RA'ANANA, Israel and RIVER EDGE, N.J., March 9, 2017 /PRNewswire/ -- Mer
Telemanagement Solutions Ltd. (MTS or the Company)
(NasdaqCM: MTSL), a global provider of software solutions for
online video advertising and telecommunications management, today
announced its financial results for the fourth quarter and the year
ended December 31, 2016.
Q4 Results: MTS's
revenues for the fourth quarter of 2016 totaled $4.0 million, up 21% sequentially, as compared
with $3.3 million for the third
quarter of 2016 and down 5% from $4.2
million for the fourth quarter of 2015. Net loss for the
quarter, including non-cash impairment charges of $3.8 million, totaled $(4.5) million, or $(0.52) per diluted share, compared with a net
loss of $(3.9) million, or
$(0.48) per diluted share, for the
fourth quarter of 2015.
On a non-GAAP basis (excluding stock-based compensation
expenses, amortization of intangible assets, goodwill and
technology impairment charges and a loss from discontinued
operations) net loss in the fourth quarter was $(432,000), or $(0.05) per diluted share, compared with a net
loss of $(139,000), or $(0.02) per diluted share, for the fourth quarter
of 2015.
During the fourth quarter of 2016, the Company performed
its annual impairment test of its reporting units
and re-evaluated the
contingent consideration payable to the
former shareholders of Vexigo. As a result of changes
that occurred in the online advertising
market during the latter part of 2016 and which
continued in the first months of 2017, which resulted
in reduced revenues and gross margins,
the Company recorded non-cash impairment charges
$3.8 million, including
a $3.3 million impairment
of acquired technology (net of tax
affect) and a $4.8
million impairment of goodwill (before a
$4.3 million
re-evaluation of the contingent consideration
payable to the former shareholders of
Vexigo). During
2015, the Company recorded a
$3.5 million non-cash charge for
impairment of goodwill, net of the re-evaluation of the contingent
consideration payable to the former shareholders of Vexigo.
Mr. Haim Mer, Chairman if
the board of MTS, commented, "While our video advertising revenues
grew in the fourth quarter of 2016 compared to the third quarter of
2016 as a result of the market's seasonal strength during the
year-end holiday period, the cost of online advertising space
increased and adversely affected the results of Vexigo's
operations. Our core telecommunications business, TEM
and Call Accounting, showed improved performance in
the fourth quarter with revenue growth of 15% compared to the third
quarter of 2016 and we successfully added several new TEM customers
with long-term contracts during 2016."
Following the year end, due to the continued weakness in
our Vexigo operations and as part of our strategy to return to
profitability during the latter part of 2017, we decided to
eliminate our non-core operations. We also took additional steps to
reduce the operational expenses of Vexigo so that Vexigo can focus
on its core video advertising business. As a result of these
actions, we are now focused on our core businesses and expect that
our quarterly operating expenses will decline by approximately
$800,000 during the second quarter of
2017 as compared to our operating expenses during the fourth
quarter of 2016.
Annual Results: MTS's full-year
2016 revenues totaled $14.1
million compared with $14.7
million for 2015. Net loss for the period, was
$(5.2) million, or $(0.62) per diluted share, compared with
$(4.7) million, or $(0.66) per diluted share, for 2015. The net loss
for the years ended December 31, 2016
and 2015 includes non-cash technology impairment charges (net of
tax effect) and goodwill impairment charges (net of a
re-evaluation of the contingent consideration payable to former
Vexigo shareholders) of approximately $3.8 million and $3.5
million, respectively.
On a non-GAAP basis (excluding stock-based compensation
expenses, amortization of intangible assets, goodwill and
technology impairment charges and income (loss) from discontinued
operations), the Company recorded a net loss of $(375,000), or $(0.04) per diluted share in 2016, compared with
a net loss of $(36,000), or
$(0.00) per diluted share in
2015.
