- Reports Positive Operating Income of $1.4 Million and EBITDA
from Continuing Operations of $3.9 Million
- Generates $1.4 Million in Cash from Continuing Operations and
Strengthens Balance Sheet with Successful Rights Offering
- Launches new products in Mobile Media and Mobile Enterprise
through two new brands, Voltari and Serrano Mobile
Motricity (Nasdaq:MOTR), a leading provider of mobile Internet
services, today announced financial results for the third quarter
ended September 30, 2012. A brief slide presentation providing an
overview of the third quarter results and recent initiatives may be
viewed at http://investor.motricity.com/events.cfm.
"In the third quarter, Motricity generated positive cash from
operations, increased EBITDA and strengthened our balance sheet,"
said Jim Smith, interim chief executive officer. "With substantial
restructuring behind us, we are in the early stages of investing in
innovation to address strong market opportunities in carrier,
mobile advertising and enterprise."
Third Quarter Results
Revenue in the third quarter of 2012 was $23.0 million, as
compared to $22.2 million in the second quarter of 2012 and $24.8
million in the third quarter of 2011. Operating income was $1.4
million, as compared to operating income of $0.7 million in the
second quarter of 2012 and to operating loss of $(147.9) million in
the third quarter of 2011. Net income from continuing operations
was $0.5 million, as compared to net loss of $(0.2) million in the
second quarter of 2012 and $(141.7) million in the third quarter of
2011. EBITDA from continuing operations (EBITDA) was $3.9 million,
as compared to EBITDA of $2.2 million in the second quarter of 2012
and EBITDA loss of $(145.3) million in the third quarter of 2011.
Net loss from continuing operations in the third quarter of 2011
included $139.5 million of impairment charges.
Motricity ended the third quarter with $19.0 million of cash and
cash equivalents. On October 11, 2012, Motricity announced that the
previously announced rights offering had closed and that the
Company expects to receive net proceeds of approximately $28
million from the offering with the issuance of 1,199,643 shares of
Series J preferred stock and 10,149,842 common stock warrants.
Launch of New Brands
During the third quarter, Motricity launched two new brands for
its mobile media and mobile enterprise lines of business:
- VoltariTM (www.voltari.com) is focused on helping advertisers
reach the right person at the right time on any mobile device.
Voltari launched V-Connect – a predictive analytics platform that
goes beyond just selling inventory by helping advertisers more
effectively target the right audience prior to launching a
campaign.
- Serrano MobileTM (www.serranomobile.com) is focused on enabling
brand marketers to acquire new customers, build loyalty, and
measure customer engagement through branded mobile
experiences. Serrano Mobile launched the Serrano platform – a
cloud-based mobile-marketing platform that simplifies the
development, management, and performance measurement of branded
mobile experiences.
- The Company's longstanding carrier-focused line of business
will remain as MotricityTM providing value-added mobile data
services to several of the largest carriers in the world.
Use of Non-GAAP Measures
This press release includes EBITDA as a non-GAAP financial
measure. EBITDA is not a measure of financial performance or
liquidity calculated in accordance with accounting principles
generally accepted in the U.S., referred to herein as GAAP, and
should be viewed as a supplement to, not a substitute for, our
results of operations presented on the basis of GAAP.
Reconciliation of this non-GAAP financial measure to the most
directly comparable GAAP financial measures is detailed in the
table below.
Our non-GAAP measures should be read in conjunction with the
corresponding GAAP measures. EBITDA has limitations as an
analytical tool and you should not consider it in isolation
from, or as a substitute for, analysis of our results as reported
in accordance with GAAP. EBITDA does not purport to represent cash
flow provided by, or used in, operating activities as defined by
GAAP.
We define EBITDA as net income (loss) before income (loss) from
discontinued operations, interest expense, provision (benefit) for
income taxes, and depreciation and amortization. EBITDA is not
necessarily comparable to similarly-titled measures reported by
other companies.
We believe EBITDA is useful to management, investors and other
users of our financial statements in evaluating our operating
performance because this financial measure is an additional tool to
compare business performance across companies and across periods.
We believe that EBITDA is often used by investors to measure a
company's operating performance without regard to items such as
interest expense, taxes and depreciation and amortization, which
can vary substantially from company to company depending upon
accounting methods and book value of assets, capital structure and
the method by which assets were acquired.
We use EBITDA:
- as a measure of operating performance to assist in comparing
performance from period to period on a consistent basis;
- as a measure for planning and forecasting overall expectations
and for evaluating actual results against such expectations;
- as a primary measure to review and assess the operating
performance of our company and management team in connection with
our executive compensation plan incentive payments; and
- in communications with our board of directors, stockholders,
analysts and investors concerning our financial performance.
