PLAINVIEW, NY--(Marketwired - March 01, 2017) - NeuLion, Inc. (NLN.TO), a leading technology product and service provider that specializes in the digital video broadcasting, distribution and monetization of live and on-demand content to Internet-enabled devices, today reported its financial results for the fourth quarter and fiscal year ended December 31, 2016.
Q4 2016 Financial Highlights
(Comparisons made between fiscal Q4 2016 and fiscal Q4 2015 results, unless otherwise noted)
- GAAP revenue of $25.5 million, down 8%
- NeuLion® Digital Platform revenue of $17.5 million, down 12%
- Operating loss of $1.8 million versus operating income of $1.8 million
- Ongoing Share Repurchase Program resulted in an additional 2.1 million shares purchased and cancelled
Fiscal Year 2016 Financial Highlights
(Comparisons made between fiscal 2016 and fiscal 2015 results, unless otherwise noted)
- GAAP revenue increased to $99.8 million, up 6%
- NeuLion Digital Platform revenue increased to $67.9 million, up 3%
- Operating loss of $0.2 million versus operating loss of $1.9 million
- Cash totaled $41.9 million at December 31, 2016
- 6.1 million shares were purchased and cancelled under the Share Repurchase Program initiated in April 2016
"We made significant progress this year implementing our long-term growth strategy, enhancing the NeuLion Digital Platform, and expanding our global presence and business in Europe and Asia," said Roy Reichbach, President and Chief Executive Officer. "We have begun to see tangible results of our expanded sales team in Europe and the integration of Saffron Digital, and we are securing new sales opportunities, which enhances the breadth of our new business pipeline. Also, we are opening up new, global market opportunities. These are important strategic steps taken to further solidify our strong foundation for sustained growth."
Mr. Reichbach added, "With our depth of content partners, new market opportunities and laser focus on quality and the customer experience, we are strategically positioned to take advantage of market trends that are increasingly driving consumers away from the traditional television model. We entered 2017 in a strong position to build and diversify our global customer base while providing excellent OTT experiences to consumers and value to our shareholders."
Q4 2016 Operational Highlights
- Delivered UFC® 205 in HD and 4K over the top ("OTT"), the first UFC event in New York since the lifting of the state ban on professional mixed martial arts
- Announced an expanded partnership with Coliseum Sports Media, to deliver live and on-demand rugby action throughout Asia on RugbyPass
- Unveiled enhanced personalization services on the NeuLion Digital Platform, to assist content owners in driving new subscriber activations and reducing customer churn
- Licensed MainConcept codecs to MAGIX for use in their VEGAS video editing product line
- Formed a partnership with Insight TV to provide a new, OTT Ultra HD entertainment platform with native Ultra HD digital content utilizing the NeuLion Digital Platform
Q4 2016 Financial Review
Total GAAP revenue was $25.5 million for the fourth quarter of 2016 ("Q4 2016"), a decrease of 8% over the prior year period. NeuLion Digital Platform revenues declined 12% to $17.5 million in Q4 2016, from $19.8 million for the prior year period. NeuLion's consumer electronics licensing and MainConcept revenue streams were $8.0 million in both Q4 2016 and the prior year period.
Non-GAAP Revenue declined 18% to $25.6 million in Q4 2016, compared to the same period a year ago. The change was primarily due to decreases in consumer electronics licensing and MainConcept revenue streams.
Adjusted EBITDA decreased to $1.7 million in Q4 2016 from $8.8 million for the prior year period, due to a decrease of $5.8 million in both GAAP and Non-GAAP Revenue. Please refer to the below table for the reconciliation of GAAP Revenue to Non-GAAP Revenue and Consolidated Net Income (Loss) to and Adjusted EBITDA.
Cost of revenue was $5.2 million, or 20% of revenue, in Q4 2016, compared to $5.4 million, or 19% of revenue, in the prior year period. Selling, general and administrative expenses, including stock-based compensation, were $14.7 million in Q4 2016, increasing 11% from $13.2 million in the prior year period. Research and development expenses decreased 7% to $5.1 million in Q4 2016, from $5.5 million for the prior comparable period, primarily following a reduction in headcount resulting from redundancy associated with the acquisition of DivX Corporation in 2015. Operating loss was $1.8 million in Q4 2016, compared to operating income of $1.8 million in the prior year period. Net loss was $0.3 million, or a net loss of $0.00 per basic and diluted share in Q4 2016, compared to a net income of $32.8 million, or a net income of $0.11 per basic and diluted share, in the prior year period.
Share Repurchase Program
On March 8, 2016, NeuLion announced that its Board of Directors had authorized the repurchase of up to $10 million of its common stock over the next 12 months through a normal course issuer bid ("NCIB") for up to 14,109,057 shares of common stock. On March 24, 2016, NeuLion announced that it had received the TSX's approval to commence the NCIB, and that the NCIB would commence on April 1, 2016. Since initiating the program, NeuLion has purchased 7.7 million shares of common stock at a total cost of $6.5 million through February 28, 2017.
