Inpixon Q1 2023 Earnings Call

Speaker 2: Good afternoon and welcome to InPiction's Business Update Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.

Speaker 2: Participants of this call are advised that 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 May 22, 2023.

Speaker 2: I would now like to call turn the call over to Alexandra Schilt, Vice President of Crescendo Communications, LLC, the company's investor relations firm. Please go ahead.

Speaker 3: Good afternoon, and thank you for joining today's conference call to discuss ImPICTION's corporate developments and financial results for its 2023 first quarter and in March 31, 2023. With us today are Nader Ali, the company's chief executive officer, and Wendy Lunderman, the company's chief financial officer.

Speaker 3: Today, Impiction released financial results for its 2023 first quarter and in March 31, 2023. If you have not received Impiction's earning release, please visit the company's investor relations page at ir.impiction.com.

Speaker 3: During the course of this conference call, the company will be making forward-looking statements.

Speaker 3: The company cautions you that any statement that is not a statement of historical fact is a forward-looking statement.

Speaker 3: This includes any projections of earnings, revenues, cash, or other statements relating to the company's future financial results, any statements about plans, strategies, or objectives of management for future operations, any statements regarding completed or planned acquisitions, or strategic partnerships.

Speaker 3: and the anticipated impact of those transactions on the company's business.

Speaker 3: Any statements concerning proposed new products or solutions, any statement 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 operation.

Speaker 3: any statements regarding the validation and the evaluation attributed to any of our securities instruments, any statements of belief, and any statements of assumptions underlying any of the foregoing.

Speaker 3: 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.

Speaker 3: 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.

Speaker 3: Investors or potential investors should read all of these risks. Impiction 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-gap numbers provide meaningful supplemental information and are helpful in assessing our historical and future performance. A table reconciling the gap information to the non-gap information is included in the company's financial release.

I will now turn the call over to Nader Ali, Impiction CEO . Please go ahead.

Thanks, Alexandra. And good afternoon, everyone, and thank you for joining our 2023 first quarter conference call as we discuss our progress and corporate developments.

I'll start by noting that our most significant accomplishment during the first quarter of 2023 was the sale of our Enterprise Apps Workplace Experience Business on March 14th, 23.

This transaction created a strategic opportunity that allowed our shareholders to benefit from me and dissipated upside into publicly traded companies while also allowing in fiction to retain its real-time location services or our TLS business line along with other business lines and refocus our resources accordingly for further growth.

We believe this was a significant achievement for both in-piction and CXAT, and we look forward to continuing to work with them as partners or resellers to offer comprehensive solution sets for our respective customers.

In this call, and going forward, when we discuss our financial results, please note that the results of operations from the workplace experience business have been excluded from our continuing operations, which is reflected for periods prior to the completion of the spin-off. You will still see a consolidate that can just continue to opt-number below the line in the P&L for that business. With that, I'm pleased to say we continue to make meaningful progress in terms of growth reporting a 17% increase in revenue to three-prone.

And while we grow revenue and streamline expenses to achieve positive cash flow faster, we are also focused on pursuing beneficial strategic opportunities that we believe will increase the company's total enterprise value for the benefit of our shareholders similar to what was achieved with the CXF transaction. In that regard, the due diligence and negotiation process with respect to the

track the real-time location and movements of physical things throughout large facilities and primarily leverages radio frequency technologies to continuously determine the position of people and objects in the areas GPS is not able to reach.

This delivers actionable location data that can be used to visualize the location of key personnel and assets live on a facility map or integrated into systems such as IoT safety applications, asset and supply chain management solutions, and more for highly advanced automation of operations.

These technologies allow customers to locate, assets, and track their real time and remember utilization of our comprehensive lineup of location technologies and form factors. Few competitors can integrate the wide variety of technologies including ultra-wide band, chirp, Wi-Fi, BLE, GPS, LIDAR, and RFID like we can.

which enables us to solve more use cases and provide greater accuracy than most competitors in the market.

With the implementation of our technology agnostic open platform which integrates a complete technology stack and communicates with other third-party systems, our customers learn more about their facilities and workflows and obtain actionable intelligence.

By leveraging the soluble data and intelligence, they can enable automation and data-driven decision-making to drive reduced costs, increase productivity, and a streamlined operations.

Independent, third-party market watchers validate our leadership position.

For example, IoT Innovation World recently named us as a recipient of their industrial IoT product of the year award.

And even more significantly earlier this year, Gardner named Impiction Leader in the 2023 Gardner Magic Quadrant for indoor location services.

This evaluation was based on specific criteria that analyze our overall completeness of vision and ability to execute.

The smarts are fifth consecutive year of being acknowledged by Gardner and the Magic Quadrant and the second time being named a leader in the space.

The report also stated the location of people and critical assets is no longer optional, but required for safety, compliance, and cost-up position.

Infrastructure and Operation Leaders to assess vendors based on their capability to meet multiple indoor location opportunities and address new new scenarios.

We have been and remain committed to innovation and to providing a full stack RTL solution that supports a multitude of use cases in a variety of industries.

and we believe our enhanced focus, streamline business operations, and improve cost structure will result in an accelerated path to profitability.

With that, Wendy, I'll turn it to you to discuss our financials.

Thank you, Nader.

As not are previously mentioned in accordance with applicable accounting guidance, the results of enterprise-absorbed-place experience businesses are presented as discontinued operations in the consolidated statements of income, and as such have been excluded from both continuing operations and segment results for all periods presented.

