SOURCE: NeuLion, Inc.

NeuLion, Inc.

November 03, 2016 07:10 ET

NeuLion Reports Third Quarter Revenue of $23.9 Million

PLAINVIEW, NY--(Marketwired - November 03, 2016) - NeuLion, Inc. (TSX: NLN), 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 third quarter ended September 30, 2016.

Q3 2016 Financial Highlights
(Comparisons made between fiscal Q3 2016 and fiscal Q3 2015 results, unless otherwise noted)

  • GAAP revenue increased to $23.9 million, up 9%
  • NeuLion Digital Platform revenue increased to $16.3 million, up 14%
  • Net loss improved to $2.7 million versus a net loss of $3.1 million
  • Ongoing Share Repurchase Program resulted in an additional 2.3 million shares purchased and cancelled

"We continued to grow our NeuLion Digital Platform revenues in the third quarter, building even further momentum since our recent acquisition of Saffron Digital," said Roy Reichbach, President and Chief Executive Officer. "As the leader in enabling live and on-demand digital content, NeuLion has earned the trust of a growing mix of global content owners in the sports and entertainment industries, including new deals in the third quarter with the Major League Baseball Players Association, the L.A. Clippers, and Street League Skateboarding, among others. And, we continue to further expand our pipeline of new customer opportunities, particularly in Europe since the expansion of our London office."

Mr. Reichbach added, "Our CE licensing business is well positioned for further growth. The NeuLion CE SDK enables leading global consumer electronics manufacturers to provide live 4K streaming at a time when improved TV affordability and 4K content availability is driving greater consumer adoption. Our next live 4K streaming event takes place with UFC 205 on November 12, which we're anticipating will have substantial demand. Each new 4K live streaming event further enhances overall visibility both for our services, and for 4K TV's, more broadly."

Q3 2016 Operational Highlights

  • Street League Skateboarding (SLS) signed a multiyear deal with NeuLion to launch an all new streaming service to connect with fans as the growth, popularity, and acceptance of street skateboarding worldwide continues to expand.
  • Nokia chose the NeuLion Digital Platform to enable delivery of live streaming for 360 video and virtual reality content to second screen devices and leading VR headsets.
  • Big Ten Network unveiled an all-new BTN2Go digital destination, utilizing the NeuLion Digital Platform to provide fans with a hyper-personalized experience customized to their favorite schools, teams and players.
  • Major League Baseball Players Association selected NeuLion to enable its all-new digital home.
  • DR Sports On Demand licensed the NeuLion Digital Platform offering fans of Dominican Republic baseball a new live world-wide OTT subscription service
  • Ivy League Digital Network launched new apps on Apple TV and Roku, powered by NeuLion.
  • Steve Ballmer, owner of the LA Clippers and past Chief Executive Officer of Microsoft, announced at the NeuLion Sports Media and Technology Conference that he had selected NeuLion as his partner for a next-generation interactive streaming service for in-market Clippers fans.

Q3 2016 Financial Review

Total GAAP revenue was $23.9 million for the third quarter of 2016 ("Q3 2016") an increase of 9% over the prior year period. NeuLion Digital Platform revenues grew 14% to $16.3 million in Q3 2016, from $14.3 million for the prior year period. NeuLion's consumer electronics licensing and MainConcept revenue streams were $7.6 million in both Q3 2016 and the prior comparable period.

Non-GAAP Revenue decreased 7% to $23.9 million in Q3 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 $2.3 million in Q3 2016 from $5.0 million for the prior year period, on $1.7 million less Non-GAAP Revenue. Please refer to the tables accompanying this release for the calculation of Non-GAAP Revenue and Adjusted EBITDA.

Cost of revenue was $4.3 million, or 18% of revenue, in Q3 2016, compared to $3.9 million, or 18% of revenue, in the prior year period. Selling, general and administrative expenses, including stock-based compensation, were $13.4 million in Q3 2016, increasing 21% from $11.1 million in the prior year period. Research and development expenses decreased 21% to $5.2 million in Q3 2016 from $6.6 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 $1.5 million in Q3 2016, compared to $1.8 million in the prior year period. Net loss was $2.7 million, or a net loss of $0.01 per basic and diluted share in Q3 2016, compared to a net loss of $3.1 million, or a net loss of $0.01 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 4.7 million shares of common stock at a total cost of $4.1 million.

For the months of July and August 2016, a broker on behalf of NeuLion purchased 1,493,600 shares of common stock at a total cost of $1.2 million. NeuLion settled with the broker and cancelled these shares during the quarter. The same broker also purchased 699,100 shares of common stock at a total cost of $0.6 million on NeuLion's behalf in September 2016, which were settled and cancelled in October 2016.

Use of Non-GAAP Financial Information

In addition to NeuLion's U.S. GAAP results, this press release also includes disclosure on 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 Non-GAAP Revenue to U.S. GAAP Revenue and Adjusted EBITDA to U.S. GAAP consolidated net income/(loss) as an exhibit to this press release.

 
Reconciliation of GAAP Revenue to Non-GAAP Revenue (in thousands):
       
   Three months ended September 30,
   2016  2015
            
GAAP Revenue  $23,857   $21,901  
            
Revenue excluded due to purchase accounting   68    3,741  
            
Non-GAAP Revenue  $23,925   $25,642  
            
            
Reconciliation of GAAP Net Loss to Adjusted EBITDA (in thousands):  
            
   Three months ended September 30,
   2016  2015
            
Consolidated Net Loss on a GAAP basis  $(2,715 ) $(3,120 )
            
Revenue excluded due to purchase accounting   68    3,741  
Depreciation and amortization   2,401    2,046  
Stock-based compensation   1,361    921  
Income tax expense   1,155    1,241  
Investment income and foreign exchange loss   53    133  
            
Adjusted EBITDA  $2,323   $4,962  
         

Quarterly Webcast

NeuLion will host a live webcast today at 5:00 p.m. ET that can be accessed at http://edge.media-server.com/m/p/fhrhnee7?DB_OEM_ID=30000. 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

About NeuLion

NeuLion, Inc. (TSX: NLN) 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.

Forward-Looking Statements

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, 2015, which is available on www.sec.gov and filed on www.sedar.com.

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