Remark Holdings Reports First Quarter 2018 Results
Management Commentary
"Our first quarter financial and operating results were in line with our plan, and we remain well on track in laying the groundwork to achieve our forecast of consolidated revenue in excess of
"Our robust revenue forecast for 2018 is directly based on the agreements we've signed and the actual deployment steps we're taking in conjunction with our clients on the ground. Our second quarter revenues will show an improvement over the first quarter both sequentially and year-over-year, with the bulk of the revenue growth from our AI business starting to advance in the third quarter as install volume accelerates.
"Looking ahead, we're focused on efficiently leveraging our advanced AI technology to enable a broad range of applications across multiple sectors. Our business plan is designed to quickly support a stream of recurring, predictable and growing revenues as our products are installed. In addition, we remain well positioned to continue to generate strong growth at Vegas.com, as we leverage our investments in this premiere digital platform to build on its visibility and grow our audience."
KanKan Artificial Intelligence Platform Three-Month Operational Highlights
- Continued to lay the groundwork to deploy KanKan's AI-based facial recognition and behavior analysis technologies in more than 10,000 retail stores through a partnership with one of
Southeast Asia's largest retailers. - Continued to build on relationships with major banking customers in
China , while securing new contracts with a number of financial institutions for KanKan's credit FinTech product, includingCITIC Bank ,Industrial Bank ,Guangdong Development Bank , andChina Minsheng Bank . - Expanded KanKan AI products into two new verticals in
China - retail (via a partnership with a leading luxury store group) and education (via a partnership withShanghai Open University ). Such contracts improve upon Remark's already solid reputation in the country and provide new use cases for KanKan's AI solutions. - Completed its first project for
Charoen Pokphand Group (CP Group ), a state-of -the-art "war room," which showcases the efficiency and strength of KanKan solutions, opening the door for potential new business.
Travel & Entertainment Segment Three-Month Operational Highlights
- Show ticket volume and conversion of traffic increased 29.6% and 29%, respectively, during the first quarter of 2018 compared to the same period of 2017.
- All top 20 show ticket sales days have occurred since
November 24, 2017 . - Record show ticket sales and consumption of show tickets in the month of
March 2018 .
Three Months Ended
- Revenue increased approximately 9% to
$16.7 million , compared to$15.3 million . - Total cost and expense was
$37.9 million , compared to$20.7 million . The increase was primarily due to non-cash charges related to early lease termination and employee stock compensation. - The increase in non-cash expense, partially offset by the increased revenue, resulted in an operating loss for the first quarter of 2018 of
$21.2 million , compared to$5.4 million . - Adjusted EBITDA for the first quarter of 2018 was
$(6.9) million , which includes the early lease termination charge of approximately$2.3 million . - Net loss was
$14.1 million , or$(0.43) per diluted share, compared to net loss of$25,000 , or$0.00 per diluted share. Net loss for the first quarter of 2018 included an$8.6 million non-cash gain related to a change in the fair value of the company's warrant liability, which occurred as a result of the decrease in the company's stock price during the period. For the first quarter of 2017, the company recorded a$6.6 million gain related to the change in the fair value of the company's warrant liability. - At
March 31, 2018 , the cash and cash equivalents balance was$21.9 million , and total restricted cash was$11.7 million , bringing the total combined cash position to$33.5 million , compared to a total combined cash position of$34.3 million atDecember 31, 2017 .
Subsequent Events
Chief Financial Officer
"Doug has played an integral role in elevating Remark to its current position of strength," added Mr. Tao. "We are grateful for his many efforts and contributions over the years, and we appreciate his commitment to stay on and ensure a seamless transition. On behalf of the entire Remark team, I wish Doug great success in his new endeavors."
Mr. Osrow commented, "It has been a pleasure working at Remark for nearly the past five years, and I am proud to have been a part of the company's transformation to where it is today."
2018 Financial Outlook
The company reaffirmed its guidance regarding certain revenue and Adjusted EBITDA expectations.
For the year ending
The company also reaffirmed its expectations for its travel & entertainment segment. Management expects to generate gross revenue of more than
Conference Call Information
Mr.
Toll-Free Number: 888-394-8218
International Number: 323-701-0225
Conference ID: 263001
Please call the conference telephone number 10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact the
The conference call will be broadcast simultaneously and available for replay via the investor section of the company's website here.
A replay of the call will be available after
Toll-Free Replay Number: 844-512-2921
International Replay Number: 412-317-6671
Replay ID: 263001
About
Forward-Looking Statements
This press release may contain forward-looking statements, including information relating to future events, future financial performance, strategies, expectations, competitive environment and regulation. Words such as "may," "should," "could," "would," "predicts," "potential," "continue," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," and similar expressions, as well as statements in future tense, identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors, including those discussed in Part I, Item 1A. Risk Factors in
Company Contact:
stao@remarkholdings.com or dosrow@remarkholdings.com
702-701-9514
Investor Relations Contact:
Liolios Group, Inc.
