Cision Reports Second Quarter 2018 Financial Results; Provides Updated Full Year 2018 Outlook



CHICAGOAug. 2018 - /PRNewswire/ -- Cision Ltd. (NYSE: CISN), a leading global provider of software and services to public relations and marketing communications professionals, today reported financial results for the quarter ended June 30, 2018.

All data presented below is compared to the second quarter of 2017, unless otherwise noted.
Second Quarter 2018 Financial Highlights
  • Revenue increased 19.3% to $187.5 million
  • Revenue, excluding the impact from purchase accounting, increased 19.4% to $187.8 million
  • Operating income increased 114.5% to $22.3 million
  • Net loss decreased 66.2% to $6.5 million
  • Adjusted EBITDA increased 13.1% to $66.2 million
  • Adjusted net income increased 153.4% to $29.4 million
  • Adjusted net income per share increased 64.3% to $0.23
"We are pleased to have delivered another solid quarter of financial results," said Kevin Akeroyd, Cision's Chief Executive Officer. "We continue to focus our efforts on delivering best-in-class products and services to our customers, executing our strategic and operational plans, and driving toward our long-term financial goals. This focus resulted in second quarter pro forma organic revenue growth of 2.5% after adjusting for non-core revenues and the impact of currency, an approximate 50 basis-point increase from the first quarter."
Second Quarter Business Statistics and Operational Highlights
  • Americas revenues increased 6.0% to $126.9 million
  • EMEA revenues increased 65.7% to $51.9 million
  • APAC revenues increased 42.6% to $8.6 million
  • Non-core revenues declined 54.7% to $1.0 million
  • Average pro forma subscription customers, including PRIME Research, increased 1.0% to approximately 41,200
  • Average annualized pro forma revenue per subscription customer, including PRIME Research and excluding the impact of currency, increased 2.8% to approximately $11,200
  • Customers that purchased services from us on a transaction basis, including PRIME Research, decreased 6.7% to approximately 41,200
  • Average pro forma revenue per customer that purchased services from us on a transaction basis, including PRIME Research and excluding the impact of currency, increased 6.2% to approximately $1,465
  • Cross-sell bookings of software, distribution and insights in the United States increased 72.5% to approximately $3.0 million
  • Cision Communications Cloud® platform customers at June 30, 2018 were approximately 8,300
Long-Term Debt
As of June 30, 2018, we had approximately $987.2 million of outstanding dollar-denominated term loans and approximately ?248.1 million of outstanding Euro-denominated term loans. During the second quarter, we reduced our outstanding dollar-denominated term loan by making an aggregate of $40.0 million of voluntary prepayments pursuant to the terms of our 2017 First Lien Credit Facility, comprised of a $30.0 million voluntary prepayment on April 30, 2018 and a $10.0 million voluntary prepayment on June 29, 2018.
Subscription and Transaction Customer Trends
Our average pro forma subscription customers, average annualized pro forma revenue per subscription customer, number of customers that purchased services from us on a transaction basis, and average pro forma revenue per customer that purchased services from us on a transaction basis appear in the table below for the most recent six fiscal quarters. All of the figures below include PRIME Research and all dollar figures have been adjusted to exclude the impact of changes in foreign currency.

Q1 2017
Q2 2017
Q3 2017
Q4 2017
Q1 2018
Q2 2018
Q2 2018
compared to
Q2 2017
Average pro forma subscription customers
39,761
40,833
40,532
40,628
40,252
41,249
1.0%
Average annualized pro forma revenue per subscription customer
$10,911
$10,925
$11,144
$11,272
$11,200
$11,225
2.8%
Pro forma transaction customers
42,588
44,131
40,829
41,670
40,216
41,172
(6.7%)
Average pro forma revenue per transaction customer
$1,314
$1,380
$1,296
$1,416
$1,392
$1,465
6.2%
Updated Full Year 2018 Outlook
Our updated outlook for the full year ending December 31, 2018 appears below (all figures in millions, except per share amounts). These estimates are based on a number of assumptions that management believes to be reasonable and reflect the Company's expectations as of the date of this release. Actual results may differ materially from these estimates as a result of various factors, and the Company refers you to the cautionary language regarding "Forward Looking Statements" included in this press release when considering this information.

