UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 
FORM 8-K

 
CURRENT REPORT
 
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
 
February 18 , 201 5
Date of Report (Date of earliest event reported)

 
YuMe, Inc.
(Exact name of registrant as specified in its charter)

 
Delaware	 	001-36039	 	27-0111478	
(State or other jurisdiction	 	(Commission	 	(IRS Employer	
of incorporation)	 	File Number)	 	Identification No.)	
 
1204 Middlefield Road, Redwood City, CA	 	94063	
(Address of principal executive offices)	 	(Zip Code)	
 
Registrant’s telephone number, including area code: (650) 591-9400

(Former name or former address, if changed since last report.)

 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions:
 
☐             Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
☐             Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
☐             Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
☐             Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) 

 

 
Item 2 .02      Results of Operations and Financial Condition.
 
On February 18, 2015, YuMe, Inc., (the “Company”) issued a press release announcing its financial results for the fourth quarter and full year ended December 31, 2014. A copy of this press release is attached hereto as exhibit 99.1.
 
The information included in the exhibit attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing.
 
Item 9.01       Financial Statements and Exhibits.
 
(d)  Exhibits.
 
The Company hereby furnishes the following exhibits:
 
Exhibit Number	 	Description	
99.1	 	Press release dated February 18, 2015	

 

 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 	YuMe, Inc.	

 	/s/ Tony Carvalho	
 	 	
 	Tony Carvalho	
 	Executive Vice President, Chief Financial Officer  	
 	(Principal Financial Officer and Duly Authorized Signatory)	

Dated: February 18, 2015	 	

 
3

 
INDEX TO EXHIBITS
 
Exhibit Number	 	Description	
99.1	 	Press release dated February 18, 2015	

  	 
Exhibit 99.1	
 
YUME REPORTS FOURTH QUARTER AND FULL YEAR 201 4 FINANCIAL RESULTS
 
Company Reports Third Consecutive Year of Adjusted EBITDA Profitability  
 
Redwood City, Calif. – February 18 , 201 5 – YuMe, Inc. (NYSE: YUME), a leading provider of digital video brand advertising solutions, today announced its financial results for the fourth quarter and full year ended December 31, 2014. Financial highlights include:
 
Fourth Quarter 2014
●	Revenue of $57.5 million, an increase of 6% from the fourth quarter of 2013 (Q4 2013);	
●	Gross margin of 48.6%, compared to 48.1% in Q4 2013;	
●	Adjusted EBITDA 1 of $5.0 million, compared to adjusted EBITDA of $8.3 million in Q4 2013;	
●	Net income of $2.3 million, or $0.07 per diluted share, compared to $5.4 million, or $0.16 per diluted share, in Q4 2013.	
 
Full Year 2014
●	Revenue of $178.1 million, an increase of 18% from 2013;	
●	Gross margin of 47.7%, compared to 46.9% in 2013;	
●	Adjusted EBITDA 1 of $1.8 million, compared to adjusted EBITDA of $9.0 million in 2013;	
●	Net loss of $8.4 million, or $0.26 per diluted share, compared to net income of $0.3 million, or $0.02 per diluted share, in 2013.	
●	As of December 31, 2014, the Company held $66.6 million in cash, cash equivalents and marketable securities and no debt.	
 
“The fourth quarter was a strong finish to another solid year. In 2014, we grew our direct sales business and invested in our programmatic initiatives, while achieving our third consecutive year of adjusted EBITDA profitability,” said Jayant Kadambi, Chief Executive Officer of YuMe. “We believe 2015 will be a watershed year for YuMe, as we expect our programmatic investments will enable us to more fully capitalize on the long-term opportunity in our market.”
 
Customer highlights include:
●	539 advertising customers in the fourth quarter of 2014, an increase of 47% from 367 in Q4 2013;	
●	880 advertising customers for full year 2014, an increase of 52% from 580 for full year 2013;	
●	Top 20 advertising customers for full year 2014 accounted for $63.3 million, or 36% of revenue, compared to $61.9 million, or 41% of revenue, for full year 2013.	

