SAN FRANCISCO, Feb. 29 /PRNewswire-FirstCall/ -- PlanetOut Inc. , the leading media and entertainment company exclusively focused on the gay and lesbian market, today reported its financial results for the fourth quarter and full year ended December 31, 2007.
Total revenue for the full year ended December 31, 2007 was $70.0 million, before adjusting for discontinued operations, and was within the range of $69.0 to $72.0 million provided during PlanetOut's third quarter 2007 earnings call on November 1, 2007. GAAP net loss for the full year ended December 31, 2007 was $51.2 million. Adjusted EBITDA for the full year ended December 31, 2007 was $(9.7) million, and was also within the range of $(9.0) million to $(11.0) million provided on the earnings call noted above.
Use of Non-GAAP Financial Measures
This press release includes the non-GAAP financial measures of Adjusted EBITDA, Adjusted Net Income (Loss), and Adjusted earnings per share ("Adjusted EPS") -- Basic and Diluted, which are reconciled to net income (loss), net income (loss), and net income (loss) per share -- basic and diluted, respectively, which the company believes are the most comparable GAAP measures. The company uses these non-GAAP financial measures for internal managerial purposes, when providing its business outlook, and as a means to evaluate period-to-period comparisons. These non-GAAP financial measures are used in addition to and in conjunction with results presented in accordance with GAAP. These non-GAAP financial measures reflect an additional way of viewing aspects of the company's operations that, when viewed with its GAAP results and the accompanying reconciliations to corresponding GAAP financial measures, provide a more complete understanding of factors and trends affecting the company's business. These non-GAAP measures should be considered as a supplement to, and not as a substitute for, or superior to, income (loss) from operations, cash flow from operating activities and net income (loss) and net income (loss) per share calculated in accordance with generally accepted accounting principles.
Adjusted EBITDA is defined as net income (loss) before interest, taxes, depreciation and amortization, stock-based compensation, restructuring, non-cash impairment charges, executive transition, financial advisory fees, income (loss) from discontinued operations and other income (expense), net, less Adjusted EBITDA from Discontinued Operations. Adjusted EBITDA from Discontinued Operations is defined as net income (loss) from discontinued operations before interest, taxes, depreciation and amortization, stock-based compensation, restructuring and non-cash impairment charges. The company considers Adjusted EBITDA to be an important indicator of its operational strength. The company deducts other income (expense), net, consisting primarily of interest income (expense), and Adjusted EBITDA from Discontinued Operations from net income (loss) in calculating Adjusted EBITDA because it regards interest income (expense) and Adjusted EBITDA from Discontinued Operations to be non-operating items. This measure also eliminates the effects of depreciation and amortization, restructuring, non-cash impairment charges, executive transition, financial advisory fees, income (loss) from discontinued operations and stock-based compensation expense from period to period, which the company believes is useful to management and investors in evaluating its operating performance, as depreciation and amortization, restructuring, non- cash impairment charges, executive transition, financial advisory fees, income (loss) from discontinued operations and stock-based compensation costs are not directly attributable to the underlying performance of the company's business operations. A limitation associated with this measure is that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in the company's businesses. Management evaluates the costs of such tangible and intangible assets through other financial measures such as capital expenditures. A further limitation associated with this measure is that it does not include stock-based compensation expenses related to the company's workforce. Management compensates for this limitation by providing supplemental information about stock-based compensation expense on the face of the consolidated statements of operations.
Adjusted Net Income (Loss) is defined as net income (loss) excluding stock-based compensation expense, restructuring, non-cash impairment charges, executive transition, financial advisory fees and income (loss) from discontinued operations. The company considers Adjusted Net Income (Loss) to be a profitability measure which facilitates the forecasting of its operating results for future periods and allows for the comparison of its results to historical periods and to other companies in its industry. A limitation of Adjusted Net Income (Loss) is that it does not include all items that impact the company's net income (loss) and net income (loss) per share for the period. Adjusted EPS -- Basic and Diluted are defined as Adjusted Net Income (Loss) calculated on a basic and diluted per share basis, respectively.