Previous

Updated
Revenue
$722 - $732

$722 - $730
Revenue, excluding the impact from purchase accounting
$724 - $734

$724 - $732
Net income
$8 - $10

($6) - $6
Adjusted EBITDA
$250 - $256

$249 - $253
Adjusted net income
$107 - $111

$106 - $109
Adjusted net income per diluted share
$0.84 - $0.86

$0.83 - $0.85
Pro-forma fully diluted weighted average shares outstanding
128.3

128.3
Additionally, for the full year ending December 31, 2018, we expect (all figures in millions):

Previous

Updated
Depreciation expense
$31 - $33

$30 - $32
Amortization expense
$106 - $110

$105 - $107
Amortization expense included in cost of revenue
$23 - $25

$23 - $24
Interest expense
$79 - $82

$78 - $80
Debt extinguishment costs
$2 - $3

$4 - $5
Interest expense, net of debt extinguishment costs
$77 - $79

$74 - $76
Cash interest expense
$64 - $66

$64 - $66
Stock-based compensation
$5 - $6

$4 - $5
Capital expenditures, inclusive of capitalized software development
$32 - $36

$34 - $36
The updated outlook above assumes three-month LIBOR of approximately 2.3% and three-month EURIBOR of approximately 0.0%. The above outlook also incorporates a change from the prior quarter with respect to our exchange rate assumptions for the second half of 2018. This change in our exchange rate assumptions for the British Pound, the Euro, the Canadian Dollar and other currencies reduced our revenue outlook for 2018 by approximately $5.7 million and reduced our updated Adjusted EBITDA outlook for 2018 by approximately $1.7 million. Additionally, we anticipate that the acquisition of certain ShareIQ assets will increase costs by approximately $1.0 million in the second half of 2018. The change in our exchange rate assumptions combined with the increased costs from ShareIQ reduced our updated Adjusted net income per diluted share outlook for 2018 by $0.02. Excluding the impact of the change in our exchange rate assumptions and our acquisition of certain ShareIQ assets, our updated revenue outlook, including the impact from purchase accounting would have been $728 million to $736 million, our updated Adjusted EBITDA outlook would have been $252 million to $256 million, and our updated Adjusted net income per diluted share outlook would have been $0.85 to $0.87. Our previous and updated assumptions for the British Pound, the Euro and the Canadian Dollar appear below:

Previous

Updated
GBP to USD
1.35

1.30
EUR to USD
1.20

1.16
CAD to USD
0.79

0.77
Our outlook for 2018 excludes the impact of any future acquisitions, divestitures, additional voluntary prepayments of our 2017 First Lien Credit Facility, refinancings or repricings of our 2017 First Lien Credit Facility or other unanticipated events. See discussion of non-GAAP financial measures below in this release.
Second Quarter 2018 Conference Call Details
As previously announced, we will hold a conference call to review our second quarter 2018 financial results via conference call on Wednesday, August 8th at 5:00 pm EDT. To hear the live event, visit the Cision investor website at http://investors.cision.com, or dial 1-877-443-4809 (participant dial-in toll free) or 1-412-317-5235 (participant dial-in International). The conference call will be simultaneously webcast on the Investor Relations section of our website: http://investors.cision.com
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. 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 13, 2018, 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 release. 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 4,000 employees with offices in 19 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
As of June 30, 2018 and December 31, 2017
(in thousands, except per share and share amounts)
(Unaudited)









2018

2017
Assets




Current assets:




Cash and cash equivalents
$      82,967

$    148,654

Accounts receivable, net
115,896

113,008

Prepaid expenses and other current assets
23,504

19,896


Total current assets
222,367

281,558
Property and equipment, net
53,874

53,578
Other intangible assets, net
430,228

456,291
Goodwill
1,180,072

1,136,403
Other assets
5,871

7,528


Total assets
$ 1,892,412

$ 1,935,358
Liabilities and Stockholders' Equity



Current liabilities:




