Q4 2022 Inpixon Earnings Call
Welcome to convictions business update call.
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Through April six 2023.
I would now like to turn the call over to Alexandra Schultz, Vice President of Crescendo 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 2022 fiscal year ended December 31 2022 with.
With us today are not are Ali the company's Chief Executive Officer, and when do you underpin the company's Chief Financial Officer.
Today infection released financial results for 2022 fiscal year ended December 31, 2022, if you have not received infections, earning release. Please visit the company's Investor Relations page at IR Dot infection dotcom.
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 fact is a forward looking statement.
This includes any projections of earnings revenues or cash or other statements relating to the company's future financial results any statements about plans strategies or objective of management for future operations any statements regarding completed our planned acquisitions or strategic partnerships and the anticipated impact of those.
<unk> transactions on the company's 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.
Of the 19 on the company's operations any statements regarding the valuation attributed to any of our securities instrument any statements of belief and any statements of assumptions underlying any of the FERC filing.
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.
Some of these risks are described in the Safe Harbor section of today's press release and in the public periodic reports the company files with the Securities and Exchange Commission. We also encourage you to read the public filings made with the SEC related to the recent spin off of our enterprise App technology.
Technology group, including the registration statement on form S. Four and Registrate rich registration statement on form S. One.
And in particular to the section or section titled Risk factors for a discussion of the risks related to the transaction.
The Companys enterprise apps business and the outlook of the combined company.
<unk> or potential investors should read all of these risks <unk> assumes no obligation to update these forward looking statements to reflect future events or actual outcome 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'll now turn the call over to not only infection CEO . Please go ahead.
Thanks Ali and good afternoon, everyone and thank you for joining our call today as we discuss our 2022 fiscal year accomplishments and financial results.
To begin I'd like to highlight the significant progress we made throughout 2022.
Despite macroeconomic headwinds globally, we executed on our growth strategy, which resulted in a 21% increase in year over year revenue.
Additionally, we maintained a solid balance sheet with over $20 million in cash and cash equivalents, allowing us to pursue growth opportunities to maximize value for our shareholders.
Jordan, We recently announced completing the business combination of CX off holding Corp, with Jim's technology group with.
With this transaction, we successfully sold our CX off workplace experience business line, which included our workplace off technologies indoor mapping events platform and related business solutions.
We worked very hard on the strategic transaction for many months with the goal of unlocking additional value for our shareholders, which we do not believe was being fairly reflective of our market cap.
As a result of this transaction, which closed on March 14th.
Shareholders received the benefit of potential upside in two rather than one publicly traded companies and.
Conviction shareholders as of the March six record date.
Over 7 million shares of <unk> common stock, representing just over 50% of the outstanding shares of <unk> common stock.
Shareholders were able to maintain the same number of infection shares that they held before the transaction plus they received net news the exceptions.
There are now two separate businesses, each with its own distinct customers and product lines.
We see this as a major accomplishment for both infection and CX App, we believe each company can better leverage the unique opportunities of each specific market with dedicated resources and management teams. While also continuing to work together as partners and our resellers to offer comprehensive solution sets for our respective customers.
In addition to completing this transaction we also implemented additional initiatives over the last few months to reduce operating expenses and overhead for both businesses. After the closing of the transaction for.
For infection, we expect to see a reduction in our annual operating expenses from the initiatives, we implemented in Q4 and reduction in operating expenses, resulting from the sale of the <unk> business.
We believe these combined efforts to decrease our operating expenses and potentially our burn by approximately 50% over the coming quarters.
We also remain committed to pursuing beneficial strategic opportunities that we believe will increase the company's total enterprise value for the benefit of our shareholders in that regard. We previously announced that we have entered into a non binding letter of intent with a third party.
If this transaction advances to fruition, we expect to result in combined enterprise value to exceed the value of the <unk> transaction.
Again, we believe the market cap is not capturing the true enterprise value inflection business that remains therefore, we are hopeful that this transaction or any transaction that we ultimately pursue will help capture that value for our shareholders. As a result, we remain aggressively engaged in the due diligence review and negotiation process and look forward to announcing further.
In the near term.
And currently we're continuing to focus on accelerating the growth of our <unk> product line.
Real time location systems are changing the way industries operate in today's data driven world businesses that leverage these technologies can gain a competitive edge by optimizing our operations and capitalizing on the benefits of smart factories, smart warehouses automated mining operations and digital supply chains.
We can help organizations, creating connected visible and automated industrial workflow with our platform by integrating location aware sensors digital twins and advanced applications.
Our.
That form a scalable flexible and intelligent users can reduce their operational costs and deliver more product faster to their customers are utilizing asset tracking automated operations collision avoidance and more all available via our platform.
The <unk> market is experiencing increased demand from a wide range of industries, including manufacturing logistics health care and others Mr.
This demand is driven by the growing need for efficient supply chain management, and the increasing need for real time operational visibility.
However, one of the challenges is that the market is characterized by complex technology significant investment requirements for new players and the need to develop meaningful ecosystem partnerships. These barriers can make it very challenging for new entrants to compete with established players like infection.
