BELLEVUE, Wash., Aug. 12, 2019 /PRNewswire/ -- Bsquare
Corporation (NASDAQ: BSQR) today announced financial results for
the second quarter of 2019.
"In May of 2019 we announced a series of initiatives called 'One
Bsquare' that recognize and build on the connection between our
smart device business and associated third-party software business
and the IoT opportunity. We believe the promise of IoT will
be realized through the development of intelligent devices and
intelligent systems that are cloud-enabled, contribute data,
facilitate distributed control and decision making, and operate
securely at scale," said Bsquare President and CEO Ralph C. Derrickson. "We have an
opportunity to help companies transform their businesses and
operations to these intelligent systems that leverages our unique
combination of expertise with embedded operating systems and IoT
software and services."
"In Q2 we started implementation of the One Bsquare
initiatives. During the quarter we restructured our executive
team, flattening the organization and adding entrepreneurial
leaders, and we formed a new team to focus on strategic
partnerships. We downsized our software development
organization and initiated the sales and marketing of our software
and services for intelligent devices and systems. And, we
announced a new customer in the facilities management space - Arcus
FM - that we believe is representative of the customers we'll be
closing moving forward."
"Our revenue was on the high end of our guidance and margins
were in-line with guidance. Our efforts to manage expense are
starting to impact our financials as our on-going operating
expense, excluding restructuring costs, were at the lowest level
since Q4 2016s. While I am pleased with these results, it
will take another two or three quarters before the full impact of
our rebuilding efforts is consistently reflected in our operating
results," concluded Mr. Derrickson.
Second Quarter 2019 Financial Highlights
- Revenue was $14.2 million, down
by $900,000 from $15.1 million in the first quarter of 2019, down
26.2% compared to the second quarter of 2018 and down 6.1% compared
to the first quarter of 2018, primarily due to lower sales of
Microsoft Windows Embedded operating systems.
- Operating expenses in the second quarter included a
$1.4 million charge for restructuring
costs associated with a workforce reduction plan approved by the
Board of Directors during the quarter.
- GAAP net loss for the current quarter was $3.9 million, or $0.30 per diluted share, compared to net loss of
$3.7 million, or $0.29 per diluted share, in the second quarter of
2018 and net loss of $2.8 million, or
$0.22 per diluted share, in the first
quarter of 2019. The GAAP net loss for the quarter includes
$1.4 million in restructuring
costs.
- Excluding the charge for restructuring costs of $1.4 million, net loss for the current quarter
was $2.5 million, or $(0.19) per diluted share, as adjusted
(1).
- Adjusted EBITDAS (2) was negative $2.2 million, compared to negative $3.6 million in the second quarter of 2018 and
negative $2.5 million in the first
quarter of 2019.
- Cash, cash equivalents, restricted cash, and short-term
investments on June 30, 2019 totaled
$12.6 million, a decrease of
approximately $2.7 million from
March 31, 2019 and a decrease of
$4.4 million from December 31, 2018.
