Phunware, Inc. (NASDAQ: PHUN) (“Phunware”
or “the Company”), a fully-integrated enterprise cloud
platform for mobile that provides products, solutions, data and
services for brands worldwide, today announced financial results
for its third quarter ended September 30, 2021.
“We are extremely excited to post 50% sequential organic growth
in net revenues quarter-over-quarter, demonstrating that we are now
reaping the benefits of our direct and indirect go-to-market
strategies for our MaaS enterprise cloud platform for mobile,” said
Alan S. Knitowski, President, CEO and Co-Founder of Phunware. “Our
team executed strongly over the past quarter on multiple fronts,
executing deals with several prominent new customers and partners
across different verticals, including scaling our dual token
economy while actively pursuing our inorganic growth strategy and
closing the acquisition of Lyte Technology. In conjunction with the
organic growth announced, the closing of Lyte also adds immediate
profitability, backlog and growth that will allow us to leverage a
new, strategic distribution network to consumers to further scale
and accelerate our blockchain initiatives. This past year has
certainly been a pivotal and encouraging period for Phunware and I
am confident that as we head into 2022, we will be firing on all
cylinders with a dynamic organic and inorganic growth strategy that
will have us poised for immense growth.”
Third Quarter 2021 Summary Financial
Results
- Net Revenues for the quarter totaled $2.2 million
- Multiscreen-as-a-Service (MaaS) Platform Subscriptions and
Services Revenues were $1.8 million
- Net Income was $0.4 million
- Net Income per Share was $0.01
- Non-GAAP Adjusted EBITDA Loss was $(2.5) million
“We are pleased with the momentum achieved in the third quarter
and are positioned well to finish the year with a great fourth
quarter,” said Matt Aune, CFO of Phunware. “As we look forward to
2022, we are excited to have a fully funded operating plan that
gives us the ability to drive organic and inorganic growth. In
addition to executing on our operational objectives, the Company
successfully raised more than $65 million and now holds
approximately 129 bitcoin. Rolling forward, we are committed to not
only growing our digital currency holdings in the future, but we
also expect to add Decentralized Finance (DeFi) to our corporate
treasury activities.”
Recent Business Highlights
- Notable Corporate Developments:
- Appointed Former Congressman and Senior Technology Executive to
its Board of Directors
- Closed Acquisition of High Performance Computer Provider Lyte
Technology
- Acquired Additional Bitcoin
- Notable Customer and Partner Wins:
- Launched Smart City Solution for the City of Pasadena
- Cox Communications and Phunware Collaborate to Deliver a
Premier Mobile Smart Hospital Solution
- Announced Partnership with HID Global to Deliver Smart
Workplace Solution on Mobile
- Virginia Hospital Center Selects Phunware & Kontakt.io for
Comprehensive Mobile Healthcare Solution
- Dignity Health, Yavapai Regional Medical Center Selects
Phunware for Comprehensive Mobile Healthcare Solution
- Phunware to Build New Headlines+ Website and Mobile Application
Portfolio for Intermarkets
- Announced Partnership with Cooper Lighting Solutions to
Integrate MaaS with Trellix
- Notable Product Updates:
- Launched PhunCoin
- Announced New PhunWallet Release and Ten Million PhunToken
Sweepstakes
- Integrated with Epic - MaaS Digital Front Door Now Available on
Epic App Orchard Marketplace
- Phunware Now Accepts Bitcoin for Lyte Personal Computers
Conference Call Information
Phunware management will host a conference call today
(November 11, 2021) at 5:00 p.m. Eastern Time
(2:00 p.m. Pacific Time) to discuss its financial results for the
third quarter ended September 30, 2021.
Interested parties may access the conference call by dialing
877-545-0523 in the United States, or 973-528-0016 from
international locations with access code: 948061. The conference
call will be broadcast live and available for replay here and via
the investor relations section of the Company’s website at
investors.phunware.com.
