-
Leaf Group Properties Reach Over 50 Million Average Monthly Unique
Visitors in the U.S. during Q4
-
Q4 and FY 2017 Marketplaces Revenue Grows 24% and 27%
Year-over-Year, Respectively
-
Q4 and FY 2017 Livestrong.com Revenue Grows 28% and 37%
Year-over-Year, Respectively
-
Total Q4 and FY 2017 Revenue of $39.7 Million and $129.0 Million,
Respectively
-
Leaf Group raises $23.3 Million from its follow-on equity offering
in February 2018
SANTA MONICA, Calif.--(BUSINESS WIRE)--
Leaf Group Ltd. (NYSE: LFGR), a diversified consumer internet company
comprised of several marketplace and media properties, today reported
financial results for the fourth quarter and fiscal year ended December
31, 2017.
“We are very pleased with our performance in 2017. In Q4, our Media
business achieved year-over-year revenue growth for the first time in
over four years,” said Sean Moriarty, CEO of Leaf Group. “Our
Marketplaces business continues to deliver consistent results with
revenue increasing 24% in Q4 year-over-year.”
|
Financial Summary
(In thousands, except per share amounts)
|
|
|
|
|
|
|
Three months ended
|
|
Year ended
|
|
|
|
|
December 31,
|
|
December 31,
|
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
Marketplaces revenue
|
|
|
$
|
28,065
|
|
|
$
|
22,618
|
|
|
$
|
84,126
|
|
|
$
|
66,139
|
|
|
Media revenue
|
|
|
|
11,662
|
|
|
|
11,371
|
|
|
|
44,864
|
|
|
|
47,313
|
|
|
Total revenue
|
|
|
$
|
39,727
|
|
|
$
|
33,989
|
|
|
$
|
128,990
|
|
|
$
|
113,452
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
$
|
(5,333
|
)
|
|
$
|
(6,220
|
)
|
|
$
|
(31,133
|
)
|
|
$
|
(2,011
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EPS - basic and diluted
|
|
|
$
|
(0.26
|
)
|
|
$
|
(0.31
|
)
|
|
$
|
(1.52
|
)
|
|
$
|
(0.10
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA(1)
|
|
|
$
|
(430
|
)
|
|
$
|
(2,637
|
)
|
|
$
|
(10,674
|
)
|
|
$
|
(15,020
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities
|
|
|
$
|
(145
|
)
|
|
$
|
385
|
|
|
$
|
(11,656
|
)
|
|
$
|
(13,093
|
)
|
|
Free cash flow(1)
|
|
|
$
|
(1,815
|
)
|
|
$
|
(445
|
)
|
|
$
|
(16,908
|
)
|
|
$
|
(16,082
|
)
|
|
|
|
|
|
|
|
|
(1)
|
|
|
These non-GAAP financial measures are described below and reconciled
to their most directly comparable GAAP measures in the accompanying
tables.
|
|
|
|
|
|
Q4 2017 Financial Summary:
“We continue to build positive momentum in the business and focus on
delivering strong operating results,” said Jantoon Reigersman, CFO of
Leaf Group. “With the successful completion of our follow-on offering in
February 2018, we head in to 2018 well-positioned to execute on our
long-term commitment to build a sustainable and profitable business.”
Leaf Group is comprised of two segments: Marketplaces and Media.
For the fourth quarter of 2017:
-
Total revenue increased 17% year-over-year due to a 24% increase in
Marketplaces revenue and a 3% increase in Media revenue.
-
Marketplaces revenue grew 24% year-over-year driven by the acquisition
of Deny Designs in May 2017, higher average order value and increased
conversion.
-
Media revenue increased by 3% year-over-year driven primarily by
increased traffic and higher monetization on Livestrong.com, offset by
the wind down of the lower-margin custom content business in Q2 2016.
-
Net loss was $(5.3) million for the quarter and Adjusted EBITDA was
$(0.4) million for the quarter, reflecting year-over-year improvements
from lower Media operating expenses, including from the realignment of
the lower-margin custom content business, and revenue growth in both
Marketplaces and Media.
-
Cash and cash equivalents was $31.3 million at period end with no debt
outstanding.
-
In February 2018, Leaf Group successfully completed its underwritten
registered public offering of 3,373,332 shares of its common stock,
including full exercise of the underwriter’s option to purchase
additional shares of common stock, at a public offering price of $7.50
per share, for net proceeds of approximately $23.3 million.
Business Highlights:
-
On a consolidated basis, Leaf Group’s properties reached over 50
million average monthly unique visitors in the U.S. during Q4 (source:
Oct – Dec 2017 U.S. comScore).
-
On a consolidated basis, Society6 and Deny Designs revenue grew 21% in
Q4 on a year-over-year basis. Revenue growth was driven the
acquisition of Deny Designs and price optimization efforts on
Society6, which contributed to an increase in average order value of
17%. Deny Designs continues to focus on further strategic integration
with Society6 and strengthening its position within the wholesale
channel through expanding relationships with key retail partners.
