Full Press Release Details
NTN Buzztime, Inc. Reports Second-Quarter
- Grew revenue 8% sequentially
CARLSBAD, Calif., August 6, 2015 - NTN
Buzztime, Inc. (NYSE MKT: NTN), reported financial results for the second quarter ended June 30, 2015.
"Second quarter revenue grew 8% sequentially,
reflecting positive trends in site count, reduced attrition and continued conversions to our BEOND platform," said Ram Krishnan,
NTN Buzztime CEO. "Site count achieved two milestones: increasing sequentially for the first time in more than 13 quarters
and reaching 50% of our installed base with the BEOND platform. We are working diligently to further growth by investing in functionality
critical to chain restaurants and by increasing our entertainment options.
"During the quarter, we
launched self-service dining while simultaneously expanding our relationship with Arooga's. Tableside payment is
unfolding smoothly, which we plan to enhance with EMV chip reading capability when we release our third generation BEOND
tablet platform. In entertainment, Jackpot Trivia is thriving. We are introducing additional features, and our data indicates
we are achieving our objective of increasing the number of younger players.
"Furthermore, upon analyzing feedback, we
identified the opportunity to create another competitive advantage by providing restaurants the option to offer free-to-consumer
arcade. While this change will delay our premium arcade general availability, we expect to command higher prices, which we anticipate
will translate into an increase in subscription revenue. Also, to reduce production costs and scrap exposure, we are outsourcing
the production of our third generation BEOND tablet platform and accelerating delivery to the end of 2015.
"In addition to expanding our revenue streams,
investing to increase the scalability of our business and improving operating efficiencies, we strengthened our balance sheet by
securing a credit agreement. We remain comfortable with our liquidity position. In aggregate, we believe these actions will drive
top line growth and lower our cash flow breakeven threshold," concluded Mr. Krishnan.
Financial Results for the Second-Quarter
$6.2 million, compared to $5.7 million in the first quarter of 2015 and $6.9 million for the same period in 2014. Sequential improvements
reflect the increase in adoption of the BEOND platform. The expected year-over-year decrease was due to fewer
installations of customers under sales-type lease arrangements and lower total site count.
Direct costs were $3.4 million including a $444,000 write-off for obsolete components and a $174,000 increase
in equipment and production costs, compared to $2.8 million for the same period in 2014. Selling,
general and administrative expenses were $4.9 million, compared to $4.6 million for the same period in 2014 reflecting the investment
in key personnel and severance, which was offset by a decrease in professional fees and consulting. Net loss was $2.6 million,
or $0.03 per share, compared to $1.3 million, or $0.02 per share, in the same period a year ago.
Metric Review for Quarter Ended June 30,
2015 Compared to March 31, 2015
The company ended the second quarter of 2015 with
2,942 subscribing venues, compared to 2,908 as of March 31, 2015. As of June 30, 2015, BEOND installations increased to 1,459 locations,
or 50% of the installed base, compared to 43% as of March 31, 2015. As of June 30, 2015, the BEOND platform conversion for Buffalo
Wild Wings, the company's largest customer, increased to 911 sites from 788 at the end of the first quarter. The Buzztime
network reached eight million registered players.
Liquidity at June 30, 2015
In April, the company
closed a three-year revolving credit agreement with East West Bank for up to $10.0 million, in addition to maintaining its equipment
lender relationship. As of June 30, 2015, cash and cash equivalents were $5.4 million, compared to $7.2 million as of December
31, 2015. Working capital remained stable at $4.9 million, compared to $5.0 million as of March
Management will review the results on a conference
call today, August 6, 2015, at 4:30 p.m. ET. To access the call, please use passcode 92279026
The call will also be accompanied live by webcast
over the Internet and accessible at the company's website at http://www.buzztime.com. The replay of the call will be available
until August 13, 2015.
Forward-looking Statements
This release contains forward-looking statements
which reflect management's current views of future events and operations, including but not limited to statements about our growth
plans, product and platform development, launches and usage, new revenue and the effect of cost control measures, acceptance in
the marketplace, customer development, customer and consumer satisfaction and the number of locations, players and games. These
statements are based on current expectations and assumptions that are subject to risks and uncertainties that could cause actual
results to differ materially. 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,
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.
