PHUN - Phunware Reports Third Quarter 2022 Financial Results

November, 10 2022 04:05 PM Phunware Inc.

AUSTIN, Texas, Nov. 10, 2022 (GLOBE NEWSWIRE) -- Phunware, Inc. (NASDAQ: PHUN) (“Phunware” or the “Company”) , a leading digital transformation platform to tech-enable contextual engagement in a mobile-first world, today announced financial results for the quarter ended September 30, 2022.

“We are very excited to continue our 2022 momentum in Q3, delivering actual revenues exceeding 120% growth year-over-year while simultaneously expanding our MaaS backlog to nearly $8M,” said Alan S. Knitowski, President, CEO and Co-Founder of Phunware. “We continue operating effectively at the intersection of mobile, cloud, big data and blockchain across all lines of business and are revising our forward revenue guidance for 2022 to up roughly 225% year-over-year, or approximately $22.5M. In parallel, we also expect that the second half of 2022 will represent a new second half record for reported revenues as a public company for its comparable period.”

Third Quarter 2022 Financial Results

Net Revenues for the quarter totaled $4.8 million
Multiscreen-as-a-Service (MaaS) Platform Revenues were $1.3 million
Hardware Revenues were $3.5 million
Net Loss was $(8.0) million
Net Loss per Share was $(0.08)
Non-GAAP Adjusted EBITDA Loss was $(6.7) million

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Recent Business Highlights

Conference Call Information

Phunware management will host a conference call today ( November 10, 2022 ) at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time) to discuss its financial results for the quarter ended September 30, 2022.

Interested parties may access the conference call by dialing 888-506-0062 in the United States, or 973-528-0011 from international locations with access code: 204760. 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) helps the world’s most respected brands create category-defining mobile experiences, with approximately one billion active devices touching its platform each month when operating at scale. For more information about how Phunware is transforming the way consumers and brands interact with mobile in the virtual and physical worlds, visit https://phunware.com , https://phunwallet.com , https://phuncoin.com , https://phuntoken.com , and follow @phunware, @phuncoin and @phuntoken on all social media platforms.

Phunware PR & Media Inquiries:
Laura Simpson
JConnelly
Email: PhunwarePR@jconnelly.com
Phone: (973) 713-8834

Phunware Investor Relations:
Matt Glover and John Yi
Gateway Investor Relations
Email: PHUN@gatewayir.com
Phone: (949) 574-3860

Condensed Consolidated Balance Sheets
(In thousands, except share and per share information)


September 30, 2022

December 31, 2021

(Unaudited)


Assets



Current assets:



Cash
$
8,538


$
23,137

Accounts receivable, net of allowance for doubtful accounts of $0 and $10 at September 30, 2022 and December 31, 2021, respectively

1,714



967

Inventory, net

3,236



2,636

Digital assets, net

12,617



32,581

Prepaid expenses and other current assets

809



686

Total current assets

26,914



60,007

Property and equipment, net

207



—

Goodwill

33,058



33,260

Intangible assets, net

2,691



3,213

Deferred tax asset

1,278



1,278

Right-of-use asset

3,929



1,260

Other assets

402



276

Total assets
$
68,479


$
99,294

Liabilities and stockholders’ equity



Current liabilities:



Accounts payable
$
7,514


$
6,589

Accrued expenses

5,599



9,621

Lease liability

949



399

Deferred revenue

1,650



3,973

PhunCoin deposits

1,203



1,202

Current maturities of long-term debt, net

12,691



4,904

Warrant liability

338



3,605

Total current liabilities

29,944



30,293

Deferred tax liability

1,278



1,278

Deferred revenue

1,158



1,299

Lease liability

3,316



1,147

Total liabilities

35,696



34,017

Commitments and contingencies



Stockholders’ equity



Common stock, $0.0001 par value; 1,000,000,000 shares authorized at September 30, 2022 and December 31, 2021; 101,321,268 and 96,751,610 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively

10



10

Additional paid-in capital

272,657



264,944

Accumulated other comprehensive loss

(553
)


(352
)
Accumulated deficit

(239,331
)


(199,325
)
Total stockholders’ equity

32,783



65,277

Total liabilities and stockholders’ equity
$
68,479


$
99,294

Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income
(In thousands, except per share information)
(Unaudited)


Three Months Ended September 30,

Nine Months Ended September 30,

2022

2021

2022

2021
Net revenues
$
4,758


$
2,160


$
17,021


$
5,242

Cost of revenues

3,963



1,026



12,935



2,842

Gross profit

795



1,134



4,086



2,400









Operating expenses:







Sales and marketing

1,819



715



5,232



1,910

General and administrative

5,189



3,296



14,745



9,075

Research and development

1,665



1,160



4,544



3,058

Total operating expenses

8,673



5,171



24,521



14,043

Operating loss

(7,878
)


(4,037
)


(20,435
)


(11,643
)








Other income (expense):







Interest (expense) income

(991
)


7



(1,645
)


(4,057
)
Loss on extinguishment of debt

—



—



—



(7,952
)
Impairment of digital assets

—



—



(21,511
)


(776
)
Fair value adjustment of warrant liability

797



1,501



3,267



(148
)
Gain on forgiveness of PPP loan

—



2,850



—



2,850

Other income, net

54



51



318



15

Total other (expense) income

(140
)


4,409



(19,571
)


(10,068
)
(Loss) income before taxes

(8,018
)


372



(40,006
)


(21,711
)
Income tax expense

—



—



—



—

Net (loss) income

(8,018
)


372



(40,006
)


(21,711
)
Other comprehensive (loss) income:







Cumulative translation adjustment

(84
)


(33
)


