Snipp Interactive Reports Financial Results for Q2 2018

By Snipp August 29, 2018

TORONTO, Aug. 29, 2018 (GLOBE NEWSWIRE) — Snipp Interactive Inc. (“Snipp” or the “Company”) (TSX-V: SPN), a global provider of digital marketing promotions, rebates and loyalty solutions, is pleased to announce its financial results for Q2 2018. All results are reported under International Financial Reporting Standards (“IFRS”) and in US dollars. A copy of the complete unaudited interim financial statements and management’s discussion and analysis are available on SEDAR (www.sedar.com).

Q2 2018 Highlights
(Refer to Non-GAAP Measures, Gross Margin, EBITDA and Bookings Backlog discussion below)

  • Revenue for Q2 2018 increased by 6% compared to Q2 2017. Revenue for Q2 2018 was $3.02MM compared to revenue for Q2 2017 of $2.85MM.
  • Revenue for the six months ended June 30, 2018 increased by 10% compared to the six months ended June 30, 2017. Revenue for the six months ended June 30, 2018 was $5.89MM compared to revenue for the six months ended June 30, 2017 of $5.33MM.
  • The Company’s EU business posted revenue growth of 60% for the six months ended June 30, 2018 compared to the six months ended June 30, 2017.
  • EBITDA in Q2 2018 improved by 5% compared to Q2 2017, an EBITDA improvement of $33,359. Q2 2018 EBITDA loss was $0.67MM vs Q2 2017 EBITDA loss of $0.71MM.
  • EBITDA in the six months ended June 30, 2018 improved by 33% compared to the six months ended June 30, 2017, an EBITDA improvement of $574,265. For the six months ended June 30, 2018 EBITDA loss was $1.14MM compared to the six months ended June 30, 2017 EBITDA loss of $1.72MM.
  • Bookings for Q2 2018 improved by 4% compared to Q2 2017, an improvement of $0.15MM. Q2 2018 Bookings were $3.54MM vs Q2 2017 Bookings of $3.39MM.
  • Bookings for the six months ended June 30, 2018 improved by 13% compared to the six months ended June 30, 2017, an improvement of $0.85MM. Bookings for the six months ended June 30, 2018 were $7.32MM vs Bookings for the six months ended June 30, 2017of $6.48MM
  • Bookings Backlog stood at $9.2MM at June 30, 2018 [a 44% increase from Q2 2017] of which $6.7MM will be recognized over the remaining 2018 and 2019 fiscal periods. This compares to Bookings Backlog at June 30, 2017 that stood at $6.4MM of which $5.8MM was recognizable over the 2017 and 2018 fiscal periods. Previously the Company reported Bookings Backlog as future revenue to be recognized in the current fiscal year and the next fiscal year. The Company is now reporting Bookings Backlog as all future revenue including revenue that extends beyond fiscal 2019.
  • Gross margin in Q2 2018 was 51% compared to 73% in Q2 2017. The decrease in margin was due to a handful of promotions that performed exceedingly well in the market resulting in higher associated reward redemptions, which resulted in higher campaign infrastructure costs. This was an aberration and we anticipate our margins to return to their historical 70%+ rate for the second half of the year.
  • The Company continued to focus on cost improvements from its integration efforts, resulting in the following Q2 2018 cost savings compared to Q2 2017:
  •    –   Salaries and compensation expenses decreased by approximately US $301k or 14%;
  •    –   General and administrative expenses decreased by approximately US $52k or 16%;
  •    –   Professional fees expenses decreased by approximately US $93k or 84%.
  • The following are cost savings recognized in the six months ended June 30, 2018 compared to the six months ended June 30, 2017:
  •    –   Salaries and compensation expenses decreased by approximately US $887k or 19%;
  •    –   General and administrative expenses decreased by approximately US $87k or 15%;
  •    –   Professional fees decreased by approximately US $51k or 28%.

“We are particularly pleased with the tangible results of our cost saving efforts in our Q2 results. Our consistent company-wide theme over the course of the last four quarters has been to drive toward profitability by reducing costs, with the ultimate goal to quickly achieve positive EBITDA,” commented Atul Sabharwal, CEO and Founder of Snipp. “We look forward to the rest of 2018 as we focus on reaching sustained profitability and taking advantage of what has become a steady stream of repeat customers. We are also excited by emerging strategic opportunities in both existing and new verticals, as well as acquisition opportunities, especially in the purchase validation space, where some competitors have begun to wind down their operations due to their inability to scale. Our EU and loyalty business also have demonstrated tremendous growth, contributing to our increasing long-term recurring revenue streams. At this point in 2018, our European operations have already grown 47% on an annualized basis and we still have another five months left in the sales year.”

