PeerStream, Inc. Reports First Quarter 2018 Results
Company Achieves Positive EBITDA from Impact of Integration Cost Reductions, First Payment from Major Business Solutions Partnership Received
NEW YORK, May 09, 2018 (GLOBE NEWSWIRE) -- PeerStream, Inc. (f/k/a Snap Interactive, Inc.) (“PeerStream,” the “Company,” “we,” “our” or “us”) (OTCQB:PEER), a leading developer of innovative decentralized technologies that power multimedia social apps and business communication solutions worldwide, today announced financial and operational results for the first quarter of 2018 ended March 31, 2018.
First Quarter 2018 Financial Highlights:
- Total revenue of $5.7 million decreased 14.5% as compared to the same period last year, and decreased 3.5% from the fourth quarter of 2017. The sequential quarterly decline was almost entirely due to a decline in revenue from our dating properties.
- Subscription revenue of $5.4 million decreased 12.8% as compared to the same period last year and decreased 1.1% from the fourth quarter of 2017. Growth in sequential quarterly subscription revenue from our video properties was offset by a decline in sequential quarterly subscription revenue from our dating properties.
- Net loss from operations was approximately $0.8 million for the quarter ended March 31, 2018, as compared to a net loss of approximately $1.0 million for the quarter ended March 31, 2017 and a net loss of approximately $1.4 million for the quarter ended December 31, 2017, reflecting the benefits of the merger integration cost savings, that totaled $3 million on an annualized basis.
- Adjusted EBITDA was approximately $0.1 million for the quarter ended March 31, 2018, a $319 thousand increase as compared to the quarter ended March 31, 2017 and a $100 thousand increase as compared to the quarter ended December 31, 2017, reflecting the benefits of the merger integration cost savings.
- Cash flow from PeerStream’s core businesses helped fund growth investments and the launch of the Business Solutions division (“PeerStream Business Solutions”).
On March 21, 2018, as a first step in providing services through PeerStream Business Solutions, we entered into a technology services agreement with ProximaX Limited (“ProximaX”) whereby we agreed to provide certain development and related services to ProximaX to facilitate the implementation of PeerStream Protocol (“PSP”) into ProximaX’s proprietary blockchain technology that is currently under development. Pursuant to the terms of the agreement, ProximaX agreed to pay PeerStream a combination of cash and tokens contingent on its completing an initial coin offering raising at least $30 million, and subject to certain development milestones as set forth in the agreement.
On April 30, 2018, ProximaX closed its initial coin offering, which generated aggregate gross proceeds in excess of $30.0 million for purposes of our technology services agreement with ProximaX. As a result, under the terms of the technology services agreement as described in more detail in our Form 8-K filed March 22, 2018, ProximaX made the first milestone payment of $5 million on May 6, 2018.
First Quarter 2018 Financial Overview (in thousands)
|Three Months Ended|
|GAAP Results (unaudited)||2018||2017||Change|
|Net cash (used in) provided by operating activities||$||(543||)||$||943||(157.6||)%|
|Financial Metrics (unaudited)|
|Adjusted EBITDA (a non-GAAP measure)||$||105||$||(214||)||NA|
First Quarter Operational Highlights and Objectives
During the three months ended March 31, 2018, we executed key components of our objectives:
- Rebranded our corporate identity to PeerStream, Inc., which we believe better reflects our mission to connect consumers and business end-users via multimedia streaming and communications;
- Began development of PSP, an open source, multimedia delivery protocol that is built on blockchain technology and designed to increase scalability, cost efficiency and security for real-time communication applications in such areas as video conferencing, messaging and workforce collaboration;
- Launched PeerStream Business Solutions to provide technology licensing, services and support related to multimedia streaming and communications for third party developers and corporate clients, leveraging the Company’s blockchain technology base; and
- Entered into a technology services agreement with ProximaX as an initial step in providing services through PeerStream Business Solutions, which agreement is presently generating revenue and cash flow in the quarter ended June 30, 2018.
Alex Harrington, Chief Executive Officer, commented, “The first quarter of 2018 was PeerStream’s debut, and the launch of PeerStream Business Solutions, which was formed to bring our expertise in multimedia communications and blockchain technology to third party developers and corporate clients. These services are expected to create additional revenue streams for us from the business-to-business market in addition to those generated from our consumer apps.”
“We were proud to announce the signing of our first PeerStream Business Solutions customer, ProximaX, during the first quarter as well. The technology services agreement that we signed with ProximaX will facilitate the implementation of PeerStream Protocol (PSP) into ProximaX’s next generation blockchain protocol. We believe that this is an important development for PeerStream, which not only benefits us financially, but also validates our blockchain capabilities, since our technology was adopted by a leading blockchain innovator.”
