Business Wire | Aug 6, 2020 07:00AM EDT

The Meet Group Reports Second Quarter 2020 Financial Results

Aug. 06, 2020

NEW HOPE, Pa.--(BUSINESS WIRE)--Aug. 06, 2020--The Meet Group, Inc. (NASDAQ: MEET), a leading provider of interactive dating solutions, today reported financial results for its second quarter ended June 30, 2020.

Second Quarter 2020 Highlights

* Total revenue of $90.3 million, up 74% from the second quarter of 2019. * GAAP net income of $10.4 million, or $0.14 per diluted share, compared with GAAP net income of $2.2 million, or $0.03 per diluted share in the second quarter of 2019. * Adjusted EBITDA of $20.8 million, compared with $9.8 million in the second quarter of 2019. * Non-GAAP net income of $19.7 million, or $0.26 per diluted share, compared with $8.8 million, or $0.11 per diluted share, in the second quarter of 2019. * Transaction with ProSiebenSat.1's and General Atlantic's joint company NuCom Group expected to close in the second half of 2020.

(See the important discussion about the presentation of non-GAAP financial measures, and reconciliation to the most direct comparable GAAP financial measures, below.)

"We continue to expect to close our acquisition by ProSiebenSat.1 and General Atlantic by the end of this year," said Geoff Cook, Chief Executive Officer of The Meet Group. "We have received antitrust clearance in the United States, Germany and Austria, and our stockholders have approved the transaction."

Second Quarter Financial Results

For the second quarter of 2020, the Company reported revenue of $90.3 million, an increase of $38.3 million, or 74%, from $52.0 million in the second quarter of 2019. GAAP net income for the second quarter of 2020 was $10.4 million, or $0.14 per diluted share, compared with GAAP net income of $2.2 million, or $0.03 per diluted share, in the second quarter of 2019. Adjusted EBITDA for the second quarter of 2020 was $20.8 million, compared with $9.8 million in the second quarter of 2019. Non-GAAP net income for the second quarter of 2020 was $19.7 million, or $0.26 per diluted share, compared with $8.8 million, or $0.11 per diluted share, in the second quarter of 2019.

The Company ended the quarter with $47.6 million in cash and cash equivalents.

Outlook and Conference Call

Due to the pending acquisition by ProSiebenSat.1's and General Atlantic's joint company NuCom Group, the Company does not plan to host an earnings conference call or provide forward-looking guidance.

THE MEET GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except par value and share data)

(Unaudited)

June 30, December 2020 31, 2019

Assets:

Current assets:

Cash and cash equivalents $ 47,644 $ 27,241

Accounts receivable, net 33,230 25,234

Prepaid expenses and other current assets 6,464 6,062

Total current assets 87,338 58,537

Deferred tax assets 13,616 16,233

Property and equipment, net 2,701 3,625

Operating lease right-of-use assets 6,550 7,034

Intangible assets, net 24,947 29,305

Goodwill 156,749 156,687

Other assets 700 1,300

Total assets $ 292,601 $ 272,721

Liabilities and stockholders' equity:

Current liabilities:

Accounts payable $ 8,610 $ 5,346

Accrued liabilities 24,806 20,090

Current portion of long-term debt 3,500 3,500

Current portion of operating lease liabilities 2,464 2,081

Current portion of finance lease obligations 9 10

Deferred revenue 3,720 3,884

Total current liabilities 43,109 34,911

Long-term debt, net 28,672 30,375

Long-term operating lease liabilities 4,204 5,024

Long-term finance lease obligations 46 53

Long-term derivative liabilities 913 1,451

Deferred tax liabilities 2,616 2,773

Other liabilities - 894

Total liabilities 79,560 75,481

Commitments and contingencies

Stockholders' equity:

Preferred stock, $0.001 par value; authorized -5,000,000 shares; no shares issued and outstanding as - - of June 30, 2020 and December 31, 2019

Series A junior participating preferred stock, $0.001par value; authorized - 200,000 shares; no shares - - issued and outstanding as of June 30, 2020 andDecember 31, 2019

