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Tapinator Releases Third Quarter 2017 Results

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Quarterly Revenue Increases 37% Over Previous Quarter

NEW YORK, Nov. 14, 2017 /PRNewswire/ -- Tapinator, Inc. (OTCQB: TAPM), a leading developer and publisher of mobile games on the iOS, Google Play and Amazon Platforms, today announced quarterly financial results and the filing of its quarterly report for the period ended September 30, 2017.  The quarterly report and unaudited financial statements may be found at:

http://www.otcmarkets.com/stock/TAPM/filings

The Company ended Q3 with 333 active mobile games, of which 29 were released in the quarter.  As of September 30, 2017, Tapinator had 89 titles within its active portfolio that had each achieved more than one million player downloads.

Financial Highlights

  • Nine-month year-to-date revenues of $2.28m; down 24% from $2.99m year-over-year
  • Quarterly revenues of $850k; down 22% from $1.08m year-over-year, and up 37% sequentially
  • Nine-month year-to-date bookings (a non-GAAP measure*) of $2.62m; down 13% from $2.99m year-over-year
  • Quarterly bookings (a non-GAAP measure*) of $899k; down 17% from $1.08m year-over-year, and up 20% sequentially
  • Full-Featured Games year-over-year revenue growth of 148% and 133% and bookings growth of 183% and 255%, for the three months and nine months ended September 30, 2017, respectively.
  • Nine-month year-to-date operating income (loss) of ($550k); down from $61k year-over-year
  • Quarterly operating income (loss) of ($105k); down from $53k year-over-year
  • Nine-month year-to date adjusted EBITDA (a non-GAAP measure*) of $127k; down 83% from $740k year-over-year
  • Quarterly adjusted EBITDA (a non-GAAP measure*) of $124k; down 56% from $278k year-over-year, and up 427% sequentially

Financial Results (unaudited)


Three Months Ended


Nine Months Ended


Sept. 30, 2017

Sept. 30, 2016


Sept. 30, 2017

Sept. 30, 2016

GAAP Results






Revenue

$849,787

$1,083,176


$2,282,677

$2,994,262

Operating Income (Loss)

(104,775)

53,233


(550,493)

60,821

Net Income (Loss)

(506,511)

(1,090,761)


(2,922,885)

(1,901,011)

Basic Net Income (Loss) Per Share

($0.01)

($0.02)


($0.05)

($0.03)

Diluted Net Income (Loss) Per Share

($0.01)

($0.02)


($0.05)

($0.03)

Weighted average common shares outstanding:






   Basic

59,459,303

56,959,303


58,641,233

56,999,814

   Diluted

59,459,303

56,959,303


58,641,233

56,999,814

 

Revenue by Game Type:






  Full-Featured

$354,951

$142,995


$649,558

$278,302

  Rapid-Launch

494,836

940,181


1,633,119

2,715,960

  Total

$849,787

$1,083,176


$2,282,677

$2,994,262

 

 

Non-GAAP Results*







Three Months Ended


Nine Months Ended


Sept. 30, 2017

Sept. 30, 2016


Sept. 30, 2017

Sept. 30, 2016

 

Bookings

$898,775

$1,083,176


$2,618,109

$2,994,262

Adjusted EBITDA

$123,566

$277,868


$127,081

$740,487

 

Bookings by Game Type:






  Full-Featured

$404,697

$142,995


$988,112

$278,302

  Rapid-Launch

494,078

940,181


1,629,997

2,715,960

  Total

$898,775

$1,083,176


$2,618,109

$2,994,262

 

* A table has been included later 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 certain relevant periods.

Summary of Results

Tapinator recorded bookings of $898,775, revenue of $849,787 and a net loss of $506,511 for the three-month period ended September 30, 2017.  This compares to bookings and gross revenue of $1,083,176 and a net loss of $1,090,761 for the same period in 2016.  The bookings decrease is attributable primarily to decreases in DAUs and ABPU across our Rapid-Launch Games portfolio, which was partially offset by an increase in our Full-Featured Games bookings, resulting primarily from growth in player engagement and monetization within our Video Poker Classic title, and to the successful launches of Solitaire Dash, Dice Mage 2, and Big Sport Fishing 2017 between the comparable periods.  The revenue decrease can be attributed to the decrease in bookings and a growing contribution of durable virtual goods to our overall revenue mix (primarily from our Full-Featured Games), resulting in a $48,988 increase in net deferred revenue during the third quarter of 2017.  The decrease in our net loss was primarily due to a non-cash debt extinguishment charge of $770,526 related to the refinancing of our Senior Secured Convertible Debenture during the third quarter of 2016.

Tapinator recorded bookings of $2,618,109, revenues of $2,282,677 and a net loss of $2,922,885 for the nine-month period ended September 30, 2017.  This compares to bookings and gross revenue of $2,994,262 and a net loss of $1,901,011 for the same period in 2016.  The bookings decrease is attributable primarily to decreases in DAUs and ABPU across our Rapid-Launch Games portfolio, which was partially offset by an increase in our Full-Featured Games bookings, resulting primarily from growth in player engagement and monetization within our Video Poker Classic title and to the successful launches of Solitaire Dash and Dice Mage 2 between the comparable periods.  The revenue decrease can be attributed to the decrease in bookings and a growing contribution of durable virtual goods to our overall revenue mix (primarily from our Full-Featured Games), resulting in a $335,432 increase in net deferred revenue during the nine-month period ended September 30, 2017.  The increase in our net loss was primarily due to the revenue decrease during the nine-month period and increased interest expense and debt discount amortization related to the refinancing of our Senior Secured Convertible Debenture during the second quarter of 2017.