-
Saatchi Art, inclusive of The Other Art Fair, saw revenue grow 56%
year-over-year in Q4 driven by an increase in the number of fairs
hosted during the quarter, improving traffic and average order value,
and a higher commission rate on Saatchi Art.
-
The shifts in strategy made to the Media business over the past year
and a half continued to produce positive results with Media revenue
increasing 3% in Q4 on a year-over-year basis, marking the first
quarter of year-over-year revenue growth in over four years.
Livestrong.com revenue grew 28% year-over-year in Q4, driven primarily
by higher monetization and an increase in visits of 25%. Revenue from
eHow and the vertical properties that leverage content and topics
formerly on eHow grew 11% year-over-year in Q4 driven primarily by an
increase in visits of 29%.
|
|
|
Operating Metrics:
|
|
|
|
|
|
|
Three months ended
|
|
|
Year ended
|
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
|
2017
|
|
2016
|
|
%
Change
|
|
|
|
2017
|
|
2016
|
|
%
Change
|
|
|
|
Marketplaces Metrics:(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Transactions(2)
|
|
|
|
501,448
|
|
|
456,406
|
|
10
|
|
%
|
|
|
1,448,211
|
|
|
1,185,272
|
|
22
|
|
%
|
|
Average Revenue per Transaction(3)
|
|
|
$
|
54.19
|
|
$
|
48.65
|
|
11
|
|
%
|
|
$
|
56.98
|
|
$
|
55.38
|
|
3
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Media Metrics:(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Visits(5) (in thousands)
|
|
|
|
697,221
|
|
|
647,324
|
|
8
|
|
%
|
|
|
2,794,244
|
|
|
2,729,990
|
|
2
|
|
%
|
|
Revenue per Visit (RPV)(6)
|
|
|
$
|
16.73
|
|
$
|
17.57
|
|
(5
|
)
|
%
|
|
$
|
16.06
|
|
$
|
17.33
|
|
(7
|
)
|
%
|
|
Video Views(7) (in thousands)
|
|
|
|
215,463
|
|
|
136,023
|
|
58
|
|
%
|
|
|
820,568
|
|
|
638,277
|
|
29
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Social Metrics (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Social Media Followers - Marketplaces(1)(8)
|
|
|
|
2,757
|
|
|
2,074
|
|
33
|
|
%
|
|
|
2,757
|
|
|
2,074
|
|
33
|
|
%
|
|
Social Media Followers - Media(8)
|
|
|
|
15,036
|
|
|
12,339
|
|
22
|
|
%
|
|
|
15,036
|
|
|
12,339
|
|
22
|
|
%
|
|
|
|
|
|
|
|
|
(1)
|
|
|
Marketplaces Metrics and Social Media Followers for prior periods
have been revised to conform to current period presentation to
include The Other Art Fair acquired in July 2016.
|
|
(2)
|
|
|
Number of transactions is defined as the total number of
transactions successfully completed by a customer during the
applicable period, excluding certain transactions generated by
Saatchi Art’s The Other Art Fair that relate to the hosting of the
art fairs, such as sales of leased space to artists, sponsorships
and tickets.
|
|
(3)
|
|
|
Average revenue per transaction is calculated by dividing total
revenue, excluding certain revenue generated by Saatchi Art’s The
Other Art Fair that relate to the hosting of the art fairs, such as
fees paid by artists for leased space, fees paid for sponsorship
opportunities and fair ticket sales, by the number of transactions
initiated in that period.
|
|
(4)
|
|
|
Media Metrics include visits and revenue generated by non-core media
properties prior to their respective disposition dates and are not
adjusted to be shown on a pro forma basis.
|
|
(5)
|
|
|
Visits are defined as the total number of times users access the
company’s content across (a) one of its owned and operated
properties and/or (b) one of its partners’ properties, to the extent
that the visited partner web pages are hosted by the company. In
each case, breaks of access of at least 30 minutes constitute a
unique visit.
|
|
(6)
|
|
|
RPV is defined as Media revenue per one thousand visits.
|
|
(7)
|
|
|
Video Views are defined as the total number of views of all of the
company’s Media videos on Facebook and YouTube, or on Leaf Group
sites or third party sites via YouTube or any other embedded video
player, during the applicable period. The company includes in this
metric (i) views of videos published by any of the company’s Media
properties, including Livestrong.com, eHow, category-specific sites
and international sites; and (ii) videos viewed on multiple YouTube
channels affiliated with the company’s properties.
|
|
(8)
|
|
|
Social Media Followers are defined as the sum of all Facebook,
Pinterest, Instagram and Twitter followers, as well as all YouTube
subscribers, across the company’s Marketplaces or Media properties,
as applicable, as of the last day of the relevant period. Social
Media Followers includes subscribers for multiple YouTube channels
affiliated with the company’s properties. Individuals are counted
more than once if they follow multiple properties or the same
property on multiple platforms, or if they subscribe to multiple
YouTube channels.
