Cision Reports First Quarter 2019 Results; Provides Updated Full Year 2019 Outlook

Q1 2018

Q2 2018

Q3 2018

Q4 2018

Q1 2019

Q1 2019 compared to Q1 2018

Average pro forma subscription customers

42,884

44,025

44,499

45,333

45,243

5.5%

Average annualized pro forma revenue per subscription customer

$ 11,475

$ 11,579

$ 11,731

$ 11,612

$ 11,552

0.7%

Pro forma transaction customers

40,216

41,172

38,152

39,173

37,662

Average pro forma revenue per transaction

$   1,375

$   1,447

$   1,350

$   1,518

$   1,439

4.7%

Updated 2019

Prior 2019

Initial Q2 2019

Q2 2018

Revenue

$773 - $783

$775 - $785

$190 - $192

$187.5

Revenue, excluding the impact from purchase accounting

$782 - $792

$782 - $792

$193 - $195

$187.8

Net income (loss) 

$10 - $20

($1) - $4

($1) - $1

($6.6)

Net income (loss) per share

$0.07 - $0.14

($0.01) - $0.02

($0.01) - $0.01

($0.05)

Adjusted EBITDA

$270 - $275

$270 - $275

$65 - $67

$66.1

Adjusted net income

$122 - $125

$122 - $125

$28 - $30

$29.3

Adjusted net income per diluted share

$0.82 - $0.85

$0.82 - $0.85

$0.20 - $0.21

$0.23

Pro-forma fully diluted weighted average shares outstanding

148.0

148.0

148.0

127.4

Depreciation expense

$29 - $32

$30 - $33

$7 - $8

$7.4

Amortization expense

$95 - $100

$105 - $110

$23 - $25

$26.2

Amortization expense included in cost of revenue

$20 - $23

$24 - $26

$5 - $6

$5.9

Interest expense, including debt extinguishment costs

$73 - $77

$76 - $79

$18 - $19

$20.5

Cash interest expense

$65 - $67

$64 - $66

$16 - $17

$16.3

Stock-based compensation

$9 - $10

$7 - $10

$2 - $3

$0.9

Capital expenditures, inclusive of capitalized software development

$40 - $43

$38 - $42

$9 - $10

$6.3

Current 

Prior

GBP to USD               

1.29

1.29

EUR to USD               

1.12

1.14

CAD to USD               

0.74

0.76

Cision Ltd. and its Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands, except per share and share amounts)

(Unaudited)

March 31,

December 31,

2019

2018

Assets

Current assets:

Cash and cash equivalents

$      82,913

$          104,769

Accounts receivable, net

140,024

120,882

Prepaid expenses and other current assets

32,311

22,824

Total current assets

255,248

248,475

Property and equipment, net

60,496

57,210

Other intangible assets, net

427,393

377,146

Goodwill

1,426,470

1,171,859

Operating lease right-of-use assets

65,737

-

Deferred tax asset

4,101

4,034

Other assets

8,762

7,652

Total assets

$  2,248,207

$       1,866,376

Liabilities and Stockholders' Equity

Current liabilities:

Current portion of long-term debt

$      13,953

$           13,210

Accounts payable

15,265

15,603

Accrued compensation and benefits

37,745

29,323

Operating lease liabilities

14,626

-

Other accrued expenses

80,936

82,507

Current portion of deferred revenue

170,588

139,725

Total current liabilities

333,113

280,368

Long-term debt, net of current portion

1,271,218

1,205,760

Deferred revenue, net of current portion

1,130

1,098

Operating lease liabilities, net of current portion

66,206

-

Deferred tax liability

74,407

69,232

Other liabilities

10,738

21,601

Total liabilities

1,756,812

1,578,059

Commitments and contingencies

Stockholders' equity:

Preferred stock, $0.0001 par value, 20,000,000 shares authorized; no shares issued and outstanding at March 31, 2019 and December 31, 2018

-

-

Common stock, $0.0001 par value, 480,000,000 shares authorized; 148,328,727 and 132,716,541 shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively

15

13

Additional paid-in capital

981,813

797,222

Accumulated other comprehensive loss

(62,090)

(68,941)

Accumulated deficit

(428,343)

(439,977)

Total stockholders' equity

491,395

288,317

 Total liabilities and stockholders' equity

$  2,248,207

$       1,866,376

Cision Ltd. and its Subsidiaries

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

(in thousands, except for per share amounts)

(Unaudited)

Three months ended March 31, 

2019

2018

Revenue

$       185,804

$       179,293

Cost of revenue

66,053

64,278

Gross Profit

119,751

115,015

Operating costs and expenses:

