EX-99.1 2 cxdo_ex991.htm PRESS RELEASE cxdo_ex991.htm

  EXHIBIT 99.1

 

 

Crexendo Announces Third Quarter 2021 Results

 

PHOENIX, AZ—(Marketwired – November 9, 2021)

 

Crexendo, Inc. (NASDAQ: CXDO) is an award-winning premier provider of Unified Communications as a Service (UCaaS), Call Center as a Service (CCaaS), communication platform software solutions, and collaboration services designed to provide enterprise-class cloud communication solutions to any size business through our business partners, agents, and direct channels. Our solutions currently support over two million end users globally and was recently recognized as the fastest growing UCaaS platform in the United States. Today, the Company reported financial results for the third quarter ended September 30, 2021.

 

Third Quarter Financial highlights:

 

·

 Total revenue increased 113% year-over-year to $8.8 million.

·

 Non-GAAP net income of $800,000 and GAAP net loss of $(125,000).

 

Financial Results for the Third Quarter of 2021

 

Consolidated total revenue for the third quarter of 2021 increased 113% to $8.8 million compared to $4.1 million for the third quarter of 2020.

 

Consolidated service revenue for the third quarter of 2021 increased 18% to $4.3 million compared to $3.7 million for the third quarter of 2020.

 

Consolidated software solutions revenue for the third quarter of 2021 of $3.8 million compared to $0 for the third quarter of 2020.

 

Consolidated product revenue for the third quarter of 2021 increased 43% to $701,000 compared to $489,000 for the third quarter of 2020.

 

Consolidated operating expenses for the third quarter of 2021 increased 120% to $8.8 million compared to $4.0 million for the third quarter of 2020. Acquisitions contributed $3.5 million of the additional operating expenses.

 

The Company reported net loss of $(125,000) for the third quarter of 2021, or $(0.01) loss per basic and diluted common share, compared to $131,000 of net income, or $0.01 per basic and diluted common share for the third quarter of 2020.

 

Non-GAAP net income of $800,000 for the third quarter of 2021, or $0.04 per basic common share and $0.03 per diluted common share, compared to a non-GAAP net income of $290,000 or $0.02 per basic and diluted common share for the third quarter of 2020.

 

EBITDA for the third quarter of 2021 increased to $622,000, compared to $212,000 for the third quarter of 2020. Adjusted EBITDA for the third quarter of 2021 increased to $1.04 million, compared to $348,000 for the third quarter of 2020.

 

 
1

 

 

Financial Results for the nine months ended September 30, 2021

 

Consolidated total revenue for the nine months ended September 30, 2021 increased 58% to $19.1 million compared to $12.1 million for the nine months ended September 30, 2020.

 

Consolidated service revenue for the nine months ended September 30, 2021 increased 19% to $12.8 million compared to $10.7 million for the nine months ended September 30, 2020.

 

Consolidated software solutions revenue for the nine months ended September 30, 2021 of $4.8 million compared to $0 for the nine months ended September 30, 2020. Software solutions revenue represents revenue from the NetSapiens business combination from the acquisition date of June 1, 2021.

 

Consolidated product revenue for the nine months ended September 30, 2021 increased 15% to $1.5 million compared to $1.3 million for the nine months ended September 30, 2020.

 

Consolidated operating expenses for the nine months ended September 30, 2021 increased 89% to $21.1 million compared to $11.2 million for the nine months ended September 30, 2020. Acquisitions contributed $4.8 million of the additional operating expenses. Additionally, during the nine months ended September 30, 2021, we incurred $1.1 million of acquisition related general and administrative expenses.

 

The Company reported a net loss of $(1.8) million for the nine months ended September 30, 2021, or a $(0.09) loss per basic and diluted common share, compared to $779,000 net income, or $0.05 per basic and diluted common share for the nine months ended September 30, 2020.

 

Non-GAAP net income of $1.1 million for the nine months ended September 30, 2021, or $0.06 per basic common share and $0.05 per diluted common share, compared to a non-GAAP net income of $1.2 million or $0.08 per basic common share and $0.07 per diluted common share for the nine months ended September 30, 2020.