Inc. (NYSE MKT: NTN) is a leading bar and restaurant social entertainment and integrated marketing platform. Trusted by bars and
restaurants in North America since 1985, Buzztime integrates trivia, card and sports games with in- and out-of-venue messaging
and communication tools. With over eight million player registrations on the Buzztime platform and over 80 million games played
last year, Buzztime players spread the word and invite friends and family to their favorite Buzztime locations to enjoy evenings
of fun and competition. With Buzztime entertainment and marketing solutions, bars and restaurants can turn casual visitors into
regulars, and give patrons a reason to stay longer. For the most up-to-date information on NTN Buzztime, please visit http://www.buzztime.com
Kirsten Chapman/Becky Herrick, LHA
(financial tables follow)
NTN BUZZTIME, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except
| June 30, 2015 | December 31, 2014 | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 5,391 | $ | 7,185 | ||||
| Accounts receivable, net | 546 | 2,190 | ||||||
| Site equipment to be installed | 3,141 | 4,755 | ||||||
| Prepaid expenses and other current assets | 660 | 742 | ||||||
| Total current assets | 9,738 | 14,872 | ||||||
| Broadcast equipment and fixed assets, net | 3,710 | 3,400 | ||||||
| Software development costs, net | 1,221 | 1,634 | ||||||
| Deferred costs | 1,297 | 1,092 | ||||||
| Goodwill | 1,020 | 1,084 | ||||||
| Intangible assets, net | 104 | 129 | ||||||
| Other assets | 149 | 57 | ||||||
| Total assets | $ | 17,239 | $ | 22,268 | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | 465 | $ | 617 | ||||
| Accrued compensation | 746 | 749 | ||||||
| Accrued expenses | 859 | 969 | ||||||
| Sales taxes payable | 147 | 133 | ||||||
| Income taxes payable | 71 | 104 | ||||||
| Current portion of long-term debt | 530 | 2,176 | ||||||
| Current portion of obligations under capital leases | 70 | 28 | ||||||
| Deferred revenue | 1,807 | 1,836 | ||||||
| Other current liabilities | 147 | 481 | ||||||
| Total current liabilities | 4,842 | 7,093 | ||||||
| Long-term debt | 5,097 | 3,143 | ||||||
| Long-term obligations under capital leases | 126 | 30 | ||||||
| Deferred revenue, excluding current portion | 406 | 378 | ||||||
| Deferred rent | 621 | 693 | ||||||
| Other liabilities | 2 | 7 | ||||||
| Total liabilities | 11,094 | 11,344 | ||||||
| Commitments and contingencies | ||||||||
| Shareholders' equity: | ||||||||
| Series A 10% cumulative convertible preferred stock, $.005 par value, $156 liquidation preference, 5,000 shares authorized; 156 issued and outstanding at June 30, 2015 and December 31, 2014 | 1 | 1 | ||||||
| Common stock, $.005 par value, 168,000 shares authorized at June 30, 2015 and December 31, 2014; 92,412 and 92,370 shares issued and outstanding at June 30, 2015 and December 31, 2014, respectively | 462 | 462 | ||||||
| Treasury stock, at cost, 503 shares at June 30, 2015 and December 31, 2014 | (456 | ) | (456 | ) | ||||
| Additional paid-in capital | 128,511 | 128,283 | ||||||
| Accumulated deficit | (122,741 | ) | (117,845 | ) | ||||
| Accumulated other comprehensive income | 368 | 479 | ||||||
| Total shareholders' equity | 6,145 | 10,924 | ||||||
| Total liabilities and shareholders' equity | $ | 17,239 | $ | 22,268 |
NTN BUZZTIME, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
(In thousands, except
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Revenues | ||||||||||||||||
| Subscription revenue | $ | 4,202 | $ | 4,573 | $ | 8,402 | $ | 9,192 | ||||||||
| Sales-type lease revenue | 1,251 | 1,590 | 2,091 | 2,703 | ||||||||||||
| Other revenue | 740 | 710 | 1,426 | 1,396 | ||||||||||||
| Total revenues | 6,193 | 6,873 | 11,919 | 13,291 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Direct operating costs (includes depreciation and amortization) | 3,379 | 2,806 | 6,028 | 5,336 | ||||||||||||
| Selling, general and administrative | 4,868 | 4,577 | 10,030 | 8,945 | ||||||||||||
| Impairment of capitalized software | 295 | 639 | 295 | 661 | ||||||||||||
