Q1 2020 Earnings Call

Ladies and gentlemen, thank you for standby and welcome to the NTN Buzztime earnings Conference call.

At this time, obviously adventurous going I mean.

Please be advised today's topic. This year recording you acquire he British systems. Please press star zero.

I would now living hand to conference over to your host for todays.

Sure since Chetan Kelly King you may begin.

Thank you. Good afternoon. Thank you for joining us today for NTN Buzztime first quarter 2020 results conference call in webcast joining us today, it's CEO Alan walk before we begin let me remind you that during this conference call management May make forward looking statements about the company's plans.

<unk> in gold in the company's anticipated financial in other performance.

Forward looking statements by their nature address matters that are two different degrees subject to risks and uncertainties that could cause actual results could differ materially and adversely from those expressed in any forward looking statement those risks and uncertainties that are outlined in the company's press release issued today and described in greater detail in part.

One item one a risk factors of the company's annual report on form 10-K for the fiscal year ended December 31, 2019 built by opened the FCC.

On March 19th 2020, and just like in other documents the company filed or files from time to time with the FCC thereafter, including in the company's current reports on form 8-K filed with the FCC on March 32020 in on April 21st 2020 in the company's quarterly report on form.

10-Q for the quarter ended March 31, 2020 expected to be filed within in the next day or to.

The forward looking statements made today or as of the D. in this call and based on current expectations, except as required by law. The company undertakes no obligation to revise or update publicly any forward looking statements for any reason now it's my pleasure to turn the call over to Alamo. Please go ahead Alan.

Thank you Kirsten. Thank you for joining us today I hope that everyone is safe and staying healthy during this challenging time I would like to thank all those fighting a cold that 19 pandemic today all share an update on our Q1 2020 results how we're navigating through the current conditions and the impact.

Just coated 19 as we plan for the future.

If you recall, we started 2020 focus on growing our business in an efficient manner with the onset of cold at 19, the abrupt and substantial impact it had on the restaurant and bar industry and therefore on our business, we turned our focus to maintaining operations and implemented measures to further reduce costs.

Today, we have 17 employees of which 15 have shifted to work from home and two gone or warehouse in the Midwest.

I'd like to give especial. Thank you to these individuals for digging in as we navigate the challenge is a 2020.

I'm proud of the entire team, whose communication commitment and execution has been fluid and seamless.

First I'll review, our response to covert 19, including prioritizing higher margin solutions and introducing out of venue game play.

I am pleased by the time gains continue to drive engagement and play at our open venues. However, due to government shelter in place directives across the country and orders requiring the shutdown of bars football onsite dining at restaurants and of general retail outlets about 70% of our approximately.

1400 paid sites temporarily suspended their subscriptions to our service.

Therefore revenue has been significantly impacted since mid March.

We believe subscription suspensions peaked in late April we are encouraged at some stage started easing and lifting restrictions on restaurants and bars in early may and the number a small number of cost of our customers have proactively reinstated their billing as bus time as a key part of their venue offering.

In addition to those venues in states that have eased <unk> lifted restrictions on restaurants and bars, we are beginning to end their temporary billing suspensions.

That said, we are uncertain when or if our customers work will reopen or if they do if they will continue to subscribe to our service.

Yes, we are unable to forecast revenue streams with any degree of certainty because the full extent to which the co bid 19 pandemic will impact our venues and therefore, our business depends on future developments that are highly uncertain and cannot be predicted at this time.

As a point of reference we estimate if you're able to retain 70% of our venues we can generate approximately $6 million, an annualized subscription and related advertising revenue.

Due to our contracted team size, we are working creatively to prioritize our development and network engagement.

Development right before cobot 19.

We released in in venue on screen shorter game experience with Bugs time trivia. Many games a five minute game play with two and a half minutes of AD space.

This version augments our longer game option.