 

EBITDA for the nine months ended September 30, 2021 decreased to a $(1.1) million loss, compared to $1.1 million in earnings for the nine months ended September 30, 2020. Adjusted EBITDA for the nine months ended September 30, 2021 decreased to $1.1 million, compared to $1.4 million for the nine months ended September 30, 2020.

 

Total cash, cash equivalents, and restricted cash at September 30, 2021 was $7.7 million compared to $17.7 million at December 31, 2020.

 

Cash used for operating activities for the nine months ended September 30, 2021 of $(473,000) compared to $423,000 provided by operating activities for the nine months ended September 30, 2020. Cash used for investing activities for the nine months ended September 30, 2021 of $(10.6) million compared to $(921,000) used for the nine months ended September 30, 2020. Cash provided by financing activities for the nine months ended September 30, 2021 of $1.1 million compared to $11.7 million for the nine months ended September 30, 2020.

 

Steven G. Mihaylo, Chief Executive Officer commented, "This was an excellent quarter, and a testament to the incredible work undertaken by the entire team. The results exceeded my expectations. Consolidated total revenue increasing by 113% for the third quarter is a remarkable number. Our record revenue of $8.8 million for the quarter is highly impressive. Our Non-GAAP net income of $800,000 for the quarter, or $0.04 per basic common share and $.03 per diluted common share shows we are executing exceptionally well. While I am pleased that we had pre-tax profitability this quarter it does not change the business will be managed primarily by monitoring cash flows from operations, non-GAAP income, EBITDA and adjusted EBITDA as we still have large GAAP expense due to intangible asset amortization costs from the merger, and other investments made in the business.”

 

Mihaylo added, “We continue to execute our plans with precision. Over the last several years we have met every milestone we committed to including achieving profitability, organically up-listing to Nasdaq, being able to complete an offering and making a major accretive acquisition. We have done this without mortgaging the future of the Company or making risky gambles. We are meticulous in our planning and are still prioritizing increasing operational efficiencies across both NetSapiens and Crexendo. The teams are working closely together, we are targeting efficiencies and cross reporting to best use the teams to support both the NetSapiens Partners/Licensees and the Crexendo Partners and end-user customers.”

 

“The acquisition has already provided many benefits outside of the financial results. We are actively migrating customers to the Crexendo VIP platform which uses the best of the NetSapiens award winning platform and the Crexendo Ride the Cloud© award winning benefits, this will provide better service and reduce costs. The NetSapiens team is working with the Crexendo engineering team, whose backgrounds have focused on maximizing customer experience, to help  provide additional benefits and enhancements to the entire NetSapiens community. I am thrilled by our progress and even more excited about our future. We will continue to grow the business organically and with appropriate accretive acquisitions. We work every day to increase shareholder value, to make this a better company and to improve the experience for our constituencies. I know this will be an exciting time for our shareholders, our employees, Crexendo Partners and end-user customers and the entire NetSapiens Partners/Licensees.”

 

 
2

 

 

Doug Gaylor, President and Chief Operating Officer, stated, "I want to take this opportunity to thank every member of the combined team, without their hard work and commitment to making this merger work we could not have achieved these strong results. Every single one of us work tirelessly every day to maximize efficiencies, to increase shareholder value and to make the best experience possible for the NetSapiens Partners/Licensees and the Crexendo Partners and end-user customers.  The teams worked together effectively on the highly successful NetSapiens User Group Meeting which occurred in October and afforded the Crexendo team the opportunity to meet a large number of the Partners/Licensees and understand their needs and concerns. This week we have most of the NetSapiens executive management team here in Phoenix working with the Crexendo team as we continue to learn from each other and work daily to improve the combined company. I am confident that this quarter’s results will be just the first of many results that will impress our shareholders, our employees, and our customers."

 

Conference Call

 

The Company is hosting a conference call today, November 9, 2021 at 4:30 PM EST. The dial-in number for domestic participants is 877-545-0320 and 973-528-0002 for international participants. Please dial in five minutes prior to the beginning of the call at 4:30 PM EST and reference Crexendo earnings call. A replay of the call will be available until November 16, 2021 by dialing toll-free at 877-481-4010 or 919-882-2331 for international callers. The replay passcode is 43421.

