Professional Diversity Network Announces Third Quarter 2016 Financial Results

CHICAGO, Nov. 14, 2016 (GLOBE NEWSWIRE) -- Professional Diversity Network, Inc. ("PDN" or "the Company") (NASDAQ:IPDN), announced its results for the Third Quarter of 2016, ending on September 30, 2016.

Q3 2016 Highlights
  • Net loss decreased to approximately $1.3 million from approximately $31.8 million in the quarter ended September 30, 2015; adjusted EBITDA deficit shrank to $342,000 from $1,042,000 in the quarter ended September 30, 2015
  • Increased registered users by 399,000 from 8,552,000 to over 8,951,000
  • Created significant new partnerships, including with Abercrombie & Fitch and Sun Life Financial, while renewing partnerships with Novartis, NY Life and others

James Kirsch, the Company's Co-Chairman, noted that "from top down, every employee has contributed to our improved financial results, which are being felt in each of the Company's three divisions."  He continued, "We are particularly pleased with these results when coupled with our recent transaction with Cosmic Forward Limited, which, we believe, positions the Company to expand its business both in the United States and abroad."

Q3 2016 Financial Summary

Revenue in the third quarter of 2016 was $6.4 million, down 31% from $9.2 million in the comparable year-ago quarter. The corresponding gross margins were 88% and 84% in the third quarters of 2016 and 2015, respectively. The net losses in the third quarter of 2016 and 2015 were $1.3 million and $31.8 million, respectively, including non-cash goodwill impairment charges that were recognized in the third quarter of 2015. The adjusted EBITDA deficit shrank from $1.0 million in Q3 2015 to $342,000 in Q3 2016, reflecting cost-cutting measures undertaken by the Company.

About   Professional Diversity Network, Inc.

The Professional Diversity Network platform provides employers that value diversity with access to diverse talent to meet their hiring needs.  Professional Diversity Network owns and operates professional networking communities including:  www.iHispano.com for Hispanic professionals, www.BlackCareerNetwork.com for African-American professionals, www.WomensCareerChannel.com for professional women,  www.Military2Career.com for Veterans,  http://www.ProAble.net for professionals with disabilities,  www.OutProNet.com for professionals in the LGBT community, and  www.AsianCareerNetwork.com for Asian-American professionals.  In addition, the Company operates the National Association of Professional Women, at www.napw.com, the country's largest networking organization dedicated to professional women.  For more information, visit:  www.prodivnet.com.

Forward Looking Statements

This press release contains certain forward-looking statements based on our current expectations, forecasts and assumptions.  Forward-looking statements can be identified by forward-looking words such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "should," "will" and "would" or similar words, and include, without limitation, statements regarding future expansion of the Company's business in the U.S. and abroad. Forward-looking statements involve risks and uncertainties and our actual results may differ materially from those stated or implied in such forward-looking statements. Factors that could contribute to such differences include, but are not limited to, our potential failure to realize the benefits from the transaction with Cosmic Forward Limited and the risk factors disclosed in our Annual Report on Form 10-K filed on March 30, 2016, as amended, our Quarterly Report on Form 10-Q filed on August 15, 2016, our Quarterly Report on Form 10-Q filed on November 14, 2016 and any subsequent filings made by us with the SEC.  We assume no obligation to update the information included in this press release, whether as a result of new information, future events or otherwise. The Form 10-K filed on March 30, 2016, as amended, the Form 10-Q filed on August 15, 2016 and the Form 10-Q filed on November 14, 2016 together with this press release, are available on our website, www.prodivnet.com. Please click on "Investor Relations."
Professional Diversity Network, Inc.  
Condensed Consolidated Statements of Comprehensive Loss  
   
    Three Months Ended September 30,     Nine Months Ended September 30,  
    2016     2015     2016     2015  
    (Unaudited)     (Revised)     (Unaudited)     (Revised)  
Revenues                        
Membership fees and related services   $ 3,748,334     $ 5,652,873     $ 13,047,652     $ 18,885,308  
Lead generation     1,554,370       2,334,276       4,489,919       7,853,402  
Recruitment services     954,887       830,250       2,295,556       2,432,951  
Product sales and other     52,857       330,769       544,440       631,198  
Consumer advertising and marketing solutions     49,719       73,011       176,771       209,097  
Total revenues     6,360,167       9,221,179       20,554,338       30,011,956  
                                 
