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8-K - FORM 8-K - RetailMeNot, Inc.d235738d8k.htm

Exhibit 99.1

RetailMeNot, Inc. Announces Second Quarter 2016 Financial Results

 

    Consolidated net revenues of $64.2 million

 

    GAAP net loss of $0.5 million; non-GAAP net income of $4.9 million

 

    GAAP EPS of $(0.01); non-GAAP EPS of $0.10

 

    Adjusted EBITDA of $9.5 million; adjusted EBITDA margins of 15%

AUSTIN, Texas, August 2, 2016 – RetailMeNot, Inc. (NASDAQ:SALE), a leading digital savings destination connecting consumers with retailers, restaurants and brands, both online and in-store, today announced its financial results for the second quarter ended June 30, 2016. In addition to this release, the company has also provided a prepared remarks document, both of which can be accessed on the Investor Relations section of our website.

“We are pleased with our overall second quarter performance. Our core segment grew year over year and we continue to see strong growth in our in-store and ads businesses,” said Cotter Cunningham, CEO & Founder, RetailMeNot, Inc. “We believe we have momentum and a set of initiatives for the second half of 2016 which should deliver audience growth through new content, an enhanced user experience and overall broader, savings-oriented messaging.”

Second Quarter Financial Results Highlights and Key Operating Metrics

(All comparisons are made to the second quarter of 2015 unless otherwise noted. Amounts may not compute due to rounding.)

With the acquisition of GiftCard Zen completed in the second quarter of 2016, RetailMeNot, Inc. is providing financial and operating results for subsequent periods in two separate operating segments, with one representing the “core” RetailMeNot business and the other representing the “gift card” business.

For our core segment, in addition to total net revenues, we are providing segment operating income, or SOI, results and guidance, as we believe this to be an important financial metric to evaluate the operating performance of this business. SOI is defined as operating income of the core business segment plus depreciation, amortization of intangible assets, stock-based compensation expense, third-party acquisition-related costs and other operating expenses (including non-cash impairments and compensation arrangements entered into in connection with acquisitions).

For our gift card segment we are providing net revenue and gross profit results and guidance, as we believe these to be important financial metrics to evaluate the operating performance of this business. We define gift card segment net revenues as the gross market value of the gift cards sold, net of returns. Gross profit represents the difference between net revenues less the cost of the gift card sold, including adjustments for shipping and chargebacks.


We are also providing results and guidance combining the results of both segments on a consolidated basis.

 

  Core Segment

 

    Total net revenues of $53.5 million, up 1%.

 

    In-store & advertising net revenues were up 37%, representing 25% of total net revenues.

 

    Mobile online transaction net revenues were up 18%, representing 11% of total net revenues.

 

    Desktop online transaction net revenues declined 11%, representing 65% of total net revenues.

 

    Segment operating income was $9.8 million, representing SOI margins of 18%.

 

    Total website visits were 152.0 million, down 7%.

 

    Mobile visits in the quarter increased 1.5% to 67.8 million, or 45% of total visits.

 

    Desktop visits in the quarter declined 13% to 84.3 million.

 

    Mobile unique visitors grew 2% to 18.8 million.

 

  Gift Card Segment

 

    Net revenues were $10.7 million.

 

    Gross profit was $0.8 million, representing gross profit margins of 8%.

 

  Consolidated Results (Core + Gift Card Segments)

 

    Net revenues grew 21% to $64.2 million.

 

    Net revenues from international markets were $11.5 million, with international net revenues representing 18% and 21% of consolidated and core segment total net revenues, respectively.

 

    GAAP net loss was $0.5 million, compared to GAAP net loss of $1.6 million.

 

    Non-GAAP net income was $4.9 million, compared to non-GAAP net income of $5.0 million.

 

    GAAP EPS was a loss of $(0.01) per share, based on 48.8 million fully-diluted, weighted-average shares outstanding, compared to a loss of $(0.03) per share, based on 53.5 million fully-diluted, weighted-average shares outstanding.

