Tapinator Announces 2020 Record Financial Results 1
• Revenues Increase 18% to $4.5 Million; Bookings* Increase 32% to $4.4 Million
• Adjusted EBITDA* Increases 479% to $1.0 Million

• Adjusted EBITDA* Margin Climbs to 23%

NEW YORK Feb 11, 2021 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 period ended December 31, 2020, and the filing of its annual report for the years ended December 31, 2020 and 2019.  The annual report and financial statements may be found at http://www.otcmarkets.com/stock/TAPM/disclosure.  The results provided below replace, in its entirety, any guidance or projections previously issued by the Company.

For the year ended December 31, 2020, Tapinator achieved record revenue of approximately $4.5 million, record bookings* of approximately $4.4 million, net loss of approximately $548,000, and record adjusted EBITDA* of approximately $1.0 million.  The Company’s revenue, bookings* and adjusted EBITDA* represent year-over-year improvements of 18%, 32% and 479%, respectively.

For the quarter ended December 31, 2020, Tapinator achieved revenue of approximately $1.2 million, bookings* of approximately $1.1 million, net loss of approximately $416,000 and adjusted EBITDA* of approximately $335,000. The Company’s quarterly revenue and bookings* represent year-over-year changes of 55% and 35%, 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     Year Ended  
  December 31,     December 31,  
  2020 2019 % Ch.   2020 2019 % Ch.
GAAP Results:              
Revenue $1,210,510 $782,970 55%   $4,454,940 $3,760,322 18%
Operating Loss ($245,787) ($877,086) NM(1)   ($345,467) ($2,375,606) NM(1)
Net Loss ($416,411) ($883,416) NM(1)   ($547,499) ($2,379,792) NM(1)
Net Loss Per Share 
-Basic & Diluted
($0.76) ($1.61) NM(1)   ($0.99) ($4.33) NM(1)
Weighted avg. common shares outstanding – basic 551,005 549,958 0%   550,979 549,958 0%
Weighted avg. common shares outstanding – diluted 551,005 549,958 0%   550,979 549,958 0%
Cash and cash equivalents $206,039 $167,016 23%   $206,039 $167,016 23%
               
Non-GAAP Results:              
Bookings:              
   Category Leading Games $880,655 $555,283 59%   $3,457,568 $2,292,919 51%
   Rapid-Launch Games 177,435 228,889 -22%   932,554 1,031,930 -10%
Total Bookings $1,058,090 $784,172 35%   $4,390,122 $3,324,850 32%
               
Adjusted EBITDA $334,921 ($37,631) NM(1)   $1,017,511 $175,696 479%
AEBITDA Margin % 28% -5%     23% 5%  
               
(1)     Percentage change not meaningful.  

Ilya Nikolayev, CEO of Tapinator commented, “We had a very strong year in 2020. We continued to invest in our social casino games by both building new features and, in particular, expanding our Live Operations systems to drive increases in engagement and monetization. These systems are currently in place within Video Poker Classic and will make their way to our recently launched social casino game, Lucky Lotto, as well as our future titles. We see 2021 as characterized by the following:

  • Ongoing investment in Video Poker Classic as we further scale the property based on increasing marketing spend
  • Leveraging our Live Operations and social casino expertise to grow other social casino properties, with a current focus on our social lottery product, Lucky Lotto
  • Launching several new games, the first of which will be an idle resource management title that is a follow up to Crypto Trillionaire which we expect to launch in Q2 of this year.

Overall, we are more excited about the business now than we have ever been. Our existing games are performing well, we have built out a strong foundation in terms of Live Operations and feature systems that will be used across our key products, and we have a strong product pipeline of new games for 2021. We continue to believe that Tapinator is fundamentally and deeply undervalued and we have our heads down working diligently on behalf of all of our shareholders to grow and unlock this value in 2021 and beyond.”

