SAN MATEO, Calif., March 11, 2020 /PRNewswire/ -- Sonim
Technologies, Inc. (Nasdaq: SONM), a leading
U.S. provider of ultra-rugged mobility solutions designed
specifically for task workers physically engaged in their work
environments, reported financial results for the fourth quarter and
full year ended December 31,
2019.
Full Year 2019 Financial Highlights
- Net revenues were $116.3 million,
compared with $135.7 million in
2018
- Gross profit was $34.5 million,
compared with $48.1 million in
2018
Fourth Quarter 2019 Financial Highlights
- Net revenues were $17.2 million,
compared with $46.5 million in Q4
2018
- Gross profit was $4.2 million,
compared with $18.2 million in Q4
2018
- GAAP net loss totaled $8.3
million
- Adjusted EBITDA loss (a non-GAAP metric reconciled below) was
$4.9 million
"We have made meaningful progress on our restructuring plan over
the past four months," said Tom
Wilkinson, Chief Executive Officer. "Since joining Sonim
late last year, I have worked with Bob
Tirva, our CFO, to closely evaluate all aspects of our
business. This includes product engineering and development, supply
chain, sales and marketing, distribution, partnerships, strategic
opportunities and administration. Within every function of Sonim's
business, we have identified opportunities to streamline our
operations and reduce costs. These changes are being
implemented with rapid effect, such as a reduction in force of more
than 200 positions worldwide. We are positioning Sonim to be
leaner, more nimble and more effective in bringing our rugged
mobility products to market so as to drive improvement in our
operating results as we weather a challenging transition in our
business and global economic uncertainty related to the COVID-19
virus, including specifically its impact in China."
Restructuring Update
Since November, management has
proactively reorganized the company into a leaner, lower cost
organization focused on a path to growth and profitability. The
company has reduced its global headcount from approximately 700
employees at year-end 2018, to approximately 500 employees as of
December 31, 2019. The company
executed an additional reduction in force of approximately 10% of
its US employees in February 2020.
Sonim also intends to relocate its headquarters to Austin, Texas, a lower cost location, as
swiftly as possible.
These actions are expected to result in a run-rate savings of
approximately 20% (or $12 million)
from the Company's 2019 operating expense run-rate, excluding
one-time IPO related costs. Restructuring the company positions
Sonim to stabilize its operations and invest for future growth.
"Sonim's board of directors has approved an operating plan for
2020 changing how we execute our business so that we can focus not
only on the needs of our customers, but also on performing well for
our shareholders. We will emerge stronger and solidify our position
as the leader in the rugged mobility sector," said Wilkinson. "In
addition to our actions on the operating cost side of the business,
we have also taken steps to better align our inventory with our
projected channel sales activity. We anticipate a challenging first
portion of the year for 2020 as we make these adjustments, but we
believe the adjustments are the necessary steps to realign Sonim's
operations within the rugged mobility marketplace."
Coronavirus Impact
Sonim Technologies is closely
monitoring the impact of the COVID-19 global outbreak with its top
priority being the health and safety of its employees, customers,
partners, and communities. While we believe our recent
restructuring efforts will enable us to improve our supply chain
and better address the global economic events related to the
COVID-19 virus, there remains uncertainty related to the public
health situation in China and
elsewhere. Additionally, the Chinese government placed a moratorium
on employment reductions while the crisis continues. As a result,
restructuring in the Company's China operations has been deferred until the
health crisis subsides and the moratorium is lifted.
"The impact of COVID-19 has delayed the execution of certain
portions of our planned restructuring actions in product
development and supply chain, but at this point we believe our
sales partners have ample inventory to continue meeting customer
needs in the near term," said Wilkinson. "There is an increasing
likelihood that our results could be negatively impacted by an
interruption in the operation of our manufacturing facility in
Shenzhen, China during the first
quarter. The magnitude of any potential impact is unknown, as it is
unclear how long it will take for the overall supply chain to
return to normal. We continue to work closely with our partners and
suppliers to manage this process appropriately."
The Company will continue to refrain from offering forward
looking guidance until the COVID-19 situation achieves greater
resolution and additional actions in the restructuring plan are
implemented.
Conference Activity
Sonim CEO Tom Wilkinson and CFO Bob Tirva will be participating in the Roth
Conference on March 16, 2020, which
has been converted to a virtual event due to COVID-19 concerns.
Management will be available to meet with investors via meetings
arranged through the Roth Capital sales team or by contacting
Matt Kreps of Darrow Associates,
investor relations for Sonim, at mkreps@darrowir.com to
request a meeting.
Fourth Quarter 2019 Financial Results
Net revenues for
the fourth quarter of 2019 decreased 63% to $17.2 million, from $46.5
million in the fourth quarter of 2018. The decrease in net
revenues was primarily attributable to lower volumes for the XP8
smart phone and XP5 feature phones sold to both US &
International carriers.