Safe Harbor Clause and Forward-Looking
Statements
This press release includes forward-looking statements. All
statements other than statements of historical facts contained in
this press release, including statements regarding our future
results of operations and financial position, business strategy and
plans, and our objectives for future operations, are
forward-looking statements. The words “anticipate,” “believe,”
“continue,” “could,” “estimate,” “expect,” “expose,” “intend,”
“may,” “might,” “opportunity,” “plan,” “possible,” “potential,”
“predict,” “project,” “should,” “will,” “would” and similar
expressions that convey uncertainty of future events or outcomes
are intended to identify forward-looking statements, but the
absence of these words does not mean that a statement is not
forward-looking.
The forward-looking statements contained in this press release
are based on our current expectations and beliefs concerning future
developments and their potential effects on us. Future developments
affecting us may not be those that we have anticipated. These
forward-looking statements involve a number of risks, uncertainties
(some of which are beyond our control) and other assumptions that
may cause actual results or performance to be materially different
from those expressed or implied by these forward-looking
statements. These risks and uncertainties include, but are not
limited to, those factors described under the heading “Risk
Factors” in our filings with the Securities and Exchange Commission
(the “SEC”), including our reports on Forms 10-K, 10-Q, 8-K and
other filings that we make with the SEC from time to time. Should
one or more of these risks or uncertainties materialize, or should
any of our assumptions prove incorrect, actual results may vary in
material respects from those projected in these forward-looking
statements. We undertake no obligation to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise, except as may be required under
applicable securities laws. These risks and others described under
“Risk Factors” in our SEC filings may not be exhaustive.
By their nature, forward-looking statements involve risks and
uncertainties because they relate to events and depend on
circumstances that may or may not occur in the future. We caution
you that forward-looking statements are not guarantees of future
performance and that our actual results of operations, financial
condition and liquidity, and developments in the industry in which
we operate may differ materially from those made in or suggested by
the forward-looking statements contained in this press release. In
addition, even if our results or operations, financial condition
and liquidity, and developments in the industry in which we operate
are consistent with the forward-looking statements contained in
this press release, those results or developments may not be
indicative of results or developments in subsequent periods.
Disclosure Information
Phunware uses and intends to continue to use its Investor
Relations website as a means of disclosing material nonpublic
information and for complying with its disclosure obligations under
Regulation FD. Accordingly, investors should monitor the Company’s
Investor Relations website, in addition to following the Company’s
press releases, SEC filings, public conference calls, presentations
and webcasts.
About Phunware, Inc.
Everything You Need to Succeed on Mobile — Transforming Digital
Human Experience
Phunware, Inc. (NASDAQ: PHUN), is the pioneer of
Multiscreen-as-a-Service (MaaS), an award-winning, fully integrated
enterprise cloud platform for mobile that provides companies the
products, solutions, data and services necessary to engage, manage
and monetize their mobile application portfolios and audiences
globally at scale. Phunware’s Software Development Kits (SDKs)
include location-based services, mobile engagement, content
management, messaging, advertising, loyalty (PhunCoin & Phun)
and analytics, as well as a mobile application framework of
pre-integrated iOS and Android software modules for building
in-house or channel-based mobile application and vertical
solutions. Phunware helps the world’s most respected brands create
category-defining mobile experiences, with more than one billion
active devices touching its platform each month. For more
information about how Phunware is transforming the way consumers
and brands interact with mobile in the virtual and physical worlds,
visit https://www.phunware.com, https://www.phuncoin.com,
https://www.phuntoken.com, and follow @phunware, @phuncoin and
@phuntoken on all social media platforms.
