SOURCE: SNAP Interactive, Inc.

Snap Interactive, Inc.

August 13, 2015 17:59 ET

Snap Interactive Reports Results for the Quarter Ended June 30, 2015

NEW YORK, NY--(Marketwired - Aug 13, 2015) -  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 ended June 30, 2015.

Highlights:

  • Total revenues decreased 7.6% and subscription revenue decreased 2.4% for the second quarter of 2015 relative to the comparable period in 2014, however, total revenues slightly increased by approximately $2.0 thousand as compared to the first quarter of 2015;
  • SNAP incurred an operating loss of approximately $0.2 million, reflecting an improvement as compared to an operating loss of approximately $0.3 million for the comparable period in 2014;
  • Cash and cash equivalents totaled approximately $1.9 million as of June 30, 2015, representing an increase of approximately $0.8 million from December 31, 2014;
  • Generated positive Adjusted EBITDA of approximately $73.0 thousand, an improvement of approximately $11.0 thousand relative to the comparable period in 2014, and an improvement of approximately $685.0 thousand compared to the first quarter of 2015;
  • Active subscriber count was 98.0 thousand as of June 30, 2015 which was relatively flat compared to the same period in 2014; and
  • Increased user activity on The Grade, our new mobile dating application, reaching a cumulative usage milestone of more than 20.0 million swipes, as compared to cumulative usage of more than 8.0 million swipes as of March 31, 2015.

Financial Highlights

   
Current period compared with same period in prior year (unaudited):  
   
    Three Months Ended        
    June 30,        
Statement of Operations and Cash Flow Results   2015     2014     % Change  
Total revenue   $ 3,188,539     $ 3,450,010     (7.6 )%
Subscription revenue   $ 3,075,868     $ 3,151,002     (2.4 )%
Advertising and marketing expense   $ 1,338,070     $ 1,110,726     20.5 %
Net loss   $ (258,986 )   $ (259,678 )   (0.3 )%
Net cash used in operating activities   $ (393,872 )   $ (301,174 )   30.8 %
                       
Non-GAAP Results                      
Active subscribers (at period end)     98,000       98,000     0.0 %
Bookings   $ 2,918,409     $ 3,021,860     (3.4 )%
Adjusted EBITDA   $ 73,405     $ 61,746     18.9 %
                       
                       
   
Current period compared to prior period (unaudited):
 
   
    Three Months Ended        
Statement of Operations and Cash Flow Results   June 30,
2015
    March 31, 2015     % Change  
Total revenue   $ 3,188,539     $ 3,186,083     0.1 %
Subscription revenue   $ 3,075,868     $ 3,129,310     (1.7 )%
Advertising and marketing expense   $ 1,338,070     $ 1,726,097     (22.5 )%
Net loss   $ (258,986 )   $ (1,219,179 )   (78.8 )%
Net cash used in operating activities   $ (393,872 )   $ (1,052,770 )   (62.6 )%
                       
Non-GAAP Results                      
Active subscribers (at period end)     98,000       102,700     (4.6 )%
Bookings   $ 2,918,409     $ 3,157,566     (7.6 )%
Adjusted EBITDA   $ 73,405     $ (612,465 )   N/A  
                       
                       
               
Balance Sheet Results:
 
 
 
June 30,
2015
  December 31,
2014
  % Change  
Cash and cash equivalents   $ 1,914,728   $ 1,138,385   68.2 %
Deferred subscription revenue   $ 1,822,872   $ 1,952,075   (6.6 )%
                   

Management Commentary 

Growth and New Initiatives

In the second quarter of 2015 we achieved important milestones in growth and new initiatives, including:

  • Board of Directors - Appointed an independent director to our Board of Directors;
  • Reengaged Users - Reactivated 1.2 million users from the AYI database via targeted email campaigns; and
  • The Grade User Activity - As of June 30, 2015, cumulative usage of The Grade mobile application exceeded 20 million swipes.