 

    Non-GAAP EPS was $0.10 per share, based on 49.6 million fully-diluted, weighted-average shares outstanding, compared to $0.09 per share, based on 54.7 million fully-diluted, weighted-average shares outstanding.

 

    Adjusted EBITDA was $9.5 million, representing adjusted EBITDA margins of 15%, compared to adjusted EBITDA of $10.6 million, or adjusted EBITDA margins of 20%.

 

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BUSINESS OUTLOOK

(All comparisons are made to the third quarter or full year of 2015, respectively, unless otherwise noted. Amounts may not compute due to rounding.)

Third Quarter 2016 (ending September 30, 2016)

With respect to our core segment, we expect:

 

    Total net revenues to be in the range of $49.5 to $54.5 million, reflecting a decline of 1% at the mid-point.

 

    Segment operating income to be in the range of $6.5 to $10.5 million, representing SOI margins of 16.3% at the midpoint.

With respect to our gift card segment, we expect:

 

    Net revenues to be in the range of $12.0 to $15.0 million.

 

    Gross profit to be in the range of $600 to $750 thousand, or gross profit margins of 5% at the midpoint.

On a consolidated basis (core + gift card segments), we expect:

 

    Net revenues to be in the range of $61.5 to $69.5 million.

 

    Adjusted EBITDA to be in the range of $5.0 to $9.0 million, or adjusted EBITDA margins of 11.2% at the midpoint.

Full Year 2016 (ending December 31, 2016)

With respect to the core segment, we expect:

 

    Total net revenues to be in the range of $232.0 to $245.0 million, reflecting a decline of 4% at the mid-point.

 

    Segment operating income to be in the range of $52.0 to $63.0 million, representing SOI margins of 24% at the midpoint.

With respect to the gift card segment, we expect:

 

    Net revenues to be in the range of $43.0 to $49.0 million.

 

    Gross profit to be in the range of $2.4 to $2.7 million, or gross profit margins of 5.6% at the midpoint.

On a consolidated basis, we expect:

 

    Net revenues to be in the range of $275.0 to $294.0 million.

 

    Adjusted EBITDA to be in the range of $50.0 to $61.0 million, or adjusted EBITDA margins of 19.5% at the midpoint.

 

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The above statements are based on current expectations and actual results may differ materially as explained under the caption “Forward-looking Statements” below. Information about RetailMeNot’s use of non-GAAP financial measures, including adjusted EBITDA, non-GAAP net income (loss) and non-GAAP net income (loss) per share, is provided below under the caption “Use of Non-GAAP Financial Measures.”

Quarterly Conference Call

RetailMeNot will host a webcast to discuss its second quarter financial results and its third quarter and 2016 business outlook today at 7:00 a.m. Central Time (8:00 a.m. Eastern Time).

A live webcast of the conference call can be accessed within the investor relations section of the RetailMeNot website at http://investor.retailmenot.com. This webcast will contain forward-looking statements and other material information regarding the company’s financial and operating results.

Following completion of the call, a replay of the call will be available beginning at 9:30 a.m. Eastern Time on August 2, 2016. To listen to the telephone replay, call (877) 344-7529 within the US, or (412) 317-0088 if calling internationally. Access Code 10088841.

RetailMeNot uses its investor relations website (http://investor.retailmenot.com) as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD. Accordingly, investors should monitor the investor relations website, in addition to following press releases, SEC filings, public conference calls and webcasts.

About RetailMeNot, Inc.