Details as follows (unaudited, in thousands except percentages
and per share amounts):
|
Three Months
Ended
|
|
|
June 30, 2019
|
|
|
June 30, 2018
|
|
|
Q2-Q2 Change
(2)
|
|
|
March 31, 2019
|
|
|
Q2-Q1 Change
(2)
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third-party
software
|
$
|
11,684
|
|
|
$
|
16,992
|
|
|
$
|
(5,308)
|
|
|
$
|
13,101
|
|
|
$
|
(1,417)
|
|
Proprietary
software
|
|
258
|
|
|
|
281
|
|
|
|
(23)
|
|
|
|
251
|
|
|
|
7
|
|
Professional
engineering service
|
|
2,238
|
|
|
|
1,930
|
|
|
|
308
|
|
|
|
1,744
|
|
|
|
494
|
|
Total
revenue
|
|
14,180
|
|
|
|
19,203
|
|
|
|
(5,023)
|
|
|
|
15,096
|
|
|
|
(916)
|
|
Total gross
profit
|
$
|
2,423
|
|
|
$
|
3,261
|
|
|
$
|
(838)
|
|
|
$
|
2,391
|
|
|
$
|
32
|
|
Gross margins
(3):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third-party
software
|
|
15
|
%
|
|
|
15
|
%
|
|
|
0
|
%
|
|
|
15
|
%
|
|
|
0
|
%
|
Proprietary
software
|
|
67
|
%
|
|
|
64
|
%
|
|
|
2
|
%
|
|
|
15
|
%
|
|
|
52
|
%
|
Professional
engineering service
|
|
22
|
%
|
|
|
29
|
%
|
|
|
(8)
|
%
|
|
|
23
|
%
|
|
|
(1)
|
%
|
Total gross
margin
|
|
17
|
%
|
|
|
17
|
%
|
|
|
0
|
%
|
|
|
16
|
%
|
|
|
1
|
%
|
Total operating
expenses
|
$
|
6,352
|
|
|
$
|
6,979
|
|
|
$
|
(627)
|
|
|
$
|
5,270
|
|
|
$
|
1,082
|
|
Total operating
expenses excluding restructuring costs (1)
|
|
4,976
|
|
|
|
6,979
|
|
|
|
(2,003)
|
|
|
|
5,270
|
|
|
|
(294)
|
|
Net loss
|
|
(3,868)
|
|
|
|
(3,683)
|
|
|
|
(185)
|
|
|
|
(2,846)
|
|
|
|
(1,022)
|
|
Per diluted
share
|
|
(0.30)
|
|
|
|
(0.29)
|
|
|
|
(0.01)
|
|
|
|
(0.22)
|
|
|
|
(0.08)
|
|
Net loss excluding
restructuring costs (1)
|
|
(2,492)
|
|
|
|
(3,683)
|
|
|
|
1,191
|
|
|
|
(2,846)
|
|
|
|
354
|
|
Per diluted share
excluding restructuring costs (1)
|
|
(0.19)
|
|
|
|
(0.29)
|
|
|
|
0.10
|
|
|
|
(0.22)
|
|
|
|
0.03
|
|
Adjusted EBITDAS
(2)
|
|
(2,228)
|
|
|
|
(3,570)
|
|
|
|
1,342
|
|
|
|
(2,517)
|
|
|
|
289
|
|
Cash, cash
equivalents and short-term investments
|
$
|
12,560
|
|
|
$
|
17,861
|
|
|
$
|
(5,301)
|
|
|
$
|
15,263
|
|
|
$
|
(2,703)
|
|
|
|
Notes:
|
(1)
|
Net loss excluding
restructuring and per diluted share excluding restructuring are
non-GAAP measurements.
|
(2)
|
Adjusted EBITDAS =
Income (loss) from operations before depreciation, amortization,
stock compensation expense, restructuring costs, and goodwill
impairment charge. Adjusted EBITDAS is a non-GAAP measurement
(reconciliation provided after financial statement
tables).
|
(3)
|
For gross margin,
amount represents percentage point change.
|
Financial Commentary on Second Quarter 2019 Results (Compared
to Second Quarter 2018)
- Third-party software revenue decreased for the quarterly
period, driven by lower sales of Microsoft Embedded and Windows
Mobile operating systems in Europe.
- Proprietary software revenue decreased for the quarterly
period, primarily due to lower DataV software sales.
- Professional engineering service revenue increased when
compared to the prior year quarterly period, primarily from
completion of a customer project in the current quarter.
- Operating expenses, excluding the charge for restructuring
costs of $1.0 million, decreased when
compared to the second quarter of 2018 due to lower salary, benefit
and marketing costs from spending reductions initiated in second
half of 2018 and first half of 2019.
- Excluding the charge for restructuring costs of $1.0 million, net loss for the current quarter
decreased by $1.2 million, or
$(0.10) per diluted share, as
adjusted, vs. the second quarter of 2018.
Third Quarter 2019 Outlook
In the third quarter, we will continue with and accelerate the
implementation of the previously announced One Bsquare initiatives
to realign our business.
Management currently has the following expectations for the
third quarter of 2019:
- Revenue in the range of $12.5
million to $14.5 million;
and
- Blended gross margin in the 15% to 17% range.
Conference Call
Management will host a conference call today, August 12, 2019, at 5 p.m.
