The Meet Group (MEET) has just reported earnings and shares are getting smashed. In this column we present the highlights and offer commentary on WHY things are so dire.

Meet Group’s Fourth Quarter 2017 Financial Highlights

  • Total revenue of $40.1 million, up 37% year over year
  • Mobile revenue of $32.0 million, up 15% year over year
  • GAAP net loss of $67.7 million, or $0.94 per diluted share primarily as a result of a non-cash asset impairment charge and deferred tax charge of $56.4 million and $7.7 million, respectively, compared to GAAP net income of $9.9 million, or $0.15 per diluted share in the prior year quarter
  • Adjusted EBITDA of $10.5 million, compared to $12.8 million in the prior year quarter
  • Non-GAAP net income of $9.5 million, or $0.12 per diluted share, compared to $12.4 million or $0.19 per diluted share in the prior year quarter

Full Year 2017 Financial Highlights

  • Total revenue of $123.8 million, up 63% year over year
  • Mobile revenue of $97.8 million, up 38% year over year
  • GAAP net loss of $64.2 million, or $0.93 per diluted share primarily as a result of a non-cash asset impairment charge and deferred tax charge of $56.4 million and $7.7 million, respectively, compared to GAAP net income of $46.3 million, or $0.80 per diluted share in the prior year
  • Adjusted EBITDA of $31.6 million, up 8% year over year, or a 26% margin
  • Non-GAAP net income of $28.5 million, or $0.39 per diluted share, compared to $26.9 million or $0.47 per diluted share in the prior year

 

So why is Meet Group stock tanking?

Well it was a an interesting MEET quarter. Its getting smashed thanks to financial engineering.

What do we mean? Well, Advertising revenue guided to ~$58m in 2018. MeetMe did ~$65.5m of ad revenue by itself in 2016. Add on Skout + If(we) + Lovoo ad based revenue, put it in a blender, and its less than MeetMe did as a standalone entity in 2016.

They ran into an industry buzz saw. They just guided to 90% GM revenue decreasing by ~40% yoy in 2018. $30m of If(we) non-ad revs were shrinking ~20% when they bought it. EBITDA would have decreased in 2017 yoy were it not for a change in depreciation and amort (increased $7.5m yoy in 2017) and stock based comp (increased 4.9m yoy in 2017).

Were it not for these rather aggressive increases, MeetMe aEBITDA would have been $14.8m in 2017. Financial engineering was done to show ebitda growth, and the Street has caught on. We would now avoid the name

Your input is required

Disagree, or have your own opinion? SUBMIT AN ARTICLE TODAY

Feel like commenting? Do you want to join a community of investors and start making money, for free? Then REGISTER now:

We want you to join our community

Benefits of signing up for a FREE membership now:

-No more costly delays in waiting for material

-Dozens of publications per week, including news coverage, earnings commentary, analysis, politics, and more

-Access to special guest contributions, including from WSJ, CNBC, and prolific independent authors

Ability to comment on articles

Access to our weekly newsletter

-Publish your own opinion/analysis

CLICK HERE: All you have to do is register, and join the community today. 

Thank you for your readership, and for your loyalty.

Regards,

Quad7Capital

——

Please Like And Share Our Content!