AUSTIN, Texas--(BUSINESS WIRE)--Perk.com Inc. (TSX: PER) (“Perk” or “the Company”), a leading cloud-based mobile rewards platform provider, today reported its operating and financial results for the third quarter and nine- month period ended September 30, 2015. Unless otherwise noted, all amounts are in US dollars.
2015 Third Quarter Highlights (all comparisons to the same prior year period)
- Total revenue increased by 156% to $13.3 million for the third quarter 2015;
- Gross profit was $6.3 million, or 47% of total revenue;
- Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”) of $2.3 million, compared to $0.4 million, an increase of 506%;
- Net loss was approximately $0.9 million, as the result of $1.4 million in transaction costs incurred during the quarter which related to the reverse takeover transaction of Mira VI Acquisition Corp. (“Mira VI”), completed on July 10th, 2015;
- Introduced Perk Plastik, a new prepaid debit card that runs via the Discover Network and allows users to convert Perk Points into money available to be used at any retail or online establishment;
- Launched Perk.TV, a website created by Perk where members can earn Perk Points for watching popular videos through their Internet web browser; and
- Completed the acquisition of AppRedeem Inc. (“AppRedeem”), an innovator in rewarded video for mobile devices in an all-stock transaction.
2015 Year-to-Date Highlights (all comparisons to the same prior year period)
- Total revenue increased 210% to $31.6 million for the nine months ended September 30, 2015;
- Gross profit was $14.3 million, or 45% of total revenue;
- Adjusted EBITDA of $4.0 million, compared to a Adjusted EBITDA of $0.3 million;
- Net loss was approximately $0.2 million, as a result of seasonally lower first quarter results and $1.5 million in transaction related costs during the nine-month period for the acquisitions of Tsavo Mobile Web (“Tsavo”), AppRedeem and Mira VI;
- Acquired Tsavo to extend Perk’s rewards platform;
- Completed private placement transaction in escrow for total gross proceeds of $19.6 million; and
- As of September 30, 2015, there have been over 10 million installations of Perk apps and users have redeemed more than 20 billion points totaling more than $20 million in Rewards paid.
Ted Hastings, Chief Executive Officer of Perk commented, “In our first three months as a publicly traded company, we have made significant progress to grow our business both organically and through targeted acquisition activity. In the third quarter, we closed on the acquisition of an industry leading rewarded video platform and launched a new website as a response to strength in mobile web advertising experienced during the quarter, while budgets for mobile apps were more constrained. We also entered a partnership with the Discover Network to host Perk Plastik. Perk Plastik is another way we have expanded our reward offerings, providing our members with greater flexibility in redeeming their Perk Points, which also gives us visibility into the offline spending habits of our consumers to begin linking brand advertisements’ influence on offline purchasing. We are offering users a unique platform that is innovative and engaging for users, easy for developers to integrate, and ultimately attractive for advertisers to utilize.
We are entering the fourth quarter of 2015 in a strong position, as we have grown our user base in Q3 including our daily active users, monthly active users and overall available advertising inventory. We have $19.9 million in available cash and are now turning our focus to building a direct advertising sales team. We intend to take advantage of the large user base we have built and the data we are assembling on those users. We have been pleased with the Company’s progress thus far and view our first full quarter as a publicly listed company as a great success.”
Acquisition Activity
- On September 21, 2015, Perk acquired 100% of AppRedeem, a San Francisco based innovator in rewarded video for mobile devices. The acquisition has enhanced the Company’s scale and increased Perk’s user base to over 10 million downloads in the mobile rewards space. The total consideration to the shareholders of AppRedeem for the acquisition is 831,601 common shares of Perk, valued at $2.6 million (CAD $3.4 million).
- On April 17th, 2015, the Company acquired the assets and liabilities of Tsavo. The acquisition included a publishing and analysis platform, a suite of mobile apps targeting the new and expecting mom audience, and provided access to infrastructure assets that can be integrated into Perk’s rewards model and Appsaholic SDK. As consideration for the acquisition, the Company is required to pay the Vendor 50% of the EBITDA generated from the Tsavo assets, on a quarterly basis, until April 17, 2018, subject to a minimum of $2 million in cumulative payments over the 3 year term.
2015 Third Quarter Financial and Operational Review
- Total revenue for the third quarter of 2015 was approximately $13.3 million, representing a 156% increase over total revenue of approximately $5.2 million for the prior year period. Excluding revenues from Tsavo and Appredeem (the “Acquisitions”), Perk’s advertising revenue increased 37% to $7.1 million, compared to $5.2 million for the third quarter 2014. The increase in advertising revenues was the result of several factors, which include an increase in users, an increase in the number of apps launched, and the use of those apps, an increase in the amount of advertising inventory available and an increase in monetization opportunities available from Perk’s apps during the period.