|
|
|
|
|
|
Conference Call and Webcast Information
Leaf Group will host a corresponding conference call and live webcast
today at 4:30 p.m. Eastern time (1:30 p.m. Pacific time). To access the
conference call, dial 833-287-0803 (U.S./CAN) or 647-689-4462
(International) and reference conference ID 8996905. To participate on
the live call, analysts should dial-in at least 10 minutes prior to the
commencement of the call. A live webcast also will be available on the
Investor Relations section of Leaf Group’s corporate website at http://ir.leafgroup.com
and via replay beginning approximately two hours after the completion of
the call.
Use of Non-GAAP Financial Measures
To supplement its consolidated financial statements, which are prepared
and presented in accordance with generally accepted accounting
principles in the United States of America (“GAAP”), Leaf Group uses
certain non-GAAP financial measures, as described below. These non-GAAP
financial measures are presented to enhance the user’s overall
understanding of Leaf Group’s financial performance and should not be
considered a substitute for, or superior to, the financial information
prepared and presented in accordance with GAAP. The non-GAAP financial
measures presented in this release, together with the GAAP financial
results, are the primary measures used by the company’s management and
board of directors to understand and evaluate the company’s financial
performance and operating trends, including period-to-period
comparisons, because they exclude certain expenses and gains that
management believes are not indicative of the company’s core operating
results. Management also uses these measures to prepare and update the
company’s short and long term financial and operational plans, to
evaluate investment decisions, and in its discussions with investors,
commercial bankers, equity research analysts and other users of the
company’s financial statements. Accordingly, the company believes that
these non-GAAP financial measures provide useful information to
investors and others in understanding and evaluating the company’s
operating results in the same manner as the company’s management and in
comparing operating results across periods and to those of Leaf Group’s
peer companies.
The use of non-GAAP financial measures has certain limitations because
they do not reflect all items of income and expense, or cash flows, that
affect the company’s financial performance and operations. An additional
limitation of non-GAAP financial measures is that they do not have
standardized meanings, and therefore other companies, including peer
companies, may use the same or similarly named measures but exclude or
include different items or use different computations. Management
compensates for these limitations by reconciling these non-GAAP
financial measures to their most comparable GAAP financial measures in
the tables captioned “Reconciliations of Non-GAAP Financial Measures”
included at the end of this release. Investors and others are encouraged
to review the company’s financial information in its entirety and not
rely on a single financial measure.
The company defines Adjusted earnings before interest, taxes,
depreciation and amortization (Adjusted EBITDA) as net income (loss)
excluding interest (income) expense, income tax expense (benefit), and
certain other non-cash or non-recurring items impacting net income
(loss) from time to time, principally comprised of depreciation and
amortization, stock-based compensation and acquisition, disposition and
realignment costs. Management believes that the exclusion of certain
expenses and gains in calculating Adjusted EBITDA provides a useful
measure for period-to-period comparisons of the company’s underlying
core revenue and operating costs that is focused more closely on the
current costs necessary to operate the company’s businesses, and
reflects its ongoing business in a manner that allows for meaningful
analysis of trends. Management also believes that excluding certain
non-cash charges can be useful because the amounts of such expenses is
the result of long-term investment decisions made in previous periods
rather than day-to-day operating decisions.
The company defines Segment Operating Contribution as net income
(loss) excluding corporate or unallocated expenses, interest (income)
expense, income tax expense (benefit), and certain other non-cash or
non-recurring items impacting net income (loss) from time to time,
principally comprised of depreciation and amortization, and stock-based
compensation. Management believes that the exclusion of certain expenses
and gains in calculating Segment Operating Contribution provides a
useful measure for period-to-period comparisons of the segment’s
underlying revenue and operating costs that is focused more closely on
the current costs necessary to operate the segment, and reflects the
segment’s ongoing business in a manner that allows for meaningful
analysis of trends. Management also believes that excluding certain
non-cash charges can be useful because the amounts of such expenses is
the result of long-term investment decisions made in previous periods
rather than day-to-day operating decisions.
The company defines Free Cash Flow as net cash provided by (used
in) operating activities net of cash flows from acquisition, disposition
and realignment activities; capital expenditures to acquire property and
equipment; and purchases of intangible assets. Management believes that
Free Cash Flow provides investors with useful information to measure
operating liquidity because it reflects the company’s underlying cash
flows from recurring operating activities after investing in capital
assets and intangible assets. Free Cash Flow is used by management, and
may also be useful for investors, to assess the company’s ability to
generate cash flow for a variety of strategic opportunities, including
reinvesting in its businesses, pursuing new business opportunities and
potential acquisitions, paying dividends and repurchasing shares.