Common stock, $0.001 par value; authorized -100,000,000 shares; 72,792,571 and 70,756,013 shares 73 71 issued and outstanding as of June 30, 2020 andDecember 31, 2019, respectively

Additional paid-in capital 438,345 430,959

Accumulated deficit (223,694 ) (231,441 )

Accumulated other comprehensive loss (1,683 ) (2,349 )

Total stockholders' equity 213,041 197,240

Total liabilities and stockholders' equity $ 292,601 $ 272,721

THE MEET GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(in thousands, except share and per share data)

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

Revenue $ 90,332 $ 52,000 $ 145,398 $ 101,513

Operating costs and expenses:

Sales and marketing 8,089 9,060 15,803 16,900

Product development 57,627 30,151 95,298 61,273 and content

General and 6,663 5,892 11,693 10,820 administrative

Depreciation and 2,689 3,430 5,509 6,628 amortization

Acquisition,restructuring and 1,335 25 4,705 504 other

Total operating costs 76,403 48,558 133,008 96,125 and expenses

Income from operations 13,929 3,442 12,390 5,388

Other income (expense):

Interest income 7 28 20 60

Interest expense (554 ) (328 ) (950 ) (731 )

Gain (loss) on foreign 3 (2 ) (4 ) (68 )currency transactions

Loss on disposal of - - (108 ) - assets

Other items of - (1 ) 2 3 (expense) income, net

Total other expense (544 ) (303 ) (1,040 ) (736 )

Income before income 13,385 3,139 11,350 4,652 tax expense

Income tax expense (3,006 ) (935 ) (3,379 ) (1,190 )

Net income $ 10,379 $ 2,204 $ 7,971 $ 3,462



Basic and diluted net income per share:

Basic net income per $ 0.14 $ 0.03 $ 0.11 $ 0.05 share

Diluted net income per $ 0.14 $ 0.03 $ 0.10 $ 0.04 share



Weighted-average shares outstanding:

Basic 72,030,143 75,648,621 71,516,532 75,250,562

Diluted 76,225,180 78,508,559 76,073,893 78,656,115

THE MEET GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)

Six Months Ended June 30,

2020 2019

Cash flows from operating activities:

Net income $ 7,971 $ 3,462

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 5,509 6,628

Amortization of right-of-use assets 1,284 1,294

Stock-based compensation expense 6,035 5,290

Deferred tax expense 2,317 268

Loss on disposal of assets 108 -

Loss on foreign currency transactions 4 68

Provision for expected credit losses 989 909

Non-cash interest expense 452 94

Changes in derivatives 246 -

Changes in contingent consideration obligations 45 64

Changes in operating assets and liabilities:

Accounts receivable (9,137 ) 2,414

Prepaid expenses, other current assets and other assets 47 (484 )

Accounts payable and accrued liabilities 5,399 (6,021 )

Deferred revenue (164 ) (19 )

Net cash provided by operating activities 21,105 13,967

Cash flows from investing activities:

Purchases of property and equipment (233 ) (688 )

Acquisition of business, net of cash acquired - (11,808 )

Net cash used in investing activities (233 ) (12,496 )

Cash flows from financing activities:

Proceeds from exercise of stock options 1,987 703

Repurchases of common stock (65 ) -

Payments of finance leases (7 ) (78 )

Proceeds from revolving loan - 7,000

Payments for restricted stock awards withheld for taxes (636 ) (371 )

Payments of term loan (1,750 ) (11,067 )

Net cash used in financing activities (471 ) (3,813 )

Change in cash and cash equivalents prior to effect of 20,401 (2,342 )foreign currency exchange rate

Effect of foreign currency exchange rate 2 29

Net increase (decrease) in cash and cash equivalents 20,403 (2,313 )

Cash and cash equivalents as of beginning of period 27,241 28,366

Cash and cash equivalents as of end of period $ 47,644 $ 26,053

Supplemental disclosure of cash flow information:

Cash paid for interest $ 245 $ 630

Cash paid for income taxes $ 1,375 $ 1,320

THE MEET GROUP, INC. AND SUBSIDIARIES

DISAGGREGATION OF REVENUE

(UNAUDITED)