The following is a reconciliation of net income (loss), the most
directly comparable GAAP measure, to EBITDA for each of the
quarters ended:
| |
September 30,
2010 |
December 31,
2010 |
March 31, 2011 |
June 30, 2011 |
September 30,
2011 |
December 31,
2011 |
March 31, 2012 |
June 30, 2012 |
September 30,
2012 |
| Net income (loss) attributable to
common shareholders |
$ 2.7 |
$ 2.3 |
$ (6.1) |
$ (4.3) |
$ (174.5) |
$ (10.4) |
$ (8.7) |
$ (1.9) |
$ 0.5 |
| Accretion of redeemable preferred stock |
(0.1) |
(0.1) |
-- |
-- |
-- |
-- |
-- |
-- |
-- |
| Series H redeemable preferred stock
dividends |
(0.4) |
(0.4) |
-- |
-- |
-- |
-- |
-- |
-- |
-- |
| Income (loss) from discontinued
operations |
1.2 |
2.9 |
0.5 |
(1.4) |
(32.8) |
(4.7) |
(4.7) |
(1.7) |
-- |
| Interest expense |
-- |
(0.1) |
-- |
-- |
(0.2) |
(0.5) |
(0.4) |
(0.5) |
(0.5) |
| Provision (benefit) for income taxes |
0.5 |
0.2 |
0.4 |
0.4 |
(6.4) |
0.3 |
0.1 |
(0.1) |
0.1 |
| Depreciation and amortization |
2.9 |
3.0 |
3.7 |
4.1 |
2.6 |
3.3 |
1.8 |
2.0 |
2.8 |
| EBITDA from continuing
operations |
$ 5.4 |
$ 3.2 |
$ (2.5) |
$ 1.6 |
$ (145.3) |
$ (1.6) |
$ (1.7) |
$ 2.2 |
$ 3.9 |
Forward-Looking Statements
Statements made in this release and related statements that
express Motricity's or its management's intentions, indications,
beliefs, expectations, guidance, estimates, forecasts or
predictions of the future constitute forward-looking statements, as
defined by the Private Securities Litigation Reform Act of 1995,
and relate to matters that are not historical facts. They include,
without limitation, statements regarding: our view of general
economic and market conditions; our exploration and review of
strategic and financing options; estimates of impairment charges
and our ability to develop, produce, market, license or sell our
products, solutions and services, compete domestically and
internationally, reduce or control expenses, improve
efficiency, realign resources, continue operational improvement,
and about the applicability of accounting policies used in our
financial reporting. These statements represent beliefs and
expectations only as of the date they were made. We may elect to
update forward-looking statements but we expressly disclaim any
obligation to do so, even if our beliefs and expectations change.
Actual results may differ from those expressed or implied in our
forward-looking statements.
Such forward-looking statements involve and are subject to
certain risks and uncertainties that may cause our actual results
to differ materially from those discussed in a forward-looking
statement. These include, but are not limited to: the sufficiency
of our liquidity and capital resources and our ability to raise
additional capital or generate the cash flows necessary to repay
our term loan; our reliance on a limited number of customers for a
substantial portion of our revenues, including the pressures on
pricing and contract terms from customers with substantial
purchasing power and further consolidations in the
telecommunications industry; our ability to realign our
business to focus on our mobile advertising and enterprise business
and obtain customers for that business; the highly competitive
nature of the mobile services industry in which many of our
competitors have significantly greater resources, which they are
using to support significantly discounted pricing; the rapid
technological changes in the mobile data services industry, which
could render our existing services obsolete; our ability to attract
and retain key employees and qualified personnel; impact of
the recent departure of members of our executive team and our
ongoing leadership transition; our ability to recognize the
expected benefits from the reduction in force implemented in 2011
and the beginning of 2012; the possibility that the process of
exploring strategic or financing options will not lead to any
strategic transaction or additional financing on favorable terms or
at all; the potential that the process will distract the attention
of our Board of Directors and management from our business; the
potential that we will incur significant expenses pursuing one or
more strategic or financing transactions unsuccessfully; the risk
that our pursuit of strategic or financing options will be
disruptive to our business the risk of claims or other litigation
arising from our pursuit of strategic options; the potential that
the pursuit of strategic or financing options will otherwise have a
material adverse effect on our business, results of operations and
financial condition; economic and political risks related to our
international operations; risks of new product offerings
reducing our customers' influence over access to mobile data
services; our ability to integrate any future acquisitions and
business combinations effectively; the impact of worldwide
economic conditions and related uncertainties and the health of and
prospects for the overall mobile services industry; risks
related to the use and protection of proprietary information,
including our ability to safeguard third party confidential
information; our ability to develop strategies to address our
markets successfully and to meet customer demands with respect to
products, services, support and service level
commitments; disruptions in datacenter services and other
capacity constraints; uncertainties inherent in the
development of new products and services and the enhancement of
existing products and services, including technical risks, cost
overruns and delays; our ability to tailor our complex
solutions to our customers' needs; our ability to utilize net
operating losses; our ability to maintain proper and effective
internal controls; uncertainty related to whether certain terms of
our term loan will have the effect of discouraging offers for our
business or common stock; our reliance on third parties to develop
content and applications, customer acceptance of such offerings and
our liability with respect to such content; undetected
software errors in our products and indemnity obligations and
claims relating to our products and services; our ability to
manage growth; impairment losses related to goodwill,
intellectual property and equipment; risks and diversion of
resources related to the litigation against us and our current and
former directors and officers; actual or perceived security
vulnerabilities in mobile devices; the impact of changing
governmental regulations and our ability to comply
therewith; risks related to the commercialization of open
source software we use; the influence and control our principal
stockholder may exert; and other uncertainties described more
fully in our filings with the Securities and Exchange
Commission.
