Company to Hold Quarterly Conference Call Today, May 12, 2016, at 12 p.m. ET
Austin, Texas, May 12, 2016 – 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 first quarter ended March 31, 2016. Unless otherwise noted, all amounts are in US dollars.
2016 First Quarter Highlights (all comparisons to the same period of the prior year)
- Total revenue increased 194% to approximately $17.3 million.
- Gross profit was approximately $7.7 million, or 45% of total revenue, compared to approximately $2.3 million or 38% of total revenue in 2015.
- On February 8, 2016, the Company completed the acquisition of the Viggle App, and its related assets which include intellectual property such as the Viggle brand name, patents in the rewards category, brand and advertiser relationships, and a direct sales team (“Viggle Acquisition”).
- Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”) was approximately ($0.6) million compared to Adjusted EBITDA of approximately ($0.5) million in 2015 despite the approximately $1.0 million of first quarter Adjusted EBITDA losses attributed to Viggle and Corona acquisitions.
- Perk partnered with Thumbstar Games in the launch of their app, Learn2Fly, which includes Perk’s Appsaholic Rewarded Moments SDK. Thumbstar Games intends to integrate Perk’s rewards platform into all of its legacy products and future game launches which includes a user base of over 50 million worldwide.
- In an effort to further expose Perk’s market-leading mobile rewards program to a larger, global audience, the Company partnered with leading mobile marketing firm, Celltick, to be the firm’s global rewards provider for its Start app.
- Net loss was approximately $2.3 million, largely due a year over year increase in share based compensation expense in addition to acquisition related expenses that contributed to higher general and administrative expenses, amortization costs, and transaction fees.
Ted Hastings, Chief Executive Officer of Perk commented, “We had a successful first quarter. We completed the Viggle acquisition, which broadened our advertising partnerships with the addition of a direct-ad sales team. We strategically aligned the Perk brand with other leaders in their respective industries. We increased the Company’s total revenue by 194% for the first quarter 2016, expanded our user base to over 50 million registered users, and to date, have paid out over $20 million in rewards to our users. Perk is quickly becoming a worldwide leading mobile rewards platform and the acquisitions completed in 2015 and early 2016 are consistent with the Company’s ongoing objectives of maintaining a strong capital position while increasing its user base and advertising inventory.
“In the months ahead, we will continue to invest in marketing efforts that will contribute to the buildout of the Perk brand and look to increase our investments in our direct-ad sales team and Corona platform. We believe these efforts and investments will lead to an increase in advertising opportunities that will further generate higher revenues for the Company. We believe Perk’s mobile rewards platform offers advertisers a unique value proposition that allows brands to connect with consumers in meaningful ways that results in the monetization of our apps and websites as well as the apps of our third party publishers. We believe that as we continue to invest in our Corona platform and invest in building out seamless monetization partnerships and solutions for the platform, we will attract even more developers to join our existing network of over 300,000+ developers around the globe. We are focused on continuing to invest in organic growth and targeted acquisitions that accelerate our business objectives and produce solid returns for our shareholders over the long term.”
Acquisition of Viggle
- During the first quarter 2016, the Company completed the Viggle Acquisition. Total consideration paid was $7.3 million and the Company used a combination of stock, warrants and cash to pay for the acquisition.
2016 First Quarter Financial and Operational Review
- Total revenue for the first quarter of 2016 was approximately $17.3 million, representing a 194% increase over total revenue of approximately $5.9 million for the prior year period. Perk’s organic revenue increased to approximately $8.4 million for the first quarter of 2016, which excludes revenues from the Orion acquisition, the AppRedeem acquisition, the Playerize acquisition, the Corona acquisition and the Viggle acquisition (collectively the “Acquisitions”). The increase in 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.
- During the first quarter of 2016 Perk generated advertising revenue from barter transactions of approximately $1.6 million, of which approximately $0.1 million was attributed to the Acquisitions. Excluding the impact of the approximately $1.5 million of barter transactions on the first quarter revenues, year over year revenue grew by 17% from approximately $5.9 million to approximately $6.9 million. Barter transactions involve Perk exchanging un-filled advertising space on its apps and in return receiving advertisements for the Perk brand on the apps and websites of, third party, digital publishers. The Company believes that barter transactions provide the Perk brand with greater exposure at no cost and while utilizing un-filled advertising space on the Perk mobile apps. In conjunction with the barter revenue, Perk recorded an increase in marketing and user acquisition expense of approximately $1.6 million. Perk did not generate advertising revenue from barter transactions during the first quarter of 2015.
