Professional Diversity Network, Inc. (NASDAQ:IPDN) (“PDN” or the
“Company”), a global developer and operator of online and in-person
networks that provides access to networking, training, educational
and employment opportunities for diverse professionals, announced
financial results for the quarter ended March 31, 2017:
Highlights of Q1 Results
- PDN Career Network business revenue grew 4.2% to $725,000
compared to first quarter 2016
- Noble Voice Education business revenue grew 13.4% to
$1,724,000 compared to first quarter 2016
- New China Education and Training business generated revenue of
$324,000
"The first quarter of 2017 was transformative for PDN, with the
commencement of our China education and training business, the
first stage of the plan envisioned by Cosmic Forward Limited
("CFL"), our investor group that acquired majority ownership
interest in the Company during the fourth quarter of 2016. We
believe this launch will help establish a base from which PDN will
grow and become profitable," said Michael Wang, PDN Chief Executive
Officer.
He continued, "We experienced revenue growth in our PDN Network
and Noble Voice businesses period-over-period and have a stronger
balance sheet compared to December 31, 2016, as a result of an
additional investment of $3.0 million from Cosmic Forward Limited,
which increased its ownership percentage in the Company to
54.64%. We previously announced our intention to launch the
first of three new business initiatives in China, during the first
quarter of 2017. In fact, we achieved this stated goal,
launching our first education and training event in March and we
exceeded our internal goals for revenue and profitability.
Early in the second quarter, we successfully expanded these
activities in China. Based on our continuing efforts toward
restructuring our US-based activities, we hope to achieve an
operating profit by mid-2018."
Mr. Wang concluded, "The significant net losses and decreased
revenues, compared to the previous year's first quarter, were
unfortunately expected and are part-and-parcel of the process of
restructuring and transforming our US-based businesses."
During the quarter, revenues declined $1.7 million, to $5.6
million, compared to the same period in 2016. The revenue
decline was primarily due to the elimination of unprofitable
revenues in our NAPW membership segment, as we focus on creating
higher "lifetime value" of the NAPW memberships we sell by
enhancing our membership value and brand positioning. Total
costs and expenses increased to $9.3 million, compared to $9.2
million in the same period in 2016. The period-over-period
increase was primarily caused by G&A expenses supporting the
change-of-control and investment by CFL and the continuing
restructuring and rebuilding of the Company's US-based
businesses. Included in the expenses is approximately $1.4
million that we do not expect to recur, offset by significant
decreases in all other cost and expense categories. Excluding
these non-recurring costs, total costs and expenses would have
declined significantly compared to the year-ago quarter.
Loss from operations increased to $3.7 million compared to $1.9
million for the same quarter in 2016, primarily as a result of
non-recurring costs and the decrease in revenue at NAPW.
Commensurately, Net Loss increased $1.7 million, to $3.1 million,
while Net Loss Per Common Share remained flat at $0.80 compared to
the first quarter of last year.
Following are highlights of the activities and development in
each of our business segments:
NAPW
For the first quarter 2017, NAPW revenue declined 44% ($2.3
million) compared to the same quarter of 2016. This
significant decline is primarily a result of management efforts to
downsize the sales team at NAPW, and to focus on: 1) the
elimination of unprofitable revenue streams and 2) rebuilding a
foundation to grow membership based on increasing the value of an
NAPW membership through better services, and brand
positioning. These ongoing efforts, together with cash
management activities that impacted lead generation spending in the
quarter, also resulted in further decline in new membership
bookings compared to the same quarter in 2016. This decline in new
membership bookings will continue to negatively impact NAPW's
revenue for several quarters, as a function of the amortization of
revenue deferral of prior period bookings.
We believe the restructuring efforts and rebuilding of NAPW’s
digital marketing capabilities are beginning to show positive signs
in brand awareness and member engagement as evidenced by
significant increases in several of our internal Key Performance
Indicators (KPIs). As our brand building and digital and
content marketing initiatives continue, combined with a strategic
and purposeful rebuild of the sales force, we expect to see
improvements in NAPW’s long term performance. Due to the nature of
key elements of the NAPW restructuring and rebuilding initiatives,
we expect revenue to stabilize in 2017 and to begin to improve in
early 2018. We believe we are executing the appropriate
strategy that will allow us to optimize the performance of the NAPW
business and position it for sustained long-term success.