SNAP's Chief Executive Officer, Clifford Lerner, said, "Q2 was a significant quarter for SNAP, during which we achieved several milestones, with the highlight being the appointment of our first independent director, Dr. Steven Fox, to our Board of Directors. We continue to seek two other independent board members to help us achieve our strategic objective to build a portfolio of mobile and Internet dating applications and brands. In addition, SNAP has developed a valuable asset in its database of over 30.0 million users. SNAP's campaign in the second quarter to reactivate inactive users by presenting AYI and third party offers was successful, engaging approximately 1.2 million users that had formerly been inactive. SNAP's infrastructure is highly scalable and our team is capable of supporting significant future growth and profitability as we seek to grow our portfolio."

Mr. Lerner continued, "The Grade, our unique female-friendly dating app and first addition to our portfolio, saw record usage in Q2, highlighted by an 81% increase in swipes in the second quarter of 2015 as compared to the first quarter of 2015, as seen in the chart below. Furthermore, The Grade also appeared in the nationally televised reality show Leah Remini: It's All Relative in the July 22nd episode 'Leah and Chelsea Handler's Dating Tips', in which The Grade is used by a cast member to help find a date. We're excited to see The Grade receive a high level of exposure to a national audience."

To view the chart on Total Swipe Count click the following link: https://www.accesswire.com/uploads/total swipe count.jpg

SNAP's Chief Operating Officer, Alex Harrington, said, "Looking at our business overall, SNAP faced revenue headwinds in the second quarter of 2015 relative to the second quarter of 2014. This was primarily due to unfavorable international exchange rates and the termination of a large, exclusive advertising contract in 2014 in favor of more flexible, non-exclusive advertising relationships in 2015. Relative to the first quarter of 2015, revenues increased slightly as our smaller advertising relationships continue to grow. AYI has delivered stable results, with subscription revenues decreasing nominally and active subscribers flat compared to the same period last year. In the near future, we expect that the focus for AYI will be on cash efficiency, rather than growth to support other investment initiatives in our portfolio."

Liquidity and Cash Flow

  • Cash Balance - We ended the second quarter of 2015 with approximately $1.9 million of cash and cash equivalents on our balance sheet; and
  • Reduction in Cash Used in Operating Activities: We reduced our consumption of cash from operating activities from nearly $1.1 million in the first quarter of 2015 to approximately $0.4 million in the second quarter of 2015.

Mr. Harrington added, "We were pleased to reduce expenses and cash burn during the second quarter of 2015 relative to the first quarter of 2015, in which we sustained a number of one-time, non-recurring items such as a repayment of an advance under an advertising agreement, expenses associated with the relocation of our corporate headquarters and a legal settlement and related legal fees. With our current liquidity position on a solid footing, we continue to manage cash conservatively and expect still more cash-efficiency in operations going forward, while continuing to explore new avenues for growth."

About Snap Interactive, Inc.

Snap Interactive, Inc. develops, owns and operates online dating applications for social networking websites and mobile platforms. The Grade is a mobile dating application catering to high quality singles. SNAP's flagship brand, AYI.com is a multi-platform online dating site with over one million monthly active users.

For more information on SNAP, 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. iPhone® is a registered trademark of Apple Inc. Android™ is a trademark of Google Inc. AYI.com® is a registered trademark of Snap Interactive, Inc.

Forward-Looking Statements

This press release contains "forward-looking statements" made under the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 that are based on current expectations, estimates, forecasts and assumptions and are subject to risks and uncertainties. Words such as "anticipate," "assume," "believe," "estimate," "expect," "goal," "intend," "plan," "project," "seek," "target," and variations of such words and similar expressions are intended to identify forward-looking statements. Such forward-looking statements are subject to certain risks, uncertainties and assumptions that may cause actual results to differ materially from those expressed by the forward-looking statements, including, but not limited to, the following: general economic, industry and market sector conditions; the Company's future growth and the ability to obtain additional financing to implement the Company's growth strategy; the ability to achieve break-even cash flow or positive Adjusted EBITDA; the ability to increase or recognize revenue, decrease expenses and increase the number of active subscribers or new subscription transactions; 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; potential acquisitions of dating and social networking companies; the ability to use indebtedness to grow our business or increase the number of active subscribers and revenue; and circumstances that could disrupt the functioning of the Company's application and websites. In evaluating these statements, you should carefully consider these risks and uncertainties and those described under the headings "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Risk Factors" in the Company's most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other Securities and Exchange Commission filings.