- Perk reported cost of revenue, which is comprised of the costs of the rewards provided to users, platform fees, and revenue sharing commissions, for the three months ended March 31, 2016 of approximately $9.6 million, compared to approximately $3.6 million for the first quarter of 2015. Excluding the impact of the Acquisitions, the Company’s cost of revenue was approximately $3.5 million for the three-month period ended March 31, 2016.
- Gross profit for the three months ended March 31, 2016 was approximately $7.7 million or 45% of total revenue, compared to approximately $2.3 million or 38% of total revenue for the first quarter of 2015. Excluding the impact of the Acquisitions, gross profit for the first quarter of 2016 was approximately $4.9 million (59% of revenues). Excluding the impact from the barter transactions, gross profit for the first quarter of 2016 was approximately $3.4 million (49% of revenues). The increase in gross profit was due to an increase in revenue as result of a larger user base, an increase in monetization opportunities and an increase in usage of the Company’s apps in 2015.
- Net loss for the three months ended March 31, 2016 was approximately $2.3 million, compared to a net loss of approximately $1.5 million, for the same period of the prior year. The increase in net loss for the first quarter 2016 was the result of an increase in share based compensation expense, an increase in transaction costs and an increase in intangibles amortization as a result of the Acquisitions.
- Adjusted EBITDA was approximately ($0.6) million for the three months ended March 31, 2016, as compared to approximately ($0.5) million of Adjusted EBITDA generated in the three months ended March 31, 2015. A table reconciling Adjusted EBITDA to net loss can be found at the end of this release.
Balance Sheet Summary
- Perk had cash and investments of approximately $14.5 million at March 31, 2016 compared with approximately $17.5 million at December 31, 2015. The decrease in available cash in the first quarter was the result of approximately $2.5 million used towards operating activities, with majority of the use being $2.0 million in income tax payments. Additionally, in the first quarter, the Company used $0.1 million for capital asset additions and $0.5 million was used to repay loans and provisions in the first quarter.
- At March 31, 2016, shareholders’ equity was approximately $36.7 million, compared to approximately $32.1 million at December 31, 2015.
Conference Call Details
Date/Time: Thursday, May 12, 2016, at 12 p.m. ET
Live Participant Dial-In (Toll-Free US & Canada): 877-407-9711
Live Participant Dial-In (International): 412-902-1014
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/q1-2016.
About Perk.com Inc.
As a leading mobile rewards platform, Perk brings together the interests of consumers, advertisers, and publishers by offering consumers rewards such as Perk Points and other digital goods. Perk Points can be redeemed for gift cards, cash, or loaded on to Perk Plastik, a re-loadable branded debit card. 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 mobile applications and websites that allow members to earn rewards such as Perk Points and digital goods. In addition to offering rewards to members through its own mobile applications and websites, Perk launched its Perk Rewards Platform, powered by Corona Labs, which allows mobile and desktop publishers to utilize rewards 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.
A copy of Perk’s unaudited interim condensed consolidated financial statements for the three months ended March 31, 2016, which are prepared in accordance with International Accounting Standard 34, Interim Financial Reporting (“IAS 34”) and Perk’s Management’s Discussion & Analysis, will be available on or before May 12, 2016 via the Canadian Securities Administrators’ website at www.sedar.com or through the Company’s website at www.ir.perk.com.
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, (c) income tax expense (recovery) and (d) 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 unaudited interim condensed consolidated financial statements prepared in accordance with IAS 34. 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 which may relate to, but which are not be limited to, Perk’s business; Perk’s strategy, operations and financial performance; Perk’s 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. 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 and partners; successful development of the “Perk” brand; Perk’s ability to keep up with rapid technology 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 Perk’s SDK’s; Perk’s ability to successfully enter new business areas and geographic markets; success of new products developed by Perk; Perk’s ability to retain key members of its management team; and certain other risk factors set forth in Perk’s Management’s Discussion and Analysis for the quarter ended March 31, 2016. Perk does not undertake to update any forward-looking statement, except as required by law.