Q4 2021 Inpixon Earnings Call

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I'd now like to turn the call over to David Waldman, President and CEO of Crescendo Communications LLC the company's the Companys Investor Relations firm. Please go ahead Sir.

Good morning, and thank you for joining today's conference call to discuss infections corporate developments and financial results for 2021 fiscal year ended December 31, 2021 with US today are not are I'll leave the company's CEO and Wendy <unk>, the Companys Chief Financial Officer.

And picture released financial results for the fiscal year ended December 31, 2021, if you have not received <unk> earnings release. Please visit the company's Investor Relations page at IR Dot infection Dot com.

During the course of this conference call the company will be making forward looking statements. The company cautions you that any statement that is not a statement of historical factors are forward looking statements. This includes any projections of earnings revenues cash or other statements relating to the companys future financial results any statements about plans strategies or objective management for future operations any statements regarding complete our planned.

<unk>, our strategic partnerships and the anticipated impact of those transactions on our business any statements concerning proposed new products or solutions any statements regarding anticipated new customers relationships or agreements any statements regarding expectations for the success of the company's products in the U S and international markets any statements regarding future economic conditions or performance, including but not.

Limited to the impact of COVID-19 on our operations any statements regarding the valuation attributed to any of our securities instruments any statements of belief and any statements of assumptions underlying any of the foregoing. These statements are based on expectations and assumptions as of the date of this conference call and are subject to numerous risks and uncertainties that cause actual results to differ materially from those described in the forward looking statements.

Some of these risks are described in the Safe Harbor section in today's press release and in the public periodic reports the company filed with the Securities and Exchange Commission investors or potential investors should read these risks and picture assumes no obligation to update these forward looking statements to reflect future events or actual outcomes and has done and to do so in addition.

To supplement the GAAP numbers. The company has provided non-GAAP adjusted net loss and net loss per share information. In addition to non-GAAP adjusted EBITDA information company believes that these non-GAAP numbers 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 company's financial release I will now.

I'll turn the call over Nadar Ali infection CEO . Please go ahead.

Alright, Thanks, David and good morning, everyone. Thank you for joining us today, so I'm going to jump right in and focus on three main topics I'd like to cover today.

Our 2021 revenues reached $16 million, that's a 72% increase over 2020 tremendous growth and in fact, if you look at the last four years Youll see we grew this business from approximately 3 million to 6 million to $9 million and now to $60 million in revenue.

Currently expect 'twenty to revenue to continue at these growth rates, primarily coming from organic growth with existing product lines.

During that time, we also maintained our gross margins above 70% and increase our annual recurring revenue in absolute dollars more on that later.

While total operating losses were higher as compared to the prior year over $21 million of that increase was primarily noncash nonrecurring expenses that we don't currently anticipate for 'twenty two with the remainder primarily related to depreciation and amortization stock based comp and expenses related to recent acquisitions.

We expect we will see an improvement here in 'twenty two as a result of the integration of the acquired entities and operational synergies, becoming more fully realized as the year goes on.

And as our revenue grows we should see improved EBITDA amaranth, anticipating a lower burn for 2022.

Second I wanted to touch on the decline in our market cap and stock price we.

We believe what we are experiencing is not unique to infection and has more to do with the macroeconomic changes over the past several months as well as the current political situation.

As I speak to our IR folks bankers and other Ceos. It is clear that this has impacted many companies from micro cap to large cap with micro and small caps disproportionately impacted by the current fellow values.

Valuations have come down, whether you're public or private or in the crypto space.

My team and I are focused and will continue to be focused on executing our business plan and controlling what we can but we do believe our market cap doesn't reflect the value of our business.

So for example, depending on the source you look at whether it's blossomed Street ventures, our portfolio or others. The median multiple for annual recurring revenue or <unk>.

Our 13% to 17 next and with larger companies getting even higher multiples.

<unk> been trading below the value of our cash on hand, which is before even taking into account any of our recurring revenue and our growth in <unk>.

This is frustrating and difficult to explain but however, as I said, we believe that much of this is due to the overall macro events.

And so hopefully when the volatility and turmoil in the market settle down settle down I believe the market will recognize that we are executing on our business plan and we should see a recovery.