(in thousands)

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

$ % $ % $ % $ %

User pay revenue:

Video $ 61,350 67.9 % $ 21,279 40.9 % $ 89,983 61.9 % $ 41,508 40.9 %

Subscription andother in-app 20,031 22.2 % 15,642 30.1 % 34,426 23.7 % 31,238 30.8 %products

Total user pay 81,381 90.1 % 36,921 71.0 % 124,409 85.6 % 72,746 71.7 %revenue

Advertising 8,951 9.9 % 15,079 29.0 % 20,989 14.4 % 28,767 28.3 %revenue

Total revenue $ 90,332 100.0 % $ 52,000 100.0 % $ 145,398 100.0 % $ 101,513 100.0 %

THE MEET GROUP, INC. AND SUBSIDIARIES

RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA

(UNAUDITED)

(in thousands)

Three Months Ended Six Months Ended June June 30, 30,

2020 2019 2020 2019

Net income $ 10,379 $ 2,204 $ 7,971 $ 3,462

Interest expense 554 328 950 731

Income tax expense 3,006 935 3,379 1,190

Depreciation and amortization 2,689 3,430 5,509 6,628 expense

Stock-based compensation 2,850 2,865 6,035 5,290 expense

Acquisition, restructuring and 1,335 25 4,705 504 other

Loss on disposal of assets - - 108 -

(Gain) loss on foreign currency (3 ) 2 4 68 transactions

Adjusted EBITDA $ 20,810 $ 9,789 $ 28,661 $ 17,873

THE MEET GROUP, INC. AND SUBSIDIARIES

RECONCILIATION OF NET INCOME TO NON-GAAP NET INCOME

(UNAUDITED)

(in thousands, except share and per share data)

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

Net income $ 10,379 $ 2,204 $ 7,971 $ 3,462

Stock-based 2,850 2,865 6,035 5,290 compensation expense

Amortization of 2,176 2,778 4,353 5,340 intangibles

Income tax expense 3,006 935 3,379 1,190

Acquisition,restructuring and 1,335 25 4,705 504 other

Non-GAAP Net Income $ 19,746 $ 8,807 $ 26,443 $ 15,786



GAAP basic net income $ 0.14 $ 0.03 $ 0.11 $ 0.05 per share

GAAP diluted net $ 0.14 $ 0.03 $ 0.10 $ 0.04 income per share

Basic Non-GAAP Net $ 0.27 $ 0.12 $ 0.37 $ 0.21 Income per share

Diluted Non-GAAP Net $ 0.26 $ 0.11 $ 0.35 $ 0.20 Income per share



Weighted-average shares outstanding:

Basic 72,030,143 75,648,621 71,516,532 75,250,562

Diluted 76,225,180 78,508,559 76,073,893 78,656,115

THE MEET GROUP, INC. AND SUBSIDIARIES

RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW

(UNAUDITED)

(in thousands)

Three Months Ended June Six Months Ended June 30, 30,

2020 2019 2020 2019

Net cash provided by operating $ 15,554 $ 10,605 $ 21,105 $ 13,967 activities

Purchases of property and (146 ) (405 ) (233 ) (688 )equipment

Free Cash Flow $ 15,408 $ 10,200 $ 20,872 $ 13,279

About The Meet Group

The Meet Group (NASDAQ: MEET) is a leading provider of interactive dating solutions designed to meet the universal need for human connection. Our ecosystem of dating apps enables users around the world to interact through one-to-many livestreaming broadcasts and text-based conversations. Our top apps, MeetMe(c), LOVOO(c), Skout(c), Tagged(c) and Growlr(c), deliver live interactions and meaningful connections to millions of users daily. Headquartered in New Hope, PA, we have offices in Philadelphia, San Francisco, Dresden and Berlin. The Meet Group is committed to safety. You can find a description of current safety practices here: https://www.themeetgroup.com/safety-practices/. For more information, visit themeetgroup.com, and follow us on Facebook, Twitter or LinkedIn.

