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Exhibit 99.1

 

TREMOR VIDEO REPORTS STRONG FIRST QUARTER 2017 RESULTS;

BUILDING ON MOMENTUM, INCREASES 2017 OUTLOOK

 

Tremor Video beats guidance across all three metrics

First quarter revenue increased 20% from prior year

 

NEW YORK, NY (May 9, 2017) — Tremor Video, Inc. (NYSE:TRMR), a provider of software for video ad effectiveness, today announced financial results for the first quarter ended March 31, 2017 that exceeded expectations across all metrics, including Total Spend, revenue and Adjusted EBITDA.

 

First Quarter 2017 Highlights:

 

·                  Revenue of $41.4 million, up 20% year-over-year

·                  Total Spend(1) of $60.9 million, up 19% year-over-year

·                  Gross profit of $19.4 million, up 19% year-over-year

·                  Adjusted EBITDA(2) of ($2.4) million compared to ($4.2) million in Q1 2016

·                  Raising full year 2017 financial guidance

 


(1)         We define Total Spend as the aggregate gross spend transacted through our platforms.  Total Spend is a non-GAAP financial measure.  Please see the discussion in the section called “Non-GAAP Financial Measures” and the reconciliations included at the end of this press release.

(2)         Adjusted EBITDA is a non-GAAP financial measure.  Please see the discussion in the section called “Non-GAAP Financial Measures” and the reconciliations included at the end of this press release.

 

“We had a very strong quarter, and I am incredibly proud of our team’s ability to execute on our strategy, delivering results that exceeded guidance across all metrics,” commented Interim Chief Executive Officer Paul Caine. “We saw continued momentum in our SSP, significantly expanding the depth and quality of our publisher relationships. Our success this quarter and our positive outlook for the remainder of the year enables us to increase our full year guidance.”

 

First Quarter 2017 Financial Results

 

The table below presents revenue, Total Spend, gross profit, net loss, Adjusted EBITDA and net loss per share for the three month periods ended March 31, 2017 and March 31, 2016.

 

(in millions, except per share amounts), (unaudited)

 

 

 

Three Months Ended

 

 

 

March 31,
2017

 

March 31,
2016

 

%
Change

 

 

 

 

 

 

 

 

 

Revenue

 

$

41.4

 

$

34.6

 

20%

 

Total Spend

 

$

60.9

 

$

51.2

 

19%

 

Gross profit

 

$

19.4

 

$

16.2

 

19%

 

Net loss

 

$

(6.9

)

$

(11.1

)

38%

 

Adjusted EBITDA

 

$

(2.4

)

$

(4.2

)

43%

 

Net loss per share

 

$

(0.14

)

$

(0.21

)

35%

 

 

1



 

First Quarter 2017 Breakdown of Total Spend(1)

(in millions), (unaudited)

 

 

 

Three Months Ended

 

 

 

March 31,
2017

 

March 31,
2016

 

%
Change

 

Programmatic

 

$

29.1

 

$

26.1

 

11%

 

Non-programmatic higher function

 

27.4

 

20.0

 

37%

 

Non-programmatic media network

 

4.4

 

5.1

 

(14)%

 

Total Spend

 

$

60.9

 

$

51.2

 

19%

 

 


(1)         Please see the discussion in the section called “Non-GAAP Financial Measures.”

 

Guidance

 

Based on information available as of May 9, 2017, the Company expects the following:

 

Q2 and Full Year 2017 Outlook

 

 

 

Q2 2017

 

Full Year 2017

Revenue

 

$38.0 – $42.0 million

 

$182.0 – $192.0 million

Total Spend

 

$66.0 – $70.0 million

 

$320.0 – $330.0 million

Adjusted EBITDA

 

($2.0) – $1.0 million

 

$3.0 – $7.0 million

 

Q1 2017 Financial Results Webcast: Tremor Video will host a conference call today at 8:00 a.m. ET to discuss its first quarter financial results. A live webcast of the event will be available on the Tremor Video Investor Relations website at http://investor.tremorvideo.com. A live domestic dial-in is available at (877) 407-9039 or internationally at (201) 689-8470. Until May 16, 2017, a domestic replay will be available at (844) 512-2921 or internationally at (412) 317-6671, using passcode 13659536, and via webcast on the Tremor Video Investor Relations website.

