PLAINVIEW, NY --(Marketwired - August 04, 2016) -
Second Quarter Year over Year Highlights
- GAAP revenue increased to $24.1 million versus $22.7 million
- NeuLion Digital Platform revenue increased to $15.9 million versus $15.5 million
- Net loss improved to a net loss of $0.8 million versus a net loss of $3.2 million
- Ongoing share repurchase program has resulted in 2.5 million shares cancelled
- Key new customer wins in Europe include Sky Sports, the English Football League with EFL Digital, and Eleven Sports Network
NeuLion , Inc. (
"Following our recent changes in management and our Saffron Digital acquisition, we have begun our expansion in the U.S and Europe with aggressive sales and marketing investments," said Roy Reichbach, President and Chief Executive Officer. "Our technology is best in class and now is the time to match our sales and marketing prowess with our technology development skills."
Operational Highlights
- EFL Digital (formerly Football League Interactive FLi) chose NeuLion as its new long-term digital partner. EFL is the digital arm of the English Football League, one of the oldest league soccer competitions in the world with 72 clubs in the UK.
- Sky Sports, offering hundreds of soccer matches as well as Formula 1 racing, cricket, rugby, tennis, boxing and more, selected NeuLion to enable its live OTT event service.
- Eleven Sports Network entered into a new multi-year agreement with NeuLion, licensing the NeuLion Digital Platform to support an all-new OTT digital service for sports fans in Belgium, Luxembourg, Poland, Singapore and Taiwan.
- NeuLion and UFC reached a historic milestone with UFC 200, delivering the first-ever live OTT 4K pay-per-view event. NeuLion was also commissioned by the UFC to redesign a brand-new UFC.TV site that offers fans a large array of personalization features.
- NeuLion acquired the assets of London-based Saffron Digital Limited as part of its strategic expansion plan to add entertainment technology features that attract content owners and rights holders interested in launching new movie and channel SVOD services, and electronic sell-through services. The transaction creates an online video powerhouse positioned to take full advantage of the accelerating adoption of live and on-demand streaming.
- With working capital of $32.2 million as of June 30, 2016, NeuLion began adding sales and marketing staff in the U.S, Europe and Asia.
Share Repurchase Program
On March 8, 2016, NeuLion announced that its Board of Directors had authorized the repurchase of up to $10 million of its common stock over the next 12 months through a normal course issuer bid ("NCIB") for up to 14,109,057 shares of common stock. On March 24, 2016, NeuLion announced that it had received the TSX's approval to commence the NCIB, and that the NCIB would commence on April 1, 2016.
For the months of April and May, a broker on behalf of NeuLion purchased an additional 1,634,304 shares of common stock at a total cost of $1.6 million. NeuLion settled with the broker and cancelled these shares during the quarter. The same broker has also made the following purchases on NeuLion's behalf, which were or will be settled after the close of the second quarter of 2016:
- 846,100 shares of common stock at a total cost of $0.7 million; NeuLion settled with the broker and cancelled these shares on July 7, 2016; and
- 678,800 shares of common stock at a total cost of $0.5 million; NeuLion intends to settle with the broker and cancel these shares in August 2016.
Second Quarter Financial Review
GAAP Results
Total GAAP revenue was $24.1 million for the second quarter of 2016 compared to $22.7 million for the prior comparable period, an increase of $1.4 million, or 6%. The NeuLion Digital Platform had revenue growth of 3% to $15.9 million for the second quarter of 2016, from $15.5 million for the prior comparable period. NeuLion's consumer electronics licensing and MainConcept revenue streams were $8.2 million in the second quarter of 2016 as compared to $7.2 million for the prior comparable period.
Cost of revenue was $4.1 million, or 17% of revenue, for the second quarter of 2016, compared to $4.2 million, or 19% of revenue, for the prior comparable period. The two percentage point improvement was due to increases in the consumer electronics licensing and MainConcept revenue streams. Selling, general and administrative expenses, including stock-based compensation, were $12.9 million for the second quarter of 2016, an increase of 13% from $11.4 million for the prior comparable period. Research and development expenses were $5.3 million for the second quarter of 2016, a decrease of 29% from $7.5 million for the prior comparable period, primarily as a result of reduction in headcount resulting from redundancy associated with the DivX acquisition. Operating loss was $0.3 million for the second quarter of 2016, compared to $2.5 million for the prior comparable period. Consolidated net loss was $0.8 million, or $0.00 per basic and diluted share, for the second quarter of 2016, compared to $3.2 million, or $(0.01) per basic and diluted share, for the prior comparable period.
