UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 1, 2016
RETAILMENOT, INC.
(Exact name of registrant as specified in its charter)
Delaware | 001-36005 | 26-0159761 | ||
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(I.R.S Employer Identification No.) |
301 Congress Avenue, Suite 700
Austin, Texas 78701
(Address of principal executive offices, including zip code)
(512) 777-2970
(Registrants telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. | Results of Operations and Financial Condition. |
On May 3, 2016, RetailMeNot, Inc. (the Company) issued a press release reporting its preliminary financial results and posted financial information and commentary (the Prepared Remarks) from G. Cotter Cunningham, its President and Chief Executive Officer, and J. Scott Di Valerio, its Chief Financial Officer, on its investor website, www.investor.retailmenot.com, each for the quarter ended March 31, 2016. A copy of the press release is furnished herewith as Exhibit 99.1.
The information furnished in this Current Report under this Item 2.02 and Exhibit 99.1 attached hereto shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 5.02. | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
Amendment of Employment Agreement with G. Cotter Cunningham.
On May 1, 2016, the Company and G. Cotter Cunningham, the Companys President and Chief Executive Officer, entered into an amendment (the Amendment) to Mr. Cunninghams existing employment agreement to provide that equity awards granted to Mr. Cunningham on or after January 1, 2017 will no longer accelerate solely upon a change in control (as defined in the Amendment). Prior to the Amendment, Mr. Cunninghams employment agreement provided that all equity awards granted to Mr. Cunningham shall, upon a change in control (as defined therein), accelerate and vest and become exercisable in full with respect to 50% of any unvested shares subject to the awards, conditioned upon his continued employment with the Company through the occurrence of such change in control. This right shall continue to exist with respect to equity awards granted to Mr. Cunningham on or before December 31, 2016.
Additionally, the Amendment provides that in the event Mr. Cunningham is terminated without cause or resigns for good reason, all equity awards made to Mr. Cunningham on or after January 1, 2016 will no longer accelerate and vest and become exercisable in full with respect to 100% of any unvested shares subject to such awards, unless such termination event occurs in connection with a change in control. Prior to the Amendment, Mr. Cunninghams employment agreement provided that he was entitled to vesting acceleration with respect to 100% of any outstanding unvested equity awards in the event of his termination without cause or resignation for good reason regardless of the occurrence of a change in control. This right shall continue to exist with respect to equity awards granted to Mr. Cunningham on or before December 31, 2015.
The foregoing description of the Amendment is qualified in its entirety by the text of the Amendment, a copy of which is attached hereto as Exhibit 10.1 and incorporated herein by reference.
Item 9.01. | Financial Statements and Exhibits |
(d) Exhibits
Exhibit No. |
Description | |
10.1 | First Amendment to Employment Agreement dated May 1, 2016, by and between the Company and G. Cotter Cunningham | |
99.1 | Press Release dated May 3, 2016 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
RETAILMENOT, INC. | ||
Date: May 3, 2016 | /s/ Jonathan B. Kaplan | |
Jonathan B. Kaplan | ||
General Counsel and Secretary |
EXHIBIT INDEX
Exhibit No. |
Description | |
10.1 | First Amendment to Employment Agreement dated May 1, 2016, by and between the Company and G. Cotter Cunningham | |
99.1 | Press Release dated May 3, 2016 |
Exhibit 10.1
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
This First Amendment (Amendment) to the Employment Agreement (as defined below) is effective as of May 1, 2016 (the Effective Date), by and between RetailMeNot, Inc., a Delaware corporation (the Company), and G. Cotter Cunningham, an individual (the Executive).
WHEREAS, the Company (then operating as WhaleShark Media, Inc.) and Executive previously entered into an Employment Agreement effective as of March 1, 2013 (the Employment Agreement); and
WHEREAS, the Company and Executive wish to amend the Employment Agreement in the manner set forth herein.
