NEW YORK, NY — (Marketwired) — 03/14/16 — Snap Interactive, Inc. (“SNAP,” the “Company,” “we,” “our” or “us”) (OTCQB: STVI), a leading online dating provider, today announced financial and operational results for the quarter and year ended December 31, 2015.
Highlights:
Total revenues decreased 11.3% for the year ended December 31, 2015 as compared to 2014, due in part to a 5.7% decrease in investment in sales and marketing leading to lower subscription revenue, and a decrease in weighted average currency exchange rates in 2015 that, when compared to weighted average exchange rates in 2014, resulted in a 5.6% decrease in bookings;
Adjusted EBITDA for the year ended December 31, 2015 was approaching breakeven, with a loss of approximately $66 thousand, an improvement of approximately $456 thousand as compared to 2014;
The management and strategic transition launched in October 2015 delivered its first major milestone in March 2016, a relaunch of AYI under a new brand, FirstMet;
Following November 2015, the Company produced two consecutive months of growth in bookings, and preliminary February 2016 figures indicate a potential third consecutive month of growth;
As part of our renewed commitment to mobile, we rebuilt and re-introduced our FirstMet iPhone and Android mobile apps in March 2016, with the goal of reducing the cost of innovation on mobile platforms;
In May and December 2015 and again in March 2016, SNAP appointed high caliber independent directors to elevate its corporate governance practices; and
Cash and cash equivalents totaled approximately $2.1 million as of December 31, 2015, representing an increase of approximately $1.0 million from December 31, 2014, and approximately flat with the quarter ended September 30, 2015.
In 2015, we initiated a strategic review process to identify ways to unlock shareholder value. As a result, we developed a new company strategy centered around the proactive commercialization of our 30 million user database via the development of a portfolio of products that are cross-sold to our users. In addition, in the fourth quarter of 2015, we completed a management transition and appointed Alex Harrington as the Company–s Chief Executive Officer. Following the management transition, the Company pursued the following strategic initiatives for the remainder of 2015:
re-engage inactive users in the user database through several strategies, including a relaunch of AYI under a new brand;
cut back on AYI marketing to preserve capital for increased marketing investment leading into and following the rebrand to FirstMet;
continue to cut expenses to maintain cash levels and attempt to attain profitability, even at lower revenue levels; and
increase our commitment to mobile by relaunching our AYI mobile apps and transition marketing resources to mobile platforms.
Alex Harrington, SNAP–s Chief Executive Officer, commented, “I am pleased to say that the first order objectives we set forth in the management transition have all been accomplished. On March 3, 2016, we successfully rebranded AYI as FirstMet, a new, stronger brand designed to reengage inactive users and lower our cost of acquiring new users. Along with the debut of FirstMet, we rebuilt and relaunched the former AYI iPhone and Android apps using a more streamlined technology that will make it easier for us to continuously improve them. In addition, expense reductions of approximately $1.9 million for the year 2015 as compared to 2014 made it possible to increase cash balances over the latter half of 2015. In addition, Q3 and Q4 2015 contributed significantly higher Adjusted EBITDA relative to the same periods in 2014, even in the context of a managed decline in revenues.”
In addition, in December 2015, SNAP began achieving growth in its monthly bookings, ending a trend of declines that had lasted for several months. Although we have not completed our normal reporting procedures for determining our February 2016 results, preliminary figures indicate a third consecutive month of increases in bookings, which the Company believes to be a leading indicator of trends in GAAP revenues.
The following table presents recent monthly bookings:
In the quarter ended December 31, 2015 and in early 2016, the Company also appointed two independent directors, Neil J. Foster and Judy F. Krandel, to its Board. In regard to the appointments, Mr. Harrington said, “Neil is an accomplished senior executive in the Digital Media and Interactive Entertainment fields, and Judy is a noted small cap investment manager. They both add exceptional strength in advising the Company and providing the highest standard of corporate governance. Now that we have a majority of independent directors on our Board, we have cleared an important governance standard that places us one step closer to our goal of listing on a national securities exchange.”