PDN Network and Noble Voice
We also made significant changes in operations of our PDN
Network and Noble Voice businesses, which we have long believed
have the potential for growth but which have historically lagged
our NAPW segment in terms of revenue generation. During the
first quarter, the PDN Network and Noble Voice businesses combined
to represent more than 43% ($2.4 million) of our overall revenue,
with PDN Network revenue growing more than 4% ($28 thousand) and
Noble Voice revenue growing more than 13% ($204 thousand),
period-over-period.
In January 2017, we unified the management of PDN Network and
Noble Voice, to align with management's original vision for these
businesses when we first purchased Noble Voice, in late 2014.
We believe integration of Noble Voice and PDN Network
businesses will facilitate capture of natural synergies between the
Noble Voice call center operations and the PDN Network recruiting
business, ultimately creating new revenue opportunities and
allowing us to move into new markets. Noble Voice is
currently matching over 6,000 job seekers a day to one or more
career opportunities, and providing continuing education advice to
job seekers who may benefit from a more advanced degree or
certification. We have invested in technology to provide multiple
career matches per job seeker, and in management systems to provide
greater value to diverse job seekers and our employment
clients.
We believe the period-over-period growth seen in the first
quarter of 2017 is an early affirmation of our decision to unify
management of these businesses. Favorable market trends in career
and education service categories have helped our matching and
placement rates, and we are adding more telesales representatives
and increasing our B2B marketing efforts using advanced
technologies, such as Artificial Intelligence for email marketing
to meet growing demand.
China Operations
We began our China Operations' education and training business
on March 25, 2017, when we held our first publicly available
education/training session. That session attracted
approximately 2,300 paying attendees and generated $324,000 in
revenue. We held three additional events in April, which
attracted approximately 3,000 attendees, and plan to hold up to
twenty similar events over the balance of this year.
Management strongly believes in the viability of our China
Operations model, which forms the basis for the substantial
investment made by CFL. We are excited about the team we have
assembled to execute this strategy, and believe our early results
confirmed our plans.
We plan to launch our China-based women's networking business
over the summer months in 2017, and our international education
support business in the fourth quarter of 2017.
While expansion into China has added to our expense structure,
we believe that increased revenues will offset the costs associated
with China expansion in the subsequent quarters of 2017 and beyond.
The Company is implementing an asset light approach towards
building significant operations in China and while we have invested
in staff and offices, we have not had to make any investments in
acquisitions or large infrastructure projects.
In his concluding remarks, Michael Wang, the Company’s CEO,
noted, “Our efforts to refine domestic operations are making
progress with two of our three operating units achieving revenue
increases in the quarter. Our NAPW business is also making
qualitative improvements to increase the lifetime value of our
members, a key performance indicator for our future success.
What is most important is that our efforts to launch our
commercial activities in China have surpassed our internal goals
for attendance, revenue and profitability. We are
accelerating our activities in the second quarter and feel very
positive about the future stability of our U.S. operations and our
potential for future long-term growth from commercial activities in
China.”
Jim Kirsch, the Company’s Executive Co-Chairman, added, “We have
worked hard to put the Company in a position to sustain reasonable
growth in the U.S. while seeking new growth internationally.
We have an exceptional group of people, both in the US and
China, who are committed to creating value for our shareholders,
members and business partners. I firmly believe that the good
work we are doing for our society, helping people achieve their
professional aspirations, with both job opportunities and
continuing education advisory services are directly aligned with
being a very profitable company. Furthermore, I am impressed with
our quick start out of the gate in China and the vast potential the
China expansion has for our future. I want to express my personal
gratitude to all who have supported the Company along its
journey.”
