAAP Reconciliations
Reconciliation of Gross Profit to Contribution [1]
Expressed in thousands of United States dollars
For the three months ended
September 30, 2020
September 30, 2019
Gross Profit
$
5,704
$
14,048
Less:
Direct adjusted operating expenses [2]
3,721
6,269
Contribution
$
1,983
$
7,779
[1] Contribution is defined as Gross profit less direct adjusted operating expenses. Contribution is considered by Management to be a useful supplemental measure when assessing financial performance. Management believes that Contribution is an important indicator of the Company’s segment profitability. However, Contribution is not a recognized measure of profitability under IFRS.
[2] Direct adjusted operating expenses is defined as expenses which are directly attributable to each operating segment. Direct adjusted operating expenses is not a measure of financial performance under IFRS.
Contribution by Line of Business
Expressed in thousands of United States dollars
For the three months ended
September 30, 2020
September 30, 2019
Loyalty Currency Retailing
Revenue
$
36,165
$
95,677
Gross Profit
4,644
11,879
Direct adjusted operating expenses
2,312
3,605
Contribution
$
2,332
$
8,274
Platform Partners
Revenue
$
1,045
$
1,782
Gross Profit
850
1,631
Direct adjusted operating expenses
411
964
Contribution
$
439
$
667
Points Travel
Revenue
$
239
$
538
Gross Profit
210
538
Direct adjusted operating expenses
998
1,700
Contribution
$
(788
)
$
(1,162
)
Reconciliation of Net Income to Adjusted EBITDA [3]
Expressed in thousands of United States dollars
For the three months ended
September 30, 2020
September 30, 2019
Net (loss) income
$
(2,467
)
$
1,098
Income tax (recovery) expense
(863
)
670
Finance costs
223
51
Depreciation and amortization
1,173
1,131
Foreign exchange (gain) loss
(178
)
254
Equity-settled share-based payment expense
987
1,193
Adjusted EBITDA
$
(1,125
)
$
4,397
[3] Adjusted EBITDA is a non-GAAP financial measure, which is defined as earnings before income tax expense, finance costs, depreciation and amortization, equity-settled share-based payment expense and foreign exchange. Management believes that adjusted EBITDA is an important indicator of the Company’s ability to generate liquidity through operating cash flow to fund future capital expenditures and working capital needs. However, adjusted EBITDA is not a measure of financial performance under IFRS and should not be considered a substitute for Net Income, which we believe to be the most directly comparable IFRS measure.
Reconciliation of Total Operating Expenses to Adjusted Operating Expenses [4]
Expressed in thousands of United States dollars
For the three months ended
September 30, 2020
September 30, 2019
Total Operating Expenses
$
8,838
$
12,437
Subtract (add):
Depreciation and amortization
1,173
1,131
Foreign exchange (gain) loss
(178
)
254
Equity-settled share-based payment expense
987
1,193
Adjusted Operating Expenses
$
6,856
$
9,859
[4] Adjusted operating expenses consists of employment expenses excluding equity-settled share-based payment expense, marketing & communications, technology services, and other operating expenses. Adjusted operating expenses is not a measure of financial performance under IFRS and should not be considered a substitute for total operating expenses, which we believe to be the most directly comparable IFRS measure.
Points International Ltd.
Condensed Consolidated Interim Statements of Financial Position
Expressed in thousands of United States dollars
(Unaudited)
As at
September 30, 2020
December 31, 2019
ASSETS
Current assets
Cash and cash equivalents
$
64,016
$
69,965
Cash held in trust
640
2,534
Funds receivable from payment processors
3,584
14,302
Accounts receivable
8,721
21,864
Prepaid taxes
622
194
Prepaid expenses and other assets
1,846
2,153
Total current assets
$
79,429
$
111,012
Non-current assets
Property and equipment
1,712
2,371
Right-of-use assets
2,071
3,060
Intangible assets
12,608
12,806
Goodwill
5,681
7,130
Deferred tax assets
3,017
2,105
Other assets
213
216
Total non-current assets
$
25,302
$
27,688
Total assets
$
104,731
$
138,700
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities
$
4,713
$
13,766
Income taxes payable
411
2,326
Payable to loyalty program partners
30,246
78,270
Current portion of lease liabilities
1,153
1,323
Current portion of other liabilities
1,018
797
Total current liabilities
$
37,541
$
96,482
Non-current liabilities
Long term debt
30,000
–
Lease liabilities
1,336
2,209
Other liabilities
67
95
Deferred tax liabilities
986
722
Total non-current liabilities
$
32,389
$
3,026
Total liabilities
$
69,930
$
99,508
SHAREHOLDERS’ EQUITY
Share capital
49,107
45,799
Contributed surplus
1,490
–
Accumulated other comprehensive (loss) income
(29
)
184
Accumulated deficit
(15,767
)
(6,791
)
Total shareholders’ equity
$
34,801
$
39,192
Total liabilities and shareholders’ equity
$
104,731
$
138,700
Points International Ltd.
Condensed Consolidated Interim Statements of Comprehensive Income
Expressed in thousands of United States dollars, except per share amounts
(Unaudited)
For the three months ended
For the nine months ended
September 30, 2020
September 30, 2019
September 30, 2020
September 30, 2019
REVENUE
Principal
$
33,977
$
92,035
$
145,648
$
276,330
Other partner revenue
3,472
5,962
15,381
17,840
Total Revenue
$
37,449
$
97,997
$
161,029
$
294,170
Direct cost of revenue
31,745
83,949
134,510
246,304
Gross Profit
$
5,704
$
14,048
$
26,519
$
47,866
OPERATING EXPENSES
Employment costs
5,447
7,887
18,079
23,090
Marketing and communications
255
429
922
1,237
Technology services
656
652
2,140
1,928
Depreciation and amortization
1,173
1,131
3,681
3,399
Foreign exchange (gain) loss
(178
)
254
(296
)
408
Other operating expenses
1,485
2,084
5,525
5,557
Impairment charges
–
–
1,798
–
Total Operating Expenses
$
8,838
$
12,437
$
31,849
$
35,619
Finance income
(27
)
(208
)
(273
)
(727
)
Finance costs
223
51
591
163
(LOSS) INCOME BEFORE INCOME TAXES
$
(3,330
)
$
1,768
$
(5,648
)
$
12,811
Income tax (recovery) expense
(863
)
670
(974
)
3,680
NET (LOSS) INCOME
$
(2,467
)
$
1,098
$
(4,674
)
$
9,131
OTHER COMPREHENSIVE INCOME (LOSS)
Items that will subsequently be reclassified to profit or loss:
Unrealized gain (loss) on foreign exchange derivatives designated as cash flow hedges
242
(259
)
(724
)
225
Income tax effect
(64
)
68
192
(60
)
Reclassification to net income of loss on foreign exchange derivatives designated as cash flow hedges
79
117
438
525
Income tax effect
(21
)
(31
)
(116
)
(139
)
Foreign currency translation adjustment
(8
)
3
(3
)
21
Other comprehensive income (loss) for the period, net of income tax
$
228
$
(102
)
$
(213
)
$
572
TOTAL COMPREHENSIVE (LOSS) INCOME
$
(2,239
)
$
996
$
(4,887
)
$
9,703
(LOSS) EARNINGS PER SHARE
Basic (loss) earnings per share
$
(0.19
)
$
0.08
$
(0.35
)
$
0.66
Diluted (loss) earnings per share
$
(0.19
)
$
0.08
$
(0.35
)
$
0.66
Points International Ltd.
Condensed Consolidated Interim Statements of Changes in Shareholders’ Equity
Attributable to equity holders of the Company
Expressed in thousands of United States dollars except number of shares (Unaudited)
Share Capital
Contributed surplus
Accumulated other comprehensive (loss) income
Accumulated deficit
Total shareholders’ equity
Number of Shares
Amount
Balance at December 31, 2019
13,241,516
$
45,799
$
–
$
184
$
(6,791
)
$
39,192
Net loss
–
–
–
–
(4,674
)
(4,674
)
Other comprehensive loss, net of tax
–
–
–
(213
)
–
(213
)
Total comprehensive loss
–
–
–
(213
)
(4,674
)
(4,887
)
Effect of equity-settled share-based payments
–
–
2,653
–
–
2,653
Share issuances – options exercised
53,374
483
(416
)
–
–
67
Settlement of RSUs
–
3,063
(4,245
)
–
–
(1,182
)
Shares repurchased and cancelled
(67,483
)
(238
)
(804
)
–
–
(1,042
)
Reclassification within equity [5]
–
–
4,302
–
(4,302
)
–
Balance at September 30, 2020
13,227,407
$
49,107
$
1,490
$
(29
)
$
(15,767
)
$
34,801
Balance at December 31, 2018
14,111,864
$
53,886
$
4,446
$
(646
)
$
(16,676
)
$
41,010
Net income
–
–
–
–
9,131
9,131
Other comprehensive income, net of tax
–
–
–
572
–
572
Total comprehensive income
–
–
–
572
9,131
9,703
Effect of equity-settled share-based payments
–
–
3,522
–
–
3,522
Share issuances – options exercised
2,338
28
(7
)
–
–
21
Settlement of RSUs
–
1,431
(4,534
)
–
–
(3,103
)
Shares purchased and held in trust
–
(3,636
)
–
–
–
(3,636
)
Shares repurchased and cancelled
(664,884
)
(2,533
)
(3,427
)
–
(1,825
)
(7,785
)
Balance at September 30, 2019
13,449,318
$
49,176
$
–
$
(74
)
$
(9,370
)
$
39,732
[5] The Corporation has adopted a policy that when contributed surplus is in debit balance, the amount is reclassified to accumulated deficit for financial statement presentation purposes.
