Kuwaitfinancialexpress.com

PLAINVIEW, NY—(Marketwired – November 05, 2015) –

Third Quarter Year–Over–Year Highlights

GAAP revenue increased 80% to $21.9 million versus $12.2 million; non–GAAP revenue increased 110% to $25.6 million versus $12.2 million

NeuLion Digital Platform revenue (GAAP and non–GAAP) increased 17% to $14.3 million versus $12.2 million

DivX and MainConcept GAAP revenue was $7.6 million; non–GAAP revenue was $11.3 million

Non–GAAP Adjusted EBITDA grew to $5.0 million versus $1.3 million

Non–GAAP Adjusted EBITDA margin increased to 19.4% versus 10.8%

Renewed agreements with the NFL, NBA and UFC®

NeuLion, Inc. (TSX: NLN), a leading technology product and service provider that specializes in the digital video broadcasting, distribution and monetization of live and on–demand content to Internet–enabled devices, today reported financial results for the third quarter ended September 30, 2015.

“In our seasonally light third quarter we continued to deliver strong gains in both sales and profitability, and further demonstrated the earnings power of our business model,” said Kanaan Jemili, Chief Executive Officer. “Revenue in our NeuLion Digital Platform grew 17% on new customer additions and expanded usage from existing customers and, during the quarter, we secured renewals from the NFL, NBA, UFC and several other important sports rights content owners. Continued scaling of the NeuLion Digital Platform contributed to a 500 basis point improvement in cost of revenue as a percentage of revenue which, along with the addition of DivX and MainConcept revenue streams, drove an 860 basis point improvement in Non–GAAP Adjusted EBITDA margin.”

Added Jemili, “As an industry leader trusted by a growing and diverse group of global content owners in sports and entertainment, we continue to innovate and drive higher quality experiences for our partners. Our unique end–to–end service offering and proven capabilities to enable on–demand and live digital content viewing anywhere and on any device place us in an excellent position to continue capitalizing on the accelerating adoption of over–the–top and 4K video worldwide. With a steady stream of new customer wins and an ongoing expansion of existing customer relationships with content owners and CE manufacturers, we are excited about our growth prospects going forward.”

Third Quarter Operational Highlights

Signed a new multi–year agreement with UFC to power their ultimate go–to digital destination, UFC.TV, including complete access to pay–per–view events, and led the rebuild and re–launch of the UFC's over–the–top business, UFC FIGHT PASS®.

Renewed agreement with the NFL and launched redesigned NFL Game Pass service as part of a group of offerings designed to enhance the traditional television model in the U.S. and international markets for the league.

Renewed agreement with the NBA and re–launched NBA League Pass International service to bring every game of the 2015/2016 season live and on–demand to viewers on multiple devices.

Powered live and on–demand streaming of the 2015 CONCACAF Gold Cup matches for Univision Deportes, the sports division of Univision Communications Inc., the leading media company serving Hispanic America.

Delivered the US Open on CNTV 5+ VIP, China's digital premium subscription service for live and on–demand global sports events, offering viewers throughout China an exclusive high–quality video experience across multiple devices with interactive touch points and allowing them to dive deeper into the sports action with live stats, multiple camera views, real–time highlights, scores, chat and more.

Launched the sixth generation of the NeuLion Digital Platform, which offers content owners end–to–end delivery of live and on–demand video in HD and Ultra HD/4K video formats, speeds their time to market with new OTT services, lowers their transport costs, and creates new personalized digital experiences for their viewers, all while creating potential new sources of revenue for them.

Licensed the DivX Consumer Electronics (CE) SDK to Broadcom to help them deliver a new generation of set–top boxes to support OTT video services that stream live and on–demand sports and premium entertainment up to 4Kp60.

Announced that Adobe® plans to incorporate the MainConcept HEVC SDK into several key apps within Adobe Creative Cloud®, such as Adobe After Effects®, Adobe Premiere® Pro, and many others.

Were selected by Euroleague Basketball to power its new Euroleague TV digital service worldwide and enable the highest–level professional basketball league in Europe, with 24 teams from 12 countries, to offer fans a more user–friendly, personalized and reliable online destination for all live and on–demand basketball action throughout the Turkish Airlines Euroleague season.

Third Quarter Financial Review

As a result of the acquisition of DivX Corporation on January 30, 2015, NeuLion is now reporting revenue for the NeuLion Digital Platform and DivX combined. Because the Company expects revenue from the NeuLion Digital Platform to grow faster than revenue from other solutions, management intends to continue to report revenue from the NeuLion Digital Platform as a key performance indicator. The NeuLion Digital Platform combines the previously reported customer categories of Pro Sports, College Sports, and TV Everywhere.

