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NeuLion Reports Record Fourth Quarter and Year-End Financial Results

Record Breaking Revenue, Non-GAAP Adjusted EBITDA and Net Income (March 13, 2014)

PLAINVIEW, NY -- (Marketwired) -- 03/13/14 -- NeuLion, Inc. (TSX: NLN), a leading enabler and provider of live and on-demand content to Internet-connected devices, today announced record financial results for both the three months and year ended December 31, 2013 (all amounts are in U.S. dollars).

NeuLion posted its best-ever quarterly revenue of $14.1 million -- an increase of 34% over the previous year period. This boosted NeuLion's 2013 revenue to $47.1 million -- an increase of 21% over the previous year. Quarterly Non-GAAP Adjusted EBITDA was $2.2 million -- an improvement of $1.4 million over the previous year period. Annual Non-GAAP Adjusted EBITDA was $3.5 million -- an improvement of $6.8 million over the previous year. Quarterly Consolidated Net Income was $1.1 million -- an improvement of $1.9 million over the previous year period. Annual Consolidated Net Loss was $2.3 million -- an improvement of $7.8 million over the previous year.

"We are extremely pleased with the improvements in both our fourth quarter and year-end financial results," said Nancy Li, Chief Executive Officer of the Company. "Our financial success directly correlates to our ability to capitalize on the worldwide adoption of digital media as the means for consuming content. This is underscored by the fact that live video delivered by NeuLion increased by 88% to 154 petabytes in 2013. We expect to see continued growth in the breadth and scope of digital media adoption over the next year and beyond."

Fourth Quarter Operational Highlights:


Professional Sports
Interactive video experience delivering live and on-demand video

  • Deployed new NHL iOS and Android mobile applications for 14 teams, individually branded to offer exclusive team content and interactive features.
  • Launched new digital service for the NBA's Portland Trailblazers, giving fans the ability to watch the Trailblazer's live games inside the NBA-approved territories.
  • Added Watch NFL Network to the Windows Store allowing fans to watch NFL Network programming and NFL RedZone live on their Windows 8 devices.

College Sports
Athletic portal and online destination for college fans

  • Extended multi-year partnership with the Big 12 Conference to host and deliver big12sports.com as well as mobile applications, live streaming of events and affiliate video portals throughout the conferences' footprints.
  • College subscription business substantially increased from the prior year and added adaptive streaming capabilities for over 15 colleges and universities on PCs, smartphones and tablets.
  • Grew mobile traffic by 43% across the NeuLion college network year-over-year.

TV Everywhere
Multi-device content delivery

  • Launched new multi-screen apps for Sport TV, Portugal's number one sports network, which enables subscribers of the network access to a multitude of live HD content on multiple devices.
  • Signed agreements with Shaw Communications and Bell Canada to create iOS and Android applications authenticated for Shaw Cable and Bell Canada subscribers.
  • Expanded the use of the NeuLion Platform to deliver high-quality, interactive live and on-demand high school sports games through MSG Varsity online.

Financial Results for the Three Months Ended December 31, 2013:

Revenue was $14.1 million, as compared to $10.5 million for the three months ended December 31, 2012, an increase of $3.6 million, or 34%.

Non-GAAP Adjusted Gross Margin % was 72%, as compared to 69% for the three months ended December 31, 2012, marking a period-over-period improvement of 3%.

Consolidated operating income was $1.1 million, as compared to a consolidated operating loss of $0.4 million for the three months ended December 31, 2012, an improvement of $1.5 million.

Consolidated net income was $1.1 million, which includes $1.1 million of non-cash and/or non-operating charges, netting a Non-GAAP Adjusted EBITDA of $2.2 million, as compared to a consolidated net loss of $(0.8) million, which includes $1.6 million of non-cash and/or non-operating charges, netting a Non-GAAP Adjusted EBITDA of $0.8 million for the three months ended December 31, 2012, marking a period-over-period improvement in Non-GAAP Adjusted EBITDA of $1.4 million, or 175%.

Financial Results for the Year Ended December 31, 2013:

Revenue was $47.1 million, as compared to $39.0 million for the year ended December 31, 2012, an increase of $8.1 million, or 21%.

Non-GAAP Adjusted Gross Margin % was 72%, as compared to 65% for the year ended December 31, 2012, marking a period-over-period improvement of 7%.

