cogint Announces Third Quarter 2017 Financial Results
Record Revenue and Record Gross Profit on Double-Digit Gross Margin
Expansion as Company Progresses Towards Transformative Business
Combination With
“I’m very excited about our third quarter accomplishments. We worked
tirelessly throughout the quarter to both negotiate and consummate our
definitive transaction agreement with
Third Quarter 2017 Financial Results
For the three months ended
-
Total revenue increased 10% to
$57.2 million . -
Information Services revenue increased 54% to
$22.8 million . -
Information Services gross profit increased 182% to
$10.1 million , a 44% gross profit margin. -
Performance Marketing revenue decreased 8% to
$34.4 million . -
Performance Marketing gross profit increased 6% to
$9.5 million , a 28% gross profit margin. - Consolidated gross profit margin increased 10 percentage points to 34%.
-
Net loss was
$14.1 million (inclusive of tax benefit of $0 million) compared to$9.7 million (inclusive of tax benefit of$4.5 million ). -
Adjusted EBITDA grew 84% to
$5.8 million .
Third Quarter 2017 and Recent Business Highlights
-
Entered into a business combination agreement with
BlueFocus International , creating a world-class global marketing services company, with BlueFocus paying or refinancing cogint’s existing debt upon closing and contributing to cogint$100.0 million in cash, Canadian-based marketing communications companyVision7 International , andU.K. -based global socially-led creative agency We Are Social. - Leveraged the cross-functionality of our intelligent platforms, CORE™ and Agile Audience Engine™, to create a comprehensive marketing services solution for Fortune 500 consumer packaged goods companies, increasing client ROI while expanding our margin.
- Continued scale of our Custom Audience Identity Graph, enabling more intelligent execution of our marketing solutions across a variety of verticals.
- Generated on average over 850,000 consumer registrations and over 8.8 million compiled survey responses daily, with a recent record high of over 1.0 million registrations and over 10.3 million compiled survey responses in a single day.
-
After successful launch of Mobile App Install product offering and Pay
Per Call ad format in 2016, revenue for these offerings continues to scale with$5.5 million and$1.9 million , respectively, for the third quarter 2017. - Powered by our proprietary CORE™ data fusion platform, launched FOREWARN™, a real-time information solution, via mobile application, for the real estate industry, providing risk assessment and due diligence.
- Released the Comprehensive Report, an idiCORE™ offering, to the risk management industry, addressing our clients’ needs in delivering the most essential tool in their risk mitigation arsenal.
Use of Non-GAAP Financial Measures
Management evaluates the financial performance of our business on a variety of key indicators, including adjusted EBITDA. Adjusted EBITDA is a non-GAAP financial measure equal to net loss, the most directly comparable financial measure based on US GAAP, adding back interest expense, income tax benefit, depreciation and amortization, share-based payments, non-recurring legal and litigation costs, acquisition and restructuring costs, write-off of long-lived assets, and other adjustments.
Conference Call
About cogint™
At cogint, we believe that time is your most valuable asset. Through powerful analytics, we transform data into intelligence, in a fast and efficient manner, so that our clients can spend their time on what matters most – running their organizations with confidence. Through leading-edge, proprietary technology and a massive data repository, our data and analytical solutions harness the power of data fusion, uncovering the relevance of disparate data points and converting them into comprehensive and insightful views of people, businesses, assets and their interrelationships. We empower clients across markets and industries to better execute all aspects of their business, from managing risk, conducting investigations, identifying fraud and abuse, and collecting debts, to identifying and acquiring new customers. At cogint, we are dedicated to making the world a safer place, to reducing the cost of doing business, and to enhancing the consumer experience.
