SOURCE: SNAP Interactive, Inc.

Snap Interactive, Inc.

March 14, 2016 16:49 ET

Snap Interactive Reports Fourth Quarter and Full Year 2015 Results

NEW YORK, NY--(Marketwired - Mar 14, 2016) - 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.

Financial Highlights

Current year compared to prior year:

           
  Years Ended        
  December 31,        
GAAP Results 2015     2014     Change  
  Subscription revenue $ 11,568,273     $ 12,769,012     (9.4 )%
  Advertising revenue $ 452,757     $ 789,678     (42.7 )%
Total revenues $ 12,021,030     $ 13,558,690     (11.3 )%
                     
Sales and marketing expense $ 5,414,563     $ 5,742,935     (5.7 )%
Net loss $ (1,297,852 )   $ (1,657,877 )   (21.7 )%
Net cash used in operating activities $ (1,211,919 )   $ (167,574 )   623.2 %
                     
Non-GAAP Results (unaudited)                    
Bookings $ 11,122,060     $ 12,894,316     (13.7 )%
Adjusted EBITDA $ (66,313 )   $ (521,842 )   (87.3 )%
                     

Current quarter compared to same quarter prior year:

           
  Three Months Ended        
  December 31,        
GAAP Results (unaudited) 2015     2014     Change  
  Subscription revenue $ 2,571,373     $ 3,239,666     (20.6 )%
  Advertising revenue $ 148,342     $ 92,162     61.0 %
Total revenues $ 2,719,715     $ 3,331,828     (18.4 )%
                     
Sales and marketing expense $ 1,190,035     $ 1,445,835     (17.7 )%
Net loss $ (359,040 )   $ (247,553 )   45.0 %
Net cash provided by (used in) operating activities $ (25,582 )   $ 220,659     N/A  
                     
Non-GAAP Results (unaudited)                    
Bookings $ 2,421,890     $ 3,090,652     (21.6 )%
Adjusted EBITDA $ 91,192     $ 969     9,310.6 %
                     

Management Commentary

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:

   
  Months Ended
  November   December   January
  2015   2015   2016
  Bookings (unaudited) $ 773,648   $ 822,526   $ 850,620
                 

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."

About Snap Interactive, Inc. 

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.

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

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.

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 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 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.  
CONSOLIDATED BALANCE SHEETS  
   
    December 31,
2015
    December 31,
2014
 
                 
Assets                
Current assets:                
  Cash and cash equivalents   $ 2,131,262     $ 1,138,385  
  Credit card holdback receivable     165,853       648,759  
  Accounts receivable, net of allowances and reserves of $55,468 and $42,533, respectively     206,547       221,128  
  Short term security deposits     -       115,104  
  Prepaid expense and other current assets     108,871       93,542  
Total current assets     2,612,533       2,216,918  
Fixed assets and intangible assets, net     387,617       563,123  
Notes receivable     81,123       78,520  
Long term security deposits     279,410       135,000  
Investments     200,000       200,000  
Total assets   $ 3,560,683     $ 3,193,561  
                 
Liabilities and stockholders' deficit                
Current liabilities:                
  Accounts payable   $ 1,065,662     $ 1,074,345  
  Accrued expenses and other current liabilities     367,018       1,062,836  
  Notes payable     -       400,000  
  Deferred subscription revenue     1,505,862       1,952,075  
  Deferred advertising revenue     -       13,427  
Total current liabilities     2,938,542       4,502,683  
Deferred rent, net of current portion     99,595       -  
Convertible note payable, net of discount     1,636,585       -  
Derivative liabilities     473,425       23,425  
Capital lease obligations, net of current portion     75,560       149,055  
Total liabilities     5,223,707       4,675,163  
Commitments and Contingencies                
Stockholders' deficit:                
Preferred stock, $0.001 par value, 10,000,000 shares authorized, none issued and outstanding     -       -  
Common stock, $0.001 par value, 100,000,000 shares authorized, 50,007,826 and 49,507,826 shares issued, respectively, and 39,692,826 and 39,182,826 shares outstanding, respectively     39,693       39,183  
Additional paid-in capital     12,974,409       11,858,489  
Accumulated deficit     (14,677,126 )     (13,379,274 )
Total stockholders' deficit     (1,663,024 )     (1,481,602 )
Total liabilities and stockholders' deficit   $ 3,560,683     $ 3,193,561  
                 
                 
                 
SNAP INTERACTIVE, INC.  
CONSOLIDATED STATEMENTS OF OPERATIONS  
   
    For the Years Ended
December 31,
 
    2015     2014  
Revenues:                
  Subscription revenue   $ 11,568,273     $ 12,769,012  
  Advertising revenue     452,757       789,678  
Total revenue     12,021,030       13,558,690  
Costs and expenses:                
  Cost of revenue     1,702,321       1,860,727  
  Sales and marketing expense     5,414,563       5,742,935  
  Product development expense     2,103,300       2,926,802  
  General and administrative expense     4,200,378       4,772,328  
  Total operating costs and expenses     13,420,562       15,302,792  
Loss from Operations     (1,399,532 )     (1,744,102 )
Interest expense, net     (1,538,320 )     (30,900 )
Change in fair value of derivative liabilities     1,640,000       117,125  
Net loss   $ (1,297,852 )   $ (1,657,877 )
                 
