Velti Announces Third Quarter 2012 Results

Velti Announces Third Quarter 2012 Results

Company to Divest Certain Assets to Focus on Key Growth Geographies and
Products

DUBLIN, Ireland and SAN FRANCISCO, Nov. 14, 2012 (GLOBE NEWSWIRE) -- Velti plc
(Nasdaq:VELT), the leading global provider of mobile marketing and advertising
technology and solutions, today announced its financial results for the third
quarter ended Sept. 30, 2012.

"We achieved strong revenue and gross profit growth in the third quarter with
continued solid demand for our services as mobile continues to emerge as a
highly strategic and effective channel for brands to establish, enhance and
manage customer relationships," said Alex Moukas, chief executive officer. "We
had a tremendous quarter in terms of contracts signed with new and existing
customers and are very pleased with the size and scope of the attendant
campaigns, as well as the geographic origin of the customers, reflecting our
success in driving revenue from our target geographies, including the United
States, United Kingdom and Western Europe. These geographies provide great
opportunities and better support our business model objectives, including
improved cash flow. We therefore made a key decision in the quarter to divest
certain assets associated with economically challenged customers, such as
Greece and the Balkan States.

"Our adjusted EBITDA results in the third quarter reflect an increase in our
R&D costs as we reduced our capitalization of internal software development
due to our accelerated software development cycles and focus. Going forward,
we expect to continue to reduce our internal capitalized software development
investments and correspondingly increase our research and development
expenses. In addition, we made key investments into our sales and marketing
organization, primarily in the U.S. market, in order to maximize the
significant regional opportunity that we see here. We believe that these
investments in top talent will allow us to continue to drive excellent results
from this region. Finally, foreign exchange fluctuation contributed negatively
to our adjusted EBITDA results.

"We also made a decision in the quarter to consolidate and streamline our
financing structure and wind-down remaining receivables in our legacy
factoring arrangements. This significantly reduces our cash interest expense
and simplifies our financing activities, providing more clarity for
investors."

Q3 2012 Financial Highlights

  *Record revenue of $62.4 million, an increase of 62 percent from Q3 2011;
    $66.6 million or 74 percent on a constant currency basis;
  *Revenue less 3^rd party costs of $39.7 million, an increase of 63 percent
    from Q3 2011;
  *Adjusted EBITDA of $6.7 million, compared with $5.6 million in Q3 2011, an
    increase of 19 percent;
  *Commencing in the third quarter Velti is significantly reducing its
    capitalization of internal software development to reflect the company's
    accelerated software development cycles and focus. This change resulted in
    higher research and development expenses in the third quarter, and
    accordingly, negatively impacted its adjusted EBITDA results. Going
    forward, Velti expects to continually reduce its internal capitalized
    software development investments. The effect of this change is $1.2
    million in the third quarter;
  *GAAP net loss attributable to Velti of $24.7 million and EPS of $(0.38)
    compared with a net income of $0.6 million and EPS of $0.01 for Q3 2011;
    included in the GAAP net loss is a $9.6 million non-cash expected loss on
    assets held for sale (primarily attributable to $7.8 million of discount
    associated with the deferred consideration from the company's
    divestiture), as well as a $5.3 million non-cash charge associated with
    the re-measurement of MIG's final deferred consideration; and
  *Adjusted net loss of $1.8 million and adjusted EPS of $(0.03) compared
    with an adjusted net loss of $1.1 million and adjusted EPS of $(0.02) for
    Q3 2011.

