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Section 1: 8-K (8-K)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 7, 2018

The Meet Group, Inc.
(Exact name of registrant as specified in its charter)



Delaware
 
001-33105
 
86-0879433
(State or other Jurisdiction of Incorporation)
 
(Commission File Number)
 
(IRS Employer Identification No.)




100 Union Square Drive
New Hope, Pennsylvania
 
 
18938
(Address of principal executive offices)
 
(Zip Code)

Registrant’s telephone number, including area code: (215) 862-1162

Not Applicable
(Former name or former address if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐



 


Item 2.02    Results of Operations and Financial Condition.
 
On November 7, 2018, the Company issued a press release announcing, among other things, its financial results for the quarter ended September 30, 2018. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K (this “Current Report”) and incorporated herein by reference.

Item 7.01    Regulation FD Disclosure.
 
As discussed in Item 2.02 above, the Company issued a press release, dated November 7, 2018, announcing, among other things, its financial results for the quarter ended September 30, 2018, the text of which is incorporated by reference into this “Item 7.01. Regulation FD Disclosure.” In addition, as discussed in the press release dated August 1, 2018, the Company is making presentation materials available on its website.

The information in Item 2.02 and Item 7.01 of this Current Report is being furnished and shall not be considered “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liability of such section, nor shall it be incorporated by reference into future filings by the Company under the Securities Act of 1933, as amended, or under the Exchange Act, unless the Company expressly sets forth in such future filing that such information is to be considered “filed” or incorporated by reference therein. This information shall not be deemed an admission as to the materiality of such information that is required to be disclosed solely by Regulation FD.

Item 9.01
 
Financial Statements and Exhibits.
 
 
 
 
(d) Exhibits
 
 
 
 
 
 
Exhibit No.
Description
 
 
 
 
The Meet Group, Inc. press release, dated
November 7, 2018.




SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
THE MEET GROUP, INC.
 
 
 
 
 
 
Date:
November 7, 2018
By: /s/ Geoff Cook
 
 
Name: Geoff Cook
Title: Chief Executive Officer


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Section 2: EX-99.1 (EARNINGS RELEASE)

Exhibit


Exhibit 99.1

The Meet Group Reports Third Quarter 2018 Financial Results

NEW HOPE, Pa., November 7, 2018 – The Meet Group, Inc. (NASDAQ: MEET), a public market leader in the mobile meeting space, today reported financial results for its third quarter ended September 30, 2018.

Third Quarter 2018 Financial Highlights

Total revenue of $45.7 million, up 42% year over year
GAAP net income of $1.3 million, or $0.02 per diluted share, compared to $2.2 million, or $0.03 per diluted share in the prior year quarter
Adjusted EBITDA of $8.7 million, compared to adjusted EBITDA of $8.9 million in the prior year quarter
Non-GAAP net income of $7.6 million, or $0.10 per diluted share, compared to $8.1 million or $0.11 per diluted share in the prior year quarter

(See the important discussion about the presentation of non-GAAP financial measures, and reconciliation to the most direct comparable GAAP financial measures, below.)

“We continue to grow video revenue across all of our apps,” said Geoff Cook, Chief Executive Officer. “In one year, we have increased the annualized video revenue run rate from virtually zero to $55 million for the month of October. Our successful Lovoo acquisition and integration, together with the dramatic growth of video revenue, have contributed to transforming our revenue mix. We tripled user pay revenue from a year ago, with that portion of our business now contributing 61% of our total revenue, up from 27% in the third quarter of 2017. We believe we are in the early days of the video opportunity and that livestreaming aligns perfectly with our mission: to facilitate human connection.

“Traffic in the quarter was also strong. We grew mobile daily active users 3% sequentially to 4.3 million and mobile monthly active users 7% sequentially to 14.6 million, reflecting quarter-over-quarter gains from each of MeetMe, Lovoo, Skout, and Tagged. For the quarter, daily live video users averaged approximately 870,000, up more than 36% sequentially. In addition, we recently surpassed our 100 millionth gift sent since launching Live monetization a year ago.”

“Advertising results were also solid,” continued Cook, “increasing sequentially for the second consecutive quarter. We continue to see evidence of a return to seasonal trends in advertising and remain cautiously optimistic about the opportunity to grow ad revenue in the fourth quarter.”

Third Quarter Financial Results

For the third quarter of 2018, the Company reported revenue of $45.7 million, an increase of 42% from $32.2 million in the prior year quarter.

