Professional Diversity Network, Inc. Announces Financial Results for the Quarter Ended September 30, 2023
CHICAGO, Nov. 14, 2023 (GLOBE NEWSWIRE) — Professional Diversity Network, Inc. (NASDAQ:IPDN), (“IPDN” or the “Company”), a global developer and operator of online and in-person networks that provides access to networking, training, educational and employment opportunities for diverse individuals, today announced its financial results for the quarter ended September 30, 2023.
“While our industry has seen the slowing through the second quarter of 2023, we are seeing an uptick in corporate spend in the third quarter of 2023 and continuing into the fourth quarter of 2023 as well. We continue to focus on strategic targeting of industries and business that we feel are in need of our services and we are seeing an increase in sales,” said Adam He, CEO of Professional Diversity Network.
Third Quarter Financial Highlights:
| ● | Total consolidated revenues for the three months ended September 30, 2023 decreased $107,000, or 5 percent, as compared to the same period in the prior year. PDN Network segment revenues increased $62,000 or 5 percent compared to revenues during the same period in the prior year. Revenues for the three months ended September 30, 2023 from the NAPW segment decreased approximately $17,000 as compared to the same period in the prior year. Revenues for the three months ended September 30, 2023 from the RemoteMore segment decreased $152,000 as compared to the same period in the prior year. | |
| ● | Basic and diluted net loss per share remained fairly consistent at $0.12 during the three months ended September 30, 2023 as compared to $0.13 during the three months ended September 30, 2022. | |
| ● | On September 30, 2023, cash balances were approximately $0.6 million as compared to $1.2 million on December 31, 2022. Working capital deficit from continuing operations on September 30, 2023, was approximately $1.3 million as compared to $0.2 million on December 31, 2022. |
Financial Results for the Three Months Ended September 30, 2023
Revenues
Total revenues for the three months ended September 30, 2023 decreased approximately $107,000, or 5.0 percent, to approximately $2,008,000 from approximately $2,115,000 during the same period in the prior year. The decrease was predominantly attributable to a reduction in contracted software development of approximately $152,000, and an approximate $18,000 decrease in membership fees and related services revenues, as compared to the same period in the prior year. Partially offsetting the decrease was an approximate $77,000 increase in recruitment services. Recruitment services for the quarter included approximately $92,000 of event revenue from the recently acquired Expo Experts for which there was no comparable revenue in the same period of the prior year.
During the three months ended September 30, 2023, our PDN Network generated approximately $1,176,000 in comparable revenues compared to approximately $1,206,000 in revenues during the three months ended September 30, 2022, a decrease of approximately $30,000 or 2.4 percent. Offsetting the decrease was an increase in event revenues of $92,000 related to Expo Experts operations for which there was no comparable activity in the same period of the prior year.
During the three months ended September 30, 2023, NAPW Network revenues were approximately $135,000, compared to revenues of approximately $152,000 during the same period in the prior year, a decrease of approximately $17,000 or 11.2 percent.
During the three months ended September 30, 2023, RemoteMore revenue was approximately $605,000, compared to revenues of approximately $757,000 during the same period in the prior year, a decrease of approximately $152,000, or 20.1 percent.
Costs and Expenses
Cost of revenues during the three months ended September 30, 2023 was approximately $923,000, a decrease of approximately $306,000, or 24.9 percent, from approximately $1,229,000 during the same period of the prior year. The decrease was predominantly due to approximately $143,000 of contracted software development costs related to RemoteMore, and approximately $128,000 of reduced third-party computer services charges.
Sales and marketing expense during the three months ended September 30, 2023 was approximately $912,000, an increase of approximately $152,000, or 20.0 percent, from $760,000 during the same period in the prior year. The increase was predominately attributed to increased marketing spend and onboarding of Expo Experts, for which there were no comparable charges in the same period of the prior year.
General and administrative expenses increased by approximately $350,000, or 34.9 percent, to approximately $1,353,000 during the three months ended September 30, 2023, as compared to approximately $357,000 the same period in the prior year. The increase was predominantly due approximately $164,000 of discretionary share-based compensation, $122,000 of salaries and related benefit charges, inclusive of $70,000 relates to employee annual incentive bonuses, $53,000 of legal expenses, and $44,000 of third-party computer services. Partially offsetting the increase was a reduction in other purchased services of approximately $35,000, as compared to the same period in the prior year.
