Q2 2020 Inpixon Earnings Call
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I would now like turn the conference over to David Waldman, President and CEO Crescendo Communications LLC, the company's Investor Relations.
Please go ahead Sir.
Good afternoon, and thank you for joining today's conference call to discuss infections corporate development in financial results.
Three months ended June Thirtyth 2020.
With us today or not or I'll leave the company CEO and when do you on demand a company's chief financial Officer.
Today, It's actually released financial results for three months ended June Thirtyth 2020, if you have not received in Texans earnings release. Please visit the company's Investor Relations page and I are taught infection dot com.
During the course of this conference call. The company will make forward looking statements comedy cautions you that any statement that is not statements. Historical fact is a forward looking statement. This includes any projections of earnings revenues cash rather statements relating to the company's future financial results any statements about plans strategies objectives, It management for future operations and he Stephen Curry.
Starting completed a planned acquisitions or strategic partnerships and anticipate impacted those transactions on our business any statements concerning proposed new products, where solutions any statements regarding anticipated new customers relationships are agreements any statements regarding expectations for the success of the company's products in the U.S. and international markets any statements regarding.
Economic conditions or performance, including but not limited to the impact of quoted 19, our operations and he Stephen a belief and any statements that assumptions underlying any of the foregoing. These statements are based on expectations and assumptions as the data. This conference call and is subject to numerous risks and uncertainties that cause actual results to differ materially from those this.
Right and the forward looking statements. Some of these risks are described in the Safe Harbor section of today's press release and public periodic reports.
The company follow the Securities Exchange Commission investors or potential investors should read these risks and fiction and assumes no obligation to update these forward looking statements to reflect future events or actual outcomes and does not intend to do so in addition to supplement the GAAP numbers. The company is provided non-GAAP adjusted net loss and net loss per share information addition to now.
Non-GAAP adjusted EBITDA information company believes that these non-GAAP numbers to provide meaningful supplemental information and are helpful. In assessing our historical and future performance a table reconciling the GAAP information to the non-GAAP information is included in the Companys financial release I'll now turn the call hurt you not or Ali Impaction CEO. Please go ahead.
Thank you David and good afternoon, everyone.
Thank you for taking the time to join our conference call today.
Let us begin by addressing how some similar to all of you. We have continued to manage through the pandemic over the last few months, including its impact on our employees and our ability to meet customer needs.
After a quick and efficient transition of all of our employees from offices to working from home.
Most of our employees continue to work remotely.
In spite of a challenging situations experienced by all both personally and professionally I remain proud of the entire infection team, which continues to be highly productive and fully engaged.
Well the pandemic generally had a minimal effect on our day to day operations and customer support efforts, we have experienced certain obstacles.
In this regard we have seen supply chain constraints and shipping delays various components, resulting from supplier factory shutdowns or a lack of on site customer staff are available to process orders and receive products.
In terms of Hamburg, certain activities like sensor installation and user acceptance testing.
As a result in certain cases customer orders and bookings originally anticipated to be realized during the second quarter were delayed to Q3.
In other cases customers away planned expenditures during the second quarter as they continue to assess the impact of the ongoing pandemic on their own business teams.
While our revenue for the second quarter declined on a year over year basis, we did not see any material impact on revenue received from our subscription based products and other services that could be performed remotely and for the six month ended June Thirtyth revenue remained flat as compared to the same period of last year.
Well businesses throughout the country and globally slow we reopened we expect that we will continue to contend with some of these challenges.
That's what impact that they will have on our results of operations for the remainder of the year is uncertain. However for the reasons I will discuss today. We continue to remain optimistic that we will be able to show meaningful year over year revenue growth and believe we will emerge from the endemic in an even stronger position as the importance of indoor intelligence and our products because.
I was more evident to current and potential customers.
Let me explain.
During a period of unprecedented times, our engineering sales and marketing teams were proactive and quickly pivoted our development resources to design develop and introduce our workplace readiness dashboards built on our inspection indoor intelligence platform to offer government and enterprise organizations solutions to helping.
Sure the safety of their visitors and employees as they prepare and begin to bring employees back to the office within the backdrop other pandemic.
Our workplace readiness solutions provide live analytics to help organizations with their efforts to implement appropriate safety precautions by showing trends and changes in people flow and occupancy density by zones.
This information is critical to organizations as it provides the ability to monitor and communicate key insights from building in zone health and to identify areas. They need increase cleaning efforts crowd management or contact racing.