RELATED LINKS:http://www.cogint.com
FORWARD-LOOKING STATEMENTS
This press release contains "forward-looking statements," as that term
is defined under the Private Securities Litigation Reform Act of 1995
(PSLRA), which statements may be identified by words such as "expects,"
"plans," "projects," "will," "may," "anticipate," "believes," "should,"
"intends," "estimates," and other words of similar meaning. Such forward
looking statements are subject to risks and uncertainties that are often
difficult to predict, are beyond our control and which may cause results
to differ materially from expectations. Readers are cautioned not to
place undue reliance on these forward-looking statements, which are
based on our expectations as of the date of this press release and speak
only as of the date of this press release and are advised to consider
the factors listed above together with the additional factors under the
heading "Forward-Looking Statements" and "Risk Factors" in the Company's
Annual Report on Form 10-K, as may be supplemented or amended by the
Company's Quarterly Reports on Form 10-Q and other
| COGINT, INC. | ||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
| (Amounts in thousands, except share data) | ||||||||
| (unaudited) | ||||||||
| September 30, 2017 | December 31, 2016 | |||||||
|
ASSETS: |
||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 10,323 | $ | 10,089 | ||||
|
Accounts receivable, net of allowance for doubtful accounts of
$2,401 and $790
at September 30, 2017 and December 31, 2016, respectively |
37,148 | 30,958 | ||||||
| Prepaid expenses and other current assets | 2,315 | 2,053 | ||||||
| Total current assets | 49,786 | 43,100 | ||||||
| Property and equipment, net | 1,899 | 1,350 | ||||||
| Intangible assets, net | 91,554 | 98,531 | ||||||
| Goodwill | 166,256 | 166,256 | ||||||
| Other non-current assets | 2,425 | 2,674 | ||||||
|
Total assets |
$ | 311,920 | $ | 311,911 | ||||
|
LIABILITIES AND SHAREHOLDERS’ EQUITY: |
||||||||
| Current liabilities: | ||||||||
| Trade accounts payable | $ | 12,400 | $ | 14,725 | ||||
| Accrued expenses and other current liabilities | 15,622 | 6,981 | ||||||
| Deferred revenue | 444 | 318 | ||||||
| Current portion of long-term debt | 2,750 | 4,135 | ||||||
| Total current liabilities | 31,216 | 26,159 | ||||||
| Promissory notes payable to certain shareholders, net | 10,543 | 10,748 | ||||||
| Long-term debt, net | 49,555 | 35,130 | ||||||
| Acquisition consideration payable in stock | 10,225 | 10,225 | ||||||
| Total liabilities | 101,539 | 82,262 | ||||||
| Shareholders' equity: | ||||||||
|
Series A preferred stock—$0.0001 par value, 10,000,000 shares
authorized;
0 share issued and outstanding at September 30, 2017 and December 31, 2016 |
- | - | ||||||
|
Series B preferred stock—$0.0001 par value, 10,000,000 shares
authorized;
0 share issued and outstanding at September 30, 2017 and December 31, 2016 |
- | - | ||||||
|
Common stock—$0.0005 par value, 200,000,000 shares authorized;
56,418,136
and 53,717,996 shares issued at September 30, 2017 and December 31, 2016, respectively; and 56,065,613 and 53,557,761 shares outstanding at September 30, 2017 and December 31, 2016, respectively |
28 | 27 | ||||||
|
Treasury stock, at cost, 352,523 and 160,235 shares at September 30,
2017 and
December 31, 2016, respectively |
(1,274 | ) | (531 | ) | ||||
| Additional paid-in capital | 373,087 | 344,384 | ||||||
| Accumulated deficit | (161,460 | ) | (114,231 | ) | ||||
| Total shareholders’ equity | 210,381 | 229,649 | ||||||
| Total liabilities and shareholders’ equity | $ | 311,920 | $ | 311,911 | ||||
| COGINT, INC. | ||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS | ||||||||||||||||
| (Amounts in thousands, except share data) | ||||||||||||||||
