NeuLion Reports Fourth Quarter Revenue of $27.8 Million
Driven by NeuLion Digital Platform Revenue Growth of 20%
PLAINVIEW, NY--(Marketwired - March 03, 2016) -
/EINPresswire.com/ -- Fourth Quarter Year-Over-Year Highlights
- GAAP revenue increased 68% to $27.8 million versus $16.5 million; Non-GAAP revenue increased 90% to $31.4 million versus $16.5 million
- NeuLion Digital Platform revenue (GAAP and Non-GAAP) increased 20% to $19.8 million versus $16.5 million
- DivX and MainConcept GAAP revenue was $8.0 million; Non-GAAP revenue was $11.6 million
- Net income grew to $32.8 million versus $1.6 million
- Non-GAAP Adjusted EBITDA grew to $8.8 million versus $3.5 million
- Non-GAAP Adjusted EBITDA margin increased to 28.0% versus 21.2%
- Working capital improved to $38.6 million at December 31, 2015 versus $7.1 million at December 31, 2014
Fiscal Year 2015 Year-Over-Year Highlights
- GAAP revenue increased 69% to $94.0 million versus $55.5 million; Non-GAAP revenue increased 97% to $109.4 million versus $55.5 million
- NeuLion Digital Platform revenue (GAAP and Non-GAAP) increased 19% to $66.1 million versus $55.5 million
- DivX and MainConcept GAAP revenue was $28.0 million; Non-GAAP revenue was $43.3 million
- Net income grew to $25.9 million versus $3.6 million
- Non-GAAP Adjusted EBITDA grew to $24.7 million versus $8.4 million
- Non-GAAP Adjusted EBITDA margin increased to 22.6% versus 15.1%
NeuLion, Inc. (TSX: NLN), a leading technology product and service provider that specializes in the digital video broadcasting, distribution and monetization of live and on-demand content to Internet-enabled devices, today reported financial results for the fourth quarter and fiscal year ended December 31, 2015.
"Revenue from our NeuLion Digital Platform grew 20% on new customer additions and expanded usage from existing customers. Continued scaling of the NeuLion Digital Platform contributed to a 500 basis point improvement in cost of revenue as a percentage of revenue which, along with the addition of the DivX and MainConcept revenue streams, drove a 680 basis point improvement in Non-GAAP Adjusted EBITDA margin," said Kanaan Jemili, Chief Executive Officer.
Added Jemili, "As an industry leader trusted by a growing and diverse group of global content owners in sports and entertainment plus the world's largest consumer electronic companies, we continue to innovate and drive higher quality experiences for our partners. Our unique end-to-end technology and service offerings and proven capabilities to enable on-demand and live digital content viewing anywhere and on any device place us in an excellent position to continue capitalizing on the accelerating adoption of over-the-top (OTT) and 4K video worldwide. With a steady stream of new customer wins and an ongoing expansion of existing customer relationships with content owners and CE manufacturers, we are excited about our growth prospects going forward."
Operational Highlights
- Launched Univision NOW, a groundbreaking new direct-to-consumer over-the-top (OTT) service by Univision Communications Inc. (UCI), the leading media company serving Hispanic America. NeuLion provides Univision with a turnkey solution for reaching their target Hispanic audience on as many screens as possible with a great user experience.
- NeuLion announced its new 4K mobile app, which enables consumers to seamlessly play out video content, in up to Ultra HD 4K, captured from their cameras and smartphones, to every connected device. As consumers use more 4K enabled smartphones and cameras from brands including Apple, GoPro, Samsung, Sony, Panasonic and others, playing video captured on these devices on 4K TVs will be significantly easier with the new app.
- As sales of 4K Ultra HDTVs continue to accelerate in the marketplace, NeuLion has secured new agreements with the world's largest suppliers of these products, signing licensing deals with Samsung and LG to embed our NeuLion Streaming SDK in their televisions. This technology will enable and enhance an interactive video experience plus deliver live streaming video 4K 60 frame resolutions on these Internet-connected TV sets, thereby connecting the ecosystem of manufacturers of Ultra HDTVs with content rights holders that have 4K content and user-generated libraries of 4K content.
