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NTN Buzztime, Inc. Reports Second Quarter 2019 Results

- Signs Repeat Customer for $3 Million Deal -

- Increases Footprint with Mobile App -

CARLSBAD, Calif., Aug. 9, 2019 /PRNewswire/ -- NTN Buzztime, Inc. (NYSE American: NTN), reported financial results for the second quarter ended June 30, 2019. 

NTN Buzztime Company Logo. (PRNewsFoto/NTN Buzztime, Inc.) (PRNewsfoto/NTN Buzztime, Inc.)

"During the second quarter, Buzztime Entertainment improved net loss compared to the prior year period and delivered its 13th consecutive quarter of positive EBITDA and gained traction on three important growth initiatives," said Ram Krishnan, NTN Buzztime CEO. "Upon test-marketing our new capital-light product, called Buzztime Basic, we signed over 80 locations in the first 75 days after it was released. After releasing a new mobile app, we achieved over 37,000 downloads. We launched our new ad platform in limited beta and began seeing transactions on the open exchange, both on a local and national basis. In addition, we completed a Nielsen study designed to measure the value of our audience, revealing we have one of the largest place-based advertising networks in the country and confirming we have a great market opportunity."

"The investments we made in the tablet platform continue to pay off in new markets. We've secured a second order from our jail partner that provides for $3.0 million of revenue through 2020 and continue to see momentum in our hardware and platform segment. In the third quarter, we will reduce our SG&A run rate to help ensure our prudent use of capital and keep our investments focused. Our new products present an exciting trajectory for growth, and we believe we will be better positioned to capture these market opportunities down the road," concluded Mr. Krishnan.

Financial Results for the Second Quarter Ended June 30, 2019
Total revenues were $5.2 million, compared to $4.8 million in the first quarter of 2019 and $5.7 million in the second quarter of 2018. The year over year decrease reflects lower subscription and professional development revenue, partially offset by increases in advertising revenue. Direct costs were $1.7 million, compared to $1.9 million for the same period in 2018. Gross margin was 67%, compared to 66% for the same period in 2018, reflecting decreased equipment sales in the current period that typically carry lower gross margins. Selling, general and administrative expense decreased to $3.4 million, compared to $3.7 million in the prior year quarter, reflecting cost management measures. Net loss attributable to common shareholders was $98,000, or $0.03 per share, improved from a net loss attributable to common shareholders of $132,000, or $0.05 per share, in the prior year quarter. Net loss was $90,000, improved from a net loss of $124,000 in the prior year quarter.  EBITDA was $686,000, compared to $691,000 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.

Metric Review for the Quarter Ended June 30 , 2019
The site count was 2,609 at June 30, 2019, compared to 2,632 at March 31, 2019. Management anticipates that site count will continue to fluctuate.

Liquidity
Cash, cash equivalents and restricted cash was $3.0 million at June 30, 2019, compared to $2.8 million at December 31, 2018. For the first six months in 2019, cash flow from operations was $1.3 million, increasing from $239,000 in the same period last year.  

Conference Call
Management will review the results on a conference call with a live question and answer session today, August 9, 2019, at 4:30 p.m. ET. To access the call, please use passcode 8597009 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 August 16, 2019.

Forward-looking Statements
This release contains forward-looking statements that reflect management's current views of future events and operations, including statements regarding the ability of the company's new products to increase the company's growth, the impact of the company's planned reduction in selling, general and administrative expense, and management's view regarding the company's ability to capture market opportunities.  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 and changes in the law, 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.

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

June 30,

2019


December 31,

2018

Current Assets:

(unaudited)



Cash and cash equivalents

$       2,727


$       2,536

Restricted cash

51


50

Accounts receivable, net

732


1,143

Income taxes receivable

8


--

Site equipment to be installed

1,689


2,539

Prepaid expenses and other current assets

506


517

Total current assets

5,713


6,785





Restricted cash, long-term

200


200

Operating lease right-of-use assets

2,245


--

Fixed assets, net

3,845


4,667

Software development costs, net

2,464


2,018

Deferred costs

377


424

Goodwill

695


667

Other assets

100


103





Total assets

$     15,639


$     14,864





LIABILITIES AND SHAREHOLDERS' EQUITY




Current Liabilities:




Accounts payable

$           283


$           271

Accrued compensation

632


572

Accrued expenses

372


444

Sales taxes payable

67


87

Income taxes payable

--


1

Current portion of long-term debt

1,083


1,000

Current portion of obligations under operating leases

363


--

Current portion of obligations under financing leases

25


45

Current portion of deferred revenue

518


1,267

Other current liabilities

231


337

Total current liabilities

3,574


4,024





Long-term debt

2,235


2,729

Obligations under operating leases

3,090


--

Obligations under financing leases

31


41

Deferred revenue

17


30

Deferred rent

--


1,123

Other liabilities

25


--

Total liabilities

8,972


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 June 30, 2019 and December 31, 2018