MARK@liolios.com
949-574-3860
[Tables to follow]
REMARK HOLDINGS, INC. AND SUBSIDIARIES |
|||||||
Condensed Consolidated Balance Sheets |
|||||||
(dollars in thousands, except per share amounts) |
|||||||
December 31, |
|||||||
2018 |
2017 |
||||||
Assets |
|||||||
Cash and cash equivalents |
$ |
21,851 |
$ |
22,632 |
|||
Restricted cash |
9,409 |
11,670 |
|||||
Trade accounts receivable |
4,549 |
3,673 |
|||||
Prepaid expense and other current assets |
6,117 |
5,518 |
|||||
Notes receivable, current |
100 |
290 |
|||||
Total current assets |
42,026 |
43,783 |
|||||
Restricted cash |
2,250 |
— |
|||||
Notes receivable |
100 |
100 |
|||||
Property and equipment, net |
13,423 |
13,387 |
|||||
Investment in unconsolidated affiliate |
1,030 |
1,030 |
|||||
Intangibles, net |
22,667 |
23,946 |
|||||
Goodwill |
20,110 |
20,099 |
|||||
Other long-term assets |
1,200 |
1,192 |
|||||
Total assets |
$ |
102,806 |
$ |
103,537 |
|||
Liabilities and Stockholders' Equity |
|||||||
Accounts payable |
$ |
25,266 |
$ |
17,857 |
|||
Accrued expense and other current liabilities |
13,205 |
16,679 |
|||||
Deferred merchant booking |
10,811 |
9,027 |
|||||
Contract liability |
7,641 |
5,807 |
|||||
Note payable |
3,000 |
3,000 |
|||||
Current maturities of long-term debt, net of unamortized discount and debt issuance |
11,500 |
38,085 |
|||||
Total current liabilities |
71,423 |
90,455 |
|||||
Long-term debt, less current portion and net of unamortized discount and debt |
26,908 |
— |
|||||
Warrant liability |
20,652 |
89,169 |
|||||
Other liabilities |
5,033 |
3,501 |
|||||
Total liabilities |
124,016 |
183,125 |
|||||
Commitments and contingencies |
|||||||
Stockholders' equity |
|||||||
Preferred stock, $0.001 par value; 1,000,000 shares authorized; none issued |
— |
— |
|||||
Common stock, $0.001 par value; 100,000,000 shares authorized; 32,843,399 and |
33 |
28 |
|||||
Additional paid-in-capital |
292,152 |
220,117 |
|||||
Accumulated other comprehensive income |
313 |
115 |
|||||
Accumulated deficit |
(313,708) |
(299,848) |
|||||
Total stockholders' equity (deficit) |
(21,210) |
(79,588) |
|||||
Total liabilities and stockholders' equity |
$ |
102,806 |
$ |
103,537 |
REMARK HOLDINGS, INC. AND SUBSIDIARIES |
|||||
Unaudited Condensed Consolidated Statements of Operations |
|||||
(dollars in thousands, except per share amounts) |
|||||
Three Months Ended March 31, |
|||||
2018 |
2017 |
||||
Revenue |
16,724 |
15,299 |
|||
Cost and expense |
|||||
Cost of revenue (excluding depreciation and amortization) |
4,032 |
2,664 |
|||
Sales and marketing |
6,895 |
5,875 |
|||
Technology and development |
902 |
908 |
|||
General and administrative |
23,317 |
8,326 |
|||
Depreciation and amortization |
2,718 |
2,861 |
|||
Other operating expense |
66 |
45 |
|||
Total cost and expense |
37,930 |
20,679 |
|||
Operating loss |
(21,206) |
(5,380) |
|||
Other income (expense) |
|||||
Interest expense |
(1,406) |
(1,018) |
|||
Other income, net |
11 |
19 |
|||
Change in fair value of warrant liability |
8,610 |
6,569 |
|||
Other loss |
(31) |
(31) |
|||
Total other income, net |
7,184 |
5,539 |
|||
Income (loss) before income taxes |
(14,022) |
159 |
|||
Provision for income taxes |
(31) |
(184) |
|||
Net loss |
(14,053) |
(25) |
|||
Other comprehensive income (loss) |
|||||
Foreign currency translation adjustments |
198 |
(24) |
|||
Comprehensive loss |
(13,855) |
(49) |
|||
Weighted-average shares outstanding, basic and diluted |
32,395 |
22,468 |
|||
Net loss per share, basic and diluted |
(0.43) |
— |
View original content with multimedia:http://www.prnewswire.com/news-releases/remark-holdings-reports-first-quarter-2018-results-300647514.html
SOURCE