IPTV asset management provider KIT digital reported that its revenue for the first quarter of 2011 was $34.5m, an increase of 98% versus the same period a year ago and an increase of 5% versus the previous quarter. On an organic basis, revenue increased approximately 38% versus the same period a year ago.
The company posted a GAAP net loss of $12.5m for the quarter, compared to a GAAP net loss of $18.4m last year, and a GAAP net loss of $8.5m in the previous quarter. The GAAP net loss includes $7.3m in non-cash charges and $12m in restructuring and integration expenses related to the reorganization and integration of recently acquired companies.
Operating EBITDA (a non-GAAP metric which the company uses as a proxy for operating cash-flow) was $7.1m in first quarter of 2011, increasing 5% sequentially and 139% over the same year-ago quarter. Operating EBITDA margin increased from 17.4% in the fourth quarter of 2010 to 20.5% in the first quarter of 2011, largely due to the reduced portion of professional services-related revenues and the increase in software fee-related revenues.
KIT’s CFO Robin Smyth said the company will “adopt a traditional EBITDA metric and demonstrate strong free cash-flow generation” once it has “cycled through the necessary restructuring and integration charges from recent acquisitions.” This will happen by the third quarter, he said.
Following the payment of consideration related to the acquisitions of ioko and Polymedia, as well as all related restructuring and integration charges and advisory fees, KIT digital expects to have approximately $38 million in cash and equivalents.
Company chairman and CEO Kaleil Isaza Tuzman said he was very pleased with the results of the first quarter, “particularly when you consider the lower digital media usage levels and consequent negative seasonality of Q1 over Q4 throughout the industry.”
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Financial Guidance:
Because much of KIT’s growth has come via M&A, including the recent purchases of Kewego, KickApps, and Kyte (January 2011), Polymedia (March 2011) and ioko (April 2011), KIT management provided new guidance that includes all recently acquired businesses. The company now estimates that it will report approximately $48m of revenues in the current second quarter (including contributions from ioko and Polymedia), and reiterated its estimates of approximately $210m of revenues and 23% EBITDA margin for fiscal 2011.
Tuzman added: “We are also glad to report we have completed the bulk of the restructuring work related to our acquisitions to date, and expect below-the-line restructuring and integration charges to approach zero by the beginning of the third quarter — two to three months earlier than we originally anticipated. This should allow us to report a ‘clean’ back-half of 2011, without adjustments to cash EBITDA, allowing for a harmonization of EBITDA and more traditional GAAP and cash-flow metrics.”
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Organic Growth Strategy:
The company says that its recent M&A activities have enabled it to reach its long-stated goal of a 45-50% market share in the IP video platform software sector, and that it will now focus on organic growth. “Going forward, we expect the pace of our M&A activity to slow dramatically, as we optimize what we have acquired,” said Tuzman.
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Related Content:
Press Release: KIT digital Reports First Quarter 2011 Results
More Broadcast Vendor M&A: Kit Digital Buys ioko for $79.4m, Completes Buying Spree
KIT digital Reports Q4 and Fiscal 2010 Results, Raises Guidance, Says Big M&A Deal Still on Track
More Broadcast Vendor M&A: KIT digital Acquires Polymedia for $34.4m
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