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SITO Mobile Reports 30% Increase in Revenue for the Third Quarter

By GlobeNewswire,  November 14, 2017, 04:05:00 PM EDT


New senior leadership accelerating insights-driven strategy with focus on larger, multi-year revenue opportunities

JERSEY CITY, N.J., Nov. 14, 2017 (GLOBE NEWSWIRE) -- SITO Mobile Ltd.(NASDAQ:SITO), an insights-driven Consumer Behavior and Location Sciences™ company, announced today its financial results for the third quarter and nine month periods ended September 30, 2017. 

Three Months Ended September 30, 2017 and Recent Business Highlights

  • Total revenue increased 30% to $11.1 million compared to $8.6 million in the corresponding period of 2016
  • Net loss of $2.7 million compared to net income of $502,000 in the corresponding period of 2016. The net loss reflects, among other things, approximately $591,000 in increased amortization expense due to a non-recurring change in the useful life of the company's patent portfolio
  • Generated Adjusted EBITDA of $296,000 for the quarter
  • Signed a multi-year partnership with Bell Media, Canada's leading content company, establishing SITO as its preferred partner for mobile data-driven audience insights and mobile advertising solutions in Canada
  • Appointed former CEO of ESPN and NFL Network Steve Bornstein and Nickelodeon Group CFO Karen Seminara to the Board of Directors

Tom Pallack, SITO's Chief Executive Officer commented, "I am encouraged with the progress that our company has made to re position our location-based, proprietary data-driven mobile solutions to focus on larger and more significant customers. We are advancing larger engagement opportunities with Fortune 500 brands and leading agencies that leverage our proprietary location-data technology and real-time insights to more effectively manage and deploy media campaigns."

"Q3 represented a record revenue quarter for SITO primarily based on our core media business, and we delivered quarter-over-quarter growth," Pallack continued. "In addition, during, and subsequent to the end of the third quarter, we closed a number of multi-year transactions, each of which are substantially larger than any transaction in SITO's history. Based on our bookings to date, we expect fourth quarter revenues to increase year-over-year and be sequentially higher than the third quarter, and our operating and net losses should narrow in the absence of non-recurring costs related to activities that occurred and concluded in the third quarter."

Pallack concluded, "Strategically, the addition of Steve Bornstein, the former CEO of ESPN, ABC Inc, and the NFL Network and Karen Seminara, the CFO of the Nickelodeon Group, to our Board of Directors is significant, and their respective experience, relationships and history of success, will add value to our company.  In addition we also appointed Bruce Rogers, Chief Insights Officers for Forbes as the inaugural member of our newly established CMO advisory group, which will help influence SITO's vision and product roadmap, while contributing valuable thought-leadership to the industry regarding the impact of digital on consumer engagement and experiences across industries."

Third Quarter Financial Summary

Total revenue for the three months ended September 30, 2017 increased 30%, or $2.5 million, to $11.1 million compared to $8.6 million in the corresponding period of 2016.  This increase was primarily driven by an increase in the number of campaigns and average campaign size as the company continues to expand its direct sales force and increase its customer base.

Gross profit for the three months ended September 30, 2017 was $5.7 million, or 51.8% of total revenue, compared to $4.8 million, or 56.0% of total revenue, in the corresponding period of 2016. The decrease in gross profit margin was primarily driven by an increase in vendor costs and continued depreciation and amortization expense of the company's mobile engagement technology platforms resulting in a lower gross profit margin compared to the prior year period.

Loss from operations for the three months ended September 30, 2017 was $2.1 million, which reflects, among other things, $591,000 in increased amortization expense due to a non-recurring change in the useful life of the company's patent portfolio.

Net loss for the three months ended September 30, 2017 was $2.7 million, or ($0.12) per basic and diluted share, compared to net income of $502,000, or $0.03 per basic and diluted share, in the corresponding period of 2016.

Adjusted EBITDA* for the three months ended September 30, 2017 was $296,000 compared to $1.1 million in the corresponding period of 2016.

* SITO Mobile has presented Adjusted EBITDA, a non-GAAP measure, because many of our investors use these non-GAAP 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. It should not be considered an alternative to GAAP measures as an indicator of the company's operating performance.

Year to Date Financial Summary

Total revenue for the nine months ended September 30, 2017 increased 29.8%, or $6.5 million, to $28.5 million compared to $22.0 million in the corresponding period of 2016.  This increase was driven primarily by an increase in the number of campaigns and average campaign size as the company continues to expand its direct sales force and increase its customer base.

Gross profit for the nine months ended September 30, 2017 was $14.2 million, or 49.6% of total revenue, compared to $12.0 million, or 54.6% of total revenue, in the corresponding period of 2016. The increase in gross profit was primarily driven by increased revenues, which was partially offset by an increase in cost of revenues due to the entry into a material media placement contract that contained some lower margin revenue, a slight increase in vendor costs and continued depreciation and amortization expense of the company's mobile engagement technology platforms resulting in a lower gross profit margin compared to the prior year period. 

