Professional Diversity Network Announces Third Quarter 2016 Financial Results
CHICAGO, Nov. 14, 2016 (GLOBE NEWSWIRE) -- Professional Diversity Network, Inc. (“PDN” or “the Company”) (NASDAQ:IPDN), announced its results for the Third Quarter of 2016, ending on September 30, 2016.
Q3 2016 Highlights
- Net loss decreased to approximately $1.3 million from approximately $31.8 million in the quarter ended September 30, 2015; adjusted EBITDA deficit shrank to $342,000 from $1,042,000 in the quarter ended September 30, 2015
- Increased registered users by 399,000 from 8,552,000 to over 8,951,000
- Created significant new partnerships, including with Abercrombie & Fitch and Sun Life Financial, while renewing partnerships with Novartis, NY Life and others
James Kirsch, the Company’s Co-Chairman, noted that “from top down, every employee has contributed to our improved financial results, which are being felt in each of the Company’s three divisions.” He continued, “We are particularly pleased with these results when coupled with our recent transaction with Cosmic Forward Limited, which, we believe, positions the Company to expand its business both in the United States and abroad.”
Q3 2016 Financial Summary
Revenue in the third quarter of 2016 was $6.4 million, down 31% from $9.2 million in the comparable year-ago quarter. The corresponding gross margins were 88% and 84% in the third quarters of 2016 and 2015, respectively. The net losses in the third quarter of 2016 and 2015 were $1.3 million and $31.8 million, respectively, including non-cash goodwill impairment charges that were recognized in the third quarter of 2015. The adjusted EBITDA deficit shrank from $1.0 million in Q3 2015 to $342,000 in Q3 2016, reflecting cost-cutting measures undertaken by the Company.
About Professional Diversity Network, Inc.
The Professional Diversity Network platform provides employers that value diversity with access to diverse talent to meet their hiring needs. Professional Diversity Network owns and operates professional networking communities including: www.iHispano.com for Hispanic professionals, www.BlackCareerNetwork.com for African-American professionals, www.WomensCareerChannel.com for professional women, www.Military2Career.com for Veterans, http://www.ProAble.net for professionals with disabilities, www.OutProNet.com for professionals in the LGBT community, and www.AsianCareerNetwork.com for Asian-American professionals. In addition, the Company operates the National Association of Professional Women, at www.napw.com, the country’s largest networking organization dedicated to professional women. For more information, visit: www.prodivnet.com.
Forward Looking Statements
This press release contains certain forward-looking statements based on our current expectations, forecasts and assumptions. Forward-looking statements can be identified by forward-looking words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “should,” “will” and “would” or similar words, and include, without limitation, statements regarding future expansion of the Company’s business in the U.S. and abroad. Forward-looking statements involve risks and uncertainties and our actual results may differ materially from those stated or implied in such forward-looking statements. Factors that could contribute to such differences include, but are not limited to, our potential failure to realize the benefits from the transaction with Cosmic Forward Limited and the risk factors disclosed in our Annual Report on Form 10-K filed on March 30, 2016, as amended, our Quarterly Report on Form 10-Q filed on August 15, 2016, our Quarterly Report on Form 10-Q filed on November 14, 2016 and any subsequent filings made by us with the SEC. We assume no obligation to update the information included in this press release, whether as a result of new information, future events or otherwise. The Form 10-K filed on March 30, 2016, as amended, the Form 10-Q filed on August 15, 2016 and the Form 10-Q filed on November 14, 2016 together with this press release, are available on our website, www.prodivnet.com. Please click on "Investor Relations."