RetailMeNot (http://www.retailmenot.com/corp/) is a leading digital savings destination connecting consumers with retailers, restaurants and brands, both online and in-store. The company enables consumers across the globe to find hundreds of thousands of digital offers to save money while they shop or dine out. During the 12 months ended June 30, 2016, RetailMeNot, Inc. experienced over 688 million visits to its websites. It also averaged 18.8 million mobile unique visitors per month during the three months ended June 30, 2016. RetailMeNot, Inc. estimates that approximately $4.8 billion in retailer sales were attributable to consumer transactions from paid digital offers in its marketplace in 2015, more than $600 million of which were attributable to its in-store solution. The RetailMeNot, Inc. portfolio of websites and mobile applications includes RetailMeNot.com in the United States; RetailMeNot.ca in Canada; VoucherCodes.co.uk in the United Kingdom; retailmenot.de in Germany; Actiepagina.nl in the Netherlands; ma-reduc.com and Poulpeo.com in France; RetailMeNot.es in Spain, RetailMeNot.it in Italy, RetailMeNot.pl in Poland and GiftCardZen.com and Deals2Buy.com in North America. RetailMeNot, Inc. is listed on the NASDAQ stock exchange under the ticker symbol “SALE.” Investors interested in learning more about the company can visit http://investor.retailmenot.com.

 

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Key Operating Metrics

Visits. RetailMeNot defines a visit as a group of interactions that take place on one of RetailMeNot Inc.’s websites from computers, smartphones, tablets or other mobile devices within a given time frame as measured by Google Analytics, a product that provides digital marketing intelligence. A single visit can contain multiple page views, events, social interactions and e-commerce transactions. A single visitor can open multiple visits. Visits can occur on the same day, or over several days, weeks or months. As soon as one visit ends, there is then an opportunity to start a new visit. A visit ends either through the passage of time or a campaign change, with a campaign generally meaning arrival via search engine, referring site or campaign-tagged information. A visit ends through passage of time either after 30 minutes of inactivity or at midnight Pacific Time. A visit ends through a campaign change if a visitor arrives via one campaign or source, leaves the site, and then returns via another campaign or source. Visits for the period do not include interactions through our mobile applications or interactions with giftcardzen.com.

Mobile Unique Visitors. This amount represents the average number of mobile unique visitors per month for the three month period ended June 30, 2016. RetailMeNot counts each of the following as a mobile unique visitor: (i) the first time a specific mobile device accesses one of our mobile applications during a calendar month, and (ii) the first time a specific mobile device accesses one of our mobile websites using a specific web browser during a calendar month. If a mobile device accesses more than one of our mobile websites or mobile applications in a single calendar month, the first access to each such mobile website or mobile application is counted as a mobile unique visitor as they are tracked separately for each mobile domain. We measure mobile unique visitors with a combination of internal data sources and Google Analytics data.

Use of Non-GAAP Financial Measures

To provide investors with additional information regarding our financial results, this document includes references to adjusted EBITDA, non-GAAP net income (loss) and non-GAAP net income (loss) per share, each of which is a non-GAAP financial measure. For a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures, see the tables provided below in this release.

RetailMeNot has not reconciled adjusted EBITDA guidance to net income guidance because we do not provide guidance for third party acquisition-related costs or other operating expense, net interest income/expense, other non-operating income and expenses and income taxes, net of any foreign exchange income or expense. As these items cannot be reasonably predicted at this time, we are unable to provide such guidance. Accordingly a reconciliation to net income guidance is not available without unreasonable effort.

RetailMeNot defines adjusted EBITDA as net income (loss) plus depreciation, amortization of intangible assets, stock-based compensation expense, third-party acquisition-related costs, other operating expenses (including non-cash impairments and compensation arrangements entered into in connection with acquisitions), net interest expense, other non-operating income or expense (including net foreign exchange gains and losses) and income taxes.

 

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RetailMeNot discloses adjusted EBITDA on a consolidated basis because it is a key measure used by RetailMeNot and its board of directors to understand and evaluate RetailMeNot’s financial and operating performance, establish budgets and operational goals and as an element in determining compensation of certain of its executives. RetailMeNot believes adjusted EBITDA facilitates period-to-period comparisons of operations that could otherwise be masked by the effect of the expenses that RetailMeNot excludes in this non-GAAP financial measure and facilitates comparisons with other peer companies, many of which use similar non-GAAP financial measures to supplement their GAAP results.