The Company also announces that as part of its continual cost reduction initiative it has decided to delist from the OTCQB, of the OTC Market in the United States of America. Snipp continues to remain an SEC registered company as a current SEC filer and therefore will still be able to have its shares traded in the United States of America with symbol SNIPF. 

CONFERENCE CALL DETAILS:

Snipp management will host a conference call and live webcast for analysts and investors on Thursday, August 30, 2018 at 10:00AM Eastern Time (US) to discuss the Company’s financial results.

To listen to the live conference call, parties in the United States and Canada should dial 877-260-1479, access code 3585718. International parties should call +1 334-323-0522 using the same access code 3585718. Please dial in approximately 15 minutes prior to the start of the call.

A live and archived webcast of the conference call will be accessible on the “Investors” section of the Company’s website under “Presentations” at www.snipp.com. To access the live webcast, please log in 15 minutes prior to the start of the call to download and install any necessary audio software.

Visit the Snipp website at http://www.snipp.com/ for Snipp’s full suite of solutions and examples of Snipp programs.

Non-GAAP Measures
Snipp uses certain performance measures throughout this document that are not recognizable under Canadian generally accepted accounting principles or IFRS (“GAAP”). These performance measures include Gross Margin and EBITDA. Management believes that these measures provide supplemental financial information that is useful in the evaluation of the Company’s operations.

Investors should be cautioned, however, that these measures should not be construed as alternatives to measures determined in accordance with GAAP and IFRS as an indicator of Snipp’s performance. The Company’s method of calculating these measures may differ from that of other organizations, and accordingly, these may not be comparable.

EBITDA
Snipp defines earnings before interest, taxes, depreciation and amortization (“EBITDA”) as revenue minus operating expenses excluding non-cash operating expenses of stock-based compensation, depreciation and amortization (interest and taxes are not included in the Company’s operating expenses).

Gross Margin
Snipp defines Gross Margin as revenue less campaign infrastructure. The Company’s calculation of Gross Margin is not a financial measure that is recognized under GAAP. Investors should be cautioned that the Company’s defined Gross Margin should not be construed as an alternative measure to other measures determined in accordance with GAAP.

Bookings Backlog
Snipp defines Bookings Backlog as future revenue from existing customer contracts to be recognized in future quarters. Bookings get translated into revenues based on IFRS principles and the Bookings Backlog reflects how revenues in future quarters are steadily being booked today.

The following are calculations of EBITDA:

 

Three

Three

Six

Six

 

 

Months Ended

Months Ended

Months Ended

Months Ended

 

 

June 30, 2018

June 30, 2017

June 30, 2018

June 30, 2017

 

 

USD

USD

USD

USD

 

Net loss before interest, foreign exchange and taxes

(1,234,544

)

(1,257,067

)

(2,275,668

)

(2,842,786

)

 

 

 

 

 

 

 

Amortization of intangibles

477,814

 

417,513

 

947,942

 

818,449

 

 

Depreciation of equipment

7,917

 

11,835

 

14,528

 

24,589

 

 

Stock-based compensation

74,561

 

120,108

 

170,244

 

282,529

 

 

 

 

 

 

 

 

EBITDA

(674,252

)

(707,611

)

(1,142,954

)

(1,717,219

)

 

 

 

 

 

The following are calculations of Gross Margin:

 

Three

 

 

Three

 

 

Six

 

 

Six

 

Months Ended

 

 

Months Ended

 

 

Months Ended

 

 

Months Ended

 

June 30, 2018

 

 

June 30, 2017

 

 

June 30, 2018

 

 

June 30, 2017

 

USD

 

 

USD

 

 

USD

 

 

USD

Revenue

3,019,342

 

 

2,849,799

 

 

5,891,859

 

 

5,334,107

 

 

 

 

 

 

 

 

 

 

 

Less:

 

 

 

 

 

 

 

 

 

 

Campaign infrastructure

1,480,785

 

 

778,565

 

 

2,509,869

 

 

1,369,482

 

 

 

 

 

 

 

 

 

 

 

Gross Margin

1,538,557

 

 

2,071,234

 

 

3,381,990

 

 

3,964,625

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Q2 2018 Financials

 

 

 

SNIPP INTERACTIVE INC.