The third topic I want to cover today is how our suite of products that have come together to deliver on the indoor intelligence experiences is more important now than ever before.

And I can give you three reasons why our current offering is so ripe for today's market.

First because hybrid and remote workplaces and events are here to stay.

Nothing is changing that back to the way it was and we believe we can help companies better than anyone else to be successful in this new hybrid work for paradigm, we have an incredible roster of customers like Aruba, Adobe Warner Media, Siemens Lenovo Nvidia meta and many more that you can find on our website all using our solutions.

To help create the best experiences for their employees customers and partners and we're continuing to add more fortune 2000 type customers that are helping us build a recurring revenue stream for years to come.

The second reason, we have great product market fit is because we are at the right place at the right time.

In fact, just last week in picture was identified by Gartner as a leader in the 2022 magic quadrant for indoor location services.

Meta versus here and companies need our products from our augmented reality technologies to our mapping positioning sensors sensors that help them create their digital twins and launch into the members.

If you're a company that doesn't have a plan to use indoor intelligence to enter the members then you need to get in touch with us.

Binding this with partners that have wearables like smart glasses, where gesture technology <unk> and the like is going to deliver significant opportunities for us to shape and create exciting new experiences for our customers.

The third reason our offering is spot on is industry, four <unk> or industrial Iot or whatever you want to call. The massive digital transformation going on in the industrial sector. This space is exploding as manufacturing warehouse.

Excuse me and logistic companies are all looking to use GWB and other sensing technologies to track assets automate workflows reduce production times and implement safety solutions.

Combine that again with <unk> and smart glasses, and we changed the factory worker experience, creating efficiencies and increasing productivity.

Alright, now I want to take a minute to explain how our tech helps companies create digital twins for the meta versus or for augmented reality, because that seems to be on top of mind for everyone. These days.

Our visual VIX products, including augmented reality and patent pending methodologies uses your smartphone camera as well as onboard sensors to create <unk> models of indoor spaces at FIS.

<unk> the user on a map with centimeter level accuracy and provides turn by turn visually guided navigation.

And then we overlay virtual artifacts onto the live map displaying key information such as room name amenities photos or reviews.

And then we just latest on your phone or smart glasses, using our CX app and make them navigating experience shareable with others.

The team is showing me a new feature that we added recently where people. These days are going into the office to meet other people, so imagine being able to see on this map, where your colleagues and friends are and being able to book a desk near them or at least no. They are onsite that day that you are planning to go in.

Of course their privacy options built in so you can decide if you want to share when and where you are in the office, but this allows us tremendous collaboration capabilities and our customer loves us functionality because it is the number one reason people want to go back to the office they want to reconnect with their peers.

<unk> is uniquely capable of providing this type of integrated solution because we can offer all of these key technologies, which is the result of our successfully executed acquisition strategy and our internal development initiatives.

I'd love to go into more in great detail about all our products and capabilities, but instead I want to share with you. Some third party facts and figures that validate what im saying about what we believe is a massive growth opportunity.

So if you go to markets and markets you can see lots of these numbers about indoor location market being $7 billion and forecasted to grow at 23% compound annual growth.

Archie allows for real time location services is a $3 $9 billion market growing at 26% industry four <unk>.

65 billion growing at 20%.

Virtual event platform $10 4 billion growing at 13, and augmented reality $15 billion growing at 31, 5% all of these sectors. We have solutions in our $1 billion market is growing at double digit compound annual growth rates.

And our internal research supports a favorable favorable situation too.

We recently released our state of indoor Intelligence 2022 study, where approximately 52% of respondents indicated they are increasing the pace of indoor intelligence initiatives with 92% reporting the indoor intelligence was key for their company to stay competitive and 77%, indicating they will be investing in indoor intelligence solutions. This year.

The huge opportunity noted in research is starting to be realized and you can see that in the strong results. We posted in 'twenty. One so let me share some stats around that.

In 'twenty, one we closed hundreds of deals with customers.

We increased our SaaS annual recurring revenue bookings by 70% or more than $4 million.

In the last few months of the year alone, we built out more than a 150 corporate campuses with tens of thousands of reserve all debt and mapped more than 12 million square feet of office space.

And importantly, our annual recurring revenue or <unk>.

