Leaf Group Ltd. (NYSE: LEAF), a diversified consumer internet
company, today reported financial results for the third quarter
ended September 30, 2019.
|
|
Financial Summary |
|
(In thousands, except per share
amounts)(unaudited) |
|
|
|
Three months ended |
|
Nine months ended |
|
|
September 30, |
|
September 30, |
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
Marketplaces revenue |
|
$ |
23,327 |
|
|
$ |
24,712 |
|
|
$ |
63,354 |
|
|
$ |
65,334 |
|
Media revenue |
|
|
16,703 |
|
|
|
16,744 |
|
|
|
46,503 |
|
|
|
44,189 |
|
Total revenue |
|
$ |
40,030 |
|
|
$ |
41,456 |
|
|
$ |
109,857 |
|
|
$ |
109,523 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(4,485 |
) |
|
$ |
(6,035 |
) |
|
$ |
(21,533 |
) |
|
$ |
(18,253 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
EPS - basic and diluted |
|
$ |
(0.17 |
) |
|
$ |
(0.24 |
) |
|
$ |
(0.83 |
) |
|
$ |
(0.75 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA(1) |
|
$ |
300 |
|
|
$ |
128 |
|
|
$ |
(7,265 |
) |
|
$ |
(1,733 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by
operating activities |
|
$ |
4,103 |
|
|
$ |
2,477 |
|
|
$ |
(8,745 |
) |
|
$ |
(3,924 |
) |
Free cash flow(1) |
|
$ |
2,297 |
|
|
$ |
900 |
|
|
$ |
(13,822 |
) |
|
$ |
(9,031 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) These non-GAAP financial measures, and reasons for why
the Company believes these non-GAAP financial measures are useful,
are described below and reconciled to their most directly
comparable GAAP measures in the accompanying tables.
Q3 2019 Financial Summary:
Leaf Group is comprised of two reporting segments: Marketplaces
and Media.
For the third quarter of 2019:
- Total revenue decreased 3% year-over-year from $41.5 million to
$40.0 million due to a 6% decrease in Marketplaces revenue while
Media revenue remained flat.
- Marketplaces revenue declined 6% year-over-year from $24.7
million to $23.3 million, reflecting a 13% year-over-year decline
in Society6 Group revenue, partially offset by a 59% increase in
Saatchi Art Group revenue year-over-year.
- Media revenue remained flat year-over-year at $16.7 million.
While there was an increase in revenue from our premium sites,
including Hunker, it was offset by a decrease in revenue from
Livestrong.com.
- Net loss was $4.5 million for the quarter, decreasing 26%
year-over-year, and Adjusted EBITDA was $0.3 million for the
quarter, reflecting an increase of $0.2 million
year-over-year.
- Cash and cash equivalents was $11.8 million at period end with
no debt outstanding.
- On November 7, 2019, Leaf Group entered into a loan and
security agreement providing for up to $10.0 million in a 364-day
senior secured working capital revolving line of credit with
Silicon Valley Bank.
- On a consolidated basis, Leaf Group’s properties reached over
71 million monthly unique visitors in the U.S. in September 2019
(source: September 2019 U.S. comScore).
Operating Metrics:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
Nine months ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
|
2019 |
|
2018 |
|
% Change |
|
|
2019 |
|
2018 |
|
% Change |
|
Marketplaces
Metrics: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Transactions(1) |
|
|
316,490 |
|
|
374,008 |
|
(15) |
% |
|
|
845,859 |
|
|
955,223 |
|
(11) |
% |
Gross Transaction Value(2) (in thousands) |
|
$ |
29,341 |
|
$ |
30,216 |
|
(3) |
% |
|
$ |
81,526 |
|
$ |
81,315 |
|
0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Media
Metrics: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Visits per Google Analytics(3) (in thousands) |
|
|
736,608 |
|
|
665,193 |
|
11 |
% |
|
|
2,194,681 |
|
|
2,221,967 |
|
(1) |
% |
Revenue per Visit (RPV)(4) |
|
$ |
22.68 |
|
$ |
25.17 |
|
(10) |
% |
|
$ |
21.19 |
|
$ |
19.89 |
|
7 |
% |
(1) Number of transactions is defined as the total number of
Marketplaces transactions successfully completed by a customer
during the applicable period, excluding certain transactions
generated by Saatchi Art’s The Other Art Fair, such as sales of
stand space to artists at fairs, sponsorship fees and ticket
sales.