Cash and Comprehensive DSOs

  *Cash position of $29.5 million as of Sept. 30, 2012;
  *Operating cash flow of $(4.9) million, or $1.4 million when adjusted for
    the strategic termination of legacy factoring arrangements and reduced
    capitalization of investment in internal software development;
  *During the third quarter, Velti made the decision to eliminate its
    remaining factored receivables. This significantly reduces the company's
    cash interest expense and simplifies its financing activities. As a result
    of this decision, the company incurred a one-time operating cash flow
    reduction of $5.1 million.
  *Comprehensive DSOs of 242 days, excluding the impact of terminating the
    company's factoring arrangements and considering the effect of the
    divestiture of assets;
  *Comprehensive DSOs improvement throughout the year driven by a gradual
    reduction in the proportion of Velti's business that comes from customer
    activities in high-DSO areas, more rapid reconciliation and invoicing and
    internal process improvements;
  *Velti expects to report positive operating cash flow in the fourth quarter
    with approximately neutral free cash flow, including an estimated $2 to $3
    million negative impact from the divestiture. Excluding the divestiture,
    the company re-iterates previous guidance of both positive operating and
    free cash flow in Q4.

Revenue Contribution and Mobile Advertising and Marketing Revenue and Margins

  *The Americas contributed 26 percent of revenue or $16.2 million, compared
    with $9.0 million in Q3 2011. The U.S. will be Velti's single largest
    market this year;
  *The U.K. contributed 27 percent of revenue or $17.1 million, compared with
    $5.3 million in the same period last year;
  *For Q3 2012, SaaS revenue contributed 78 percent of total revenue,
    compared with 67 percent for Q3 2011; license and software revenue
    contributed 8 percent of total revenue, compared with 26 percent for Q3
    2011; and managed services revenue contributed 14 percent of total
    revenue, compared with 7 percent for Q3 2011;
  *Mobile advertising revenue was $14 .0 million (22 percent of total
    revenue), an increase of 87 percent from Q3 2011 and mobile advertising
    3^rd party costs were $10.5 million; resultant mobile advertising revenue
    less 3^rd party costs were $3.4 million; and
  *Mobile marketing revenue was $48.4 million (78 percent of total revenue),
    an increase of 58 percent from Q3 2011 and mobile marketing 3^rd party
    costs were $12.2 million; resultant mobile marketing revenue less 3rd
    party costs were $36.3 million.

Please see the reconciliation of net income (loss) before non-controlling
interest to adjusted EBITDA later in this release.

Company to Divest Greek, Balkan and other Assets to Focus on Key Growth
Geographies and Products

Velti also announced today that it has entered into an agreement to divest
certain declining assets, focused on geographies and customers with worsening
economic and demand characteristics, to a group led by local, non-executive
management and comprising approximately 75 employees in total. These assets
are characterized by very long revenue collection cycles (DSOs: approximately
450 days), are located in troubled economies, and have heavy capital
expenditure requirements.

Key aspects of the transaction:

  *The consideration for the transaction is approximately $23.5 million
    payable in cash in three annual installments, with potential upside in the
    event that the divested operations exceed 2014 expectations;
  *Depending on the timing of closing of the transaction, the 2012 estimated
    impact to Velti's revenue and adjusted EBITDA is expected to be $10 to $15
    million and $6 to $9 million, respectively, to reflect exclusion of the
    divested assets. This reflects the heavily back-end loaded nature of the
    revenue and adjusted EBITDA associated with these assets;
  *Revenue from geographies characterized by high-DSOs, including the PIIGS
    countries, and other North African and Middle Eastern countries is
    expected to decline to 2 to 3 percent of total revenue for fiscal year
    2013;
  *Total capital expenditures are expected to be materially reduced by
    approximately $6 million per year, reducing cash investment requirements;
    in addition, the company has avoided potential multi-million dollar
    severance costs that it would have incurred if the businesses had simply
    been wound down;
  *As a result of the divestiture and other operational improvements, Velti
    is targeting comprehensive DSOs below 180 days by Dec. 31, 2013;
  *Revenue from the Americas and U.K., as a percentage of total revenue, are
    expected to increase to 55 to 60 percent in fiscal year 2012 and to 65 to
    70 percent of total revenue in fiscal year 2013; and
  *Velti's 2013 and 2014 revenue growth rates are expected to increase to the
    mid-30 percent range in both years (2013 vs. pro forma 2012, excluding
    divested assets).