Points International Ltd.
Condensed Consolidated Interim Statements of Cash Flows
Expressed in thousands of United States dollars
(Unaudited)
For the three months ended
For the nine months ended
September 30, 2020
September 30, 2019
September 30, 2020
September 30, 2019
Cash flows from operating activities
Net (loss) income for the period
$
(2,467
)
$
1,098
$
(4,674
)
$
9,131
Adjustments for:
Depreciation of property and equipment
332
316
1,008
894
Depreciation of right-of-use assets
242
290
839
868
Amortization of intangible assets
599
525
1,834
1,637
Unrealized foreign exchange loss (gain)
800
(542
)
(66
)
(614
)
Equity-settled share-based payment transactions
987
1,193
2,653
3,522
Finance costs
223
51
591
163
Deferred income tax (recovery) expense
(448
)
6
(572
)
448
Impairment charges
–
–
1,798
–
Derivative contracts designated as cash flow hedges
322
(142
)
(285
)
750
Changes in cash held in trust
(144
)
–
1,894
500
Changes in non-cash balances related to operations
(28,157
)
(1,940
)
(35,268
)
(15,867
)
Interest paid
(233
)
(51
)
(551
)
(163
)
Net cash (used in) provided by operating activities
$
(27,944
)
$
804
$
(30,799
)
$
1,269
Cash flows from investing activities
Acquisition of property and equipment
(21
)
(130
)
(349
)
(798
)
Additions to intangible assets
(547
)
(61
)
(1,663
)
(600
)
Net cash used in investing activities
$
(568
)
$
(191
)
$
(2,012
)
$
(1,398
)
Cash flows from financing activities
Net (repayments to) proceeds from long term debt
(5,000
)
–
30,000
–
Payment of lease liabilities
(314
)
(350
)
(951
)
(808
)
Proceeds from exercise of share options
–
–
67
21
Shares repurchased and cancelled
–
(2,473
)
(1,042
)
(7,785
)
Purchase of share capital held in trust
–
(2,176
)
–
(3,636
)
Taxes paid on net settlement of RSUs
(2
)
(134
)
(1,182
)
(3,103
)
Net cash (used in) provided by financing activities
$
(5,316
)
$
(5,133
)
$
26,892
$
(15,311
)
Effect of exchange rate fluctuations on cash held
(747
)
545
(30
)
635
Net decrease in cash and cash equivalents
$
(34,575
)
$
(3,975
)
$
(5,949
)
$
(14,805
)
Cash and cash equivalents at beginning of the period
$
98,591
$
58,301
$
69,965
$
69,131
Cash and cash equivalents at end of the period
$
64,016
$
54,326
$
64,016
$
54,326
Interest Received
$
35
$
235
$
335
$
745
Taxes Paid
$
(9
)
$
(27
)
$
(1,851
)
$
(1,213
)
Amounts received in interest and paid in taxes were reflected as operating cash flows in the condensed consolidated interim statements of cash flows.
Vroom Delivers Record Ecommerce Units and Gross Profit
Ecommerce Unit Sales Up 59% YoY
Ecommerce Gross Profit Up 120% YoY
NEW YORK–(BUSINESS WIRE)–
Vroom, Inc. (NASDAQ:VRM), a leading e-commerce platform for buying and selling used vehicles, today announced financial results for the third quarter ended September 30, 2020 (“Q3 2020”).
HIGHLIGHTS OF THIRD QUARTER 2020
8,823 ecommerce units sold, up 59% YoY
Ecommerce revenue of $221.8 million, up 25% YoY
Ecommerce gross profit of $19.3 million, up 120% YoY
Paul Hennessy, Chief Executive Officer of Vroom, commented:
“I am very pleased with our results for the third quarter, in which we successfully managed the challenges presented by the COVID-19 pandemic, outperformed our plan, demonstrated the strength of our business model, and hit the accelerator on significantly scaling our business. By doing the things we said we would do — adding vehicle inventory, increasing marketing, relying on data to drive decision making, and enhancing our customer experience — we increased the velocity of the Vroom flywheel, drove conversion and increased GPPU. We will continue to execute our plan and invest in the growth of our business as we transform the market for buying and selling used vehicles.”
COVID-19 Update
Note: All sequential comparisons are on a current quarter over prior quarter basis.
After the initial disruption in our ecommerce operations due to the COVID-19 pandemic, consumer demand for used vehicles has returned to pre-COVID-19 levels and, in the three months ended September 30, 2020, we experienced continued strong consumer demand for our ecommerce solutions and contact-free delivery. Ecommerce units sold increased sequentially 31.4% to 8,823 units driven by increased consumer demand, higher inventory levels and increased marketing spend, and ecommerce revenue increased sequentially 26.3% to $221.8 million.
Ecommerce gross profit and gross profit per unit experienced strong sequential growth of 167.4% to $19.3 million and 103.5% to $2,188 per unit, respectively.
THIRD QUARTER 2020 FINANCIAL DISCUSSION
All financial comparisons are on a year-over-year basis unless otherwise noted.
Ecommerce Results
Three Months Ended
September 30,
Nine Months Ended
September 30,
2019
2020
Change
% Change
2019
2020
Change
% Change
(in thousands, except unit
data and average days to sale)
(in thousands, except unit
data and average days to sale)
Ecommerce units sold
5,563
8,823
3,260
58.6
%
12,606
23,466
10,860
86.1
%
Ecommerce revenue:
Vehicle revenue
$
174,510
$
213,943
$
39,433
22.6
%
$
381,709
$
610,008
$
228,299
59.8
%
Product revenue
3,603
7,818
4,215
117.0
%
7,212
20,493
13,281
184.2
%
Total ecommerce revenue
$
178,113
$
221,761
$
43,648
24.5
%
$
388,921
$
630,501
$
241,580
62.1
%
Ecommerce gross profit:
Vehicle gross profit
$
5,171
$
11,486
$
6,315
122.1
%
$
14,611
$
20,296
$
5,685
38.9
%
Product gross profit
3,603
7,818
4,215
117.0
%
7,212
20,493
13,281
184.2
%
Total ecommerce gross profit
$
8,774
$
19,304
$
10,530
120.0
%
$
21,823
$
40,789
$
18,966
86.9
%
Average vehicle selling price per ecommerce unit
$
31,370
$
24,248
$
(7,122
)
(22.7
)%
$
30,280
$
25,995
$
(4,285
)
(14.2
)%
Gross profit per ecommerce unit:
Vehicle gross profit per ecommerce unit
$
929
$
1,302
$
373
40.2
%
$
1,159
$
865
$
(294
)
(25.4
)%
Product gross profit per ecommerce unit
648
886
238
36.7
%
572
873
301
52.6
%
Total gross profit per ecommerce unit
$
1,577
$
2,188
$
611
38.7
%
$
1,731
$
1,738
$
7
0.4
%
Ecommerce average days to sale
71
52
(19
)
(26.8
)%
67
62
(5
)
(7.5
)%
Ecommerce Units
Ecommerce units sold increased 58.6% to 8,823 driven by increased consumer demand, higher inventory levels and increased marketing spend. Average monthly unique visitors to our platform increased 19.4% to 928,277.
Ecommerce Revenue
Ecommerce revenue increased 24.5% to $221.8 million.
Ecommerce Vehicle revenue increased 22.6% to $214.0 million. The increase in ecommerce Vehicle revenue was primarily attributable to the increase in ecommerce units sold, partially offset by a decrease in the average selling price per unit, which decreased from $31,370 to $24,248. The decrease in average selling price was driven by demand predicted by our data analytics.
Ecommerce Product revenue increased 117.0% to $7.8 million. The increase in ecommerce Product revenue was primarily attributable to the increase in ecommerce units sold, and further increased by an improvement in ecommerce Product revenue per unit, which increased from $648 to $886 per unit. The increase in ecommerce Product revenue per unit was driven by higher attachment rates, improved financing features in our ecommerce platform as well as our strategic partnerships.
Ecommerce Gross Profit
Ecommerce gross profit increased 120.0% to $19.3 million.
Ecommerce Vehicle gross profit increased 122.1% to $11.5 million. The increase in ecommerce Vehicle gross profit was due to a $373 increase in ecommerce Vehicle gross profit per unit, driven primarily by improvements in inbound logistics and reconditioning costs and the increase in ecommerce units sold.
Ecommerce Product gross profit increased 117.0% to $7.8 million. The increase in ecommerce Product gross profit was primarily attributable to the increase in ecommerce units sold, and further increased by an improvement in ecommerce Product gross profit per unit, which increased from $648 to $886 per unit. The increase in Product gross profit per unit was driven by higher attachment rates, improved financing features in our ecommerce platform as well as our strategic partnerships.
Ecommerce Gross Profit per Unit
Ecommerce gross profit per unit increased 38.7% to $2,188.
Ecommerce Vehicle gross profit per unit increased 40.2% to $1,302, driven primarily by improvements in inbound logistics and reconditioning costs.