 

 

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(Expressed in U.S. Dollars)

 

 

(Unaudited)

 

 

As at

 

 

 

 

 

 

June 30, 2018

December 31, 2017

 

 

 

ASSETS

 

 

 

 

 

Current

 

 

Cash

$

1,340,217

 

$

386,630

 

Accounts receivable, net of allowance for doubtful accounts of $24,693 (2017 – $24,693)

 

2,882,844

 

 

3,815,278

 

Deposits, prepaid expenses and other assets

 

939,558

 

 

498,151

 

 

 

 

 

 

5,162,619

 

 

4,700,059

 

 

 

 

Equipment

 

58,149

 

 

66,329

 

Intangible assets

 

4,720,605

 

 

5,121,845

 

Goodwill

 

3,343,129

 

 

3,343,129

 

 

 

 

 

$

13,284,502

 

$

13,231,362

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY 

 

 

 

 

 

Current

 

 

Accounts payable and accrued liabilities

$

2,914,895

 

$

2,542,885

 

Deferred revenue

 

810,881

 

 

959,881

 

Due to related parties

 

22,155

 

 

44,972

 

Working Capital Line of Credit

 

 

 

933,159

 

 

 

 

 

 

3,747,931

 

 

4,480,897

 

 

 

 

Shareholders’ equity 

 

 

Common shares

 

29,023,285

 

 

26,186,684

 

Warrants

 

421,796

 

 

421,796

 

Contributed surplus

 

5,040,343

 

 

4,797,541

 

Deficit

 

(23,699,411

)

 

(21,395,878

)

Accumulated other comprehensive loss

 

(1,249,442

)

 

(1,259,678

)

 

 

 

 

 

9,536,571

 

 

8,750,465

 

 

 

 

 

$

13,284,502

 

$

13,231,362

 

 

 

 

 

 

 

 

SNIPP INTERACTIVE INC.

 

 

 

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

 

(Expressed in U.S. Dollars)

 

 

 

(Unaudited)

 

 

 

 

Three

Three

Six

Six

 

Months Ended

Months Ended

Months Ended

Months Ended

 

June 30, 2018

June 30, 2017

June 30, 2018

June 30, 2017

 

 

 

 

 

REVENUE

$

3,019,342

 

$

2,849,799

 

$

5,891,859

 

$

5,334,107

 

 

 

 

 

 

EXPENSES

 

 

 

 

Salaries and compensation

 

1,859,596

 

 

2,160,587

 

 

3,765,144

 

 

4,652,284

 

General and administrative

 

263,994

 

 

315,743

 

 

510,705

 

 

597,846

 

Campaign infrastructure

 

1,480,785

 

 

778,565

 

 

2,509,869

 

 

1,369,482

 

Professional fees

 

17,460

 

 

110,099

 

 

129,326

 

 

180,484

 

Marketing and investor relations

 

43,477

 

 

19,261

 

 

77,164

 

 

64,651

 

Travel

 

28,282

 

 

25,313

 

 

42,605

 

 

38,737

 

Bad debt expense

 

 

 

147,842

 

 

 

 

147,842

 

Amortization of intangibles

 

477,814

 

 

417,513

 

 

947,942

 

 

818,449

 

Depreciation of equipment

 

7,917

 

 

11,835

 

 

14,528

 

 

24,589

 

Stock-based compensation

 

74,561

 

 

120,108

 

 

170,244

 

 

282,529

 

 

 

4,253,886

 

 

4,106,866

 

 

8,167,527

 

 

8,176,893

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss before interest, foreign exchange and taxes 

 

(1,234,544

)

 

(1,257,067

)

 

(2,275,668

)

 

(2,842,786

)

 

 

 

 

 

Interest income (expense)

 

247

 

 

(23,848

)

 

(8,633

)

 

(56,650

)

Foreign exchange gain (loss)

 

9,279

 

 

(13,167

)

 

(5,941

)

 

(22,910

)

Provision for taxes

 

(13,291

)

 

 

 

(13,291

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss for the period

 

(1,238,309

)

 

(1,294,082

)

 

(2,303,533

)

 

(2,922,346

)

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER COMPREHENSIVE LOSS

 

 

 

 

Items that may be reclassified subsequently to loss

 

 

 

 

Cumulative translation adjustment

 

(8,765

)

 

75,145

 

 

10,236

 

 

71,885

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive loss for the period

$

(1,247,074

)

$

(1,218,937

)

$

(2,293,297

)

$

(2,850,461

)

Basic and diluted loss per common share

$

(0.01

)

$

(0.01

)

$

(0.01

)

$

(0.02

)

Weighted average number of common shares outstanding – basic and diluted

 

213,240,338

 

 

137,186,913

 

 

198,304,815

 

 

141,786,049

 

 

 

 

SNIPP INTERACTIVE INC.