NOW THEREFORE, in consideration of their mutual promises and agreements contained in the Employment Agreement and other good and valuable consideration, the Company and Executive agree as follows:
1. | Section 1.4.4 of the Employment Agreement shall be amended and restated in its entirety to read as follows: |
1.4.4. Change in Control. The Company previously granted to Executive stock options in connection with his employment (the Employment Options), which are governed by the RetailMeNot, Inc. 2013 Equity Incentive Plan, as amended and the WhaleShark Media, Inc. 2007 Stock Option Plan, as amended (these plans, along with the RetailMeNot, Inc. GiftcardZen 2012 Equity Incentive Plan, are collectively referred to as the Plan) and related award documents. The Company also previously granted to Executive 2,750,000 shares of the Companys common stock, which are governed by the Vesting Agreement and the Amended and Restated Vesting Agreement and related documents. With respect to all equity grants made to Executive by Company on or before December 31, 2016 (the Pre-2017 Equity Grants), on a Change in Control, fifty percent of any unvested shares of the Pre-2017 Equity Grants shall accelerate and vest and become exercisable in full, subject to Executives continued employment with the Company through the date of such event. For the purposes of this Agreement, Change in Control shall mean (i) a merger or consolidation or the sale, or exchange by the stockholders of the Company of all or substantially all of the capital stock of the Company, where the stockholders of the Company immediately before such transaction do not obtain or retain, directly or indirectly, at least a majority of the beneficial interest in the voting stock or other voting equity of the surviving or acquiring corporation or other surviving or acquiring entity, in substantially the same proportion as before such transaction, or (ii) the sale or exchange of all or substantially all of the Companys assets (other than a sale or transfer to a subsidiary of the Company as defined in Section 424(f) of the Internal Revenue Code of 1986, as amended) where the stockholders of the Company immediately before such sale or exchange do not obtain or retain, directly or indirectly, at least a majority of the beneficial interest in the voting stock or other voting equity of the corporation or other entity acquiring the Companys assets, in substantially the same proportion as before such transaction.
2. | Section 1.6.2 of the Employment Agreement shall be amended and restated in its entirety to read as follows: |
1.6.2. Termination Without Cause or Resignation for Good Reason - Not In Connection with A Change in Control. Subject to the provisions set forth in this Agreement, in the case of a termination of Executives employment hereunder Without Cause in accordance with
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Section 1.5.4 above or a resignation for Good Reason in accordance with Section 1.5.5 above, the Company shall pay Executive the following severance package (Severance Package): (i) an amount equivalent to twelve months of Executives then Base Salary, subject to the tax withholding specified in Section 1.4.1 above, payable as set forth herein (Severance Payment); (ii) to the extent Executive participates in any medical, prescription drug, dental, vision and any other group health plan of the Company immediately prior to Executives Termination Date, the Company shall pay to Executive in a lump sum a fully taxable cash payment in an amount equal to twelve times the monthly premium cost to Executive of continued coverage for Executive (and for Executives spouse and dependents to the extent participating in such plans immediately prior to the Termination Date) that would be incurred for continuation coverage under such plans in accordance with Section 4980B of the Internal Revenue Code of 1986, as amended, and Part 6 of Title 1 of the Employee Retirement Income Security Act of 1986, as amended, less applicable tax withholding, payable on the first payday following the 30th day after Executives termination date (Executive may, but is not obligated to, use such payment toward the cost of continuation coverage premiums); and (iii) with respect to all equity grants made to Executive by Company on or before December 31, 2015 (the Pre-2016 Equity Grants), one-hundred percent of any unvested shares of the Pre-2016 Equity Grants shall accelerate and vest and become exercisable in full. The Companys obligation to provide Executive with the Severance Package is contingent upon Executives execution of a general release of claims satisfactory to the Company, with such release becoming effective on or before 30 days following Executives termination date (Severance Condition). Payment of the Severance Payment will commence on the first payday following the 30th day after Executives termination date and continue over a twelve month period in equal installments, with payments made on Companys regular paydays. Such release will not affect Executives continuing obligations to the Company under the Proprietary Information and Inventions Agreement. The Companys obligation to pay and Executives right to receive the Severance Package set forth herein shall cease in the event of Executives material breach of any of his obligations under this Agreement or the Proprietary Information and Inventions Agreement.
