Tapinator Releases Q1 2016 Results - Q1 Revenues Grow 106% Year-Over-Year to $849,000; 2016 Guidance Confirmed

05 May, 2016, 08:10 ET from Tapinator, Inc.

NEW YORK, May 5, 2016 /PRNewswire/ --

Tapinator, Inc. (OTC: TAPM), an emerging growth company within the mobile gaming industry, today announced financial results and the filing of its quarterly report for the three months ended March 31, 2016.  The quarterly report and unaudited financial statements may be found at http://www.otcmarkets.com/stock/TAPM/filings.

"Tapinator showed rapid business expansion in the first quarter of 2016," stated Tapinator CEO, Ilya Nikolayev.  "Our first quarter revenues grew 106% year-over-year to approximately $849,000, representing our seventh consecutive quarter of at least double-digit year-over-year revenue growth.   Our revenue expansion can be primarily attributed to the continued broadening of our Rapid-Launch Games portfolio, as well as to a select number of Full-Featured Games that we believe have significant franchise potential.  In addition to our strong revenue growth, Tapinator is also pleased to announce adjusted EBITDA (a non-GAAP measure) of approximately $221,000 in the first quarter of 2016, an increase of 97% year-over-year, and our eighth consecutive quarter of positive adjusted EBITDA.  

"We are very pleased with our first quarter results as we saw significant acceleration of both year-over-year player and revenue growth rates as compared to the seasonally strong fourth quarter of 2015.  Based on our year-to-date results, we are confirming the financial guidance we provided earlier this year as part of our 2015 annual results announcement, which we have supplied again later in the press release."

Financial Highlights 

  • Quarterly revenue of $848,613; up 106% year-over-year
  • Quarterly adjusted EBITDA* (a non-GAAP measure) of $220,510; up 97% year-over-year
  • $1.49 million in cash and cash equivalents as of March 31, 2016, unchanged from December 31, 2015

* A table has been included later in this press release with non-GAAP adjustments to the Company's net loss, resulting in positive adjusted EBITDA for the relevant periods.

Product Highlights 

The Company ended Q1 with 214 active games, of which 28 were released in the quarter.  As of March 31, 2016, Tapinator had 51 titles in its portfolio that had each achieved at least one million downloads, up from 42 games that had reached this milestone at the end of Q4 2015.

The Company continues to invest significant resources into its Full-Featured Games business.  The majority of the Company's Full-Featured Games development work in Q1 focused on titles that will be launching in Q2 and Q3 of this year.

In early Q2, the Company released its second video poker game, Video Poker Classic. According to AppAnnie, the game has quickly become a Top 100 downloaded Casino property on both iOS and Google Play. Although it is still early in the game's lifespan, the Company is excited by its early performance, based on both monetization and player engagement metrics. Later this quarter, the Company will release its third social casino property. The resulting portfolio of social casino games will enable targeted cross promotion of players and will offer our customers a wide variety of game types to toggle between.  

Also in Q2, the Company will be soft launching Combo Quest 2, the freemium sequel to the original paid game, Combo Quest, which was featured four times on iOS and generated over one million downloads. The soft launch process will allow the Company to optimize the game's monetization and retention, prior to a global launch scheduled for Q3 of this year.

Finally, at the end of Q2, the Company will be releasing its ROCKYTM game. The title, built in partnership with MGM, is based on the legendary movie franchise. The game will feature multiplayer functionality, collectible fighter cards, and time-tap mechanics. The Company believes that these systems will equip the ROCKYTM game with best-in-class in-app purchase monetization and player engagement.

Player & Game Metrics 

  • Average DAUs - 742,000; up 174% year-over-year
  • Average MAUs - 11.7 million; up 154% year-over-year
     
  • Average New Daily Downloads - 476,000; up 159% year-over-year
  • Cumulative Downloads - 210 million as of March 31, 2016; up 224% year-over-year, and up 26% sequentially
  • Game Library - 214 active titles as of March 31, 2016; up from 114 year-over-year, and up from 183 sequentially
  • Game Diversification - No single game accounted for more than 12% of total revenues during the three-month period ended March 31, 2016

Financial Results* (unaudited) 



                                                          Three Months Ended
                                                 March 31, 2016     March 31, 2015
GAAP Results
Revenue                                                $848,613           $411,883
Operating Income (Loss)                                   6,893             62,240
Net Income (Loss)                                     (402,820)              5,840
Diluted Net Income (Loss) Per Share                     ($0.01)              $0.00
Weighted average common shares outstanding:
Diluted                                              57,081,281         55,819,919
Non-GAAP Results
Adjusted EBITDA                                        $220,510           $111,682

 

* Certain reclassifications have been made to the 2015 data to conform to the current year presentation. These reclassifications had no effect on reported income (losses).