- Perk reported cost of sales, which is comprised of the costs of the rewards provided to users, platform fees, and revenue sharing commissions, for the three months ended September 30, 2015 of approximately $7.0 million, compared to $2.8 million in the third quarter of 2014. Excluding the results of the Acquisitions, cost of sales increased by $0.2 million to $3.0 million from the third quarter of 2014. The increase in costs is a result of an increase in the number of apps launched, and an increase in overall app usage, which resulted in an increase in rewards paid out to users.
- Gross profit for the three months ended September 30, 2015 was approximately $6.3 million, compared to approximately $2.4 million for the third quarter 2014.
- Net loss for the three months ended September 30, 2015 was approximately $0.9 million as the result of incurring transaction costs of $1.4 million related to the acquisition of Mira VI. Net income for the same period of the prior year was approximately $0.1 million.
- Adjusted EBITDA was approximately $2.3 million for the three months ended September 30, 2015, representing an increase of approximately $1.9 million, as compared to $0.4 million Adjusted EBITDA generated in the three months ended September 30, 2014. A table reconciling Adjusted EBITDA to net income can be found at the end of this release.
2015 Year-to-Date Financial and Operational Review
- Total revenue for the nine months ended September 30, 2015 was approximately $31.6 million, representing a 210% increase over total revenue of approximately $10.2 million for the prior year period. Perk’s revenue, excluding revenues generated from the Acquisitions, increased 110% to $21.5 million.
- Perk reported cost of sales for the nine months ended September 30, 2015 of approximately $17.3 million compared to $4.2 million for the prior year period. Excluding the results from the Acquisitions, cost of sales increased to $10.5 million from $4.2 million in 2014, as a result of an increase in apps launched, increase in app usage, and an increase in rewards paid out to users.
- Gross profit for the nine months ended September 30, 2015 was approximately $14.3 million, compared to approximately $6.0 million for the prior year period.
- Net loss for the nine months ended September 30, 2015 was approximately $0.2 million compared to net income of approximately $0.01 million for same period of the prior year. Net Income for the Company was affected by the $1.5 million in transaction costs related to acquisitions completed during the nine month period.
- For the nine months ended September 30, 2015, Adjusted EBITDA was approximately $4.0 million, as compared to $0.3 million Adjusted EBITDA in the same nine months ended of the prior year.
Balance Sheet Summary
- Perk had cash of approximately $19.9 million at September 30, 2015 compared with approximately $2.3 million at December 31, 2014. At September 30, 2015, shareholders’ equity was approximately $28.0 million, compared to approximately $2.8 million, at December 31, 2014.
Conference Call Details
Date/Time: Thursday, November 5, 2015, at 12 p.m. ET
Live Participant Dial-In (Toll-Free US & Canada): 877-407-9711
Live Participant Dial-In (International): 412-902-1014
Webcast
The call will also be simultaneously webcast over the Internet via the “Investor Relations” section of Perk’s website at ir.perk.com or by clicking on the conference call link: http://perk.equisolvewebcast.com/q3-2015.
About Perk.com Inc.
As a leading mobile rewards platform, Perk brings together the interests of consumers, advertisers, and publishers by offering users rewards such as Perk Points which is a digital reward system. Perk Points can be redeemed for gift cards, cash, or loaded on to Perk Plastik, a re-loadable branded debit card. In addition, Perk works with brands and publishers to reach consumers through truly engaging and innovative formats using rewards as a way to achieve maximum engagement of their brands and products.
Perk currently owns and operates 15 mobile applications that allow members to earn Perk Points. Perk also operates numerous websites as well as AppTrailers, a leading mobile video rewards app. In addition to offering Perk Points to members through its own mobile applications and websites, Perk launched Appsaholic Software Development Kit which allows mobile and desktop publishers to utilize Perk’s rewards system to engage and entice users through the publisher’s own applications and websites.
Additional information about Perk.com Inc. can be found at the Company’s corporate website: www.ir.perk.com.
Financial Information
A copy of Perk’s Quarterly Report which includes the Company’s consolidated financial statements and Management’s Discussion & Analysis, will be available upon filing via the Canadian Securities Administrators’ website at www.sedar.com under the Document Type “Financial Statements of RTO Acquirer” or through the Company’s website at www.ir.perk.com.