Ecommerce Product gross profit per unit increased 36.7% to $886. The increase in Product gross profit per unit was driven by higher attachment rates, improved financing features in our ecommerce platform as well as our strategic partnerships.
Results by Segment
Three Months Ended
September 30,
Nine Months Ended
September 30,
2019
2020
Change
% Change
2019
2020
Change
% Change
(in thousands)
(in thousands)
Units:
Ecommerce
5,563
8,823
3,260
58.6
%
12,606
23,466
10,860
86.1
%
TDA
3,282
1,463
(1,819
)
(55.4
)%
9,444
5,608
(3,836
)
(40.6
)%
Wholesale
5,420
6,166
746
13.8
%
16,046
14,110
(1,936
)
(12.1
)%
Total units
14,265
16,452
2,187
15.3
%
38,096
43,184
5,088
13.4
%
Revenue:
Ecommerce
$
178,113
$
221,761
$
43,648
24.5
%
$
388,921
$
630,501
$
241,580
62.1
%
TDA
103,106
37,272
(65,834
)
(63.9
)%
281,603
150,901
(130,702
)
(46.4
)%
Wholesale
59,054
63,972
4,918
8.3
%
165,705
170,469
4,764
2.9
%
Total revenue
$
340,273
$
323,005
$
(17,268
)
(5.1
)%
$
836,229
$
951,871
$
115,642
13.8
%
Gross profit:
Ecommerce
$
8,774
$
19,304
$
10,530
120.0
%
$
21,823
$
40,789
$
18,966
86.9
%
TDA
6,650
2,798
(3,852
)
(57.9
)%
18,830
9,144
(9,686
)
(51.4
)%
Wholesale
247
3,343
3,096
1,253.4
%
875
1,506
631
72.1
%
Total gross profit
$
15,671
$
25,445
$
9,774
62.4
%
$
41,528
$
51,439
$
9,911
23.9
%
Gross profit per unit:
Ecommerce
$
1,577
$
2,188
$
611
38.7
%
$
1,731
$
1,738
$
7
0.4
%
TDA
$
1,974
$
1,828
$
(146
)
(7.4
)%
$
1,931
$
1,569
$
(362
)
(18.8
)%
Wholesale
$
46
$
542
$
496
1,078.3
%
$
55
$
107
$
52
94.5
%
Total gross profit per unit
$
1,099
$
1,547
$
448
40.8
%
$
1,090
$
1,191
$
101
9.3
%
Total Units
Total units sold increased 15.3% to 16,452.
Ecommerce units sold increased 58.6% to 8,823, as discussed above.
TDA units sold decreased 55.4% to 1,463, primarily due to continued disruptions related to the COVID-19 pandemic in the Houston area.
Wholesale units sold increased 13.8% to 6,166, primarily due to an increase of wholesale grade units purchased from consumers.
Total Revenue
Total revenue decreased 5.1% to $323.0 million.
Ecommerce revenue increased 24.5% to $221.8 million, as discussed above.
TDA revenue decreased 63.9% to $37.3 million. TDA revenue decreased primarily due to the decrease in TDA units sold and a lower average selling price per unit, which decreased from $30,236 to $24,316.
Wholesale revenue increased 8.3% to $64.0 million. The increase in wholesale revenue was primarily attributable to the increase in wholesale units sold, partially offset by a decrease in wholesale average selling price per unit, which decreased from $10,896 to $10,375.
Total Gross Profit
Total gross profit increased 62.4% to $25.4 million.
Ecommerce gross profit increased 120.0% to $19.3 million, as discussed above.
TDA gross profit decreased 57.9% to $2.8 million. TDA gross profit decreased primarily due to lower TDA units sold and a decrease in TDA gross profit per unit of $146.
Wholesale gross profit increased to $3.3 million. Wholesale gross profit increased primarily due to an increase in wholesale gross profit per unit of $496.
Total Gross Profit per Unit
Total gross profit per unit increased 40.8% to $1,547.
Ecommerce gross profit per unit increased 38.7% to $2,188.
TDA gross profit per unit decreased 7.4% to $1,828.
Wholesale gross profit per unit increased to $542.
SG&A
Three Months Ended
September 30,
Nine Months Ended
September 30,
2019
2020
Change
% Change
2019
2020
Change
% Change
(in thousands)
(in thousands)
Compensation & benefits
$
19,050
$
22,881
$
3,831
20.1
%
$
52,018
$
63,821
$
11,803
22.7
%
Marketing expense
14,606
15,341
735
5.0
%
34,442
44,829
10,387
30.2
%
Outbound logistics
4,255
8,500
4,245
99.8
%
9,199
19,762
10,563
114.8
%
Occupancy and related costs
2,770
2,610
(160
)
(5.8
)%
8,041
7,574
(467
)
(5.8
)%
Professional fees
3,497
1,773
(1,724
)
(49.3
)%
9,378
5,697
(3,681
)
(39.3
)%
Other
6,756
10,022
3,266
48.3
%
18,131
25,735
7,604
41.9
%
Total selling, general & administrative expenses
$
50,934
$
61,127
$
10,193
20.0
%
$
131,209
$
167,418
$
36,209
27.6
%
Selling, general and administrative expenses increased 20.0% to $61.1 million. The increase was primarily due to a $3.6 million increase in stock-based compensation included within compensation and benefits, a $4.2 million increase in outbound logistics costs partially attributable to the growth in ecommerce units sold, which increased outbound logistics costs by $2.5 million, and increases in market rates of logistics providers, which increased outbound logistics costs by $1.7 million, and a $3.3 million increase in other selling, general and administrative expenses primarily related to additional insurance costs associated with being a publicly traded company. These increases were offset by a $1.7 million decrease in professional fees.
We expect selling, general and administrative expenses to increase in the future as we scale our business and sell more ecommerce units. We will also continue to invest in and improve our customer experience and invest in expanding our proprietary logistics network including our last-mile delivery operations.
Loss from Operations and Net Loss
Loss from operations slightly increased 0.3% to $36.9 million. Net loss decreased 4.8% to $37.9 million.
Non-GAAP Measures
In addition to our results determined in accordance with accounting principles generally accepted in the United States, or GAAP, we believe the following non-GAAP financial measures are useful in evaluating our operating performance: EBITDA, Adjusted EBITDA, Adjusted loss from operations, Non-GAAP net loss, Non-GAAP net loss per share and Non-GAAP net loss per share, as adjusted. These non-GAAP financial measures have limitations as analytical tools in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP. Because of these limitations, these non-GAAP financial measures should be considered along with other operating and financial performance measures presented in accordance with GAAP. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures.
We calculate EBITDA as net loss before interest expense, interest income, income tax expense and depreciation and amortization expense and we calculate Adjusted EBITDA as EBITDA adjusted to exclude the one-time, IPO related acceleration of non-cash stock-based compensation expense and the one-time, IPO related non-cash revaluation of a preferred stock warrant. We calculate Adjusted loss from operations as operating loss adjusted to exclude the one-time, IPO related acceleration of non-cash stock-based compensation expense and we calculate Non-GAAP net loss as net loss adjusted to exclude the one-time, IPO related acceleration of non-cash stock-based compensation expense and the one-time, IPO related non-cash revaluation of a preferred stock warrant. The following table presents a reconciliation of the Non-GAAP measures to the most directly comparable financial measures prepared in accordance with GAAP, for each of the periods presented.
EBITDA and Adjusted EBITDA
EBITDA and Adjusted EBITDA are supplemental performance measures that our management uses to assess our operating performance and the operating leverage in our business. Because EBITDA and Adjusted EBITDA facilitate internal comparisons of our historical operating performance on a more consistent basis, we use these measures for business planning purposes.
