Tapinator Releases Third Quarter 2015 Financial Report

Q3 Revenues of $728,000, an Increase of 191% Year-Over-Year

12 Nov, 2015, 07:45 ET from Tapinator, Inc.

NEW YORK, November 12, 2015 /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 period ended September 30, 2015.  The complete report may be found at http://www.otcmarkets.com/stock/TAPM/filings.

"Tapinator continued to show significant business expansion in the third quarter of 2015," stated Tapinator CEO, Ilya Nikolayev.  "Our quarterly revenues grew 191% year-over-year and 18% quarter-over-quarter, representing our sixth consecutive quarter of at least double-digit sequential 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 small number of full-featured titles that we believe have significant franchise potential. In addition to our very strong revenue growth, Tapinator is also pleased to announce adjusted EBITDA of $73,914 in the third quarter of 2015, an increase of 65% year-over-year and our sixth consecutive quarter of positive adjusted EBITDA.

We are very proud of our accomplishments in Q3 2015, in terms of our financial performance, product traction and user growth. Tapinator is particularly pleased to deliver these results even as we continue to make substantial investments in new game development, marketing and data/analytics infrastructure."

Financial Highlights 

  • Quarterly revenue of $728,128; up 191% year-over-year
  • Quarterly adjusted EBITDA (a non-GAAP measure) of $73,914; up 65% year-over-year
  • $1.79 million in cash and cash equivalents as of September 30, 2015

Product Highlights 

The Company ended Q3 with 153 games, of which 26 were launched in the quarter.  Tapinator has 37 titles in its portfolio that have each achieved at least one million downloads, up from 20 games that had reached this milestone at the end of Q2. Within its full-featured games business, the Company had seven titles that have been selected as "Best New Games" and one "Free App of the Week" on iOS as of the end of Q3.

Dice Mage was featured as a "Best New Game" and was distinguished with a rare "App Store Editors' Note." The title climbed to the #2 position in Free Dice games and became a top 10 grossing Dice game.  Dice Mage joined our other role playing game, Combo Quest, which became Apple's "Free App of the Week" in October, and received over 1 million downloads during this exclusive promotion.

Rotatio, our latest quick-fix arcade game, was featured as a "Best New Game," and a major update of the title is scheduled to launch later this month.

Video Poker VIP, Tapinator's first social casino title, launched on iPhone devices during the quarter, received several important feature updates, and we believe, is currently the best video poker product on mobile. In Q1 2016, we plan on releasing unique multiplayer functionality within this game, which we project will have a significant positive impact on key engagement and monetization metrics.  We view this game, and the social casino category in general, as important to our future growth strategy.  

Finally, we began development of a game that represents Tapinator's most prominent licensed IP deal to date. This title will launch in Q2 2016 and is based on a major hit movie franchise, whose popularity has spanned nearly forty years, and which has earned over $1 billion in revenue.  This game will be announced in Q4 2015, along with a number of other full-featured games that we are currently developing for 2016.

Player & Game Metrics 

  • Average DAUs - 591,000; up 223% year-over-year, and up 25% sequentially
  • Average MAUs - 10.2 million; up 221% year-over-year, and up 32% sequentially
  • Average New Daily Downloads - 424,000; up 247% year-over-year, and up 19% sequentially
  • Cumulative Downloads - 135 million as of September 30, 2015; up 282% year-over-year, and up 39% sequentially
  • Game Library - 153 titles as of September 30, 2015; up from 65 year-over-year, and up from 127 sequentially
  • Game Concentration - No single game accounted for more than 10% of total revenues during the nine-month period ended September 30, 2015

Financial Results (unaudited) 


   
                                Three Months Ended               Nine Months Ended
                          Sept. 30, 2015  Sept. 30, 2014  Sept. 30, 2015  Sept. 30, 2014
    GAAP Results
    Revenue                    $728,128       $250,339     $1,755,369       $572,643
    Operating Income (Loss)   ($173,038)       $33,835      ($254,118)       $38,127
    Net Income (Loss)         ($582,390)       $33,835      ($875,541)       $38,102
    Diluted Net Income
    (Loss) Per Share             ($0.01)         $0.00         ($0.02)         $0.00
    Non-GAAP Results
    Adjusted EBITDA             $73,914        $44,907       $373,187        $49,579

Tapinator recorded gross revenues of $728,128 and a net loss of $582,390 for the three-month period ended September 30, 2015.  This compares to revenue of $250,339 and net income of $33,835 for the same period in 2014.  The 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.

For the three-month period ended September 30, 2015, the Company incurred an operating loss of $173,038, as compared to operating income of $33,835 for the comparable three-month period in 2014.  The reduction in operating income is primarily due to increases in development and software amortization, personnel and marketing costs.

For the three-month period ended September 30, 2015, the Company achieved adjusted EBITDA (a non-GAAP measure of earnings discussed below) of $73,914, as compared to adjusted EBITDA of $44,907 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 grew significantly to $1.8 million as of September 30, 2015 from the period ended December 31, 2015 when the cash balance was $121,740.  The increase in cash is attributable to the $2.0 million growth financing transaction that the Company completed during the second quarter of this year.

Restatement of previously filed interim financial statements 

Based on the reassessment of the authorized but unissued shares of common stock available to settle the Company's outstanding warrants and the potential conversion of shares related to the senior secured convertible debenture, the financial statements and footnote disclosures for the three and six months ended June 30, 2015 have been restated.  In particular, the derivative and warrant liability recorded in the previously filed interim financials have been adjusted.  These adjustments reduced the net loss from $4,987,720 to $293,149, and resulted in a change in stockholders' equity (deficit) from ($3,346,159) to

$3,348,412.

The complete amended report may be found online at: http://www.otcmarkets.com/stock/TAPM/filings.

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 150 mobile gaming titles that, collectively, have achieved over 135 million downloads.  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.  Founded in 2013, Tapinator is headquartered in New York, with product development teams located in Denmark, Pakistan, Indonesia, Canada, and Russia.  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 "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. Examples of forward-looking statements contained in this press release include, among others, statements regarding the quoting and trading of our common stock and our expectations regarding our development and monetization plans for 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             Nine Months Ended
                              Sept. 30, 2015 Sept. 30, 2014  Sept. 30, 2015 Sept. 30, 2014

    Net income (loss)              ($582,390)        $33,835     ($875,541)       $38,102
    Interest expense                 $81,950             $0       $138,603             $0
    Income taxes                          $0             $0         $3,772            $25
    Amortization of capitalized
    R&D costs                       $139,354        $10,882       $291,955        $10,881
    Depreciation and amortization    $92,110           $190       $314,685           $571
    Debt discount amortization      $327,402             $0       $479,048             $0
    Stock-based expense              $15,488             $0        $20,664             $0
    Adjusted EBITDA                  $73,914        $44,907       $373,187        $49,579

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

SOURCE Tapinator, Inc.