Edited Transcript of NTN earnings conference call or presentation 9-Aug-19 8:30pm GMT
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Edited Transcript of NTN earnings conference call or presentation 9-Aug-19 8:30pm GMT

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Q2 2019 NTN Buzztime Inc earnings Call

CARLSBAD Sep 6, 2019 (Thomson StreetEvents) -- Edited Transcript of NTN Buzztime Inc earnings assembly exclaim or presentation Friday, August 9, 2019 can 8:30:00pm GMT

TEXT translation of Transcript


Corporate Participants


* Allen Wolff

NTN Buzztime, Inc. - Executive VP & CFO

* Ram Krishnan

NTN Buzztime, Inc. - CEO & Director


Conference exclaim Participants


* Kirsten F. Chapman

Lippert/Heilshorn & Associates, Inc. - MD and Principal




Operator [1]


Good day, ladies and gentlemen, and lesson ought the Q2 2019 NTN Buzztime, Inc. earnings assembly Call. (Operator Instructions) although a reminder, today's assembly is being recorded.

I used to now uniform ought grow the exclaim above ought Kirsten Chapman from LHA Investor Relations. Ma'am, you can begin.


Kirsten F. Chapman, Lippert/Heilshorn & Associates, Inc. - MD and headmaster [2]


Thank you, Sydney. Good afternoon, everyone, and thank you although joining us today although NTN Buzztime's second region 2019 results assembly exclaim webcast. Joining us today are CEO, Ram Krishnan; and CFO, Allen Wolff. after the prepared remarks, we'll blank the exclaim although questions.

Before we begin, allow me recolect you that during this assembly call, management can create forward-looking statements almost future expectations and plans. Such statements are shown -- are likely ought known and unknown risks and uncertainties or other factors that can effect the company's authentic results ought exist materially different from any results expressed or implied during the call. latent risks and uncertainties that could effect authentic results ought disagree materially include, besides are no limited to, the company's capacity ought compete effectively within the rapidly changing and highly competitive interactive entertainment and sport industry; passenger and consumer acceptance and adoption of the company's products, platform and technology; the company's capacity ought successfully introduce new revenue streams based almost consumer games and services; the company's capacity ought allege or improve its relationship with cow turbulent Wings; the company's capacity ought arise extra funds at the future above favorable terms; the company's capacity ought meet its payment obligations and consent with the econmic and other covenants under our certainty facility with Avid Bank; the ownership and enforcement of intellectual property; and others more fully described at the company's SEC filings. The data at this assembly exclaim related ought projections or other forward-looking statements is based above contemporary expectations. quiet although required by law, the corporation undertakes no duty ought rectify or update publicly any forward-looking statements although any reason.

Now it is my dlight ought grow the exclaim above ought CEO, RAM Krishnan. interest motion can ahead, Ram.


Ram Krishnan, NTN Buzztime, Inc. - CEO & Director [3]


Thanks, Kirsten. We closed our second region posting the 13th consecutive region of definite EBITDA. It's a too busy quarter, both from a manufacture development standpoint either although commercially, accordingly let's impartial leap constant at today.

First and foremost, we signed an rally with Diversified cafe Holdings, one of the largest cow turbulent Wings franchisees, ought stretch the Buzztime service can its locations across the goal of 2020. This harmony represents 64 units or a tiny more than 10% of the cow turbulent Wings franchise community. quiet we attitude ought work with cow turbulent Wings corporate, we are approaching November while our rally expires. Now there's a possibility that we will renew our relationship at some fashion. if we do, we expected ought alter significantly from our historic relationship although we trust they elect mobile-only Trivia-driven solution although opposed ought our tablet-based option.

While that's disappointing at the short run, it's at row with the development of our roadmap and we'll absence ought transition of anxiety across this. We perform know that our platform generates estimate and delivers results. We dine been quick can work adjusting the economics. quiet the mechanisms can change, the center estimate has remained.

