Sphere 3D Reports Third Quarter Fiscal Year 2018 Financial Results
07 Novembro 2018 - 7:05PM
Sphere 3D Corp. (NASDAQ: ANY), a company delivering
containerization, virtualization, and data management solutions,
today reported financial results for its third quarter ended
September 30, 2018.
Third Quarter 2018 Financial Results:
- Net revenue for the third quarter of 2018 was $15.9 million,
compared to $21.7 million for the third quarter of 2017.
- Product revenue for the third quarter of 2018 was $13.9
million, compared to $19.6 million for the third quarter of
2017. The overall decrease in product revenue is primarily
due to an increase of approximately $5.7 million of backlog at the
end of the third quarter of 2018 compared with the third quarter of
2017 primarily due to the inability to acquire, on a timely basis,
adequate supply of product to meet customer demand within the
quarter.
- Disk systems revenue was $10.1 million, compared to $14.1
million for the third quarter of 2017. Disk systems is defined as
RDX, SnapServer family, virtual desktop infrastructure, and
Glassware derived products.
- Tape archive product revenue was $3.8 million compared to $5.5
million for the third quarter of 2017.
- Service revenue was $2.0 million for the third quarter of 2018
compared to $2.1 million for the third quarter of 2017.
- Gross margin for the third quarter of 2018 was 30.4%, compared
to 31.1% for the third quarter of 2017. Non-GAAP gross margin
for the third quarter of 2018 was 33.9%, compared to 33.7% for the
third quarter of 2017. Our methodology for determining non-GAAP
gross margin, which excludes the effect of intangible asset
amortization from gross profit, is described in the Use of GAAP and
Non-GAAP Financial Measures section of this announcement. See
also, “Non-GAAP Reconciliations” below.
- Operating expenses for the third quarter of 2018 were $7.7
million, compared to $11.2 million for the third quarter of 2017.
- Share-based compensation expense for the third quarter of 2018
was $0.3 million, compared to $2.0 million for the third quarter of
2017. Depreciation and amortization was $0.9 million for the third
quarter of 2018, compared to $1.5 million for the third quarter of
2017.
- Adjusted EBITDA for the third quarter of 2018 was a net loss of
$1.8 million, or a net loss of $0.95 per share, based on 1.9
million weighted average shares outstanding, compared to adjusted
EBITDA net loss of $0.6 million, or a net loss of $0.85 per share,
based on 0.7 million weighted average shares outstanding for the
third quarter of 2017. Adjusted EBITDA is a non-GAAP measure
presented as net loss before interest expense, income taxes,
depreciation and amortization, share-based compensation, and
warrant revaluation gain. For additional information
regarding the non-GAAP financial measures discussed in this
release, please see “Use of GAAP and Non-GAAP Financial Measures”
and "Non-GAAP Reconciliations " below.
- Net loss for the third quarter of 2018 was $4.9 million, or a
net loss of $2.53 per share, compared to a net loss of $3.5
million, or a net loss of $4.72 per share, for the third quarter of
2017.
Nine Months Ended September 30, 2018 Financial
Results:
- Net revenue for the first nine months of 2018 was $53.8
million, compared to $62.9 million for the first nine months of
2017.
- Product revenue for the first nine months of 2018 was $47.6
million, compared to $56.2 million for the first nine months of
2017. The overall decrease in product revenue is primarily
due to an increase of approximately $5.7 million of backlog at the
end of the third quarter of 2018 compared with the third quarter of
2017 primarily due to the inability to acquire, on a timely
basis, adequate supply of product to meet customer demand within
the quarter.
- Disk systems revenue was $35.9 million, compared to $40.6
million for the first nine months of 2017. Disk systems is defined
as RDX, SnapServer family, virtual desktop infrastructure, and
Glassware derived products.
- Tape archive product revenue was $11.7 million compared to
$15.6 million for the first nine months of 2017.
- Service revenue was $6.2 million in the first nine months of
2018 compared to $6.7 million for the first nine months of
2017.
- Gross margin for the first nine months of 2018 was 30.8%,
compared to 30.2% for the first nine months of 2017. Non-GAAP
gross margin for the first nine months of 2018 was 33.9%, compared
to 32.9% for the first nine months of 2017. Our methodology for
determining non-GAAP gross margin, which excludes the effect of
intangible asset amortization from gross profit, is described in
the Use of GAAP and Non-GAAP Financial Measures section of this
announcement. See also, “Non-GAAP Reconciliations”
below.
