The Meet Group Posts Preliminary Results, Raises Top-Line View

The Meet Group MEET recently announced its preliminary fourth-quarter and 2018 results. The company expects to report final results in March 2019.

The Meet Group now estimates revenues of almost $52.3 million, better than the previous guidance of $47.8-$48.8 million for the fourth quarter. Adjusted EBITDA is now expected to be roughly $10.3 million, better than the previous guidance of $8.7-$9.1 million.

For 2018, The Meet Group now expects revenues of almost $178.5 million, better than the previous expectation of $174-$175 million. Adjusted EBITDA is now expected to be roughly $31.8 million, better than the previous guidance of $30.2-$30.6 million.

The preliminary results are expected to boost The Meet Group’s share price. The stock has returned 96.1% in the past year, significantly outperforming the industry’s growth of 3.9%.

 

Strong Growth in Video Revenues: Key Catalyst

Strong growth in video revenues is expected to drive top-line growth in the to-be-reported quarter. The Meet Group expects video revenues to grow sequentially. Management stated that annualized video revenue run-rate was $71 million (based on the month of December) at the end of 2018 that reflects significant growth within a short span of time.

Per Bloomberg, the company’s live-streaming apps are being rapidly adopted by millennials. The recently launched battle feature on its MeetMe and Skout apps is particularly engrossing.

Battles bring together two livestreamers and their audiences for a live competition in categories like singing or comedy. Each battle lasts just a few minutes, and the streamer earning more diamonds through gifts from viewers during the battle period wins the competition. Management stated that more than 30,000 battles per day took place in the past week only. Robust monetization of the battle feature (users pay for the gifts) is expected to drive top-line growth.

Moreover, advertising revenues are estimated to grow roughly 19% on a quarter-over-quarter basis.

Earnings Estimates Stable

The Zacks Consensus Estimate for fourth-quarter earnings has remained steady at 11 cents over the past 60 days and reflects 8.3% decline on a year-over-year basis.

Moreover, the consensus mark for 2018 earnings has remained steady at 34 cents over the past 60 days and reflects 12.8% decline on a year-over-year basis.

Notably, The Meet Group has beaten the consensus mark for earnings in all of the trailing four quarters, with average being 50.9%.

Zacks Rank & Other Stocks to Consider

The Meet Group currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Cloudera CLDR, Veeva Systems VEEV and Verint VRNT are stocks worth considering in the broader computer and technology sector. All three sport the same Zacks rank as of The Meet Group.

Expected long-term earnings growth rate for Cloudera, Verint and Veeva is 8%, 10% and 19.5%, respectively.

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