Sales and marketing

33,233

29,708

Research and development

8,543

6,700

General and administrative

51,965

46,222

Amortization of intangible assets

18,811

20,250

Total operating costs and expenses

112,552

102,880

Operating income

7,199

12,135

Non operating income (expense):

Foreign exchange gains (losses)

3,082

(7,883)

Interest and other income (loss), net

317

(256)

Gain on sale of business

28,144

-

Interest expense

(19,273)

(19,688)

Loss on extinguishment of debt

(355)

(2,432)

Total non operating income (loss)

11,915

(30,259)

Income (loss) before income taxes

19,114

(18,124)

Provision for (benefit from) income taxes

7,480

(17,682)

Net income (loss)

11,634

Other comprehensive income-foreign currency translation adjustments

6,851

7,075

Comprehensive income

$        18,485

$          6,633

Net income (loss) per share:

Basic

$            0.08

$           (0.00)

Diluted

$            0.08

$           (0.00)

Weighted average shares outstanding used in computing per share amounts:

Basic

145,413,574

123,946,264

Diluted

146,356,683

123,946,264

Cision Ltd. and its Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

Three months ended March 31, 

2019

2018

Cash flows from operating activities

Net income (loss)

$   11,634

$       (442)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization

31,021

33,277

Non-cash interest charges and amortization of debt discount and deferred financing costs

2,780

3,198

Equity-based compensation expense

2,081

1,341

Provision for doubtful accounts

267

1,572

Deferred income taxes

35

(18,791)

Unrealized currency translation (gains) losses 

(3,008)

7,864

Gain on sale of business

(28,144)

-

Payment of contingent consideration

(4,296)

-

Other

-

60

Changes in operating assets and liabilities, net of effects of acquisitions and disposal:

Accounts receivable

(6,171)

(6,812)

Prepaid expenses and other current assets 

(2,779)

(2,950)

Operating lease right-of-use assets

4,384

-

Other assets 

(442)

48

Accounts payable

(2,701)

(443)

Accrued compensation and benefits

5,098

(17)

Other accrued expenses

(843)

(3,330)

Deferred revenue

18,420

20,853

Operating lease liabilities

(2,144)

-

Other liabilities

3,701

875

Net cash provided by operating activities

28,893

36,303

Cash flows from investing activities

Purchases of property and equipment

(4,377)

(3,739)

Software development costs

(7,954)

(5,033)

Acquisitions of businesses, net of cash and restricted cash acquired of $6,068 and $2,711

(148,541)

(62,713)

Proceeds from disposal of business

44,865

-

Other

21

-

Net cash used in investing activities

(115,986)

(71,485)

Cash flows from financing activities

Proceeds from revolving credit facility

40,000

-

Repayment of revolving credit facility

(40,000)

-

Proceeds from term credit facility, net of debt discount of $1,013

73,987

-

Repayments of term credit facility

(3,494)

(3,362)

Payments of deferred financing costs

(1,619)

(131)

Proceeds from the exercise of stock options

264

-

Payment of contingent consideration

(3,695)

(2,873)

Net cash provided by (used in) financing activities

65,443

(6,366)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

394

742

Decrease in cash, cash equivalents and restricted cash

(21,256)

(40,806)

Cash, cash equivalents and restricted cash

Beginning of period

104,769

148,654

End of the period

$   83,513

$  107,848

Supplemental disclosure of cash flows information

Issuance of shares for acquisitions

182,248

20,143

Cision Ltd. and its Subsidiaries

Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA

(in millions)

(Unaudited)

Three months ended March 31,

2019

2018

Change

Net income (loss)

$   11.6

$    (0.4)

$  12.1

Depreciation and amortization

31.0

33.3

(2.3)

Interest expense and loss on extinguishment of debt

19.6

22.1

(2.5)

Provision for (benefit from) income taxes

7.5

(17.7)

25.2

EBITDA (1)

69.8

37.3

32.5

Acquisition and offering related costs

19.3

10.9

8.4

Stock-based compensation

2.1

1.3

0.7

Deferred revenue reduction from purchase accounting

3.1

0.9

2.2

Gain on sale of business

(28.1)

0.0

(28.1)

Unrealized translation (gain) loss

(3.0)

7.9

(10.9)

Adjusted EBITDA (2)

$   63.1

$   58.2

$     4.9

Cision Ltd. and its Subsidiaries

Reconciliation of Net Income (Loss) to Adjusted Net Income and Adjusted Net Income per Diluted Share

(in millions, except for per share and share amounts)

(Unaudited)

Three months ended March 31,

2019

2018

Change

Net income (loss)

$   11.6

$    (0.4)

