Q1 2022 Inpixon Earnings Call
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Good day, ladies and gentlemen, and welcome to the NN picture in first quarter 2022 business update call.
Lines have been placed on a listen only mode. If you should require assistance throughout the conference. Please press star zero on your telephone keypad to be July operator at this time. It is my pleasure to turn the floor over to your host David Waldman Investor Relations, Sir the floor is yours.
Yeah.
Thank you and good afternoon, everyone and thank you for joining today's conference call to discuss infections corporate developments and financial results for its first quarter ended March 31, 2022, with us today or not or I will lead the company's CEO and Wendy <unk>, the Companys Chief Financial Officer.
Today in picture released financial results for the first quarter ended March 31, 2022, 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 relating to future events and expectations. These statements are based on expectations and assumptions as of the data.
<unk> conference call and are subject to numerous risks and uncertainties that could 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 of today's press release and public periodic reports the company filed with the Securities and Exchange Commission and picture 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 has provided non-GAAP financial measures in our discussion. The company believes that these non-GAAP numbers provide meaningful supplemental information 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'll now turn the call over to not Ali <unk> CEO . Please go ahead.
Thanks, David.
So everyone and thanks for joining us today.
Let's get started so first of all I am pleased to report that <unk> strong growth trajectory has continued through the first quarter of 2022 across multiple fronts.
77% increase in revenue over the same period of last year, primarily driven by an increase in sales related to our indoor intelligence segment, and particularly our enterprise employee experience.
We also saw continued high gross profit margins in the 73% range and.
And we expanded our customer base as compared to the same period last year, leveraging our indoor intelligence products to drive enhanced more connected employee experiences and smarter safer more secure work environment.
Many of these customers are amongst some of the largest organizations in the world and you can see some of them listed on our website.
What I wanted to just talk about where we are focusing our attention both in order to capitalize on where we see the greatest opportunities and also to address some of our challenges.
But before I expand on this further I do want to address a couple of things regarding the market impact on our stock price and NASDAQ compliance.
So I know many of you are frustrated with the stock price and I share your frustration.
The number one thing that keeps me up at night, because I know, we're executing on the business and yes. It is not reflected in the stock price given all of the macroeconomic trends.
Trends that are happening.
So what I've told my team is to focus on executing our business plan and our growth plans, let's control what we can.
And there are a lot of what is happening is nothing to do with us, but the overall market in tech stocks in particular have been hammered by a number of macroeconomic headwinds, including the war in Ukraine, COVID-19 supply chain challenges inflation, increasing labor costs et cetera et cetera. So we're focusing on what we can do and what we can.
Troll and as I said, what we're seeing isn't unique to infection.
Or even to Microcap companies, it's everything from large cast and Microcap, we've seen valuations go down for private and public companies for crypto.
So everything across the board is being.
Hammer. These days just varying degrees and certainly microcap stocks are even more challenged with market volatility.
<unk> right so.
That is where what the reality is.
We believe the trends are what we're seeing in our stock price doesn't really reflect the successes we've realized in the execution of our business plan or the opportunities in front of us.
I certainly believe that growth and you will see this from a lot of the analysts as well as the growth in value stocks like infection arent opportunity.
So, let's talk a little bit more about what those infliction growth opportunities are here.
Here in a few minutes.
But while we're on the subject to stock price I do want to just make sure everyone knows that in terms of our NASDAQ listing we did receive a letter from NASDAQ on April 26, 2022, granting us an additional 180 calendar day extension, so that gets us to October 24th.
To regain compliance with the minimum bid price requirement. So we will be working diligently to resolve this during the next six months.
Alright, so lets go onto the opportunities and what really is happening with the business.
Our indoor intelligence segments has really two drivers of growth for redefining experiences and bridging the gap between our digital and physical worlds, we refer to them as enterprise apps. This includes our CX App acquisition from last year, the events business executive briefing business et cetera, and then the industrial apps as a second one.
And that includes the most recent acquisition of Intranets and December last year on the front end, coupled with the hardware from our sensors tags chips et cetera that we've been building over the last couple of years. So both of these.
Segments.
Do you support and leverage our maps or augmented reality or on device positioning analytics et cetera.
And they're both being impacted.
<unk> with some of these trends that are happening.
In the marketplace. So, let's I want to touch on a few of these trends and how thats affecting our business and why that's driving the growth that we're seeing.
So the first two trends that I want to talk about is the back office and the employee experiences and these are somewhat intertwined although remote employee experience is also important and something that our employee experience App does help address to create equity across.
Employees that are in the office versus working remotely entirely.
So when you think about box office and the employee experience.
There's a few things that are going on obviously, we don't know.