3. | Section 1.6.3 of the Employment Agreement shall be amended and restated in its entirety to read as follows: |
1.6.3. Termination Without Cause or Resignation for Good Reason In Connection with a Change in Control. Subject to the provisions set forth in this Agreement, in the case of a termination of Executives employment hereunder Without Cause in accordance with Section 1.5.4 above or the resignation of Executives employment hereunder for Good Reason in accordance with Section 1.5.5 above, in each case, sixty days prior to or within twelve months after a Change in Control, the Company shall provide the following severance package (CIC Severance Package): (i) Company shall pay Executive an amount equivalent to twelve months of Executives then Base Salary plus one-hundred percent of Executives Bonus Base, subject to the tax withholding specified in Sections 1.4.1 and 1.4.2 above, payable as set forth herein (CIC Severance Payment); (ii) to the extent Executive participates in any medical, prescription drug, dental, vision and any other group health plan of the Company immediately prior to the Termination Date, the Company shall pay to Executive in a lump sum a fully taxable cash payment in an amount equal to twelve times the monthly premium cost to Executive of continued coverage for Executive (and for Executives spouse and dependents to the extent participating in such plans immediately prior to the Termination Date) that would be incurred for continuation coverage under such plans in accordance with Section 4980B of the Internal Revenue Code of 1986, as amended, and Part 6 of Title 1 of the Employee Retirement Income Security Act of 1986, as amended, less applicable tax withholding payable on the first payday
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following the 30th day after Executives termination date (Executive may, but is not obligated to, use such payment toward the cost of continuation coverage premiums); and (iii) one-hundred percent of any unvested shares subject to any equity grants issued to Executive by Company shall accelerate and vest and become exercisable in full. Companys obligation to provide Executive with the CIC Severance Package is contingent upon Executives execution of a general release of claims satisfactory to the Company, with such release becoming effective on or before 30 days following Executives termination date. Payment of the CIC Severance Payment will commence on the first payday following the 30th day after Executives termination date and continue over a twelve month period in equal installments, with payments made on Companys regular paydays. Such release will not affect Executives continuing obligations to the Company under the Proprietary Information and Inventions Agreement. The Companys obligation to pay and Executives right to receive the CIC Severance Package set forth herein shall cease in the event of Executives material breach of any of his obligations under this Agreement or the Proprietary Information and Inventions Agreement.
4. | Except as specifically amended, the Employment Agreement shall remain in full force and effect as originally executed. On or after the date hereof, each reference in the Employment Agreement to this Agreement, hereunder, herein or words of like import shall mean and be a reference to the Employment Agreement as amended by hereby. |
5. | This Amendment may be signed in counterparts, including by DocuSign or .PDF format, each of which shall be an original, with the same effect as if the signatures were upon the same instruments. |
IN WITNESS WHEREOF this Amendment is hereby executed to be effective as of the date set forth above.
COMPANY | ||
RETAILMENOT, INC. | ||
By: | /s/ C. Thomas Ball | |
C. Thomas Ball | ||
Chairman of the Compensation Committee of the Board of Directors | ||
EXECUTIVE | ||
/s/ G. Cotter Cunningham | ||
G. Cotter Cunningham |
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Exhibit 99.1
RetailMeNot, Inc. Announces First Quarter 2016 Financial Results
- | In-Store + Advertising Net Revenues grew 36% over the prior year period |
- | GAAP EPS of $0.00; non-GAAP EPS of $0.13 |
- | Adjusted EBITDA of $12.3 million; adjusted EBITDA margins of 22% |
AUSTIN, Texas, May 3, 2016 RetailMeNot, Inc. (NASDAQ:SALE), a leading digital savings destination connecting consumers with retailers, restaurants and brands, both online and in-store, today announced its financial results for the first quarter ended March 31, 2016.
The first quarter of the year is off to a solid start, with total net revenues and adjusted EBITDA coming in above the high end of guidance, said Cotter Cunningham, CEO & Founder, RetailMeNot, Inc. Expanding the ways consumers can save utilizing the RetailMeNot App and global websites, remains a top priority for the business. The GiftCard Zen acquisition, coupled with enhancements to our food and dining experience on mobile are just two of the ways we believe will help drive the business forward.
First Quarter Financial Results Highlights and Key Operating Metrics
(All comparisons are made to the first quarter of 2015 unless otherwise noted. Amounts may not compute due to rounding.)
| Total net revenues declined 9% to $54.6 million. |
- | In-store + advertising net revenues increased 36% to $10.5 million, representing 19% of total net revenues. |
- | Mobile online transaction net revenues increased 7% to $5.9 million, representing 11% of total net revenues. |
- | Desktop online transaction net revenues declined 19% to $38.2 million, representing 70% of total net revenues. |
| Net revenues from international markets were $12.2 million, representing 22% of total net revenues. |
| GAAP net loss was $36 thousand, compared to GAAP net income of $4.1 million. |
| Non-GAAP net income was $6.3 million, compared to a non-GAAP net income of $10.8 million. |
| EPS was $0.00 per share, based on 49.2 million fully-diluted, weighted-average shares outstanding. |
| Non-GAAP EPS was $0.13 per share, based on 50.0 million fully-diluted, weighted-average shares outstanding. |
| Adjusted EBITDA was $12.3 million, representing 22% of total net revenues. |
| Total website visits were 162.2 million, down 10%. |
- | Mobile visits in the quarter declined 1% to 69.9 million, or 43% of total visits. |
- | Desktop visits in the quarter declined 15% to 92.3 million. |
| Mobile unique visitors grew 5% totaling 19.2 million. |
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Business Outlook
With the acquisition of GiftCard Zen completed in the second quarter of 2016, RetailMeNot, Inc. will provide financial results for subsequent periods in two separate operating segments, with one representing the core RetailMeNot business and the other representing the gift card business.
