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Tapinator Announces Record Q1 2022 Financial Results

05/10/2022

- Revenue Increases 38% Year-Over- Year to Record $1.7 Million 
- Bookings* Increases 30% Year-Over-Year to $1.7 Million
- Net Income Increases 241% Year-Over-Year to Record $810k
- Adjusted EBITDA* Increases 147% Year-Over-Year to $494k
- Basic EPS of $0.29 and Fully Diluted EPS of $.27

NEW YORK, May 10, 2022 /PRNewswire/ -- Tapinator, Inc. (OTC: TAPM) ("Tapinator," the "Company," "we," "our" or "us"), a developer and publisher of category leading games for mobile platforms and a collector and publisher of fine art NFTs, today announced unaudited financial results for the three months ended March 31, 2022, and the filing of its quarterly report for the periods ended March 31, 2022 and 2021.

The quarterly report and financial statements have been published on OTC Markets and may be found at http://www.otcmarkets.com/stock/TAPM/disclosure.  The results provided below replace, in their entirety, any guidance or projections previously issued by the Company.

For the three months ended March 31, 2022, Tapinator achieved record revenue of $1.7 million, bookings* of approximately $1.7 million, record net income of approximately $810,000 and adjusted EBITDA* of approximately $494,000.  The Company's annual revenue, bookings*, net income and adjusted EBITDA* represent year-over-year improvements of 38%, 30%, 241% and 147%, respectively.  For the quarter, the Company also announced basic and fully diluted net income per share of $0.29 and $0.27 per share, respectively.

*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 adjusted EBITDA (a non-GAAP measure) for the relevant periods.

Financial Highlights


Quarter Ended




March 31




2022

2021

% Ch.


GAAP Results:





Revenue

$1,681,482

$1,215,905

38%


Operating Income

$373,446

$100,712

271%


Net Income

$809,829

$237,453

241%


Net Income margin %

48%

20%








Net Income Per Share - Basic

$0.29

$0.09

222%


Net Income Per Share - Diluted

$0.27

$0.08

238%







Weighted avg. common shares outstanding - basic

2,824,810

2,767,845



Weighted avg. common shares outstanding - diluted

2,996,466

2,954,805








Non-GAAP Results:





Bookings:





     Category Leading Games

$1,382,653

$1,138,182

21%


     Rapid-Launch Games

$149,906

$197,321

-24%


     NFT Publishing

$205,128

$0

NM(1)


      Total Bookings

$1,737,687

$1,335,503

30%







Adjusted EBITDA

$493,851

$199,831

148%


Adjusted EBITDA Margin %

29%

16%








(1)  Percentage change not meaningful.





Ilya Nikolayev, CEO of Tapinator commented, "We are extremely proud of another record performance this past quarter. These results are driven by our continued strong execution within our mobile gaming business, combined with robust performance from within our NFT art collection and publishing businesses. 

On the mobile gaming side, our products continue to perform as expected and we continue to release updates for our key games, including Video Poker Classic, Crypto Trillionaire and Lucky Lotto. We also successfully launched Keno Vegas, a new social casino product that leverages some of the extensive foundation, including monetization and live operations systems, that we have spent years building out for Video Poker Classic. We are pleased with the product's initial metrics and look forward to further developing the game.

With respect to our NFT business, we are focused on two directions:

1) NFT500 is our NFT fine art collection platform and corresponding mobile application. To date, we have acquired approximately 400 fine art NFTs from more than 150 prominent NFT artists such as Tyler Hobbs, Matt Kane, Larva Labs, Bored Ape Yacht Club, Vera Molnar, XCOPY, Helena Sarin, Pindar Van Arman, Monica Rizzolli, Refik Anadol, Manolo Gamboa Naon, Kevin Abosch, Zach Lieberman, Pak, Anne Spalter, Snofro, Hackatao, Bruce Gilden, Justin Aversano, Claire Silver, Sofia Crespo, Zancan, Matt Deslauriers, Nick Kuder, Proof Collective and Damien Hirst.  We continue to refine, diversify and expand our collection and we view these digital assets as long-term investments within the emerging NFT art asset class.  We remain highly enthused about our collection and the assets that we have acquired to date.

