Arena (US:AREN)2023-11-14 21:37Financial Performance - Digital advertising revenue increased by 19% and 14% for the three and nine months ended September 30, 2023, compared to the same periods in 2022[173]. - Total revenue for the three months ended September 30, 2023, was $63,418, representing a 10.7% increase from $57,277 in the same period of 2022, driven by a $6,141 increase in revenue[190]. - For the nine months ended September 30, 2023, total revenue increased by $14,332 or 9.0% to $173,604 compared to $159,272 in the same period of 2022[208]. - Digital revenue accounted for 72.3% of total revenue in Q3 2023, up from 66.3% in Q3 2022, with digital advertising revenue increasing by 28.6% to $36,659[196]. - Total digital revenue increased by $12,274 or 11.7% to $116,897 for the nine months ended September 30, 2023 compared to $104,623 in the same period of 2022[210]. Profitability - Gross profit for the three months ended September 30, 2023, was $28,173, a 14.5% increase from $24,606 in Q3 2022, with a gross profit margin improvement to 44.4%[192]. - Gross profit for the nine months ended September 30, 2023 was $71,182, an increase of $10,700 or 17.7% from $60,482 in the same period of 2022[208]. - The gross profit percentage improved to 41.0% for the nine months ended September 30, 2023, up from 38.0% in the same period of 2022[208]. - The net loss for the three months ended September 30, 2023, was $11,166, a reduction of 32.3% compared to a net loss of $16,505 in the same period of 2022[190]. - The total net loss for the nine months ended September 30, 2023, was $(50,027) million, an improvement from $(57,161) million for the same period in 2022[225]. Expenses - Cost of revenue for Q3 2023 was $35,245, an increase of 7.9% from $32,671 in Q3 2022, driven by higher publisher partner revenue share payments and technology licensing fees[197]. - Total operating expenses decreased by $1,453 or 1.3% to $106,892 for the nine months ended September 30, 2023 compared to $108,345 in the same period of 2022[206]. - Operating expenses for Q3 2023 totaled $35,025, a decrease of 3.8% from $36,395 in Q3 2022, reflecting cost management efforts[190]. - General and administrative expenses decreased by $2,465 or 18.3% to $11,028 for the three months ended September 30, 2023, primarily due to a $1,979 or 41.8% decrease in stock-based compensation[202]. - Selling and marketing expenses totaled $56,743 for the nine months ended September 30, 2023, reflecting a $3,620 increase or 6.8% from $53,123 in the prior year[215]. Cash Flow and Financing - For the nine months ended September 30, 2023, net cash used in operating activities was $22,265, an increase from $14,676 in the same period of 2022, reflecting a cash outflow primarily due to payments to employees and interest[187]. - Net cash provided by financing activities for the nine months ended September 30, 2023, was $18,649, a decrease from $30,945 in the same period of 2022, primarily due to lower proceeds from public offerings[189]. - Net cash used in investing activities for the nine months ended September 30, 2023, was $3,467, a significant decrease from $12,315 in the same period of 2022, primarily due to lower acquisition costs[188]. - As of September 30, 2023, the outstanding balance of the SLR working capital line of credit was $17,303, with $22,697 available for additional use[181]. Business Developments - A definitive business combination agreement was signed on November 5, 2023, to combine operations with Bridge Media Networks, involving a cash investment of approximately $50,000 and an advertising commitment of $60,000 over five years[168]. - The business combination will result in Simplify and related entities holding approximately 65% of the fully diluted common stock of the newly formed company, New Arena[168]. - The company has guaranteed a minimum annual royalty of $15,000 through December 31, 2029, totaling $78,750 related to the Sports Illustrated media business[182]. Economic Conditions - The company is closely monitoring macroeconomic conditions, including inflation and rising interest rates, which present significant risks to its business[172].