Meet Group reports Q2 earnings beat, but Q3 sales outlook disappoints

Meet Group (NASDAQ: MEET) stock price decreased 2% before the bell after the live-streaming platform’s Q3 sales outlook failed to meet estimates. However, for the second quarter, sales and earnings topped estimates. The stock price has been volatile this year losing 24%.

Thanks to increase adoption of video-streaming service from the users, revenue soared 22% to $52 million and adjusted EBITDA jumped 29%. Adjusted earnings came in at 11 cents per share, up 3 cents from the prior year period. Analysts were anticipating sales of $50.8 million and non-GAAP EPS of 10 cents.

Commenting on the strong performance from the video service, CEO Geoff Cook said, “Strong execution in video continued to drive our business growth. We grew revenue 22% from the prior year quarter to a new record high fueled by video revenue growth of 150% over the same period.”

Key Metrics Performance

Meet’s key performance metrics remained intact for the second quarter. Daily Active Users (DAU) rose 8% while Monthly Active Users (MAU) surged double-digits (14.4%) to 18.24 million.

Mobile Average Revenue Per User (ARPU) grew 11% over prior year, while mobile Average Revenue per Daily Active User (ARPDAU) rose 19%.

When it comes to video-service related metrics, number of video DAU rose to 892,000 while Average video revenue per daily active video user (vARPDAU) jumped 76% to 26 cents due to the rise in video DAU.

New Game Launch in Q4

The company also plans to launch livestreaming dating game in the fourth quarter. It also has plans to improve the content and safety standards to make sure the platform is clean of abusive content. Meet is confident of generating $200 million revenues by 2021 from video-streaming services aided by the launch of the dating game, which is expected to improve the video DAU and ARPU next year.

Investors would be keeping a close tab on how this and it all depends on how well Meet is able to execute its plans. If the livestreaming game is well received by its users, it would be definitely accretive to earnings in the next few years.

Outlook Update

Meet expects third quarter revenue to be between $50.5-51.0 million lower than then $53.5 million estimates. Adjusted EBITDA is anticipated in the range of $9.3-9.5 million. The company hasn’t provided earnings outlook, but the street is expecting 12 cents per share for the third quarter.

For the full-year period, the company is guiding sales of $210-215 million while analysts are anticipating $212.69 million, which is at the midpoint of the Meet’s guided range. Adjusted EPS is expected to increase 28% to $0.46 as per the consensus.

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