Tapinator Releases Q4 and Annual 2015 Results

2015 Revenues of $2.49 Million, an Increase of 159% Year-Over-Year

Mar 29, 2016, 08:00 ET from Tapinator, Inc.

NEW YORK, March 29, 2016 /PRNewswire/ --

Tapinator, Inc. (OTC: TAPM), an emerging growth company within the mobile gaming industry, today announced financial results for the period ended December 31, 2015, and the filing of its annual report and audited financial statements for the years ended December 31, 2015 and 2014.  The annual report and audited financial statements may be found at http://www.otcmarkets.com/stock/TAPM/filings.

"Tapinator continued to show solid business expansion in the fourth quarter of 2015," stated Tapinator CEO, Ilya Nikolayev.  "Our fourth quarter revenues grew 87% year-over-year to approximately $693,000, representing our sixth consecutive quarter of at least double-digit year-over-year revenue growth.   Our revenue expansion can be attributed to both the continued broadening of our rapid-launch games portfolio, as well as our continued investment into a select number of full-featured titles 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 $150,000 in the fourth quarter of 2015, an increase of 187% year-over-year and our seventh consecutive quarter of positive adjusted EBITDA.  

For the year ended December 31, 2015, Tapinator achieved revenue of approximately $2.49 million and adjusted EBITDA of approximately $523,000, representing year-over-year growth rates of 159% and 414%, respectively.

We are very pleased with of our accomplishments in 2015, in terms of our financial performance, product traction and user growth.  Tapinator was able to deliver these results even as we continue to make substantial investments in our new game development, human resources, marketing and data/analytics infrastructure.  We believe that we have laid the appropriate groundwork to allow Tapinator to support a much larger enterprise and we look forward to demonstrating continued business growth in 2016 and beyond."

Financial Highlights 

  • Annual revenue of $2,448,051; up 159% year-over-year
  • Quarterly revenue of $692,682; up 87% year-over-year
  • Annual adjusted EBITDA (a non-GAAP measure) of $522,894; up 414% year-over-year*
  • Quarterly adjusted EBITDA (a non-GAAP measure) of $149,707; up 187% year-over-year*
  • $1.49 million in cash and cash equivalents as of December 31, 2015

* A table has been included 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 Q4 with 183 active games, of which 30 were released in the quarter.  As of December 31, 2015, Tapinator had 42 titles in its portfolio that had each achieved at least one million downloads, up from 37 games that had reached this milestone at the end of Q3.

The Company continues to invest significant resources into its full-featured games business. The majority of the Company's full-featured development work in Q4 focused on products that will launch in Q2 2016. Amongst the eight launches that the Company has announced for 2016 are three games that are being built as freemium products from the ground up, with best-in-class monetization and engagement techniques.  In particular, the Company is enthused about the significant potential of these games:

1. ROCKY: original title based on the ROCKY movie franchise with multiplayer and social features


2. Combo Quest 2: freemium sequel to the original paid game, Combo Quest, which was featured four times on iOS and generated over one million downloads


3. Big Sport Fishing 2: sequel to a fishing game portfolio with over 15 million installs on mobile devices worldwide


Player & Game Metrics 

  • Average DAUs - 532,000; up 149% year-over-year
  • Average MAUs - 8.8 million; up 104% year-over-year  
  • Average New Daily Downloads - 338,000; up 144% year-over-year
  • Cumulative Downloads - 166 million as of December 31, 2015; up 245% year-over-year, and up 23% sequentially
  • Game Library - 183 titles as of December 31, 2015; up from 94 year-over-year, and up from 153 sequentially
  • Game Diversification - No single game accounted for more than 10% of total revenues during the twelve-month period ended December 31, 2015

   
    Financial Results (unaudited)
                                        Three Months Ended          Twelve Months Ended
                                   Dec. 31, 2015  Dec. 31, 2014  Dec. 31, 2015 Dec. 31, 2014
    GAAP Results
    Revenue                              $692,682       $370,806    $2,448,051      $943,449
    Operating Income (Loss)             ($639,599)       $23,819      (893,713)       61,946
    Net Income (Loss)                 ($1,048,465)      ($30,211)   (1,924,008)        7,892
    Diluted Net Income (Loss) Per Share    ($0.02)        ($0.00)       ($0.03)        $0.00
    Weighted average common shares
    outstanding:
    Diluted                            57,109,303     55,641,871    57,109,303    55,641,871
    Non-GAAP Results
    Adjusted EBITDA                      $149,707        $52,184       522,895       101,762

Annual Summary of Results  

Tapinator recorded gross revenues of $2,448,051 and a net loss of $1,924,008 for the twelve-month period ended December 31, 2015.  This compares to revenue of $943,449 and a net income of $7,892 for the same period in 2014.  The net loss was primarily attributable to an operating loss experienced during the year, coupled with increases in financing related charges associated with the Company's $2.0 million convertible debenture financing completed during the second quarter of this year and more fully described within the accompanying notes to our audited financial statements.

