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ID Watchdog Announces Updated Guidance for Fourth Quarter 2016 and First Quarter 2017

DENVER, Feb. 23, 2017 /PRNewswire/ -- 

ID Watchdog, Inc. (TSX VENTURE: IDW) (IDWAF) ("ID Watchdog" or the "Company"), provider of consumer-facing identity theft protection and resolution services, today announced that the Company is updating its revenue, operating income and Adjusted EBITDA guidance for the fourth quarter ending December 31, 2016 and also providing first quarter 2017 guidance.  All amounts are in U.S. dollars.

Fourth Quarter 2016 Updated Guidance

For the fourth quarter, ID Watchdog anticipates revenue from our Employee Benefit Channel and total revenue will be approximately $2,285,000 and $2,604,000, which represents increases increase of approximately 112% and 83%, respectively, compared to the fourth quarter of 2015.   Also, ID Watchdog anticipates fourth quarter 2016 operating income and Adjusted EBITDA of approximately $181,000 and $300,000, respectively, with our Adjusted EBITDA margin as a percent of total revenues of 11.5%.

First Quarter 2017 Guidance


Three Months
Ending March 31,
2016 Actual


Three Months Ending
March 31, 2017

Guidance


Change

vs.

2016

Employee Benefit Revenue

$2,231,700


$3,100,000 to $3,150,000


39% to 41%

Total Revenue

$2,572,675


$3,450,000 to $3,500,000


34% to 36%

Gross Margin

$1,886,836


$2,375,000 to $2,450,000


26% to 30%

Operating Income

$291,043


$200,000 to $250,000


-14% to -31%

Adjusted EBITDA

$331,803


$300,000 to $350,000


-10% to 6%

 

Mike Greene, CEO of ID Watchdog stated, "In late 2016 we secured a $3.0 million credit facility, which allowed us to substantially reduce our interest expense beginning in the fourth quarter of 2016, and it will also provide us with tremendous financial flexibility to aggressively grow our business going forward.  Also, in the second half of 2016, we entered into a settlement agreement with a Tech Support Channel sales affiliate resulting in a dismissal of the lawsuit allowing us to focus our full attention on expanding or business."

Mike Greene continued, "We are off to a great start to 2017 and we are estimating first quarter 2017 Employee Benefit Channel revenue growth of between 39% and 41% over the first quarter of 2016.  Further, a number of our new employers in our Employee Benefit Channel deferred their enrollments from January 1 to the second quarter of 2017 and therefore we anticipate further revenue growth in the second quarter as compared to the levels projected for the first quarter of 2017."

Greene continued, "In 2017 we will continue to enhance our identity theft protection offerings and expand our customer support, which will modestly increase our cost of service and cause a slight decline in our gross profit margin as compared to 2016.  Note that our operating income and Adjusted EBITDA margins generally trough in the first quarter of each year due to increased costs associated with securing, onboarding and registering the significant number of new customers we added in January, and subsequently these margins expand as we move through the year. Also, during the first quarter of 2017, we have significantly increased our sales and marketing efforts and anticipate a highly level of professional services expenditures, which put additional pressure on our first quarter operating income and Adjusted EBITDA."

"In conclusion, we had a very successful 2016 and we are very excited about our prospects as we enter 2017 with the headwinds of 2016 behind us and the available resources necessary to aggressively expand our sales and marketing efforts and a great product enhancement plan to continue to drive increased market share.  Further, over the last twelve months we have developed a number of new opportunities that should drive increased Employee Benefit Channel growth in late 2017 and 2018.  We are also in the early stages of our January 2018 enrollment selling cycle, which is off to a strong start," Greene concluded.

About Non-IFRS Financial Measure

To supplement the Company's consolidated financial results presented in accordance with International Financial Reporting Standards ("IFRS"), the Company reports "Adjusted EBITDA" (net income (loss) before deducting net interest expense, income tax expense, depreciation and amortization, share-based compensation, and gain (loss) on warrant liability) and uses this metric to measure the performance of our business.  Adjusted EBITDA is not a performance measure defined under IFRS and is not considered an alternative to income from operations or net earnings (loss) in the context of measuring the Company's performance.  Adjusted EBITDA does not have a standardized meaning and is therefore not likely to be comparable with similar measures used by other publicly traded companies.  Adjusted EBITDA should not be used as an exclusive measure of cash flow since it does not account for the impact of working capital changes, income taxes, interest payments, capital expenditures, debt principal reductions and other sources and uses of cash, and is not meant to be considered in isolation or as a substitute for financial information prepared in accordance with IFRS.

Financial information contained in this press release should be read in conjunction with the unaudited consolidated interim condensed financial statements and notes thereto included in our most recent annual and quarterly reports. These documents are available online at www.sedar.com and in the "Company Overview" section of our website at www.IDWatchdog.com.

About ID Watchdog, Inc.

ID Watchdog was founded in 2005 and is headquartered in Denver, Colorado. The Company provides three-tiered comprehensive monitoring, detection and resolution for identity theft. ID Watchdog proactively detects identity theft problems at their source and provides immediate resolution services to ensure complete peace of mind for individuals. All the Company's services have been developed with input from industry experts; national consumer advocacy groups; federal, state, and local law enforcement agencies; consumer protection agencies; and adhere to guidelines published by the Consumer Federation of America. For more information, please visit www.IDWatchdog.com.

Forward-Looking Statement

This press release contains opinions, forecasts, projections, and other statements about future events or results that constitute forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and financial outlook and forward looking information within the meaning of applicable Canadian securities laws (collectively, "forward-looking statements"). All statements, other than statements of historical fact, that address activities, events or developments that we or our management intends, expects, projects, believes or anticipates will or may occur in the future are forward-looking statements. Such statements are based upon certain assumptions and assessments made by our management in light of their experience and their perception of historical trends, current economic and industry conditions, expected future developments and other factors they believe to be appropriate. Such forward-looking statements include, but are not limited to, statements about: future revenue and the growth of revenue including growth from our Employee Benefit Channel; anticipated expenditures; our business strategies; our ability to grow in both the near and long term and the funding of our growth opportunities; the plans, objectives, expectations and intentions of the company regarding revenue growth; the Company's financial position including liquidity and financial capacity, and the future development of the company's business.

The forward-looking statements included in this release are also subject to a number of material risks and uncertainties, including but not limited to economic, competitive, governmental, and technological factors affecting our operations, markets, services and prices. Such forward-looking statements are not guarantees of future performance, and actual results, developments and business decisions may differ from those envisaged by such forward-looking statements. We identify the principal risks and uncertainties that affect our performance Company's filings with Canadian regulators at www.sedar.com. Furthermore, the forward-looking statements and financial outlook contained in this release are made as at the date hereof and the Company does not undertake any obligation to update publicly or to revise any of the included forward-looking statements and financial outlook, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws. The Company's forward-looking statements are expressly qualified in their entirety by this cautionary statement.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Company Contact:
Jay B. Lewis
Chief Financial Officer
ID Watchdog, Inc.
303-339-8099
InvestorRelations@idwatchdog.com 
www.idwatchdog.com

 

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