SITO Mobile Reports Third Quarter 2016 Financial Results

JERSEY CITY, N.J., Nov. 14, 2016 (GLOBE NEWSWIRE) — SITO Mobile Ltd. (NASDAQ:SITO), a leading mobile engagement platform, today announced its results for the third quarter ended September 30, 2016.

Third Quarter 2016 Business Highlights

  • TOTAL REVENUE: was $10.3 million, an increase of 129% year-over-year.
  • MEDIA PLACEMENT REVENUE: (SITO Mobile’s programmatic advertising revenue) was $8.4 million, an increase of 179% year-over-year.
  • GROSS PROFIT: was $5.7 million (55% gross margin), up from $2.4 million (52% gross margin) in Q3 2015. (Please refer to the supplemental schedule below for calculation of Gross Profit and Gross Margin).
  • ADJUSTED EBITDA: was $1.8 million, up from a loss of $(0.7) million in Q3 of 2015. (See attached schedule for reconciliation of Adjusted EBITDA to GAAP)
  • NET INCOME: was $501 thousand which equates to $0.03 (diluted) earnings per share on total (diluted) shares outstanding of 19.5 million.

“Q3 was another successful and productive quarter for SITO Mobile,” said Jerry Hug, SITO Mobile’s CEO. “Our media placement business once again delivered stellar year-over-year growth and we made good progress on our key priorities. We added new customers and increased total campaigns while also adding more partners to our data ecosystem. Our RFP pipeline is growing and our pool of opportunities is increasing as current and prospective clients begin to recognize, appreciate and embrace the value of SITO Mobile’s location-based marketing platform.”

Hug continued, “In September we raised $10.3 million in net proceeds through an equity offering. This successful offering was enabled by the strength of our strategic positioning in the mobile adtech marketplace coupled with our strong revenue growth and profitability. As a result of this offering, we added several new institutional shareholders and increased market awareness and liquidity. The proceeds from this offering strengthen our balance sheet, and provide financial flexibility as we execute our plan.” 

Conference call information:

Date: Monday, November 14, 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 November 14, 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 13649156.

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 Nine Months Ended  
    September 30,     September 30,  
    2016     2015     2016     2015  
Revenue                                
Media placement   $ 8,424,099     $ 3,023,222     $ 21,583,479     $ 6,804,752  
Wireless applications     1,790,135       1,346,642       4,735,213       4,738,271  
Licensing and royalties     127,196       144,469       388,561       419,008  
Total revenue     10,341,430       4,514,333       26,707,253       11,962,031  
                                 
Costs and Expenses                                
Cost of revenue     4,648,156       2,163,333       12,135,274       5,614,836  
Sales and marketing     2,798,283       1,198,469       7,561,188       2,951,750  
General and administrative     1,792,440       2,253,446       5,143,764       4,892,354  
Loss on impairment of long-lived asset           831,000             831,000  
Depreciation and amortization     164,269       208,891       489,073       354,333  
                                 
Total costs and expenses     9,403,148       6,655,139       25,329,299       14,644,273  
                                 
Income (loss) from operations     938,282       (2,140,806 )     1,377,954       (2,682,242 )
                                 
Other Income (Expense)                                
Interest expense     (436,782 )     (475,265 )     (1,321,895 )     (1,309,700 )
                                 
Net income (loss) before income taxes     501,500       (2,616,071 )     56,059       (3,991,942 )
Provision for income taxes                        
                                 
Net income (loss)   $ 501,500     $ (2,616,071 )   $ 56,059     $ (3,991,942 )
                                 
Basic earnings (loss) per share   $ 0.03     $ (0.16 )   $ 0.00     $ (0.25 )
Basic weighted average shares outstanding     17,433,011       16,422,988       17,714,960       15,735,226  
                                 
Diluted earnings (loss) per share   $ 0.03     $ (0.16 )   $ 0.00     $ (0.25 )
Diluted weighted average shares outstanding     19,573,308       16,422,988       19,762,037       15,735,226  
                                 