It's debatable, whether the pandemic has ended or if we move onto an endemic stayed as some people might say, but it is clear that organizations have to move on and be prepared to bring their employees back to work. The pandemic has changed what going to work looks like right in terms of number of days you might be in the office or <unk>.
100% remote versus in the office locations people are working from various locations.
There's a lot of moving going on.
And the office space itself is changing right and how those spaces are being utilized more and more collaboration spaces are opening up.
No.
What companies are looking for our hybrid solutions that allow for flexible environment and these things are here to stay.
And we believe they're necessary in a post pandemic world right.
Some of the other things that are going on ABC news reported more than 47 million Americans quit their job last year. The most ever on record and that resignation rates are continuing to set records. Even in 2022 with over $4 5 million U S workers, putting in March and one of the reasons employees are quitting is because of the lack of the right technology.
Harvard Business review recently published an article by Unisys couple of weeks ago, saying exit exit interviews revealed that a lack of technology that enables seamless communication and collaboration among teams is often a factor and resignations. They sit in a historic shift employees are abandoning company that don't prior.
Ties the employee and user experience or more specifically they are ditching the leadership that doesn't provide the technologies and infrastructure required for their workforces to succeed in this new digital workplace.
They closed the article was validation that digital employee experience has become paramount to an enterprise bottom line.
Talent acquisition and retention can be one of the most significant challenges accompany faces and.
Those that choose the value of their employees are the ones that will succeed I've talked about the value of making sure that.
Focus on the employee experience and why that putting your people first is important that we will get to the results in terms of the products in terms of the profitability in terms of your customers et cetera. So the companies that are focused on that those are the types of companies that are our customers that we want to as customers companies like Adobe Aruba, Warner Media, Pfizer Clorox and many more.
Our enterprise App platform delivers to these modern enterprise organizations that are focused on its people by providing a smart innovative and connected space with technologies that provide end to end logistics management tools analytics for the workplace for events and customer experience programs.
Over the last few years the effects of the pandemic has created some challenges.
With customers adjusting open data as a result of various COVID-19 variants that have emerged and the competition in this arena certainly increase but we had infection can deliver an experience in a way that we believe our competitors cannot.
Our customers want an amazing experience for their employees with an intuitive UI UX experience that aligns to our customers' brands. We believe we deliver the best employee App experience in the market today from news feeds to surveys pulls and notifications, we're simplifying the modes of employee communication and making it simpler and easier for employees to communicate.
Employers to communicate with their employees and for employees to find communicate and connect with each other no matter where they may be.
And then wonder platform, that's rich with lots of features Thats already integrated with all of their existing enterprise software. We have an enterprise level platform with over 150 workplace features and partnerships that allow for over 75 enterprise software integrations.
This allows for one mobile app for all employees to access all of these various things. So that's a huge differentiator for us.
They also want something thats easily easy to scale globally right. So our platform allows customers start with one campus and then scale quickly by adding additional campuses desks rooms and buildings all within the same app.
So you have a.
The same experience across all of your locations across all of your entities. This also provides management visibility in one location or across all the locations to better understand what's happening there space space utilization and how better to serve their employees.
So today, our enterprise solutions are driving experience for employees.
Roughly 300 campuses across more than 50, plus customers and in a number of countries globally.
We believe the current number of campuses, we built for our current customers. So far represents only a small portion of their total aggregate footprint. So we have an opportunity here to multiply our recurring revenue just by expanding our footprint within our existing customer base rate I've talked about how it is important for us to keep building that recurring revenue stream.
And this is part of what's going on here right. So we certainly have some up front nonrecurring revenues and certainly the other segment of our business has one time sales, but the reoccurring revenue that we start building in with these customers is very key and youre going to see that growth as we continue to build here and as these customers expand.
<unk>.
I touched on this last quarter, we're seeing that we land we start with one campuses are a few campuses, but after initial deployment, we're seeing our bookings with these customers increased by 89% within the first year right and so.
We are seeing for every 100000 for example at 89000 additional bookings that we're receiving the expansion land and expand strategy is working and I expect that number to even grow as we fully rollout to their locations.
Hybrid events is another piece that I've touched on in the past, but it's important to bring up here. That's another major trend, that's resulting from the pandemic pre pandemic events were primarily 100% person joined dependent tend to make the shift was 100% of virtual so the hybrid event allows.
Allows for greater reach with potential for massive expansion audience not just by number of attendees, but also geographic regions. So whether it's an executive briefing event with 50 people or an industry conference with 50000 people, they're almost all turning hybrid and they're looking to use product like infections award winning event platform to deliver the best possible experience.
For attending in person or online and again all of these products use.
Enterprise solutions use are.
