Tapinator Releases Q2 2016 Results - Q2 Revenues Grow 73% Year-Over-Year to $1,062,000
NEW YORK, August 15, 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 June 30, 2016. The quarterly report and unaudited financial statements may be found at http://www.otcmarkets.com/stock/TAPM/filings.
"Tapinator continued to show rapid business expansion in the second quarter of 2016," stated Tapinator CEO, Ilya Nikolayev. Driven by more than 18 million average monthly active users, our second quarter revenues grew 73% year-over-year to approximately $1,062,000, representing our eighth consecutive quarter of at least double-digit year-over-year revenue growth. Our revenue expansion in the quarter can be primarily attributed to the continued broadening of our Rapid-Launch Games portfolio, as well as to the highly successful launch of our Video Poker Classic title within our Full-Featured Games division. In addition to our strong revenue growth, Tapinator is also pleased to announce adjusted EBITDA (a non-GAAP earnings measure) of approximately $242,000 in the second quarter of 2016, an increase of 62% year-over-year, and our ninth consecutive quarter of positive adjusted EBITDA.
We are very pleased with our second quarter results as we saw significant year-over-year player and revenue growth rates combined with increased diversification of our revenue base. Player engagement accelerated toward the end of quarter and thus we believe the Company is well positioned to continue to deliver strong revenue and EBITDA growth during the second half of this year."
Financial Highlights
- Quarterly revenues of $1,062,474; up 73% year-over-year
- Six-month year-to-date revenues of $1,911,086; up 86% year-over-year
- Quarterly adjusted EBITDA* (a non-GAAP measure) of $242,111; up 62% year-over-year
- Six-month year-to date adjusted EBITDA* (a non-GAAP measure) of $462,620; up 55% year-over-year
- $834,736 in cash and cash equivalents as of June 30, 2016
* 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 Q2 with 244 active games, of which 31 were released in the quarter. As of June 30, 2016, Tapinator had 66 titles in its portfolio that had each achieved at least one million downloads, up from 51 games that had reached this milestone at the end of Q1 2016. Within our Rapid-Launch Games business, Crocodile Attack 2016, Multi-Storey Car Parking 3D, and Extreme Car Stunts 3D performed especially well, with over 9.5 million downloads and 180,000 daily active unique (DAU) players in Q2. These three titles illustrate the diversity of the Company's portfolio as they encompass three genres: Parking, Stunts, and Animal Simulation.
The Company continues to invest significant resources into its Full-Featured Games business. Specifically, we are selectively developing and/or publishing a small number of full-featured games each year that we believe have 'evergreen' characteristics and/or major 'hit' potential. Specific highlights from these efforts include the following:
In early Q2, the Company released its second video poker game, Video Poker Classic. In just four months since Video Poker Classic's launch, the title has quickly risen to become the #1 Video Poker game on iPad and a top 5 Video Poker game on iPhone, Google Play and Amazon Kindle. According to AppAnnie, the game is a Top 200 grossing Casino property on both iOS and Google Play and we expect the game, which has 'evergreen' characteristics, to contribute meaningfully to the Company's revenues for 2016.
In late Q2, the Company launched Combo Quest 2, the freemium sequel to our original paid game, Combo Quest. The sequel, which was featured as a 'Best New Game' on iOS and has generated in excess of 500,000 installs to date, was well received by players who have given the game a 4.5 (out of 5.0) average review score. Unfortunately, the monetization of the game did not meet internal expectations and we are working on additional improvements to the game prior to its upcoming Google Play launch.
In Q3, we will be launching Big Sport Fishing 2017 in partnership with RocketMind. Given the recent success of the Pokémon Go mobile game from Nintendo and Niantic, we are enthused by the market's embrace of augmented reality. In Big Sport Fishing 2017, we believe players will enjoy using their phone as a virtual fishing rod to tackle gorgeous global fishing environments around the world, 24/7, and from their own home or office.
Finally, during Q4, the Company will be releasing its ROCKY [TM] 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 ROCKY [TM] game with best-in-class in-app purchase monetization and player engagement.
