Q3 2022 Inpixon Earnings Call
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Good afternoon, and welcome to the in pitch and business update call. All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing Star key followed by Zero Park participants of this call I advised.
The audio of this conference call is being broadcast live over the Internet and is also being recorded for playback purposes, a telephone replay of the call will be available approximately one hour. After the end of the call through November 21st 2022.
Now I'd like to turn the call over to Alexandra Shield, Vice President of Christian Bayle Communications LLC, the company's Investor Relations firm. Please go ahead.
Good afternoon, and thank you for joining today's conference call to discuss infections corporate developments and financial results for its third quarter ended September 30 F. 2022.
With us today are not rally the company's Chief Executive Officer, and when do you under Amendment, the company's Chief Financial Officer Today, <unk> released financial results for its third quarter ended September 32022.
That received infections earnings release, please visit the company's Investor Relations page at IR gotten infection dotcom.
During the course of this conference call the company will be making forward looking statements.
The company cautions you that any statements that is not a statement of historical fact 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 objectives objectives of management for future operations any.
Regarding completed or planned acquisitions or strategic partnerships and the anticipated impact of those transactions on the company's business.
Statements concerning proposed new products or solutions.
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 the company's operations.
Statements regarding the valuation attributed to any of our securities instrument 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 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 in the public periodic reports the company filed with the Securities and Exchange Commission.
We also encourage you to read the public filings made with the SEC related to the proposed business combination with <unk> technology group, including a registration statement on form S. Four registration statement on form S. One and in particular to the infection risk section titled risk factors for a discussion of the risks that can affect.
The transaction the Companys enterprise apps business and the outlook of the combined company investors or potential investors should read all of these reps.
<unk> 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 adjusted net loss and net loss per share information. In addition to non-GAAP adjusted EBITDA information. The 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 turn the call over to not early infection CEO . Please go ahead.
Thanks, Ali and Hello, everyone. Thanks for joining us today, as we discuss our progress and business developments during the third quarter.
So late last year, we announced that we would explore options to maximize shareholder value and joined this most recent quarter, we've taken meaningful action in a number of ways in furtherance of this objective.
We implemented measures to streamline our operations and reduce our operating cost, including reducing our global head count by approximately 20%.
We regained compliance with nasdaq's bid price requirement and we announced the signing of a definitive agreement for the spin off and sale of our enterprise apps business to Ken's technology group in a transaction that will deliver shares of <unk> capital stock based on a pre transaction value of $69 million to holders of infection securities as ever.
Record date to be announced.
We expect a record date will be announced as we get closer to regulatory clearance.
We believe this transaction is a win for our shareholders recognizing the value of our workplace experience technologies, including our enterprise App indoor mapping events platform augmented reality and related business solutions based on a transaction value that offers a significant premium over infections current market price.
In addition, this transaction will provide the enterprise apps business with more focused and dedicated capital and operational resources, including a new management team and board to become a more recognized force in the industry.
I believe that our company continues to be undervalued in this market. So we will continue to evaluate other strategic opportunities for the remainder of our business. In this regard as we previously announced we have entered into a nonbinding letter of intent and are in due diligence stages with another third party in connection with a potential transaction involving the remainder of.
Our business.
We are determined to pursue opportunities that we believe will unlock additional value for our shareholders.
With respect to our results of operations, while revenue for the nine months was up over the same period last year, we have faced headwinds given the volatility in the overall financial markets. The uncertainty felt by some of our prospective customers and the ongoing supply chain challenges net.
Nevertheless, we believe these challenges are short term and we have focused our efforts on pursuing opportunities that we believe will result in a faster path to profitability and streamlining operate operations to position our businesses for long term success and continued growth.
Additionally, we believe the activities we are undertaking will assist us in exploring our path to profitability. We're convinced we're more convinced now than ever that there are vast opportunities in the market and we believe we are firmly positioned ourselves at the forefront of the industry by building comprehensive full stack solutions that few competitors can match.
Organizations are continuing to seek technologies that maximize efficiency increased productivity and drive growth as I've mentioned on previous conference calls. This shift has accelerated as a result of the pandemic as organizations are trying to adapt to hybrid and remote workplaces, while keeping employees engaged and productive in our enterprise solutions are in.
Excellent.
Many of our customers are validating that belief and expressing their satisfaction by growing their investments with US. We continue to have success with what we've referred to before is our land and expand strategy.
As an example, one of our customers, which is a well known organization. The entertainment industry started with a pilot in 2021 for our experienced job then they expanded to two regional headquarter campuses and then expand into Europe , and Asia, giving US 15 toll campuses live in or out.
