Kubient Reports Third Quarter 2020 Results
Kubient, a cloud-based digital advertising platform, reported Q3 2020 financial results highlighting significant growth and operational changes. Net revenues rose to $280,000, up from $92,000 last quarter and $56,000 in Q3 2019, driven by increased customer engagement. However, the net loss widened to $5.8 million, compared to $1.5 million last quarter. Operating expenses surged to $1.7 million, attributed to IPO-related costs. Key developments included onboarding a new SVP and detection of an ad fraud scheme, enhancing their market positioning. Kubient's cash reserves stood at $8.4 million as of September 30, 2020.
- Net revenues for Q3 increased to $280,000, a 204% rise from Q2 and a significant increase from $56,000 in Q3 2019.
- Publisher inventory available for monetization rose 428% from September to October 2020.
- Successfully onboarded Ryan Adams as Senior VP of Partnerships to drive monetization.
- Detected a new ad fraud scheme, enhancing the credibility of Kubient's AI fraud prevention tool, KAI.
- GAAP net loss increased to $5.8 million in Q3 from $1.5 million in the previous quarter.
- Total operating expenses rose to $1.7 million, up from $1.2 million in Q2, largely due to IPO-related costs.
- Net loss per share worsened to $(1.03) compared to $(0.42) in Q2.
- For the nine months ended September 30, net loss reached $7.4 million, significantly higher than $3.0 million in the same period last year.
NEW YORK, Nov. 12, 2020 /PRNewswire/ -- Kubient, Inc. (NasdaqCM: KBNT, KBNTW) ("Kubient" or the "Company"), a cloud-based software platform for digital advertising, today reported financial results for the third quarter and nine months ended September 30, 2020.
Third Quarter 2020 and Recent Operational Highlights
- Onboarded former Director at Centro, advertising technology and publishing veteran, Ryan Adams, as Senior Vice President of Partnerships
- Appointed Chairman, Founder, and Chief Strategy Officer ("CSO"), Paul Roberts, as Interim Chief Executive Officer ("CEO")
- Evaluated and streamlined The Associated Press' ("AP") digital advertising supply chain, resulting in a reduction in half of its non-essential vendors and a more optimized and cost-effective infrastructure
- Discovered new "Weasel Injection" ad fraud scheme or fake traffic being purchased by Demand Side Platforms ("DSP") and Supply Side Platforms ("SSP") of major brands
- Publisher inventory that Kubient can monetize, or ad impression opportunities, for the Audience Cloud, Kubient's flexible open marketplace for advertisers and publishers to reach, monetize and connect their audiences, increased
428% from September to October - Closed an initial public offering (IPO) of 2,500,000 units, resulting in gross proceeds of approximately
$12.5 million , before deducting underwriting discounts and commissions and other offering expenses
Management Commentary
"Our results for the third quarter were an encouraging step forward, driven by a number of key developments including our successful optimization of the AP's ad infrastructure as well as our noteworthy detection of the Weasel Injection fraud through our Kubient Artificial Intelligence (KAI) pre-bid ad-fraud prevention tool," said Kubient Founder, Chairman, CSO, and Interim CEO Paul Roberts. "As the digital advertising industry began to pick back up during the period, we witnessed an influx of 'supply' or publisher inventory connected to our audience cloud platform. To address this unmet and growing need, we've brought on a senior level ad veteran in Ryan Adams, who will be focused on maximizing this new monetization opportunity. Our plan with his new team will be to attract more brands and ad agencies to our audience cloud, ultimately driving demand-side revenue and supporting the ready-made supply-side inventory.
"The additional data points of progress we're seeing with our ad fraud prevention tool KAI are also encouraging. The Weasel Injection scheme proved to be a major issue for a number of global enterprises, underscoring just how prevalent this issue is and highlighting how important we believe our product can be. In an industry where speed is crucial, KAI is the fastest tool in a
Third Quarter 2020 Financial Results
Net revenues increased to
Total operating expenses increased to
GAAP net loss attributable to common shareholders was
As of September 30, 2020, the Company had cash of
Nine Month 2020 Financial Results
Net revenues increased to
Total operating expenses increased to
GAAP net loss attributable to common shareholders was
Conference Call
Kubient will hold a conference call today (November 12, 2020) at 5:00 p.m. Eastern time (2:00 p.m. Pacific time) to discuss these results.
Kubient management will host the conference call, followed by a question and answer period.
U.S. dial-in: 1-877-407-9208
International dial-in: 1-201-493-6784
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 Gateway Investor Relations at 949-574-3860.
