Cision Reports First Quarter 2019 Results; Provides Updated Full Year 2019 Outlook
CHICAGO, May 9, 2019 /PRNewswire/ -- Cision Ltd. (NYSE: CISN), a leading global provider of software and services to public relations and marketing communications professionals, today reported results for the first quarter ended March 31, 2019.
Financial Highlights
First Quarter 2019
-- Revenue increased 3.6% to $185.8 million
-- Revenue, excluding the impact of purchase accounting, increased 4.8% to
$188.9 million
-- Operating income decreased 40.7% to $7.2 million
-- Net income was $11.6 million versus a prior year net loss of $0.4
million
-- Adjusted EBITDA increased 8.4% to $63.1 million
-- Adjusted net income increased 16.9% to $27.0 million
-- Adjusted net income per share was $0.19
"We are pleased to have delivered strong financial results for the first quarter of 2019, including record organic constant currency revenue growth of 4.9% versus the prior year, with solid growth in both the core business and in each of Falcon and TrendKite," said Kevin Akeroyd, Cision's Chief Executive Officer. "We have dramatically improved the value proposition we bring to our public relations and marketing communications customers, and these new offerings will feature prominently in our plans to further extend our industry leadership position. Over the coming quarters, our priorities will be on completing our outstanding integration work, while driving towards our long-term financial goals and objectives."
First Quarter Business Statistics and Operational Highlights
-- Americas revenues increased 3.8% to $126.4 million
-- EMEA revenues increased 2.1% to $51.6 million
-- APAC revenues increased 11.8% to $7.8 million
-- Non-core revenues declined 53.6% to $0.6 million
-- Average pro forma subscription customers increased 5.5% to approximately
45,300
-- Average annualized pro forma revenue per subscription customer,
excluding the impact of currency, increased 0.7% to approximately
$11,600
-- Customers that purchased services from us on a transaction basis
decreased 6.4% to approximately 37,700
-- Average quarterly pro forma revenue per customer that purchased services
from us on a transaction basis, excluding the impact of currency,
increased 4.7% to approximately $1,440
-- Cross-sell bookings of software, distribution and insights in the US
increased 8.4% to $3.0 million
Subscription and Transaction Customer Trends
All of the figures below include our acquisitions of Falcon.io ("Falcon") and TrendKite, Inc. ("TrendKite") and exclude the divestiture of our email marketing business for all periods shown and have been further adjusted to exclude the impact of fluctuations in foreign currency.
Q1 2018
Q2 2018
Q3 2018
Q4 2018
Q1 2019 Q1 2019 compared to Q1 2018
Average pro
forma
subscription
customers 42,884 44,025 44,499 45,333 45,243 5.5%
Average
annualized pro
forma revenue
per
subscription
customer $11,475 $11,579 $11,731 $11,612 $11,552 0.7%
Pro forma
transaction
customers 40,216 41,172 38,152 39,173 37,662 (6.4%)
Average pro
forma revenue
per
transaction $1,375 $1,447 $1,350 $1,518 $1,439 4.7%
Updated Full Year 2019 Outlook and Initial Second Quarter 2019 Outlook
Our updated outlook for the full fiscal year ending December 31, 2019 appears below (all figures in millions, except share and per share amounts). Additionally, due to our acquisitions of Falcon and TrendKite and the divestiture of our email marketing assets that were all completed in the first quarter of 2019, we have provided an initial outlook for our second quarter ending June 30, 2019. These estimates are based on a number of assumptions that management believes to be reasonable and reflect our expectations as of the date of this release. Actual results may differ materially from these estimates as a result of various factors, and Cision refers you to the cautionary language regarding "Forward Looking Statements" included in this press release when considering this information.