- NeuLion key performance indicators for 2015 continued to highlight the demand for the company's technology and services. NeuLion delivered 63,000 live events for the 2015 calendar year, an increase of 26% over the prior year, and the number of live events delivered was more than double that of NeuLion's closest competitor. NeuLion video traffic ending the year 2015 was 307 petabytes, representing a 35% growth year over year and with the total 2015 video traffic more than tripling that of the 2012 calendar year.
- NeuLion successfully delivered multiple live NBA games in 4K with BT Sports from The O2 arena in London, and recently made history as the first company to successfully deliver a 4K live stream of a sporting event in the United States. Working with Univision, NeuLion delivered the soccer game between the national teams of Mexico and Senegal, in stunning 4K, from Marlins Park in Miami.
- NeuLion's deployment in Google Chromecast continues to expand as NeuLion partners grow their connected device strategies. NeuLion now powers more than 10 streaming services on Chromecast, including sports apps for the Big Ten Conference, Euroleague, Major League Soccer, NBA, NFL, Tennis Channel, UFC, Univision, World Surf League, and others.
Fourth Quarter Financial Review
As a result of the acquisition of DivX Corporation on January 30, 2015, NeuLion is now reporting revenue for the NeuLion Digital Platform and DivX combined. Because NeuLion expects revenue from the NeuLion Digital Platform to grow faster than revenue from other solutions, management intends to continue to report revenue from the NeuLion Digital Platform as a key performance indicator. The NeuLion Digital Platform combines the previously reported customer categories of Pro Sports, College Sports, and TV Everywhere.
GAAP Results
Total GAAP revenue was $27.8 million for the fourth quarter of 2015 compared to $16.5 million for the previous year's quarter, an increase of $11.3 million, or 68%. The NeuLion Digital Platform had revenue growth of 20% to $19.8 million for the current period, from $16.5 million for the comparable prior period, due to new customer wins and expanded usage from existing customers. DivX and MainConcept revenue was $8.0 million in the fourth quarter of 2015.
Cost of revenue was $5.4 million, or 19% of revenue, for the current period, compared to $4.0 million, or 24% of revenue, for the prior comparable period. The five percentage point improvement was due to a combination of the addition of DivX and MainConcept revenue streams and improved operating costs. Selling, general and administrative expenses, including stock-based compensation, were $13.2 million for the current period, an increase of 65% from $8.0 million for the prior comparable period. Research and development expenses were $5.5 million for the current period, more than double the $2.1 million figure reported in the prior comparable period primarily as a result of increased headcount resulting from the DivX acquisition in January 2015. SG&A and R&D expenses associated with DivX for the fourth quarter of 2015 were $4.2 million and $3.5 million, respectively. Operating income for both the fourth quarters of 2015 and 2014 were $1.8 million. Consolidated net income was $32.8 million, or $0.11 per diluted share, for the current period compared with consolidated net income of $1.6 million, or $0.01 per diluted share, for the prior comparable period. The increase in consolidated net income was primarily driven by a $31.2 million income tax benefit recorded in the current period.
Non-GAAP Results
Non-GAAP revenue increased 68% to $27.8 million from the same period a year ago. Non-GAAP Adjusted EBITDA more than doubled to $8.8 million from $3.5 million for the same period last year, with $3.3 million of the increase due to the acquisition of DivX and $2.0 million coming from organic improvement due to higher revenue and improved cost of revenue as a percentage of revenue, offset by increases in SG&A, excluding stock-based compensation, and R&D expenses. Please refer to the tables accompanying this release for the calculation of Non-GAAP revenue and Adjusted EBITDA.
