Tapinator Announces Q3 2023 Financial Results

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Nov 13, 2023, 16:02 ET

Revenue Decreases 10% Year-Over-Year to $1.2 Million
Bookings^* Decreases 1% Year-Over-Year to $1.2 Million
Net Loss of $288k Compared to Previous Year Net income of $144k
Adjusted EBITDA^* Increases 65% Year-Over-Year to $337k
Basic and Fully Diluted EPS of ($0.11)

NEW YORK, Nov. 13, 2023 /PRNewswire/ -- Tapinator, Inc. (OTC: TAPM) ("Tapinator," the "Company," "we," "our" or "us"), a developer and publisher of category leading games for mobile platforms, today announced unaudited financial results for the three and nine months ended September 30, 2023, and the filing of its quarterly report for the periods ended September 30, 2023 and 2022.

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 September 30, 2023, Tapinator achieved revenue of approximately $1.2 million, bookings* of approximately $1.2 million, net loss of approximately $288,000 and adjusted EBITDA^* of approximately $337,000. The Company's revenue and bookings^* represent year-over-year period declines of 10% and 1%, respectively while the Company's adjusted EBITDA^* represents a year-over-year increase of 65%.

For the nine months ended September 30, 2023, Tapinator achieved revenue of approximately $3.3 million, bookings* of approximately $3.5 million, net loss of approximately $4,000 and adjusted EBITDA^* of approximately $673,000. The Company's revenue, bookings^* and adjusted EBITDA^* represent year-over-year period declines of 25%, 17% and 32%, 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 income, resulting in adjusted EBITDA (a non-GAAP measure) for the relevant periods.

Financial Highlights

	Three Months Ended			Nine Months Ended
	September 30			September 30
	2023	2022	*% Ch.*	2023	2022	*% Ch.*
GAAP Results:
Revenue	$1,175,828	$1,306,117	-10 %	$3,277,662	$4,383,148	-25 %
Operating Income	$167,033	$71,689	133 %	$260,697	$617,848	-58 %
Net Income (Loss)	($288,350)	$143,864	NM⁽¹⁾	($3,795)	$877,088	NM⁽¹⁾
Net Income (Loss) margin %	-25 %	11 %		0 %	20 %

Net Income (Loss) Per Share - Basic	($0.11)	$0.05	NM⁽¹⁾	($0.00)	$0.31	NM⁽¹⁾
Net Income (Loss) Per Share - Diluted	($0.11)	$0.05	NM⁽¹⁾	($0.00)	$0.30	NM⁽¹⁾

Weighted avg. common shares outstanding - basic	2,725,439	2,824,814		2,725,349	2,824,814
Weighted avg. common shares outstanding - diluted	2,725,439	2,831,771		2,725,349	2,933,894

Non-GAAP Results:
Bookings:
Category Leading Games	$1,166,733	$1,108,554	5 %	$3,340,992	$3,642,511	-8 %
Rapid-Launch Games	37,699	93,237	-60 %	159,461	333,382	-52 %
NFT Publishing	-	12,328	-100 %	-	230,054	-100 %
Total Bookings	$1,204,432	$1,214,119	-1 %	$3,500,453	$4,205,947	-17 %

Adjusted EBITDA	$337,386	$203,969	65 %	$673,192	$990,248	-32 %
Adjusted EBITDA Margin %	29 %	16 %		21 %	23 %

⁽¹⁾ Percentage change not meaningful.

Ilya Nikolayev, CEO of Tapinator, commented, "For Q3 2023, as expected, our core social casino Category Leading Games business was basically flat year-over-year. The 10% decrease in revenue that we saw, year-over-year, can be attributed primarily to the continuing decline of our legacy Rapid-Launch Games business. This decline was expected and has been previously communicated.

