RENT Rent the Runway Inc

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

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

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

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