Snap Interactive Reports Third Quarter 2017 Results

NEW YORK, NY / ACCESSWIRE / November 7, 2017 / Snap Interactive, Inc. ("SNAP," the "Company," "we," "our," or "us") (OTCQB: STVI), a leading provider of live video social networking and interactive dating applications, today announced financial and operational results for the quarter ended September 30, 2017.

Presentation for Merger:

On October 7, 2016, we completed our previously announced merger (the "AVM Merger") with A.V.M. Software ("AVM"). The Merger has been accounted for as a "reverse merger" under the acquisition method of accounting for business combinations with AVM being treated as the accounting acquirer of SNAP. Accordingly, the financial results included in this release reflect the operations of AVM for the period of January 1, 2016 through September 30, 2016, and the operations of the post-AVM Merger Company for the period of January 1, 2017 through September 30, 2017.

Third Quarter 2017 Financial Highlights:

  • Reported total revenues of $5.9 million, a 27.5% increase as compared to the third quarter of 2016, driven primarily by the completion of the AVM Merger;
  • Subscription revenues increased 30.2% as compared to the same period last year, driven primarily by the completion of the AVM Merger;
  • Net loss from operations was approximately $2.0 million for the quarter ended September 30, 2017, which included $604 thousand of one-time expenses primarily related to legal and consulting fees for the proposed LiveXLive merger, and a one-time payroll tax expense related to the AVM Merger;
  • Adjusted EBITDA was approximately $(1.1) million for the quarter ended September 30, 2017, which included $604 thousand of one-time expenses primarily related to legal and consulting fees for the proposed LiveXLive merger, and a one-time payroll tax expense related to the AVM Merger; and
  • Cash flow from the core businesses helped fund growth investments and our new product launch.

Third Quarter 2017 Business Highlights:

  • Continued product development investment through our Innovation Lab to build on our technology and commercial platform as we begin to launch growth initiatives in the live video and live streaming markets;
  • Finalized product development work for the most significant product launch in recent company history with the rollout of Camfrog Live in October 2017 - providing "one-to-many" live video streaming capabilities with new monetization opportunities for content creators;
  • Substantially finished work on a new live video chat consumer application;
  • Completed the commercial launch of 50more, a new dating application targeted at the fast-growing market of users 50 years and older;
  • Signed an exclusive advertising operations partnership with a full-service digital advertising and media company, with the goal of maximizing advertising revenue;
  • Expanded the relationship with our leading payment processor to allow bitcoin payment processing on Camfrog and Tinychat, with plans to continue pursuing further cryptocurrency and blockchain technology opportunities; and
  • Continued merger integration efforts to streamline the business.

Third Quarter 2017 Financial Overview (in thousands)

Current quarter compared to same quarter prior year:

Three Months Ended
September 30,
GAAP Results (unaudited)
2017
2016
Change
Subscription revenue
 $ 5,447 $ 4,182 30.2 %
Advertising revenue
 $ 480 $ 466 3.0 %
Total revenues
 $ 5,927 $ 4,648 27.5 %
Net loss
 $ (2,004 ) $ 274 (831.4 )%
Net cash used in operating activities
 $ (1,281 ) $ 407 (414.7 )%
Financial Metrics (unaudited)
Bookings
 $ 5,471 $ 2,624 108.5 %
Adjusted EBITDA (a non-GAAP measure)
 $ (1,133 ) $ 71 1,695.8 %

Year-to-date versus last year same period

Nine Months Ended
September 30,
GAAP Results (unaudited)
2017
2016
Change
Subscription revenue
 $ 17,414 $ 12,443 40.0 %
Advertising revenue
 $ 1,472 $ 1,498 (1.7 )%
Total revenues
 $ 18,886 $ 13,941 35.5 %
Net loss
 $ (4,528 ) $ (428 ) 957.9 %
Net cash provided by (used in) operating activities
 $ (660 ) $ 302 (318.5 )%
Financial Metrics (unaudited)
Bookings
 $ 17,209 $ 12,091 42.3 %
Adjusted EBITDA (a non-GAAP measure)
 $ (1,881 ) $ 53 (3,649.1 )%

Recent Developments:

Innovation Lab Developments

In a significant new product launch, the Company introduced Camfrog Live, an enhancement to its Camfrog video social networking application, in October 2017. While Camfrog has historically enabled users to connect in video-enabled chat rooms on a many-to-many basis, Camfrog Live extends the range of content available to Camfrog users by creating a platform for amateur and established live video content creators. Camfrog Live offers each content creator his or her own live channel and equips them with monetization tools and revenue share eligibility.