For the three-month period ended September 30, 2017, the Company incurred an operating loss of $104,775, as compared to operating income of $53,233 for the comparable three-month period in 2016.  The operating loss was primarily due to the lower revenues for the three months ended September 30, 2017. 

For the nine-month period ended September 30, 2017, the Company incurred an operating loss of $550,493, as compared to operating income of $60,821 for the comparable nine-month period in 2016.  The operating loss was primarily due to the lower revenue for the nine months ended September 30, 2017. 

For the three-month period ended September 30, 2017, the Company achieved adjusted EBITDA (a non-GAAP measure of earnings discussed below) of $123,566, as compared to adjusted EBITDA of $277,868 for the comparable three-month period in 2016.  The decrease in adjusted EBITDA is primarily due to an operating loss incurred during the period, as compared to operating income generated in the comparable period in 2016.

For the nine-month period ended September 30, 2017, the Company achieved adjusted EBITDA (a non-GAAP measure of earnings discussed below) of $127,081, as compared to adjusted EBITDA of $740,487 for the comparable nine-month period in 2016.  The decrease in adjusted EBITDA is primarily due to an operating loss incurred during the period, as compared to operating income generated in the comparable period in 2016.

Management Commentary on Results

Tapinator showed year-over-year declines but sequential growth in its top-line revenue and bookings* and adjusted EBITDA* in the third quarter of 2017.  The topline slowdown can be attributed to a broad based year-over-year decline in our Rapid-Launch Games business that began in the fourth quarter of 2016 and peaked during the second quarter of 2017.   This slowdown was partially offset by strong gains in our Full-Featured Games business.  Beginning with our second quarter report, we have begun to break out operating and financial results between these two businesses to give investors greater transparency into the Company's performance and future prospects, especially as we have shifted our focus to the Full-Featured Games opportunity.

Reflecting on our third quarter performance, Tapinator's CEO Ilya Nikolayev stated, "In 2017, Tapinator is showing the results of the transition that we had previously anticipated and communicated to our shareholders – the shift from our Rapid-Launch Games business to our Full-Featured Games business. Although all transitions are difficult, we are encouraged by two important trends. First, our Full-Featured Games bookings grew by 255% for the nine-month period ended September 30, 2017 and certain games including Video Poker Classic and Solitaire Dash are showing metrics that, we believe, will allow us to achieve greater scale in 2018. Second, after a decline earlier this year, we are seeing our Rapid-Launch Games business stabilize and are seeing growth within certain new categories. Overall, we believe and are confident that the potential size, quality and sustainability of earnings from the Full-Featured Games business is significantly greater than that of our Rapid-Launch Games business. Accordingly, we will continue to invest in our Full-Featured Games business – both existing winners, including Video Poker Classic and Solitaire Dash, as well as new games with home run and/or evergreen potential. Our goal in terms of our Full-Featured Games is to create franchise-type titles that have product lifespans of five to ten years. In 2018, we anticipate that (1) several titles from our existing Full-Featured portfolio will grow significantly as we optimize these titles for content and monetization; and (2) we will achieve scale with several new game launches that are currently in development.  

(*Non-GAAP Measures.) 

Player & Game Metrics

 

  • Average DAUs – 692 thousand in Q3 2017; down 42% year-over-year, and up 10% sequentially
  • Average MAUs – 11.7 million in Q3 2017; down 46% year-over-year, and up 5% sequentially
  • ABPU - $0.01 in Q3 2017; unchanged year-over-year, and unchanged sequentially
  • Cumulative Player Downloads – 451 million as of September 30, 2017; up 39% year-over-year, and up 7% sequentially
  • Number of Titles that have achieved at least 1.0 million player downloads – 89 as of September 30, 2017
  • Full-Featured Games Average DAUs – 44 thousand in Q3 2017; up 63% year-over-year, and up 76% sequentially
  • Average MAUs – 11.7 million in Q3 2017; down 46% year-over-year, and up 5% sequentially
  • Full Featured Games ABPU - $0.10 in Q3 2017; up 74% year-over-year, and down 22% sequentially

 


Three Months Ended


2017


2016

All Games:

Sept. 30, 2017


Jun. 30, 2017


Sept. 30, 2017


Jun. 30, 2017

Average DAUs (in thousands)

692


627


1,183


1,074

Average MAUs (in thousands)

11,679


11,094


21,453


18,305

ABPU

$0.01


$0.01


$0.01


$0.01

 

Full-Featured Games:









Average DAUs (in thousands)

44


25


27


10

Average MAUs (in thousands)

541


214


302


119

ABPU

$0.10


$0.13


$0.06


$0.09

 

Rapid-Launch Games:






Average DAUs (in thousands)

647


602


1,156


1,039

Average MAUs (in thousands)

11,138


10,880


21,151

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