1 Adjusted EBITDA is a non-GAAP financial measure that we calculate as net income, adjusted to exclude income taxes, interest, depreciation and amortization, and stock-based compensation. We believe that adjusted EBITDA provides useful information to investors in understanding and evaluating our operating results in the same manner as management and the board of directors. This non-GAAP information is not necessarily comparable to non-GAAP information of other companies. Non-GAAP information should not be viewed as a substitute for, or superior to, net income prepared in accordance with GAAP as a measure of our profitability or liquidity. Users of this financial information should consider the types of events and transactions for which adjustments have been made.

 

 

Business Outlook
Today, the Company is providing the following estimates for its key financial measures for the first quarter and full year of 2015:
 
 	Q 1 201 5	FY 2015	
Revenue	$39.5 - $41.5 million	$196 - $206 million	
Adjusted EBITDA	$(4.0) - $(2.0) million	$0.0 - $4.0 million	
   
Conferen ce Call and Webcast Information
Senior management will host a conference call at 4:30 p.m. ET today to discuss the Company’s results. Investors may access the live call by dialing (877) 201-0168 or (647) 788-4901. A replay will be available through Tuesday, February 24 at (855) 859-2056 or (404) 537-3406. (Conference ID: 79910565). A live and archived Webcast of the call will be available at http://investors.yume.com .
 
About YuMe
YuMe, Inc. (NYSE: YUME) is a leading provider of digital video brand advertising solutions. Its proprietary data science-driven technologies and large audience footprint drive inventory monetization and enable advertisers to reach targeted, brand receptive audiences across a wide range of Internet-connected devices. Designed to serve the specific needs of brand advertising, YuMe’s technology platform simplifies the complexities associated with delivering effective digital video advertising campaigns in today’s highly-fragmented market. YuMe is headquartered in Redwood City, CA with European headquarters in London and 16 additional offices worldwide. For more information, visit  YuMe.com/pr , follow  @YuMeVideo  and like YuMe  on Facebook. Current YuMe logos can be found at www.yume.com/news/logos .
 
YuMe, YuMe for Publishers and YFP are trademarks of YuMe. All other brands, products or service names are or may be trademarks or service marks of their respective owners.
 
Forward-Looking Statements
This press release contains forward-looking statements, including those in management quotations and under the caption “Business Outlook”. In some cases, you can identify forward-looking statements by the words “may,” “will,” “expect,” “intend,” “plan,” “objective,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “potential,” “continue” and “ongoing,” or the negative of these terms, or other comparable terminology intended to identify statements about the future. All statements other than statements of historical fact are statements that could be forward-looking statements, including, but not limited to, statements about our programmatic initiatives; our growth strategy; our operating results; market trends; and quotations from management. These forward-looking statements are subject to risks and uncertainties, assumptions and other factors that could cause actual results and the timing of events to differ materially from future results that are expressed or implied in our forward-looking statements. Factors that could cause or contribute to such differences include our history of net losses and limited operating history, which make it difficult to evaluate our prospects, our fluctuating quarterly results of operations, and our dependence on a limited number of customers in a highly competitive industry.  These and other risk factors are discussed under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2013 and our Quarterly Report on Form 10-Q for the three months ended September 30, 2014 that have been filed with the U.S. Securities and Exchange Commission (the “SEC”), and in our future filings and reports with the SEC. The forward-looking statements in this press release are based on information available to YuMe as of the date hereof, and YuMe assumes no obligation to update any forward-looking statements.

 

 

Non-GAAP Financial Measures
To supplement our consolidated financial statements, which are prepared and presented in accordance with U.S. generally accepted accounting principles (“GAAP”), we report adjusted EBITDA, which is a non-GAAP financial measure. We calculate adjusted EBITDA as net income, excluding income taxes, interest, depreciation and amortization, and stock-based compensation. We believe that adjusted EBITDA provides useful information to investors in understanding our operating results in the same manner as management and the board of directors. This non-GAAP information is not necessarily comparable to non-GAAP information presented by other companies. Non-GAAP financial information should not be viewed as a substitute for, or superior to, financial information prepared in accordance with GAAP. Users of this non-GAAP financial information should consider the types of events and transactions for which adjustments have been made.
 
