Phunware, Inc. (NASDAQ:
PHUN) (“Phunware” or the “Company,” “we,”
“us” or “our”), the pioneer of Location Based SaaS that
offers the only fully integrated enterprise cloud platform for
mobile that enables brands to engage, manage and monetize anyone
anywhere, today announced financial results for the quarter ended
September 30, 2023.
“I am pleased to announce the launch of the
Phunware 3.0 strategy, which focuses on the pillars of continued
software sales, the development of additional strategies to
monetize our IP, and the resumption of development and incipient
launch of our digital assets ecosystem, including PhunToken,
PhunCoin and Phunwallet,” said CEO Mike Snavely. “I’m glad to be
back at Phunware, and am committed to guiding the organization
toward a promising future of revolutionizing the way brands and
consumers interact. We’ve already hit the ground running on
aggressively pursuing our new corporate initiative and look forward
to keeping our shareholders well-informed with regular
updates.”
Third Quarter 2023 Financial
Results
- Net revenues for the quarter totaled
$2.8 million
- Platform revenues were $1.3
million
- Hardware revenues were $1.5
million
- Net loss was $(19.0) million
- Net loss per share was $(0.16)
- Non-GAAP Adjusted EBITDA loss was
$(4.3) million
Recent Business Highlights
- Notable Corporate and Product
Developments:
- Announced Purchase Agreement for up to
$30 Million with Lincoln Park Capital Fund
- Provided Corporate Update Naming Mike
Snavely as CEO
- Announced Wind Down of Lyte
Technology’s Operations to Reinforce Core Mission
- Notable Customer and Partner Wins:
- VHC Health Signs Multi-Year Renewal of
Digital Front Door Application with Phunware
- Partnered with Wailea Beach Resort –
Marriott, Maui for its Enhanced Smart Hospitality Solution
Conference Call Information
Phunware management will host a conference call
today (November 9, 2023) at 4:30 p.m. Eastern Time
(1:30 p.m. Pacific Time) to discuss its financial results for the
quarter ended September 30, 2023.
Interested parties may access the conference call
by dialing 800-343-4136 in the United States, or 203-518-9843 from
international locations with access code: PHUNWQ3. 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), the pioneer of
Location Based SaaS that offers the only fully integrated
enterprise cloud platform for mobile that enables brands to engage,
manage and monetize anyone anywhere. Phunware’s Software
Development Kits (SDKs) include location-based services, mobile
engagement, content management, messaging, advertising, loyalty
(PhunCoin & PhunToken) 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
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 and follow @phunware 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.comPhone: (949) 574-3860
Condensed Consolidated Balance Sheets |
(In thousands, except share and per share information) |
|
|
September 30, 2023 |
|
December 31, 2022 |
|
(Unaudited) |
|
|
Assets |
|
|
|
Current assets: |
|
|
|
Cash |
$ |
2,857 |
|
|
$ |
1,955 |
|
Accounts receivable, net of allowance for doubtful accounts of $68
and $198 at September 30, 2023 and December 31, 2022,
respectively |
|
1,053 |
|
|
|
958 |
|
Inventory |
|
899 |
|
|
|
2,780 |
|
Digital assets |
|
75 |
|
|
|
10,137 |
|
Prepaid expenses and other current assets |
|
599 |
