TANGELO REPORTS 2017 Q3 FINANCIAL RESULTS; OPERATIONAL FOCUS DRIVES BUSINESS METRICS
Toronto, Ontario – November 30, 2017 – Tangelo Games Corp. (“Tangelo” or the “Company”) (TSX-VENTURE: GEL) reports its financial results for the third quarter of 2017 (the three and nine month periods ended September 30, 2017).
All figures CAD
- Tangelo generated revenue of $8.45 million and $26.70 million for the three and nine months ended September 30, 2017 compared to revenue of $9.31 million and $30.22 million for the three and nine months ended September 30, 2016. The Operating Loss was $1.08 million and $2.26 million for the three and nine months ended September 30, 2017 compared to $0.12 million and $1.45 million for the three and nine months ended September 30, 2016. Adjusted EBITDA of $2.03 million and $6.94 million was realized for the three and nine months ended September 30, 2017 compared to $2.96 million and $8.72 million for the three and nine months ended September 30, 2016 (see Non- IFRS measures).
- In the third quarter, Tangelo’s operational turnaround began to bear fruit:
o Paying users at Tangelo Israel grew year-over-year for this first time since the acquisition of the Diwip business.
o Revenue from new players at Tangelo Spain grew year-over-year for the first time since the acquisition of Akamon.
Vicenc Marti, President of Tangelo, commented: “While our development staff has been focused on the essential tasks of developing a better mobile product and completing our migration from Flash to Unity, our operating teams have been fighting hard to drive user growth and spend across our current platforms. In this quarter, Tangelo delivered several improved business metrics that represent milestones in our operational turnaround of Tangelo’s social casino assets.
Tangelo Israel – monetizing historical user base
As previously identified, one of our key growth opportunities is unlocking the value in the historical Tangelo Israel database through better data-driven marketing. In the quarter, Tangelo grew paying users at Tangelo Israel year-over-year and quarter-over-quarter for the first time since the acquisition of the Diwip business, and in doing so, effectively reversed a two year decline. This turnaround was driven by a comprehensive range of initiatives, including changing management, technology platform and CRM systems.
Tangelo Spain – driving new user revenue through new features and markets
While Facebook desktop continues to decline as a destination for much of the industry, Tangelo Spain is growing revenue from first-time players at its own portal through the release of innovative new features, including the introduction of its coin “bank” and new missions and tournaments. These new features had the effect of growing portal revenue in Spain and Latin America, including Argentina and Mexico. In the quarter overall, Tangelo grew revenue from new players at Tangelo Spain year-over-year for the first time since the acquisition of Akamon.
Remarkably, these milestones were achieved prior to Tangelo launching its new mobile apps scheduled for release in the next two quarters. Additionally, we achieved these important growth metrics while maintaining our focus on migration out of FLASH and into UNITY, which is nearing completion.
Oscar Fonrodona, Tangelo’s Managing Director, remarked: “Our path is clear: we need to continue optimizing our internal marketing programs to set up Tangelo for its next phase of growth, which will be around the launch of its mundijuegos app for the Latin markets by the end of Q4 2017 and the launch of our English-language app at the end of Q1 2018.
Tangelo’s first new US facing app is ‘Best Jackpot’, which will deliver a unique jackpot-based gaming experience, is expected to be released by the end of Q1 2018.”
James Lanthier, Chief Executive Officer of Tangelo, commented: “We are pleased with our progress in improving the business. While our improvement in operating metrics may take some time to translate into revenue and operating profit growth, the business is demonstrably heading in the right direction, with paying users increasingly slightly quarter-over-quarter from approximately 53,000 to 54,000. Our decline in overall revenue in the comparative periods was primarily driven by a reduction in revenue from Facebook at both Tangelo Israel and Tangelo Spain, a secular trend affecting most publishers in the sector. Tangelo’s Facebook business was further impacted by our lack of new content due to our migration process. Migration is nearly complete, however, and as we have previously stated, our best defense against Facebook desktop’s gradual decline as a distribution platform is a better mobile product, and with two upcoming mobile app releases and the Unity migration nearly complete, we believe that we are well positioned in this regard.
Our costs were essentially flat between periods, and in Q4 we have taken additional steps to reduce our corporate overhead costs and obligations.
The Company reiterates that it is in discussions with a number of parties regarding potential transactions that could result in an acquisition, merger with, or sale to a third party. The Company can offer no assurances that these discussions will yield a successful transaction, and the Company can offer no further details or commentary regarding the likelihood or nature of the potential transactions.”
Financial Results and Non-IFRS Measures
The Company has included certain Non-IFRS performance measures, namely EBITDA and adjusted EBITDA, within this press release. The Company believes that, in addition to conventional measures prepared in accordance with IFRS, we and certain investors and securities analysts use this information to evaluate the Company’s performance and ability to generate cash, profits and meet financial commitments. These Non-IFRS measures do not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other issuers. These Non-IFRS measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.
EBITDA is defined as “Earnings Before Interest, Tax, Depreciation and Amortization”. Adjusted EBITDA adjusts EBTIDA for due diligence and transaction costs and restructure and severance expenses as these are generally non-recurring. The Company removes stock based compensation in calculating Adjusted EBITDA as it is a non- cash expense that can vary significantly depending on the timing of option grants. EBITDA does not include the discontinued operations of Vast and Tech Channel. The following tables provide a reconciliation to Operating Loss/Income on the Statements of Consolidated Income and Comprehensive Loss for the three and nine months ended September 30, 2017 and 2016 as reported in the Company’s interim financial statements.
Caution Regarding Forward-Looking Information:
Certain statements in this press release may constitute “forward looking statements” which involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. When used in this press release, such statements may use such words as “may”, “will”, expect”, “believe”, “plan” and other similar terminology. These statements include, but are not limited to, statements with respect to the future business and operations of the Company, the ability of the Company to release new and successful games, the financial results of the Company and its subsidiaries, negotiations with the Company’s lenders to extend or amend terms of the credit facility, the potential to enter into a strategic or financing transaction with a third party or receive approval from the Company’s lenders to enter into such transaction, and the future prospects of the Company. These statements reflect management’s current expectations regarding future events and operating performance and speak only as of the date of this press release. The forward-looking statements involve a number of risks and uncertainties. These risks and uncertainties include, but are not limited to, general economic, market or business conditions and future developments in the sectors of the economy in which the businesses of Tangelo operate. The foregoing list of factors is not exhaustive. Please see the Company’s short form prospectus dated March 27, 2015, the Company’s Annual Information Form dated November 11, 2015 and other documents available under the Company’s profile on www.sedar.com, for a more detailed description of the risk factors. The Company undertakes no obligation to update publicly or revise any forward-looking statements, whether a result of new information, future results or otherwise, except as required by law.
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