Quarterly Summary of Results  

Tapinator recorded gross revenues of $848,613 and a net loss of $402,820 for the three-month period ended March 31, 2016.  This compares to revenue of $411,883 and a net income of $5,840 for the same period in 2015.  The net loss was attributable to a decrease in operating income, coupled with increases in primarily non-cash financing related charges associated with the Company's $2.0 million convertible debenture financing completed during the second quarter of 2015.

For the three-month period ended March 31, 2016, the Company generated operating income of $6,893, as compared to operating income of $62,240 for the comparable three-month period in 2015.  The reduction in operating income is primarily due to increases in amortization of capitalized software development, general & administrative costs, and marketing & public relations costs.

For the three-month period ended March 31, 2016, the Company achieved adjusted EBITDA (a non-GAAP measure of earnings discussed below) of $220,510, as compared to adjusted EBITDA of $111,682 for the comparable three-month period in 2015.  The increase in adjusted EBITDA is primarily due to operating leverage on the higher level of revenues.

Tapinator's cash balance remained unchanged at approximately $1.5 million as of March 31, 2016, from December 31, 2016.

Forward Guidance 

Tapinator expects to achieve annualized revenue growth in 2016 in the range of 50%-75%, resulting in a forecasted revenue range of $3.7 million - $4.3 million for the year.  The Company expects to achieve near break-even results at the operating income level, and is targeting an Adjusted EBITDA (a non-GAAP measure) percentage of 22% for 2016.  Assuming, the Company achieves break-even results at the operating income level, the Company expects to incur net losses in 2016 of approximately $1.6 million, primarily as a result of financing related charges associated with the Company's $2.0 million convertible debenture financing completed during 2015, including $1.5 million in expected non-cash charges.

About Tapinator 

Tapinator (OTC: TAPM) designs, develops, and publishes mobile games on the iOS, Google Play, and Amazon platforms. Tapinator's owned and operated portfolio includes over 200 mobile gaming titles that have achieved over 200 million cumulative downloads, primarily within the Simulation, Arcade, Role Playing, Casino and Sports genres. A number of these titles have risen to the top of the mobile leaderboard charts and have been featured by the Apple, Google, and Amazon App Stores. Tapinator generates revenues through the sale of advertisements, the sale of paid downloadable games, and the sale of additional in-game content. Founded in 2013, Tapinator is headquartered in New York, with product development teams located in Germany, Pakistan, Indonesia, Canada, and the United States.  For a full listing of Tapinator game titles and to view the Company's most recent investor presentation, please go to http://www.Tapinator.com

Key Operating Metrics 

We manage our business by tracking several operating metrics: 'DAUs,' which measure daily active users of our games, 'MAUs,' which measure monthly active users of our games, 'Downloads,' which measure non-unique downloads of our games, each of which is recorded by third party systems and our internal analytics system. The numbers for these operating metrics are calculated using internal company data, based on tracking of user account activity. We believe that the numbers are reasonable estimates of our user base for the applicable period of measurement; however, factors relating to user activity and systems may impact these numbers.

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," "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. Our statements regarding our financial outlook for the full fiscal year 2016 contained in this press release are forward-looking statements.  Additional examples of forward-looking statements contained in this press release include, among others, statements regarding our ability to support a much larger enterprise, our ability to continue significant business growth in 2016 and beyond, and our expectations regarding consumer acceptance and monetization of our mobile games. 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, the uncertainties inherent in the hits nature of the mobile gaming business. 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 in general, see Tapinator's Risk Factors which are available at http://www.tapinator.com/disclaimers.

Non-GAAP Financial Measure 

We have provided in this release the non-GAAP financial measure of 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 adjusted EBITDA internally in analyzing our financial results to assess operational performance and liquidity. The presentation of 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 adjusted EBITDA in assessing our performance and when planning, forecasting and analyzing future periods. We believe 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 and 2015 adjusted EBITDA to the most directly comparable GAAP financial measures below. Some limitations of adjusted EBITDA:

  • 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
                                                    March 31, 2016  March 31, 2015
Reconciliation of Net Income (Loss) to Adjusted
EBITDA:
Net income (loss)                                        (402,820)           5,840
Interest expense, net                                      $81,495         $15,754
Income taxes                                                $4,376          $3,146
Amortization of capitalized software development          $188,910         $48,954
Depreciation and amortization of other assets              $19,162            $488
Amortization of debt discount                             $323,843         $37,500
Stock-based expense                                         $5,544              $0
Adjusted EBITDA                                           $220,510        $111,682

 

CONTACT 
Tapinator Investor Relations
investor.relations@tapinator.com
+1-(914)-930-6232

 


SOURCE Tapinator, Inc.