Accounting Policies for Video
Advertising
Revenues and
Cost of
Revenues:
In accordance with general accepted accounting policy, the
Company accounts for a portion of its Video Advertising revenues
and the cost of revenues derived from third-party arrangements on a
net basis. Video Advertising revenues for the
fourth quarter and twelve
months ended December
31, 2016 totaled $1.9 million and
$6.5 million respectively. If these
revenues had been presented on a gross basis, Video Advertising
revenues would have increased by approximately
$2.8 million to $4.7
million in the fourth quarter of
2016 and by $10.8
million to
$17.3 million
for the twelve months
ended December
31, 2016, while gross
profit would have remained unchanged.
Non-GAAP Financial Measures:
This release includes non-GAAP net loss and basic and diluted
net loss per share. These non-GAAP measures exclude the following
items:
- M&A expenses related to the acquisition of
Vexigo
- Amortization of purchased intangible assets (net of tax
effect)
- Stock based compensation expenses
- Impairment of goodwill and technology (net of tax
effect)
- Re-evaluation of contingent consideration
- Net income (loss) from discontinued
operations
MTS's management believes that the presentation of
non-GAAP measures provides useful information to investors and
management regarding financial and business trends relating to the
Company's results of operations as well as the net amount of cash
generated by its business operations. These non-GAAP financial
measures are not in accordance with, or an alternative for,
generally accepted accounting principles and may be different from
non-GAAP financial measures used by other companies. In addition,
these non-GAAP financial measures are not based on any
comprehensive set of accounting rules or principles. MTS believes
that non-GAAP financial measures should only be used to evaluate
the Company's results of operations in conjunction with the
corresponding GAAP measures.
About MTS
Mer Telemanagement Solutions Ltd. (MTS) provides video
advertising solutions for online and mobile platforms and Call
Accounting and TEM solutions and services.
MTS's Vexigo (www.vexigo.com) subsidiary creates video
advertising solutions for online and mobile platforms, and
leverages them to offer advertising optimization services to
advertisers and website owners.
MTS's telecommunications business is focused on innovative
products and services for enterprises in the area of telecom
expense management (TEM) and Call Accounting.
Headquartered in Israel, MTS
markets its solutions through wholly-owned subsidiaries in
Israel, the U.S and Hong Kong, as well as through distribution
channels. For more information please visit the MTS web
site: www.mtsint.com.
Certain matters discussed in this news release are
forward-looking statements that involve a number of risks and
uncertainties including, but not limited to, risks in product
development plans and schedules, rapid technological change,
changes and delays in product approval and introduction, customer
acceptance of new products, the impact of competitive products and
pricing, market acceptance, the lengthy sales cycle, proprietary
rights of the Company and its competitors, risk of operations in
Israel, government regulations,
dependence on third parties to manufacture products, general
economic conditions and other risk factors detailed in the
Company's filings with the United States Securities and Exchange
Commission.
