Tapinator Releases First Quarter 2018 Results
May 16, 2018 --
NEW YORK, May 16, 2018 /PRNewswire/ --
- Revenue increased 9% to $889 thousand from $813 thousand year-over-year
- Adjusted EBITDA* increased 290% to $160 thousand from $41 thousand year-over-year
- Cash Increased to $1.6 million from $247 thousand in prior period
Tapinator, Inc. (OTCQB: TAPM), a developer and publisher of mobile games and applications on the iOS, Google Play, Amazon and Ethereum platforms today announced financial results for its first quarter ended March 31, 2018 and the filing of its quarterly report with OTC Markets.
For the quarter ended March 31, 2018, Tapinator achieved revenue of approximately $889,000, bookings of $883,000, net loss of approximately $916,000, and adjusted EBITDA* of approximately $122,000, representing year-over-year changes of 9%, -9%, 65% and 194%, respectively.
- Quarterly revenue of $888,688; up 9% year-over-year
- Quarterly bookings of $883,078; down 9% year-over-year*
- Quarterly Net loss of 915,880, up 65% year-over-year
- Quarterly adjusted EBITDA of $160,106; up 290% year-over-year*
- $1,595,789 in cash as March 31, 2018; up 547% from $246,755 as of December 31, 2017
* A table has been included in this press release with non-GAAP adjustments to the Company's revenue resulting in bookings (a non-GAAP measure) and non-GAAP adjustments to the Company's net loss, resulting in positive adjusted EBITDA (a non-GAAP measure) for the relevant periods.
Andrew Merkatz, President & CFO of Tapinator, commented on the quarterly results, "We are pleased to have successfully completed our fundraising efforts during the first quarter of 2018. We closed a fully subscribed private placement for which we received net proceeds of approximately $2.6 million, a portion of which we used to eliminate the Company's debt in its entirety. Having emerged from these efforts completely debt-free and adequately capitalized, we are now fully focused on building sustainable, organic revenue growth via our primary Full-Featured Games strategy, and demonstrating continued year-over-year adjusted EBITDA improvements. Given the robust launch schedule for our new Full-Featured Games detailed below, we expect a majority of our revenue growth to be delivered in the third and fourth quarters of this year. Based on our year-to-date performance, we have provided updated annual financial guidance later in this release."
Ilya Nikolayev, CEO of Tapinator, added, "Our Full-Featured games pipeline for this year is aggressive with five new game launches scheduled for the second half of 2018. We look forward to delivering best-in-class experiences that are focused on long-term engagement and monetization. We are especially excited about Dice Mage Duel, the latest addition to our hit Dice Mage series, and two new games that we have yet to announce. We recognize that our Rapid-Launch games business is past its peak and that the growth of our Full-Featured games is increasingly important. For this reason, the two games that we have yet to announce focus on proven, evergreen categories where, we believe, we can establish long-term financial success. Finally, we recognize that the blockchain gaming market is currently in its infancy. But, we believe that gaming is one of the most promising verticals for blockchain technology and that franchise-type games may be built as decentralized, Ethereum applications. We look forward to the launch of BitPainting later this month, as we seek to establish a leadership position within this quickly developing industry."
The Company ended Q1 with 386 active games, of which 23 were released in the quarter. As of March 31, 2018, Tapinator had 98 titles in its portfolio that had each achieved at least one million downloads, up from 94 games that had reached this milestone at the end of 2017.
The Company continues to have significant conviction regarding its Full-Featured Games business and has a robust development pipeline planned for 2018. The Company's goal for its Full-Featured business is to create franchise-type games that have product lifespans of at least five to ten years. In order to accomplish this, the Company believes that it needs to achieve average player lifetime values (LTVs) that exceeds the customer acquisition cost, at scale. The Company has been able to achieve this, at certain download volumes, for two products: "Video Poker Classic" and "Solitaire Dash." The Company believes that, in 2018, it will be able to continue to scale both of these products as well as launch new games that can achieve these coveted metrics. As an extension of its Full-Featured Games business, the Company is also seeking to establish early leadership within the nascent blockchain gaming category through its newly established, Revolution Blockchain subsidiary.
In addition to two games for 2018 that we have not yet announced, the Company is particularly enthused about the significant potential of the following 2018 game releases and updates:
Fusion Heroes (released May 10, 2018 and featured within iOS App Store within "New Games We Love"): craft your own Mech and dominate in fierce Heads-Up combat. Build a mighty robo-hero to take on endless hordes of battle-droids with an arsenal cannons, missiles, lasers and more. From the wreckage of battle, scavenge and recruit an army of allies. Take on missions, find loot, and battle to victory in this fast-paced action RPG.
BitPainting (scheduled for early-access release May, 2018): a crypto-collectibles product for the global art market where players vie to build beautiful and unique collections of iconic virtual art on the blockchain.