We have the expertise and the experience to navigate these challenges in a way that we can we believe we can create opportunities for infection to drive growth and capture a larger share of the market.
Our full stack industrial or Tls allows customers to locate learn and leverage data and intelligence to reduce cost grow revenue and increase productivity.
Let's start with locate which is at the core of infections indoor intelligence and what we have been building over the past several years.
<unk> technologies enable our customers to locate our find and track the real time movement of their raw materials finished goods vehicles forklift equipment tools personnel and more we do this by using a comprehensive lineup of location technologies and form factors.
Few competitors can integrate the wide variety of technologies that we can including ultra wideband.
RFID GPS BLE QR codes wired past massive.
NFC, Lidar and Wi Fi, which enable us to solve more use cases and provide greater accuracy than most competitors in the market.
Yeah.
Our customers, then learn or gain insights and intelligence, if you will about their space and operations.
Identifying assets and their locations customers are able to learn more and have greater visibility into and control of their operations. For example, big companies have an ERP enterprise resource planning system, such as S&P or AWS or warehouse management system or in EMEA as manufacturing execution system.
These systems typically have a lot of information about the assets in the building, but they often don't know the real time location of a particular asset conviction Archie less knows that location and can push it to the ERP AWS or mes, so that that system can be become more intelligent.
The customer can see where their assets and products are being used that can trigger advanced automation to deliver products to right place at the right time and so forth.
They can identify how much time is spent in each step of the production process, where there might be inconsistency or errors in the manufacturing process.
And then pension can pull data such as item number et cetera from those or other systems into ours and display that data on the <unk> dashboard, increasing the visibility of key data.
With implementation of our technology agnostic open platform, which integrates a complete technology stack and communicate with their other systems. Our customers can learn more about their day to day operations and processes and are able to better manage their assets and inventory pinpoint DTA of shipments in short just in time delivery of <unk>.
To the Assembly line and overall address inefficiencies bottlenecks and danger zones.
And finally, the way in which this information can be leveraged and put into action is where organizations can experience breakthroughs that will truly optimize our operations by increasing productivity and cutting costs by eliminating search times and reducing errors.
Creasing efficiency by streamlining operations, and automating workflows, and enhancing safety with collision avoidance and Geofence Geo fencing weightings within dangerous areas.
Leveraging data and analytics allows for smarter decisions around changing and enhancing processes and procedures.
With deeper automation and more integration organizations can address even more use cases are taking full advantage of the initial <unk> investment.
This is how the power of indoor intelligence can be extended and fully realized.
Our single full stack platform enables these integrations and automation to address a multitude of key customer challenges and as we integrate the artificial intelligence capabilities. We've been exploring we expect to further increase locational precision and will unlock advanced capabilities never before possible.
Given our ability to address many common obstacles industry space, we have entered into a variety of verticals and secured new customers and numerous purchase orders as for some of our accomplishments. We recently secured a new contract with one of the world's largest telecommunication companies that will be reselling, our Rts RTL our solutions through their global.
<unk> force, which we understand has over 1000 sales reps, including a focused team of Iot sales specialist.
Selling to their customers around the world for us to improve their operational efficiencies and further automated factories and warehouses.
We feel this deal has a major potential and we already have pilots with multiple end user companies underway.
We secured a new approved supplier partnership status with one of the world's leading electric vehicle manufacturers, an important first step for them to be able to purchase our solutions for their manufacturing and warehousing facilities. We already have several automotive automotive manufacturers as customers and this validates our account based marketing and sale.
Strategy to go win strategic for verticals and accounts.
We also signed a collaboration agreement with one of the leading providers in the mining market, whereby we are providing our full stack <unk> solution to them for resale.
Our full stack I mean, everything from the front end software and location engine down to the radio frequency anchors and transmitter tag modules. This arrangement is already bearing fruit.
And in fact, we recently secured another purchase order from them a six figure deal and we're now evaluating assumptions for additional verticals besides mining industry with them.
We are also except as a member of S&P's partner program. This has the potential to significantly expand our reach into new markets and secure additional customers as we can market, our oculus solutions to S&P's <unk>.
440000 customers worldwide.
We have a number of prebuilt integrations to be S&P models already available, which make it possible.
Hospital to easily inject location information into an exchange information with S&P applications, unlocking advanced automation and intelligence capabilities for S&P customers.
And we were also recognized for the fifth consecutive year in the 2023, Gartner Magic quadrant for indoor location services, which marks the second consecutive year that we were named as a leader in this space.
I encourage you to access to report on our website at <unk> Dot com and to read why Gartner identifies infection as a leader for real time location technologies.
And despite the headwinds in the global electronics supply chain, we have worked strategically with global component suppliers to ensure continued chip and module availability with adequate lead times. This has helped our key OEM partners to meet their customer order fulfillment requirements as well as ours.
The current momentum is strong and we anticipate that it will continue in 2020, we built.
With the initiatives, we put in place, including reducing costs and streamlining our operations. We can firmly secure our leadership position in the <unk> market as well as accelerate our path to profitability.
