SITO Mobile Reports Second Quarter 2016 Financial Results

Q2 Revenue $9.9 Million, Up 168% Year-Over-Year; Led by Media Placement Revenue of $8.3 Million, Up 285% Year-Over-Year

Brent Rosenthal to join SITO Mobile’s Board of Directors

JERSEY CITY, N.J., Aug. 15, 2016 (GLOBE NEWSWIRE) — SITO Mobile Ltd. (NASDAQ:SITO), a leading mobile engagement platform, today announced its results for the second quarter ended June 30, 2016.

Second Quarter 2016 Business Highlights

  • TOTAL REVENUE: was $9.9 million, an increase of 168% year-over-year.
     
  • MEDIA PLACEMENT REVENUE: (SITO Mobile’s programmatic advertising revenue) was $8.3 million, an increase of 285% year-over-year and 71% sequentially.
     
  • GROSS PROFIT: was $5.4 million (55% gross margin) in Q2 2016, up from $1.8 million (51% gross margin) in Q2 2015. (Please refer to the supplemental schedule below for calculation of Gross Profit and Gross Margin).
     
  • ADJUSTED EBITDA:  was $1.8 million for the quarter, up from $0.1 million in Q1 and ($0.2) million in Q2 of 2015.  (See attached schedule for reconciliation of Adjusted EBITDA to GAAP)
     
  • NET INCOME:  was $0.7 million, which equates to $0.04 earnings per share on total shares outstanding of 17.4 million.

“In the Second quarter, we produced early indications of the kind of consistent, solid revenue growth we’re expecting as we work towards becoming a dominant player in location-based mobile advertising,” said Jerry Hug, CEO of SITO Mobile. “The overall market for mobile advertising is already measured in $10’s of billions and is growing rapidly.   Mobile Media is uniquely equipped to handle location-based ad campaigns and SITO Mobile is emerging as a leading player in this $18 billion segment of the mobile advertising market. SITO Mobile is creating higher levels of mobile consumer engagement – resulting in more clients, more campaigns and larger campaign spending commitments, as the largest global advertisers shift significant advertising dollars to mobile. On this foundation, we look forward to producing meaningful revenue growth for the balance of 2016 and beyond.”

Commenting on SITO’s new Board Member, Hug added, “We’re excited to welcome Brent Rosenthal to our Board of Directors.  Brent is an accomplished investor and business professional with an outstanding 20+ year track record of creating shareholder value in cable, telecom, mobile, Out-of-Home and information companies.  Most recently, he spearheaded an investment in Rentrak Corporation (NASDAQ:RENT) where he served on the Board of Directors from 2008 – 2016, including as the Non-Executive Chairman from 2011 – 2016.  He worked closely with management to pivot the Company which led to a dramatic increase in market capitalization,  culminating in a merger with comScore (NASDAQ:SCOR).  Brent’s business acumen, professional network and extensive public company Board experience will be invaluable to our team.”

Conference call information:

Date: Monday, August 15, 2016
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

Participating on the call will be SITO Mobile’s Chief Executive Officer Jerry Hug and Chief Financial Officer Kurt Streams. To join the live conference call, please dial into the above referenced telephone numbers five to ten minutes prior to the scheduled conference call time.

A replay will be available for 2 weeks starting on August 15, 2016 at approximately 8:00 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 13642293.

About SITO Mobile Ltd.

SITO Mobile provides a mobile engagement platform that enables brands to increase awareness, loyalty, and ultimately sales. For more information, visit www.sitomobile.com

Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, sales growth, our reliance on brand owners and wireless carriers, the possible need for additional capital as well as other risks identified in our filings with the SEC. Any forward-looking statement made by us in this press release is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

[FINANCIAL TABLES TO FOLLOW]

SITO Mobile, Ltd.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

    For the Three Months Ended     For the Six Months Ended  
    June 30,     June 30,  
    2016     2015     2016     2015  
                         
