Tapinator Inc (TAPM)

[misanthrope]

NEW YORK, Nov. 14, 2016 /PRNewswire/ -- Tapinator, Inc. (OTC: TAPM), a publisher of mobile games on the iOS, Google Play and Amazon platforms, today announced financial results and the filing of its quarterly report for the period ended September 30, 2016. The quarterly report and unaudited financial statements may be found at http://www.otcmarkets.com/stock/TAPM/filings.

"Tapinator demonstrated strong growth in the third quarter of 2016," stated Tapinator CEO, Ilya Nikolayev. "Driven by more than 21 million average monthly active users, our third quarter revenues grew 49% year-over-year to approximately $1,083,000, representing our ninth consecutive quarter of at least double-digit year-over-year revenue growth. Our revenue expansion can be attributed primarily to the broadening of our Rapid-Launch Games portfolio and, within our Full-Featured Games division, to the late Q2 launch of Combo Quest 2 on iOS and the continued growth of our Video Poker Classic title across all major mobile platforms. In addition to our strong revenue growth, Tapinator is also pleased to announce adjusted EBITDA (a non-GAAP earnings measure) of approximately $277,000 in the third quarter of 2016, an increase of 276% year-over-year, and our tenth consecutive quarter of positive adjusted EBITDA.

We were very pleased with our third quarter results as we saw significant year-over-year growth in player engagement, revenue and adjusted EBITDA, combined with increased diversification of our revenue base. However, within our Rapid-Launch business, new player downloads on the Google Play platform slowed, beginning midway through the third quarter, causing us to take a more cautious outlook toward our upcoming fourth quarter performance as more fully described in our Forward Guidance below."

Financial Highlights

-- Quarterly revenues of $1,083,176; up 49% year-over-year

-- Nine-month year-to-date revenues of $2,994,262; up 71% year-over-year

-- Quarterly adjusted EBITDA* (a non-GAAP measure) of $277,869; up 276%

year-over-year

-- Nine-month year-to date adjusted EBITDA* (a non-GAAP measure) of

$740,490; up 98% year-over-year

-- $750,976 in cash and cash equivalents as of September 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 Q3 with 272 active games, of which 28 were released during the quarter. As of September 30, 2016, Tapinator had 81 titles within its portfolio that had each achieved at least one million downloads, up from 66 games that had reached this milestone at the end of Q2 2016. Within our Rapid-Launch Games business, Whirlpool Car Derby 3D, Multi-Storey Car Parking 3D, and City Car Stunts 3D performed especially well in Q3, achieving over 4.5 million combined downloads and 90,000 combined daily active unique (DAU) players in Q3. These leading titles also illustrate the diversity of the Company's portfolio maturity as these games were released in July 2016, March 2016 and January 2015, respectively.

The Company continues to dedicate substantial resources to its Full-Featured Games business and is making larger, more concentrated investments into games that management believes have 'evergreen' characteristics and/or major 'hit' potential. To that end, the Company did not release any new Full-Featured Games in Q3, but instead focused on important upcoming game releases for Q4 2016 and Q1 2017.

On December 8, 2016, the Company will be releasing its ROCKY(TM) mobile game. The title, built in partnership with MGM, is based on the legendary movie franchise and is being released in conjunction with the 40(th) anniversary of the original motion picture. The game, currently in soft-launch in Canada and Australia, will feature multiplayer functionality, collectible fighter cards, and time-tap mechanics. The Company believes that these systems will equip the ROCKY (TM) mobile game with best-in-class monetization and player engagement.

Also in Q4, the Company will launch Combo Quest 2, the freemium sequel to our original paid game, Combo Quest, on the Google Play platform. 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. The Google Play version will feature additional improvements to the game that are designed to increase both player monetization and enjoyment.