RetailMeNot’s presentation of non-GAAP net income and non-GAAP net income per share excludes the impact of amortization of purchased intangible assets, stock-based compensation expense, third party acquisition-related costs, other non-cash operating expenses (including, non-cash impairments and compensation arrangements entered into in connection with acquisitions) and income taxes, net of the tax effect of the adjustments above. These measures are not key metrics used by RetailMeNot or its board of directors to measure financial or operating performance or otherwise manage the business. However, RetailMeNot provides non-GAAP net income and non-GAAP net income per share as supplemental information for investors, as they facilitate period-to-period comparisons of operations that could otherwise be masked by the effect of the expenses that RetailMeNot excludes in these non-GAAP financial measures and facilitates comparisons with other peer companies, many of which use similar non-GAAP financial measures to supplement their GAAP results.

Adjusted EBITDA, non-GAAP net income (loss) and non-GAAP net income (loss) per share have limitations as analytical tools, and you should not consider these measures in isolation or as substitutes for analysis of RetailMeNot’s results as reported under GAAP. Because of these limitations, you should consider adjusted EBITDA, non-GAAP net income (loss) and non-GAAP net income (loss) per share alongside other financial performance measures, including various cash flow metrics, operating income (loss), net income (loss) and RetailMeNot’s other GAAP results.

Forward-looking Statements

This release contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, included herein regarding RetailMeNot’s strategy, future operations, future financial position, future net revenues, projected costs, prospects, plans and objectives of management are forward-looking statements. The words “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will,” “would” and similar expressions (or the negative of these terms) are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements include, among other things, statements about management’s estimates regarding future net revenues, adjusted EBITDA, segment operating income, gross profit and other financial performance, visits, mobile unique visitors, e-mail subscribers, other consumer engagement metrics, new product and content offerings and other statements about management’s beliefs, intentions or goals. RetailMeNot may not actually achieve the expectations disclosed in the forward-looking statements, and you should not place undue reliance on RetailMeNot’s forward-

 

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looking statements. These forward-looking statements involve risks and uncertainties that could cause actual results or events to differ materially from the expectations disclosed in the forward-looking statements, including, but not limited to, (1) RetailMeNot’s ability to attract visitors to its websites from search engines, to attract and retain users and to increase users’ engagement with its solutions; (2) RetailMeNot’s ability to monetize digital offers through its mobile solutions; (3) RetailMeNot’s ability to attract and retain paid retailers and maintain its relationships with performance marketing networks and suppliers of gift cards; (4) RetailMeNot’s ability to manage the growth in scope and complexity of its business, including accurately planning and forecasting its financial results; (5) RetailMeNot’s ability to obtain and maintain high quality digital offer content and maintain the positive perception of its brands; (6) the competitive environment for RetailMeNot’s business; (7) changes in consumer sentiment regarding RetailMeNot’s use of cookies; (8) RetailMeNot’s need to manage regulatory, tax and litigation risks, including regulations related to gift cards and imposing sales tax on e-commerce or m-commerce; (9) RetailMeNot’s ability to use and protect consumer data and to protect its intellectual property; (10) RetailMeNot’s ability to manage international business uncertainties; (11) the impact and integration of current and future acquisitions; and (12) other risks and potential factors that could affect RetailMeNot’s business and financial results identified in RetailMeNot’s filings with the Securities and Exchange Commission (the “SEC”), including its quarterly report on Form 10-Q filed with the SEC on May 3, 2016. Additional information will also be set forth in RetailMeNot’s future quarterly reports on Form 10-Q, annual reports on Form 10-K and other filings that RetailMeNot makes with the SEC. RetailMeNot does not intend or undertake any duty to release publicly any updates or revisions to any forward-looking statements contained herein.

