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CST: 27/05/2019 02:40:46   

Leaf Group Ltd. Reports Fourth Quarter 2018 Results

83 Days ago

  • Q4 Leaf Group Revenue Grows 15% Year-over-Year to $45.5 Million
  • Q4 Marketplaces Revenue Grows 2% Year-over-Year to $28.6 Million
  • Q4 Media Revenue Grows 45% Year-over-Year to $16.9 Million

SANTA MONICA, Calif., March 04, 2019 (GLOBE NEWSWIRE) -- Leaf Group Ltd. (NYSE: LEAF), a diversified consumer internet company, today reported financial results for the fourth quarter ended December 31, 2018.

 
Financial Summary
(In thousands, except per share amounts)
                         
    Three months ended   Year ended
    December 31,    December 31, 
    2018   2017   2018   2017
Marketplaces revenue   $ 28,603     $ 28,065     $ 93,937     $ 84,126  
Media revenue     16,916       11,662       61,105       44,864  
Total revenue   $ 45,519     $ 39,727     $ 155,042     $ 128,990  
                         
Net loss   $ (4,937 )   $ (5,333 )   $ (23,190 )   $ (31,133 )
                         
EPS - basic and diluted   $ (0.19 )   $ (0.26 )   $ (0.94 )   $ (1.52 )
                         
Adjusted EBITDA(1)   $ 252     $ (430 )   $ (1,481 )   $ (10,674 )
                         
Net cash provided by (used in) operating activities   $ 622     $ (145 )   $ (3,302 )   $ (11,656 )
Free cash flow(1)   $ (1,478 )   $ (1,815 )   $ (10,509 )   $ (16,908 )
                         


(1)   These non-GAAP financial measures, and reasons for why we believe these non-GAAP financial measures are useful, are described below and reconciled to their most directly comparable GAAP measures in the accompanying tables.

Q4 2018 Financial Summary:

Leaf Group is comprised of two reporting segments: Marketplaces and Media.

For the fourth quarter of 2018:

  • Total revenue increased 15% year-over-year from $39.7 million to $45.5 million due to a 2% increase in Marketplaces revenue and a 45% increase in Media revenue.
  • Marketplaces revenue increased 2% year-over-year from $28.1 million to $28.6 million primarily due to a 13% increase in Saatchi Art Group revenue and flat year-over-year revenue in Society6 Group.
  • Media revenue increased 45% year-over-year from $11.7 million to $16.9 million primarily due to the acquisition of Well+Good in June 2018 and improved ad monetization yields across the Company’s media properties.

  • Net loss was $(4.9) million for the quarter, improving 7% year-over-year, and Adjusted EBITDA was $0.3 million for the quarter, improving by $0.7 million year-over-year.
     
  • Cash and cash equivalents was $31.1 million at period end with no debt outstanding.
     
  • On a consolidated basis, Leaf Group’s properties reached 54 million monthly unique visitors in the U.S. in December 2018 (source: Dec 2018 U.S. comScore).

Operating Metrics:

Leaf Group has historically reported the number of visits to its Media properties as a key operating metric and has used internal data to derive the number of visits during the applicable reporting period. In the second quarter of 2018, Leaf Group began to report visits using data derived from Google Analytics, as Leaf Group is replacing its internal methodology with Google Analytics. On a transitional basis in reports covering periods in fiscal year 2018, the Company reported visits using data derived from both its internal methodology and Google Analytics. Beginning in reports for periods in fiscal year 2019, the Company will only report visits using data derived from Google Analytics.

                                     
    Three months ended     Year ended  
    December 31,      December 31,   
    2018   2017  
Change
    2018   2017  
Change
 
Marketplaces Metrics:                                    
Number of Transactions(1)     480,753     501,448   (4 )%     1,435,976     1,448,211   (1 )%
Gross Transaction Value(2) (in thousands)   $ 35,681   $ 35,055   2 %   $ 116,996   $ 105,337   11 %
                                     
Media Metrics:                                    
Visits - Internal(3) (in thousands)     615,966     697,221   (12 )%     2,832,259     2,794,244   1 %
Revenue per Visit (RPV)(4)   $ 27.46   $ 16.73   64 %   $ 21.57   $ 16.06   34 %
Visits - Google Analytics(5) (in thousands)     622,158     705,847   (12 )%     2,844,125     2,846,119   %
Revenue per Visit (RPV)(4)   $ 27.19   $ 16.52   65 %   $ 21.48   $ 15.76   36 %


