Tapinator Reports First Quarter 2019 Financial Results

NEW YORK, NY / ACCESSWIRE / May 15, 2019 / Tapinator, Inc. (OTCQB: TAPM), a developer and publisher of category leading apps for mobile platforms, today announced financial results for the period ended March 31, 2019, and the filing of its quarterly report on Form 10-Q for the period ended March 31, 2019 and 2018. The quarterly report may be found at http://www.sec.gov. The results provided below replaces, in their entirety, any guidance or projections previously issued by the Company.

Ilya Nikolayev, Chief Executive Officer, stated, "Tapinator had a strong start to the year with solid bookings growth led by our Category Leading Apps. Our previously announced strategy shift from Rapid Launch Games to Category Leading Apps has now been fully implemented. We believe we have emerged from this shift in a much stronger position, with respect to both the longevity and future growth opportunity from these select, best-in-class mobile software applications.

In the first quarter of 2019, we achieved the following major product milestones:

• We completed the very successful global launch of Crypto Trillionaire on iOS. The game received prominent featuring by Apple and was very well received by players (it enjoys a 4.8 out of 5.0 customer review score). We plan to invest significantly in future product updates and marketing with the intention of making Crypto Trillionaire a true category leader within the idle tapper genre across all major mobile platforms.

• We completed the successful soft launch of My Horoscope on iOS, our new astrology application that monetizes exclusively through subscriptions, and currently focuses on the areas of Horoscopes, Birth Charts, Compatibility and Numerology. According to IBIS World, a publisher of business intelligence, supernatural and psychic services were a $2.0 billion market in 2018, but the industry has yet to significantly enter the mobile age. The My Horoscope application features a clean, minimalistic design that appeals to both a younger and middle-aged demographic alike. We believe My Horoscope is a unique addition to the App Store that we will be able to grow into an evergreen Category Leading App. We are investing significantly in continued product development, and we are planning the global launch of My Horoscope, supported by a significant marketing effort, in the second or third quarter of this year.

• At the end of the first quarter, we launched a major update to Video Poker Classic, the top video poker game on mobile. Our new 2.0 version brings multi-hand capability, a popular casino feature, to the game's core single-hand gameplay. With this new version, Video Poker Classic now has the richest offering of any video poker title on mobile devices, in terms of game types, gameplay formats and overall functionality.

We are also excited to bring a new social casino title to market in the fourth quarter of this year. The product will feature extremely high-end graphics, proven metagame systems and completely unique gameplay, all within the well-established and highly lucrative social casino genre. The product is based upon an IP license that we have secured from a real money casino operator. We will be providing more detail about this product as we get closer to our launch date."

First Quarter 2019 Financial Highlights (unaudited):

*A table has been included later 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.

Andrew Merkatz, President and Chief Financial Officer, said, "This is an exciting time for Tapinator and the mobile apps industry at large. Our financial performance from our Category Leading Apps continues to be solid and we believe our bookings will continue to benefit as we stack our new and updated apps on top of our core business throughout the year. We are pleased about our performance in Q1, excited about what's to come in 2019 and believe that we remain on track to reach our financial goals."

Current Outlook

We continue to have conviction regarding our Category Leading Apps business and, therefore, for our business in its entirety. The strategic changes we implemented over the past 24 months, shifting from Rapid-Launch Games to Category Leading Apps now appear to have been prudent. Specifically, we believe we will return to company-wide bookings growth in 2019 while continuing to deliver strong double digit revenue and bookings growth within our Category Leading Apps. This growth is expected to be derived from our seasoned franchises such as Video Poker Classic and Solitaire Dash, combined with recently launched titles such as Crypto Trillionaire and My Horoscope, and from our new social casino title that we expect to launch during the fourth quarter of 2019.

*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 intangible assets previously acquired, acquisition-related transaction expenses, contingent consideration fair value adjustments and restructuring expense;
• Adjusted EBITDA does not reflect income tax expense;
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 (unaudited)