- Operating expenses for the first nine months of 2018 were $27.9
million, compared to $34.3 million for the first nine months of
2017.
- Share-based compensation expense for the first nine months of
2018 was $1.5 million, compared to $5.6 million for the first nine
months of 2017. Depreciation and amortization was $3.3 million for
the first nine months of 2018, compared to $4.6 million for the
first nine months of 2017.
- Adjusted EBITDA for the first nine months of 2018 was a net
loss of $7.0 million, or a net loss of $4.58 per share, based on
1.5 million weighted average shares outstanding, compared to
adjusted EBITDA net loss of $4.2 million, or a net loss of $7.70
per share, based on 0.6 million weighted average shares outstanding
for the first nine months of 2017. Adjusted EBITDA is a non-GAAP
measure presented as net loss before interest expense, income
taxes, acquisition costs, depreciation and amortization,
share-based compensation, loss on revaluation of investment, and
warrant revaluation gain. For additional information
regarding the non-GAAP financial measures discussed in this
release, please see “Use of GAAP and Non-GAAP Financial Measures”
and "Non-GAAP Reconciliations " below.
- Net loss for the first nine months of 2018 was $17.7 million,
or a net loss of $11.55 per share, compared to a net loss of $18.8
million, or a net loss of $34.19 per share, for the first nine
months of 2017.
Investor Conference Call:
Sphere 3D will not be hosting a third quarter 2018 earnings
conference call.
Use of GAAP and Non-GAAP Financial
Measures:
To supplement Sphere 3D’s consolidated financial statements
presented in accordance with GAAP, the Company uses Adjusted
EBITDA, a non-GAAP financial measure that excludes from the
consolidated statement of operations the effects of interest
expense, income taxes, acquisition costs, depreciation and
amortization, share-based compensation, loss on revaluation of
investment, and warrant revaluation gain. The Company also uses
Non-GAAP gross profit and Non-GAAP gross-margin, non-GAAP financial
measures that exclude the effect of intangible asset amortization.
Sphere 3D uses the above non-GAAP financial measures internally to
understand, manage and evaluate the business. Management believes
it is useful for itself and investors to review, as applicable,
both GAAP information and the non-GAAP measures in order to assess
the performance of continuing operations and for planning and
forecasting in future periods. The presentation of these non-GAAP
measures is intended to provide investors with an understanding of
the Company’s operational results and trends that enables them to
analyze the base financial and operating performance and facilitate
period-to-period comparisons and analysis of operational trends.
Sphere 3D believes the presentation of these non-GAAP financial
measures is useful to investors in allowing for greater
transparency with respect to supplemental information used by
management in its financial and operational decision-making.
Non-GAAP financial measures should be considered in addition
to results prepared in accordance with GAAP, but should not be
considered substitutes for or superior to GAAP results. In
addition, the Company’s non-GAAP financial measures may not be
comparable to similarly titled measures utilized by other companies
since such other companies may not calculate such measures in the
same manner as does the Company.
Investors are encouraged to review the reconciliation of these
non-GAAP financial measures to the most comparable GAAP measures,
which are provided in the attached table after the text of this
release.
About Sphere 3DSphere 3D
Corp. (NASDAQ: ANY) delivers containerization, virtualization,
and data management solutions. Sphere 3D, along with its
wholly owned subsidiaries Overland
Storage and Tandberg Data, has a strong portfolio of
brands, including Overland-Tandberg, HVE
ConneXions and UCX ConneXions, dedicated to helping
customers achieve their IT goals. For more information,
visit www.sphere3d.com.
Safe Harbor Statement
This press release contains forward–looking
statements, which include, among others, Sphere 3D’s expectations,
beliefs, plans, objectives, prospects, financial condition,
assumptions or future events or performance, that may involve
risks, uncertainties, and assumptions concerning the Company’s
business and products, including the entry into the Purchase
Agreement with Purchaser, pursuant to which Purchaser proposes to
acquire Overland and the Data Protection and Archive business from
Sphere 3D; the market adoption, actual performance and
functionality of our products; our inability to comply with the
covenants in our credit facilities or to obtain additional debt or
equity financing; any increase in our future cash needs; our
ability to maintain compliance with NASDAQ Capital Market listing
requirements; unforeseen and proposed changes in the course of
Sphere 3D’s business or the business of its wholly–owned
subsidiaries, including, without limitation, Overland Storage and
Tandberg Data; the level of success of our collaborations and
business partnerships; possible actions by customers, partners,
suppliers, competitors or regulatory authorities; and other risks
detailed from time to time in our periodic reports contained in our
Annual Information Form and other filings with Canadian securities
regulators (www.sedar.com) and in periodic reports filed with the
United States Securities and Exchange Commission (www.sec.gov). All
forward–looking statements speak only as of the date of this
written communication. Sphere 3D undertakes no obligation to 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, except as required by law.