"We made a key decision in the quarter to divest certain assets associated
with economically challenged geographies, including among others, Greece and
the Balkan States," said Moukas. "As we stated previously, we are focused on
reworking contracts worldwide with existing customers to conform to the terms
we are receiving from our new customers. Quite a few of our customers in the
regions where we are divesting assets are focusing on conserving cash above
all else and therefore seem unwilling or unable to conform to our new payment
requirements. Our structuring this deal as a divestiture, as opposed to simply
walking away from these customers, accomplishes five key goals: First, we are
able to monetize the assets as opposed to shutting off these customers.
Second, we are able to maintain upside if the region recovers. Third, we will
be able to focus our business and cash investments on services and regions,
such as the Americas and the United Kingdom, that are best suited to our
longer term business model. Fourth, we are able to ensure continuity of
customer service. And finally, we are able to eliminate any future severance
or other downsizing liabilities associated with these assets. This transaction
is expected to help facilitate 2013 free cash flow generation, a reduction in
DSOs and an accelerated growth profile."

Additional Third Quarter Business Highlights

  *Included among Velti's successes was its largest deal signed to date - a
    $27 million, two-year agreement with a large U.S. brand to drive increased
    engagement with and long-term loyalty of the brand's existing
    customers;this represents a major milestone in Velti's ongoing
    penetration of the U.S. market; and
  *Velti announced the addition of several technology industry executives
    across both its product and sales and marketing functions:Harry Patz
    joined the company as Chief Revenue Officer.Patz, a 20-year veteran of
    Microsoft Corporation, managed the Microsoft Communications Sector
    Business in North America which he helped grow to $1 billion of revenue;
    Patz is responsible for driving Velti's revenue strategy and operations in
    North America.Jason Hoffman also joined Velti from Microsoft as Senior
    Vice President, Product.Hoffman previously led Analytics, Yield
    management and Optimization efforts for Display and Search advertising at
    Microsoft.

For additional information related to our third quarter 2012 results, please
see the Q3 2012 Earnings Slide Deck available on the Events section of the
investor website at http://investors.velti.com/events.cfm.

Q3 Financials Reconciliation and Q4 Outlook

Reconciliation: GAAP Operating Cash Flow ($ in       Quarter Ended Sept. 30^th
millions)
                                                    
Net Cash Used in Operating Activities                $(4,898)
Includes: Termination of Factoring Arrangement       $5,074
Includes: Reduction in Internal Software Development $1,176
Capitalization
Pro Forma Net Cash Generated from Operating          $1,352
Activities

                                                    
Reconciliation: Adj. EBITDA ($ in millions)          Quarter Ended Sept. 30^th
                                                    
Adj. EBITDA as Reported                              $6,705
Includes: Reduction in Internal Software Development $1,176
Capitalization
Pro Forma Adj. EBITDA                                $7,881

                                                    
Reconciliation: FY 2012E Adj. EBITDA Guidance ($ in  As of Quarter Ended Sept.
millions)                                            30^th
                                                    
Adj. EBITDA, Year to Date as Reported                $17,490
Plus: Q3 Reduction in Internal Software Development  $1,176
Capitalization
Plus: Q4 Reduction in Internal Software Development  $3,500
Capitalization
Plus: Q4 Mid-point Divested Adj. EBITDA              $7,500
Plus: Q4 Mid-point Adj. EBITDA                       $55,334
Original FY 2012 Mid-point Adj. EBITDA Guidance      $85,000

Velti is announcing revenue and adjusted EBITDA guidance for the fourth
quarter and fiscal year ending Dec. 31^st as follows:

($ in millions)                 Qtr. End. Dec. 31^st       FYE Dec. 31^st
                               Low           High         Low        High
Adjusted Revenue Guidance       $97.1         $113.1       $270.0     $286.0
Add: Divested Revenue           $15.0         $10.0       $15.0     $10.0
Comparable Revenue Guidance     $112.1       $123.1       $285.0     $296.0
^(1)
Revenue Guidance (Q2 Call; Q4   $110.5       $125.5       $285.0     $296.0
Implied from Annual) ^(2)
Change vs. Comparable           $1.6          ($2.4)       $0         $0
                                                                  