Forward-Looking Statements

Certain statements in this press release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including whether we will close our transaction with ProSiebenSat.1 and General Atlantic as anticipated. All statements other than statements of historical facts contained herein are forward-looking statements. The words "believe," "may," "estimate," "continue," "anticipate," "intend," "should," "plan," "could," "target," "potential," "project," "outlook," "is likely," "expect" and similar expressions, as they relate to us, are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. Important factors that could cause actual results to differ from those in the forward-looking statements include the risk that our applications will not function easily or otherwise as anticipated, the risk that we will not launch additional features and upgrades as anticipated, the risk that unanticipated events affect the functionality of our applications with popular mobile operating systems, any changes in such operating systems that degrade our mobile applications' functionality and other unexpected issues which could adversely affect usage on mobile devices. Further information on our risk factors is contained in our filings with the Securities and Exchange Commission (SEC), including the Form 10-K for the year ended December 31, 2019 filed with the SEC on March 12, 2020 and the Form 10-Q for the quarter ended March 31, 2020 filed with the SEC on May 6, 2020. Any forward-looking statement made by us herein speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

Regulation G - Non-GAAP Measures

The Company defines mobile traffic and engagement metrics (including MAU, DAU, chats per day, and new users per day) to include mobile app traffic for all properties and mobile web traffic for MeetMe, Skout and LOVOO. The Company defines a Video Daily Active User (vDAU) as a registered user of one of our platforms who has logged in and visited the Live feature, either as a broadcaster or viewer, on the day of measurement. The Company defines Average Daily Video Revenue per Video Daily Active User (vARPDAU) as the average daily video revenue per vDAU. The Company uses these user metrics for financial and operational decision-making and as a means to evaluate period-to-period comparisons. The Company presents user metrics because it believes them to be an important supplemental measure of performance that is commonly used by securities analysts, investors and other interested parties in the evaluation of companies in its industry and because it believes that these metrics provide useful information to investors regarding the Company's financial condition and results of operations. There is no directly comparable U.S. generally accepted accounting principles (GAAP) measure to vARPDAU provided in the Company's financial statements and therefore no reconciliation is provided.

The Company uses Adjusted EBITDA, Non-GAAP Net Income and Free Cash Flow, which are not calculated and presented in accordance with GAAP, in evaluating its financial and operational decision making and as a means to evaluate period-to period comparison. The Company uses these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. The Company presents these non-GAAP financial measures because it believes them to be an important supplemental measure of performance that is commonly used by securities analysts, investors and other interested parties in the evaluation of companies in our industry. We refer you to the reconciliations above for these historical non-GAAP financial measures to their directly comparable GAAP financial measures.

The Company defines Adjusted EBITDA as net income or loss before interest expense, benefit from or provision for income taxes, depreciation and amortization expense, stock-based compensation expense, non-recurring acquisition, restructuring and other expenses, gain or loss on foreign currency transactions, gain or loss on sale or disposal of assets, provision for expected credit losses outside the normal range and goodwill and long-lived asset impairment charges. The Company excludes stock-based compensation expense because it is non-cash in nature. The Company defines Non-GAAP Net Income as net income or loss before benefit from or provision for income taxes, amortization on intangibles, non-recurring acquisition, restructuring and other expenses, goodwill and long-lived asset impairment charges and non-cash stock-based compensation expense. The Company defines Free Cash Flow as net cash provided by or used in its operating activities, minus purchases of property and equipment, as shown in the consolidated statements of cash flows.

Non-GAAP financial measures should not be considered as an alternative to net income, operating income, cash flow from operating activities, as a measure of liquidity or any other financial measure. They may not be indicative of the historical operating results of the Company nor is it intended to be predictive of potential future results. Investors should not consider non-GAAP financial measures in isolation or as a substitute for performance measures calculated in accordance with GAAP.

View source version on businesswire.com: https://www.businesswire.com/news/home/20200806005189/en/

CONTACT: Investor Contact: Leslie Arena larena@themeetgroup.com 267 714 6418 Media Contact: Brandyn Bissinger bbissinger@themeetgroup.com 267 446 7010