Investor Contact:
Tina
Brown+1-408-283-4731Investor.relations@sphere3d-overland.com
SPHERE 3D
CORP. |
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS |
(In thousands, except
per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
Nine Months
Ended |
|
|
|
September 30, |
|
September 30, |
|
|
|
|
2018 |
|
|
|
2017 |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
|
(Unaudited) |
|
(Unaudited) |
Net
revenue |
|
$ |
15,891 |
|
|
$ |
21,679 |
|
|
$ |
53,800 |
|
|
$ |
62,855 |
|
Cost
of revenue |
|
|
11,056 |
|
|
|
14,946 |
|
|
|
37,234 |
|
|
|
43,904 |
|
Gross
profit |
|
|
4,835 |
|
|
|
6,733 |
|
|
|
16,566 |
|
|
|
18,951 |
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
Sales and
marketing |
|
|
3,303 |
|
|
|
4,586 |
|
|
|
11,707 |
|
|
|
14,090 |
|
|
Research and
development |
|
|
694 |
|
|
|
1,793 |
|
|
|
3,011 |
|
|
|
5,460 |
|
|
General and
administrative |
|
|
3,735 |
|
|
|
4,840 |
|
|
|
13,186 |
|
|
|
14,743 |
|
|
|
|
|
7,732 |
|
|
|
11,219 |
|
|
|
27,904 |
|
|
|
34,293 |
|
Loss
from operations |
|
|
(2,897 |
) |
|
|
(4,486 |
) |
|
|
(11,338 |
) |
|
|
(15,342 |
) |
|
Interest
expense |
|
|
(682 |
) |
|
|
(519 |
) |
|
|
(2,141 |
) |
|
|
(2,770 |
) |
|
Interest expense
- related party |
|
|
(882 |
) |
|
|
(614 |
) |
|
|
(2,815 |
) |
|
|
(1,912 |
) |
|
Other (expense)
income, net |
|
|
(66 |
) |
|
|
2,642 |
|
|
|
(229 |
) |
|
|
2,223 |
|
Loss
before income taxes |
|
|
(4,527 |
) |
|
|
(2,977 |
) |
|
|
(16,523 |
) |
|
|
(17,801 |
) |
Provision for income taxes |
|
|
325 |
|
|
|
504 |
|
|
|
1,154 |
|
|
|
1,002 |
|
Net
loss |
|
$ |
(4,852 |
) |
|
$ |
(3,481 |
) |
|
$ |
(17,677 |
) |
|
$ |
(18,803 |
) |
|
|
|
|
|
|
|
|
|
|
Net
loss per share: |
|
|
|
|
|
|
|
|
|
Basic and
diluted |
|
$ |
(2.53 |
) |
|
$ |
(4.72 |
) |
|
$ |
(11.55 |
) |
|
$ |
(34.19 |
) |
|
|
|
|
|
|
|
|
|
|
Shares used in computing |
|
|
|
|
|
|
|
|
net
loss per share: |
|
|
|
|
|
|
|
|
|
Basic and
diluted |
|
|
1,917 |
|
|
|
738 |
|
|
|
1,531 |
|
|
|
550 |
|
|
|
|
|
|
|
|
|
|
|
SPHERE 3D
CORP. |
CONDENSED CONSOLIDATED
BALANCE SHEETS |
(In
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
December 31, |
|
|
|
2018 |
|
2017 |
|
|
|
(Unaudited) |
|
(Unaudited) |
ASSETS |
|
|
|
|
Cash
and cash equivalents |
|
$ |
2,081 |
|
$ |
4,598 |
Accounts receivable, net |
|
|
7,298 |
|
|
11,482 |
Inventories |
|
|
8,000 |
|
|
8,366 |
Other
current assets |
|
|
1,621 |
|
|
1,829 |
|
Total current
assets |
|
|
19,000 |
|
|
26,275 |
Property and equipment, net |
|
|
2,349 |
|
|
2,742 |
Intangible assets, net |
|
|
38,409 |
|
|
41,473 |
Goodwill |
|
|
11,590 |
|
|
11,590 |
Other
assets |
|
|
1,172 |
|
|
1,200 |
|
Total