For the twelve-month period ended December 31, 2015, the Company incurred an operating loss of $893,714, as compared to operating income of $61,946 for the comparable twelve-month period in 2014.  The reduction in operating income is primarily due to increases in depreciation of capitalized software development, general and administrative costs, marketing and public relations costs, and a $584,479 impairment of acquired software assets taken during the fourth quarter of this year and more fully described within the accompanying notes to our audited financial statements.

For the twelve-month period ended December 31, 2015, the Company achieved adjusted EBITDA (a non-GAAP measure of earnings discussed below) of $522,894, as compared to adjusted EBITDA of $101,762 for the comparable twelve-month period in 2014.  The five-fold increase in adjusted EBITDA is primarily due to operating leverage on the higher level of revenues.

Tapinator's cash balance increased to $1.5 million as of December 31, 2015 from the period ended December 31, 2014 when the cash balance was $122,000.  The increase in cash is attributable to the $2.0 million growth financing transaction that the Company completed during the second quarter of 2015.

Quarterly Summary of Results  

Tapinator recorded gross revenues of $692,682 and a net loss of $1,048,465 for the three-month period ended December 31, 2015.  This compares to revenue of $370,806 and a net loss of $30,211 for the same period in 2014.  The increase in net loss was primarily attributable to an operating loss experienced in the quarter, coupled with increases in financing related charges associated with the Company's $2.0 million convertible debenture financing completed during the second quarter of this year and more fully described within the accompanying notes to our audited financial statements.

For the three-month period ended December 31, 2015, the Company incurred an operating loss of $639,599, as compared to operating income of $23,819 for the comparable three-month period in 2014.  The reduction in operating income is primarily due to increases in depreciation of capitalized software development, general and administrative costs, marketing and public relations costs, and a $584,479 impairment of acquired software assets taken during the fourth quarter of this year and more fully described within the accompanying notes to our audited financial statements.

For the three-month period ended December 31, 2015, the Company achieved adjusted EBITDA (a non-GAAP measure of earnings discussed below) of $149,707, as compared to adjusted EBITDA of $52,184 for the comparable three-month period in 2014.  The increase in adjusted EBITDA is primarily due to operating leverage on the higher level of revenues.

Tapinator's cash balance decreased to $1.5 million as of December 31, 2015 from the period ended September 30, 2015 when the cash balance was $1.8 million.  The decrease in cash is primarily attributable to a $95,573 interest payment related to the Company's $2.0 million convertible debenture, coupled with increases in expenditures relating to new game development.

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 $1.3 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 190 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 Denmark, Pakistan, Indonesia, Canada, and the United States.  For a full listing of Tapinator game titles, please go to Tapinator.com.  For further financial information on the Company, please go to OTCMarkets.com/stock/TAPM.  For live updates, please like us on Facebook at facebook.com/Tapinator or follow us on Twitter at twitter.com/Tapinator.

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 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          Twelve Months Ended
                                               Dec. 31,    Dec. 31,      Dec. 31,   Dec. 31,
                                                 2015        2014          2015       2014

    Reconciliation of Net Income (Loss) to Adjusted
    EBITDA:
    Net income (loss)                       ($1,048,465)  ($30,211)  ($1,924,008)    $7,892
    Interest expense, net                       $81,464    $15,941      $220,068    $15,940
    Income taxes                                     $0       $590        $3,773       $614
    Impairment of capitalized software         $584,479         $0      $584,479         $0
    Amortization of capitalized software
    development                                $169,689    $27,540      $753,882    $38,421
    Depreciation and amortization of other
    assets                                      $19,347       $824       $41,792     $1,395
    Amortization of debt discount              $327,402    $37,500      $806,451    $37,500
    Stock-based expense                         $15,792         $0       $36,456         $0
    Adjusted EBITDA                            $149,707    $52,184      $522,894   $101,762

Contact
Tapinator Investor Relations
investor.relations@tapinator.com
+1-914-930-6232

SOURCE Tapinator, Inc.