 

###

 

About Tremor Video: Tremor Video (NYSE: TRMR) provides software for video advertising effectiveness. Our buyer and seller platforms enable seamless transactions in a premium video marketplace by offering control and transparency to clients.  We employ patented all-screen technology to make every advertising moment more relevant for consumers, and deliver maximum results for buyers and sellers.

 

“Safe Harbor” Statement: This press release contains forward-looking statements that involve risks, uncertainties, assumptions and other factors that could cause actual results and the timing of certain events to differ materially from those set forth in or implied by such forward-looking statements. All statements other than statements of historical fact are forward-looking statements, including, but not limited to, statements related to Tremor Video’s future financial results, growth potential, or future profitability, including 2017 second quarter and full year financial guidance and statements with respect to future revenue mix or the development or adoption of the company’s solutions. Important factors that could cause actual results or the timing of events to differ materially from those set forth in or implied by any forward-looking statements include, without limitation, risks and uncertainties associated with: the company’s continuing development of its business model; unfavorable conditions in the global economy or reductions in digital advertising spend; the company’s ability to effectively innovate and adapt to rapidly changing technology and client needs; increased competition as well as innovations by new and

 

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existing competitors; expansion of the online video advertising market; the company’s ability to attract new advertisers and increase spend from existing advertisers; the company’s ability to attract advertising spend from TV media buyers; risks of entering new markets in which we have limited or no experience and difficulty adapting our solutions for new markets; adoption of brand-centric metrics, advanced ad formats and performance-based pricing models by advertisers; the company’s ability to effectively deliver video ad campaigns with demo guarantees; the rate of decline of the company’s non-programmatic media network; adoption of the company’s programmatic solutions by advertisers and publishers; adoption of the company’s All-Screen product and other higher-function buying products by advertisers; the company’s ability to acquire an adequate supply of premium video advertising inventory from publishers on terms that are favorable to it; the company’s ability to detect fraudulent or malicious activity and ensure a high level of brand safety for its clients; identifying, attracting and retaining qualified personnel, including a successor CEO; defects, errors or interruptions in the company’s solutions; the company’s ability to collect and use data to deliver video ads; the impact of tools that block the display of video ads; the effect of regulatory developments and industry standards regarding internet privacy and other matters; maintaining, protecting and enhancing the company’s intellectual property; costs associated with defending intellectual property infringement, securities litigation and other claims; future opportunities and plans, including the uncertainty of expected future financial performance and results; as well as other risks and uncertainties detailed from time-to-time under the caption “Risk Factors” and elsewhere in Tremor Video’s filings with the U.S. Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2016, filed with the U.S. Securities and Exchange Commission on March 10, 2017 and future filings and reports by the company, including its Quarterly Report on Form 10-Q for the quarter ended March 31, 2017.

 

Forward-looking statements are based on current expectations and beliefs and are not guarantees of future performance or events. Investors are cautioned not to place undue reliance on any forward-looking statements. Furthermore, forward-looking statements speak only as of the date on which they are made, and, except as required by law, Tremor Video disclaims any obligation to update these forward-looking statements to reflect future events or circumstances.

 

Non-GAAP Financial Measures: To supplement its consolidated financial statements, which are prepared and presented in accordance with U.S. generally accepted accounting principles (“GAAP”), Tremor Video reports Total Spend and Adjusted EBITDA, which are non-GAAP financial measures. We define Total Spend as the aggregate gross spend transacted through our platforms. Total Spend does not represent revenue earned by us. Within Total Spend, we closely monitor the percentage contributions among the following operational metrics: programmatic; non-programmatic higher function; and non-programmatic media. Programmatic includes all spend attributable to the Tremor Video SSP, Tremor Video DSP and agency trading desks. We define non-programmatic higher-function as non-programmatic spend running through our buyer platform that utilizes our higher-function products, including our All-Screen optimization solution, our advanced data targeting solutions, and our proprietary outcome-based pricing models. We define non-programmatic media as non-programmatic spend running through our buyer platform that is purchased without any of our higher-function products. We track these operational metrics in order to better understand how our clients are transacting on our platforms, which informs decisions as to the allocation of resources and capital. We define Adjusted EBITDA as net loss plus (minus): interest expense and other income (expense), net, provision for income taxes, depreciation and amortization expense, non-cash stock-based compensation expense, non-cash stock-based long-term incentive compensation, executive severance and retention costs, acquisition related costs, litigation costs associated with class action securities litigation, mark-to-market expense, impairment charges, and other adjustments. We use these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. We believe that these measures provide useful information about our operating results, enhance the overall understanding of our past financial performance and future prospects, and allow for greater transparency with respect to key metrics used by