About Leaf Group
Leaf Group Ltd. (NYSE: LFGR) is a diversified consumer internet company
that builds enduring, creator-driven brands that reach passionate
audiences in large and growing lifestyle categories, including art and
design (Saatchi Art), fitness and wellness (Livestrong.com),
home and décor (Society6 and Hunker), do-it-yourself projects and crafts
(eHow), amongst others. For more information about Leaf Group, visit www.leafgroup.com.
Cautionary Information Regarding Forward-Looking Statements
This press release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. The
forward-looking statements set forth in this press release include
statements regarding potential synergies achieved from acquisitions, the
impact of strategic operational changes and our future financial
performance. In addition, statements containing words such as
“guidance,” “may,” “believe,” “anticipate,” “expect,” “intend,” “plan,”
“project,” “projections,” “business outlook,” and “estimate” or similar
expressions constitute forward-looking statements. Actual results may
differ materially from the results predicted, and reported results
should not be considered an indication of future performance. These
forward-looking statements involve risks and uncertainties regarding the
company’s future financial performance; could cause actual results or
developments to differ materially from those indicated due to a number
of factors affecting Leaf Group’s operations, markets, products and
services; and are based on current expectations, estimates and
projections about the company’s industry, financial condition, operating
performance and results of operations, including certain assumptions
related thereto. Potential risks and uncertainties that could affect the
company’s operating and financial results are described in Leaf Group’s
annual report on Form 10-K for the fiscal year ending December 31, 2017
filed with the Securities and Exchange Commission (http://www.sec.gov)
on March 1, 2018, as such risks and uncertainties may be updated from
time to time in Leaf Group’s quarterly reports on Form 10-Q filed with
the Securities and Exchange Commission, including, without limitation,
information under the captions “Risk Factors” and “Management's
Discussion and Analysis of Financial Condition and Results of
Operations.” These risks and uncertainties include, among others: the
company’s ability to successfully drive and increase traffic to its
marketplaces and media properties; the company’s ability to attract new
and repeat customers and artists to its marketplaces and successfully
grow its marketplace businesses; the impact of increasing mobile usage
on the company’s marketplace businesses; changes in the methodologies of
internet search engines, including ongoing algorithmic changes made by
Google, Bing and Yahoo!; the effects of shifting consumption of media
content and online shopping from desktop to mobile devices and/or social
media platforms; the potential impact on advertising based revenue of
lower ad unit rates, a reduction in online advertising spending, a loss
of advertisers, lower advertising yields, increased availability of ad
blocking software, particularly on mobile devices and/or ongoing changes
in ad unit formats; the impact of certain changes made to the business
model for the company’s media properties, including the ability to
successfully launch, manage and grow new vertically focused web
properties; our ability to effectively integrate, manage, operate and
grow our recently acquired Deny Designs marketplace business; the
company’s dependence on material agreements with a specific business
partner for a significant portion of its advertising revenue; the
company’s ability to effectively manage its expected uses of the
proceeds from its recent follow-on offering of common stock; the
company’s ability to successfully expand its current lines of business
and grow new lines of business; changes in amortization or depreciation
expense due to a variety of factors; potential write downs, reserves
against or impairment of assets including receivables, goodwill,
intangibles (including media content) or other assets; and the company’s
ability to retain key personnel. From time to time, the company may
consider acquisitions or divestitures that, if consummated, could be
material. Any forward-looking statements regarding financial metrics are
based upon the assumption that no such acquisition or divestiture is
consummated during the relevant periods. If an acquisition or
divestiture were consummated, actual results could differ materially
from any forward-looking statements. The company does not intend to
revise or update the information set forth in this press release, except
as required by law, and may not provide this type of information in the
future.
