SEATTLE, Aug. 13, 2020 /PRNewswire/ -- Bsquare Corporation
(NASDAQ: BSQR) today announced financial results for the second
quarter of 2020. For the second quarter of 2020, revenue was
$8.9 million, net loss was
$1.1 million, adjusted EBITDAS was
negative $0.8 million, and cash
increased by $1.9 million.
"COVID-19 and seasonal ordering patterns ended our three-quarter
trend of increasing revenue. Partner Solutions segment revenue,
which was strong in Q1 2020, was particularly affected as customer
ordering slowed and magnified the quarter over quarter decrease.
The challenges of the pandemic, however, did drive a higher level
of collaboration that allowed us to strengthen relationships and
retain our customers. Aggressive expense and cash management for
the past several quarters enabled us to bolster our cash reserves,"
said Ralph C, Derrickson, CEO and President of Bsquare.
Added Derrickson: "The COVID-19 pandemic is driving rapid change
in every corner of life and work, creating new requirements for the
systems we all rely on. As our customers are responding we are
seeing evidence that there is a significant role for Bsquare's
intelligent device and system services, and we remain confident
that our technology will be part of the answer."
Second Quarter 2020 Financial Highlights
- Cash, cash equivalents, restricted cash, and short-term
investments totaled $12.6 million on
June 30, 2020, an increase of
approximately $1.9 million from
March 31, 2020.
- Revenue for Q2 2020 was $8.9
million, down $7.8 million
from Q1 2020. Revenue declines were driven by pandemic-related
reductions in demand on top of normal seasonality in the Partner
Solutions segment, while Edge-to-Cloud segment revenue remained
steady.
- Gross margin for Partner Solutions was 14%, lower than the
atypical gross margin of Q1 2020 and returning to a level
consistent with prior periods. Edge-to-cloud margin improved
sequentially but continues to reflect the cost of addressing
customer requirements for previously delivered software.
- Operating expenses for the quarter were at their lowest level
since the first quarter of 2019 and operating expenses, excluding
restructuring costs, declined for the sixth consecutive
quarter.
- Net loss for the current quarter was $1.1 million, or $0.08 per diluted share, compared to net loss of
$0.5 million, or $0.04 per diluted share, in the first quarter of
2020.
- Adjusted EBITDAS was approximately negative $0.8 million, compared to approximately
break-even results in the first quarter of 2020.
Details as follows (unaudited, in thousands except percentages
and per share amounts):
|
|
Three Months
Ended
|
|
|
|
June 30,
2020
|
|
|
March 31,
2020
|
|
|
Quarter-
over-
Quarter
Change
|
|
|
June 30,
2019
|
|
|
Year-over-
Year
Change
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Partner
Solutions
|
|
$
|
8,110
|
|
|
$
|
15,905
|
|
|
$
