KIT Digital announced that its revenue for the first quarter of 2012 was $59m, down 16% from the previous quarter.
The GAAP net loss in the quarter was $24.9m, compared to GAAP net income of $400,000 last quarter and a GAAP net loss of $12.5m last year.
The non-GAP operating loss for the quarter was $8m, compared to non-GAAP operating income of $16.5m in the preceding quarter and a non-GAAP operating loss of $7.1m for the first quarter of 2011.
The results, which were in line with the KIT’s company’s negative pre-announcement earlier this month, are substantially lower than the company’s previously issued guidance of “at least $72m for the first quarter of 2012”, and full year 2012 revenue in the range of $320m to $330m, with a non-GAAP operating margin in the range of 23.5% to 25.5%. Based on this guidance, the consensus estimates of equity analysts for the quarter had been revenue of $72.4m and earnings of 3 cents per share.
The poor results are the latest in a series of issues that have roiled the company recently.
Former KIT Digital CEO Kaleil Isaza Tuzman resigned from his position as the company’s non-executive chairman, citing differences with the company’s board of directors regarding KIT’s strategic sales process.
Tuzman, who oversaw an aggressive M&A program at KIT Digital, recently stepped down as down as the company’s CEO as part of a management shake-up, which also involved the resignation of four directors from the company’s board.
In response to the company’s recent problems, KIT Digital says it has undertaken a number of initiatives aimed at corrective action. These include:
- Hiring a new Corporate Controller based in New York;
- Hiring a new Head of Internal Audit based in New York;
- Retaining 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
- Appointing HSBC as global financial services partner to implement cash management and pooling functions.
- 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.
Completed Capital Raise
The company also announced that it has raised gross proceeds of approximately $29.2m through the sale of common stock. Cannacord Genuity acted as sole placement agent.
FY 2012 Updated Outlook
KIT said that it now expects its revenue for the full year 2012 to be approximately $250m with non-GAAP operating income margins “trending toward previous levels” in the second half of the year. The company’s previous guidance was for full year 2012 revenue in the range of $320m to $330m, with a non-GAAP operating margin in the range of 23.5% to 25.5%.
“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.”
Press Release: KIT digital Reports Q1 2012 Results In Line With Preliminary Q1 2012 Announcement
WSJ Article: Investors Need First Aid KIT
Streaming Media Article: What’s Going on with KIT Digital?
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