Social Reality Beats Guidance to Achieve Record Revenue and Net Income Profitability for Q2 2015
Company Provides Full Year 2015 Guidance of $30M Revenue, a 485% Increase Over 2014; Q2 Adjusted EBITDA of $1.8M; Net Income of $416k
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E-mailLOS ANGELES, CA -- (Marketwired) -- 08/13/15 -- Social Reality, Inc. (OTCQB: SCRI), an Internet advertising and platform technology company that provides tools to automate the digital advertising market, today announced second quarter 2015 financial results. Revenue for the quarter ended June 30, 2015 was $10,761,573, an increase of 3,786% over the second quarter of 2014, and a 168% increase over the first quarter of 2015.
"We are excited by the rapid growth that we are experiencing. This growth validates the synergies of the investments we made at the end of 2014. We are also very proud of the team for achieving net income profitability in the second quarter, as this has been a long-term goal for the company and adds us to a short list of profitable advertising technology companies," said Christopher Miglino, Social Reality's CEO and Chairman. "We continue to see demand in our platform, thus we are providing full-year 2015 revenue guidance of $30M, a 486% increase over 2014," added Miglino.
Second Quarter 2015 Highlights
- Revenue of $10,761,573 represents a 168% increase over the first quarter of 2015
- Fourth consecutive quarter-over-quarter increase in revenue
- $1.8M in adjusted EBITDA
- Net income of $416k
- FY 2015 revenue guidance of $30M
Three- and six-month financial results for the period ended June 30, 2015
Revenue for the three months ended June 30, 2015, totaled $10,761,573 compared to $276,934 reported for the three months ended June 30, 2014. Revenue of $14,782,857 was reported for the first half of 2015, compared to $830,611 in the first half of 2014. Gross profit increased to $5,603,130 for the three months ended June 30, 2015, compared to $72,629 for the same period of 2014. Gross profit increased to $7,381,939 for the six months ended June 30, 2015, compared to $253,691 for the same period of 2014.
The company reported net income of $415,591 for the three months ended June 30, 2015, compared to a net loss of ($880,112) for the corresponding period of 2014. The company reported a net loss of ($1,638,870) for the six months ended June 30, 2015, compared to a net loss of ($1,567,922) for the corresponding period of 2014. For the quarter ended June 30, 2015, net income was $0.01 per diluted share, compared to a net loss of ($0.04) per share for the three months ended June 30, 2014. Adjusted EBITDA was $1,804,000 for the quarter ended June 30, 2015, compared to ($625,000) in the same period of 2014. For the first half of 2015, the net loss was ($0.06) per share, compared to a net loss of ($0.08) per share for the same period of 2014, and adjusted EBITDA was $1,094,000 for the first half of 2015, compared to ($1,076,000) in the same period of 2014. As shown in the following table, Reconciliation of Adjusted EBITDA to GAAP, the differences between net income and adjusted EBITDA are primarily composed of non-cash stock-based compensation, amortization, accretion, and interest expenses.
Balance Sheet as of June 30, 2015
Cash and cash equivalents totaled $1,515,726 on June 30, 2015. Current assets and total assets were $10,784,710 and $32,101,129, respectively, while current liabilities and total liabilities were $17,045,848 and $27,533,988, respectively. As of June 30, 2015, the company had stockholders' equity of $4,567,141, a 15% sequential increase over $3,963,032 at March 31, 2015.
About Social Reality, Inc.
Social Reality, Inc. is an Internet advertising company that provides tools to automate the digital advertising market. The company has built technologies and leveraged partner technologies that service social media and the Real Time Bidding (RTB) markets. For more information, please visit www.socialreality.com.