For our core business, in addition to total net revenues, the company will be providing adjusted segment operating income, or SOI, guidance, as we believe this to be an important financial metric to evaluate the operating performance of that business. Adjusted SOI is defined as operating income of the core business segment plus depreciation, amortization of intangible assets, stock-based compensation expense, third-party acquisition-related costs and other operating expenses (including non-cash impairments and compensation arrangements entered into in connection with acquisitions).
For our gift card business, the company defines net revenues as the gross market value of the gift card sold, or GMV, net of returns. Gross profit is determined in accordance with GAAP and represents the difference between net revenues (which includes GMV, net of returns) less the cost of the gift card sold, including adjustments for shipping and chargebacks.
The company will also provide guidance combining the results of both businesses on a consolidated basis.
Second Quarter 2016
With respect to our core business, the company expects the following:
| Total net revenues to be in the range of $47.0 to $52.0 million. |
| Adjusted segment operating income to be in the range of $3.5 to $7.5 million, representing adjusted segment operating income margins of 11% at the midpoint. |
With respect to our gift card business, the company expects the following:
| Total net revenues to be in the range of $11.5 to $12.5 million. |
| Gross profit to be in the range of $575 to $625 thousand, or gross profit margins of 5% at the midpoint. |
On a consolidated basis, the company expects the following:
| Total net revenues to be in the range of $58.5 to $64.5 million, or growth of 16% at the midpoint. |
| Adjusted EBITDA, inclusive of the impact of the GiftCard Zen acquisition, to be in the range of $3.0 to $7.0 million, or adjusted EBITDA margins of 8% at the midpoint. |
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Full Year 2016
With respect to the core business, the company expects the following:
| Total net revenues to be in the range of $228.0 to $241.0 million, or a decline of 6% at the midpoint. |
| Adjusted segment operating income in the range of $52.0 to $63.0 million, representing adjusted segment operating income margins of 24.5% at the midpoint. |
With respect to the gift card business, the company expects the following:
| Total net revenues to be in the range of $43.0 to $49.0 million, or growth of 36% at the midpoint. |
| Gross profit to be in the range of $2.2 to $2.4 million, or gross profit margins of 5% at the midpoint. |
On a consolidated basis, the company expects the following:
| Total net revenues to be in the range of $271.0 to $290.0 million, or growth of 13% at the midpoint. |
| Adjusted EBITDA, inclusive of the impact of the GiftCard Zen acquisition, to be in the range of $50.0 to $61.0 million, or adjusted EBITDA margins of 20% at the midpoint. |
The above statements are based on current expectations and actual results may differ materially as explained under the caption Forward-looking Statements below. Information about RetailMeNots use of non-GAAP financial measures, including adjusted EBITDA and adjusted SOI, is provided below under the caption Use of Non-GAAP Financial Measures.
Quarterly Conference Call
RetailMeNot will host a webcast to discuss its first quarter financial results and its second quarter and 2016 business outlook today at 7:00 a.m. Central Time (8:00 a.m. Eastern Time).
A live webcast of the conference call can be accessed within the investor relations section of the RetailMeNot website at http://investor.retailmenot.com. This webcast will contain forward-looking statements and other material information regarding the companys financial and operating results.
Following completion of the call, a replay of the call will be available beginning at 9:30 a.m. Eastern Time on May 3, 2016. To listen to the telephone replay, call (877) 344-7529 within the US, or (412) 317-0088 if calling internationally. Access Code 10082940.
RetailMeNot uses its investor relations website (http://investor.retailmenot.com) as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD. Accordingly, investors should monitor the investor relations website, in addition to following press releases, SEC filings, public conference calls and webcasts.
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About RetailMeNot, Inc.