Eastern Time (2 p.m. Pacific
Time). To access the call
dial 1-800-239-9838 or 1-856-344-9316 for
international callers, and reference "BSQUARE Corporation Second
Quarter 2019 Earnings Conference Call." A replay will be available
for two weeks following the call by dialing 1-844-512-2921, or
1-412-317-6671 for international callers; reference pin
number 6669112. A live and replay Webcast of the call will be
available at www.bsquare.com in the investor relations section.
About Bsquare Corporation
Bsquare builds technology that is powering the next
generation of intelligent devices and the systems in which they
operate. We believe the promise of IoT will be realized
through the development of intelligent devices and intelligent
systems that are cloud-enabled, contribute data, facilitate
distributed control & decision making, and operate securely at
scale. Bsquare's suite of services and software
components allow our customers to create new revenue streams and
operating models while providing new opportunities for lowering
costs and improving operations. We serve a global customer base
from offices in Bellevue, Washington, the United
Kingdom and Taiwan. For more information,
visit www.bsquare.com.
Cautionary Note Regarding Forward-Looking Statements
This release contains "forward-looking statements" within the
meaning of the safe-harbor provisions of the U.S. Private
Securities Litigation Reform Act of 1995. Forward-looking
statements can be identified by words such as: "expect," "believe,"
"plan," "strategy," "future," "may," "should," "will," and similar
references to future periods. Examples of forward-looking
statements include, among others, statements we make regarding
expected operating results in future periods, such as anticipated
revenue, gross margins, profitability, cash and investments, and
regarding strategies for customer retention, growth, new product
and service developments, and market position. Forward-looking
statements are neither historical facts nor assurances about future
performance. Instead, they are based on current beliefs,
expectations and assumptions about the future of our business and
other future conditions. Because forward-looking statements relate
to the future, they are subject to inherent uncertainties, risks,
and changes in circumstances that are difficult to predict and many
of which are outside of our control. Our actual results and
financial condition may differ materially from those indicated in
the forward-looking statements. Therefore, you should not rely on
any of these forward-looking statements.
Important factors that could cause our actual results and
financial condition to differ materially from those indicated in
the forward-looking statements include, among others: our ability
to execute our development initiatives and sales and marketing
strategies around DataVâ„¢, the Internet of Things, and our product
and service offerings more generally; the extent to which we are
successful in gaining new long-term customers and retaining
existing ones; whether we are able to maintain our favorable
relationship with Microsoft as a systems integrator and
distributor; our success in leveraging strategic partnering
initiatives with companies such as Microsoft, AWS and Intel; and
such other risk factors as discussed in our most recent Annual
Report on Form 10-K and other filings with the Securities and
Exchange Commission. Any forward-looking statement made by us in
this release is based only on information currently available to us
and speaks only as of the date on which it is made. Except as may
be required by law, we undertake no obligation to publicly update
any forward-looking statement, whether written or oral, that may be
made from time to time, whether as a result of new information,
future developments or otherwise.
BSQUARE
Contact:
|
Investor
Contact:
|
Peter Biere, Chief
Financial Officer
|
Leslie
Phillips
|
BSQUARE
Corporation
|
The Blueshirt
Group
|
+1
425.519.5900
|
+ 1
415.217.5869
|
investorrelations@bsquare.com
|
leslie@blueshirtgroup.com
|
Bsquare, the Bsquare Logo, and DataV are trademarks of
Bsquare Corporation in the U.S. and other countries. Other names
and brands herein may be trademarks of others.