Investor Contacts

Michael Magaro

RetailMeNot, Inc.

mmagaro@rmn.com

(512) 777-2899

Anne Bawden

RetailMeNot, Inc.

abawden@rmn.com

(415) 200-8654

Media Contact

Michelle Skupin

RetailMeNot, Inc.

mskupin@rmn.com

(808) 224-3215

 

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RetailMeNot, Inc.

Condensed Consolidated Statements of Operations

(Unaudited, in thousands, except per share data)

 

     Three Months Ended June 30,     Six Months Ended June 30,  
             2016                     2015                     2016                     2015          

Net revenues

   $ 64,250      $ 53,180      $ 118,899      $ 113,564   

Cost of net revenues (1)

     14,905        5,176        20,105        10,522   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     49,345        48,004        98,794        103,042   

Operating expenses:

        

Product development (1)

     13,000        13,072        25,611        26,392   

Sales and marketing (1)

     24,165        22,636        47,490        44,277   

General and administrative (1)

     10,833        9,712        21,059        19,282   

Amortization of purchased intangible assets

     2,519        2,739        4,473        5,365   

Other operating expenses

     2,462        763        3,294        1,528   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     52,979        48,922        101,927        96,844   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from operations

     (3,634     (918     (3,133     6,198   

Other income (expense):

        

Interest expense, net

     (571     (492     (1,171     (913

Other income (expense), net

     442        (154     564        (397
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income taxes

     (3,763     (1,564     (3,740     4,888   

Benefit from (provision for) income taxes

     3,292        (27     3,233        (2,420
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ (471   $ (1,591   $ (507   $ 2,468   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) per share:

        

Basic

   $ (0.01   $ (0.03   $ (0.01   $ 0.05   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ (0.01   $ (0.03   $ (0.01   $ 0.04   
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average number of common shares used in computing net income (loss) per share:

        

Basic

     48,828        53,482        49,008        53,754   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     48,828        53,482        49,008        54,891   
  

 

 

   

 

 

   

 

 

   

 

 

 

RetailMeNot, Inc.

Condensed Consolidated Statements of Operations (continued)

(Unaudited, in thousands)

 

     Three Months Ended June 30,      Six Months Ended June 30,  
             2016                      2015                      2016                      2015          

(1) Includes stock-based compensation as follows:

           

Cost of net revenues

   $ 445       $ 530       $ 940       $ 1,119   

Product development

     1,933         2,074         4,029         4,333   

Sales and marketing

     1,100         1,525         2,577         2,947   

General and administrative

     2,575         2,415         5,089         4,958   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 6,053       $ 6,544       $ 12,635       $ 13,357   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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RetailMeNot, Inc.

Reconciliation of Adjusted EBITDA

(Unaudited, in thousands)

 

     Three Months Ended June 30,     Six Months Ended June 30,  
             2016                     2015                     2016                     2015          

Net income (loss)

   $ (471   $ (1,591   $ (507   $ 2,468   

Depreciation and amortization

     4,557        4,253        8,507        8,179   

Stock-based compensation expense

     6,053        6,544        12,635        13,357   

Third party acquisition-related costs

     64        —          488        55   

Other operating expenses

     2,462        763        3,294        1,528   

Interest expense, net

     571        492        1,171        913   

Other (income) expense, net

     (442     154        (564     397   

(Benefit from) provision for income taxes

     (3,292     27        (3,233     2,420   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 9,502      $ 10,642      $ 21,791      $ 29,317   
  

 

 

   

 

 

   

 

 

   

 

 

 

RetailMeNot, Inc.

