Millennial Media Reports 2012 Third Quarter Financial Results

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Revenue of $47.4 Million Representing 88% Year-Over-Year Growth

BALTIMORE--(BUSINESS WIRE)--Millennial Media, Inc. (MM), the independent leader in mobile advertising, today reported financial results for the third quarter ended September 30, 2012 that exceeded its preliminary results reported on October 15, 2012.

Financial Results and Business Highlights

Revenue: For the third quarter of 2012, revenue was $47.4 million, an 88.0% year-over-year increase from revenue of $25.2 million for the third quarter of 2011.

Gross Margin: For the third quarter of 2012, gross margin improved to 40.9%, compared to 39.3% for the third quarter of 2011.

Adjusted EBITDA: For the third quarter of 2012, adjusted EBITDA, a non-GAAP financial measure that we define as net income (loss) before interest, taxes, depreciation and amortization, and non-cash stock-based compensation, was $2.1 million compared to adjusted EBITDA of $0.6 million for the third quarter of 2011. Adjusted EBITDA for the second quarter of 2012 was $(0.7) million.

Net Loss: For the third quarter of 2012, net loss, on a GAAP basis, was $(1.8) million, compared to a net loss of $(0.2) million for the third quarter of 2011 and a net loss of $(2.2) million for the second quarter of 2012.

Net Loss per Share: For the third quarter of 2012, on a GAAP basis, basic and diluted net loss per share was $(0.02), compared to basic and diluted net loss per share of $(0.09) for the third quarter of 2011 and $(0.03) for the second quarter of 2012.

Other Business Metrics: As of September 30, 2012, Millennial Media reached over 380 million monthly unique users globally, including approximately 150 million monthly unique users in the United States alone. More than 38,000 apps were enabled by mobile app developers to operate on Millennial Media's platform as of September 30, 2012. As of September 30, 2012, Millennial Media has developed more than 300 million proprietary user profiles.

"As previously announced, we delivered accelerated revenue growth for the third quarter along with strong gross margin performance," stated Paul Palmieri, co-founder, President and CEO of Millennial Media. "Our comprehensive suite of advertising solutions continues to be sought after by more and more brand advertisers looking to use a proven mobile platform to achieve their marketing objectives. During the quarter, we also continued to build on our leadership position with investments in technology and other resources as well as in the expansion of our international operations to accommodate both global and more regional demand for our platform."

Outlook

Millennial Media expects revenue for the fourth quarter of 2012 to be in the range of $61.5 million to $63.0 million and adjusted EBITDA to be between $3.0 million and $3.5 million. For the full year 2012, Millennial Media expects revenue to be in the range of $181.0 million to $182.5 million and adjusted EBITDA to be between $2.0 million and $2.5 million.

Non-GAAP Financial Measures

To supplement its consolidated financial statements, which are prepared and presented in accordance with U.S. generally accepted accounting principles ("GAAP"), Millennial Media reports adjusted EBITDA, which is a non-GAAP financial measure. The Company uses this non-GAAP financial measure for financial and operational decision making and as a means to evaluate period-to-period comparisons. The Company believes that this measure provides useful information about operating results, enhances the overall understanding of past financial performance and future prospects, and allows for greater transparency with respect to key metrics used by management in its financial and operational decision making. Non-GAAP financial measures should be considered in addition to results and guidance prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. The non-GAAP financial measure included in this press release has been reconciled to the nearest GAAP measure in the table following the financial statements attached to this press release.

Third Quarter Financial Results Conference Call: Millennial Media will host a conference call today at 5:00 p.m. ET to discuss the third quarter 2012 financial results, developments in its business and the Company's expectations for the remainder of 2012. A live webcast of the event will be available on the Investor Relations page of the Millennial Media website athttp://investors.millennialmedia.com. A live domestic dial-in is available at 866-202-0886 (U.S.) or 617-213-8841 (international), using passcode 66975658. If you are unable to listen to the live conference call, a replay will be available through November 12, 2012, and can be accessed by dialing 888-286-8010 (U.S.) or 617-801-6888 (international) using passcode 68327444. An archived version of the webcast will also be available at http://investors.millennialmedia.com.