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Professional Diversity Network,
Inc.Consolidated Balance Sheets |
|
|
|
|
|
|
|
|
March 31, |
|
|
December 31, |
|
|
|
2017 |
|
|
2016 |
|
|
|
(Unaudited) |
|
|
|
|
|
Current Assets: |
|
|
|
|
|
Cash and cash
equivalents |
|
$ |
5,562,237 |
|
|
$ |
6,068,973 |
|
Accounts receivable,
net |
|
|
2,661,755 |
|
|
|
2,170,529 |
|
Incremental direct
costs |
|
|
418,795 |
|
|
|
423,023 |
|
Prepaid expenses and
other current assets |
|
|
667,043 |
|
|
|
957,140 |
|
Total current
assets |
|
|
9,309,830 |
|
|
|
9,619,665 |
|
|
|
|
|
|
|
|
|
|
Property and equipment,
net |
|
|
276,019 |
|
|
|
277,534 |
|
Capitalized technology,
net |
|
|
108,408 |
|
|
|
173,368 |
|
Goodwill |
|
|
20,201,190 |
|
|
|
20,201,190 |
|
Intangible assets,
net |
|
|
8,466,339 |
|
|
|
9,183,439 |
|
Merchant reserve |
|
|
1,426,927 |
|
|
|
1,426,927 |
|
Security deposits |
|
|
175,375 |
|
|
|
220,754 |
|
Other assets |
|
|
- |
|
|
|
35,000 |
|
Total assets |
|
$ |
39,964,088 |
|
|
$ |
41,137,877 |
|
|
|
|
|
|
|
|
|
|
Current
Liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
1,190,956 |
|
|
$ |
2,172,332 |
|
Accrued expenses |
|
|
1,259,629 |
|
|
|
962,172 |
|
Deferred revenue |
|
|
5,431,317 |
|
|
|
5,485,599 |
|
Total current
liabilities |
|
|
7,881,902 |
|
|
|
8,620,103 |
|
|
|
|
|
|
|
|
|
|
Deferred tax
liability |
|
|
2,998,519 |
|
|
|
3,653,274 |
|
Deferred rent |
|
|
54,275 |
|
|
|
55,718 |
|
Other liabilities |
|
|
18,951 |
|
|
|
33,159 |
|
Total liabilities |
|
|
10,953,647 |
|
|
|
12,362,254 |
|
|
|
|
|
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
Equity |
|
|
|
|
|
|
|
|
Common stock, $0.01 par
value; 45,000,000 shares authorized; 3,934,616 shares and
3,623,899 shares issued as of March 31, 2017 and December 31, 2016,
respectively; and 3,931,838 shares and 3,619,338 shares outstanding
as of March 31, 2017 and December 31, 2016, respectively |
|
|
39,329 |
|
|
|
36,204 |
|
Additional paid in
capital |
|
|
79,568,158 |
|
|
|
76,234,772 |
|
Accumulated other
comprehensive loss |
|
|
(112 |
) |
|
|
- |
|
Accumulated
deficit |
|
|
(50,559,817 |
) |
|
|
(47,458,236 |
) |
Treasury stock, at
cost; 1,048 shares at March 31, 2017 and December 31, 2016 |
|
|
(37,117 |
) |
|
|
(37,117 |
) |
Total stockholders'
equity |
|
|
29,010,441 |
|
|
|
28,775,623 |
|
|
|
|
|
|
|
|
|
|
Total liabilities and
stockholders' equity |
|
$ |
39,964,088 |
|
|
$ |
41,137,877 |
|
|
|
|
|
Professional Diversity Network,
Inc.Consolidated Statements of Operations |
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
|
|
|
Revenues |
|
|
|
|
|
|
|
Membership fees and
related services |
|
$ |
2,815,496 |
|
|
|
$ |
5,040,174 |
|
Lead generation |
|
|
1,724,167 |
|
|
|
|
1,519,591 |
|
Recruitment
services |
|
|
658,544 |
|
|
|
|
623,309 |
|
Product sales and
other |
|
|
46,368 |
|
|
|
|
86,993 |
|
Education and
training |
|
|
324,204 |
|
|
|
|
- |
|
Consumer advertising
and marketing solutions |
|
|
65,702 |
|
|
|
|
73,076 |
|
Total revenues |
|
|
5,634,481 |
|
|
|
|
7,343,143 |
|
|
|
|
|
|
|
|
|
|
|
Costs and
expenses: |
|
|
|
|
|
|
|
|
|
Cost of revenues |
|
|
700,646 |
|
|
|
|
884,745 |
|
Sales and
marketing |
|
|
3,254,897 |
|
|
|
|
3,821,576 |
|
General and
administrative |
|
|
4,534,502 |
|
|
|
|
3,168,417 |
|
Litigation
settlement |
|
|
- |
|
|
|
|
500,000 |
|
Depreciation and
amortization |
|
|
835,830 |
|
|
|
|
867,010 |
|
Total costs and
expenses |
|
|
9,325,875 |
|
|
|
|
9,241,748 |
|
|
|
|
|
|
|
|
|
|
|
Loss from
operations |
|
|
(3,691,394 |
) |
|
|
|
(1,898,605 |
) |
|
|
|
|
|
|
|
|
|
|
Other (expense)
income |
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(12,399 |
) |
|
|
|
(389 |
) |
Interest and other
income |
|
|
2,250 |
|
|
|
|
1,132 |
|
Other finance
costs |
|
|
(2,324 |
) |
|
|
|
- |
|
Other (expense) income,
net |
|
|
(12,473 |
) |
|
|
|
743 |
|
|
|
|
|
|
|
|
|
|
|
Loss before income tax
benefit |
|
|
(3,703,867 |
) |
|
|
|
(1,897,862 |
) |
Income tax benefit |
|
|
(602,286 |
) |
|
|
|
(458,224 |
) |
Net loss |
|
|
(3,101,581 |
) |
|
|
|
(1,439,638 |
) |
|
|
|
