Snap Interactive Reports Second Quarter 2017 Results

Innovation Lab Investments Yield Early Progress

NEW YORK, NY / ACCESSWIRE / August 8, 2017 / Snap Interactive, Inc. ("SNAP," the "Company," "we," "our," or "us") (OTCQB: STVI), a leading provider of live video social networking and interactive dating applications, today announced financial and operational results for the quarter ended June 30, 2017.

Presentation for Merger:

On October 7, 2016, we completed our previously announced merger (the "Merger") with A.V.M. Software ("AVM"). The Merger has been accounted for as a "reverse merger" under the acquisition method of accounting for business combinations with AVM being treated as the accounting acquirer of SNAP. Accordingly, the financial results included in this release reflect the operations of AVM for the period of January 1, 2016 through June 30, 2016, and the operations of the post-Merger Company for the period of January 1, 2017 through June 30, 2017.

Second Quarter 2017 Financial Highlights:

  • Reported total revenues of $6.2 million, a 43.3% increase when compared to the second quarter of 2016 as a result of the completion of the Merger;
  • Subscription revenues increased 48.3% compared to the same period last year as a result of the completion of the Merger;
  • Cash flow provided by operating activities for the six months ended June 30, 2017 was approximately $621 thousand, with balance sheet cash and equivalents increasing by approximately $452 thousand from December 31, 2016 to approximately $4.6 million at June 30, 2017;
  • Net loss from operations was approximately $1.5 million for the quarter ended June 30, 2017; and
  • Adjusted EBITDA was approximately ($516) thousand for the quarter ended June 30, 2017 with positive Adjusted EBITDA from the core business excluding expenses in support of strategic growth business opportunities in our Innovation Lab, which in their pre-launch stage generate no revenue to offset operating expenses.

Second Quarter 2017 Business Highlights

  • Continued strategic investments in our Innovation Lab to leverage our technology and commercial platform as we begin to launch growth initiatives in the live video and live streaming markets;
  • Completed the beta launch of 50more, with a subsequent commercial launch in July, of a new dating application targeted at the fast-growing market of users 50 years and older;
  • Substantially completed development work on a new live video chat consumer application, which we expect to launch commercially in the third quarter of 2017;
  • Initiated development of a live video streaming entertainment service, which will initially be integrated into Camfrog;
  • Defined phase two of Merger integration opportunities to streamline the cost of operating the core businesses, and reallocate resources appropriately towards growth initiatives; and
  • Explored merger & acquisition opportunities.

Second Quarter 2017 Financial Overview (in thousands)

Current quarter compared to same quarter prior year:

Three Months Ended
June 30,
GAAP Results (unaudited)
2017
2016
Change
Subscription revenue
 $ 5,743 $ 3,873 48.3 %
Advertising revenue
 $ 497 $ 483 2.9 %
Total revenues
 $ 6,240 $ 4,356 43.3 %
Net loss
 $ (1,485 ) $ (742 ) 100.1 %
Net cash used in operating activities
 $ (322 ) $ (513 ) (37.2 )%
Financial Metrics (unaudited)
Bookings
 $ 5,595 $ 2,624 113.2 %
Adjusted EBITDA (a non-GAAP measure)
 $ (516 ) $ (316 ) 63.3 %

Year-to-date versus last year same period

Six Months Ended
June 30,
GAAP Results (unaudited)
2017
2016
Change
Subscription revenue
 $ 11,967 $ 8,261 44.9 %
Advertising revenue
 $ 992 $ 1,032 (3.9 )%
Total revenues
 $ 12,959 $ 9,293 39.4 %
Net loss
 $ (2,523 ) $ (701 ) 259.9 %
Net cash provided by (used in) operating activities
 $ 621 $ (106 ) N/A
Financial Metrics (unaudited)
Bookings
 $ 11,738 $ 8,111 44.7 %
Adjusted EBITDA (a non-GAAP measure)
 $ (729 ) $ (19 ) N/A

"The second quarter of 2017 placed a big emphasis on strategic investment at SNAP, as we lay a new foundation for growth with several upcoming product launches," commented Alex Harrington, SNAP's Chief Executive Officer. "We see great opportunity in interactive live video as an emerging consumer trend on web and mobile. We intend to leverage the strengths of our core technology platform, which we believe provides us with a competitive advantage. We are particularly excited to have substantially completed the development of a new live video chat consumer application and look forward to sharing more details on this exciting product as we approach our full launch. Our primary objective on a go-forward basis is to continue growing our platform aggressively, while maintaining a strong balance sheet and operational health."