GAAP Results

Total GAAP revenue was $21.9 million for the third quarter of 2015 compared to $12.2 million for the previous year's quarter, an increase of $9.7 million, or 80%. The NeuLion Digital Platform had revenue growth of 17% to $14.3 million for the current period, from $12.2 million for the comparable prior period, due to new customer wins and expanded usage from existing customers. DivX and MainConcept revenue was $7.6 million in the third quarter of 2015.

Cost of revenue was $3.9 million, or 18% of revenue, for the current period, compared to $2.8 million, or 23% of revenue, for the prior comparable period. The five percentage point improvement was due to a combination of the addition of DivX and MainConcept revenue streams and improved broadcast operating costs. Selling, general and administrative expenses, including stock–based compensation, were $11.2 million for the current period, an increase of 76% from $6.3 million for the prior comparable period. Research and development expenses were $6.6 million for the current period, more than triple the $2.1 million figure reported in the prior comparable period primarily as a result of increased headcount resulting from the DivX acquisition in January 2015. SG&A and R&D expenses associated with DivX for the third quarter of 2015 were $3.7 million and $4.1 million, respectively. The operating loss for the third quarter was $1.7 million compared to operating income of $0.2 million for the third quarter of 2014. The consolidated net loss was $3.1 million, or $0.01 per diluted share, for the current period compared with consolidated net income of $0.2 million, or $0.00 per diluted share, for the prior comparable period.

Non–GAAP Results

Non–GAAP revenue increased 111% to $25.6 million from the prior year's level. Non–GAAP Adjusted EBITDA more than tripled to $5.0 million from $1.3 million for the same period last year, with $2.8 million of the increase due to the acquisition of DivX and $0.9 million coming from organic improvement due to higher revenue and improved cost of revenue as a percentage of revenue, offset by increases in SG&A, excluding stock–based compensation, and R&D expenses. Please refer to the tables accompanying this release for the calculation of non–GAAP revenue and Adjusted EBITDA.

Use of Non–GAAP Financial Information

In addition to our U.S. GAAP results, this press release also includes disclosure on certain non–GAAP financial measures, as such term is used by the SEC. The Company defines non–GAAP revenues as GAAP revenues before purchase accounting adjustments as a result of an acquisition. The Company defines Non–GAAP Adjusted EBITDA as consolidated net income (loss) before interest, income taxes, depreciation and amortization, purchase accounting adjustments, stock–based compensation, acquisition–related expenses, gain on revaluation of convertible note derivative, and foreign exchange gain (loss). Non–GAAP Adjusted EBITDA is a key measure used by management to evaluate the Company's results and make strategic decisions about the Company, including potential acquisitions. Management believes this measure is useful to investors because it is an indicator of operational performance. Because not all companies use identical calculations, the Company's presentation of non–GAAP Revenue and Adjusted EBITDA may not be comparable to similarly titled measures of other companies. This measure does not have any standardized meaning prescribed by U.S. GAAP and therefore is unlikely to be comparable to the calculation of similar measures used by other companies, and should not be viewed as an alternative to measures of financial performance or changes in cash flows calculated in accordance with U.S. GAAP.

Pursuant to the requirements of Regulation G, we have provided a reconciliation of non–GAAP revenue to U.S. GAAP revenue and Non–GAAP Adjusted EBITDA to U.S. GAAP consolidated net income/(loss) as an exhibit to this press release.

About NeuLion

NeuLion, Inc. (TSX: NLN) offers solutions that power the highest quality digital experiences for live and on–demand content up to 4K on any device. Through its end–to–end technology platform, NeuLion enables digital content management, distribution and monetization for content owners worldwide, including the NFL, NBA, World Surf League, Univision Deportes, Euroleague Basketball and others. With the recent acquisition of DivX, LLC, NeuLion also operates a robust consumer electronics licensing business that has enabled over 1 billion devices worldwide with secure, high–quality video playback, and delivers a DivX consumer software offering that has been downloaded over 1 billion times. NeuLion's customers include major sports, entertainment and global content companies as well as major consumer electronics manufacturers and software companies. NeuLion is headquartered in Plainview, NY. For more information about NeuLion, visit www.NeuLion.com.

