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CST: 20/05/2019 22:02:52   

SITO Reports Fourth Quarter and Full-Year 2018 Results 

52 Days ago

JERSEY CITY, N.J., March 29, 2019 (GLOBE NEWSWIRE) -- SITO Mobile Ltd(NASDAQ: SITO), an insights-driven Consumer Behavior and Location Sciences™ company, announced today its financial results for the three months and full-year ended December 31, 2018.

Fourth Quarter Financial Overview

  • Revenue for the three months ended December 31, 2018 was $11.1 million
  • Net loss in the fourth quarter of 2018 was $1.1 million, compared to $6.8 million in the corresponding period of 2017. The year-over-year improvement reflects, among other things, a $2.2 million reduction in executive compensation, and $1.0 million in employee salary and commissions that were eliminated as part of a targeted restructuring initiative
  • Adjusted EBITDA* for the fourth quarter of 2018 was $145,000 compared to a loss of $2.0 million in the corresponding period of 2017
  • Detailed financial results for the fourth quarter and the full year ended December 31, 2018 are described in the financial summary sections below

Full-Year 2018 and Recent Operational Achievements

“The strategic actions we took in 2018 and the early part of 2019 to restructure and strengthen our organization were necessary to better position SITO to scale our operations augment our revenue model with transformative, multi-year, consumer insights and data-driven transactions and capitalize on the significant market opportunity in front of us,” commented Tom Pallack, SITO’s Chief Executive Officer.  “Over the past several months, we have revamped and enhanced every aspect of the organization, strengthened our product offering and the ability to leverage our proprietary and unique location-based, data-driven capabilities, while streamlining our corporate structure, lowering our overall head count, bolstering our balance sheet and reducing G&A expenses.”

"Our business and revenue mix continue to shift towards enterprise customers that are utilizing SITO consumer insights for data-driven transactions," Pallack added. "During the fourth quarter of 2018, sales to enterprise customers and recurring engagements leveraging our proprietary data represented 35% of our total sales.  We believe we now have the right management team in place and the necessary access to funds through our new factoring agreement to effectively drive our brand direct and channel partner strategy.”

Fourth Quarter Financial Summary

Total revenue for the three months ended December 31, 2018 decreased by $3.6 million, or 24%, to $11.1 million, compared to $14.7 million in the corresponding period of 2017. The decrease in total revenue was primarily due to a reduction in the average spending per customer, which we are actively working to offset with an increase of enterprise data-driven engagements with larger brands and agencies.

Gross profit for the three months ended December 31, 2018 was $5.6 million, or 50% of total revenue, compared to $6.8 million, or 46% of total revenue, for the corresponding period of 2017.  The increase in gross profit as a percentage of total revenue was due primarily to higher gross margins in new client engagements.

Loss from operations for the three months ended December 31, 2018 was $1.3 million, compared to a loss from operations of $6.9 million in the corresponding period of 2017. The decrease in loss from operations was primarily due to an overall decrease in office and employee compensation expense as part of management’s strategic restructuring efforts.

Net loss for the three months ended December 31, 2018 was $1.1 million, or ($0.04) per basic and diluted share, compared to a net loss of $6.7 million, or ($0.31) per basic and diluted share, for the corresponding period of 2017.

Adjusted EBITDA* for the three months ended December 31, 2018 was $145,000, compared to a loss of $2.0 million in the corresponding period of 2017.

* To supplement our financial results presented in accordance with generally accepted accounting principles in the United States (“GAAP”), SITO Mobile has presented Adjusted EBITDA, a non-GAAP financial measure, because many of our investors use these non-GAAP financial measures to monitor the Company's performance. Generally, a non-GAAP financial measure is a quantitative assessment of a company's performance, financial position or cash flow 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. Non-GAAP financial measures should not be considered as a substitute for, or superior to, the measures of financial performance prepared in accordance with GAAP. 

Full-Year Financial Summary

Total revenue for the year ended December 31, 2018 declined by $3.2 million, or 7%, to $39.7 million, compared to total revenue of $42.9 million for the year ended December 31, 2017.  The decrease in total revenue was primarily due to a reduction in the average spending per customer, which we are actively working to offset with an increase of enterprise data-driven engagements with larger brands and agencies.

