NTN Buzztime, Inc. Reports Third Quarter 2018 Results

CARLSBAD, Calif., Nov. 7, 2018 /PRNewswire/ -- NTN Buzztime, Inc. NTN, reported financial results for the third quarter ended September 30, 2018.

NTN Buzztime Company Logo. (PRNewsFoto/NTN Buzztime, Inc.) (PRNewsfoto/NTN Buzztime, Inc.)

"Third quarter 2018 delivered 15.5% revenue growth over third quarter 2017; reported positive net income for the first time since 2012; and reached $1.1 million in EBITDA, more than double third quarter 2017," said Ram Krishnan, NTN Buzztime CEO. "The results reflect our diversification strategy, which includes focusing on hardware sales, licensing content, and entering new markets. To drive future growth, we continue to invest in advancing our technology platform and extending our solution suite. Leveraging our foundation interactive entertainment, we are developing new options in functionality, form factor, and mobility culminating in an entry-level price point option that we expect to broaden market appeal."

Recent Highlights

  • Delivered initial round of tablets to partner in the jail service industry.
  • Launched a Quick Service and Fast casual mode that combines the order and payment, which generated interest at October's FSTEC conference.
  • Increased player engagement with sweepstake promotions that drive the network effect and venue traffic for customers.
  • Positioned to release an entry-level or capital-light offering in the first quarter of 2019, new elements include
    • A sitehub the size of a deck of cards that improves functionality, eliminates wires and lowers costs;
    • A new TV display form factor that increases flexibility to add more content and advertising; and 
    • Mobile Trivia and Mobile Live that leverage successful games with new features designed to expand audience.

"We believe our lighter offering will enhance our value equation, increase our market potential, give players way more places to play, expand our audience through mobile downloads, and improve our ability to scale. All of which, we believe will create shareholder value," concluded Krishnan.

Financial Results for the Third Quarter Ended September 30, 2018

Total revenues were $6.0 million, up 15.5% from $5.2 million in the third quarter of 2017, as hardware revenue increases offset lower subscription revenue. Direct costs were $2.1 million and gross margin was 65%, compared to $1.5 million and 70% for the same period in 2017, reflecting higher equipment lease revenue, which carries a higher cost and lower margin. Selling, general and administrative expense was $3.4 million, or 57% of revenue, down from $3.6 million, or 70% of revenue, in the prior year quarter. Net income was $222,000, or $0.08 per share, improved from a net loss of $184,000, or $0.07 per share, in the prior year quarter.  EBITDA was $1.1 million, compared to $517,000 in the third quarter of 2017.

EBITDA is defined as earnings before interest, taxes, depreciation and amortization and is not intended to represent a measure of performance in accordance with accounting principles generally accepted in the United States (GAAP).  Although EBITDA is positive this quarter, it may not be positive in future quarters. A detailed description and reconciliation of EBITDA and management's reasons for using this measure is set forth at the end of this press release.

Metric Review for the Quarter Ended September 30, 2018

The site count was 2,666 at September 30, 2018, compared to 2,703 at June 30th.  Management anticipates the net site count will continue to fluctuate. The tablet platform installations increased 84% of the installed base, compared to 83% as of June 30, 2018.

Liquidity

Cash and cash equivalents were $3.1 million at September 30, 2018, compared to $3.4 million at December 31, 2017. Total deferred revenue was $2.5 million, down from $3.6 million at December 31, 2017. Working capital was $3.0 million at September 30, 2018, improving $4.1 million from negative $1.1 million at December 31, 2017.

Conference Call

Management will review the results on a conference call with a live question and answer session today, November 7, 2018, at 4:30 p.m. ET. To access the call, please use passcode 7619929 and dial:

  • (877) 307-1373 for the live call and (855) 859-2056 for the replay, if calling from the United States or Canada; or
  • (678) 224-7873 for the live call and (404) 537-3406 for the replay, if calling internationally.

The call will also be accompanied live by webcast that will be accessible at the company's website at http://www.buzztime.com.  The replay of the call will be available until November 14, 2018.