(201
)


(18
)
Comprehensive (loss) income
$
(8,102
)

$
339


$
(40,207
)

$
(21,729
)








Net (loss) income per share, basic
$
(0.08
)

$
0.01


$
(0.41
)

$
(0.31
)
Net (loss) income per common share, diluted
$
(0.08
)

$
—


$
(0.41
)

$
(0.31
)








Weighted-average common shares used to compute net (loss) income per share, basic

98,822



74,347



97,803



70,185

Weighted-average common shares used to compute net (loss) income per share, diluted

98,822



74,699



97,803



70,185

Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)


Nine Months Ended September 30,

2022

2021
Operating activities



Net loss
$
(40,006
)

$
(21,711
)
Adjustments to reconcile net loss to net cash used in operating activities:



Amortization of debt discount and deferred financing costs

690



2,770

(Gain) loss on change in fair value of warrant liability

(3,267
)


148

Loss on extinguishment of debt

—



7,952

Impairment of digital assets

21,511



776

Gain on forgiveness of PPP loan

—



(2,850
)
Stock-based compensation

2,169



3,933

Other adjustments

990



297

Changes in operating assets and liabilities:



Accounts receivable

(723
)


(272
)
Inventory

(731
)


—

Prepaid expenses and other assets

(254
)


(345
)
Accounts payable

925



(1,236
)
Accrued expenses

(1,118
)


(2,891
)
Accrued legal settlement

—



(3,000
)
Lease liability payments

(594
)


(662
)
Deferred revenue

(2,464
)


(1,998
)
Net cash used in operating activities

(22,872
)


(19,089
)
Investing activities



Acquisition payment

(1,125
)


—

Purchase of digital assets

(923
)


(1,497
)
Capital expenditures

(238
)


—

Net cash used in investing activities

(2,286
)


(1,497
)
Financing activities



Proceeds from borrowings, net of issuance costs

11,795



9,980

Payments on borrowings

(4,698
)


(25,116
)
Proceeds from exercise of options to purchase common stock

16



73

Proceeds from sales of common stock, net of issuance costs

3,655



32,610

Net cash provided by financing activities

10,768



17,547

Effect of exchange rate on cash and restricted cash

(209
)


(19
)
Net decrease in cash and restricted cash

(14,599
)


(3,058
)
Cash and restricted cash at the beginning of the period

23,137



4,031

Cash and restricted cash at the end of the period
$
8,538


$
973


Nine Months Ended September 30,

2022

2021
Supplemental disclosure of cash flow information:



Interest paid
$
613


$
1,315

Income taxes paid
$
—


$
—

Supplemental disclosures of non-cash activities:



Right-of-use assets obtained in exchange for operating lease obligations
$
3,053


$
—

Non-cash exchange of digital assets
$
911


$
—

Issuance of common stock in connection with acquisition of Lyte Technology, Inc.
$
1,814


$
—

Proceeds not received related to sales of common stock
$
—


$
97

Issuance of common stock for payment of board of director fees
$
—


$
66

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 Ended September 30,

Nine Months Ended September 30,
(in thousands)
2022

2021

2022

2021
Net (loss) income
$
(8,018
)

$
372


$
(40,006
)

$
(21,711
)
Add back: Depreciation and amortization

185



17



553



75

Add back (less): Interest expense (income)

991



(7
)


1,645



4,057

EBITDA

(6,842
)


382



(37,808
)


(17,579
)
Add back: Stock-based compensation

899



1,495



2,169



3,933

Add back: Loss on extinguishment of debt

—



—



—



7,952

Add back: Impairment of digital assets

—



—



21,511



776

Less: Gain on forgiveness of PPP loan

—



(2,850
)


—



(2,850
)
(Less) Add back: Fair value adjustment of warrant liability

(797
)


(1,501
)


(3,267
)


148

Less: Gain on sale of digital asset

(1
)


—



(195
)


—

Adjusted EBITDA
$
(6,741
)

$
(2,474
)

$
(17,590
)

$
(7,620
)


Three Months Ended September 30,

Nine Months Ended September 30,
(in thousands, except percentages)
2022

2021

2022

2021
Gross profit
$
795


$
1,134


$
4,086


$
2,400

Add back: Amortization of intangibles

—



—



—



7

Add back: Stock-based compensation

59



352



154



884

Adjusted gross profit
$
854


$
1,486


$
4,240


$
3,291

Gross margin

16.7
%


52.5
%


24.0
%


45.8
%
Adjusted gross margin

17.9
%


68.8
%


24.9
%


62.8
%

Supplemental Information
(In thousands, except percentages)


Three Months Ended September 30,

Change
(in thousands, except percentages)
2022

2021

Amount

%
Net Revenues







Platform revenue
$
1,259


$
2,160


$
(901
)


(41.7)
%
Hardware revenue

3,499



—



3,499



100.0
%
Net revenues
$
4,758


$
2,160


$
2,598



120.3
%
Platform revenue as percentage of total revenue

26.5
%


100.0
%




Hardware revenue as percentage of total revenue

73.5
%


—
%


Nine Months Ended September 30,

Change
(in thousands, except percentages)
2022

2021

Amount

%
Net Revenues







Platform revenue
$
5,379


$
5,242


$
137



2.6
%
Hardware revenue

11,642



—



11,642



100.0
%
Net revenues
$
17,021


$
5,242


$
11,779



224.7
%
Platform revenue as percentage of total revenue

31.6
%


100.0
%




Hardware revenue as percentage of total revenue

68.4
%


—
%

Company Name:	Phunware Inc.
Stock Symbol:	PHUN
Market:	NASDAQ
Website:	phunware.com

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