Adjusted EBITDA Guidance        $50.8         $59.8        $68.3      $77.3
Add: Q4 Divested Adj. EBITDA    $9.0         $6.0        $9.0      $6.0
Add: Q4 Est. Reduction:
Internal S/W Dev.               $3.5         $3.5        $3.5      $3.5
Capitalization
Add: Q3 Reduction: Internal S/W --            --           $1.2      $1.2
Dev. Capitalization
Comparable Adj. EBITDA Guidance $63.3         $69.3        $82.0      $88.0
^(3)
Adj. EBITDA Guidance (Q2 Call;  $60.7         $68.7        $82.0      $88.0
Q4 Implied from Annual) ^(2)
Change vs. Comparable           $2.6          $0.6         $0         $0
(1) Quarter ended Dec. 31st equals FYE Dec. 31st less YTD revenue.
(2) Qtr. End. Dec. 31st Low equals FYE Dec. 31st Low less YTD at end of Q2
less high guidance for Q3. Qtr. End. Dec. 31st High equals FYE Dec. 31st High
less YTD at end of Q2 less low guidance for Q3.
(3) Quarter ended Dec. 31st equals low and high guidance for FYE Dec. 31st
less YTD Adj. EBITDA less Q3 reduction in internal S/W Dev. Capitalization.

Velti expects to be operating cash flow positive and approximately free cash
flow neutral during the fourth quarter including the negative impact of the
divestiture.

Velti Announces 2013 Analyst Day Event

The company will hold its 2013 Analyst Day on Wednesday, Jan. 30, 2013 in New
York City.The company will discuss trends and drivers in the mobile market,
customer testimonials and case studies, product demonstrations as well as its
growth strategy.Further details on the event will be provided in the coming
weeks.

Conference Call

The company will host a conference call today at 4:30 PM ET to discuss these
results. The conference call can be accessed at (877) 415-4117 or (708)
290-1138 (International), conference ID# 55278764. The call will also be
broadcast simultaneously at http://investors.velti.com. Following completion
of the call, a recorded replay of the webcast will be available for three
month on the Events section of the investor website at
http://investors.velti.com/events.cfm. To listen to the telephone replay, call
toll-free (855) 859-2056 or (404) 537-3406 (International), conference ID#
55278764. The telephone replay will be available from 7:30 PM ET Nov. 14
through 11:59 PM ET Nov. 28, 2012. Additional investor information can be
accessed at http://velti.com.

Use of Non-GAAP Measures

This press release includes non-GAAP financial measures such as adjusted
EBITDA, adjusted net income and adjusted earnings per share. These non-GAAP
financial measures are not a measure of financial performance or liquidity
calculated in accordance with accounting principles generally accepted in the
U.S., referred to herein as GAAP, and should be viewed as a supplement to, not
a substitute for, our results of operations presented on the basis of GAAP.
Reconciliation of these non-GAAP financial measures to the most directly
comparable GAAP financial measures is detailed in the table below.

Our non-GAAP measures should be read in conjunction with the corresponding
GAAP measures. These non-GAAP financial measures have limitations as an
analytical tool and you should not consider them in isolation from, or as a
substitute for, analysis of our results as reported in accordance with GAAP.

We define adjusted net income (loss) by excluding foreign exchange gains or
losses, share-based compensation expense, non-recurring and acquisition
related expenses, deferrals of net profits of our equity method investments
related to transactions with us, and acquisition-related depreciation and
amortization.

We define adjusted EBITDA by excluding from adjusted net income (loss), gains
or losses from our equity method investments, the remaining depreciation and
amortization, the provision for income taxes, net interest expense, and other
income and expense.

Adjusted net income (loss) and adjusted EBITDA are not necessarily comparable
to similarly-titled measures reported by other companies.

Adjusted income (loss) per share is adjusted net income (loss) divided by
diluted shares outstanding.

