NTN Buzztime, Inc. Reports Third Quarter 2019 Results
CARLSBAD, Calif., Oct. 30, 2019 /PRNewswire/ -- NTN Buzztime, Inc. (NYSE American: NTN), reported financial results for the third quarter ended September 30, 2019.
Allen Wolff, Interim CEO, said, "Our overarching vision will continue to be delivering interactive entertainment and innovative technology that helps customers acquire, engage and retain patrons. Earlier this year, we launched our mobile app, ad exchange and lighter product, and we continued investment in our hardware solution. For the third quarter, we reported 71% gross margin and posted our 14(th) consecutive quarter of positive EBITDA. We secured a $3 million hardware follow-on contract with our correctional facility partner, formed a partnership to deliver tablets to a digital marketing and loyalty company, and grew our hardware pipeline to over $30 million at quarter end. Also, sites with our new, lighter product Buzztime Basic grew and we increased volume on our ad exchange.
"Our team is committed to driving growth, executing on key initiatives and operating efficiently. With this resolve and a more diverse product suite, we are focused on delivering revenue on a shorter horizon, scaling the business and achieving Buzztime's full potential."
Financial Results for the Third Quarter Ended September 30, 2019
Total revenues were $4.6 million, compared to $5.2 million in the second quarter of 2019 and $6.0 million in the third quarter of 2018, reflecting a decrease in subscription revenue due to lower site count and in hardware revenue due to the timing of deploying larger deals. Direct costs were $1.3 million, compared to $2.1 million for the same period in 2018. Gross margin was 71%, compared to 65% for the same period in 2018, reflecting product mix. Selling, general and administrative expense was $3.5 million, relatively flat compared to the prior year quarter. The company is reducing its full-year 2019 SG&A forecast from $14 million to less than $13.5 million. Net loss attributable to common shareholders was $351,000, or $0.12 per share, compared to a net income attributable to common shareholders of $222,000, or $0.08 per share, in the prior year quarter. EBITDA was $465,000, compared to $1.1 million in the prior year quarter.
EBITDA is defined as earnings before interest, taxes, depreciation and amortization and is not intended to represent a measure of performance in accordance with accounting principles generally accepted in the United States (GAAP). Although EBITDA is positive this quarter, it may not be positive in future quarters. A detailed description and reconciliation of EBITDA and management's reasons for using this measure is set forth at the end of this press release.
Site Count for the Quarter Ended September 30 , 2019
Excluding the Buzztime Basic locations, the site count was 2,565 at September 30, 2019, compared to 2,609 at June 30, 2019. Management anticipates that site count will continue to fluctuate.
Liquidity
Cash, cash equivalents and restricted cash was $2.8 million at September 30, 2019, compared to $2.8 million at December 31, 2018. For the first nine months in 2019, cash flow from operations was $1.8 million, increasing from $528,000 for the same period last year.
Conference Call
Management will review the results on a conference call with a live question and answer session today, October 30, 2019, at 4:30 p.m. ET. To access the call, please use passcode 9388102 and dial:
-- (877) 307-1373 for the live call and (855) 859-2056 for the replay, if
calling from the United States or Canada; or
-- (678) 224-7873 for the live call and (404) 537-3406 for the replay, if
calling internationally.
The call will also be accompanied live by webcast that will be accessible at the company's website at http://www.buzztime.com/investors. The replay of the call will be available until November 6, 2019.
Forward-looking Statements
This release contains forward-looking statements that reflect management's current views of future events and operations, including statements regarding full-year 2019 SG&A forecast. Among the factors that could cause or contribute to material differences between the Company's actual results and the expectations indicated by the forward-looking statements are risks and uncertainties that include, but are not limited to, the Company's ability to raise additional funds in the future on favorable terms or at all; the Company's ability to compete effectively within the highly competitive interactive games, entertainment and marketing services industries, including the Company's ability to successfully commercially launch attractive product offerings; the Company's ability to grow its subscription revenue and successfully implement its other business strategies; the impact of new products and technological change, especially in the mobile and wireless markets, on the Company's operations and competitiveness; the Company's ability to maintain an adequate supply of its tablets and related equipment; the Company's ability to comply with its financial covenants to Avidbank and its right to declare a default if the Company does not, which could lead to all payment obligations becoming immediately due and payable; the Company's ability to adequately protect its proprietary rights and intellectual property; the Company's ability to successfully and efficiently manage the design, manufacturing and assembly process of the tablet and related equipment used in its tablet platform; and the other risks and uncertainties described in Part I, Item 1A "Risk Factors" of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2018, and described in other documents we file from time to time with the Securities and Exchange Commission thereafter.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.