Loss per share of common stock:                
Basic and diluted   $ (0.03 )   $ (0.04 )
  Weighted average number of common shares used in calculating net loss per share of common stock:                
Basic and diluted     39,627,264       39,169,196  
                 
                 
                 
SNAP INTERACTIVE, INC.  
CONSOLIDATED STATEMENTS OF CASH FLOWS  
   
    Years Ended
December 31,
 
    2015     2014  
Cash flows from operating activities:                
Net loss   $ (1,297,852 )   $ (1,657,877 )
Adjustments to reconcile net loss to net cash used in operating activities:                
Depreciation and amortization     167,161       181,675  
Lease obligation interest expense     -       3,473  
Stock-based compensation expense     1,086,430       1,040,585  
Loss on disposal of fixed assets     79,628       -  
Amortization of debt issuance cost     139,406       3,958  
Amortization of debt discount     932,219       -  
Change in fair value of derivative liabilities     (1,640,000 )     (117,125 )
Changes in operating assets and liabilities:                
  Restricted cash     -       490,315  
  Credit card holdback receivable     482,906       (416,495 )
  Accounts receivable     14,581       164,242  
  Security deposits     (85,554 )     (250,104 )
  Prepaid expenses and other current assets     (16,120 )     22,113  
  Accounts payable, accrued expenses and other current liabilities     (703,802 )     567,579  
  Deferred rent     88,718       (38,644 )
  Deferred subscription revenue     (446,213 )     125,304  
  Deferred advertising revenue     (13,427 )     (286,573 )
  Net cash used in operating activities     (1,211,919 )     (167,574 )
Cash flows from investing activities:                
Purchase of property and equipment     (77,283 )     (3,731 )
Proceeds from sale of fixed assets     6,000       -  
Security deposits for property and equipment     56,248       -  
Purchase of non-marketable equity securities     -       (100,000 )
Repayment (issuance) to employees of note receivable and accrued interest     (2,603 )     92,046  
Net cash used in investing activities     (17,638 )     (11,685 )
Cash flows from financing activities:                
Payments of capital lease obligations     (63,317 )     (9,708 )
Repayment of promissory notes     (400,000 )     -  
Payment of financing costs     (314,249 )     -  
Proceeds from issuance of convertible promissory note     3,000,000       400,000  
Net cash provided by financing activities     2,222,434       390,292  
Net increase in cash and cash equivalents     992,877       211,033  
Balance of cash and cash equivalents at beginning of year     1,138,385       927,352  
Balance of cash and cash equivalents at end of year   $ 2,131,262     $ 1,138,385  
Supplemental disclosure of cash flow information:                
Cash paid in interest   $ 316,000     $ -  
Cash paid in taxes   $ -     $ -  
                 
Non-cash investing and financing activities:                
Compound embedded derivative under the Note and Securities Purchase Agreement recorded as derivative liabilities (See Note 5)   $ 1,748,000     $ -  
Warrants issued under the Advisory Services Agreement as additional consideration for the Note and recorded as derivative liabilities (See Note 5)   $ 342,000     $ -  
Warrants issued for debt issuance costs   $ -     $ 4,750  
Common stock issued under the Advisory Services Agreement as additional consideration for the Note   $ 30,000     $ -  
Equipment acquired under capital lease obligations   $ -     $ 218,605  
                 
                 
                 
SNAP INTERACTIVE, INC
RECONCILIATION OF GAAP TO NON-GAAP RESULTS
(unaudited)
 
    Three Months Ended     For the Years Ended  
    December 31,     December 31,  
    2015     2014     2015     2014  
Reconciliation of Subscription Revenue to Bookings                        
  Subscription revenue   $ 2,571,374     $ 3,239,666     $ 11,568,273     $ 12,769,012  
  Change in deferred subscription revenue     (149,484 )     (149,014 )     (446,213 )     125,304  
Bookings   $ 2,421,890     $ 3,090,652     $ 11,122,060     $ 12,894,316  
                                 
                                 
    Three Months Ended
December 31,
    For the Years Ended
December 31,
 
    2015     2014     2015     2014  
Reconciliation of Net loss to Adjusted EBITDA:                                
  Net loss   $ (359,040 )   $ (247,553 )   $ (1,297,852 )   $ (1,657,877 )
  Interest expense, net     437,954       15,763       1,538,320       30,900  
  Depreciation and amortization expense     35,578       51,534       167,161       181,675  
  Change in fair value of derivative liabilities     (360,000 )     (70,275 )     (1,640,000 )     (117,125 )
  Loss on disposal of fixed assets     -       -       79,628       -  
  Stock-based compensation expense     336,700       251,500       1,086,430       1,040,585  
Adjusted EBITDA   $ 91,189     $ 969     $ (66,313 )   $ (521,842 )
           
           
        Months Ended  
        November     December     January  
        2015     2015     2016  
Reconciliation of Subscription Revenue to Bookings                      
  Subscription revenue       $ 844,268     $ 866,165     $ 865,896  
  Change in deferred subscription revenue         (70,620 )     (43,639 )     (15,276 )
Bookings       $ 773,648     $ 822,526     $ 850,620  
                             

Non-GAAP Financial Measures

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.

Contact Information