Gross profit for the year ended December 31, 2018 was $18.4 million, or 46% of total revenue, compared to $20.7 million, or 48% of total revenue, for the year ended December 31, 2017.  The reduction in gross profit was primarily driven by lower revenues.  
                                                        
Loss from operations for the year ended December 31, 2018 was $18.5 million, compared to a loss from operations of $14.4 million for the year ended December 31, 2017, which reflects, among other things, a decrease in revenue of $3.2 million and an increase in sales and marketing expense of $4.7 million.

Net loss for the year ended December 31, 2018 was $17.0 million, or ($0.68) per basic and diluted share, compared to a net loss of $15.0 million, or $(0.69) per basic and diluted share, for the year ended December 31, 2017.
                                                                                                                                        
Adjusted EBITDA* for year ended December 31, 2018  was a loss of $10.1 million, compared to an Adjusted EBITDA loss of $2.6 million for the year ended December 31, 2017.

Balance Sheet Summary

The Company ended the year with $2.6 million in cash and cash equivalents, compared to cash and cash equivalents $3.6 million at December 31, 2017. Subsequent to December 31, 2018 the company entered into a new factoring and security agreement with Fast Pay Partners LLC that provides up to $9.5 million in accounts receivable financing, with an option to expand the facility by an additional $5.5 million dollars later this year.

Conference Call Information

Date: Friday, March 29, 2019
Time: 9:00 a.m. Eastern Time (ET)
Dial in Number for U.S. & Canadian Callers: 877-407-8293
Dial in Number for International Callers (Outside U.S. & Canada): 201-689-8349

The conference call will also be webcasted live on the Investor Relations section of SITO’s IR web site at http://ir.sitomobile.com/ir-calendar.

A replay will be available for 2 weeks starting on March 29, 2018 at approximately 11:00 a.m. ET. To access the replay, please dial 877-660-6853 in the U.S. and 201-612-7415 for international callers. The conference ID# is 13689171.

About SITO Mobile, Ltd. 

SITO delivers consumer location-based data-driven solutions for brands spanning strategic insights and media campaign delivery services. Through Consumer Behavior and Location Sciences™, SITO explores the consumer journey yielding a powerful strategic knowledge asset for executives and strategic decision makers delivering actionable insights to understand and influence consumer behaviors.

Our consumer location focused science reveals deep, real-time understandings of consumer movements, interests, actions, associations, and experiences providing increased clarity for brands navigating business decisions, developing advertising campaigns, and advancing business imperatives. The company is home to a proprietary location-data technology stack and has amassed a multi-year consumer behavioral, movement, location, and demographic database arming clients with a powerful resource for identifying real-time insights, longitudinal behavioral research, and delivery of successful media campaigns. SITO’s in-store targeting, proximity targeting, geo-conquesting and attribution data combine to create and optimize measurable hyper-targeted campaigns for brands. For more information regarding SITO’s science, technology and solutions spanning media and research, visit www.sitomobile.com.

About Non-GAAP Financial Measures

We present EBITDA and Adjusted EBITDA and in this press release to provide a supplemental measure of our operating performance. We define EBITDA as earnings before interest expense, income tax expense, depreciation and amortization expense, and Adjusted EBITDA, as EBITDA before stock based compensation, certain non-recurring professional expenses related to pending or threatened contested solicitations of the Company’s shareholders, investigations of former executives, defense of certain class action lawsuits, and implementation of a section 382 rights plan. We believe EBITDA and Adjusted EBITDA are useful performance measures used by us to facilitate a comparison of our operating performance and earnings on a consistent basis from period-to-period and to provide for a more complete understanding of factors and trends affecting our business than measures under generally accepted accounting principles in the United States of America (GAAP) can provide alone. The non-GAAP measures included in this release, however, should be considered in addition to, and not as a substitute for or superior to, operating income, cash flows, or other measures of financial performance prepared in accordance with GAAP. Please refer to the financial tables included below for a reconciliation of GAAP to non-GAAP measures.