Updated 2019
Prior 2019 Initial Q2 2019 Q2 2018
Revenue
$773 - $783
$775 - $785
$190 - $192 $187.5
Revenue, excluding the
impact from purchase
accounting
$782 - $792
$782 - $792
$193 - $195 $187.8
Net income (loss)
$10 - $20
($1) - $4
($1) - $1 ($6.6)
Net income (loss) per
share
$0.07 - $0.14
($0.01) - $0.02
($0.01) - $0.01 ($0.05)
Adjusted EBITDA
$270 - $275
$270 - $275
$65 - $67 $66.1
Adjusted net income
$122 - $125
$122 - $125
$28 - $30 $29.3
Adjusted net income
per diluted share
$0.82 - $0.85
$0.82 - $0.85
$0.20 - $0.21 $0.23
Pro-forma fully
diluted weighted
average shares
outstanding 148.0 148.0 148.0 127.4
Depreciation expense
$29 - $32
$30 - $33
$7 - $8 $7.4
Amortization expense
$95 - $100
$105 - $110
$23 - $25 $26.2
Amortization expense
included in cost of
revenue
$20 - $23
$24 - $26
$5 - $6 $5.9
Interest expense,
including debt
extinguishment costs
$73 - $77
$76 - $79
$18 - $19 $20.5
Cash interest expense
$65 - $67
$64 - $66
$16 - $17 $16.3
Stock-based
compensation
$9 - $10
$7 - $10
$2 - $3 $0.9
Capital expenditures,
inclusive of
capitalized software
development
$40 - $43
$38 - $42
$9 - $10 $6.3
The above outlook assumes the inclusion of results from our acquisitions from the date of their respective acquisitions through the quarter ended June 30, 2019 and year ended December 31, 2019, and the inclusion of results from our e-mail marketing assets from January 1, 2019 through the date of its divestiture. The updated outlook above assumes LIBOR of approximately 2.6%, EURIBOR of approximately 0%, and the following exchange rates with respect to the British Pound, the Euro and the Canadian Dollar for fiscal year 2019:
Current
Prior
GBP to USD 1.29 1.29
EUR to USD 1.12 1.14
CAD to USD 0.74 0.76
A number of foreign currencies, including the Euro, the Canadian Dollar and the Swedish Kroner, have recently weakened against the US dollar. The negative impact of these changes in foreign exchange rates to our updated full year 2019 revenue and Adjusted EBITDA outlook since issuing our prior full year 2019 outlook is approximately $2.0 million and $1.0 million, respectively. We left both our full year 2019 revenue outlook, excluding the impact from purchase accounting and our full year 2019 Adjusted EBTDA outlook unchanged despite this anticipated currency headwind. Additionally, our outlook for 2019 excludes any additional acquisitions, divestitures, or other unanticipated events. See our discussion of non-GAAP financial measures included in this release.
Conference Call and Webcast
As previously announced, we will hold a conference call and webcast to review our first quarter 2019 financial results on Thursday, May 9, 2019 at 5:00 pm EDT. To hear the live event, visit the Cision investor website at http://investors.cision.com, or by dialing 1-877-443-4809 (participant dial in toll free) or 1-412-317-5235 (participant dial in International). For those accessing the call via Cision's investor website, we suggest logging in at least 15 minutes prior to the start of the live event. For those dialing in, participants should ask to be joined into the Cision Ltd. earnings call. A replay of the earnings webcast will be available approximately two hours after the conclusion of the live event on May 9, 2019. To access the webcast recording / conference replay, visit http://investors.cision.com or you can dial 1-877-344-7529 (US), 1-412-317-0088 (International), or 1-855-669-9658 (Canada). The replay access code for the earnings call is 10131339. The replay will be available through May 23, 2019.