About Buzztime:
Buzztime (NYSE American: NTN) delivers interactive entertainment and innovative technology that helps its customers acquire, engage and retain its patrons. Most frequently used in bars and restaurants in North America, the Buzztime tablets, mobile app and technology offer engaging solutions to establishments that have guests who experience dwell time, such as casinos, senior living, and more. Casual dining venues license Buzztime's customizable solution to differentiate themselves via competitive fun by offering guests trivia, card, sports and arcade games. Buzztime's platform creates connections among the players and venues and amplifies guests' positive experiences. Buzztime's in-venue TV network creates one of the largest digital out of home ad audiences in the US and Canada. Buzztime hardware solutions leverages the company's experience manufacturing durable tablets and charging systems, enabling a diverse group of businesses including corrections, point-of-sale and loyalty with product implementation. Buzztime games have also been recently licensed by other businesses serving other markets. For more information, please visit http://www.buzztime.com or follow us on Facebook or Twitter@buzztime.
IR AGENCY CONTACT:
Kirsten Chapman, LHA Investor Relations, buzztime@lhai.com 415-433-3777
NTN BUZZTIME, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except par value amount)
ASSETS
September 30,
December 31,
2019
2018
---
Current Assets:
(unaudited)
Cash and cash equivalents $2,533 $2,536
Restricted cash 51 50
Accounts receivable, net 777 1,143
Site equipment to be installed 1,601 2,539
Prepaid expenses and other current assets 585 517
Total current assets 5,547 6,785
Restricted cash, long-term 200 200
Operating lease right-of-use assets 2,176 --
Fixed assets, net 3,365 4,667
Software development costs, net 2,504 2,018
Deferred costs 340 424
Goodwill 687 667
Other assets 100 103
Total assets $14,919 $14,864
===
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $335 $271
Accrued compensation 450 572
Accrued expenses 322 444
Sales taxes payable 71 87
Income taxes payable 6 1
Current portion of long-term debt 1,000 1,000
Current portion of obligations under operating
leases 412 --
Current portion of obligations under financing
leases 22 45
Current portion of deferred revenue 743 1,267
Other current liabilities 171 337
Total current liabilities 3,532 4,024
Long-term debt 1,987 2,729
Obligations under operating leases 2,992 --
Obligations under financing leases 25 41
Deferred revenue 13 30
Deferred rent -- 1,123
Other liabilities 25 --
Total liabilities 8,574 7,947
Commitments and contingencies
Shareholders' equity:
Series A 10% cumulative convertible preferred
stock, $0.005 par value, $156 liquidation
preference, 156 shares authorized; 156 shares
issued and outstanding at September 30, 2019
and December 31, 2018 1 1
Common stock, $0.005 par value, 15,000 shares
authorized at September 30, 2019 and December
31, 2018; 2,895 and 2,875 shares issued at
September 30, 2019 and December 31, 2018,
respectively 14 14
Treasury stock, at cost, 10 shares at September
30, 2019 and December 31, 2018 (456 ) (456 )
Additional paid-in capital 136,695 136,552
Accumulated deficit (130,156 ) (129,394 )
Accumulated other comprehensive income 247 200
Total shareholders' equity 6,345 6,917
Total liabilities and shareholders' equity $14,919 $14,864
===
NTN BUZZTIME, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME
(unaudited)
(In thousands, except per share data)
Three months ended Nine months ended
September 30, September 30,
---
2019 2018 2019 2018
---
Revenues
Subscription revenue $3,723 $4,005 $11,356 $12,111
Hardware revenue 11 1,158 811 2,427
Other revenue 846 841 2,471 2,878
---
Total revenues 4,580 6,004 14,638 17,416
Operating expenses:
