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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.

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

Source:SITO Mobile, Ltd.