RetailMeNot (http://www.retailmenot.com/corp/) is a leading digital savings destination connecting consumers with retailers, restaurants and brands, both online and in-store. The company enables consumers across the globe to find hundreds of thousands of digital offers to save money while they shop or dine out. During the 12 months ended March 31, 2016, RetailMeNot, Inc. experienced over 700 million visits to its websites. It also averaged 19.2 million mobile unique visitors per month during the three months ended March 31, 2016. RetailMeNot, Inc. estimates that approximately $4.8 billion in retailer sales were attributable to consumer transactions from paid digital offers in its marketplace in 2015, more than $600 million of which were attributable to its in-store solution. The RetailMeNot, Inc. portfolio of websites and mobile applications includes RetailMeNot.com in the United States; RetailMeNot.ca in Canada; VoucherCodes.co.uk in the United Kingdom; retailmenot.de in Germany; Actiepagina.nl in the Netherlands; ma-reduc.com and Poulpeo.com in France; RetailMeNot.es in Spain, RetailMeNot.it in Italy, RetailMeNot.pl in Poland and GiftCardZen.com and Deals2Buy.com in North America. RetailMeNot, Inc. is listed on the NASDAQ stock exchange under the ticker symbol SALE. Investors interested in learning more about the company can visit http://investor.retailmenot.com.
Key Operating Metrics
Visits. RetailMeNot defines a visit as a group of interactions that take place on one of RetailMeNot Inc.s websites from computers, smartphones, tablets or other mobile devices within a given time frame as measured by Google Analytics, a product that provides digital marketing intelligence. A single visit can contain multiple page views, events, social interactions and e-commerce transactions. A single visitor can open multiple visits. Visits can occur on the same day, or over several days, weeks or months. As soon as one visit ends, there is then an opportunity to start a new visit. A visit ends either through the passage of time or a campaign change, with a campaign generally meaning arrival via search engine, referring site or campaign-tagged information. A visit ends through passage of time either after 30 minutes of inactivity or at midnight Pacific Time. A visit ends through a campaign change if a visitor arrives via one campaign or source, leaves the site, and then returns via another campaign or source. Visits for the period do not include interactions through our mobile applications.
Mobile Unique Visitors. This amount represents the average number of mobile unique visitors per month for the three month period ending March 31, 2016. RetailMeNot counts each of the following as a mobile unique visitor: (i) the first time a specific mobile device accesses one of our mobile applications during a calendar month, and (ii) the first time a specific mobile device accesses one of our mobile websites using a specific web browser during a calendar month. If a mobile device accesses more than one of our mobile websites or mobile applications in a single calendar month, the first access to each such mobile website or mobile application is counted as a mobile unique visitor as they are tracked separately for each mobile domain. We measure mobile unique visitors with a combination of internal data sources and Google Analytics data.
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Use of Non-GAAP Financial Measures
To provide investors with additional information regarding our financial results, this document includes references to consolidated adjusted EBITDA and adjusted Segment Operating Income (SOI) of the core business segment which are non-GAAP financial measures. For a reconciliation of consolidated adjusted EBITDA to net income, the most directly comparable GAAP financial measure, see the table provided below in this release. A reconciliation of adjusted Segment Operating Income to Operating Income of the core business segment, the most directly comparably GAAP financial measure, will be provided in future periods.
RetailMeNot defines consolidated adjusted EBITDA as net income (loss) plus depreciation, amortization of intangible assets, stock-based compensation expense, third-party acquisition-related costs, other operating expenses (including non-cash impairments and compensation arrangements entered into in connection with acquisitions), net interest expense, other non-operating income or expense (including net foreign exchange gains and losses) and income taxes.
RetailMeNot defines adjusted SOI as operating income of the core business segment plus depreciation, amortization of intangible assets, stock-based compensation expense, third-party acquisition-related costs and other operating expenses (including non-cash impairments and compensation arrangements entered into in connection with acquisitions).
RetailMeNot discloses consolidated adjusted EBITDA and adjusted SOI because these are the key measures used by RetailMeNot and its board of directors to understand and evaluate RetailMeNots financial and operating performance, establish budgets and operational goals and as an element in determining executive compensation. RetailMeNot believes consolidated adjusted EBITDA and adjusted SOI also facilitate period-to-period comparisons of operations that could otherwise be masked by the effect of the expenses that RetailMeNot excludes in these non-GAAP financial measures and facilitates comparisons with other peer companies, many of which use similar non-GAAP financial measures to supplement their GAAP results.
Consolidated adjusted EBITDA and adjusted SOI have limitations as analytical tools, and you should not consider these measures in isolation or as substitutes for analysis of RetailMeNots results as reported under GAAP. Because of these limitations, you should consider consolidated adjusted EBITDA and adjusted SOI alongside other financial performance measures, including various cash flow metrics, operating income (loss), net income (loss) and RetailMeNots other GAAP results.