Direct operating costs (includes depreciation and
amortization) 1,344 2,115 4,545 6,109
Selling, general and administrative 3,464 3,444 10,355 11,123
Depreciation and amortization (excluding depreciation
and amortization included in direct costs 88 75 273 244
---
Total operating expenses 4,896 5,634 15,173 17,386
---
Operating (loss) income (316 ) 370 (535 ) 30
Other expense, net (16 ) (138 ) (189 ) (305 )
---
(Loss) income before income taxes (331 ) 232 (724 ) (275 )
Income tax provision (19 ) (10 ) (30 ) (36 )
---
Net (loss) income (351 ) 222 (754 ) (311 )
Series A preferred stock dividend (8 ) (8 )
Net (loss) income attributable to common shareholders $(351 ) $222 $(762 ) $(319 )
Net (loss) income per common share - basic and diluted $(0.12 ) $0.08 $(0.27 ) $(0.12 )
Weighted average shares outstanding - basic and diluted 2,874 2,857 2,870 2,628
===
Comprehensive (loss) income:
Net (loss) income $(351 ) $222 $(754 ) $(311 )
Foreign currency translations adjustment (18 ) 39 47 (52 )
---
Total comprehensive (loss) income $(369 ) $261 $(707 ) $(363 )
NTN BUZZTIME, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(In thousands)
Nine months ended
September 30,
2019 2018
---
Cash flows provided by operating activities:
Net loss $(754 ) $(311)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 2,191 2,068
Provision for doubtful accounts 144 53
Amortization of operating lease right-of-use assets 217
Scrap expense 5 30
Transfer of fixed assets to sales-type lease 7 10
Stock-based compensation 172 368
Amortization of debt issuance costs 7 57
Loss from disposition of equipment and capitalized software 42 53
Changes in assets and liabilities:
Accounts receivable 222 (617 )
Site equipment to be installed 475 (267 )
Operating lease liabilities (111 )
Prepaid expenses and other liabilities (66 ) 40
Accounts payable and accrued expenses (196 ) 69
Income taxes 4 24
Deferred costs 84 305
Deferred revenue (541 ) (1,209 )
Deferred rent (148 )
Other liabilities (141 ) 3
---
Net cash provided by operating activities 1,761 528
Cash flows used in investing activities:
Capital expenditures (111 ) (291 )
Capitalized software development expenditures (882 ) (690 )
Proceeds from sale of equipment 29
Net cash used in investing activities (964 ) (981 )
Cash flows (used in) provided by financing activities:
Net proceeds from issuance of common stock related to
registered direct offering 1,375
Proceeds from long-term debt 4,000
Payment on long-term debt (750 ) (5,019 )
Principal payments on financing leases (39 ) (132 )
Payment of preferred stockholder dividends (8 ) (8 )
Tax withholding related to net share settlement of
vested restricted stock units (29 ) (12 )
Net cash (used in) provided by financing activities (826) 181
Effect of exchange rate on cash 27 (28 )
Net decrease in cash and cash equivalents (2) (300 )
Cash, cash equivalents and restricted cash at beginning of period 2,786 3,378
---
Cash, cash equivalents and restricted cash at end of period $2,784 $3,078
NTN BUZZTIME, INC. AND SUBSIDIARIES
RECONCILIATION of GAAP TO NON-GAAP
(unaudited)
(In thousands)
A schedule reconciling the Company's consolidated net (loss) income calculated in accordance with GAAP to EBITDA is included in the supplemental table below. The Company defines EBITDA as earnings before interest, taxes, depreciation and amortization. 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) income per GAAP (in thousands) to EBITDA:
Three months ended Nine months ended
September 30,
September 30,
2019 2018 2019 2018
Net (loss) income per GAAP $(351 ) $222 $(754 ) $(311 )
Interest expense, net 60 118 196 305
Income tax provision 19 10 30 36
Depreciation and amortization 737 732 2,191 2,068
Total EBITDA $465 $1,082 $1,663 $2,098
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SOURCE NTN Buzztime, Inc.
