The Arena Group Reports 2024 Second Quarter Financial Results
The Arena Group (NYSE American: AREN) reported its Q2 2024 financial results, highlighting significant cost reductions and improved financial performance. Key points include:
- Over $40 million in annual cost eliminations
- Positive Adjusted EBITDA achieved in Q2
- Revenue decreased 20.2% to $27.2 million
- Net loss narrowed to $8.2 million ($0.28 per share)
- Gross profit margin improved to 39.3%
- Operating expenses reduced by 32.1%
The company's majority shareholder, Simplify Inventions, increased financial support by expanding the credit line to $50 million and converting $15 million to equity. The previously announced business combination agreement was terminated. KPMG LLP was appointed as the new independent auditor.
Il Gruppo Arena (NYSE American: AREN) ha riportato i risultati finanziari del secondo trimestre 2024, evidenziando significative riduzioni dei costi e un miglioramento delle performance finanziarie. I punti chiave includono:
- Oltre 40 milioni di dollari in eliminazioni di costi annuali
- EBITDA adeguato positivo raggiunto nel Q2
- Fatturato diminuito del 20,2% a 27,2 milioni di dollari
- Perdite nette ridotte a 8,2 milioni di dollari (0,28 dollari per azione)
- Margine di profitto lordo migliorato al 39,3%
- Spese operative ridotte del 32,1%
Il principale azionista della società, Simplify Inventions, ha aumentato il supporto finanziario espandendo la linea di credito a 50 milioni di dollari e convertendo 15 milioni in capitale. L'accordo di combinazione aziendale precedentemente annunciato è stato annullato. KPMG LLP è stata nominata come nuovo revisore indipendente.
El Grupo Arena (NYSE American: AREN) informó sus resultados financieros del segundo trimestre de 2024, destacando importantes reducciones de costos y una mejora en el rendimiento financiero. Los puntos clave incluyen:
- Más de 40 millones de dólares en eliminaciones de costos anuales
- EBITDA ajustado positivo alcanzado en el Q2
- Ingresos disminuidos en un 20,2% a 27,2 millones de dólares
- Pérdida neta reducida a 8,2 millones de dólares (0,28 dólares por acción)
- Margen de ganancia bruta mejorado al 39,3%
- Gastos operativos reducidos en un 32,1%
El principal accionista de la empresa, Simplify Inventions, aumentó el apoyo financiero al ampliar la línea de crédito a 50 millones de dólares y convertir 15 millones en capital. El acuerdo de combinación empresarial previamente anunciado fue cancelado. KPMG LLP fue designada como nuevo auditor independiente.
아레나 그룹 (NYSE American: AREN)이 2024년 2분기 재무 실적을 보고하며, 대규모 비용 절감과 재무 성과 개선을 강조했습니다. 주요 내용은 다음과 같습니다:
- 연간 4천만 달러 이상의 비용 제거
- 2분기에 조정된 EBITDA가 긍정적으로 달성됨
- 수익이 20.2% 감소하여 2,720만 달러
- 순손실이 820만 달러로 축소 (주당 0.28달러)
- 총 이익률이 39.3%로 개선됨
- 운영 비용이 32.1% 감소됨
회사의 최대 주주인 Simplify Inventions는 신용 한도를 5천만 달러로 확대하고 1,500만 달러를 자본으로 전환함으로써 재정 지원을 증가시켰습니다. 이전에 발표된 사업 결합 계약은 종료되었습니다. KPMG LLP가 새로운 독립 감사인으로 임명되었습니다.
Le Groupe Arena (NYSE American: AREN) a publié ses résultats financiers du deuxième trimestre 2024, mettant en avant des réductions de coûts significatives et une amélioration de la performance financière. Les points clés incluent :
- Plus de 40 millions de dollars d'élimination de coûts annuels
- EBITDA ajusté positif atteint au Q2
- Chiffre d'affaires diminué de 20,2 % à 27,2 millions de dollars
- Perte nette réduite à 8,2 millions de dollars (0,28 dollar par action)
- Marge brute améliorée à 39,3 %
- Dépenses d'exploitation réduites de 32,1 %
Le principal actionnaire de l'entreprise, Simplify Inventions, a augmenté son soutien financier en étendant sa ligne de crédit à 50 millions de dollars et en convertissant 15 millions de dollars en capitaux propres. L'accord de fusion d'entreprise précédemment annoncé a été annulé. KPMG LLP a été nommée nouveau commissaire aux comptes indépendant.