Non-IFRS Measures
The Company defines Adjusted EBITDA as net income (loss) from operations before: (a) depreciation of property and equipment and amortization of intangible assets; (b) share-based compensation, and (c) other charges, net. Management uses Adjusted EBITDA as a measure of the Company's operating performance because it provides information related to the Company's ability to provide operating cash flows for acquisitions, capital expenditures and working capital requirements. The Company also believes that analysts and investors use Adjusted EBITDA as a supplemental measure to evaluate the overall operating performance of companies in its industry. Adjusted EBITDA should be used in addition to and in conjunction with the results presented in the Company’s consolidated financial statements prepared in accordance with IFRS. Management strongly encourages investors to review the Company's financial statements in their entirety and to not rely on any single financial measure. As non-IFRS financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-IFRS financial measures having the same or similar names.
Cautionary Statement Regarding Forward-Looking Statements
This press release contains forward-looking statements, including with respect to Perk’s business, Perk’s ability to grow its active consumer base; the proposed used of proceeds with respect to the funds raised from the private placement; user and advertiser engagement; Perk’s ability to establish new marketing partnerships; Perk’s ability to expand into new markets; and Perk’s ability to acquire and integrate new businesses and technologies. Such forward-looking statements reflect Perk’s expectations about its future operating results, performance and opportunities that involve substantial risks and uncertainties. These statements include but are not limited to statements regarding the intended terms of the offering and the closing of the offering. When used herein, the words "anticipate", "believe", "estimate", "upcoming", "plan", "target", "intend" and "expect" and similar expressions, as they relate to Perk or its management, are intended to identify such forward-looking statements. These forward-looking statements are based on information currently available to Perk and are subject to a number of risks, uncertainties, and other factors that could cause Perk’s actual results, performance, prospects, and opportunities to differ materially from those expressed in, or implied by, these forward-looking statements, including, but not limited to: maintenance by Perk of relationships with advertising network providers; maintenance by Perk of its agreement with Yahoo!; successful development of the “Perk” brand; Perk’s ability to keep up with rapid technological developments in Perk’s markets; Perk’s ability to avoid defects in products and services delivered by Perk; Perk’s ability to attract app and website developers to its Appsaholic SDK; Perk’s ability to successfully enter new business areas and geographic markets; success of new products developed by Perk and Perk’s ability to retain key members of its management team.
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Perk.com Inc.
Unaudited interim condensed consolidated statements of operations and comprehensive loss Three and nine months ended September 30, 2015 and 2014 (In thousands of US Dollars, except for share amounts) |
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| Three months Ended September 30, | Nine months Ended September 30, | |||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||
| Revenue | $ | 13,283 | $ | 5,192 | $ | 31,607 | $ | 10,212 | ||||||
| Cost of sales | 7,006 | 2,807 | 17,321 | 4,205 | ||||||||||
| Gross profit | 6,277 | 2,385 | 14,286 | 6,007 | ||||||||||
| Expenses | ||||||||||||||
| Employee compensation and benefits | 2,944 | 883 | 6,111 | 2,050 | ||||||||||
| Marketing and user acquisition | 436 | 787 | 1,558 | 2,606 | ||||||||||
| General and administrative | 1,250 | 400 | 3,354 | 1,101 | ||||||||||
| Depreciation of property and equipment | 95 | 13 | 162 | 37 | ||||||||||
| Amortization of intangible assets | 357 | - | 647 | - | ||||||||||
| Transaction costs | 1,534 | - | 1,534 | - | ||||||||||
| 6,616 | 2,083 | 13,366 | 5,794 | |||||||||||
| Income (loss) from operations | (339) | 302 | 920 | 213 | ||||||||||
| Foreign exchange gain | (129) | - | (126) | - | ||||||||||
| Other income | (2) | (12) | (2) | (25) | ||||||||||
| Gain on revaluation of forward exchange contract | (288) | - | (501) | - | ||||||||||
