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Exhibit
99.1
FOR
IMMEDIATE RELEASE
KIT
digital Reports on Integration of Recent Acquisitions and Strategic Outlook for
2010
Company Expects to Exceed
2009 Guidance, with Revenue of Approx. $46 Million,
and Operating EBITDA Margins
Over 10%
NEW YORK and PRAGUE, Czech Republic
– December 4,
2009 – KIT
digital, Inc. (NASDAQ: KITD), a leading global provider of on-demand software
solutions for managing and monetizing Internet Protocol (IP) based video assets,
reports on 2009 expectations and recent operational milestones, and sets out
strategic objectives for 2010.
“Over the
last two months since the acquisitions of Nunet and The FeedRoom, we have
established a strong foundation for continued expansion across both our regional
P&Ls and our industry verticals,” said Gavin Campion, president of KIT
digital. “Our processes and corporate systems are now integrated and prepared to
meet the opportunities ahead. We see tremendous potential for ‘3-screen’ IP
video platform deployments with mobile operators as well as MSOs globally, and
see particularly strong growth in the BRIC countries. Expansion into these
markets and the launch of our next-generation ‘VX2’ platform will be areas of
major strategic focus in 2010.”
Integration
of Nunet and The FeedRoom
As part
of the integration of Nunet and The FeedRoom, KIT digital will officially retire
both brands next week, with all marketing activity now fully integrated under
the KIT digital name. The complementary features of the acquired IP video
software platforms are being systematically added to KIT VX, the company’s
end-to-end software platform that enables enterprise clients to acquire, manage
and distribute video assets. These enhanced features will be progressively
rolled out to new and existing clients during the first and second quarter of
2010 as a significantly enhanced platform known as ‘VX2‘ is introduced, with a
superset of functionality. The company intends to fully deploy VX2 across its
global client set by the third quarter of 2010.
The
integration of Nunet and The FeedRoom was conducted in support of KIT digital’s
head office and global operations hub in Prague, Czech Republic. Human
resources, payroll, finance, internal communications, IT support, technical
operations and R&D functions are now consolidated and reporting into the
relevant executive in Prague. The company’s new and existing regional sales
offices have also been better integrated, including the company’s two New York
City locations, which have been consolidated into The FeedRoom’s original
location at 205 Hudson Street under the leadership of Dan Rosen, head of the
Americas group for KIT digital. Nunet’s original location in Cologne, Germany
will continue to be an important regional sales office and technical development
center under the leadership of Markus Schloesser, vice president of business
development and head of KIT digital Germany. Former Nunet CEO Arnd Froehlich has
joined the executive team of KIT digital as global head of mobile services and
innovation, and will divide his time between the company's Cologne and Prague
offices.
In
November, to support the integration of the global sales force, more than 55
members of the combined company’s sales and marketing teams completed a 4-day
summit in Cairo, Egypt. The event focused on growing KIT digital’s international
reach with the marketing and technological capabilities contributed by Nunet and
FeedRoom. The agenda included global coordination around sales outreach relating
to 10 prospective enterprise platform deals with mobile operators in the U.S.,
Spain, Australia, Brazil and China. Since the acquisitions, global new business
leads have increased by 25%.
“Though
there have been tough decisions along the way,” continued Campion, “we are very
pleased with the integration of Nunet and The FeedRoom assets thus far. We have
materially enhanced our management and technical development teams, and are now
poised to take advantage of the cross-selling and up-selling opportunities that
emerge from these types of combinations. After a strong third quarter with a
record 19 new client wins on a stand-alone basis (plus another seven by Nunet
and FeedRoom on a pro forma basis) we see strong new client and cash flow growth
in Q4 as we continue to realize synergies in our global operations as a result
of the acquisitions—a process we expect to continue through the first quarter of
2010.”
Corporate
Outlook for Q4 2009 and Strategic Priorities for 2010
“This was
a great year for us on a number of fronts,” commented Kaleil Isaza Tuzman,
chairman and chief executive officer of KIT digital. “We achieved the
operational results targets we set out for ourselves for the second consecutive
year (despite the ‘Great Recession’), crossed over to free cash flow-positive
status, lifted our monthly ARPU materially, listed on the NASDAQ Global Market,
and substantially built out our technical capabilities. But we are not yet
satisfied and are even more excited about 2010.”
KIT
digital expects 2009 revenue of approximately $46 million with an operating
EBITDA margin in excess of 10% for 2009. On a stand-alone basis (prior to any
financial impact from its Q4 acquisitions of Nunet and The FeedRoom), management
believes the company will have clearly achieved original 2009 guidance of more
than $40 million in revenue and rising operating cash-flow margins (which the
company defines as “operating EBITDA”) averaging at least 10% for the year.
