Shares of The Meet Group Inc. (NASDAQ: MEET) tumbled on Thursday following the social-network company's fourth-quarter report. Despite beating analyst estimates for both revenue and earnings, the stock was down about 18% at market close.
The Meet Group reported fourth-quarter revenue of $40.1 million, up 37% year over year and about $2.3 million higher than the average analyst estimate. Mobile revenue jumped 15%, to $32.0 million, and the company started to monetize livestreaming video. Based on February's results, livestreaming revenue is at a $19 million annualized run rate.
Non-GAAP earnings per share came in at $0.12, down from $0.19 in the prior-year period, but $0.01 better than analysts were expecting. The company lost $67.7 million, or $0.94 per share, on a GAAP basis, due in part to an asset-impairment charge of $56.4 million and a deferred tax charge of $7.7 million. The impairment charge was related to the underperforming advertising business, which was the cause of a disappointing third-quarter report.
CEO Geoff Cook expects video to be a growth driver in 2018: "We expect video revenue to continue to grow quickly in 2018 and beyond, as we seek to rapidly expand our daily video audience and improve our per-video-user monetization rates. We are in the process of video-enabling our large, global social community, and we believe that outside of Asia we are the only social dating company of size with a full-scale commitment to live video."
While The Meet Group beat estimates for the fourth quarter, there were some negatives. The writedown related to the advertising business wiped out the company's profit in the fourth quarter, and even adjusted earnings declined compared to the prior-year period. The company slashed $7 million of costs earlier this week via headcount reductions -- not exactly a good sign for a growth company.
The Meet Group will need to return to earnings growth for investors to jump back on board.
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