Period prior to the completion of the CXF spin-off. The consolidated statements of cash loads are presented on a consolidated basis for both continuing operations and discontinuing operations.

Please refer to the 10Q for additional information.

Revenues for the three-bent-bended March 31, 2023, were at $3.1 million compared to $2.6 million for the comparable period in the prior year. For an increase of approximately...

$0.5 million or approximately 17%. This increases primarily attributable to the increase in indoor intelligence sales from the Aware and the RTOS component product line.

Growth profit for the three months ended March 31, 2023 was $2.3 million, compared to a growth profit of $1.9 million for the comparable period in the prior year, representing an increase of 25%.

The gross profit margin for the three months ended March 31, 2023 was 75% compared to 70% for the three months ended March 31, 2022. This increase in gross profit margin is due to the sales mix during the period. Operating expenses for the three months ended March 31, 2023.

We're $10.5 million and $11.1 million for the comparable period in the prior year. This decrease of $0.6 million is primarily a tribute to lower compensation, professional fees, and legal expense, and the three-month send is March 31, 2023.

Net loss from continuing operations for the three months ended March 31, 2023, was $12.3 million compared to $10.8 million for the comparable period in the prior year. This increase in loss of approximately $1.5 million was primarily a trivial to you, the deferred tax provision expense of approximately $2.5 million. Offset by higher gross profit.

for approximately a half million dollars and lower operating expenses of approximately $0.6 million.

Non-GAAP-adjusted EBITDA for the three months ended March 31, 2023 with a loss of $7.7 million compared to a loss of $8.8 million for the prior year period.

Non-GAP adjusted EBIDA is defined as net income or loss before interest, provision for income taxes, appreciation and amortization, plus adjustments for other income or expense items, non-recurring items and non-cash items including stock based compensation.

Proform a non-gap knit loft for basic and diluted common share for the three month-thended March 31, 2023, was a loss of a dollar and one cent per share compared to a loss of $4.79 per share for the prior year period. The first year period was a loss of $4.79 per share for the prior year period.

Non-gab net loss per share is to bind net loss per basic and diluted share adjusted for non-cash items, including stock based compensation, amortization of intangibles, and one time charges and other adjustments, including unrealized gain and losses from equity securities, transaction costs and acquisition costs.

As of March 31, 2023, we had approximately $15.3 million in cash and cash equivalent.

This concludes my comments and I would now like it turns the callbacker written out.

All right, thanks Wendy. Alejandra, could you please lead us through the Q&A discussion? Yes, thanks Nutter. 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 now. Some of them were as deplicated, so we did our best to reconcile those were possible. If you have any further questions there to the call, please feel free to follow up with investor relations and we'll be sure to

As of now, we don't have a definitive agreement or a timeline that we can discuss, but as soon as we do, updates will be provided as required.

Thank you, Nader. Our next question, the shared outstanding has increased by using the ATM. What are the proceeds used for?

resources to fund our operations and successfully execute on our strategic plans. So during what's been a particularly volatile economic market, the ATM facility allows us to defuxually raise capital and more feeable market prices in order to achieve our objectives. So I think that's

Thank you. Our next question. Would the stock price deflated? Have you received notice from NASDAQ regarding compliance? And how do you intend on restoring value for shareholders?

So we have publicly disclosed the receipt of the bid price compliance notice. I think that was in mid-April. And as mentioned in addition to working on the growth of our RTLS business line, the company is actively pursuing other strategic opportunities that we believe can provide additional value for our shareholders.

We believe the recent spin-off of our enterprise apps business is a good example of that and we'll continue to progress on another opportunity that if brought to fruition, the anticipated will also be beneficial for our shareholders.

Thank you, Nader. We have a few questions really, mostly the sales and marketing, so we've grouped them together here. And it starts with, what geographies are you targeting now and in the future? Do you have dedicated sales teams to handle specific industries to accelerate penetration?

What is the typical contract size and is it recurring revenue streams or mainly a single upfront payment? And when can you share any details on current customers you were working with and are there any big names? All right, okay, so let me make sure I try to cover all of them and let me know if I miss something. But create questions.

Currently our top geographies in no particular order are North America, Europe , Asia, and South Africa.

However, we receive a steady stream of increase from all around the world and pursue those opportunities that are most appropriate. We use both a direct sales force and indirect sales partners such as contributors and integrators. In terms of the yield size, we don't disclose specifics due to competitive reasons, but that you've seen in some of our...

Previous announcements that some of our order sizes can be hundreds of thousand dollars and others, you know over a million dollars, so

wide range there. We're fortunate to have a mix of revenue types with contracts often including recurring revenue, hardware sales and one-time services revenue. We are building more and more on, you know, and focusing more on the recurring revenue piece.

And as for our customers, yes, we absolutely have numerous notable brand name customers. And many of them are very large global customers and we continue to land and expand with. A portion of our clients are listed on our customers page on our corporate website and other clients were not at liberty to share without their consent.

And by the way, there's more information on this.

in the company overview section in our 10, recent 10K filing. I think you covered them all. Thank you very much, Nauter. That does conclude the Q&A section. I'll turn it back to you for the close.

All right, thanks, Alexander. And thank you all for joining us today. And as always, we appreciate the support of our shareholders and look forward to providing you more updates as developments unfold. Thank you. Jenny, I think we're good with the call now.

Thank you very much. This does conclude today's conference call. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.