| (unaudited) | ||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Revenue | $ | 57,248 | $ | 52,176 | $ | 161,038 | $ | 132,643 | ||||||||
|
Cost of revenues (exclusive of depreciation and
amortization) |
37,687 | 39,658 | 109,509 | 97,709 | ||||||||||||
| Gross profit | 19,561 | 12,518 | 51,529 | 34,934 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Sales and marketing expenses | 6,280 | 3,699 | 16,636 | 10,004 | ||||||||||||
| General and administrative expenses | 21,365 | 13,614 | 60,938 | 40,148 | ||||||||||||
| Depreciation and amortization | 3,585 | 3,507 | 10,460 | 9,112 | ||||||||||||
| Write-off of long-lived assets | - | 4,055 | 3,626 | 4,055 | ||||||||||||
| Total operating expenses | 31,230 | 24,875 | 91,660 | 63,319 | ||||||||||||
| Loss from operations | (11,669 | ) | (12,357 | ) | (40,131 | ) | (28,385 | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Interest expense, net | (2,426 | ) | (1,880 | ) | (7,098 | ) | (5,561 | ) | ||||||||
| Other expenses, net | - | - | - | (1,273 | ) | |||||||||||
| Total other expense | (2,426 | ) | (1,880 | ) | (7,098 | ) | (6,834 | ) | ||||||||
| Loss before income taxes | (14,095 | ) | (14,237 | ) | (47,229 | ) | (35,219 | ) | ||||||||
| Income taxes | - | (4,493 | ) | - | (11,519 | ) | ||||||||||
| Net loss | $ | (14,095 | ) | $ | (9,744 | ) | $ | (47,229 | ) | $ | (23,700 | ) | ||||
| Loss per share: | ||||||||||||||||
| Basic and diluted | $ | (0.25 | ) | $ | (0.19 | ) | $ | (0.86 | ) | $ | (0.56 | ) | ||||
| Weighted average number of shares outstanding: | ||||||||||||||||
| Basic and diluted | 55,390,247 | 50,654,690 | 54,665,776 | 42,100,504 | ||||||||||||
| Comprehensive loss: | ||||||||||||||||
| Net comprehensive loss | $ | (14,095 | ) | $ | (9,744 | ) | $ | (47,229 | ) | $ | (23,700 | ) | ||||
| COGINT, INC. | ||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| (Amounts in thousands, except share data) | ||||||||
| (unaudited) | ||||||||
| Nine Months Ended September 30, | ||||||||
| 2017 | 2016 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | (47,229 | ) | $ | (23,700 | ) | ||
|
Adjustments to reconcile net loss to net cash (used in) provided by
operating
activities: |
||||||||
| Depreciation and amortization | 10,460 | 9,112 | ||||||
| Non-cash interest expenses and related amortization | 2,268 | 1,839 | ||||||
| Share-based compensation expense | 27,702 | 21,941 | ||||||
| Non-cash loss on exchange of warrants | - | 1,273 | ||||||
| Write-off of long-lived assets | 3,626 | 4,055 | ||||||
| Provision for bad debts | 2,352 | 666 | ||||||
| Deferred income tax benefit | - | (11,561 | ) | |||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable | (8,542 | ) | (3,301 | ) | ||||
| Prepaid expenses and other current assets | (262 | ) | 545 | |||||
| Other non-current assets | 249 | (549 | ) | |||||
| Trade accounts payable | (2,325 | ) | 5,027 | |||||
| Accrued expenses and other current liabilities | 8,641 | (533 | ) | |||||
| Deferred revenue | 126 | (428 | ) | |||||
| Net cash (used in) provided by operating activities | (2,934 | ) | 4,386 | |||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchase of property and equipment | (1,144 | ) | (722 | ) | ||||
| Capitalized costs included in intangible assets | (5,512 | ) | (7,980 | ) | ||||
| Acquisition, net of cash acquired | - | (50 | ) | |||||
| Deposits as collateral | - | (750 | ) | |||||
| Net cash used in investing activities | (6,656 | ) | (9,502 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from issuance of shares, net of issuance costs | - | 4,724 | ||||||
| Proceeds for debt obligations, net of debt costs | 14,039 | (682 | ) | |||||
| Repayments of long-term debt | (3,472 | ) | (1,688 | ) | ||||
| Taxes paid related to net share settlement of vesting of restricted stock units | (743 | ) | (305 | ) | ||||
| Net cash provided by financing activities | 9,824 | 2,049 | ||||||
