"KIT digital Reports Q1 2012 Results In Line With Preliminary Q1 2012 Announcement
Provides Operational Update and Announces $29.2 Million Capital Raise to Support Global Tier One Customer Strategy NEW YORK, NY, May 15, 2012 (MARKETWIRE via COMTEX) --KIT digital, Inc. (NASDAQ: KITD), a leading video management software and services company, today reported first quarter results for the period ended March 31, 2012 that were in line with preliminary figures announced on May 3, 2012. The company also reported a number of strategic and operational initiatives in support of targeted growth, improved financial controls and a strengthened balance sheet, including the completion of a $29.2 million common equity placement.
"During my first 45 days as CEO we have conducted a thorough strategic and operational review of our business," said Barak Bar-Cohen, CEO. "Based on this assessment, we have thus far taken definitive steps to support our operating plan and improve financial controls. This includes raising capital to support our updated operational plan and global commercial strategy. Going forward, we intend to sharpen our focus on tier one video management software and services, which we believe will result in significantly higher cash flow levels by the end of 2012."
Q1 2012 Results First quarter 2012 revenues were $59.0 million, compared to $70.0 million in the preceding quarter and $34.5 million for the first quarter of 2011. Non-GAAP operating loss was $8.0 million, compared to non-GAAP operating income of $16.5 million in the preceding quarter and $7.1 million of non-GAAP operating loss for the first quarter of 2011.
First quarter GAAP net loss was $24.9 million or $0.53 per share, compared to GAAP net income of $0.4 million or $0.01 per share in the preceding quarter and GAAP net loss of $12.5 million or $0.34 per share in the first quarter of 2011. Free cash flow from operations was a negative $12.9 million, compared to a positive $1.3 million in the previous quarter, and a negative $10.2 million in the first quarter of 2011.
Cash and cash equivalents at March 31, 2012 totaled $26.1 million, compared to $45.7 million on December 31, 2011. The decrease in Q1 was primarily attributable to one-time residual payments of consideration for acquisitions closed in Q4; higher than usual legal, accounting and audit costs associated with corporate development activity; post-consolidation integration costs; and other cash requirements of the business during the quarter, which were in line with previous quarters.
Operational Update The company has undertaken a number of initiatives that support our focus on providing video management software and services to tier one customers around the world. They include:
-- Hiring of additional commercial and deployment resources in the high
growth areas of Latin America and South East Asia;
-- Prioritization of development resources to the Cosmos platform, the
technology product which caters to the needs of tier one customers;
-- Planned divestiture of non-core business lines: content solutions,
digital marketing, and lower-margin broadcast systems integration; and
-- Transition of company's current CFO, Robin Smyth, into a Corporate
Development role, and the initiation of a search for a new CFO.
Improving Financial Controls and Reporting The company has taken the following steps in light of the recently identified material weakness in financial controls and reporting:
-- The company has hired a new Corporate Controller based in New York;
-- The company has hired a new Head of Internal Audit based in New York;
-- The company has retained one of the Big Four accounting firms to
advise on the implementation of best-practice governance and monthly
close policies, as well as to provide advice on the ongoing
implementation of Netsuite to manage financial controls and processes;
and
-- The company has appointed HSBC as global financial services partner to
implement cash management and pooling functions.
Important New Contracts in Q1 2012
-- VRT, the large Belgian broadcaster, extended its contract for the
provision of online streaming and video-on-demand services;
-- Sky Italia, the Italian digital television provider, selected the
Cosmos platform to run all of its online video delivery services,
mirroring recent similar moves by Sky Germany and Sky UK;
-- BSkyB, the British satellite broadcasting and broadband services
company, announced the launch of its Sky Now service in the UK, which
will run on the Cosmos platform;
-- One of Latin America's leading pay-TV providers will deploy their "TV
Everywhere" service over the Cosmos platform;
-- Voice of America, the multimedia broadcaster providing news broadcasts
to an international audience, extended its contract;
-- A major telecommunications company in South East Asia chose the
company to provide an over the top, multi-device video service through
the Cosmos platform and Connected Device Framework; and
-- The company signed software license deals with a number of other
well-known brands, including: Alstom, AXA, Total, Air France, and LVMH
Hennessy.
Completed Capital Raise The company also announced that it has raised gross proceeds of approximately $29.2 million through the sale of common stock. The Company issued to investors 7.0 million shares of common stock priced at $4.17 per share. Investors also received warrants to acquire 5.25 million shares of common stock at an exercise price of $5.00 per share. Canaccord Genuity Inc. acted as sole placement agent.
FY 2012 Updated Outlook For 2012, the company is setting a baseline revenue expectation at $250 million with non-GAAP operating income margins trending toward previous levels in the second half of the year. The company expects to begin generating positive free cash flow from operations no later than the fourth quarter of this year. This outlook is dependent on the company's ongoing strategic review of its business lines and contractual relationships with its customers, and the company intends to provide a more complete outlook in due course upon completion of its comprehensive analysis.
"Over the last several months, we have observed an increase in RFPs issued by major broadcasters and network operators around the world. In each of these opportunities, it is clear that our unique combination of broadcast-grade video management software, world-class professional services, and years of deployment experience is our major point of differentiation," Bar-Cohen said. "With the capital raise and key initiatives announced today, we can now execute on these opportunities and build a growing and cash-generating business."
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