“We plan to continue to seek new partnerships with blockchain-based companies to enhance the breadth of our technical capabilities. Along those lines, we have joined the partnership program at Kochava for their OnXCHNG platform, an open source blockchain framework expected to launch later in 2018 for the digital advertising industry. This and other partnerships in development will continue to expand our ability to serve the requirements of our proprietary apps and the needs of our clients,” concluded Mr. Harrington.
2018 Business Objectives:
PeerStream’s business objectives in 2018 include:
- Advancing development of PSP, our multimedia delivery protocol that integrates with blockchain technology;
- Developing our PeerStream Business Solutions offerings and customer pipeline;
- Launching a beta version of Backchannel, our new secure video messaging service leveraging blockchain technology and its benefits;
- Growing our live video streaming entertainment business by increasing the content creator base and monetization for Camfrog Live, and extending this service to users of the Paltalk application;
- Exploring strategic opportunities such as business partnerships and merger and acquisition opportunities;
- Continuing to take steps towards listing our common stock on a national securities exchange; and
- Continuing to defend our intellectual property.
Jason Katz, Chairman, President and Chief Operating Officer added, “We remain focused on investing in the development of PSP and Backchannel. Both are scheduled to launch later in 2018 and we believe both will be well-received by consumers and business customers alike.”
Liquidity and Capital Resources
- With the receipt of the first payment in our ProximaX deal, cash bank balances as of May 8, 2018 were approximately $8.5 million, an increase of approximately $5.0 million from cash bank balances on March 31, 2018.
- Adjusted EBITDA was a positive $0.1 million which benefited from the full realization of the integration cost savings following our 2016 merger with AVM Software, Inc. (the “AVM Merger”), which totaled $3 million.
- Cash and cash equivalents at March 31, 2018 were approximately $3.5 million, a decline of approximately $623 thousand from December 31, 2017 due to seasonal cash needs including annual bonuses, legal expenses from a merger agreement terminated in October 2017, and delayed funds transfer from a major payment processor. PeerStream remains debt free.
- Management believes the Company has sufficient working capital to fund operations, R&D and organic growth initiatives for the foreseeable future.
Judy Krandel, Chief Financial Officer, commented, "The launch of Business Solutions and our lucrative first deal have had a transformative effect on the capital resources of the Company. With approximately $8.5 million in the bank, we now have an ample war chest with which to fuel organic growth and M&A activities. In addition, we have made great improvements in integrating and rightsizing our business after the merger with AVM last year, helping us to generate positive adjusted EBITDA in the first quarter. With improving profitability in the consumer apps business and expected growth from our business solutions business, we believe that PeerStream has a very positive outlook.”
Quarterly Results Conference Call
PeerStream management will host a conference call and live webcast to discuss these results Wednesday May 9th at 8:30am Eastern Time. To access the call, please dial 1-888-394-8218 (domestic) or 1-323-701-0225 (international). The conference call will also be webcast live on the Investor Relations section of the PeerStream website http:/www.peerstream.com/events-and-presentations/
A replay of the webcast will be archived on the Investors section of the PeerStream website beginning shortly after the call. A telephone replay of the call will also be available following the call until May 23, 2018 and may be accessed via telephone by dialing 1-844-512-2921 for the U.S. (or 1-412-317-6671 outside the United States) and entering pass code: 9869587.
About PeerStream, Inc.
PeerStream, Inc., formerly Snap Interactive, Inc., builds innovative decentralized technologies that power multimedia social apps and business communication solutions worldwide. The Company is currently developing PeerStream Protocol (“PSP”), a decentralized multimedia content delivery solution building on blockchain technology. PSP will form the core of a technology platform that supports the Company’s portfolio of social video applications and newly formed business solutions group created to serve the blockchain adoption needs of corporate clients. The Company’s app portfolio features Paltalk, which hosts one of the world’s largest collections of video-based social communities, and Backchannel, a blockchain-based secure video messaging app expected to launch in 2018. The Company has a long history of technology innovation and holds 26 patents.
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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 ability to effectively develop and incorporate blockchain technology into the Company’s applications; the ability to effectively market and generate revenue from our new business solutions unit; our ability to effectively develop and launch the PSP and our ability to generate user and developer support for the PSP; user acceptance of our updated applications; the Company’s ability to institute corporate governance standards or achieve compliance with national securities 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 Company’s ability to generate positive cash flow from operations; 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 our industry; 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.
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