Reconciliation of Non-GAAP Net Income and Non-GAAP Diluted EPS

(Unaudited, in thousands, except per share data and percentage rates)

 

     Three Months Ended June 30,     Six Months Ended June 30,  
             2016                     2015                     2016                     2015          

GAAP Income (loss) before income taxes

   $ (3,763   $ (1,564     (3,740     4,888   

GAAP Benefit from (provision for) income taxes

     3,292        (27     3,233        (2,420
  

 

 

   

 

 

   

 

 

   

 

 

 

GAAP Net income (loss)

   $ (471   $ (1,591   $ (507   $ 2,468   

Non-GAAP adjustments to net income (loss):

        

Amortization of purchased intangibles

     2,519        2,739        4,473        5,365   

Stock-based compensation expense

     6,053        6,544        12,635        13,357   

Third party acquisition-related costs

     64        —          488        55   

Other operating expenses

     2,462        763        3,294        1,528   

Less: Tax effect of adjustments above

     (5,767     (3,467     (9,235     (7,011
  

 

 

   

 

 

   

 

 

   

 

 

 

Total non-GAAP net income

   $ 4,860      $ 4,988      $ 11,148      $ 15,762   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted net income (loss) per share:

        

GAAP

   $ (0.01   $ (0.03   $ (0.01   $ 0.04   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP

   $ 0.10      $ 0.09      $ 0.22      $ 0.29   
  

 

 

   

 

 

   

 

 

   

 

 

 

Shares used in non-GAAP diluted EPS calculation:

        

Weighted-average shares outstanding used in calculating GAAP diluted EPS

     48,828        53,482        49,008        54,891   

Additional dilutive securities for non-GAAP diluted EPS

     801        1,219        901        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted-average shares outstanding used in calculating non-GAAP diluted EPS

     49,629        54,701        49,909        54,891   
  

 

 

   

 

 

   

 

 

   

 

 

 

Reconciliation of non-GAAP effective tax rate:

        

GAAP Effective tax rate

     87.5     -1.7     86.4     49.5

Tax effect of non-GAAP adjustments to net income

     -53.8     42.9     -51.4     -12.1
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP effective tax rate

     33.7     41.2     35.0     37.4
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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RetailMeNot, Inc.

Segment Results

(Unaudited, in thousands)

 

     Three Months Ended June 30, 2016  
     Core      Gift Cards     Unallocated     Total  

Net revenues

   $ 53,509       $ 10,741      $  —        $ 64,250   

Cost of net revenues

     4,387         9,927        591        14,905   
  

 

 

    

 

 

   

 

 

   

 

 

 

Gross profit

     49,122         814        (591     49,345   

Operating expenses:

         

Product development

     9,546         254        3,200        13,000   

Sales and marketing

     22,386         355        1,424        24,165   

General and administrative

     7,379         514        2,940        10,833   

Amortization of purchased intangible assets

     —          —         2,519        2,519   

Other operating expenses

     —          —         2,462        2,462   
  

 

 

    

 

 

   

 

 

   

 

 

 

Total operating expenses

     39,311         1,123        12,545        52,979   
  

 

 

    

 

 

   

 

 

   

 

 

 

Income (loss) from operations

   $ 9,811       $ (309   $ (13,136   $ (3,634
  

 

 

    

 

 

   

 

 

   

 

 

 

 

     Three Months Ended June 30, 2015  
     Core      Gift Cards      Unallocated     Total  

Net revenues

   $ 53,180       $  —         $  —        $ 53,180   

Cost of net revenues

     4,523         —          653        5,176   
  

 

 

    

 

 

    

 

 

   

 

 

 

Gross profit

     48,657         —          (653     48,004   

Operating expenses:

          

Product development

     10,206         —          2,866        13,072   

Sales and marketing

     20,780         —          1,856        22,636   

General and administrative

     7,029         —          2,683        9,712   

Amortization of purchased intangible assets

     —          —          2,739        2,739   

Other operating expenses

     —          —          763        763   
  

 

 

    

 

 

    

 

 

   

 

 

 

Total operating expenses

     38,015         —          10,907        48,922   
  

 

 

    

 

 

    

 

 

   

 

 

 

Income (loss) from operations

   $ 10,642       $ —        $ (11,560   $ (918
  

 

 

    

 

 

    

 

 