Mr. Harrington added, "R&D and product development expenses for our Innovation Lab were strongly felt this quarter, and in spite of that we were able to responsibly manage our cash balance. We are optimistic that early non-financial metrics associated with these new products will validate the business opportunities. We look forward to sharing launch metrics in the coming months, which we believe will ultimately indicate future financial benefits for our stockholders. With product launches in the near future, we have a lot to be excited about in the second half of the year."

Jason Katz, SNAP's Chairman, President, and Chief Operating Officer, added, "Post-Merger, and with a significant progress in integration, SNAP has continued to enhance its portfolio of applications. We took a major step forward with the July 2017 launch of 50more. As the year progresses, our Innovation Lab will continue to be developing prototypes for next generation social video products. Meanwhile, we intend to continue to streamline operations to provide the internally-generated cash to fuel these initiatives."

Liquidity and Capital Resources

  • SNAP ended the quarter with approximately $4.6 million in cash and cash equivalents and no debt, with cash and cash equivalents increasing from December 31, 2016 by approximately $452 thousand; and
  • Management believes the Company has sufficient working capital to fund operations, R&D and organic growth initiatives.

Judy Krandel, SNAP's Chief Financial Officer, added, "We anticipate the cost savings associated with phase two of our Merger integration efforts and optimization of our marketing spend, once fully implemented, will allow us to fully fund our Innovation Lab and growth initiatives with cash flow from operations going forward. Our objective is to become a more streamlined organization, capable of driving future growth while preserving a strong balance sheet, and we made great progress in that endeavor during the quarter."

Quarterly Results Conference Call

SNAP will host a conference call and live webcast to discuss these results today at 4:30pm Eastern Time. To access the call, please dial 1-800-753-9188 (toll-free) or 1-719-457-2552. The conference call will also be webcast live on the Investor Relations section of the SNAP website at http://www.snap-interactive.com/investor-relations/.

A replay of the webcast will be archived on the Investor Relations section of the SNAP website beginning shortly after the call. A telephone replay of the call will also be available following the call until August 22, 2017, 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: 3876523.

About Snap Interactive, Inc.

Snap Interactive, Inc. is a leading provider of live video social networking and interactive dating applications. SNAP has a diverse product portfolio consisting of nine products, including Paltalk and Camfrog, which together host one of the world's largest collections of video-based communities, and FirstMet, a prominent interactive dating brand serving users 35 and older. The Company has a long history of technology innovation and holds 25 patents related to video conferencing and online gaming.

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

To be added to our distribution list, please visit http://www.snap-interactive.com/investor-relations/investor-alerts.

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.

IR Contact:

Mike Cole
MZ Group
949-259-4988
mike.cole@mzgroup.us
IR@snap-interactive.com

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 ability to effectively integrate the operations of the Company and AVM; 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 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.
 CONDENSED CONSOLIDATED BALANCE SHEETS

June 30,
2017
December 31,
2016
(unaudited)
Assets
Current assets:
Cash and cash equivalents
$
4,614,619
$
4,162,596
Credit card holdback receivable
168,960
172,169
Accounts receivable, net of allowances and reserves of $51,195 and $57,674, respectively
646,095
958,695
Prepaid expense and other current assets
406,788
1,047,483
Total current assets
5,836,462
6,340,943
Property and equipment, net
657,010
793,305
Goodwill
14,304,667
14,304,667
Intangible assets, net
4,762,818
5,605,193
Other receivables
85,115
82,435
Long term security deposits
141,807
397,608
Total assets
$
25,787,879
$
27,524,151
Liabilities and stockholders' equity
Current liabilities:
Accounts payable
$
2,451,624
$
1,665,831
Accrued expenses and other current liabilities
248,648
472,406
Deferred subscription revenue
2,600,388
2,828,827
Total current liabilities
5,300,660
4,967,064
Deferred rent, net of current portion
-
261,286
Deferred tax liability
1,452,339
1,452,339
Total liabilities
6,752,999
6,680,689
Commitments and Contingencies
Stockholders' equity:
Common stock, $0.001 par value, 25,000,000 shares authorized; and 6,720,915 and 6,714,915 shares issued and outstanding as of June 30, 2017 and December 31, 2016, respectively
6,721
6,715
Additional paid-in capital
16,579,649
15,865,568
Retained earnings
2,448,510
4,971,179
Total stockholders' equity
19,034,880
20,843,462
Total liabilities and stockholders' equity
$
25,787,879
$
27,524,151