Revenue                        
Media placement   $ 8,297,880     $ 2,154,030     $ 13,159,380     $ 3,781,530  
Wireless applications     1,454,428       1,387,313       2,945,078       3,391,629  
Licensing and royalties     125,946       139,535       261,365       274,539  
Total revenue     9,878,254       3,680,878       16,365,823       7,447,698  
                                 
Costs and Expenses                                
Cost of revenue     4,430,522       1,807,237       7,487,118       3,423,210  
Sales and marketing     2,662,886       905,285       4,762,905       1,781,574  
General and administrative     1,454,056       1,474,156       3,351,324       2,638,908  
Depreciation and amortization     160,444       77,361       324,804       145,442  
                                 
Total costs and expenses     8,707,908       4,264,039       15,926,151       7,989,134  
                                 
Income (loss) from operations     1,170,346       (583,161 )     439,672       (541,436 )
                                 
Other Income (Expense)                                
Interest income                       54,323  
Interest expense     (445,091 )     (454,199 )     (885,113 )     (888,758 )
                                 
Net income (loss) before income taxes     725,255       (1,037,360 )     (445,441 )     (1,375,871 )
                                 
Provision for income taxes                        
                                 
Net income (loss)   $ 725,255     $ (1,037,360 )   $ (445,441 )   $ (1,375,871 )
                                 
Basic earnings (loss) per share   $ 0.04     $ (0.07 )   $ (0.02 )   $ (0.09 )
Basic weighted average shares outstanding     17,355,478       15,404,817       17,288,445       15,385,645  
                                 
Diluted earnings (loss) per share   $ 0.04     $     $     $  
Diluted weighted average shares outstanding     19,831,509                    
                                 

Non-GAAP Financial Measures

This press release uses Adjusted EBITDA, a non-GAAP financial measure. Adjusted EBITDA should not be considered a replacement for, and should be read together with, the most comparable GAAP financial measure, which is Operating Profit (Loss). A reconciliation of Adjusted EBITDA to Operating Profit (Loss) is included herein.

To supplement our financial results and guidance presented in accordance with U.S. generally accepted accounting principles (GAAP), the Company uses certain non-GAAP financial measures in this press release, including EBITDA. The Company believes that non-GAAP financial measures are helpful in understanding its past financial performance and potential future results, particularly in light of the effect of various acquisition transactions effected by the Company. Non-GAAP financial measures are not meant to be considered in isolation or as a substitute for or superior to comparable GAAP measures and should be read in conjunction with the consolidated financial statements prepared in accordance with GAAP. 

Management excludes stock based compensation expense because they believe that the non-GAAP financial measures excluding this item provide meaningful supplemental information regarding operational performance. In particular, because of varying available valuation methodologies, subjective assumptions and the variety of award types that companies can use under FASB ASC 718, we believe that providing non-GAAP financial measures that exclude this expense allows investors to make more meaningful comparisons between our operating results and those of other companies. Accordingly, management believes that excluding this expense provides investors and management with greater visibility to the underlying performance of our business operations, facilitates comparison of our results with other periods, and may also facilitate comparison with the results of other companies in our industry.  Management uses Adjusted EBITDA in managing and analyzing its business and financial condition. Management believes that the presentation of non-GAAP financial measures provides investors greater transparency into ongoing results of operations allowing investors to better compare the Company’s results from period to period.

    For the Three Months Ended June 30,   For the Six Months Ended June 30,
    2016     2015       2016       2015  
                 
Net Income (Loss)     725,255       (1,037,360 )       (445,441 )     (1,375,871 )
Adjustments to reconcile net income (loss) to EBITDA:                
Depreciation and amortization expense included in costs and expenses:                
Amortization included in cost of revenue     271,198       175,001         523,693         326,412  
Depreciation and other amortization     160,444       77,361         324,804         145,442  
Total depreciation and amortization expense     431,642       252,362         848,497         471,854  
                 
Interest Income                   54,323  
Interest expense     445,091       454,199         885,113         888,758  
Provision for income taxes     –        –          –          –   
                 
