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 June 30, 2022 , Tapinator achieved revenue of approximately $1.4 million , bookings* of approximately $1.3 million , net loss of approximately $77,000 and adjusted EBITDA * of approximately $292,000 . The Company's revenue, bookings * and adjusted EBITDA * represent year-over-year declines of 2%, 12% and 22%, respectively. For the quarter, the Company also announced basic and fully diluted net loss per share of $0.03 per share.
For the six months ended June 30, 2022 , Tapinator achieved revenue of approximately $3.1 million , bookings* of approximately $3.0 million , net income of approximately $733,000 and adjusted EBITDA * of approximately $786,000 . The Company's annual revenue, bookings * , net income and adjusted EBITDA * represent year-over-year improvement of 17%, 9%, 62% and 37%, respectively. For the six-month period, the Company also announced basic and fully diluted net earnings per share of $0.26 per share.
* 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 |
|
| Six Months Ended |
|
| June 30 |
|
| June 30 |
|
| 2022 | 2021 | % Ch. |
| 2022 | 2021 | % Ch. |
GAAP Results: |
|
|
|
|
|
|
|
Revenue | $1,395,549 | $1,420,437 | -2 % |
| $3,077,031 | $2,636,342 | 17 % |
Operating Income | $172,713 | $263,388 | -34 % |
| $546,159 | $364,100 | 50 % |
Net Income (Loss) | ($76,605) | $215,993 | NM (1) |
| $733,224 | $453,446 | 62 % |
Net Income (Loss) margin % | -5 % | 15 % |
|
| 24 % | 17 % |
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Net Income (Loss) Per Share - Basic | ($0.03) | $0.08 | -138 % |
| $0.26 | $0.16 | NM (1) |
Net Income (Loss) Per Share - Diluted | ($0.03) | $0.07 | -143 % |
| $0.26 | $0.16 | NM (1) |
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Weighted avg. common shares outstanding - basic | 2,824,810 | 2,815,680 |
|
| 2,824,810 | 2,781,575 |
|
Weighted avg. common shares outstanding - diluted | 2,824,810 | 2,898,420 |
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| 2,859,761 | 2,847,980 |
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Non-GAAP Results: |
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Bookings: |
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Category Leading Games | $1,151,302 | $1,232,152 | -7 % |
| $2,533,955 | $2,370,335 | 7 % |
Rapid-Launch Games | $90,239 | $187,804 | -52 % |
| $240,145 | $385,126 | -38 % |
NFT Publishing | $12,598 | $0 | NM (1) |
| $217,726 | $0 | NM (1) |
Total Bookings | $1,254,139 | $1,419,957 | -12 % |
| $2,991,826 | $2,755,461 | 9 % |
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Adjusted EBITDA | $292,429 | $374,457 | -22 % |
| $786,278 | $574,288 | 37 % |
Adjusted EBITDA Margin % | 21 % | 26 % |
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| 26 % | 22 % |
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(1) Percentage change not meaningful. |
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Ilya Nikolayev , CEO of Tapinator commented, "Our results this quarter, in both our mobile gaming and NFT collection and publishing businesses were negatively impacted by macroeconomic headwinds and industry wide slowdowns as compared to the significant growth experienced during the pandemic era. On the mobile gaming side, we continue to have multi-year conviction regarding our key franchise games, including Video Poker Classic, Crypto Trillionaire, Keno Vegas and Lucky Lotto, and are actively continuing to develop these titles. During this past quarter, we also embarked upon a longer-term strategy of increasing our investment in game marketing, a strategy we believe to be important for resuming overall growth in future quarters.
With respect to our NFT business, we are focused on two directions:
1) NFT 500 is our NFT fine art collection platform and corresponding mobile application. To date, we have acquired approximately 450 fine art NFTs from more than 250 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 , Anne Spalter , Snofro, Hackatao, Bruce Gilden , Guy Bourdin , Justin Aversano , Claire Silver , Sofia Crespo , Zancan, Matt Deslauriers , Nick Kuder and Damien Hirst . We continue to refine, diversify, and expand our collection and we view these digital assets as attractive long-term investments within the emerging NFT art asset class. While we remain highly enthused about our collection and the assets that we have acquired to date, we believe the short-term volatility of the NFT and overall crypto markets necessitate a more cautious go-forward approach in the near term as we focus our resources on riding out the difficult macro environment facing our core mobile gaming business.
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. While we plan to continue these publishing efforts opportunistically, we do not plan to focus heavily in this area in the near term given the volatility of the NFT market. However, we still believe that we have only scratched the surface of NFTs and Web3 more broadly, and we will continue to evaluate specific opportunities that can drive long term growth."
