Remark Holdings

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Remark Holdings Reports Fourth Quarter and Full Year 2017 Results

March 29, 2018 at 8:00 AM EDT

LAS VEGAS, March 29, 2018 /PRNewswire/ -- Remark Holdings, Inc. (NASDAQ: MARK), a diversified global technology company with leading artificial intelligence (AI) solutions and digital media properties, including Vegas.com, reported its financial results for the fourth quarter and full year ended December 31, 2017.

Management Commentary
"We are pleased to announce our increased guidance today as our businesses continue to outperform our initial expectations," said Kai-Shing Tao, the company's Chairman and Chief Executive Officer. "In 2017, our FinTech business generated our first significant revenue amounts from our KanKan operations, and we have quickly been able to monetize KanKan's other AI technologies as evidenced by our recent successes in securing significant contracts."

"Here in Las Vegas, our Vegas.com operations continue to do well, primarily driven by increases in show ticket sales, and we look forward to what 2018 will bring with new product enhancements to our offerings," concluded Mr. Tao.

Three-Month and Twelve-Month 2017 Financial Results
Net revenue for the quarter was $18.6 million, a 24% increase year-over-year. Net revenue for 2017 was $70.6 million, a 19% increase year-over-year. The company's quarterly and full year financial results include Fanstang, which the company acquired in September 2016 and which was only a nominal part of the company's financial results for the same periods of 2016.

Three Months Ended December 31st:  2017 Compared to 2016

  • Net revenue was $18.6 million, compared to $15.0 million.
  • Total cost and expense was $40.0 million, compared to $24.7 million.
  • Operating loss was $21.4 million, compared to $9.7 million.
  • Net loss was $89.2 million, or $3.47 per diluted share, compared to $8.6 million, or $0.40 per diluted share. Net loss for the fourth quarter of 2017 included a $66.5 million non-cash charge related to a change in the fair value of the company's warrant liability, which occurred as a result of the significant increase in the company's stock price during the period. For the fourth quarter of 2016, the company recorded a $3.1 million gain related to the change in the fair value of the company's warrant liability during the period.
  • At December 31, 2017, the cash and cash equivalents balance was $22.6 million, and total restricted cash was $11.7 million, bringing the total combined cash position to $34.3 million, compared to a total combined cash position of $18.5 million at December 31, 2016.

Twelve Months Ended December 31st:  2017 Compared to 2016

  • Net revenue was $70.6 million, compared to $59.3 million.
  • Total cost and expense was $108.0 million, compared to $81.9 million.
  • Operating loss was $37.4 million, compared to $22.6 million. Operating loss for 2017 included a $14.6 million non-cash charge related to the impairment of goodwill and other intangible assets purchased from China Branding Group Limited (including Fanstang) in September 2016.
  • Net loss was $106.7 million, or $4.49 per diluted share, compared to $31.7 million, or $1.54 per diluted share. Net loss for 2017 included a $64.1 million non-cash charge related to the change in the fair value of the company's warrant liability, compared to a $5.8 million gain recorded for 2016.

2018 Financial Outlook
The company increased its limited guidance regarding certain revenue and EBITDA expectations.

For 2018, company management expects to generate consolidated net revenue in excess of $120 million. KanKan's Artificial Intelligence Platform will be the primary driver of the growth as its revenue rapidly increases. For the year ending December 31, 2018, management expects KanKan to generate more than $50 million in net revenue.

Remark Holdings management also indicated it expects its travel & entertainment segment to generate gross revenue of more than $375 million and net revenue between approximately $70 million to $80 million, with an EBITDA margin approximating 12% to 15% of net revenue, during 2018.

Conference Call Information
Mr. Tao and Remark Holdings' CFO Douglas Osrow will hold a conference call today (March 29, 2018) at 8:30 a.m. Eastern Time (5:30 a.m. Pacific Time) to discuss these financial results. A question and answer session will follow management's presentation.

Toll-Free Number: 888-882-4478
International Number: 323-701-0225
Conference ID: 5682880

Please call the conference telephone number 10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact the Liolios Group at 949-574-3860.

The conference call will be broadcast simultaneously and available for replay via the investor section of the company's website here.

A replay of the call will be available after 11:30 a.m. Eastern time on the same day through April 2, 2018.

Toll-Free Replay Number: 844-512-2921
International Replay Number: 412-317-6671
Replay ID: 5682880

Remark Holdings, Inc. (PRNewsFoto/Remark Media, Inc.)

