Tapinator Inc (TAPM)

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Tapinator Releases Q4 and Annual 2016 ResultsFont size: A | A | A
8:00 AM ET 3/29/17 | PR Newswire
2016 Revenues of $3.73 Million, an Increase of 52% Year-Over-Year - 2016 Adjusted EBITDA of $871,000, an Increase of 67% Year-Over-Year

Tapinator, Inc. (OTC: TAPM), a developer and publisher of mobile games, today announced financial results for the period ended December 31, 2016, and the filing of its annual report and audited financial statements for the years ended December 31, 2016 and 2015. The annual report and audited financial statements may be found at http://www.otcmarkets.com/stock/TAPM/filings.

"Tapinator continued to show healthy top-line growth in the fourth quarter of 2016," stated Tapinator President, Andrew Merkatz. "While our fourth quarter revenues grew 7% year-over-year in the period, our bookings (a non-GAAP measure) grew 19% during the same comparative period to approximately $823,000, representing our tenth consecutive quarter of at least double-digit year-over-year bookings growth. The growing contribution of in-app purchases to our overall revenue mix necessitated our adoption of a new revenue recognition policy during the fourth quarter of 2016, resulting in the deferral of meaningful GAAP revenue during the period. While this new policy is explained in greater detail within the notes to our 2016 audited financial statements, it is important to note that bookings, as opposed to revenue, is the fundamental top-line metric that we use to manage our business, as we believe that it is the most useful indicator of our sales activity in a given period. Over the long term, the factors impacting our bookings and revenue are the same. However, in the short term, there are factors that may cause revenue to exceed or be less than bookings in any period. Both our revenue and bookings expansion in the fourth quarter can be attributed primarily to our Full-Featured Games business, an area that we believe will become increasingly meaningful to the Company as we move forward. While our Rapid-Launch Games portfolio continues to play an important role within our overall business, the long-term strategy that we have communicated is rooted in our continued investment into a select number of full-featured gaming titles that we believe have significant franchise potential. Tapinator also recorded adjusted EBITDA (a non-GAAP measure) of approximately $130,000 in the fourth quarter of 2016, a decrease of 13% year-over-year, but representing our eleventh consecutive quarter of positive adjusted EBITDA.

For the year ended December 31, 2016, Tapinator achieved revenue of approximately $3.73 million, bookings of $3.82 million, and adjusted EBITDA of approximately $871,000, representing year-over-year growth rates of 52%, 56%, and 67%, respectively."

Reflecting on the year's performance, Tapinator's CEO Ilya Nikolayev stated, "We are very pleased with our accomplishments in 2016, 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 into the human resources, marketing, and live operations infrastructure that, we believe, will allow us to significantly grow our Full-Featured Games business. In 2016, we feel we continued to lay the appropriate groundwork to allow Tapinator to support a much larger enterprise, as it scales existing products and launches new ones, in 2017 and beyond."

Financial Highlights

-- Annual revenue of $3,731,773; up 52% year-over-year

-- Annual bookings of $3,817,175; up 56% year-over-year*

-- Annual adjusted EBITDA of $871,195; up 67% year-over-year*

-- Quarterly revenue of $737,511; up 7% year-over-year

-- Quarterly bookings of $822,913; up 19% year-over-year*

-- Quarterly adjusted EBITDA of $130,707; down 13% year-over-year*

-- $590,461 in cash and cash equivalents as of December 31, 2016

* A table has been included in this press release with non-GAAP adjustments to the Company's revenue resulting in bookings (a non-GAAP measure) and non-GAAP adjustments to the Company's net loss, resulting in positive adjusted EBITDA (a non-GAAP measure) for the relevant periods.

Product Highlights

The Company ended Q4 with 297 active games, of which 26 were released in the quarter. As of December 31, 2016, Tapinator had 86 titles in its portfolio that had each achieved at least one million downloads, up from 81 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 Company's goal in terms of its Full-Featured business is to create franchise-type games that have product lifespans of at least five years. In order to accomplish this, the Company believes that it needs to achieve average player lifetime values (LTVs) that exceeds the customer acquisition cost, at scale. The Company has been able to achieve this, at certain download volumes, for two products: "Video Poker Classic" and "Solitaire Dash." The Company believes that, in 2017, it will be able to scale both of these products as well as launch new games that can achieve these coveted metrics. In particular, the Company is enthused about the significant potential of the following 2017 game releases:

1) Big Sport Fishing 2017: sequel to a fishing game portfolio with over 15 million installs on mobile devices worldwide. Has been in soft launch for six months, which has provided us with live operations data to improve the product before global release

