Kitara Media Reports Second Quarter 2014 Financial Results

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Aug 15, 2014, 08:00 ET

JERSEY CITY, N.J., Aug. 15, 2014 /PRNewswire/ -- Kitara Media Corp ("Kitara Media") (OTCBB: KITM), a leading digital media and technology company providing video solutions to advertisers, digital marketers and publishers, today reported financial results for the second quarter ended June 30, 2014.

In the second quarter, Kitara Media remained focused on advancing the business strategy according to plan by delivering mobile and multiscreen video capabilities for advertisers, engaging strategic acquisition opportunities, and addressing industry changes associated with new standards in the online video advertising industry.

"We have made significant investments across the business and advanced our Propel+ technology platform to deliver a mobile solution that will expand revenue opportunities and markets. In addition, technology enhancements were made to embrace new viewability, performance and safety metrics," said Bob Regular, CEO of Kitara Media. "The online video advertising market showed mixed results in second-quarter as the industry deployed new standards intended to increase the accountability, transparency and performance of video advertising. In the short-term, however, these macro changes have created adjustment challenges in the quarter for us to meet advertiser and publisher requirements. While we had to sacrifice revenue and margin in the interim, we adapted quickly to implement the right changes and set the foundation for growth with new standards and mobile."

Business Highlights

The following are some of the highlights Kitara Media achieved in the second quarter:

Completed Mobile and Multi-screen advertising capabilities of the Propel+ Platform
Completed the integration of proprietary and third party technology systems and measurement into the Propel+ Platform to enable viewability measurement, ad safety firewalls, and advanced ad performance measurement
Completed the integration of the HealthGuru platform into the Propel+ Platform
Completed a new sophisticated reporting and data insights layer into the Propel+ Platform to enhance margin improvement, targeting and ad campaign performance
Expanded the sales and client management team to rapidly grow advertisers and web site publishers in line with new standards

Second Quarter Financial Results

Consolidated revenue for the three months ended June 30, 2014 decreased by $289,000 to $5.2 million as compared to $5.5 million for the three months ended June 30, 2013. Consolidated revenue for the six months ended June 30, 2014 increased by $1.7 million to $12.1 million as compared to $10.4 million for the six months ended June 30, 2013.

Consolidated margins for the three months ended June 30, 2014 decreased by $900,000 to $836,000 as compared to $1.7 million for the three months ended June 30, 2013. Consolidated margins for the six months ended June 30, 2014 decreased by $930,000 to $2.1 million as compared to $3 million for the six months ended June 30, 2013.

Consolidated net loss for the three months ended June 30, 2014 increased by $3.6 million to a net loss of $3.4 million as compared to a net income of $261,000 for the three months ended June 30, 2013. Consolidated net loss for the six months ended June 30, 2014 increased by $6.1 million to a net loss of $6 million as compared to a net income of $120,000 for the six months ended June 30, 2013.

Earnings before interest, taxes, depreciation and amortization ("EBITDA") for the three months ended June 30, 2014 decreased by $3.2 million to negative $2.9 million as compared to a positive $342,000 for the three months ended June 30, 2013. EBITDA for the six months ended June 30, 2014 decreased by $5.6 million to negative $5.2 million as compared to positive $357,000 for the six months ended June 30, 2013.

Further details concerning the results of operations for the three months ended June 30, 2014 are contained in a Quarterly Report on Form 10-Q which Kitara Media filed with the Securities and Exchange Commission.

About Kitara Media

Kitara Media is a leading digital media and technology company providing video solutions to advertisers, digital marketers and publishers. With nearly 500 million monthly video ad views, Kitara Media delivers strong engagement for advertisers, high revenues for publishers, as well as improved user experience with PROPEL+, an internally developed proprietary video ad technology platform. Kitara Media owns and operates several online media sites including Healthguru.com and Adotas.com. The company is headquartered in Jersey City, NJ. For more information visit http://www.kitaramedia.com.

Forward-Looking Statements:

Certain information and statements contained in this press release, including those regarding Kitara Media's capital structure, ability to execute its operating plan, anticipated financial flexibility and other statements that are not statements of historical fact, are forward-looking statements within the meaning of federal securities laws. These statements may be identified, without limitation, by the use of forward-looking terminology such as "anticipates", "expects," "will" or comparable terms or the negative thereof. Such statements are based on management's current estimates, assumptions that management believes to be reasonable, and currently available competitive, financial, and economic data as of the date hereof and we undertake no obligation to update any such statements to reflect subsequent changes in events or circumstances. Forward-looking statements are inherently uncertain and subject to a variety of events, factors and conditions, many of which are beyond the control of Kitara Media and not all of which are known to Kitara Media, including, without limitation those risk factors described from time to time in Kitara Media's reports filed with the SEC. Among the factors that could cause actual results to differ materially are Kitara Media's: loss of key advertising customers; inability to acquire new advertising customers; inability to expand its video content library; inability to protect its intellectual property; inability to comply with the covenants in its credit facility; inability to obtain necessary financing or enter into equity arrangements with existing or new institutional shareholders; inability to execute its acquisition strategy; inability to effectively manage its growth; failure to effectively integrate the operations of acquired businesses; competition; loss of key personnel; increases in costs of operations; continued compliance with government regulations; and general economic conditions.

Non-GAAP Financial Measures

To supplement its consolidated financial statements, which are prepared and presented in accordance with U.S. generally accepted accounting principles ("GAAP"), Kitara Media reports EBITDA, which are non-GAAP financial measures. Kitara Media calculates EBITDA by taking net income/(loss) and adding back depreciation, amortization, interest expense, stock-based compensation, and taxes less interest income. Kitara Media calculates adjusted EBITDA as EBITDA plus merger expenses. Kitara Media uses these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. Kitara Media believes that these measures provide useful information about operating results, enhances the overall understanding of past financial performance and future prospects, and allows for greater transparency with respect to key metrics used by management in its financial and operational decision making. The non-GAAP financial measures should be considered in addition to results and guidance prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. The non-GAAP financial measures included in this press release have been reconciled to the nearest GAAP measure in the table following the financial statement attached to this press release.

	Three Months Ended June 30,		Six Months Ended June 30,
	2014	2013	2014	2013
Revenue	$5,230	$5,519	$12,175	$10,428
Cost of revenue	4,394	3,783	10,059	7,382
Gross Profit	836	1,736	2,116	3,046
GP as % of revenue	16%	31%	17%	29%

Operating expenses
Employee Expenses	2,453	1,001	4,690	2,016
Related party expenses	-	69	-	154
Other operating expenses	1,549	324	3,005	519
Depreciation and amortization	115	81	225	237
Total operating expenses	4,117	1,475	7,920	2,926

Operating income (loss)	(3,281)	261	(5,804)	120
Interest Expense	(69)	-	(156)	-
Income (loss) before income taxes	(3,350)	261	(5,960)	120
Income taxes	15	-	16	-
Net income (loss)	$(3,365)	$261	$(5,976)	$120

EBIDTA (a non-GAAP measure)	(2,924)	342	(5,266)	357

Net income (loss)	$(3,365)	$261	$(5,976)	$120
Depreciation and amortization	115	81	225	237
Interest expenses, less other income	69	-	156	-
Stock compensation expense	242	-	313	-
Taxes	15	-	16	-
EBITDA (a non-GAAP measure)	$(2,924)	$342	$(5,266)	$357