BSQUARE
CORPORATION
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(In thousands,
except share amounts)
|
|
|
|
June 30, 2019
|
|
|
December 31,
2018
|
|
|
|
(Unaudited)
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
6,333
|
|
|
$
|
10,005
|
|
Restricted
cash
|
|
|
600
|
|
|
|
263
|
|
Short-term
investments
|
|
|
5,627
|
|
|
|
6,409
|
|
Accounts receivable,
net of allowance for doubtful accounts of $31 and $40 at
June 30, 2019 and December 31, 2018,
respectively
|
|
|
8,957
|
|
|
|
11,581
|
|
Contract
assets
|
|
|
788
|
|
|
|
1,053
|
|
Prepaid expenses and
other current assets
|
|
|
592
|
|
|
|
685
|
|
Total
current assets
|
|
|
22,897
|
|
|
|
29,996
|
|
Restricted cash,
long-term
|
|
|
—
|
|
|
|
263
|
|
Equipment, furniture
and leasehold improvements, less accumulated
depreciation
|
|
|
450
|
|
|
|
911
|
|
Intangible assets,
less accumulated amortization
|
|
|
218
|
|
|
|
267
|
|
Deferred tax
assets
|
|
|
7
|
|
|
|
7
|
|
Right-of-use lease
asset, net
|
|
|
897
|
|
|
|
—
|
|
Other non-current
assets
|
|
|
498
|
|
|
|
550
|
|
Total
assets
|
|
$
|
24,967
|
|
|
$
|
31,994
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Third-party software
fees payable
|
|
$
|
7,378
|
|
|
$
|
7,620
|
|
Accounts
payable
|
|
|
680
|
|
|
|
565
|
|
Accrued
compensation
|
|
|
1,585
|
|
|
|
1,629
|
|
Other accrued
expenses
|
|
|
65
|
|
|
|
653
|
|
Deferred
rent
|
|
|
—
|
|
|
|
347
|
|
Deferred
revenue
|
|
|
1,104
|
|
|
|
1,652
|
|
Operating
lease
|
|
|
1,070
|
|
|
|
—
|
|
Total
current liabilities
|
|
|
11,882
|
|
|
|
12,466
|
|
Deferred rent,
long-term
|
|
|
—
|
|
|
|
150
|
|
Deferred revenue,
long-term
|
|
|
1,094
|
|
|
|
1,037
|
|
Operating lease,
long-term
|
|
|
156
|
|
|
|
—
|
|
Shareholders'
equity:
|
|
|
|
|
|
|
|
|
Preferred stock, no
par: 10,000,000 shares authorized; no shares issued and
outstanding
|
|
|
—
|
|
|
|
—
|
|
Common stock, no par:
37,500,000 shares authorized; 12,794,598 and 12,777,573 shares
issued and outstanding at June 30, 2019 and December 31,
2018, respectively
|
|
|
138,562
|
|
|
|
138,280
|
|
Accumulated other comprehensive loss
|
|
|
(1,000)
|
|
|
|
(926)
|
|
Accumulated
deficit
|
|
|
(125,727)
|
|
|
|
(119,013)
|
|
Total
shareholders' equity
|
|
|
11,835
|
|
|
|
18,341
|
|
Total
liabilities and shareholders' equity
|
|
$
|
24,967
|
|
|
$
|
31,994
|
|
BSQUARE
CORPORATION
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(In thousands,
except per share amounts)
|
(Unaudited)
|
|
|
Three Months Ended
June 30,
|
|
|
Six Months Ended
June 30,
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third-party
software
|
$
|
11,684
|
|
|
$
|
16,992
|
|
|
$
|
24,785
|
|
|
$
|
33,056
|
|
Proprietary
software
|
|
258
|
|
|
|
281
|
|
|
|
509
|
|
|
|
2,076
|
|
Professional
engineering service
|
|
2,238
|
|
|
|
1,930
|
|
|
|
3,982
|
|
|
|
4,749
|
|
Total
revenue
|
|
14,180
|
|
|
|
19,203
|
|
|
|
29,276
|
|
|
|
39,881
|
|
Cost of
revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third-party
software
|
|
9,923
|
|
|
|
14,480
|
|
|
|
21,072
|
|
|
|
27,834
|
|
Proprietary
software
|
|
86
|
|
|
|
100
|
|
|
|
299
|
|
|
|
141
|
|
Professional
engineering service
|
|
1,748
|
|
|
|
1,362
|
|
|
|
3,091
|
|
|
|
3,445
|
|
Total
cost of revenue
|
|
11,757
|
|
|
|
15,942
|
|
|
|
24,462
|
|
|
|
31,420