The conference call will be broadcast live and available for replay here and via the Investor Relations section of Kubient's website.
A telephonic replay of the conference call will be available after 8:00 p.m. Eastern time through November 19, 2020.
Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Replay ID: 13712644
About Kubient
Kubient is a technology company with a mission to transform the digital advertising industry to audience-based marketing. Kubient's next generation cloud-based infrastructure enables efficient marketplace liquidity for buyers and sellers of digital advertising. The Kubient Audience Cloud is a flexible open marketplace for advertisers and publishers to reach, monetize and connect their audiences. The Company's platform provides a transparent programmatic environment with proprietary artificial intelligence-powered pre-bid ad fraud prevention, and proprietary real-time bidding (RTB) marketplace automation for the digital out of home industry. The Audience Cloud is the solution for brands and publishers that demand transparency and the ability to reach audiences across all channels and ad formats. For additional information, please visit https://kubient.com/.
Forward-Looking Statements
The information contained herein includes forward-looking statements. These statements relate to future events or to our future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. You should not place undue reliance on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and which could, and likely will, materially affect actual results, levels of activity, performance or achievements. Any forward-looking statement reflects our current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. We assume no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. The safe harbor for forward-looking statements contained in the Securities Litigation Reform Act of 1995 protects companies from liability for their forward-looking statements if they comply with the requirements of the Act.
Kubient Investor Relation
Gateway Investor Relations
Matt Glover and Tom Colton
T: 1-949-574-3860
Kubient@gatewayir.com
Kubient, Inc. | ||||||||
Condensed Consolidated Statements of Operations | ||||||||
(unaudited) | ||||||||
For the Three Months Ended | For the Nine Months Ended | |||||||
September 30, | September 30, | |||||||
2020 | 2019 | 2020 | 2019 | |||||
Net Revenues | $ 280,401 | $ 55,872 | $ 1,753,851 | $ 161,828 | ||||
Operating Expenses: | ||||||||
Technology | 545,639 | 315,824 | 1,577,197 | 1,070,561 | ||||
General and administrative | 1,167,861 | 703,238 | 2,489,867 | 1,494,609 | ||||
Total Operating Expenses | 1,713,500 | 1,019,062 | 4,067,064 | 2,565,170 | ||||
Loss From Operations | (1,433,099) | (963,190) | (2,313,213) | (2,403,342) | ||||
Other (Expense) Income: | ||||||||
Interest expense | (389,319) | (362,179) | (1,118,614) | (522,278) | ||||
Interest expense - related parties | (200,821) | (29,551) | (403,372) | (29,666) | ||||
Amortization of beneficial conversion feature | (1,984,322) | - | (1,984,322) | - | ||||
Gain on settlement of notes and other payables | 139,333 | - | 139,333 | - | ||||
Gain on forgiveness of accounts payable - supplier | - | - | 236,248 | - | ||||
Loss on extinguishment of convertible note payable | (297,272) | - | (297,272) | - | ||||
Other income | 1,000 | 12 | 13,294 | 256 | ||||
Total Other Expense | (2,731,401) | (391,718) | (3,414,705) | (551,688) | ||||
Net Loss | (4,164,500) | (1,354,908) | (5,727,918) | (2,955,030) | ||||
Deemed dividend related to warrant down round adjustment | (1,682,000) | - | (1,682,000) | - | ||||
Net Loss Attributable to Common Shareholders | $ (5,846,500) | $ (1,354,908) | $ (7,409,918) | $ (2,955,030) | ||||
Net Loss Per Share - Basic and Diluted | $ (1.03) | $ (0.38) | $ (1.72) | $ (0.82) | ||||
Weighted Average Common Shares Outstanding - | ||||||||
Basic and Diluted | 5,676,561 | 3,599,300 | 4,300,905 | 3,599,909 | ||||
Kubient, Inc. | |||
Condensed Consolidated Balance Sheets | |||
September 30, | December 31, | ||
2020 | 2019 | ||
(unaudited) | |||
Assets | |||
Current Assets: | |||
Cash | $ 8,356,834 | $ 33,785 | |
Accounts receivable, net | 797,422 | 38,704 | |
Prepaid expenses and other current assets | 117,085 | 28,072 | |
Total Current Assets | 9,271,341 | 100,561 | |
Intangible assets, net | 1,357,726 | 83,333 | |
Property and equipment, net | 8,088 | 4,549 | |