Der Arena Group (NYSE American: AREN) hat seine finanziellen Ergebnisse für das zweite Quartal 2024 bekannt gegeben und dabei erhebliche Kostensenkungen und eine verbesserte finanzielle Leistung hervorgehoben. Die wichtigsten Punkte sind:
- Über 40 Millionen Dollar jährliche Kosteneliminierungen
- Positives bereinigtes EBITDA im Q2 erreicht
- Umsatz um 20,2% auf 27,2 Millionen Dollar gesunken
- Nettoverlust auf 8,2 Millionen Dollar (0,28 Dollar pro Aktie) reduziert
- Bruttogewinnmarge auf 39,3% verbessert
- Betriebskosten um 32,1% gesenkt
Der Mehrheitsaktionär des Unternehmens, Simplify Inventions, hat die finanzielle Unterstützung erhöht, indem die Kreditlinie auf 50 Millionen Dollar ausgeweitet und 15 Millionen Dollar in Eigenkapital umgewandelt wurde. Die zuvor angekündigte Unternehmenszusammenschlussvereinbarung wurde beendet. KPMG LLP wurde als neuer unabhängiger Prüfer ernannt.
- Cost reduction initiatives led to over $40 million in eliminated annual costs
- Achieved positive Adjusted EBITDA in Q2 2024
- Gross profit margin improved to 39.3% from 38.7% year-over-year
- Operating expenses decreased by 32.1% compared to Q2 2023
- Net loss from continuing operations narrowed by $4.6 million year-over-year
- Credit line expanded from $25 million to $50 million
- $15 million of debt converted to equity, strengthening the balance sheet
- Total revenue decreased 20.2% year-over-year to $27.2 million
- Digital advertising revenue decreased by 10.0%
- Net loss of $8.2 million, or $0.28 per diluted share
- Cash and cash equivalents decreased to $6.1 million from $9.3 million at year-end 2023
- Substantial doubt about the company's ability to continue as a going concern remains
Insights
The Arena Group's Q2 2024 results reveal a mixed financial picture. While revenue declined
The expanded
Investors should monitor the company's progress towards sustained profitability and its ability to generate organic growth in its restructured verticals.
The Arena Group's digital transformation shows promising signs amid restructuring. The Sports vertical's shift to a variable cost model led to a 600% year-over-year increase in pageviews, reaching over 150 million. The Finance vertical achieved record-breaking performance with a
However, the
The success of these digital initiatives will be important in offsetting the decline in print revenue and achieving the modest organic growth management anticipates in the second half of 2024.
The appointment of KPMG as the new independent auditor signals a commitment to enhanced financial oversight. This change, coupled with the restructured agreement with majority shareholder Simplify, demonstrates a focus on improving corporate governance and transparency.
The termination of the Bridge Media merger agreement reflects adaptability in strategic planning. However, the continued reliance on Simplify for financial support raises questions about long-term independence and decision-making.
Investors should closely monitor the company's ability to achieve operational independence and sustainable profitability. The expanded credit line provides a financial cushion but also increases the company's obligations to its majority shareholder, potentially impacting future strategic decisions.
Company Highlights Success of Recent Restructurings, Majority Shareholder Significantly Increases Financial Commitment for Future Growth
Management Commentary
“Nearly all of our cost reduction initiatives are complete, leading to an expected over
“We achieved positive Adjusted EBITDA in the current quarter with performance increasing significantly within the quarter from April to June 2024,” she added. “Excluding non-recurring severance charges and higher legal fees would have delivered profitability in June. We anticipate being able to report to our shareholders further improvements in the second half of this year due to the continued phase-out of restructuring costs, increased operational efficiencies and modest organic growth.”
Expanded Line of Credit, Increased Liquidity and Termination of Business Combination Agreement
“I want to be clear: I am as committed to The Arena Group today as I have ever been, particularly in light of the shift towards profitability and the success of new leadership in such a short period of time,” commented Manoj Bhargava, owner of Simplify Inventions, LLC (“Simplify”).
