PRESS RELEASE DATED MAY 11, 2017
Published on May 11, 2017
Exhibit 99.1
News Release
Draft ONLY
For Release on May 11, 2017
Inpixon
Reports Financial Results For The First Quarter
Ended March 31, 2017 And Provides Corporate Update
Conference Call To Be Held Today at 4:30 pm Eastern Time
PALO ALTO, Calif. – Inpixon (NASDAQ: INPX), a leading indoor positioning and data analytics company, today reported financial results for the first quarter ended March 31, 2017 and provided an update on corporate developments.
First Quarter 2017 Financial Highlights:
| ● | 2017 Q1 revenue of $13.5 million |
| ● | 2017 Q1 gross margin of 24% |
| ● | 2017 Q1 GAAP net loss of $2.79 per share |
| ● | 2017 Q1 Proforma Non-GAAP net loss1 of $2.03 per share |
| ● | 2017 Q1 Non-GAAP Adjusted EBITDA1 loss of $3.3 million |
“The renewal of our contract with the FBI, the extension of our contract with the Army and this week’s announcement of an approximately $2.5 million project win with a leading health insurer are encouraging and we believe show traction with both our commercial and government customer base,” said Nadir Ali, Inpixon’s CEO. “We anticipate a more significant impact with government customers in Q3 and Q4 from the Integrio acquisition as we approach the government fiscal year end. I look forward to our earnings call today when we will have a conversation with our CTO, Craig Harper, about where our Indoor Positioning Analytics product is headed and where we see industry trends in the space.”
First Quarter 2017 Financial Results
Revenue: Total revenues for the quarter ended March 31, 2017 were $13.5 million compared to $14.1 million for the comparable period in the prior year. For the three months ended March 31, 2017, Indoor Positioning Analytics revenue was $981,000 compared to $1 million for the prior year period. Infrastructure revenue was $12.5 million for the three months ended March 31, 2017, and $13.1 million for the prior year period. This decline in revenue is primarily attributable to a delay in order processing at the end of the quarter. We experienced credit constraints that were compounded by the Integrio acquisition,that pushed a substantial amount of infrastructure related orders to the 2nd Quarter of 2017. The Company is addressing these credit limitations with the relevant vendors/distributors to minimize impact in future quarters.
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Gross Profit: Total gross profit for the quarter ended March 31, 2017 was $3.3 million, compared to $4.0 million for the comparable period in the prior year. The gross profit margin for the quarter ended March 31, 2017 was 24% compared to 28% during the prior year period. This decline in gross profit margin relates to the impact of infrastructure sales from the Inpixon Federal division, which have a lower margin profile.
Net Loss: GAAP net loss attributable to stockholders for the quarter ended March 31, 2017 was $6.1 million, compared to $4.3 million for the prior year period. GAAP net loss per share for the three months ended March 31, 2017 was $2.79 compared to $2.57 for the prior year period. This increase in net loss per share was primarily attributable to lower gross profit, increase in amortization of intangibles and depreciation costs, additional costs incurred for the Integrio operations offset by a reduction in operating expenses related to Inpixon USA.
Non-GAAP net loss1: For the quarter ended March 31, 2017, pro-forma non-GAAP net loss was $4.4 million, compared to a non-GAAP net loss of $2.9 million for the prior year period. For the quarter ended March 31, 2017, non-GAAP net loss per share was $2.03, compared to a non-GAAP net loss per share of $1.71 for the prior year period. Non-GAAP net loss per share is defined as net loss per basic and diluted share adjusted for non-cash items including stock based compensation, amortization of intangibles and one time charges including severance costs, change in the fair value of shares to be issued, change in the fair value of derivative liability and acquisition costs.