|
|
|
Leaf Group Ltd. and Subsidiaries
Unaudited Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
|
|
|
|
|
|
|
Three months ended
|
|
Year ended
|
|
|
|
|
December 31,
|
|
December 31,
|
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product revenue
|
|
|
$
|
24,943
|
|
|
$
|
20,723
|
|
|
$
|
75,784
|
|
|
$
|
60,563
|
|
|
Service revenue
|
|
|
|
14,784
|
|
|
|
13,266
|
|
|
|
53,206
|
|
|
|
52,889
|
|
|
Total revenue
|
|
|
|
39,727
|
|
|
|
33,989
|
|
|
|
128,990
|
|
|
|
113,452
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product costs (exclusive of amortization of intangible assets shown
separately below)(1)
|
|
|
|
18,836
|
|
|
|
15,493
|
|
|
|
56,292
|
|
|
|
42,081
|
|
|
Service costs (exclusive of amortization of intangible assets shown
separately below)(1)(2)
|
|
|
|
5,929
|
|
|
|
5,547
|
|
|
|
21,810
|
|
|
|
25,434
|
|
|
Sales and marketing(1)(2)
|
|
|
|
7,404
|
|
|
|
7,044
|
|
|
|
28,297
|
|
|
|
26,654
|
|
|
Product development(1)(2)
|
|
|
|
4,276
|
|
|
|
4,350
|
|
|
|
18,613
|
|
|
|
19,964
|
|
|
General and administrative(1)(2)
|
|
|
|
7,658
|
|
|
|
7,254
|
|
|
|
29,591
|
|
|
|
30,704
|
|
|
Amortization of intangible assets
|
|
|
|
1,181
|
|
|
|
1,654
|
|
|
|
5,728
|
|
|
|
10,900
|
|
|
Total operating expenses
|
|
|
|
45,284
|
|
|
|
41,342
|
|
|
|
160,331
|
|
|
|
155,737
|
|
|
Loss from operations
|
|
|
|
(5,557
|
)
|
|
|
(7,353
|
)
|
|
|
(31,341
|
)
|
|
|
(42,285
|
)
|
|
Interest income
|
|
|
|
47
|
|
|
|
36
|
|
|
|
195
|
|
|
|
96
|
|
|
Interest expense
|
|
|
|
(1
|
)
|
|
|
(2
|
)
|
|
|
(5
|
)
|
|
|
(4
|
)
|
|
Other (expense) income, net
|
|
|
|
(9
|
)
|
|
|
1,041
|
|
|
|
(19
|
)
|
|
|
40,172
|
|
|
Loss before income taxes
|
|
|
|
(5,520
|
)
|
|
|
(6,278
|
)
|
|
|
(31,170
|
)
|
|
|
(2,021
|
)
|
|
Income tax benefit (expense)
|
|
|
|
187
|
|
|
|
58
|
|
|
|
37
|
|
|
|
10
|
|
|
Net loss
|
|
|
$
|
(5,333
|
)
|
|
$
|
(6,220
|
)
|
|
$
|
(31,133
|
)
|
|
$
|
(2,011
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share - basic and diluted
|
|
|
$
|
(0.26
|
)
|
|
$
|
(0.31
|
)
|
|
$
|
(1.52
|
)
|
|
$
|
(0.10
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares - basic and diluted
|
|
|
|
20,908
|
|
|
|
19,773
|
|
|
|
20,501
|
|
|
|
20,152
|
|
|
__________________
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Depreciation expense included in the above line items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product costs
|
|
|
$
|
150
|
|
|
$
|
—
|
|
|
$
|
252
|
|
|
$
|
—
|
|
|
Service costs
|
|
|
|
989
|
|
|
|
632
|
|
|
|
3,092
|
|
|
|
3,563
|
|
|
Sales and marketing
|
|
|
|
9
|
|
|
|
11
|
|
|
|
36
|
|
|
|
49
|
|
|
Product development
|
|
|
|
23
|
|
|
|
33
|
|
|
|
91
|
|
|
|
138
|
|
|
General and administrative
|
|
|
|
636
|
|
|
|
725
|
|
|
|
2,604
|
|
|
|
3,440
|
|
|
Total depreciation
|
|
|
$
|
1,807
|
|
|
$
|
1,401
|
|
|
$
|
6,075
|
|
|
$
|
7,190
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) Stock-based compensation included in the above line
items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service costs
|
|
|
$
|
146
|
|
|
$
|
120
|
|
|
$
|
599
|
|
|
$
|
1,174
|
|
|
Sales and marketing
|
|
|
|
173
|
|
|
|
139
|
|
|
|
759
|
|
|
|
725
|
|
|
Product development
|
|
|
|
495
|
|
|
|
296
|
|
|
|
1,847
|
|
|
|
1,502
|
|
|
General and administrative
|
|
|
|
1,325
|
|
|
|
1,106
|
|
|
|
5,360
|
|
|
|
4,378
|
|
|
Total stock-based compensation
|
|
|
$
|
2,139
|
|
|
$
|
1,661
|
|
|
$
|
8,565
|
|
|
$
|
7,779
|
|
|
|
|
|
|
Leaf Group Ltd. and Subsidiaries
Unaudited Condensed Consolidated Balance Sheets
(In thousands)
|
|
|
|
|
|
|
December 31,
|
|
December 31,
|
|
|
|
|
2017
|
|
|
2016
|