About Motricity
Motricity (Nasdaq:MOTR) empowers mobile operators, brands and
advertising agencies to maximize the reach and economic potential
of the mobile ecosystem through the delivery of relevance-driven
merchandising, marketing and advertising solutions. Motricity
leverages advanced predictive analytics capabilities to deliver the
right content, to the right person at the right time. Motricity's
unique combination of technology, mobile-expertise and go-to-market
approach delivers return-on-investment for our mobile operator,
brand and advertising agency customers. For more information, visit
www.motricity.com.
The Motricity, Inc. logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=7813
Supplemental Data Schedule
| |
September 30,
2010 |
December 31,
2010 |
March 31, 2011 |
June 30, 2011 |
September 30,
2011 |
December 31,
2011 |
March 31, 2012 |
June 30, 2012 |
September 30,
2012 |
| Revenue details |
|
|
|
|
|
|
|
|
|
| North American carrier revenue |
$ 25.5 |
$ 24.1 |
$ 21.9 |
$ 21.8 |
$ 19.7 |
$ 19.3 |
$ 18.8 |
$ 18.6 |
$ 19.4 |
| International carrier revenue |
-- |
1.0 |
1.1 |
0.6 |
0.4 |
0.4 |
-- |
0.4 |
0.2 |
| Mobile media and enterprise revenue |
2.0 |
0.9 |
1.3 |
3.4 |
4.7 |
3.1 |
4.0 |
3.2 |
3.4 |
| Total revenues |
$ 27.5 |
$ 26.0 |
$ 24.3 |
$ 25.8 |
$ 24.8 |
$ 22.8 |
$ 22.8 |
$ 22.2 |
$ 23.0 |
| |
|
|
|
|
|
|
|
|
|
| EBITDA from continuing
operations |
$ 5.4 |
$ 3.2 |
$ (2.5) |
$ 1.6 |
$ (145.3) |
$ (1.6) |
$ (1.7) |
$ 2.2 |
$ 3.9 |
| EBITDA margin from continuing operations |
20% |
12% |
-10% |
6% |
-586% |
-7% |
-7% |
10% |
17% |
| |
| |
| Motricity,
Inc. |
| Condensed Consolidated
Balance Sheets |
| (in thousands, except
share data) |
| |
|
|
| |
September 30,
2012 |
December 31,
2011 |
| |
(unaudited) |
|
| Assets |
|
|
| Current assets |
|
|
| Cash and cash equivalents |
$ 18,977 |
$ 13,066 |
| Restricted short-term investments |
387 |
434 |
| Accounts receivable, net of allowance for
doubtful accounts of $836 and $905, respectively |
16,911 |
42,521 |
| Prepaid expenses and other current
assets |
3,782 |
5,758 |
| Assets held for sale |
-- |
5,206 |
| Total current
assets |
40,057 |
66,985 |
| Property and equipment, net |
8,604 |
15,440 |
| Goodwill |
25,436 |
25,208 |
| Intangible assets, net |
8,903 |
10,120 |
| Other assets |
1,975 |
359 |
| Total assets |
$ 84,975 |
$ 118,112 |
| |
|
|
| Liabilities and stockholders'
equity |
|
|
| Current liabilities |
|
|
| Accounts payable and accrued
expenses |
$ 13,295 |
$ 34,583 |
| Accrued compensation |
4,121 |
5,200 |
| Deferred revenue |
860 |
1,824 |
| Debt facilities |
21,954 |
-- |
| Other current liabilities |
2,581 |
681 |
| Liabilities held for sale |
-- |
5,120 |
| Total current
liabilities |
42,811 |
47,408 |
| Deferred tax liability |
290 |
262 |
| Debt facilities |
-- |
20,531 |
| Other non-current liabilities |
10 |
786 |
| Total liabilities |
43,111 |
68,987 |
| |
|
|
| Stockholders' equity |
|
|
| Preferred stock, $0.001 par value,
350,000,000 shares authorized; no shares issued and
outstanding |
|
|
| Common stock, $0.001 par value,