From a product perspective, our focus continues to be what we communicated last quarter and is three-fold:

Continue to execute on our Video Poker Classic roadmap, to further optimize our flagship product;
Port features that have been proven within Video Poker Classic to Keno Vegas and Lucky Lotto, with the goal of pushing the metrics of these titles closer to that of Video Poker Classic; and
Build a new mobile game that focuses on the blackjack space. We are excited to announce that this game, Blackjack Live Casino, launched globally last week on Apple's iOS platform: https://apps.apple.com/us/app/blackjack-live-casino/id6450670256. Through certain social and live functionality, we believe that this game is uniquely positioned within the blackjack category. An important component of this game is that of real-time live hosts.

We believe that all three strategic components laid out above are important for the growth of our business. In particular, we have been testing Blackjack Live Casino internally and are especially excited about its potential. In the mobile gaming space, current blackjack offerings focus on either solitary play (one player sitting at a table alone) or on a multiplayer experience (emulating a traditional blackjack table). We believe that there is significant opportunity for a third type of experience on mobile, focused on live, community play. We are very excited to introduce live host functionality and to begin ramping up marketing initiatives for the product over the coming weeks."

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 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 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. 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, gain on digital asset dividends & airdrops, gain on sale of digital assets and gain on sale of investments;
Adjusted EBITDA does not reflect income tax expense;
Adjusted EBITDA does not include other income or expenses, 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, amortization, and impairment of capitalized software are non-cash charges, the assets being depreciated, 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

	Totals as of 12/31/2022	Q1 2023	Q2 2023	Q3 2023	Cumulative Totals as of 09/30/2023
# of NFTs Collected	581	110	14	19	724
# of NFTs Sold	-54	-80	-99	-6	-239
# of NFTs Held, Cumulatively	527	557	472	485	485
Cost of NFTs Collected	$ 2,665,445	$ 142,054	$ 22,711	$ 95,018	$ 2,925,228
Proceeds from Sale of Collected NFTs	(1,191,354)	(277,504)	(51,391)	(9,139)	(1,529,388)
Proceeds from Sale of Digital Asset Dividends / Airdrops	(185,816)	-	-	-	(185,816)
Cost of NFTs Collected, Net of Sales Proceeds	$ 1,288,275	$ (135,450)	$ (28,680)	$ 85,879	$ 1,210,024

Reconciliation of GAAP to Non-GAAP Results

	Three Months Ended		Nine Months Ended
	September 30		September 30
	2023	2022	2023	2022
Reconciliation of Revenue to Bookings:
Revenue	$1,175,828	$1,306,117	$3,277,662	$4,383,148
Change in deferred revenue	28,605	(91,998)	222,791	(177,201)
Bookings	$1,204,433	$1,214,119	$3,500,453	$4,205,947

Reconciliation of Net Income to Adjusted EBITDA:
Net income (loss)	($288,350)	$143,864	($3,795)	$877,088
Interest expense, net	(1,945)	-	(4,255)	(322)
Income tax expense, net	-	-	54,900	-
Loss on Impairment of digital assets	449,514	-	449,514	452,846
Gain on digital asset dividends & airdrops	-	-	-	(145,682)
Amortization of capitalized software development costs	164,225	92,299	394,110	247,474
Depreciation and amortization of other assets	3,212	3,420	9,637	10,680
Gain (loss) on sale of digital assets	7,814	(72,175)	(232,071)	(560,991)
Gain on sale of investments	-	-	(3,596)	(5,091)
Stock-based compensation	2,916	36,561	8,748	114,246
Adjusted EBITDA	$337,386	$203,969	$673,192	$990,248

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, Crypto Trillionaire and Keno Vegas. We generate revenues from our mobile games via consumer transactions, including in-app purchases and subscriptions, and through the sale of branded advertisements. 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 belief that Blackjack Live Casino is uniquely positioned within the blackjack gaming category and in the game's potential, our belief that all three strategic components summarized in the bullets points above are important for the growth of our business and our belief that there is significant opportunity for a third type of experience in the mobile blackjack gaming space, focused on live, community play. 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
[email protected]
914.930.6232

SOURCE Tapinator, Inc.