iPass Reports First Quarter 2018 Financial Results
"As you know, since joining iPass, we’ve been on a mission to transform our business to software and technology," said
- Revenue of
$11.4 millionin Q1'18 as closing Veri-Fi™ business was slower than expected on global General Data Protection Regulation ("GDPR") concerns ahead of the May 25, 2018enactment in the European Union.
- Net Annual Contract Value ("ACV"), defined as the annualized sales value under committed contract for newly acquired or significant upsell customers signed, in Q1’18 totaled
$1.6 millioncompared to $1.2 millionin Q4'17 and $0.9 millionin Q3’17.
- Customer Churn, defined as the annualized impact on revenue, based on the prior quarter run-rate, of any customer that terminates or has write-down of committed contract value, was
$1.5 millionin Q1’18 compared to $1.0 millionin Q4’17 and $1.1 millionin Q3’17.
- Network Access Cost ("NAC") was
$6.8 millionin Q1'18, down from $9.1 millionin Q4'17 and $10.3 millionin Q3'17, with no adverse impact on the usage capacity under contract.
- Capital Raise was
$0.5 millionin the quarter from the common stock purchase agreement signed in November 2017, leaving capacity of $8.3 millionavailable. In April 2018, we raised an additional $0.8 millionunder this facility, bringing the total raised to $2.5 millionsince inception in November 2017.
- Nasdaq Delisting Extension Granted on
May 7, 2018, to regain compliance with the previously received Nasdaq delisting notice. We will transfer from the Nasdaq Global Marketto the Nasdaq Capital Marketand continue to remediate our bid price and market capitalization deficiencies in accordance with the plan we presented to Nasdaq in April 2018.
“We continue to aggressively pursue opportunities to strengthen our balance sheet, including cash-rich, non-dilutive deals like the one we announced today," continued Griffiths. “Our investment in iPass
Selected Financial Results
|Three Months Ended|
|(unaudited; in millions)|
|Revenue Mobile Connectivity Services||11.4||13.2||14.3|
|Other Pricing Plan Customers||6.6||7.4||9.5|
|Network Access Costs||6.8||9.1||9.6|
|Gross Margin (1)||28.0||%||20.9||%||21.2||%|
|Network Operations Expense||1.4||1.4||1.7|
|R&D, S&M, and G&A expense||7.0||7.3||7.2|
|Total Operating Expenses||8.4||8.7||8.9|
|Other income (expense) and provision for income taxes||0.2||0.3||(0.1||)|
|GAAP Total Net Loss||(4.0||)||(4.3||)||(4.3||)|
|Adjusted EBITDA Loss (2)||(3.4||)||(3.8||)||(3.4||)|
|Shares of Common Stock Outstanding at Period End||70.4||69.3||66.4|
|Cash and Cash Equivalents||2.8||5.2||13.5|
|Deferred Revenue (Short-term plus Long-term)||3.1||3.8||3.2|
- Gross Margin is defined as Total Revenue less Network Access Costs less Network Operations Expense divided by Total Revenue.
- See “Information Regarding Non-GAAP Financial and Operational Measures” for a definition of iPass Adjusted EBITDA.
Key Operating Metrics
The following are several key metrics iPass tracks to evaluate operating performance. Together, they provide insights into our Wi-Fi network acquisition strategy, consumption of network, and active users of our network services.
|For the Quarter Ended|
|(in thousands except percentages and TB)|
|Committed purchase capacity(1)||63||%||88||%||84||%||85||%||83||%|
|Total purchased capacity (TB)(2)||79||90||89||88||88|
|Network Hours Consumed(4):|
|Unlimited and strategic partnerships||371||500||645||521||407|
|Other pricing plans||208||270||298||327||363|
|Total Network Hours Consumed||579||770||943||848||770|
|Wi-Fi Network Users(5):|
|Total Wi-Fi Network Users||150||165||174||173||158|
- Committed purchase capacity is the percentage of total quarterly NAC related to committed Wi-Fi capacity deals (versus pay-as-you-go deals).
- Total purchased capacity is the average monthly Wi-Fi network usage capacity in a given quarter, shown in terabytes.
- Capacity consumed is shown as a percentage of total purchased capacity consumed in a given quarter.
- Network Hours Consumed represents the average monthly number of hours used by our customers on our commercial footprint in a given quarter.
- Wi-Fi Network Users, categorized by our go-to-market revenue streams, is the unique count of users each month in each quarter that connected to the iPass network. Starting this quarter, the iPass network includes both commercial footprint and open access footprint, curated via iPass SmartConnnect (restated for all prior quarters).
iPass will host a live conference call today at
The telephone replay dial-in numbers are 1-888-203-1112 and 1-719-457-0820 and will be available until
The statements in this press release including statements under the caption "Financial Outlook" such as, but not limited to, the following: which we expect to be about
In addition, investors and others should note that iPass announces material financial information to its investors using its investor relations website,
Information Regarding Non-GAAP Financial and Operational Measures
This press release also contains financial measures that are not calculated in accordance with U.S. generally accepted accounting principles ("GAAP"). iPass considers Adjusted EBITDA as a supplemental measure of the iPass' performance that is not required by, nor presented in accordance with GAAP.
iPass defines Adjusted EBITDA as net income (loss) before interest, income taxes, depreciation, stock-based compensation, out of period adjustment, and nonrecurring legal costs. iPass believes Adjusted EBITDA provides a meaningful comparison between its core operating results, on a consistent basis, over different periods of time. Accordingly, management uses this financial measure for evaluating and making operating decisions and for purposes of comparison with its strategic plan, operating budgets and allocation of resources.