GAAP net income was $1.3 million, or $0.02 per diluted share, compared to $2.2 million, or $0.03 per diluted share, in the prior year quarter. Adjusted EBITDA in the third quarter of 2018 was $8.7 million compared to $8.9 million in the prior year quarter, reflecting the ongoing shift towards user pay revenue.

The Company ended the quarter with $21.8 million in cash and cash equivalents.










Company Outlook

The Company is providing the following outlook for the fourth quarter of 2018 and is increasing its outlook for the full year 2018.

Fourth quarter 2018:
Revenue in the range of $47.8 million to $48.8 million
Adjusted EBITDA in the range of $8.7 million to $9.1 million

Full year 2018:
Revenue in the range of $174 million to $175 million
Adjusted EBITDA in the range of $30.2 million to $30.6 million






THE MEET GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

 
September 30,
2018
 
December 31,
2017
ASSETS
 
 
 
CURRENT ASSETS:
 
 
 
Cash and cash equivalents
$
21,822,387

 
$
24,158,444

Accounts receivable, net of allowance of $555,402 and $527,958 at September 30, 2018 and December 31, 2017, respectively
24,575,376

 
26,443,675

Prepaid expenses and other current assets
5,081,053

 
3,245,174

Total current assets
51,478,816

 
53,847,293

Restricted cash
500,000

 
894,551

Goodwill
148,863,242

 
150,694,135

Property and equipment, net
3,253,213

 
4,524,118

Intangible assets, net
39,345,358

 
48,719,428

Deferred taxes
16,379,363

 
15,521,214

Other assets
1,972,799

 
1,144,032

Total assets
$
261,792,791

 
$
275,344,771

LIABILITIES AND STOCKHOLDERSEQUITY
 
 
 
CURRENT LIABILITIES:
 
 
 
Accounts payable
$
6,054,937

 
$
6,277,846

Accrued liabilities
19,146,585

 
19,866,438

Current portion of long-term debt
15,000,000

 
15,000,000

Current portion of capital lease obligations
152,131

 
254,399

Deferred revenue
4,820,137

 
4,433,450

Total current liabilities
45,173,790

 
45,832,133

Long-term capital lease obligations, less current portion, net
74,408

 
192,137

Long-term debt, less current portion, net
25,338,637

 
40,637,106

Long-term derivative liability
1,822,202

 
2,995,657

Other liabilities
114,627

 
147,178

Total liabilities
72,523,664

 
89,804,211

STOCKHOLDERS EQUITY:
 
 
 
Preferred stock, $.001 par value; authorized - 5,000,000 shares; 0 shares issued and outstanding at September 30, 2018 and December 31, 2017

 

Common stock, $.001 par value; authorized - 100,000,000 shares; 73,534,370 and 71,915,018 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively
73,534

 
71,918

Additional paid-in capital
415,572,623

 
408,029,068

Accumulated deficit
(224,569,415
)
 
(221,435,888
)
Accumulated other comprehensive loss
(1,807,615
)
 
(1,124,538
)
Total stockholders equity
189,269,127

 
185,540,560

Total liabilities and stockholders equity
$
261,792,791

 
$
275,344,771






THE MEET GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2018
 
2017
 
2018
 
2017
Revenues
$
45,716,053

 
$
32,246,472

 
$
126,155,591

 
$
83,634,737

Operating costs and expenses:
 
 
 
 
 
 
 
Sales and marketing
8,753,156

 
4,600,148

 
23,554,635

 
14,305,498

Product development and content
26,134,682

 
16,021,977

 
72,647,507

 
41,006,376

General and administrative
4,938,844

 
5,021,739

 
15,562,125

 
13,044,965

Depreciation and amortization
3,423,929

 
2,969,570

 
10,558,712

 
7,619,584

Acquisition and restructuring
416,141

 
3,378,838

 
4,802,694

 
8,648,692

Total operating costs and expenses
43,666,752

 
31,992,272

 
127,125,673

 
84,625,115

Income (loss) from operations
2,049,301

 
254,200

 
(970,082
)
 
(990,378
)
Other income (expense):
 
 
 
 
 
 
 
Interest income
3,823

 
1,374

 
13,773

 
5,344

Interest expense
(559,345
)
 
(244,361
)
 
(1,838,325
)
 
(421,947
)
Gain (loss) on foreign currency transactions
(6,229
)
 