(2) Gross transaction value is defined as the total dollar value
of Marketplaces transactions, excluding the revenue from certain
transactions generated by Saatchi Art’s The Other Art Fair, such as
sales of stand space to artists at fairs, sponsorship fees and
ticket sales. Gross transaction value is the total amount paid by
the customer including the total product price inclusive of artist
margin, shipping charges, sales taxes, and is net of any
promotional discounts. Gross transaction value does not reflect any
subsequent cancellations, refunds or credits and does not represent
revenue earned by the Company.
(3) Visits per Google Analytics is defined as the total number
of times users access the Company’s content across (a) one of its
owned and operated properties and/or (b) one of its customers’
properties, to the extent that the visited customer web pages are
hosted by the Company. In each case, breaks of access of at least
30 minutes constitute a unique visit. Additionally, a visit is also
considered to have ended at midnight or if a user arrives via one
campaign, leaves, and then comes back via a different campaign.
(4) RPV is defined as Media revenue per one thousand visits.
Shareholder Letter and Conference Call
Information
Leaf Group’s detailed Shareholder Letter is available at
https://ir.leafgroup.com/investor-overview/quarterly-and-annual-results/default.aspx.
Leaf Group will host a corresponding conference call to answer
questions today at 5:00 p.m. Eastern time (2:00 p.m. Pacific time).
To access the conference call, dial 833-287-0803 (U.S./CAN) or
647-689-4462 (International) and reference conference ID
9171698. To participate on the live call, analysts should
dial-in at least 10 minutes prior to the commencement of the call.
A live webcast also will be available on the Investor Relations
section of Leaf Group’s corporate website at
http://ir.leafgroup.com and via replay beginning approximately two
hours after the completion of the call.
Use of Non-GAAP Financial Measures
To supplement its consolidated financial statements, which are
prepared and presented in accordance with generally accepted
accounting principles in the United States of America (“GAAP”),
Leaf Group uses certain non-GAAP financial measures, as described
below. These non-GAAP financial measures are presented to enhance
the user’s overall understanding of Leaf Group’s financial
performance and should not be considered a substitute for, or
superior to, the financial information prepared and presented in
accordance with GAAP. The non-GAAP financial measures presented in
this release, together with the GAAP financial results, are the
primary measures used by the Company’s management and board of
directors to understand and evaluate the Company’s financial
performance and operating trends, including period-to-period
comparisons, because they exclude certain expenses and gains that
management believes are not indicative of the Company’s core
operating results. Management also uses these measures to prepare
and update the Company’s short and long term financial and
operational plans, to evaluate investment decisions, and in its
discussions with investors, commercial bankers, equity research
analysts and other users of the Company’s financial statements.
Accordingly, the Company believes that these non-GAAP financial
measures provide useful information to investors and others in
understanding and evaluating the Company’s operating results in the
same manner as the Company’s management and in comparing operating
results across periods and to those of Leaf Group’s peer
companies.
The use of non-GAAP financial measures has certain limitations
because they do not reflect all items of income and expense, or
cash flows, that affect the Company’s financial performance and
operations. An additional limitation of non-GAAP financial measures
is that they do not have standardized meanings, and therefore other
companies, including peer companies, may use the same or similarly
named measures but exclude or include different items or use
different computations. Management compensates for these
limitations by reconciling these non-GAAP financial measures to
their most comparable GAAP financial measures in the tables
captioned “Reconciliations of Non-GAAP Financial Measures” included
at the end of this release. Investors and others are encouraged to
review the Company’s financial information in its entirety and not
rely on a single financial measure.
The Company defines Adjusted earnings before interest,
taxes, depreciation and amortization (Adjusted EBITDA) as
net income (loss) excluding interest (income) expense, income tax
expense (benefit), and certain other non-cash or non-recurring
items impacting net income (loss) from time to time, principally
comprised of depreciation and amortization, stock-based
compensation, contingent payments to certain key employees/equity
holders of acquired businesses and other payments attributable to
acquisition, disposition or corporate realignment activities.