Forward–Looking Statements

Certain statements herein are forward–looking statements and represent NeuLion's current intentions in respect of future activities. Forward–looking statements can be identified by the use of the words “will,” “expect,” “seek,” “anticipate,” “believe,” “plan,” “estimate,” “expect,” and “intend” and statements that an event or result “may,” “will,” “can,” “should,” “could,” or “might” occur or be achieved and other similar expressions. These statements, in addressing future events and conditions, involve inherent risks and uncertainties. Although the forward–looking statements contained in this release are based upon what management believes to be reasonable assumptions, NeuLion cannot assure readers that actual results will be consistent with these forward–looking statements. These forward–looking statements are made as of the date of this release and NeuLion assumes no obligation to update or revise them to reflect new events or circumstances, except as required by law. Many factors could cause NeuLion's actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward–looking statements, including: our ability to derive anticipated benefits from the acquisition of DivX; our ability to successfully integrate the operations of DivX; our ability to realize some or all of the anticipated benefits of our partnerships; general economic and market segment conditions; our customers' subscriber levels and financial health; our ability to pursue and consummate acquisitions in a timely manner; our continued relationships with our customers; our ability to negotiate favorable terms for contract renewals; competitor activity; product capability and acceptance rates; technology changes; regulatory changes; foreign exchange risk; interest rate risk; and credit risk. These factors should be considered carefully and readers should not place undue reliance on the forward–looking statements. A more detailed assessment of the risks that could cause actual results to materially differ from current expectations is contained in the “Risk Factors” section of NeuLion's Annual Report on Form 10–K for the fiscal year ended December 31, 2014, which is available on www.sec.gov and filed on www.sedar.com.

NEULION, INC.

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CONDENSED CONSOLIDATED BALANCE SHEETS

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(in thousands, except share data)

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(Expressed in U.S. dollars)

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September 30,

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December 31,

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2015

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2014

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(unaudited)

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ASSETS

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Current

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Cash and cash equivalents

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$

59,064

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$

25,898

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Accounts receivable, net of allowance for doubtful accounts of $1,806 and $221

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15,980

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8,056

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Other receivables

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684

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603

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Inventory

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229

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304

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Deferred tax assets, net

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384

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0

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Prepaid expenses and deposits

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3,606

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1,315

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Due from related parties

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292

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111

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Total current assets

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80,239

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36,287

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Property, plant and equipment, net

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6,866

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3,830

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Intangible assets, net

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25,000

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406

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Goodwill

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11,496

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11,327

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Other assets

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1,549

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88

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Total assets

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$

125,150

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$

51,938

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LIABILITIES AND EQUITY

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Current

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Accounts payable

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$

22,931

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$

14,362

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Accrued liabilities

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9,267

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5,248

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Due to related parties

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166

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0

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Deferred revenue

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11,596

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9,602

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Total current liabilities

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43,960

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29,212

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Long–term deferred revenue

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1,053

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1,019

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Deferred rent liabilities

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1,741

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0

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Deferred tax liabilities

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3,821

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1,451

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Other long–term liabilities

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146

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202

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Total liabilities

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50,721

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31,884

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Redeemable preferred stock, net (par value: $0.01; shares authorized: 50,000,000; shares issued and outstanding: 28,089,083)

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Class 3 Preference Shares (par value: $0.01; shares authorized, shares issued and outstanding: 17,176,818)

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10,000

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10,000

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Class 4 Preference Shares (par value: $0.01; shares authorized, shares issued and outstanding: 10,912,265)

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4,977

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4,955

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Total redeemable preferred stock

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14,977

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14,955

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Stockholders' equity

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Common stock (par value: $0.01; shares authorized: 300,000,000; shares issued and outstanding: 244,419,077 and 178,210,006 respectively)

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2,444

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1,782

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Additional paid–in capital

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148,173

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87,631

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Promissory notes receivable

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(209

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(209

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Accumulated deficit

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(90,956

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(84,105

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Total stockholders' equity

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59,452

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5,099

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Total liabilities and stockholders' equity

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$

125,150

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$

51,938

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NEULION, INC.Â

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS ANDÂ

COMPREHENSIVE INCOME (LOSS)Â

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Three months ended September 30,

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Nine months ended September 30,

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2015

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2014

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2015

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2014

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Revenue

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$

21,901

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$

12,177

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$

66,259

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$

39,056

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Costs and expenses

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Cost of revenue, exclusive of depreciation and amortization shown separately below

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3,863

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2,813

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12,404

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9,860

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Selling, general and administrative, including stock–based compensation

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11,150

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6,330

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32,454

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19,108

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Research and development

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6,588

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2,104

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19,384

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