Now we are at 19 campuses and over 4 million square feet license and there are 10 more campuses and progress scheduled to be completed by the end of Q1 next year.
Their implementation is a great example of the power of our technology agnostic platform and our ability to integrate with third party systems. They are using blue dot way, finding NFC room booking integrations to health attestation forms.
Facilities ticketing visitor registration systems occupancy occupancy sensors tied to this space availability maps smart Walker booking checks at port appointment bookings and more than <unk>.
Almost all cases of our experience products, we are helping our customers to transform their workspace operations and how their employees interact with the potentially large textile.
For example, in one or another one of our recent enterprise deployments, we enabled our customers consolidate 11 different tools services and integrations into one unique experience, helping that customer to drive adoption and throughput and an exciting initiative to support return to the office and hybrid work.
We have many other examples of our success in cross selling and up selling with our clients. We think the experienced app and hybrid events platform has a lot of upside potential with both new and existing clients.
Now, let's turn to our industrial business line.
The industrial Internet of things market, or Iot is big and growing larger markets and markets estimates or reached $106 1 billion by 2026.
Grand View research recently stated advancements in technology, and the increasing availability of affordable sensors and processors that can provide real time access to information are expected to drive the growth.
We could not agree more we've seen that industrial Iot can deliver benefits that customers need even as the economy slows. These.
These location intelligent solutions automate processes, helping organizations to increase efficiency and reduce costs by.
By harnessing location data and adding context industrial organizations, such as factories warehouses and mining operations can make database decisions improve resource allocation reduce waste and boost production speed throughput quality and more ultimately, creating agile resilient operations to mitigate the volatility.
D and disruption in todays uncertain market.
We are witnessing strong traction in the market and we brought numerous brought in numerous purchase orders and contracts throughout the quarter.
Including a new purchase order with one of the largest electronic distributors in the world whereby infections industrial Iot platform and ultra wideband tags are now available for streamline purchasing throughout this worldwide channel.
We also brought in the first purchase order following the execution of our collaboration agreement with Schonborn systems to implement infections.
Oh <unk> solutions for our customers seeking collision avoidance systems and increased mining safety.
Purchase orders for additional solutions in three countries with a leading global energy products and services company also came in to implement and fictions industrial algae products for asset tracking and to enhance business operations.
Catherine will also begin a pilot program utilizing in fiction provided BLE mesh network technology to attract high value assets with a.
Within our large manufacturing site.
Finally, we had some additional purchase orders with multiple large mining equipment manufacturers for Archie less components for their collision avoidance and proximity warning solutions to optimize mining operations and improve worker safety.
As you can see we have a good purchase activity from new customers as well as existing customers that land and expand strategy. We talked about earlier for the experienced shop is also bearing fruit on the industrial side of the business.
As an example, we have a customer in the top 100 on the Forbes Global 2000 list of the larger public companies in the World. In 2021, we first started working with the division, which manufactures equipment for power plant, we installed our industrial Iot platform Ultra wideband tags, and then electronic shelf labels to help them automate their manufacturing processes.
Then they expanded their use cases by purchasing our GPS tags to improve their logistics and shipping processes.
And then a third area of the facility, we installed our wire past PLE tracking solution to <unk>.
Great example of expanding cross customer sites and countries and are adding technologies and use cases. It's also a good proof point on how our platform supports multiple technologies, which is again something many competitors simply can't do.
It was so successful that they install this at another facility in another country to track production orders and then we landed a third side in an entirely different continent and we're currently in discussions to bring on several other sites. We have the potential to have dozens of your manufacturing facilities standard on centralized on the infection are jealous.
It's been an eventful and productive quarter for infection. Overall, we are making significant strides in order to create value for shareholders expand our business operations grow our customer base and we continue to explore all options available to us Ulta.
Ultimately, we believe these activities will accelerate our path to profitability as well as increased adoption in the market.
We are focused and continue to work diligently on the business and towards completing the strategic transactions and will keep our shareholders apprised of developments.
With that Wendy I'll turn it over to you to discuss our financials.
Great. Thank you David.
Revenue for the three and nine months ended September 32020, Q4 by $2 million and $14 $1 million respectively.
The $4 $5 million and $10 $9 million for the comparable period in the prior year for a decrease of approximately 6% on an increase of approximately 30% respectively. This decrease for the 2022 third quarter, its primarily actually that you delayed shipments.
Iot product line and lower sales for the whole product line.
However for the nine months.
We did see an increase in revenue, which is primarily a chevy Akiva increase in indoor intelligence sales, including the addition of the <unk> product line during the second quarter 2021 on the addition of the Iot product line in the fourth quarter 2021.