Oh, sorry, P. eyes, and upload capabilities allow customers to integrate data collected from external sources sources, such as temperature readings thermal camera accounts or customize will health assessment questionnaire responses within the same dashboard offerings single platform to assess and monitor workplace readiness across.
The variety of use cases.
Within ability to deploy our food solutions remotely by leveraging existing Wi Fi access points businesses that use our technology within their premises have ready to use access to our workplace readiness dashboards with the essential tools I've described.
For those customers, who are looking tissue tags for asset tracking where identify identity badges to visitors and employees for managing occupancy and to adhere to best practices.
We will be offering ultra wide band or are you WB technology with centimeter level positioning accuracy.
Earlier this week, we announced the receipt of FCC certification for our your WB module, which has a very exciting milestone.
You did we view the radio technology that can enable a more precise measure of radio frequency signals, allowing for essentially to lever level accuracy and location measurements.
This technology can be implemented in a broad range of applications and the increased location accuracy allows were contextual decision, making reduced operating costs increased safety and greater security for assets and data communication.
The seismic adoption of the Internet of things is already beginning to include you WB transmitting technology in several consumer and industrial applications that will require a mission critical transmissions of high quality data with accurate locational context.
We expect that you WB will be significant in our future offerings, along with the work, we're doing and Fiveg cellular detection next generation BLE and Wi Fi six.
Our sensor fusion capabilities have long been a differentiator for us and we expect to continue to show our leadership and innovation in this space.
In addition to the significant product development work, our marketing and sales team embarked on a nationwide reclaim your workplace advertising campaign designed to increase awareness of the value of our offerings, including our workplace readiness solutions.
The campaign is targeted at key decision makers at Fortune 500, and other large enterprises and government agencies via a series of print and digital ads online videos radio spots and podcast sponsorships.
We delivered over 15 million impressions throughout the campaign, we are well known online and print media, including the Wall Street Journal, New York Times, Washington Post linked in the Ted Radio hour and planet money.
In addition, we launched a new corporate website, the complements our AD campaign.
The website provides existing and potential customers a comprehensive an informational platform that highlights our vast capabilities as well as best practices for companies during the ongoing pandemic.
The website includes the Queen modern design with advanced search engine optimization around or workplace readiness solutions.
Since the launch the website traffic has increased dramatically by more than 12 times and has already climbing the search rankings, surpassing most of our competitors.
Looking ahead, we intend to aggressively pursue efforts over the coming months to create awareness around the utility and value of our technology to organizations around the world.
Our offering around our core competencies encompass visitor analytics way finding navigation security.
That prevention evacuation.
Asset tracking workforce productivity facility management building energy efficiency and much more.
We believe the work we're doing provides customers with significant value as global businesses address new realities.
During the quarter, we signed a collaboration and reseller agreement with Lenovo, a leading multinational technology company.
In connection with this collaboration Lenovo its incorporating our workers readiness to ask dashboard with physical distancing and contrast contact tracing capabilities into its think aiotv back to work solutions.
Lenovo market and sell into in picks in workplace readiness solutions through its sales channels and deployments and will be facility by Lynn Lenovo is field network of more than 20000 technicians.
We are excited about the opportunities for this partnership which has already leading to conversations with fortune 500 organizations.
As we continue to explore multiple organic growth opportunities, we're expanding our team with new hire throughout our organization, including in sales and marketing product development and customer success.
During the second quarter, we also welcome Tyler Hoffman as our new Chief revenue Officer.
Tyler answer more than 20 years in revenue leadership positions at prominent companies, including pay Pal, Google visa ebay and seen at networks.
He has deep experience in enterprise software and software as a service spanning fintech ecommerce security data media and retail sector and we believe that he will be instrumental to our progression and growth.
In connection with our acquisition growth activities at the end of the second quarter. We completed the acquisition of a global distribution and development license persist and Sigma Platts software suite, where we acquired the right to market distribute and develop a suite of data analytics statistical and visualization tools.
This transaction brings a significant number of large well known corporate enterprises universities and government agencies into our customer base.
We expect this transaction to be accretive to earnings and contribute approximately three and a half million dollars in revenue annually.
Additionally, we will continue to actively evaluate and pursue where appropriate strategic M&A opportunities that will allow us to build upon and enhance our overall platform. As we are determined to establish ourselves as a leader in the indoor intelligence market.
In connection with our acquisition strategy, we intend to explore a multitude of opportunities. Some of these opportunities may offer us the ability to enhance our technology and product offerings expand our verticals and or international presence and global footprint.