9,357

 
101,030

 
(2,072
)
Other
6,527

 

 
28,154

 

Total other expense
(555,224
)
 
(233,630
)
 
(1,695,368
)
 
(418,675
)
Income (loss) before income tax benefit (expense)
1,494,077

 
20,570

 
(2,665,450
)
 
(1,409,053
)
Income tax benefit (expense)
(196,146
)
 
2,202,152

 
(484,552
)
 
4,934,216

Net income (loss)
$
1,297,931

 
$
2,222,722

 
$
(3,150,002
)
 
$
3,525,163

 
 
 
 
 
 
 
 
Basic and diluted net income (loss) per common stockholder:
 
 
 
 
 
 
 
Basic net income (loss) per common stockholder
$
0.02

 
$
0.03

 
$
(0.04
)
 
$
0.05

Diluted net income (loss) per common stockholder
$
0.02

 
$
0.03

 
$
(0.04
)
 
$
0.05

 
 
 
 
 
 
 
 
Weighted average shares outstanding:
 
 
 
 
 
 
 
Basic
73,362,467

 
71,800,274

 
72,704,205

 
67,711,324

Diluted
79,365,576

 
76,078,563

 
72,704,205

 
72,425,863






THE MEET GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

 
Nine Months Ended September 30,
 
2018
 
2017
Cash flows from operating activities:
 
 
 
Net income (loss)
$
(3,150,002
)
 
$
3,525,163

Adjustments to reconcile net income (loss) to net cash provided by operating activities:
 
 
 
Depreciation and amortization
10,558,712

 
7,619,584

Stock-based compensation expense
7,026,991

 
5,802,046

Deferred taxes
(694,951
)
 
(5,383,583
)
(Gain) loss on foreign currency transactions
(101,030
)
 
2,072

Bad debt expense
408,998

 
168,000

Amortization of loan origination costs
261,373

 
142,034

Change in derivatives
(18,412
)
 

Changes in operating assets and liabilities:
 
 
 
Accounts receivable
1,302,954

 
3,850,379

Prepaid expenses, other current assets and other assets
(2,326,004
)
 
4,391,126

Accounts payable and accrued liabilities
4,414,400

 
2,669,471

Deferred revenue
515,743

 
(115,831
)
Net cash provided by (used in) operating activities
18,198,772

 
22,670,461

Cash flows from investing activities:
 
 
 
Purchase of property and equipment
(404,446
)
 
(1,055,020
)
Acquisition of business, net of cash and restricted cash acquired

 
(65,802,792
)
Net cash provided by (used in) investing activities
(404,446
)
 
(66,857,812
)
Cash flows from financing activities:
 
 
 
Proceeds from exercise of stock options
824,307

 
2,797,893

Proceeds from issuance of common stock

 
42,995,371

Proceeds from exercise of warrants

 
2,396,250

Payments of capital leases
(211,290
)
 
(202,401
)
Proceeds from long-term debt

 
15,000,000

Payments for restricted stock awards withheld for taxes
(306,127
)
 
(507,398
)
Payments of contingent consideration
(5,000,000
)
 

Payments on long-term debt
(15,559,842
)
 
(15,000,000
)
Net cash provided by (used in) financing activities
(20,252,952
)
 
47,479,715

Change in cash, cash equivalents, and restricted cash prior to effects of foreign currency exchange rate
(2,458,626
)
 
3,292,364

Effect of foreign currency exchange rate (translation)
(271,982
)
 
(2,072
)
Net (decrease) increase in cash, cash equivalents, and restricted cash
(2,730,608
)
 
3,290,292

Cash, cash equivalents, and restricted cash at beginning of period
25,052,995

 
22,246,015

Cash, cash equivalents, and restricted cash at end of period
$
22,322,387

 
$
25,536,307

Supplemental disclosure of cash flow information:
 
 
 
Cash paid for interest
$
1,598,781

 
$
279,913






THE MEET GROUP, INC. AND SUBSIDIARIES
RECONCILIATION OF TOTAL REVENUE
(UNAUDITED)

 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2018
 
2017(1)
 
2018
 
2017(1)
 
$
 
%
 
$
 
%
 
$
 
%
 
$
 
%
User pay revenue
$
28,058,843

 
61.4
%
 
$
8,582,700

 
26.6
%
 
$
76,034,926

 
60.3
%
 
$
18,342,865

 
21.9
%
Advertising
17,657,210

 
38.6
%
 
23,663,772

 
73.4
%
 
50,120,665

 
39.7
%
 
65,291,872

 
78.1
%
Total revenue
$
45,716,053

 
100.0
%
 
$
32,246,472

 
100.0
%
 
$
126,155,591

 
100.0
%
 
$
83,634,737

 
100.0
%
(1) Prior period amounts have not been adjusted under the modified retrospective adoption method.