EBITDA     1,601,988       (330,799 )       1,288,169         39,064  
                 
Adjustments to reconcile EBITDA:                
Stock based compensation expense included in costs and expenses:                
Sales and marketing      75,327       22,808         149,361         45,923  
General and administrative     110,604       124,491         410,072         251,342  
Total stock based compensation expense     185,931       147,299         559,433         297,265  
                 
Adjusted EBITDA     1,787,919       (183,500 )       1,847,602         336,329  
                             

SITO Mobile, Ltd.
CONDENSED CONSOLIDATED BALANCE SHEETS

    June 30,     December 31,  
    2016     2015  
    (Unaudited)        
Assets            
Current assets            
Cash and cash equivalents   $ 1,682,785     $ 2,615,184  
Accounts receivable, net     8,819,725       6,167,816  
Other prepaid expenses     91,055       123,692  
                 
Total current assets     10,593,565       8,906,692  
                 
Property and equipment, net     492,010       585,356  
                 
Other assets                
Capitalized software development costs, net     1,846,330       1,600,813  
Intangible assets:                
Patents     406,546       445,473  
Patent applications cost     928,969       897,087  
Other intangible assets, net     1,574,507       1,714,477  
Goodwill     6,444,225       6,444,225  
Deferred loan costs, net     56,520       78,116  
Other assets including security deposits     108,938       84,829  
                 
Total other assets     11,366,035       11,265,020  
                 
Total assets   $ 22,451,610     $ 20,757,068  
                 

CONDENSED CONSOLIDATED BALANCE SHEETS

    June 30,     December 31,  
    2016     2015  
    (Unaudited)        
             
Liabilities and Stockholders’ Equity                
Current liabilities                
Accounts payable   $ 6,837,561     $ 4,828,600  
Accrued expenses     1,795,234       1,277,896  
Deferred revenue     563,976       532,909  
Current obligations under capital lease     3,320       11,699  
Note payable, net – current portion     2,068,450       3,984,219  
                 
Total current liabilities     11,268,541       10,635,323  
                 
Long-term liabilities                
Obligations under capital lease     4,510       6,201  
Note payable     5,315,989       4,934,966  
                 
Total long-term liabilities     5,320,499       4,941,167  
                 
Total liabilities     16,589,040       15,576,490  
                 
Commitments and contingencies – See notes 17                
                 
Stockholders’ Equity                 
Preferred stock, $.0001 par value, 5,000,000 shares authorized; none outstanding            
Common stock, $.001 par value; 100,000,000 shares authorized, 17,357,520 shares issued and outstanding as of June 30, 2016 and $.001 par value; 300,000,000 shares authorized, 17,157,520 shares issued and outstanding as of December 31, 2015     17,3576       17,156  
Additional paid-in capital     145,665,480       144,538,247  
Accumulated deficit     (139,820,266 )     (139,374,825 )
                 
Total stockholders’ equity      5,862,570       5,180,578  
                 
Total liabilities and stockholders’ equity    $ 22,451,610     $ 20,757,068  
                 

SITO Mobile, Ltd.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

    For the Three Months Ended  
    June 30,  
    2016     2015  
             
Cash Flows from Operating Activities              
Net income (loss)         $ 725,255     $ (1,037,364 )
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:                
Depreciation expense       43,263       35,419  
Amortization expense – software development costs     271,199       175,001  
Amortization expense – patents     49,431       43,645  
Amortization expense – discount of debt     198,910       152,585  
Amortization expense – deferred costs     9,432       13,334  
Amortization expense – intangible assets     67,750        
Provision for bad debt       95,005        
Loss on disposition of assets            
Stock based compensation      185,931       147,299  
Changes in operating assets and liabilities:                
(Increase) in accounts receivable, net     (2,675,931 )     (794,502 )
Decrease (increase) in prepaid expenses     42,649       (134,211 )
(Increase) decrease in other assets     (10,794 )     (250  
Increase (decrease) in accounts payable     2,375,634       (1,032,077 )
Increase (decrease) in accrued expenses     234,611       129,690 )
Increase in deferred revenue     249,054       308,669  
Increase in accrued interest     60,474       83,513  
                 