2) Shadowborne: console-quality, hard-core action based role-playing game. This game is a first of its kind release on mobile and will appeal to console players seeking a similar experience on mobile devices. Monetization model is freemium with 100+ upgrade options across categories such as armor, weapons, and visual customization

3) Arena War: an arena-style synchronous, multiplayer strategy game. This game offers a unique combination of fast, synchronous multiplayer battles and long-term progress via upgrades and unlocks. The systems built around the latter, we believe, will enable best-in-class monetization

Player & Game Metrics

-- Average DAUs - 834,000 in Q4 2016; up 57% year-over-year

-- Average MAUs - 14.6 million in Q4 2016; up 66% year-over-year

-- Average New Daily Downloads - 384,000 in Q4 2016; up 13% year-over-year

-- Cumulative Downloads - 360 million as of December 31, 2016; up 116% year-over-year

-- Game Library - 297 titles as of December 31, 2016; up from 183 year-over-year

-- Game Diversification - No single game accounted for more than 6% of total revenues during the twelve-month period ended December 31, 2016

Financial Results (unaudited)

View data
Three Months Ended Twelve Months Ended Dec. 31, 2016 Dec. 31, 2015 Dec. 31, 2016 Dec. 31, 2015 GAAP Results Revenue $737,511 $692,682 $3,731,773 $2,448,051 Operating Income (Loss) ($72,034) ($639,599) ($11,212) ($893,713) Net Income (Loss) ($445,614) ($1,048,465) ($2,346,624) ($1,924,008) Diluted Net Income (Loss) Per Share ($0.01) ($0.02) ($0.04) ($0.03) Weighted average common shares outstanding: Diluted 56,959,303 57,109,303 56,989,631 57,109,303 Non-GAAP Results Bookings $822,913 $692,682 $3,817,174 $2,448,051 Adjusted EBITDA $130,707 $149,707 $871,195 $522,895

Annual Summary of Results

Tapinator recorded bookings of $3,817,175, gross revenues of $3,731,773 and a net loss of $2,346,624 for the twelve-month period ended December 31, 2016. This compares to bookings and gross revenue of $2,448,051 and a net loss of $1,924,008 for the same period in 2015. The bookings and revenue increases can be attributed to growth in the size of our Rapid Launch Games portfolio as well as to the strong performance of select Full-Featured titles that launched in 2016. 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 twelve-month period ended December 31, 2016, the Company incurred an operating loss of $11,212, as compared to operating loss of $893,713 for the comparable twelve-month period in 2015. The decrease in operating loss is primarily due to a non-recurring $584,479 impairment of acquired software assets taken during the fourth quarter of 2015, coupled with operating leverage on the higher level of revenues achieved during the period.

For the twelve-month period ended December 31, 2016, the Company achieved adjusted EBITDA (a non-GAAP measure of earnings discussed below) of $871,195, as compared to adjusted EBITDA of $522,895 for the comparable twelve-month period in 2015. The 67% increase in adjusted EBITDA is primarily due to operating leverage on the higher level of revenues.

Tapinator's cash balance decreased to $590,461 as of December 31, 2016 from the period ended December 31, 2015 when the cash balance was $1.5 million. 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, coupled with increases in expenditures relating to new game development & marketing.

Quarterly Summary of Results

Tapinator recorded bookings of $822,913, gross revenues of $737,511 and a net loss of $445,614 for the three-month period ended December 31, 2016. This compares to bookings and gross revenue of $692,682 and a net loss of $1,048,465 for the same period in 2015. The bookings and revenue increases can be attributed primarily to the strong performance of select Full-Featured titles that launched in 2016. The decrease in net loss was primarily attributable to a non-recurring $584,479 impairment of acquired software assets taken during the fourth quarter of 2015.

For the three-month period ended December 31, 2016, the Company incurred an operating loss of $72,034, as compared to operating loss of $639,599 for the comparable three-month period in 2015. The decrease in operating loss was primarily attributable to a non-recurring $584,479 impairment of acquired software assets taken during the fourth quarter of 2015.

For the three-month period ended December 31, 2016, the Company achieved adjusted EBITDA (a non-GAAP measure of earnings discussed below) of $130,707, as compared to adjusted EBITDA of $149,707 for the comparable three-month period in 2015. The decrease in adjusted EBITDA during the period is primarily due to increased game marketing costs, partially offset by a reduction in general and administrative expenses.

Tapinator's cash balance decreased to $590,461 as of December 31, 2016 from the period ended September 30, 2016 when the cash balance was $750,976. The decrease in cash during the period is primarily attributable to continued significant investment in capital expenditures relating to new game development, combined with a decrease in adjusted EBITDA.