We believe these non-GAAP financial measures are useful to management,
investors and other users of our financial statements in evaluating our
operating performance because these financial measures are additional tools to
compare business performance across companies and across periods. We believe
that:

  *these non-GAAP financial measures are often used by investors to measure a
    company's operating performance without regard to items such as interest
    expense, taxes, depreciation and amortization and foreign exchange gains
    and losses, which can vary substantially from company to company depending
    upon accounting methods and book value of assets, capital structure and
    the method by which assets were acquired; and
  *investors commonly use these non-GAAP financial measures to eliminate the
    effect of restructuring and share-based compensation expenses, one-time
    non-recurring expenses, and acquisition-related expenses, which vary
    widely from company to company and impair comparability.

We use these non-GAAP financial measures:

  *as a measure of operating performance to assist in comparing performance
    from period to period on a consistent basis;
  *as a measure for planning and forecasting overall expectations and for
    evaluating actual results against such expectations;
  *as a primary measure to review and assess the operating performance of our
    company and management team in connection with our executive compensation
    plan incentive payments; and
  *in communications with our board of directors, stockholders, analysts and
    investors concerning our financial performance.

Note to Financial Statements

The financial information in this announcement does not constitute statutory
financial statements as defined in Article 102 of the Companies (Jersey) Law
1991. Copies of our annual report and financial statements will be available
at our registered office: First Floor, 28-32 Pembroke Street Upper, Dublin 2,
Republic of Ireland or can be downloaded at the company's website at
www.velti.com.

Forward-Looking Statements

"Safe harbor" statement under the Private Securities Litigation Reform Act of
1995: This press release contains forward-looking statements including
statements regarding revenue and adjusted EBITDA guidance for the fourth
quarter and fiscal year; our expectations to be operating cash flow positive
and approximately free cash flow neutral during the fourth quarter and to
achieve increasing positive free cash flows thereafter; our expectations
concerning our ability to drive revenue from our target geographies, including
the United States, United Kingdom and Western Europe; our plans to reduce the
company's internal capitalized software development investments; and the
impact of the divestment of Greek, Balkan and other assets, including the
anticipated impact on revenue and revenue growth rate, EBITDA, DSOs and cash
flow.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, the company's results could differ materially from the
results expressed or implied by the forward-looking statements.These risks
and uncertainties include - but are not limited to - our ability to collect on
outstanding accounts receivable, manage our accounts payable, and improve our
comprehensive DSOs; achieve the benefit of the divestment of these Greek,
Balkan and other assets; continue to expand as the leading global provider of
integrated, comprehensive mobile marketing and advertising technology; expand
our customer base; and achieve the benefits of our acquisitions, and potential
liability resulting from pending or future litigation.We also face the impact
of Hurricane Sandy, as well as the global political and economic
uncertainties, and in particular the impact of economic uncertainties in
Europe in general and in Greece in particular. Further information on these
and other factors that could affect the company's results is included in our
Annual Report on Form 20-F and our current reports on Form 6-K filed with the
Securities and Exchange Commission and in other filings we may make with the
Securities and Exchange Commission from time to time.Velti assumes no
obligation and does not intend to update these forward-looking statements,
except as required by law.

About Velti

Velti is a leading global provider of mobile marketing and advertising
technology and solutions that enable brands, advertising agencies, mobile
operators and media to implement highly targeted, interactive and measurable
campaigns by communicating with and engaging consumers via their mobile
devices. The Velti platform, called Velti mGage™, allows customers to use
mobile and traditional media to reach targeted consumers, engage the consumer
through the mobile Internet and applications, convert them into customers and
continue to actively manage the relationship through the mobile channel. Velti
is a publicly-held corporation based in Jersey, and trades on the NASDAQ
Global Select Market under the symbol VELT. For more information, visit
www.velti.com.