 

About Crexendo

 

Crexendo, Inc. is an award-winning premier provider of Unified Communications as a Service (UCaaS), Call Center as a Service (CCaaS), communication platform software solutions, video conferencing and collaboration services designed to provide enterprise-class cloud communication solutions to any size business through our business partners, agents, and direct channels. Our solutions currently support over two million end users globally and was recently recognized as the fastest growing UCaaS platform in the United States.

 

Safe Harbor Statement  

 

This press release contains forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for such forward-looking statements. The words "believe," "expect," "anticipate," "estimate," "will" and other similar statements of expectation identify forward-looking statements. Specific forward-looking statements in this press release include information about Crexendo (i) believing this was an excellent quarter with results exceeded expectations; (ii) believing consolidated total revenue increasing by 113% is a remarkable number and revenue of $8.8 million being highly impressive; (iii) believing  Non-GAAP net income shows it is executing exceptionally well; (iv) believing that  the business should be managed primarily by monitoring cash flows from operations, non-GAAP income, EBITDA and adjusted EBITDA; (v) believing it continues to execute  plans with precision; (vi) believing it has met every milestone  committed to including achieving profitability, organically up-listing to Nasdaq, being able to complete an offering and making a major accretive acquisition and done so without mortgaging the future of the Company or making risky gambles; (vii) believing it is meticulous in  planning and prioritizing increasing operational efficiencies across both NetSapiens and Crexendo with the teams targeting efficiencies and cross reporting to best use the teams to support both the NetSapiens and Crexendo Partners and end-users; (viii) believing the acquisition has already provided many benefits outside of the financial results including  migrating customers to the Crexendo VIP platform which will provide better service and reduce costs and NetSapiens team  working with the Crexendo engineering team providing additional benefits and enhancements to the entire NetSapiens community; (ix) being thrilled by its progress and even more excited about its future while  continuing to grow the business organically and with appropriate accretive acquisitions; (x) working every day to increase shareholder value, to make this a better company and to improve the experience for our constituencies with believing this this will be an exciting time for  shareholders,  employees, Crexendo and NetSapiens; (xi) believing every  one works tirelessly every day to maximize efficiencies, to increase shareholder value and to make the best experience possible for the NetSapiens Partners/Licensees and the Crexendo Partners and enduser customers and  (xii) being confident that this quarter’s results will be just the first of many results that will impress our shareholders, our employees, and customers.

 

For a more detailed discussion of risk factors that may affect Crexendo’s operations and results, please refer to the company's Form 10-K for the year ended December 31, 2020, and quarterly Form 10-Qs as filed with the SEC. These forward-looking statements speak only as of the date on which such statements are made, and the company undertakes no obligation to update such forward-looking statements, except as required by law.

 

Contact

 

Crexendo, Inc.
Doug Gaylor

President and Chief Operating Officer
602-732-7990

dgaylor@crexendo.com

 

 
3

 

 

CREXENDO, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(Unaudited, in thousands, except par value and share data)

 

 

 

September 30,

2021

 

 

December 31,

2020

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

 $ 7,701

 

 

 $ 17,579

 

Restricted cash

 

 

 -

 

 

 

 100

 

Trade receivables, net of allowance for doubtful accounts of $40 as of September 30, 2021 and $21 as of December 31, 2020

 

 

 1,280

 

 

 

 538

 

Contract assets

 

 

 209

 

 

 

 159

 

Inventories

 

 

 479

 

 

 

 504

 

Equipment financing receivables

 

 

 324

 

 

 

 286

 

Contract costs

 

 

 519

 

 

 

 421

 

Prepaid expenses

 

 

 650

 

 

 

 190

 

Income tax receivable

 

 

 11

 

 

 

 4

 

Total current assets

 

 

 11,173

 

 

 

 19,781

 

 

 

 

 

 

 

 

 

 

Long-term trade receivables, net of allowance for doubtful accounts of $0 as of September 30, 2021 and $0 as of December 31, 2020

 

 

 27

 

 

 

 -

 

Long-term equipment financing receivables, net

 