We have included adjusted EBITDA in this release because it is a key measure we use to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget and to develop short- and long-term operational plans. In particular, we believe that adjusted EBITDA can provide a useful measure for period-to-period comparisons of our operating results because it excludes some expenses that may mask underlying trends.
 
In the table following the financial statements attached to this press release, the non-GAAP financial measures used in this press release are reconciled to the most directly comparable GAAP financial measures. With respect to adjusted EBITDA expectations provided under “Business Outlook” above, quantitative reconciliation to the most directly comparable GAAP financial measure is not feasible, because unpredictable fluctuations in our stock price makes it difficult to estimate accurately future stock-based compensation expenses that are excluded from these non-GAAP financial measures. We expect the variability of the above charges may have a significant and unpredictable impact on our future GAAP financial results.
 
###
 
Investor Relations
Gary J. Fuges, CFA
ir@yume.com
650-503-7875  

 

 
YuMe, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)  
 
 	 	As of Dec ember 3 1 ,	 	 	As of December 31,	 	
 	 	2014	 	 	2013	 	
 	 	(Unaudited)	 	 	 	(1)	 	
Assets	 	 	 	 	 	 	 	 	
Current assets:	 	 	 	 	 	 	 	 	
Cash and cash equivalents	 	$	38,059	 	 	$	42,626	 	
Marketable securities	 	 	26,158	 	 	 	7,295	 	
Accounts receivable, net	 	 	68,441	 	 	 	65,493	 	
Prepaid expenses and other current assets	 	 	3,642	 	 	 	2,572	 	
Total current assets	 	 	136,300	 	 	 	117,986	 	
Marketable securities, long-term	 	 	2,428	 	 	 	14,186	 	
Property, equipment and software, net	 	 	10,407	 	 	 	6,610	 	
Goodwill	 	 	3,902	 	 	 	3,902	 	
Intangible assets, net	 	 	1,329	 	 	 	2,049	 	
Restricted cash	 	 	292	 	 	 	292	 	
Deposits and other assets	 	 	384	 	 	 	362	 	
Total assets	 	$	155,042	 	 	$	145,387	 	
 	 	 	 	 	 	 	 	 	
Liabilities and stockholders’ equity	 	 	 	 	 	 	 	 	
Current liabilities:	 	 	 	 	 	 	 	 	
Accounts payable	 	$	11,692	 	 	$	7,722	 	
Accrued digital media property owner costs	 	 	18,277	 	 	 	17,359	 	
Accrued liabilities	 	 	15,984	 	 	 	12,734	 	
Deferred revenue	 	 	198	 	 	 	314	 	
Capital leases, current	 	 	41	 	 	 	359	 	
Total current liabilities	 	 	46,192	 	 	 	38,488	 	
Capital leases, non-current	 	–	 	 	 	22	 	
Other long-term liabilities	 	 	117	 	 	 	139	 	
Deferred tax liability	 	 	431	 	 	 	773	 	
Total liabilities	 	 	46,740	 	 	 	39,422	 	
 	 	 	 	 	 	 	 	 	
Stockholders’ equity:	 	 	 	 	 	 	 	 	
Common stock	 	 	33	 	 	 	32	 	
Additional paid-in-capital	 	 	138,497	 	 	 	127,690	 	
Accumulated deficit	 	 	(30,067	)	 	 	(21,677	)	
Accumulated other comprehensive loss	 	 	(161	)	 	 	(80	)	
Total stockholders’ equity	 	 	108,302	 	 	 	105,965	 	
Total liabilities and stockholders’ equity	 	$	155,042	 	 	$	145,387	 	
 
(1) The condensed consolidated balance sheet as of December 31, 2013 was derived from audited financial statements.