Use of Non-GAAP Financial Information
In addition to NeuLion's U.S. GAAP results, this press release also includes disclosure of certain non-GAAP financial measures, as such term is used by the Securities and Exchange Commission. NeuLion defines "Non-GAAP Revenue" as GAAP revenues before purchase accounting adjustments as a result of the acquisition of DivX. NeuLion defines "Adjusted EBITDA" as consolidated net income (loss) before interest, income taxes, depreciation and amortization, purchase accounting adjustments, stock-based compensation, acquisition-related expenses, gain on revaluation of convertible note derivative and foreign exchange gain (loss). Adjusted EBITDA is a key measure used by management to evaluate NeuLion's results and make strategic decisions about the company, including potential acquisitions. Management believes this measure is useful to investors because it is an indicator of operational performance. Because not all companies use identical calculations, NeuLion's presentation of Non-GAAP Revenue and Adjusted EBITDA may not be comparable to similarly titled measures of other companies. These measures do not have any standardized meanings prescribed by U.S. GAAP and therefore are unlikely to be comparable to the calculation of similar measures used by other companies, and should not be viewed as alternatives to measures of financial performance or changes in cash flows calculated in accordance with U.S. GAAP.
Pursuant to the requirements of Regulation G, NeuLion has provided a reconciliation of U.S. GAAP consolidated net income (loss) to Adjusted EBITDA in the below table.
|Reconciliation of GAAP Revenue to non-GAAP Revenue (in thousands):|
|Three months ended,||Year ended,|
|Revenue excluded due to purchase accounting||42||3,572||1,057||15,308|
|Reconciliation of GAAP Net Income (Loss) to Adjusted EBITDA (in thousands):|
|Three months ended,||Year ended,|
|Consolidated Net Income (Loss) on a GAAP Basis||$||(344||)||$||32,766||$||(1,753||)||$||25,916|
|Revenue excluded due to purchase accounting||42||3,572||1,057||15,308|
|Depreciation and amortization||2,400||1,910||8,899||7,544|
|Gain on revaluation of convertible note derivative||-||-||-||(507||)|
|Income tax (benefit) expense||(1,622||)||(31,176||)||1,411||(27,847||)|
|Investment income (expense) and foreign exchange loss||167||166||94||578|
|Adjusted EBITDA||$||1,735||$||8,760||$||14,390||$||24,716|| |
NeuLion will host a live webcast tomorrow, March 2, 2017 at 8:30 a.m. ET that can be accessed at http://edge.media-server.com/m/p/sx93bxh8. In addition, a replay of the webcast will be available for a limited time at http://neulion.com/investor.
Financial Statements and MD&A
SEC Filing: click here
SEDAR Filing: click here
NeuLion, Inc. (NLN.TO) offers solutions that power the highest quality digital experiences for live and on-demand content in up to 4K on any device. Through its end-to-end technology platform, NeuLion enables digital video management, distribution and monetization for content owners worldwide including the NFL, NBA, World Surf League, Univision Deportes, Euroleague Basketball and others. NeuLion powers the entire video ecosystem for content owners and rights holders, consumer electronic companies, and third party video integrators through its MainConcept business. NeuLion's robust consumer electronics licensing business enables its customers like Sony, LG, Samsung and other to stream secure, high-quality video seamlessly across their consumer devices. NeuLion is headquartered in Plainview, NY. For more information about NeuLion, visit www.NeuLion.com.
Certain statements herein are forward-looking statements and represent NeuLion's current intentions in respect of future activities. Forward-looking statements can be identified by the use of the words "will," "expect," "seek," "anticipate," "believe," "plan," "estimate," "expect," and "intend," statements that an event or result "may," "will," "can," "should," "could," or "might" occur or be achieved, and other similar expressions. These statements, in addressing future events and conditions, involve inherent risks and uncertainties. Although the forward-looking statements contained in this release are based upon what management believes to be reasonable assumptions, NeuLion cannot assure readers that actual results will be consistent with these forward-looking statements. These forward-looking statements are made as of the date of this release and NeuLion assumes no obligation to update or revise them to reflect new events or circumstances, except as required by law. Many factors could cause NeuLion's actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including: our ability to derive anticipated benefits from the acquisition of DivX Corporation and Saffron Digital Media; our ability to realize some or all of the anticipated benefits of our partnerships; general economic and market segment conditions; our customers' subscriber levels and financial health; our ability to pursue and consummate acquisitions in a timely manner; our continued relationships with our customers; our ability to negotiate favorable terms for contract renewals; competitor activity; product capability and acceptance rates; technology changes; regulatory changes; foreign exchange risk; interest rate risk; and credit risk. These factors should be considered carefully and readers should not place undue reliance on the forward-looking statements. A more detailed assessment of the risks that could cause actual results to materially differ from current expectations is contained in the "Risk Factors" section of NeuLion's Annual Report on Form 10-K for the fiscal year ended December 31, 2016, which is available on www.sec.gov and filed on www.sedar.com.
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