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 September 30
    For the Nine Months
Ended September 30
 
    2016     2015     2016     2015  
                         
Net income (loss)     501,500       (2,616,071 )     56,059       (3,991,942 )
Adjustments to reconcile net income (loss) to EBITDA:                                
Depreciation and amortization expense included in costs and expenses:                                
Amortization included in cost of revenue     292,955       226,593       820,744       553,005  
Depreciation and other amortization     164,269       208,891       489,073       354,333  
Total depreciation and amortization expense     457,224       435,484       1,309,817       907,338  
                                 
Interest expense     436,782       475,265       1,321,895       1,309,700  
Loss on impairment of long-lived asset           831,000             831,000  
Provision for income taxes                        
                                 
EBITDA     1,395,506       (874,322 )     2,687,771       (943,904 )
                                 
Adjustments to reconcile EBITDA:                                
Stock based compensation expense included in costs and expenses:                                
Sales and marketing     70,728       30,366       220,090       66,521  
General and administrative     304,961       174,790       715,033       319,540  
Total stock based compensation expense     375,689       205,156       935,123       386,061  
                                 
Adjusted EBITDA     1,771,195       (669,166 )     3,622,894       (557,843 )
                                 

SITO Mobile, Ltd.
CONDENSED CONSOLIDATED BALANCE SHEETS
 
    September 30,     December 31,  
    2016     2015  
    (Unaudited)        
Assets            
Current assets            
Cash and cash equivalents   $ 9,836,888     $ 2,615,184  
Accounts receivable, net     9,813,623       6,167,816  
Other prepaid expenses     287,707       123,692  
                 
Total current assets     19,938,218       8,906,692  
                 
Property and equipment, net     458,348       585,356  
                 
Other assets                
Capitalized software development costs, net     1,858,921       1,600,813  
Intangible assets:                
Patents     514,327       445,473  
Patent applications cost     811,248       897,087  
Other intangible assets, net     1,506,757       1,714,477  
Goodwill     6,444,225       6,444,225  
Deferred loan costs, net     47,023       78,116  
Other assets including security deposits     108,938       84,829  
                 
Total other assets     11,291,439       11,265,020  
                 
Total assets   $ 31,688,005     $ 20,757,068  
                 
Liabilities and Stockholders’ Equity                
Current liabilities                
Accounts payable   $ 4,412,043     $ 4,828,600  
Accrued expenses     1,953,505       1,277,896  
Deferred revenue     431,780       532,909  
Current obligations under capital lease     3,402       11,699  
Note payable, net – current portion     2,475,304       3,984,219  
                 
Total current liabilities     9,276,034       10,635,323  
                 
Long-term liabilities                
Obligations under capital lease     3,622       6,201  
Note payable, net     4,644,983       4,934,966  
                 
Total long-term liabilities     4,648,605       4,941,167  
                 
Total liabilities     13,924,639       15,576,490  
                 
Stockholders’ Equity                
Preferred stock, $.0001 par value, 5,000,000 shares authorized; none outstanding            
Common stock, $.001 par value; 100,000,000 shares authorized, 20,587,770 shares issued and outstanding as of September 30, 2016 and $.001 par value; 300,000,000 shares authorized, 17,157,520 shares issued and outstanding as of December 31, 2015     20,587       17,156  
Additional paid-in capital     157,061,545       144,538,247  
Accumulated deficit     (139,318,766 )     (139,374,825 )
                 