| Professional Diversity Network, Inc. | ||||||||||||||||
| Condensed Consolidated Statements of Comprehensive Loss | ||||||||||||||||
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| (Unaudited) | (Revised) | (Unaudited) | (Revised) | |||||||||||||
| Revenues | ||||||||||||||||
| Membership fees and related services | $ | 3,748,334 | $ | 5,652,873 | $ | 13,047,652 | $ | 18,885,308 | ||||||||
| Lead generation | 1,554,370 | 2,334,276 | 4,489,919 | 7,853,402 | ||||||||||||
| Recruitment services | 954,887 | 830,250 | 2,295,556 | 2,432,951 | ||||||||||||
| Product sales and other | 52,857 | 330,769 | 544,440 | 631,198 | ||||||||||||
| Consumer advertising and marketing solutions | 49,719 | 73,011 | 176,771 | 209,097 | ||||||||||||
| Total revenues | 6,360,167 | 9,221,179 | 20,554,338 | 30,011,956 | ||||||||||||
| Costs and expenses: | ||||||||||||||||
| Cost of revenues | 745,159 | 1,464,214 | 2,433,550 | 4,647,520 | ||||||||||||
| Sales and marketing | 3,064,454 | 5,132,077 | 10,314,145 | 17,226,640 | ||||||||||||
| General and administrative | 3,010,862 | 3,748,138 | 9,428,493 | 11,593,955 | ||||||||||||
| Impairment expense | - | 26,744,249 | - | 26,744,249 | ||||||||||||
| Depreciation and amortization | 819,894 | 925,684 | 2,498,136 | 2,730,880 | ||||||||||||
| Loss on sale of property and equipment | - | 32,649 | - | 32,649 | ||||||||||||
| Total costs and expenses | 7,640,369 | 38,047,011 | 24,674,324 | 62,975,893 | ||||||||||||
| Loss from operations | (1,280,202 | ) | (28,825,832 | ) | (4,119,986 | ) | (32,963,937 | ) | ||||||||
| Other (expense) income | ||||||||||||||||
| Interest expense | (215,781 | ) | (9,229 | ) | (216,948 | ) | (84,339 | ) | ||||||||
| Interest and other income | 150 | 2,382 | 801 | 25,566 | ||||||||||||
| Other income (expense), net | (215,631 | ) | (6,847 | ) | (216,147 | ) | (58,773 | ) | ||||||||
| Change in fair value of warrant liability | (401,000 | ) | 2,224 | (401,000 | ) | 93,784 | ||||||||||
| Loss before income tax benefit | (1,896,833 | ) | (28,830,455 | ) | (4,737,133 | ) | (32,928,926 | ) | ||||||||
| Income tax expense (benefit) | (623,699 | ) | 2,976,217 | (1,218,092 | ) | 1,509,395 | ||||||||||
| Net loss | $ | (1,273,134 | ) | $ | (31,806,672 | ) | $ | (3,519,041 | ) | $ | (34,438,321 | ) | ||||
| Net loss per common share, basic and diluted | $ | (0.70 | ) | $ | (17.59 | ) | $ | (1.94 | ) | $ | (20.05 | ) | ||||
| per common share: Weighted average shares used in computing net loss |
||||||||||||||||
| Basic and diluted | 1,809,676 | 1,808,099 | 1,809,676 | 1,717,816 | ||||||||||||
| Professional Diversity Network, Inc. | ||||||||
| Condensed Consolidated Balance Sheets | ||||||||
| September 30, | December 31, | |||||||
| 2016 | 2015 | |||||||
| (Unaudited) | (Revised) | |||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 515,963 | $ | 2,070,693 | ||||
| Accounts receivable, net | 1,839,474 | 2,510,530 | ||||||
| Short-term investments | - | 500,000 | ||||||
| Incremental direct costs | 547,616 | 1,023,916 | ||||||
| Prepaid license fee | - | 112,500 | ||||||
| Prepaid expenses and other current assets | 229,689 | 411,592 | ||||||
| Total current assets | 3,132,742 | 6,629,231 | ||||||
| Property and equipment, net | 313,622 | 444,398 | ||||||
| Capitalized technology, net | 240,463 | 456,523 | ||||||
| Goodwill | 20,201,190 | 20,201,190 | ||||||
| Intangible assets, net | 9,900,539 | 12,051,839 | ||||||
| Merchant reserve | 1,426,927 | 1,260,849 | ||||||
| Security deposits | 189,375 | 383,786 | ||||||
| Other assets | 1,049,026 | - | ||||||
| Total assets | $ | 36,453,884 | $ | 41,427,816 | ||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | 5,359,151 | $ | 4,465,941 | ||||
| Accrued expenses | 1,519,491 | 837,712 | ||||||
| Deferred revenue | 6,406,542 | 9,966,893 | ||||||
| Customer deposits | - | 112,500 | ||||||