Management believes that the exclusion of certain expenses and
gains in calculating Adjusted EBITDA provides a useful measure for
period-to-period comparisons of the Company’s underlying core
revenue and operating costs that is focused more closely on the
current costs necessary to operate the Company’s businesses, and
reflects its ongoing business in a manner that allows for
meaningful analysis of trends. Management also believes that
excluding certain non-cash charges can be useful because the
amounts of such expenses is the result of long-term investment
decisions made in previous periods rather than day-to-day operating
decisions.
The Company defines Segment Operating
Contribution as earnings before corporate or unallocated
expenses and also excludes: (a) depreciation expense; (b)
amortization of intangible assets; (c) share-based compensation
expense; (d) interest and other income (expense); (e) income taxes;
and (f) contingent payments to certain key employees/equity holders
of acquired businesses. Management believes that the exclusion of
certain expenses and gains in calculating Segment Operating
Contribution provides a useful measure for period-to-period
comparisons of the segment’s underlying revenue and operating costs
that is focused more closely on the current costs necessary to
operate the segment, and reflects the segment’s ongoing business in
a manner that allows for meaningful analysis of trends. Management
also believes that excluding certain non-cash charges can be useful
because the amounts of such expenses is the result of long-term
investment decisions made in previous periods rather than
day-to-day operating decisions.
The Company defines Free Cash Flow as net cash
provided by (used in) operating activities net of cash flows from
contingent payments to certain key employees/equity holders of
acquired businesses; other payments attributable to acquisition,
disposition or corporate realignment activities; purchases of
property and equipment; and purchases of intangible assets.
Management believes that Free Cash Flow provides investors with
useful information to measure operating liquidity because it
reflects the Company’s underlying cash flows from recurring
operating activities after investing in capital assets and
intangible assets. Free Cash Flow is used by management, and may
also be useful for investors, to assess the Company’s ability to
generate cash flow for a variety of strategic opportunities,
including reinvesting in its businesses, pursuing new business
opportunities and potential acquisitions, paying dividends and
repurchasing shares.
About Leaf Group
Leaf Group Ltd. (NYSE: LEAF) is a diversified consumer internet
company that builds enduring, digital-first brands that reach
passionate audiences in large and growing lifestyle categories,
including fitness and wellness (Well+Good, Livestrong.com and
MyPlate App), and art and design (Saatchi Art, Society6 and
Hunker). For more information about Leaf Group,
visit www.leafgroup.com.
Cautionary Information Regarding 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. The forward-looking
statements set forth in this press release include, among other
things, statements regarding potential synergies achieved from
acquisitions, the impact of strategic operational changes and the
Company’s future financial performance. In addition, statements
containing words such as “guidance,” “may,” “believe,”
“anticipate,” “expect,” “intend,” “plan,” “project,” “projections,”
“business outlook,” and “estimate” or similar expressions
constitute forward-looking statements. Actual results may differ
materially from the results predicted, and reported results should
not be considered an indication of future performance. These
forward-looking statements involve risks and uncertainties
regarding the Company’s future financial performance; could cause
actual results or developments to differ materially from those
indicated due to a number of factors affecting Leaf Group’s
operations, markets, products and services; and are based on
current expectations, estimates and projections about the Company’s
industry, financial condition, operating performance and results of
operations, including certain assumptions related thereto.
Potential risks and uncertainties that could affect the Company’s
operating and financial results are described in Leaf Group’s
annual report on Form 10-K for the fiscal year ending December 31,
2018 filed with the Securities and Exchange Commission
(http://www.sec.gov) on March 4, 2019, as such risks and
uncertainties may be updated from time to time in Leaf Group’s
quarterly reports on Form 10-Q filed with the Securities and
Exchange Commission, including, without limitation, information
under the captions “Risk Factors” and “Management's Discussion and
Analysis of Financial Condition and Results of Operations.” These
risks and uncertainties include, among others: the Company’s
ability to successfully drive and increase traffic to its
marketplaces and media properties; changes in the methodologies of
internet search engines, including ongoing algorithmic changes made
by Google, Bing and Yahoo!; the Company’s ability to attract new
and repeat customers and artists to its marketplaces and
successfully grow its marketplace businesses; the potential impact
on advertising-based revenue from lower ad unit rates, a reduction
in online advertising spending, a loss of advertisers, lower
advertising yields, increased availability of ad blocking software,
particularly on mobile devices and/or ongoing changes in ad unit
formats; the Company’s dependence on various agreements with a
specific business partner for a significant portion of its
advertising revenue; the effects of shifting consumption of media
content and online shopping from desktop to mobile devices and/or
social media platforms; the Company’s history of incurring net
operating losses; the Company’s ability to obtain capital when
desired on favorable terms; potential write downs, reserves against
or impairment of assets including receivables, goodwill,
intangibles (including media content) or other assets; the
Company’s ability to effectively integrate, manage, operate and
grow acquired businesses; the Company’s ability to retain key
personnel; the Company’s ability to prevent any actual or perceived
security breaches; the Company’s ability to expand its business
internationally; the review of strategic alternatives; the
Company’s ability to generate long-term value for its stockholders;
and any future actions that may be taken by activist stockholders.
