LAS VEGAS, May 9, 2019 /PRNewswire/ -- Remark Holdings,
Inc. (NASDAQ: MARK), a diversified global technology company with
leading artificial intelligence (AI) solutions and digital media
properties, reported its financial results for the first quarter
ended March 31, 2019.
Management Commentary
"During the first quarter, we
continued to build-out our AI products in the large supermarket
space, while working with additional partners in laying the ground
work to deploy our AI solutions in the retail, public and workplace
safety and surveillance arenas," said Kai-Shing Tao, Chairman and Chief Executive
Officer of Remark Holdings. "Our current retail initiative is
leading to tangible gains for our strategic partner in the areas of
consumer targeting, engagement and in-store revenue, which bodes
well for the ongoing deployment of our solutions in additional
large retail venues. We're also executing against an active
pipeline of proof of concept initiatives that introduce our
proprietary technologies, application flexibility and
cost-efficient approach to a range of blue-chip companies in
China and Southeast
Asia.
"We are on track in divesting Vegas.com and moving forward in
our transition into a pure-play AI enterprise. The sale will
allow us to reduce our debt, restructure our balance sheet and
streamline our cost structure, while expanding our ability to work
with strategic partners in the AI space. We remain focused on
launching our AI solutions in multiple sectors, with the goal of
building a stream of recurring revenues, supported by modest
recurring capital costs."
Recent Highlights
- Continuing to work closely with a diverse group of clients in
executing on various stages of AI product deployment tailored to
the retail, construction, traffic control, food safety and
entertainment segments.
- The deployment of Remark's Smart AI product in two large
supermarkets in China is leading
to tangible gains for the Company's strategic partner in the areas
of consumer targeting, engagement and in-store revenue, which bodes
well for the ongoing deployment of the Company's solutions in
additional, large retail venues.
- Remark's facial recognition algorithm was ranked in the top
twenty in the latest Face Recognition Vendor Test (FVRT) 1:1
evaluation conducted by the U.S. National Institute of Standards
and Technology (NIST). Remark's AI facial recognition product beat
out top AI companies in the world, including billion-dollar
unicorns, such as SenseTime and Face++.
- Remark remains on track regarding the sale of Vegas.com,
subject to certain closing conditions, including approval of the
transaction by the Company's stockholders. A special meeting of
stockholders will be held on May 14,
2019 to obtain stockholder approval for the transaction. The
closing of the transaction is expected to take place during the
second quarter of 2019.
Three Months Ended March 31,
2019 compared to Three Months Ended March 31, 2018
- Revenue for the first quarter of 2019 was approximately
$19.5 million, compared to
$16.7 million in the first quarter of
2018. Results reflect a $3.4 million
increase in revenue resulting from transaction growth in the Travel
& Entertainment segment, offset by a $0.6 million decrease in revenue from the
Company's other business units. Our Technology & Data
Intelligence segment contributed $0.4
million in revenue from the deployment of our AI based
retail and safety solutions. A further $0.9
million was delivered for our AI- based public safety
solution, but revenue recognition will be deferred until such time
as we collect the amounts due from the customer. We anticipate
collections to begin in the second quarter of 2019.
- Total cost and expense for the first quarter of 2019 was
$25.3 million, compared to
$37.9 million in 2018, driven
primarily by a reduction in stock-based compensation expense to
$0.3 million, from $11.6 million in 2018, which resulted because the
prior-year period included at the corporate level an $11.6 million stock option grant to Remark's CEO
while the first quarter of 2019 had no individual grants of similar
scale. The Company's cost and expense for the first quarter of 2018
also included $2.3 million of rent
expense related to a liability the Company recorded when it
abandoned certain leased property prior to the end of the lease
contract.
- The decreases in stock-based compensation expense and rent
expense at the corporate level were partially offset by an increase
of $0.8 million in paid search
marketing cost in Remark's Travel & Entertainment segment
resulting from the competitive nature of the paid-search
marketplace, and by an increase of $0.5
million in stock-based compensation in Remark's Technology
& Data Intelligence segment as a result of changes in the
Company's liability related to awards granted to employees in
China.
- Operating loss was $5.8 million,
compared to $21.2 million due to the
combined effect of the revenue increase and the decrease in total
cost and expense.
- Adjusted EBITDA was negative $3.1
million, compared to negative $6.9
million.