Forward-Looking Statements
This press release contains forward-looking statements that are based upon current expectations and involve certain risks. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, including, without limitation: our ability to grow our revenues and manage our gross margins; our history of losses; our limited operating history; the terms of our financing agreement with Victory Park Management, LLC as agent for the lenders; the impact of our debt obligations on our liquidity and financial conditions; the impact of the earn out payments to Mr. Steel; our possible need for additional financing; risks associated with loss of access to the Facebook platform; risks associated with loss of access to RTB inventory buyers; the continued appeal of digital advertising; our dependence on our publishers; risks related to possible future acquisitions; the limited market for our Class A common stock; and the impact of penny stock rules on the trading in our Class A common stock, among others, all as set forth in our Annual Report on Form 10-K for the year ended December 31, 2014 as filed with the Securities and Exchange Commission, and our other filings with the SEC. Except for our ongoing obligations to disclose material information under the Federal securities laws, Social Reality undertakes no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events. These forward-looking statements speak only as of the date of this report, and you should not rely on these statements without also considering the risks and uncertainties associated with these statements and our business.
SOCIAL REALITY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2015 AND 2014
(Unaudited)
Three Months ended Six Months ended
June 30, June 30,
------------------------ ------------------------
2015 2014 2015 2014
----------- ----------- ----------- -----------
Revenues $10,761,573 $ 276,934 $14,782,857 $ 830,611
Cost of revenue 5,158,443 204,305 7,400,918 576,920
----------- ----------- ----------- -----------
Gross profit 5,603,130 72,629 7,381,939 253,691
Operating expense 4,252,752 953,202 7,162,752 1,822,607
----------- ----------- ----------- -----------
Income (loss) from
operations 1,350,378 (880,573) 219,187 (1,568,916)
Interest income
(expense) (934,787) 461 (1,858,057) 994
----------- ----------- ----------- -----------
Income (loss) before
provision for income
taxes 415,591 (880,112) (1,638,870) (1,567,922)
Provision for income
taxes - - - -
----------- ----------- ----------- -----------
Net income (loss) $ 415,591 $ (880,112) $(1,638,870) $(1,567,922)
=========== =========== =========== ===========
Net income (loss) per
share, basic $ 0.02 $ (0.04) $ (0.06) $ (0.08)
=========== =========== =========== ===========
Net income (loss) per
share, diluted $ 0.01 $ (0.04) $ (0.06) $ (0.08)
=========== =========== =========== ===========
Weighted average shares
outstanding, basic 26,911,285 20,515,259 26,879,029 20,390,170
=========== =========== =========== ===========
Weighted average shares
outstanding, diluted 29,520,556 20,515,259 26,879,029 20,390,170
=========== =========== =========== ===========
SOCIAL REALITY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30, December 31,
2015 2014
------------- -------------
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 1,515,726 $ 1,843,393
Accounts receivable, net of allowance for
doubtful accounts of $103,533 and $52,338 9,124,275 3,874,620
Prepaid expenses 142,259 222,532
Other current assets 2,450 7,352
------------- -------------
Total current assets 10,784,710 5,947,897
Property and equipment, net of accumulated
depreciation of $34,460 and $25,013 18,155 27,602
Goodwill/ and other intangibles 18,318,911 18,318,911
Deferred debt issue costs 2,279,366 2,907,736
Prepaid stock based compensation 690,793 1,008,019
Other assets 9,194 4,804
------------- -------------
Total assets $ 32,101,129 $ 28,214,969
============= =============
Liabilities and stockholders' equity
Current liabilities:
Accounts payable and accrued expenses $ 7,810,331 $ 2,882,120
Note payable - related party 2,500,000 2,500,000
Notes payable, current portion 1,541,000 1,350,000
Unearned revenue 22,640 25,295
Contingent consideration payable to related
party - current portion 3,827,339 3,586,722
Put liability 1,344,538 -
------------- -------------
Total current liabilities 17,045,848 10,344,137
Notes payable 7,131,728 7,713,014
Contingent consideration payable to related
party - long term 3,356,412 3,145,401
