Company reduces quarterly operating expenses by
51% vs. the same quarter prior year, drives $13.6 million positive
swing in quarterly income from continuing operations, demonstrating
transformation plan’s rapid effectiveness
The Arena Group Holdings, Inc. (NYSE American: AREN) (“Arena”),
a technology platform and media company home to hundreds of media
brands, including TheStreet, Parade Media (“Parade”), Men’s
Journal, Surfer, Powder and Athlon Sports, today announced
financial results for the three and nine months ending September
30, 2024 (“Q3 2024”). The Company’s business transformation plan
enabled a positive swing of more than $13.6 million in quarterly
income from continuing operations in the third quarter of 2024
compared to the net loss from continuing operations in the third
quarter of 2023 (“Q3 2023”). This resulted in quarterly net income
of $4.0 million and the first quarter of positive net income in the
Company’s history.
Financial Highlights for Q3 2024:
- Q3 2024 revenue from continuing operations was $33.6 million,
compared to $37.0 million from continuing operations in Q3
2023.
- Net income was $4.0 million, or $0.11 in diluted earnings per
share for Q3 2024, compared to a net loss of $11.2 million, or
$0.47 in diluted loss per share for Q3 2023.
- Total operating expenses from continuing operations for Q3 2024
were $8.9 million, less than half the $18.4 million spent in Q3
2023 from continuing operations.
- Adjusted EBITDA for Q3 2024 was $11.2 million compared to
Adjusted EBITDA of $3.1 million for Q3 2023.
- Arena closed a deal to license a copy of its proprietary
content management system. This deal also included Arena acquiring
multiple sites, including the top-tier automotive website,
Autoblog.
- Arena extended the maturity on its line of credit with Simplify
Inventions, LLC and converted $15 million of debt to common
equity.
“The financial results for Q3 2024 reflect the strength of the
new, leaner, more efficient Arena Group,” said The Arena Group CEO
Sara Silverstein. “We’re achieving meaningful revenue
diversification, including a significant increase in e-commerce and
other revenue, enabling a substantial improvement in profitability.
We generated higher gross margins, returned to positive operating
income, and delivered our first-ever quarter of positive net
income.”
“Our business transformation plan has focused on a restructuring
and investments in tech and editorial,” added Silverstein. “We’re
building a modern media company that not only creates great
content, but also delivers strong results for our partners and
drives diversified revenue and sustainable profits. We generated
more than $13.6 million higher income from continuing operations on
$3.4 million in lower revenue as we shed unprofitable operations.
We believe we now have a stable, profitable platform for
growth.”
After cutting an expected $40 million in costs on an annual
basis, while leaving its editorial and technology teams largely in
place, Arena’s transformation has focused on growth, audience
development, diversifying revenue and a strong balance sheet.
This includes advancements in tech that help its partners better
reach and leverage the company’s 100 million monthly users, not
only for advertising but also for e-commerce. Arena’s investment in
obtaining first-party data – via its proprietary platform –
provides industry-leading addressability and monetization.
Arena’s affiliate commerce business increased 287% during the
six months Q2-Q3 2024 versus the same period last year with
significant growth in real, organic traffic to commerce posts and
deeper relationships with retail partners who see the value of the
highly-transactional audiences. While expanding the company’s range
of commerce coverage, it has also improved revenue per post 57% Q3
2024 vs Q2 2024 as the company has become a trusted partner to
top-tier merchants.
Brand highlights:
- Athlon Sports: Audience traffic continues to grow
substantially, increasing to 231M page views in Q3 (up 65% vs Q2).
The site now garners an average of 77M page views a month, making
it one of the world's largest sports websites. Revenue was up 65%
Q3 vs. Q2.
- Parade: Digital traffic of Parade and Parade Pets
also remains strong with more than 46M average monthly users and
62M average monthly page views. It has balanced, diversified
revenue as its e-commerce business and social media audience
continue to grow.
- TheStreet: The financial brand continues to reach
a large, dedicated, high-net-worth, finance-focused audience and
excels at diversifying revenue streams through affiliate commerce
which is up +396% this quarter vs Q2.
Use of Non-GAAP Financial Measures
We report our financial results in accordance with generally
accepted accounting principles in the United States of America
(“GAAP”); however, management believes that certain non-GAAP
financial measures provide users of our financial information with
useful supplemental information that enables a better comparison of
our performance across periods. We believe Adjusted EBITDA provides
visibility to the underlying continuing operating performance by
excluding the impact of certain items that are noncash in nature or
not related to our core business operations. We calculate Adjusted
EBITDA as net income (loss) as adjusted for net loss from
discontinued operations, with additional adjustments for (i)
interest expense (net), (ii) income taxes, (iii) depreciation and
amortization, (iv) stock-based compensation, (v) change in
valuation of contingent consideration; (vi) liquidated damages,
(vii) loss on impairment of assets, (viii) employee retention
credit, and (ix) employee restructuring payments.