|
(7,795)
|
|
|
$
|
11,684
|
|
|
$
|
(3,574)
|
|
Edge to
Cloud
|
|
|
814
|
|
|
|
824
|
|
|
|
(10)
|
|
|
|
2,496
|
|
|
|
(1,682)
|
|
Total
revenue
|
|
|
8,924
|
|
|
|
16,729
|
|
|
|
(7,805)
|
|
|
|
14,180
|
|
|
|
(5,256)
|
|
Total gross
profit
|
|
$
|
1,046
|
|
|
$
|
2,585
|
|
|
$
|
(1,539)
|
|
|
$
|
2,423
|
|
|
$
|
(1,377)
|
|
Gross margins
(1):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Partner
Solutions
|
|
|
14
|
%
|
|
|
17
|
%
|
|
|
(3)
|
%
|
|
|
15
|
%
|
|
|
(1)
|
%
|
Edge to
Cloud
|
|
|
(15)
|
%
|
|
|
(20)
|
%
|
|
|
5
|
%
|
|
|
27
|
%
|
|
|
(42)
|
%
|
Total gross
margin
|
|
|
12
|
%
|
|
|
15
|
%
|
|
|
(3)
|
%
|
|
|
17
|
%
|
|
|
(5)
|
%
|
Total operating
expenses
|
|
|
2,121
|
|
|
|
3,024
|
|
|
|
(903)
|
|
|
|
6,352
|
|
|
|
(4,231)
|
|
Total operating
expenses excluding restructuring costs (2)
|
|
|
2,121
|
|
|
|
3,024
|
|
|
|
(903)
|
|
|
|
4,976
|
|
|
|
(2,855)
|
|
Net loss
|
|
|
(1,073)
|
|
|
|
(474)
|
|
|
|
(599)
|
|
|
|
(3,868)
|
|
|
|
2,795
|
|
Per diluted
share
|
|
|
(0.08)
|
|
|
|
(0.04)
|
|
|
|
(0.04)
|
|
|
|
(0.30)
|
|
|
|
0.22
|
|
Net loss excluding
restructuring costs (2)
|
|
|
(1,073)
|
|
|
|
(474)
|
|
|
|
(599)
|
|
|
|
(2,492)
|
|
|
|
1,419
|
|
Per diluted share
excluding restructuring costs (2)
|
|
|
(0.08)
|
|
|
|
(0.04)
|
|
|
|
(0.04)
|
|
|
|
(0.20)
|
|
|
|
0.12
|
|
Adjusted EBITDAS
(2)
|
|
|
(806)
|
|
|
|
(28)
|
|
|
|
(778)
|
|
|
|
(2,252)
|
|
|
|
1,446
|
|
Cash, restricted
cash, cash equivalents and short-term investments
|
|
$
|
12,582
|
|
|
$
|
10,644
|
|
|
$
|
1,938
|
|
|
$
|
12,560
|
|
|
$
|
22
|
|
|
Notes:
|
(1)
|
Quarter-over-quarter
change and year-over-year change represent percentage point
change.
|
|
|
(2)
|
Total operating
expenses excluding restructuring costs, net loss excluding
restructuring costs, net loss per diluted share excluding
restructuring costs, and Adjusted EBITDAS are non-GAAP financial
measures (reconciliation provided after financial statement
tables).
|
Financial Commentary on Second
Quarter 2020 Results Compared to
Second Quarter 2019
- Partner Solutions revenue decreased for the comparative period,
driven by lower sales of Microsoft operating systems and other
embedded software.
- Edge to Cloud revenue decreased when compared to the prior year
second quarter, primarily from completion of software consulting
projects during 2019 that did not recur in 2020.
- Total operating expenses, both including and excluding
restructuring costs, decreased when compared to the second quarter
of 2019 due to announced spending reduction initiatives that
reduced salary, benefit and marketing costs.
- Net loss for Q2 2020 was $1.1
million or $(0.08) per diluted
share compared to a loss of $3.9
million or $(0.30) per diluted
share in Q2 2019, an improvement of $2.8
million or $0.22 per diluted
share.
Conference Call
Management will host a conference call today, August 13, 2020, at 5 p.m.
