Professional Diversity Network, Inc. Reports Second Quarter 2018 Financial Results

 

CHICAGO, August 14, 2018 (GLOBE NEWSWIRE) — Professional Diversity Network, Inc. (NASDAQ:IPDN), (“PDN” or the “Company”), a global developer and operator of online and in-person networks that provide access to networking, training, educational and employment opportunities for diverse individuals, today announced its second quarter 2018 financial results for the quarter ended June 30, 2018.

 

Second Quarter Highlights include:

 

Reduced net loss from continuing operations to $1.8 million for the quarter ended June 30, 2018 compared to a net loss of $11.9 million for the quarter ended June 30, 2017 (or a net loss of $2.0 million excluding goodwill impairment charge)
   
Total cost and expenses reduced by $11.8 million, or 74.4%, from $15.9 million for the quarter ended June 30, 2017 to $4.1 million for the quarter ended June 30, 2018. The $11.8 million reduction in total cost and expenses includes a $9.9 million goodwill impairment charge. Excluding goodwill impairment charge, total cost and expenses reduced by $1.9 million
   
Reduced Adjusted EBITDA loss to $1.0 million for the quarter ended June 30, 2018 compared to $1.5 million for the quarter ended June 30, 2017
   
We sold certain assets of our Noble Voice business on May 25, 2018 to a long-time customer since the management believes this business is not critical to the company’s future strategy

 

Michael Wang, Professional Diversity Network Chief Executive Officer, stated, “While the company continued to sustain losses, we have taken great strides in reducing our costs and overheads and consequently greatly reduced our losses. Our focus is to enhance our diversity recruitment and women’s networking segments, with a focus on delivering superior performance to our clients and members. The improvements in these sectors in the U.S. are very important to our global growth. Our women’s networking and employment services operations in the U.S. are very complimentary to our China expansion. “

 

Wang continued, “We continue to have more work to do in China and the U.S. in 2018 to enhance shareholder value. Our recruitment brand is very strong and I am pleased with the progress made in the first half of 2018 to create more value for our customers by launching new services to help companies hire executive talent, especially in the digital transformation sector. For the balance of 2018, we will continue to remain vigilant on our cost controls and invest in growth where and when we see opportunities to do so. We continue to believe that China presents significant opportunity for our future growth toward profitability and much of my time and the company’s efforts will be in the China market.”

 

 
 

 

2018 Second Quarter Financial Results

 

For the quarter ended June 30, 2018, PDN reported total revenue of $2.1 million, a 42.0% decrease from the quarter ended June 30, 2017, attributable primarily to reduction in our sales staff and workforce in our NAPW segment in order to reduce costs.

 

Total operating expenses for the quarter ended June 30, 2018, decreased by 74.4% to $4.1 million from $15.9 million for the quarter ended June 30, 2017. This decrease is primarily the result of a $9.9 million goodwill impairment charge recorded in our NAPW segment in June 2017, and our aggressive cost control efforts, including a $0.9 million decrease in general and administrative expense and a $0.7 million decrease in sales and marketing expenses.

 

The Company reported a net loss for the quarter ended June 30, 2018 of $2.0 million or $0.46 per share compared to a net loss of $12.0 million, or $3.07 per share, for the period ended June 30, 2017.

 

Loss from continuing operations during the quarter ended June 30, 2018 was $1.8 million compared to a loss of $11.9 million in the quarter ended June 30, 2017. During the second quarter of 2018, the Company reported an Adjusted EBITDA loss of $1.0 million compared to Adjusted EBITDA loss of $1.5 million during the same period of the prior year, a decrease of $0.5 million.

 

As of June 30, 2018, the Company had $2.7 million in cash and $4.6 million in current assets, which represents a decrease of $0.3 million in cash and $1.1 million in current assets from December 31, 2017. Accounts receivable as of June 30, 2018, was $0.4 million, 53.1% less than the $0.9 million as of December 31, 2017. Total assets as of June 30, 2018 were $16.6 million, a decrease of $2.6 million from $19.2 million as of December 31, 2017.