Andrew Merkatz, President of Tapinator, also commented on the Company’s results, “We are extremely proud of the following operating accomplishments in 2020:

  • We achieved record annual revenue of approximately $4.5mm, representing annual growth of 18% year-over-year
  • We reported record annual Bookings* of approximately $4.4mm, representing annual growth of 32%
  • We reported annual Bookings* growth within our core Category Leading Games Business of 51%
  • Through a combination of top line growth and aggressive cost control, we reduced our net loss from approximately to $2.4mm in 2019 to approximately $500k in 2020
  • We reported record annual adjusted EBITDA* of approximately $1.0mm, representing annual growth of 479%
  • Our annual adjusted EBITDA* margin climbed to 23% in 2020, up from 5% in the previous year
  • We paid off our accounts receivable based line of credit in full during the third quarter
  • We finished 2020 with a strong and focused pipeline of new games to enter the market in 2021. We believe this pipeline represents valuable future opportunity for our shareholders given the Company’s significant operating leverage

2020 was a tumultuous year as the COVID-19 pandemic affected businesses globally. Owing to our high preparedness for remote work, we were able to continue to operate throughout the pandemic with minimal disruption.  While the outbreak of the COVID-19 pandemic has negatively impacted most parts of the economy, the mobile gaming industry has been one of the few bright spots. Following initial governmental stay-at-home orders, consumer participation and engagement trends spiked, yielding significant growth in game downloads, engagement and revenue.  The rise in at-home entertainment has provided strong tailwinds to both Tapinator and the industry as a whole. Although the initial spike in engagement during the second quarter of 2020 has slowed, consumers are still engaging with mobile games more than pre-pandemic levels, which we believe indicates that a significant portion of revenue growth and engagement will be long-lasting.  We believe Tapinator stands to benefit from these longer term secular trends. As a seasoned operator within the massive and lucrative market for mobile gaming, we believe we are well positioned to continue to deliver strong growth and product leadership in the coming years.”

Current Outlook

We continue to have conviction regarding our Category Leading Games business, and specifically our focus on social casino games.  While we are not providing financial guidance at this time, we believe we are well positioned to deliver another year of strong company-wide revenue and bookings growth and solid adjusted EBITDA margins.

*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 Income, 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 and projected Bookings and adjusted EBITDA to the most directly comparable GAAP financial measures below.  Some limitations of Bookings and adjusted EBITDA are as follows:

  • Bookings does 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 and interest income or expense;
  • 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), Diluted Net Income (Loss) Per Share, Cash Flow from Operations, Operating Income (Loss) and our other financial results presented in accordance with GAAP.

Reconciliation of GAAP to Non-GAAP Results

  Quarter Ended   Year Ended
  December 31,   December 31,
  2020 2019   2020 2019
Reconciliation of Revenue to Bookings:          
Revenue $1,210,510 $782,969   $4,454,940 $3,760,322
Change in deferred revenue (152,420) 1,203   (64,818) (435,473)
Bookings $1,058,090 $784,172   $4,390,122 $3,324,849
           
Reconciliation of Net Loss 
to Adjusted EBITDA:
         
Net loss ($416,411) ($883,416)   ($547,499) ($2,379,792)
Interest expense, net 6,330   31,407 4,186
Impairment of capitalized software 374,428 114,171   374,428 114,171
Amortization of capitalized software development 127,285 153,420   493,141 647,705
One-time share settlement expense 170,625   170,625
Depreciation and amortization of other assets 752 1,115   3,307 5,552
Stock-based expense 78,242 347,838   379,139 1,560,962
One-time financing costs 222,911   112,963 222,911
Adjusted EBITDA $334,921 ($37,631)   $1,017,511 $175,696
           

About Tapinator

Tapinator Inc. (OTC: TAPM) develops and publishes category leading games for mobile platforms, with a focus on the social casino genre. 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 Solitaire Derby. Tapinator generates revenues through the sale of branded advertising and via consumer transactions, including in-app purchases and subscriptions. Founded in 2013, Tapinator is headquartered in New York, with product development and marketing teams located in North America and Europe.

Consumers can find high-quality mobile entertainment wherever they see the ‘T’ character logo, or at http://tapinator.com.

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,” “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 expectation that we will launch an idle resource management title as a follow up to Crypto Trillionaire in Q2 of this year, our belief that our 2021 pipeline of new games represents valuable  future opportunity for our shareholders given the Company’s significant operating leverage, our belief that a significant portion of revenue growth and engagement will be long-lasting after the COVID-19 pandemic and our related belief that we will continue to benefit from these secular trends, our belief we are well positioned to continue to deliver strong growth and product leadership in the coming years and our belief we are well positioned to deliver another year of strong company-wide revenue and bookings growth and solid adjusted EBITDA margins. 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 March 16, 2020 and as updated from time to time.

CONTACT:

Tapinator Investor Relations
investor.relations@tapinator.com
914.930.6232

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