Looking beyond this year, in Q1 2017 we will be launching Big Sport Fishing 2017 (BSF 2017) in partnership with RocketMind. BSF 2017, currently in soft-launch in Canada, was originally scheduled for a 2016 release, but based on initial player feedback, was delayed to allow for further game improvements prior to global launch. This product-centric decision was taken in the context of what management believes to be the enormous size and long-term opportunity of the virtual fishing market on mobile. Also in Q1 2017, we will be launching a unique Solitaire game, the name of which has not yet been disclosed. Solitaire, according to App Store and Google Play leaderboards, is the most popular category of card games on mobile and, recently, several themed solitaire games have proven out the category's top grossing potential. Our new solitaire title will combine the classic game with a theme that we believe will resonate widely, across age groups and geographic regions.

Player & Game Metrics

-- Average DAUs -- 1.2 million; up 100% year-over-year

-- Average MAUs -- 21.5 million; up 110% year-over-year

-- Average New Daily Downloads -- 626,000; up 51% year-over-year

-- Cumulative Player Downloads -- 324 million as of September 30, 2016; up

140% year-over-year

-- Game Library -- 272 active titles as of September 30, 2016; up from 158

year-over-year

-- Game Diversification -- No single game accounted for more than 7% of

total revenues during the nine-month period ended September 30, 2016

Financial Results* (unaudited)

Three Months Ended Nine Months Ended

Sept 30, 2016 Sept 30, 2015 Sept 30, 2016 Sept 30, 2015

------------- ------------- ------------- -------------

GAAP Results

Revenue $1,083,176 $728,128 $2,994,262 $1,755,369

Operating Income

(Loss) 53,232 (173,038) 60,822 (254,118)

Net Income

(Loss) (1,090,762) (582,390) (1,901,009) (875,541)

Diluted Net

Income (Loss)

Per Share ($0.02) ($0.01) ($0.03) ($0.02)

Weighted average common shares

outstanding:

Diluted 56,959,303 57,089,948 56,999,814 55,814,974

Non-GAAP Results

Adjusted EBITDA $277,869 $73,914 $740,490 $373,188



*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 $1,083,176 and a net loss of $1,090,762 for the three-month period ended September 30, 2016. This compares to gross revenue of $728,128 and net loss of $582,390 for the same period in 2015. The net loss increase was primarily attributable to non-cash financing related charges associated with the refinancing of the Company's Senior Secured Convertible Debenture which was completed during the third quarter of 2016.

For the nine-month period ended September 30, 2015, the Company recorded gross revenues of $2,994,262 and a net loss of $1,901,009. This compares to gross revenue of $1,755,369 and net loss of $875,541 for the same period in 2015. The net loss increase was primarily attributable to non-cash financing related charges associated with the refinancing of the Company's Senior Secured Convertible Debenture which was completed during the third quarter of 2016, together with increased general and administrative, and marketing and public relations costs.

For the three-month period ended September 30, 2016, the Company generated operating income of $53,232, as compared to an incurred operating loss of $173,038 for the comparable three-month period ended September 30, 2015. The increase in operating income is primarily due to operating leverage on the higher level of revenues achieved during the period.

For the nine-month period ended September 30, 2016, the Company generated operating income of $60,822, as compared to an incurred operating loss of $254,118 for the comparable nine-month period ended September 30, 2015. The increase in operating income is primarily due to operating leverage on the higher level of revenues achieved during the period.

For the three-month period ended September 30, 2016, the Company achieved adjusted EBITDA (a non-GAAP earnings measure discussed below) of $277,869 (25.6%), as compared to adjusted EBITDA of $73,914 (10.2%) for the comparable three-month period ended September 30, 2015. The increase in adjusted EBITDA is primarily due to operating leverage on the higher level of revenues achieved during the period.

For the nine-month period ended September 30, 2016, the Company achieved adjusted EBITDA (a non-GAAP earnings measure discussed below) of $740,490 (24.7%), as compared to adjusted EBITDA of $373,188 (21.3%) for the comparable nine-month period ended September 30, 2015. The increase in adjusted EBITDA is primarily due to operating leverage on the higher level of revenues achieved during the period.