Forward-looking Statements

This release contains forward-looking statements that reflect management's current views of future events and operations, including statements regarding management's expectations regarding future growth, market expansion, and the ability of the company's new lighter offerings to enhance the value of the company's offerings, to increase the company's market potential and the company's ability to scale, and to create shareholder value.  These risks and uncertainties include the risks of unsuccessful execution or launch of products, platforms or brands, risks associated with customer retention and growth plans, the impact of alternative entertainment options and technologies and competitive products, brands, technologies and pricing, adverse economic conditions, the regulatory environment and changes in the law, failure of customer and/or player acceptance or demand for new or existing products, lower market acceptance or appeal of both existing and new products and services by particular demographic groups or audiences as a whole, termination of partnership and contractual relationships and technical problems or outages. Please see NTN Buzztime, Inc.'s recent filings with the Securities and Exchange Commission for information about these and other risks that may affect the Company. All forward-looking statements included in this release are based on information available to us on the date hereof. These statements speak only as of the date hereof and NTN Buzztime, Inc. does not undertake to publicly update or revise any of its forward-looking statements, even if experience or future changes show that the indicated results or events will not be realized.

About Buzztime:

Buzztime NTN delivers interactive entertainment and innovative technology, including performance analytics and secure payment with Europay, MasterCard® and Visa® (EMV) chip card readers or with near-field communication (NFC) technology to accept Apple, Android and Samsung Pay. Most frequently used in bars and restaurants in North America, the Buzztime tablets and technology offer engaging solutions to establishments that have guests who experience dwell time, such as casinos, senior living and more. Casual dining venues license Buzztime's customizable solution to differentiate themselves via competitive fun by offering guests trivia, card, sports and arcade games, customized menus and self-service dining features. Buzztime's platform improves operating efficiencies, creates connections among the players and venues, and amplifies guests' positive experiences.  The Buzztime platform has also been recently resold and the content licensed for other businesses serving other markets.   For more information, please visit http://www.buzztime.com or follow us on Facebook or Twitter @buzztime.

IR AGENCY CONTACT:

Kirsten Chapman/Becky Herrick, LHA Investor Relations

buzztime@lhai.com

415-433-3777

 

NTN BUZZTIME, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(In thousands, except par value amount)









ASSETS

September 30,

2018



December 31,

2017

Current Assets:

(unaudited)





Cash and cash equivalents

$       3,078



$       3,378

Accounts receivable, net

1,279



714

Site equipment to be installed

3,600



4,866

Prepaid expenses and other current assets

572



680

Total current assets

8,529



9,638









Fixed assets, net

3,645



3,678

Software development costs, net

1,840



1,459

Deferred costs

470



775

Goodwill

976



1,004

Other assets

84



16









Total assets

$     15,544



$     16,570









LIABILITIES AND SHAREHOLDERS' EQUITY







Current Liabilities:







Accounts payable

$           341



$           390

Accrued compensation

360



646

Accrued expenses

792



418

Sales taxes payable

137



107

Income taxes payable

36



13

Current portion of long-term debt

1,104



5,059

Current portion of obligations under capital leases

156



176

Current portion of deferred revenue

2,487



3,564

Deferred rent

33



182

Other current liabilities

96



192

Total current liabilities

5,542



10,747









Long-term debt

2,977



8

Obligations under capital leases

48



164

Deferred revenue

31



63

Other liabilities

50



52

Total liabilities

8,648



11,034









Commitments and contingencies















Shareholders' equity:







Series A 10% cumulative convertible preferred stock, $0.005 par value, $156 liquidation preference, 156 shares authorized; 156 shares issued and outstanding at September 30, 2018 and December 31, 2017

1



1

Common stock, $0.005 par value, 15,000 shares authorized at September 30, 2018 and December 31, 2017; 2,872 and 2,521 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively

14



13

Treasury stock, at cost, 10 shares at September 30, 2018 and December 31, 2017

(456 )



(456 )

Additional paid-in capital

136,482



134,752

Accumulated deficit

(129,438 )



(129,119 )

Accumulated other comprehensive income

293



345

Total shareholders' equity

6,896



5,536









Total liabilities and shareholders' equity

$     15,544



$     16,570

 

NTN BUZZTIME, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(In thousands, except per share data)











Three months ended

September 30,



Nine months ended

September 30,



2018



2017



2018



2017

Revenues















Subscription revenue

$      4,005



$      4,279



$    12,111



$   12,737

Hardware revenue

1,158



116



2,427



524

Other revenue

841



803



2,878



2,717

Total revenues

6,004



5,198



17,416



15,978

















Operating expenses:















Direct operating costs (includes depreciation and amortization)

2,115



1,539



6,019



5,013

Selling, general and administrative

3,444



3,636



11,123



11,628

Depreciation and amortization (excluding depreciation and amortization included in direct costs