|
|
|
1,033 |
|
Total current assets |
|
5,483 |
|
|
|
16,863 |
|
Property and equipment, net |
|
165 |
|
|
|
221 |
|
Goodwill |
|
16,731 |
|
|
|
31,113 |
|
Intangible assets, net |
|
2,023 |
|
|
|
2,524 |
|
Right-of-use asset |
|
3,041 |
|
|
|
3,712 |
|
Other assets |
|
367 |
|
|
|
402 |
|
Total assets |
$ |
27,810 |
|
|
$ |
54,835 |
|
Liabilities and stockholders’ equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
7,969 |
|
|
$ |
7,699 |
|
Accrued expenses |
|
946 |
|
|
|
2,895 |
|
Lease liability |
|
1,008 |
|
|
|
954 |
|
Deferred revenue |
|
1,516 |
|
|
|
2,904 |
|
PhunCoin deposits |
|
1,202 |
|
|
|
1,202 |
|
Current maturities of long-term debt, net |
|
5,563 |
|
|
|
9,667 |
|
Warrant liability |
|
— |
|
|
|
256 |
|
Total current liabilities |
|
18,204 |
|
|
|
25,577 |
|
Deferred revenue |
|
743 |
|
|
|
1,274 |
|
Lease liability |
|
2,308 |
|
|
|
3,103 |
|
Total liabilities |
|
21,255 |
|
|
|
29,954 |
|
Commitments and contingencies (Note 8) |
|
|
|
Stockholders’ equity |
|
|
|
Common stock, $0.0001 par value; 1,000,000,000 shares authorized;
129,062,144 shares issued and 128,555,644 shares outstanding as of
September 30, 2023 and 103,153,337 shares issued and
outstanding as of December 31, 2022, respectively |
|
13 |
|
|
|
10 |
|
Treasury stock at cost; 506,500 and 0 shares at September 30,
2023 and December 31, 2022, respectively |
|
(502 |
) |
|
|
— |
|
Additional paid-in capital |
|
287,498 |
|
|
|
275,562 |
|
Accumulated other comprehensive loss |
|
(463 |
) |
|
|
(472 |
) |
Accumulated deficit |
|
(279,991 |
) |
|
|
(250,219 |
) |
Total stockholders’ equity |
|
6,555 |
|
|
|
24,881 |
|
Total liabilities and stockholders’ equity |
$ |
27,810 |
|
|
$ |
54,835 |
|
Condensed Consolidated Statements of Operations and
Comprehensive Loss |
(In thousands, except per share information) |
(Unaudited) |
|
|
Three Months Ended September
30, |
|
Nine Months Ended September
30, |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
Net revenues |
$ |
2,792 |
|
|
$ |
4,758 |
|
|
$ |
11,026 |
|
|
$ |
17,021 |
|
Cost of revenues |
|
2,597 |
|
|
|
3,963 |
|
|
|
10,014 |
|
|
|
12,935 |
|
Gross profit |
|
195 |
|
|
|
795 |
|
|
|
1,012 |
|
|
|
4,086 |
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
Sales and marketing |
|
1,027 |
|
|
|
1,819 |
|
|
|
3,627 |
|
|
|
5,232 |
|
General and administrative |
|
3,478 |
|
|
|
5,189 |
|
|
|
12,956 |
|
|
|
14,745 |
|
Research and development |
|
1,042 |
|
|
|
1,665 |
|
|
|
4,026 |
|
|
|
4,544 |
|
Impairment of goodwill |
|
13,188 |
|
|
|
— |
|
|
|
14,391 |
|
|
|
— |
|
Total operating expenses |
|
18,735 |
|
|
|
8,673 |
|
|
|
35,000 |
|
|
|
24,521 |
|
Operating loss |
|
(18,540 |
) |
|
|
(7,878 |
) |
|
|
(33,988 |
) |
|
|
(20,435 |
) |
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
Interest expense |
|
(264 |
) |
|
|
(991 |
) |
|
|
(1,354 |
) |
|
|
(1,645 |
) |
Loss on extinguishment of debt |
|
(237 |
) |
|
|
— |
|
|
|
(237 |
) |
|
|
— |
|
Impairment of digital assets |
|
— |
|
|
|
— |
|
|
|
(50 |
) |
|
|
(21,511 |
) |
Gain on sale of digital assets |
|
— |
|
|
|
1 |
|
|
|
5,310 |
|
|
|
195 |
|
Fair value adjustment of warrant liability |
|
— |
|
|
|
797 |
|
|
|
256 |
|
|
|
3,267 |
|
Other income, net |
|
62 |
|
|
|
53 |
|
|
|
291 |
|
|
|
123 |
|
Total other income (expense), net |
|
(439 |
) |
|
|
(140 |
) |
|
|
4,216 |
|
|
|
(19,571 |