Andrew Merkatz , President of Tapinator, also commented on the Company's results, "Overall market conditions within both the mobile gaming and crypto markets deteriorated significantly in Q2 2022. According to research firm Sensor Tower, mobile spending declined at a rate of 12% year-over-year during the second quarter of 2022. The 12% decrease in our Bookings during the quarter would indicate that our top-line performance was in line with the market overall. Given past and current macro conditions, we would expect to see at least three more quarters of year-over-year contraction. We believe that our historic focus on maintaining a lean cost structure has positioned us well to withstand such contraction. We expect that our continued investments in our franchise games, combined with our more recent investments in game marketing will begin to yield meaningful results for the Company as we look out to 2023 and beyond."
Current Outlook
While we continue to have conviction regarding our mobile games business, and specifically our Category Leading Games, as indicated in the previous quarter, we are facing macroeconomic headwinds and witnessing 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 and our historic focus on cost control. Our investments within the NFT space are more speculative and volatile, and we have recently begun tempering these investments, given market conditions. However, we continue to believe there could be substantial long-term opportunities for the Company within the nascent Web3 markets representing the intersection of NFTs, digital art, gaming and the emerging metaverse and we will continue to explore these opportunities. At this time, we are not providing financial guidance.
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 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.
NFT 500 Supplemental Information – Summary Collection Metrics |
|
| Totals as of
12/31/2021 | Q1 2022 | Q2 2022 | Cumulative
Totals as of
6/30/2022 |
# of NFTs Collected | 360 | 53 | 67 | 480 |
# of NFTs Sold | -9 | -5 | -18 | -32 |
# of NFTs Held | 351 | 399 | 448 | 448 |
Cost of NFTs Collected | $ 1,198,761 | $ 431,117 | $ 767,831 | $ 2,397,709 |
Proceeds from Sale of Collected NFTs | (179,028) | (303,565) | (411,750) | (894,343) |
Proceeds from Sale of Digital Asset Dividends & Airdrops | - | (42,600) | (143,216) | (185,816) |
Cost of NFTs Collected, Net of Sales Proceeds | $ 1,019,733 | $ 84,952 | $ 212,865 | $ 1,317,550 |
Reconciliation of GAAP to Non-GAAP Results |
|
| Quarter Ended |
| Six Months Ended |
| June 30 |
| June 30 |
| 2022 | 2021 |
| 2022 | 2021 |
Reconciliation of Revenue to Bookings: |
|
|
|
|
|
Revenue | $1,395,549 | $1,420,437 |
| $3,077,031 | $2,636,342 |
Change in deferred revenue | (141,411) | (481) |
| (85,205) | 119,118 |
Bookings | $1,254,139 | $1,419,956 |
| $2,991,826 | $2,755,460 |
|
|
|
|
|
|
Reconciliation of Net Income to Adjusted EBITDA: |
|
|
|
|
|
Net income (loss) | ($76,605) | $215,993 |
| $733,224 | $453,446 |
Interest expense, net | - | 629 |
| (322) | 2,250 |
Income tax benefit | - | (45,348) |
| - | (74,480) |
Impairment of digital assets | 452,846 | 0 |
| 452,846 | - |
Standstill agreement, non-recurring | - | 93,555 |
| - | 93,555 |
Gain on digital asset dividends & airdrops | (7,794) | - |
| (145,682) | - |
Amortization of capitalized software development | 79,525 | 89,771 |
| 155,175 | 167,854 |
Gain on extinguishment of debt | - | - |
| - | (109,231) |
Depreciation and amortization of other assets | 3,630 | 1,013 |
| 7,259 | 1,765 |
Gain on sale of digital assets | (195,734) | (1,441) |
| (488,816) | (1,441) |
Gain on sale of investments | - | - |
| (5,091) | - |
Stock-based expense | 36,561 | 20,285 |
| 77,685 | 40,570 |
Adjusted EBITDA | $292,429 | $374,457 |
| $786,278 | $574,288 |
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 NFT 500 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 our longer-term strategy of increasing our investment in game marketing will result in resuming overall growth in future quarters, our belief that we have only scratched the surface of NFTs and Web3 more broadly, our expectation that we will see three more quarters of year-over-year contraction, our belief that our historic focus on maintaining a lean cost structure has positioned us well to withstand such contraction, our expectation that our continued investments in our franchise games combined with our more recent investments in game marketing will begin to yield meaningful results for us as we look out to 2023, our belief that we are relatively well positioned to weather the current macroeconomic headwinds and industry wide slowdown given our focus on evergreen game types within the social casino genre and our historic focus on cost control and our continued belief there are substantial long-term opportunities for us within the nascent Web3 markets representing the intersection of NFTs, digital art, 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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