Is approximately 45% of our revenues in 2021 that means we've got roughly $7 million in the bag to start this year from our current product lines and we believe this will only continue to grow as we move forward in 2022.

In addition to our smart campus App, which is really about connecting people in the office.

To highlight two of our other product lines, where we think growth opportunities just as exciting and then we haven't fully focus our sales and marketing on yet that's hybrid events and industrial Iot So let's start with hybrid events with.

With masking an indoor capacity regulations relaxing in many areas events are shifting from purely virtual to hybrid the hybrid virtual events space is taking off as it is only recently that in person hybrid events are being held given the pandemic environment.

More and more in person our hybrid business activities and conferences are being announced today in fact, we're about to host Aruba is atmosphere event in Vegas.

With an anticipated 50000 attendees that in person and online so in other words hybrid and our customers that are using our platform. Our winning awards. Our platform was recently selected by the association of briefing program managers as their exclusive event management solution.

<unk> membership includes top tier enterprises, including more than 100 Fortune 500 companies and we expect this relationship will lead to more sales opportunities for event would they are fortune 500 customers.

And there was a huge meta versus play that we can take advantage of in the event space immersive experiences can allow remote attendees to visit a virtual trade show booth and chat with product experts, while onsite attendees can use augmented reality to navigate the show floor in view digital details on the product and companies they see physically in front of them every.

Venue and event needs to have our app and maps and level up the experience that they are providing their attendees were looking to partner with folks in this space to make that happen in 'twenty two.

Now, let's move to industrial Iot or industry four point out some of the biggest spend with location technologies in this space using old school tack like RFID and handheld barcode scanners, just one zebra another show up in the Gartner Magic quadrant as leaders, we plan to take them on with ultra wide band and our proprietary turf technology. This market.

<unk> was the primary driver for the Internet of acquisition, we made in December .

Completed our offering in the Iot space, So think smart factories, smart warehouses and digital supply chain and we believe this will allow us to take market share from the zebra and Uber census of the world.

Digitizing. These facilities is top of mind for manufacturers and we have a complete offering for them now integrating the latest cutting edge technologies, including augmented reality and Wearables.

You've heard me say this before and I'll say it again all of these acquired and developed technologies have been pulled together for a reason our platform approach our ability to offer a single platform, which delivers multiple solutions and use cases is working the upsell and cross sell potential is real and it is being realized let me give you a couple of examples. So if we look at our <unk>.

<unk> office App deals in 'twenty, one for every $100000 of contract value. An initial deal. We won another $89000 on average in those customers or an 89% bookings expansion.

This is a classic land and expand strategy get in and then up sell and sell them more of what they bought and cross sell and sell them are complementary solutions.

Seen natural sales growth expansion with our customers because these large customers have so many offices and some internal system. So for example, they might rollout our app to their U S offices, and then they expanded to European offices or some customers start with a pilot and then expand and they often buy more features and add more integrations to other internal system.

Along the way.

These same large companies that need our smart office App also hold internal and external event that will no doubt be hybrid and they'll need our event solution.

And then we want to make these experiences even more immersive enrich and we use our augmented reality technologies to bring them into the members.

Another huge cross sell opportunity is to pursue sales of our industrial Iot solutions for smart warehouses smart factories into our corporate customers and vice versa.

So you can imagine automakers and others that may be using our smart campus out, but also have manufacturing side to their business right. So we've got an ability to cross sell the Iot solutions with those customers.

So I hope these examples and data that I provided you that you can see the vast potential here and how we're realizing the benefits of our acquisition development strategy and bringing these technologies and solutions all of them are the infection route.

So just to wrap up before I hand, the call over to Wendy to go over the financials, Let me summarize the current situation.

We have tremendous we have a tremendous suite of products and IP that allow us to deliver the hottest in demand markets today right. The hybrid workforce AAR meta versus an industry four <unk>.

We're planning for continued organic base growth at the levels that we've seen over the last year.

We're landing and expanding in our footprint and customers and capturing more market share by increasing our stickiness and we're continually presented with the cross sell upsell opportunities that increase our ASP or average sales selling prices.

And lastly, we've got sufficient capital that we believe provides us over a year of runway based on existing operations, while allowing us to execute on our growth strategy.