(1)   Number of transactions is defined as the total number of Marketplaces transactions successfully completed by a customer during the applicable period, excluding certain transactions generated by Saatchi Art’s The Other Art Fair, such as sales of stand space to artists at fairs, sponsorship fees and ticket sales.
(2)   Gross transaction value is defined as the total dollar value of Marketplaces transactions, excluding the revenue from certain transactions generated by Saatchi Art’s The Other Art Fair, such as sales of stand space to artists at fairs, sponsorship fees and ticket sales. Gross transaction value is the total amount paid by the customer including the total product price inclusive of artist margin, shipping charges, taxes, and is net of any promotional discounts. Gross transaction value does not reflect any subsequent cancellations, refunds or credits and does not represent revenue earned by the Company.
(3)   Visits - Internal is defined as the total number of times users access the Company’s content across (a) one of its owned and operated properties and/or (b) one of its customers’ properties, to the extent that the visited customer web pages are hosted by the Company. In each case, breaks of access of at least 30 minutes constitute a unique visit.
(4)   RPV is defined as Media revenue per one thousand visits.
(5)   Visits per Google Analytics is defined as the total number of times users access the Company’s content across (a) one of its owned and operated properties and/or (b) one of its customers’ properties, to the extent that the visited customer web pages are hosted by the Company. In each case, breaks of access of at least 30 minutes constitute a unique visit. Additionally, a visit is also considered to have ended at midnight or if a user arrives via one campaign, leaves, and then comes back via a different campaign.

Shareholder Letter and Conference Call Information

Leaf Group’s detailed Shareholder Letter is available at https://ir.leafgroup.com/investor-overview/quarterly-and-annual-results/default.aspx.

Leaf Group will host a corresponding conference call to answer questions today at 5:00 p.m. Eastern time (2:00 p.m. Pacific time). To access the conference call, dial 833-287-0803 (U.S./CAN) or 647-689-4462 (International) and reference conference ID 5167638. To participate on the live call, analysts should dial-in at least 10 minutes prior to the commencement of the call. A live webcast also will be available on the Investor Relations section of Leaf Group’s corporate website at http://ir.leafgroup.com and via replay beginning approximately two hours after the completion of the call. 

Use of Non-GAAP Financial Measures

To supplement its consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles in the United States of America (“GAAP”), Leaf Group uses certain non-GAAP financial measures, as described below. These non-GAAP financial measures are presented to enhance the user’s overall understanding of Leaf Group’s financial performance and should not be considered a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. The non-GAAP financial measures presented in this release, together with the GAAP financial results, are the primary measures used by the Company’s management and board of directors to understand and evaluate the Company’s financial performance and operating trends, including period-to-period comparisons, because they exclude certain expenses and gains that management believes are not indicative of the Company’s core operating results. Management also uses these measures to prepare and update the Company’s short and long term financial and operational plans, to evaluate investment decisions, and in its discussions with investors, commercial bankers, equity research analysts and other users of the Company’s financial statements. Accordingly, the Company believes that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating the Company’s operating results in the same manner as the Company’s management and in comparing operating results across periods and to those of Leaf Group’s peer companies.

The use of non-GAAP financial measures has certain limitations because they do not reflect all items of income and expense, or cash flows, that affect the Company’s financial performance and operations. An additional limitation of non-GAAP financial measures is that they do not have standardized meanings, and therefore other companies, including peer companies, may use the same or similarly named measures but exclude or include different items or use different computations. Management compensates for these limitations by reconciling these non-GAAP financial measures to their most comparable GAAP financial measures in the tables captioned “Reconciliations of Non-GAAP Financial Measures” included at the end of this release. Investors and others are encouraged to review the Company’s financial information in its entirety and not rely on a single financial measure.

The Company defines Adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) as net income (loss) excluding interest (income) expense, income tax expense (benefit), and certain other non-cash or non-recurring items impacting net income (loss) from time to time, principally comprised of depreciation and amortization, stock-based compensation, contingent payments to certain key employees/equity holders of acquired businesses and other payments attributable to acquisition, disposition or corporate realignment activities. Management believes that the exclusion of certain expenses and gains in calculating Adjusted EBITDA provides a useful measure for period-to-period comparisons of the Company’s underlying core revenue and operating costs that is focused more closely on the current costs necessary to operate the Company’s businesses, and reflects its ongoing business in a manner that allows for meaningful analysis of trends. Management also believes that excluding certain non-cash charges can be useful because the amounts of such expenses is the result of long-term investment decisions made in previous periods rather than day-to-day operating decisions.