"In launching the Camfrog Live video streaming entertainment service, SNAP is tapping into a multi-billion dollar global market for live streaming and joining the ranks of industry players such as Momo, YouNow, and Bigo Live," commented Alex Harrington, Chief Executive Officer of SNAP. "Camfrog will host live streaming video content creators and influencers to create a more compelling product experience, and these users have a monetary incentive to use their social media reach to drive adoption of our application. The Company believes one-to-many live streaming has applications across its portfolio of products and intends to roll out this capability on Paltalk in the near future."

The live streaming project is one of several initiatives in SNAP's Innovation Lab, which the Company founded in 2017 to build new business opportunities on top of its significant live video technology and commercial platform. Also in progress is a multiparty video chat application that is currently expected to be due for release in the fourth quarter. Finally, the Company is exploring opportunities to integrate blockchain and cryptocurrency applications in its business. On July 31, 2017, the Company announced that certain products were accepting bitcoin for payment, and SNAP management envisions other near term opportunities to integrate blockchain technology.

Terminated LiveXLive Merger Agreement

On October 31, 2017, the Company terminated its previously announced merger agreement with LiveXLive Media, Inc. ("LiveXLive"), pursuant to which it would have been acquired by LiveXLive. The merger agreement was terminated by SNAP due to certain conditions of the agreement that were not fulfilled as of October 27, 2017, which relieved SNAP of its obligations under the agreement. No termination fee is payable by SNAP in connection with the termination of the merger agreement.

Jason Katz, SNAP's Chairman, commented, "We believe that SNAP's prospects as a stand-alone company remain strong, and we continue to innovate in its core business, live video social networking applications. As we look into the future, we see new business models, such as live streaming, and new technologies, such as blockchain, creating value enhancement for current products and new product opportunities."

Liquidity and Capital Resources

  • SNAP ended the quarter with approximately $3.3 million in cash and cash equivalents and no debt, with cash and cash equivalents decreasing from December 31, 2016 by approximately $862 thousand;
  • Based on cost reduction initiatives completed to date in 2017, we expect to realize over $3MM in expense savings in 2018; and
  • Management believes the Company has sufficient working capital to fund operations, R&D and organic growth initiatives.

Judy Krandel, SNAP's Chief Financial Officer, commented, "During the quarter, we made great progress optimizing our business model in a way that we expect will enhance both operational consistency and profitability going forward. Notwithstanding the significant one-time expenses we incurred this quarter that were primarily related to the LiveXLive merger and the AVM Merger, we have taken over $3 million of annualized costs out of the business without affecting our productivity since the start of 2017. Our goal was to establish a more streamlined operational model in order to preserve our balance sheet and support future product launches, and we believe we have primarily completed that goal."

Quarterly Results Conference Call

SNAP will host a conference call and live webcast to discuss these results today at 4:30pm Eastern Time. To access the call, please dial 1-888-539-3686 (toll-free) or 1-719-325-2480. The conference call will also be webcast live on the Investor Relations section of the SNAP website at http://www.snap-interactive.com/investor-relations/.

A replay of the webcast will be archived on the Investor Relations section of the SNAP website beginning shortly after the call. A telephone replay of the call will also be available following the call until November 21, 2017, and may be accessed via telephone by dialing 1-844-512-2921 for the U.S. (or 1-412-317-6671 outside the United States) and entering passcode: 3963913.

About Snap Interactive, Inc.

Snap Interactive, Inc. is a leading provider of live video social networking and interactive dating applications. SNAP has a diverse product portfolio consisting of nine products, including Paltalk and Camfrog, which together host one of the world's largest collections of video-based communities, and FirstMet, a prominent interactive dating brand serving users 35 and older. The Company has a long history of technology innovation and holds 26 patents related to video conferencing and online gaming.

For more information, please visit http://www.snap-interactive.com.

To be added to our distribution list, please visit http://www.snap-interactive.com/investor-relations/investor-alerts.

The contents of our websites are not part of this press release, and you should not consider the contents of these websites in making an investment decision with respect to our common stock.