Eastern Time (2 p.m. Pacific
Time). To access the call
dial 1-866-248-8441 or 1-856-344-9206 for international
callers, and reference "BSQUARE Corporation Second
Quarter 2020 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 2721094. 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 Seattle, Washington, and the United
Kingdom. 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 our
preparation for and ability to service customers during the
COVID-19 pandemic and our ability to achieve our business plans,
strategies and expectations. 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; 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; the impact of COVID-19 on our business; risks
relating to our receipt of a PPP loan; 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:
|
Christopher Wheaton,
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 and the Bsquare Logo 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,
2020
|
|
|
December 31,
2019
|
|
|
|
(Unaudited)
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
11,982
|
|
|
$
|
7,712
|
|
Restricted
cash
|
|
|
600
|
|
|
|
600
|
|
Short-term
investments
|
|
|
—
|
|
|
|
2,249
|
|
Accounts receivable,
net of allowance for doubtful accounts of $69 and $31 at June 30,
2020 and December 31, 2019, respectively
|
|
|
6,243
|
|
|
|
9,216
|
|
Contract
assets
|
|
|
638
|
|
|
|
494
|
|
Prepaid expenses and
other current assets
|
|
|
782
|
|
|
|
244
|
|
Total current
assets
|
|
|
20,245
|
|
|
|
20,515
|
|
Equipment, furniture
and leasehold improvements, less accumulated
depreciation
|
|
|
294
|
|
|
|
252
|
|
Deferred tax
assets
|
|
|
7
|
|
|
|
7
|
|
Intangible assets,
less accumulated amortization
|
|
|
120
|
|
|
|
169
|
|
Right-of-use lease
asset, net
|
|
|
1,343
|
|
|
|
1,828
|
|
Other non-current
assets
|
|
|
66
|
|
|
|
284
|
|
Total
assets
|
|
$
|
22,075
|
|
|
$
|
23,055
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Third-party software
fees payable
|
|
$
|
6,198
|
|
|
$
|
7,224
|
|
Accounts
payable
|
|
|
371
|
|
|
|
408
|
|
Notes payable
|
|
|
695
|
|
|
|
—
|
|
Accrued
compensation
|
|
|
643
|
|
|
|
1,001
|
|
Other accrued
expenses
|
|
|
665
|
|
|
|
306
|
|
Deferred
revenue
|
|
|
2,558
|
|
|
|
1,559
|
|
Operating
lease
|
|
|
292
|
|
|
|
702
|
|
Total current
liabilities
|
|
|
11,422
|
|
|
|
11,200
|
|
Deferred revenue,
long-term
|
|
|
205
|
|
|
|
903
|
|
Operating lease,
long-term
|
|
|
1,135
|
|
|
|
1,256
|
|
Notes payable,
long-term
|
|
|
881
|
|
|
|
—
|
|
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; 13,155,139 and 13,042,293 shares
issued and outstanding at June 30, 2020 and December 31, 2019,
respectively
|
|
|
139,199
|
|
|
|
138,877
|
|
Accumulated other
comprehensive loss
|
|
|
(1,026)
|
|
|
|
(987)
|
|
Accumulated
deficit
|
|
|
(129,741)
|
|
|
|
(128,194)
|
|
Total shareholders'
equity
|
|
|
8,432
|
|
|
|
9,696
|
|
Total liabilities and
shareholders' equity
|
|
$
|
22,075
|
|
|
$
|
23,055
|
|
BSQUARE
CORPORATION
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(In thousands,
except per share amounts)
|
(Unaudited)
|
|
|
|
Three Months Ended
June 30,
|
|
|
Six Months Ended
June 30,
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Partner
Solutions
|
|
$
|
8,110
|
|
|
$
|
11,684
|
|
|
$
|
24,015
|
|
|
$
|
24,785
|
|
Edge to
Cloud
|
|
|
814
|
|
|
|
2,496
|
|
|
|
1,638
|
|
|
|
4,491
|
|
Total