The Company defines Segment Operating Contribution as earnings before corporate or unallocated expenses and also excludes: (a) depreciation expense; (b) amortization of intangible assets; (c) share-based compensation expense; (d) interest and other income (expense); (e) income taxes; and (f) contingent payments to certain key employees/equity holders of acquired businesses. Management believes that the exclusion of certain expenses and gains in calculating Segment Operating Contribution provides a useful measure for period-to-period comparisons of the segment’s underlying revenue and operating costs that is focused more closely on the current costs necessary to operate the segment, and reflects the segment’s ongoing business in a manner that allows for meaningful analysis of trends. Management also believes that excluding certain non-cash charges can be useful because the amounts of such expenses is the result of long-term investment decisions made in previous periods rather than day-to-day operating decisions.

The Company defines Free Cash Flow as net cash provided by (used in) operating activities net of cash flows from contingent payments to certain key employees/equity holders of acquired businesses; other payments attributable to acquisition, disposition or corporate realignment activities; purchases of property and equipment; and purchases of intangible assets. Management believes that Free Cash Flow provides investors with useful information to measure operating liquidity because it reflects the Company’s underlying cash flows from recurring operating activities after investing in capital assets and intangible assets. Free Cash Flow is used by management, and may also be useful for investors, to assess the Company’s ability to generate cash flow for a variety of strategic opportunities, including reinvesting in its businesses, pursuing new business opportunities and potential acquisitions, paying dividends and repurchasing shares.

About Leaf Group

Leaf Group Ltd. (NYSE: LEAF) is a diversified consumer internet company that builds enduring, creator-driven brands that reach passionate audiences in large and growing lifestyle categories, including fitness and wellness (Well+Good, Livestrong.com and MyPlate App), and art and design (Saatchi Art, Society6 and Hunker). For more information about Leaf Group, visit www.leafgroup.com.

Cautionary Information Regarding Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. The forward-looking statements set forth in this press release include, among other things, statements regarding potential synergies achieved from acquisitions, the impact of strategic operational changes and the Company’s future financial performance. In addition, statements containing words such as “guidance,” “may,” “believe,” “anticipate,” “expect,” “intend,” “plan,” “project,” “projections,” “business outlook,” and “estimate” or similar expressions constitute forward-looking statements. Actual results may differ materially from the results predicted, and reported results should not be considered an indication of future performance. These forward-looking statements involve risks and uncertainties regarding the Company’s future financial performance; could cause actual results or developments to differ materially from those indicated due to a number of factors affecting Leaf Group’s operations, markets, products and services; and are based on current expectations, estimates and projections about the Company’s industry, financial condition, operating performance and results of operations, including certain assumptions related thereto. Potential risks and uncertainties that could affect the Company’s operating and financial results are described in Leaf Group’s annual report on Form 10-K for the fiscal year ending December 31, 2018 filed with the Securities and Exchange Commission (http://www.sec.gov) on March 4, 2019, as such risks and uncertainties may be updated from time to time in Leaf Group’s quarterly reports on Form 10-Q filed with the Securities and Exchange Commission, including, without limitation, information under the captions “Risk Factors” and “Management's Discussion and Analysis of Financial Condition and Results of Operations.” These risks and uncertainties include, among others: the Company’s ability to successfully drive and increase traffic to its marketplaces and media properties; changes in the methodologies of internet search engines, including ongoing algorithmic changes made by Google, Bing and Yahoo!; the Company’s ability to attract new and repeat customers and artists to its marketplaces and successfully grow its marketplace businesses; the potential impact on advertising-based revenue from lower ad unit rates, a reduction in online advertising spending, a loss of advertisers, lower advertising yields, increased availability of ad blocking software, particularly on mobile devices and/or ongoing changes in ad unit formats; the Company’s dependence on various agreements with a specific business partner for a significant portion of its advertising revenue; the effects of shifting consumption of media content and online shopping from desktop to mobile devices and/or social media platforms; the Company’s history of incurring net operating losses; the Company’s ability to obtain capital when desired on favorable terms; potential write downs, reserves against or impairment of assets including receivables, goodwill, intangibles (including media content) or other assets; the Company’s ability to effectively integrate, manage, operate and grow acquired businesses; the Company’s ability to retain key personnel; the Company’s ability to prevent any actual or perceived security breaches; and the Company’s ability to expand its business internationally. From time to time, the Company may consider acquisitions or divestitures that, if consummated, could be material. Any forward-looking statements regarding financial metrics are based upon the assumption that no such acquisition or divestiture is consummated during the relevant periods. If an acquisition or divestiture were consummated, actual results could differ materially from any forward-looking statements. Any forward-looking statement made by the Company in this press release is based only on information currently available to the Company and speaks only as of the date on which it is made. The Company undertakes no obligation to revise or update any forward-looking information, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise, except as required by law, and may not provide this type of information in the future.

