PeerStream, Inc. Renews Strategic Focus on Core Video Apps and Reports Full Year and Fourth Quarter 2019 Results
Adopts Streamlined Plan of Operation, Right Sizes Spending and Reduces Total Expenses
NEW YORK, NY, March 24, 2020 (GLOBE NEWSWIRE) -- via NEWMEDIAWIRE -- PeerStream, Inc. (“PeerStream,” the “Company,” “we,” “our” or “us”) (OTCQB: PEER), a leading communications software innovator that powers multimedia social applications and developer of secure communications software, today announced financial and operational results for the fourth quarter and full year ended December 31, 2019.
Jason Katz, Chairman and CEO of PeerStream, commented, “During the fourth quarter of 2019, the Company adopted a streamlined plan of operations, whereby we reduced operating expenses to better align with our revenue. Even after accounting for one-time severance costs incurred in the fourth quarter, we decreased total costs and expenses by over 13%, or $2.7 million, compared to the prior year, with most of the decrease occurring in the fourth quarter. We intend to continue making further sustainable cost reductions to right-size operations and reduce cash consumption. Our secure communications business has been costly to operate and had a long sales cycle with no revenue generated in the past twelve months. Accordingly, the Board of Directors decided to pursue the monetization of the secure communications business, either through residual ownership or sale. Based on the Board’s decision, in February 2020, we entered into an asset purchase agreement, pursuant to which we agreed to sell substantially all of the assets related to our secure communications business, subject to the terms and conditions of the agreement. We believe that the decision to try to monetize our secure communications business, coupled with a streamlined plan of operation, positions us well for 2020.
Although we cannot predict the impact that the recent outbreak of coronavirus will have on our business or results of operations in 2020, to date, our core multimedia social applications have been able to support the increased demand we have experienced. PeerStream continues to serve as a form of safe and entertaining communication during this global pandemic and in order to help those affected in hardest hit countries will continue to offer some of our group video conferencing services free of charge.
PeerStream began 2020 focused intently on the opportunities for growth of our core video applications, Paltalk and Camfrog. At the end of 2019, we launched our consumer application platform strategy, under which we plan to co-brand our video chat applications and promote them in partnership with large third-party communities. During the fourth quarter of 2019, we reached our first agreement with a well-known launch partner that has over 30 million active worldwide users who has agreed to a trial of our consumer application platform. We’re also excited to be the first company to integrate SEC Reg A+ qualified Props tokens into our applications via a partnership with YouNow, Inc. We began distributing Props tokens through Camfrog in February 2020 and we expect to launch Props distributions through Paltalk in the second quarter of 2020.
Looking ahead, we plan to continue to advance our product offerings by implementing enhancements to our live video chat applications, as well as other features that focus on new user acquisition, retention and monetization. With solid cash flow from our core video chat applications, a good cash position and a clean balance sheet, we believe that PeerStream has a sturdy foundation to grow our core business in a cost efficient manner as we continue to pursue profitability and organic growth,” concluded Mr. Katz.
2019 Business Highlights:
During the year ended December 31, 2019, we executed key components of our objectives:
- launched our consumer application platform strategy, under which we plan to co-brand our video chat applications and promote them in partnership with third-party communities, with the expectation of entering into revenue sharing arrangements with potential partners. During the fourth quarter, we reached agreement with a launch partner with 30 million monthly active users who has agreed to a trial of our consumer application platform;
- decreased our operating expenses through a streamlined plan of operations by over 13%, or $2.7 million, for the year, which includes reductions in sales and marketing expenses of over 41%, or approximately $747.4 thousand, and reductions in general and administrative expenses of over 19%, or $1.5 million. These reductions were offset by one-time severance costs of $0.3 million recorded in the fourth quarter;
- launched our partnership with YouNow in the Props Developer Network, which, enables us to distribute YouNow’s Props tokens to our application end users for anticipated loyalty and retention benefits;
- completed and delivered work constituting the second development milestone under a technology and services agreement with ProximaX Limited (“ProximaX”), whereby we agreed to provide certain development and related services to ProximaX to facilitate the implementation of PSP into ProximaX’s proprietary blockchain protocol (the “ProximaX Agreement”); and
- completed the sale of our dating assets to The Dating Company, LLC in order to enable us to focus on our core video applications and to try to monetize secure communications technology solutions.
2019 Full Year Financial Highlights:
- Total revenue was $15.3 million compared to $20.3 million for the year ended December 31, 2018, a 25% decline, which was primarily due to a $1.5 million decrease in revenue recognized under the ProximaX Agreement and a $2.9 million decrease in revenue related to our video properties;
- Subscription revenue declined by $2.9 million, or 20%, to $11.4 million, compared to $14.3 million in the year ended December 31, 2018, principally as a result of a decrease in virtual gift purchases and active subscribers;
- Net loss from continuing operations was approximately $8.9 million, an increase of $6.9 million as compared to a net loss from continuing operations of approximately $2.0 million for the year ended December 31, 2018, which was driven by the decrease of $5.0 million in revenue in the year ended December 31, 2019 and a non-cash charge of $6.8 million related to goodwill impairment and was partially offset by a reduction of $2.7 million in expenses compared to the prior year;
- Net loss was approximately $8.4 million, an increase of $4.6 million as compared to a net loss of approximately $3.8 million for the year ended December 31, 2018; and
- Adjusted EBITDA, a non-GAAP measure, was approximately positive $0.1 million, as compared to positive Adjusted EBITDA of approximately $2.9 million for the year ended December 31, 2018.