Non-GAAP Results
Non-GAAP Revenue decreased 9% to $24.2 million for the second quarter of 2016 from the same period a year ago. The change was primarily due to decreases in the consumer electronics licensing and MainConcept revenue streams. Adjusted EBITDA decreased to $3.3 million for the second quarter of 2016 from $4.2 million for the prior comparable period, on $2.5 million less Non-GAAP Revenue. Please refer to the tables accompanying this release for the calculation of Non-GAAP Revenue and Adjusted EBITDA.
Use of Non-GAAP Financial Information
In addition to NeuLion's U.S. GAAP results, this press release also includes disclosure on certain non-GAAP financial measures, as such term is used by the Securities and Exchange Commission. NeuLion defines "Non-GAAP Revenue" as GAAP revenues before purchase accounting adjustments as a result of an acquisition. NeuLion defines "Adjusted EBITDA" as consolidated net income (loss) before interest, income taxes, depreciation and amortization, purchase accounting adjustments, stock-based compensation, acquisition-related expenses, listing-related expenses, gain on revaluation of convertible note derivative, and foreign exchange gain (loss). Adjusted EBITDA is a key measure used by management to evaluate NeuLion's results and make strategic decisions about the company, including potential acquisitions. Management believes this measure is useful to investors because it is an indicator of operational performance. Because not all companies use identical calculations, NeuLion's presentation of Non-GAAP Revenue and Adjusted EBITDA may not be comparable to similarly titled measures of other companies. These measures do not have any standardized meanings prescribed by U.S. GAAP and therefore are unlikely to be comparable to the calculation of similar measures used by other companies, and should not be viewed as alternatives to measures of financial performance or changes in cash flows calculated in accordance with U.S. GAAP.
Pursuant to the requirements of Regulation G, NeuLion has provided a reconciliation of Non-GAAP Revenue to U.S. GAAP revenue and Adjusted EBITDA to U.S. GAAP consolidated net income/(loss) as an exhibit to this press release.
Quarterly Webcast
NeuLion will host a live webcast today at 5:00 p.m. ET that can be accessed at http://edge.media-server.com/m/p/45wtmhkn . In addition, a replay of the webcast will be available for a limited time at http://neulion.com/investor .
About NeuLion
NeuLion, Inc. (
Forward-Looking Statements
Certain statements herein are forward-looking statements and represent NeuLion's current intentions in respect of future activities. Forward-looking statements can be identified by the use of the words "will," "expect," "seek," "anticipate," "believe," "plan," "estimate," "expect," and "intend," statements that an event or result "may," "will," "can," "should," "could," or "might" occur or be achieved, and other similar expressions. These statements, in addressing future events and conditions, involve inherent risks and uncertainties. Although the forward-looking statements contained in this release are based upon what management believes to be reasonable assumptions, NeuLion cannot assure readers that actual results will be consistent with these forward-looking statements. These forward-looking statements are made as of the date of this release and NeuLion assumes no obligation to update or revise them to reflect new events or circumstances, except as required by law. Many factors could cause NeuLion's actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including: our ability to derive anticipated benefits from the acquisition of DivX; our ability to realize some or all of the anticipated benefits of our partnerships; general economic and market segment conditions; our customers' subscriber levels and financial health; our ability to pursue and consummate acquisitions in a timely manner; our continued relationships with our customers; our ability to negotiate favorable terms for contract renewals; competitor activity; product capability and acceptance rates; technology changes; regulatory changes; foreign exchange risk; interest rate risk; and credit risk. These factors should be considered carefully and readers should not place undue reliance on the forward-looking statements. A more detailed assessment of the risks that could cause actual results to materially differ from current expectations is contained in the "Risk Factors" section of NeuLion's Annual Report on Form 10-K for the fiscal year ended December 31, 2015, which is available on www.sec.gov and filed on www.sedar.com .