| Promissory note | 445,000 | 445,000 | ||||||
| Total current liabilities | 13,730,184 | 15,828,046 | ||||||
| Deferred tax liability | 3,724,816 | 4,942,908 | ||||||
| Line of credit – Master Credit Facility, net of unamortized debt issuance costs | 827,679 | - | ||||||
| Deferred rent | 55,434 | 45,155 | ||||||
| Other liabilities | 47,367 | 426,267 | ||||||
| Total liabilities | 18,385,480 | 21,242,376 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders' Equity | ||||||||
| Common stock, $0.01 par value; 45,000,000 shares authorized; 1,815,232 shares issued as of September 30, 2016 and December 31, 2015; and 1,808,628 shares outstanding as of September 30, 2016 and December 31, 2015 |
18,097 | 18,097 | ||||||
| Additional paid in capital | 64,956,199 | 63,554,194 | ||||||
| Accumulated deficit | (46,868,775 | ) | (43,349,734 | ) | ||||
| Treasury stock, at cost; 1,048 shares at September 30, 2016 and December 31, 2015 | (37,117 | ) | (37,117 | ) | ||||
| Total stockholders' equity | 18,068,404 | 20,185,440 | ||||||
| Total liabilities and stockholders' equity | $ | 36,453,884 | $ | 41,427,816 | ||||
Non-GAAP Financial Measures
In this news release, PDN makes reference to “Adjusted EBITDA,” a measure of financial performance not calculated in accordance with accounting principles generally accepted in the United States (“GAAP”). Management has included Adjusted EBITDA because it believes that investors may find it useful to review PDN’s financial results as adjusted to exclude items as determined by management. Reconciliations of this non-GAAP financial measure to the most directly comparable GAAP financial measure, net loss, to the extent available without unreasonable effort, are set forth below.
Management believes Adjusted EBITDA provides a meaningful representation of PDN’s operating performance and provides useful information to investors regarding our financial condition and results of operations. Adjusted EBITDA is commonly used by financial analysts and others to measure operating performance. Furthermore, management believes that this non-GAAP financial measure may provide investors with additional meaningful comparisons between current results and results of prior periods as they are expected to be reflective of our core ongoing business. However, while we consider Adjusted EBITDA to be an important measure of operating performance, Adjusted EBITDA and other non-GAAP financial measures have limitations, and investors should not consider them in isolation or as a substitute for analysis of our results as reported under GAAP. Further, Adjusted EBITDA, as PDN defines it, may not be comparable to Adjusted EBITDA, or similarly titled measures, as defined by other companies.
Reconciliation of Net Income (Loss) to Adjusted EBITDA
The following table reconciles net income (loss) to Adjusted EBITDA, which is a non-GAAP financial measure:
| (Amounts in thousands) | ||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Net loss | $ | (1,273 | ) | $ | (31,807 | ) | $ | (3,519 | ) | $ | (34,438 | ) | ||||
| Impairment expense | - | 26,744 | - | 26,744 | ||||||||||||
| Stock-based compensation expense | 118 | 114 | 218 | 351 | ||||||||||||
| Depreciation and amortization | 820 | 926 | 2,498 | 2,731 | ||||||||||||
| Litigation settlement | - | - | 500 | - | ||||||||||||
| Gain on lease cancellation | - | - | (424 | ) | - | |||||||||||
| Change in fair value of warrant liability | 401 | (2 | ) | 401 | (94 | ) | ||||||||||
| Interest expense | 216 | 9 | 217 | 84 | ||||||||||||
| Interest and other income | - | (2 | ) | (1 | ) | (26 | ) | |||||||||
| Income tax expense (benefit) | (624 | ) | 2,976 | (1,218 | ) | 1,509 | ||||||||||
| Adjusted EBITDA | $ | (342 | ) | $ | (1,042 | ) | $ | (1,328 | ) | $ | (3,139 | ) | ||||
CONTACT: David Mecklenburger, CFO (312) 614-0944 investor@prodivnet.com
Released November 14, 2016