About Millennial Media

Millennial Media is the leading independent mobile advertising and data platform. Our technology, tools and services help app developers and mobile website publishers maximize their advertising revenue, acquire users and gain audience insights. Our platform also enables us to offer advertisers powerful Mobile Audience Solutions (MAS) that utilize our significant scale, sophisticated targeting and uniquely engaging creative capabilities to deliver meaningful results.

Forward-Looking Statements

The statements in this press release that are not historical facts constitute "forward-looking statements" that involve risks and uncertainties and are made pursuant to the Private Securities Litigation Reform Act of 1995. These forward-looking statements include expectations regarding financial results for the fourth quarter and full year of 2012, our growth and that of the mobile app economy, and our continued expansion as the leading mobile advertising platform company. The achievement or success of the matters covered by such forward-looking statements involve risks, uncertainties and assumptions, and if any such risks or uncertainties materialize or if any of the assumptions prove incorrect, our results could differ materially from the results expressed or implied by the forward-looking statements we make. These risks and uncertainties include, but are not limited to risks associated with our ability to expand our developer and advertiser base, keep pace with technological and market developments and remain competitive against larger companies in our industry as well as potential new entrants into our markets. Further information on these and other factors that could affect our results is included in our Quarterly Report on Form 10-Q that will be filed for the quarter ended September 30, 2012 and other filings we make with the Securities and Exchange Commission from time to time. These documents are available on the 'SEC Filings' section of the Investor Relations page of our website at http://investors.millennialmedia.com.

The statements made in this release are based on information available to us as of the date of this release, and we assume no obligation and do not intend to update these forward-looking statements, except as required by law.

Millennial Media, Inc.
           
Consolidated Balance Sheets
(in thousands, except share and per share data)
           
      December 31,   September 30,
      2011   2012
Assets         (unaudited)
Current assets:          
Cash and cash equivalents     $ 16,707     $ 122,404  
Accounts receivable, net of allowances of $1,216 and $2,217          
as of December 31, 2011 and September 30, 2012, respectively       34,986       51,176  
Prepaid expenses and other current assets       1,417       2,119  
Total current assets       53,110       175,699  
           
Property and equipment, net       3,688       5,777  
Goodwill       1,348       1,348  
Intangible assets, net       1,179       980  
Deferred offering costs       1,985        
Other assets       575       634  
Total assets     $ 61,885     $ 184,438  
           
Liabilities, redeemable convertible preferred stock and stockholders' (deficit) equity      
Current liabilities:          
Accounts payable and accrued expenses     $ 2,883     $ 3,176  
Accrued cost of revenue       20,963       28,227  
Accrued payroll and payroll related expenses       5,153       6,431  
Deferred revenue       157       219  
Total current liabilities       29,156       38,053  
           
Series B warrant outstanding       183        
Other long-term liabilities       299       267  
Total liabilities       29,638       38,320  
           
Redeemable convertible preferred stock:          
Series A-1 preferred stock, $0.001 par value, 6,341,465 and 0          
shares authorized, issued and outstanding as of December 31, 2011          
and September 30, 2012, respectively       1,880        
Series A-2 preferred stock, $0.001 par value, 9,448,220 and 0          
shares authorized, issued and outstanding as of December 31, 2011          
and September 30, 2012, respectively       7,033        
Series B preferred stock, $0.001 par value, 12,737,605 and 0          
shares authorized, 12,686,855 and 0 issued and outstanding          
as of December 31, 2011 and September 30, 2012, respectively       19,882        
Series C preferred stock, $0.001 par value, 10,759,630 and 0          
shares authorized, issued and outstanding as of December 31, 2011          
and September 30, 2012, respectively       18,441        
Series D preferred stock, $0.001 par value, 8,442,833 and 0          
shares authorized, issued and outstanding as of December 31, 2011          
and September 30, 2012, respectively       29,432        
Total redeemable convertible preferred stock       76,668        
           