Put liability - 1,260,010
------------- -------------
Total liabilities 27,533,988 22,462,562
------------- -------------
Stockholders' equity:
Preferred stock, authorized 50,000,000
shares, $0.001 par value,
Undesignated, 49,800,000 shares, no shares
issued and outstanding
Series 1 Preferred stock, authorized
200,000 shares, 86,000 shares issued and
outstanding, respectively 86 86
Class A common stock, authorized 250,000,000
shares, $0.001 par value, 29,544,943 and
29,416,612 shares issued, respectively, and
27,158,080 and 27,029,749 shares
outstanding, respectively 27,158 27,030
Class B common stock, authorized 9,000,000
shares, $0.001 par value, no shares issued
and outstanding - -
Additional paid in capital 13,596,629 13,143,153
Accumulated deficit (9,056,732) (7,417,862)
------------- -------------
Total stockholders' equity 4,567,141 5,752,407
------------- -------------
Total liabilities and stockholders' equity $ 32,101,129 $ 28,214,969
============= =============
SOCIAL REALITY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTH PERIODS ENDED JUNE 30, 2015 AND 2014
(Unaudited)
Six Month Periods Ended
June 30,
----------------------------
2015 2014
------------- -------------
Cash flows from operating activities:
Net loss $ (1,638,870) $ (1,567,922)
Adjustments to reconcile net loss to net
cash provided (used) by operating
activities:
Amortization of stock based prepaid fees 317,226 336,834
Stock based compensation 446,683 147,909
Amortization of debt issue costs 628,370 -
PIK interest expense accrued to principal 176,966 -
Accretion of contingent consideration 451,628 -
Accretion of put liability 84,528 -
Depreciation 9,447 6,522
Bad debt expense 51,195 -
Changes in operating assets and liabilities:
Accounts receivable (5,300,850) 167,424
Prepaid expenses 80,273 (8,645)
Other current assets 4,902 (2,000)
Other assets (4,390) (804)
Accounts payable and accrued expenses 4,928,211 (503,965)
Unearned revenue (2,655) -
------------- -------------
Cash provided (used) by operating activities 232,664 (1,424,647)
------------- -------------
Cash flows from investing activities:
Purchase of equipment - (6,856)
------------- -------------
Cash used by investing activities - (6,856)
------------- -------------
Cash flows from financing activities:
Sale of common stock - 1,273,161
Cost of common stock sale - (16,291)
Proceeds from warrant offering 6,921 -
Repayments of note payable (567,252) -
------------- -------------
Cash (used) provided by financing activities (560,331) 1,256,870
------------- -------------
Net decrease in cash (327,667) (174,633)
Cash, beginning of period 1,843,393 1,715,264
------------- -------------
Cash, end of period $ 1,515,726 $ 1,540,631
============= =============
Supplemental Schedule of Cash Flow
Information:
Cash paid for interest $ 462,887 $ -
============= =============
Cash paid for taxes $ - $ -
============= =============
Use of Non-GAAP Measure - Adjusted EBITDA
Social Reality's management evaluates and makes operating decisions using various financial metrics. In addition to the company's GAAP results, management also considers the non-GAAP measure of Adjusted EBITDA. Adjusted EBITDA is defined as net income before income taxes, depreciation and amortization expenses, plus stock-based compensation and interest expense. Management believes that this non-GAAP measure provides useful information about Social Reality's operating results. The tables below provide a reconciliation of this non-GAAP financial measure with the most directly comparable GAAP financial measure. This non-GAAP measure should be considered a supplement to, and not a substitute for, or superior to, financial measures calculated in accordance with GAAP.
Reconciliation of Adjusted EBITDA to GAAP
Three Months Ended Six Months Ended
June 30, June 30,
------------------- --------------------
(unaudited, in thousands) 2015 2014 2015 2014
--------- --------- --------- ---------
Net income (loss) $ 416 $ (880) $ (1,639) $ (1,568)
plus:
Equity based compensation 448 251 865 485
--------- --------- --------- ---------
Adjusted net income (loss) $ 864 $ (629) $ (774) $ (1,083)
Interest expense 935 - 1,858 -
Depreciation of property, plant
and equipment 5 4 10 7
--------- --------- --------- ---------
Adjusted EBITDA $ 1,804 $ (625) $ 1,094 $ (1,076)
========= ========= ========= =========
Contact:Robert Haag Managing Director IRTH [email protected] 1-866-976-4784
Source: Social Reality, Inc.
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