| NEULION, INC. | ||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
| (in thousands, except share data) | ||||||||
| (Expressed in U.S. dollars) | ||||||||
| June 30, | December 31, | |||||||
| 2016 | 2015 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Current | ||||||||
| Cash and cash equivalents | $ | 46,105 | $ | 53,413 | ||||
| Accounts receivable, net of allowance of doubtful accounts of $383 and $688 | 9,568 | 12,967 | ||||||
| Other receivables | 1,310 | 604 | ||||||
| Inventory | 206 | 199 | ||||||
| Prepaid expenses and deposits | 3,390 | 2,928 | ||||||
| Due from related parties | 392 | 304 | ||||||
| Total current assets | 60,971 | 70,415 | ||||||
| Property, plant and equipment, net | 6,880 | 6,585 | ||||||
| Intangible assets, net | 27,961 | 23,627 | ||||||
| Goodwill | 13,229 | 11,496 | ||||||
| Deferred tax assets | 31,016 | 30,614 | ||||||
| Other assets | 3,062 | 1,413 | ||||||
| Total assets | $ | 143,119 | $ | 144,150 | ||||
| LIABILITIES AND EQUITY | ||||||||
| Current | ||||||||
| Accounts payable | $ | 7,690 | $ | 10,006 | ||||
| Accrued liabilities | 9,579 | 10,230 | ||||||
| Due to seller - Saffron Digital Limited | 1,500 | - | ||||||
| Due to related parties | 8 | 18 | ||||||
| Deferred revenue | 10,042 | 11,570 | ||||||
| Total current liabilities | 28,819 | 31,824 | ||||||
| Long-term deferred revenue | 1,302 | 1,067 | ||||||
| Deferred rent liabilities | 1,460 | 1,649 | ||||||
| Deferred tax liabilities | 1,093 | 1,425 | ||||||
| Other long-term liabilities | 114 | 127 | ||||||
| Total liabilities | 32,788 | 36,092 | ||||||
| Stockholders' equity | ||||||||
| Common stock (par value: $0.01; shares authorized: 500,000,000; shares issued and outstanding: | ||||||||
| 2016: 283,418,354 and 2015: 280,903,667) | 2,834 | 2,809 | ||||||
| Additional paid-in capital | 168,647 | 167,705 | ||||||
| Promissory notes receivable | (209 | ) | (209 | ) | ||||
| Accumulated deficit | (60,941 | ) | (62,247 | ) | ||||
| Total stockholders' equity | 110,331 | 108,058 | ||||||
| Total liabilities and stockholders' equity | $ | 143,119 | $ | 144,150 | ||||
| NEULION, INC. | |||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND | |||||||||||||||||
| COMPREHENSIVE INCOME (LOSS) | |||||||||||||||||
| (unaudited) | |||||||||||||||||
| (in thousands, except share and per share data) | |||||||||||||||||
| (Expressed in U.S. dollars) | |||||||||||||||||
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||
| 2016 | 2015 | 2016 | 2015 | ||||||||||||||
| Revenue | $ | 24,111 | $ | 22,684 | $ | 50,404 | $ | 44,358 | |||||||||
| Costs and expenses | |||||||||||||||||
| Cost of revenue, exclusive of depreciation and amortization shown separately below | 4,131 | 4,215 | 8,785 | 8,541 | |||||||||||||
| Selling, general and administrative, including stock-based compensation | 12,918 | 11,390 | 24,823 | 21,303 | |||||||||||||
| Research and development | 5,285 | 7,480 | 9,639 | 12,796 | |||||||||||||
| Depreciation and amortization | 2,125 | 2,062 | 4,099 | 3,588 | |||||||||||||
| 24,459 | 25,147 | 47,346 | 46,228 | ||||||||||||||
| Operating income (loss) | (348 | ) | (2,463 | ) | 3,058 | (1,870 | ) | ||||||||||
| Other income (expense) | |||||||||||||||||
| (Loss) gain on foreign exchange | (222 | ) | (149 | ) | 72 | (340 | ) | ||||||||||
| Investment income, net | 21 | 90 | 54 | 184 | |||||||||||||
| Interest on convertible note, including amortization of debt discount | - | 202 | - | (123 | ) | ||||||||||||
| Gain on conversion of convertible note and revaluation of related derivative, net | - | 300 | - | 507 | |||||||||||||
| (201 | ) | 443 | 126 | 228 | |||||||||||||
| Net and comprehensive income (loss) before income taxes | (549 | ) | (2,020 | ) | 3,184 | (1,642 | ) | ||||||||||
| Income taxes | (227 | ) | (1,203 | ) | (1,878 | ) | (2,089 | ) | |||||||||
| Net and comprehensive income (loss) | $ | (776 | ) | $ | (3,223 | ) | $ | 1,306 | $ | (3,731 | ) | ||||||
| Net income (loss) per weighted average number of shares | |||||||||||||||||
| of common stock outstanding - basic | $ | 0.00 | $ | (0.01 | ) | $ | 0.00 | $ | (0.02 | ) | |||||||
| Weighted average number of shares | |||||||||||||||||
| of common stock outstanding - basic | 282,836,109 | 224,949,928 | 282,331,886 | 213,990,794 | |||||||||||||
| Net income (loss) per weighted average number of shares | |||||||||||||||||