Player & Game Metrics
- Average DAUs - 1.1 million; up 127% year-over-year
- Average MAUs - 18.3 million; up 136% year-over-year
- Average New Daily Downloads - 629,000; up 78% year-over-year
- Cumulative Downloads - 267 million as of June 30, 2016; up 175% year-over-year, and up 27% sequentially
- Game Library - 244 active titles as of June 30, 2016; up from 128 year-over-year, and up from 214 sequentially
- Game Diversification - No single game accounted for more than 8% of total revenues during the six-month period ended June 30, 2016
Financial Results*(unaudited)
Three Months Ended Six Months Ended
June 30, 2016 June 30, 2015 June 30, 2016 June 30, 2015
GAAP Results
Revenue $1,062,474 $615,358 $1,911,086 $1,027,241
Operating Income (Loss) 694 (143,319) 7,590 (81,078)
Net Income (Loss) (407,430) (298,990) (810,247) (293,149)
Diluted Net Income (Loss)
Per Share ($0.01) ($0.01) ($0.01) ($0.01)
Weighted average common
shares outstanding:
Diluted 56,959,303 55,285,873 57,020,292 55,159,574
Non-GAAP Results
Adjusted EBITDA $242,111 $187,591 $462,620 $299,273
* 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, Inc. recorded gross revenues of $1,062,474 and a net loss of $407,430 for the three-month period ended June 30, 2016. This compares to revenue of $615,358 and net loss of $298,990 for the same period in 2015. The net loss was primarily attributable to non-cash financing related charges associated with the Company's $2.0 million convertible debenture financing completed during the second quarter of 2015, together with increased marketing costs and increased amortization of capitalized software costs.
For the six-month period ended June 30, 2015, the Company recorded gross revenues of $1,911,086 and a net loss of $810,247. This compares to revenue of $1,027,241 and net loss of $293,149 for the same period in 2015. The net loss was primarily attributable to non-cash financing related charges associated with the Company's $2.0 million convertible debenture financing completed during the second quarter of 2015, together with increased marketing costs and increased amortization of capitalized software costs.
For the three-month period ended June 30, 2016, the Company generated operating income of $694, as compared to an incurred operating loss of $143,319 for the comparable three-month period ended June 30, 2015. The increase in operating income is primarily due to operating leverage on the higher level of revenues.
For the six-month period ended June 30, 2016, the Company generated operating income of $7,590, as compared to an incurred operating loss of $81,078 for the comparable six-month period ended June 30, 2015. The increase in operating income is primarily due to operating leverage on the higher level of revenues.
For the three-month period ended June 30, 2016, the Company achieved adjusted EBITDA (a non-GAAP earnings measure discussed below) of $242,111, as compared to adjusted EBITDA of $187,591 for the comparable three-month period ended June 30, 2015. The increase in adjusted EBITDA is primarily due to operating leverage on the higher level of revenues.
For the six-month period ended June 30, 2016, the Company achieved adjusted EBITDA (a non-GAAP earnings discussed below) of $462,620, as compared to adjusted EBITDA of $299,273 for the comparable six-month period ended June 30, 2015. The increase in adjusted EBITDA is primarily due to operating leverage on the higher level of revenues.
Tapinator's cash balance decreased to $834,736 as of June 30, 2015 from the period ended December 31, 2015, when the cash balance was $1,487,196. The decrease in cash is primarily due to a principal repayment of $560,000 and interest payments of $89,600 related to the Company's Senior Secured Convertible Debenture. As previously disclosed in a press release dated August 2, 2016, the Company successfully refinanced this Debenture in July 2016, resulting in a new Senior Secured Convertible Debenture that matures in May 2018.
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 250 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 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 to continue to deliver strong growth during the second half of this year, 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 Six Months Ended
June 30, 2016 June 30, 2015 June 30, 2016 June 30, 2015
Reconciliation of Net Income
(Loss) to Adjusted
EBITDA:
Net income (loss) (407,430) (298,990) (810,247) (293,149)
Interest expense, net $81,537 $40,900 $163,032 $56,654
Income taxes $2,744 $626 $7,119 $3,772
Amortization of capitalized
software development 197,584 $103,648 $386,493 $152,602
Depreciation and amortization
of other assets $19,833 $222,087 $38,994 $222,574
Amortization of debt discount $323,843 $114,146 $647,686 $151,646
Stock-based expense $24,000 $5,175 $29,544 $5,175
Adjusted EBITDA $242,111 187,591 462,620 $299,273
CONTACT:Tapinator Investor Relations, Email: [email protected], Telephone: +1-914-930-6232
SOURCE Tapinator, Inc.
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