 

 
YuMe, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)  
(Unaudited)
 
 	 	Three Months Ended	 	 	Year Ended	 	
 	 	December 3 1 ,	 	 	December 3 1 ,	 	
 	 	2014	 	 	2013	 	 	201 4	 	 	201 3	 	
Revenue	 	$	57,463	 	 	$	54,039	 	 	$	178,134	 	 	$	151,128	 	
Cost of revenue(1)	 	 	29,561	 	 	 	28,063	 	 	 	93,096	 	 	 	80,242	 	
Gross profit	 	 	27,902	 	 	 	25,976	 	 	 	85,038	 	 	 	70,886	 	
Operating expenses:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Sales and marketing(1)	 	 	17,439	 	 	 	14,273	 	 	 	65,112	 	 	 	47,118	 	
Research and development(1)	 	 	1,881	 	 	 	1,417	 	 	 	5,908	 	 	 	4,499	 	
General and administrative(1)	 	 	6,107	 	 	 	4,406	 	 	 	21,736	 	 	 	17,992	 	
Total operating expenses	 	 	25,427	 	 	 	20,096	 	 	 	92,756	 	 	 	69,609	 	
Income (loss) from operations	 	 	2,475	 	 	 	5,880	 	 	 	(7,718	)	 	 	1,277	 	
Interest and other income (expense), net	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Interest expense, net	 	–	 	 	 	(6	)	 	 	(8	)	 	 	(47	)	
Other income (expense), net	 	 	(357	)	 	 	13	 	 	 	(888	)	 	 	(239	)	
Total interest and other income (expense), net	 	 	(357	)	 	 	7	 	 	 	(896	)	 	 	(286	)	
Income (loss) before income taxes	 	 	2,118	 	 	 	5,887	 	 	 	(8,614	)	 	 	991	 	
Income tax (expense) benefit	 	 	149	 	 	 	(508	)	 	 	224	 	 	 	(670	)	
Net income (loss)	 	$	2,267	 	 	$	5,379	 	 	$	(8,390	)	 	$	321	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income (loss) per share:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic	 	$	0.07	 	 	$	0.17	 	 	$	(0.26	)	 	$	0.02	 	
Diluted	 	$	0.07	 	 	$	0.16	 	 	$	(0.26	)	 	$	0.02	 	
Weighted-average shares used to compute net income (loss) per share:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic	 	 	33,050	 	 	 	31,916	 	 	 	32,591	 	 	 	15,752	 	
Diluted	 	 	33,904	 	 	 	33,461	 	 	 	32,591	 	 	 	17,250	 	

 	(1)	Stock-based compensation included above (in thousands, unaudited):	
 
 	 	Three Months Ended	 	 	Year Ended	 	
 	 	December 3 1 ,	 	 	December 3 1 ,	 	
 	 	2014	 	 	2013	 	 	2014	 	 	2013	 	
Cost of revenue	 	$	97	 	 	$	78	 	 	$	342	 	 	$	185	 	
Sales and marketing	 	 	754	 	 	 	619	 	 	 	2,776	 	 	 	1,806	 	
Research and development	 	 	131	 	 	 	123	 	 	 	482	 	 	 	346	 	
General and administrative	 	 	623	 	 	 	506	 	 	 	2,174	 	 	 	1,497	 	
Total stock-based compensation	 	$	1,605	 	 	$	1,326	 	 	$	5,774	 	 	$	3,834	 	

 

 
YuMe, Inc.
RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION
(In thousands)  
(Unaudited)
 
 	 	Three Months Ended	 	 	Year Ended	 	
 	 	December 3 1 ,	 	 	December 3 1 ,	 	
 	 	2014	 	 	2013	 	 	2014	 	 	2013	 	
Net income (loss)	 	$	2,267	 	 	$	5,379	 	 	$	(8,390	)	 	$	321	 	
Adjustments:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Interest expense	 	–	 	 	 	6	 	 	 	8	 	 	 	47	 	
Income tax expense (benefit)	 	 	(149	)	 	 	508	 	 	 	(224	)	 	 	670	 	
Depreciation and amortization expense	 	 	1,251	 	 	 	1,066	 	 	 	4,620	 	 	 	4,103	 	
Stock-based compensation expense	 	 	1,605	 	 	 	1,326	 	 	 	5,774	 	 	 	3,834	 	
Total Adjustments	 	 	2,707	 	 	 	2,906	 	 	 	10,178	 	 	 	8,654	 	
Adjusted EBITDA	 	$	4,974	 	 	$	8,285	 	 	$	1,788	 	 	$	8,975