Net Loss from Continuing Operations
As the result of the factors discussed above, during the three months ended September 30, 2023, we incurred a net loss from continuing operations of approximately $1,320,000, an increase in the net loss of approximately $226,000, compared to a net loss of approximately $1,095,000 during the three months ended September 30, 2022.
Financial Results for the Nine Months Ended September 30, 2023
Revenues
Total revenues for the nine months ended September 30, 2023 decreased approximately $558,000, or 8.8 percent, to approximately $5,805,000 from approximately $6,363,000 during the same period in the prior year. The decrease was predominantly attributable to a reduction in comparable recruitment services revenues of approximately $658,000 and an approximate $110,000 decrease in membership fees and related services revenues, as compared to the same period in the prior year. Partially offsetting the decrease were increases of approximately $25,000 of contracted software development related to RemoteMore, as compared to the same period in the prior year, and approximately $240,000 of event revenue from the recently acquired Expo Experts for which there was no comparable revenue in the same period of the prior year.
During the nine months ended September 30, 2023, our PDN Network generated approximately $3,258,000 in comparable revenues compared to approximately $3,971,000 in revenues during the nine months ended September 30, 2022, a decrease of approximately $713,000 or 18.0 percent. The decrease in revenues was primarily driven by the softening in client hiring due to the macroeconomic environment change stemming from the latter half of 2022 and through the second quarter of 2023. Offsetting the decrease was an increase in event revenues of $240,000 related to Expo Experts’ operations for which there was no comparable activity in the same period of the prior year.
During the nine months ended September 30, 2023, NAPW Network revenues were approximately $400,000, compared to revenues of approximately $510,000 during the same period in the prior year, a decrease of approximately $110,000 or 21.6 percent.
During the nine months ended September 30, 2023, RemoteMore revenue was approximately $1,907,000, compared to revenues of approximately $1,882,000 during the same period in the prior year, an increase of approximately $25,000, or 1.3 percent.
Costs and Expenses
Cost of revenues during the nine months ended September 30, 2023 was approximately $2,763,000, a decrease of approximately $260,000, or 8.6 percent, from approximately $3,023,000 during the same period of the prior year.
Sales and marketing expense during the nine months ended September 30, 2023 was approximately $2,850,000, an increase of approximately $671,000, or 30.8 percent, from $2,179,000 during the same period in the prior year. The increase was predominately attributed to increased marketing spend and onboarding of Expo Experts in fiscal 2023, for which there were no comparable charges in the same period of the prior year.
General and administrative expenses increased by approximately $1,181,000, or 47.8 percent, to approximately $3,650,000 during the nine months ended September 30, 2023, as compared to approximately $2,469,000 the same period in the prior year. The increase was predominantly due to the settlement of litigation resulting in a one-time, non-cash gain of approximately $908,000 in the prior year for which there was no comparable transaction in the current year.
Net Loss from Continuing Operations
During the nine months ended September 30, 2023, we incurred a net loss of approximately $3,861,000 from continuing operations, an increase in the net loss of approximately $1,824,000, compared to a net loss of approximately $2,038,000 during the same period in the prior year.
Summary of the Quarter’s Financial Information
Amounts in following tables are in thousands except for per share amounts and outstanding shares.