Current portion of long-term debt
$      13,269

$      13,349

Accounts payable
15,928

13,327

Accrued compensation and benefits
22,809

25,873

Other accrued expenses
74,602

73,483

Current portion of deferred revenue
148,005

140,351


Total current liabilities
274,613

266,383
Long-term debt, net of current portion
1,218,581

1,266,121
Deferred revenue, net of current portion
1,298

1,412
Deferred tax liability
64,180

62,617
Other liabilities
21,271

22,456


Total liabilities
1,579,943

1,618,989
Stockholders' equity:




Preferred stock, $0.0001 par value, 20,000,000 shares authorized; no shares issued and outstanding at June 30, 2018 and December 31, 2017
-

-

Common stock, $0.0001 par value, 480,000,000 shares authorized; 130,713,555 and 122,634,922 shares issued and outstanding at June 30, 2018 and December 31, 2017, respectively
13

12

Additional paid-in capital
794,165

771,813

Accumulated other comprehensive loss
(53,428)

(35,111)

Accumulated deficit
(428,281)

(420,345)


Total stockholders' equity
312,469

316,369


 Total liabilities and stockholders' equity
$ 1,892,412

$ 1,935,358

Cision Ltd. and its Subsidiaries

Condensed Consolidated Statements of Operations and Comprehensive Loss

 (in thousands, except per share and share amounts)

(Unaudited)















Three months ended June 30, 

Six months ended June 30, 




2018

2017

2018

2017

Revenue
$       187,475

$    157,131

$       366,768

$    302,949

Cost of revenue
66,757

49,218

131,035

94,284



Gross profit
120,718

107,913

235,733

208,665












Operating costs and expenses:









Sales and marketing
28,299

28,010

57,978

55,300


Research and development
8,290

5,566

14,990

11,018


General and administrative
41,538

41,460

87,760

81,692


Amortization of intangible assets
20,264

22,466

40,514

43,477



Total operating costs and expenses
98,391

97,502

201,242

191,487



Operating income
22,327

10,411

34,491

17,178












Non operating income (expense):









Foreign exchange gain (losses)
15,964

(686)

8,081

(2,634)


Interest and other income, net
348

224

92

2,273


Interest expense
(20,474)

(36,328)

(40,162)

(73,243)


Loss on extinguishment of debt
-

-

(2,432)

-



Total non operating loss
(4,162)

(36,790)

(34,421)

(73,604)



Income (loss) before income taxes
18,165

(26,379)

70

(56,426)

Provision for (benefit from) income taxes
24,628

(7,231)

6,946

(14,285)



Net loss
$        (6,463)

$   (19,148)

$        (6,876)

$   (42,141)

Other comprehensive income (loss) - foreign currency translation adjustments
(25,392)

16,700

(18,317)

22,594



Comprehensive loss
$      (31,855)

$     (2,448)

$      (25,193)

$   (19,547)












Net loss per share:









Basic and diluted
$          (0.05)

$       (0.63)

$          (0.05)

$       (1.43)

Weighted average shares outstanding used in computing per share amounts:









Basic and diluted
127,392,151

30,394,760

125,678,727

29,387,796












Cision Ltd. and its Subsidiaries
Condensed Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 2018 and June 30, 2017
(in thousands)
(Unaudited)












2018

2017
Cash flows from operating activities



Net loss
$   (6,876)

$   (42,141)
Adjustments to reconcile net loss to net cash provided by operating activities:




Depreciation and amortization
66,878

67,290

Non-cash interest charges and amortization of debt discount and deferred financing costs
7,301

12,577

Equity-based compensation expense
2,210

1,926

Provision for doubtful accounts
3,015

1,125

Deferred income taxes
2,549

(15,451)

Unrealized currency translation losses (gains)
(8,249)

2,394

Gain on sale of business
-

(1,785)

Other
86

(168)

Changes in operating assets and liabilities, net of effects of acquisitions and disposal:





Accounts receivable
277

4,104


Prepaid expenses and other current assets 
(3,131)

(766)


Other assets 
(168)