The Velti logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=7438

                                                             
                         For the Three Months    For the Nine Months Ended
                          Ended September 30,     September 30,
                         2012         2011       2012           2011
                         
Reconciliation to         (in thousands except per share amounts)
adjusted EBITDA:
Net income (loss) before  $ (24,740)   $623     $ (51,300)     $ (40,425)
non-controlling interest
Adjustments:                                                  
Foreign exchange gains    (3,210)      (8,777)    (2,136)        (6,974)
Non-cash share based      6,578        3,773      22,530         23,626
compensation^(1)
Non-recurring and
acquisition-related       7,384        2,404      8,916          11,681
(income) expenses^(2)
Loss (gain) from equity   (151)        109        551            1,398
method investments^(3)
Expected loss on assets   9,626        —          9,626          —
held for sale
Depreciation and
amortization -            2,717        795        7,941          2,387
acquisition related
Adjusted net loss         $ (1,796)    $ (1,073)  $ (3,872)      $ (8,307)
Loss (gain) from equity
method investments -      2,174        (371)      2,628          (1,015)
other
Depreciation and          5,990        4,993      16,057         11,263
amortization - other
Income tax expense        46           482        1,186          3,440
Interest expense, net     257          1,482      1,416          4,584
Other expense             34           120        75             34
Adjusted EBITDA           $6,705     $5,633   $17,490      $9,999
                                                             
Adjusted net loss per     $ (0.03)     $ (0.02)   $ (0.06)       $ (0.15)
share - basic
                                                             
Adjusted net loss per     $ (0.03)     $ (0.02)   $ (0.06)       $ (0.15)
share - diluted
                                                             
Basic shares              64,684       61,595     63,472         53,914
                                                             
Diluted shares            64,684       61,595     63,472         53,914

^(1) During the quarter ended June 30, 2012 and September 30, 2012 includes
accrued annual bonuses that are expected to be paid in stock.During the nine
months ended September 30, 2011, we recognized additional compensation expense
of approximately $10.5 million.This relates to certain performance based
deferred share awards granted to employees in 2009 that were approved for
vesting. The performance metrics of these awards were set at the time of grant
based on then current projections of company performance under IFRS for 2009
and 2010. These metrics did not contemplate our conversion to US GAAP, the
impact of acquisitions completed during 2009 and 2010, or the impact on our
results of preparing for and completing our US public offering. Due to the
judgment required to reconcile actual company performance with the original
metrics, it was determined that any vesting wouldbe required to be treated as
a modification under the guidance in ASC 718. This required the fair value of
the awards to be remeasured on the vesting approval date, with the incremental
fair value charged to expense over the remaining vesting period.Share based
expenses were included in the condensed consolidated statements of operations
for the three and nine months ended September 30, 2012 and 2011 as follows:
                                                             
                                                             
                         For the Three Months    For the Nine Months Ended
                          Ended September 30,     September 30,
                         2012         2011       2012           2011
                         (in thousands)
Datacenter and direct     $775       $601     $2,525       $2,980
project
General and               2,601        1,342      9,374          10,218
administrative
Sales and marketing       1,925        1,127      6,434          7,022
Research and development  1,277        703        4,197          3,406
                         $6,578     $3,773   $22,530      $23,626

                                                             
^(2) Non-recurring and acquisition-related expenses in 2012 resulted from
re-measurement of contingent consideration for our Mobile Interactive Group
acquisition including locking of the contingent consideration and for
acquisition related expenses for completed acquisitions. These expenses were
offset by a first quarter gain on re-measurement of our pre-acquisition
ownership interest in CASEE to fair value.Non-recurring and
acquisition-related expenses in 2011 included acquisition related expenses
related to our acquisition of Mobclix, interest expense to recognize the
remaining discount upon repayment of certain loan facilities, interest expense
related to a lender fee in connection with our IPO, and other non-recurring
items offset by the reversal of a one time tax liability related to pre-IPO
performance share awards that were released to employees in 2010.
^(3) Profit and loss from equity method investments represents deferral of our
equity investments' net profits related to transactions with Velti.

