Fourth Quarter and Full Year 2011 Results

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Fourth Quarter and Full Year 2011 Results

NTN Buzztime, Inc. Announces Fourth Quarter and Full Year 2011 Results

CARLSBAD, Calif., March 29, 2012 — NTN Buzztime, Inc. (NYSE AMEX: NTN) today announced results for the fourth quarter and year ended December 31, 2011.

“During the year our core business added a small number of net subscribers in a challenging environment for our venue owners.


During the year we also acquired the Stump! trivia business, added new games and features to our network, put in place a robust data warehouse to allow us to analyze our network data for clients plus significantly increased our client-facing staff count.  We are now better informed about our player behavior than ever and better able to assist clients in their businesses.  This gives us the capability to be a true partner to our venues in helping them increase the length of stay at their venues and raise the average spend per visit” said Michael Bush, the company’s CEO.

“Overall we continue to push to expand our player base by improving the game experience across platforms.   We are developing a new tablet Playmaker, integrating mobile and on-line services and have launched a new set of customer marketing services based on our network data.  We are transforming the Company so it becomes a more compelling value to our customers and a fabulous experience for players.  We recently raised $2.5 million from a rights offering which we will be investing into these growth initiatives.  We look forward to a year of progress by leveraging our unique capabilities of cross platform interactive games, social networking and digital marketing,” added Mr. Bush

Results for the Fourth Quarter Ended December 31, 2011

Revenues for the fourth quarter of 2011 were $6.1 million, compared to revenues of $6.3 million for the same period of 2010.  The 4% decrease in revenue was primarily the result of lower average revenue per site and lower advertising and other revenues, offset by revenue generated from the newly acquired Stump! Trivia business.

The Company ended the fourth quarter of 2011 with 3,932 subscribing venues, compared to 3,925 at December 31, 2010.  During the fourth quarter of 2011, installations were higher at 254 compared with 223 in the same quarter last year, and terminations were lower at 232 compared to 313.  Customer churn was 5.9% for the quarter, an improvement from 7.9% in the prior year period.

Total site counts
and churn percentages

Q4
2011

 

Q4
2010

 

Increase
(Decrease)

Site Count – Beginning of Quarter

3,910

 

4,015

 

(105)

Q4 Installations

254

 

223

 

31

Q4Terminations

(232)

 

(313)

 

(81)

Site Count – End of Quarter

3,932

 

3,925

 

7

Churn Percentage

5.9%

 

7.9%

 

(2.0)

Gross margin as a percentage of revenue decreased to 74% in the fourth quarter of 2011, compared to 78% in the fourth quarter of 2010.  Direct costs increased primarily due to Stump! Trivia direct expenses, which were offset by a decrease in service provider fees due primarily to fewer service calls during the three months ended December 31, 2011 compared to the same period in 2010, and also a decrease in depreciation and amortization expense. 
Selling, general and administrative expenses increased 14%, to $5.1 million for the three months ended December 31, 2011 from $4.4 million for the same period in 2010.  The increase in selling, general and administrative expenses was primarily due to increased payroll and related expense of $0.3 million primarily due to increased headcount and merit increases, and increased professional fees of $0.2 million due to software development and programming consulting and legal fees associated with the Stump! Trivia acquisition.
Net loss for the fourth quarter of 2011 was $1.0 million, or $0.02 per share, compared to net income of $0.3 million or $0.01 per share in the same period a year ago.

Results for the Fiscal Year Ended December 31, 2011

Revenues for 2011 were $23.9 million for the fiscal year ended December 31, 2011, compared to revenue of $25.3 million for the prior year. Net loss for 2011 was $3.4 million, compared to a net loss of $0.4 million a year ago.

For the full year of 2011, installations were lower by approximately 4%; however, terminations were also lower by approximately 12% compared with the full year of 2010.  Customer churn was 25.7% for 2011, an improvement from 28.8% in the prior year.

Total site counts
and churn percentages

FY
2011

 

FY
2010

 

Increase
(Decrease)

Site Count – Beginning of Year

3,925

 

4,016

 

(91)

Installations

1,016

 

1,053

 

(37)

Terminations

(1,009)

 

(1,144)

 

(135)

Site Count – End of Year

3,932

 

3,925

 

7

Churn Percentage

25.7%

 

28.8%

 

(3.1)

Gross margin as a percentage of revenue remained stable at 76% for the full year of 2011 and 2010.

Selling, general and administrative expenses increased $1.5 million, or 8%, to $20.4 million for the year ended December 31, 2011 compared to $18.9 million for the same period in 2010.  The increase in selling, general and administrative expenses was due to increased payroll and related expense of $1.1 million primarily due to increased headcount, merit increases, increased severance expense and increased recruiting and relocation expense for executive officers.  Professional fees increased $0.2 million due to legal fees associated with the Stump! Trivia asset acquisition as well as increased consulting expenses.  Marketing expenses also increased by approximately $0.2 million to support lead generation, new program launches and other promotional activities.  We recognized expenses of $0.1 million related to our new playmaker development and approximately $0.1 million related to the relocation of our corporate offices and warehouse during the year ended December 31, 2011, which were not recognized during the same period in 2010. These increases were offset by lower bad debt expense of $0.2 million resulting from improved collection efforts and decreased occupancy expenses of $0.1 million as a result of the lease for the new corporate headquarters.