With that Wendy I'll turn it to you to discuss our financials.
Thank you Tyler Rhett.
Revenues for the year ended December 31, 2022 were $19 4 million compared to $16 million for the comparable period in the prior year for an increase of approximately $3 4 million or approximately.
21%.
This increase is primarily attributable to an increase in indoor intelligence sales, including $2 $6 million from our smart Apis App and $900000 from a real time location based technology.
Gross profit for the year ended December 31, 2022 was $13 9 million compared.
Compared to a gross profit of $11 $6 million for the 2021 fiscal year, representing an increase of 20%.
The gross profit margin for the year ended December 31, 2022 was 72% compared to 73% for the year ended December 31 2021.
This lower margin is primarily due to the sales mix during the year.
Net loss attributable to stockholders for the year ended December 31, 2022 was $63 4 million compared to $69 $2 million for the comparable period in the prior year.
This decrease in loss of approximately $5 $8 million was primarily attributable to the decrease in operating expenses of $13 $7 million and the higher gross margin of $2 $3 million offset by an increase in other loss of $10 $9 million.
non-GAAP adjusted EBITDA for the year ended December 31, 2022, with a loss of $26 $6 million.
There to allow us a $29 6 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 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 year ended December 31, 2022, with a loss of 12 point.
$12 25 per share compared to a loss of $18 77 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 and other adjustments, including impairment of goodwill and intangibles provision for unrealized loss on equity securities and acquisition costs.
As of December 31, 2022, we had approximately $22 million in cash and cash equivalents.
This concludes my comments and I now would like to turn the call back over to another.
Thanks, Wendy Ali could you please lead us through the Q&A session.
Yes. Thanks.
Like last quarter in our conference call announcement press release, we suggested interested parties submit their questions in advance 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 respond as quickly.
Possible.
Our first question is why the new shareholders that bought infection. A few weeks ago have the same dividend rate as the longtime and factors.
Good question. So yes part of the transaction agreement shareholders as of the March six record date, we're entitled to the share distributions for the CX op transactions.
You have to keep in mind, we have tens of thousands of shareholders with trades happening every day it would be difficult not only to assess how long any one individual has held our stock is of any particular day, but then to implement special entitlements based on length of ownership. So the normal practice for a transaction of this nature is to inform shareholders of any specific record date.
To determine who would be entitled to participate in the distributions and Thats the process we followed.
Great. Thanks, not R. R.
Second question is investors have been waiting on an update on the letter of intent when do you expect to provide further update.
Yes, so I'm assuming this is about the second transaction, which we have put out there that we were negotiating a letter of intent and as I mentioned during my remarks.
We are working aggressively on this admittedly last few weeks, we've had to allocate more time and resources to closing the <unk> transaction, but we are continuing to work through the process. We are evaluating our options to ensure that we are doing what we can to maximize value for the company and our shareholders and will only enter into an agreement with <unk>, we feel does.
So we will update we'll share updates as soon as we can but we are working towards that second transaction as we speak.
Great. Thank you.
Our next question given the sale of CX App can you comment on what you would expect for a normalized level of operating expenses going forward.
Sure Yeah, so I touched on this a little bit earlier, but I believe we're seeing at least a 50% reduction in operating expenses going forward over the next several quarters with the sale of the <unk> business, which just happened in mid March and as a result of the cost cutting measures that the company implemented.
Starting in Q4 last year into some.
Some adjustments this year. So this will we expect will significantly impact our burn and allow us to get to positive cash flow faster as well.
Thank you. Our next question what actions are the is the.
The company, taking to restore shareholder confidence on their investment and why is the company not fighting against the shortage of the stock and liquidity.
Okay.
Yeah. Good question look we are working diligently on various opportunities that we believe will provide value for our shareholders.
We believe this has been apparent with the CX App transaction and as I just talked about we have a second LOI in place with respect to our our Tls business. So we are looking at ways to create shareholder value through these transactions and executing on our business.
As far as shorting, our stock I reach out to accounts counsel advisors and a couple of Ceos.
Commented on the sushi publicly to better understand what theyre doing to address this challenge.
So we're thinking through and.
Working on that keep in mind, there are limited options to combat illegal naked shorting and this is an area that regulators are also challenged with but we are looking at and talking to folks.
Thank you.
Our next question do any senior management team members intend to resign as the result of the transaction.
Yes, I feel it's important to keep the management team intact as we progress through this major inflection point in the company following the <unk> transaction and in pursuing other opportunities for the remainder of our business. So to the extent, we are able to come to a definitive terms and close on our second transaction for the remainder of our business. We don't expect that all of our seed.
Your management team will be staying but for now our core senior management is essential to ensure successful execution and completion of our business plan on these transactions.
Alright. Thank you that does conclude the Q&A I'll turn it back to you for closing.
Alright, Thanks Alley, and thank you all for joining today as always we appreciate the support of all of our shareholders and look forward to providing more updates in the near future.
Thank you and take care everyone.
Thank you. This does conclude today's conference and you may disconnect. Your lines at this time and we thank you for your participation.