Total stockholders’ equity     17,763,366       5,180,578  
                 
Total liabilities and stockholders’ equity   $ 31,688,005     $ 20,757,068  
                 

SITO Mobile, Ltd.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
    For the Three Months Ended  
    September 30,  
    2016     2015  
Cash Flows from Operating Activities            
Net income (loss)   $ 501,500     $ (2,616,071 )
Adjustments to reconcile net income (loss) to net cash (used in) operating activities:                
Depreciation expense     43,774       47,117  
Amortization expense – software development costs     292,956       230,689  
Amortization expense – patents     52,744       49,001  
Amortization expense – discount of debt     200,281       165,681  
Amortization expense – deferred costs     9,497       14,478  
Amortization expense – intangible assets     67,750       112,773  
Provision for bad debt     (10,673 )     240,000  
Loss on disposition of assets     237        
Loss on impairment of long-lived asset           831,000  
Stock based compensation     375,689       336,835  
Changes in operating assets and liabilities:                
(Increase) in accounts receivable, net     (983,224 )     (298,682 )
(Increase) in prepaid expenses     (196,655 )     (98,008 )
Decrease (increase) in other assets           50,000  
(Decrease) increase in accounts payable     (2,425,512 )     545,993  
Increase in accrued expenses     158,268       72,511  
(Decrease) in deferred revenue     (132,195 )     (280,214 )
Increase in accrued interest     60,567       87,116  
                 
Net cash provided by (used in) operating activities     (1,984,996 )     (509,781 )
                 
Cash Flows from Investing Activities                
Patents and patent applications costs     (42,803 )     (119,869 )
Purchase of property and equipment     (11,050 )     (140,922 )
Proceeds from sale of property and equipment     700        
Capitalized software development costs     (305,546 )     (541,592 )
Purchase of intangible assets           (1,300,000 )
                 
Net cash (used in) investing activities   $ (359,399 )   $ (2,102,383 )
                 
Cash Flows from Financing Activities                
Proceeds from issuance of common stock   $ 12,203,605     $ 1,909,000  
Stock issuance costs     (1,180,000 )     (75,000 )
Restructuring of debt            
Principal reduction on obligation under capital lease     (807 )     (4,946 )
Principal reduction on repayment of debt     (525,000 )      
                 
Net cash provided by financing activities     10,497,798       1,829,054  
                 
Net decrease in cash and cash equivalents     8,154,103       (783,110 )
                 
Cash and cash equivalents – beginning of period     1,682,785       2,787,250  
                 
Cash and cash equivalents – ending of period   $ 9,836,888     $ 2,004,140  
                 
Supplemental Information:                
                 
Interest expense paid   $ 232,238     $ 208,161  
Income taxes paid   $ 16,900     $ 4,600  
                 

SITO Mobile, Ltd.
Supplemental Schedule
Amounts in thousands except percentages
 
    September 30,
2015
    December 31,
2015
    Fiscal Year 2015     March 31,
2016
    June 30,
2016
    September 30,
2016
 
     Reported      Adjusted      Reported      Reported      Adjusted      Reported      Reported      Reported  
Revenue                                                                
Media placement     3,023       3,023       5,345       12,150       12,150       4,862       8,298       8,424  
Wireless Applications     1,347       1,347       1,622       6,360       6,360       1,491       1,454       1,790  
Licensing and royalties     144       144       245       664       664       135       126       127  
Total Revenue     4,514       4,514       7,212       19,174       19,174       6,488       9,878       10,341  
                                                                 
Cost of Revenue     1,513       2,164       3,449       7,987       9,064       3,057       4,431       4,648  
                                                                 
Gross Profit     3,001       2,350       3,763       11,187       10,110       3,431       5,448       5,693  
Gross Margin     66 %     52 %     52 %     58 %     53 %     53 %     55 %     55 %
Operating Expenses                                                                
General and administrative     2,241       2,254       1,584       6,439       6,476       1,897       1,454       1,792  
Sales & marketing     1,849       1,198       1,877       5,906       4,829       2,100       2,663       2,798  
Research and development     13       0       0       37       0       0       0       0  
Loss on impairment of long-lived asset     831       831       0       831       831       0       0       0  
Depreciation & amortization     209       209       219       573       573       164       160       164  
Total Operating Expenses     5,143       4,492       3,680       13,786       12,709       4,161       4,276       4,755  
                                                                 
Income (Loss) from Operations     (2,142 )     (2,142 )     83       (2,599 )     (2,599 )     (730 )     1,171       938  
                                                                 

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: Contacts:
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