Sonim's smartphones include the XP6, XP7, and XP8 models. The
number of smartphone units sold during the three months ended
December 31, 2019 compared to the
three months ended December 31, 2018
decreased by 57%, primarily due to decreased demand for older XP7
and XP6 models, and slower than expected ramp of the XP8. Feature
phones include the XP3, XP5, and XP5s models. The number of feature
phone units sold during the three months ended December 31, 2019 compared to the three months
ended December 31, 2018 decreased by
65%, primarily due to decreases in demand for the XP5s from several
carriers. With introduction of the higher volume XP3 in the second
quarter of 2019, feature phones represented about 46% of unit sales
in Q4 of 2019, compared to approximately 51% in Q4 of
2018.
Gross profit for the fourth quarter of 2019 decreased 77% to
$4.2 million (24% of net revenues)
from $18.2 million (39% of net
revenues) in the fourth quarter of 2018. The decrease in gross
profit was primarily attributable to the decrease in revenue,
changes in product mix, a one-time reserve adjustment of
$1.0 million related to inventory
reserves in the three months ended December
31, 2019, and $0.4 million in
amortized fulfillment costs as a result of the adoption of ASC 606.
On a non-GAAP basis, adding back these one-time non-cash costs,
adjusted gross profit would have been $5.6
million (33% of net sales).
Net loss attributable to common stockholders for the fourth
quarter of 2019 totaled $8.3 million
or $(0.41) per basic share (based on
20.4 million shares), compared to net income attributable to common
stockholders of $3.2 million, or
$0.31 per basic share (based on 10.5
million shares), in the fourth quarter of 2018. The higher net loss
attributable to common stockholders of $11.5
million for the fourth quarter 2019 compared to the fourth
quarter 2018 was primarily driven by a decrease in gross profit of
$14.0 million and lower operating
expenses of $1.1 million as compared
to the fourth quarter of 2018.
Adjusted EBITDA (a non-GAAP metric reconciled below) for the
fourth quarter of 2019 decreased $10.7
million to a loss of $4.9
million, compared to a gain of $5.8
million in the fourth quarter of 2018. The decrease in
adjusted EBITDA was primarily due to an increase in net loss.
Full Year 2019 Financial Results
Net revenues for the
year ended 2019 decreased 14% to $116.3
million from $135.7 million in
the year ended 2018. The decrease in net revenues was primarily due
a decrease in average sales price due to changes in product mix and
a decrease in professional service revenue.
Gross profit for the year ended 2019 was $34.5 million (30% of net revenues) compared with
$48.1 million (35% of net revenues)
in the year ended 2018. The decline in gross profit was primarily
due to the one-time reserve of $3.1
million noted previously, changes in product mix and
$1.5 million in amortized fulfillment
costs as a result of the adoption ASC 606.
Net loss attributable to common stockholders for the year ended
2019 totaled $25.8 million, or
$(1.39) per basic share (based on
18.6 million shares), compared to net loss attributable to common
stockholders of $8.9 million, or
$(2.57) per basic share (based on 3.4
million shares), for the year ended 2018. The higher net loss
attributable to common stockholders for the year ended 2019
compared to 2018 was primarily driven by a decrease in gross profit
of $13.6 million and an increase in
operating expenses of $14.2 million,
offset in part by the absence of a $10.2
million non-cash dividend payout in 2018 related to shares
of convertible Series A, Series A-1 and Series A-2 preferred
stock.
Adjusted EBITDA (a non-GAAP metric reconciled below) for the
year ended 2019 decreased by $19.3
million to a loss of $12.4
million from a gain of $6.9
million for the year ended 2018. The decrease in adjusted
EBITDA was primarily due to an increase in net loss of
$27.1 million, lower interest expense
of $0.3 million and decrease in
warrant valuation of $0.9 million,
partially offset by an increase of $6.3
million in stock-based compensation expense, an increase in
depreciation and amortization of $3.5
million and $0.7 million in
one-time restructuring costs.
Non-GAAP Financial Measures
Sonim provides Non-GAAP
information to assist investors in assessing its operations in the
way that its management evaluates those operations. Adjusted EBITDA
is a supplemental measure of the Company's performance that is not
required by, and is not determined in accordance with, GAAP.
Non-GAAP financial information is not a substitute for any
financial measure determined in accordance with GAAP.
We define Adjusted EBITDA as net income (loss) adjusted to
exclude the impact of stock-based compensation expense,
depreciation and amortization, interest expense, income tax
expense, change in fair value of warrant liability and one-time
restructuring costs. Adjusted EBITDA is a useful financial metric
in assessing our operating performance from period to period by
excluding certain items that we believe are not representative
of our core business.