revenue
|
|
|
8,924
|
|
|
|
14,180
|
|
|
|
25,653
|
|
|
|
29,276
|
|
Cost of
revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Partner
Solutions
|
|
|
6,944
|
|
|
|
9,923
|
|
|
|
20,100
|
|
|
|
21,072
|
|
Edge to
Cloud
|
|
|
934
|
|
|
|
1,834
|
|
|
|
1,922
|
|
|
|
3,390
|
|
Total cost of
revenue
|
|
|
7,878
|
|
|
|
11,757
|
|
|
|
22,022
|
|
|
|
24,462
|
|
Gross
profit
|
|
|
1,046
|
|
|
|
2,423
|
|
|
|
3,631
|
|
|
|
4,814
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative
|
|
|
2,067
|
|
|
|
3,082
|
|
|
|
4,964
|
|
|
|
6,016
|
|
Research and
development
|
|
|
54
|
|
|
|
1,894
|
|
|
|
181
|
|
|
|
4,230
|
|
Restructuring
costs
|
|
|
—
|
|
|
|
1,376
|
|
|
|
—
|
|
|
|
1,376
|
|
Total operating
expenses
|
|
|
2,121
|
|
|
|
6,352
|
|
|
|
5,145
|
|
|
|
11,622
|
|
Loss from
operations
|
|
|
(1,075)
|
|
|
|
(3,929)
|
|
|
|
(1,514)
|
|
|
|
(6,808)
|
|
Other income (loss),
net
|
|
|
2
|
|
|
|
61
|
|
|
|
(33)
|
|
|
|
94
|
|
Loss before income
taxes
|
|
|
(1,073)
|
|
|
|
(3,868)
|
|
|
|
(1,547)
|
|
|
|
(6,714)
|
|
Income
taxes
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Net loss
|
|
$
|
(1,073)
|
|
|
$
|
(3,868)
|
|
|
$
|
(1,547)
|
|
|
$
|
(6,714)
|
|
Basic loss per
share
|
|
$
|
(0.08)
|
|
|
$
|
(0.30)
|
|
|
$
|
(0.12)
|
|
|
$
|
(0.52)
|
|
Diluted loss per
share
|
|
$
|
(0.08)
|
|
|
$
|
(0.30)
|
|
|
$
|
(0.12)
|
|
|
$
|
(0.52)
|
|
Net loss excluding
restructuring costs (3)
|
|
$
|
(1,073)
|
|
|
$
|
(2,492)
|
|
|
$
|
(1,547)
|
|
|
$
|
(5,338)
|
|
Per diluted share
excluding restructuring costs (3)
|
|
$
|
(0.08)
|
|
|
$
|
(0.19)
|
|
|
$
|
(0.12)
|
|
|
$
|
(0.41)
|
|
Shares used in per
share calculations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
13,110
|
|
|
|
12,855
|
|
|
|
13,051
|
|
|
|
12,879
|
|
Diluted
|
|
|
13,110
|
|
|
|
12,855
|
|
|
|
13,051
|
|
|
|
12,879
|
|
BSQUARE
CORPORATION
|
RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES TO MOST DIRECTLY COMPARABLE GAAP
FINANCIAL MEASURES
|
(In thousands,
unaudited)
|
|
Adjusted
EBITDAS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
June 30,
|
|
|
Six Months
Ended
June 30,
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
Loss from operations,
as reported
|
|
$
|
(1,075)
|
|
|
$
|
(3,929)
|
|
|
$
|
(1,514)
|
|
|
$
|
(6,808)
|
|
Depreciation and
amortization
|
|
|
164
|
|
|
|
286
|
|
|
|
360
|
|
|
|
480
|
|
Stock-based
compensation
|
|
|
105
|
|
|
|
15
|
|
|
|
320
|
|
|
|
183
|
|
Restructuring
costs
|
|
|
—
|
|
|
|
1,376
|
|
|
|
—
|
|
|
|
1,376
|
|
Adjusted EBITDAS
(1)
|
|
$
|
(806)
|
|
|
$
|
(2,252)
|
|
|
$
|
(834)
|
|
|
$
|
(4,769)
|
|
|
|
(1)
|
Adjusted EBITDAS is a
non-GAAP financial measure that BSQUARE defines as income (loss)
from operations before depreciation expense on fixed assets and
amortization expense (including impairment) on intangible assets,
stock-based compensation expense, restructuring costs, and goodwill
impairment (when applicable). 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. Adjusted EBITDAS
has limitations, including that it does not reflect our entire cost
structure to operate our business (such as the cost of replacing
assets being depreciated or amortized, capital expenditures, and
stock-based compensation expenses which we expect to continue being
meaningful, and income tax expense (benefit)) and may not be
comparable to similarly titled measures used by other companies.