Phunware PR & Media Inquiries:Email:
press@phunware.comPhone: (512) 693-4199
Phunware Investor Relations:Matt Glover and
John YiGateway Investor RelationsEmail: PHUN@gatewayir.com Phone:
(949) 574-3860
Consolidated Balance Sheets(In
thousands, except share and per share information)
|
September 30,2021 |
|
December 31,2020 |
|
(Unaudited) |
|
|
Assets |
|
|
|
Current assets: |
|
|
|
Cash |
$ |
882 |
|
|
$ |
3,940 |
|
Accounts receivable, net of allowance for doubtful accounts of $606
and $356 at September 30, 2021 and December 31, 2020,
respectively |
1,223 |
|
|
664 |
|
Digital currencies |
789 |
|
|
— |
|
Prepaid expenses and other current assets |
745 |
|
|
304 |
|
Total current assets |
3,639 |
|
|
4,908 |
|
Property and equipment, net |
— |
|
|
13 |
|
Goodwill |
25,883 |
|
|
25,900 |
|
Intangible assets, net |
38 |
|
|
111 |
|
Deferred tax asset |
537 |
|
|
537 |
|
Restricted cash |
91 |
|
|
91 |
|
Right-of-use asset |
1,486 |
|
|
— |
|
Other assets |
276 |
|
|
276 |
|
Total assets |
$ |
31,950 |
|
|
$ |
31,836 |
|
Liabilities and
stockholders’ equity (deficit) |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
7,085 |
|
|
$ |
8,462 |
|
Accrued expenses |
2,417 |
|
|
5,353 |
|
Accrued legal settlement |
— |
|
|
3,000 |
|
Lease liability |
486 |
|
|
— |
|
Deferred revenue |
1,815 |
|
|
2,397 |
|
PhunCoin deposits |
1,202 |
|
|
1,202 |
|
Current maturities of long-term debt, net |
83 |
|
|
4,435 |
|
Warrant liability |
1,762 |
|
|
1,614 |
|
Total current liabilities |
14,850 |
|
|
26,463 |
|
Long-term debt |
849 |
|
|
3,762 |
|
Long-term debt - related party |
195 |
|
|
195 |
|
Deferred tax liability |
537 |
|
|
537 |
|
Deferred revenue |
1,262 |
|
|
2,678 |
|
Lease liability |
1,232 |
|
|
— |
|
Deferred rent |
— |
|
|
180 |
|
Total liabilities |
18,925 |
|
|
33,815 |
|
Stockholders’ equity
(deficit) |
|
|
|
Common stock, $0.0001 par value; 1,000,000,000 shares authorized at
September 30, 2021 and December 31, 2020; 75,556,118 and
56,380,111 shares issued and outstanding as of September 30,
2021 and December 31, 2020, respectively |
8 |
|
|
6 |
|
Additional paid-in capital |
180,887 |
|
|
144,156 |
|
Accumulated other comprehensive loss |
(356 |
) |
|
(338 |
) |
Accumulated deficit |
(167,514 |
) |
|
(145,803 |
) |
Total stockholders’ equity (deficit) |
13,025 |
|
|
(1,979 |
) |
Total liabilities and
stockholders’ equity (deficit) |
$ |
31,950 |
|
|
$ |
31,836 |
|
Consolidated Statements of Operations and
Comprehensive Income (Loss)(In thousands, except per share
information)
|
Three Months EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Net revenues |
$ |
2,160 |
|
|
$ |
3,130 |
|
|
$ |
5,242 |
|
|
$ |
7,983 |
|
Cost of revenues |
1,026 |
|
|
898 |
|
|
2,842 |
|
|
2,757 |
|
Gross profit |
1,134 |
|
|
2,232 |
|
|
2,400 |
|
|
5,226 |
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
Sales and marketing |
715 |
|
|
383 |
|
|
1,910 |
|
|
1,265 |
|
General and administrative |
3,296 |
|
|
4,276 |
|
|
9,075 |
|
|
11,981 |
|
Research and development |
1,160 |
|
|
572 |
|
|
3,058 |
|
|
1,811 |
|
Legal settlement |
— |
|
|
4,500 |
|
|
— |
|
|
4,500 |
|
Total operating expenses |
5,171 |
|
|
9,731 |
|
|
14,043 |
|
|
19,557 |
|
Operating loss |
(4,037 |
) |
|
(7,499 |
) |
|
(11,643 |
) |
|
(14,331 |
) |
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
Interest income (expense) |
