Arena (US:AREN)2023-08-13 16:00Revenue Performance - Digital advertising revenue increased by 19% and 14% for the three and six months ended June 30, 2023, compared to the same periods in 2022[154]. - Revenue per page view (RPM) for the three and six months ended June 30, 2023, was $22.98 and $19.73, respectively, compared to $17.00 and $16.01 for the same periods in 2022[157]. - For the three months ended June 30, 2023, total revenue increased by $5,054, or 9.4%, to $58,806 compared to $53,752 for the same period in 2022[176]. - Total revenue for the six months ended June 30, 2023, increased by $8,191 to $110,186 compared to $101,995 for the same period in 2022, representing an 8.0% growth[192]. Digital Subscriptions - Digital subscriptions decreased by $2,112, or 38.5% for the three months ended June 30, 2023[176]. - Digital subscriptions decreased by $4,702 to $7,249 for the six months ended June 30, 2023, reflecting a 39.3% decline[192][193]. Profitability and Loss - The company incurred a net loss of $38,861 for the six months ended June 30, 2023, with cash on hand of $5,489[159]. - Net loss for the three months ended June 30, 2023 was $19,484, a reduction of $2,723 from $22,207 in the same period of 2022[172]. - Net loss from continuing operations for the six months ended June 30, 2023, was $38,861, a decrease of $1,795 from $40,656 in the prior year, indicating a 4.4% improvement[186]. Operating Expenses - Total operating expenses for the six months ended June 30, 2023, were $71,867, a slight decrease of $83 compared to $71,950 in the same period of 2022[186]. - Operating expenses decreased by $801, leading to a loss from operations of $14,296, which improved by $6,335 compared to the prior year[172]. - Total selling and marketing expenses for the three months ended June 30, 2023, were $19,503, an increase of $2,020 or 11.6% from $17,483 in the prior year[181]. - Selling and marketing expenses totaled $37,472 for the six months ended June 30, 2023, reflecting an increase of $2,773 or 8.0% from $34,699 in the prior year[197]. - General and administrative expenses decreased by $3,112 to $11,722 for the three months ended June 30, 2023, primarily due to reductions in stock-based compensation and professional services[182]. - General and administrative expenses decreased by $3,573 or 12.6% to $24,775 for the six months ended June 30, 2023, compared to $28,348 in the same period of 2022[199]. Cash Flow and Working Capital - Net cash used in operating activities for the six months ended June 30, 2023, was $16,400, compared to $7,465 for the same period in 2022[168]. - The working capital deficit increased to $144,754 as of June 30, 2023, from $137,669 as of December 31, 2022[166]. - The company had $25,093 available under its working capital line of credit as of June 30, 2023[161]. Debt and Financing - The company plans to refinance or extend the maturities of its current debt totaling $102,691 to alleviate concerns about its ability to continue as a going concern[160]. - Interest expense increased significantly to $5,001 for the three months ended June 30, 2023, compared to $2,506 in the same period of 2022, marking a 99.6% rise[183][184]. - Interest expense increased by $3,857 or 72.4% to $9,183 for the six months ended June 30, 2023, compared to $5,326 in the prior year[200]. Investments and Commitments - A binding letter of intent was signed with Simplify Inventions, LLC to expand video capabilities, involving a cash investment of approximately $50,000 and an advertising commitment of $12,000 annually for five years[150]. - The company guaranteed a minimum annual royalty of $15,000 through December 31, 2029, related to the Sports Illustrated media business[162]. Other Financial Metrics - Gross profit for the three months ended June 30, 2023 was $21,664, an increase of $5,534, representing a gross profit margin of 36.8%, up from 30.0% in the prior year[174]. - Gross profit for the six months ended June 30, 2023, was $43,009, an increase of $7,133 or 19.9% from $35,876 in the prior year, with a gross profit margin improvement to 39.0%[190][192]. - Total cost of revenue for the three months ended June 30, 2023 was $37,142, a decrease of $480 from $37,622 in the same period of 2022[179]. - For the six months ended June 30, 2023, total cost of revenue was $67,177, an increase of $1,058 or 1.6% compared to $66,119 in the same period of 2022[194]. Stock and Shares - The weighted average number of shares outstanding increased to 22,074,500 from 18,258,890 year-over-year[171]. - The company reported a basic and diluted net loss per common share of $(0.88) for continuing operations, an improvement of $0.30 from $(1.18) in the prior year[171]. Adjusted EBITDA - Adjusted EBITDA for the six months ended June 30, 2023 was $(4,536), compared to $(5,340) for the same period in 2022[206]. - Stock-based compensation decreased by $985 or 20.4% to $3,845 for the six months ended June 30, 2023[194]. - Stock-based compensation is a noncash cost that affects Adjusted EBITDA, which helps in making period-to-period comparisons of operating performance[208]. Changes in Fair Value - The change in fair value of contingent consideration was $90 for the three months ended June 30, 2023, reflecting the impact of the Fexy Studios acquisition[183]. - The change in fair value of contingent consideration was $(409) for the six months ended June 30, 2023, representing a 100% change from no prior value[200]. - Change in fair value of contingent consideration relates to the put option on common stock from the Fexy Studios acquisition[209]. Miscellaneous - Liquidated damages are owed to investors from private placements conducted between 2018 and 2020 due to unmet covenants[211]. - Loss on impairment of assets indicates certain assets are no longer useful[211]. - Employee retention credit represents payroll-related tax credits under the Cares Act[211]. - Employee restructuring payments include severance payments to employees and payments to the former CEO for the three and six months ended June 30, 2023 and 2022, respectively[211]. - Management's financial analysis is based on GAAP-compliant condensed consolidated financial statements, with estimates that may differ from actual results[212]. - There have been no material changes to critical accounting policies and estimates compared to the previous Annual Report[213]. - Recent accounting pronouncements are discussed in the Notes to the condensed consolidated financial statements[214]. - Market risk disclosures are not applicable to smaller reporting companies as defined by SEC regulations[215].