Consolidated operating loss was $1.6 million, as compared to $9.3 million for the year ended December 31, 2012, an improvement of $7.7 million.

Consolidated net loss was $2.3 million, which includes $5.8 million of non-cash and/or non-operating charges, netting a Non-GAAP Adjusted EBITDA of $3.5 million, as compared to a consolidated net loss of $10.1 million, which includes $6.8 million of non-cash and/or non-operating charges, netting a Non-GAAP Adjusted EBITDA of $(3.3) million for the year ended December 31, 2012, marking a year-over-year improvement in Non-GAAP Adjusted EBITDA of $6.8 million.

NeuLion Financial Highlights

NeuLion Financial Highlights Three months ended December 31, 2013 vs December 31, 2012 Q4 2013 Q4 2012 $ change % (million) (million) (million) change Total Revenue $14.1 $10.5 $3.6 34% Professional Sports (1) $6.8 $3.9 $2.9 74% College Sports (1) $3.8 $3.1 $0.7 23% TV Everywhere (1) $3.0 $2.9 $0.1 3% Non-GAAP Adjusted Gross Margin % (defined below) 72% 69% -- -- Consolidated Operating Income (Loss) $1.1 $(0.4) $1.5 -- Non-GAAP Adjusted EBITDA (defined below) $2.2 $0.8 $1.4 175% Consolidated Net Income (Loss) $1.1 $(0.8) $1.9 -- Year ended December 31, 2013 vs December 31, 2012 2013 YE 2012 YE $ change % (million) (million) (million) change Total Revenue $47.1 $39.0 $8.1 21% Professional Sports (1) $20.9 $13.5 $7.4 55% College Sports (1) $12.6 $10.9 $1.7 16% TV Everywhere (1) $11.3 $10.6 $0.7 7% Non-GAAP Adjusted Gross Margin % (defined below) 72% 65% -- -- Consolidated Operating Income (Loss) $(1.6) $(9.3) $7.7 -- Non-GAAP Adjusted EBITDA (defined below) $3.5 $(3.3) $6.8 -- Consolidated Net Income (Loss) $(2.3) $(10.1) $7.8 --

(1) Excludes equipment revenue

Use of Non-GAAP Measures

Non-GAAP Adjusted Gross Margin %

We report non-GAAP Adjusted Gross Margin % because it is a key measure used by management to evaluate our results and make strategic decisions about the Company, including potential acquisitions. Non-GAAP Adjusted Gross Margin % represents consolidated operating income (loss) plus depreciation and amortization, research and development expenses and selling general administrative expenses divided by total revenue. This measure does not have any standardized meaning prescribed by U.S. GAAP and therefore is unlikely to be comparable to the calculation of similar measures used by other companies, and should not be viewed as an alternative to measures of financial performance or changes in cash flows calculated in accordance with U.S. GAAP.

The below table reconciles our Non-GAAP Adjusted Gross Margin % to its most directly comparable U.S. GAAP measure, consolidated operating income (loss):

Three months ended Year ended December 31, December 31, 2013 2012 2013 2012 Consolidated operating income (loss) on a GAAP basis 1,117,379 (433,242) (1,639,586) (9,333,040) Amortization and depreciation 767,782 842,614 3,755,054 4,407,474 Research and development 1,962,676 1,663,510 7,422,802 6,672,778 Selling, general and administrative, including stock-based compensation 6,300,462 5,244,689 24,289,845 23,541,296 ----------- ---------- ---------- ---------- Non-GAAP Adjusted Gross Margin 10,148,299 7,317,571 33,828,115 25,288,508 =========== ========== ========== ========== Non-GAAP Adjusted Gross Margin % (as a % of total revenue) 72% 69% 72% 65% =========== ========== ========== ==========

Non-GAAP Adjusted EBITDA

We report Non-GAAP Adjusted EBITDA because it is a key measure used by management to evaluate our results and make strategic decisions about our Company, including potential acquisitions. Non-GAAP Adjusted EBITDA represents consolidated net income (loss) before interest, income taxes, depreciation and amortization, stock-based compensation, discount on convertible note and foreign exchange loss. This measure does not have any standardized meaning prescribed by U.S. generally accepted accounting principles (U.S. GAAP) and therefore is unlikely to be comparable to the calculation of similar measures used by other companies, and should not be viewed as an alternative to measures of financial performance or changes in cash flows calculated in accordance with U.S. GAAP.