Forward-looking Statements
This release contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, included herein regarding RetailMeNots strategy, future operations, future financial position, future net revenues, projected costs, prospects, plans and objectives of management are forward-looking statements. The words anticipate, believe, could, estimate, expect, intend, may, plan, potential, predict, project, seek, should, target, will, would and similar expressions (or the
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negative of these terms) are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements include, among other things, statements about managements estimates regarding future net revenues, adjusted EBITDA, adjusted segment operating income, gross profit and other financial performance, visits, mobile unique visitors, e-mail subscribers, other consumer engagement metrics, new product and content offerings and other statements about managements beliefs, intentions or goals. RetailMeNot may not actually achieve the expectations disclosed in the forward-looking statements, and you should not place undue reliance on RetailMeNots forward-looking statements. These forward-looking statements involve risks and uncertainties that could cause actual results or events to differ materially from the expectations disclosed in the forward-looking statements, including, but not limited to, (1) RetailMeNots ability to attract visitors to its websites from search engines, to attract and retain users and to increase users engagement with its solutions; (2) RetailMeNots ability to monetize digital offers through its mobile solutions; (3) RetailMeNots ability to attract and retain paid retailers and maintain its relationships with performance marketing networks and suppliers of gift cards; (4) RetailMeNots ability to manage the growth in scope and complexity of its business, including accurately planning and forecasting its financial results; (5) RetailMeNots ability to obtain and maintain high quality digital offer content and maintain the positive perception of its brands; (6) the competitive environment for RetailMeNots business; (7) changes in consumer sentiment regarding RetailMeNots use of cookies; (8) RetailMeNots need to manage regulatory, tax and litigation risks, including regulations related to gift cards and imposing sales tax on e-commerce or m-commerce; (9) RetailMeNots ability to use and protect consumer data and to protect its intellectual property; (10) RetailMeNots ability to manage international business uncertainties; (11) the impact and integration of current and future acquisitions; and (12) other risks and potential factors that could affect RetailMeNots business and financial results identified in RetailMeNots filings with the Securities and Exchange Commission (the SEC), including its annual report on Form 10-K filed with the SEC on February 19, 2016. Additional information will also be set forth in RetailMeNots future quarterly reports on Form 10-Q, annual reports on Form 10-K and other filings that RetailMeNot makes with the SEC. RetailMeNot does not intend or undertake any duty to release publicly any updates or revisions to any forward-looking statements contained herein.
Investor Contact
Michael Magaro
mmagaro@rmn.com
(512) 777-2899
Media Contact
Brian Hoyt
media@rmn.com
(512) 777-2957
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RetailMeNot, Inc.
Condensed Consolidated Statements of Operations
(Unaudited, in thousands, except per share data)
Three Months Ended March 31, | ||||||||
2016 | 2015 | |||||||
Net revenues |
$ | 54,649 | $ | 60,384 | ||||
Costs and expenses: |
||||||||
Cost of net revenues (1) |
5,200 | 5,346 | ||||||
Product development (1) |
12,611 | 13,320 | ||||||
Sales and marketing (1) |
23,325 | 21,641 | ||||||
General and administrative (1) |
10,226 | 9,570 | ||||||
Amortization of purchased intangible assets |
1,954 | 2,626 | ||||||
Other operating expenses |
832 | 765 | ||||||
|
|
|
|
|||||
Total costs and expenses |
54,148 | 53,268 | ||||||
|
|
|
|
|||||
Income from operations |
501 | 7,116 | ||||||
Other income (expense): |
||||||||
Interest expense, net |
(600 | ) | (421 | ) | ||||
Other income (expense), net |
122 | (243 | ) | |||||
|
|
|
|
|||||
Income before income taxes |
23 | 6,452 | ||||||
Provision for income taxes |
(59 | ) | (2,393 | ) | ||||
|
|
|
|
|||||
Net income (loss) |
$ | (36 | ) | $ | 4,059 | |||
|
|
|
|
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Net income (loss) per share: |
||||||||
Basic |
$ | 0.00 | $ | 0.08 | ||||
|
|
|
|
|||||
Diluted |
$ | 0.00 | $ | 0.07 | ||||
|
|
|
|
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Weighted average number of common shares used in computing net income (loss) per share: |
||||||||
Basic |
49,188 | 54,029 | ||||||
|
|
|
|
|||||
Diluted |
49,188 | 55,035 | ||||||
|
|
|
|
RetailMeNot, Inc.