|
|
Assets
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
31,344
|
|
|
$
|
50,864
|
|
|
Accounts receivable, net
|
|
|
|
8,663
|
|
|
|
6,849
|
|
|
Prepaid expenses and other current assets
|
|
|
|
2,741
|
|
|
|
8,139
|
|
|
Total current assets
|
|
|
|
42,748
|
|
|
|
65,852
|
|
|
Property and equipment, net
|
|
|
|
11,665
|
|
|
|
11,503
|
|
|
Intangible assets, net
|
|
|
|
10,431
|
|
|
|
11,273
|
|
|
Goodwill
|
|
|
|
17,152
|
|
|
|
11,167
|
|
|
Other assets
|
|
|
|
1,246
|
|
|
|
1,457
|
|
|
Total assets
|
|
|
$
|
83,242
|
|
|
$
|
101,252
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
$
|
1,980
|
|
|
$
|
2,451
|
|
|
Accrued expenses and other current liabilities
|
|
|
|
17,182
|
|
|
|
15,017
|
|
|
Deferred revenue
|
|
|
|
2,064
|
|
|
|
2,180
|
|
|
Total current liabilities
|
|
|
|
21,226
|
|
|
|
19,648
|
|
|
Deferred tax liability
|
|
|
|
40
|
|
|
|
108
|
|
|
Other liabilities
|
|
|
|
3,456
|
|
|
|
1,746
|
|
|
Total liabilities
|
|
|
|
24,722
|
|
|
|
21,502
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
Stockholders’ equity
|
|
|
|
|
|
|
|
|
Common stock
|
|
|
|
2
|
|
|
|
2
|
|
|
Additional paid-in capital
|
|
|
|
523,012
|
|
|
|
513,139
|
|
|
Treasury stock
|
|
|
|
(35,706
|
)
|
|
|
(35,641
|
)
|
|
Accumulated other comprehensive loss
|
|
|
|
(17
|
)
|
|
|
(112
|
)
|
|
Accumulated deficit
|
|
|
|
(428,771
|
)
|
|
|
(397,638
|
)
|
|
Total stockholders’ equity
|
|
|
|
58,520
|
|
|
|
79,750
|
|
|
Total liabilities and stockholders’ equity
|
|
|
$
|
83,242
|
|
|
$
|
101,252
|
|
|
|
|
|
|
Leaf Group Ltd. and Subsidiaries
Unaudited Condensed Consolidated Statements of Cash Flows
(In thousands)
|
|
|
|
|
|
|
|
Three months ended
December 31,
|
|
Year ended
December 31,
|
|
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
$
|
(5,333
|
)
|
|
$
|
(6,220
|
)
|
|
$
|
(31,133
|
)
|
|
$
|
(2,011
|
)
|
|
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
|
2,988
|
|
|
|
3,055
|
|
|
|
11,803
|
|
|
|
18,090
|
|
|
Deferred income taxes
|
|
|
|
|
(136
|
)
|
|
|
(12
|
)
|
|
|
(68
|
)
|
|
|
(45
|
)
|
|
Stock-based compensation
|
|
|
|
|
2,139
|
|
|
|
1,661
|
|
|
|
8,565
|
|
|
|
7,779
|
|
|
Gain on disposal of businesses and online properties
|
|
|
|
|
—
|
|
|
|
(1,081
|
)
|
|
|
—
|
|
|
|
(40,230
|
)
|
|
Other
|
|
|
|
|
(147
|
)
|
|
|
101
|
|
|
|
(191
|
)
|
|
|
111
|
|
|
Change in operating assets and liabilities, net of effect of
acquisitions and disposals:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable, net
|
|
|
|
|
(1,427
|
)
|
|
|
271
|
|
|
|
(1,108
|
)
|
|
|
3,502
|
|
|
Prepaid expenses and other current assets
|
|
|
|
|
(316
|
)
|
|
|
418
|
|
|
|
705
|
|
|
|
238
|
|
|
Other long-term assets
|
|
|
|
|
56
|
|
|
|
(419
|
)
|
|
|
81
|
|
|
|
(371
|
)
|
|
Accounts payable
|
|
|
|
|
(592
|
)
|
|
|
901
|
|
|
|
(1,140
|
)
|
|
|
529
|
|
|
Accrued expenses and other liabilities
|
|
|
|
|
2,529
|
|
|
|
2,564
|
|
|
|
972
|
|
|
|
(166
|
)
|
|
Deferred revenue
|
|
|
|
|
94
|
|
|
|
(854
|
)
|
|
|
(142
|
)
|
|
|
(519
|
)
|
|
Net cash provided by (used in) operating activities
|
|
|
|
|
(145
|
)
|
|
|
385
|
|
|
|
(11,656
|
)
|
|
|
(13,093
|
)
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of property and equipment
|
|
|
|
|
(1,619
|
)
|
|
|
(839
|
)
|
|
|
(5,337
|
)
|
|
|
(4,582
|
)
|
|
Purchases of intangible assets
|
|
|
|
|
(51
|
)
|
|
|
(27
|
)
|
|
|
(286
|
)
|
|
|
(147
|
)
|
|
Cash received from disposal of businesses and online properties, net
of cash disposed
|
|
|
|
|
—
|
|
|
|
715
|
|
|
|
4,285
|
|
|
|
36,815
|
|
|
Cash paid for acquisitions, net of cash acquired
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(6,304