The below table reconciles our Non-GAAP Adjusted EBITDA to its most directly comparable U.S. GAAP measure, consolidated net income (loss):

Three months ended Year ended December 31, December 31, 2013 2012 2013 2012 Consolidated net income (loss) on a GAAP basis 1,071,979 (862,040) (2,278,345) (10,078,764) Depreciation and amortization 767,782 842,614 3,755,054 4,407,474 Stock-based compensation 344,291 361,497 1,416,892 1,627,231 Discount on convertible note -- 77,922 233,769 77,922 Deferred income taxes 11,556 333,884 276,846 612,884 Interest and foreign exchange loss 33,844 16,992 128,144 54,918 ---------- ---------- ---------- ----------- Non-GAAP Adjusted EBITDA 2,229,452 770,869 3,532,360 (3,298,335) ========== ========== ========== ===========

About NeuLion
NeuLion, Inc. (TSX: NLN) offers the true end-to-end solution for delivering live and on-demand content to Internet-enabled devices. NeuLion enables content owners and distributors, cable operators and telecommunications companies to capitalize on the massive consumer demand for viewing video content on PCs, smartphones, iPads and other similar devices. NeuLion's customers include major entertainment, sports, global content and news companies. NeuLion is based in Plainview, NY. For more information about NeuLion, visit www.neulion.com.

Forward-Looking Statements
Certain statements herein are forward-looking statements and represent NeuLion's current intentions in respect of future activities. Forward-looking statements can be identified by the use of the words "will," "expect," "seek," "anticipate," "believe," "plan," "estimate," "expect," and "intend" and statements that an event or result "may," "will," "can,""should," "could," or "might" occur or be achieved and other similar expressions. These statements, in addressing future events and conditions, involve inherent risks and uncertainties. These factors should be considered carefully and readers should not place undue reliance on the forward-looking statements. Although the forward-looking statements contained in this release are based upon what management believes to be reasonable assumptions, NeuLion cannot assure readers that actual results will be consistent with these forward-looking statements. These forward-looking statements are made as of the date of this release and NeuLion assumes no obligation to update or revise them to reflect new events or circumstances, except as required by law. Many factors could cause NeuLion's actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including: our ability to realize some or all of the anticipated benefits of our partnerships; general economic and market segment conditions; our customers' subscriber levels and financial health; our ability to pursue and consummate acquisitions in a timely manner; our continued relationships with our customers; our ability to negotiate favorable terms for contract renewals; competitor activity; product capability and acceptance rates; technology changes; regulatory changes; foreign exchange risk; interest rate risk; and credit risk. A more detailed assessment of the risks that could cause actual results to materially differ from current expectations is contained in the "Risk Factors" section of NeuLion's Annual Report on Form 10-K for the fiscal year ended December 31, 2013, which is available on www.sec.gov and filed on www.sedar.com.

