Revenue Increases 23% from Third Quarter of
2014
IoT Revenue Grows 83% from Third Quarter of 2014
with Increased Gross Margins
Positive Adjusted EBITDA Guidance for Fourth
Quarter Includes Recently-Acquired DigiCore Holdings Ltd.
Novatel Wireless, Inc. (NASDAQ:MIFI), a leading provider of
solutions for the Internet of Things (IoT) and inventors of MiFi®
technology, announced financial results for the third quarter ended
September 30, 2015.
"The acquisitions of Feeney Wireless and DigiCore have truly
changed the game for Novatel Wireless. We anticipate that half of
the Company's revenues in the fourth quarter will relate to the
Internet of Things, with an increasing mix of higher-margin SaaS
and services revenues to combine with our stable and strong MiFi
device business. The addition of DigiCore's fleet and vehicle SaaS
telematics offerings, with DigiCore's installed base of
approximately 155,000 fleet subscribers for the Ctrack™ telematics
platform, plus another 190,000 Ctrack subscribers for consumer and
commercial vehicle tracking, is expected to cause our non-GAAP
gross margins from IoT products to leap from 30% in the third
quarter to more than 45% in the fourth quarter," said Sue Swenson,
Chair and CEO of Novatel Wireless. "Over the past few months, we
delivered on our cost rationalization targets and completed our
acquisition activities, setting the stage for a return to positive
adjusted EBITDA in the fourth quarter and beyond. We are now
squarely focused on strategy execution, integration and operational
excellence."
Third Quarter 2015 Financial Highlights
The Company announced the following U.S. GAAP ("GAAP") financial
results for the third quarter of 2015:
- Revenue increased by 23.1% to $54.6 million in the third
quarter of 2015, compared to $44.3 million in the third quarter of
2014. Revenue from machine-to-machine ("M2M") products and services
was $17.4 million in the third quarter of 2015, increasing by 82.7%
from $9.5 million in the third quarter of 2014, due to the
Company's focus on growing IoT revenues as well as the acquisition
of Feeney Wireless ("FW") earlier this year. Revenue from mobile
computing products was $37.1 million in the third quarter of 2015,
increasing by 6.8% from $34.8 million in the third quarter of 2014,
primarily driven by ongoing sales of the Company's MiFi 6620L
offering.
- Net loss per share was ($0.38) in the third quarter of 2015,
with a net loss of ($20.8 million), compared to net loss per share
of ($0.23), with a net loss of ($8.8 million), in the third
quarter of 2014. The net loss for the third quarter of 2015
included a $10.5 million charge for a non-cash change in an
acquisition-related escrow account for the purchase of DigiCore
Holdings Ltd. ("DigiCore"), a $2.1 million charge for amortization
of the debt discount and debt issuance costs associated with the
Company's convertible notes issued in June 2015, $2.8 million of
charges related to estimated contingent earn-out payments related
to the acquisition of FW and adjustments to the inventory valuation
for FW based on the fair value of finished goods, $1.0 million of
restructuring charges related to the Company's cost containment
initiatives, and $0.7 million of professional fees and
transactional expenses related to the acquisition of DigiCore.
- As of September 30, 2015, the Company had cash and cash
equivalents of $10.2 million, with no amounts drawn down on its $25
million revolving credit facility with Wells Fargo Bank.
The Company also announced the following non-GAAP financial
results for the third quarter of 2015. A reconciliation of
these non-GAAP financial measures to the Company's GAAP financial
results is included in the tables accompanying this news
release:
- Non-GAAP gross profit increased by 41.8% to $15.0 million in
the third quarter of 2015, from $10.6 million in the third
quarter of 2014, driven by a combination of increased revenue and
increased gross margins across all product sets. Non-GAAP gross
margin increased to 27.5% in the third quarter of 2015, compared to
23.9% in the third quarter of 2014, as the Company transitions
toward an improved mix of higher margin products, and with M2M
revenue comprising approximately 32% of the Company's total revenue
in the third quarter of 2015. Non-GAAP gross margin on M2M
products and solutions increased to 30.2% in the third quarter of
2015, compared to 26.6% in the third quarter of 2014, and non-GAAP
gross margin on mobile computing products increased to 26.2% in the
third quarter of 2015, compared to 23.1% in the third quarter of
2014.
- Non-GAAP operating expenses decreased by 15.8% to $16.3 million
in the third quarter of 2015, compared to $19.3 million in the
second quarter of 2015, due to the success of the Company's
restructuring activities initiated in the third quarter which
reduced annualized operating costs and expenses by $10
million. The cost containment activities included reducing the
Company's headcount by 34, or approximately 9% of the total
workforce, and eliminating 21 outsourced or contractor positions,
and was complemented by additional strategies to reduce costs. On a
year-over-year basis, non-GAAP operating expenses increased by
26.8% compared to $12.8 million in the third quarter of 2014, due
to recently-acquired FW's operating structure and costs being
included within the Company's operating expenses for the third
quarter of 2015.
- Adjusted EBITDA improved by 47.0% to ($0.3 million) in the
third quarter of 2015, compared to ($0.6 million) in the third
quarter of 2014. This improvement was driven by a combination
of increased revenue and higher gross margins from a better product
mix.