 

3



 

management in its financial and operational decision making. Non-GAAP financial measures should be considered in addition to results and guidance prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. The non-GAAP financial measures included in this press release have been reconciled to the nearest GAAP measure in the table following the financial statements attached to this press release. With respect to our expectations under “Guidance” above, reconciliation of Total Spend and Adjusted EBITDA guidance to the closest corresponding GAAP measure is not available without unreasonable efforts on a forward-looking basis due to the high variability, complexity and low visibility with respect to the costs and charges excluded from these non-GAAP measures, in particular, the measures and effects of stock-based compensation expense specific to equity compensation awards that are directly impacted by unpredictable fluctuations in our stock price. We expect the variability of these costs and charges to have a significant, and potentially unpredictable, impact on our future GAAP financial results.

 

Investor Relations Contact:

Andrew Posen

212-792-2315

IR@TremorVideo.com

 

Media Contact:

Ivy Chen

MWWPR

415-580-6133

ichen@mww.com

 

4



 

Exhibit A

 

Tremor Video, Inc.

Consolidated Balance Sheets

(in thousands)

 

 

 

March 31,

 

December 31,

 

 

 

2017

 

2016

 

 

 

(unaudited)

 

 

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

28,032

 

$

43,160

 

Accounts receivable, net

 

67,665

 

79,027

 

Prepaid expenses and other current assets

 

3,114

 

2,405

 

Total current assets

 

98,811

 

124,592

 

Long-term assets:

 

 

 

 

 

Restricted cash

 

 

770

 

Property and equipment, net

 

9,209

 

9,656

 

Intangible assets, net

 

5,933

 

6,922

 

Goodwill

 

10,871

 

10,758

 

Other assets

 

1,596

 

1,527

 

Total long-term assets

 

27,609

 

29,633

 

Total assets

 

$

126,420

 

$

154,225

 

 

 

 

 

 

 

Liabilities and stockholders’ equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable and accrued expenses

 

$

44,653

 

$

64,691

 

Deferred rent and security deposits payable

 

880

 

704

 

Contingent consideration on acquisition, short-term

 

3,517

 

2,483

 

Deferred revenue

 

27

 

5

 

Capital leases, current

 

352

 

362

 

Other current liabilities

 

100

 

179

 

Total current liabilities

 

49,529

 

68,424

 

Long-term liabilities:

 

 

 

 

 

Deferred rent, long-term

 

5,778

 

6,072

 

Deferred tax liabilities

 

446

 

447

 

Capital leases, long-term

 

668

 

760

 

Total liabilities

 

56,421

 

75,703

 

Stockholders’ equity:

 

 

 

 

 

Common stock

 

5

 

5

 

Treasury stock

 

(8,443

)

(6,037

)

Additional paid-in capital

 

284,237

 

283,486

 

Accumulated other comprehensive loss

 

(245

)

(331

)

Accumulated deficit

 

(205,555

)

(198,601

)

Total stockholders’ equity

 

69,999

 

78,522

 

Total liabilities and stockholders’ equity

 

$

126,420

 

$

154,225

 

 

5



 

Tremor Video, Inc.