Management expects to achieve operating EBITDA margins in excess of 15% in Q4
2009. (See discussion of operating EBITDA, a non-GAAP term, in “About Operating
EBITDA,” below.)
“Since we
have been experiencing virtually no client attrition and more than 75% of our
revenue is derived from long-term contracts, we have fairly high visibility into
our forward performance. As such, in January, we plan to share our targets
regarding revenue and expanded operating cash flow margins for 2010, as we have
for the past two years since new management joined the company,” said Isaza
Tuzman.
“Given
our former executive presence in Dubai (we completed our headquarters move to
Prague in August), we have received a number of inquiries about the Dubai World
debt default,” said Isaza Tuzman. “Our operations and sales have been completely
unaffected by the financial events recently occurring in the UAE. Less than 5%
of our staff is based in the MENA (Middle East and North Africa) region, mostly
in Cairo, and less than 0.3% of our revenues are generated by our UAE-based
clients. That said, we are bullish on future business prospects in MENA, and
will continue to staff up in the region over time.”
The KIT
digital board and senior management team have defined four strategic priorities
for 2010. These are: i) complete the technical and sales integration of Nunet
and The FeedRoom; ii) roll out enhanced VX2 platform functionality across client
deployments globally; iii) expand in the BRIC markets (Brazil, Russia, India,
and China) via onshore office openings, commercial partnerships, joint ventures
or selected acquisitions; and iv) improve corporate marketing and visibility
globally as the true leader in the enterprise-class IP video asset management
industry.
About
KIT digital
KIT
digital (NASDAQ: KITD) is a leading, global provider of on-demand, Internet
Protocol (IP) based video asset management solutions. KIT VX, the company’s
end-to-end software platform, enables enterprise clients to acquire, manage and
distribute video assets across the three screens of today’s world: the personal
computer, mobile device, and IPTV-enabled television set. The application of VX
ranges from commercial video distribution to internal corporate deployments,
including corporate communications, human resources, training, security and
surveillance. KIT digital’s client base includes more than 600 enterprise
customers across 30+ countries, including The Associated Press, Best Buy,
Bristol-Myers Squibb, Disney-ABC, General Motors, Google, IMG Worldwide, Intel,
McDonald's, News Corp, Telefonica, the U.S. Department of Defense, Verizon and
Vodafone. KIT digital maintains principal offices in Prague, Cologne, Dubai,
London, Melbourne (Australia), New York, Stockholm and Toronto. For additional
information, please visit www.kitd.com.
About
Operating EBITDA
Management
uses operating EBITDA for forecasting and budgeting, and as a proxy for
operating cash flow. Operating EBITDA is not a financial measure calculated in
accordance with U.S. generally accepted accounting principles (GAAP) and should
not be considered in isolation, or as an alternative to net income, operating
income or other financial measures reported under GAAP. The company defines
operating EBITDA as earnings before: non-cash derivative income/loss, non-cash
stock based compensation; acquisition-related restructuring costs and other
non-recurring charges; impairment of property and equipment; merger and
acquisition expenses; and depreciation and amortization. Other companies
(including the company’s competitors) may define operating EBITDA differently.
The company presents operating EBITDA because it believes it 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 a similar industry. Management also uses this information internally for
forecasting, budgeting and performance-based executive compensation. It may not
be indicative of the historical operating results of KIT digital nor is it
intended to be predictive of potential future results. Please see the “GAAP to
non-GAAP Reconciliation” table in the company’s press release, “KIT digital
Reports Record Operating Results and New Client Contracts in Third Quarter
2009,” issued on November 19, 2009, for further information about this non-GAAP
measure and reconciliation of operating EBITDA to net loss for the periods
indicated in the release.
KIT
digital Forward-Looking Statement
This
press release contains certain "forward-looking statements" related to the
businesses of KIT digital, Inc., which can be identified by the use of
forward-looking terminology such as "believes," "expects" or similar
expressions. Such forward-looking statements involve known and unknown risks and
uncertainties, including uncertainties relating to product development and
commercialization, the ability to obtain or maintain patent and other
proprietary intellectual property protection, market acceptance, future capital
requirements, regulatory actions or delays, competition in general and other
factors that may cause actual results to be materially different from those
described herein as anticipated, believed, estimated or expected. Certain of
these risks and uncertainties are or will be described in greater detail in our
public filings with the U.S. Securities and Exchange Commission. KIT digital is
not under obligation to (and expressly disclaims any such obligation to) update
or alter its forward-looking statements whether as a result of new information,
future events or otherwise.
KIT
digital Media Contact:
Daniel
Goodfellow
Vice
President, Marketing & Communications
Tel.
+1-646-873-3086
daniel@kitd.com
KIT digital Investor Relations
Contact:
Matt
Glover
Liolios
Group, Inc.
Tel.
+1-949-574-3860
info@liolios.com