 

 837

 

 

 

 906

 

Property and equipment, net

 

 

 3,059

 

 

 

 2,734

 

Deferred income tax assets, net

 

 

 8,883

 

 

 

 6,054

 

Operating lease right-of-use assets

 

 

 732

 

 

 

 1

 

Intangible assets, net

 

 

 23,237

 

 

 

 252

 

Goodwill

 

 

 28,129

 

 

 

 272

 

Contract costs, net of current portion

 

 

 696

 

 

 

 549

 

Income tax receivable, net of current portion

 

 

 256

 

 

 

 -

 

Other long-term assets

 

 

 287

 

 

 

 156

 

Total Assets

 

 $ 77,316

 

 

 $ 30,705

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

 $ 624

 

 

 $ 56

 

Accrued expenses

 

 

 4,351

 

 

 

 1,628

 

Finance leases

 

 

 130

 

 

 

 29

 

Notes payable

 

 

 73

 

 

 

 71

 

Operating lease liabilities

 

 

 490

 

 

 

 1

 

Contingent consideration

 

 

 746

 

 

 

 -

 

Contract liabilities

 

 

 1,831

 

 

 

 778

 

Total current liabilities

 

 

 8,245

 

 

 

 2,563

 

 

 

 

 

 

 

 

 

 

Contract liabilities, net of current portion

 

 

 1,053

 

 

 

 450

 

Finance leases, net of current portion

 

 

 237

 

 

 

 55

 

Notes payable, net of current portion

 

 

 1,818

 

 

 

 1,873

 

Operating lease liabilities, net of current portion

 

 

 269

 

 

 

 -

 

Total liabilities

 

 

 11,622

 

 

 

 4,941

 

 

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

 

 

Preferred stock, par value $0.001 per share - authorized 5,000,000 shares; none issued

 

 

 —

 

 

 

 —

 

Common stock, par value $0.001 per share - authorized 50,000,000 shares, 21,667,628 shares issued and outstanding as of September 30, 2021 and 17,983,177 shares issued and outstanding as of December 31, 2020

 

 

 22

 

 

 

 18

 

Additional paid-in capital

 

 

 117,593

 

 

 

 75,834

 

Accumulated deficit

 

 

 (51,931 )

 

 

 (50,088 )

Accumulated other comprehensive income

 

 

 10

 

 

 

 -

 

Total stockholders' equity

 

 

 65,694

 

 

 

 25,764

 

 

 

 

 

 

 

 

 

 

Total Liabilities and Stockholders' Equity

 

 $ 77,316

 

 

 $ 30,705

 

  

 
4

 

CREXENDO, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

(Unaudited, in thousands, except per share and share data)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Service revenue

 

 $ 4,325

 

 

 $ 3,654

 

 

 $ 12,791

 

 

 $ 10,747

 

Software solutions revenue

 

 

 3,784

 

 

 

 -

 

 

 

 4,796

 

 

 

 -

 

Product revenue

 

 

 701

 

 

 

 489

 

 

 

 1,509

 

 

 

 1,317

 

Total revenue

 

 

 8,810

 

 

 

 4,143

 

 

 

 19,096

 

 

 

 12,064

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of service revenue

 

 

 1,210

 

 

 

 946

 

 

 

 3,816

 

 

 

 2,824

 

Cost of software solutions revenue

 

 

 1,675

 

 

 

 -

 

 

 

 2,201

 

 

 

 -

 

Cost of product revenue

 

 

 461

 

 

 

 314

 

 

 

 972

 

 

 

 797

 

Selling and marketing

 

 

 2,070

 

 

 

 1,051

 

 

 

 5,106

 

 

 

 3,151

 

General and administrative

 

 

 2,983

 

 

 

 1,351

 

 

 

 7,918

 

 

 

 3,585

 

Research and development

 

 

 358

 

 

 

 326

 

 

 

 1,096

 

 

 

 840

 

Total operating expenses

 

 

 8,757

 

 

 

 3,988

 

 

 

 21,109

 

 

 

 11,197

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income/(loss) from operations

 

 

 53

 

 

 

 155

 

 

 

 (2,013 )

 

 