Products across the board right, so whether it's the match whether it's the analytics, whether it's the on device positioning, they're all integrated and delivering towards the complete solution.
So I wanted to talk about another trend here in the third trend on the industrial automation side right. So we talked about enterprise apps and then.
I mentioned the industrial apps. So this kind of drives the industrial app side and the growth that we're seeing there.
We're in the middle of what's being called the fourth industrial Revolution.
Focus on.
Interconnectivity automation machine learning AI and real time data with more changes in innovation coming just behind all of this right. So it's a continuous.
Evolution here ultimately this all leads to intelligence, it's all about the data and intelligence that you get from the data.
We refer to as indoor intelligence, if you will.
And for US. This is the driving force for I understand it's creating new opportunities and as eccentric puts it.
By bringing new life to physical machinery, and connected products, allowing us digitize manufacturing and operations, we've been talking about the combination of physical and digital world and how those things are coming together and disconnected works. So while these new technologies with <unk> coming in it's all becoming more and more of a reality today.
And windows using this technology will design thing smarter engineered things safer manufacture things faster.
<unk> things remotely and producing sustainably, making everything better.
<unk> industrial Iot <unk> technologies and capabilities are key to this industrial Revolution, we have a breadth of software and hardware products that make up our RTL assumptions and make us.
And give us a differentiator in this space.
So we've got a broad range of technique.
Technologies here from ultra wide band to Wi Fi Bluetooth and to our proprietary implementation of chirp technology.
Infections location, where enterprise class multi technology.
<unk> solutions are helping organizations deliver on the concept of smart factories, smart warehouses paperless factories smart yard management digital supply chains, and the list goes on and on.
And finally I wanted to just touch on one other trend.
That is in the news a lot and we haven't touched on today.
Obviously, the meta versus in the extended reality that encompasses so a lot of the focus of extended reality, which includes augmented reality virtual reality mixed reality.
And of course, <unk> has been on consumer products right in gaming and virtual reality, but as powerful as it can be in the consumer segment the.
The market has really a week into the meta versus benefits for BBB right.
So from digital twins that you upload into the meta versus to the use of augmented reality and business operations from factories to hospitals to entertainment venues.
Opportunities to profoundly improve business activities is tremendous.
And then pension delivers the foundational technologies required to make this a reality, we can leverage our proprietary technologies and skilled employees in the areas of hardware design software development wireless communications mapping positioning augmented reality computer vision <unk> rendering.
Visualization et cetera.
For delivering on what our customers need and the metrics right. So for example are mapped to create those digital twins of your physical space.
To launch into the mid <unk> right and we're already leveraging the augmented reality capabilities that we acquired through visual into our maps and into our employee experience App and soon all of those that functionality will be in the industrial outside as well.
So we have lots of different ways that we're able to help our customers not only improves the employee experience, but also help them launch into.
The <unk> and we also have key collaborations in integration partnerships with companies in this ecosystem that we've already established.
Leveraging to help make the experience.
As possible for our customers.
So the way in which our technologies are aligned with all of these huge market trends that we just talked about I believe positions us well for what we think will be continued substantial growth end markets.
Only just beginning to gain traction.
Now I'll turn the call over to Wendy here to discuss the numbers, but before I do I will just note that.
We achieved $5 $2 million in revenue during this first quarter of 2002, which as I mentioned earlier is a 77% increase compared to the same period of 'twenty, one and we've seen a generally consistent revenue growth rate over the last two years.
Primarily due to the execution of our growth strategy, which is a combination of organic revenue growth and the addition of newly acquired complementary products and technologies aimed at ensuring we could offer our customers a one stop shop.
You will for their indoor intelligence needs.
We're still open to continuing to explore strategic acquisitions to enhance our business.
We've got all the foundation technology pieces already in house, and we're anticipating continued strong revenue growth, but now with a primary focus on the organic growth over the acquisition growth.
Alright, so with that I'd like to now turn the call over to Wendy to discuss our financials Wendy.
Thank you Alan.
Revenues for the three months ended March 31, 2022 were $5 2 million compared to $3 million for the comparable period in the prior year for an increase of approximately $2 $3 million or approximately 77%.
This increase is primarily attributed to the increase of indoor intelligence sales, particularly the addition of the fact that product line during the second quarter 2021.
Gross profit for the three months ended March 31, 2022, with $3 8 million.
Compared to $2 $1 million for 2021, representing an increase of about 86%.
The gross profit margin for the three months ended March 31, 2022 was 73% compared to 70% for the three months ended March 31 2021.
Net income or loss attributable to stockholders have input from for the three months ended March 31, 2022 was Alaska is $11 million compared to a loss of $12 6 million for the comparable period in the prior year.