For example, we're looking at opportunities to be on devices through mobile phone apps with on device navigation and other functionality, including incorporating our face readiness solution on the device.
Others may expand our capabilities around security artificial intelligence.
Our VR or other high growth sectors.
We look forward to providing more information around these opportunities and if they arise.
Turning to our financials, while we did experienced a decrease in revenue during the second quarter compared to Q2 2019 as mentioned at the beginning of the call. Our revenue for the six month period, ending June Thirtyth 2020 was relatively unchanged, which we believe reflects the long term stability of the business.
In addition, we remain encouraged by the outlook for continued growth and anticipate that we will continue to see growth on a year over year basis.
Additionally, during the second quarter of this year, we were able to access capital resources from our aftermarket or ATM facility. We ended the quarter with approximately 39 million of cash cash equivalents and have reduced our debt.
As a result, our balance sheet, the stronger than ever providing us with the ability to execute and continue to invest in our organic growth strategy as well as explore other potential strategic transactions to increase shareholder value.
With that I'll now turn the call over to wanting to discuss our financial results for the three months ended June Thirtyth. During 2000, and then I will wrap up with a few closing comments Wendy.
Thanks, and thanks, everyone for joining us today.
Revenues for the second quarter ended Q3, 2020 were $1.1 billion compared to $1.5 million, they're comparable period in the prior year for a decrease of 450 $415000 or approximately 28%.
The decrease in revenues in the second quarter 2020 compared to the prior period in 2019 were primarily attributable to the delay and anticipated customer orders for our sensors from a significant customer that was received subsequent to the quarter and.
Gross profit for the three months ended June Thirtyth, 2020, with $771000 compared to $1.1 million for the comparable period in the prior year for a decrease of 30% well gross margin for the three months ended June 30, 2020, with 72% compared to 74% for the second quarter ending.
Q3 in 2019.
This decrease in margin is primarily due to lower margins associated with infections mapping services. During the second quarter ended June 30 to 2020.
Loss from operations for the three months ended Q3 2020 was $5.1 million.
Barry to $4.7 million for the comparable period in the prior year.
This increase in loss of approximately 400000 dollar was primarily attributable to the decrease in revenue during the second quarter 2020 as compared to the same carried up last year.
Net loss attributable to stockholders of infection for the three months ended June 32000, $27.3 million compared to $5.2 million for the comparable period in the prior year.
The higher loss of approximately $2.1 million was primarily attributed to the lower revenue additional interest expense in debt discount on promissory notes at a $1.4 million evaluation along the Jeff.
Non-GAAP adjusted EBITDA for the three months ended June Thirtyth 2020, well the loss of $3.9 million.
Compared to last a 1.9 $9 for the pie appeared in 2019.
Non-GAAP adjusted EBITDA is defined as net income or loss before interest provision for income taxes, and depreciation and amortization plus adjustments or other.
Income or expense items, nonrecurring items, and noncash items, including stock based compensation.
Pro forma non-GAAP net loss per basic and diluted common share for the three months ended June 30, 20, Tony was a loss of 21 cents per share compared to a lot of $13.33 per share for the prior period in 2019.
Non-GAAP net loss per share is defined as net loss per basic and diluted share adjusted for stock based compensation amortization of intangibles provision for doubtful accounts severance costs acquisition costs costs associated with public offerings and onetime charges, including the loss on the exchange of debt for equity in valuation allowance adjustment.
On hand at June 30, 2020, with approximately $39.5 million.
This concludes my comments and I'll now turn it back I turn the call back over to another.
Thanks Wendy.
So I'd like to thank everyone for participating on our second quarter conference call. While we identified certain challenges that we along with our customers and the rest of the world I've had to navigate as a result of the covered 19 pandemic. It's also important to recognize that during the second quarter 2020, we have been able to make progress towards improving our overall financial condition in a significant way.
This progress has well positioned us to be able to continue to invest in and execute on our growth strategy for the longer term.
As a result, we have rapidly enhance and expanded our product offerings geared towards filling a critical need in today's world.
These solutions will help our customers create a safer healthier environment for their employees and visitors to support efforts to comply with best practice recommendations.
I look forward to the remainder of the year and providing further updates as we continue to expand overall awareness not just on our workplace readiness solution across all of our capabilities, which we believe make us a leader in indoor intelligence with an ability to offer a comprehensive suite of solutions that is almost in comparable in the market today with a single organization.
Patient.