$  12.1

Provision for (benefit from) income taxes

7.5

(17.7)

25.2

Acquisition and offering related costs

19.3

10.9

8.4

Gain on sale of business

(28.1)

-

(28.1)

Stock-based compensation expense

2.1

1.3

0.8

Deferred revenue reduction from purchase accounting

3.1

0.9

2.2

Amortization related to acquired intangible assets

23.7

25.9

(2.2)

Non-recurring interest and loss on extinguishment of debt

0.4

2.4

(2.1)

Unrealized translation (gain) loss 

(3.0)

7.9

(10.9)

Adjusted Income before income taxes

36.5

31.3

5.3

Less: Income tax at a 26% rate

(9.5)

(8.1)

(1.4)

Adjusted net income (3)

$   27.0

$   23.1

$     3.9

Pro forma fully-diluted weighted average shares outstanding

145.4

123.9

21.5

Adjusted net income per diluted share (4)

$   0.19

$   0.19

$       -

Cision Ltd. and its Subsidiaries

Reconciliation of Net Cash Provided by Operating Activities to Adjusted Net Cash Provided by

Operating Activities

(in millions)

(Unaudited)

Three months ended March 31,

2019

2018

Change

Net cash provided by operating activities

$   28.9

$   36.3

$   (7.4)

Acquisition and offering related costs

19.3

10.9

8.4

Adjusted net cash provided by operating activities (5)

$   48.2

$   47.2

$     1.0

(1)

Cision defines EBITDA as net income (loss), plus depreciation and amortization expense, plus interest expense and loss on extinguishment of debt, plus provision for (or minus benefit from) income taxes.

(2)

Cision defines Adjusted EBITDA as EBITDA, further adjusted for acquisition and offering related costs, stock-based compensation, deferred revenue reduction from purchase accounting, (gains) losses related to divested businesses or assets, sponsor fees and expenses, and unrealized translation losses (gains). All of the items included in the reconciliation from net income to Adjusted EBITDA are either non-cash items or are items that we consider to be less useful in assessing our operating performance. In the case of the non-cash items, we believe that investors can better assess our operating performance if the measures are presented without such items because, unlike cash expenses, these adjustments do not affect our ability to generate free cash flow or invest in our business. For example, by excluding depreciation and amortization from EBITDA, users can compare operating performance without regard to different accounting determinations such as useful life. In the case of the other items, we believe that investors can better assess operating performance if the measures are presented without these items because their financial impact does not reflect ongoing operating performance.

(3)

Cision defines Adjusted net income as net income (loss) plus provision for (or minus benefit from) income taxes, further adjusted for acquisition and offering related costs, (gains) losses related to divested businesses or assets, stock-based compensation, deferred revenue reduction from purchase accounting, amortization related to acquired intangibles, non-recurring interest and losses on extinguishment of debt, sponsor fees and expenses, and unrealized translation losses (gains), which together, sum to Adjusted net income (loss) before income taxes. Adjusted net income (loss) before income taxes is then taxed at an assumed long-term corporate tax rate of 26%. All of the items included in the reconciliation from net income to Adjusted net income are either non-cash items or are items that we consider to be less useful in assessing our operating performance. In the case of the non-cash items, we believe that investors can better assess our operating performance if the measures are presented without such items because, unlike cash expenses, these adjustments do not affect our ability to generate free cash flow or invest in our business. For example, by excluding the amortization related to acquired intangibles, users can compare operating performance without regard to highly variable amortization expenses related to our acquisitions. In the case of the other items, we believe that investors can better assess operating performance if the measures are presented without these items because their financial impact does not reflect ongoing operating performance.

(4)

Cision defines Adjusted net income per diluted share as Adjusted net income, as defined above, divided by the fully-diluted pro forma weighted average shares outstanding for the period. For purposes of calculating the number of fully diluted shares outstanding, we have excluded the potential impact of dilution from outstanding warrants to purchase shares of our common stock prior to the dates of their conversion, and stock options and restricted units issued and outstanding pursuant to our 2017 Omnibus Incentive Plan. During the second quarter of fiscal 2018, we issued an aggregate of 6,342,989 ordinary shares (6,100,209 ordinary shares on May 18, 2018 and 242,780 ordinary shares on June 4, 2018), in exchange for all of our outstanding warrants, pursuant to the completion of our warrant exchange transactions. During the third quarter of 2018, we issued 2,000,000 ordinary shares for the earn-out achieved during the quarter. Commencing on these respective issuance dates, we included the issued shares in our fully-diluted pro forma weighted average share count.

(5)

Cision defines Adjusted net cash provided by operating activities as net cash provided by operating activities adjusted for acquisition related costs and expenses.