So I'd like to turn the call over to Wendy now to discuss our financials and I'll come back to answer some of the questions. You also made to our Investor relations firm <unk>.

Thank you.

Revenues for the year ended December 31, 2021 were $16 million compared to $9 $3 million for the comparable period in the prior year, an increase of approximately $6 7 million or approximately 72%.

This increase is primarily attributed to the approximate $5 million increase in indoor intelligence sales, including our smart App and real time location based technology and an increase of approximately $1 $7 million of state sales.

Gross profit for the year ended December 31, 2021 was 11 6 million compared to $6 $7 million in 2020, representing an increase of 74%.

The gross profit margin for the year ended December 31, 2021, with 73% compared to 72% for the year ended December 31 2020.

This increased margin is primarily due to the sales mix.

Net loss attributable to stockholders for the year ended December 31, 2021 was $69 $2 million compared to $29 $2 million for the comparable period in the prior year.

Greece and loss of approximately $39 $9 million was primarily attributable to the increase in operating expenses of $53 $8 million offset by the higher gross margin of $4 9 million and reduced other loss of $5 5 million.

Although total operating expenses were higher as compared to the prior year over $21 million was comprised of.

Nonrecurring and noncash expenses, which are not anticipated for 2022.

non-GAAP adjusted EBITDA for the year ended December 31, 2021 was the loss of $29 $6 million compared to a loss of $17 $1 million for the prior year period.

non-GAAP adjusted EBITDA is defined as net income or loss before interest provision for income taxes, depreciation and amortization plus adjustments for other income and expense items nonrecurring items and noncash items, including stock based compensation.

Pro forma non-GAAP net loss per basic and diluted share.

For the year ended December 31, 2021 was a loss of 26 cents per share compared to a loss of 71 per share.

For the prior year period non-GAAP net loss per share is defined as net loss per basic and diluted share adjusted for noncash items, including stock based compensation amortization of intangibles, and one time charges or other adjustments, including loss on the exchange of debt for equity provision for valuation allowance on notes and acquisition costs.

As of December 31, 2021, we had approximately 52.

$5 million in cash and cash equivalents and approximately $43 million in treasury.

This concludes my comments and I'd like to turn the call back over to another.

Thanks, Wendy David could you please lead us through the Q&A discussion.

Yes. Thanks.

Like last quarter in our conference call announced in press release, you suggested interested parties submit your questions in advance we'd like to address those questions for you know some of them were duplicative. So we get our best to reconcile those where possible. If you have any further questions. After the call. Please feel free to follow up with Investor Relations and we'll be sure to respond as quickly as possible.

So turning to our first question in December the company announced it was working on a strategic transaction can you provide a status update.

Sure So what I can.

I'd say there is that our exploration process is still underway and we really have no new information to share at this time, except to note that we are evaluating the strategic opportunities to the extent, we believe that can maximize shareholder value.

Thank you. Our next question recently, there was a linkedin posts by a Siemens employee sharing a video that showed in pictures work with Siemens energy can you elaborate on that project.

Sure. Yes that was that was a really nice video that our customer posted Siemens energy is a great customer of ours. They use our industrial Iot solution for managing <unk>.

Cereal tracking in an additive manufacturing facility in Europe .

And if you see the video our customers state that it helped them greatly improve the transparency of powder handling processes on the shop floor.

And then as in Linkedin posts, you wrote that a project that cannot be called anything else than a success story, so that was awesome.

He was talking about how fast installation commissioning.

In global Enterprise model for all Siemens energy sites available. So I think this is a great example of one of the many success stories we have.

We believe we're just at the tip of the whole Iot iceberg and.

There is significant potential for us and Theyre now, especially with the Internet of acquisition.

The industrial workplace is modernizing to standardize and centralize indoor tracking for more automation and sustainability. So we look forward to expanding our footprint in that sector.

Thank you. Our next question I understand that <unk> has a number of automakers as customers what all does the company do within the automotive sector.

So we actually have several top tier automotive automotive manufacturers as customers that industry is a great example of how we can support multiple use cases. So for example, one of our customers.

BMW inventory tracking using our Bluetooth tag another one track the movement of electrical vehicle battery safe boxes.

Another uses ultra wideband technologies for production tracking.

And besides the automakers are customers include automobile parts suppliers too. So for instance, one is monitoring material flow using Bluetooth.