                                                                
Veltiplc
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
                                                                
                                    For the Three Months For the Nine Months
                                   Ended                Ended
                                    September 30,        September 30,
                                   2012       2011      2012       2011
Revenue:                                                         
Software as a service (SaaS)        $48,540  $25,545 $144,254 $76,374
revenue
License and software revenue        5,229      10,091    9,632      16,959
Managed services revenue            8,624      2,552     18,991     8,763
Total revenue                       62,393     38,188    172,877    102,096
Cost and expenses:                                               
Third-party costs                   22,701     13,746    60,542     35,096
Datacenter and direct project costs 6,894      4,127     22,371     12,218
General and administrative expenses 15,516     10,260    46,788     34,137
Sales and marketing expenses        13,193     7,785     38,466     27,364
Research and development expenses   5,724      2,814     14,744     9,207
Acquisition related charges         5,622      —         9,950      7,603
Expected loss on assets held for    9,626      —         9,626      —
sale
Depreciation and amortization       8,707      5,788     23,998     13,650
Total cost and expenses             87,983     44,520    226,485    139,275
Loss from operations                (25,590)   (6,332)   (53,608)   (37,179)
Interest expense, net               (257)      (1,482)   (1,416)    (6,363)
Loss from foreign currency          3,210      8,777     2,136      6,974
transactions
Other income (expense)              (34)       (120)     5,953      (34)
Gain (loss) before income taxes,
equity method investments and       (22,671)   843       (46,935)   (36,602)
non-controllinginterest
Income tax expense                  (46)       (482)     (1,186)    (3,440)
Net gain (loss) from equity method  (2,023)    262       (3,179)    (383)
investments
Net income (loss)                   (24,740)   623       (51,300)   (40,425)
Net income (loss) attributable to   (23)       25        (66)       (75)
non-controlling interest
Net income (loss) attributable to   $ (24,717) $598    $ (51,234) $ (40,350)
Velti
                                                                
Net loss attributable to Velti per                               
share:
Basic                               $ (0.38)   $0.01   $ (0.81)   $ (0.75)
Diluted                             $ (0.38)   $0.01   $ (0.81)   $ (0.75)
Weighted average number of shares
outstanding for use in computing                                 
per share amounts:
Basic                               64,684     61,595    63,472     53,914
Diluted                             64,684     63,926    63,472     53,914


                                                                
Veltiplc
Condensed Consolidated Balance Sheets
(in thousands, except share and per share amounts)
(unaudited)
                                                                
                                                   September 30, December 31,
                                                   2012          2011
ASSETS                                                           
Current assets:                                                  
Cash and cash equivalents                           $29,497     $75,765
Trade receivables (including related party
receivables of $0.3 million and $0.5 million as of
September 30, 2012 and December 31, 2011,           109,520       70,968
respectively), net of allowance for doubtful
accounts
Accrued contract receivables (including related
party receivables of $1.8 million and $3.3 million  71,991        98,203
as of September 30, 2012 and December 31, 2011,
respectively)
Prepayments                                         19,271        22,664
Assets held for sale                                17,340        —
Other receivables and current assets(including
related party receivables of $4.0 million and $5.5  40,288        49,726
million as of September 30, 2012 and December 31,
2011, respectively)
Total current assets                                287,907       317,326
Non-current assets:                                              
Property and equipment, net                         12,829        5,922
Intangible assets, net                              106,896       91,192
Equity investments                                  —             2,270
Goodwill                                            70,450        52,956
Other assets                                        12,174        11,865
Total non-current assets                            202,349       164,205
Total assets                                        $490,256    $481,531
LIABILITIES AND SHAREHOLDERS' EQUITY                             
Current liabilities:                                             
Accounts payable                                    $38,853     $41,565
Accrued liabilities                                 70,941        49,621
Deferred revenue and current portion of deferred    11,043        6,217
government grant
Current portion of acquisition related liabilities  35,850        26,900
Current portion of long-term debt and short-term    233           2,881
financings
Income tax liabilities                              7,912         9,883
Total current liabilities                           164,832       137,067
Non-current liabilities:                                         
Long-term debt                                      15,297        6,859
Deferred government grant - non-current             1,845         3,162
Acquisition related liabilities - non-current       2,215         18,772
Other non-current liabilities                       18,265        18,180
Total liabilities                                   202,454       184,040
Commitments and contingencies                                    
Shareholders' equity:                                            
                                                                
