Press Releases

Professional Diversity Network Announces Third Quarter 2015 Financial Results

CHICAGO, Nov. 16, 2015 (GLOBE NEWSWIRE) -- Professional Diversity Network, Inc. (“PDN” or “the Company”) (NASDAQ:IPDN), a developer and operator of online networks that provide access to employment opportunities for diverse professionals in the United States, announced today its quarterly financial results for the quarter ended September 30, 2015.

The Company will host a conference call at 4:30 pm Eastern Time today to discuss the financial results. Please call (877) 407-9205 (US toll free) or (201) 689-8054 (International) to participate in the call, no passcode needed. A replay of this conference call will also be available following the call at: http://investor.prodivnet.com.

Third Quarter Highlights:

  • All divisions were close to Adjusted EBITDA break-even upon exiting the quarter.
  • Adjusted EBITDA deficit improved significantly from month-to-month in the third quarter, and the month of September was close to Adjusted EBITDA break-even.
  • Registered users in our PDN division increased by 19% sequentially, from 5.7 million users in Q2 to 6.8 million users in Q3.  

Jim Kirsch, CEO of Professional Diversity Network, commented that, “the third quarter marked significant progress in streamlining our operations and focusing on profitable business opportunities. Each of our major groups advanced meaningfully toward profitability and we finished the quarter on a high note, approaching Adjusted EBITDA break-even in the third month of the quarter.”  

Third Quarter Financial Summary:

Revenue in the third quarter of 2015 was $9.3 million, up 493% from $1.6 million in the comparable year-ago quarter. The corresponding gross margins were 84% and 75% in the third quarters of 2015 and 2014, respectively. The net losses in the third quarter of 2015 and 2014 were $29.7 million and $0.9 million, respectively, including non-cash goodwill impairment charges that were recognized in the third quarter of 2015.

As of September 30, 2015, PDN had $4.6 million in cash and short-term investments.   

About Professional Diversity Network (PDN)

Professional Diversity Network, Inc. (PDN) is an Internet software and services company that develops and operates online professional networking communities dedicated to serving diverse professionals in the United States and employers seeking to hire diverse talent. Our subsidiary, National Association of Professional Women (NAPW), is one of the largest, most recognized networking organizations of professional women in the country, spanning more than 200 industries and professions. 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. Forward-looking statements can be identified by forward-looking words such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "should," “will” and "would" or similar words. Forward-looking statements involve risks and uncertainties and our actual results may differ materially from those stated or implied in such forward-looking statements. Factors that could contribute to such differences include, but are not limited to: failure to realize synergies and other financial benefits from mergers and acquisitions within expected time frames, including increases in expected costs or difficulties related to integration of merger and acquisition partners; inability to identify and successfully negotiate and complete additional combinations with potential merger or acquisition partners or to successfully integrate such businesses, including our ability to realize the benefits and cost savings from, and limit any unexpected liabilities acquired as a result of, any such business combinations; our limited operating history in a new and unproven market; increasing competition in the market for online professional networks; our ability to comply with increasing governmental regulation and other legal obligations related to privacy; our ability to adapt to changing technologies and social trends and preferences; our ability to attract and retain a sales and marketing team, management and other key personnel and the ability of that team to execute on the Company’s business strategies and plans; our ability to obtain and maintain intellectual property protection for our intellectual property; any future litigation regarding our business, including intellectual property claims; and the risk factors disclosed in our Form 10-K filed on March 31, 2015 and any subsequent filings made by us with the SEC. We assume no obligation to update the information included in this press release, whether as a result of new information, future events or otherwise. The Form 10-K filed on March 31, 2015, together with this press release and the financial information contained herein, are available on our website, www.prodivnet.com. Please click on "Investor Relations."

   
Professional Diversity Network, Inc.  
Condensed Consolidated Statements of Comprehensive Loss  
                   
    3 Months Ended September 30,   9 Months Ended September 30,  
      2015       2014       2015       2014    
                   
Revenues                  
Membership fees and related services   $   5,775,006     $   402,397     $   19,317,933     $   402,397    
Lead generation       2,334,276             7,853,402        
Recruitment services       830,250         712,728         2,432,951         2,114,178    
Products sales and other       330,769         11,395         631,198         11,395    
Consumer advertising and marketing solutions       73,011         448,860         209,097         1,317,351    
Total revenues       9,343,312         1,575,380         30,444,581         3,845,321    
                   
Costs and expenses:                  
Cost of revenues       1,464,214         388,084         4,647,520         1,150,309    
Sales and marketing       5,132,077         991,785         17,226,640         2,551,312    
General and administrative       3,748,138         648,218         11,593,955         1,755,933    
Impairment expense       24,717,157         -          24,717,157         -     
Depreciation and amortization       925,684         130,065         2,730,880         314,619    
Gain on sale of property and equipment       32,649         -          32,649         -     
Total costs and expenses       36,019,919         2,158,152         60,948,801         5,772,173    
                   
Loss from operations       (26,676,607 )       (582,772 )       (30,504,220 )       (1,926,852 )  
                   