|
)
|
|
|
(1,413
|
)
|
|
Restricted deposits
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
742
|
|
|
|
136
|
|
|
Other
|
|
|
|
|
1
|
|
|
|
20
|
|
|
|
7
|
|
|
|
98
|
|
|
Net cash provided by (used in) investing activities
|
|
|
|
|
(1,669
|
)
|
|
|
(131
|
)
|
|
|
(6,893
|
)
|
|
|
30,907
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from exercises of stock options and purchases under ESPP
|
|
|
|
|
657
|
|
|
|
353
|
|
|
|
2,598
|
|
|
|
579
|
|
|
Repurchases of common stock
|
|
|
|
|
—
|
|
|
|
(1,359
|
)
|
|
|
(65
|
)
|
|
|
(4,874
|
)
|
|
Taxes paid on net share settlements of restricted stock units
|
|
|
|
|
(523
|
)
|
|
|
(114
|
)
|
|
|
(3,284
|
)
|
|
|
(1,246
|
)
|
|
Cash paid for acquisition holdback
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(119
|
)
|
|
|
—
|
|
|
Other
|
|
|
|
|
(16
|
)
|
|
|
(17
|
)
|
|
|
(65
|
)
|
|
|
(32
|
)
|
|
Net cash provided by (used in) financing activities
|
|
|
|
|
118
|
|
|
|
(1,137
|
)
|
|
|
(935
|
)
|
|
|
(5,573
|
)
|
|
Effect of foreign currency on cash and cash equivalents
|
|
|
|
|
1
|
|
|
|
55
|
|
|
|
(36
|
)
|
|
|
53
|
|
|
Change in cash and cash equivalents
|
|
|
|
|
(1,695
|
)
|
|
|
(828
|
)
|
|
|
(19,520
|
)
|
|
|
12,294
|
|
|
Cash and cash equivalents, beginning of period
|
|
|
|
|
33,039
|
|
|
|
51,692
|
|
|
|
50,864
|
|
|
|
38,570
|
|
|
Cash and cash equivalents, end of period
|
|
|
|
$
|
31,344
|
|
|
$
|
50,864
|
|
|
$
|
31,344
|
|
|
$
|
50,864
|
|
|
|
|
|
|
Leaf Group Ltd. and Subsidiaries
Reconciliations of Non-GAAP Financial Measures
(In thousands, except per share amounts)
|
|
|
|
|
|
|
|
Three months ended December 31,
|
|
Year ended December 31,
|
|
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Adjusted EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
$
|
(5,333
|
)
|
|
$
|
(6,220
|
)
|
|
$
|
(31,133
|
)
|
|
$
|
(2,011
|
)
|
|
Add (deduct):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax (benefit) expense
|
|
|
|
|
(187
|
)
|
|
|
(58
|
)
|
|
|
(37
|
)
|
|
|
(10
|
)
|
|
Interest (income) expense, net
|
|
|
|
|
(46
|
)
|
|
|
(34
|
)
|
|
|
(190
|
)
|
|
|
(92
|
)
|
|
Other expense (income), net(1)
|
|
|
|
|
9
|
|
|
|
(1,041
|
)
|
|
|
19
|
|
|
|
(40,172
|
)
|
|
Depreciation and amortization(2)
|
|
|
|
|
2,988
|
|
|
|
3,055
|
|
|
|
11,803
|
|
|
|
18,090
|
|
|
Stock-based compensation(3)
|
|
|
|
|
2,139
|
|
|
|
1,661
|
|
|
|
8,565
|
|
|
|
7,779
|
|
|
Acquisition, disposition and realignment costs(4)
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
299
|
|
|
|
1,396
|
|
|
Adjusted EBITDA
|
|
|
|
$
|
(430
|
)
|
|
$
|
(2,637
|
)
|
|
$
|
(10,674
|
)
|
|
$
|
(15,020
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities
|
|
|
|
$
|
(145
|
)
|
|
$
|
385
|
|
|
$
|
(11,656
|
)
|
|
$
|
(13,093
|
)
|
|
Purchases of property and equipment
|
|
|
|
|
(1,619
|
)
|
|
|
(839
|
)
|
|
|
(5,337
|
)
|
|
|
(4,582
|
)
|
|
Purchases of intangible assets
|
|
|
|
|
(51
|
)
|
|
|
(27
|
)
|
|
|
(286
|
)
|
|
|
(147
|
)
|
|
Acquisition, disposition and realignment cash flows(4)
|
|
|
|
|
—
|
|
|
|
36
|
|
|
|
371
|
|
|
|
1,740
|
|
|
Free Cash Flow
|
|
|
|
$
|
(1,815
|
)
|
|
$
|
(445
|
)
|
|
$
|
(16,908
|
)
|
|
$
|
(16,082
|
)
|
|
|
|
|
|
|
|
|
(1)
|
|
|
Primarily consists of income from the disposition of certain
businesses, including Cracked, and non-core media properties.
|
|
(2)
|
|
|
Represents depreciation expense of the company’s long-lived tangible
assets and amortization expense of its finite-lived intangible
assets, including amortization expense related to its investment in
media content assets as included in the company’s GAAP results of
operations.