 867

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income/(expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

 -

 

 

 

 1

 

 

 

 1

 

 

 

 3

 

Interest expense

 

 

 (24 )

 

 

 (23 )

 

 

 (64 )

 

 

 (54 )

Other income/(expense), net

 

 

 (17 )

 

 

 1

 

 

 

 (14 )

 

 

 (28 )

Total other income/(expense), net

 

 

 (41 )

 

 

 (21 )

 

 

 (77 )

 

 

 (79 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income/(loss) before income tax

 

 

 12

 

 

 

 134

 

 

 

 (2,090 )

 

 

 788

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax benefit/(provision)

 

 

 (137 )

 

 

 (3 )

 

 

 247

 

 

 

 (9 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income/(loss)

 

 $ (125 )

 

 $ 131

 

 

 $ (1,843 )

 

 $ 779

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings/(loss) per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 $ (0.01 )

 

 $ 0.01

 

 

 $ (0.09 )

 

 $ 0.05

 

Diluted

 

 $ (0.01 )

 

 $ 0.01

 

 

 $ (0.09 )

 

 $ 0.05

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 21,596,415

 

 

 

 15,244,804

 

 

 

 19,757,658

 

 

 

 15,058,192

 

Diluted

 

 

 21,596,415

 

 

 

 17,249,035

 

 

 

 19,757,658

 

 

 

 16,793,896

 

 

 
5

 

 

CREXENDO, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(Unaudited, in thousands)

 

 

 

Nine Months Ended September 30,

 

 

 

2021

 

 

2020

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

Net income/(loss)

 

 $ (1,843 )

 

 $ 779

 

Adjustments to reconcile net income/(loss) to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

 931

 

 

 

 197

 

Share-based compensation

 

 

 1,150

 

 

 

 377

 

Non-cash operating lease amortization

 

 

 (4 )

 

 

 -

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Trade receivables

 

 

 199

 

 

 

 (248 )

Contract assets

 

 

 (50 )

 

 

 (72 )

Equipment financing receivables

 

 

 31

 

 

 

 (395 )

Inventories

 

 

 37

 

 

 

 119

 

Contract costs

 

 

 (245 )

 

 

 (100 )

Prepaid expenses

 

 

 (384 )

 

 

 (191 )

Income tax receivable

 

 

 (263 )

 

 

 4

 

Other assets

 

 

 335

 

 

 

 (46 )

Accounts payable and accrued expenses

 

 

 228

 

 

 

 (25 )

Income tax payable

 

 

 -

 

 

 

 5

 

Contract liabilities

 

 

 (595 )

 

 

 19

 

Net cash provided by/(used for) operating activities

 

 

 (473 )

 

 

 423

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

Purchase of property and equipment

 

 

 (91 )

 

 

 (745 )

Acquisitions of assets and businesses, net of cash received

 

 

 (10,505 )

 

 

 (176 )

Net cash used for investing activities

 

 

 (10,596 )

 

 

 (921 )

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

   Payment of contingent consideration

 

 

 -

 

 

 

 (54 )

Repayments made on finance leases

 

 

 (71 )

 

 

 (22 )

Proceeds from notes payable

 

 

 -

 

 

 

 1,001

 

Repayments made on notes payable

 

 

 (53 )

 

 

 (39 )

Proceeds from exercise of options

 

 

 1,365

 

 

 

 2,007

 

Taxes paid on the net settlement of stock options and RSUs

 

 

 (160 )

 

 

 -

 

Proceeds from issuance of common stock in connection with an offering

 

 

 -

 

 

 

 8,778

 

Net cash provided by financing activities

 

 

 1,081

 

 

 

 11,671

 

Effect of exchange rate changes on cash

 

 

 10

 

 

 

 -

 

NET INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH

 

 

 (9,978 )

 

 

 11,173

 

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT THE BEGINNING OF THE PERIOD

 

 

 17,679

 

 

 

 4,280

 

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT THE END OF THE PERIOD

 

 $ 7,701

 

 

 $ 15,453

 

Cash used during the year for:

 

 

 

 

 

 

 

 

Income taxes, net

 

 $ (15 )