(Tables Follow)

 
Investor Contacts:
Jantoon Reigersman
Chief Financial Officer
(310) 917-6413
IR@leafgroup.com

Shawn Milne
Investor Relations
(415) 264-3419
shawn.milne@leafgroup.com

Media Contact:
Sharna Daduk
(310) 917-6405
sharna.daduk@leafgroup.com 
 

Leaf Group Ltd. and Subsidiaries
Unaudited Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)

                       
  Three months ended   Year ended
  December 31,    December 31, 
  2018   2017   2018   2017
Revenue:                      
Product revenue $ 25,333     $ 24,943     $ 83,458     $ 75,784  
Service revenue   20,186       14,784       71,584       53,206  
Total revenue   45,519       39,727       155,042       128,990  
Operating expenses:                      
Product costs (exclusive of amortization of intangible assets shown separately below)(1)   19,987       18,836       61,991       56,292  
Service costs (exclusive of amortization of intangible assets shown separately below)(1)(2)   8,091       5,929       29,168       21,810  
Sales and marketing(1)(2)   9,148       7,404       32,792       28,297  
Product development(1)(2)   4,821       4,276       20,183       18,613  
General and administrative(1)(2)   7,575       7,658       30,159       29,591  
Amortization of intangible assets   956       1,181       4,071       5,728  
Total operating expenses   50,578       45,284       178,364       160,331  
Loss from operations   (5,059 )     (5,557 )     (23,322 )     (31,341 )
Interest income   152       47       316       195  
Interest expense   (6 )     (1 )     (11 )     (5 )
Other (expense) income, net   13       (9 )     (78 )     (19 )
Loss before income taxes   (4,900 )     (5,520 )     (23,095 )     (31,170 )
Income tax (expense) benefit   (37 )     187       (95 )     37  
Net loss $ (4,937 )   $ (5,333 )   $ (23,190 )   $ (31,133 )
                       
Net loss per share - basic and diluted $ (0.19 )   $ (0.26 )   $ (0.94 )   $ (1.52 )
                       
Weighted average number of shares - basic and diluted   25,370       20,908       24,581       20,501  
__________________                      
                       
(1) Depreciation expense included in the above line items:                      
Product costs $ 332     $ 150     $ 961     $ 252  
Service costs   880       989       3,059       3,092  
Sales and marketing   6       9       28       36  
Product development   10       23       62       91  
General and administrative   498       636       2,089       2,604  
Total depreciation $ 1,726     $ 1,807     $ 6,199     $ 6,075  
                       
(2) Stock-based compensation included in the above line items:                      
Service costs $ 184     $ 146     $ 699     $ 599  
Sales and marketing   177       173       937       759  
Product development   516       495       2,278       1,847  
General and administrative   1,168       1,325       5,517       5,360  
Total stock-based compensation $ 2,045     $ 2,139     $ 9,431     $ 8,565  
                       
                       

Leaf Group Ltd. and Subsidiaries
Unaudited Condensed Consolidated Balance Sheets
(In thousands)

             
    December 31,    December 31, 
    2018   2017
Assets            
Current assets            
Cash and cash equivalents   $ 31,081     $ 31,344  
Accounts receivable, net     12,627       8,663  
Prepaid expenses and other current assets     3,932       2,741  
Total current assets     47,640       42,748  
Property and equipment, net     13,126       11,665  
Intangible assets, net     13,933       10,431  
Goodwill     19,435       17,152  
Other assets     988       1,246  
Total assets   $ 95,122     $ 83,242  
             
Liabilities and Stockholders' Equity            
Current liabilities            
Accounts payable   $ 1,519     $ 1,980  
Accrued expenses and other current liabilities     22,149       17,182  
Deferred revenue     2,115       2,064  
Total current liabilities     25,783       21,226  
Deferred tax liability     86       40  
Other liabilities     2,566       3,456  
Total liabilities     28,435       24,722  
Commitments and contingencies            
Stockholders’ equity            
Common stock     3       2  
Additional paid-in capital     554,403       523,012  
Treasury stock     (35,706 )     (35,706 )
Accumulated other comprehensive loss     (52 )     (17 )
Accumulated deficit     (451,961 )     (428,771 )
Total stockholders’ equity     66,687       58,520  
Total liabilities and stockholders’ equity   $ 95,122     $ 83,242  
                 