| Gain on revaluation of provision | (19) | - | (19) | - | ||||||||||
| Finance cost | 228 | 52 | 553 | 52 | ||||||||||
| Income (loss) before income taxes | (129) | 262 | 1,015 | 186 | ||||||||||
| Income tax expense (recovery) | ||||||||||||||
| Current | 745 | 147 | 838 | 145 | ||||||||||
| Deferred | 52 | - | 348 | - | ||||||||||
| 797 | 147 | 1,186 | 145 | |||||||||||
| Net income (loss) from continuing operations | (926) | 115 | (171) | 41 | ||||||||||
| Discontinued operation | ||||||||||||||
| Loss for the period from discontinued operation net of tax | - | - | - | (30) | ||||||||||
| Net income (loss) for the period | (926) | 115 | (171) | 11 | ||||||||||
| Net income attributable to non-controlling interest | - | 6 | 3 | 1 | ||||||||||
| Net income (loss) attributable to the shareholders of the Company | (926) | 109 | (174) | 10 | ||||||||||
| Other comprehensive loss for items to be reclassified to net income or loss in subsequent periods | ||||||||||||||
| Foreign currency translation adjustment | (19) | (117) | (37) | (119) | ||||||||||
| Total comprehensive loss for the period | $ | (945) | $ | (8) | $ | (211) | $ | (109) | ||||||
| Net income (loss) per share | ||||||||||||||
| Basic net income (loss) per share | $ | (0.05) | $ | 0.01 | $ | (0.01) | $ | 0.00 | ||||||
| Diluted net income (loss) per share | $ | (0.05) | $ | 0.01 | $ | (0.01) | $ | 0.00 | ||||||
| Basic net income (loss) per share from continuing operations | $ | (0.05) | $ | 0.01 | $ | (0.01) | $ | 0.00 | ||||||
| Diluted net income (loss) per share from continuing operations | $ | (0.05) | $ | 0.01 | $ | (0.01) | $ | 0.00 | ||||||
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Perk.com Inc. Unaudited interim condensed consolidated statements of financial position As at September 30, 2015 and December 31, 2014 (In thousands of US Dollars) |
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| September 30, 2015 | December 31, 2014 | ||||||||||
| Assets | |||||||||||
| Current assets | |||||||||||
| Cash | $ | 19,886 | $ | 2,273 | |||||||
| Trade receivables | 12,220 | 6,423 | |||||||||
| Prepaid expenses and other current assets | 1,014 | 246 | |||||||||
| Income tax receivable | 74 | 533 | |||||||||
| 33,194 | 9,475 | ||||||||||
| Non-current assets | |||||||||||
| Restricted marketable securities | 881 | - | |||||||||
| Other Assets | 50 | - | |||||||||
| Property and equipment | 631 | 164 | |||||||||
| Intangible assets | 5,321 | 100 | |||||||||
| Goodwill | 3,757 | - | |||||||||
| $ | 43,834 | $ | 9,739 | ||||||||
| Liabilities | |||||||||||
| Current liabilities | |||||||||||
| Bank credit facility | 772 | 2,696 | |||||||||
| Trade and other payables | 6,404 | 788 | |||||||||
| Unredeemed rewards liability | 658 | 240 | |||||||||
| Current portion of loans and borrowings | 1,239 | 2,298 | |||||||||
| Current portion of provisions | 325 | - | |||||||||
| Current portion of deferred lease inducements | 6 | - | |||||||||
| Income taxes payable | 879 | 90 | |||||||||
| 10,283 | 6,112 | ||||||||||
| Non-current liabilities | |||||||||||
| Loans and borrowings | 339 | - | |||||||||
| Provisions for contingent consideration | 3,017 | - | |||||||||
| Deferred tax liabilities | 2,120 | 805 | |||||||||
| Deferred lease inducements | 51 | 33 | |||||||||
| 15,810 | 6,950 | ||||||||||
| Shareholders’ equity | |||||||||||
| Share capital | 25,488 | 1,068 | |||||||||
| Contributed surplus | 1,438 | 321 | |||||||||
| Accumulated other comprehensive income (loss) | (28) | 9 | |||||||||
| Retained earnings | 1,126 | 1,365 | |||||||||
| 28,024 | 2,763 | ||||||||||
| Non-controlling interest | - | 26 | |||||||||
| $ | 43,834 | $ | 9,739 | ||||||||
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Perk.com Inc.
Unaudited reconciliation to Adjusted EBITDA Three and nine months ended September 30, 2015 and 2014 (In thousands of US Dollars) |
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| Three months ended September 30, | Nine months ended September 30, | ||||||||||||
| 2015 | 2014 | 2015 | 2014 | ||||||||||
| Income (loss) from operations | (339) | 302 | 920 | 213 | |||||||||
| Add: | |||||||||||||
| Depreciation of property and equipment | 95 | 13 | 162 | 37 | |||||||||
| Amortization of intangible assets | 357 | - | 647 | - | |||||||||
| Transaction costs | 1,534 | - | 1,534 | - | |||||||||
| Common stock warrants issued for services | - | 54 | - | 54 | |||||||||
| Share-based compensation | 626 | 6 | 689 | 17 | |||||||||
| Adjusted EBITDA | 2,273 | 375 | 3,952 | 321 | |||||||||