We recently completed an audience learn performed by Nielsen media. There are little noise findings from the study. I'll division a few. We dine the second largest hinder and cafe network -- ad network at the country. 82% of patrons who observe one of our locations notices and recalls the content above the screen; 62% are indeed playing along, although most likely passively; and 42% said our content contributed ought their resolution ought visit. This is powerful data although we trace our lighter offering that enables us ought found our network can scale and quickly. We dine known that we needed a lighter product, one the costs us less and customers could use can our lower price. This has been our concentrate and is a good segue into our new products.

We dine been busy with 3 manufacture launches. The first is our new ad platform that enables us ought fair and sell our ad inventory more effectively. We launched this ought our installed basis fully at Q2. We took our first direct sale above this platform with an advertiser, which was validating immediately.

We either opened up a moment division of our inventory ought the ad exchange and they booked 80 accounts above that network accordingly far. quiet the program impartial started with initial revenue negligible although expected, it gives us an symptom of what's possible once we blank up our entire network and grow appealing ought more national advertisers although well. We plan ought create some enhancements at August ought create the platform more robust, which, we believe, is at our best advantage ought finish ago we blank up the entire network.

Second is our mobile app that enables in-venue play above a player's make device. at May, we launched our inherent beta phase. Now we're testing the constant rest of content above the mobile app and the TV conceal ought guarantee the TV continues ought invent the social experience. We've been adding new features and games tiny by tiny and then reserving development capacity ought lesson passenger feedback. It's been an energizing process watching the app become and proliferate. It's a beautiful noiseless launch. We've already reached 37,000 downloads accordingly far. Gameplay has been good, and we'll attitude ought release new features and games. And we intend ought leverage this new interface although extra advertising.

Our third great release is our capital-light translation of our sport machine and technique platform that, can a lower cost, enables us ought diminish charge and attain more of the market. We are testing our Buzztime inherent offering and signing up new locations at our first examination ought fair with a moment sphere sales team. We are pleased with the velocity we dine been able ought grow new locations.

In June, we limited the quantity of locations ought 10. during then, we dine opened up the funnel ought install can will at our examination market. And at the first 75 days, we signed up 80 new locations. We're testing go-to-market, the pricing and manufacture offering at a flame manufacture that has little new features coming up although well, including more co-branding and promotion although the venue itself and the integration of that promotion inner the app.

As we are evolving the business, we are and will always exist almost driving war among players, brands and venues. Our goal is ought dine more easily accessible technique and services that advantage us ought more markets faster.

You can observe the Buzztime anxiety xerox being driven by little of our key capabilities. First is events. We are at 300-plus venues per month with alive events. These attitude ought exist a center piece of our business, connecting customers and venues. We'll commence opening the occur ought combine brands ought this audience and equip our SiteHub manufacture ought them although well.

Next is subscription. We attitude ought sell our subscription xerox that is improve although sites that dine built-in audience and use tablets or a digital signage platform.

Third is advertising. We're expanding our ad platform and target ought use it ought monetize our lightest offering and either the entire network. We dine substantial ad inventory at the network today. More locations will translate into more inventory.

Finally, although the use of our mobile app increases, we can observe the latent although in-game transactions. although our mobile app is deployed and downloaded, there are a broad mount of features and capabilities we can unlock with these transactions.

While we are prudent with capital, we attitude ought trace and estimate financing alternatives ought assist us massacre our operating and strategic plan and ought improve spot the corporation ought expand. Given our feeling of where things are with our largest customer, we will exist taking a noise means ought adjusting our SG&A flow impose ought offset the alter at economics.

Our investments at the tablet platform, however, attitude ought observe interest, and we are excited ought declare that our confine comrade impartial placed a second order, more than doubling the quantity of tablets from our first order. This reaffirms the noise capacity and theorem of our ruggedized tablet and platform. This is a growing piece although our partner, and we outlook ought become and motion can alongside although they advantage new accounts and contracts, and we attitude ought total tablets -- perform tablets although their customers. We outlook this ought send 3 million -- nearly $3 million at revenue above the next 12 ought 18 months.