                 

Leaf Group Ltd. and Subsidiaries
Unaudited Condensed Consolidated Statements of Cash Flows
(In thousands)

                           
    Three months ended
December 31, 
  Year ended
December 31, 
 
    2018   2017   2018   2017  
Cash flows from operating activities                          
Net loss   $ (4,937 )   $ (5,333 )   $ (23,190 )   $ (31,133 )  
Adjustments to reconcile net loss to net cash used in operating activities:                          
Depreciation and amortization     2,682       2,988       10,270       11,803    
Deferred income taxes     29       (136 )     46       (68 )  
Stock-based compensation     2,045       2,139       9,431       8,565    
Other     (52 )     (147 )     15       (191 )  
Change in operating assets and liabilities, net of effect of acquisitions and disposals:                          
Accounts receivable, net     (498 )     (1,427 )     (1,310 )     (1,108 )  
Prepaid expenses and other current assets     (239 )     (316 )     (904 )     705    
Other long-term assets     43       56       274       81    
Accounts payable     (584 )     (592 )     (806 )     (1,140 )  
Accrued expenses and other liabilities     3,223       2,529       3,954       972    
Deferred revenue     (1,090 )     94       (1,082 )     (142 )  
Net cash provided by (used in) operating activities     622       (145 )     (3,302 )     (11,656 )  
Cash flows from investing activities                          
Purchases of property and equipment     (2,100 )     (1,619 )     (7,162 )     (5,337 )  
Purchases of intangible assets           (51 )     (45 )     (286 )  
Cash received from disposal of businesses and online properties, net of cash disposed                       4,285    
Cash paid for acquisitions, net of cash acquired                 (10,349 )     (6,304 )  
Restricted deposits                       606    
Other     3       1       8       7    
Net cash (used in) provided by investing activities     (2,097 )     (1,669 )     (17,548 )     (7,029 )  
Cash flows from financing activities                          
Proceeds from exercises of stock options and purchases under ESPP     546       657       2,016       2,598    
Repurchases of common stock                       (65 )  
Proceeds from issuance of common stock                 23,367          
Taxes paid on net share settlements of restricted stock units     (777 )     (523 )     (3,961 )     (3,284 )  
Cash paid for acquisition holdback                       (119 )  
Cash paid for contingent consideration liability                 (905 )        
Other     (17 )     (16 )     (68 )     (65 )  
Net cash (used in) provided by financing activities     (248 )     118       20,449       (935 )  
Effect of foreign currency on cash, cash equivalents and restricted cash     (6 )     1       36       (36 )  
Change in cash, cash equivalents and restricted cash     (1,729 )     (1,695 )     (365 )     (19,656 )  
Cash, cash equivalents and restricted cash, beginning of period     33,664       33,995       32,300       51,956    
Cash, cash equivalents and restricted cash, end of period   $ 31,935     $ 32,300     $ 31,935     $ 32,300    
                           
Reconciliation of cash, cash equivalents and restricted cash                          
Cash and cash equivalents   $ 31,081     $ 31,344     $ 31,081     $ 31,344    
Restricted cash included in other current assets     136       136       136       136    
Restricted cash included in other long-term assets     718       820       718       820    
Total cash, cash equivalents and restricted cash shown in the statement of cash flows   $ 31,935     $ 32,300     $ 31,935     $ 32,300    
                                   
                                   

Leaf Group Ltd. and Subsidiaries
Reconciliations of Non-GAAP Financial Measures
(In thousands)

                           
    Three months ended
December 31, 
  Year ended
December 31, 
 
    2018   2017   2018   2017  
Adjusted EBITDA:                          
Net loss   $  (4,937 )   $  (5,333 )   $  (23,190 )   $  (31,133 )  
Add (deduct):                          
Income tax (benefit) expense      37        (187 )      95        (37 )  
Interest (income) expense, net      (146 )      (46 )      (305 )      (190 )  
Other expense (income), net      (13 )      9        78        19    
Depreciation and amortization(1)      2,682        2,988        10,270        11,803    
Stock-based compensation(2)      2,045        2,139        9,431        8,565    
Acquisition, disposition, realignment and contingent payment costs(3)      584        —        2,140        299    
Adjusted EBITDA   $  252     $  (430 )   $  (1,481 )   $  (10,674 )  
                           