Summary of Financial Position
| September 30, 2023 | December 31, 2022 | |||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 615 | $ | 1,237 | ||||
| Other current assets | 1,631 | 2,020 | ||||||
| Total current assets | $ | 2,246 | $ | 3,257 | ||||
| Long-term assets | 4,332 | 3,579 | ||||||
| Total Assets | $ | 6,578 | $ | 6,836 | ||||
| Total current liabilities | $ | 4,015 | $ | 3,943 | ||||
| Total long-term liabilities | 426 | 584 | ||||||
| Total liabilities | $ | 4,441 | $ | 4,527 | ||||
| Total stockholders’ equity | 2,466 | 2,546 | ||||||
| Total stockholders’ equity – noncontrolling interests | (329 | ) | (237 | ) | ||||
| Total liabilities and stockholders’ equity | $ | 6,578 | $ | 6,836 | ||||
Summary of Financial Operations
| Nine Months Ended September 30, | Change | Change | ||||||||||||||
| 2023 | 2022 | (Dollars) | (Percent) | |||||||||||||
| Revenues: | ||||||||||||||||
| Membership fees and related services | $ | 400 | $ | 510 | $ | (110 | ) | (21.6 | )% | |||||||
| Recruitment services | 3,422 | 3,840 | (418 | ) | (10.9 | )% | ||||||||||
| Contracted software development | 1,907 | 1,882 | 25 | 1.3 | % | |||||||||||
| Consumer advertising and marketing solutions | 76 | 131 | (55 | ) | (42.0 | )% | ||||||||||
| Total revenues | $ | 5,805 | $ | 6,363 | $ | (558 | ) | (8.8 | )% | |||||||
| Cost and expenses: | ||||||||||||||||
| Cost of revenues | $ | 2,763 | $ | 3,023 | $ | (260 | ) | (8.6 | )% | |||||||
| Sales and marketing | 2,850 | 2,179 | 671 | 30.8 | % | |||||||||||
| General and administrative | 3,650 | 2,469 | 1,181 | 47.8 | % | |||||||||||
| Depreciation and amortization | 429 | 746 | (317 | ) | (42.5 | )% | ||||||||||
| Total pre-tax cost and expenses: | $ | 9,692 | $ | 8,417 | $ | 1,275 | 15.1 | % | ||||||||
| Consolidated net loss from continuing operations, net of tax | $ | (3,861 | ) | $ | (2,038 | ) | $ | (1,824 | ) | (89.5 | )% | |||||
| Basic and diluted loss per share: | ||||||||||||||||
| Continuing operations | $ | (0.37 | ) | $ | (0.25 | ) | ||||||||||
| Weighted average outstanding shares used in computing net loss per common share: | ||||||||||||||||
| Basic and diluted | 10,453,764 | 8,195,282 | ||||||||||||||
| Three Months Ended September 30, | Change | Change | ||||||||||||||
| 2023 | 2022 | (Dollars) | (Percent) | |||||||||||||
| Revenues: | ||||||||||||||||
| Membership fees and related services | $ | 135 | $ | 153 | $ | (18 | ) | (11.8 | )% | |||||||
| Recruitment services | 1,243 | 1,166 | 77 | 6.6 | % | |||||||||||
| Products sales and other | 605 | 757 | (152 | ) | (20.1 | )% | ||||||||||
| Consumer advertising and marketing solutions | 25 | 39 | (14 | ) | (33.3 | )% | ||||||||||
| Total revenues | $ | 2,008 | $ | 2,115 | $ | (107 | ) | (5.0 | )% | |||||||
| Cost and expenses: | ||||||||||||||||
| Cost of revenues | $ | 923 | $ | 1,229 | $ | (306 | ) | (24.9 | )% | |||||||
| Sales and marketing | 912 | 760 | 152 | 20.0 | % | |||||||||||
| General and administrative | 1,353 | 1,003 | 350 | 34.9 | % | |||||||||||
| Depreciation and amortization | 149 | 233 | (84 | ) | (36.1 | )% | ||||||||||
| Total pre-tax cost and expenses: | $ | 3,337 | $ | 3,225 | $ | 112 | 3.5 | % | ||||||||
| Consolidated net loss from continuing operations, net of tax | $ | (1,320 | ) | $ | (1,095 | ) | $ | (226 | ) | (20.6 | )% | |||||
| Basic and diluted loss per share: | ||||||||||||||||
| Continuing operations | $ | (0.12 | ) | $ | (0.13 | ) | ||||||||||
| Weighted average outstanding shares used in computing net loss per common share: | ||||||||||||||||
| Basic and diluted | 11,115,612 | 8,461,494 | ||||||||||||||
Summary of Cash Flows from Continuing Operations
| Nine Months Ended September 30, | ||||||||
| Cash (used in) provided by continuing operations | 2023 | 2022 | ||||||
| Operating activities | $ | (2,415 | ) | $ | (1,394 | ) | ||
| Investing activities | (879 | ) | (31 | ) | ||||
| Financing activities | 2,700 | (515 | ) | |||||
| Net increase in cash and cash equivalents from continuing operations | $ | (594 | ) | $ | (1,940 | ) | ||
Professional Diversity Network, Inc. and Subsidiaries
Non-GAAP (Adjusted) Financial Measures
We believe Adjusted EBITDA provides a meaningful representation of our operating performance that provides useful information to investors regarding our financial condition and results of operations. Adjusted EBITDA is commonly used by financial analysts and others to measure operating performance. Furthermore, management believes that this non-GAAP financial measure may provide investors with additional meaningful comparisons between current results and results of prior periods as they are expected to be reflective of our core ongoing business. However, while we consider Adjusted EBITDA to be an important measure of operating performance, Adjusted EBITDA and other non-GAAP financial measures have limitations, and investors should not consider them in isolation or as a substitute for analysis of our results as reported under GAAP. Further, Adjusted EBITDA, as we define it, may not be comparable to EBITDA, or similarly titled measures, as defined by other companies.