Three Months Ended
September 30,
Nine Months Ended
September 30,
2019
2020
2019
2020
(in thousands)
(in thousands)
Net loss
$
(39,764
)
$
(37,850
)
$
(100,243
)
$
(142,137
)
Adjusted to exclude the following:
Interest expense
3,797
2,259
9,903
6,382
Interest income
(1,190
)
(1,289
)
(4,454
)
(3,960
)
Provision for income taxes
48
33
122
138
Depreciation and amortization expense
1,537
1,196
4,683
3,255
EBITDA
$
(35,572
)
$
(35,651
)
$
(89,989
)
$
(136,322
)
One-time IPO related acceleration of non-cash stock-based compensation
—
—
—
1,262
One-time IPO related non-cash revaluation of preferred stock warrant
—
—
—
20,470
Adjusted EBITDA
$
(35,572
)
$
(35,651
)
$
(89,989
)
$
(114,590
)
Adjusted loss from operations
Three Months Ended
September 30,
Nine Months Ended
September 30,
2019
2020
2019
2020
(in thousands)
(in thousands)
Loss from operations
$
(36,780
)
$
(36,873
)
$
(94,232
)
$
(119,218
)
Add: One-time IPO related acceleration of non-cash stock based compensation
—
—
—
1,262
Adjusted loss from operations
$
(36,780
)
$
(36,873
)
$
(94,232
)
$
(117,956
)
Non-GAAP net loss, Non-GAAP net loss per share and Non-GAAP net loss per share, as adjusted
Three Months Ended
September 30,
Nine Months Ended
September 30,
2019
2020
2019
2020
(in thousands, except share and per share amounts)
Net loss
$
(39,764
)
$
(37,850
)
$
(100,243
)
$
(142,137
)
Accretion of redeemable convertible preferred stock
(65,686
)
—
(109,529
)
—
Net loss attributable to common stockholders
$
(105,450
)
$
(37,850
)
$
(209,772
)
$
(142,137
)
Add: One-time IPO related acceleration of non-cash stock based compensation
—
—
—
1,262
Add: One-time IPO related non-cash revaluation of preferred stock warrant
—
—
—
20,470
Non-GAAP net loss
$
(105,450
)
$
(37,850
)
$
(209,772
)
$
(120,405
)
Weighted-average number of shares outstanding used to compute net loss per share, basic and diluted
8,615,682
121,123,472
8,591,554
53,731,475
Net loss per share, basic and diluted
$
(12.24
)
$
(0.31
)
$
(24.42
)
$
(2.65
)
Impact of one-time IPO related acceleration of non-cash stock based compensation
—
—
—
0.02
Impact of one-time IPO related non-cash revaluation of preferred stock warrant
—
—
—
0.38
Non-GAAP net loss per share, basic and diluted
$
(12.24
)
$
(0.31
)
$
(24.42
)
$
(2.25
)
Non-GAAP net loss per share, as adjusted, basic and diluted(a)
$
(0.31
)
$
(0.29
)
$
(0.77
)
$
(0.93
)
(a) Non-GAAP net loss per share, as adjusted, has been computed to give effect to, as of the beginning of each period presented (i) the shares of common stock issued in connection with our IPO, (ii) the automatic conversion of all outstanding shares of redeemable convertible preferred stock into shares of common stock that occurred upon the consummation of our IPO and (iii) the shares of common stock issued in connection with our follow-on public offering. The computation of Non-GAAP net loss per share, as adjusted, is as follows:
Three Months Ended
September 30,
Nine Months Ended
September 30,
2019
2020
2019
2020
(in thousands, except share and per share amounts)
Non-GAAP net loss
$
(105,450
)
$
(37,850
)
$
(209,772
)
$
(120,405
)
Add: Accretion of redeemable convertible preferred stock
65,686
—
109,529
—
Non-GAAP net loss, as adjusted
$
(39,764
)
$
(37,850
)
$
(100,243
)
$
(120,405
)
Weighted-average number of shares outstanding used to compute net loss per share, basic and diluted
8,615,682
121,123,472
8,591,554
53,731,475
Add: unweighted adjustment for common stock issued in connection with IPO
24,437,500
—
24,437,500
24,437,500
Add: unweighted adjustment for conversion of redeemable convertible preferred stock in connection with IPO
85,533,394
—
85,533,394
85,533,394
Add: unweighted adjustment for common stock issued in connection with follow-on public offering
10,800,000
10,800,000
10,800,000
10,800,000
Less: Adjustment for the impact of the above items already included in weighted-average number of shares outstanding for the periods presented
—
(1,760,869
)
—
(44,897,573
)
Weighted-average number of shares outstanding used to compute net loss per share, as adjusted, basic and diluted
129,386,576
130,162,603
129,362,448
129,604,796
Non-GAAP net loss per share, as adjusted, basic and diluted
$
(0.31
)
$
(0.29
)
$
(0.77
)
$
(0.93
)
Financial Outlook
We expect another quarter of significant year-over-year growth in ecommerce unit sales and revenue for Q4 2020 and continued strength in total ecommerce gross profit per unit. Through the third quarter, our year-to-date ecommerce units sold has grown 86% over the prior year. Combined with our strong sequential growth quarter to quarter, we believe we are on track for continued growth into 2021. For Q4 2020, we expect the following results:
Ecommerce unit sales of 10,500 to 11,500, implying 25% sequential growth and Q4 year over year growth of 74% at the middle of the guidance range.
Average ecommerce selling price per unit of $24,500 to $25,500 and average ecommerce gross profit per unit of $2,050 to $2,150.
TDA unit sales of 1,400 to 1,600, average selling price per unit of $24,500 to $25,500 and average gross profit per unit of $1,650 to $1,750.
Wholesale unit sales of 6,000 to 7,000, average selling price per unit of $9,500 to $10,500 and average gross profit per unit of breakeven to $100.
Total revenue of $372 to $414 million.
Total gross profit of $24 to $28 million.
EBITDA of ($52) to ($44) million.
Stock-based compensation expense of $4.3 million.
Net loss per share of ($0.41) to ($0.35).
Prior to our IPO, our shares outstanding primarily consisted of shares of redeemable convertible preferred stock, which automatically converted to shares of common stock upon the consummation of our IPO. In addition, all warrants outstanding were exercised upon the IPO or shortly thereafter, and certain stock-based compensation shares were issued or vested upon the IPO. We expect the following number of GAAP weighted average shares outstanding for the remainder of 2020:
Quarter
YTD
Q4 2020
130,300,000
72,900,000
These estimates exclude any shares potentially issuable under stock-based compensation plans.
The foregoing estimates are forward-looking statements that reflect the Company’s expectations as of November 11, 2020 and are subject to substantial uncertainty. See “Forward-Looking Statements” below.
Conference Call & Webcast Information
Vroom management will discuss these results and other information regarding the Company during a conference call and audio webcast Wednesday, November 11, 2020 at 5:00 p.m. ET.
The conference call can be accessed via telephone by dialing 1-833-519-1297 (or 914-800-3868 for international access) and entering the conference ID 7077759. A live audio webcast will also be available at ir.vroom.com. An archived webcast of the conference call will be accessible on the website within 48 hours of its completion.
About Vroom (NASDAQ: VRM)
Vroom is an innovative, end-to-end ecommerce platform that offers a better way to buy and a better way to sell used vehicles. The Company’s scalable, data-driven technology brings all phases of the vehicle buying and selling process to consumers wherever they are and offers an extensive selection of vehicles, transparent pricing, competitive financing, and contact-free, at-home pick-up and delivery. For more information visit www.vroom.com.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking statements, including without limitation statements regarding our expectations for future results of operations. These statements are based on management’s current assumptions and are neither promises nor guarantees, but involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. For factors that could cause actual results to differ materially from the forward-looking statements in this press release, please see the risks and uncertainties identified under the heading “Risk Factors” in our Quarterly report on Form 10-Q for the quarter ended September 30, 2020 which is available on our Investor Relations website at ir.vroom.com and on the SEC website at www.sec.gov. All forward-looking statements reflect our beliefs and assumptions only as of the date of this press release. We undertake no obligation to update forward-looking statements to reflect future events or circumstances.
VROOM, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
(unaudited)
As of
As of
December 31,
September 30,
2019
2020
ASSETS
Current Assets:
Cash and cash equivalents
$
217,734
$
1,161,362
Restricted cash
1,853
27,961
Accounts receivable, net of allowance of $789 and $1,809, respectively
RICHARDSON, Texas, Nov. 11, 2020 (GLOBE NEWSWIRE) — Fossil Group, Inc. (NASDAQ: FOSL) today announced financial results for the third quarter ended October 3, 2020.
Third Quarter Summary
Worldwide net sales of $435 million decreased 19% on a reported basis and 20% in constant currency. Topline performance was better than expected, due to continued strength in both owned and third party e-commerce, strong growth in Mainland China and modest improvement within the wholesale channel globally.
On a constant currency basis, sales from the Company’s owned e-commerce websites increased 66% and third party marketplace e-commerce sales increased 44% compared to prior year.
Gross margin of 52.8%, representing 120 basis points of expansion compared to the third quarter of 2019.
The Company reduced operating expenses by $75 million, or 26%, on a year-over-year basis, reflecting continued progress under its New World Fossil 2.0 – Transform to Grow program (“NWF 2.0”).
Operating income of $18 million compared to an operating loss of $9 million a year ago, primarily reflecting gross margin and cost reduction benefits.
Cash and cash equivalents of $324 million, and total debt of $239 million as of October 3, 2020.
“The organization continues to execute well in the face of a challenging environment,” stated Kosta Kartsotis, Chairman and CEO. “We outperformed our topline expectations in the third quarter, reflecting ongoing momentum in our digital channels and strong growth in mainland China, as well as trend improvement in the wholesale channel globally.”
“In addition, we are making good progress on our strategic priorities, with accelerated initiatives around our digital expansion programs and structural cost reduction efforts. Given the uncertain environment, we are remaining agile and continuing to closely manage liquidity, expenses and inventory as we position the business for future growth.”
Third Quarter 2020 Operating Results
Worldwide net sales totaled $435.5 million, a decrease of 19% on a reported basis and 20% in constant currency compared to $539.5 million in the third quarter of fiscal 2019. The year-over-year decline was primarily due to COVID-19 related traffic declines in both Fossil stores and wholesale doors. Partly offsetting brick-and-mortar sales declines was growth in digital channels, with owned e-commerce websites increasing 66% and dedicated third party marketplaces growing 44%, both on a constant currency basis. The following table provides a summary of net sales performance, on both an as reported and constant currency basis, for the third quarter of 2020 compared to the 2019 third quarter (in millions, except percentage data).