|
|
|
|
|
|
|
Other comprehensive
loss: |
|
|
|
|
|
|
|
|
|
Foreign
currency translation adjustment |
|
|
(112 |
) |
|
|
|
- |
|
Comprehensive loss |
|
$ |
(3,101,693 |
) |
|
|
$ |
(1,439,638 |
) |
|
|
|
|
|
|
|
|
|
|
Net loss per common
share, basic and diluted |
|
$ |
(0.80 |
) |
|
|
$ |
(0.80 |
) |
|
|
|
|
|
|
|
|
|
|
Weighted average shares
used in computing net loss per common share: |
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
|
3,870,386 |
|
|
|
|
1,808,314 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table provides a reconciliation of Adjusted EBITDA
to Net Loss, the most directly comparable GAAP measure reported in
our consolidated financial statements:
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
Net
loss |
|
$ |
(3,102 |
) |
|
|
$ |
(1,440 |
) |
Stock-based compensation expense |
|
|
516 |
|
|
|
|
57 |
|
Litigation settlement |
|
|
- |
|
|
|
|
500 |
|
Depreciation and amortization |
|
|
836 |
|
|
|
|
867 |
|
Interest
expense |
|
|
12 |
|
|
|
|
- |
|
Interest
and other income |
|
|
(2 |
) |
|
|
|
(1 |
) |
Income
tax benefit |
|
|
(602 |
) |
|
|
|
(458 |
) |
Adjusted
EBITDA |
|
$ |
(2,342 |
) |
|
|
$ |
(475 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
About Professional Diversity Network (PDN)
Professional Diversity Network, Inc. (PDN) is a
global developer and operator of online and in-person networks that
provides access to networking, training, educational and employment
opportunities for diverse professionals. We operate subsidiaries in
the United States and China including Noble Voice, a career
placement and career counseling call center and National
Association of Professional Women (NAPW), which is one of the
largest, most recognized networking organizations of professional
women in the country, spanning more than 200 industries and
professions. Through an online platform and our relationship
recruitment affinity groups, we provide our employer clients a
means to identify and acquire diverse talent and assist them with
their efforts to comply with the Equal Employment Opportunity
Office of Federal Contract Compliance Program. Our mission is to
utilize the collective strength of our affiliate companies,
members, partners and unique proprietary platform to be
the standard in business diversity recruiting, networking
and professional development for women, minorities, veterans, LGBT
and disabled persons globally.
Forward-Looking Statements
This press release contains certain
forward-looking statements based on our current expectations,
forecasts and assumptions that involve risks and uncertainties.
This release does not constitute an offer to sell or a solicitation
of offers to buy any securities of any entity. Forward-looking
statements in this release are based on information available to us
as of the date hereof. Our actual results may differ materially
from those stated or implied in such forward-looking statements,
due to risks and uncertainties associated with our business, which
include the risk factors disclosed in our most recently filed
Annual Report on Form 10-K and in our subsequent filings with the
Securities and Exchange Commission. Forward-looking statements
include statements regarding our expectations, beliefs, intentions
or strategies regarding the future and can be identified by
forward-looking words such as "anticipate," "believe," "could,"
"estimate," "expect," "intend," "may," “plan,” "should," and
"would" or similar words. We assume no obligation to update the
information included in this press release, whether as a result of
new information, future events or otherwise. Our most recently
filed Annual Report on Form 10-K, together with this press release
and the financial information contained herein, are available on
our website, www.prodivnet.com. Please click on "Investor
Relations."
CONTACT: Professional Diversity Network, Inc.
Chris Wesser – EVP and Secretary
cwesser@prodivnet.com
516-659-8560
Jim Kirsch – Co Executive Chairman
jkirsch@prodivnet.com
312-614-9021
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