THE MEET GROUP, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO ADJUSTED EBITDA
(UNAUDITED)

 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2018
 
2017
 
2018
 
2017
Net income (loss)
$
1,297,931

 
$
2,222,722

 
$
(3,150,002
)
 
$
3,525,163

 
 
 
 
 
 
 
 
Interest expense
559,345

 
244,361

 
1,838,325

 
421,947

Income tax (benefit) expense
196,146

 
(2,202,152
)
 
484,552

 
(4,934,216
)
Depreciation and amortization
3,423,929

 
2,969,570

 
10,558,712

 
7,619,584

Stock-based compensation expense
2,767,196

 
2,299,696

 
7,026,991

 
5,802,046

Acquisition and restructuring
416,141

 
3,378,838

 
4,802,694

 
8,648,692

(Gain) loss on foreign currency transactions
6,229

 
(9,357
)
 
(101,030
)
 
2,072

Adjusted EBITDA
$
8,666,917

 
$
8,903,678

 
$
21,460,242

 
$
21,085,288

 
 
 
 
 
 
 
 
GAAP basic net income (loss) per common stockholder
$
0.02

 
$
0.03

 
$
(0.04
)
 
$
0.05

GAAP diluted net income (loss) per common stockholder
$
0.02

 
$
0.03

 
$
(0.04
)
 
$
0.05

Basic adjusted EBITDA per common stockholder
$
0.12

 
$
0.12

 
$
0.30

 
$
0.31

Diluted adjusted EBITDA per common stockholder
$
0.11

 
$
0.12

 
$
0.28

 
$
0.29

 
 
 
 
 
 
 
 
Weighted average shares outstanding:
 
 
 
 
 
 
 
Basic
73,362,467

 
71,800,274

 
72,704,205

 
67,711,324

Diluted
79,365,576

 
76,078,563

 
77,831,545

 
72,425,863






THE MEET GROUP, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME
(UNAUDITED)


 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2018
 
2017
 
2018
 
2017
GAAP Net income (loss)
$
1,297,931

 
$
2,222,722

 
$
(3,150,002
)
 
$
3,525,163

 
 
 
 
 
 
 
 
Stock-based compensation expense
2,767,196

 
2,299,696

 
7,026,991

 
5,802,046

Amortization of intangibles
2,904,120

 
2,378,152

 
8,915,214

 
5,982,459

Income tax (benefit) expense
196,146

 
(2,202,152
)
 
484,552

 
(4,934,216
)
Acquisition and restructuring
416,141

 
3,378,838

 
4,802,694

 
8,648,692

Non-GAAP net income
$
7,581,534

 
$
8,077,256

 
$
18,079,449

 
$
19,024,144

 
 
 
 
 
 
 
 
GAAP basic net income (loss) per common stockholder
$
0.02

 
$
0.03

 
$
(0.04
)
 
$
0.05

GAAP diluted net income (loss) per common stockholder
$
0.02

 
$
0.03

 
$
(0.04
)
 
$
0.05

Basic Non-GAAP net income per common stockholder
$
0.10

 
$
0.11

 
$
0.25

 
$
0.28

Diluted Non-GAAP net income per common stockholder
$
0.10

 
$
0.11

 
$
0.23

 
$
0.26

 
 
 
 
 
 
 
 
Weighted average shares outstanding:
 
 
 
 
 
 
 
Basic
73,362,467

 
71,800,274

 
72,704,205

 
67,711,324

Diluted
79,365,576

 
76,078,563

 
77,831,545

 
72,425,863








Webcast and Conference Call Details

Management will host a webcast and conference call to discuss third quarter 2018 financial results today, November 7, 2018 at 8:30 a.m. Eastern time. To access the call dial 866-572-9351 (US and Canada) or 703-736-7482 (International) and when prompted provide the participant passcode 3187279 to the operator. An audio replay will be available at 855-859-2056 domestically or 404-537-3406 internationally, using passcode 3187279 through November 14, 2018. In addition, a webcast of the conference call will be available live on the Investor Relations section of the Company’s website at www.themeetgroup.com and a replay of the webcast will be available for 90 days.