Shortly after the opening of business on Monday, August 19, 2024, the Board of Directors of The Arena Group, and the ownership of Simplify finalized previously disclosed negotiations around alternative structures or options to the business combination agreement. As a result, The Arena Group and Simplify mutually agreed to terminate the business combination agreement in light of changes in the structures of both organizations. To increase the strength of the Company’s balance sheet and to address liquidity concerns, Simplify has agreed to:
-
Increase the Company’s existing
$25 million $50 million -
Convert
$15 million - Line of Credit maturity date extended to December 1, 2026.
“In the months since our pending business combination with Bridge Media was first agreed to, The Arena Group has ended its management of Sports Illustrated and the Bridge Media assets have not performed to expectations,” continued Ms. Silverstein. “As a result, combining the assets of The Arena Group and Bridge Media no longer made sense. We have terminated the business combination and will move forward as a significantly strengthened stand-alone company with the continued support of our majority shareholder, Simplify.”
Though the expansion and modification of terms on the existing line of credit with Simplify increase liquidity and strengthen The Arena Group, these changes do not alleviate all conditions that raised substantial doubt about The Arena Group’s ability to continue as a going concern as previously disclosed.
Second Quarter Business Highlights
-
Sports Vertical: The new management team overhauled the structure and business model of the Athlon Sports brand, shifting from a fixed to a variable cost model. Following the exiting of the Sports Illustrated brand, the new framework reached strong operational performance in six weeks. Traffic increased nearly four-fold from the first to the second quarter of 2024, reaching more than 150 million pageviews. This represents an increase of over
600% year over year. -
Finance Vertical: This vertical produced the best quarter on record by delivering a year over year increase of over
750% in markets team page view traffic and diversifying and solidifying revenue streams through affiliate commerce, the relaunch of a new and improved TheStreet Pro subscription offering, and the launch of the Come Cruise with Me site and newsletter. - Lifestyle Vertical: The Company’s lifestyle vertical achieved the highest April and May traffic on record and delivered record vertical revenue. A continued focus on the health category resulted in major pharmaceutical and healthcare sponsorships. The Company published four newsstand issues of Parade magazine sold exclusively in Dollar Tree stores and launched a new Best Reads channel.
- Commerce Vertical: Revenue growth in the commerce vertical accelerated in the current quarter and the Company delivered year-over-year increases in both content output and revenue as compared to second quarter of 2023.
- Adventure Vertical: Traffic in the adventure vertical nearly doubled year over year as compared to the second quarter of 2023 while remaining stable as compared to the first quarter of 2024. The Company launched the first integrated campaign across digital, social and video on all sites and published the first digital cover of Men’s Journal since March 2023.
Second Quarter 2024 Financial Results
Total revenue was
Total operating expenses were
For the three months ended June 30, 2024, the net loss from continuing operations was
As of June 30, 2024, the Company had cash and cash equivalents of
KPMG Appointed as Independent Auditor
On July 11, 2024, the Board of Directors approved the appointment of KPMG LLP as The Arena Group’s new independent registered public accounting firm to perform independent audit services, effective immediately, replacing Marcum LLP.
About The Arena Group
The Arena Group (NYSE American: AREN) is an innovative technology platform and media company with a proven cutting-edge playbook that transforms media brands. Our unified technology platform empowers creators and publishers with tools to publish and monetize their content, while also leveraging quality journalism of anchor brands like TheStreet, Parade, Men’s Journal and Athlon Sports to build their businesses. The company aggregates content across a diverse portfolio of over 265 brands, reaching over 100 million users monthly. Visit us at thearenagroup.net and discover how we are revolutionizing the world of digital media.