Loss from operations for the nine months ended September 30, 2017 was $7.6 million, which reflects, among other things $591,000 in one-time expenses related to increased amortization expense due to a non-recurring change in the useful life of the company's patent portfolio.

Net loss for the nine months ended September 30, 2017 was $9.2 million, or ($0.44) per basic and diluted share, compared to net income of $56,000, or $0.00 per basic and diluted share, for the corresponding period of 2016. The decline in net income was primarily due to the $2.1 million increase in gross profit offset by a $2.8 million increase in general and administrative costs excluding certain non-recurring expenses, a $2.9 million increase in sales and marketing expense, and a $3.7 million increase in non-recurring general and administrative costs.

Cash used in operations for the nine months ended September 30, 2017 was $4.3 million compared to $570,000 for the corresponding period of 2016.

Adjusted EBITDA* for the nine months ended September 30, 2017 was a loss of $1.5 million compared to income of $1.5 million in the corresponding period of 2016.

Balance Sheet Summary

The Company ended the quarter with $2.6 million in cash, cash equivalents and marketable securities compared to $8.7 million at December 31, 2016. Management believes current cash levels and cash flows from future operations will be adequate to meet anticipated working capital needs, anticipated levels of capital expenditures and contractual obligations for the next 12 months.

Conference call information:

Date: Tuesday, November 14, 2017

Time: 4:30 p.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.

To join the live conference call, please dial into the above referenced telephone numbers five minutes prior to the scheduled conference call time.

A replay will be available for two weeks beginning on November 14, 2017 at approximately 8 p.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 13673112.

About SITO Mobile, Ltd.

SITO turns the consumer journey into a powerful instrument for marketers, delivering actionable insights that influence behavior in real-time. Through Consumer Behavior and Location Sciences™, SITO develops customized, data-driven solutions for brands spanning strategic insights and media. Our science and products reveal a deeper, real-time understanding of customer interests, actions and experiences providing increased clarity for brands when it comes to navigating business decisions and delivering advertising. The company is home to an internally developed, proprietary location-data technology stack, arming clients with a powerful resource for granular data, real-time insights and optimization, and delivery of successful media campaigns. Using in-store targeting, proximity targeting, geo-conquesting and attribution data, SITO creates audience profiles to develop measurable hyper-targeted campaigns for brands. For more information regarding SITO's science, technology and customized 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 contested solicitations pending or threatened against the Company, investigations of former executives, class action lawsuits, section 382 rights plan, and direct registered public offerings. 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 press release 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, for the year ended December 31, 2017, our Quarterly Report on Form 10-Q for the quarter ended September 30, 3017, 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, our Quarterly Report on Form 10-Q and the documents that we reference in our Annual Report on Form 10-K, our Quarterly Report on Form 10-Q 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. Forward-looking statements are made based on management's beliefs, estimates and opinions on the date the statements are made and we undertake 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, we cannot guarantee future results, levels of activity, performance or achievements.

Contact:

Investor Relations

Rob Fink

Hayden IR

Phone: 646.415.8972

Email: SITO@haydenir.com





SITO Mobile, Ltd.          
UNAUDITED CONDENSED CONSOLIDATED

STATEMENTS OF OPERATIONS
     
               
        For the Three Months Ended For the Nine Months Ended
        September 30, September 30,
        2017   2016   2017   2016  
               
Revenue          
  Media placement $   10,916,126     8,424,099     28,163,712     21,583,479  
  Licensing and royalties     155,795     127,196     357,291     388,561  
  Total revenue     11,071,921     8,551,295     28,521,003     21,972,040  
               
Costs and Expenses     5,729,732     4,791,620     14,156,891     11,998,312  
  Cost of revenue     5,342,189     3,759,675     14,364,112     9,973,728  
  Sales and marketing     3,395,943     2,870,828     10,607,985     7,685,561  
  General and administrative   3,732,184     1,356,537     10,150,616     4,236,541  
  Depreciation and amortization     713,903     153,696     996,590     458,072  
               
Total costs and expenses     13,184,219     8,140,736     36,119,303     22,353,902  
               
    (Loss) income from operations     (2,112,298 )   410,559     (7,598,300 )   (381,862 )
               
Other Income (Expense)          
  Interest expense     (555,288 )   (436,782 )   (1,299,049 )   (1,321,673 )
               
    Net (loss) before income taxes     (2,667,586 )   (26,223 )   (8,897,349 )   (1,703,535 )
               
    Provision for income taxes     -      -      -      -   
               
    Net (loss) from continuing operations     (2,667,586 )   (26,223 )   (8,897,349 )   (1,703,535 )
               
Discontinued Operations          
  Income (loss) from operations of

discontinued component
    2,788     527,723     (312,844 )   1,759,594  
                     
  Income tax benefit     -      -      -      -   
               
    Net income (loss) from discontinued operations     2,788     527,723     (312,844 )   1,759,594  
               