Solitaire Dash 2.0 (scheduled for release July 2018): our horse-racing themed tri-peaks solitaire game will be receiving a significant update for its 2.0 version. The user interface is being completely redesigned in the form of a map to visually represent player progress. Players will have many additional ways to increase earning potential and in-game rewards, including improved streak bonuses and "sponsorships" that will be awarded for completing in-game content. We will also be introducing new level types, which will have their own unique obstacles, power-ups and mechanics. Finally, card streaks, an important component of the game, will be getting a major overhaul, along with unique rewards for attaining certain milestones. In short, Solitaire Dash 2.0 will combine the proven systems of top grossing card games with its own unique features to create a best-in-class solitaire product.
Dice Mage Duel (scheduled for release September 2018): with this upcoming sequel to the critically acclaimed Dice Mage and Dice Mage 2 games, magical dice dueling is back! Battle other mages in this turn-based multiplayer card game. Summon monsters, conjure spells, and roll mystic dice! Collect cards, find and upgrade powerful loot to become the ultimate Dice Mage.
Divide & Conquer (scheduled for release October 2018): an arena-style synchronous, multiplayer strategy game. This game offers a unique combination of fast, synchronous multiplayer battles and long-term progress via upgrades and unlocks. The systems built around the latter, we believe, will enable best-in-class monetization. Players of similar skill levels (based on tiers) are placed on a map. They must capture territory and special structures as they grow their empire and eliminate opponents - all in real time. As a player succeeds in battle, the player earns resources. This bounty is then used to level up units and, eventually, unlock new units as the player moves up in tiers.
Financial Highlights Three Months Ended Mar. 31, 2018 Mar. 31, 2017 GAAP Results Revenue $888,688 $812,794 Operating Loss ($592,671) ($178,340) Net Loss ($915,880) ($554,255) Diluted Net Loss Per Share ($0.01) ($0.01) Cash $1,595,789 $479,565 Debt $0 $979,364 Non-GAAP Results Bookings $883,078 $968,845 Adjusted EBITDA $160,106 $41,338
Quarterly Summary of Results
Tapinator recorded gross revenues of $888,688 and bookings of $883,078 for the three-month period ended March 31, 2018. This compares to gross revenues of $812,794 and bookings of $968,845 for the comparable three-month period in 2017. The increase in revenue was attributable primarily to an increase in Consumer App Store Transactions, driven by our Full-Featured Games business, which was partially offset by a decrease in Advertising revenue, driven by declines in our Rapid-Launch Games business. The decrease in bookings was caused by a 10% bookings decrease in our Rapid Launch Games business, a business we believe to have peaked, and a 7% decrease in our Full-Featured Games bookings, resulting from significant reductions in marketing spend for our Video Poker Classic and Solitaire Dash titles during the comparable periods.
For the three-month period ended March 31, 2018, the Company incurred an operating loss of $592,671, as compared to an operating loss of $178,340 for the comparable three-month period in 2017. The increase in operating loss was primarily attributable to $620,417 in non-cash, stock based compensation expense incurred in the most recent quarter.
The Company recorded a net loss of $915,880 for the three-month period ended March 31, 2018, as compared to a net loss of $554,255 for the comparable three-month period in 2017. The net loss increase was primarily attributable to $620,417 in non-cash, stock based compensation expense incurred in the most recent quarter.
For the three-month period ended March 31, 2018; the Company achieved adjusted EBITDA (a non-GAAP measure of earnings discussed below) of $160,106, as compared to adjusted EBITDA of $41,338 for the comparable three-month period in 2017. The increase in adjusted EBITDA is primarily due to $620,417 in non-cash, stock based compensation expense incurred in the most recent quarter which is included in net loss and backed out of the adjusted EBITDA figure.
Tapinator's cash balance increased to $1.6 million as of March 31, 2018 from the period ended December 31, 2018 when the cash balance was $247 thousands. The increase in cash during the period is primarily attributable to $2.6 million in net proceeds received from the issuance of common stock which was offset by a $1.14 million principal repayment of our Senior Secured Convertible Debenture.