7 |
|
|
(1,362 |
) |
|
(4,057 |
) |
|
(1,923 |
) |
Loss on extinguishment of debt |
— |
|
|
(950 |
) |
|
(7,952 |
) |
|
(1,031 |
) |
Impairment of digital currency |
— |
|
|
— |
|
|
(776 |
) |
|
— |
|
Gain (loss) on change in fair value of warrant liability |
1,501 |
|
|
1,244 |
|
|
(148 |
) |
|
1,244 |
|
Gain on forgiveness of PPP loan |
2,850 |
|
|
— |
|
|
2,850 |
|
|
— |
|
Other income |
51 |
|
|
— |
|
|
15 |
|
|
— |
|
Total other income
(expense) |
4,409 |
|
|
(1,068 |
) |
|
(10,068 |
) |
|
(1,710 |
) |
Income (loss) before
taxes |
372 |
|
|
(8,567 |
) |
|
(21,711 |
) |
|
(16,041 |
) |
Income tax expense |
— |
|
|
— |
|
|
— |
|
|
— |
|
Net income (loss) |
372 |
|
|
(8,567 |
) |
|
(21,711 |
) |
|
(16,041 |
) |
Other comprehensive income
(loss): |
|
|
|
|
|
|
|
Cumulative translation
adjustment |
(33 |
) |
|
47 |
|
|
(18 |
) |
|
(28 |
) |
Comprehensive income
(loss) |
$ |
339 |
|
|
$ |
(8,520 |
) |
|
$ |
(21,729 |
) |
|
$ |
(16,069 |
) |
|
|
|
|
|
|
|
|
Net income (loss) per common
share, basic |
$ |
0.01 |
|
|
$ |
(0.19 |
) |
|
$ |
(0.31 |
) |
|
$ |
(0.38 |
) |
Net income (loss) per common
share, diluted |
$ |
— |
|
|
$ |
(0.19 |
) |
|
$ |
(0.31 |
) |
|
$ |
(0.38 |
) |
|
|
|
|
|
|
|
|
Weighted-average common shares
used to compute net income (loss) per share, basic |
74,347 |
|
|
44,304 |
|
|
70,185 |
|
|
42,089 |
|
Weighted-average common shares
used to compute net income (loss) per share, diluted |
74,699 |
|
|
44,304 |
|
|
70,185 |
|
|
42,089 |
|
Consolidated Statements of Cash
Flows(In thousands)
|
Nine Months EndedSeptember
30, |
|
2021 |
|
2020 |
Operating
activities |
|
|
|
Net loss |
$ |
(21,711 |
) |
|
$ |
(16,041 |
) |
Adjustments to reconcile net loss to net cash used in operating
activities: |
|
|
|
Amortization of debt discount and deferred financing costs |
2,770 |
|
|
1,217 |
|
Loss (gain) on change in fair value of warrant liability |
148 |
|
|
(1,244 |
) |
Loss on extinguishment of debt |
7,952 |
|
|
1,031 |
|
Impairment of digital currencies |
776 |
|
|
— |
|
Gain on forgiveness of PPP loan |
(2,850 |
) |
|
— |
|
Stock-based compensation |
3,933 |
|
|
3,458 |
|
Other adjustments |
297 |
|
|
145 |
|
Changes in operating assets and liabilities: |
|
|
|
Accounts receivable |
(272 |
) |
|
551 |
|
Prepaid expenses and other assets |
(345 |
) |
|
(94 |
) |
Accounts payable |
(1,236 |
) |
|
536 |
|
Accrued expenses |
(2,891 |
) |
|
1,332 |
|
Accrued legal settlement |
(3,000 |
) |
|
4,500 |
|
Lease liability payments |
(662 |
) |
|
— |
|
Deferred revenue |
(1,998 |
) |
|
(1,906 |
) |
Net cash used in operating activities |
(19,089 |
) |
|
(6,515 |
) |
Investing
activities |
|
|
|
Purchase of digital currencies |
(1,497 |
) |
|
— |
|
Net cash used in investing activities |
(1,497 |
) |
|
— |
|
Financing
activities |
|
|
|
Proceeds from borrowings, net of issuance costs |
9,980 |
|
|
10,207 |
|
Proceeds from related party bridge loans |
— |
|
|
560 |
|
Payments on senior convertible notes |
(25,116 |
) |
|
(3,948 |
) |
Payments on related party notes |
— |
|
|
(200 |
) |
Net repayments on factoring agreement |
— |
|
|
(638 |
) |
Proceeds from exercise of options to purchase common stock |
73 |
|
|
95 |
|
Proceeds from sales of common stock, net of issuance costs |
32,610 |
|
|
1,341 |
|
Net cash provided by financing activities |
17,547 |
|
|
7,417 |
|