) |
Loss before taxes |
|
(18,979 |
) |
|
|
(8,018 |
) |
|
|
(29,772 |
) |
|
|
(40,006 |
) |
Income tax expense |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Net loss |
|
(18,979 |
) |
|
|
(8,018 |
) |
|
|
(29,772 |
) |
|
|
(40,006 |
) |
Other comprehensive income (loss): |
|
|
|
|
|
|
|
Cumulative translation adjustment |
|
(37 |
) |
|
|
(84 |
) |
|
|
9 |
|
|
|
(201 |
) |
Comprehensive loss |
$ |
(19,016 |
) |
|
$ |
(8,102 |
) |
|
$ |
(29,763 |
) |
|
$ |
(40,207 |
) |
|
|
|
|
|
|
|
|
Loss per share, basic and diluted |
$ |
(0.16 |
) |
|
$ |
(0.08 |
) |
|
$ |
(0.27 |
) |
|
$ |
(0.41 |
) |
|
|
|
|
|
|
|
|
Weighted-average common shares used to compute loss per share,
basic and diluted |
|
119,989 |
|
|
|
98,822 |
|
|
|
109,430 |
|
|
|
97,803 |
|
Condensed Consolidated Statements of Cash
Flows |
(In thousands) |
(Unaudited) |
|
|
Nine Months Ended September
30, |
|
2023 |
|
2022 |
Operating activities |
|
|
|
Net loss |
$ |
(29,772 |
) |
|
$ |
(40,006 |
) |
Adjustments to reconcile net loss to net cash used in operating
activities: |
|
|
|
Amortization of debt discount and deferred financing costs |
|
832 |
|
|
|
690 |
|
Loss on extinguishment of debt |
|
237 |
|
|
|
— |
|
Gain on change in fair value of warrant liability |
|
(256 |
) |
|
|
(3,267 |
) |
Gain on sale of digital assets |
|
(5,310 |
) |
|
|
(195 |
) |
Impairment of digital assets |
|
50 |
|
|
|
21,511 |
|
Impairment of goodwill |
|
14,391 |
|
|
|
— |
|
Stock-based compensation |
|
3,662 |
|
|
|
2,169 |
|
Other adjustments |
|
1,945 |
|
|
|
1,185 |
|
Changes in operating assets and liabilities: |
|
|
|
Accounts receivable |
|
(122 |
) |
|
|
(723 |
) |
Inventory |
|
1,470 |
|
|
|
(731 |
) |
Prepaid expenses and other assets |
|
583 |
|
|
|
(254 |
) |
Accounts payable |
|
269 |
|
|
|
925 |
|
Accrued expenses |
|
(921 |
) |
|
|
(1,118 |
) |
Lease liability payments |
|
(1,008 |
) |
|
|
(594 |
) |
Deferred revenue |
|
(1,919 |
) |
|
|
(2,464 |
) |
Net cash used in operating activities |
|
(15,869 |
) |
|
|
(22,872 |
) |
Investing activities |
|
|
|
Proceeds received from sale of digital assets |
|
15,390 |
|
|
|
— |
|
Purchase of digital assets |
|
— |
|
|
|
(923 |
) |
Acquisition payment |
|
— |
|
|
|
(1,125 |
) |
Capital expenditures |
|
(7 |
) |
|
|
(238 |
) |
Net cash provided by (used in) investing activities |
|
15,383 |
|
|
|
(2,286 |
) |
Financing activities |
|
|
|
Proceeds from borrowings, net of issuance costs |
|
— |
|
|
|
11,795 |
|
Payments on borrowings |
|
(5,056 |
) |
|
|
(4,698 |
) |
Proceeds from sales of common stock, net of issuance costs |
|
6,879 |
|
|
|
3,655 |
|
Proceeds from exercise of options to purchase common stock |
|
58 |
|
|
|
16 |
|
Payment for stock repurchase |
|
(502 |
) |
|
|
— |
|
Net cash provided in financing activities |
|
1,379 |
|
|
|
10,768 |
|
Effect of exchange rate on cash |
|
9 |
|
|
|
(209 |
) |
Net increase (decrease) in cash |
|
902 |
|
|
|
(14,599 |
) |
Cash at the beginning of the period |
|
1,955 |
|
|
|
23,137 |
|
Cash at the end of the period |
$ |
2,857 |
|
|
$ |
8,538 |
|
|
Nine Months Ended September
30, |
|
2023 |
|
2022 |
Supplemental disclosure of cash flow
information: |
|
|
|
Interest paid |
$ |
1,140 |
|
$ |
613 |
Income taxes paid |
$ |
— |
|
$ |
— |
Supplemental disclosures of non-cash investing and
financing activities: |
|
|
|