IR Contact:

[email protected]

Forward-Looking Statements

This press release contains "forward-looking statements." Such statements may be preceded by the words "intends," "may," "will," "plans," "expects," "anticipates," "projects," "predicts," "estimates," "aims," "believes," "hopes," "potential" or similar words. Forward-looking statements are not guarantees of future performance, are based on certain assumptions and are subject to various known and unknown risks and uncertainties, many of which are beyond the Company's control, and cannot be predicted or quantified and consequently, actual results may differ materially from those expressed or implied by such forward-looking statements. Such risks and uncertainties include, without limitation, risks and uncertainties associated with general economic, industry and market sector conditions; the ability to effectively integrate the operations of the Company and AVM; user acceptance of our updated applications; the Company's ability to institute corporate governance standards or achieve compliance with national securities exchange listing requirements; the Company's future growth and the ability to obtain additional financing to implement the Company's growth strategy; the ability to increase or recognize revenue, decrease expenses and increase the number of active subscribers, new subscription transactions or monthly active users; the ability to enter into new advertising agreements; the Company's ability to generate positive cash flow from operations; the ability to diversify new user acquisition channels or improve the conversion of users to paid subscribers; the ability to anticipate and respond to changing user and industry trends and preferences; the intense competition in the online dating marketplace; the ability to release new applications or derive revenue from new applications; and circumstances that could disrupt the functioning of the Company's applications. More detailed information about the Company and the risk factors that may affect the realization of forward-looking statements is set forth in the Company's filings with the Securities and Exchange Commission ("SEC"), including the Company's most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Investors and security holders are urged to read these documents free of charge on the SEC's website at http://www.sec.gov.

All forward-looking statements speak only as of the date on which they are made. The Company undertakes no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement was made, except to the extent required by applicable securities laws.

SNAP INTERACTIVE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

September 30,
2017
December 31,
2016
(unaudited)
Assets
Current assets:
Cash and cash equivalents
$
3,300,267
$
4,162,596
Credit card holdback receivable
157,250
172,169
Accounts receivable, net of allowances and reserves of $46,858 and $57,674, respectively
529,593
958,695
Prepaid expense and other current assets
472,684
1,047,483
Total current assets
4,459,794
6,340,943
Property and equipment, net
635,160
793,305
Goodwill
13,086,472
14,304,667
Intangible assets, net
4,341,630
5,605,193
Other receivables
51,814
82,435
Other assets
66,807
397,608
Total assets
$
22,641,677
$
27,524,151
Liabilities and stockholders' equity
Current liabilities:
Accounts payable
$
1,961,950
$
1,665,831
Accrued expenses and other current liabilities
689,022
472,406
Deferred subscription revenue
2,624,018
2,828,827
Total current liabilities
5,274,990
4,967,064
Deferred rent, net of current portion
-
261,286
Deferred tax liability
-
1,452,339
Total liabilities
5,274,990
6,680,689
Commitments and Contingencies
Stockholders' equity:
Common stock, $0.001 par value, 25,000,000 shares authorized; and 6,719,199 and 6,714,915 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively
6,719
6,715
Additional paid-in capital
16,916,791
15,865,568
Retained earnings
443,177
4,971,179
Total stockholders' equity
17,366,687
20,843,462
Total liabilities and stockholders' equity
$
22,641,677
$
27,524,151

SNAP INTERACTIVE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

Three Months Ended
September 30,
Nine Months Ended
September 30,
2017
2016
2017
2016
Revenues:
Subscription revenue
$
5,447,119
$
4,181,950
$
17,413,511
$
12,443,530
Advertising revenue
480,356
465,998
1,472,505
1,497,683
Total revenues
5,927,475
4,647,948
18,886,016
13,941,213
Costs and expenses:
Cost of revenue
1,228,198
1,120,788
3,753,522
3,746,847
Sales and marketing expense
1,944,488
862,639
6,310,931
2,724,703
Product development expense
2,217,777
1,864,430
6,635,561
6,384,620
General and administrative expense
2,549,112
867,900
6,735,737
1,884,794
Total costs and expenses
7,939,575
4,715,757
23,435,751
14,740,964
Loss from operations
(2,012,100
)
(67,809
)
(4,549,735
)
(799,751
)
Interest income, net
7,765
-
39,643
802
Other (expense) income, net
-
243
(17,910
)
30,000
Loss before provision for income taxes
(2,004,335
)
(67,566
)
(4,528,002
)
(768,949
)
Provision for income taxes
-
341,366
-
341,366
Net (loss) income
$
(2,004,335
)
$
273,800
$
(4,528,002
)
$
(427,583
)
Net (loss) income per share of common stock:
Basic and diluted
$
(0.31
)
$
0.22
$
(0.70
)
$
(0.35
)
Weighted average number of shares of common stock used in calculating net loss per share of common stock:
Basic and diluted
6,452,292
1,233,996
6,449,572
1,233,996