- Net loss was $8.9 million, or
$0.23 per diluted share, compared to
a net loss of $14.0 million, or
$0.43 per diluted share. Net loss for
the first quarter of 2019 included a non-cash loss of $1.4 million related to a change in the fair
value of Remark's warrant liability, which occurred due to the
increase in the Company's stock price during the period. The same
period of 2018 included a non-cash gain of $8.6 million related to a change in the fair
value of Remark's warrant liability, which occurred due to the
decrease in the Company's stock price during that period.
- At March 31, 2019, the cash and
cash equivalents balance was $16.5
million, and total restricted cash was $11.2 million, bringing the total combined cash
position to $27.7 million, compared
to a total combined cash position of $25.5
million at December 31, 2018.
Cash increased primarily due to timing of payments related to
elements of working capital.
Conference Call Information
Mr. Tao will hold a conference call today May 9, 2019 at 4:30 p.m.
Eastern Time (1:30 p.m. Pacific
Time) to discuss these financial results. A question and
answer session will follow management's presentation.
Toll-Free Number: 866-548-4713
International Number: 323-794-2093
Conference ID: 1500520
Please call the conference telephone number 10 minutes prior to
the start time. An operator will register your name and
organization.
The conference call will be broadcast simultaneously and
available for replay via the investor section of the Company's
website here.
A replay of the call will be available after 7:30 pm Eastern time on the same day through
May 13, 2019.
Toll-Free Replay Number: 844-512-2921
International Replay Number: 412-317-6671
Replay ID: 1500520
[Tables to follow]
About Remark Holdings, Inc.
Remark Holdings, Inc.
(NASDAQ: MARK) delivers an integrated suite of AI solutions that
enable businesses and organizations to solve problems, reduce risk
and deliver positive outcomes. The company's easy-to-install AI
products are being rolled out in a wide range of applications
within the retail, financial, public safety and workplace arenas.
The company also owns and operates digital media properties that
deliver relevant, dynamic content and ecommerce solutions. The
company is headquartered in Las Vegas,
Nevada, with additional operations in Los Angeles, California and in Beijing, Shanghai, Chengdu and Hangzhou, China. For more information, please
visit the company's website at www.remarkholdings.com.
Forward-Looking Statements
This press release may
contain forward-looking statements, including information relating
to future events, future financial performance, strategies,
expectations, competitive environment and regulation. Words such as
"may," "should," "could," "would," "predicts," "potential,"
"continue," "expects," "anticipates," "future," "intends," "plans,"
"believes," "estimates," and similar expressions, as well as
statements in future tense, identify forward-looking statements.
These statements involve known and unknown risks, uncertainties and
other factors, including those discussed in Part I, Item 1A. Risk
Factors in Remark Holdings' Annual Report on Form 10-K and Remark
Holdings' other filings with the SEC. Any forward-looking
statements reflect Remark Holdings' current views with respect to
future events, are based on assumptions and are subject to risks
and uncertainties. Given such uncertainties, you should not place
undue reliance on any forward-looking statements, which represent
Remark Holdings' estimates and assumptions only as of the date
hereof. Except as required by law, Remark Holdings undertakes no
obligation to update or revise publicly any forward-looking
statements after the date hereof, whether as a result of new
information, future events or otherwise.
Company Contact:
Alison
Davidson
Remark Holdings, Inc.
adavidson@remarkholdings.com
702-701-9514
Investor Relations Contact:
Brad Edwards
The Plunkett Group, Inc.