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  
   
    June 30,
2015
    December 31,
2014
 
    (Unaudited)        
Assets                
Current assets:                
  Cash and cash equivalents   $ 1,914,728     $ 1,138,385  
  Credit card holdback receivable     229,160       648,759  
  Accounts receivable, net of allowances and reserves of $59,038 and $42,533, respectively     264,341       221,128  
  Short term security deposits     -       115,104  
  Prepaid expense and other current assets     114,961       93,542  
Total current assets     2,523,190       2,216,918  
Fixed assets and intangible assets, net     418,494       563,123  
Notes receivable     79,800       78,520  
Long term security deposits     335,659       135,000  
Investments     200,000       200,000  
Total assets   $ 3,557,143     $ 3,193,561  
                 
Liabilities and stockholders' equity (deficit)                
Current liabilities:                
  Accounts payable   $ 896,914     $ 1,074,345  
  Accrued expenses and other current liabilities     360,644       1,062,836  
  Notes payable     -       400,000  
  Deferred subscription revenue     1,822,872       1,952,075  
  Deferred advertising revenue     -       13,427  
Total current liabilities     3,080,430       4,502,683  
Deferred rent, net of current portion     59,904       -  
Convertible note payable, net of discount     1,023,020       -  
Derivative liabilities     1,703,425       23,425  
Capital lease obligations, net of current portion     113,676       149,055  
Total liabilities     5,980,455       4,675,163  
Commitments and Contingencies                
Stockholders' equity (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 39,682,826 and 39,182,826 shares outstanding, respectively     39,683       39,183  
Additional paid-in capital     12,394,444       11,858,489  
Accumulated deficit     (14,857,439 )     (13,379,274 )
Total stockholders' equity (deficit)     (2,423,312 )     (1,481,602 )
Total liabilities and stockholders' equity (deficit)   $ 3,557,143     $ 3,193,561  
                 
                 
   
SNAP INTERACTIVE, INC.  
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  
(Unaudited)  
   
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2015     2014     2015     2014  
Revenues:                                
  Subscription revenue   $ 3,075,868     $ 3,151,002     $ 6,205,178     $ 6,290,022  
  Advertising revenue     112,671       299,008       169,444       452,341  
Total revenues     3,188,539       3,450,010       6,374,622       6,742,363  
Costs and expenses:                                
  Programming, hosting and technology expense     477,486       669,795       1,004,433       1,612,206  
  Compensation expense     777,116       864,859       1,513,696       1,634,262  
  Professional fees     176,728       262,876       411,361       513,031  
  Advertising and marketing expense     1,338,070       1,110,726       3,064,167       2,582,937  
  General and administrative expense     657,514       795,854       1,602,115       1,659,272  
Total costs and expenses     3,426,914       3,704,110       7,595,772       8,001,708  
Loss from operations     (238,375 )     (254,100 )     (1,221,150 )     (1,259,345 )
  Interest expense, net     (430,611 )     (5,578 )     (667,015 )     (3,705 )
  Change in fair value of derivative liabilities     410,000       -       410,000       70,275  
Loss before provision for income taxes     (258,986 )     (259,678 )     (1,478,165 )     (1,192,775 )
Provision for income taxes     -       -       -       -  
Net loss   $ (258,986 )   $ (259,678 )   $ (1,478,165 )   $ (1,192,775 )
                                 
Net loss per share of common stock:                                
Basic and diluted   $ (0.01 )   $ (0.01 )   $ (0.04 )   $ (0.03 )
Weighted average number of shares of common stock used in calculating net loss per share of common stock:                                
Basic and diluted     39,682,826       39,152,713       39,550,411       39,155,340  
                                 
                                 
   
SNAP INTERACTIVE, INC.  
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  
(Unaudited)  
   