Our non-GAAP Adjusted EBITDA may not be comparable to a
similarly titled measure used by other companies, has limitations
as an analytical tool, and should not be considered in isolation,
or as a substitute for analysis of our operating results as
reported under GAAP. Additionally, we do not consider our non-GAAP
Adjusted EBITDA as superior to, or a substitute for, the equivalent
measures calculated and presented in accordance with GAAP. Some of
the limitations are that Adjusted EBITDA:
- does not reflect interest expense, or the cash required to
service our debt, which reduces cash available to us;
- does not reflect income tax provision, which is a noncash
expense;
- does not reflect depreciation and amortization expense and,
although this is a noncash expense, the assets being depreciated
may have to be replaced in the future, increasing our cash
requirements;
- does not reflect stock-based compensation and, therefore, does
not include all of our compensation costs;
- does not reflect the change in valuation of contingent
consideration, and, although this is a noncash income or expense,
the change in the valuations each reporting period are not impacted
by our actual business operations but is instead strongly tied to
the change in the market value of our common stock;
- does not reflect liquidated damages and, therefore, does not
include future cash requirements if we repay the liquidated damages
in cash instead of shares of our common stock (which the investor
would need to agree to);
- does not reflect any losses from the impairment of assets,
which is a noncash operating expense;
- does not reflect the employee retention credits recorded by us
for payroll related tax credits under the CARES Act; and
- does not reflect payments related to employee severance and
employee restructuring changes for our former executives.
The following table presents a reconciliation of Adjusted EBITDA
to net loss, which is the most directly comparable GAAP measure,
for the periods indicated:
Three Months Ended September 30,
2024
2023
Net income (loss)
$
3,956
$
(11,166
)
Net loss from discontinued operations
822
2,394
Net income (loss) from continued operations
4,778
(8,772
)
Add: Interest expense (net)
3,159
4,042
Income taxes
40
52
Depreciation and amortization
2,379
3,246
Stock-based compensation
732
3,762
Change in valuation of contingent consideration
-
60
Liquidated damages
77
151
Employee restructuring payments
(8
)
605
Adjusted EBITDA
$
11,157
$
3,146
About The Arena Group
The Arena Group (NYSE American: AREN) is an innovative
technology platform and media company with a proven cutting-edge
playbook that transforms media brands. Our unified technology
platform empowers creators and publishers with tools to publish and
monetize their content, while also leveraging quality journalism of
anchor brands like TheStreet, Parade, Men’s Journal and Athlon
Sports to build their businesses. The company aggregates content
across a diverse portfolio of brands, reaching over 100 million
users monthly. Visit us at thearenagroup.net and discover how we
are revolutionizing the world of digital media.
Forward-Looking Statements
This Press Release of The Arena Group Holdings, Inc. (the
“Company,” “we,” “our,” and “us”) contains certain forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933, as amended (the “Securities Act”), and Section 21E of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Forward-looking statements relate to future events or future
performance and include, without limitation, statements concerning
our business strategy, future revenues, cost reductions, market
growth, capital requirements, product introductions, expansion
plans and the adequacy of our funding and our ability to alleviate
the conditions that raise substantial doubt about our ability to
continue as a going concern (as disclosed in our Quarterly Report
on Form 10-Q for the quarterly period ended September 30, 2024
filed with the SEC on November 14, 2024). Other statements
contained in this Press Release that are not historical facts are
also forward-looking statements. We have tried, wherever possible,
to identify forward-looking statements by terminology such as
“may,” “will,” “could,” “should,” “expects,” “anticipates,”
“intends,” “plans,” “believes,” “seeks,” “estimates,” and other
stylistic variants denoting forward-looking statements.
We caution investors that any forward-looking statements
presented in this Press Release, or that we may make orally or in
writing from time to time, are based on information currently
available, as well as our beliefs and assumptions. The actual
outcome related to forward-looking statements will be affected by
known and unknown risks, trends, uncertainties, and factors that
are beyond our control or ability to predict. Although we believe
that our assumptions are reasonable, they are not guarantees of
future performance, and some will inevitably prove to be incorrect.
As a result, our actual future results can be expected to differ
from our expectations, and those differences may be material.
Accordingly, investors should use caution in relying on
forward-looking statements, which are based only on known results
and trends at the time they are made, to anticipate future results
or trends. We detail other risks in our public filings with the
Securities and Exchange Commission (the “SEC”), including in Part
I, Item 1A, Risk Factors, in our Annual Report on Form 10-K for the
year ended December 31, 2023 filed with the SEC on April 1, 2024
and in Part II, Item 1A, Risk Factors, in Quarterly Report on Form
10-Q for the quarterly period ended September 30, 2024 filed with
the SEC on November 14, 2024. The discussion in this Press Release
should be read in conjunction with the condensed consolidated
financial statements and notes thereto included in Part I, Item 1
of our Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 2024 and our consolidated financial statements and
notes thereto included in Part II, Item 8 of our Annual Report on
Form 10-K for the year ended December 31, 2023.
This press release and all subsequent written and oral
forward-looking statements attributable to us or any person acting
on our behalf are expressly qualified in their entirety by the
cautionary statements contained or referred to in this section. We
do not undertake any obligation to release publicly any revisions
to our forward-looking statements to reflect events or
circumstances after the date of this Press Release except as may be
required by law.