From time to time, the Company may consider acquisitions or
divestitures that, if consummated, could be material. Any
forward-looking statements regarding financial metrics are based
upon the assumption that no such acquisition or divestiture is
consummated during the relevant periods. If an acquisition or
divestiture were consummated, actual results could differ
materially from any forward-looking statements. Any forward-looking
statement made by the Company in this press release is based only
on information currently available to the Company and speaks only
as of the date on which it is made. The Company undertakes no
obligation to revise or update any forward-looking information,
whether written or oral, that may be made from time to time,
whether as a result of new information, future developments or
otherwise, except as required by law, and may not provide this type
of information in the future.
(Tables Follow)
Investor
Contacts: |
|
Jantoon ReigersmanChief
Financial Officer(310) 917-6413IR@leafgroup.com Shawn
MilneInvestor Relations(415)
264-3419shawn.milne@leafgroup.com |
|
Leaf Group Ltd. and Subsidiaries
Unaudited Condensed Consolidated Statements of Operations (In
thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
Nine months ended |
|
September 30, |
|
September 30, |
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
Product revenue |
$ |
19,611 |
|
|
$ |
22,482 |
|
|
$ |
53,021 |
|
|
$ |
58,125 |
|
Service revenue |
|
20,419 |
|
|
|
18,974 |
|
|
|
56,836 |
|
|
|
51,398 |
|
Total revenue |
|
40,030 |
|
|
|
41,456 |
|
|
|
109,857 |
|
|
|
109,523 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
Product costs (exclusive of amortization of intangible assets shown
separately below)(1) |
|
14,221 |
|
|
|
16,202 |
|
|
|
40,049 |
|
|
|
42,003 |
|
Service costs (exclusive of amortization of intangible assets shown
separately below)(1)(2) |
|
9,107 |
|
|
|
8,229 |
|
|
|
26,000 |
|
|
|
21,077 |
|
Sales and marketing(1)(2) |
|
7,372 |
|
|
|
8,796 |
|
|
|
22,498 |
|
|
|
23,644 |
|
Product development(1)(2) |
|
4,973 |
|
|
|
5,558 |
|
|
|
15,652 |
|
|
|
15,362 |
|
General and administrative(1)(2) |
|
8,072 |
|
|
|
7,615 |
|
|
|
24,724 |
|
|
|
22,584 |
|
Amortization of intangible assets |
|
807 |
|
|
|
1,133 |
|
|
|
2,619 |
|
|
|
3,115 |
|
Total operating expenses |
|
44,552 |
|
|
|
47,533 |
|
|
|
131,542 |
|
|
|
127,785 |
|
Loss from operations |
|
(4,522 |
) |
|
|
(6,077 |
) |
|
|
(21,685 |
) |
|
|
(18,262 |
) |
Interest income |
|
44 |
|
|
|
116 |
|
|
|
232 |
|
|
|
164 |
|
Interest expense |
|
(5 |
) |
|
|
(2 |
) |
|
|
(15 |
) |
|
|
(4 |
) |
Other income (expense),
net |
|
(6 |
) |
|
|
(59 |
) |
|
|
6 |
|
|
|
(92 |
) |
Loss before income taxes |
|
(4,489 |
) |
|
|
(6,022 |
) |
|
|
(21,462 |
) |
|
|
(18,194 |
) |
Income tax benefit
(expense) |
|
4 |
|
|
|
(13 |
) |
|
|
(71 |
) |
|
|
(59 |
) |
Net loss |
$ |
(4,485 |
) |
|
$ |
(6,035 |
) |
|
$ |
(21,533 |
) |
|
$ |
(18,253 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share—basic and
diluted |
$ |
(0.17 |
) |
|
$ |
(0.24 |
) |
|
$ |
(0.83 |
) |
|
$ |
(0.75 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of
shares - basic and diluted |
|
26,089 |
|
|
|