Gross profit for the three and nine months ended September 32020, here with $2 $9 million and $1 $1 million respectively.
Gross profit of $3 $3 million and $7 $9 million in the 2021 receptor period.
With a decrease of approximately 10% an increase of 28% respectively.
Gross profit margin for the three and nine months ended September 30 employees, 22, with 70% and 71% compared to 73% for both the three and nine months ended September 30 of 2021.
This decrease in margin was primarily due to the sales mix during the period.
Net loss attributable to stockholders of infection for the three and nine months ended September 32022.
$17 $6 million, and $48 $7 million, respectively, compared to $33.6 million and $31 $4 million, respectively for the comparable periods in the prior year.
This increase in loss was primarily attributed to lower gross profit of $7 $6 million goodwill impairment and other noncash items, including unrealized net loss on equity securities.
I'll start by decreased operating expenses in the nine months ended September 32022.
non-GAAP adjusted EBITDA for the three and nine months ended September 32022, with a loss of $8 $2 million and $26 $9 million, respectively, compared to a loss of $6 $7 million and $18 $5 million in the prior year periods respectively.
non-GAAP adjusted EBITDA is defined as net income or loss before interest provision for income taxes, depreciation and amortization plus adjustments for other <unk>.
Tom 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 and nine months ended September 32022, with a loss of $3 96 billion and.
And a loss of $13.44 respectively.
Compared to a loss of $3 77.
And a lots of 13.
Six eight 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 and other adjustments, including impairment of goodwill provision for valuation allowance on node and acquisition costs.
As of September 32022, we had approximately $63 million in cash and cash equivalents.
That was offset by payments of approximately $45 $8 million related to redemption of shares of our series a preferred stock and increased by $15 million in gross proceeds received from the sale of securities subsequent to the end of the quarter.
This concludes my comments and now I'd like to turn the call back over to another.
Yeah.
Thanks, Wendy Alan would you please lead us through the Q&A discussion.
Yes. Thanks.
Like last quarter in our conference call announcement press release, we suggested interested parties submit their questions and then we'd 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 risks.
And as quickly as possible.
First question is in your share consolidation press release on October six.
You State you entered into a nonbinding LOI with a third party for the remainder of the business, but can you elaborate on that.
So unfortunately I cannot go into specifics at this time, but as we stated this is a nonbinding letter of intent one involving the remainder of our business. We do not have a definitive agreement in place yet and we're still in due diligence stages. As I mentioned, we are and will continue to explore all options available to us and only enter into agreements that we believe are in the <unk>.
Best interests of invention and our shareholders. We will provide updates regarding this as soon as we are able to do so.
Thanks, Dana next question can you explain what number of shares infection shareholders will receive a 10 in layman's terms.
I'll do my best Yeah. So while this information is in our filings I'll provide a quick summary, so infection shareholders and certain other security holders will receive an aggregate of approximately $6 9 million shares of <unk> class, a and class C common stock.
Allocated 10% and 90%, respectively and subject to adjustment in accordance with the terms of the merger agreement.
The record date for holders of securities that are entitled to receive Securities will be announced at a later date. Following the resolution of any assets. You are the regulatory comments that may be received in connection with the related registration statements that have been filed.
In connection with the transaction.
For more information regarding in terms of transaction. We encourage you to read the company's form 8-K filed on September 26 2022.
Thank you next question is why was the $15 million registered direct offering conducted.
Yeah as Wendy indicated we were required to redeem a portion of our series a preferred stock in accordance with their terms. So this offering was able to provide additional capital to support our operations.
Thank you.
Our next question are you considering further cost reductions or restructuring given the sale of the CX that business line, such as additional reductions in the workforce or realignment of management.
So as we've previously previously announced we reduced head count by approximately 20% at the end of third quarter. We do also have to ensure that we have sufficient resources to continue to realize growth across our business lines. However, we will continue to critically evaluate our expenditures and cash resources to maximize.
Efficiencies in operations.
Thank you. Our next question does the investor of the $5 85.
Placement received their infection shares over a period of time.
So there was a pre funded warrant issued in lieu of common stock and the investor Panamax size or pre funded warrant overtime.
But for more specific information regarding the terms of that transaction. Please refer to the 8-K filed on October 20th and that that will give you more detail.
Alright, thank you not or that concludes the Q&A I'll turn it back to you for the close.
Alright, Thanks Alley, and thank you all for joining us today as always we appreciate the support of all our shareholders and look forward to providing more updates in the near future. Thank you and take care everyone.
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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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