Use of Non-GAAP Financial Information
In addition to our U.S. GAAP results, this press release also includes disclosure on certain Non-GAAP financial measures, as such term is used by the SEC. NeuLion defines Non-GAAP revenues as GAAP revenues before purchase accounting adjustments as a result of an acquisition. NeuLion defines Adjusted EBITDA as consolidated net income (loss) before interest, income taxes, depreciation and amortization, purchase accounting adjustments, stock-based compensation, acquisition-related expenses, listing-related expenses, gain on revaluation of convertible note derivative, and foreign exchange gain (loss). Adjusted EBITDA is a key measure used by management to evaluate NeuLion's results and make strategic decisions about the company, including potential acquisitions. Management believes this measure is useful to investors because it is an indicator of operational performance. Because not all companies use identical calculations, NeuLion's presentation of Non-GAAP Revenue and Adjusted EBITDA may not be comparable to similarly titled measures of other companies. This measure does not have any standardized meaning prescribed by U.S. GAAP and therefore is unlikely to be comparable to the calculation of similar measures used by other companies, and should not be viewed as an alternative to measures of financial performance or changes in cash flows calculated in accordance with U.S. GAAP.
Pursuant to the requirements of Regulation G, we have provided a reconciliation of Non-GAAP revenue to U.S. GAAP revenue and Adjusted EBITDA to U.S. GAAP consolidated net income/(loss) as an exhibit to this press release.
About NeuLion
NeuLion, Inc. (TSX: NLN) offers solutions that power the highest quality digital experiences for live and on-demand content up to 4K on any device. Through its end-to-end technology platform, NeuLion enables digital content management, distribution and monetization for content owners worldwide including the NFL, NBA, World Surf League, Univision Deportes, Euroleague Basketball and others. NeuLion also operates a robust consumer electronics licensing business that has enabled over 1 billion devices worldwide with secure, high-quality video streaming, and delivers a DivX consumer software offering that has been downloaded over 1 billion times. NeuLion's customers include major sports, entertainment and global content companies as well as major consumer electronics manufacturers and software companies. NeuLion is headquartered in Plainview, NY. For more information about NeuLion, visit www.NeuLion.com.
Forward-Looking Statements
Certain statements herein are forward-looking statements and represent NeuLion's current intentions in respect of future activities. Forward-looking statements can be identified by the use of the words "will," "expect," "seek," "anticipate," "believe," "plan," "estimate," "expect," and "intend" and statements that an event or result "may," "will," "can," "should," "could," or "might" occur or be achieved and other similar expressions. These statements, in addressing future events and conditions, involve inherent risks and uncertainties. Although the forward-looking statements contained in this release are based upon what management believes to be reasonable assumptions, NeuLion cannot assure readers that actual results will be consistent with these forward-looking statements. These forward-looking statements are made as of the date of this release and NeuLion assumes no obligation to update or revise them to reflect new events or circumstances, except as required by law. Many factors could cause NeuLion's actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including: our ability to derive anticipated benefits from the acquisition of DivX; our ability to realize some or all of the anticipated benefits of our partnerships; general economic and market segment conditions; our customers' subscriber levels and financial health; our ability to pursue and consummate acquisitions in a timely manner; our continued relationships with our customers; our ability to negotiate favorable terms for contract renewals; competitor activity; product capability and acceptance rates; technology changes; regulatory changes; foreign exchange risk; interest rate risk; and credit risk. These factors should be considered carefully and readers should not place undue reliance on the forward-looking statements. A more detailed assessment of the risks that could cause actual results to materially differ from current expectations is contained in the "Risk Factors" section of NeuLion's Annual Report on Form 10-K for the fiscal year ended December 31, 2015, which is available on www.sec.gov and filed on www.sedar.com.