Non-GAAP adjusted EBITDA1: Total non-GAAP Adjusted EBITDA for the three months ended March 31, 2017 was a loss of $3.3 million compared to a loss of $2.5 million for the prior year period. Non-GAAP adjusted EBITDA is defined as net income (loss) before interest, provision for (benefit from) income taxes, and depreciation and amortization plus adjustments for other income or expense items, non-recurring items and non-cash stock-based compensation.
1A reconciliation of GAAP to non-GAAP financial measures is provided in the financial statement tables included in this press release. An explanation of these measures is also included under the heading “Non-GAAP Financial Measures.”
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First Quarter 2017 Business Highlights and Recent Developments
| ● | Inpixon Announces Purchase Order From Leading Health Insurer |
| ● | FBI Renews Contract with Inpixon Federal |
| ● | U.S. Army Extends Contract With Inpixon |
All results summarized in this press release (including the financial statement tables) should be considered preliminary, are qualified in their entirety by the financial statement tables included in this press release and are subject to change. Please refer to Inpixon’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2017, which will be filed with the U.S. Securities and Exchange Commission on or before May 15, 2017.
Conference Call Information
Management will host a conference call on Thursday, May 11, 2017, at 4:30 p.m. Eastern Time to review financial results and corporate highlights. Following management’s formal remarks, there will be a question and answer session.
To listen to the conference call, interested parties within the U.S. should call 1-844-824-3831. International callers should call +1-412-317-5141. All callers should ask for the Inpixon conference call. The conference call will also be available through a live webcast, which can be accessed at http://client.irwebkit.com/inpixon.
A replay of the call will be available approximately one hour after the end of the call through June 11, 2017. The replay can be accessed via Inpixon’s website or by dialing 1-877-344-7529 (U.S.) or +1-412-317-0088 (international). The replay conference playback code is 10107128.
About Inpixon
Inpixon (NASDAQ: INPX) is a leader in Indoor Positioning and Data Analytics. Inpixon sensors are designed to find all accessible cellular, Wi-Fi, and Bluetooth devices anonymously. Paired with a high performance, data analytics platform, this technology delivers visibility, security, and business intelligence on any commercial or government premises world-wide. Inpixon’s products, infrastructure solutions, and professional services group help customers take advantage of mobile, big data, analytics, and the Internet of Things (IoT) to uncover the untold stories of the indoors. For the latest insight on Indoor Positioning and Data Analytics, follow Inpixon on LinkedIn and @_Inpixon on Twitter.
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Safe Harbor Statement
All statements in this release that are not based on historical fact are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and the provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. While management has based any forward-looking statements included in this release on its current expectations, the information on which such expectations were based may change. These forward-looking statements rely on a number of assumptions concerning future events and are subject to a number of risks, uncertainties and other factors, many of which are outside of the control of Inpixon and its subsidiaries, which could cause actual results to materially differ from such statements. Such risks, uncertainties, and other factors include, but are not limited to, the fluctuation of global economic conditions, the performance of management and employees, the Company’s ability to obtain financing, competition, general economic conditions and other factors that are detailed in Inpixon’s periodic and current reports available for review at www.sec.gov. Furthermore, we operate in a highly competitive and rapidly changing environment where new and unanticipated risks may arise. Accordingly, investors should not place any reliance on forward-looking statements as a prediction of actual results. We disclaim any intention to, and undertake no obligation to, update or revise forward-looking statements.
Non-GAAP Financial Measures
Management believes that certain financial measures not in accordance with generally accepted accounting principles in the United States (“GAAP"”) are useful measures of operations. EBIDTA, Adjusted EBITDA and pro forma net loss per share are non-GAAP measures. Inpixon defines “EBITDA” as net income (loss) before interest, provision for (benefit from) income taxes, and depreciation and amortization. Management uses Adjusted EBITDA as the matrix in which it manages the business and Inpixon defines “Adjusted EBITDA” as EBITDA plus adjustments for other income or expense items, non-recurring items and non-cash stock-based compensation. Inpixon defines “pro forma net loss per share” as GAAP net loss per share adjusted for stock-based compensation, amortization of intangibles, change in the fair value of shares to be issued, change in the fair value of derivative liability and one-time non-recurring charges such as severance costs and acquisition costs.