 

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in U.S. Dollars)

 

 

(Unaudited)

 

 

 

Six

Six

 

Months Ended

Months Ended

 

June 30, 2018

June 30, 2017

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

Net loss for the period

$

(2,303,533

)

$

(2,922,346

)

Items not involving cash:

 

 

Amortization of intangibles

 

947,942

 

 

818,449

 

Depreciation of equipment

 

14,528

 

 

24,589

 

Stock-based compensation

 

170,244

 

 

282,529

 

Changes in non-cash working capital items:

 

 

Accounts receivable

 

932,434

 

 

826,328

 

Deposits, prepaid expenses and other assets

 

(441,407

)

 

(365,881

)

Accounts payable and accrued liabilities

 

372,011

 

 

47,499

 

Deferred revenue

 

(149,000

)

 

263,659

 

Due to related parties

 

(22,817

)

 

(30,963

)

 

 

 

Net cash flows used in operating activities

 

(479,598

)

 

(1,056,137

)

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

Additions to equipment

 

(6,349

)

 

(2,646

)

Additions to intangible assets

 

(546,702

)

 

(704,818

)

 

 

 

Net cash flows used in investing activities

 

(553,051

)

 

(707,464

)

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

Proceeds from common shares issued

 

3,018,950

 

 

3,375,076

 

Share issuance costs

 

(109,791

)

 

(19,927

)

Repayment of working capital line of credit

 

(933,159

)

 

(901,317

)

 

 

 

Net cash flows provided by financing activities

 

1,976,000

 

 

2,453,832

 

 

 

 

Effect of exchange rate changes on cash 

 

10,236

 

 

71,885

 

 

 

 

Change in cash for the period

 

953,587

 

 

762,116

 

 

 

 

Cash and cash equivalents, beginning of period

 

386,630

 

 

2,375,619

 

 

 

 

Cash and cash equivalents, end of period

$

1,340,217

 

$

3,137,735

 

 

About Snipp:
Snipp is a global loyalty and promotions company with a singular focus: to develop disruptive engagement platforms that generate insights and drive sales. Our solutions include shopper marketing promotions, loyalty, rewards, rebates and data analytics, all of which are seamlessly integrated to provide a one-stop marketing technology platform. We also provide the services and expertise to design, execute and promote client programs. SnippCheck, our receipt processing engine, is the market leader for receipt-based purchase validation; SnippLoyalty is the only unified loyalty solution in the market for CPG brands. Snipp has powered hundreds of programs for Fortune 1000 brands and world-class agencies and partners.

Snipp is headquartered in Toronto, Canada with offices across the United States, Canada, Ireland, Europe, and India. The company is publicly listed on the Toronto Stock Venture Exchange (TSX) in Canada. Snipp was selected to the TSX Venture 50®, an annual ranking of the strongest performing companies on the TSX Venture Exchange, in 2015 and 2016. SNIPP IS RANKED AMONGST THE TOP 500 FASTEST GROWING COMPANIES IN NORTH AMERICA on Deloitte’s 2017 Technology Fast 500™ List, for the second year in a row.

FOR FURTHER INFORMATION PLEASE CONTACT:

Snipp Interactive Inc.

Jaisun Garcha

Chief Financial Officer

investors@snipp.com

Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements that involve risks and uncertainties, which may cause actual results to differ materially from the statements made. When used in this document, the words “may”, “would”, “could”, “will”, “intend”, “plan”, “anticipate”, “believe”, “estimate”, “expect” and similar expressions are intended to identify forward-looking statements. Such statements reflect our current views with respect to future events and are subject to such risks and uncertainties. Many factors could cause our actual results to differ materially from the statements made, including those factors discussed in filings made by us with the Canadian securities regulatory authorities. Should one or more of these risks and uncertainties, such as changes in demand for and prices for the products of the company or the materials required to produce those products, labour relations problems, currency and interest rate fluctuations, increased competition and general economic and market factors, occur or should assumptions underlying the forward looking statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, or expected. We do not intend and do not assume any obligation to update these forward-looking statements, except as required by law. The reader is cautioned not to put undue reliance on such forward-looking statements.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Copyright Snipp Interactive Inc. All rights reserved. All other trademarks and trade names are the property of their respective owners.