About Remark Holdings, Inc.
Remark Holdings, Inc. (NASDAQ: MARK) primarily focuses on the development and deployment of artificial-intelligence-based solutions for businesses in many industries. Additionally, the company owns and operates digital media properties that deliver relevant, dynamic content. The company's U.S. operations are headquartered in Las Vegas, Nevada, with additional operations in Los Angeles, California, and its China operations are headquartered in Chengdu, China with additional operations in Beijing, Shanghai, and Hangzhou. For more information, please visit the company's website at www.remarkholdings.com.

Forward-Looking Statements
This press release may contain forward-looking statements, including information relating to future events, future financial performance, strategies, expectations, competitive environment and regulation. Words such as "may," "should," "could," "would," "predicts," "potential," "continue," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," and similar expressions, as well as statements in future tense, identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors, including those discussed in Part I, Item 1A. Risk Factors in Remark Holdings' Annual Report on Form 10-K and Remark Holdings' other filings with the SEC. Any forward-looking statements reflect Remark Holdings' current views with respect to future events, are based on assumptions and are subject to risks and uncertainties. Given such uncertainties, you should not place undue reliance on any forward-looking statements, which represent Remark Holdings' estimates and assumptions only as of the date hereof. Except as required by law, Remark Holdings undertakes no obligation to update or revise publicly any forward-looking statements after the date hereof, whether as a result of new information, future events or otherwise.

Company Contact:
Douglas Osrow
Remark Holdings, Inc.
dosrow@remarkholdings.com
702-701-9514 ext. 3025

Investor Relations Contact:
Matt Glover or Tom Colton
Liolios Group, Inc.
MARK@liolios.com
949-574-3860

[Tables to follow]

 

REMARK HOLDINGS, INC. AND SUBSIDIARIES 

Consolidated Balance Sheets

(dollars in thousands, except per share amounts)








December 31,


2017


2016

Assets




Cash and cash equivalents

$

22,632


$

6,893

Restricted cash

11,670


9,405

Trade accounts receivable

3,673


1,372

Prepaid expense and other current assets

5,518


3,323

Notes receivable, current

290


181

Assets held for sale


Total current assets

43,783


21,174

Restricted cash


2,250

Notes receivable

100


190

Property and equipment, net

13,387


15,531

Investment in unconsolidated affiliate

1,030


1,030

Intangibles, net

23,946


37,406

Goodwill

20,099


26,763

Other long-term assets

1,192


1,355

Total assets

$

103,537


$

105,699





Liabilities and Stockholders' Equity




Accounts payable

$

17,857


$

16,546

Accrued expense and other current liabilities

16,679


13,965

Deferred merchant booking

9,027


6,991

Deferred revenue

5,807


4,072

Note payable

3,000


Current maturities of long-term debt, net of debt issuance cost

38,085


100

Capital lease obligations


179

Total current liabilities

90,455


41,853

Long-term debt, less current portion and net of debt issuance cost


37,825

Warrant liability

89,169


25,030

Other liabilities

3,501


3,591

Total liabilities

183,125


108,299





Commitments and contingencies








Stockholders' equity




Preferred stock, $0.001 par value; 1,000,000 shares authorized; none issued


Common stock, $0.001 par value; 100,000,000 shares authorized; 28,406,026
and 22,232,004 shares issued and outstanding; each at December 31, 2017
and 2016, respectively

28


22

Additional paid-in-capital

220,117


190,507

Accumulated other comprehensive income (loss)

115


(16)

Accumulated deficit

(299,848)


(193,113)

Total stockholders' equity (deficit)

(79,588)


(2,600)

Total liabilities and stockholders' equity

$

103,537


$

105,699

 

 

REMARK HOLDINGS, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

(dollars in thousands, except per share amounts)




Year Ended December 31,


2017


2016

Revenue, net

70,601



59,328






Cost and expense




Cost of revenue (excluding depreciation and amortization)

16,909



11,155


Sales and marketing

23,600



19,541


Technology and development

3,551



2,796


General and administrative

37,689



36,460


Depreciation and amortization

11,070



10,299


Impairments

14,646



1,159


Other operating expense

515



515


Total cost and expense

107,980



81,925






Operating loss

(37,379)



(22,597)


Other income (expense)




Interest expense

(4,645)



(4,685)


Other income, net

23



29


Loss on extinguishment of debt



(9,157)


Change in fair value of warrant liability

(64,139)



5,790


Other loss

(317)



(313)


Total other income, net

(69,078)



(8,336)






Income (loss) before income taxes

(106,457)



(30,933)


Provision for income taxes

(278)



(746)


Net loss

(106,735)



(31,679)


Other comprehensive income (loss)




Foreign currency translation adjustments

131




Comprehensive loss

(106,604)



(31,679)






Weighted-average shares outstanding, basic and diluted

23,763



20,529


Net loss per share, basic and diluted

(4.49)



(1.54)


 

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SOURCE Remark Holdings, Inc.