Furthermore, iPass believes the use of Adjusted EBITDA is useful to investors:
- To provide an additional analytical tool for understanding the company’s financial performance by excluding the impact of items which may obscure trends in the core operating performance of the business;
- To provide consistency and enhance investors’ ability to compare the company’s performance across financial reporting periods; and
- To facilitate comparisons to the operating results of other companies in the company’s industry, which may use similar financial measures to supplement their GAAP results.
Adjusted EBITDA should not be considered in isolation, or construed as an alternative to net income, or any other performance measure derived in accordance with GAAP, or as an alternative to cash flow from operating activities or as a measure of the company's liquidity. In addition, other companies may calculate Adjusted EBITDA differently than iPass does, which would limit its usefulness in comparing iPass’ financial results with those of such other companies.
iPass defines a key operating metric, ACV, as the annualized sales value committed under contract for newly acquired customers or significant upsell, in total across the
iPass (NASDAQ:IPAS) is a leading provider of global mobile connectivity, offering simple, secure, always-on Wi-Fi access on any mobile device. Built on a software-as-a-service (SaaS) platform, the iPass cloud-based service keeps its customers connected by providing unlimited Wi-Fi connectivity on unlimited devices. iPass is the world’s largest Wi-Fi network, with more than 64 million hotspots globally, at airports, hotels, train stations, convention centers, outdoor venues, inflight, and more. Using patented technology, the iPass
iPass® is a registered trademark of
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CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited; in thousands)
|March 31, 2018||December 31, 2017|
|Cash and cash equivalents||$||2,766||$||5,159|
|Accounts receivable, net||6,910||8,717|
|Other current assets||587||712|
|Total current assets||12,373||16,229|
|Property and equipment, net||1,128||1,334|
|Liabilities and Stockholders’ Equity (Deficit)|
|Deferred revenue, short-term||3,022||3,723|
|Total current liabilities||16,597||16,501|
|Deferred revenue, long-term||40||102|
|Other long-term liabilities||362||1,009|
|Stockholders’ equity (deficit):|
|Additional paid-in capital||227,333||226,490|
|Total stockholders’ equity (deficit)||(2,203||)||791|
|Total liabilities and stockholders’ equity (deficit)||$||14,796||$||18,403|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
(Unaudited; in thousands, except share and per share data)
|Three Months Ended
|Cost of revenue and operating expenses:|
|Network access costs||6,844||9,559|
|Research and development||1,953||1,974|
|Sales and marketing||2,469||2,454|
|General and administrative||2,589||2,772|
|Total cost of revenue and operating expenses||15,239||18,451|
|Interest income, net||7||14|
|Foreign exchange loss, net||(143||)||(49||)|
|Loss before income taxes||(3,948||)||(4,200||)|
|Provision for income taxes||65||115|
|Net loss per share - basic and diluted||$||(0.06||)||$||(0.07||)|
|Weighted average shares outstanding - basic and diluted||69,853,058||65,567,707|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; in thousands)
|Three months ended March 31,|
|Cash flows from operating activities:|
|Adjustments to reconcile net loss to net cash used in operating activities:|
|Stock-based compensation expense||344||350|
|Depreciation and amortization||198||454|
|Provision for (recovery of) doubtful accounts||(67||)||39|
|Changes in operating assets and liabilities:|
|Prepaid expenses and other current assets||(189||)||(232||)|
|Net cash used in operating activities||(2,927||)||(2,388||)|
|Cash flows from investing activities:|
|Purchases of property and equipment||(5||)||(222||)|
|Net cash used in investing activities||(5||)||(222||)|
|Cash flows from financing activities:|
|Net proceeds from issuance of common stock||—||10|
|Proceeds from common stock purchase agreement||539||—|
|Net cash provided by financing activities||539||10|
|Net decrease in cash and cash equivalents||(2,393||)||(2,600||)|
|Cash and cash equivalents at beginning of period||5,159||16,072|
|Cash and cash equivalents at end of period||$||2,766||$||13,472|
|Supplemental disclosures of cash flow information:|
|Net cash paid for taxes||$||47||$||46|
|Accrued amounts for acquisition of property and equipment||$||—||$||73|
|Accrued issuance cost of common stock purchase agreement||$||38||$||—|
RECONCILIATION OF NON-GAAP TO GAAP METRICS
(Unaudited, in thousands)
|Three Months Ended|
|GAAP Net loss||$||(4,013||)||$||(4,313||)||$||(4,315||)|
|Income tax expense||65||(196||)||115|
|Depreciation of property and equipment||198||446||454|
|Stock-based compensation expense||344||314||350|
|Prior period adjustment to revenue||—||1||—|
|Nonrecurring legal costs||—||(11||)||—|
|Adjusted EBITDA loss||$||(3,413||)||$||(3,790||)||$||(3,410||)|