170


Accounts payable
1,877

(1,437)


Accrued compensation and benefits
(3,347)

(10,764)


Other accrued expenses
(7,097)

481


Deferred revenue
8,743

2,537


Other liabilities
(435)

(1,984)



Net cash provided by operating activities
63,633

18,108







Cash flows from investing activities



Purchases of property and equipment
(6,860)

(5,273)
Software development costs
(8,197)

(7,408)
Acquisitions of businesses, net of cash received of $2,711 and $12,355
(62,713)

(54,992)
Proceeds from disposal of business
-

23,675
Change in restricted cash
5

607



Net cash used in investing activities
(77,765)

(43,391)







Cash flows from financing activities



Payment of amounts due to Cision Owner
-

(1,940)
Proceeds from term credit facility, net of debt discount of $1,108
-

28,892
Repayments of term credit facility
(46,676)

(5,650)
Payments on capital lease obligations
-

(114)
Payments of deferred financing costs
(294)

-
Proceeds from merger and recapitalization
-

305,210
Payment of contingent consideration
(2,873)




Net cash provided by (used in) financing activities
(49,843)

326,398
Effect of exchange rate changes on cash and cash equivalents
(1,712)

1,409



Increase (decrease) in cash and cash equivalents
(65,687)

302,524







Cash and cash equivalents



Beginning of period
148,654

35,135
End of the period
$  82,967

$  337,659







Supplemental non-cash information



Issuance of securities by Cision Owner in Connection with acquisitions
$           -

$      7,000
Non-cash contribution from Cision Owner in connection with merger
-

451,139
Issuance of shares for acquisition
20,143

-
Use of Non-GAAP Financial Measures
Non-GAAP results are presented only as a supplement to our financial statements based on U.S. 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, Adjusted net income per diluted share and organic revenue growth. We define organic revenue growth as the change in our total revenue excluding non-core revenues, calculated on a constant currency basis after giving pro forma effect to all acquisitions as though they occurred at the beginning of the applicable period. Additionally, we believe that the presentation of non-GAAP measures provides information that is useful to investors, research analysts, investment banks and lenders under our 2017 First Lien Credit Facility 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 Loss to EBITDA and Adjusted EBITDA
(in millions)
(Unaudited)


Three
Months
Ended
June 30,
2018

Three
Months
Ended
June 30,
2017

Change

Six
Months
Ended
June 30,
2018

Six
Months
Ended
June 30,
2017

Change
Net loss
$             (6.5)

$           (19.1)

$            12.7

$             (6.9)

$           (42.1)

$            35.3
Depreciation and amortization
33.6

34.7

(1.1)

66.9

67.3

(0.4)
Interest expense and loss on extinguishment of debt
20.5

36.3

(15.9)

42.6

73.2

(30.6)
Provision for (benefit from) income taxes
24.6

(7.2)

31.9

6.9

(14.3)

21.2
EBITDA (1)
72.2

44.6

27.6

109.5

84.1

25.4
Acquisition and offering related costs
8.9

12.0

(3.1)

19.8

20.3

(0.5)
Gain on sale of business
-

-

-

-

(1.8)

1.8
Stock-based compensation
0.9

0.9

(0.1)

2.2

1.9

0.3
Deferred revenue reduction from purchase accounting
0.3

0.1

0.2

1.2

0.1

1.1
Sponsor fees and expenses
-

0.1

(0.1)

-

0.3

(0.3)
Unrealized translation (gain) loss
(16.1)

0.6

(16.7)

(8.2)

2.4

(10.6)
Adjusted EBITDA (2)
$            66.2

$            58.5

$              7.7

$          124.4

$          107.3

$            17.1

Cision Ltd. and its Subsidiaries
Reconciliation of Net Loss to Adjusted Net Income and Adjusted Net Income per Diluted Share
(in millions, except for per share amounts)
(Unaudited)


Three
Months
Ended
June 30,
2018

Three
Months
Ended
June 30,
2017

Change

Six
Months
Ended
June 30,
2018

Six
Months
Ended
June 30,
2017

Change
Net loss
$             (6.5)

...

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