Full Press Release Details
Quarter 2008 Earnings
afternoon ladies and gentlemen. Thank you for standing by. Welcome to the
Atrinsic, Incorporated First Quarter 2008 Earnings Conference Call. During
today's presentation, all parties will be in a listen-only mode. Following
presentation the conference will be open for questions. If you have a question
please press the, star followed by the one on your touchtone phone. Please
press, star zero for operator assistance at any time. For participants using
speaker equipment, it may be necessary to pick up your handset before making
your selection. This conference is being recorded today, Thursday, May 15,
now like to turn the conference over to Cameron Donahue, the Head of
Communications. Please go ahead.
afternoon and welcome to the Atrinsic First Quarter 2008 Earnings Conference
Call. The earnings release should be available on wire shortly. We apologize
the delay in this. I'd also like to point out that during the course of the
conference call, there may be statements made relating to future events of
Company that are forward-looking statements as apply in the Private
Securities Litigation Reform Act of 1995. Actual results, performance or
achievements could differ materially from those anticipated in such
forward-looking statements as a result of certain factors including those set
forth in the Company's filings with the Securities and Exchange
also be noted that the web cast for today's conference call may be downloaded
the Internet by visiting Atrinsic Corporate website at atrinsic.com and then
selecting Investor Relations at the top of the web page and then clicking Events
and Presentations. Also on that website you will find the link to the news
release we are issuing with the first quarter results. An archived version
the web cast will shortly be accessible from our Investor Relations site and
will be available for at least the next 12 months pursuant to SEC
those interested in reviewing the Company's currently filed 10-QSB which
contains all the financial information being discussed today, you can find
document also via Atrinsic's Corporate website by selecting Investor Relations
and under the heading Financial Reporting where all the Company's recent SEC
filings can be found. You can also search the EDGAR database directly at SEC.gov
and then search for Company Filings.
time I would introduce Burton Katz, Chief Executive Officer of Atrinsic. Mr.
Katz, the floor is yours.
you, Cameron, and thanks to all who join us today. Atrinsic's first quarter
2008 has been an important and productive period of time for the Company. This
quarter included closing the acquisition of Traffix, Inc. and the subsequent
integration of the two companies. Most important, we began solidifying and
executing on our unique business model which provides both cost synergies and
new revenue opportunities during the full 2008 fiscal year. With the transaction
closing in early February, we will focus the majority of our prepared comments
describing the pro forma results, our business model, the status of the
integration, key business highlights, and an update on our annual
pleased to announce our first quarter pro forma results which has tracked our
previously issued guidance as well as our internal expectations. On a pro forma
basis giving consideration to the February 4, 2008 acquisition of Traffix,
occurring on January 1st, 2007, net sales were approximately $37.4 million.
forma gross profits for the first fiscal quarter was approximately 15.5 million
and the pro forma adjusted EBITDA was approximately 2.3 million. The Company
also closed the quarter with approximately $36 million in cash on its balance
sheet with no short or long-term debt representing a positive increase in our
cash position since closing.
Dan Harvey, will provide more detail on both pro forma and GAAP results shortly.
After closing the transaction on February 4th of this fiscal year, our
management team has engaged in a detailed review of the combined company's
business units and subsequently restructured it to support the strategic
positioning of the business and begin realizing the synergies we expect to
end, I want to first reiterate and summarize our go-to-market approach. Today
Atrinsic is positioned as the fastest growing mobile entertainment and digital
advertising network in the domestic U.S. market. We compete with a truly unique
business model combining the power of Internet media with the latest in mobile
entertainment. First, the business leverages the growing convergence trend
between the scale of the Internet with the portability of the mobile handsets.
Second, it creates a formidable, vertically integrated digital media company
that owns proprietary content, creates exclusive direct to consumer products,
and owns its own media and distribution network.
Atrinsic is able to monetize its audience through both a subscription based
revenue model in addition to third party advertising. In short, we successfully
repurposed rich online-based content which is historically sold in an
ad-supported model into portable mobile products monetized with a directly
billed subscription model. Since we own a network of web properties, extensive
libraries of content, and primary access to online distributions, we are able
drive large audiences at a lower acquisition cost than most players in the
market providing us with significant competitive advantages.
Atrinsic is organized into two divisions. Atrinsic Networks, which monetizes
consumer audience with third party advertising and Atrinsic Entertainment which
monetizes its customers through direct subscription-based billing via the mobile
phone, credit card and local exchange carriers. In our continuing efforts to
out and commercially exploit identified synergies from the acquisition of
Traffix, Inc., we have initiated an integration plan that better positions
company to execute on its most profitable growth opportunities. Under this
Atrinsic will save approximately $4 million in annualized fixed costs associated
with reducing its workforce for overlaps created as a result of the merger
including the move of its headquarters to a single New York City
ongoing integration effort has been substantial, yet we are making tremendous
progress. As we complete the integration of the two businesses, I'm confident
we're on the correct strategic path given the development cycle of the online
and mobile market and our relative positions to create profitable growth over
the long-term. In the most previous quarter, only one of the organizations
generating positive, albeit minimal, EBITDA. Today out of the gate we are
collectively profitable with both our network services and entertainment service
business units generating positive EBITDA. This combination makes more sense
every day we are together and I am increasingly confident in our ability to
deliver value for our shareholders with both organic growth and the acquisition
platform we have created.
building a truly unique business in a rapidly expanding space and are poised
benefit from several industry-wide trends. Atrinsic is positioned as a leading
mobile entertainment and digital advertising network in the domestic U.S. market
with the ability to offer low cost digital content, help consumers find that