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Tapinator Releases Annual 2017 Results

03/30/2018

2017 Full Year Revenues of $3.14 Million and Adjusted EBITDA of $249,000

2017 Q4 Revenues of $858,000 and Adjusted EBITDA of $121,000

New York, NY, March 30, 2018 - Tapinator, Inc. (OTC: TAPM), a developer and publisher of mobile games and applications on the iOS, Google Play, Amazon and Ethereum platforms today announced financial results for the period ended December 31, 2017, and the filing of its annual report and audited financial statements for the years ended December 31, 2017 and 2016.  The annual report and audited financial statements may be found at http://www.otcmarkets.com/stock/TAPM/filings.

For the year ended December 31, 2017, Tapinator achieved revenue of approximately $3.14 million, bookings of $3.49 million, and adjusted EBITDA of approximately $249,000, representing year-over-year declines of 16%, 8%, and 72%, respectively.  For the quarter ended December 31, 2017, Tapinator achieved revenue of approximately $859,000, bookings of $881,000, and adjusted EBITDA of approximately $121,000, representing year-over-year growth rate of 16%, 7%, and decline of 7%, respectively.

  • Annual revenue of $3,141,360; down 16% year-over-year
  • Annual bookings of $3,498,788; down 8% year-over-year*
  • Annual adjusted EBITDA of $247,996; down 72% year-over-year*
  • Quarterly revenue of $858,683; up 16% year-over-year
  • Quarterly bookings of $880,680; up 7% year-over-year*
  • Quarterly adjusted EBITDA of $120,915; down 7% year-over-year*
  • $246,755 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.

Reflecting on the year’s performance, Tapinator’s CEO Ilya Nikolayev stated, “2017 represented a pivotal year for the Company.  As we communicated early last year, we shifted our focus from Rapid-Launch Games to the more lucrative Full-Featured Games opportunity. While this shift resulted in what we believe to be only a temporary pause in our overall top-line growth, our strategy has already yielded positive results in that our Full-Featured Games Bookings increased by almost 200% in 2017 as compared to 2016. Looking forward, we are very excited about our Full-Featured Games pipeline as we have a robust portfolio of new games slated to launch in 2018.” 

Andrew Merkatz, President & CFO of Tapinator, also commented on the 2017 results and 2018 outlook, "We spent significant management effort in 2017 working to improve our balance sheet to properly position the Company for the significant market opportunities we believe now exist. As we recently disclosed via OTC Markets, on February 15, 2018, we recently completed a private placement for which we received net proceeds of $2,581,787, and subsequently eliminated the Company's debt in its entirety. Having emerged from these efforts completely debt-free and adequately capitalized, we are now re-doubling our focus on producing sustainable revenue growth and demonstrating improved bottom-line financial performance through a combination of new product introductions and corporate development."

Product Highlights

The Company ended Q4 with 360 active games, of which 27 were released in the quarter.  As of December 31, 2017, Tapinator had 94 titles in its portfolio that had each achieved at least one million downloads, up from 89 games that had reached this milestone at the end of Q3.

The Company continues to have significant conviction regarding its Full-Featured Games business and has a robust development pipeline heading into 2018. The Company’s goal for its Full-Featured business is to create franchise-type games that have product lifespans of at least five to ten 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 2018, it will be able to continue to scale both of these products as well as launch new games that can achieve these coveted metrics.  As an extension of its Full-Featured Games business, the Company is also seeking to establish early leadership within the nascent blockchain gaming category through its newly established, Revolution Blockchain subsidiary. 

In addition to certain games that we have not yet announced, the Company is particularly enthused about the significant potential of the following 2018 game releases and updates:

Fusion Heroes: craft your own Mech and dominate in fierce Heads-Up combat.  Build a mighty robo-hero to take on endless hordes of battle-droids with an arsenal cannons, missiles, lasers and more. From the wreckage of battle, scavenge and recruit an army of allies. Take on missions, find loot, and battle to victory in this fast-paced action RPG.

Darkwinds: pirate-themed, blockchain based crypto-collectible card game where players fight each other to become the great grand master of the seven seas.

BitPainting: a crypto-collectibles game based on the global art market where player can vie to build beautiful and unique collections of iconic digital art on the blockchain.

Divide & Conquer: 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.  Players of similar skill levels (based on tiers) are placed on a map. They must capture territory and special structures as they grow their empire and eliminate opponents - all in real time. As a player succeeds in battle, the player earns resources. This bounty is then used to level up units and, eventually, unlock new units as the player moves up in tiers.

Solitaire Dash 2.0: our horse-racing themed tri-peaks solitaire game will be receiving a significant update for its 2.0 version. The user interface is being completely redesigned in the form of a map to visually represent player progress. Players will have many additional ways to increase earning potential and in-game rewards, including improved streak bonuses and "sponsorships" that will be awarded for completing in-game content. We will also be introducing new level types, which will have their own unique obstacles, power-ups and mechanics. Finally, card streaks, an important component of the game, will be getting a major overhaul, along with unique rewards for attaining certain milestones. In short, Solitaire Dash 2.0 will combine the proven systems of top grossing card games with its own unique features to create a best-in-class solitaire product. 

