MeetMe Posts Q2 2016 Results And Acquires Skout

Acquisitions
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It’s good news all around for MeetMe. The social discovery service, founded in 2005 to connect users on mobile devices, has posted better-than-anticipated financial results for the second quarter of 2016. The company also announced plans to acquire Skout, a leading global mobile network for meeting new people.

Wall Street’s initial projections predicted $15.27 million in revenue for MeetMe. Instead, revenue exceeded expectations, climbing 48% from last year and clocking in at $16.4 million. Mobile revenue rose 82% to $15.1 million year-over-year. Mobile represented more than 92% of MeetMe’s total revenue in the second quarter.

Adjusted EBITDA increased 109% year-over-year to $6.0 million, reflecting a 37% adjusted EBITDA margin. Non-GAAP net income reached $4.8 million, a 103% increase over Q2 of last year.

The quarter proved to be a record-breaker in more ways that one. MeetMe set new records for mobile DAU (daily active users), MAU (monthly active users), and user engagement in Q2 2016. Mobile daily active users grew 15% year-over-year to 1.22 million on average. Total mobile MAU reached 4.8 million, a 32% increase year-over-year, and up 10% sequentially from Q1. In July, mobile DAU record surpassed 1.37 million DAU for the first time and reached a new record of 32.2 million chats in a single day.

In an earnings call, CEO Geoff Cook called the numbers “tremendous progress” towards the company’s mission of “creating the largest global service for meeting and chatting with new people.”

Shares of MeetMe jumped in response to the news, as well as the news that the company would acquire Skout. The acquisition comes at a cost of $28.5 million in cash and approximately 5.37 million common shares of MeetMe, implying an enterprise value of $54.6 million based on MeetMe’s closing stock price on June 24, 2016.

As a united force, the companies hope to strengthen their shared vision of creating the largest global service for meeting and chatting with new people. The acquisition is expected to provide greater scale for monetization and increased profitability for the combined company.

Skout will remain a separate brand and standalone mobile application following the closing of the acquisition, and its headquarters will remain in San Francisco, CA. A handful of Skout employees have been offered positions with MeetMe. Skout’s founders, Christian Wiklund and Niklas Lindstrom, have agreed to assist with the transition for one year after the closing.

“I am thrilled to bring two of the largest mobile apps for meeting and chatting with new people into the same portfolio,” said Cook. “Skout is among the earliest mobile social discovery services. I’ve known and tracked the company for more than eight years. We share not only the same vision but also many of the same key engagement metrics…. I am excited by the opportunity to work closely with their talented team to accelerate growth and engagement across both apps around the world.”