2018 Full-Year Guidance Update (Unaudited)
Low High ($ in thousands) FY 2018 FY 2018 Revenue $3,931 $4,117 Bookings * $4,137 $4,345 Operating Loss ($2,419) ($2,327) Net Loss ($2,742) ($2,650) Adjusted EBITDA * $456 $548 % of Revenue 11% 13% Cash $1,275 $1,341
Tapinator (OTCQB: TAPM) develops and publishes mobile games and applications on the iOS, Google Play, Amazon and Ethereum platforms. Tapinator's portfolio includes over 300 mobile gaming titles that, collectively, have achieved over 450 million player downloads, including games such as ROCKY™, Video Poker Classic, Solitaire Dash and Dice Mage. Tapinator generates revenues through the sale of branded advertisements and via consumer transactions, including in-app purchases. Founded in 2013, Tapinator is headquartered in New York, with product development teams located in the United States, Germany, Bulgaria, Pakistan, Indonesia, and Canada. Consumers can find high-quality mobile entertainment wherever they see the 'T' character logo, or at http://tapinator.com
Forward Looking Statements
To the extent that statements contained in this press release are not descriptions of historical facts regarding Tapinator, they are forward-looking statements reflecting the current beliefs and expectations of management made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as "believe," "feel," "may," "will," "expect," "anticipate," "estimate," "intend," and similar expressions (as well as other words or expressions referencing future events, conditions or circumstances) are intended to identify forward-looking statements. Forward-looking statements in this release involve substantial risks and uncertainties that could cause the development and monetization of our mobile games, future results, performance or achievements to differ significantly from those expressed or implied by the forward-looking statements. Such risks and uncertainties include, among others, our belief that our pipeline of Full-Featured Games will continue to produce positive results, particularly in terms of our expectation that a majority of our revenue growth will occur in the third and fourth quarters of this year, our goal of creating franchise-type games with product lifespans of at least five to ten years in the Full-Featured Games category, our belief that we can continue to scale "Video Poker Classic" and "Solitaire Dash" to achieve our desired customer metrics, our ability to become an early leader in the blockchain gaming category and our ability to create franchise-type games in the blockchain gaming category. Tapinator undertakes no obligation to update or revise any forward-looking statements. The quoting and trading of the Company's common stock on the OTC Market Group's OTC Link quotation system is often thin and characterized by wide fluctuations in trading prices, due to many factors that may have little to do with the Company's operations or business prospects. As a result, there may be volatility in the market price of the shares of the Company's common stock for reasons unrelated to operating performance. Moreover, the OTC Market Group's OTC Link quotation system is not a stock exchange, and trading of securities on it is often more sporadic than trading of securities listed on the NASDAQ Stock market or another securities exchange. Accordingly, stockholders may have difficulty reselling any of their shares. For a further description of the risks and uncertainties that could cause actual results to differ from those expressed in these forward-looking statements, as well as risks relating to the business of the Company, see Tapinator's Risk Factors which are available within the disclaimers section of Tapinator.com.
Non-GAAP Financial Measures
We have provided in this release the non-GAAP financial measures of Bookings and adjusted EBITDA, as a supplement to the consolidated financial statements, which are prepared in accordance with United States generally accepted accounting principles ("GAAP"). Management uses Bookings and adjusted EBITDA internally in analyzing our financial results to assess operational performance and liquidity. The presentation of Bookings and adjusted EBITDA is not intended to be considered in isolation or as a substitute for the financial information prepared in accordance with GAAP. We believe that both management and investors benefit from referring to Bookings and adjusted EBITDA in assessing our performance and when planning, forecasting and analyzing future periods. We believe Bookings and adjusted EBITDA is useful to investors because it allows for greater transparency with respect to key financial metrics we use in making operating decisions and because our investors and analysts use them to help assess the health of our business. We have provided reconciliations between our historical 2016 Bookings and adjusted EBITDA to the most directly comparable GAAP financial measures below. Some limitations of Bookings and adjusted EBITDA are as follows:
- Bookings does not reflect that we defer and recognize online game revenue over the estimated life of durable virtual goods;
- Adjusted EBITDA does not include the impact of stock-based expense, impairment of intangible assets previously acquired, acquisition-related transaction expenses, contingent consideration fair value adjustments and restructuring expense;
- Adjusted EBITDA does not reflect income tax expense;
- Adjusted EBITDA does not include other income or expense, which includes foreign exchange gains and losses and interest income or expense;
- Adjusted EBITDA excludes depreciation and amortization of intangible assets. Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future; and
- Other companies, including companies in our industry, may calculate adjusted EBITDA differently or not at all, which will reduce their usefulness as a comparative measure.
Because of these limitations, you should consider adjusted EBITDA along with other financial performance measures, including revenue, net income (loss), diluted net income (loss) per share, cash flow from operations, GAAP operating expense, GAAP operating margin and our other financial results presented in accordance with GAAP. See the GAAP to non-GAAP reconciliations below for further details:
Reconciliation of GAAP to Non-GAAP Results (unaudited)
Three Months Ended Mar. 31, 2018 Mar. 31, 2017 Reconciliation of Revenue to Bookings: Revenue $888,688 $812,794 Change in deferred revenue $(5,610) $156,051 Bookings $883,078 $968,845 Three Months Ended Mar. 31, 2018 Mar. 31, 2017 Reconciliation of Net Income (Loss) to Adjusted EBITDA: Net income (loss) ($915,880) ($554,255) Interest expense, net $135,333 $144,674 Income taxes $0 $2,150 Amortization of capitalized software development $129,009 $195,412 Depreciation and amortization of other assets $3,351 $5,878 Amortization of debt discount $187,876 $229,091 Stock-based expense $620,417 $18,388 Adjusted EBITDA $160,106 $41,338
Tapinator Investor Relations
SOURCE Tapinator, Inc.
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