2) Our NFT Publishing business focuses on partnering with artists who have existing bodies of work and helping them enter the NFT space. There are a multitude of talented artists, including digital creatives and photographers, who would be a great fit for NFTs, yet lack the technical, marketing and curatorial expertise to succeed. The significant experience that we have acquired as collectors and operators within this area has put us in a position where we are able to assist.  We entered the NFT Publishing business in Q3 of last year and, to date, have successfully sold out several collection releases representing over 200 works of art from several artists. We believe that we have only scratched the surface of NFTs and Web3 more broadly, and we are currently working diligently to identify and execute upon specific opportunities that can drive long term growth."

Andrew Merkatz, President of Tapinator, also commented on the Company's results, "We are especially pleased with the following operating and record setting accomplishments in the first quarter of 2022:

  • We achieved record revenue of approximately $1.7mm and bookings* of approximately $1.7mm, representing growth of 38% and 30% year-over-year, respectively. Our revenue and bookings growth were driven by both our Category Leading Games and NFT publishing businesses.
  • Through a combination of strong top-line performance and an ongoing commitment to tight cost management, we delivered record net income of approximately $810k, representing basic and fully diluted EPS of $0.29 and $0.27, respectively.
  • We reported record adjusted EBITDA* of approximately $494k, representing growth of 147% year-over-year.
  • Our adjusted EBITDA* margin was 29% during the quarter, up from 16% in 2021, indicative of the significant operating leverage we have designed into our business.
  • Within our NFT500 collection, we acquired 40 NFT artworks from many prominent artists whose works we believe, in general, are well positioned to yield significant long term capital appreciation. We also sold five NFTs resulting in realized gains of approximately $293,000 during the quarter. During the quarter, we also claimed dividends/airdrops from our digital asset holdings resulting in realized gains of approximately $43,000 and unrealized gains of approximately $95,000.
  • We successfully launched Keno Vegas, a highly promising new social casino title that leverages some of the extensive foundation that we have spent years building out for Video Poker Classic.

Current Outlook

While we continue to have conviction regarding our mobile games business, and specifically our Category LeadingGames, we are facing macroeconomic headwinds and beginning to see an industry wide slowdown as compared to the significant growth experienced during the pandemic era.  We believe we are relatively well positioned to weather such slowdown given our focus on evergreen game types within the social casino genre.  Our investments within the NFT space are more speculative and volatile, but we continue to believe there are substantial long-term opportunities for the Company within the nascent Web3 markets representing the intersection of NFTs, digital art, gaming and the emerging metaverse. Due to the significant volatility and illiquidity within NFT markets, we do not intend to provide non-GAAP current market valuation estimates for our NFT collection. We are also not providing financial guidance at this time. 

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 measures of Revenue and Operating 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 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 in assessing our performance and when planning, forecasting and analyzing future periods. We believe Bookings and adjusted EBITDA are 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. Below, we have provided reconciliations between our historical Bookings and adjusted EBITDA to the most directly comparable GAAP financial measures below.  Some limitations of Bookings and adjusted EBITDA are as follows:

  • Bookings do 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 previously capitalized software or intangible assets previously acquired, acquisition-related transaction expenses, one-time financing expenses, contingent consideration fair value adjustments, share settlement expense, 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, interest income or expense, and gain on extinguishment of debt;
  • Adjusted EBITDA excludes depreciation and amortization of intangible assets and impairment of capitalized software. Although depreciation and amortization and impairment of capitalized software are non-cash charges, the assets being depreciated and amortized or impaired 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 Bookings and adjusted EBITDA along with other financial performance measures, including Revenue, Net Income (Loss), Basic and Diluted Net Income (Loss) Per Share, Cash Flow from Operations, Operating Income (Loss), and our other financial results presented in accordance with GAAP.