25,111 |
|
|
|
25,868 |
|
|
|
24,315 |
|
__________________ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Depreciation expense
included in the above line items: |
|
|
|
|
|
|
|
|
|
|
|
Product costs |
$ |
401 |
|
|
$ |
235 |
|
|
$ |
1,162 |
|
|
$ |
629 |
|
Service costs |
|
951 |
|
|
|
787 |
|
|
|
2,831 |
|
|
|
2,179 |
|
Sales and marketing |
|
7 |
|
|
|
6 |
|
|
|
20 |
|
|
|
22 |
|
Product development |
|
12 |
|
|
|
14 |
|
|
|
35 |
|
|
|
52 |
|
General and administrative |
|
184 |
|
|
|
512 |
|
|
|
1,073 |
|
|
|
1,591 |
|
Total depreciation |
$ |
1,555 |
|
|
$ |
1,554 |
|
|
$ |
5,121 |
|
|
$ |
4,473 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) Stock-based compensation
included in the above line items: |
|
|
|
|
|
|
|
|
|
|
|
Service costs |
$ |
315 |
|
|
$ |
189 |
|
|
$ |
758 |
|
|
$ |
515 |
|
Sales and marketing |
|
269 |
|
|
|
292 |
|
|
|
520 |
|
|
|
760 |
|
Product development |
|
635 |
|
|
|
603 |
|
|
|
1,791 |
|
|
|
1,762 |
|
General and administrative |
|
1,241 |
|
|
|
1,418 |
|
|
|
3,521 |
|
|
|
4,349 |
|
Total stock-based compensation |
$ |
2,460 |
|
|
$ |
2,502 |
|
|
$ |
6,590 |
|
|
$ |
7,386 |
|
Leaf Group Ltd. and Subsidiaries
Unaudited Condensed Consolidated Balance Sheets (In thousands)
|
|
|
|
|
|
|
|
|
September 30, |
|
December 31, |
|
|
2019 |
|
2018 |
Assets |
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
11,790 |
|
|
$ |
31,081 |
|
Accounts receivable, net |
|
|
11,854 |
|
|
|
12,627 |
|
Prepaid expenses and other current assets |
|
|
3,087 |
|
|
|
3,932 |
|
Total current assets |
|
|
26,731 |
|
|
|
47,640 |
|
Property and equipment,
net |
|
|
13,545 |
|
|
|
13,126 |
|
Operating lease right-of-use
assets |
|
|
7,713 |
|
|
|
— |
|
Intangible assets, net |
|
|
13,308 |
|
|
|
13,933 |
|
Goodwill |
|
|
19,406 |
|
|
|
19,435 |
|
Other assets |
|
|
1,045 |
|
|
|
988 |
|
Total assets |
|
$ |
81,748 |
|
|
$ |
95,122 |
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity |
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
Accounts payable |
|
$ |
3,633 |
|
|
$ |
1,519 |
|
Accrued expenses and other current liabilities |
|
|
17,389 |
|
|
|
22,149 |
|
Deferred revenue |
|
|
2,709 |
|
|
|
2,115 |
|
Total current liabilities |
|
|
23,731 |
|
|
|
25,783 |
|
Deferred tax liability |
|
|
106 |
|
|
|
86 |
|
Operating lease
liabilities |
|
|
7,249 |
|
|
|
— |
|
Other liabilities |
|
|
284 |
|
|
|
2,566 |
|
Total liabilities |
|
|
31,370 |
|
|
|
28,435 |
|
Commitments and
contingencies |
|
|
|
|
|
|
Stockholders’ equity |
|
|
|
|
|
|
Common stock |
|
|
3 |
|
|
|
3 |
|
Additional paid-in capital |
|
|
559,664 |
|
|
|
554,403 |
|
Treasury stock |
|
|
(35,706 |
) |
|
|
(35,706 |
) |
Accumulated other comprehensive loss |
|
|
(89 |
) |
|
|
(52 |
) |
Accumulated deficit |
|
|
(473,494 |
) |
|
|
(451,961 |
) |
Total stockholders’ equity |
|
|
50,378 |
|
|
|
66,687 |
|
Total liabilities and stockholders’ equity |
|
$ |
81,748 |
|
|
$ |
95,122 |
|
Leaf Group Ltd. and Subsidiaries
Unaudited Condensed Consolidated Statements of Cash Flows (In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30, |
|
Nine months ended September 30, |
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
|
Cash flows from