The following non-GAAP financial information in the tables that follow are reconciled to comparable information presented using GAAP, derived by adjusting amounts determined in accordance with GAAP for certain items presented in the accompanying selected operating statement data.
The adjustments for the three and nine months ended September 30, 2023 relate to stock-based compensation, litigation settlement reserves, loss attributable to noncontrolling interest, depreciation and amortization, interest and other income and income tax expense (benefit).
The adjustments for the three and nine months ended September 30, 2022 relate to stock-based compensation, litigation settlement reserves, loss attributable to noncontrolling interest, depreciation and amortization, interest and other income and income tax expense (benefit).
| Three Months Ended September 30, | ||||||||
| 2023 | 2022 | |||||||
| (in thousands) | ||||||||
| Loss from Continuing Operations | $ | (1,320 | ) | $ | (1,095 | ) | ||
| Stock-based compensation | 199 | – | ||||||
| Litigation settlement reserve | – | 34 | ||||||
| Loss attributable to noncontrolling interest | 14 | 149 | ||||||
| Depreciation and amortization | 149 | 233 | ||||||
| Interest and other income | (2 | ) | (1 | ) | ||||
| Income tax expense (benefit) | (7 | ) | (25 | ) | ||||
| Adjusted EBITDA | $ | (967 | ) | $ | (705 | ) | ||
| Nine Months Ended September 30, | ||||||||
| 2023 | 2022 | |||||||
| (in thousands) | ||||||||
| Loss from Continuing Operations | $ | (3,861 | ) | $ | (2,038 | ) | ||
| Stock-based compensation | 262 | 440 | ||||||
| Litigation settlement reserve | – | (909 | ) | |||||
| Loss attributable to noncontrolling interest | 92 | 508 | ||||||
| Depreciation and amortization | 429 | 746 | ||||||
| Interest and other income | (9 | ) | (5 | ) | ||||
| Income tax benefit | (17 | ) | (36 | ) | ||||
| Adjusted EBITDA | $ | (3,104 | ) | $ | (1,294 | ) | ||
About Professional Diversity Network
Professional Diversity Network, Inc. (NASDAQ: IPDN) is a global developer and operator of online and in-person networks that provides access to networking, training, educational and employment opportunities for diverse professionals. We operate subsidiaries in the United States including National Association of professional Women (NAPW) and its brand, International Association of Women (IAW), which is one of the largest, most recognized networking organizations of professional women in the country, spanning more than 200 industries and professions. Through an online platform and our relationship recruitment affinity groups, we provide our employer clients a means to identify and acquire diverse talent and assist them with their efforts to comply with the Equal Employment Opportunity Office of Federal Contract Compliance Program. Our mission is to utilize the collective strength of our affiliate companies, members, partners and unique proprietary platform to be the standard in business diversity recruiting, networking and professional development for women, minorities, veterans, LGBTQ+ and disabled persons globally.
Forward-Looking Statements
This press release contains certain forward-looking statements based on our current expectations, forecasts and assumptions that involve risks and uncertainties. This release does not constitute an offer to sell or a solicitation of offers to buy any securities of any entity. Forward-looking statements in this release are based on information available to us as of the date hereof. Our actual results may differ materially from those stated or implied in such forward-looking statements, due to risks and uncertainties associated with our business, which include the risk factors disclosed in our most recently filed Annual Report on Form 10-K and in our subsequent filings with the Securities and Exchange Commission. Forward-looking statements include statements regarding our expectations, beliefs, intentions or strategies regarding the future and can be identified by forward-looking words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “should,” and “would” or similar words. We assume no obligation to update the information included in this press release, whether as a result of new information, future events or otherwise. Our most recently filed Annual Report on Form 10-K, together with this press release and the financial information contained herein, are available on our website, www.prodivnet.com. Please click on “Investor Relations.”
Investor Inquiries:
investors@ipdnusa.com
+1 (312) 614-0950
Source: Professional Diversity Network, Inc.
