NTN Buzztime, Inc. Announces Third Quarter 2011 Results

CARLSBAD, Calif., Nov. 10, 2011 /PRNewswire/ -- NTN Buzztime, Inc. (NYSE AMEX: NTN) today announced results for the third quarter ended September 30, 2011.

"This quarter we had a net site gain of 6 compared to last quarter's customer total and reduced our quarterly churn to its lowest quarterly level in two years.  On the product side, following the end of the quarter, our acquisition of the hosted live trivia event business Stump! Trivia will strengthen our in-venue offerings, expanding our customer base and attracting new customers and players," said NTN Buzztime's CEO Michael Bush. "Beyond adding new customers and in-venue entertainment, we are intensely engaged in initiatives that we hope will change the face of the Company by interacting more regularly and meaningfully with our nearly 4,000 Buzztime subscribing locations; exciting and engaging the 2 million registered Buzztime players in-venue, at home and on the road, and bringing together a network of game players to discuss our games, swap scores and share ideas.  As these initiatives develop we are confident that solid financial results will follow," added Mr. Bush.

Results for the Third Quarter Ended September 30, 2011

Revenues for the third quarter of 2011 were $5.9 million, compared to revenues of $6.5 million for the same period of 2010.  The 10% decrease in revenue was the result of lower site count in the third quarter of 2011 than in the comparable 2010 period, together with lower revenues per site and lower advertising and other revenues.

The Company ended the third quarter of 2011 with 3,910 subscribing venues, compared to 4,015 at September 30, 2010, a decrease of 2.6%.  During the third quarter of 2011, installations were lower at 220 compared with 274 in the same quarter last year; however, terminations were also lower at 214 compared to 268.  Customer churn was 5.5% for the quarter, an improvement from 6.7% in the prior year period.


Total site counts

and churn percentages

Q3

2011


Q3

2010


Increase

(Decrease)

Site Count – Beginning of Quarter

3,904


4,009


(105)

Q3 Installations

220


274


(54)

Q3 Terminations

(214)


(268)


(54)

Site Count - End of Quarter

3,910


4,015


(105)

Churn Percentage

5.5%


6.7%


(1.2)




Gross margin as a percentage of revenue increased to 78% in the third quarter of 2011, compared to 77% in the third quarter of 2010.  Direct costs decreased, primarily due to a decrease in service provider fees in turn due primarily to fewer service calls during the three months ended September 30, 2011 compared to the same period in 2010, and also a decrease in depreciation and amortization expense.  

Selling, general and administrative expenses increased 11%, to $5.2 million for the three months ended September 30, 2011 from $4.7 million for the same period in 2010.  The increase in selling, general and administrative expenses was due to increased payroll and related expense of $268,000 primarily due to increased headcount and merit increases, increased marketing expenses of $202,000 primarily due to increased activities to support lead generation, new program launches and other promotional activity and increased professional fees of $149,000 primarily related to software development consulting and legal fees associated with the asset acquisition that was completed in October 2011.  These increases were offset by lower bad debt expense of $74,000 resulting from improved collection efforts and other miscellaneous net decreases of approximately $30,000.

Net loss for the third quarter of 2011 was $0.8 million, or $0.01 per share, compared to net income of $0.1 million or $0.00 per share in the same period a year ago.

Conference Call

Management will review these results in a conference call today, November 10, 2011, at 4:30 p.m. ET.

To access the conference call, please dial (877) 790-8271, if calling from the United States or Canada, or (954) 320-7648, if calling internationally, and use passcode 24385586.

A replay of the call will be available until November 17, 2011, which can be accessed by dialing (855) 859-2056, if calling from the United States or Canada, or (404) 537-3406, if calling internationally. Please use passcode 24385586 to access the replay.

The call will also be accompanied live by webcast over the Internet and accessible at the Company's Web site at http://www.buzztime.com.

About Buzztime

NTN Buzztime, Inc. (NYSE Amex: NTN) is a leading bar and restaurant social entertainment and integrated marketing platform. Trusted by over 3,900 bars and restaurants in North America since 1985, Buzztime integrates trivia, card and sports games with in- and out-of-venue messaging and communication tools.  With over 2,000,000 registered consumers and more than 50,000,000 games played each year, Buzztime players spread the word and invite friends and family to their favorite Buzztime location to enjoy an evening of fun and competition. With Buzztime entertainment and marketing solutions, bars and restaurants attract new customers, turn casual visitors into regulars, and give guests a reason to stay longer.  For the most up-to-date information on NTN Buzztime, please visit www.buzztime.com or follow us on Facebook or Twitter.

Forward-looking Statements

This release contains forward-looking statements which reflect management's current views of future events and operations, including but not limited to statements about our acquisition, strengthening offerings, expanding customer base, new customers and players, other benefits of our products and services and the number of locations, players and games. These statements are based on current expectations and assumptions that are subject to risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties include the risks of adverse economic conditions, failure of customer and/or player demand, lower market acceptance or appeal of both existing and new products and services by particular demographic groups or audiences as a whole, termination of partnership and contractual relationships, the impact of competitive products and pricing and technical problems or outages. Please see NTN Buzztime, Inc.'s recent filings with the Securities and Exchange Commission for information about these and other risks that may affect the Company. All forward-looking statements included in this release are based on information available to us on the date hereof. These statements speak only as of the date hereof, and NTN Buzztime, Inc. does not undertake to publicly update or revise any of its forward-looking statements, even if experience or future changes show that the indicated results or events will not be realized.