Effect of exchange rate on cash and restricted cash |
(19 |
) |
|
(30 |
) |
Net (decrease) increase in cash and restricted cash |
(3,058 |
) |
|
872 |
|
Cash and restricted cash at the beginning of the period |
4,031 |
|
|
362 |
|
Cash and restricted cash at the end of the period |
$ |
973 |
|
|
$ |
1,234 |
|
Interest paid |
$ |
1,315 |
|
|
$ |
681 |
|
Income taxes paid |
$ |
— |
|
|
$ |
— |
|
|
Nine Months EndedSeptember
30, |
|
2021 |
|
2020 |
Supplemental
disclosures of non-cash financing activities: |
|
|
|
Proceeds not yet received for sales of common stock |
$ |
97 |
|
|
$ |
— |
|
Issuance of common stock for payment of legal, earned bonus and
board of director fees |
$ |
66 |
|
|
$ |
1,239 |
|
Issuance of common stock upon partial conversions of senior
convertible note |
$ |
— |
|
|
$ |
2,266 |
|
Reacquisition of equity component of senior convertible note |
$ |
— |
|
|
$ |
(1,388 |
) |
Equity classified cash conversion feature of senior convertible
note |
$ |
— |
|
|
$ |
219 |
|
Non-GAAP Financial Measures and
Reconciliation
Our non-GAAP financial measures include adjusted
gross profit, adjusted gross margin and adjusted earnings before
interest, taxes, depreciation and amortization ("EBITDA") (our
"non-GAAP financial measures"). Our non-GAAP financial measures
should be considered in addition to, not as a substitute for, or
superior to, financial measures calculated in accordance with GAAP.
They are not measurements of our financial performance under GAAP
and should not be considered as alternatives to revenue or net
loss, as applicable, or any other performance measures derived in
accordance with GAAP and may not be comparable to other similarly
titled measures of other businesses. Our non-GAAP financial
measures have limitations as analytical tools and should not be
considered in isolation or as a substitute for analysis of our
operating results as reported under GAAP. Some of these limitations
include: (i) Non-cash compensation is and will remain a key element
of our overall long-term incentive compensation package, although
we exclude it as an expense when evaluating its ongoing operating
performance for a particular period, (ii) Our non-GAAP financial
measures do not reflect the impact of certain charges resulting
from matters we consider not to be indicative of ongoing
operations, and (iii) other companies in our industry may calculate
our non-GAAP financial measures differently than we do, limiting
their usefulness as comparative measures.
We compensate for these limitations to our
non-GAAP financial measures by relying primarily on our GAAP
results and using our non-GAAP financial measures only for
supplemental purposes. Our non-GAAP financial measures include
adjustments for items that may not occur in future periods.
However, we believe these adjustments are appropriate because the
amounts recognized can vary significantly from period to period, do
not directly relate to the ongoing operations of our business and
complicate comparisons of our internal operating results and
operating results of other peer companies over time. Each of the
normal recurring adjustments and other adjustments described in
this paragraph help management with a measure of our operating
performance over time by removing items that are not related to
day-to-day operations or are non-cash expenses.