75



76



244



250

Total operating expenses

5,634



5,251



17,386



16,891

Operating income (loss)

370



(53 )



30



(913 )

Other (expense) income, net

(138 )



(122 )



(305 )



496

Income (loss) before income taxes

232



(175 )



(275 )



(417 )

Provision for income taxes

(10 )



(9 )



(36 )



(21 )

Net income (loss)

$         222



$       (184 )



$       (311 )



$       (438 )

















Net income (loss) per common share – basic and diluted

$        0.08



$      (0.07 )



$      (0.12 )



$      (0.18 )

















Weighted average shares outstanding – basic and diluted

2,857



2,505



2,628



2,419

















Comprehensive income (loss):















Net income (loss)

$         222



$       (184 )



$       (311 )



$       (438 )

Foreign currency translations adjustment

39



80



(52 )



136

Total comprehensive income (loss)

$         261



$       (104 )



$       (363 )



$       (302 )

















 

NTN BUZZTIME, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(In thousands)





Nine months ended

September 30,



2018



2017

Cash flows provided by operating activities:







Net loss

$     (311 )



$     (438 )

Adjustments to reconcile net loss to net cash provided by operating activities:







Depreciation and amortization

2,068



1,716

Provision for doubtful accounts

53



47

Scrap expense

30



30

Transfer of fixed assets to sales-type lease

10



--

Stock-based compensation

368



347

Amortization of debt issuance costs

57



39

Issuance of common stock in lieu of cash payment for bonus compensation

--



178

Impairment of capitalized software

23



5

Loss from disposition of equipment

30



8

Changes in assets and liabilities:







Accounts receivable

(617 )



254

Site equipment to be installed

(56 )



(3,047 )

Prepaid expenses and other liabilities

40



37

Accounts payable and accrued expenses

69



(350 )

Income taxes

24



(2 )

Deferred costs

305



36

Deferred revenue

(1,109 )



2,521

Deferred rent

(148 )



(140 )

Other liabilities

(97 )



(185 )

Net cash provided by operating activities

739



1,056









Cash flows used in investing activities:







Capital expenditures

(502 )



(562 )

Software development expenditures

(690 )



(556 )

Net cash used in investing activities

(1,192 )



(1,118 )









Cash flows provided by (used in) financing activities:







Proceeds from long-term debt

4,000



--

Payment on long-term debt

(5,019 )



(2,857 )

Debit issuance costs of long-term debt

(23 )



(22 )

Principal payments on capital lease

(132 )



(116 )

Net proceeds from issuance of common stock related to registered direct offering

1,375



1,773

Tax withholding related to net share settlements of vested restricted stock units

(12 )



--

Payment of preferred stockholder dividends

(8 )



(8 )

Net cash provided by (used in) financing activities

181



(1,230 )









Net decrease in cash and cash equivalents

(272 )



(1,292 )

Effect of exchange rate on cash

(28 )



70

Cash and cash equivalents at beginning of period

3,378



5,686

Cash and cash equivalents at end of period

3,078



4,464









Non-GAAP Information

A schedule reconciling the Company's consolidated net income (loss) calculated in accordance with GAAP to EBITDA is included in the supplemental table below. The Company defines EBITDA as earnings before interest, taxes, depreciation and amortization. EBITDA is not intended to represent a measure of performance in accordance with GAAP, nor should EBITDA be considered as an alternative to statements of cash flows as a measure of liquidity. EBITDA is included herein because the Company believes it is a measure of operating performance that financial analysts, lenders, investors and other interested parties find to be a useful tool for analyzing companies like Buzztime that carry significant levels of non-cash depreciation and amortization charges in comparison to their net income or loss calculation in accordance with GAAP.

The following table reconciles our net income (loss) per GAAP (in thousands) to EBITDA:



Three months ended

September 30,



Nine months ended

September 30,



2018



2017



2018



2017

Net income (loss) per GAAP

$       222



$      (184 )



$      (311 )



$     (438 )

Interest expense, net

118



106



305



388

Income tax provision

10



9



36



21

Depreciation and amortization

732



586



2,068



1,716

Total EBITDA

$    1,082



$       517



$    2,098



$   1,687

 

Cision View original content to download multimedia:http://www.prnewswire.com/news-releases/ntn-buzztime-inc-reports-third-quarter-2018-results-300745244.html

SOURCE NTN Buzztime, Inc.

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