Free Cash Flow:                          
Net cash provided by (used in) operating activities   $  622     $  (145 )   $  (3,302 )   $  (11,656 )  
Purchases of property and equipment      (2,100 )      (1,619 )      (7,162 )      (5,337 )  
Purchases of intangible assets      —        (51 )      (45 )      (286 )  
Acquisition, disposition, realignment and contingent payments(3)      —        —        —        371    
Free Cash Flow   $  (1,478 )   $  (1,815 )   $  (10,509 )   $  (16,908 )  
                           


(1)   Represents depreciation expense of the Company’s long-lived tangible assets and amortization expense of its finite-lived intangible assets, including amortization expense related to its investment in media content assets as included in the Company’s GAAP results of operations.
(2)   Represents the expense related to stock-based awards granted to employees, as included in the Company’s GAAP results of operations.
(3)   Represents such items, when applicable, as (a) legal, accounting and other professional service fees directly attributable to acquisition, disposition or corporate realignment activities, (b) employee severance, (c) contingent payments to certain key employees/equity holders of acquired businesses, and (d) other payments attributable to acquisition, disposition or corporate realignment activities.
     
     

Leaf Group Ltd. and Subsidiaries
Reconciliation of Segment Disclosure
(In thousands)

                           
    Three months ended December 31,      Year ended December 31, 
    2018   2017     2018   2017
Segment Revenue:                          
Marketplaces   $ 28,603     $ 28,065       $ 93,937     $ 84,126  
Media     16,916       11,662         61,105       44,864  
Total revenue   $ 45,519     $ 39,727       $ 155,042     $ 128,990  
                           
Segment Operating Contribution:                          
Marketplaces(1)   $ (967 )   $ 993       $ (1,131 )   $ (2,530 )
Media(1)     7,866       5,456         26,419       18,248  
Add (deduct):                          
Corporate expenses(2)     (6,726 )     (6,879 )       (27,089 )     (26,691 )
Acquisition, disposition and realignment costs(3)     79               320       299  
Adjusted EBITDA   $ 252     $ (430 )     $ (1,481 )   $ (10,674 )
                           
Reconciliation to consolidated pre-tax income (loss):                          
Adjusted EBITDA   $ 252     $ (430 )     $ (1,481 )   $ (10,674 )
Add (deduct):                          
Interest income (expense), net     146       46         305       190  
Other income (expense), net     13       (9 )       (78 )     (19 )
Depreciation and amortization(4)     (2,682 )     (2,988 )       (10,270 )     (11,803 )
Stock-based compensation(5)     (2,045 )     (2,139 )       (9,431 )     (8,565 )
Acquisition, disposition, realignment and contingent payment costs(6)     (584 )             (2,140 )     (299 )
Loss before income taxes   $ (4,900 )   $ (5,520 )     $ (23,095 )   $ (31,170 )
                           


(1)   Segment operating contribution reflects earnings before corporate and unallocated expenses and also excludes: (a) depreciation expense; (b) amortization of intangible assets; (c) share-based compensation expense; (d) interest and other income (expense); (e) income taxes; and (f) contingent payments to certain key employees/equity holders of acquired businesses. 
(2)   Corporate expenses include corporate and unallocated operating expenses that are not directly attributable to the operating segments, including: corporate information technology, marketing and general and administrative support functions and also excludes the following: (a) depreciation expense; (b) amortization of intangible assets; (c) share-based compensation expense; (d) interest and other income (expense); and (e) income taxes.
(3)   Represents such items, when applicable, as (a) legal, accounting and other professional service fees directly attributable to acquisition, disposition or corporate realignment activities, (b) employee severance, and (c) other payments attributable to acquisition, disposition or corporate realignment activities, excluding contingent payments to certain key employees/equity holders of acquired businesses.
(4)   Represents depreciation expense of the Company’s long-lived tangible assets and amortization expense of its finite-lived intangible assets, including amortization expense related to its investment in media content assets, included in the Company’s GAAP results of operations.
(5)   Represents the expense related to stock-based awards granted to employees as included in the Company’s GAAP results of operations.
(6)   Represents such items, when applicable, as (a) legal, accounting and other professional service fees directly attributable to acquisition, disposition or corporate realignment activities, (b) employee severance, (c) contingent payments to certain key employees/equity holders of acquired businesses, and (d) other payments attributable to acquisition, disposition or corporate realignment activities.

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