| of common stock outstanding - diluted | $ | 0.00 | $ | (0.01 | ) | $ | 0.00 | $ | (0.02 | ) | |||||||
| Weighted average number of shares | |||||||||||||||||
| of common stock outstanding - diluted | 282,836,109 | 224,949,928 | 296,418,692 | 213,990,794 | |||||||||||||
| NEULION, INC. | |||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||
| (unaudited) | |||||||||
| (in thousands) | |||||||||
| (Expressed in U.S. dollars) | |||||||||
| Six months ended June 30, | |||||||||
| 2016 | 2015 | ||||||||
| OPERATING ACTIVITIES | |||||||||
| Net income (loss) | $ | 1,306 | $ | (3,731 | ) | ||||
| Adjustments to reconcile net income (loss) to net cash | |||||||||
| provided by (used in) operating activities: | |||||||||
| Depreciation and amortization | 4,099 | 3,588 | |||||||
| Stock-based compensation | 2,127 | 921 | |||||||
| Amortization of debt discount | - | 123 | |||||||
| Gain on revaluation of convertible note derivative | - | (507 | ) | ||||||
| Deferred income taxes | (303 | ) | 147 | ||||||
| Changes in operating assets and liabilities, net of acquisitions | |||||||||
| Accounts receivable | 3,399 | 9,299 | |||||||
| Income tax receivable | - | 4,318 | |||||||
| Other receivables | (706 | ) | 362 | ||||||
| Inventory | (7 | ) | 63 | ||||||
| Prepaid expenses, deposits and other assets | (2,058 | ) | (1,961 | ) | |||||
| Due from related parties | (88 | ) | (86 | ) | |||||
| Accounts payable | (2,317 | ) | (8,201 | ) | |||||
| Accrued liabilities | (1,082 | ) | (3,076 | ) | |||||
| Deferred revenue | (1,293 | ) | (3,008 | ) | |||||
| Deferred rent liability | (189 | ) | (85 | ) | |||||
| Long-term liabilities | (13 | ) | (37 | ) | |||||
| Due to related parties | (10 | ) | 9 | ||||||
| Cash provided by (used in) operating activities | 2,865 | (1,862 | ) | ||||||
| INVESTING ACTIVITIES | |||||||||
| Acquisition of Saffron Digital Limited | (7,500 | ) | - | ||||||
| Cash acquired from acquisition of DivX Corporation | - | 9,718 | |||||||
| Purchase of property, plant and equipment | (1,514 | ) | (527 | ) | |||||
| Cash (used in) provided by investing activities | (9,014 | ) | 9,191 | ||||||
| FINANCING ACTIVITIES | |||||||||
| Repurchases of common stock | (1,560 | ) | - | ||||||
| Proceeds from exercise of stock options | 401 | 813 | |||||||
| Proceeds from exercise of broker units | - | 19 | |||||||
| Cash (used in) provided by financing activities | (1,159 | ) | 832 | ||||||
| Net (decrease) increase in cash and cash equivalents, during the period | (7,308 | ) | 8,161 | ||||||
| Cash and cash equivalents, beginning of period | 53,413 | 25,898 | |||||||
| Cash and cash equivalents, end of period | $ | 46,105 | $ | 34,059 | |||||
| Supplemental disclosure of cash flow information: | |||||||||
| Cash paid for income taxes | $ | 2,015 | $ | 1,590 | |||||
| Supplemental disclosure of non-cash activities: | |||||||||
| Accretion of issuance costs on Class 4 Preference Shares | $ | - | $ | 15 | |||||
| Issuance of shares of common stock upon acquisition of DivX Corporation | $ | - | $ | 58,521 | |||||
| Issuance of convertible note upon acquisition of DivX Corporation | $ | - | $ | 27,000 | |||||
| Reconciliation of GAAP Revenue to non-GAAP Revenue (in thousands) : | ||||||||
| Three months ended June 30, | ||||||||
| 2016 | 2015 | |||||||
| GAAP Revenue | $ | 24,111 | $ | 22,683 | ||||
| Revenue excluded due to purchase accounting | 82 | 4,032 | ||||||
| Non-GAAP Revenue | $ | 24,193 | $ | 26,715 | ||||
| Reconciliation of GAAP Net Loss to Adjusted EBITDA (in thousands) : | ||||||||
| Three months ended June 30, | ||||||||
| 2016 | 2015 | |||||||
| Consolidated Net Income (Loss) on a GAAP basis | $ | (776 | ) | $ | (3,223 | ) | ||
| Revenue excluded due to purchase accounting | 82 | 4,032 | ||||||
| Depreciation and amortization | 2,125 | 2,062 | ||||||
| Stock-based compensation | 1,372 | 594 | ||||||
| Acquisition-related expenses | 102 | - | ||||||
| Gain on revaluation of convertible note derivative | - | (300 | ) | |||||
| Income tax expense | 227 | 1,203 | ||||||
| Investment income (expense) and foreign exchange loss | 201 | (143 | ) | |||||
| Adjusted EBITDA | $ | 3,333 | $ | 4,225 | ||||
Attachment Available: http://www.marketwire.com/library/MwGo/2016/8...eba001.pdf
CONTACT INFORMATION Press Contact: Chris Wagner Email contact +1 516 622 8357 Investor Relations Contact: Tim Alavathil Email contact +1 647 426 1254
