$TAPM News - Tapinator Releases Q4 and Annual 2016 Results - 2016 Revenues of $3.73 Million, an Increase of 52% Year-Over-Year

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Published - March 29, 2017
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$TAPM News - Tapinator Releases Q4 and Annual 2016 Results - 2016 Revenues of $3.73 Million, an Increase of 52% Year-Over-Year - (FinancialNewsMedia.com Wire)

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2016 Adjusted EBITDA of $871,000 an Increase of 67% Year-Over-Year - New York, NY - (http://www.financialnewsmedia.com News Alert) - 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. Read this and more for Tapinator at: http://financialnewsmedia.com/profiles/tapm.html

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)



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.

About Tapinator

Tapinator (OTC: TAPM) develops and publishes mobile games on the iOS, Google Play, and Amazon platforms. Tapinator's portfolio includes over 250 mobile gaming titles that, collectively, have achieved over 350 million player downloads, including games such as ROCKY™, Combo Quest, Video Poker Classic, Solitaire Dash and Burn It Down. Tapinator generates revenues through the sale of branded advertisements, paid downloadable games and premium in-game content. Founded in 2013, Tapinator is headquartered in New York, with product development teams located in the United States, Germany, Pakistan, Indonesia, Russia and Canada. Consumers can find high-quality mobile entertainment wherever they see the 'T' character logo, or at 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," "feel," "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. 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, see Tapinator's Risk Factors which are available within the disclaimers section of Tapinator.com.

Non-GAAP Financial Measures

We have provided in this release the non-GAAP financial measures of Bookings and 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 Bookings and adjusted EBITDA internally in analyzing our financial results to assess operational performance and liquidity. The presentation of Bookings and 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 Bookings and adjusted EBITDA in assessing our performance and when planning, forecasting and analyzing future periods. We believe Bookings and 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 Bookings and adjusted EBITDA to the most directly comparable GAAP financial measures below. Some limitations of Bookings and adjusted EBITDA are as follows:

Bookings does not reflect that we defer and recognize online game revenue over the estimated life of durable virtual goods;
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, 2016 Dec. 31, 2015 Dec. 31, 2016 Dec. 31, 2015
Reconciliation of Revenue to Bookings:
Revenue $737,511 $692,682 $3,731,773 $2,448,051
Change in deferred revenue $85,402 $0 $85,402 $0
Bookings $822,913 $692,682 $3,817,175 $2,448,051

Three Months Ended Twelve Months Ended
Dec. 31, 2016 Dec. 31, 2015 Dec. 31, 2016 Dec. 31, 2015
Reconciliation of Net Income (Loss) to Adjusted
EBITDA:
Net income (loss) ($445,614) ($1,048,465) ($2,346,624) ($1,924,008)
Interest expense, net $144,490 $81,464 $451,990 $220,068
Income taxes $0 $0 $7,027 $3,773
Impairment of capitalized software $0 $584,479 $0 $584,479
Amortization of capitalized software development $178,627 $169,689 $767,187 $753,882
Depreciation and amortization of other assets $5,726 $19,347 $50,275 $41,792
Amortization of debt discount $229,091 $327,402 $1,105,869 $806,451
Loss On Extinguishment $0 $0 $770,526 $0
Stock-based expense $18,387 $15,792 $64,945 $36,456
Adjusted EBITDA $130,707 $149,707 $871,195 $522,894

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


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