PEER Reports Q1 2018 + ProximaX Deal

May 9, 2018 at 3:06 pm Leave a comment

Peerstream (OTCBB: PEER and formerly known as Snap Interactive: STVI) reported Q1 revenues of $5.7mm, a decline of 3.5% from Q4 2017 and a 14.5% decline from Q1 2017. The revenue decline was due to a slowdown in the company’s legacy dating business and the decline outpaced the sequential growth achieved by Peerstream’s video streaming business. Despite the overall decrease in revenue, PEER posted its first EBITDA profit since the AVM merger was completed, reporting $105k in EBITDA. PEER was able to achieve positive EBITDA despite the double digit decline in revenue due to cost savings obtained through merger integration efforts.

We were pleased to see that the company was able to show sequential growth in its streaming business and that the company has been successful in achieving the merger synergies that have allowed for such a significant reduction in the company’s expense structure. More importantly, we are excited to learn of the post quarter-end developments related to the company’s Peerstream Protocol blockchain initiatives where the company’s recently executed ProximaX deal has already generated a payment of $5 million and will likely generated another $2.5-$5m over the next few quarters as various milestones are achieved. Thus, Peerstream this week received almost as much cash as the company earned in revenue in all of Q1 and there remains significant upside in additional revenue to be earned plus the value of a fairly significant stake in the coins of Proximax’s recent ICO, which raised over $30 million.

We believe Peerstream’s deal with ProximaX is a game changer that has been completely overlooked by investors. The deal’s $5 million initial payment raised PEER’s cash position as of today to $8.5 million, plus the deal provides another $2.5-$5 million in payments for achieving future milestones. We believe the ProximaX deal will provide a material boost to Peerstream’s revenue in Q2 and beyond. Perhaps even more importantly, we believe such a contract with a company like ProximaX will give Peerstream an enhanced resume for pursuing deals with other significant players in the emerging blockchain development space.

In summary, we believe that Peerstream’s reduced cost structure plus growth in the company’s core video streaming business will result in the company being cash flow positive for the remainder of 2018.  Additionally, we believe the rapidly emerging growth of the company’s blockchain initiatives could push PEER into its first profitable quarter in 2018.  And last but not least, we see significant latent value in the company’s patent portfolio and would not be surprised to see some developments that could add materially to the company’s cash balances and/or bottom line in the near future.  We believe Groove participants would do well to add PEER to their portfolio and note that the current $5 – $6 trading range does not come close to reflecting the financial impact or marketplace implications of the recent ProximaX or Kochava deals.  We see PEER as being very cheap at any price below $7 and expect that investors at today’s prices will enjoy significant double digit returns over the next few quarters.

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