NEULION, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(Expressed in U.S. dollars)
As of December 31,
2015 2014
---------------------------------------------------------------------------
ASSETS
Current
Cash and cash equivalents $ 53,413 $ 25,898
Accounts receivable, net 12,967 8,056
Other receivables 604 603
Inventory 199 304
Prepaid expenses and deposits 2,928 1,315
Due from related parties 304 111
---------------------------------------------------------------------------
Total current assets 70,415 36,287
Property, plant and equipment, net 6,585 3,830
Intangible assets, net 23,627 406
Goodwill 11,496 11,327
Deferred tax assets 30,614 -
Other assets 1,413 88
---------------------------------------------------------------------------
Total assets $ 144,150 $ 51,938
===========================================================================
LIABILITIES AND EQUITY
Current
Accounts payable $ 10,006 $ 14,362
Accrued liabilities 10,230 5,248
Due to related parties 18 -
Deferred revenue 11,570 9,602
---------------------------------------------------------------------------
Total current liabilities 31,824 29,212
Long-term deferred revenue 1,067 1,019
Deferred rent liabilities 1,649 -
Deferred tax liabilities 1,425 1,451
Other long-term liabilities 127 202
---------------------------------------------------------------------------
Total liabilities 36,092 31,884
===========================================================================
Redeemable preferred stock, net (par value: $0.01;
authorized: 50,000,000; issued and outstanding:
2015: 0 and 2014: 28,089,083)
Class 3 Preference Shares (par value: $0.01;
authorized, issued and outstanding: 2015: 0 and
2014: 17,176,818 - 10,000
Class 4 Preference Shares (par value: $0.01;
authorized, issued and outstanding: 2015: 0 and
2014: 10,912,265 - 4,955
-------------------------------------------------------------------------
Total redeemable preferred stock - 14,955
===========================================================================
Stockholders' equity
Common stock (par value: $0.01; shares authorized:
300,000,000; shares issued and outstanding: 2015:
280,903,667 and 2014: 178,210,006) 2,809 1,782
Additional paid-in capital 167,705 87,631
Promissory notes receivable (209) (209)
Accumulated deficit (62,247) (84,105)
---------------------------------------------------------------------------
Total stockholders' equity 108,058 5,099
---------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 144,150 $ 51,938
===========================================================================
NEULION, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME (LOSS)
(in thousands, except share and per share data)
(Expressed in U.S. dollars)
Year ended December 31,
2015 2014 2013
---------------------------------------------------------------------------
Revenue $ 94,043 $ 55,520 $ 47,107
---------------------------------------------------------------------------
Costs and expenses
Cost of revenue, exclusive of
depreciation and amortization
shown separately below 17,775 13,897 13,279
Selling, general and
administrative, including stock-
based compensation 45,672 27,073 24,290
Research and development 24,912 8,381 7,423
Depreciation and amortization 7,544 2,621 3,755
---------------------------------------------------------------------------
95,903 51,972 48,747
===========================================================================
Operating income (loss) (1,860) 3,548 (1,640)
Other income (expense)
Loss on foreign exchange (818) (138) (125)
Investment income, net 363 428 (2)
Interest on convertible note,
including amortization of debt
discount (123) - (234)
Gain on conversion of convertible
note and revaluation of related
derivative, net 507 - -
---------------------------------------------------------------------------
(71) 290 (361)
---------------------------------------------------------------------------
Net and comprehensive income (loss)
before income taxes (1,931) 3,838 (2,001)
Income tax benefit (expense) 27,847 (271) (277)
---------------------------------------------------------------------------
Net and comprehensive income (loss) $ 25,916 $ 3,567 $ (2,278)
===========================================================================
Net income (loss) per weighted
average number of shares of common
stock outstanding - basic $ 0.11 $ 0.01 $ (0.01)
===========================================================================
Weighted average number of shares of
common stock outstanding - basic 233,489,798 174,645,803 166,663,448
===========================================================================
Net income (loss) per weighted
average number of shares of common
stock outstanding - diluted $ 0.11 $ 0.01 $ (0.01)
===========================================================================