Conference Call
Management will review these results in a conference call today, March 29, 2012, at 4:30 p.m. ET.
To access the conference call, please dial (877) 790-8271, if calling from the United States or Canada, or (954) 320-7648, if calling internationally, and use passcode 62919471.   A replay of the call will be available until April 5, 2012, which can be accessed by dialing (855) 859-2056, if calling from the United States or Canada, or (404) 537-3406, if calling internationally. Please use passcode 62919471 to access the replay.

The call will also be accompanied live by webcast over the Internet and accessible at the Company’s Web site at /.
About Buzztime
NTN Buzztime, Inc. (NYSE Amex: NTN) is a leading bar and restaurant social entertainment and integrated marketing platform. Trusted by over 3,900 bars and restaurants in North America since 1985, Buzztime integrates trivia, card and sports games with in- and out-of-venue messaging and communication tools.  With over 2,400,000 registered consumers and more than 52,000,000 games played each year, Buzztime players spread the word and invite friends and family to their favorite Buzztime location to enjoy an evening of fun and competition. With Buzztime entertainment and marketing solutions, bars and restaurants attract new customers, turn casual visitors into regulars, and give guests a reason to stay longer.  For the most up-to-date information on NTN Buzztime, please visit www.buzztime.com or follow us on Facebook or Twitter.
Forward-looking Statements
This release contains forward-looking statements which reflect management’s current views of future events and operations, including but not limited to statements about our acquisition, strengthening offerings, expanding customer base, new customers and players, increasing player stays and spending, other benefits of our products and services and the number of locations, players and games These statements are based on current expectations and assumptions that are subject to risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties include the risks of adverse economic conditions, failure of customer and/or player demand, the impact of alternative entertainment options and technologies, competitive products, and pricing, lower market acceptance or appeal of both existing and new products and services by particular demographic groups or audiences as a whole, termination of partnership and contractual relationships and technical problems or outages. Please see NTN Buzztime, Inc.’s recent filings with the Securities and Exchange Commission for information about these and other risks that may affect the Company. All forward-looking statements included in this release are based on information available to us on the date hereof. These statements speak only as of the date hereof, and NTN Buzztime, Inc. does not undertake to publicly update or revise any of its forward-looking statements, even if experience or future changes show that the indicated results or events will not be realized.

(financial tables follow)


NTN BUZZTIME, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
(In thousands, except par value amount)

 

 

 

 

December 31,

 

ASSETS

2011

2010

Current Assets:

 

 

Cash and cash equivalents…………………………………………………………………..

$      1,374

$      3,906

Restricted cash………………………………………………………………………………..

50

Accounts receivable, net……………………………………………………………………..

750

549

Investment available-for-sale…………………………………………………………………

184

Prepaid expenses and other current assets………………………………………………….

624

588

 

 

 

Total current assets……………………………………………………………………

2,798

5,227

Broadcast equipment and fixed assets, net………………………………………………………..

4,255

3,638

Software development costs, net…………………………………………………………………..

1,320

1,094

Deferred costs…………………………………………………………………………………………

1,132

839

Goodwill………………………………………………………………………………………………

1,236

1,261

Intangible assets, net………………………………………………………………………………..

845

1,025

Other assets…………………………………………………………………………………………..

61

41

 

 

 

Total assets…………………………………………………………………………….

$    11,647

$    13,125

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

Current Liabilities:

 

 

Accounts payable……………………………………………………………………………..

$        528

$        423

Accrued compensation……………………………………………………………………….

757

628

Accrued expenses……………………………………………………………………………..

801

451

Sales taxes payable……………………………………………………………………………

764

856

Income taxes payable…………………………………………………………………………

77

8

Obligations under capital leases—current portion………………………………………..

286

376

Deferred revenue……………………………………………………………………………….

463

520

Other current liabilities………………………………………………………………………

192

74

 

 

 

Total current liabilities……………………………………………………………….

3,868

3,336

Obligations under capital leases, excluding current portion……………………………………

164

105

Deferred revenue, excluding current portion………………………………………………………

186

124

Deferred rent…………………………………………………………………………………………..

756

Other liabilities………………………………………………………………………………………

323

99

 

 

 

Total liabilities………………………………………………………………………..

5,297

3,664

Commitments and contingencies

 

 

 

 

 

Shareholders’ equity:

 

 

Series A 10% cumulative convertible preferred stock, $.005 par value, $161 liquidation preference, 5,000 shares authorized; 161 shares issued and outstanding………………………………………………………

1

1

 

 

 

Common stock, $.005 par value, 84,000 shares authorized; 60,927 and 60,751               shares issued and outstanding at December 31, 2011 and 2010, respectively……………………………………………

305

304

Treasury stock, at cost, 503 shares at December 31, 2011 and 2010………………….

(456)

(456)

Additional paid-in capital……………………………………………………………………

116,497

116,114

Accumulated deficit…………………………………………………………………………..

