Velti Posts 2nd Quarter 2013 Results [Professional Services Close - Up]
(Professional Services Close - Up Via Acquire Media NewsEdge) Velti plc, a global provider of mobile marketing and advertising technology and solutions, on August 20, announced financial results for the second quarter ended June 30.
"While we understood there would be challenges to improving Velti's financial position and driving long-term growth, the second quarter proved to be more difficult than expected," said Alex Moukas, chief executive officer. "We continued however to take significant steps to focus the company on predictable business, customers and geographies. We also began a major restructuring effort to align our organization to our business strategy and current revenue level, removing approximately $40 million in annualized costs, in addition to our previously announced $40 million reduction of capital expenditures.
"Over the past few months we have made significant progress extricating ourselves from businesses at the root of many of our difficulties, focusing instead on core opportunities for growth in mobile marketing in key geographies like Western Europe, North America, India and China. For example, in the fourth quarter of 2012 we began to reduce our commercial activities in Greece and Cyprus, and as of the end of Q2 2013 we are generating no meaningful revenue from customers in this region. Notwithstanding this reduction of business, customers with business activities in Greece and Cyprus continued to account for a significant portion of the Company's outstanding receivables. Due to a deterioration in collections from these customers, and indications that future payments were also at risk, we made the decision to write-down more than $100 million in outstanding receivables.
"We remain focused on creating and executing highly effective campaigns for our customers. Our mobile marketing customers have responded with a retention rate of more than 95 percent and we continue to sign substantial contracts with new customers.
"We move into the second half of the year as a more disciplined, focused organization that remains a leader in mobile marketing. We are committed to doing all we can to deliver value to customers and shareholders and our actions position Velti to become profitable and cash flow positive in 2014."
Engagement of Advisors
-The company engaged an investment bank to sell its supply-side U.S. advertising business, also known as Mobclix, as well as look at other strategic opportunities for the company.
-The company engaged Deloitte Financial Advisory Services to assist in evaluating the near-term and longer-term collectability of receivables on the books of its Greek and Cypriot subsidiaries. As a result of this evaluation, Velti is taking a charge in Q2 of approximately $111 million to its trade receivables and accrued contract receivables relating to its enterprise business, which primarily sold customized mobile marketing platforms to customers with operations principally within Greece and Cyprus. As part of Deloitte's engagement, Scott Avila from Deloitte is serving as the company's chief restructuring officer to provide restructuring advice and assistance.
Q2 Business Highlights
-Velti continues to experience demand for its services. During the second quarter it won and renewed programs with premier global brands such as Vodafone, Nokia, Coca-Cola, Toyota and China Unicom.
-The company launched Velti Pay, a mobile payment and messaging solution.
-Velti launched an enhanced version of its mGage Inspire platform that gives customers greater control over managing programs that support customer life-cycle management and long-term loyalty.
-Velti's new release of the mGage Communicate Pro platform is currently being rolled out simultaneously in the USA and the United Kingdom. The platform brings new functionality to allow brands to conduct interactive mobile marketing campaigns with a global reach.
Q2 2013 Financial Highlights
-Revenue of $31.2 million, a decrease of 47 percent from Q2 2012.
-Revenue less third-party costs in Q2 of $8.8 million.
-Adjusted EBITDA on a consolidated basis of $(20.9) million, excluding the one-time write off of certain receivables of $110.7 million, compared with $6.2 million in Q2 2012.
-Adjusted EBITDA, excluding Starcapital (our variable interest entity, or "VIE", that holds previously divested assets which we are required to consolidate despite a lack of equity ownership) of $(17.5) million, excluding bad debt expense of $98.7 million, compared with $6.2 million in Q2 2012.
-GAAP net loss attributable to Velti of $130.3 million and diluted EPS of $(1.56) during Q2 compared with a net loss of $17.7 million and EPS of $(0.28) for Q2 2012.
Mobile Advertising and Marketing Revenues and Third-Party Costs
-Mobile advertising revenue of $8.9 million, and mobile advertising third-party costs of $5.4 million; resultant mobile advertising revenue less third-party costs of $3.6 million, or a margin of 40 percent.
-Mobile marketing revenue of $22.3 million, and mobile marketing third-party costs of $17.0 million; resultant mobile marketing revenue less third-party costs of $5.3 million, or a margin of 23 percent.
Cash, Operating and Free Cash Flow
-Cash position of $19.4 million as of June 30.
-Q2 operating cash flow of $0.3 million, which excludes $7.6 million of acquisition-related payments associated with MIG.
-Q2 free cash flow of ($3.3) million, which excludes $7.6 million of acquisition-related payments associated with MIG.
((Comments on this story may be sent to firstname.lastname@example.org))
(c) 2013 ProQuest Information and Learning Company; All Rights Reserved.
[ Back To Technology News's Homepage ]