Costs and expenses:                                
Cost of revenues     745,159       1,464,214       2,433,550       4,647,520  
Sales and marketing     3,064,454       5,132,077       10,314,145       17,226,640  
General and administrative     3,010,862       3,748,138       9,428,493       11,593,955  
Impairment expense     -       26,744,249       -       26,744,249  
Depreciation and amortization     819,894       925,684       2,498,136       2,730,880  
Loss on sale of property and equipment     -       32,649       -       32,649  
Total costs and expenses     7,640,369       38,047,011       24,674,324       62,975,893  
                                 
Loss from operations     (1,280,202 )     (28,825,832 )     (4,119,986 )     (32,963,937 )
                                 
Other (expense) income                                
Interest expense     (215,781 )     (9,229 )     (216,948 )     (84,339 )
Interest and other income     150       2,382       801       25,566  
Other income (expense), net     (215,631 )     (6,847 )     (216,147 )     (58,773 )
                                 
Change in fair value of warrant liability     (401,000 )     2,224       (401,000 )     93,784  
                                 
Loss before income tax benefit     (1,896,833 )     (28,830,455 )     (4,737,133 )     (32,928,926 )
Income tax expense (benefit)     (623,699 )     2,976,217       (1,218,092 )     1,509,395  
Net loss   $ (1,273,134 )   $ (31,806,672 )   $ (3,519,041 )   $ (34,438,321 )
                                 
Net loss per common share, basic and diluted   $ (0.70 )   $ (17.59 )   $ (1.94 )   $ (20.05 )
                                 
 per common share:Weighted average shares used in computing net loss                                
Basic and diluted     1,809,676       1,808,099       1,809,676       1,717,816  

   
Professional Diversity Network, Inc.  
Condensed Consolidated Balance Sheets  
   
    September 30,     December 31,  
    2016     2015  
    (Unaudited)     (Revised)  
Current Assets:            
Cash and cash equivalents   $ 515,963     $ 2,070,693  
Accounts receivable, net     1,839,474       2,510,530  
Short-term investments     -       500,000  
Incremental direct costs     547,616       1,023,916  
Prepaid license fee     -       112,500  
Prepaid expenses and other current assets     229,689       411,592  
Total current assets     3,132,742       6,629,231  
                 
Property and equipment, net     313,622       444,398  
Capitalized technology, net     240,463       456,523  
Goodwill     20,201,190       20,201,190  
Intangible assets, net     9,900,539       12,051,839  
Merchant reserve     1,426,927       1,260,849  
Security deposits     189,375       383,786  
Other assets     1,049,026       -  
Total assets   $ 36,453,884     $ 41,427,816  
                 
Current Liabilities:                
Accounts payable   $ 5,359,151     $ 4,465,941  
Accrued expenses     1,519,491       837,712  
Deferred revenue     6,406,542       9,966,893  
Customer deposits     -       112,500  
Promissory note     445,000       445,000  
Total current liabilities     13,730,184       15,828,046  
                 
Deferred tax liability     3,724,816       4,942,908  
Line of credit - Master Credit Facility, net of unamortized debt issuance costs     827,679       -  
Deferred rent     55,434       45,155  
Other liabilities     47,367       426,267  
Total liabilities     18,385,480       21,242,376  
                 
Commitments and contingencies                
                 
Stockholders' Equity                
Common stock, $0.01 par value; 45,000,000 shares authorized; 1,815,232  shares issued as of September 30, 2016 and December 31, 2015; and 1,808,628  shares outstanding as of September 30, 2016 and December 31, 2015     18,097       18,097  
Additional paid in capital     64,956,199       63,554,194  
Accumulated deficit     (46,868,775 )     (43,349,734 )
Treasury stock, at cost; 1,048 shares at September 30, 2016 and December 31, 2015     (37,117 )     (37,117 )
Total stockholders' equity     18,068,404       20,185,440  
                 
Total liabilities and stockholders' equity   $ 36,453,884     $ 41,427,816  

Non-GAAP Financial Measures

In this news release, PDN makes reference to "Adjusted EBITDA," a measure of financial performance not calculated in accordance with accounting principles generally accepted in the United States ("GAAP").  Management has included Adjusted EBITDA because it believes that investors may find it useful to review PDN's financial results as adjusted to exclude items as determined by management.  Reconciliations of this non-GAAP financial measure to the most directly comparable GAAP financial measure, net loss, to the extent available without unreasonable effort, are set forth below.

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