Forward-Looking Statements
This communication contains "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, including statements regarding our future financial and operating performance outlook for the fiscal year ending December 31, 2019, as well as information relating to the acquisitions of Falcon.io and TrendKite and our divestiture of certain e-mail marketing assets and our realization of the expected benefits therefrom. In this context, forward-looking statements often address expected future business and financial performance and financial condition, and often contain words such as "anticipate," "intend," "plan," "goal," "seek," "aim," "strive," "believe," "see," "project," "predict," "estimate," "expect," "continue," "strategy," "future," "likely," "may," "might," "should," "will," "would," "target," similar expressions, and variations or negatives of these words. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations, and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy, and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict and many of which are outside of our control. Accordingly, you should not place undue reliance on these statements, as actual results may vary materially. A detailed discussion of some of the risks and uncertainties that could cause our actual results and financial condition to differ materially from the forward-looking statements is described under the caption "Risk Factors" in our most recent annual report on Form 10-K filed on March 1, 2019, along with our other filings with the U.S. Securities and Exchange Commission. Any forward-looking statement made by us in this communication is based only on information currently available to us and speaks only as of the date of this report. We do not assume any obligation to publicly provide revisions or updates to any forward-looking statements, whether as a result of new information, future developments or otherwise, should circumstances change, except as otherwise required by securities and other applicable laws. Please consult our public filings at www.sec.gov or www.Cision.com.
About Cision
Cision Ltd. (NYSE: CISN) is a leading global provider of earned media software and services to public relations and marketing communications professionals. Cision's software allows users to identify key influencers, craft and distribute strategic content, and measure meaningful impact. Cision has over 4,500 employees with offices in 22 countries throughout the Americas, EMEA, and APAC. For more information about its award-winning products and services, including the Cision Communications Cloud®, visit www.cision.com and follow Cision on Twitter @Cision.
Cision Ltd. and its Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands, except per share and share amounts)
(Unaudited)
March 31,
December 31,
2019 2018
Assets
Current assets:
Cash and cash
equivalents $82,913 $104,769
Accounts
receivable, net 140,024 120,882
Prepaid expenses
and other
current assets 32,311 22,824
Total current assets 255,248 248,475
Property and equipment, net 60,496 57,210
Other intangible assets, net 427,393 377,146
Goodwill 1,426,470 1,171,859
Operating lease right-of-use assets 65,737
Deferred tax asset 4,101 4,034
Other assets 8,762 7,652
Total assets $2,248,207 $1,866,376
Liabilities and Stockholders' Equity
Current liabilities:
Current portion
of long-term
debt $13,953 $13,210
Accounts payable 15,265 15,603
Accrued
compensation
and benefits 37,745 29,323
Operating lease
liabilities 14,626
Other accrued
expenses 80,936 82,507
Current portion
of deferred
revenue 170,588 139,725
Total current liabilities 333,113 280,368
Long-term debt, net of current portion 1,271,218 1,205,760
Deferred revenue, net of current portion 1,130 1,098
Operating lease liabilities, net of
current portion 66,206
Deferred tax liability 74,407 69,232
Other liabilities 10,738 21,601
Total liabilities 1,756,812 1,578,059
Commitments and contingencies
Stockholders' equity:
Preferred stock,
$0.0001 par
value,
20,000,000
shares
authorized; no
shares issued
and outstanding
at March 31,
2019 and
December 31,
2018
Common stock,
$0.0001 par
value,
480,000,000
shares
authorized;
148,328,727 and
132,716,541
shares issued
and outstanding
at March 31,
2019 and
December 31,
2018,
respectively 15 13
Additional paid-
in capital 981,813 797,222
Accumulated
other
comprehensive
loss (62,090) (68,941)
Accumulated
deficit (428,343) (439,977)
Total stockholders' equity 491,395 288,317
Total liabilities and
stockholders' equity $2,248,207 $1,866,376
Cision Ltd. and its Subsidiaries
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