We believe that Adjusted EBITDA, viewed in addition to, and not
in lieu of, our reported GAAP results, provide useful information
to investors regarding our performance and overall results of
operations for various reasons,
including:
- non-cash equity grants made to employees at a certain price do
not necessarily reflect the performance of our business at such
time, and as such, stock-based compensation expense is not a key
measure of our operating performance; and
- costs associated with certain one-time events, such as changes
in fair value of warrant liability and restructuring costs, are not
considered a key measure of our operating performance.
We use Adjusted EBITDA:
- as a measure of operating performance;
- for planning purposes, including the preparation of budgets and
forecasts;
- to allocate resources to enhance the financial performance of
our business;
- to evaluate the effectiveness of our business strategies;
- to periodically assess compliance with certain covenants and
other provisions under our credit facilities;
- in communications with our board of directors concerning our
financial performance; and
- as a consideration in determining compensation for certain key
employees.
Adjusted EBITDA has limitations as an analytical tool, and
should not be considered in isolation, or as a substitute for
analysis of our results as reported under GAAP. Some of these
limitations include:
- it does not reflect all cash expenditures, future requirements
for capital expenditures or contractual commitments;
- it does not reflect changes in, or cash requirements for,
working capital needs;
- it does not reflect interest expense on our debt or the cash
requirements necessary to service interest or principal payments;
and
- other companies in our industry may define and/or calculate
this metric differently than we do, limiting its usefulness as a
comparative measure.
Set forth below is a reconciliation from net income (loss) to
Adjusted EBITDA for the three months and years ended December 31, 2019 and 2018, respectively:
|
Reconciliation of
GAAP Income (Loss) to Adjusted EBITDA
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
|
December
31,
|
|
December
31,
|
|
|
2019
|
2018
|
|
2019
|
2018
|
|
Net income
(loss)
|
$ (8,336)
|
$ 4,337
|
|
$ (25,834)
|
$ 1,277
|
|
Adjustments:
|
|
|
|
|
|
|
Depreciation and
amortization
|
1,946
|
511
|
|
3,525
|
1,850
|
|
Stock-based
compensation
|
397
|
123
|
|
6,308
|
252
|
|
Interest
expense
|
310
|
428
|
|
1,522
|
1,828
|
|
Change in fair value
of warrant liability
|
—
|
326
|
|
—
|
970
|
|
Income tax
|
604
|
87
|
|
1,388
|
754
|
|
Restructuring
costs
|
158
|
—
|
|
736
|
—
|
|
Adjusted
EBITDA
|
$ (4,921)
|
$ 5,812
|
|
$ (12,355)
|
$ 6,931
|
About Sonim Technologies, Inc.
Sonim Technologies is a
leading U.S. provider of ultra-rugged mobility solutions designed
specifically for task workers physically engaged in their work
environments, often in mission-critical roles. The Sonim solution
includes ultra-rugged mobile phones, a suite of industrial-grade
accessories, and data and workflow applications which are
collectively designed to increase worker productivity,
communication and safety on the job site. For more information,
visit www.sonimtech.com.
Important Cautions Regarding Forward-Looking
Statements
This release contains forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995. These statements relate to, among other things, future
growth, profitability, continued market acceptance of the Company's
products. These forward-looking statements are based on Sonim's
current expectations, estimates and projections about its business
and industry, management's beliefs and certain assumptions made by
the Company, all of which are subject to change. Forward-looking
statements generally can be identified by the use of
forward-looking terminology such as, "future", "believe," "expect,"
"may," "will," "intend," "estimate," "continue," or similar
expressions or the negative of those terms or expressions. Such
statements involve risks and uncertainties, which could cause
actual results to vary materially from those expressed in or
indicated by the forward-looking statements. Factors that may cause
actual results to differ materially include Sonim's ability to
continue to generate positive cash flow, and ability to be
profitable; anticipated trends, such as the use of and demand for
its products; its ability to attract and retain customers to
purchase and use its products; its ability to attract wireless
carriers as customers for its products; the evolution of technology
affecting its products and markets; its ability to successfully
address the technical issues identified with respect to its
products; its ability to introduce new products and enhance
existing products, as well as the other potential factors described
under "Risk Factors" included in Sonim's Quarterly Report on
Form 10-Q for the three months ended September 30, 2019 and other documents on
file with the Securities and Exchange Commission (available at
www.sec.gov). Sonim cautions you not to place undue reliance on
forward-looking statements, which reflect an analysis only and
speak only as of the date hereof. Sonim assumes no obligation to
update any forward-looking statements in order to reflect events or
circumstances that may arise after the date of this release, except
as required by law.