Issuance of common stock for 2022 Promissory Note |
$ |
800 |
|
$ |
— |
Right-of-use assets obtained in exchange for operating lease
obligations |
$ |
— |
|
$ |
3,053 |
Non-cash exchange of digital assets |
$ |
557 |
|
$ |
911 |
Issuance of common stock in connection with acquisition of Lyte
Technology, Inc. |
$ |
— |
|
$ |
1,814 |
Issuance of common stock under the 2018 Employee Stock Purchase
Plan previously accrued |
$ |
47 |
|
$ |
116 |
Issuance of common stock for payment of bonuses previously
accrued |
$ |
379 |
|
$ |
— |
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) |
2023 |
|
2022 |
|
2023 |
|
2022 |
Net loss |
$ |
(18,979 |
) |
|
$ |
(8,018 |
) |
|
$ |
(29,772 |
) |
|
$ |
(40,006 |
) |
Add back: Depreciation and amortization |
|
188 |
|
|
|
185 |
|
|
|
564 |
|
|
|
553 |
|
Add back: Interest expense |
|
264 |
|
|
|
991 |
|
|
|
1,354 |
|
|
|
1,645 |
|
Add back: Income tax expense |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
EBITDA |
|
(18,527 |
) |
|
|
(6,842 |
) |
|
|
(27,854 |
) |
|
|
(37,808 |
) |
Add Back: Stock-based compensation |
|
838 |
|
|
|
899 |
|
|
|
3,662 |
|
|
|
2,169 |
|
Add Back: Loss on extinguishment of debt |
|
237 |
|
|
|
— |
|
|
|
237 |
|
|
|
— |
|
Add Back: Impairment of digital currencies |
|
— |
|
|
|
— |
|
|
|
50 |
|
|
|
21,511 |
|
Add Back: Impairment of goodwill |
|
13,188 |
|
|
|
— |
|
|
|
14,391 |
|
|
|
— |
|
Less: Fair value adjustment for warrant liabilities |
|
— |
|
|
|
(797 |
) |
|
|
(256 |
) |
|
|
(3,267 |
) |
Less: Gain on sale of digital assets |
|
— |
|
|
|
(1 |
) |
|
|
(5,310 |
) |
|
|
(195 |
) |
Adjusted EBITDA |
$ |
(4,264 |
) |
|
$ |
(6,741 |
) |
|
$ |
(15,080 |
) |
|
$ |
(17,590 |
) |
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
(in thousands, except percentages) |
2023 |
|
2022 |
|
2023 |
|
2022 |
Gross profit |
$ |
195 |
|
|
$ |
795 |
|
|
$ |
1,012 |
|
|
$ |
4,086 |
|
Add back: Stock-based compensation |
|
80 |
|
|
|
59 |
|
|
|
444 |
|
|
|
154 |
|
Adjusted gross profit |
$ |
275 |
|
|
$ |
854 |
|
|
$ |
1,456 |
|
|
$ |
4,240 |
|
Adjusted gross margin |
|
9.8 |
% |
|
|
17.9 |
% |
|
|
13.2 |
% |
|
|
24.9 |
% |
Supplemental Information |
(In thousands, except percentages) |
|
|
Three Months Ended September 30, |
|
Change |
(in thousands, except percentages) |
2023 |
|
2022 |
|
Amount |
|
% |
Net Revenues |
|
|
|
|
|
|
|
|
Platform revenue |
$ |
1,253 |
|
|
$ |
1,259 |
|
|
$ |
(6 |
) |
|
(0.5 |
)% |
Hardware revenue |
|
1,539 |
|
|
|
3,499 |
|
|
|
(1,960 |
) |
|
(56.0 |
)% |
Net revenues |
$ |
2,792 |
|
|
$ |
4,758 |
|
|
$ |
(1,966 |
) |
|
(41.3 |
)% |
Platform revenue as percentage of total revenue |
|
44.9 |
% |
|
|
26.5 |
% |
|
|
|
|
|
Hardware revenue as percentage of total revenue |
|
55.1 |
% |
|
|
73.5 |
% |
|
|
|
|
|
|
Nine Months Ended September 30, |
|
Change |
(in thousands, except percentages) |
2023 |
|
2022 |
|
Amount |
|
% |
Net Revenues |
|
|
|
|
|
|
|
|
Platform revenue |
$ |
3,893 |
|
|
$ |
5,379 |
|
|
$ |
(1,486 |
) |
|
(27.6 |
)% |
Hardware revenue |
|
7,133 |
|
|
|
11,642 |
|
|
|
(4,509 |
) |
|
(38.7 |
)% |
Net revenues |
$ |
11,026 |
|
|
$ |
17,021 |
|
|
$ |
(5,995 |
) |
|
(35.2 |
)% |
Platform revenue as percentage of total revenue |
|
35.3 |
% |
|
|
31.6 |
% |
|
|
|
|
|
Hardware revenue as percentage of total revenue |
|
64.7 |
% |
|
|
68.4 |
% |
|
|
|
|
|
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