 

 
 

 

 

Professional Diversity Network, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS
 

 

   June 30,   December 31, 
   2018   2017 
   (Unaudited)   (Adjusted) 
Current Assets:          
Cash and cash equivalents (Amount related to variable interest entity of $1,282,479 and $1,671,378 as of June 30, 2018 and December 31, 2017, respectively)  $2,666,832   $2,926,088 
Accounts receivable, net   424,079    905,723 
Incremental direct costs   34,347    145,292 
Prepaid expenses and other current assets   699,405    478,379 
Current assets from discontinued operations   755,084    1,180,099 
Total current assets   4,579,747    5,635,581 
           
Property and equipment, net   105,834    221,184 
Capitalized technology, net   177,097    153,381 
Goodwill   5,590,150    5,590,150 
Intangible assets, net   5,026,506    6,264,706 
Merchant reserve   760,849    760,849 
Security deposits   76,007    225,957 
Long-term assets from discontinued operations   240,637    327,257 
Total assets  $16,556,827   $19,179,065 
           
Current Liabilities:          
Accounts payable  $1,227,991   $1,120,444 
Accrued expenses   762,414    1,166,214 
Deferred revenue   2,806,453    4,004,015 
Current liabilities from discontinued operations   474,994    484,524 
Total current liabilities   5,271,852    6,775,197 
           
Deferred tax liability   1,618,932    1,993,662 
Deferred rent   40,160    56,082 
Other liabilities   -    52,321 
Total liabilities   6,930,944    8,877,262 
           
Commitments and contingencies          
           
Stockholders’ Equity          
Common stock, $0.01 par value; 45,000,000 shares authorized; 4,840,669 shares and 3,963,864 shares issued as of June 30, 2018 and December 31, 2017, respectively; and 4,839,621 shares and 3,962,816 shares outstanding as of June 30, 2018 and December 31, 2017, respectively   48,407    39,639 
Additional paid in capital   83,395,128    80,016,218 
Accumulated other comprehensive loss   15,097    28,848 
Accumulated deficit   (73,795,632)   (69,745,785)
Treasury stock, at cost; 1,048 shares at June 30, 2018 and December 31, 2017   (37,117)   (37,117)
Total stockholders’ equity   9,625,883    10,301,803 
           
Total liabilities and stockholders’ equity  $16,556,827   $19,179,065 

 

 
 

 

 

Professional Diversity Network, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited)
 

 

  

Three Months Ended

 June 30,

  

Six Months Ended

June 30,

 
   2018   2017   2018   2017 
                 
Revenues:                    
Membership fees and related services  $1,335,726   $2,444,797   $2,947,947   $5,260,293 
Recruitment services   692,377    624,103    1,313,792    1,282,647 
Product sales and other   6,360    26,573    10,017    72,941 
Education and training   9,577    505,490    16,048    829,694 
Consumer advertising and marketing solutions   74,543    58,327    144,277    124,029 
Total revenues   2,118,583    3,659,290    4,432,081    7,569,604 
                     
Costs and expenses:                    
Cost of revenues   339,911    497,741    625,744    856,188 
Sales and marketing   1,023,526    1,762,360    2,116,650    4,161,319 
General and administrative   2,063,866    3,009,073    4,415,678    6,852,788 
Goodwill impairment charge   -    9,920,305    -    9,920,305 
Depreciation and amortization   659,143    750,913    1,339,022    1,536,868 
Total costs and expenses   4,086,446    15,940,392    8,497,094    23,327,468 
                     
Loss from operations   (1,967,863)   (12,281,102)   (4,065,013)   (15,757,864)
                     
Other (expense) income                    
Interest expense   -    -    -    (12,399)
Interest and other income   3,777    2,851    4,667    5,101 
Other finance costs   -    4,088    22,558    1,764 
Other (expense) income, net   3,777    6,939    27,225    (5,534)
                     
Loss before income tax benefit   (1,964,086)   (12,274,163)   (4,037,788)   (15,763,398)
Income tax benefit   (123,415)   (360,307)   (372,465)   (925,097)
Loss from continuing operations   (1,840,671)   (11,913,856)   (3,665,323)   (14,838,301)
Loss from discontinued operations, net of tax, including gain on sale of $63,687   (174,763)   (161,088)   (384,523)   (338,224)
Net loss   (2,015,434)   (12,074,944)   (4,049,846)   (15,176,525)
                     