Net cash provided by (used in) operating activities       921,873       (1,909,249 )
                 
Cash Flows from Investing Activities                  
Patents and patent applications costs       (41,449 )     (74,148 )
Purchase of property and equipment     (9,852 )     (225,000 )
Capitalized software development costs     (342,673 )     (340,350 )
                 
Net cash used in investing activities     $ (393,974 )   $ (639,498 )
                 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

    For the Three Months Ended  
    June 30,  
    2016     2015  
Cash Flows from Financing Activities            
Repayments on related party loans           525,000  
Principal reduction on obligation under capital lease      (3,564 )     (4,911 )
Principal reduction on repayment of debt     (525,000 )      
                 
Net cash (used in) provided by financing activities       (528,564 )     520,089  
                 
Net decrease in cash and cash equivalents       (665 )     (2,028,658 )
                 
Cash and cash equivalents – beginning of period       1,683,450       4,815,907  
                 
Cash and cash equivalents – ending of period     $ 1,682,785     $ 2,787,249  
                 
Supplemental Information:                
                 
Interest expense paid   $ 115,812     $ 204,685  
Income taxes paid   $ 17,729     $ 4,600  

SITO Mobile, Ltd.
Supplemental Schedule
Amounts in thousands except percentages

  June 30, 2015   September 30, 2015   December 31, 2015   Fiscal Year 2015   March 31, 2016   June 30, 2016
  Reported   Adjusted   Reported   Adjusted   Reported   Reported   Adjusted   Reported   Reported
Revenue                                  
Media placement     2,154         2,154         3,023         3,023       5,345         12,150         12,150       4,862       8,298  
Wireless Applications     1,387         1,387         1,347         1,347       1,622         6,360         6,360       1,491       1,454  
Licensing and royalties     140         140         144         144       245         664         664       135       126  
Total Revenue     3,681         3,681         4,514         4,514       7,212         19,174         19,174       6,488       9,878  
                                   
Cost of Revenue     1,445         1,807         1,513         2,164       3,449         7,987         9,064       3,057       4,431  
                                   
Gross Profit     2,236         1,874         3,001         2,350       3,763         11,187         10,110       3,431       5,448  
Gross Margin   61 %     51 %     66 %     52 %     52 %     58 %     53 %     53 %     55 %
Operating Expenses                                  
General and administrative     1,459         1,474         2,241         2,254       1,584         6,439         6,476       1,897       1,454  
Sales & marketing     1,268         906         1,849         1,198       1,877         5,906         4,829       2,100       2,663  
Research and development     15         –          13         –        0         37         –        0       0  
Loss on impairment of long-lived asset     –          –          831         831       0         831         831       0       0  
Depreciation & amortization     77         77         209         209       219         573         573       164       160  
Total Operating Expenses     2,819         2,457         5,143         4,492       3,680         13,786         12,709       4,161       4,276  
                                   
Income (Loss) from Operations   (583 )     (583 )     (2,142 )     (2,142 )     83       (2,599 )     (2,599 )     (730 )     1,171  
                                                                       

Note: Certain reclassifications have been made to conform the fiscal 2015 quarterly amounts to the fiscal 2016 classifications for comparative purposes. The Company is reporting a vendor cost in cost or revenue that had been previously reported in sales and marketing expense and is reporting research and development cost in general and administrative expense. The changes are only expense reclassifications and do not affect revenue, total costs and revenues, income (loss) from operations, net income or any balance sheet accounts. Amounts affected by the reclassification are shown in bold in the table above.

CONTACT: Contact:
Investor Relations:
Joseph Wilkinson
SVP Investor Relations
Joseph.Wilkinson@sitomobile.com

Media Relations:
Alexandra Levy
Silicon Alley Media
alex@siliconalley-media.com

RELATED LINKS
http://www.sitomobile.com