Third Quarter
2020
2019
Growth (Decline)
Amounts as Reported
Amounts as Reported
Dollars as Reported (1)
Constant Currency Dollars (2)
Percentage as Reported (1)
Percentage Constant Currency (2)
Americas
$
175
$
220
$
(45
)
$
(43
)
(20
)
%
(20
)
%
Europe
135
174
(39
)
(44
)
(22
)
(25
)
Asia
120
143
(23
)
(24
)
(16
)
(17
)
Corporate
5
2
3
3
135
117
Total net sales
$
435
$
539
$
(104
)
$
(108
)
(19
)
%
(20
)
%
Watches
$
357
$
445
$
(88
)
$
(92
)
(20
)
%
(21
)
%
Leathers
38
54
(16
)
(17
)
(31
)
(31
)
Jewelry
29
28
1
—
2
(1
)
Other
11
12
(1
)
1
9
8
Total net sales
$
435
$
539
$
(104
)
$
(108
)
(19
)
%
(20
)
%
(1)
Reported GAAP amounts include impacts from currency.
(2)
Eliminates the effect of currency changes in fiscal 2020 to give investors a better understanding of the underlying trends within the business. See constant currency financial information at the end of this release for more information.
Gross profit totaled $229.8 million compared to $278.5 million in the third quarter of 2019. Gross margin increased 120 basis points to 52.8% versus 51.6% a year ago, primarily reflecting a higher mix of e-commerce sales, favorable region and product mix and favorable pricing on sell-through of older generation connected products, partially offset by heightened promotional activity and an unfavorable currency impact of approximately 120 basis points.
Operating expenses totaled $212.3 million compared to $287.7 million a year ago. Operating expenses in the third quarter of 2020 included $5.7 million of restructuring costs, primarily related to employee costs, professional services and store closures, while operating expenses in the third quarter of 2019 included $7.0 million of restructuring costs. Third quarter selling, general and administrative expenses decreased on a year-over-year basis, reflecting lower compensation, marketing and discretionary costs.
Third quarter operating income was $17.5 million compared to operating loss of $9.2 million in the third quarter of 2019. Net income totaled $16.0 million, or $0.31 per diluted share, compared to net loss of $25.9 million, or ($0.51) per diluted share, in the third quarter of 2019. Per share data included restructuring charges of $0.09 per diluted share in the third quarter of 2020 while per share data in the third quarter of 2019 included non-cash intangible asset impairment charges of $0.25 per diluted share and restructuring expenses of $0.11 per diluted share. During the third quarter of fiscal 2020, currencies, including both the translation impact on operating earnings and the impact of foreign currency hedging contracts, unfavorably affected income per diluted share by approximately $0.09.
New World Fossil 2.0 – Transform to Grow Initiative
During 2019, the Company initiated NWF 2.0, which was designed to deliver gross margin benefits and operating expense reductions totaling $200 million over the three-year period from 2019 to 2021. As a result of the unprecedented impact of COVID-19, earlier this year the Company significantly expanded its NWF 2.0 initiative to $250 million to include additional organizational efficiencies and accelerate its digital initiatives. The Company expects to generate $100 million in expense savings in 2020.
Balance Sheet Summary
As of October 3, 2020, the Company had cash and cash equivalents of $324 million and total debt of $239 million, including $162 million of borrowings under its Term Credit Agreement. Inventories at the end of third quarter 2020 totaled $360 million, a decrease of 37% versus a year ago, reflecting accelerated inventory reduction actions, primarily in older generation connected product, and proactive management of inbound receipts to align with reduced consumer demand.
COVID-19 Update
The Company is continuing to closely manage liquidity, expenses and inventory to navigate COVID-19 impacts and related macro uncertainty. During the third quarter, the Company:
Reduced operating expenses across payroll, marketing, professional fees, travel and contract labor versus prior year;
Closely managed working capital by reducing inventory receipts; and
Reduced outstanding debt and revolving credit levels by $30 million.
As of October 3, 2020, the Company had total liquidity of $356 million, comprised of $324 million of cash and cash equivalents and $32 million of availability under its revolving credit facility. The Company expects to end the fourth quarter of 2020 with approximately $300 million to $325 million of cash and cash equivalents and approximately $30 million of availability under its revolving credit facility.
Outlook
The Company anticipates that impacts from COVID-19 will continue to pressure sales in the fourth quarter of 2020, with ongoing strength in e-commerce channels offset by contraction in Fossil retail stores and the wholesale channel. Worldwide net sales are expected to decline in the range of 40% to 30%.
Safe Harbor
Certain statements contained herein that are not historical facts, including multi-year New World Fossil expense reduction estimates, , future financial estimates as well as estimated impacts from COVID-19, , constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and involve a number of risks and uncertainties. The actual results of the future events described in such forward-looking statements could differ materially from those stated in such forward-looking statements. Among the factors that could cause actual results to differ materially are: the effect of worldwide economic conditions; the impact of COVID-19; the length and severity of COVID-19; the duration of trends resulting from the impact of COVID-19, including strength in e-commerce channels; the pace of recovery following COVID-19; the impact of the Coronavirus Aid, Relief, and Economic Security Act; significant changes in consumer spending patterns or preferences; interruptions or delays in the supply of key components; acts of war or acts of terrorism; changes in foreign currency valuations in relation to the U.S. dollar; lower levels of consumer spending resulting from a general economic downturn or generally reduced shopping activity caused by public safety or consumer confidence concerns; the performance of our products within the prevailing retail environment; risks related to excess inventory, including older generation connected products; customer acceptance of both new designs and newly-introduced product lines, including risks related to new generation connected products; financial difficulties encountered by customers; the effects of vigorous competition in the markets in which we operate; compliance with debt covenants and other contractual provisions; risks related to the success of our restructuring programs; the termination or non-renewal of material licenses, risks related to foreign operations and manufacturing; changes in the costs of materials, labor and advertising; government regulation and tariffs; our ability to secure and protect trademarks and other intellectual property rights; and the outcome of current and possible future litigation, as well as the risks and uncertainties set forth in the Company’s most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”). These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effect on us. While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting us will be those that we anticipate. Readers of this release should consider these factors in evaluating, and are cautioned not to place undue reliance on, the forward-looking statements contained herein. The Company assumes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.
About Fossil Group, Inc.
Fossil Group, Inc. is a global design, marketing, distribution and innovation company specializing in lifestyle accessories. Under a diverse portfolio of owned and licensed brands, our offerings include fashion watches, jewelry, handbags, small leather goods and connected products. We are committed to delivering the best in design and innovation across our owned brands, Fossil, Michele, Misfit, Relic, Skagen and Zodiac, and licensed brands, Armani Exchange, BMW, Diesel, DKNY, Emporio Armani, kate spade new york, Michael Kors, PUMA and Tory Burch. We bring each brand story to life through an extensive distribution network across numerous geographies, categories and channels. Certain press release and SEC filing information concerning the Company is also available at www.fossilgroup.com.
Investor Relations:
Christine Greany
The Blueshirt Group
(858) 523-1732
christine@blueshirtgroup.com
Consolidated Income Statement Data
For the 13
Weeks Ended
For the 13
Weeks Ended
($ in millions, except per share data):
October 3, 2020
September 28, 2019
Net sales
$
435.5
$
539.5
Cost of sales
205.7
261.0
Gross profit
229.8
278.5
Gross margin
52.8
%
51.6
%
Operating expenses:
Selling, general and administrative expenses
206.6
264.1
Trade name impairment
—
16.6
Restructuring charges
5.7
7.0
Total operating expenses
$
212.3
$
287.7
Total operating expenses (% of net sales)
48.7
%
53.3
%
Operating income (loss)
17.5
(9.2
)
Operating margin
4.0
%
(1.7
)
%
Interest expense
8.0
7.4
Other income (expense) – net
—
(1.4
)
Income (loss) before income taxes
9.5
(18.0
)
Provision for income taxes
(6.8
)
6.9
Less: Net income attributable to noncontrolling interest
0.3
1.0
Net income attributable to Fossil Group, Inc.
$
16.0
$
(25.9
)
Earnings per share:
Basic
$
0.31
$
(0.51
)
Diluted
$
0.31
$
(0.51
)
Weighted average common shares outstanding:
Basic
51.3
50.5
Diluted
51.8
50.5
Consolidated Balance Sheet Data ($ in millions):
October 3, 2020
September 28, 2019
Assets:
Cash and cash equivalents
$
323.6
$
147.5
Accounts receivable – net
189.8
247.6
Inventories
359.5
570.2
Other current assets
134.9
126.4
Total current assets
$
1,007.8
$
1,091.7
Property, plant and equipment – net
$
118.5
$
155.0
Operating lease right-of-use assets
244.5
292.1
Intangible and other assets – net
151.5
101.8
Total long-term assets
$
514.5
$
548.9
Total assets
$
1,522.3
$
1,640.6
Liabilities and stockholders’ equity:
Accounts payable, accrued expenses and other current liabilities
$
528.5
$
507.3
Short-term debt
21.4
21.8
Total current liabilities
$
549.9
$
529.1
Long-term debt
$
217.9
$
242.1
Long-term operating lease liabilities
260.7
288.6
Other long-term liabilities
70.2
70.9
Total long-term liabilities
$
548.8
$
601.6
Stockholders’ equity
423.6
$
509.9
Total liabilities and stockholders’ equity
$
1,522.3
$
1,640.6
Constant Currency Financial Information
The following table presents the Company’s business segment and product net sales on a constant currency basis which are non-GAAP financial measures. To calculate net sales on a constant currency basis, net sales for the current fiscal year period for entities reporting in currencies other than the U.S. dollar are translated into U.S. dollars at the average rates during the comparable period of the prior fiscal year. The Company presents constant currency information to provide investors with a basis to evaluate how its underlying business performed excluding the effects of foreign currency exchange rate fluctuations. The constant currency financial information presented herein should not be considered a substitute for, or superior to, the measures of financial performance prepared in accordance with GAAP.