SNAP INTERACTIVE, INC.
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

Three Months Ended
June 30,
Six Months Ended
June 30,
2017
2016
2017
2016
Revenues:
Subscription revenue
$
5,742,707
$
3,872,306
$
11,966,391
$
8,261,580
Advertising revenue
496,882
483,261
992,149
1,031,685
Total revenues
6,239,589
4,355,567
12,958,540
9,293,265
Costs and expenses:
Cost of revenue
1,242,819
1,227,059
2,524,324
2,626,059
Sales and marketing expense
2,135,951
943,448
4,366,443
1,862,064
Product development expense
2,206,440
2,427,355
4,417,785
4,520,190
General and administrative expense
2,116,498
530,151
4,186,625
1,016,894
Total costs and expenses
7,701,708
5,128,013
15,495,177
10,025,207
Loss from operations
(1,462,119
)
(772,446
)
(2,536,637
)
(731,942
)
Interest income (expense), net
(4,845
)
274
31,968
559
Other (expense) income, net
(18,000
)
30,000
(18,000
)
30,000
Loss before provision for income taxes
(1,484,964
)
(742,172
)
(2,522,669
)
(701,383
)
Provision for income taxes
-
-
-
-
Net loss
$
(1,484,964
)
$
(742,172
)
$
(2,522,669
)
$
(701,383
)
Net loss per share of common stock:
Basic and diluted
$
(0.22
)
$
(0.14
)
$
(0.38
)
$
(0.13
)
Weighted average number of shares of common stock used in calculating net loss per share of common stock:
Basic and diluted
6,715,574
5,228,617
6,715,246
5,228,617

SNAP INTERACTIVE, INC.
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

Six Months Ended
June 30,
2017
2016
Cash flows from operating activities:
Net loss
$
(2,522,669
)
$
(701,383
)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation of property and equipment
253,547
326,056
Amortization of intangible assets
842,375
275,546
Loss on disposal of property and equipment
17,074
-
Stock-based compensation expense
694,287
111,751
Common stock issued for services
19,800
-
Accrued interest from notes receivables issued to employees
(2,680
)
-
Changes in operating assets and liabilities:
Credit card holdback receivable
3,209
-
Accounts receivable
312,600
255,823
Prepaid expenses and other current assets
640,695
(37,647
)
Accounts payable, accrued expenses and other current liabilities
596,324
(154,145
)
Deferred rent
(5,485
)
-
Deferred subscription revenue
(228,439
)
(181,807
)
Net cash provided by (used in) operating activities
620,638
(105,806
)
Cash flows from investing activities:
Purchase of property and equipment
(134,326
)
(204,858
)
Net cash used in investing activities
(134,326
)
(204,858
)
Cash flows from financing activities:
Payments of capital lease obligations
(34,289
)
-
Net cash used in financing activities
(34,289
)
-
Net increase (decrease) in cash and cash equivalents
452,023
(310,664
)
Balance of cash and cash equivalents at beginning of period
4,162,596
6,676,557
Balance of cash and cash equivalents at end of period
$
4,614,619
$
6,365,893
Supplemental disclosure of cash flow information:
Cash paid in interest
$
12,899
$
560
Cash paid in taxes
$
26,210
$
-

SNAP INTERACTIVE, INC
 RECONCILIATION OF GAAP TO NON-GAAP RESULTS
(unaudited)

Three Months Ended
June 30,
Six Months Ended
June 30,
2017
2016
2017
2016
Reconciliation of Net loss to Adjusted EBITDA:
Net income (loss)
$
(1,484,964)
$
(742,172)
$
(2,522,669
)
$
(701,383
)
Interest expense, net
4,845
(274)
(31,968)
(559)
Other expense (income), net
18,000
(30,000)
18,000
(30,000)
Depreciation and amortization expense
544,098
359,002
1,095,922
601,602
Loss on disposal of property and equipment
17,074
-
17, 074
-
Stock-based compensation expense
384,585
97,540
694,287
111,751
Adjusted EBITDA
$
(516,362
)
$
(315,904)
$
(729,354
)
$
(18,589
)

Non-GAAP Financial Measures and Key Metrics

The Company has provided in this release certain non-GAAP financial measures, including Adjusted EBITDA, and other key metrics, including bookings, to supplement the condensed 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. The Company calculates bookings as subscription revenue recognized during the period plus the change in deferred subscription revenue recognized during the period.

Management uses these financial metrics 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 financial metrics in assessing our performance and when planning, forecasting and analyzing future periods. The Company believes these financial metrics 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.

Our use of Adjusted EBITDA has limitations as an analytical tool, and you should not consider this performance measure in isolation from or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:

  • Adjusted EBITDA does not reflect cash capital expenditures for assets underlying depreciation and amortization expense that may need to be replaced or for new capital expenditures;
  • Adjusted EBITDA does not reflect our working capital requirements;
  • Adjusted EBITDA does not consider the potentially dilutive impact of stock-based compensation; and
  • Other companies, including companies in our industry, may calculate Adjusted EBITDA differently, which reduces its usefulness as a comparative measure.

Because of these limitations, you should consider these financial metrics 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.