Consolidated Statements of Operations

(in thousands, except share and per share data)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2017

 

2016

 

 

 

(unaudited)

 

 

 

 

 

 

 

Revenue

 

$

41,400

 

$

34,565

 

Cost of revenue

 

22,023

 

18,347

 

Gross profit

 

19,377

 

16,218

 

 

 

 

 

 

 

Operating Expenses:

 

 

 

 

 

Technology and development(1)

 

5,661

 

5,843

 

Sales and marketing(1)

 

13,053

 

12,664

 

General and administrative(1)

 

5,083

 

4,922

 

Depreciation and amortization

 

2,349

 

2,239

 

Mark-to-market(2)

 

55

 

1,044

 

Total operating expenses

 

26,201

 

26,712

 

 

 

 

 

 

 

Loss from operations

 

(6,824

)

(10,494

)

 

 

 

 

 

 

Interest and other (expense) income, net:

 

 

 

 

 

Interest expense

 

(52

)

(2

)

Other (expense) income, net

 

25

 

(252

)

Total interest and other expense, net

 

(27

)

(254

)

 

 

 

 

 

 

Loss before provision for income taxes

 

(6,851

)

(10,748

)

 

 

 

 

 

 

Provision for income taxes

 

9

 

326

 

 

 

 

 

 

 

Net loss

 

$

(6,860

)

$

(11,074

)

 

 

 

 

 

 

Net loss per share:

 

 

 

 

 

Basic and diluted

 

$

(0.14

)

$

(0.21

)

 

 

 

 

 

 

Weighted-average number of shares of common stock outstanding:

 

 

 

 

 

Basic and diluted

 

49,998,547

 

52,372,857

 

 


(1)   Stock-based compensation expense included above:

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2017

 

2016

 

 

 

(unaudited)

 

 

 

 

 

 

 

Technology and development

 

$

211

 

$

218

 

Sales and marketing

 

368

 

386

 

General and administrative

 

437

 

360

 

Total stock-based compensation expense

 

$

1,016

 

$

964

 

 


(2)   Reflects expense incurred based on the Company’s re-measurement, at March 31, 2017 and March 31, 2016, of the estimated fair value of earn-out payments that may become due in connection with the acquisition of The Video Network Pty Ltd, an Australian proprietary limited company (“TVN”), and which are not conditioned on continued employment with the Company.

 

6



 

Tremor Video, Inc.

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2017

 

2016

 

 

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

 

Net loss

 

$

(6,860

)

$

(11,074

)

 

 

 

 

 

 

Adjustments required to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

Depreciation and amortization expense

 

2,349

 

2,239

 

Loss from sublease

 

 

341

 

Bad debt expense (recovery)

 

296

 

(35

)

Stock-based compensation expense

 

1,016

 

964

 

Compensation expense related to acquisition contingent consideration

 

825

 

1,206

 

Mark-to-market expense

 

55

 

1,049

 

Net changes in operating assets and liabilities:

 

 

 

 

 

Deferred tax benefit

 

(27

)

 

Decrease in accounts receivable

 

11,262

 

17,966

 

Increase in prepaid expenses and other assets

 

(779

)

(137

)

Decrease in accounts payable and accrued expenses

 

(20,499

)

(14,932

)

Decrease in other current liabilities

 

(79

)

 

Decrease (increase) in deferred rent

 

(118

)

245

 

Decrease (increase) in restricted cash

 

770

 

(320

)

Increase in deferred revenue

 

22

 

79

 

Net cash used in operating activities

 

(11,767

)

(2,409

)

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

Purchase of property and equipment

 

(754

)

(854

)

Net cash used in investing activities

 

(754

)

(854

)

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

Proceeds from common stock issuance

 

256

 

 

Proceeds from the exercise of stock options awards

 

38

 

 

Principal portion of capital lease payments

 

(102

)

 

Treasury stock - repurchase of stock

 

(2,406

)

 

Tax withholdings related to net share settlements of restricted stock units

 

(654

)

(215

)

Net cash used in financing activities

 

(2,868

)

(215

)

 

 

 

 

 

 

Net decrease in cash and cash equivalents

 

(15,389

)

(3,478

)

 

 

 

 

 

 

Effect of exchange rate changes in cash and cash equivalents

 

261

 

35

 

 

 

 

 

 

 

Cash and cash equivalents at beginning of period

 

43,160

 

59,887

 

Cash and cash equivalents at end of period

 

$

28,032

 

$

56,444

 

 

7



 

Exhibit B

 

Tremor Video, Inc.