The Company also grew activity on its new mobile app, The Grade, during the quarter ended December 31, 2015. With total cumulative swipes climbing to over 43 million at December 31, 2015, the fourth quarter of 2015 witnessed some of the highest levels of user activity ever on the app. However, beginning in December 2015, SNAP–s management decided to begin reallocating a portion of its marketing investment for The Grade to the rebranded FirstMet service, which produces substantially all revenue and cash flow for the Company. As a result of this reallocation of resources, user activity on The Grade will likely be negatively affected in 2016.
Advertising revenue was an area of growth in the fourth quarter of 2015, reflecting a 61% improvement over the comparable period in 2014. This improvement was driven by additional ad placements within SNAP media and optimizations increasing the revenue earned per impression. The Company believes advertising revenue has significant potential for growth in 2016.
Growth and New Initiatives
In 2016, the Company will seek to drive continued growth in bookings through the following initiatives:
launching a new dating product leveraging our existing product platform and the strength of our user database;
continuing to grow and improve our mobile platforms;
reengaging more inactive users in our large user database; and
driving more international growth through foreign language translations of our apps.
Mr. Harrington added, “Having only partially tapped the potential of our 30 million user database, we are excited about FirstMet and what it can mean for fueling subscription revenue growth in the business. We believe that the rebranding will provide a simple, fast way to reinvigorate growth in the product and reengage inactive users. In connection with the roll out, we have launched marketing campaigns to attract both new and existing customers. Moreover, with the rebranded FirstMet iPhone and Android apps, we have made mobile the focal point for innovation at the Company going forward. Finally, a new product launch anticipated for the third quarter of 2016 is expected to create an additional revenue opportunity for the Company.”
Liquidity and Cash Flow
Cash Balance: We ended the fourth quarter of 2015 with approximately $2.1 million of cash and cash equivalents on our balance sheet;
Cash Provided by (Used in) Operating Activities: The fourth quarter of 2015 was approximately cash flow neutral, with $26 thousand in cash consumed from operations activities; and
During the quarter, we continued to manage expenses in order to maintain a stable cash position. We anticipate having sufficient resources to launch our growth initiatives in the near future.
Mr. Harrington concluded, “2015 was a year of reinvention for SNAP. We appointed a new CEO, added three new members to the Board of Directors, grew our new product The Grade, rebranded the core product AYI as FirstMet, raised new capital and rebuilt and relaunched our mobile apps. We believe we have started the year auspiciously with two consecutive months and a projected third month of growth in bookings. We are proud of our accomplishments this year and expect that the foundations set in 2015 will lead to a strong 2016.”
Snap Interactive, Inc. develops, owns and operates dating applications for social networking websites and mobile platforms. The Grade is a patent-pending mobile dating application catering to high-quality singles. SNAP–s flagship brand, FirstMet (formerly AYI.com), is a multi-platform online dating site with a large user database of approximately 30 million users.
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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.
Facebook is a registered trademark of Facebook Inc. Apple, iTunes and iPhone are registered trademarks of Apple Inc. and App Store is a registered service mark of Apple Inc. Android and Google Play are registered trademarks of Google Inc. FirstMet and The Grade are trademarks and AYI.com is a registered trademark of Snap Interactive, Inc.
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 Company–s ability to institute corporate governance standards or achieve compliance with national 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 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 web site at .
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.
The Company has provided in this release certain non-GAAP financial information, including bookings and Adjusted EBITDA, to supplement the 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. Management uses these non-GAAP financial measures 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 non-GAAP financial measures in assessing our performance and when planning, forecasting and analyzing future periods. The Company believes these non-GAAP financial measures 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.
Some limitations of bookings and Adjusted EBITDA as financial measures include that:
Bookings does not reflect that we recognize subscription revenue from subscription fees and micro-transactions over the length of the subscription term or a two-month period, respectively;
Adjusted EBITDA does not (i) reflect cash capital expenditures for assets underlying depreciation and amortization expense that may need to be replaced or for new capital expenditures; (ii) working capital requirements; (iii) consider the potentially dilutive impact of stock-based compensation; (iv) reflect interest expense or interest payments on our outstanding indebtedness; and (v) reflect the change in fair value of warrants; and
Other companies, including companies in our industry, may calculate bookings or Adjusted EBITDA differently or choose not to calculate bookings or Adjusted EBITDA at all, which reduces their usefulness as comparative measures.
Because of these limitations, you should consider this non-GAAP financial information 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.
Adam Handelsman
212-518-7721
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