And another thing is doing production tracking based on ultra wideband.

And tracking forklift with ultra wideband as well so.

There's a variety of use cases and actually we have a automotive manufacture that's using completely different use case, which is in the corporate side and the business offices and they have over 5000 of their office employees using our smart office app across eight locations. So this is where again that cross sell upsell story that we've been talking about.

<unk> is really ripe for opportunity and we're seeing that happen right. So we can we can work with our customers in their manufacturing facilities, but then also in the corporate.

Spaces, and Thats kind of our two pronged strategy, we're going after the enterprise as well as the industrial space.

Great. Thank you. Our next question digital Twins is a key initiative that is supported by Microsoft and many other large corporations can you provide some color on your digital twins initiative, and if or how the company is advancing in this area.

Yes, I mean sure. There's obviously a lot of press these days about digital twins.

For us we've been we've been kind of doing this for many years right. So for instance, our mapping platform. We plot on the map digital twins of all of the facilities.

Key places and things right, so whether it's conference room, SaaS elevators restaurants forklift.

Et cetera every element can be displayed with key data pulled from external sources. So you can view it on the map.

And see things like the temperature of a room or the hours of our cafe onsite or the part numbers in a box.

And a warehouse so you're standing in a room viewing the physical environment. While Youre also looking at your phone or tablet viewing the digital version or a digital twin of that same space.

Those two environments as one is really what the.

Meadow versus right and so we're doing things like this and associating multiple assets to other elements. So for instance, bundling parts to a work order or boxes to their palate.

And this is more advanced use of digital twins that can enable even more automated processes that result in speed and reduction in errors.

So I think we're far ahead from our competition and being able to bring practical use cases into.

The meta versus especially on the industrial side.

But this is something that we are very comfortable with and can help our customers.

<unk> launched their digital twin into the members.

Great. Thank you. Our next question CX App is powering Aruba is atmosphere conference that is being held soon in Nevada. Please comment on how the company helps conferences, especially in post pandemic environment.

Yeah. So I mentioned this earlier on the call but.

So we are supporting the Aruba atmosphere event, both our virtual event platform for remote and attendees and our mobile app for onsite attendees.

Our ability to provide an integrated solution for a hybrid events is so key right now and it's a huge opportunity we're seeing a lot of large companies that need our smart office apps, but they also hold internal and external event that will no doubt be hybrid and need our event solution. So we believe our ability to offer this in person virtual and simultaneous hybrid event.

<unk> platform.

<unk> in the market and gives us another advantage.

If you accept platform differentiates itself from competitors and that Bill.

Our ability to deliver native iOS and Android smartphone apps enhanced the experience of the event, regardless, whether you're attending in person or remotely.

We're continuing to see demand for the event platform and again. This is another cross selling opportunity with our fortune 2000 customers as they get back to doing events.

Great. Thank you. Our next question you have not been able to meet the $1 compliance with our NASDAQ listing are you exploring a reverse split.

Yes look I mean I think.

As I talked about earlier, we've got both a robust sales pipeline, we're executing on our business. That's our main focus.

That said, we've got no control over the market rate and we can control what we can control clearly the micro and small caps have been disproportionately impacted by the current sell off in the market.

But our NASDAQ listing is of Paramount importance.

We haven't as shareholder approval for a reverse split at this time.

And this is something we want to try to avoid.

But under current NASDAQ rules, we expect we have several more months to work towards curing this price requirement organically and that's our focus right now.

Great. Thank you that does conclude the Q&A and I'll turn it over to you for the close.

Alright, Thanks, Ed.

I'd just like to highlight that we are committed to continued growth and innovation that delivers exceptional user experiences and we're excited by the opportunities of what can be accomplished in the physical and digital world when leveraging our comprehensive indoor intelligence technologies.

We remain fully committed to building shareholder value by continuing to grow our business working towards positive cash flow and leveraging our balance sheet. We believe we have built the foundation for future success, both operationally and financially and we appreciate the support of all of our shareholders and look forward to providing you updates as the exciting developments unfold. So thank you for.

We're taking some time out to be with us today and take care.

Thank you ladies and gentlemen, this does conclude todays event you may disconnect at this time and have a wonderful day, we thank you for your participation.