NEULION, INC. CONSOLIDATED BALANCE SHEETS (Expressed in U.S. dollars, unless otherwise noted) As of December 31, -------------------------- 2013 2012 $ $ ------------ ------------ ASSETS Current Cash and cash equivalents 19,644,270 11,108,107 Accounts receivable, net 5,289,136 4,193,949 Other receivables 364,797 348,891 Inventory 481,012 416,541 Prepaid expenses and deposits 1,135,949 1,185,051 Due from related parties 243,842 899,967 ------------ ------------ Total current assets 27,159,006 18,152,506 Property, plant and equipment, net 3,357,626 3,446,648 Intangible assets, net 1,649,959 4,015,301 Goodwill 11,327,626 11,327,626 Other assets 81,778 161,913 ------------ ------------ Total assets 43,575,995 37,103,994 ============ ============ LIABILITIES AND EQUITY Current Accounts payable 13,002,104 9,813,237 Accrued liabilities 5,338,418 4,766,668 Due to related parties 16,743 12,282 Deferred revenue 8,856,629 5,715,102 Convertible note, net of discount - 320,560 ------------ ------------ Total current liabilities 27,213,894 20,627,849 Long-term deferred revenue 725,853 1,134,075 Other long-term liabilities 270,892 357,852 Deferred tax liability 1,180,978 911,978 ------------ ------------ Total liabilities 29,391,617 23,031,754 ------------ ------------ Redeemable preferred stock, net (par value: $0.01; authorized: 50,000,000; issued and outstanding: 28,089,083) Class 3 Preference Shares (par value: $0.01; authorized: 17,176,818; issued and outstanding: 17,176,818) 10,000,000 10,000,000 Class 4 Preference Shares (par value: $0.01; authorized; 10,912,265; issued and outstanding: 10,912,265) 4,924,775 4,894,683 ------------ ------------ Total redeemable preferred stock 14,924,775 14,894,683 ------------ ------------ Stockholders' deficit Common stock (par value: $0.01; authorized: 300,000,000; issued and outstanding: 170,326,338 and 164,207,147, respectively) 1,703,263 1,642,072 Additional paid-in capital 85,437,337 83,138,137 Promissory notes receivable (209,250) (209,250) Accumulated deficit (87,671,747) (85,393,402) ------------ ------------ Total shareholders' deficit (740,397) (822,443) ------------ ------------ Total liabilities and shareholders' deficit 43,575,995 37,103,994 ============ ============ NEULION, INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Expressed in U.S. dollars, unless otherwise noted) Years ended December 31, ---------------------------- 2013 2012 $ $ ------------- ------------- Revenue Services revenue 46,257,712 37,178,431 Equipment revenue 849,466 1,804,495 ------------- ------------- 47,107,178 38,982,926 ------------- ------------- Costs and Expenses Cost of services revenue, exclusive of depreciation and amortization shown separately below 12,697,104 12,280,658 Cost of equipment revenue 581,959 1,413,760 Selling, general and administrative, including stock-based compensation 24,289,845 23,541,296 Research and development 7,422,802 6,672,778 Depreciation and amortization 3,755,054 4,407,474 ------------- ------------- 48,746,764 48,315,966 ------------- ------------- Operating loss (1,639,586) (9,333,040) ------------- ------------- Other income (expense) Loss on foreign exchange (125,657) (56,244) Interest, net (2,487) 1,326 Discount on convertible note (233,769) (77,922) ------------- ------------- (361,913) (132,840) ------------- ------------- Net and comprehensive loss before income taxes (2,001,499) (9,465,880) Provision for income taxes (276,846) (612,884) ------------- ------------- Net and comprehensive loss (2,278,345) (10,078,764) ============= ============= Net loss per weighted average number of shares of common stock outstanding - basic and diluted $ (0.01) $ (0.07) ============= ============= Weighted average number of shares of common stock outstanding - basic and diluted 166,663,448 146,899,685 ============= ============= NEULION, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Expressed in U.S. dollars, unless otherwise noted) Years ended December 31, -------------------------- 2013 2012 $ $ ------------ ------------ OPERATING ACTIVITIES Consolidated net loss (2,278,345) (10,078,764) Adjustments to reconcile net loss to cash provided by (used in) operating activities Depreciation and amortization 3,755,054 4,407,474 Discount on convertible note 233,769 77,922 Stock-based compensation 1,416,892 1,627,231 Income taxes 269,000 612,884 Changes in operating assets and liabilities Accounts receivable (1,095,187) (699,872) Inventory (64,471) 380,895 Prepaid expenses, deposits and other assets 129,237 68,613 Other receivables (15,906) (39,127) Due from related parties 656,125 (165,515) Accounts payable 3,188,867 215,878 Accrued liabilities 635,341 (524,327) Deferred revenue 2,733,305 (684,793) Long-term liabilities (86,960) (74,307) Due to related parties 4,461 (1,016) ------------ ------------ Cash provided by (used in) operating activities 9,481,182 (4,876,824) ------------ ------------ INVESTING ACTIVITIES Purchase of property, plant and equipment, net (1,300,690) (1,106,700) ------------ ------------ Cash used in investing activities (1,300,690) (1,106,700) ------------ ------------ FINANCING ACTIVITIES Exercise of stock options 353,991 -- Exercise of broker warrants 1,680 -- Convertible note -- 545,628 Private placement, net -- 4,199,121 ------------ ------------ Cash provided by financing activities 355,671 4,744,749 ------------ ------------ Net increase (decrease) in cash and cash equivalents during the year 8,536,163 (1,238,775) Cash and cash equivalents, beginning of year 11,108,107 12,346,882 ------------ ------------ Cash and cash equivalents, end of year 19,644,270 11,108,107 ============ ============


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