      Net (loss) income $   (2,664,798 )   501,500     (9,210,193 )   56,059  
               
  Basic net income (loss) per share          
    Continuing operations     (0.12 )   (0.00 )   (0.42 )   (0.10 )
    Discontinued operations     0.00     0.03     (0.01 )   0.10  
    Basic net loss per share $   (0.12 )   0.03     (0.44 )   0.00  
               
  Basic weighted average shares outstanding     21,597,130     17,433,011     20,994,017     17,714,960  
               
  Diluted earnings (loss) per share          
    Continuing operations     -      (0.00 )   -      (0.09 )
    Discontinued operations     -      0.03     -      0.09  
    Diluted net earnings (loss) per share $   -      0.03     -      0.00  
               
  Diluted weighted average shares outstanding      -      19,573,308     -      19,762,037  





SITO Mobile, Ltd.        
UNAUDITED CONDENSED CONSOLIDATED BALANCE

SHEETS
       
             
        September 30,   December 31,
        2017     2016  
        (Unaudited)    
             
Assets        
  Current assets        
    Cash and cash equivalents $   2,585,453   $   8,744,545  
    Accounts receivable, net     12,975,448       8,842,256  
    Other prepaid expenses     1,410,624       229,039  
    Assets from discontinued operations, net     14,861       870,716  
             
      Total current assets     16,986,386       18,686,556  
             
  Property and equipment, net     468,308       410,688  
             
  Other assets        
    Capitalized software development costs, net     1,666,814       1,698,992  
    Intangible assets:        
      Patents     746,075       461,730  
      Patent applications cost     -        854,088  
      Other intangible assets, net     1,235,757       1,439,007  
    Goodwill     6,444,225       6,444,225  
    Other assets including security deposits     92,420       150,038  
             
      Total other assets     10,185,291       11,048,080  
             
      Total assets $   27,639,985   $   30,145,324  
         
Liabilities and Stockholders' Equity        
  Current liabilities        
    Accounts payable $   6,261,331   $   3,184,237  
    Accrued expenses     3,282,101       2,180,944  
    Deferred revenue, current portion     1,840,039       245,407  
    Current obligations under capital lease     3,642       3,446  
    Note payable, net - current portion     -        2,896,893  
    Liabilities from discontinued operations, net     170,225       607,236  
             
      Total current liabilities     11,557,338       9,118,163  
             
  Long-term liabilities        
    Obligations under capital lease     -        2,756  
    Deferred revenue, noncurrent portion     900,616       -   
    Note payable, net     -        3,952,827  
             
      Total long-term liabilities     900,616       3,955,583  
             
      Total liabilities     12,457,954       13,073,746  
             
  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,        
    20,950,460 shares issued and outstanding as of September 30, 2017        
    and $.001 par value; 100,000,000 shares authorized,        
    20,681,047 shares issued and outstanding as of December 31, 2016     21,949       20,680  
    Additional paid-in capital     165,149,086       157,829,709  
    Accumulated deficit     (149,989,004 )     (140,778,811 )
             
      Total stockholders' equity     15,182,031       17,071,578  
             
      Total liabilities and stockholders' equity $   27,639,985   $   30,145,324  







SITO Mobile, Ltd.

Reconciliation of GAAP Net Income to Adjusted EBITDA
     
   
    For the Three Months Ended     For the Nine Months Ended
    September 30,     September 30,
    2017     2016       2017     2016  
                   
Net (loss) income $   (2,664,798 ) $   501,500     $   (9,210,193 ) $   56,059  
Net income (loss) from discontinued operations     2,788       527,723         (312,844 )     1,759,594  
Net (loss) from continuing operations     (2,667,586 )     (26,223 )       (8,897,349 )     (1,703,535 )
Adjustments to reconcile net income (loss) to EBITDA:                  
Depreciation and amortization expense included in costs and expenses:                  
Amortization included in cost of revenue     228,782       177,449         666,876       463,547  
Depreciation and other amortization     713,903       153,696         996,590       458,072  
Total depreciation and amortization expense     942,685       331,145         1,663,466       921,619  
Interest expense     555,288       436,782         1,299,049       1,321,673  
Provision for income taxes     -        -          -        -   
                   
EBITDA     (1,169,613 )     741,704         (5,934,834 )     539,757  
                   
Adjustments to reconcile EBITDA:                  
Stock based compensation expense

included in costs and expenses:
                 
Sales and marketing     235,104       70,439         474,386       218,763  
General and administrative     487,064       304,095         843,270       712,434  
 Total stock based compensation expense     722,168       374,534         1,317,656       931,197  
                   
Certain non-recurring expenses     743,769       -          3,156,782       -   
                   
Adjusted EBITDA $   296,324   $   1,116,238     $   (1,460,396 ) $   1,470,954  

 

Source: SITO Mobile, Ltd.

This article appears in: News Headlines

Referenced Stocks: SITO


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