- Total revenue was $2.6 million compared to $5.1 million for the three months ended December 31, 2018, a 50% decline, which was primarily due to a $1.5 million decrease in revenue recognized under the ProximaX Agreement and a $0.9 million decrease in revenue related to our video properties;
- Subscription revenue declined by $0.9 million, or 27%, to $2.5 million, compared to $3.4 million for the three months ended December 31, 2018, principally as a result of a decrease in virtual gift purchases and active subscribers;
- Net loss from continuing operations was approximately $7.9 million, an increase of $7.8 million as compared to a net loss from continuing operations of approximately $0.1 million for the three months ended December 31, 2018, which was driven by one-time severance costs paid during the quarter to former employees of approximately $0.3 million. The increase was also driven by a decrease of $2.6 million in revenue for the quarter ended December 31, 2019 and a non-cash charge of $6.8 million related to goodwill impairment, which was partially offset by a reduction of $1.6 million in expenses;
- Net loss was approximately $7.9 million, an increase of $7.3 million as compared to a net loss of approximately $0.6 million for the three months ended December 31, 2018; and
- Adjusted EBITDA, a non-GAAP measure, was approximately negative $0.8 million, as compared to positive Adjusted EBITDA of approximately $0.4 million for the three months ended December 31, 2018.
Liquidity and Capital Resources
- Cash and cash equivalents totaled $3.4 million at December 31, 2019;
- PeerStream remains debt free, with $0.6 of non-current operating lease obligations; and
- Management believes that the Company will continue to have sufficient working capital to fund operations, R&D and organic growth initiatives for the next twelve months.
| Year Ended December 31, | |||||
| 2019 | 2018 | Change | |||
| Subscription revenue | $ 11,406 | $ 14,336 | -20.4% | ||
| Advertising revenue | 439 | 1,007 | -56.4% | ||
| Technology service revenue | 3,439 | 4,989 | -31.1% | ||
| Total revenues | $ 15,284 | $ 20,332 | -24.8% | ||
| Loss from continuing operations | $ (8,943) | $ (2,006) | 345.8% | ||
| Income (loss) from discontinued operations | $ 563 | $ (1,791) | -131.4% | ||
| Net loss | $ (8,380) | $ (3,797) | 120.7% | ||
| Net cash (used in) provided by operating activities | $ (4,465) | $ 2,733 | -263.4% | ||
| Financial Metrics (unaudited) | |||||
| Active subscribers (at period end) | 103,800 | 109,200 | -4.9% | ||
| Subscription bookings | $ 11,767 | $ 14,219 | -17.2% | ||
| Adjusted EBITDA (a non-GAAP measure) | $ 135 | $ 2,932 | -95.4% | ||
| Three Months Ended December 31, | |||||
| GAAP Results (unaudited) | 2019 | 2018 | Change | ||
| Subscription revenue | $ 2,504 | $ 3,429 | -27.0% | ||
| Advertising revenue | 118 | 254 | -53.5% | ||
| Technology service revenue | (44) | 1,448 | -103.0% | ||
| Total revenues | $ 2,579 | $ 5,132 | -49.7% | ||
| Loss from continuing operations | $ (7,896) | $ (147) | 5272.0% | ||
| Loss from discontinued operations | $ - | $ (407) | 100.0% | ||
| Net loss | $ (7,896) | $ (554) | 1325.3% | ||
| Net cash used in operating activities | $ (178) | $ (568) | 68.6% | ||
| Financial Metrics (unaudited) | |||||
| Active subscribers (at period end) | 103,800 | 109,200 | -4.9% | ||
| Subscription bookings | $ 2,900 | $ 3,390 | -14.4% | ||
| Adjusted EBITDA (a non-GAAP measure) | $ (783) | $ 391 | -300.4% | ||
Quarterly Results Conference Call
Management is suspending holding quarterly results conference calls until further notice. Please contact ir@peerstream.com or Kirin Smith or Stephanie Prince at PCG Advisory at ksmith@pcgadvisory.com and sprince@pcgadvisory.com, respectively, with any questions.
About PeerStream, Inc. (OTCQB: PEER)PeerStream is a communications software innovator that powers multimedia social applications. We have also developed a suite of secure communications software for use worldwide. Our product portfolio includes Paltalk and Camfrog, which together host one of the world’s largest collections of video-based communities. Our other products include Tinychat and Vumber. The Company has an over 20-year history of technology innovation and holds 18 patents. For more information, please visit: http://www.peerstream.com.
To be added to our news distribution list, please visit: http://www.peerstream.com/investor-alerts/. Forward-Looking StatementsThis 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, our ability to effectively market and generate revenue from our applications, risks and uncertainties related to our increasing focus on the use of new and novel technologies, such as blockchain and Props tokens, to enhance our applications, and our ability to timely complete development of applications using new technologies; our ability to effectively integrate Props tokens into our existing applications; our ability to effectively secure new software development and licensing customers; legal and regulatory requirements related to the use of blockchain, including us holding and distributing cryptocurrencies and accepting cryptocurrencies as a method of payment for our services; the use of the internet and privacy and protection of user data; risks related to our holdings of digital tokens, including risks related to the volatility of the trading price of digital tokens and our ability to convert digital tokens into fiat currency; and our ability to manage our partnerships and strategic alliances. 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 website at 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.
Contacts: IR@peerstream.com Kirin Smith / Stephanie Prince PCG Advisory ksmith@pcgadvisory.com 646-863-6519