| Depreciation and amortization (excluding depreciation and amortization included in direct costs) | 123 | 151 | 244 | 303 | ||||||||||||
| Total operating expenses | 8,665 | 8,173 | 16,597 | 15,245 | ||||||||||||
| Operating loss | (2,472 | ) | (1,300 | ) | (4,678 | ) | (1,954 | ) | ||||||||
| Other expense, net | (139 | ) | (51 | ) | (182 | ) | (36 | ) | ||||||||
| Loss before income taxes | (2,611 | ) | (1,351 | ) | (4,860 | ) | (1,990 | ) | ||||||||
| (Provision) benefit for income taxes | (14 | ) | 3 | (28 | ) | (7 | ) | |||||||||
| Net loss | $ | (2,625 | ) | $ | (1,348 | ) | $ | (4,888 | ) | $ | (1,997 | ) | ||||
| Net loss per common share - basic and diluted | $ | (0.03 | ) | $ | (0.02 | ) | $ | (0.05 | ) | $ | (0.02 | ) | ||||
| Weighted average shares outstanding - basic and diluted | 91,890 | 88,831 | 91,883 | 83,534 | ||||||||||||
| Comprehensive loss | ||||||||||||||||
| Net loss | $ | (2,625 | ) | $ | (1,348 | ) | $ | (4,888 | ) | (1,997 | ) | |||||
| Foreign currency translation adjustment | 42 | 67 | (111 | ) | 4 | |||||||||||
| Total comprehensive loss | $ | (2,583 | ) | $ | (1,281 | ) | $ | (4,999 | ) | $ | (1,993 | ) |
NTN BUZZTIME, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH
| Six months ended June 30, | ||||||||
| 2015 | 2014 | |||||||
| Cash flows used in operating activities: | ||||||||
| Net loss | $ | (4,888 | ) | $ | (1,997 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 1,421 | 1,375 | ||||||
| Provision for doubtful accounts | 12 | 41 | ||||||
| Stock-based compensation | 218 | 111 | ||||||
| Issuance of common stock to consultant in lieu of cash payment | 1 | 30 | ||||||
| Impairment of capitalized software | 295 | 661 | ||||||
| Loss from disposition of equipment | 5 | 1 | ||||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable | 1,626 | (285 | ) | |||||
| Site equipment to be installed | 995 | (2,128 | ) | |||||
| Prepaid expenses and other assets | (344 | ) | 54 | |||||
| Accounts payable and accrued liabilities | (251 | ) | 182 | |||||
| Income taxes payable | (27 | ) | (20 | ) | ||||
| Deferred costs | (207 | ) | (346 | ) | ||||
| Deferred revenue | - | 395 | ||||||
| Deferred rent | (72 | ) | (64 | ) | ||||
| Net cash used in operating activities | $ | (1,216 | ) | (1,990 | ) | |||
| Cash flows used in investing activities: | ||||||||
| Capital expenditures | (445 | ) | (485 | ) | ||||
| Software development expenditures | (379 | ) | (295 | ) | ||||
| Proceeds from the sale of equipment | 9 | - | ||||||
| Net cash used in investing activities | (815 | ) | (780 | ) | ||||
| Cash flows provided by financing activities: | ||||||||
| Proceeds from public offering of common stock, net | - | 6,369 | ||||||
| Proceeds from long-term debt | 4,574 | 3,023 | ||||||
| Payments on long-term debt | (4,267 | ) | (898 | ) | ||||
| Principal payments on capital leases | (23 | ) | (12 | ) | ||||
| Proceeds from exercise of stock options | 1 | 23 | ||||||
| Tax withholding related to net-share settlements of restricted stock units | - | (27 | ) | |||||
| Net cash provided by financing activities | 285 | 8,478 | ||||||
| Net (decrease) increase in cash and cash equivalents | (1,746 | ) | 5,708 | |||||
| Effect of exchange rate on cash | (48 | ) | 1 | |||||
| Cash and cash equivalents at beginning of period | 7,185 | 5,455 | ||||||
| Cash and cash equivalents at end of period | $ | 5,391 | $ | 11,164 |
A schedule reconciling
the Company's consolidated net loss calculated in accordance with GAAP to EBITDA is included in the supplemental table below.
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 loss
per GAAP (in thousands) to EBITDA:
| For the three months ended June 30, | For the six months ended June 30, | |||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Net loss per GAAP | $ | (2,625 | ) | $ | (1,348 | ) | $ | (4,888 | ) | $ | (1,997 | ) | ||||
| Interest expense, net | 182 | 40 | 284 | 64 | ||||||||||||
| Income tax provision | 14 | (3 | ) | 28 | 7 | |||||||||||
| Depreciation and amortization | 720 | 690 | 1,421 | 1,375 | ||||||||||||
| EBITDA | $ | (1,709 | ) | $ | (621 | ) | $ | (3,155 | ) | $ | (551 | ) |