Dice Mage Multiplayer: with this upcoming sequel to the critically acclaimed Dice Mage and Dice Mage 2 games, magical dice dueling is back! Battle other mages in this turn-based multiplayer card game. Summon monsters, conjure spells, and roll mystic dice! Collect cards, find and upgrade powerful loot to become the ultimate Dice Mage.

Player & Game Metrics

  • Average DAUs – 714,000 in Q4 2017; down 14% year-over-year
  • Average MAUs – 12 million in Q4 2017; down 18% year-over-year
  • Average New Daily Downloads – 305,000 in Q4 2017; down 20% year-over-year
  • Game Library – 360 titles as of December 31, 2016; up from 297 year-over-year

Financial Highlights

 

Annual Summary of Results

Tapinator recorded gross revenues of $3,141,360 and bookings of $3,498,788 for the twelve-month period ended December 31, 2016.  This compares to gross revenue of $3,731,773 and bookings of $3,817,174 for the same period in 2016.  The decrease of revenue and bookings was caused by a 34% and 34% decrease in our Rapid-Launch Games business, respectively, which was partially offset by a 162% and 197% increase in our Full-Featured Games business, respectively.

For the twelve-month period ended December 31, 2017, the Company incurred an operating loss of $913,408, as compared to operating loss of $11,214 for the comparable twelve-month period in 2016.  The increase in operating loss is primarily due to lower revenue achieved in 2017, coupled with a non-recurring $256,310 impairment of capitalized software taken during the fourth quarter of 2017.

For the twelve-month period ended December 31, 2017, the Company recorded a net loss of $3,690,147, compares to a net loss of $1,924,008 for the same period in 2016.  The net loss increase was primarily attributable to the operating loss increase recorded during the period, coupled with non-cash financing related charges and interest expense associated with the refinancing of the Company’s Senior Secured Convertible Debenture which was completed during the third quarter of 2017.

For the twelve-month period ended December 31, 2017, the Company achieved adjusted EBITDA (a non-GAAP measure of earnings discussed below) of $247,996, as compared to adjusted EBITDA of $871,195 for the comparable twelve-month period in 2016.  The 72% decrease in adjusted EBITDA is primarily due to higher net loss recorded in 2017.

Tapinator’s cash balance decreased to $246,755 as of December 31, 2017 from the period ended December 31, 2016 when the cash balance was $590,467.  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.

Quarterly Summary of Results

Tapinator recorded gross revenues of $858,683 and bookings of $880,680 for the three-month period ended December 31, 2017.  This compares to gross revenues of $737,511 and bookings of $822,913 for the comparable three-month period in 2016.  The revenue and bookings increase was caused by a 273% and 92% increase in our Full-Featured Games business, respectively, which was partially offset by a 12% and 12% decrease in our Rapid Launch Games business, respectively.

For the three-month period ended December 31, 2017, the Company incurred an operating loss of $362,916, as compared to operating loss of $72,034 for the comparable three-month period in 2016.  The increase in operating loss was primarily attributable to a non-recurring $256,310 impairment of capitalized software taken during the fourth quarter of 2017.

The Company recorded a net loss of $767,262 for the three-month period ended December 31, 2017, as compared to a net loss of $445,614 for the comparable three-month period in 2016.  The net loss increase was primarily attributable to the operating loss increase recorded during the period.

For the three-month period ended December 31, 2017, the Company achieved adjusted EBITDA (a non-GAAP measure of earnings discussed below) of $120,915, as compared to adjusted EBITDA of $130,707 for the comparable three-month period in 2016.  The decrease in adjusted EBITDA is primarily due to higher net loss during the period, which was substantially offset by a non-recurring $256,310 impairment of capitalized software.

Tapinator’s cash balance increased to $246,755 as of December 31, 2017 from the period ended September 30, 2017 when the cash balance was $134,426.  The increase in cash during the period is primarily attributable to a $100,000 equity investment the Company received during the fourth quarter of 2017.

About Tapinator

Tapinator (OTC: TAPM) develops and publishes mobile games and applications on the iOS, Google Play, Amazon and Ethereum platforms.  Tapinator’s portfolio includes over 300 mobile gaming titles that, collectively, have achieved over 450 million player downloads, including games such as ROCKY™, Video Poker Classic, Solitaire Dash and Dice Mage. Tapinator generates revenues through the sale of branded advertisements and via consumer transactions, including in-app purchases. Founded in 2013, Tapinator is headquartered in New York, with product development teams located in the United States, Germany, Bulgaria, Pakistan, Indonesia, and Canada.  Consumers can find high-quality mobile entertainment wherever they see the ‘T’ character logo, or at http://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, our belief that the decline in our overall top-line growth is only temporary, our belief that our pipeline of Full-Featured will continue to produce positive results, our goal of creating franchise-type games with product lifespans of at least five years and our ability to become an early leader in the blockchain gaming category. 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 (audited)

CONTACT

Tapinator Investor Relations

investor.relations@tapinator.com

(914) 930-6232

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