1


1

Common stock, $0.005 par value, 15,000 shares authorized at June 30, 2019 and December 31, 2018; 2,882 and 2,875 shares issued at June 30, 2019 and December 31, 2018, respectively

14


14

Treasury stock, at cost, 10 shares at June 30, 2019 and December 31, 2018

(456 )


(456 )

Additional paid-in capital

136,648


136,552

Accumulated deficit

(129,805 )


(129,394 )

Accumulated other comprehensive income

265


200

Total shareholders' equity

6,667


6,917





Total liabilities and shareholders' equity

$     15,639


$     14,864

 

NTN BUZZTIME, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(unaudited)

(In thousands, except per share data)



Three months ended

June 30,


Six months ended

June 30,


2019


2018


2019


2018

Revenues








Subscription revenue

$    3,800


$    4,041


$    7,633


$   8,106

Hardware revenue

595


590


800


1,269

Other revenue

831


1,020


1,625


2,037

Total revenues

5,226


5,651


10,058


11,412









Operating expenses:








Direct operating costs (includes depreciation and amortization)

1,717


1,937


3,201


3,904

Selling, general and administrative

3,422


3,658


6,891


7,679

Depreciation and amortization (excluding depreciation and amortization included in direct costs

89


83


185


169

Total operating expenses

5,228


5,678


10,277


11,752

Operating loss

(2 )


(27 )


(219 )


(340 )

Other expense, net

(88 )


(73 )


(173 )


(167 )

Loss before income taxes

(90 )


(100 )


(392 )


(507 )

Income tax provision

--


(24 )


(11 )


(26 )

Net loss

(90 )


(124 )


(403 )


(533 )

Series A preferred stock dividend

(8 )


(8 )


(8 )


(8 )

Net loss attributable to common shareholders

$        (98 )


$      (132 )


$      (411 )


$     (541 )









Net loss per common share – basic and diluted

$     (0.03 )


$     (0.05 )


$     (0.14 )


$    (0.22 )









Weighted average shares outstanding – basic and diluted

2,870


2,514


2,868


2,512









Comprehensive loss:








Net loss

$        (98 )


$      (124 )


$      (403 )


$     (533 )

Foreign currency translations adjustment

32


(43 )


65


(91 )

Total comprehensive loss

$        (58 )


$      (167 )


$      (338 )


$     (624 )

 

NTN BUZZTIME, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(In thousands)



Six months ended

June 30,


2019


2018

Cash flows provided by operating activities:




Net loss

$     (403 )


$    (533)

Adjustments to reconcile net loss to net cash provided by operating activities:




Depreciation and amortization

1,454


1,336

Provision for doubtful accounts

27


36

Amortization of operating lease right-of-use assets

144


--

Scrap expense

4


28

Transfer of fixed assets to sales-type lease

6


10

Stock-based compensation

109


251

Amortization of debt issuance costs

5


17

Loss from disposition of equipment and capitalized software

16


23

Changes in assets and liabilities:




Accounts receivable

384


(108 )

Site equipment to be installed

465


(111 )

Operating lease liabilities

(58 )


--

Prepaid expenses and other liabilities

12


(176 )

Accounts payable and accrued expenses

(20 )


145

Income taxes

(10 )


14

Deferred costs

47


234

Deferred revenue

(866 )


(848 )

Deferred rent

--


(99 )

Other liabilities

23


20

Net cash provided by operating activities

1,339


239





Cash flows used in investing activities:




Capital expenditures

(79 )


(280 )

Capitalized software development expenditures

(639 )


(424 )

Net cash used in investing activities

(718 )


(704 )





Cash flows (used in) provided by financing activities:




Net proceeds from issuance of common stock related to registered direct offering

--


1,381

Payment on long-term debt

(417 )


(364 )

Principal payments on financing leases

(30 )


(88 )

Payment of preferred stockholder dividends

(8 )


(8 )

Tax withholding related to net share settlement of vested restricted stock units

(13 )


--

Net cash (used in) provided by financing activities

(468 )


921





Effect of exchange rate on cash

39


(49 )

Net increase in cash and cash equivalents

192


407

Cash, cash equivalents and restricted cash at beginning of period

2,786


3,378

Cash, cash equivalents and restricted cash at end of period

2,978


3,785

 

NTN BUZZTIME, INC. AND SUBSIDIARIES
RECONCILIATION of GAAP TO NON-GAAP
(unaudited)
(In thousands)

A schedule reconciling the Company's consolidated net loss 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 per GAAP (in thousands) to EBITDA:


Three months ended

June 30,


Six months ended

June 30,


2019


2018


2019


2018

Net loss per GAAP

$        (90 )


$      (124 )


$      (403 )


$      (533 )

Interest expense, net

69


94


136


187

Income tax provision

--


24


11


26

Depreciation and amortization

707


697


1,454


1,336

Total EBITDA

$       686


$       691


$    1,198


$    1,016

 

Cision

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