Other (expense) income                   
Interest expense       (9,229 )       (377 )       (84,339 )       (377 )  
Interest and other income       2,382         27,791         25,566         95,047    
Acquisition related costs       -          (968,839 )       -          (968,839 )  
Loss on sale of marketable securities       -          -          -          -     
Other (expense) income, net       (6,847 )       (941,425 )       (58,773 )       (874,169 )  
                   
Change in fair value of warrant liability       2,224         (34,547 )       93,784         (21,015 )  
                   
Loss before income tax benefit       (26,681,230 )       (1,558,744 )       (30,469,209 )       (2,822,036 )  
Income tax benefit       2,976,217         (617,717 )       1,509,395         (1,130,306 )  
Net loss   $   (29,657,447 )   $   (941,027 )   $   (31,978,604 )   $   (1,691,730 )  
                   
Net loss per common share, basic and diluted   $   (2.05 )   $   (0.14 )   $   (2.33 )   $   (0.26 )  
                   
Weighted average shares used in computing net loss per common share:                  
Basic and diluted       14,464,789         6,721,357         13,742,524         6,451,852    
                   

 

   
Professional Diversity Network, Inc.  
Condensed Consolidated Balance Sheets  
           
    September 30,   December 31,  
      2015       2014    
    (Unaudited)      
Current Assets:          
Cash and cash equivalents   $ 3,881,217     $ 1,519,467    
Accounts receivable     2,529,657       3,448,748    
Short-term investments     750,000       5,198,878    
Incremental direct costs     1,085,288       900,868    
Prepaid license fee       168,750         337,500    
Prepaid expenses and other current assets       1,063,598         381,057    
Deferred tax asset       38,800         58,200    
Total current assets     9,517,310       11,844,718    
           
Property and equipment, net       665,707         874,769    
Capitalized technology, net       583,870         526,070    
Goodwill     20,597,067       45,180,531    
Intangible assets, net     12,768,939       14,934,225    
Merchant reserve       1,260,849         860,849    
Security deposits       386,262         371,310    
Other assets       -          -     
Total assets   $ 45,780,004     $ 74,592,472    
           
Current Liabilities:          
Accounts payable   $   3,310,342     $ 4,941,135    
Accrued expenses     2,193,693       549,727    
Deferred revenue     8,556,511       10,078,938    
Customer deposits     168,750       337,500    
Notes payable     62,352       1,389,386    
Note payable - related party     445,000       437,186    
Warrant liability     5       93,789    
Capital lease obligations     -       15,232    
Total current liabilities     14,736,653       17,842,893    
           
Deferred rent     89,213       25,946    
Deferred tax liability     4,571,606       3,081,611    
Total liabilities     19,397,472       20,950,450    
           
Commitments and contingencies          
           
Stockholders' Equity          
Common stock, $0.01 par value; 25,000,000 shares authorized; 14,633,819 and 12,928,072 shares issued as of September 30, 2015 and December 31, 2014, respectively; and 14,425,436 and 12,719,689 shares outstanding as of September 30, 2015 and December 31, 2014, respectively.     144,338       127,280    
Additional paid in capital     63,348,378       58,646,322    
Accumulated deficit     (37,073,067 )     (5,094,463 )  
Treasury stock, at cost; 8,382 shares at September 30, 2015 and December 31, 2014     (37,117 )     (37,117 )  
Total stockholders' equity     26,382,532       53,642,022    
           
Total liabilities and stockholders' equity   $ 45,780,004     $ 74,592,472    
           

Non-GAAP Financial Measures

In this news release, PDN makes reference to “Adjusted EBITDA,” a measure of financial performance not calculated in accordance with accounting principles generally accepted in the United States (“GAAP”).  Management has included Adjusted EBITDA because it believes that investors may find it useful to review PDN’s financial results as adjusted to exclude items as determined by management.  Reconciliations of this non-GAAP financial measure to the most directly comparable GAAP financial measure, net loss, to the extent available without unreasonable effort, are set forth below.

Management believes Adjusted EBITDA provides a meaningful representation of PDN’s operating performance and 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 PDN defines it, may not be comparable to Adjusted EBITDA, or similarly titled measures, as defined by other companies.

Reconciliation of Net Income (Loss) to Adjusted EBITDA

The following table reconciles net income (loss) to Adjusted EBITDA, which is a non-GAAP financial measure:

    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2015     2014     2015     2014  
Net loss $ (29,657 ) $ (941 ) $ (31,979 ) $ (1,692 )
Impairment expense     24,717       -       24,717       -  
Stock-based compensation expense     114       25       351       50  
Depreciation and amortization     926       130       2,731       315  
Change in fair value of warrant liability     (2 )     35       (94 )     21  
Interest expense     9       -       84       -  
Interest and other income     (2 )     (28 )     (25 )     (95 )
Income tax expense (benefit)     2,976       (618 )     1,509       (1,130 )
Adjusted EBITDA $   (919 ) $   (1,397 ) $   (2,706 ) $   (2,531 )

 

CONTACTS:

At the company:

David Mecklenburger, CFO
(312) 614-0950
investor@prodivnet.com

Investor Relations:

Gary Abbott
Merriman Capital
(415) 248-5639
gabbott@merrimanco.com

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Source: Professional Diversity Network, Inc.