Forward Looking Statements
This press release includes statements that constitute forward-looking statements. Forward-looking statements may be identified by the use of words such as “forecast,” “guidance,” “plan,” “estimate,” “will,” “would,” “project,” “maintain,” “intend,” “expect,” “anticipate,” “prospect,” “strategy,” “future,” “likely,” “may,” “should,” “believe,” “continue,” “opportunity,” “potential,” and other similar expressions that predict or indicate future events or trends or that are not statements of historical matters, and include, for example, statements related to the Company’s anticipated future expenses and investments, business strategy and plans, expectations relating to its industry, market conditions and market trends and growth, market position and potential market opportunities, and objectives for future operations. These forward-looking statements are based on information available at the time the statements are made and/or management’s good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in or suggested by the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, the ability of the Company to expand its verticals; the Company’s ability to grow its subscribers; the Company’s ability to grow its advertising revenue; general economic uncertainty in key global markets and a worsening of global economic conditions or low levels of economic growth; the effects of steps that the Company could take to reduce operating costs; the remaining effects of the COVID-19 pandemic and impact on the demand for the Company products; the inability of the Company to sustain profitable sales growth; circumstances or developments that may make the Company unable to implement or realize the anticipated benefits, or that may increase the costs, of its current and planned business initiatives; and those factors detailed by the Company in its public filings with the SEC, including its Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q. Should one or more of these risks, uncertainties, or facts materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by the forward-looking statements contained herein. Accordingly, you are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Except as required under the federal securities laws and the rules and regulations of the SEC, we do not have any intention or obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.
| THE ARENA GROUP HOLDINGS, INC. AND SUBSIDIARIES | ||||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2024 |
2023 |
2024 |
2023 |
|||||||||||||
| Revenue | $ |
27,183 |
|
$ |
34,072 |
|
$ |
56,124 |
|
$ |
62,490 |
|
||||
| Cost of revenue (includes amortization of developed technology and platform development for three months ended 2024 and 2023 of |
|
16,465 |
|
|
20,855 |
|
|
36,473 |
|
|
38,945 |
|
||||
| Gross profit |
|
10,718 |
|
|
13,217 |
|
|
19,651 |
|
|
23,545 |
|
||||
| Operating expenses | ||||||||||||||||
| Selling and marketing |
|
3,751 |
|
|
6,904 |
|
|
8,315 |
|
|
12,751 |
|
||||
| General and administrative |
|
8,632 |
|
|
11,601 |
|
|
18,767 |
|
|
24,576 |
|
||||
| Depreciation and amortization |
|
913 |
|
|
1,065 |
|
|
1,900 |
|
|
2,161 |
|
||||
| Loss on impairment of assets |
|
- |
|
|
- |
|
|
1,198 |
|
|
119 |
|
||||
| Total operating expenses |
|
13,296 |
|
|
19,570 |
|
|
30,180 |
|
|
39,607 |
|
||||
| Loss from operations |
|
(2,578 |
) |
|
(6,353 |
) |
|
(10,529 |
) |
|
(16,062 |
) |
||||
| Other (expense) income | ||||||||||||||||
| Change in valuation of contingent consideration |
|
- |
|
|
90 |
|
|
(313 |
) |
|
(409 |
) |
||||
| Interest expense, net |
|
(4,249 |
) |
|
(5,001 |
) |
|
(8,588 |
) |
|
(9,183 |
) |
||||
| Liquidated damages |
|
(76 |
) |
|
(177 |
) |
|
(152 |
) |
|
(304 |
) |
||||
| Total other expense |
|
(4,325 |
) |
|
(5,088 |
) |
|
(9,053 |
) |
|
(9,896 |
) |
||||
| Loss before income taxes |
|
(6,903 |
) |
|
(11,441 |
) |
|
(19,582 |
) |
|
(25,958 |
) |
||||
| Income tax provision |
|
(35 |
) |
|
(86 |
) |
|
(76 |
) |
|
(93 |
) |
||||
| Loss from continuing operations |