Condensed Consolidated Statements of Operations (continued)
(Unaudited, in thousands)
Three Months Ended March 31, | ||||||||
2016 | 2015 | |||||||
(1) Includes stock-based compensation as follows: |
||||||||
Cost of net revenues |
$ | 495 | $ | 589 | ||||
Product development |
2,096 | 2,259 | ||||||
Sales and marketing |
1,477 | 1,422 | ||||||
General and administrative |
2,514 | 2,543 | ||||||
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|
|
|
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Total |
$ | 6,582 | $ | 6,813 | ||||
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|
|
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RetailMeNot, Inc.
Reconciliation of Adjusted EBITDA
(Unaudited, in thousands)
Three Months Ended March 31, | ||||||||
2016 | 2015 | |||||||
Net income (loss) |
$ | (36 | ) | $ | 4,059 | |||
Depreciation and amortization |
3,950 | 3,926 | ||||||
Stock-based compensation expense |
6,582 | 6,813 | ||||||
Third party acquisition-related costs |
424 | 55 | ||||||
Other operating expenses |
832 | 765 | ||||||
Interest expense, net |
600 | 421 | ||||||
Other (income) expense, net |
(122 | ) | 243 | |||||
Provision for income taxes |
59 | 2,393 | ||||||
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|
|
|
|||||
Adjusted EBITDA |
$ | 12,289 | $ | 18,675 | ||||
|
|
|
|
RetailMeNot, Inc.
Reconciliation of Non-GAAP Net Income and Non-GAAP Diluted EPS
(Unaudited, in thousands, except per share data)
Three Months Ended March 31, | ||||||||
2016 | 2015 | |||||||
GAAP Income before income taxes |
$ | 23 | $ | 6,452 | ||||
GAAP Provision for income taxes |
(59 | ) | (2,393 | ) | ||||
|
|
|
|
|||||
GAAP Net income (loss) |
$ | (36 | ) | $ | 4,059 | |||
Non-GAAP adjustments to net income (loss): |
||||||||
Amortization of purchased intangibles |
1,954 | 2,626 | ||||||
Stock-based compensation expense |
6,582 | 6,813 | ||||||
Third party acquisition-related costs |
424 | 55 | ||||||
Other operating expenses |
832 | 765 | ||||||
Less: Tax effect of adjustments above |
(3,468 | ) | (3,544 | ) | ||||
|
|
|
|
|||||
Total non-GAAP net income |
$ | 6,288 | $ | 10,774 | ||||
|
|
|
|
|||||
Diluted net income (loss) per share: |
||||||||
GAAP |
$ | 0.00 | $ | 0.07 | ||||
|
|
|
|
|||||
Non-GAAP |
$ | 0.13 | $ | 0.20 | ||||
|
|
|
|
|||||
Shares used in non-GAAP diluted EPS calculation: |
||||||||
Weighted-average shares outstanding used in calculating GAAP diluted EPS |
49,188 | 55,035 | ||||||
Additional dilutive securities for non-GAAP diluted EPS |
824 | | ||||||
|
|
|
|
|||||
Weighted-average shares outstanding used in calculating non-GAAP diluted EPS |
50,012 | 55,035 | ||||||
|
|
|
|
|||||
Reconciliation of non-GAAP effective tax rate: |
||||||||
GAAP Effective tax rate |
256.5 | % | 37.1 | % | ||||
Tax effect of non-GAAP adjustments to net income |
-220.6 | % | -1.6 | % | ||||
|
|
|
|
|||||
Non-GAAP effective tax rate |
35.9 | % | 35.5 | % | ||||
|
|
|
|
8
RetailMeNot, Inc.