Share capital, nominal value £0.05, 100,000,000
ordinary shares authorized; 64,997,427 and
61,790,985 shares issued and outstanding as of      5,404         5,148
September 30, 2012 and December31, 2011,
respectively
Additional paid-in capital                          390,877       346,031
Accumulated deficit                                 (85,960)      (34,726)
Accumulated other comprehensive (loss)              (22,519)      (19,046)
Total Velti shareholders' equity                    287,802       297,407
Non-controlling interests                           —             84
Total equity                                        287,802       297,491
Total liabilities and shareholders' equity          $490,256    $481,531


                                                                
Veltiplc
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
                                                                
                                  Three Months Ended    Nine Months Ended
                                   September 30,         September 30,
                                  2012       2011       2012       2011
                                                                
Cash flows from operating                                        
activities:
Net loss                           $ (24,740) $623     $ (51,300) $ (40,425)
                                                                
Adjustments to reconcile net loss
to net cash used in operating                                    
activities:
Depreciation and amortization      8,707      5,788      23,998     13,650
Loss on assets held for sale       9,626      —          9,626      —
Change in fair value of contingent 5,321      (6,142)    9,179      1,174
consideration
Non-cash interest expense          167        521        776        2,185
Share-based compensation           6,338      3,773      21,708     23,626
Deferred income taxes and other    —          (735)      (977)      1,115
tax liabilities
Undistributed (gain) loss of       2,012      (262       3,179      383
equity method investments
Foreign currency transactions loss (3,210)    (8,777)    (2,136)    (6,974)
Provision for doubtful accounts    102        (22)       1,043      422
Gain on previously held shares in  —          —          (6,028)    —
CASEE
Change in operating assets and                                   
liabilities:
Trade receivables and accrued      (12,848)   (17,618)   (33,263)   (6,000)
contract receivables
Prepayments and other current      10,051     (8,143)    5,485      (33,362)
assets
Other assets                       446        (5,508)    (5)        (207)
Accounts payable and other accrued (9,558)    9,903      16,685     (15,143)
liabilities
Deferred revenue and government    2,688      1,650      6,226      3,869
grant income
Net cash generated by (used in)    (4,898)    (24,949)   4,196      (55,687)
operating activities
Cash flow from investing                                         
activities:
Purchase of property and equipment (1,625)    (602)      (9,414)    (1,385)
Investments in software            (15,585)   (6,209)    (38,727)   (21,729)
development and purchased software
Investment in subsidiaries and
equity method investments, net of  —          —          (9,507)    (9,268)
cash acquired
Net cash used in investing         (17,210)   (6,811)    (57,648)   (32,382)
activities
Cash flow from financing                                         
activities:
Net proceeds from issuance of      573        25,464     1,333      273,780
ordinary shares
Proceeds from borrowings and debt  13,280     —          13,282     917
financing
Repayment of borrowings            (8,022)    (10,560)   (9,514)    (63,720)
Net cash generated from financing  5,831      14,904     5,101      210,977
activities
Effect of changes in foreign       1,075      (2,195)    2,083      127
exchange rates
Net increase (decrease) in cash    (15,202)   (19,051)   (46,268)   123,035
and cash equivalents
Cash and cash equivalents at       44,699     159,440    75,765     17,354
beginning of period
Cash and cash equivalents at end   $29,497  $140,389 $29,497  $140,389
of period

CONTACT: For further information, please contact:
        
         Velti plc
         Wilson W. Cheung
         Chief Financial Officer
         wcheung@velti.com
        
         Leslie Green
         Investor Relations
         lgreen@velti.com

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