YuMe (YUME) Misses Q3 EPS by 12c; Announces Exec. Changes, Restructuring Plan
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YuMe (NYSE: YUME) reported Q3 EPS of ($0.13), $0.12 worse than the analyst estimate of ($0.01). Revenue for the quarter came in at $35 million versus the consensus estimate of $41 million.
Executive and Board of Directors Changes, Restructuring Plan Announced
The Company announced today that Jayant Kadambi will no longer serve as YuMe’s Chairman of the Board and Chief Executive Officer, effective immediately. Mr. Kadambi will remain on the Board. Additionally, Jim Soss, Executive Vice President and General Manager, North America, and Hardeep Bindra, Executive Vice President, Operations, will no longer be employed at YuMe, effectively immediately.
YuMe’s Board of Directors has named Paul Porrini to the role of Interim CEO. Mr. Porrini most recently served as the Company’s Executive Vice President, General Counsel and Secretary, and has led YuMe’s legal and human resources functions since July 2012. Prior to joining YuMe, Mr. Porrini served in leadership roles at Hewlett-Packard Company and Bluestone Software, a web application server company. Michael Hudes, a member of YuMe’s executive staff since 2010, has been named Executive Vice President, Chief Revenue Officer, and will lead the Company’s global sales, business development and revenue operations teams. Ayyappan Sankaran, a co-founder, will remain as Executive Vice President, Chief Technology Officer, and will remain on the Board. Tony Carvalho will remain as Executive Vice President, Chief Financial Officer. Messrs. Carvalho, Hudes and Sankaran will report to Mr. Porrini.
Additionally, the Board of Directors has appointed Eric Singer, a current independent Board member and managing member of VIEX Capital Advisors, the largest shareholder in the Company, to the role of Chairman.
Mr. Singer commented, “We appreciate Jayant’s efforts and passion for the business, and we wish him well in his new endeavors. We also would like to thank Jim and Hardeep for their service to the Company. The Board believes Paul has the leadership skills to help YuMe reinvigorate growth, leverage its core software and data management platform, and further improve operating efficiencies. We look forward to working with him and his team.”
Mr. Porrini commented, “I am honored to lead YuMe’s talented and experienced team. In the third quarter, we exceeded our gross margin and our operating expense improvement goals and grew our programmatic channel revenue, but execution issues in the back-half of the quarter resulted in lower-than-expected revenue and adjusted EBITDA. Our strong gross margin performance illustrates the strength of our platform, and our top priorities are to unlock the value of this strategic asset by improving our business fundamentals while exploring a range of strategic alternatives.”
The Board of Directors also approved a restructuring plan to further reduce costs and improve the Company’s profitability. The plan includes the executive changes stated above, real estate consolidation and other workforce changes. This plan, combined with additional cost saving initiatives, is expected to reduce incremental fourth quarter operating expenses by approximately $2.0 million compared to the third quarter of 2016. The Company expects fourth quarter 2016 results to include a $1.5 million charge related to the restructuring plan. The Company anticipates these current initiatives to result in annual cost savings of approximately $6.0 million in 2017, and expects to achieve additional cost savings in 2017 from future initiatives.
Special Committee Update
On September 14, 2016, YuMe disclosed that its Board of Directors had formed a special committee of independent directors, and that it was in the process of selecting a financial advisor. Today, the Company is announcing its Board has initiated a strategic alternatives review process to enhance shareholder value and has selected Deutsche Bank as the Company’s financial advisor.
This review may result in the Company pursuing value-enhancing initiatives as an independent company, a sale of the Company, a merger with another party, or another strategic transaction involving some or all of the assets of the Company. There can be no assurance that this process will result in any strategic alternatives being announced or consummated. The Company has not set a timetable for completion of this review process, and it does not intend to discuss or disclose further developments during this process unless and until the Board has approved a specific action or otherwise determined that further disclosure is appropriate or required by law.
For earnings history and earnings-related data on YuMe (YUME) click here.
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