Stockholders' (deficit) equity:          
Preferred stock, $0.001 par value, 5,000,000 shares authorized,          
no shares issued and outstanding as of December 31, 2011          
and September 30, 2012              
Common stock, $0.001 par value, 250,000,000 shares authorized,          
18,011,035 and 76,757,515 shares issued and outstanding as of          
December 31, 2011 and September 30, 2012, respectively       17       75  
Additional paid-in capital             198,687  
Accumulated other comprehensive loss       (25 )     (52 )
Accumulated deficit       (44,413 )     (52,592 )
Total stockholders' (deficit) equity       (44,421 )     146,118  
Total liabilities, redeemable convertible preferred stock and stockholders' (deficit) equity     $ 61,885     $ 184,438  
                   
Millennial Media, Inc.
                 
Unaudited Consolidated Statements of Operations
(in thousands, except share and per share data)
                 
    Three Months Ended   Nine Months Ended
    September 30,   September 30,
    2011   2012   2011   2012
                 
Revenue   $ 25,189     $ 47,366     $ 69,129     $ 119,707  
Cost of revenue     15,293       28,005       42,536       71,683  
Gross profit     9,896       19,361       26,593       48,024  
Operating expenses:                
Sales and marketing     3,203       5,922       10,179       16,561  
Technology and development     1,518       4,667       3,316       10,084  
General and administrative     5,382       10,491       13,946       28,428  
Total operating expenses     10,103       21,080       27,441       55,073  
Loss from operations     (207 )     (1,719 )     (848 )     (7,049 )
Interest and other expense                
Interest expense     (1 )     (14 )     (2 )     (52 )
Other expense     (36 )           (62 )     (834 )
Total interest and other expense     (37 )     (14 )     (64 )     (886 )
Loss before income taxes     (244 )     (1,733 )     (912 )     (7,935 )
Income tax benefit (expense)     2       (36 )     495       (46 )
Net loss     (242 )     (1,769 )     (417 )     (7,981 )
Accretion of dividends on redeemable convertible preferred stock     (1,259 )     -       (3,728 )     (1,328 )
Net loss attributable to common stockholders   $ (1,501 )   $ (1,769 )   $ (4,145 )   $ (9,309 )
                 
Net loss per share:                
Basic and diluted   $ (0.09 )   $ (0.02 )   $ (0.25 )   $ (0.17 )
                 
Weighted average common shares outstanding:                
Basic and diluted     16,400,211       75,498,564       16,336,295       55,146,195  
                 
Stock-based compensation expense included above:                
Sales and marketing   $ 49     $ 286     $ 112     $ 410  
Technology and development     385       2,037       621       2,889  
General and administrative     170       903       371       1,974  
                                 
Millennial Media, Inc.
 
Reconciliation of Unaudited GAAP Net Loss to Non-GAAP Adjusted EBITDA
               
          Three Months Ended
          September 30,
          2011  
           2012           
          (in thousands)
Net loss     $ (242 )   $ (1,769 )
Adjustments:          
  Interest expense, net       1       14  
  Income tax (benefit) expense       (2 )     36  
  Depreciation and amortization expense       220       631  
  Stock-based compensation expense       605       3,226  
    Total net adjustments       824       3,907  
Adjusted EBITDA     $ 582     $ 2,138  
               
               
          Three Months Ended    
          June 30, 2012    
          (in thousands)    
Net loss     $ (2,238 )    
Adjustments:          
  Interest (income) expense, net       17      
  Income tax (benefit) expense       5      
  Depreciation and amortization expense       522      
  Stock-based compensation expense       963      
    Total net adjustments       1,507      
Adjusted EBITDA     $ (731 )    
           

Contact:

Millennial Media, Inc.
Investor Relations
Jonathan Schaffer, 212-871-3953
IR@millennialmedia.com
or
Media Relations
Matthew Lindberg, 203-682-8214
press@millennialmedia.com