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Sizmek Reports Third Quarter 2015 Results

The following excerpt is from the company's SEC filing.

Core Business Revenues Grow 30% on foreign currency adjusted basis

Mobile Revenues Increase over 300% fueled by HTML 5 adoption

Acquisition of Dynamic Creative Solutions business will leverages platform investment

Austin, TX. November 12, 2015

Sizmek Inc. (NASDAQ: SZMK), a global open ad management company that delivers multiscreen campaigns, today reported financial results for the third quarter ended September 30, 2015. Revenues for the three months ended September 30, 2015 were $40.3 million compared to $39.5 million in the prior year. On a constant currency basis, revenues gr ew 8% to $42.7 million when compared to the same period in the prior year and adjusted for the effect of changes in foreign currency. Core products, consisting of all products except rich media flash, grew 30% for the three months when adjusted for the effect of the change in foreign currencies, comprising 90% of the business for the third quarter.

Adjusted EBITDA for the three months ended September 30, 2015 was $0.1 million, or $0.4 million when adjusted for the effect of changes in foreign currency, compared to Adjusted EBITDA for the same period of 2014 of $4.5 million.

We made progress in growing our global customer base, while increasing our programmatic revenues and expanding our product suite, said Neil Nguyen, CEO and President of Sizmek. However, our investments this year into our new platform MDX NXT and the recently acquired mobile DSP is putting pressure on EBITDA. Yet, these capital investments are necessary as Sizmek continues to transform its platform and product offerings to establish itself as the leading independent advertising technology platform. As global advertisers seek an alternative to the publisher owned technology solutions, Sizmeks open ad management platform is gaining traction.

Third quarter highlights include:

Core NAM product revenues grew 20% for the nine months ending September 30, 2015 when compared to the same period in the prior year;

Mobile formats (or HTML5) revenues grew 303% from the third quarter of 2014, and grew 183% on a year to date basis over the prior year;

In-stream video revenue increased 17% from the third quarter of 2014 and grew 16% on a year to date basis over 2014 on a constant currency basis;

Flash based rich medias decline accelerated to 59% when compared to the third quarter of 2014, up from second quarters year over year decline of 35% and now representing approximately10% of total revenues in the third quarter;

At September 30, 2015 the Company had $64.9 million of cash and cash equivalents on hand and has no long-term debt.

Acquisition of Dynamic Creative Solutions Business

In a separate press release today, Sizmek announced that it has acquired the dynamic creative solutions business from Cofactor, a business unit within Tegna, Inc., for $20.0 million, consisting of $11.0 million in cash at closing and $9.0 million in cash to be paid in a year. As part of the transaction, Sizmek, Inc. will become the preferred ad management platform vendor to the Cofactor business unit.

Third Quarter 2015 Financial Results Webcast

The Companys third quarter financial results conference call will be broadcast live on the Internet at 5 p.m. ET on November 12, 2015. To access the conference call by telephone, interested parties may dial (855) 765-5680 and enter passcode 65790526. International callers may access the call by dialing (707) 294-1311. Please call five minutes in advance to ensure that you are connected. A replay will also be available for seven days following the call. To access the replay, interested parties may dial (855) 859-2056 and enter passcode 65790526. International callers may access the replay by dialing (404) 537-3406. Participants can access the webcast at www.sizmek.com/investor-relations. For the webcast, please allow 15 minutes to register and download any necessary software. Following the calls completion, a replay will also be available on the Companys website.

Basis of Presentation

Sizmek Inc. was formed in 2013 and operated as the online segment of DG until February 7, 2014. On February 7, 2014, pursuant to the Agreement and Plan of Merger, dated as of August 12, 2013, by and among Digital Generation, Inc. (DG), Extreme Reach, Inc., and a wholly-owned subsidiary of Extreme Reach, DGs online business was spun off into Sizmek and the remainder of DG became a wholly-owned subsidiary of Extreme Reach. Accordingly, the accompanying financial statements reflect results up to February 7, 2014 on a carve-out basis and results subsequent to February 7, 2014 on a stand-alone basis.

The accompanying financial statements and schedules reflect the combined historical results of operations and cash flows of DGs online business conducted through its online subsidiaries and an allocable portion of certain DG corporate expenses for periods up to February 7, 2014. These combined financial statements include expense allocations for (1) certain corporate functions historically provided by DG, including, but not limited to, finance, audit, legal, information technology, human resources, communications, compliance, and shared services; and (2) employee benefits and incentives and (3) share-based compensation. These expenses have been allocated to Sizmek on the basis of direct usage when identifiable, with the remainder allocated on a pro-rata basis of combined revenues, headcount or other measures of the Company and DG. Sizmek considers the basis on which the expenses have been allocated to be a reasonable reflection of the utilization of services provided to or the benefit received by the Company during the periods presented. The allocations may not, however, reflect the full...


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