 

 $ -

 

Interest expense

 

 $ (64 )

 

 $ (54 )

Supplemental disclosure of non-cash investing and financing information:

 

 

 

 

 

 

 

 

Stock issued for the acquisition of Centric Telecom

 

 $ 346

 

 

 $ -

 

Contingent consideration related to the acquisition of Centric Telecom

 

 $ 746

 

 

 $ -

 

Stock issued in connection with the merger with NetSapiens

 

 $ 16,942

 

 

 $ -

 

Stock options issued in connection with the merger with NetSapiens

 

 $ 22,120

 

 

 $ -

 

Property and equipment financed through finance leases

 

 $ 273

 

 

 $ -

 

Prepaid assets financed through finance leases

 

 $ 14

 

 

 $ -

 

Purchase of property and equipment with a note payable

 

 $ -

 

 

 $ 2,000

 

Adjustment to intangible assets and contingent consideration of customer relationship asset acquisition

 

 $ -

 

 

 $ (121 )

 

 
6

 

 

CREXENDO, INC. AND SUBSIDIARIES

Supplemental Segment Financial Data

(Unaudited, in thousands)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Cloud telecommunications services

 

 $ 5,026

 

 

 $ 4,143

 

 

 $ 14,300

 

 

 $ 12,064

 

Software solutions

 

 

 3,784

 

 

 

 -

 

 

 

 4,796

 

 

 

 -

 

Consolidated revenue

 

 

 8,810

 

 

 

 4,143

 

 

 

 19,096

 

 

 

 12,064

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income/(loss) from operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cloud telecommunications services

 

 

 (253 )

 

 

 155

 

 

 

 (2,004 )

 

 

 867

 

Software solutions

 

 

 306

 

 

 

 -

 

 

 

 (9 )

 

 

 -

 

Total operating income/(loss)

 

 

 53

 

 

 

 155

 

 

 

 (2,013 )

 

 

 867

 

Other income/(expense), net:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cloud telecommunications services

 

 

 (22 )

 

 

 (21 )

 

 

 (58 )

 

 

 (79 )

Software solutions

 

 

 (19 )

 

 

 -

 

 

 

 (19 )

 

 

 -

 

Total other income/(expense), net

 

 

 (41 )

 

 

 (21 )

 

 

 (77 )

 

 

 (79 )

Income/(loss) before income tax provision:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cloud telecommunications services

 

 

 (275 )

 

 

 134

 

 

 

 (2,062 )

 

 

 788

 

Software solutions

 

 

 287

 

 

 

 -

 

 

 

 (28 )

 

 

 -

 

Income/(loss) before income tax provision

 

 $ 12

 

 

 $ 134

 

 

 $ (2,090 )

 

 $ 788

 

 

 
7

 

 

Use of Non-GAAP Financial Measures

 

            To evaluate our business, we consider and use non-generally accepted accounting principles (“Non-GAAP”) net income and Adjusted EBITDA as a supplemental measure of operating performance. These measures include the same adjustments that management takes into account when it reviews and assesses operating performance on a period-to-period basis. We consider Non-GAAP net income to be an important indicator of overall business performance because it allows us to evaluate results without the effects of share-based compensation, acquisition related expenses and amortization of intangibles. We define EBITDA as U.S. GAAP net income/(loss) before interest income, interest expense, other income and expense, provision for income taxes, and depreciation and amortization. We believe EBITDA provides a useful metric to investors to compare us with other companies within our industry and across industries. We define Adjusted EBITDA as EBITDA adjusted for acquisition related expenses and share-based compensation. We use Adjusted EBITDA as a supplemental measure to review and assess operating performance. We also believe use of Adjusted EBITDA facilitates investors’ use of operating performance comparisons from period to period, as well as across companies.