    Six Months Ended
June 30,
 
    2015     2014  
Cash flows from operating activities:                
Net loss   $ (1,478,165 )   $ (1,192,775 )
Adjustments to reconcile net loss to net cash used in operating activities:                
Depreciation and amortization     96,007       86,873  
Stock-based compensation expense     506,455       494,712  
Loss on disposal of fixed assets     79,628       -  
Amortization of debt issuance cost     60,198       -  
Amortization of debt discount     397,863       -  
Change in fair value of derivative liabilities     (410,000 )     (70,275 )
Changes in operating assets and liabilities:                
  Restricted cash     -       104,893  
  Credit card holdback receivable     419,599       (453,752 )
  Accounts receivable     (43,213 )     108,489  
  Security deposits     (85,555 )     -  
  Prepaid expenses and other current assets     (22,210 )     (13,303 )
  Accounts payable, accrued expenses and other current liabilities     (873,646 )     (89,913 )
  Deferred rent     49,027       (19,306 )
  Deferred subscription revenue     (129,203 )     131,996  
  Deferred advertising revenue     (13,427 )     146,667  
  Net cash used in operating activities     (1,446,642 )     (765,694 )
Cash flows from investing activities:                
Purchase of property and equipment     (37,007 )     (3,731 )
Proceeds from sale of fixed assets     6,000       -  
Purchase of non-marketable equity securities     -       (50,000 )
Issuance to employees of note receivable and accrued interest     (1,280 )     -  
Notes receivable     -       47,818  
Net cash used in investing activities     (32,287 )     (5,913 )
Cash flows from financing activities:                
Payments of capital lease obligations     (30,479 )     -  
(Repayment of) proceeds from promissory notes     (400,000 )     400,000  
Payment of financing costs     (314,249 )     -  
Proceeds from issuance of promissory notes     3,000,000       -  
Net cash provided by financing activities     2,255,272       400,000  
Net increase (decrease) in cash and cash equivalents     776,343       (371,607 )
Balance of cash and cash equivalents at beginning of period     1,138,385       927,352  
Balance of cash and cash equivalents at end of period   $ 1,914,728     $ 555,745  
                 
Supplemental disclosure of cash flow information:                
Cash paid in interest and taxes   $ 90,000     $ -  
Non-cash investing and financing activities:                
Compound embedded derivative under the Note and Securities Purchase Agreement recorded as derivative liabilities   $ 1,748,000     $ -  
Warrants issued under the Advisory Services Agreement as additional consideration for the Note and recorded as derivative liabilities   $ 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     $ -  
                 
                 
   
SNAP INTERACTIVE, INC.  
RECONCILIATION OF GAAP TO NON-GAAP RESULTS  
(Unaudited)  
   
    Three Months Ended  
 
 
 
 
June 30,
2015
    March 31,
2015
  June, 30
2014
 
Reconciliation of Subscription Revenue to Bookings                      
  Subscription revenue   $ 3,075,868     $ 3,129,310   $ 3,151,002  
  Change in deferred subscription revenue     (157,459 )     28,256     (129,142 )
Bookings   $ 2,918,409     $ 3,157,566   $ 3,021,860  
                       
                       
       
    Three Months Ended  
Reconciliation of net loss to Adjusted EBITDA:   June 30,
2015
    March 31,
2015
    June 30,
2014
 
Net loss   $ (258,986 )   $ (1,219,179 )   $ (259,678 )
  Interest expense, net     430,611       236,404       5,578  
  Depreciation and amortization expense     35,188       60,819       43,610  
  Loss on disposal of fixed assets     -       79,628       -  
  Change in fair value of derivative liabilities     (410,000 )     -       -  
  Stock-based compensation expense     276,592       229,863       272,236  
Adjusted EBITDA   $ 73,405     $ (612,465 )   $ 61,746  
                         

Non-GAAP Financial Measures

The Company defines Adjusted EBITDA as earnings before interest, taxes, depreciation and amortization, plus non-cash stock-based compensation and the non-cash change in fair value of derivative liabilities. The Company has provided in this release certain non-GAAP financial information including bookings and Adjusted EBITDA to supplement the condensed consolidated financial statements, which are prepared in accordance with generally accepted accounting principles in the United States ("GAAP"). 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 over the length of the subscription term and subscription revenue from micro-transactions over a two-month period;
  • Adjusted EBITDA does not (i) reflect cash capital expenditure requirements for assets underlying depreciation and amortization expense that may need to be replaced or for new capital expenditures; (ii) the Company's 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.

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