Brad@ThePlunkettGroup.com
212-739-6740
REMARK HOLDINGS,
INC. AND SUBSIDIARIES
|
Condensed
Consolidated Balance Sheets
|
(dollars in
thousands, except per share amounts)
|
|
|
|
|
|
March
31, 2019
|
|
December 31,
2018
|
|
(Unaudited)
|
|
|
Assets
|
|
|
|
Cash and cash
equivalents
|
$
|
16,512
|
|
|
$
|
14,410
|
|
Restricted
cash
|
11,139
|
|
|
11,138
|
|
Trade accounts
receivable, net
|
4,416
|
|
|
6,369
|
|
Prepaid expense and
other current assets
|
13,500
|
|
|
12,128
|
|
Notes receivable,
current
|
100
|
|
|
100
|
|
Total current
assets
|
45,667
|
|
|
44,145
|
|
Property and
equipment, net
|
9,654
|
|
|
10,570
|
|
Operating lease
assets
|
6,108
|
|
|
—
|
|
Investment in
unconsolidated affiliates
|
1,960
|
|
|
2,005
|
|
Intangibles,
net
|
16,749
|
|
|
17,930
|
|
Goodwill
|
18,514
|
|
|
18,514
|
|
Other long-term
assets
|
852
|
|
|
644
|
|
Total
assets
|
$
|
99,504
|
|
|
$
|
93,808
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
Accounts
payable
|
$
|
21,276
|
|
|
$
|
30,876
|
|
Accrued expense and
other current liabilities
|
31,921
|
|
|
24,664
|
|
Deferred merchant
booking
|
10,747
|
|
|
4,664
|
|
Contract
liability
|
6,089
|
|
|
4,063
|
|
Note
payable
|
3,000
|
|
|
3,000
|
|
Current maturities of
long-term debt, net of unamortized discount and debt
issuance
cost
|
35,547
|
|
|
35,314
|
|
Total current
liabilities
|
108,580
|
|
|
102,581
|
|
Operating lease
liabilities, long-term
|
7,339
|
|
|
—
|
|
Warrant
liability
|
2,799
|
|
|
1,383
|
|
Other
liabilities
|
254
|
|
|
2,968
|
|
Total
liabilities
|
118,972
|
|
|
106,932
|
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
Preferred stock,
$0.001 par value; 1,000,000 shares authorized; none
issued
|
—
|
|
|
—
|
|
Common stock, $0.001
par value; 100,000,000 shares authorized; 40,722,229 and
39,053,312 shares
issued and outstanding; each at March 31, 2019 and December
31,
2018,
respectively
|
41
|
|
|
39
|
|
Additional
paid-in-capital
|
310,618
|
|
|
308,018
|
|
Accumulated other
comprehensive income
|
(62)
|
|
|
32
|
|
Accumulated
deficit
|
(330,065)
|
|
|
(321,213)
|
|
Total stockholders'
deficit
|
(19,468)
|
|
|
(13,124)
|
|
Total liabilities and
stockholders' deficit
|
$
|
99,504
|
|
|
$
|
93,808
|
|
REMARK HOLDINGS,
INC. AND SUBSIDIARIES
|
Unaudited Condensed
Consolidated Statements of Operations and Comprehensive
Loss
|
(dollars in
thousands, except per share amounts)
|
|
|
|
Three Months Ended
March 31,
|
|
2019
|
|
2018
|
Revenue
|
$
|
19,463
|
|
|
$
|
16,724
|
|
Cost and
expense
|
|
|
|
Cost of revenue
(excluding depreciation and amortization)
|
4,369
|
|
|
4,032
|
|
Sales and
marketing
|
10,107
|
|
|
9,351
|
|
Technology and
development
|
3,502
|
|
|
3,049
|
|
General and
administrative
|
4,606
|
|
|
18,564
|
|
Depreciation and
amortization
|
2,472
|
|
|
2,718
|
|
Other operating
expense
|
251
|
|
|
216
|
|
Total cost and
expense
|
25,307
|
|
|
37,930
|
|
Operating
loss
|
(5,844)
|
|
|
(21,206)
|
|
Other income
(expense)
|
|
|
|
Interest
expense
|
(1,525)
|
|
|
(1,406)
|
|
Other income
(expense), net
|
(41)
|
|
|
11
|
|
Change in fair value
of warrant liability
|
(1,416)
|
|
|
8,610
|
|
Other loss
|
(26)
|
|
|
(31)
|
|
Total other income
(expense), net
|
(3,008)
|
|
|
7,184
|
|
Loss before income
taxes
|
(8,852)
|
|
|
(14,022)
|
|
Benefit from (provision
for) income taxes
|
—
|
|
|
(31)
|
|
Net loss
|
$
|
(8,852)
|
|
|
$
|
(14,053)
|
|
Other comprehensive
income (loss)
|
|
|
|
Foreign currency
translation adjustments
|
(94)
|
|
|
198
|
|
Comprehensive
loss
|
$
|
(8,946)
|
|
|
$
|
(13,855)
|
|
|
|
|
|
Weighted-average
shares outstanding, basic and diluted
|
39,258
|
|
|
32,395
|
|
|
|
|
|
|
|
|
|
Net loss per share,
basic and diluted
|
$
|
(0.23)
|
|
|
$
|
(0.43)
|
|
|
|
|
|
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SOURCE Remark Holdings, Inc.