 

            In our November 9, 2021 earnings press release, as furnished on Form 8-K, we included Non-GAAP net income, EBITDA and Adjusted EBITDA. The terms Non-GAAP net income, EBITDA, and Adjusted EBITDA are not defined under U.S. GAAP, and are not measures of operating income, operating performance or liquidity presented in analytical tools, and when assessing our operating performance, Non-GAAP net income, EBITDA, and Adjusted EBITDA should not be considered in isolation, or as a substitute for net income/(loss) or other consolidated income statement data prepared in accordance with U.S. GAAP. Some of these limitations include, but are not limited to:

 

 

·

EBITDA and Adjusted EBITDA do not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments;

 

 

 

 

·

they do not reflect changes in, or cash requirements for, our working capital needs;

 

 

 

 

·

they do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on our debt that we may incur;

 

 

 

 

·

they do not reflect income taxes or the cash requirements for any tax payments;

 

 

 

 

·

although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will be replaced sometime in the future, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements;

 

 

 

 

·

while share-based compensation is a component of operating expense, the impact on our financial statements compared to other companies can vary significantly due to such factors as the assumed life of the options and the assumed volatility of our common stock; and

 

 

 

 

·

other companies may calculate EBITDA and Adjusted EBITDA differently than we do, limiting their usefulness as comparative measures.

 

We compensate for these limitations by relying primarily on our U.S. GAAP results and using Non-GAAP net income, EBITDA, and Adjusted EBITDA only as supplemental support for management’s analysis of business performance. Non-GAAP net income, EBITDA and Adjusted EBITDA are calculated as follows for the periods presented.

 

Reconciliation of Non-GAAP Financial Measures

 

            In accordance with the requirements of Regulation G issued by the SEC, we are presenting the most directly comparable U.S. GAAP financial measures and reconciling the unaudited Non-GAAP financial metrics to the comparable U.S. GAAP measures.

 

 
8

 

 

Reconciliation of U.S. GAAP Net Income/(Loss) to Non-GAAP Net Income

(Unaudited, in thousands, except for per share and share data)

 

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

U.S. GAAP net income/(loss)

 

 $ (125 )

 

 $ 131

 

 

 $ (1,843 )

 

 $ 779

 

Share-based compensation

 

 

 415

 

 

 

 136

 

 

 

 1,150

 

 

 

 377

 

Acquisition related expenses

 

 

 4

 

 

 

 -

 

 

 

 1,065

 

 

 

 -

 

Amortization of intangible assets

 

 

 506

 

 

 

 23

 

 

 

 773

 

 

 

 69

 

Non-GAAP net income

 

 $ 800

 

 

 $ 290

 

 

 $ 1,145

 

 

 $ 1,225

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 $ 0.04

 

 

 $ 0.02

 

 

 $ 0.06

 

 

 $ 0.08

 

Diluted

 

 $ 0.03

 

 

 $ 0.02

 

 

 $ 0.05

 

 

 $ 0.07

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 21,596,415

 

 

 

 15,244,804

 

 

 

 19,757,658

 

 

 

 15,058,192

 

Diluted

 

 

 26,196,240

 

 

 

 17,249,035

 

 

 

 22,481,104

 

 

 

 17,249,035

 

 

Reconciliation of U.S. GAAP Net Income/(Loss) to EBITDA to Adjusted EBITDA

(Unaudited, in thousands)

 

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

U.S. GAAP net income/(loss)

 

 $ (125 )

 

 $ 131

 

 

 $ (1,843 )

 

 $ 779

 

Depreciation and amortization

 

 

 569

 

 

 

 57

 

 

 

 931

 

 

 

 197

 

Interest expense

 

 

 24

 

 

 

 23

 

 

 

 64

 

 

 

 54

 

Interest and other expense/(income)

 

 

 17

 

 

 

 (2 )

 

 

 13

 

 

 

 25

 

Income tax provision/(benefit)

 

 

 137

 

 

 

 3

 

 

 

 (247 )

 

 

 9

 

EBITDA

 

 

 622

 

 

 

 212

 

 

 

 (1,082 )

 

 

 1,064

 

Acquisition related expenses

 

 

 4

 

 

 

 -

 

 

 

 1,065

 

 

 

 -

 

Share-based compensation

 

 

 415

 

 

 

 136

 

 

 

 1,150

 

 

 

 377

 

Adjusted EBITDA

 

 $ 1,041

 

 

 $ 348

 

 

 $ 1,133

 

 

 $ 1,441

 

 

 
9