Weighted average number of shares of
common stock outstanding - diluted 245,346,681 214,711,362 166,663,448
===========================================================================
NEULION, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Expressed in U.S. dollars)
Year ended December 31,
2015 2014 2013
---------------------------------------------------------------------------
OPERATING ACTIVITIES
Net income (loss) $ 25,916 $ 3,567 $ (2,278)
Adjustments to reconcile net
income (loss) to net cash
provided by operating
activities:
Depreciation and amortization 7,544 2,621 3,755
Stock-based compensation 2,702 1,438 1,417
Amortization of debt discount 123 - 234
Gain on revaluation of
convertible note derivative (507) - -
Income tax (benefit) expense (32,402) 271 269
Changes in operating assets and
liabilities, net of acquisitions
Accounts receivable 18,851 (2,767) (1,095)
Income tax receivable 4,318 - -
Other receivables 246 (238) (16)
Inventory 105 177 (64)
Prepaid expenses, deposits and
other assets (1,262) (185) 129
Due from related parties (193) 133 656
Accounts payable (5,191) 1,360 3,189
Accrued liabilities (587) (91) 635
Deferred revenue (984) 1,038 2,733
Deferred rent liability (263) - -
Long-term liabilities (75) (68) (87)
Due to related parties 18 (17) 4
---------------------------------------------------------------------------
Cash provided by operating
activities 18,359 7,239 9,481
---------------------------------------------------------------------------
INVESTING ACTIVITIES
Cash acquired from acquisition of
DivX Corporation 9,718 - -
Purchase of property, plant and
equipment (1,428) (1,850) (1,301)
---------------------------------------------------------------------------
Cash provided by (used in)
investing activities 8,290 (1,850) (1,301)
===========================================================================
FINANCING ACTIVITIES
Proceeds from exercise of stock
options 847 733 354
Proceeds from exercise of broker
units 19 132 2
===========================================================================
Cash provided by financing
activities 866 865 356
---------------------------------------------------------------------------
Net increase in cash and cash
equivalents, during the year 27,515 6,254 8,536
Cash and cash equivalents,
beginning of year 25,898 19,644 11,108
---------------------------------------------------------------------------
Cash and cash equivalents, end of
year $ 53,413 $ 25,898 $ 19,644
===========================================================================
Supplemental disclosure of cash
flow information:
Cash paid for income taxes $ 3,961 $ - $ -
===========================================================================
Supplemental disclosure of non-
cash activities:
Par value of shares of common
stock issued upon exercise of
cashless warrants $ 19 $ 52 $ 10
===========================================================================
Accretion of issuance costs on
Class 4 Preference Shares $ 46 $ 30 $ 30
===========================================================================
Issuance of shares of common stock
upon acquisition of DivX
Corporation $ 58,521 $ - $ -
===========================================================================
Issuance of shares of common stock
upon conversion of Preference
Shares $ 15,000 $ - $ -
===========================================================================
Issuance of shares of common stock
upon declaration of dividend on
Preference Shares $ 4,058 $ - $ -
===========================================================================
NEULION, INC.
RECONCILIATION OF NON-GAAP MEASURES
(in thousands)
(Expressed in U.S. dollars)
Reconciliation
of GAAP Revenue
to Non-GAAP
Revenue:
Organic DivX Consolidated
------------------- ------------------- -------------------
Three months
ended December
31, 2015 2014 2015 2014 2015 2014
------------------- ------------------- -------------------
GAAP Revenue $ 19,774 $ 16,464 $ 8,010 $ - $ 27,784 $ 16,464
Revenue excluded
due to purchase
accounting - - 3,572 - 3,572 -
------------------- ------------------- -------------------
Non-GAAP Revenue $ 19,774 $ 16,464 $ 11,582 $ - $ 31,356 $ 16,464
=================== =================== ===================
Organic DivX Consolidated
------------------- ------------------- -------------------
Year ended
December 31, 2015 2014 2015 (1) 2014 2015 2014
------------------- ------------------- -------------------
GAAP Revenue $ 66,088 $ 55,520 $ 27,955 $ - $ 94,043 $ 55,520
Revenue excluded
due to purchase
accounting - - 15,308 - 15,308 -
------------------- ------------------- -------------------
Non-GAAP Revenue $ 66,088 $ 55,520 $ 43,263 $ - $109,351 $ 55,520
=================== =================== ===================
(1) The figures presented are for the period from February 1, 2015 to
December 31, 2015.