|
|
(3)
|
|
|
Represents the expense related to stock-based awards granted to
employees, as included in the company’s GAAP results of operations.
|
|
(4)
|
|
|
Represents such items, when applicable, as (a) legal, accounting and
other professional fees directly attributable to acquisition,
disposition or corporate realignment activities and (b) employee
severance and other payments attributable to acquisition,
disposition or corporate realignment activities.
|
|
|
|
|
|
|
|
|
Leaf Group Ltd. and Subsidiaries
Reconciliation of Segment Disclosure
(In thousands)
|
|
|
|
|
|
|
|
Three months ended December 31,
|
|
|
Year ended December 31,
|
|
|
|
|
|
2017
|
|
2016
|
|
|
2017
|
|
2016
|
|
Segment Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketplaces
|
|
|
|
$
|
28,065
|
|
|
$
|
22,618
|
|
|
|
$
|
84,126
|
|
|
$
|
66,139
|
|
|
Media
|
|
|
|
|
11,662
|
|
|
|
11,371
|
|
|
|
|
44,864
|
|
|
|
47,313
|
|
|
Total revenue
|
|
|
|
$
|
39,727
|
|
|
$
|
33,989
|
|
|
|
$
|
128,990
|
|
|
$
|
113,452
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Operating Contribution:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketplaces(1)
|
|
|
|
$
|
993
|
|
|
$
|
(104
|
)
|
|
|
$
|
(2,530
|
)
|
|
$
|
626
|
|
|
Media(1)
|
|
|
|
|
5,456
|
|
|
|
3,946
|
|
|
|
|
18,248
|
|
|
|
10,803
|
|
|
Add (deduct):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate expenses(2)
|
|
|
|
|
(6,879
|
)
|
|
|
(6,479
|
)
|
|
|
|
(26,691
|
)
|
|
|
(27,845
|
)
|
|
Acquisition, disposition and realignment costs(3)
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
299
|
|
|
|
1,396
|
|
|
Adjusted EBITDA
|
|
|
|
$
|
(430
|
)
|
|
$
|
(2,637
|
)
|
|
|
$
|
(10,674
|
)
|
|
$
|
(15,020
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation to consolidated pre-tax income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
|
|
$
|
(430
|
)
|
|
$
|
(2,637
|
)
|
|
|
$
|
(10,674
|
)
|
|
$
|
(15,020
|
)
|
|
Add (deduct):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income (expense), net
|
|
|
|
|
46
|
|
|
|
34
|
|
|
|
|
190
|
|
|
|
92
|
|
|
Other income (expense), net(4)
|
|
|
|
|
(9
|
)
|
|
|
1,041
|
|
|
|
|
(19
|
)
|
|
|
40,172
|
|
|
Depreciation and amortization(5)
|
|
|
|
|
(2,988
|
)
|
|
|
(3,055
|
)
|
|
|
|
(11,803
|
)
|
|
|
(18,090
|
)
|
|
Stock-based compensation(6)
|
|
|
|
|
(2,139
|
)
|
|
|
(1,661
|
)
|
|
|
|
(8,565
|
)
|
|
|
(7,779
|
)
|
|
Acquisition, disposition and realignment costs(3)
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
(299
|
)
|
|
|
(1,396
|
)
|
|
Loss before income taxes
|
|
|
|
$
|
(5,520
|
)
|
|
$
|
(6,278
|
)
|
|
|
$
|
(31,170
|
)
|
|
$
|
(2,021
|
)
|
|
|
|
|
|
|
|
|
(1)
|
|
|
Segment operating contribution reflects earnings before corporate
and unallocated expenses and also excludes: (a) depreciation
expense; (b) amortization of intangible assets; (c) share-based
compensation expense; (d) interest and other income (expenses); and
(e) income taxes.
|
|
(2)
|
|
|
Corporate expenses include corporate and unallocated operating
expenses that are not directly attributable to the operating
segments, including: corporate information technology, marketing and
general and administrative support functions and also excludes the
following: (a) depreciation expense; (b) amortization of intangible
assets; (c) share-based compensation expense; (d) interest and other
income (expenses); and (e) income taxes.
|
|
(3)
|
|
|
Represents such items, when applicable, as (a) legal, accounting and
other professional service fees directly attributable to
acquisition, disposition or corporate realignment activities and (b)
employee severance and other payments attributable to acquisition,
disposition or corporate realignment activities.
|
|
(4)
|
|
|
Primarily consists of income from the disposition of certain
businesses, including Cracked, and non-core media properties.
|
|
(5)
|
|
|
Represents depreciation expense of our long-lived tangible assets
and amortization expense of our finite-lived intangible assets,
including amortization expense related to our investment in media
content assets, included in our GAAP results of operations.
|
|
(6)
|
|
|
Represents the expense related to stock-based awards granted to
employees as included in our GAAP results of operations.
|
|
|
|
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20180301006168/en/
Source: Leaf Group Ltd.