Net Sales
For the 13 Weeks Ended
October 3, 2020
September 28, 2019
($ in millions)
As Reported
Impact of Foreign Currency Exchange Rates
Constant Currency
As Reported
Segment:
Americas
$
175.1
$
1.3
$
176.4
$
220.0
Europe
135.3
(5.4
)
129.9
173.9
Asia
119.7
(0.2
)
119.5
143.3
Corporate
5.4
(0.1
)
5.3
2.3
Total net sales
$
435.5
$
(4.4
)
$
431.1
$
539.5
Product Categories:
Watches
$
356.6
$
(3.1
)
$
353.5
$
445.5
Leathers
37.7
(0.3
)
37.4
54.5
Jewelry
28.9
(0.9
)
28.0
28.2
Other
12.3
(0.1
)
12.2
11.3
Total net sales
$
435.5
$
(4.4
)
$
431.1
$
539.5
Adjusted EBITDA
Adjusted EBITDA is a non-GAAP financial measure. We define Adjusted EBITDA as our net income (loss) before the impact of income tax expense (benefit), plus interest expense, amortization and depreciation, impairment expense, other non-cash charges, stock-based compensation expense, and restructuring expense minus interest income. We have included Adjusted EBITDA herein because it is widely used by investors for valuation and for comparing our financial performance with the performance of our competitors. We also use Adjusted EBITDA to monitor and compare the financial performance of our operations. Our presentation of Adjusted EBITDA may not be comparable to similarly titled measures other companies report. Adjusted EBITDA is not intended to be used as an alternative to any measure of our performance in accordance with GAAP. The following table reconciles Adjusted EBITDA to the most directly comparable GAAP financial measure, which is income (loss) before income taxes. Certain line items presented in the tables below, when aggregated, may not foot due to rounding.
Fiscal 2019(1)
Fiscal 2020
($ in millions):
Q4
Q1
Q2
Q3
Total
Income (loss) before income taxes
$
(6.0
)
$
(149.1
)
$
(43.8
)
$
9.5
$
(189.4
)
Plus:
Interest expense
7.0
7.5
7.9
8.0
30.4
Amortization and depreciation
12.9
12.2
10.7
10.3
46.1
Impairment expense
4.7
19.6
3.4
4.6
32.3
Other non-cash charges
43.2
21.7
3.6
2.9
71.4
Stock-based compensation
1.9
3.1
2.9
3.2
11.1
Restructuring expense
5.2
9.4
10.5
5.7
30.8
Less:
Interest Income
0.1
—
(0.1
)
(0.1
)
(0.1
)
Adjusted EBITDA
$
68.8
$
(75.6
)
$
(4.7
)
$
44.3
$
32.8
(1)
Prior period amounts have been adjusted to conform to the current period presentation.
Synacor Reports Third Quarter 2020 Financial Results
–Company delivers 17% growth in Zimbra Enterprise SaaS and Cloud ID SaaS revenue
–Reinstates Financial Guidance for Fourth Quarter 2020
BUFFALO, N.Y.–(BUSINESS WIRE)–
Synacor, Inc. (Nasdaq: SYNC), a leading provider of cloud-based Collaboration and Identity Management software and services serving global enterprises, video, internet and communications providers, and governments, today announced its financial results for the third quarter ended September 30, 2020.
Third Quarter Financial Highlights
Third quarter revenue of $18.5 million
GAAP net loss of $4.0 million, inclusive of $1.8 million of restructuring and impairment charges
Adjusted EBITDA of $1.0 million with near break-even operating cash flow
Portal & Advertising Segment Adjusted EBITDA margin of 7% with sequential revenue growth of 16%, showing solid recovery post the onset of COVID-19
$8.1 million of recurring software revenue, that included 17% year-over-year growth in our focus areas of Zimbra Enterprise SaaS and Cloud ID SaaS
Company reinstates financial guidance for the fourth quarter 2020, including expectations for continued double-digit Enterprise SaaS growth, double-digit Adjusted EBITDA margins and positive free cash flow
“Our third quarter results provide real evidence of Synacor’s transformation into a world-class Enterprise SaaS company that is also committed to expanded margins and positive cash flow,” said Himesh Bhise, Synacor’s Chief Executive Officer. “Zimbra Enterprise SaaS plus Cloud ID SaaS delivered 17% year-over-year growth, our second consecutive quarter of double digit Enterprise SaaS revenue growth that we expect will continue into 2021. We have also improved profitability: year-to-date Software Segment adjusted EBITDA margin expanded to 32% from 27% a year ago, and our Portal & Advertising Segment adjusted EBITDA margin was 7% in Q3 and break-even year-to-date, despite the impact of COVID-19.”
Bhise added, “We enter Q4 and 2021 with noteworthy Cloud ID customer launches, a compelling new Zimbra Cloud collaboration platform, a pronounced market recovery underway in Advertising, a robust sales pipeline, and a cost structure that will yield positive free cash-flow.”
Recent Operating Highlights
Over 200 new and expansion customers for Zimbra email and collaboration platform delivered through worldwide channel partners
Debuted Zimbra Cloud in North America – an integrated collaboration suite for small business with email, videoconferencing, chat, and cloud storage – for $2.95 per month with a 30-day free trial
Signed four expansion deals for Cloud ID with content streaming and service provider customers; and pipeline remains robust
Achieved significant launch milestones with current Cloud ID customers that will grow active users, including smart-speaker enablement for a large digital services provider, doubling of traffic with a Canadian OTT provider, and going live with content network Epix
Active advertising publishers were 104 at the end of the third quarter, reflecting proactive reduction of less profitable publishers to enhance segment profitability
Renewed six Zimbra contracts, three Cloud ID contracts, and two portal contracts with service providers in North America
Unallocated corporate G&A declined 29% compared to the year ago quarter as a result of previously announced $10 million of cost reductions
Financial Results
Revenue
For the third quarter of 2020, revenue was $18.5 million, compared to reported revenue of $31.4 million, or $23.7 million when excluding the ATT.net portal business, in the third quarter of 2019. The decline was primarily driven by the COVID-19 impact on our business.
Revenue in our Software & Services segment totaled $10.1 million, compared with $11.1 million in the third quarter of 2019, as double-digit growth in Enterprise SaaS was offset by COVID-19 related declines in consumer email, maintenance, and enterprise licenses.
Revenue in our Portal & Advertising segment totaled $8.4 million, compared with reported revenue of $20.3 million, or $12.6 million net of the ATT.net portal business, in the third quarter of 2019. Revenue increased 16% sequentially compared to the second quarter of 2020, and continues to improve into the fourth quarter, despite the impact from COVID-19.
Net Loss
Net loss for the third quarter of 2020 was $4.0 million, or $0.10 per share, compared with a net loss of $3.7 million, or $0.10 per share, in the prior year. Adjusted net loss was $2.3 million, or $0.05 per share in the current quarter, compared with an adjusted net loss of $1.0 million, or $0.03 per share, in the third quarter of 2019. Adjusted net loss excludes asset impairments, restructuring charges and certain legal and professional fees.
Adjusted EBITDA
Adjusted EBITDA for the third quarter of 2020 was $1.0 million, or 5.3% of revenue, compared with $2.7 million, or 8.7% of revenue, in the third quarter of 2019. Adjusted EBITDA excludes stock-based compensation, other income and expense, asset impairments, restructuring costs, and certain legal and professional fees.
Cash
Cash and cash equivalents at the end of the third quarter was $4.3 million, compared with $6.0 million at the end of the second quarter. The Company continues to have no borrowings on its $12 million credit facility, and expects to be cash flow positive beginning with the fourth quarter of 2020 on a go-forward basis.
Guidance
The Company previously suspended its practice of providing financial guidance on May 6, 2020 given the uncertainties regarding the COVID-19 pandemic. Due to improved visibility, the Company has decided to reinstate financial guidance.
Based on information available as of November 11, 2020, the Company is providing guidance as follows for the fourth quarter 2020:
Revenue of $20.0 million to $22.0 million
GAAP net loss of $0.5 million to $1.1 million
Adjusted EBITDA of $2.5 million to $3.1 million
Conference Call Details
Synacor will host a conference call today at 5 p.m. ET to discuss its third quarter 2020 financial results. The live webcast of the Company’s earnings conference call can be accessed at https://www.synacor.com/investor-relations/events-and-presentations. To participate, please dial 1-833-235-2655 (toll free) or 1-647-689-4151 (international) and reference conference ID 4592597.
Following the conclusion of the live call, a replay of the webcast will be available on the Investor Relations section of the Company’s website for at least 90 days. A telephonic replay of the conference call will also be available from 8 p.m. ET on November 11, 2020 until 11:59 p.m. ET on November 18, 2020 by dialing 1-800-585-8367 or 1-416-621-4642 and using the pin number 4592597.