625,000,000 shares authorized; 46,156,393 and 46,226,797 shares
issued and outstanding as of September 30, 2012 and December 31,
2011, respectively |
46 |
46 |
| Additional paid-in capital |
571,951 |
570,331 |
| Accumulated deficit |
(529,560) |
(519,480) |
| Accumulated other comprehensive loss |
(573) |
(1,772) |
| Total stockholders'
equity |
41,864 |
49,125 |
| Total liabilities and stockholders'
equity |
$ 84,975 |
$ 118,112 |
| |
| |
| Motricity,
Inc. |
| Condensed Consolidated
Statements of Operations |
| (in thousands, except
share data and per share amounts) |
|
(unaudited) |
| |
|
|
|
|
| |
Three Months
Ended |
Nine Months
Ended |
| |
September
30, |
September
30, |
| |
2012 |
2011 |
2012 |
2011 |
| |
|
|
|
|
| Revenue |
$ 23,046 |
$ 24,766 |
$ 68,041 |
$ 74,847 |
| |
|
|
|
|
| Operating expenses |
|
|
|
|
| Direct third party expenses |
4,572 |
4,853 |
14,735 |
11,794 |
| Datacenter and network operations,
excluding depreciation |
3,479 |
5,196 |
10,708 |
15,938 |
| Product development and sustainment,
excluding depreciation |
2,628 |
5,290 |
10,408 |
12,789 |
| Sales and marketing, excluding
depreciation |
2,771 |
3,950 |
7,782 |
11,138 |
| General and administrative, excluding
depreciation |
5,416 |
7,019 |
16,712 |
19,078 |
| Depreciation and amortization |
2,777 |
2,572 |
6,572 |
10,448 |
| Impairment charges |
-- |
139,519 |
-- |
139,519 |
| Acquisition transaction and integration
costs |
-- |
(171) |
-- |
5,901 |
| Restructuring |
-- |
4,465 |
2,505 |
4,840 |
| Total operating
expenses |
21,643 |
172,693 |
69,422 |
231,445 |
| Operating income (loss) |
1,403 |
(147,927) |
(1,381) |
(156,598) |
| |
|
|
|
|
| Other expense, net |
|
|
|
|
| Other income (expense) |
(281) |
11 |
(802) |
37 |
| Interest and investment income, net |
-- |
1 |
1 |
27 |
| Interest expense |
(490) |
(189) |
(1,424) |
(189) |
| Other expense, net |
(771) |
(177) |
(2,225) |
(125) |
| Income (loss) from continuing operations
before income taxes |
632 |
(148,104) |
(3,606) |
(156,723) |
| Provision (benefit) for income taxes |
96 |
(6,355) |
28 |
(5,471) |
| Net income (loss) from continuing
operations |
536 |
(141,749) |
(3,634) |
(151,252) |
| Net loss from discontinued
operations |
-- |
(32,789) |
(6,446) |
(33,696) |
| Net income (loss) |
$ 536 |
$ (174,538) |
$ (10,080) |
$ (184,948) |
| |
|
|
|
|
| Net income (loss) from continuing
operations per share – basic and diluted |
$ 0.01 |
$ (3.09) |
$ (0.08) |
$ (3.40) |
| Net loss from discontinued operations
per share – basic and diluted |
-- |
(0.71) |
(0.14) |
(0.76) |
| Net income (loss) per share –
basic and diluted |
$ 0.01 |
$ (3.80) |
$ (0.22) |
$ (4.16) |
| |
|
|
|
|
| Weighted-average common shares
outstanding – basic |
46,083,396 |
45,877,275 |
46,029,357 |
44,489,853 |
| |
|
|
|
|
| Weighted-average common shares
outstanding – diluted |
46,087,311 |
45,877,275 |
46,029,357 |
44,489,853 |
CONTACT: Investor and Media Contact:
Alex Wellins
(415) 217-5861
alex@blueshirtgroup.com
Motricity, Inc. (MM) (NASDAQ:MOTR)
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