Management provides Adjusted EBITDA and pro forma net loss per share measures so that investors will have the same financial information that management uses, which may assist investors in assessing Inpixon’s performance on a period-over-period basis. Adjusted EBITDA or pro forma net loss per share is not a measure of financial performance under GAAP, and should not be considered an alternative to net income (loss) or any other measure of performance under GAAP, or to cash flows from operating, investing or financing activities as an indicator of cash flows or as a measure of liquidity. Adjusted EBITDA and pro forma net loss per share have limitations as analytical tools and should not be considered either in isolation or as a substitute for analysis of Inpixon’s results as reported under GAAP.
Contacts:
Inpixon Investor Relations:
CORE IR
Scott Arnold, +1-516-222-2560
Managing Director
www.coreir.com
or
Media Contact:
PAN Communications
Hilary Katulak, +1-617-502-4347
hkatulak@pancomm.com
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INPIXON AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except number of shares and par value data)
| March 31, | December 31, | |||||||
| 2017 | 2016 | |||||||
| (Unaudited) | (Audited) | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 738 | $ | 1,821 | ||||
| Accounts receivable, net | 6,418 | 11,788 | ||||||
| Notes and other receivables | 341 | 362 | ||||||
| Inventory | 782 | 1,061 | ||||||
| Prepaid licenses and maintenance contracts | 10,907 | 13,321 | ||||||
| Assets held for sale | 23 | 23 | ||||||
| Prepaid assets and other current assets | 1,347 | 1,768 | ||||||
| Total current assets | 20,556 | 30,144 | ||||||
| Prepaid licenses and maintenance contracts, non-current | 4,282 | 5,169 | ||||||
| Property and equipment, net | 1,278 | 1,385 | ||||||
| Software development costs, net | 2,183 | 2,058 | ||||||
| Intangible assets, net | 16,308 | 17,691 | ||||||
| Goodwill | 9,028 | 9,028 | ||||||
| Other assets | 942 | 998 | ||||||
| Total assets | $ | 54,577 | $ | 66,473 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 22,528 | $ | 23,027 | ||||
| Accrued liabilities | 4,280 | 4,169 | ||||||
| Deferred revenue | 12,382 | 15,043 | ||||||
| Short-term debt | 4,618 | 6,887 | ||||||
| Liabilities held for sale | 2,046 | 2,041 | ||||||
| Total current liabilities | 45,854 | 51,167 | ||||||
| Deferred revenue, non-current | 4,932 | 5,960 | ||||||
| Long-term debt | 4,342 | 4,047 | ||||||
| Other liabilities | 374 | 371 | ||||||
| Acquisition liability - Integrio | 1,558 | 1,648 | ||||||
| Acquisition liability - LightMiner | -- | 567 | ||||||
| Total liabilities | 57,060 | 63,760 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders’ (deficit) equity: | ||||||||
| Preferred stock, $0.001 par value; 5,000,000 shares authorized; no shares issued or outstanding | -- | -- | ||||||
| Convertible Series 1 Preferred Stock - $1,000.00 stated value; 5,000,000 shares authorized; 2,250 issued and outstanding at March 31, 2017 and December 31, 2016. Liquidation preference of $2,250,000 at March 31, 2017 and December 31, 2016. | 1,340 | 1,340 | ||||||
| Common stock, $0.001 par value; 50,000,000 shares authorized; 2,197,667 and 2,171,886 issued and 2,181,745 and 2,155,964 outstanding at March 31, 2017 and December 31, 2016, respectively | 2 | 2 | ||||||
| Additional paid-in capital | 64,997 | 64,148 | ||||||