About Synacor
Synacor (Nasdaq: SYNC) is a cloud-based software and services company serving global video, internet and communications providers, device manufacturers, governments and enterprises. Synacor’s mission is to enable its customers to better engage with their consumers. Its customers use Synacor’s technology platforms and services to scale their businesses and extend their subscriber relationships. Synacor delivers managed portals, advertising solutions, email and collaboration platforms, and cloud-based identity management. www.synacor.com
Non-GAAP Financial Measures
The Company uses certain non-GAAP financial measures in this release. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles (GAAP).
We report adjusted EBITDA because it is a key measure used by our management and Board of Directors to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget and to develop short- and long-term operational plans. In particular, the exclusion of certain expenses in calculating adjusted EBITDA can provide a useful measure for period-to-period comparisons of our core business. Accordingly, we believe that adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and Board of Directors.
For a reconciliation of adjusted EBITDA to net loss, the most directly comparable financial measure calculated and presented in accordance with GAAP, please refer to the table “Reconciliation of GAAP to Non-GAAP Measures” in this press release.
We report adjusted net loss and adjusted diluted earnings per share because we believe these measures provide investors with additional information to assess our financial performance. These measures should be viewed as supplemental data, rather than substitutes or alternatives to the comparable GAAP measures. For a reconciliation of our GAAP Condensed Consolidated Statements of Operations to our adjusted non-GAAP measures, please refer to the table “Reconciliation of Adjusted Financial Measures” in this press release.
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
“Safe Harbor” statement under the Private Securities Litigation Reform Act of 1995: This press release contains forward-looking statements concerning Synacor’s expected financial performance including, without limitation, it’s fourth quarter and full year 2020 guidance, the statements and quotations from management, statements regarding the impact of the Company’s cost reduction plan on its future financial results, statements regarding future revenue improvement in the Portal & Advertising segment and the ability to achieve positive cash flow in future periods, and Synacor’s strategic and operational plans. The achievement or success of the matters covered by such forward-looking statements involves risks, uncertainties and assumptions. If any such risks or uncertainties materialize or if any of the assumptions prove incorrect, the Company’s results could differ materially from the results expressed or implied by the forward-looking statements the Company makes.
The risks and uncertainties referred to above include – but are not limited to – risks associated with: the impact of the COVID-19 pandemic on our business, execution of our plans and strategies; our ability to obtain new customers; our ability to integrate the assets and personnel from acquisitions; expectations regarding consumer taste and user adoption of applications and solutions; developments in internet browser software and search advertising technologies; general economic conditions; expectations regarding the Company’s ability to timely expand the breadth of services and products or introduction of new services and products; consolidation within the cable and telecommunications industries; changes in the competitive dynamics in the market for online search and digital advertising; the risk that security measures could be breached and unauthorized access to subscriber data could be obtained; potential third party intellectual property infringement claims or other legal claims against Synacor; and the price volatility of our common stock.
Further information on these and other factors that could affect the Company’s financial results is included in filings it makes with the Securities and Exchange Commission from time to time, including the section entitled “Risk Factors” in the Company’s most recent Form 10-K filed with the SEC. These documents are available on the SEC Filings section of the Investor Information section of the Company’s website at http://investor.synacor.com/. All information provided in this release and in the attachments is available as of November 11, 2020, and except as required by applicable law, Synacor undertakes no duty to update this information.
Synacor, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
September 30, 2020
December 31, 2019
Assets
Current assets:
Cash and cash equivalents
$
4,280
$
10,966
Accounts receivable, net
12,809
20,532
Prepaid expenses and other current assets
3,287
2,989
Total current assets
20,376
34,487
Property and equipment, net
12,192
14,948
Operating lease right-of-use assets
3,458
4,765
Goodwill
15,943
15,948
Intangible assets
6,820
8,411
Other assets
876
1,319
Total Assets
$
59,665
$
79,878
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
$
8,597
$
12,583
Accrued expenses and other current liabilities
3,725
5,878
Current portion of deferred revenue
5,750
6,509
Current portion of long-term debt and finance leases
1,018
2,529
Current portion of operating lease liabilities
2,434
2,165
Total current liabilities
21,524
29,664
Long-term portion debt and finance leases
1,309
729
Deferred revenue
1,696
2,366
Long-term portion of operating lease liabilities
1,629
2,846
Deferred income taxes
334
275
Other long-term liabilities
248
334
Total Liabilities
26,740
36,214
Stockholders’ Equity:
Common stock
405
401
Treasury stock
(2,004
)
(1,931
)
Additional paid-in capital
147,572
146,460
Accumulated deficit
(112,416
)
(100,747
)
Accumulated other comprehensive loss
(632
)
(519
)
Total stockholders’ equity
32,925
43,664
Total Liabilities and Stockholders’ Equity
$
59,665
$
79,878
Synacor, Inc.
Condensed Consolidated Statement of Operations
(In thousands except for share and per share data)
(Unaudited)
Three Months Ended September 30,
Nine Months Ended September 30,
2020
2019
2020
2019
Revenue
$
18,529
$
31,366
$
57,288
$
95,039
Costs and operating expenses:
Cost of revenue (1)
10,403
15,634
30,168
49,292
Technology and development (1)(2)
3,085
5,545
9,136
14,668
Sales and marketing (2)
3,410
5,473
11,581
17,014
General and administrative (1)(2)
3,238
5,648
10,978
14,068
Depreciation and amortization
1,991
2,605
6,430
7,607
Total costs and operating expenses
22,127
34,905
68,293
102,649
Loss from operations
(3,598
)
(3,539
)
(11,005
)
(7,610
)
Other (expense) income, net
(124
)
101
218
110
Interest expense
(37
)
(80
)
(146
)
(199
)
Loss before income taxes
(3,759
)
(3,518
)
(10,933
)
(7,699
)
Provision for income taxes
203
207
736
757
Net loss
$
(3,962
)
$
(3,725
)
$
(11,669
)
$
(8,456
)
Net loss per share:
Basic
$
(0.10
)
$
(0.10
)
$
(0.30
)
$
(0.22
)
Diluted
$
(0.10
)
$
(0.10
)
$
(0.30
)
$
(0.22
)
Weighted average shares used to compute net loss per share:
Basic
39,503,951
39,073,998
39,405,791
39,047,561
Diluted
39,503,951
39,073,998
39,405,791
39,047,561
Notes:
(1) Exclusive of depreciation and amortization shown separately.
(2) Includes stock-based compensation as follows:
Three Months Ended September 30,
Nine Months Ended September 30,
2020
2019
2020
2019
Technology and development
$
50
$
103
$
163
$
298
Sales and marketing
97
149
301
375
General and administrative
186
277
629
511
$
333
$
529
$
1,093
$
1,184
Synacor, Inc.
Reconciliation of GAAP to Non-GAAP Measures
(In thousands)
(Unaudited)
The following table presents a reconciliation of net loss to adjusted EBITDA for each of the periods indicated:
Three Months Ended September 30,
Nine Months Ended September 30,
2020
2019
2020
2019
Reconciliation of Adjusted EBITDA:
Net loss
$
(3,962
)
$
(3,725
)
$
(11,669
)
$
(8,456
)
Provision for income taxes
203
207
736
757
Interest expense
37
80
146
199
Other expense (income), net
124
(101
)
(218
)
(110
)
Depreciation and amortization
2,562
3,036
8,059
8,509
Asset impairment**
687
1,525
687
1,751
Stock-based compensation expense
333
529
1,093
1,184
Restructuring costs
1,099
819
1,219
819
Certain legal and professional services fees*
(94
)
370
1,704
1,406
Adjusted EBITDA
$
989
$
2,740
$
1,757
$
6,059
*
“Certain legal and professional services fees” includes legal fees and other related expenses outside the ordinary course of business, as well as fees and expenses related to merger and acquisition activities.
**
“Asset Impairment” includes impairment charges related to property, plant and equipment, capitalized software and leased assets.
Synacor, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Nine Months Ended September 30,
2020
2019
Cash Flows from Operating Activities:
Net loss
$
(11,669
)
$
(8,456
)
Adjustments to reconcile net loss to net cash and cash equivalents
provided by (used in) operating activities:
Depreciation and amortization
8,081
8,513
Asset impairment
687
1,751
Stock-based compensation expense
1,093
1,184
Provision for deferred income taxes
59
59
Change in allowance for doubtful accounts
(20
)
77
Changes in operating assets and liabilities:
Accounts receivable, net
7,743
5,369
Prepaid expenses and other assets
122
59
Operating lease right-of-use assets and liabilities, net
(109
)
36
Accounts payable, accrued expenses and other liabilities
(5,561
)
(3,132
)
Deferred revenue
(1,429
)
(251
)
Net cash (used in) provided by operating activities
(1,003
)
5,209
Cash Flows from Investing Activities:
Purchases of property and equipment
(2,640
)
(3,159
)
Net cash used in investing activities
(2,640
)
(3,159
)
Cash Flows from Financing Activities:
Repayments on long-term debt and finance leases
(2,863
)
(2,531
)
Proceeds from exercise of common stock options
—
40
Payment of debt issuance costs
—
(60
)
Purchase of treasury stock and shares received to satisfy minimum tax withholdings
(73
)
(32
)
Net cash used in financing activities
(2,936
)
(2,583
)
Effect of exchange rate changes on cash and cash equivalents
(107
)
(156
)
Net decrease in Cash and Cash equivalents
(6,686
)
(689
)
Cash and cash equivalents, beginning of period
10,966
15,921
Cash and cash equivalents, end of period
$
4,280
$
15,232
Synacor, Inc.