About The Meet Group

The Meet Group (NASDAQ: MEET) is a portfolio of mobile social entertainment apps designed to meet the universal need for human connection. We leverage a powerful live-streaming video platform, empowering our global community to forge meaningful connections. Our primary apps, MeetMe©, LOVOO©, Skout©, and Tagged©, keep millions of mobile daily active users entertained and engaged and originate untold numbers of casual chats, friendships, dates, and marriages. Our apps, available on iPhone, iPad, and Android in multiple languages, use innovative products and sophisticated data science to let our users stream live video, send gifts, chat, and share photos. The Meet Group has a diversified revenue mix consisting of in-app purchases, subscription, and advertising, and we have offices in New Hope, Philadelphia, San Francisco, Dresden, and Berlin. For more information, visit themeetgroup.com, and follow us on FacebookTwitter or LinkedIn.

Forward-Looking Statements

Certain statements in this press release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including whether fourth quarter 2018 and full year 2018 revenue and Adjusted EBITDA will be in the projected range, whether momentum will continue as expected, whether we have set the stage for sustainable long-term revenue growth as expected, whether our investment in livestreaming video will continue to yield strong results, whether there is a return to seasonal trends in advertising, whether there is an opportunity to grow ad revenue in the fourth quarter and whether the opportunity to continue to grow video engagement and revenue is significant. All statements other than statements of historical facts contained herein are forward-looking statements. The words “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “could,” “target,” “potential,” “project,” “is likely,” “expect” and similar expressions, as they relate to us, are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. Important factors that could cause actual results to differ from those in the forward-looking statements include the risk that our applications will not function easily or otherwise as anticipated, the risk that we will not launch additional features and upgrades as anticipated, the risk that unanticipated events affect the functionality of our applications with popular mobile operating systems, any changes in such operating systems that degrade our mobile applications’ functionality and other unexpected issues which could adversely affect usage on mobile devices. Further information on our risk factors is contained in our filings with the Securities and Exchange Commission (“SEC”), including the Form 10-K for the year ended December 31, 2017 filed with the SEC on March 16, 2018 and our Quarterly Report on Form 10-Q for the quarters ended March 31, 2018 and June 30, 2018 filed with the SEC on May 7, 2018 and August 2, 2018, respectively. Any forward-looking statement made by us herein speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.




Regulation G – Non-GAAP Measures

The Company defines mobile traffic and engagement metrics (including MAU, DAU, chats per day, and new users per day) to include mobile app traffic for all properties and mobile web traffic for MeetMe, Skout and Lovoo.

The Company uses Adjusted EBITDA and Non-GAAP Net Income, which are not calculated and presented in accordance with U.S. generally accepted accounting principles (“GAAP”), in evaluating its financial and operational decision making and as a means to evaluate period-to period comparison. The Company uses these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. The Company presents these non-GAAP financial measures because it believes them to be an important supplemental measure of performance that is commonly used by securities analysts, investors and other interested parties in the evaluation of companies in our industry. We refer you to the reconciliations below.

The Company defines Adjusted EBITDA as earnings (or loss) from operations before interest expense, benefit or provision for income taxes, depreciation and amortization, stock-based compensation, changes in warrant obligations, nonrecurring acquisition, restructuring or other expenses, gain or loss on foreign currency adjustment, and goodwill and long-lived asset impairment charges, if any. The Company excludes stock-based compensation because it is non-cash in nature. The Company defines Non-GAAP Net Income as earnings (or loss) before benefit or provision for income taxes, amortization on intangibles, non-recurring acquisition and restructuring costs, goodwill and long-lived asset impairment charges and non-cash stock-based compensation.

Non-GAAP financial measures should not be considered as an alternative to net income, operating income, cash flow from operating activities, as a measure of liquidity or any other financial measure. They may not be indicative of the historical operating results of the Company nor is it intended to be predictive of potential future results. Investors should not consider non-GAAP financial measures in isolation or as a substitute for performance measures calculated in accordance with GAAP.




 


# # #





Investor Contact:
Leslie Arena
larena@themeetgroup.com
267 714 6418
 
Media Contact:
Brandyn Bissinger
bbissinger@themeetgroup.com
267 446 7010



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