|
|
Gross
profit
|
|
2,423
|
|
|
|
3,261
|
|
|
|
4,814
|
|
|
|
8,461
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative
|
|
3,082
|
|
|
|
4,901
|
|
|
|
6,016
|
|
|
|
10,349
|
|
Research and
development
|
|
1,894
|
|
|
|
2,078
|
|
|
|
4,230
|
|
|
|
4,308
|
|
Restructuring
costs
|
|
1,376
|
|
|
|
—
|
|
|
|
1,376
|
|
|
|
—
|
|
Total
operating expenses
|
|
6,352
|
|
|
|
6,979
|
|
|
|
11,622
|
|
|
|
14,657
|
|
Loss from
operations
|
|
(3,929)
|
|
|
|
(3,718)
|
|
|
|
(6,808)
|
|
|
|
(6,196)
|
|
Other income,
net
|
|
61
|
|
|
|
47
|
|
|
|
94
|
|
|
|
91
|
|
Loss before income
taxes
|
|
(3,868)
|
|
|
|
(3,671)
|
|
|
|
(6,714)
|
|
|
|
(6,105)
|
|
Income tax benefit
(expense)
|
|
—
|
|
|
|
(12)
|
|
|
|
—
|
|
|
|
(12)
|
|
Net loss
|
$
|
(3,868)
|
|
|
$
|
(3,683)
|
|
|
$
|
(6,714)
|
|
|
$
|
(6,117)
|
|
Basic loss per
share
|
$
|
(0.30)
|
|
|
$
|
(0.29)
|
|
|
$
|
(0.52)
|
|
|
$
|
(0.48)
|
|
Diluted loss per
share
|
$
|
(0.30)
|
|
|
$
|
(0.29)
|
|
|
$
|
(0.52)
|
|
|
$
|
(0.48)
|
|
Net loss excluding
restructuring costs (3)
|
$
|
(2,492)
|
|
|
$
|
(3,683)
|
|
|
$
|
(5,338)
|
|
|
$
|
(6,117)
|
|
Per diluted share
excluding restructuring costs (3)
|
$
|
(0.19)
|
|
|
$
|
(0.29)
|
|
|
$
|
(0.41)
|
|
|
$
|
(0.48)
|
|
Shares used in per
share calculations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
12,855
|
|
|
|
12,697
|
|
|
|
12,879
|
|
|
|
12,685
|
|
Diluted
|
|
12,855
|
|
|
|
12,697
|
|
|
|
12,879
|
|
|
|
12,685
|
|
BSQUARE
CORPORATION
|
NON-GAAP
INFORMATION AND RECONCILIATION TO COMPARABLE GAAP FINANCIAL
MEASURES
|
(In thousands,
unaudited)
|
|
|
Three Months Ended
June 30,
|
|
|
Six Months Ended
June 30,
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
Loss from operations,
as reported
|
$
|
(3,929)
|
|
|
$
|
(3,718)
|
|
|
$
|
(6,808)
|
|
|
$
|
(6,196)
|
|
Depreciation and
amortization
|
|
286
|
|
|
|
164
|
|
|
|
480
|
|
|
|
305
|
|
Stock-based
compensation
|
|
39
|
|
|
|
(16)
|
|
|
|
207
|
|
|
|
315
|
|
Restructuring
costs
|
|
1,376
|
|
|
|
—
|
|
|
|
1,376
|
|
|
|
—
|
|
Adjusted EBITDAS
(1)
|
$
|
(2,228)
|
|
|
$
|
(3,570)
|
|
|
$
|
(4,745)
|
|
|
$
|
(5,576)
|
|
|
|
(1)
|
Adjusted EBITDAS is a
non-GAAP financial measure. Generally, a non-GAAP financial measure
is a numerical measure of a company's performance, financial
position or cash flow that either excludes or includes amounts that
are not normally excluded or included in the most directly
comparable measure calculated and presented in accordance with
GAAP. Adjusted EBITDAS is defined as income (loss) from operations
before depreciation expense on fixed assets and amortization
expense (including impairment) on intangible assets, stock-based
compensation expense, restructuring, and goodwill impairment.
Adjusted EBITDAS should not be construed as a substitute for net
income (loss) or net cash provided (used) by operating activities
(all as determined in accordance with GAAP) for the purpose of
analyzing our operating performance, financial position and cash
flows, as Adjusted EBITDAS is not defined by GAAP. However, BSQUARE
regards Adjusted EBITDAS as a complement to net income and other
GAAP financial performance measures, including an indirect measure
of operating cash flow.
|
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SOURCE Bsquare