assets |
|
$ |
72,520 |
|
$ |
83,280 |
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY |
|
|
|
|
Current liabilities |
|
$ |
68,161 |
|
$ |
67,910 |
Deferred income taxes |
|
|
1,309 |
|
|
1,342 |
Other
long-term liabilities |
|
|
2,343 |
|
|
3,565 |
Total
shareholders' equity |
|
|
707 |
|
|
10,463 |
|
Total liabilities
and shareholders' equity |
|
$ |
72,520 |
|
$ |
83,280 |
|
|
|
|
|
|
SPHERE 3D
CORP. |
NON-GAAP
RECONCILIATIONS |
(In thousands, except
per share data) |
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
Nine Months
Ended |
|
|
September 30, |
|
September 30, |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
(Unaudited) |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
15,891 |
|
|
$ |
21,679 |
|
|
$ |
53,800 |
|
|
$ |
62,855 |
|
|
|
|
|
|
|
|
|
|
Gross Profit -
GAAP |
|
$ |
4,835 |
|
|
$ |
6,733 |
|
|
$ |
16,566 |
|
|
$ |
18,951 |
|
Intangible asset
amortization |
|
|
554 |
|
|
|
570 |
|
|
|
1,666 |
|
|
|
1,700 |
|
Gross Profit -
Non -GAAP |
|
$ |
5,389 |
|
|
$ |
7,303 |
|
|
$ |
18,232 |
|
|
$ |
20,651 |
|
|
|
|
|
|
|
|
|
|
Gross Margin
Percentages |
|
|
|
|
|
|
|
|
GAAP |
|
|
30.4 |
% |
|
|
31.1 |
% |
|
|
30.8 |
% |
|
|
30.2 |
% |
Non-GAAP |
|
|
33.9 |
% |
|
|
33.7 |
% |
|
|
33.9 |
% |
|
|
32.9 |
% |
|
|
|
|
|
|
|
|
|
Net
loss |
|
$ |
(4,852 |
) |
|
$ |
(3,481 |
) |
|
$ |
(17,677 |
) |
|
$ |
(18,803 |
) |
Less: |
|
|
|
|
|
|
|
|
Interest expense |
|
|
1,564 |
|
|
|
1,133 |
|
|
|
4,956 |
|
|
|
4,682 |
|
Provision for income taxes |
|
|
325 |
|
|
|
504 |
|
|
|
1,154 |
|
|
|
1,002 |
|
Acquisition costs |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
34 |
|
Depreciation and amortization |
|
|
888 |
|
|
|
1,517 |
|
|
|
3,298 |
|
|
|
4,574 |
|
Share-based compensation |
|
|
255 |
|
|
|
1,981 |
|
|
|
1,520 |
|
|
|
5,647 |
|
Loss on revaluation of investment |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,145 |
|
Warrant revaluation gain |
|
|
- |
|
|
|
(2,283 |
) |
|
|
(259 |
) |
|
|
(2,518 |
) |
Adjusted
EBITDA |
|
$ |
(1,820 |
) |
|
$ |
(629 |
) |
|
$ |
(7,008 |
) |
|
$ |
(4,237 |
) |
|
|
|
|
|
|
|
|
|
Net loss per
share: |
|
|
|
|
|
|
|
|
Basic and
diluted |
|
$ |
(2.53 |
) |
|
$ |
(4.72 |
) |
|
$ |
(11.55 |
) |
|
$ |
(34.19 |
) |
|
|
|
|
|
|
|
|
|
Adjusted net loss
per share: |
|
|
|
|
|
|
|
|
Basic and
diluted |
|
$ |
(0.95 |
) |
|
$ |
(0.85 |
) |
|
$ |
(4.58 |
) |
|
$ |
(7.70 |
) |
|
|
|
|
|
|
|
|
|
Shares used in
computing |
|
|
|
|
|
|
|
|
net loss and
adjusted EBITDA per share: |
|
|
|
|
|
|
|
|
Basic and
diluted |
|
|
1,917 |
|
|
|
738 |
|
|
|
1,531 |
|
|
|
550 |
|
|
|
|
|
|
|
|
|
|
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