operating activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(4,485 |
) |
|
$ |
(6,035 |
) |
|
$ |
(21,533 |
) |
|
$ |
(18,253 |
) |
|
Adjustments to reconcile net
loss to net cash used in operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
2,362 |
|
|
|
2,687 |
|
|
|
7,740 |
|
|
|
7,588 |
|
|
Non-cash lease expense |
|
|
424 |
|
|
|
— |
|
|
|
1,386 |
|
|
|
— |
|
|
Deferred income taxes |
|
|
15 |
|
|
|
7 |
|
|
|
20 |
|
|
|
17 |
|
|
Stock-based compensation |
|
|
2,460 |
|
|
|
2,502 |
|
|
|
6,590 |
|
|
|
7,386 |
|
|
Other |
|
|
97 |
|
|
|
13 |
|
|
|
118 |
|
|
|
67 |
|
|
Change in operating assets and liabilities, net of effect of
acquisitions and disposals: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable, net |
|
|
(360 |
) |
|
|
(816 |
) |
|
|
654 |
|
|
|
(812 |
) |
|
Prepaid expenses and other current assets |
|
|
722 |
|
|
|
(686 |
) |
|
|
845 |
|
|
|
(665 |
) |
|
Other long-term assets |
|
|
7 |
|
|
|
152 |
|
|
|
109 |
|
|
|
231 |
|
|
Operating lease ROU assets and liabilities |
|
|
(415 |
) |
|
|
— |
|
|
|
(1,695 |
) |
|
|
— |
|
|
Accounts payable |
|
|
1,549 |
|
|
|
661 |
|
|
|
2,034 |
|
|
|
(222 |
) |
|
Accrued expenses and other liabilities |
|
|
1,658 |
|
|
|
3,410 |
|
|
|
(5,607 |
) |
|
|
731 |
|
|
Deferred revenue |
|
|
69 |
|
|
|
582 |
|
|
|
594 |
|
|
|
8 |
|
|
Net cash (used in) provided by operating activities |
|
|
4,103 |
|
|
|
2,477 |
|
|
|
(8,745 |
) |
|
|
(3,924 |
) |
|
Cash flows from
investing activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of property and
equipment |
|
|
(1,806 |
) |
|
|
(1,561 |
) |
|
|
(5,167 |
) |
|
|
(5,062 |
) |
|
Purchases of intangible
assets |
|
|
— |
|
|
|
(16 |
) |
|
|
— |
|
|
|
(45 |
) |
|
Cash paid for acquisitions,
net of cash acquired |
|
|
— |
|
|
|
— |
|
|
|
(1,900 |
) |
|
|
(10,349 |
) |
|
Other |
|
|
— |
|
|
|
5 |
|
|
|
— |
|
|
|
5 |
|
|
Net cash used in investing activities |
|
|
(1,806 |
) |
|
|
(1,572 |
) |
|
|
(7,067 |
) |
|
|
(15,451 |
) |
|
Cash flows from
financing activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from exercises of
stock options and purchases under ESPP |
|
|
281 |
|
|
|
841 |
|
|
|
726 |
|
|
|
1,470 |
|
|
Proceeds from issuance of
common stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
23,367 |
|
|
Taxes paid on net share
settlements of restricted stock units |
|
|
(364 |
) |
|
|
(916 |
) |
|
|
(2,403 |
) |
|
|
(3,184 |
) |
|
Cash paid for acquisition
holdback |
|
|
— |
|
|
|
— |
|
|
|
(625 |
) |
|
|
— |
|
|
Cash paid for contingent
consideration liability |
|
|
— |
|
|
|
— |
|
|
|
(934 |
) |
|
|
(905 |
) |
|
Other |
|
|
(20 |
) |
|
|
(17 |
) |
|
|
(75 |
) |
|
|
(51 |
) |
|
Net cash (used in) provided by financing activities |
|
|
(103 |
) |
|
|
(92 |
) |
|
|
(3,311 |
) |
|
|
20,697 |
|
|
Effect of foreign currency on
cash, cash equivalents and restricted cash |
|
|
(6 |
) |
|
|
45 |
|
|
|
(2 |
) |
|
|
42 |
|
|
Change in cash, cash equivalents and restricted cash |
|
|
2,188 |
|
|
|
858 |
|
|
|
(19,125 |
) |
|
|
1,364 |
|
|
Cash, cash equivalents and
restricted cash, beginning of period |
|
|
10,622 |
|
|
|
32,806 |
|
|
|
31,935 |
|
|
|
32,300 |
|
|
Cash, cash equivalents and
restricted cash, end of period |