| Treasury stock, at cost, 15,922 shares | (695 | ) | (695 | ) | ||||
| Due from Sysorex Consulting Inc. | (666 | ) | (666 | ) | ||||
| Accumulated other comprehensive income | 63 | 52 | ||||||
| Accumulated deficit | (65,525 | ) | (59,473 | ) | ||||
| Stockholders’ equity attributable to Inpixon | (484 | ) | 4,708 | |||||
| Non-controlling interest | (1,999 | ) | (1,995 | ) | ||||
| Total stockholders' (deficit) equity | (2,483 | ) | 2,713 | |||||
| Total liabilities and stockholders’ (deficit) equity | $ | 54,577 | $ | 66,473 | ||||
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INPIXON AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(In thousands, except per share data)
| For the Three Months Ended | ||||||||
| March 31, | ||||||||
| 2017 | 2016 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Revenues | ||||||||
| Products | $ | 9,448 | $ | 10,348 | ||||
| Services | 4,033 | 3,739 | ||||||
| Total Revenues | 13,481 | 14,087 | ||||||
| Cost of Revenues | ||||||||
| Products | 8,054 | 8,042 | ||||||
| Services | 2,139 | 2,098 | ||||||
| Total Cost of Revenues | 10,193 | 10,140 | ||||||
| Gross Profit | 3,288 | 3,947 | ||||||
| Operating expenses: | ||||||||
| Research and development | 558 | 587 | ||||||
| Sales and marketing | 2,040 | 2,501 | ||||||
| General and administrative | 4,658 | 3,965 | ||||||
| Acquisition related costs | 3 | 20 | ||||||
| Amortization of intangibles | 1,383 | 1,056 | ||||||
| Total operating expenses | 8,642 | 8,129 | ||||||
| Loss from operations | (5,354 | ) | (4,182 | ) | ||||
| Other income (expense) | ||||||||
| Interest expense | (684 | ) | (143 | ) | ||||
| Change in fair value of shares to be issued | -- | (1 | ) | |||||
| Change in fair value of derivative liability | 56 | -- | ||||||
| Other (expense) income | (65 | ) | 20 | |||||
| Total other income (expense) | (693 | ) | (124 | ) | ||||
| Loss from continuing operations | (6,047 | ) | (4,306 | ) | ||||
| Loss from discontinued operations, net of tax | (9 | ) | -- | |||||
| Net loss | (6,056 | ) | (4,306 | ) | ||||
| Net loss attributable to non-controlling interest | (4 | ) | (4 | ) | ||||
| Net loss attributable to stockholders of Inpixon | $ | (6,052 | ) | $ | (4,302 | ) | ||
| Comprehensive loss | ||||||||
| Net Loss | (6,056 | ) | (4,306 | ) | ||||
| Unrealized foreign exchange gain/(loss) from cumulative translation adjustments | 11 | 17 | ||||||
| Comprehensive loss | $ | (6,045 | ) | $ | (4,289 | ) | ||
| Net loss per share - basic and diluted | $ | (2.79 | ) | $ | (2.57 | ) | ||
| Weighted average common shares outstanding: | ||||||||
| Basic and Diluted | 2,170,909 | 1,673,714 | ||||||
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INPIXON AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
| For the Three Months Ended | ||||||||
| March 31, | ||||||||
| 2017 | 2016 | |||||||
| (Unaudited) | ||||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (6,056 | ) | $ | (4,306 | ) | ||
| Adjustment to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 401 | 263 | ||||||
| Amortization of intangible assets | 1,383 | 1,056 | ||||||
| Stock based compensation | 283 | 364 | ||||||
| Change in fair value of shares to be issued | -- | 1 | ||||||
| Change in fair value of derivative liability | (56 | ) | -- | |||||
| Amortization of technology | 17 | -- | ||||||
| Amortization of deferred financing costs | 43 | -- | ||||||
| Amortization of debt discount | 294 | -- | ||||||