|
(6,938 |
) |
|
(11,527 |
) |
|
(19,658 |
) |
|
(26,051 |
) |
||||
| Loss from discontinued operations, net of tax |
|
(1,249 |
) |
|
(7,957 |
) |
|
(91,887 |
) |
|
(12,810 |
) |
||||
| Net loss | $ |
(8,187 |
) |
$ |
(19,484 |
) |
$ |
(111,545 |
) |
$ |
(38,861 |
) |
||||
| Basic and diluted net loss per common share: | ||||||||||||||||
| Continuing operations | $ |
(0.24 |
) |
$ |
(0.52 |
) |
$ |
(0.70 |
) |
$ |
(1.27 |
) |
||||
| Discontinued operations |
|
(0.04 |
) |
|
(0.36 |
) |
|
(3.27 |
) |
|
(0.62 |
) |
||||
| Basic and diluted net loss per common share | $ |
(0.28 |
) |
$ |
(0.88 |
) |
$ |
(3.97 |
) |
$ |
(1.89 |
) |
||||
| Weighted average number of common shares outstanding – basic and diluted |
|
29,399,365 |
|
|
22,074,500 |
|
|
28,110,331 |
|
|
20,509,676 |
|
||||
| THE ARENA GROUP HOLDINGS, INC., AND SUBSIDIARIES | ||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||
| June 30, 2024 | December 31, 2023 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ |
6,085 |
|
$ |
9,284 |
|
||
| Accounts receivables, net |
|
22,698 |
|
|
31,676 |
|
||
| Prepayments and other current assets |
|
5,555 |
|
|
5,791 |
|
||
| Current assets from discontinued operations |
|
1,014 |
|
|
43,648 |
|
||
| Total current assets |
|
35,352 |
|
|
90,399 |
|
||
| Property and equipment, net |
|
225 |
|
|
328 |
|
||
| Operating lease right-of-use assets |
|
2,565 |
|
|
176 |
|
||
| Platform development, net |
|
7,380 |
|
|
8,723 |
|
||
| Acquired and other intangible assets, net |
|
24,489 |
|
|
27,457 |
|
||
| Other long term assets |
|
773 |
|
|
1,003 |
|
||
| Goodwill |
|
42,575 |
|
|
42,575 |
|
||
| Noncurrent assets from discontinued operations |
|
- |
|
|
18,217 |
|
||
| Total assets | $ |
113,359 |
|
$ |
188,878 |
|
||
| Liabilities, mezzanine equity and stockholders’ deficiency | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ |
4,977 |
|
$ |
7,803 |
|
||
| Accrued expenses and other |
|
27,270 |
|
|
28,903 |
|
||
| Line of credit |
|
- |
|
|
19,609 |
|
||
| Unearned revenue |
|
10,719 |
|
|
16,938 |
|
||
| Subscription refund liability |
|
131 |
|
|
46 |
|
||
| Operating lease liability, current portion |
|
122 |
|
|
358 |
|
||
| Contingent consideration |
|
- |
|
|
1,571 |
|
||
| Liquidating damages payable |
|
3,076 |
|
|
2,924 |
|
||
| Simplify loan |
|
12,748 |
|
|
- |
|
||
| Bridge notes |
|
8,000 |
|
|
7,887 |
|
||
| Debt |
|
102,372 |
|
|
102,309 |
|
||
| Current liabilities from discontinued operations |
|
97,516 |
|
|
47,673 |
|
||
| Total current liabilities |
|
266,931 |
|
|
236,021 |
|
||
| Unearned revenue, net of current portion |
|
530 |
|
|
542 |
|
||
| Operating lease liability, net of current portion |
|
2,101 |
|
|
- |
|
||
| Other long-term liabilities |
|
169 |
|
|
406 |
|
||
| Deferred tax liabilities |
|
661 |
|
|
599 |
|
||
| Noncurrent liabilities from discontinued operations |
|
- |
|
|
10,137 |
|
||
| Total liabilities |
|
270,392 |
|
|
247,705 |
|
||
| Mezzanine equity: | ||||||||
| Series G redeemable and convertible preferred stock, |
|
168 |
|
|
168 |
|
||
| Total mezzanine equity |
|
168 |
|
|
168 |
|
||
| Stockholders' deficiency: | ||||||||
| Common stock, |
|
295 |
|
|
237 |
|
||
| Additional paid-in capital |
|
332,702 |
|
|
319,421 |
|
||
| Accumulated deficit |
|
(490,198 |
) |
|
(378,653 |
) |
||
| Total stockholders’ deficiency |
|
(157,201 |
) |
|
(58,995 |
) |
||
| Total liabilities, mezzanine equity and stockholders’ deficiency | $ |
113,359 |
|
$ |
188,878 |
|
||
View source version on businesswire.com: https://www.businesswire.com/news/home/20240818869669/en/
Investor Relations Contact
Rob Fink, FNK IR
aren@fnkir.com
646.809.4048
The Arena Group Contact
Steve Janisse
c-sjanisse@thearenagroup.net
404.574.9206
Source: The Arena Group
FAQ
What were The Arena Group's (AREN) Q2 2024 financial results?
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What changes were made to The Arena Group's (AREN) credit line in August 2024?
Why did The Arena Group (AREN) terminate its business combination agreement in 2024?