Other comprehensive loss:   (2,015,434)   (12,074,944)   (4,049,846)   (15,176,525)
Foreign currency translation adjustment   (90,459)   1,733    (13,751)   1,621 
Comprehensive loss  $(2,105,893)  $(12,073,211)  $(4,063,597)  $(15,174,904)
                     
Basic and diluted loss per share:                    
Continuing operations   (0.42)   (3.03)   (0.85)   (8.21)
Discontinued operations   (0.04)   (0.04)   (0.09)   (0.19)
Net loss  $(0.46)  $(3.07)  $(0.94)  $(8.39)
                     
Weighted average shares used in computing net loss per common share:                    
Basic and diluted   4,371,440    3,932,886    4,296,944    1,808,314 

 

 
 

 

 

Professional Diversity Network, Inc.

ADJUSTED EBITDA (Unaudited)
 

 

We believe Adjusted EBITDA provides a meaningful representation of our operating performance that provides useful information to investors regarding our financial condition and results of operations. Adjusted EBITDA is commonly used by financial analysts and others to measure operating performance. Furthermore, management believes that this non-GAAP financial measure may provide investors with additional meaningful comparisons between current results and results of prior periods as they are expected to be reflective of our core ongoing business. However, while we consider Adjusted EBITDA to be an important measure of operating performance, Adjusted EBITDA and other non-GAAP financial measures have limitations, and investors should not consider them in isolation or as a substitute for analysis of our results as reported under GAAP. Further, Adjusted EBITDA, as we define it, may not be comparable to EBITDA, or similarly titled measures, as defined by other companies.

 

The following table provides a reconciliation of Adjusted EBITDA to Net Loss, the most directly comparable GAAP measure reported in our consolidated financial statements:

 

   Three Months Ended   Six Months Ended 
   June 30,   June 30, 
   2018   2017   2018   2017 
   (in thousands)         
Loss from Continuing Operations  $(1,841)  $(11,914)  $(3,665)  $(14,839)
Stock-based compensation expense   347    70    466    585 
Goodwill impairment charge   -    9,920    -    9,920 
Depreciation and amortization   659    751    1,339    1,537 
Interest Expense   -    -    -    12 
Interest and other income   (4)   (3)   (5)   (5)
Income tax benefit   (123)   (360)   (372)   (925)
Adjusted EBITDA  $(962)  $(1,536)  $(2,237)  $(3,715)

 

About Professional Diversity Network (PDN)

 

Professional Diversity Network, Inc. (PDN) is a global developer and operator of online and in-person networks that provides access to networking, training, educational and employment opportunities for diverse professionals. We operate subsidiaries in the United States and China including National Association of Professional Women (NAPW), which is one of the largest, most recognized networking organizations of professional women in the country, spanning more than 200 industries and professions, and Noble Voice, a career placement and career counseling call center. Through an online platform and our relationship recruitment affinity groups, we provide our employer clients a means to identify and acquire diverse talent and assist them with their efforts to comply with the Equal Employment Opportunity Office of Federal Contract Compliance Program. Our mission is to utilize the collective strength of our affiliate companies, members, partners and unique proprietary platform to be the standard in business diversity recruiting, networking and professional development for women, minorities, veterans, LGBT and disabled persons globally.

 

Forward-Looking Statements

 

This press release contains certain forward-looking statements based on our current expectations, forecasts and assumptions that involve risks and uncertainties. This release does not constitute an offer to sell or a solicitation of offers to buy any securities of any entity. Forward-looking statements in this release are based on information available to us as of the date hereof. Our actual results may differ materially from those stated or implied in such forward-looking statements, due to risks and uncertainties associated with our business, which include the risk factors disclosed in our most recently filed Annual Report on Form 10-K and in our subsequent filings with the Securities and Exchange Commission. Forward-looking statements include statements regarding our expectations, beliefs, intentions or strategies regarding the future and can be identified by forward-looking words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “should,” and “would” or similar words. We assume no obligation to update the information included in this press release, whether as a result of new information, future events or otherwise. Our most recently filed Annual Report on Form 10-K, together with this press release and the financial information contained herein, are available on our website, www.prodivnet.com. Please click on “Investor Relations.”

 

CONTACT: Professional Diversity Network, Inc.

 

investor@prodivnet.com