THE ARENA GROUP HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS Three
Months Ended September 30, Nine Months Ended September
30,
2024
2023
2024
2023
Revenue
$
33,555
$
36,996
$
89,679
$
99,486
Cost of revenue (includes amortization of platform development and
developed technology for the three months ended September 30, 2024
and 2023 of $1,474 and $2,191, respectively and for the nine months
ended September 30, 2024 and 2023 of $4,530 and $6,883,
respectively)
16,562
23,046
53,035
61,991
Gross profit
16,993
13,950
36,644
37,495
Operating expenses Selling and marketing
2,011
6,422
10,326
19,173
General and administrative
6,023
10,940
24,790
35,516
Depreciation and amortization
905
1,055
2,805
3,216
Loss on impairment of assets
-
-
1,198
119
Total operating expenses
8,939
18,417
39,119
58,024
Income (loss) from operations
8,054
(4,467
)
(2,475
)
(20,529
)
Other (expense) income Change in valuation of contingent
consideration
-
(60
)
(313
)
(469
)
Interest expense, net
(3,159
)
(4,042
)
(11,747
)
(13,225
)
Liquidated damages
(77
)
(151
)
(229
)
(455
)
Total other expense
(3,236
)
(4,253
)
(12,289
)
(14,149
)
Income (loss) before income taxes
4,818
(8,720
)
(14,764
)
(34,678
)
Income tax provision
(40
)
(52
)
(116
)
(145
)
Income (loss) from continuing operations
4,778
(8,772
)
(14,880
)
(34,823
)
Loss from discontinued operations, net of tax
(822
)
(2,394
)
(92,709
)
(15,204
)
Net income (loss)
$
3,956
$
(11,166
)
$
(107,589
)
$
(50,027
)
Basic and diluted net income (loss) per common share: Continuing
operations
$
0.13
$
(0.37
)
$
(0.48
)
$
(1.61
)
Discontinued operations
(0.02
)
(0.10
)
(2.96
)
(0.70
)
Basic and diluted net income (loss) per common share
$
0.11
$
(0.47
)
$
(3.44
)
$
(2.31
)
Weighted average number of common shares outstanding – basic and
diluted
37,610,058
23,445,675
31,291,641
21,567,166
THE ARENA GROUP HOLDINGS, INC., AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS September 30, 2024
December 31, 2023 Assets Current assets: Cash and
cash equivalents
$
5,773
$
9,284
Accounts receivables, net
25,858
31,676
Prepayments and other current assets
5,675
5,791
Current assets from discontinued operations
528
43,648
Total current assets
37,834
90,399
Property and equipment, net
196
328
Operating lease right-of-use assets
2,421
176
Platform development, net
7,203
8,723
Acquired and other intangible assets, net
23,640
27,457
Other long term assets
356
1,003
Goodwill
42,575
42,575
Noncurrent assets from discontinued operations
-
18,217
Total assets
$
114,225
$
188,878
Liabilities, mezzanine equity and stockholders’ deficiency
Current liabilities: Accounts payable
$
4,192
$
7,803
Accrued expenses and other
23,386
28,903
Line of credit
-
19,609
Unearned revenue
7,574
16,938
Subscription refund liability
96
46
Operating lease liability, current portion
247
358
Contingent consideration
-
1,571
Liquidating damages payable
3,153
2,924
Bridge notes
8,000
7,887
Debt
102,404
102,309
Current liabilities from discontinued operations
98,378
47,673
Total current liabilities
247,430
236,021
Unearned revenue, net of current portion
357
542
Operating lease liability, net of current portion
1,911
-
Other long-term liabilities
46
406
Deferred tax liabilities
692
599
Simplify loan
1,100
-
Noncurrent liabilities from discontinued operations
-
10,137
Total liabilities
251,536
247,705
Mezzanine equity: Series G redeemable and convertible preferred
stock, $0.01 par value, $1,000 per share liquidation value and
1,800 shares designated; aggregate liquidation value: $168; Series
G shares issued and outstanding: 168; common shares issuable upon
conversion: 8,582 at September 30, 2024 and December 31, 2023
168
168
Series H convertible preferred stock, $0.01 par value, $1,000 per
share liquidation value and 23,000 shares designated; aggregate
liquidation value: $14,356 and $14,356; Series H shares issued and
outstanding: none and 14,356; common shares issuable upon
conversion: none and 1,981,128 at September 30, 2024 and December
31, 2023, respectively
-
-
Total mezzanine equity
168
168
Stockholders' deficiency: Common stock, $0.01 par value, authorized
1,000,000,000 shares; issued and outstanding: 47,448,047 and
23,836,706 shares at September 30, 2024 and December 31, 2023,
respectively
474
237
Additional paid-in capital
348,289
319,421
Accumulated deficit
(486,242
)
(378,653
)
Total stockholders’ deficiency
(137,479
)
(58,995
)
Total liabilities, mezzanine equity and stockholders’ deficiency
$
114,225
$
188,878
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241114017258/en/
Steve Janisse c-sjanisse@thearenagroup.net 404-574-9206
Arena (AMEX:AREN)
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