SNAP INTERACTIVE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

Nine Months Ended
September 30,
2017
2016
Cash flows from operating activities:
Net loss
$
(4,528,002
)
$
(427,583
)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation of property and equipment
355,348
321,167
Amortization of intangible assets
1,263,563
413,317
Loss on disposal of property and equipment
17,074
-
Stock-based compensation expense
1,033,143
118,001
Common stock issued for services
19,800
-
Cancellation of common stock
(1,716
)
-
Bad debt expense
79,486
-
Deferred tax asset
-
(341,366
)
Changes in operating assets and liabilities:
Credit card holdback receivable
14,919
138,800
Accounts receivable
349,616
289,947
Other assets
20,361
(50,519
)
Prepaid expenses and other current assets
574,799
(188,607
)
Accounts payable, accrued expenses and other current liabilities
575,510
380,632
Deferred rent
4,775
-
Deferred subscription revenue
(438,953
)
(352,215
)
Net cash (used in) provided by operating activities
(660,277
)
301,574
Cash flows from investing activities:
Purchase of property and equipment
(214,277
)
(157,897
)
Return of security deposit
75,000
-
Net cash used in investing activities
(139,277
)
(157,897
)
Cash flows from financing activities:
Payments of capital lease obligations
(62,775
)
-
Net cash used in financing activities
(62,775
)
-
Net (decrease) increase in cash and cash equivalents
(862,329
)
143,677
Balance of cash and cash equivalents at beginning of period
4,162,596
6,676,557
Balance of cash and cash equivalents at end of period
$
3,300,267
$
6,820,234
Supplemental disclosure of cash flow information:
Cash paid in interest
$
12,899
$
560
Cash paid in taxes
$
26,210
$
-

SNAP INTERACTIVE, INC.
RECONCILIATION OF GAAP TO NON-GAAP RESULTS
(unaudited)

Three Months Ended
Nine Months Ended
September 30,
September 30,
2017
2016
2017
2016
Reconciliation of Net (loss) income to Adjusted EBITDA:
Net (loss) income
$
(2,004,335
)
$
273,800
$
(4,528,002
)
$
(427,583
)
Interest (income), net
(7,765
)
-
(39,643
)
(802
)
Other expense (income), net
-
(243
)
17,910
(30,000
)
Income tax (benefit)
-
(341,366
)
-
(341,366
)
Depreciation and amortization expense
522,988
132,882
1,618,911
734,484
Loss on disposal of property and equipment
17,074
-
17,074
-
Stock-based compensation expense
338,856
6,250
1,033,143
118,001
Adjusted EBITDA
$
(1,133,182
)
$
71,323
$
(1,880,607
)
$
52,734

Non-GAAP Financial Measures and Key Metrics

The Company has provided in this release certain non-GAAP financial measures, including Adjusted EBITDA, and other key metrics, including bookings, to supplement the condensed consolidated financial statements, which are prepared in accordance with generally accepted accounting principles in the United States ("GAAP"). The Company defines Adjusted EBITDA as net loss adjusted to exclude interest income (expense), net, depreciation and amortization expense, gain (loss) on change in fair value of derivative liabilities, loss on disposal of fixed assets and stock-based compensation expense. The Company calculates bookings as subscription revenue recognized during the period plus the change in deferred subscription revenue recognized during the period.

Management uses these financial metrics internally in analyzing the Company's financial results to assess operational performance and to determine the Company's future capital requirements. The presentation of this financial information is not intended to be considered in isolation or as a substitute for the financial information prepared in accordance with GAAP. The Company believes that both management and investors benefit from referring to these financial metrics in assessing our performance and when planning, forecasting and analyzing future periods. The Company believes these financial metrics are useful to investors and others to understand and evaluate the Company's operating results and it allows for a more meaningful comparison between the Company's performance and that of competitors.

Our use of Adjusted EBITDA has limitations as an analytical tool, and you should not consider this performance measure in isolation from or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:

  • Adjusted EBITDA does not reflect cash capital expenditures for assets underlying depreciation and amortization expense that may need to be replaced or for new capital expenditures;
  • Adjusted EBITDA does not reflect our working capital requirements;
  • Adjusted EBITDA does not consider the potentially dilutive impact of stock-based compensation; and
  • Other companies, including companies in our industry, may calculate Adjusted EBITDA differently, which reduces its usefulness as a comparative measure.

Because of these limitations, you should consider these financial metrics along with other financial performance measures, including total revenues, subscription revenue, deferred revenue, net income (loss), cash and cash equivalents, restricted cash, net cash used in operating activities and our financial results presented in accordance with GAAP.