However, BSQUARE regards Adjusted EBITDAS as a complement to net
income and other GAAP financial performance measures. BSQUARE uses
Adjusted EBITDAS to evaluate BSQUARE's financial performance and
the effectiveness of its business strategies on a consistent basis
across reporting periods, and BSQUARE believes the measure is often
used by analysts, investors and other interested parties to
evaluate comparable companies.
|
Total operating
expenses excluding restructuring costs
|
|
Three Months
Ended
June 30,
|
|
|
Six Months
Ended
June 30,
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
Total operating
expenses
|
|
$
|
2,121
|
|
|
$
|
6,352
|
|
|
$
|
5,145
|
|
|
$
|
11,622
|
|
Restructuring
costs
|
|
|
—
|
|
|
|
1,376
|
|
|
|
—
|
|
|
|
1,376
|
|
Total operating
expenses excluding restructuring costs (1)
|
|
$
|
2,121
|
|
|
$
|
4,976
|
|
|
$
|
5,145
|
|
|
$
|
10,246
|
|
|
|
(1)
|
Total operating
expenses excluding restructuring costs and goodwill impairment is a
non-GAAP financial measure that BSQUARE defines as total operating
expenses, plus an add-back for restructuring costs (and goodwill
impairment, when applicable). This measure should not be construed
as a substitute for total operating loss for the purpose of
analyzing our operating performance, and it has limitations,
including that it does not reflect our entire cost structure to
operate our business. However, BSQUARE regards this measure as a
complement to GAAP operating expenses because it excludes costs
that may not be indicative of operating performance. BSQUARE uses
this measure to evaluate its financial performance and the
effectiveness of its business strategies on a consistent basis
across reporting periods, and BSQUARE believes the measure is often
used by analysts, investors and other interested parties to
evaluate comparable companies.
|
Net loss excluding
restructuring costs
|
|
Three Months
Ended
June 30,
|
|
|
Six Months
Ended
June 30,
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
Net loss
|
|
$
|
(1,073)
|
|
|
$
|
(3,868)
|
|
|
$
|
(1,547)
|
|
|
$
|
(6,714)
|
|
Restructuring
costs
|
|
|
—
|
|
|
|
1,376
|
|
|
|
—
|
|
|
|
1,376
|
|
Net loss excluding
restructuring costs (1)
|
|
$
|
(1,073)
|
|
|
$
|
(2,492)
|
|
|
$
|
(1,547)
|
|
|
$
|
(5,338)
|
|
|
|
(1)
|
Net loss excluding
restructuring costs is a non-GAAP financial measure that BSQUARE
defines as net loss, plus an add-back for restructuring costs (and
goodwill impairment, when applicable). This measure should not be
construed as a substitute for total operating loss for the purpose
of analyzing our operating performance, and it has limitations,
including that it does not reflect our entire cost structure to
operate our business. However, BSQUARE regards this measure as a
complement to GAAP net loss because it excludes costs that may not
be indicative of operating performance. BSQUARE uses this measure
to evaluate its financial performance and the effectiveness of its
business strategies on a consistent basis across reporting periods,
and BSQUARE believes the measure is often used by analysts,
investors and other interested parties to evaluate comparable
companies.
|
Net loss per
diluted share excluding restructuring costs
|
|
Three Months
Ended
June 30,
|
|
|
Six Months
Ended
June 30,
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
Diluted loss per
share
|
|
$
|
(0.08)
|
|
|
$
|
(0.30)
|
|
|
$
|
(0.12)
|
|
|
$
|
(0.52)
|
|
Restructuring
costs
|
|
|
—
|
|
|
|
(0.10)
|
|
|
$
|
—
|
|
|
$
|
(0.10)
|
|
Net loss excluding
restructuring costs (1)
|
|
$
|
(0.08)
|
|
|
$
|
(0.20)
|
|
|
$
|
(0.12)
|
|
|
$
|
(0.42)
|
|
|
|
(1)
|
Net loss excluding
restructuring costs is a non-GAAP financial measure that BSQUARE
defines as diluted loss per share, plus an add-back for the per
diluted share amount of restructuring costs (and goodwill
impairment, when applicable). Other than being expressed on a per
diluted share basis, this measure is the same as net loss excluding
restructuring costs, has the same limitations, and is used and
disclosed by BSQUARE for the same reasons.
|
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SOURCE Bsquare