|
$ |
12,810 |
|
|
$ |
33,664 |
|
|
$ |
12,810 |
|
|
$ |
33,664 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
cash, cash equivalents and restricted cash |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
11,790 |
|
|
$ |
32,810 |
|
|
$ |
11,790 |
|
|
$ |
32,810 |
|
|
Restricted cash included in
other current assets |
|
|
136 |
|
|
|
136 |
|
|
|
136 |
|
|
|
136 |
|
|
Restricted cash included in
other long-term assets |
|
|
884 |
|
|
|
718 |
|
|
|
884 |
|
|
|
718 |
|
|
Total cash, cash equivalents and restricted cash shown in the
statement of cash flows |
|
$ |
12,810 |
|
|
$ |
33,664 |
|
|
$ |
12,810 |
|
|
$ |
33,664 |
|
|
Leaf Group Ltd. and Subsidiaries
Unaudited Reconciliations of Non-GAAP Financial Measures (In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30, |
|
Nine months ended September 30, |
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
|
Adjusted
EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(4,485 |
) |
|
$ |
(6,035 |
) |
|
$ |
(21,533 |
) |
|
$ |
(18,253 |
) |
|
Add (deduct): |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax (benefit) expense |
|
|
(4 |
) |
|
|
13 |
|
|
|
71 |
|
|
|
59 |
|
|
Interest (income) expense, net |
|
|
(39 |
) |
|
|
(114 |
) |
|
|
(217 |
) |
|
|
(160 |
) |
|
Other expense (income), net |
|
|
6 |
|
|
|
59 |
|
|
|
(6 |
) |
|
|
92 |
|
|
Depreciation and amortization(1) |
|
|
2,362 |
|
|
|
2,687 |
|
|
|
7,740 |
|
|
|
7,588 |
|
|
Stock-based compensation(2) |
|
|
2,460 |
|
|
|
2,502 |
|
|
|
6,590 |
|
|
|
7,386 |
|
|
Acquisition, disposition, realignment and contingent payment
costs(3) |
|
|
— |
|
|
|
1,016 |
|
|
|
90 |
|
|
|
1,555 |
|
|
Adjusted EBITDA |
|
$ |
300 |
|
|
$ |
128 |
|
|
$ |
(7,265 |
) |
|
$ |
(1,733 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash
Flow: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by
operating activities |
|
$ |
4,103 |
|
|
$ |
2,477 |
|
|
$ |
(8,745 |
) |
|
$ |
(3,924 |
) |
|
Purchases of property and
equipment |
|
|
(1,806 |
) |
|
|
(1,561 |
) |
|
|
(5,167 |
) |
|
|
(5,062 |
) |
|
Purchases of intangible
assets |
|
|
— |
|
|
|
(16 |
) |
|
|
— |
|
|
|
(45 |
) |
|
Acquisition, disposition,
realignment and contingent payments(3) |
|
|
— |
|
|
|
— |
|
|
|
90 |
|
|
|
— |
|
|
Free Cash Flow |
|
$ |
2,297 |
|
|
$ |
900 |
|
|
$ |
(13,822 |
) |
|
$ |
(9,031 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Represents depreciation expense of the Company’s long-lived
tangible assets and amortization expense of its finite-lived
intangible assets, including amortization expense related to its
investment in media content assets as included in the Company’s
GAAP results of operations. (2) Represents the expense related to
stock-based awards granted to employees, as included in the
Company’s GAAP results of operations. (3) Represents such items,
when applicable, as (a) legal, accounting and other professional
service fees directly attributable to acquisition, disposition or
corporate realignment activities, (b) employee severance, (c)
contingent payments to certain key employees/equity holders of
acquired businesses, and (d) other payments attributable to
acquisition, disposition or corporate realignment
activities.