CONSOLIDATED BALANCE SHEETS
|
U.S. dollars in
thousands
|
|
|
|
December
31,
|
|
December
31,
|
|
|
2016
|
|
2015
|
|
|
Unaudited
|
|
Audited
|
ASSETS
|
|
|
|
|
|
|
|
|
|
CURRENT
ASSETS:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
1,508
|
|
$
3,444
|
Restricted
cash
|
|
504
|
|
231
|
Restricted marketable
securities
|
|
136
|
|
134
|
Trade receivables,
net
|
|
5,305
|
|
4,485
|
Other accounts
receivable and prepaid expenses
|
|
343
|
|
103
|
|
|
|
|
|
Total current
assets
|
|
7,796
|
|
8,397
|
|
|
|
|
|
LONG-TERM
ASSETS:
|
|
|
|
|
Severance pay
fund
|
|
752
|
|
668
|
|
|
|
|
|
|
|
|
|
|
PROPERTY AND EQUIPMENT,
NET
|
|
198
|
|
160
|
|
|
|
|
|
|
|
|
|
|
OTHER
ASSETS:
|
|
|
|
|
Goodwill
|
|
3,479
|
|
8,298
|
Other intangible
assets, net
|
|
63
|
|
4,461
|
|
|
|
|
|
Total other
assets
|
|
3,542
|
|
12,759
|
|
|
|
|
|
Total assets
|
|
$
12,288
|
|
$
21,984
|
|
|
|
|
|
|
CONSOLIDATED
BALANCE SHEETS
|
U.S. dollars in
thousands (except share and per share data)
|
|
|
|
|
|
|
|
|
|
December
31,
|
|
December
31,
|
|
|
|
2016
|
|
2015
|
|
|
|
Unaudited
|
|
Audited
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
|
|
Trade
payables
|
|
$
4,086
|
|
$
3,297
|
|
Deferred
revenues
|
|
1,374
|
|
1,826
|
|
Accrued expenses and
other liabilities
|
|
2,554
|
|
2,205
|
|
Liabilities related
to Vexigo acquisition
|
|
1,202
|
|
1,300
|
|
Deferred tax
liability (*)
|
|
-
|
|
102
|
|
Liabilities of
discontinued operations
|
|
132
|
|
105
|
|
|
|
|
|
|
|
Total current
liabilities
|
|
9,348
|
|
8,835
|
|
|
|
|
|
|
|
LONG-TERM
LIABILITIES
|
|
|
|
|
|
Accrued severance
pay
|
|
914
|
|
798
|
|
Liabilities related
to Vexigo acquisition
|
|
-
|
|
5,624
|
|
Deferred tax
liability (*)
|
|
166
|
|
578
|
|
|
|
|
|
|
|
Total long-term
liabilities
|
|
1,080
|
|
7,000
|
|
|
|
|
|
|
|
COMMITMENTS AND
CONTINGENT LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY:
|
|
|
|
|
|
Share
capital
|
|
23
|
|
21
|
|
Additional paid-in
capital
|
|
26,570
|
|
25,648
|
|
Treasury
shares
|
|
(29)
|
|
(29)
|
|
Accumulated other
comprehensive loss
|
|
1
|
|
(8)
|
|
Accumulated
deficit
|
|
(24,704)
|
|
(19,483)
|
|
|
|
|
|
|
|
Total shareholders'
equity
|
|
1,860
|
|
6,149
|
|
|
|
|
|
|
|
Total liabilities and
shareholders' equity
|
|
$
12,288
|
|
$
21,984
|
|
|
(*)
Reclassified
|
|
|
|
|
|
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
U.S. dollars in
thousands (except share and per share data)
|
|
|
|
Twelve months
ended December
31,
|
|
|
Three months
ended December
31,
|
|
|
|
2016
|
|
2015
|
|
|
2016
|
|
2015
|
|
|
|
Unaudited
|
|
Unaudited
|
|
|
Unaudited
|
|
Unaudited
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
Services
|
|
$
5,985
|
|
$
6,018
|
|
|
$
1,568
|
|
$
1,419
|
|
Product
sales
|
|
1,566
|
|
1,677
|
|
|
589
|
|
492
|
|
Video
Advertising
|
|
6,501
|
|
7,017
|
|
|
1,872
|
|
2,325
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
|
14,052
|
|
14,712
|
|
|
4,029
|
|
4,236
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues
(*):
|
|
|
|
|
|
|
|
|
|
|
Services
|
|
2,248
|
|
2,546
|
|
|
613
|
|
591
|
|
Product sales
|
|
460
|
|
522
|
|
|
125
|
|
130
|
|
Video
Advertising
|
|
4,205
|
|
5,346
|
|
|
1,396
|
|
1,846
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cost of
revenues
|
|
6,913
|
|
8,414
|
|
|
2,134
|