(in thousands, except for per share amounts)
(Unaudited)
Three months ended March 31,
2019 2018
Revenue $185,804 $179,293
Cost of revenue 66,053 64,278
Gross Profit 119,751 115,015
Operating costs and expenses:
Sales and
marketing 33,233 29,708
Research and
development 8,543 6,700
General and
administrative 51,965 46,222
Amortization of
intangible assets 18,811 20,250
Total operating costs and expenses 112,552 102,880
Operating income 7,199 12,135
Non operating income (expense):
Foreign exchange
gains (losses) 3,082 (7,883)
Interest and other
income (loss),
net 317 (256)
Gain on sale of
business 28,144
Interest expense (19,273) (19,688)
Loss on
extinguishment of
debt (355) (2,432)
Total non operating income (loss) 11,915 (30,259)
Income (loss) before income taxes 19,114 (18,124)
Provision for (benefit from) income
taxes 7,480 (17,682)
Net income (loss) 11,634 (442)
Other comprehensive income-
foreign
currency translation adjustments
6,851 7,075
Comprehensive income $18,485 $6,633
Net income (loss) per share:
Basic $0.08 $(0.00)
Diluted $0.08 $(0.00)
Weighted average shares outstanding used
in computing per share
amounts:
Basic 145,413,574 123,946,264
Diluted 146,356,683 123,946,264
Cision Ltd. and its Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
Three months ended March 31,
2019 2018
Cash flows from operating activities
Net income (loss) $11,634 $(442)
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Depreciation and
amortization 31,021 33,277
Non-cash interest
charges and
amortization of
debt discount and
deferred financing
costs 2,780 3,198
Equity-based
compensation
expense 2,081 1,341
Provision for
doubtful accounts 267 1,572
Deferred income
taxes 35 (18,791)
Unrealized currency
translation
(gains) losses (3,008) 7,864
Gain on sale of
business (28,144)
Payment of
contingent
consideration (4,296)
Other 60
Changes in
operating assets
and liabilities,
net of effects of
acquisitions and
disposal:
Accounts
receivable (6,171) (6,812)
Prepaid
expenses and
other current
assets (2,779) (2,950)
Operating lease
right-of-use
assets 4,384
Other assets (442) 48
Accounts
payable (2,701) (443)
Accrued
compensation
and benefits 5,098 (17)
Other accrued
expenses (843) (3,330)
Deferred
revenue 18,420 20,853
Operating lease
liabilities (2,144)
Other
liabilities 3,701 875
Net cash provided by
operating activities 28,893 36,303
Cash flows from investing activities
Purchases of property and equipment (4,377) (3,739)
Software development costs (7,954) (5,033)
Acquisitions of businesses, net of cash
and restricted cash acquired of $6,068
and $2,711 (148,541) (62,713)
Proceeds from disposal of business 44,865
Other 21
Net cash used in investing
activities (115,986) (71,485)
Cash flows from financing activities
Proceeds from revolving credit facility 40,000
Repayment of revolving credit facility (40,000)
Proceeds from term credit facility, net
of debt discount of $1,013 73,987
Repayments of term credit facility (3,494) (3,362)
Payments of deferred financing costs (1,619) (131)
Proceeds from the exercise of stock
options 264
Payment of contingent consideration (3,695) (2,873)
Net cash provided by (used
in) financing activities 65,443 (6,366)
Effect of exchange rate changes on cash,
cash equivalents and restricted cash 394 742
Decrease in cash, cash
equivalents and restricted
cash (21,256) (40,806)
Cash, cash equivalents and restricted cash
Beginning of period 104,769 148,654
End of the period $83,513 $107,848
Supplemental disclosure of cash flows information
Issuance of shares for acquisitions 182,248 20,143
Use of Non-GAAP Financial Measures
Non-GAAP results are presented only as a supplement to our financial statements based on US generally accepted accounting principles (GAAP). Non-GAAP financial information is provided to enhance the reader's understanding of our financial performance, but none of these non-GAAP financial measures are recognized terms under GAAP, and non-GAAP measures should not be considered in isolation or as a substitute for financial measures calculated in accordance with GAAP. Reconciliations of the most directly comparable GAAP measures to non-GAAP measures, such as Adjusted EBITDA, and Adjusted net income per share, are provided within the schedules attached to this release. We use non-GAAP measures in our operational and financial decision-making, believing that it is useful to exclude certain items in order to focus on what we deem to be a more reliable indicator of ongoing operating performance and our ability to generate cash flow from operations. As a result, internal management