Cautionary Statement Regarding Certain Forward-Looking Information

This announcement contains forward-looking statements. These statements are based on our management’s beliefs and assumptions and on information currently available to our management. Forward-looking statements include statements concerning the following: SITO’s plans and initiatives; our possible or assumed future results of operations; our ability to attract and retail customers; our ability to sell additional products and services to customers; our competitive position; our industry environment; and our potential growth opportunities. You should not place undue reliance on forward-looking statements, because they involve known and unknown risks, uncertainties and other factors, which are, in some cases, beyond our control and which could materially affect results. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under “Risk Factors” in our Annual Report on Form 10-K and the reports we file with the SEC.  Actual events or results may vary significantly from those implied or projected by the forward-looking statements due to these risk factors.  No forward-looking statement is a guarantee of future performance. You should read our Annual Report on Form 10-K and the documents that we reference in our Annual Report on Form 10-K and have filed as exhibits thereto with the Securities and Exchange Commission, or the SEC, with the understanding that our actual future results and circumstances may be materially different from what we expect, as described in this announcement. Forward-looking statements are made based on management’s beliefs, estimates and opinions on the date the statements are made and the Company undertakes no obligation to update forward-looking statements if these beliefs, estimates and opinions or other circumstances should change, except as may be required by applicable law. Although we believe that the expectations reflected in the forward-looking statements are reasonable, SITO is not guaranteeing, and cannot guarantee, future financial and operating results, levels of business activity, performance or achievements.

IR Contact:

Rob Fink
Hayden IR
646.415.8972
SITO@haydenir.com


SITO Mobile, Ltd.
CONSOLIDATED STATEMENTS OF OPERATIONS

                 
        For the Three Months Ended   For the Years Ended
        December 31,   December 31,
        2018    2017    2018    2017 
                     
Revenue                
  Media placement $   11,116,172   $   14,696,065   $   39,746,351   $   42,859,777  
  Licensing and royalties     -        -        -        130,653  
  Total revenue     11,116,172       14,696,065       39,746,351       42,990,430  
                     
Cost of Revenue                
  Cost of revenue     5,525,155       7,878,174       21,343,912       22,242,286  
  Gross profit     5,591,017       6,817,891       18,402,439       20,748,144  
                     
Operating Expenses                
  Sales and marketing     3,564,946       3,914,245       19,213,687       14,522,230  
  General and administrative     3,155,437       6,194,355       17,009,684       16,029,040  
  Legal settlement - See notes 16     -        3,500,000       -        3,500,000  
  Depreciation and amortization     146,584       141,395       647,680       1,137,985  
  Total operating expenses     6,866,967       13,749,995       36,871,051       35,189,255  
                     
    Loss from operations     (1,275,950 )     (6,932,104 )     (18,468,612 )     (14,441,111 )
                     
Other Income (Expense)                
  Earnings from joint venture     -        -        -        1,464,754  
  Gain (loss) on revaluation of warrant liability     207,136       158,646       1,364,704       (477,810 )
  Other income     1,123       -        118,753       -   
  Interest income (expense), net     (6,467 )     2,613       1,830       (1,296,436 )
                     
    Net loss before income taxes     (1,074,158 )     (6,770,845 )     (16,983,325 )     (14,750,603 )
                     
    Income tax (expense) benefit     (1,886 )     80,522       (82,282 )     80,522  
                     
    Net loss from continuing operations     (1,076,044 )     (6,690,323 )     (17,065,607 )     (14,670,081 )
                     
Discontinued Operations                
  Income from operations of discontinued component     -        (56,013 )     -        (368,857 )
                     
    Net income from discontinued operations     -        (56,013 )     -        (368,857 )
                     
      Net loss $   (1,076,044 ) $   (6,746,336 ) $   (17,065,607 ) $   (15,038,938 )
                     
  Basic and diluted net (loss) per share                
    Continuing operations     (0.04 )     (0.30 )     (0.68 )     (0.69 )
    Discontinued operations     -        (0.00 )     -        (0.02 )
    Basic and diluted net (loss) per share $   (0.04 ) $   (0.31 ) $   (0.68 ) $   (0.71 )
                     
  Basic and diluted weighted average shares outstanding     25,453,327       22,009,540       24,926,197       21,249,985  
                     
                     

SITO Mobile, Ltd.
CONSOLIDATED BALANCE SHEETS

               
        December 31,  
        2018   2017  
               
Assets          
  Current assets          
    Cash and cash equivalents $   2,597,246 $   3,611,438  
    Accounts receivable, net     10,206,664     13,005,718  
    Other prepaid expenses      469,041     374,380  
    Assets from discontinued operations     -      10,596  
               