|
2,567
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
(loss)
|
|
7,139
|
|
6,298
|
|
|
1,895
|
|
1,669
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
Research and
development
|
|
2,763
|
|
1,805
|
|
|
1,022
|
|
534
|
|
Selling and
marketing
|
|
2,343
|
|
2,225
|
|
|
641
|
|
606
|
|
General and
administrative
|
|
3,472
|
|
3,459
|
|
|
947
|
|
766
|
|
Goodwill and
technology impairment, net of change in contingent earn-out
consideration
|
|
4,245
|
|
3,514
|
|
|
4,245
|
|
3,514
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating
expenses
|
|
12,823
|
|
11,003
|
|
|
6,855
|
|
5,420
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
loss
|
|
(5,684)
|
|
(4,705)
|
|
|
(4,960)
|
|
(3,751)
|
|
Financial expenses,
net
|
|
(17)
|
|
(17)
|
|
|
(17)
|
|
(38)
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before taxes on
income
|
|
(5,701)
|
|
(4,722)
|
|
|
(4,977)
|
|
(3,789)
|
|
Taxes on income (tax
benefit)
|
|
(507)
|
|
194
|
|
|
(523)
|
|
154
|
|
Net loss from
continuing operations
|
|
(5,194)
|
|
(4,916)
|
|
|
(4,454)
|
|
(3,943)
|
|
Net income (loss) from
discontinued operations
|
|
(27)
|
|
177
|
|
|
(27)
|
|
84
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
(5,221)
|
|
$
(4,739)
|
|
|
$
(4,481)
|
|
$
(3,859)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss
per Ordinary share
|
|
$
(0.62)
|
|
$
(0.66)
|
|
|
$
(0.52)
|
|
$
(0.48)
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number
of Ordinary shares used in
computing basic and diluted net loss per share
|
|
8,452,280
|
|
7,174,994
|
|
|
8,691,855
|
|
8,043,290
|
|
(*) Reclassified
|
RECONCILIATION OF
GAAP TO NON-GAAP RESULTS
|
U.S. dollars in
thousands (except share and per share data)
|
|
|
|
Twelve months
ended December
31,
|
|
Three months
ended December
31,
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
GAAP net
loss
|
|
(5,221)
|
|
(4,739)
|
|
(4,481)
|
|
(3,859)
|
|
M&A expenses
related to the acquisition of Vexigo Ltd.
|
|
-
|
|
424
|
|
-
|
|
-
|
|
Stock-based
compensation expenses
|
|
223
|
|
170
|
|
53
|
|
47
|
|
Amortization of
intangible assets (net of tax effect)
|
|
836
|
|
772
|
|
209
|
|
243
|
|
Video Advertising
technology impairment (net of tax effect)
|
|
3,279
|
|
-
|
|
3,279
|
|
-
|
|
Goodwill impairment,
net of evaluation of contingent
consideration
|
|
481
|
|
3,514
|
|
481
|
|
3,514
|
|
Income (loss) from
discontinued operations
|
|
27
|
|
(177)
|
|
27
|
|
(84)
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP net
loss
|
|
$
(375)
|
|
$
(36)
|
|
$
(432)
|
|
$
(139)
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP diluted net loss
per Ordinary share
|
|
$
(0.62)
|
|
$
(0.66)
|
|
$
(0.52)
|
|
$
(0.48)
|
|
Non-GAAP diluted net
loss per Ordinary share
|
|
$
(0.04)
|
|
$
(0.00)
|
|
$
(0.05)
|
|
$
(0.02)
|
|
Weighted average
number of Ordinary shares used in computing non-GAAP diluted net loss per
share
|
|
8,452,280
|
|
7,174,994
|
|
8,691,855
|
|
8,043,290
|
|
|
|
|
|
|
|
|
|
|
|
Contacts:
Company:
Alon
Mualem
CFO
Tel:
+972-9-7777-540
Email:
Alon.Mualem@mtsint.com
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/mts-announces-full-year-and-fourth-quarter-2016-financial-results-and-implements-cost-cutting-measures-300421069.html
SOURCE Mer Telemanagement Solutions Ltd. (MTS)