SONIM
TECHNOLOGIES, INC. CONSOLIDATED BALANCE
SHEETS DECEMBER 31, 2019 and DECEMBER 31, 2018
(IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)
|
|
|
|
|
|
|
|
|
|
2019
|
|
|
2018
|
|
Assets
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
11,298
|
|
|
$
|
13,049
|
|
Accounts receivable,
net
|
|
|
10,082
|
|
|
|
18,877
|
|
Inventory
|
|
|
19,531
|
|
|
|
21,831
|
|
Prepaid expenses and
other current assets
|
|
|
6,430
|
|
|
|
10,111
|
|
Total current
assets
|
|
|
47,341
|
|
|
|
63,868
|
|
Property and
equipment, net
|
|
|
1,442
|
|
|
|
1,071
|
|
Other
assets
|
|
|
6,676
|
|
|
|
2,406
|
|
Total
assets
|
|
$
|
55,459
|
|
|
$
|
67,345
|
|
Liabilities and
stockholders' equity
|
|
|
|
|
|
|
|
|
Current portion of
long-term debt
|
|
$
|
9,821
|
|
|
$
|
301
|
|
Accounts
payable
|
|
|
7,234
|
|
|
|
27,295
|
|
Accrued
expenses
|
|
|
10,265
|
|
|
|
16,381
|
|
Deferred
revenue
|
|
|
291
|
|
|
|
4,223
|
|
Total current
liabilities
|
|
|
27,611
|
|
|
|
48,200
|
|
Income tax
payable
|
|
|
1,961
|
|
|
|
807
|
|
Long-term debt, less
current portion
|
|
|
362
|
|
|
|
13,209
|
|
Total
liabilities
|
|
|
29,934
|
|
|
|
62,216
|
|
|
|
|
|
|
|
|
|
|
Common stock, $0.001
par value per share; 100,000,000 shares authorized:
20,437,235 shares issued and
outstanding at December 31, 2019; 100,000,000 shares
authorized; 15,591,357 shares issued and
outstanding at December 31, 2018
|
|
|
20
|
|
|
|
15
|
|
Preferred Stock,
$0.001 par value per share; 5,000,000 shares authorized
|
|
|
—
|
|
|
|
—
|
|
Additional paid-in
capital
|
|
|
191,751
|
|
|
|
148,641
|
|
Accumulated
deficit
|
|
|
(166,246)
|
|
|
|
(143,527)
|
|
Total stockholders'
equity
|
|
|
25,525
|
|
|
|
5,129
|
|
Total liabilities and
stockholders' equity
|
|
$
|
55,459
|
|
|
$
|
67,345
|
|
SONIM
TECHNOLOGIES, INC. CONSOLIDATED STATEMENTS OF
OPERATIONS YEARS ENDED DECEMBER 31, 2019 and
2018 (IN THOUSANDS EXCEPT SHARE AND PER SHARE
AMOUNTS)
|
|
|
|
|
|
|
|
.
|
|
2019
|
|
|
2018
|
|
Net
revenues
|
|
$
|
116,251
|
|
|
$
|
135,665
|
|
Cost of
revenues
|
|
|
81,742
|
|
|
|
87,576
|
|
Gross
profit
|
|
|
34,509
|
|
|
|
48,089
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Research and
development
|
|
|
26,064
|
|
|
|
23,247
|
|
Sales and
marketing
|
|
|
13,908
|
|
|
|
12,228
|
|
General and
administrative
|
|
|
16,182
|
|
|
|
7,220
|
|
Restructuring
costs
|
|
|
736
|
|
|
|
—
|
|
Total operating
expenses
|
|
|
56,890
|
|
|
|
42,695
|
|
Income (loss) from
operations
|
|
|
(22,381)
|
|
|
|
5,394
|
|
Interest
expense
|
|
|
(1,522)
|
|
|
|
(1,828)
|
|
Change in fair value
of warrant liability
|
|
|
—
|
|
|
|
(970)
|
|
Other expense,
net
|
|
|
(543)
|
|
|
|
(565)
|
|
Income (loss) before
income taxes
|
|
|
(24,446)
|
|
|
|
2,031
|
|
Income tax
expense
|
|
|
(1,388)
|
|
|
|
(754)
|
|
Net income
(loss)
|
|
|
(25,834)
|
|
|
|
1,277
|
|
Dividends on Series
A, Series A-1 and Series A-2 preferred stock
|
|
|
—
|
|
|
|
(10,152)
|
|
Net loss attributable
to common stockholders
|
|
$
|
(25,834)
|
|
|
$
|
(8,875)
|
|
Net loss per share
attributable to common stockholders, basic
|
|
$
|
(1.39)
|
|
|
$
|
(2.57)
|
|
Weighted–average
shares used in computing net loss per share attributable to common stockholders, basic
|
|
|
18,603,582
|
|
|
|
3,447,283
|
|
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SOURCE Sonim Technologies, Inc.