   

 

 

 

 

     Six Months Ended June 30, 2016  
     Core      Gift Cards     Unallocated     Total  

Net revenues

   $ 108,158       $ 10,741      $  —        $ 118,899   

Cost of net revenues

     8,955         9,927        1,223        20,105   
  

 

 

    

 

 

   

 

 

   

 

 

 

Gross profit

     99,203         814        (1,223     98,794   

Operating expenses:

         

Product development

     18,847         254        6,510        25,611   

Sales and marketing

     43,893         355        3,242        47,490   

General and administrative

     14,363         514        6,182        21,059   

Amortization of purchased intangible assets

     —          —         4,473        4,473   

Other operating expenses

     —          —         3,294        3,294   
  

 

 

    

 

 

   

 

 

   

 

 

 

Total operating expenses

     77,103         1,123        23,701        101,927   
  

 

 

    

 

 

   

 

 

   

 

 

 

Income (loss) from operations

   $ 22,100       $ (309   $ (24,924   $ (3,133
  

 

 

    

 

 

   

 

 

   

 

 

 

 

     Six Months Ended June 30, 2015  
     Core      Gift Cards      Unallocated     Total  

Net revenues

   $ 113,564       $  —         $  —        $ 113,564   

Cost of net revenues

     9,151         —          1,371        10,522   
  

 

 

    

 

 

    

 

 

   

 

 

 

Gross profit

     104,413         —          (1,371     103,042   

Operating expenses:

          

Product development

     20,604         —          5,788        26,392   

Sales and marketing

     40,692         —          3,585        44,277   

General and administrative

     13,800         —          5,482        19,282   

Amortization of purchased intangible assets

     —          —          5,365        5,365   

Other operating expenses

     —          —          1,528        1,528   
  

 

 

    

 

 

    

 

 

   

 

 

 

Total operating expenses

     75,096         —          21,748        96,844   
  

 

 

    

 

 

    

 

 

   

 

 

 

Income (loss) from operations

   $ 29,317       $ —        $ (23,119   $ 6,198   
  

 

 

    

 

 

    

 

 

   

 

 

 

 

10


RetailMeNot, Inc.

Reconciliation of Unallocated Expenses

(Unaudited, in thousands)

 

     Three Months Ended June 30,      Six Months Ended June 30,  
             2016                      2015                      2016                      2015          

Depreciation expense

   $ 2,038       $ 1,514       $ 4,034       $ 2,814   

Stock-based compensation expense

     6,053         6,544         12,635         13,357   

Third party acquisition-related costs

     64         —           488         55   

Amortization of purchased intangible assets

     2,519         2,739         4,473         5,365   

Other operating expenses

     2,462         763         3,294         1,528   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Unallocated expenses

   $ 13,136       $ 11,560       $ 24,924       $ 23,119   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

11


RetailMeNot, Inc.

Condensed Consolidated Balance Sheets

(Unaudited, in thousands)

 

     As of June 30,
2016
    As of December 31,
2015
 

Assets

    

Current assets:

    

Cash and cash equivalents

   $ 244,409      $ 259,769   

Accounts receivable, net

     42,247        67,504   

Inventory

     922        —     

Prepaids and other current assets, net

     13,048        9,959   
  

 

 

   

 

 

 

Total current assets

     300,626        337,232   

Property and equipment, net

     21,605        21,382   

Intangible assets, net

     61,076        61,245   

Goodwill

     192,371        174,725   

Other assets, net

     6,758        8,040   
  

 

 

   

 

 

 

Total assets

   $ 582,436      $ 602,624   
  

 

 

   

 

 

 

Liabilities and Stockholders’ Equity

    

Current liabilities:

    

Accounts payable

   $ 7,687      $ 8,713   

Accrued compensation and benefits

     12,008        10,136   

Accrued expenses and other current liabilities

     8,008        7,155   

Income taxes payable

     2,225        5,109   

Current maturities of long term debt

     10,000        10,000   
  

 