NFT500 Supplemental Information – Summary Collection Metrics

Summary Collection Metrics





Totals as of
12/31/2021

Q1 2022

Totals as of
3/31/2022

# of NFTs Collected

360

53

413

# of NFTs Sold

-9

-5

-14

# of NFTs Held

351

NA

399

Cost of NFTs Collected

$     1,198,761

$        431,117

$   1,629,878

Proceeds from Sale of Collected NFTs

(179,028)

(303,565)

(482,593)

Proceeds from Sale of Digital Asset Dividends & Airdrops

-

(42,600)

(42,600)

Cost of NFTs Collected, Net of Sale Proceeds

$     1,019,733

$          84,952

$   1,104,685

Reconciliation of GAAP to Non-GAAP Results


Quarter Ended


March 31


2022

2021

Reconciliation of Revenue to Bookings:



Revenue

$1,681,482

$1,215,905

Change in deferred revenue

56,206

119,598

Bookings

$1,737,688

$1,335,503




Reconciliation of Net Income to Adjusted EBITDA:



Net income

$809,829

$237,453

Interest expense, net

(322)

1,622

Income tax benefit

-

(29,132)

Gain on digital asset dividends & airdrops

(137,888)

-

Amortization of capitalized software development

75,650

78,083

Gain on extinguishment of debt

-

(109,231)

Depreciation and amortization of other assets

3,630

752

Gain on sale of digital assets

(293,082)

-

Gain on sale of investments

(5,091)

-

Stock-based expense

41,125

20,285

Adjusted EBITDA

$493,851

$199,831




About Tapinator

Tapinator Inc. (OTC: TAPM) develops and publishes category leading games for mobile platforms. Tapinator's library includes more than 300 titles that, collectively, have achieved over 500 million mobile downloads, including notable properties such as Video Poker Classic and Crypto Trillionaire.  Through our wholly-owned subsidiary, Revolution Blockchain and the NFT500 platform, we have amassed a significant collection of what we believe are "blue-chip" fine art NFT's, and we have developed and launched a mobile application that extends the utility of these digital asset investments.  We generate revenues from our mobile games via consumer transactions, including in-app purchases and subscriptions, and through the sale of branded advertisements. We also generate revenue from publishing and selling NFTs in partnership with select artists. Founded in 2013, we are headquartered in New York, with product teams located in North America and Europe.

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," "goal," "seek," "plan," "feel," "opinion," "may," "will," "expect," "anticipate," "estimate," "intend," "target," and similar expressions (as well as other words or expressions referencing future events, conditions or circumstances) are intended to identify forward-looking statements. These forward-looking statements include, among other things, our view that our NFT art digital assets are long-term investments within the emerging NFT art asset class, our belief that we have only scratched the surface of NFTs and Web3 more broadly, our belief that we are well positioned to yield significant long term capital appreciation within our NFT500 art collection, our belief that we are relatively well positioned to weather a potential industry wide mobile gaming business slowdown compared to the significant growth experienced during the pandemic era given our Category Leading Games focus on evergreen game types within the social casino genre and our continued belief there are substantial long-term opportunities for us within the nascent Web 3.0 markets representing the intersection of NFTs, digital art, mobile gaming and the emerging metaverse.  Forward-looking statements are subject to risks and uncertainties that could cause our future results, performance or achievements to differ significantly from those expressed or implied by the forward-looking statements. Except as required by law, 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 Marketplace 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 Marketplace is not a stock exchange, and trading of securities on it is often more sporadic than trading of securities listed on a national 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, please see the Company's Supplemental Information Report as filed with the OTC Markets on October 20, 2021 and as updated from time to time.

CONTACT:
Tapinator Investor Relations
investor.relations@tapinator.com
914.930.6232

 

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