NTN BUZZTIME, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value amount)






September 30,

2011

December 31,

2010

ASSETS

(unaudited)


Current Assets:



   Cash and cash equivalents                                                 

$  2,462

$  3,906

   Accounts receivable, net                                                   

516

549

   Investment available-for-sale                                                

184

   Prepaid expenses and other current assets                                    

506

588




       Total current assets                                                     

3,484

5,227

Broadcast equipment and fixed assets, net                                       

4,250

3,638

Software development costs, net                                               

1,262

1,094

Deferred costs                                                             

1,171

839

Goodwill                                                                  

1,221

1,261

Intangible assets, net                                                        

720

1,025

Other assets                                                               

89

41




       Total assets                                                           

$  12,197

$  13,125




LIABILITIES AND SHAREHOLDERS' EQUITY






Current Liabilities:



   Accounts payable and accrued expenses                                     

$  1,211

$  874

   Accrued compensation                                                     

990

628

   Sales tax payable                                                         

752

856

   Income tax payable                                                       

4

8

   Obligations under capital leases—current portion                                

303

376

   Deferred revenue                                                         

537

520

   Other current liabilities                                                     

47

74




       Total current liabilities                                                    

3,844

3,336

Obligations under capital leases, excluding current portion                           

148

105

Deferred revenue, excluding current portion                                      

173

124

Deferred rent                                                               

645

Other liabilities                                                             

112

99




       Total liabilities                                                           

4,922

3,664

Commitments and contingencies






Shareholders' equity:



   Series A 10% cumulative convertible preferred stock, $.005 par value, $161 liquidation preference, 5,000 shares authorized; 161 shares issued and outstanding

1

1

   Common stock, $.005 par value, 84,000 shares authorized; 60,907 and 60,751 shares issued and outstanding at September 30, 2011 and December 31, 2010, respectively

304

304

Treasury stock, at cost, 503 shares at September 30, 2011 and December 31, 2010      

(456)

(456)

Additional paid-in capital                                                      

116,399

116,114

Accumulated deficit                                                         

(109,672)

(107,284)

Accumulated other comprehensive income                                       

699

782




       Total shareholders' equity                                                 

7,275

9,461




       Total liabilities and shareholders' equity                                      

$  12,197

$  13,125









NTN BUZZTIME, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share data)


Three Months Ended

September 30,

Nine Months Ended

September 30,


2011

2010

2011

2010

Revenues                                                                 

$  5,872

$  6,505

$  17,766

$  18,967






Operating expenses:





Direct operating costs (includes depreciation and amortization)                       

1,312

1,522

4,244

4,589

Selling, general and administrative                                              

5,180

4,665

15,386

14,481

Depreciation and amortization (excluding depreciation and amortization included in direct costs)

175

163

504

508






Total operating expenses                                                     

6,667

6,350

20,134

19,578






Operating (loss) income                                                     

(795)

155

(2,368)

(611)

Other (expense) income, net                                                   

(5)

(16)

36

(73)






(Loss) income before income taxes                                             

(800)

139

(2,332)

(684)

   Provision for income taxes                                                  

(37)

(15)

(48)

(38)






Net (loss) income                                                           

$  (837)

$  124

(2,380)

$  (722)











Net (loss) income per common share – basic                                     

$  (0.01)

$  0.00

$  (0.04)

$  (0.01)






Net (loss) income per common share –diluted                                     

$  (0.01)

$  0.00

$  (0.04)

$  (0.01)






Weighted average shares outstanding – basic                                     

60,404

60,209

60,394

60,100






Weighted average shares outstanding –diluted                                    

60,404

60,849

60,394

60,100









NTN BUZZTIME, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED CASH FLOW DATA

(Unaudited)

(In thousands)





Nine months ended

September 30,


2011

2010

Cash flows provided by operating activities:



Net loss                                                                     

$  (2,380)

$  (722)

Adjustments to reconcile net loss to net cash provided by operating activities:



   Depreciation and amortization                                                  

2,313

2,406

   Provision for doubtful accounts                                                 

(16)

232

   Gain on contract termination                                                   

(11)

   Stock-based compensation                                                   

242

209

   Loss on sales of securities available-for-sale                                     

30

   Loss from disposition of equipment and capitalized software                         

164

265

   Changes in assets and liabilities:



       Accounts receivable                                                       

51

(76)

       Prepaid expenses and other assets                                           

32

(4)

       Accounts payable and accrued expenses                                     

461

(421)

       Income taxes payable                                                      

(5)

(12)

       Deferred costs                                                           

(333)

176

       Deferred revenue                                                         

66

161

       Deferred rent                                                             

76




       Net cash provided by operating activities                                       

701

2,203

Cash flows used in investing activities:



   Capital expenditures                                                         

(1,302)

(992)

   Software development expenditures                                            

(760)

(707)

   Proceeds from sales of securities available-for-sale                                

134

   Trademark license                                                           

(35)




       Net cash used in investing activities                                           

(1,928)

(1,734)

Cash flows used in financing activities:



   Proceeds from note payable                                                   

123

   Principal payments on note payable                                             

(4)

   Principal payments on capital leases                                             

(336)

(302)

   Proceeds from exercise of stock options                                         

36

61




       Net cash used in financing activities                                           

(181)

(241)




Net (decrease) increase in cash and cash equivalents                                

(1,408)

228

Effect of exchange rate on cash                                                 

(36)

(10)

Cash and cash equivalents at beginning of period                                    

3,906

3,637




Cash and cash equivalents at end of period                                         

$       2,462

$        3,855







SOURCE NTN Buzztime, Inc.



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