Deferred offering costs | 10,000 | 285,196 | |
Total Assets | $ 10,647,155 | $ 473,639 | |
Liabilities and Stockholders' Equity (Deficiency) | |||
Current Liabilities: | |||
Accounts payable - suppliers | $ 319,484 | $ 785,180 | |
Accounts payable - trade | 1,531,084 | 867,554 | |
Accrued expenses and other current liabilities | 766,621 | 478,674 | |
Accrued interest | 3,001 | 117,912 | |
Accrued interest - related parties | - | 4,204 | |
Due to related party | 29,000 | 29,000 | |
Notes payable, current portion | 136,242 | 113,967 | |
Convertible notes payable, current portion, net of discount of | |||
and | - | 2,569,006 | |
Convertible notes payable - related parties, current portion, net of discount of | |||
and | - | 548,799 | |
Total Current Liabilities | 2,785,432 | 5,514,296 | |
Notes payable, non-current portion | 269,848 | - | |
Total Liabilities | 3,055,280 | 5,514,296 | |
Commitments and contingencies | |||
Stockholders' Equity (Deficiency): | |||
Preferred stock, | |||
No shares issued and outstanding | |||
as of September 30, 2020 and December 31, 2019 | - | - | |
Common stock, | |||
7,661,300 and 3,601,521 shares issued and outstanding | |||
as of September 30, 2020 and December 31, 2019 | 77 | 36 | |
Additional paid-in capital | 21,723,133 | 3,362,724 | |
Accumulated deficit | (14,131,335) | (8,403,417) | |
Total Stockholders' Equity (Deficiency) | 7,591,875 | (5,040,657) | |
Total Liabilities and Stockholders' Equity (Deficiency) | $ 10,647,155 | $ 473,639 | |
Kubient, Inc. | |||
Condensed Consolidated Statements of Cash Flows | |||
(unaudited) | |||
For the Nine Months Ended | |||
September 30, | |||
2020 | 2019 | ||
Cash Flows From Operating Activities: | |||
Net loss | $ (5,727,918) | $ (2,955,030) | |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Depreciation and amortization | 227,355 | 4,303 | |
Bad debt expense | 3,734 | (10,670) | |
Gain on forgiveness of accounts payable - supplier | (236,248) | - | |
Allowance for other asset | - | 200,000 | |
Stock-based compensation: | |||
Stock options | 15,993 | 15,894 | |
Common stock | 62,484 | 30,800 | |
Amortization of debt discount and debt issuance costs | 915,994 | 444,928 | |
Amortization of debt discount and debt issuance costs - related parties | 357,201 | 27,541 | |
Amortization of beneficial conversion feature | 1,984,322 | - | |
Loss on extinguishment of convertible note payable | 297,272 | - | |
Gain on settlement of notes and other payables | (139,333) | - | |
Changes in operating assets and liabilities: | |||
Accounts receivable | (762,452) | 288,830 | |
Prepaid expenses and other current assets | (89,013) | (36,967) | |
Other asset | - | (200,000) | |
Accounts payable - suppliers | (193,334) | (180,514) | |
Accounts payable - trade | 68,002 | 403,470 | |
Accrued expenses and other current liabilities | 492,372 | 13,304 | |
Accrued interest | 195,596 | - | |
Accrued interest - related parties | 53,026 | - | |
Net Cash Used In Operating Activities | (2,474,947) | (1,954,111) | |
Cash Flows From Investing Activities: | |||
Purchase of intangible assets | (855,019) | (70,000) | |
Purchase of property and equipment | (5,287) | (2,449) | |
Advances to related party | - | (75,000) | |
Repayment of related party advances | - | 75,000 | |
Net Cash Used In Investing Activities | (860,306) | (72,449) | |
Cash Flows From Financing Activities: | |||
Proceeds from sale of common stock and warrants in initial | |||
public offering, net [1] | 11,503,488 | - | |
Payment of initial public offering issuance costs | (841,376) | - | |
Proceeds from issuance of convertible notes payable and | |||
investor warrants [2] | - | 2,127,401 | |
Advances from related party | - | 29,250 | |
Repayment of advance from related party | - | (45,000) | |
Proceeds from issuance of notes payable | 656,190 | - | |
Repayment of notes payable | (95,000) | (90,427) | |
Proceeds from issuance of notes payable - related parties | 585,000 | - | |
Repayment of note payable - related party | (150,000) | - | |
Net Cash Provided By Financing Activities | 11,658,302 | 2,021,224 | |
Net Increase (Decrease) In Cash | 8,323,049 | (5,336) | |
Cash - Beginning of the Period | 33,785 | 7,518 | |
Cash - End of the Period | $ 8,356,834 | $ 2,182 | |
[1] Includes gross proceeds of | |||
[2] Includes gross proceeds of |
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SOURCE Kubient