      Total current assets     13,272,951     17,002,132  
               
  Property and equipment, net     343,572     449,949  
               
  Other assets          
    Capitalized software development costs, net     861,699     1,485,285  
    Intangible assets:          
      Patents, net     630,857     742,574  
      Other intangible assets, net     897,007     1,168,007  
    Goodwill     6,444,225     6,444,225  
    Other assets      114,101     92,420  
               
      Total other assets     8,947,889     9,932,511  
               
      Total assets $   22,564,412 $   27,384,592  


Liabilities and Stockholders' Equity            
  Current liabilities          
    Accounts payable  $   4,377,805  $   6,506,902   
    Accrued expenses     4,610,146      9,911,540   
    Deferred revenue     264,493      -   
    Current obligations under capital lease     3,571      2,756   
    Warrant liability     174,684      1,539,388   
    Liabilities from discontinued operations     -      210,789   
               
      Total current liabilities     9,430,699      18,171,375   
               
  Long-term liabilities          
    Obligations under capital lease     7,644      -   
               
      Total long-term liabilities     7,644      -   
               
      Total liabilities     9,438,343      18,171,375   
               
  Commitments and contingencies - See notes 16          
               
  Stockholders' Equity            
    Preferred stock, $.0001 par value, 5,000,000 shares authorized;          
      none outstanding     -      -   
    Common stock, $.001 par value; 100,000,000 shares authorized,          
    25,529,078 shares issued and outstanding as of December 31, 2018; and          
    22,039,529 shares issued and outstanding as of December 31, 2017     25,527      22,038   
    Additional paid-in capital     185,983,898      165,008,928   
    Accumulated deficit     (172,883,356)     (155,817,749)  
               
      Total stockholders' equity       13,126,069      9,213,217   
               
      Total liabilities and stockholders' equity   $   22,564,412  $   27,384,592   
               
               

SITO Mobile, Ltd.
RECONCILIATION OF GAAP NET INCOME TO ADJUSTED EBITDA

    For the Three Months Ended     For the Years Ended  
    December 31,     December 31,  
    2018     2017       2018     2017    
                     
Net (loss) $   (1,076,044 ) $   (6,746,336 )   $   (17,065,607 ) $   (15,038,938 )  
Net income (loss) from discontinued operations     -        (56,013 )       -        (368,857 )  
Net (loss) from continuing operations     (1,076,044 )     (6,690,323 )       (17,065,607 )     (14,670,081 )  
Adjustments to reconcile net (loss) to EBITDA:                    
Depreciation and amortization expense included in cost of revenue and operating expenses:                    
Amortization included in cost of revenue     207,690       225,609         764,375       438,094    
Depreciation and other amortization     146,584       141,395         647,680       1,137,985    
Total depreciation and amortization expense     354,274       367,004         1,412,055       1,576,079    
Interest income (expense), net     (6,467 )     2,613         1,830       (1,296,436 )  
Income tax expense     (1,886 )     80,522         (82,282 )     80,522    
                     
EBITDA     (713,417 )     (6,406,454 )       (15,573,100 )     (11,878,088 )  
                     
Adjustments to reconcile EBITDA:                    
Stock based compensation expense included in operating expenses:                    
Sales and marketing     302,590       342,674         1,805,944       817,061    
General and administrative     728,661       560,941         4,377,613       1,348,333    
 Total stock based compensation expense     1,031,251       903,615         6,183,557       2,165,394    
                     
Gain (loss) on warrant revaluation     207,136       158,646         1,364,704       (477,810 )  
                     
Certain non-recurring expenses                    
Other litigation     (8,254 )     3,526,760         509,421       3,526,935    
Investigations of former executives     42,603       66,447         86,674       741,360    
Class action lawsuits     -        893         35,991       235,062    
Section 382 rights plan     -        -          -        135,228    
Contested proxy solicitation pending of threatened against the Company     -        96,780         59,998       2,020,370    
Total non-recurring expenses     34,349       3,690,880         692,084       6,658,955    
                     
Adjusted EBITDA $   145,047   $   (1,970,605 )   $   (10,062,163 ) $   (2,575,929 )  
                     

 

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