reports used during monthly operating reviews include Adjusted EBITDA, and Adjusted net income per share. Additionally, we believe that the presentation of non-GAAP measures provides information that is useful to investors as it indicates, for example, our ability to meet capital expenditures and working capital requirements and otherwise meet our obligations as they become due. Investors are cautioned that non-GAAP financial measures are not a substitute for GAAP disclosures. This communication also includes certain forward-looking non-GAAP financial measures. We are unable to present without unreasonable efforts a reconciliation of forward-looking non-GAAP financial information to the corresponding GAAP financial information because management cannot reliably predict all of the necessary information. Forward-looking non-GAAP financial information is based on numerous assumptions, including assumptions with respect to general business, economic, market, regulatory and financial conditions and various other factors, all of which are difficult to predict and many of which are beyond our control. Accordingly, investors are cautioned not to place undue reliance on this information. Non-GAAP measures are frequently used by securities analysts, investors, and other interested parties in their evaluation of companies comparable to Cision, many of which present non-GAAP measures when reporting their results. These measures can be useful in evaluating our performance against our peer companies because we believe the measures provide users with valuable insight into key components of GAAP financial disclosures. However, non-GAAP measures have limitations as an analytical tool. Non-GAAP measures are not necessarily comparable to similarly titled measures used by other companies. They are not presentations made in accordance with GAAP, are not measures of financial condition or liquidity, and should not be considered as an alternative to profit or loss for the period determined in accordance with GAAP or operating cash flows determined in accordance with GAAP. As a result, you should not consider such performance measures in isolation from, or as a substitute analysis for, results of operations as determined in accordance with GAAP.
Cision Ltd. and its Subsidiaries
Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA
(in millions)
(Unaudited)
Three months ended
March 31,
2019 2018 Change
---
Net income (loss) $11.6 $(0.4) $12.1
Depreciation and
amortization 31.0 33.3 (2.3)
Interest expense and
loss on
extinguishment of
debt 19.6 22.1 (2.5)
Provision for (benefit
from) income taxes 7.5 (17.7) 25.2
---
EBITDA (1) 69.8 37.3 32.5
---
Acquisition and
offering related
costs 19.3 10.9 8.4
Stock-based
compensation 2.1 1.3 0.7
Deferred revenue
reduction from
purchase accounting 3.1 0.9 2.2
Gain on sale of
business (28.1) 0.0 (28.1)
Unrealized translation
(gain) loss (3.0) 7.9 (10.9)
---
Adjusted EBITDA (2) $63.1 $58.2 $4.9
Cision Ltd. and its Subsidiaries
Reconciliation of Net Income (Loss) to Adjusted Net Income and Adjusted Net Income per Diluted Share
(in millions, except for per share and share amounts)
(Unaudited)
Three months ended March 31,
2019 2018 Change
---
Net income (loss) $11.6 $(0.4) $12.1
Provision for (benefit from) income taxes 7.5 (17.7) 25.2
Acquisition and offering related costs 19.3 10.9 8.4
Gain on sale of business (28.1) (28.1)
Stock-based compensation expense 2.1 1.3 0.8
Deferred revenue reduction from purchase accounting 3.1 0.9 2.2
Amortization related to acquired intangible assets 23.7 25.9 (2.2)
Non-recurring interest and loss on extinguishment of debt 0.4 2.4 (2.1)
Unrealized translation (gain) loss (3.0) 7.9 (10.9)
---
Adjusted Income before income taxes 36.5 31.3 5.3
Less: Income tax at a 26% rate (9.5) (8.1) (1.4)
---
Adjusted net income (3) $27.0 $23.1 $3.9
Pro forma fully-diluted weighted average shares outstanding 145.4 123.9 21.5
Adjusted net income per diluted share (4) $0.19 $0.19
$ -
Cision Ltd. and its Subsidiaries
Reconciliation of Net Cash Provided by Operating Activities to Adjusted Net Cash Provided by
Operating Activities
(in millions)
(Unaudited)
Three months ended
March 31,
2019 2018 Change
---
Net cash
provided by
operating
activities $28.9 $36.3 $(7.4)
Acquisition
and offering
related
costs 19.3 10.9 8.4
---
Adjusted net
cash
provided by
operating
activities
(5) $48.2 $47.2 $1.0
(1) Cision defines EBITDA as net income
(loss), plus depreciation and
amortization expense, plus interest
expense and loss on extinguishment
of debt, plus provision for (or
minus benefit from) income taxes.