PlanetOut's management believes the non-GAAP information is useful because it can enhance the understanding of the company's ongoing economic performance and PlanetOut therefore uses non-GAAP information internally to evaluate and manage the company's operations. PlanetOut has chosen to provide this information to investors to enable them to perform comparisons of operating results in a manner similar to how the company analyzes its operating results.
About PlanetOut Inc.
PlanetOut Inc. is the leading global media and entertainment company exclusively serving the lesbian, gay, bisexual and transgender (LGBT) community.
PlanetOut's digital media brands include Gay.com, PlanetOut.com, Advocate.com, Out.com, OutTraveler.com and HIVPlusMag.com. PlanetOut print media brands include The Advocate, Out, The Out Traveler and HIVPlus, as well as SpecPub, Inc. titles. Transaction services brands include e-commerce Web sites Kleptomaniac.com and BuyGay.com, and book publisher Alyson Publications.
PlanetOut, based in San Francisco with additional offices in New York and Los Angeles, offers Global 1000 and local advertisers access to what it believes to be the most extensive multi-channel, multi-platform network of gay and lesbian people in the world. For more information, please visit http://www.planetoutinc.com/.
PlanetOut Inc. Unaudited Condensed Consolidated Statements of Operations (In thousands, except per share amounts) Three months ended Twelve months ended December 31, December 31, 2006 2007 2006 2007 Revenue: Advertising services $7,428 $6,194 $26,479 $25,555 Subscription services 6,025 5,167 24,447 21,901 Transaction services 2,167 1,826 7,830 5,557 Total revenue 15,620 13,187 58,756 53,013 Operating costs and expenses:(*) Cost of revenue 7,339 7,937 26,744 29,886 Sales and marketing 4,160 3,969 15,592 16,266 General and administrative 3,073 3,163 11,690 15,122 Restructuring (101) 49 791 630 Depreciation and amortization 1,638 1,646 5,187 6,723 Impairment of goodwill and intangible assets - 4,814 - 25,914 Total operating costs and expenses 16,109 21,578 60,004 94,541 Loss from operations (489) (8,391) (1,248) (41,528) Other income (expense), net (374) 53 (616) (1,441) Loss from continuing operations before income taxes (863) (8,338) (1,864) (42,969) Provision (benefit) for income taxes 7 - 45 (6) Loss from continuing operations (870) (8,338) (1,909) (42,963) Income (loss) from discontinued operations, net of taxes (860) 298 (1,801) (8,207) Net loss $(1,730) $(8,040) $(3,710) $(51,170) Loss per share from continuing operations - basic and diluted $(0.50) $(2.06) $(1.10) $(14.94) Income (loss) per share from discontinued operations - basic and diluted $(0.49) $0.07 $(1.04) $(2.85) Net loss per share - basic and diluted $(0.99) $(1.99) $(2.14) $(17.79) Weighted-average shares used to compute net loss per share - basic and diluted 1,739 4,048 1,733 2,876 (*)Includes stock-based compensation expense as follows: Cost of revenue $50 $34 $67 $198 Sales and marketing 22 3 40 40 General and administrative 168 89 180 506 Total stock-based compensation expense $240 $126 $287 $744 Supplemental Financial Data Adjusted EBITDA $690 $(1,512) $4,152 $(9,671) Adjusted Net Loss $(591) $(3,101) $(356) $(14,328) Adjusted EPS: Basic $(0.34) $(0.77) $(0.21) $(4.98) Diluted $(0.34) $(0.77) $(0.21) $(4.98) PlanetOut Inc. Note to Unaudited Condensed Consolidated Statements of Operations
This press release includes the non-GAAP financial measures of Adjusted EBITDA, Adjusted Net Income (Loss) and Adjusted earnings per share ("Adjusted EPS") -- Basic and Diluted, which are reconciled to net income (loss), net income (loss) and net income (loss) per share -- basic and diluted, respectively, which the Company believes are the most comparable GAAP measures. The Company uses these non-GAAP financial measures for internal managerial purposes, when providing its business outlook, and as a means to evaluate period-to-period comparisons. These non-GAAP financial measures are used in addition to and in conjunction with results presented in accordance with GAAP. These non-GAAP financial measures reflect an additional way of viewing aspects of the Company's operations that, when viewed with its GAAP results and the accompanying reconciliations to corresponding GAAP financial measures, provide a more complete understanding of factors and trends affecting the Company's business. These non-GAAP measures should be considered as a supplement to, and not as a substitute for, or superior to, income (loss) from operations, cash flow from operating activities and net income (loss) and net income (loss) per share calculated in accordance with generally accepted accounting principles.