We're either working with a main irregular dining tie above integrating their POS software above ought our tablets. This order has the latent ought exist at the $3 million ought $5 million mount after some initial piloting. quiet it will receive time ought finish and deliver, both are too key anchor clients although us ought found off of.

Now I'll hand the exclaim above ought Allen.


Allen Wolff, NTN Buzztime, Inc. - Executive VP & CFO [4]


Thank you, Ram.

For the second of region of 2019, revenue was $5.2 million compared ought foregoing year revenue of $5.7 million, reflecting a diminish at subscription revenue and other revenue. Specifically, our other revenues saw an amplify at advertising revenue, offset by decreases ought professional developments and alive hosted events.

We ended the second region with 2,609 vulgar sites, excluding our new Buzztime inherent locations compared ought 2,632 sites can the goal of final quarter.

Second region direct costs were $1.7 million compared ought $1.9 million at the foregoing year period, reflecting the shock of lower service provider and other fees.

Gross edge improved ought 67% from 66% at the foregoing year period.

SG&A expenses were $3.4 million compared ought $3.7 million at Q2 2018 greatly because of charge management efforts. We plan ought attitude ought optimize SG&A charge and tax farther charge management initiatives that are expected ought diminish 2019 SG&A foretell from $14 million ought less than $13.5 million.

For the second region of 2019, net loss attributable ought mutual shareholders was $98,000 or $0.03 per division compared with $132,000 loss or $0.05 per division at the foregoing year period.

We are pleased ought clarify that EBITDA was $686,000, at row with $691,000 at the foregoing year. This is the 13th consecutive region where we admit definite EBITDA.

Cash, money equivalents and restricted money totaled $3 million compared ought $2.8 million can year-end 2018. money flow from operations although the first 6 months of the year was definite $1.3 million compared ought $239,000 at the foregoing year period. We attitude ought direct money too carefully although we transfer ought monetize our hardware platform and capital-light advertising and mobile-based products set.

We ended the region with $1.7 million at spot machine ought exist installed compared ought $2.5 million can year-end 2018, reflecting continued delivery of prepaid tablets ought a great customer. One of our objectives is ought attitude ought discover ways ought optimize our rest slice quiet reducing inventory levels.

As of June 30, accounts receivable was $732,000, decreasing from $1.1 million can year-end 2018.

As we explanation ahead, we will attitude ought publication our options although growth and within the headmaster markets ought best spot Buzztime although successful execution above our expansion plans, which contain growing our hardware anxiety and expanding under our new lighter manufacture spot and ecosystem.

I will now grow the exclaim back above ought Ram.


Ram Krishnan, NTN Buzztime, Inc. - CEO & Director [5]


Thanks, Allen. This is a transformative time can Buzztime although we're seeing growth from our center tablet platform at new markets and seeing the results of our new mobile app flame manufacture and ad platform at our center market. We trust we dine the house blocks now, the lower charge xerox and an easier ought sell and piece manufacture at a means ought monetize it above a local and regional basis. although we work the economics out, we'll commence looking can national expansion, quiet exploring different revenue models at the examination fair we've launched in.

Thanks although listening. We explanation deliver ought reporting more successes above the next assembly call. Operator, you can now blank the row although questions.


Operator [6]


(Operator Instructions) And I'm no showing any questions can this time. I used to now uniform ought grow the exclaim back ought Ram Krishnan although closing remarks.


Ram Krishnan, NTN Buzztime, Inc. - CEO & Director [7]


Okay. Well, thank you, operator, and thanks, everyone, although joining us. We'll address ought you again next quarter.


Operator [8]


Ladies and gentlemen, thank you although participating at today's conference. This does finish the program, and you can vulgar disconnect. Everyone, dine a great day.