Leaf Group Ltd. and Subsidiaries
Unaudited Reconciliation of Segment Disclosure (In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30, |
|
Nine months ended September 30, |
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
Segment
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
Marketplaces |
|
$ |
23,327 |
|
|
$ |
24,712 |
|
|
$ |
63,354 |
|
|
$ |
65,334 |
|
Media |
|
|
16,703 |
|
|
|
16,744 |
|
|
|
46,503 |
|
|
|
44,189 |
|
Total revenue |
|
$ |
40,030 |
|
|
$ |
41,456 |
|
|
$ |
109,857 |
|
|
$ |
109,523 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Operating
Contribution: |
|
|
|
|
|
|
|
|
|
|
|
|
Marketplaces(1) |
|
$ |
815 |
|
|
$ |
326 |
|
|
$ |
(1,840 |
) |
|
$ |
(164 |
) |
Media(1) |
|
|
6,664 |
|
|
|
6,559 |
|
|
|
16,918 |
|
|
|
18,553 |
|
Add (deduct): |
|
|
|
|
|
|
|
|
|
|
|
|
Corporate expenses(2) |
|
|
(7,179 |
) |
|
|
(6,774 |
) |
|
|
(22,343 |
) |
|
|
(20,363 |
) |
Acquisition, disposition and realignment costs(3) |
|
|
— |
|
|
|
17 |
|
|
|
— |
|
|
|
241 |
|
Adjusted EBITDA |
|
$ |
300 |
|
|
$ |
128 |
|
|
$ |
(7,265 |
) |
|
$ |
(1,733 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation to
consolidated pre-tax income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
$ |
300 |
|
|
$ |
128 |
|
|
$ |
(7,265 |
) |
|
$ |
(1,733 |
) |
Add (deduct): |
|
|
|
|
|
|
|
|
|
|
|
|
Interest income (expense), net |
|
|
39 |
|
|
|
114 |
|
|
|
217 |
|
|
|
160 |
|
Other income (expense), net |
|
|
(6 |
) |
|
|
(59 |
) |
|
|
6 |
|
|
|
(92 |
) |
Depreciation and amortization(4) |
|
|
(2,362 |
) |
|
|
(2,687 |
) |
|
|
(7,740 |
) |
|
|
(7,588 |
) |
Stock-based compensation(5) |
|
|
(2,460 |
) |
|
|
(2,502 |
) |
|
|
(6,590 |
) |
|
|
(7,386 |
) |
Acquisition, disposition, realignment and contingent payment
costs(6) |
|
|
— |
|
|
|
(1,016 |
) |
|
|
(90 |
) |
|
|
(1,555 |
) |
Loss before income taxes |
|
$ |
(4,489 |
) |
|
$ |
(6,022 |
) |
|
$ |
(21,462 |
) |
|
$ |
(18,194 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Segment operating contribution reflects earnings before
corporate and unallocated expenses and also excludes: (a)
depreciation expense; (b) amortization of intangible assets; (c)
share-based compensation expense; (d) interest and other income
(expense); (e) income taxes; and (f) contingent payments to certain
key employees/equity holders of acquired businesses.
(2) Corporate expenses include corporate and unallocated
operating expenses that are not directly attributable to the
operating segments, including: corporate information technology,
marketing and general and administrative support functions and also
excludes the following: (a) depreciation expense; (b) amortization
of intangible assets; (c) share-based compensation expense; (d)
interest and other income (expense); and (e) income taxes.
(3) Represents such items, when applicable, as (a) legal,
accounting and other professional service fees directly
attributable to acquisition, disposition or corporate realignment
activities, (b) employee severance, and (c) other payments
attributable to acquisition, disposition or corporate realignment
activities, excluding contingent payments to certain key
employees/equity holders of acquired businesses.
(4) Represents depreciation expense of the Company’s long-lived
tangible assets and amortization expense of its finite-lived
intangible assets, including amortization expense related to its
investment in media content assets, included in the Company’s GAAP
results of operations.
(5) Represents the expense related to stock-based awards granted
to employees as included in the Company’s GAAP results of
operations.
(6) Represents such items, when applicable, as (a) legal,
accounting and other professional service fees directly
attributable to acquisition, disposition or corporate realignment
activities, (b) employee severance, (c) contingent payments to
certain key employees/equity holders of acquired businesses, and
(d) other payments attributable to acquisition, disposition or
corporate realignment activities.
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