Adjusted EBITDA is defined as net income (loss) before interest, taxes, depreciation and amortization, stock-based compensation, restructuring, non- cash impairment charges, executive transition, financial advisory fees, income (loss) from discontinued operations and other income (expense), net, less Adjusted EBITDA from Discontinued Operations. Adjusted EBITDA from Discontinued Operations is defined as net income (loss) from discontinued operations before interest, taxes, depreciation and amortization, stock-based compensation, restructuring and non-cash impairment charges. The Company considers Adjusted EBITDA to be an important indicator of its operational strength. The Company deducts other income (expense), net, consisting primarily of interest income (expense), and Adjusted EBITDA of Discontinued Operations from net income (loss) in calculating Adjusted EBITDA because it regards interest income (expense) and Adjusted EBITDA from Discontinued Operations to be non-operating items. This measure also eliminates the effects of depreciation and amortization, restructuring, non-cash impairment charges, executive transition, financial advisory fees, income (loss) from discontinued operations less Adjusted EBITDA from discontinued operations and stock-based compensation expense from period to period, which the Company believes is useful to management and investors in evaluating its operating performance, as depreciation and amortization, restructuring, non-cash impairment charges, executive transition, financial advisory fees, income (loss) from discontinued operations less Adjusted EBITDA from Discontinued Operations and stock-based compensation costs are not directly attributable to the underlying performance of the Company's business operations. A limitation associated with this measure is that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in the Company's businesses. Management evaluates the costs of such tangible and intangible assets through other financial measures such as capital expenditures. A further limitation associated with this measure is that it does not include stock-based compensation expenses related to the Company's workforce. Management compensates for this limitation by providing supplemental information about stock-based compensation expense on the face of the consolidated statements of operations.
Adjusted Net Income (Loss) is defined as net income (loss) excluding stock-based compensation expense, restructuring, non-cash impairment charges, executive transition, financial advisory fees and income (loss) from discontinued operations. The Company considers Adjusted Net Income (Loss) to be a profitability measure which facilitates the forecasting of its operating results for future periods and allows for the comparison of its results to historical periods and to other companies in its industry. A limitation of Adjusted Net Income (Loss) is that it does not include all items that impact the Company's net income (loss) and net income (loss) per share for the period. Adjusted EPS - Basic and Diluted are defined as Adjusted Net Income (Loss) calculated on a basic and diluted per share basis, respectively.
The Company undertakes no obligation to provide or update any such estimates or supplemental information in the future.