Since DivX was acquired by NeuLion on January 30, 2015, the purchase price
allocation included an adjustment to record the fair value of assumed
contractual payments due to DivX for which no or little additional
obligations existed in order to receive such payments. These contractual
payments are for fixed multi-year site licenses and unbilled per unit
royalties for units shipped prior to the acquisition. Prior to the
acquisition, revenue in such transactions was recognized during the period
in which such customers reported the number of royalty-eligible units that
they had shipped. Revenues from annual or other license fees are recognized
based on the specific terms of the license arrangement. For instance, some
of the DivX's large CE customers have entered into agreements for which they
have the right to ship an unlimited number of units over a specified term
for a flat fee. The Company records the fees associated with these
arrangements on a straight-line basis over the specified term. Upon closing
the acquisition of DivX, because DivX assumed no additional obligations
under such contracts, these fixed payments are considered a fixed payment
stream, rather than revenue and are therefore treated as accounts receivable
as opposed to revenue as part of the purchase accounting. The fair value of
the remaining fixed payments due under the applicable contracts is estimated
by calculating the discounted cash flows associated with such fixed
payments. The reduction in revenues related to the fixed payments being
treated as accounts receivable as opposed to revenues has been reflected as
a non-GAAP financial measure to include the effect of the excluded revenues
to allow investors and analysts to make meaningful comparisons between
DivX's ongoing core business operating results and those of other companies.
We anticipate the revenue
excluded due to purchase
accounting going-forward
as follows:
Q1 2016 $ 878
=========
Reconciliation of GAAP Net Income (Loss) to Non-GAAP Adjusted EBITDA:
Organic DivX Consolidated
------------------ ------------------- ------------------
Three months
ended December
31, 2015 2014 2015 2014 2015 2014
------------------ ------------------- ------------------
Consolidated Net
Income on a
GAAP basis $ 28,946 $ 1,621 $ 3,820 $ - $ 32,766 $ 1,621
Revenue excluded
due to purchase
accounting - - 3,572 - 3,572 -
Depreciation and
amortization 343 546 1,567 - 1,910 546
Stock-based
compensation 859 349 - - 859 349
Acquisition-
related
expenses - 806 - - - 806
Listing-related
expenses 663 - - - 663 -
Income tax
(benefit)
expense (25,453) 106 (5,723) - (31,176) 106
Investment
income
(expense) and
foreign
exchange loss 138 72 28 - 166 72
------------------ ------------------ ------------------
Non-GAAP
Adjusted EBITDA $ 5,496 $ 3,500 $ 3,264 $ - $ 8,760 $ 3,500
================== =================== ==================
Organic DivX Consolidated
------------------ ------------------- ------------------
Year ended 2015
December 31, 2015 2014 (1) 2014 2015 2014
------------------ ------------------- ------------------
Consolidated Net
Income (Loss)
on a GAAP basis $ 33,872 $ 3,567 $ (7,956) $ - $ 25,916 $ 3,567
Revenue excluded
due to purchase
accounting - - 15,308 - 15,308 0
Depreciation and
amortization 1,731 2,621 5,813 - 7,544 2,621
Stock-based
compensation 2,702 1,438 - - 2,702 1,438
Acquisition-
related
expenses 341 806 18 - 359 806
Listing-related
expenses 663 - - - 663 -
Gain on
revaluation of
convertible
note derivative (507) - - - (507) -
Income tax
(benefit)
expense (25,382) 271 (2,465) - (27,847) 271
Investment
income
(expense) and
foreign
exchange loss 580 (290) (2) - 578 (290)
------------------ ------------------- ------------------
Non-GAAP
Adjusted EBITDA $ 14,000 $ 8,413 $ 10,716 $ - $ 24,716 $ 8,413
================== =================== ==================
(1) The figures presented are for the period from February 1, 2015 to
December 31, 2015.
I
nvestor Relations Contact:
Tim Alavathil
SVP, Finance
Email contact
(647) 426-1254
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