Reconciliation of Total Spend to Revenue

(in thousands)

(unaudited)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2017

 

2016

 

 

 

 

 

 

 

Total Spend

 

$

60,892

 

$

51,230

 

SSP inventory costs(1)

 

19,492

 

16,665

 

Revenue

 

$

41,400

 

$

34,565

 

 


(1)   We record revenue from our buyer platform on a gross basis, including costs of inventory.  Accordingly, for revenue generated from our buyer platform, total spend is equivalent to revenue.  We record revenue from our seller platform, the Tremor Video SSP net of inventory costs. Total spend through the Tremor Video SSP is equal to the revenue generated from the Tremor Video SSP plus associated costs of inventory.

 

Tremor Video, Inc.

Reconciliation of Net Loss to Adjusted EBITDA

(in thousands)

(unaudited)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2017

 

2016

 

 

 

 

 

 

 

Net loss

 

$

(6,860

)

$

(11,074

)

Adjustments:

 

 

 

 

 

Depreciation and amortization expense

 

2,349

 

2,239

 

Stock-based compensation expense

 

1,016

 

964

 

Executive severance and retention costs(1)

 

70

 

105

 

Acquisition-related costs(2)

 

825

 

1,219

 

Litigation expenses

 

 

181

 

Provision for income taxes

 

9

 

326

 

Mark-to-market expense(3)

 

55

 

1,044

 

Interest and other (income) expense, net

 

27

 

254

 

Other adjustments(4)

 

109

 

520

 

Total net adjustments

 

4,460

 

6,852

 

Adjusted EBITDA

 

$

(2,400

)

$

(4,222

)

 


(1)   Reflects severance costs related to the termination of certain executives and the accrual of compensation expense in connection with retention bonuses that may become payable to certain executives.

 

(2)   Reflects acquisition-related costs incurred in connection with the Company’s acquisition of TVN.  Includes $825 and $1,206 for the three months ended  March 31, 2017 and March 31, 2016, respectively, of compensation-related expenses related to contingent consideration payments that may become due to certain TVN sellers that are subject to continued employment.

 

(3)   Reflects expense incurred based on the Company’s re-measurement, at March 31, 2017 and March 31, 2016, of the estimated fair value of earn-out payments that may become due in connection with the acquisition of TVN and which are not conditioned on continued employment with the Company.

 

(4)   Reflects amounts accrued in connection with a one-time change in the Company’s employee vacation policy.

 

8



 

Exhibit C

 

Tremor Video, Inc.

Consolidated Quarterly Statement of Operations

(in thousands)

(unaudited)

 

 

 

Q1 2016

 

Q2 2016

 

Q3 2016

 

Q4 2016

 

Q1 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

34,565

 

$

37,107

 

$

41,281

 

$

53,808

 

$

41,400

 

 

 

 

 

 

 

 

 

 

 

 

 

Inventory costs

 

16,368

 

17,922

 

19,198

 

25,476

 

16,088

 

Other cost of revenue

 

1,979

 

1,985

 

3,500

 

4,060

 

5,935

 

Total cost of revenue

 

18,347

 

19,907

 

22,698

 

29,536

 

22,023

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit

 

16,218

 

17,200

 

18,583

 

24,272

 

19,377

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating expenses

 

26,712

 

22,831

 

22,311

 

24,998

 

26,201

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

(10,494

)

(5,631

)

(3,728

)

(726

)

(6,824

)

 

 

 

 

 

 

 

 

 

 

 

 

Total interest and other (expense) income, net

 

(254

)

(46

)

68

 

(20

)

(27

)

 

 

 

 

 

 

 

 

 

 

 

 

Loss before provision for income taxes

 

(10,748

)

(5,677

)

(3,660

)

(746

)

(6,851

)

 

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

326

 

178

 

(43

)

(345

)

9

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(11,074

)

$

(5,855

)

$

(3,617

)

$

(401

)

$

(6,860

)

 

9