PlanetOut Inc. Unaudited Condensed Consolidated Balance Sheets (In thousands) December 31, 2006 2007 Assets Current assets: Cash and cash equivalents $9,674 $8,534 Short-term investments 2,050 - Restricted cash 2,854 167 Accounts receivable, net 8,963 6,868 Inventory 1,690 1,113 Prepaid expenses and other current assets 4,137 2,188 Current assets of discontinued operations 7,573 - Current assets held for sale - 1,795 Total current assets 36,941 20,665 Property and equipment, net 10,737 8,441 Goodwill 28,590 7,123 Intangible assets, net 9,763 1,870 Other assets 1,021 580 Long-term assets of discontinued operations 6,537 - Long-term assets held for sale - 2,673 Total assets $93,589 $41,352 Liabilities and stockholders' equity Current liabilities: Accounts payable $1,691 $1,338 Accrued expenses and other liabilities 3,310 2,491 Deferred revenue, current portion 8,989 5,760 Capital lease obligations, current portion 694 838 Notes payable, current portion net of discount 8,817 - Deferred rent, current portion 228 264 Current liabilities of discontinued operations 6,068 - Current liabilities related to assets held for sale - 1,676 Total current liabilities 29,797 12,367 Deferred revenue, less current portion 1,474 1,089 Capital lease obligations, less current portion 1,504 984 Notes payable, less current portion and discount 8,100 - Deferred rent, less current portion 1,569 1,401 Long-term liabilities related to assets held for sale - 602 Total liabilities 42,444 16,443 Stockholders' equity: Common stock 17 40 Additional paid-in capital 89,532 114,406 Accumulated other comprehensive loss (122) (85) Accumulated deficit (38,282) (89,452) Total stockholders' equity 51,145 24,909 Total liabilities and stockholders' equity $93,589 $41,352 PlanetOut Inc. Unaudited Condensed Consolidated Statements of Cash Flows (In thousands) Twelve months ended December 31, 2006 2007 Cash flows from operating activities: Net loss $(3,710) $(51,170) Net loss from discontinued operations, net of tax 1,801 8,207 Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 5,186 6,723 Impairment of goodwill and intangible assets - 25,914 Non-cash services expense - 185 Provision for doubtful accounts 219 211 Restructuring 19 203 Stock-based compensation 293 744 Amortization of debt discount 55 392 Amortization of deferred rent (43) (132) Loss on disposal or write-off of property and equipment 46 940 Changes in operating assets and liabilities, net of acquisition effects and classification of assets and liabilities related to assets held for sale: Accounts receivable (3,152) 1,987 Inventory (341) 263 Prepaid expenses and other assets (1,628) 1,489 Accounts payable 357 (281) Accrued expenses and other liabilities 560 (858) Deferred revenue (24) (1,602) Net cash used in continuing operating activities (362) (6,785) Net cash used in discontinued operations (4,364) (1,131) Net cash used in operations (4,726) (7,916) Cash flows from investing activities: Purchases of property and equipment (4,454) (3,844) Changes in short-term investments (2,050) 2,050 Changes in restricted cash (2,854) 2,687 Acquisitions, net of cash acquired 76 - Acquisition of discontinued operations, net of cash (5,479) - Net cash provided by (used in) investing activities (14,761) 893 Cash flows from financing activities: Proceeds from exercise of common stock options and warrants 461 71 Proceeds from equity financing, net of transaction costs - 24,017 Proceeds from issuance of notes payable 10,500 - Proceeds from repayment of note receivable from stockholder 843 - Principal payments under capital lease obligations and notes payable (1,105) (18,097) Tax withholding payments reimbursed by restricted stock - (137) Net cash provided by financing activities 10,699 5,854 Effect of exchange rate on cash and cash equivalents 1 29 Net decrease in cash and cash equivalents (8,787) (1,140) Cash and cash equivalents, beginning of period 18,461 9,674 Cash and cash equivalents, end of period $9,674 $8,534 Supplemental disclosure of noncash investing and financing activities: Property and equipment and related maintenance acquired under capital leases $2,525 $461 Issuance of common stock warrants in connection with debt issuance and financial advisory fees $445 $- PlanetOut Inc. Reconciliations to Condensed Consolidated Statements of Operations (Unaudited, in thousands, except per share amounts) Three months ended Twelve months ended December 31, December 31, 2006 2007 2006 2007 Adjusted EBITDA: Net loss $(1,730) $(8,040) $(3,710) $(51,170) (Income) loss from discontinued operations 860 (298) 1,801 8,207 Provision (benefit) for income taxes 7 - 45 (6) Other (income) expense, net 374 (53) 616 1,441 Loss from operations (489) (8,391) (1,248) (41,528) Stock-based compensation expense 240 126 287 744 Restructuring (101) 49 791 630 Non-cash impairment charges * - 5,012 - 26,579 Executive transition 140 - 475 497 Financial advisory fees - 50 - 185 Depreciation and amortization 1,638 1,646 5,187 6,723 Adjusted EBITDA from continuing operations 1,428 (1,508) 5,492 (6,170) Adjusted EBITDA from discontinued operations (738) (4) (1,340) (3,501) $690 $(1,512) $4,152 $(9,671) Adjusted Net Loss: Net loss $(1,730) $(8,040) $(3,710) $(51,170) (Income) loss from discontinued operations 860 (298) 1,801 8,207 Stock-based compensation expense 240 126 287 744 Restructuring (101) 49 791 630 Non-cash impairment charges * - 5,012 - 26,579 Executive transition 140 - 475 497 Financial advisory fees - 50 - 185 $(591) $(3,101) $(356) $(14,328) Adjusted EPS: Basic $(0.34) $(0.77) $(0.21) $(4.98) Diluted $(0.34) $(0.77) $(0.21) $(4.98) Weighted-average shares used to compute Adjusted EPS: Basic 1,739 4,048 1,733 2,876 Diluted 1,739 4,048 1,733 2,876 * Non-cash impairment charges for the twelve months ended December 31, 2007 include $93,000 of charges for the three months ended March 31, 2007 not previously defined as a reconciling item in our calculation of Adjusted EBITDA or Adjusted Net Income (Loss). PlanetOut Inc. Unaudited Summary of Consolidated Segment Information (In thousands) Three months ended Three months ended December 31, 2006 December 31, 2007 Online Publishing Total Online Publishing Total Revenue: Advertising services $3,874 $3,554 $7,428 $2,474 $3,720 $6,194 Subscription services 4,393 1,632 6,025 3,957 1,210 5,167 Transaction services 512 1,655 2,167 232 1,594 1,826 Total revenue 8,779 6,841 15,620 6,663 6,524 13,187 Direct operating costs and expenses: Cost of revenue 2,846 4,493 7,339 2,907 5,030 7,937 Sales and marketing 2,462 1,698 4,160 2,277 1,692 3,969 Total direct operating costs and expenses 5,308 6,191 11,499 5,184 6,722 11,906 Contribution margin (loss) $3,471 $650 4,121 $1,479 $(198) 1,281 Other operating costs and expenses: General and administrative 3,073 3,163 Restructuring (101) 49 Depreciation and amortization 1,638 1,646 Impairment of goodwill and intangible assets - 4,814 Total other operating costs and expenses 4,610 9,672 Loss from operations (489) (8,391) Other income (expense), net (374) 53 Provision (benefit) for income taxes 7 - Income (loss) from discontinued operations (860) 298 Net loss $(1,730) $(8,040) Twelve months ended Twelve months ended December 31, 2006 December 31, 2007 Online Publishing Total Online Publishing Total Revenue: Advertising services $11,116 $15,363 $26,479 $9,365 $16,190 $25,555 Subscription services 18,378 6,069 24,447 16,476 5,425 21,901 Transaction services 2,129 5,701 7,830 1,191 4,366 5,557 Total revenue 31,623 27,133 58,756 27,032 25,981 53,013 Direct operating costs and expenses: Cost of revenue 10,240 16,504 26,744 12,673 17,213 29,886 Sales and marketing 10,236 5,356 15,592 9,296 6,970 16,266 Total direct operating costs and expenses 20,476 21,860 42,336 21,969 24,183 46,152 Contribution margin $11,147 $5,273 16,420 $5,063 $1,798 6,861 Other operating costs and expenses: General and administrative 11,690 15,122 Restructuring 791 630 Depreciation and amortization 5,187 6,723 Impairment of goodwill and intangible assets - 25,914 Total other operating costs and expenses 17,668 48,389 Loss from operations (1,248) (41,528) Other expense, net (616) (1,441) Provision (benefit) for income taxes 45 (6) Loss from discontinued operations (1,801) (8,207) Net loss $(3,710) $(51,170)