We intentionally utilize the second channel to enable segmentation for audience has attracted to the shorter engagement horizon and to explore more customization options for the future.

Opportunities include additional branded experiences competitions and pricing as well as features to inspire in venue challenges that encourage invites insured.

When the effects of the pandemic began to adversely impact our business. We also took immediate action to engage our players through expanded connectivity the our mobile app to offer out of that you gaming.

This transition this quick transition much fruitful, we experienced an immediate spike in daily active users more specifically mobile game play from March to April is up over 100%.

With this expanded connectivity radius, our daily active user engagement has increased more than three times.

While we will continue to explore out of venue opportunities.

Businesses reopen and restrictions are lifted or he is our primary focus will be enabling sites to drive customers and play into venues as they opened for business.

Although our advertising revenue tapered off at the end of Q1, we had two and a half months of solid performance at the beginning of the year.

We met our expectation to more than double our Q4 2019 programmatic advertising revenue of 80000.

As we recorded over $160000 and programmatic advertising revenue in Q1 2020.

This is a testament to the efficacy the AD exchange and the strategy to complement subscription revenue with programmatic digital out of home advertising.

We anticipate bringing the AD network back online in the upcoming weeks as our venues reopened for business.

With regards to our hardware business, we anticipate delivering another shipment of tablets to our correctional facility partner in the upcoming months.

Given the state of the economy as a result of the pandemic the lumpiness of tablet orders and the limited band with our contracted team has to focus on this business. We believe the short term opportunity to build the hardware business is limited.

For example spend go a party to which we have sold tablets in the past anticipate orders previously planned for 2020 being pushed into 2021.

Therefore, we are exploring creative ways to monetize their inventory and the assets related to the hardware business.

In addition to the impact that cobot 19 have on her 2021st quarter result, our results were also impacted.

By lower site count during the quarter compared to the prior year and by the sale of our live events business in January 2020.

Our Q1, 2020 revenues were $2.4 million compared to $4.8 million in Q1 2019.

We reduced SGN expense to $3.1 million in Q1, 2020 from $3.5 million in Q1 2019.

For Q1, 2020, including noncash impairments of $800000 for capitalized software and goodwill related to our Canadian business net loss attributable to common shareholders was $1.2 million or 42 cents per share.

This compares to a net loss attributable to common shareholders, a $313000 or 11 cents per share in Q1 2019.

Unrestricted cash was $2.2 million at March 31, 2020, compared to $3.2 million at December 31, 2019.

Subsequent to quarter end in April we received a 1.6 million dollar loan through the carriers Act Paycheck protection program.

Gold the program is to maintain Johnson, the small business sector and we are using our loan proceeds for the allowable related expenses.

And our 29 to 10-K, we included a statement regarding a substantial backed out about our ability to continue as a going concern through March 19 2021.

As a result of the impact of the coal that 19 pandemic on her business and taking into account our current financial condition. We believe we will have sufficient cash resources to pay forecasted cash outlays through October 2020, assuming we're able to successfully manage our working capital deficit by managing.

The timing of payment to our vendors other third parties and the obligations to our lender.

Additionally, we submitted our plan to regain compliance with stockholders' equity listing stand or to the NYSE in late April.

Finally, as we know the ability to be a standalone publicly traded company is extremely challenging at our size and in this environment, we are evaluating opportunities to monetize our assets and exploring all options.

In conclusion, 2020 will be a challenging year for many industries and businesses, including us and our venue partners and the restaurant and bar industry.

In that regard the benefits of our platform become more critical to our customers influencing dining choice and increasing dwell time, thereby enhancing the guest experience. So we look forward to supporting our customers with trivia expense experiences as they reopen for business.

Thank you for joining US today, please stay safe and I look forward to connecting with each of you directly in the upcoming weeks.

Operator, you may conclude the call.

Thank you ladies and gentlemen. This concludes today's conference call. Thank you for participating you may now disconnect everyone have a great day.

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