This decrease in loss of approximately $1 3 million was primarily attributed to the increased gross profit of $1.8 million.
Lower operating costs of approximately <unk> <unk>.
$6 million and higher non controlling interest of $4 million offset by the $1 5 million unrealized loss projects.
non-GAAP adjusted EBITDA for the three months ended March 31, 2022, with a loss of $8 $8 million.
There to allow us to $5 $6 million in 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 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 March 31 2022.
Loss of seven cents per share compared to a loss of $8 per share for the prior year period.
non-GAAP net loss per share is defined as net loss per basic and diluted share adjusted.
Adjusted for noncash items, including stock based compensation amortization of intangibles, one time charges and other adjustments, including loss on the exchange of debt for equity unrealized gains or losses on notes and acquisition time.
As of March 31, 2022, we had approximately $75 $9 million in cash cash equivalents and Treasury securities.
This concludes my comments and I'd now like to turn the call back over to Tyler.
Alright, Thanks Randy.
David would you please lead us through the Q&A discussion.
Great. Thanks, not like last quarter in our conference call in our press release, we suggested interested parties submit their questions in advance wed like to address those questions for you know some of them were duplicative. So we did 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.
As quickly as possible so.
So our first question in December the company announced that it received an indication of interest for a potential strategic transaction can you provide a status update.
Okay.
Yes, what I can say there is that the exploration process and discussions are still underway.
But we have no new information to share at this time, except to note that we are evaluating strategic opportunities.
And to the extent, we believe they can maximize shareholder value. So we'll continue to evaluate and move forward on those as it makes sense.
Great. Thank you. Our next question, which division is showing the greatest revenue gains and corporate demand.
Good question, Yes. So we're currently seeing the most traction with our enterprise App solutions, which given the return to office.
Environment that we're in makes sense.
And we're witnessing the most revenue growth within that part of our indoor intelligence segment. So.
Our intelligence is obviously in terms of our business segments. The one thats seeing the most growth within that its enterprise apps.
And that's because customers care about their employees and wanted to have the technologies in place to deliver that experience.
As I mentioned.
They are at risk if they don't right.
What can happen with this great resignation going on when you don't prioritize the employee experience and we're continuing to gain the attention of fortune 500 companies across various industries and as I indicated we've historically been able to substantially expand our footprint in these accounts once.
We land them.
And I expect that.
That number will increase as we fully rollout to all of the campuses there so enterprise.
Enterprise assets.
Allowing us to build tremendous growth with increased recurring revenue streams and more value for infection shareholders.
Great. Thanks. Our next question is why would $1 75 strike price warrants bought back.
Other than lease leaving them alone eventually expire as more warrants were initiated at 47 strike.
Yeah Fair question. So this was done to and completed to really clean up some of the restrictions challenges related to those prior warrants, which would then allow us to more easily execute strategic transaction, if and when appropriate.
And so that was the main driver for that.
Okay. Thanks. Our next question can you provide us with an update on the intranet integration.
Sure. So as you guys know we've completed the <unk> acquisition in December 2021, he brings some great synergies and complimentary technologies and in fact, we're already integrating our technology into the Internet Iot platform, because we see a strong opportunity for sure in what's referred to as the yard area. So just outs.
Slide the manufacturing facility, where many of their parts and materials are stored and chirp is particularly well suited for asset tracking in those areas and to work with other technologies such as ultra wideband.
And as we discussed earlier, we see strong potential for growth in the Iot sector right and there's a lot of spend in the industrial.
Verticals and so we're looking forward to executing on that and our teams are very active in connecting with new prospective customers.
We're.
Just featured speakers logistics statement put on BVA all the German Logistics Association next week, we are exhibiting and speaking at the logistics and distribution trade fair.
And then I think in June we are exhibiting at embedded world.
So theres a lot of conferences and trade associations that we're attending and participating marketing activities to grow that side of the business.
That one has been challenged by some supply chain issues on the hardware side, but as Youll see were still seeing growth despite that.
We will continue to build.
And integrate internet into the rest of the organization. So we're pretty pleased with the progress on the acquisition integration front.
And we're looking to grow this business.
Over the next several quarters.
Alright, thank you not or that does conclude the Q&A and I'll turn it back over to you for the close.
Alright, well. Thank you everyone for joining us today, we're really.
Take your time.
As I've said, we're focused on executing and growing the business.
And im.
Im pleased with the results that we showed today and we're building the enterprise outside as well as the industrial apps.
We've been fortunate to keep winning customers in the space. We just had a couple of fortune five hundreds that we closed this month. So thank you for your support and interest and we will be in touch soon thank you.
Ladies and gentlemen, this does conclude today's teleconference. You may now disconnect. Your lines at this time and enjoy the rest of your day.
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