| Provision for doubtful accounts | -- | 212 | ||||||
| Other | 13 | 2 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable and other receivables | 5,392 | 787 | ||||||
| Inventory | 278 | (67 | ) | |||||
| Other current assets | 420 | 140 | ||||||
| Prepaid licenses and maintenance contracts | 3,301 | 446 | ||||||
| Other assets | (3 | ) | 1 | |||||
| Accounts payable | (499 | ) | (848 | ) | ||||
| Accrued liabilities | 168 | (1,323 | ) | |||||
| Deferred revenue | (3,689 | ) | 3,371 | |||||
| Other liabilities | (82 | ) | (103 | ) | ||||
| Total Adjustments | 7,664 | 4,302 | ||||||
| Net Cash Provided by (Used in) Operating Activities | 1,608 | (4 | ) | |||||
| Cash Flows Used in Investing Activities: | ||||||||
| Purchase of property and equipment | (82 | ) | (48 | ) | ||||
| Investment in capitalized software | (351 | ) | (414 | ) | ||||
| Net Cash Flows Used in Investing Activities | (433 | ) | (462 | ) | ||||
| Cash Flows Provided by Financing Activities | ||||||||
| Advances (repayment) of line of credit | (2,269 | ) | (588 | ) | ||||
| Repayment of term loan | -- | (167 | ) | |||||
| Repayments to related party | -- | (3 | ) | |||||
| Net Cash Used in Financing Activities | (2,269 | ) | (758 | ) | ||||
| Effect of Foreign Exchange Rate on Changes on Cash | 11 | 17 | ||||||
| Net Decrease in Cash and Cash Equivalents | (1,083 | ) | (1,207 | ) | ||||
| Cash and Cash Equivalents - Beginning of period | 1,821 | 4,060 | ||||||
| Cash and Cash Equivalents - End of period | $ | 738 | $ | 2,853 | ||||
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Reconciliation of Non-GAAP Financial Measures:
| (In thousands) | Three
Months Ended March 31, |
|||||||
| 2017 | 2016 | |||||||
| Net loss attributable to common stockholders | $ | (6,052 | ) | $ | (4,302 | ) | ||
| Adjustments: | ||||||||
| Non-recurring one-time charges: | ||||||||
| Acquisition transaction/financing costs | 3 | 20 | ||||||
| Change in the fair value of shares to be issued | -- | 1 | ||||||
| Change in the fair value of derivative liability | (56 | ) | -- | |||||
| Severance | 27 | -- | ||||||
| Stock based compensation - acquisition costs | 7 | -- | ||||||
| Stock-based compensation – compensation and related benefits | 276 | 364 | ||||||
| Interest expense | 684 | 143 | ||||||
| Depreciation and amortization | 1,785 | 1,319 | ||||||
| Adjusted EBITDA | $ | (3,326 | ) | $ | (2,455 | ) | ||
| (In thousands, except share data) | Three
Months Ended March 31, |
|||||||
| 2017 | 2016 | |||||||
| Net loss attributable to common stockholders | $ | (6,052 | ) | $ | (4,302 | ) | ||
| Adjustments: | ||||||||
| Non-recurring one-time charges: | ||||||||
| Acquisition transaction/financing costs | 3 | 20 | ||||||
| Change in the fair value of shares to be issued | -- | 1 | ||||||
| Change in the fair value of derivative liability | (56 | ) | -- | |||||
| Severance | 27 | -- | ||||||
| Stock based compensation - acquisition costs | 7 | -- | ||||||
| Stock-based compensation – compensation and related benefits | 276 | 364 | ||||||
| Amortization of intangibles | 1,383 | 1,056 | ||||||
| Proforma non-GAAP net loss | $ | (4,412 | ) | $ | (2,861 | ) | ||
| Proforma non-GAAP net loss per basic and diluted common share | $ | (2.03 | ) | $ | (1.71 | ) | ||
| Weighted average basic and diluted common shares outstanding | 2,170,909 | 1,673,714 | ||||||
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