Segment Results
(In thousands except for percentages)
(Unaudited)
The Company has two reportable segments which are determined on the basis of the products and services provided to customers, identified as follows:
(i) Software & Services, which includes email / collaboration (Zimbra) and identity management (Cloud ID).
(ii) Portal & Advertising, which includes managed portals and advertising solutions for publishers.
The following table presents the key segment financial measures for the periods indicated. Please refer to the Reconciliation of GAAP to Non-GAAP Measures schedule for the reconciliation of Adjusted EBITDA.
Three Months Ended September 30,
Nine Months Ended September 30,
2020
2019
% Change
2020
2019
% Change
Segment Revenue:
Software & Services
$
10,116
$
11,091
(8.8
)
%
$
32,093
$
32,837
(2.3
)
%
Portal & Advertising
8,413
20,275
(58.5
)
%
25,195
62,202
(59.5
)
%
Total
$
18,529
$
31,366
(40.9
)
%
$
57,288
$
95,039
(39.7
)
%
Segment Adjusted EBITDA:
Software & Services
$
2,890
$
3,378
(14.4
)
%
$
10,136
$
8,966
13.0
%
Portal & Advertising
588
2,881
(79.6
)
%
(56
)
8,036
(100.7
)
%
Unallocated Corporate Expense
(2,489
)
(3,519
)
29.3
%
(8,323
)
(10,943
)
23.9
%
Total
$
989
$
2,740
(63.9
)
%
$
1,757
$
6,059
(71.0
)
%
Segment Adjusted EBITDA margin*
Software & Services
28.6
%
30.5
%
-190 bps
31.6
%
27.3
%
430 bps
Portal & Advertising
7.0
%
14.2
%
-720 bps
(0.2
)
%
12.9
%
-1310 bps
Total
5.3
%
8.7
%
-340 bps
3.1
%
6.4
%
-330 bps
* Adjusted EBITDA as a percent of revenue
The following tables presents a disaggregation of segment revenue for the periods indicated based upon the accounting definition of revenue recognition:
(i) Recurring = revenue recognized over time
(ii) Non-recurring = revenue recognized at a point in time
Three Months Ended September 30,
Nine Months Ended September 30,
2020
2019
% Change
2020
2019
% Change
Software & Services Revenue:
Recurring
$
8,139
$
8,240
(1.2
)
%
$
24,532
$
25,143
(2.4
)
%
Non-recurring
1,977
2,851
(30.7
)
%
7,561
7,334
3.1
%
Discontinued Products **
—
—
—
%
—
360
(100.0
)
%
Total
$
10,116
$
11,091
(8.8
)
%
$
32,093
$
32,837
(2.3
)
%
Portal & Advertising Revenue:
Recurring
$
554
$
1,274
(56.5
)
%
$
2,659
$
3,982
(33.2
)
%
Non-recurring
7,859
19,001
(58.6
)
%
22,536
58,220
(61.3
)
%
Total
$
8,413
$
20,275
(58.5
)
%
$
25,195
$
62,202
(59.5
)
%
Total Revenue:
Recurring
$
8,693
$
9,514
(8.6
)
%
$
27,191
$
29,125
(6.6
)
%
Non-recurring
9,836
21,852
(55.0
)
%
30,097
65,554
(54.1
)
%
Discontinued Products **
—
—
—
%
—
360
—
%
Total
$
18,529
$
31,366
(40.9
)
%
$
57,288
$
95,039
(39.7
)
%
** VAM video product line which was discontinued during Q1 2019.
Synacor, Inc.
Reconciliation of Adjusted Financial Measures
(In thousands except per share amounts)
(Unaudited)
Three months ended September 30, 2020
Per GAAP
Statements
Asset
Impairment
Restructuring
Costs
Certain
Legal &
Professional
Fees
Adjusted
Non-GAAP
Revenue
$
18,529
$
18,529
Costs and operating expenses:
Cost of revenue (1)
10,403
10,403
Technology and development (1)(2)
3,085
(405)
2,680
Sales and marketing (2)
3,410
(561)
2,849
General and administrative (1)(2)
3,238
(687)
(133)
94
2,512
Depreciation and amortization
1,991
1,991
Total costs and operating expenses
22,127
(687)
(1,099)
94
20,435
Loss from operations
(3,598)
687
1,099
(94)
(1,906)
Other expense, net
(124)
(124)
Interest expense
(37)
(37)
Loss before income taxes
(3,759)
687
1,099
(94)
(2,067)
Provision for income taxes (3)
203
203
Net loss
$
(3,962)
$
687
$
1,099
$
(94)
$
(2,270)
Diluted EPS
$
(0.10)
$
0.02
$
0.03
$
—
$
(0.05)
Three months ended September 30, 2019
Per GAAP
Statements
Asset
Impairment
Restructuring
Costs
Certain
Legal &
Professional
Fees
Adjusted
Non-GAAP
Revenue
$
31,366
$
31,366
Costs and operating expenses:
Cost of revenue (1)
15,634
(292)
$
15,342
Technology and development (1)(2)
5,545
(329)
$
5,216
Sales and marketing (2)
5,473
(192)
$
5,281
General and administrative (1)(2)
5,648
(1,525)
(6)
(370)
$
3,747
Depreciation and amortization
2,605
2,605
Total costs and operating expenses
34,905
(1,525)
(819)
(370)
32,191
Loss from operations
(3,539)
1,525
819
370
(825)
Other income, net
101
101
Interest expense
(80)
(80)
Loss before income taxes
(3,518)
1,525
819
370
(804)
Provision for income taxes (3)
207
207
Net loss
$
(3,725)
$
1,525
$
819
$
370
$
(1,011)
Diluted EPS
$
(0.10)
$
0.04
$
0.02
$
0.01
$
(0.03)
Notes:
(1) Exclusive of depreciation and amortization shown separately.
(2) Includes stock-based compensation
(3) No income tax effects to adjustments presented due to full valuation allowance.
Synacor’s management believes that certain non-GAAP measures of Adjusted Net Loss and Adjusted Diluted Earnings per Share provide investors with additional information to assess the Company’s financial performance. These measures should be viewed as supplemental data, rather than substitutes or alternatives to the comparable GAAP measures.
Synacor, Inc.
Reconciliation of Adjusted Financial Measures
(In thousands except per share amounts)
(Unaudited)
Nine months ended September 30, 2020
Per GAAP
Statements
Asset
Impairment
Restructuring
Costs
Certain
Legal &
Professional
Fees
Adjusted
Non-GAAP
Revenue
$
57,288
$
57,288
Costs and operating expenses:
Cost of revenue (1)
30,168
30,168
Technology and development (1)(2)
9,136
(405
)
8,731
Sales and marketing (2)
11,581
(561
)
11,020
General and administrative (1)(2)
10,978
(687
)
(253
)
(1,704
)
8,334
Depreciation and amortization
6,430
6,430
Total costs and operating expenses
68,293
(687
)
(1,219
)
(1,704
)
64,683
Loss from operations
(11,005
)
687
1,219
1,704
(7,395
)
Other income, net
218
218
Interest Expense
(146
)
(146
)
Loss before income taxes
(10,933
)
687
1,219
1,704
(7,323
)
Provision for income taxes (3)
736
736
Net loss
$
(11,669
)
$
687
$
1,219
$
1,704
$
(8,059
)
Diluted EPS
$
(0.30
)
$
0.02
$
0.03
$
0.04
$
(0.21
)
Nine months ended September 30, 2019
Per GAAP
Statements
Asset
Impairment
Restructuring
Costs
Certain
Legal &
Professional
Fees
Adjusted
Non-GAAP
Revenue
$
95,039
$
95,039
Costs and operating expenses:
Cost of revenue (1)
49,292
(292
)
49,000
Technology and development (1)(2)
14,668
(329
)
14,339
Sales and marketing (2)
17,014
(192
)
16,822
General and administrative (1)(2)
14,068
(1,751
)
(6
)
(1,406
)
10,905
Depreciation and amortization
7,607
7,607
Total costs and operating expenses
102,649
(1,751
)
(819
)
(1,406
)
98,673
Loss from operations
(7,610
)
1,751
819
1,406
(3,634
)
Other income, net
110
110
Interest Expense
(199
)
(199
)
Loss before income taxes
(7,699
)
1,751
819
1,406
(3,723
)
Provision for income taxes (3)
757
757
Net loss
$
(8,456
)
1,751
$
819
$
1,406
$
(4,480
)
Diluted EPS
$
(0.22
)
$
0.04
$
0.02
$
0.04
$
(0.11
)
Notes:
(1) Exclusive of depreciation and amortization shown separately.
(2) Includes stock-based compensation
(3) No income tax effects to adjustments presented due to full valuation allowance.
Synacor’s management believes that certain non-GAAP measures of Adjusted Net Loss and Adjusted Diluted Earnings per Share provide investors with additional information to assess the Company’s financial performance. These measures should be viewed as supplemental data, rather than substitutes or alternatives to the comparable GAAP measures.