(110,719)

(107,284)

Accumulated other comprehensive income………………………………………………..

722

782

 

 

 

Total shareholders’ equity…………………………………………………………..

6,350

9,461

 

 

 

Total liabilities and shareholders’ equity………………………………………….

$    11,647

$    13,125

 

 

 

 

 

 

NTN BUZZTIME, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)

 

Three Months Ended
December 31,

Twelve Months Ended
December 31,

 

 

2011

2010

2011

2010

 

Revenues…………………………………………………………..

$     6,104

$     6,342

$   23,870

$   25,309

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

Direct operating costs (includes depreciation and amortization)…………………………

1,563

1,474

5,807

6,063

 

Selling, general and administrative………………………………………………………

5,062

4,425

20,448

18,906

 

Depreciation and amortization (excluding depreciation and amortization included in direct costs)

387

157

891

665

 

 

 

 

 

 

 

Total operating expenses……………………………………………………………..

7,012

6,056

27,146

25,634

 

 

 

 

 

 

 

Operating (loss) income…………………………………………………………………

(908)

286

(3,276)

(325)

 

Other income (expense):

 

 

 

 

 

Interest income…………………………………………………………………

1

3

3

 

Interest expense………………………………………………………………..

(13)

(20)

(52)

(101)

Other (expense) income………………………………………………………………….

(3)

59

69

65

 

 

 

 

 

 

 

Total other (expense) income………………………………………………………..

(16)

40

20

(33)

 

 

 

 

 

 

 

(Loss) income before income taxes………………………………………………………….

(924)

326

(3,256)

(358)

 

Provision for income taxes………………………………………………………………..

(115)

(4)

(163)

(42)

 

 

 

 

 

 

 

Net (loss) income…………………………………………………………………

$    (1,039)

$       322

$    (3,419)

$      (400)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income per common share – basic………………………………………………

$     (0.02)

$      0.01

$     (0.06)

$     (0.01)

 

 

 

 

 

 

 

Net (loss) income per common share – diluted……………………………………………

$     (0.02)

$      0.01

$     (0.06)

$     (0.01)

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding – basic………………………………………………

60,424

60,248

60,402

60,134

 

 

 

 

 

 

 

Weighted average shares outstanding – diluted…………………………………………….

60,424

60,746

60,402

60,134

 

 

 

 

 

 

 

 


NTN BUZZTIME, INC. AND SUBSIDIARIES
CONSOLIDATED CASH FLOW DATA *
(Unaudited)
(In thousands)

 

 

 

 

 

Twelve months ended
December 31,

 

 

 

2011

2010

 

Cash flows provided by operating activities:

 

 

 

Net loss…………………………………………………………………………………………..

$     (3,419 )

$        (400 )

 

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

Depreciation and amortization………………………………………………………….

3,260

3,203

 

Provision for doubtful accounts………………………………………………………..

5

191

 

Stock-based compensation………………………………………………………………

332

299

 

Loss on sales of securities available-for-sale………………………………………….

30

 

Loss from disposition of equipment and capitalized software………………………

166

259

 

Changes in assets and liabilities:

 

 

 

Accounts receivable……………………………………………………………….

(204 )

(131 )

 

Prepaid expenses and other assets………………………………………………

(58 )

41

 

Accounts payable and accrued liabilities……………………………………….

494

(1,082 )

 

Income taxes payable……………………………………………………………..

70

169

 

Deferred costs………………………………………………………………………

(293 )

244

 

Deferred revenue…………………………………………………………………..

4

38

 

Deferred rent……………………………………………………………………….

187

 

 

 

 

 

Net cash provided by operating activities……………………………………..

574

2,831

 

Cash flows used in investing activities:

 

 

 

Capital expenditures…………………………………………………………………………….

(1,594 )

(1,323 )

 

Software development expenditures…………………………………………………………..

(1,080 )

(845 )

 

Trademark license……………………………………………………………………………….

(35 )

 

Proceeds from sale of securities available-for-sale……………………………………………

134

 

Acquisitions, net of cash acquired…………………………………………………………….

(200 )

Changes in restricted cash……………………………………………………………………..

(50 )

 

 

 

 

 

Net cash used in investing activities……………………………………………

(2,790 )

(2,203 )

 

Cash flows used in financing activities:

 

 

 

Principal payments on capital leases………………………………………………………….

(446 )

(425 )

 

Proceeds from note payable…………………………………………………………………….

123

 

Payments on note payable……………………………………………………………………..

(13 )

 

Proceeds from exercise of stock options………………………………………………………

36

61

 

 

 

 

 

Net cash used in financing activities……………………………………………

(300 )

(364 )

 

 

 

 

 

Net (decrease) increase in cash and cash equivalents……………………………………………….

(2,516 )

264

 

 

 

 

 

Effect of exchange rate on cash………………………………………………………………………..

(16 )

5

 

 

 

 

 

Cash and cash equivalents at beginning of period………………………………………………….

3,906

3,637

 

 

 

 

 

Cash and cash equivalents at end of period…………………………………………………………

$      1,374

$      3,906

 

 

 

 

 

 

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