(2) Cision defines Adjusted EBITDA as
EBITDA, further adjusted for
acquisition and offering related
costs, stock-based compensation,
deferred revenue reduction from
purchase accounting, (gains) losses
related to divested businesses or
assets, sponsor fees and expenses,
and unrealized translation losses
(gains). All of the items included
in the reconciliation from net
income to Adjusted EBITDA are either
non-cash items or are items that we
consider to be less useful in
assessing our operating performance.
In the case of the non-cash items,
we believe that investors can better
assess our operating performance if
the measures are presented without
such items because, unlike cash
expenses, these adjustments do not
affect our ability to generate free
cash flow or invest in our business.
For example, by excluding
depreciation and amortization from
EBITDA, users can compare operating
performance without regard to
different accounting determinations
such as useful life. In the case of
the other items, we believe that
investors can better assess
operating performance if the
measures are presented without these
items because their financial impact
does not reflect ongoing operating
performance.
(3) Cision defines Adjusted net income as
net income (loss) plus provision for
(or minus benefit from) income
taxes, further adjusted for
acquisition and offering related
costs, (gains) losses related to
divested businesses or assets,
stock-based compensation, deferred
revenue reduction from purchase
accounting, amortization related to
acquired intangibles, non-recurring
interest and losses on
extinguishment of debt, sponsor fees
and expenses, and unrealized
translation losses (gains), which
together, sum to Adjusted net income
(loss) before income taxes. Adjusted
net income (loss) before income
taxes is then taxed at an assumed
long-term corporate tax rate of
26%. All of the items included in
the reconciliation from net income
to Adjusted net income are either
non-cash items or are items that we
consider to be less useful in
assessing our operating performance.
In the case of the non-cash items,
we believe that investors can better
assess our operating performance if
the measures are presented without
such items because, unlike cash
expenses, these adjustments do not
affect our ability to generate free
cash flow or invest in our business.
For example, by excluding the
amortization related to acquired
intangibles, users can compare
operating performance without regard
to highly variable amortization
expenses related to our
acquisitions. In the case of the
other items, we believe that
investors can better assess
operating performance if the
measures are presented without these
items because their financial impact
does not reflect ongoing operating
performance.
(4) Cision defines Adjusted net income
per diluted share as Adjusted net
income, as defined above, divided by
the fully-diluted pro forma
weighted average shares outstanding
for the period. For purposes of
calculating the number of fully
diluted shares outstanding, we have
excluded the potential impact of
dilution from outstanding warrants
to purchase shares of our common
stock prior to the dates of their
conversion, and stock options and
restricted units issued and
outstanding pursuant to our 2017
Omnibus Incentive Plan. During the
second quarter of fiscal 2018, we
issued an aggregate of 6,342,989
ordinary shares (6,100,209 ordinary
shares on May 18, 2018 and 242,780
ordinary shares on June 4, 2018), in
exchange for all of our outstanding
warrants, pursuant to the completion
of our warrant exchange
transactions. During the third
quarter of 2018, we issued 2,000,000
ordinary shares for the earn-out
achieved during the quarter.
Commencing on these respective
issuance dates, we included the
issued shares in our fully-diluted
pro forma weighted average share
count.
(5) Cision defines Adjusted net cash
provided by operating activities as
net cash provided by operating
activities adjusted for acquisition
related costs and expenses.
Investor Contact:
Jack Pearlstein
Chief Financial Officer
Jack.Pearlstein@cision.com
Media Contact:
Jenn Deering Davis
VP, Communications
Jenn.Deering.Davis@cision.com
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SOURCE Cision Ltd.