Condensed Consolidated Balance Sheets
(Unaudited, in thousands)
As of March 31, | As of December 31, | |||||||
2016 | 2015 | |||||||
Assets |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 256,909 | $ | 259,769 | ||||
Accounts receivable, net |
43,772 | 67,504 | ||||||
Prepaids and other current assets, net |
9,743 | 9,959 | ||||||
|
|
|
|
|||||
Total current assets |
310,424 | 337,232 | ||||||
Property and equipment, net |
20,710 | 21,382 | ||||||
Intangible assets, net |
59,538 | 61,245 | ||||||
Goodwill |
175,516 | 174,725 | ||||||
Other assets, net |
6,925 | 8,040 | ||||||
|
|
|
|
|||||
Total assets |
$ | 573,113 | $ | 602,624 | ||||
|
|
|
|
|||||
Liabilities and Stockholders Equity |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | 5,699 | $ | 8,713 | ||||
Accrued compensation and benefits |
6,859 | 10,136 | ||||||
Accrued expenses and other current liabilities |
8,219 | 7,155 | ||||||
Income taxes payable |
1,883 | 5,109 | ||||||
Current maturities of long term debt |
10,000 | 10,000 | ||||||
|
|
|
|
|||||
Total current liabilities |
32,660 | 41,113 | ||||||
Deferred tax liability-noncurrent |
3,157 | 1,498 | ||||||
Long term debt |
58,474 | 60,872 | ||||||
Other noncurrent liabilities |
7,786 | 7,752 | ||||||
|
|
|
|
|||||
Total liabilities |
102,077 | 111,235 | ||||||
Stockholders equity: |
||||||||
Common stock |
49 | 51 | ||||||
Additional paid-in capital |
474,225 | 495,151 | ||||||
Accumulated other comprehensive loss |
(4,272 | ) | (4,883 | ) | ||||
Retained earnings |
1,034 | 1,070 | ||||||
|
|
|
|
|||||
Total stockholders equity |
471,036 | 491,389 | ||||||
|
|
|
|
|||||
Total liabilities and stockholders equity |
$ | 573,113 | $ | 602,624 | ||||
|
|
|
|
9
RetailMeNot, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited, in thousands)
Three Months Ended March 31, | ||||||||
2016 | 2015 | |||||||
Cash flows from operating activities: |
||||||||
Net income (loss) |
$ | (36 | ) | $ | 4,059 | |||
Adjustments to reconcile net income (loss) to cash provided by operating activities: |
||||||||
Depreciation and amortization expense |
3,950 | 3,926 | ||||||
Stock based compensation expense |
6,582 | 6,813 | ||||||
Excess income tax benefit from stock-based compensation |
(18 | ) | (755 | ) | ||||
Deferred income tax expense (benefit) |
2,229 | 1,698 | ||||||
Non-cash interest expense |
102 | 102 | ||||||
Impairment of assets |
834 | | ||||||
Amortization of deferred compensation |
| 768 | ||||||
Other non-cash (gains) losses, net |
(1,524 | ) | 1,038 | |||||
Provision for doubtful accounts receivable |
149 | (252 | ) | |||||
Changes in operating assets and liabilities: |
||||||||
Accounts receivable, net |
23,552 | 23,142 | ||||||
Prepaid expenses and other current assets, net |
(2,116 | ) | (843 | ) | ||||
Accounts payable |
(2,924 | ) | 376 | |||||
Accrued expenses and other current liabilities |
(5,577 | ) | (10,084 | ) | ||||
Other noncurrent assets and liabilities |
1,149 | 634 | ||||||
|
|
|
|
|||||
Net cash provided by operating activities |
26,352 | 30,622 | ||||||
Cash flows from investing activities: |
||||||||
Payments for acquisition of businesses, net of acquired cash |
| | ||||||
Proceeds from sale of property and equipment |
2 | | ||||||
Purchase of other assets |
(42 | ) | (2 | ) | ||||
Purchase of non-marketable investment |
| | ||||||
Purchase of property and equipment |
(2,155 | ) | (2,332 | ) | ||||
|
|
|
|
|||||
Net cash used in investing activities |
(2,195 | ) | (2,334 | ) | ||||
Cash flows from financing activities: |
||||||||
Proceeds from notes payable, net of issuance costs |
| 29,950 | ||||||
Payments on notes payable |
(2,500 | ) | | |||||
Excess income tax benefit from stock-based compensation and other |
18 | 755 | ||||||
Payments of principal on capital lease arrangements |
| (3 | ) | |||||
Payments for repurchase of common stock |
(23,770 | ) | (24,473 | ) | ||||
Proceeds from issuance of common stock, net of tax payments related to net share settlement of equity awards |
(1,051 | ) | 2,393 | |||||
|
|
|
|
|||||
Net cash provided by (used in) financing activities |
(27,303 | ) | 8,622 | |||||
Effect of foreign currency exchange rate on cash |
286 | (1,077 | ) | |||||
|
|
|
|
|||||
Change in cash and cash equivalents |
(2,860 | ) | 35,833 | |||||
Cash and cash equivalents, beginning of period |
259,769 | 244,482 | ||||||
|
|
|
|
|||||
Cash and cash equivalents, end of period |
$ | 256,909 | $ | 280,315 | ||||
|
|
|
|
10