 

   

 

 

 

Total current liabilities

     39,928        41,113   

Deferred tax liability – noncurrent

     2,825        1,498   

Long term debt

     55,876        60,872   

Other noncurrent liabilities

     8,455        7,752   
  

 

 

   

 

 

 

Total liabilities

     107,084        111,235   

Stockholders’ equity:

    

Common stock

     49        51   

Additional paid-in capital

     480,380        495,151   

Accumulated other comprehensive loss

     (5,640     (4,883

Retained earnings

     563        1,070   
  

 

 

   

 

 

 

Total stockholders’ equity

     475,352        491,389   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 582,436      $ 602,624   
  

 

 

   

 

 

 

 

12


RetailMeNot, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited, in thousands)

 

     Three Months Ended June 30,     Six Months Ended June 30,  
             2016                     2015                     2016                     2015          

Cash flows from operating activities:

        

Net income (loss)

   $ (471   $ (1,591   $ (507   $ 2,468   

Adjustments to reconcile net income (loss) to cash provided by operating activities:

        

Depreciation and amortization expense

     4,557        4,253        8,507        8,179   

Stock based compensation expense

     6,053        6,544        12,635        13,357   

Excess income tax benefit from stock-based compensation

     (15     (552     (33     (1,307

Deferred income tax expense (benefit)

     (227     (1,416     2,002        282   

Non-cash interest expense

     106        101        208        203   

Impairment of assets

     —          —          834        —     

Amortization of deferred compensation

     2,458        768        2,458        1,536   

Other non-cash (gains) losses, net

     (485     114        (2,009     1,152   

Provision for doubtful accounts receivable

     108        (35     257        (287

Changes in operating assets and liabilities:

        

Accounts receivable, net

     612        7,819        24,164        30,961   

Inventory

     (55     —          (55     —     

Prepaid expenses and other current assets, net

     (3,401     (887     (5,517     (1,730

Accounts payable

     1,522        780        (1,402     1,156   

Accrued expenses and other current liabilities

     4,069        (2,077     (1,508     (12,161

Other noncurrent assets and liabilities

     2        198        1,151        832   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by operating activities

     14,833        14,019      $ 41,185      $ 44,641   

Cash flows from investing activities:

        

Payments for acquisition of businesses, net of acquired cash

     (21,279     —          (21,279     —     

Proceeds from sale of property and equipment

     8        5        10        5   

Purchase of other assets

     (2     (4,300     (44     (4,302

Purchase of non-marketable investment

     —          (4,000     —          (4,000

Purchase of property and equipment

     (2,969     (3,991     (5,124     (6,323
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash used in investing activities

     (24,242     (12,286     (26,437     (14,620

Cash flows from financing activities:

        

Proceeds from notes payable, net of issuance costs

     —          —          —          29,950   

Payments on notes payable

     (2,500     (2,500     (5,000     (2,500

Payment of offering costs related to public offerings

     —          —          —          —     

Excess income tax benefit from stock-based compensation and other

     15        552        33        1,307   

Payments of principal on capital lease arrangements

     —          (4     —          (7

Payments for repurchase of common stock

     —          (2,719     (23,770     (27,192

Proceeds from issuance of common stock, net of tax payments related to net share settlement of equity awards

     (139     2,073        (1,190     4,466   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by (used in) financing activities

     (2,624     (2,598     (29,927     6,024   

Effect of foreign currency exchange rate on cash

     (467     367        (181     (710
  

 

 

   

 

 

   

 

 

   

 

 

 

Change in cash and cash equivalents

     (12,500     (498     (15,360     35,335   

Cash and cash equivalents, beginning of period

     256,909        280,315        259,769        244,482   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents, end of period

   $ 244,409      $ 279,817      $ 244,409      $ 279,817   
  

 

 

   

 

 

   

 

 

   

 

 

 

– RMNSALE-F –

 

13