| Net increase (decrease) in cash and cash equivalents | $ | 234 | $ | (3,067 | ) | |||
| Cash and cash equivalents at beginning of period | 10,089 | 13,462 | ||||||
| Cash and cash equivalents at end of period | $ | 10,323 | $ | 10,395 | ||||
| SUPPLEMENTAL DISCLOSURE INFORMATION | ||||||||
| Cash paid for interest | $ | 4,940 | $ | 3,795 | ||||
| Cash paid for income taxes | $ | - | $ | - | ||||
| Share-based compensation expense capitalized in intangible assets | $ | 1,002 | $ | 868 | ||||
| Issuance of common stock to a vendor for services rendered | $ | - | $ | 146 | ||||
| Fair value of acquisition consideration | $ | - | $ | 21,206 | ||||
| Warrants issued in relation to the term loan | $ | - | $ | 492 | ||||
Use and Reconciliation of Non-GAAP Financial Measures
Management evaluates the financial performance of our business on a variety of key indicators, including adjusted EBITDA. Adjusted EBITDA is a non-GAAP financial measure equal to net loss, the most directly comparable financial measure based on US GAAP, adding back interest expense, income tax benefit, depreciation and amortization, share-based compensation expense, non-recurring legal and litigation costs, acquisition and restructuring costs, write-off of long-lived assets, and other adjustments, as noted in the tables below.
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| (In thousands) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
| Net loss | $ | (14,095 | ) | $ | (9,744 | ) | $ | (47,229 | ) | $ | (23,700 | ) | ||||
| Interest expense, net | 2,426 | 1,880 | 7,098 | 5,561 | ||||||||||||
| Income tax benefit | - | (4,493 | ) | - | (11,519 | ) | ||||||||||
| Depreciation and amortization | 3,585 | 3,507 | 10,460 | 9,112 | ||||||||||||
| Share-based compensation expense | 11,071 | 7,318 | 27,702 | 21,941 | ||||||||||||
| Non-recurring legal and litigation costs | 340 | 633 | 9,170 | 1,493 | ||||||||||||
| Acquisition and restructuring costs | 2,474 | - | 4,792 | 431 | ||||||||||||
| Write-off of long-lived assets | - | 4,055 | 3,626 | 4,055 | ||||||||||||
| Non-cash loss on exchange of warrants | - | - | - | 1,273 | ||||||||||||
| Adjusted EBITDA | $ | 5,801 | $ | 3,156 | $ | 15,619 | $ | 8,647 | ||||||||
We present adjusted EBITDA as a supplemental measure of our operating performance because we believe it provides useful information to our investors as it eliminates the impact of certain items that we do not consider indicative of our cash operations and ongoing operating performance. In addition, we use it as an integral part of our internal reporting to measure the performance of our reportable segments, evaluate the performance of our senior management and measure the operating strength of our business.
Adjusted EBITDA is a measure frequently used by securities analysts, investors and other interested parties in their evaluation of the operating performance of companies similar to ours and is an indicator of the operational strength of our business. Adjusted EBITDA eliminates the uneven effect across all reportable segments of considerable amounts of non-cash depreciation and amortization, share-based payments and write-off of long-lived assets.
Adjusted EBITDA is not intended to be a performance measure that should be regarded as an alternative to, or more meaningful than, either operating income or net income as indicators of operating performance or to cash flows from operating activities as a measure of liquidity. The way we measure adjusted EBITDA may not be comparable to similarly titled measures presented by other companies, and may not be identical to corresponding measures used in our various agreements.
View source version on businesswire.com: http://www.businesswire.com/news/home/20171108006290/en/
Source:
Cogint, Inc.
Jordyn Kopin, 646-356-8469
Director, Investor
Relations
JKopin@cogint.com