Reconciliation of GAAP to Non-GAAP
Financial Measures(In thousands, except percentages)
|
Three Months EndedSeptember 30, |
|
Nine Months EndedSeptember 30, |
(in thousands) |
2021 |
|
2020 |
|
2021 |
|
2020 |
Net income (loss) |
$ |
372 |
|
|
$ |
(8,567 |
) |
|
$ |
(21,711 |
) |
|
$ |
(16,041 |
) |
Add back: Depreciation and amortization |
17 |
|
|
33 |
|
|
75 |
|
|
120 |
|
(Less) Add back: Interest (income) expense |
(7 |
) |
|
1,362 |
|
|
4,057 |
|
|
1,923 |
|
EBITDA |
382 |
|
|
(7,172 |
) |
|
(17,579 |
) |
|
(13,998 |
) |
Add back: Stock-based compensation |
1,495 |
|
|
1,708 |
|
|
3,933 |
|
|
3,458 |
|
Add back: Legal settlement |
— |
|
|
4,500 |
|
|
— |
|
|
4,500 |
|
Add back: Loss on extinguishment of debt |
— |
|
|
950 |
|
|
7,952 |
|
|
1,031 |
|
Add back: Impairment of digital currencies |
— |
|
|
— |
|
|
776 |
|
|
— |
|
Less: gain on forgiveness of PPP loan |
(2,850 |
) |
|
— |
|
|
(2,850 |
) |
|
— |
|
(Less) add back: (Gain) loss on change in fair value of warrant
liability |
(1,501 |
) |
|
(1,244 |
) |
|
148 |
|
|
(1,244 |
) |
Adjusted EBITDA |
$ |
(2,474 |
) |
|
$ |
(1,258 |
) |
|
$ |
(7,620 |
) |
|
$ |
(6,253 |
) |
|
Three Months EndedSeptember 30, |
|
Nine Months EndedSeptember 30, |
(in thousands, except
percentages) |
2021 |
|
2020 |
|
2021 |
|
2020 |
Gross profit |
$ |
1,134 |
|
|
$ |
2,232 |
|
|
$ |
2,400 |
|
|
$ |
5,226 |
|
Add back: Amortization of intangibles |
— |
|
|
4 |
|
|
7 |
|
|
17 |
|
Add back: Stock-based compensation |
352 |
|
|
104 |
|
|
884 |
|
|
217 |
|
Adjusted gross profit |
$ |
1,486 |
|
|
$ |
2,340 |
|
|
$ |
3,291 |
|
|
$ |
5,460 |
|
Adjusted gross margin |
68.8 |
% |
|
74.8 |
% |
|
62.8 |
% |
|
68.4 |
% |
Supplemental Information(In
thousands, except percentages)
|
Three Months EndedSeptember 30, |
|
Change |
(in thousands, except
percentages) |
2021 |
|
2020 |
|
Amount |
|
% |
Net
Revenues |
|
|
|
|
|
|
|
Platform subscriptions and services |
$ |
1,771 |
|
|
$ |
2,860 |
|
|
$ |
(1,089 |
) |
|
(38.1)% |
Application transaction |
389 |
|
|
270 |
|
|
119 |
|
|
44.1% |
Net revenues |
$ |
2,160 |
|
|
$ |
3,130 |
|
|
$ |
(970 |
) |
|
(31.0)% |
Platform subscriptions and
services as a percentage of net revenues |
82.0 |
% |
|
91.4 |
% |
|
|
|
|
Application transactions as a
percentage of net revenues |
18.0 |
% |
|
8.6 |
% |
|
|
|
|
|
Nine Months EndedSeptember 30, 2021 |
|
Change |
(in thousands, except
percentages) |
2021 |
|
2020 |
|
Amount |
|
% |
Net
Revenues |
|
|
|
|
|
|
|
Platform subscriptions and services |
$ |
4,472 |
|
|
$ |
7,274 |
|
|
$ |
(2,802 |
) |
|
(38.5)% |
Application transaction |
770 |
|
|
709 |
|
|
61 |
|
|
8.6% |
Net revenues |
$ |
5,242 |
|
|
$ |
7,983 |
|
|
$ |
(2,741 |
) |
|
(34.3)% |
Platform subscriptions and
services as a percentage of net revenues |
85.3 |
% |
|
91.1 |
% |
|
|
|
|
Application transactions as a
percentage of net revenues |
14.7 |
% |
|
8.9 |
% |
|
|
|
|
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