In addition to all of you would like to thank our shareholders customers and partners and our meeting employees across the globe for your continued support I'll now turn the call over for questions Victor.
Thank you.
We will now have our question and answer session.
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One moment, please let me now poll for questions.
Our first question comes from the coal Kaufman Blackbird capital. Please proceed with your question.
Hi, everyone I Love first I'd like to say congratulations on the progress you've made thus far.
My question is that you mentioned that certain orders expected in Q2 were delayed to Q3.
Could you provide some color on these delays and how they can possibly.
Positively impact Q3.
Sure. Thanks, Nicole further question.
Yes, as Wendy mentioned, there was a particular significant customer which.
Had an order that we anticipate in Q2 that did get delayed as a result of.
The pandemic and we have received in Q3.
We currently anticipate anticipate.
Partial shipment of that order in Q3 with the visibility that we have in supply chain.
With the balance prior to the end of the year. So I think it's good news that we've been able to received that order or the customer as.
You know awaiting the delivery of.
The sensors associated with that order and we'll expect.
To be able to ship.
Terrific and portion in Q3 and the balance in Q4.
But given that supply chain challenges continue to be experience and remain fluid.
There is uncertain there, but we were pretty confident that before the end of year, we should have the order completely fulfilled.
Okay, Great and just as a follow up to that I know you can't mention or given needs of the company's that.
Sure I'm in contact with them that are in your sales pipeline, but could you give some a broad overview in terms of the size and types of companies that you are talking too.
Sure yet.
You can imagine many of our customers, especially in the securities based don't.
Like to have a share their names, but certainly could give you some ideas or types of companies the significant customer I just mentioned as a you know.
Technology company here in Silicon Valley in the Fortune.
100.
We have other fortune 500 customers as I mentioned earlier on the call that we're engaged in for a variety of our solutions, we continue to build on our.
Government customers so throughout the U.S. government.
You know agencies, both at individual department levels and agency wide type discussions are happening.
And then we do get periodically calls from international government.
And we've had some as retail hospitality conversations as well from large brand marquee names that you would all recognize so that will give you a flavor of the types of customers were engaging with.
Great well I'm looking forward to further updates and thanks for taking my question I'll have any other questions I'll jump in the queue. Thank you. Thank you.
Thank you.
Next question comes from back would force capital. Please proceed with your question.
Hey, guys. Thanks for taking my question I mean, you guys that are pretty good job shoring up the balance sheet.
How do you plan to deploy saw the cash they rate.
Hi, Alan Thank you for the question.
Yeah look I mean, our focus.
This year and certainly with the capital is really about growth and growing the company. Despite the challenges that we and other space as it was all depend imec.
We feel that.
We can deploy the capital and put it to good use in terms of both organic growth and strategic M&A type growth. So specifically on the organic side.
As I mentioned, we've we've increased our sales and marketing efforts with the launch of the.
Marketing campaign advertising campaign.
We are promoting the workplace readiness solutions, we're also expanding our sales and marketing workforce.
That was part of the reasons why we brought Tyler analysts to really grow and build our sales organization and help us scale. The company. So we'll be adding onto the workforce on on both those sides product development customer support.
And we'll be investing in R&D, just like we did with this you WB.
Sounds from that you saw from the FCC.
We want to continue to innovate and be a leader in the space. So we'll continue to invest in that.
Which all will drive our organic growth, which is a which is a priority for the company.
Strategic M&A type.
Opportunities.
We will put the capital to work to make sure, we're creating value and ROI for our shareholders and showing growth.
It will be looking at additional technology enhancements, our offerings that we could add to our portfolio that will really help us scale. We may look at it adding additional.
Companies into the portfolio that expand our vertical presence or geographic presence.
And specifically in terms of.
Getting on to the device rate.
Mobile device.
Penetration is important for us so having apps navigation on device as well as the way we provided in indoor premises is a is an area that we're looking into so we'll be considering a lot of high growth sectors around.
Around security, a guy and a RV our as it relates to indoor intelligence.
Well, it's great I mean that sounds all pretty exciting thanks, so much.
Thanks Alan.
Thank you.
Ladies and gentlemen, Unfortunately due to time constraints that it's all the time will have today for question I'd now like to turn the floor back over to management for any closing remarks.
Yes.
Thanks, Richard Thank you everyone for joining our call today, we look forward to updating you as the business progresses and please stay safe. Thank you.
Ladies and gentlemen. This concludes todays webcast you may now disconnect. Your lines at this time. Thank you for your participation and have a great day.