- Non-GAAP net loss for the third quarter of 2015 improved by
18.4% to ($1.9 million), or ($0.04) per share, compared to a
net loss of ($2.4 million), or ($0.06) per share, in the third
quarter of 2014. Non-GAAP net loss improved during the third
quarter of 2015 due to the Company's revenue growth and increased
gross margins.
Recent Highlights
The Company's business and organizational highlights since the
beginning of the third quarter include:
- On October 5, 2015, the Company closed its acquisition of
DigiCore, with its Ctrack™ SaaS offerings for the fleet management,
user-based insurance, and asset tracking and monitoring markets.
The acquisition added 345,000 Ctrack subscribers to the Company's
growing SaaS base, including 155,000 fleet SaaS subscribers and
190,000 subscribers for other consumer and commercial vehicle
tracking solutions. DigiCore significantly increases the
Company's global footprint, with DigiCore having a presence in over
50 countries spanning six continents. The Company is currently
developing its strategy to increase penetration for Ctrack into
newer markets, including the United States.
- DigiCore was selected to provide a custom solution for KLM
Equipment Services (KLM) at the Amsterdam Airport Schiphol,
providing a platform that different companies and KLM departments
at the airport can use to manage employee access to equipment.
Ctrack ensures that only approximately 5,000 of the 60,000 airport
employees have access to KLM's equipment via identification
software and Ctrack GPS units. KLM can use a desktop computer,
smartphone or tablet to view where specific equipment is located to
enable more efficient use of KLM's airport vehicles. The
access card registration system also records the length of time
each employee uses the equipment, enabling automatic invoicing.
- Mercedes Benz South Africa selected DigiCore on November 1,
2015 to be the preferred supplier of stolen vehicle recovery units
for every commercial vehicle sold with Mercedes Benz's Fleetboard
telematics device. An optional dashboard camera solution provided
by DigiCore also will be offered to all Mercedes Benz South Africa
commercial clients.
- FW announced two new products to complement their full lineup
of IoT modems and appliances. In September 2015, FW launched the
Skyus-DS, a rugged, low-cost embedded modem kit designed to handle
the demanding environments of the Internet of Things. While
harnessing the power and simplicity of the original Skyus™, this
new version adds interchangeable SIM cards and GPS. FW also
announced a planned December 2015 launch of the Skyus X, a cellular
routing appliance designed to withstand harsh mobile environments,
while remaining highly available and secure.
- The Company announced a partnership with surveillance
specialist QVIS Monitoring LTD on July 7, 2015, to deliver turnkey
mobile tracking solutions throughout the United Kingdom for
consumer and commercial telematics, including a bundled offering
with hardware, SaaS, airtime and managed services.
- The Company launched the MiFi® U620L 4G LTE Global USB for
Verizon Wireless (NASDAQ:VZ), based on the proven MiFi 6600 family
of award-winning mobile hotspots, on July 16, 2015. The U620L is
designed to support the most demanding IoT bandwidth requirements
as well as offer basic 4G LTE connectivity in a versatile, secure
USB stick providing "future proof" connectivity for all
applications and use cases.
- The Company announced the availability of the MiFi® M100 LTE
hotspot in September 2015 with U.S. Cellular (NYSE:USM), the
nation's fifth largest wireless carrier, to deliver best-in-class
4G LTE mobile broadband to U.S. Cellular customers. This is the
first LTE-only MiFi brand mobile hotspot for North America,
equipped with numerous bands for exceptional coverage, including
Band 12 for coverage in underserved areas.
- Sue Swenson was appointed as Chief Executive Officer of the
Company on October 27, 2015, replacing Alex Mashinsky. Ms. Swenson
has been a member of the Company's Board of Directors since 2012
and has served as Chair of the Board since 2014. Ms. Swenson
brings decades of leadership experience and operational expertise
in the wireless technologies industry, with prior service as
president and COO of PacTel Cellular (which later became part of
AirTouch Cellular), CEO and president of Cellular One, president of
Leap Wireless, COO of T-Mobile USA, COO of Amp'd Mobile, and CEO of
Sage, North America. Ms. Swenson is Chair of FirstNet and also
sits on a number of other boards including those of Harmonic,
Spirent Plc and Wells Fargo.
Combined Company Fourth Quarter Business
Outlook
The following statements are forward-looking and actual results
may differ materially. Please see the section titled "Cautionary
Note Regarding Forward-Looking Statements" at the end of this news
release. A more detailed description of risks related to our
business is included in the reports filed by the Company with the
Securities and Exchange Commission.
Our guidance for the fourth quarter of 2015 reflects current
business indicators and expectations as of the date of this news
release, current exchange rates for foreign currencies, as well as
preliminary assessments of historical DigiCore results adjusted to
conform to U.S. GAAP. Novatel Wireless expects to complete the
conversion of DigiCore historical results from International
Financial Reporting Standards ("IFRS") to GAAP by December 18, 2015
and plans to provide a pro forma income statement for the combined
company for the nine months ended September 30, 2015, prepared in
accordance with GAAP, at that time.
|
Fourth Quarter 2015
Outlook |
Revenue |
$66 million - $72 million |
Non-GAAP Gross Margin |
34% - 37% |
Non-GAAP Operating Expenses |
$26 million - $28 million |
Adjusted EBITDA |
$0.1 million - $1.7 million |
Non-GAAP Net Loss Per Share |
$(0.08) - $(0.05) |
Weighted Average Shares Outstanding |
approximately 56 million |
Our fourth quarter outlook is inclusive of the following
anticipated contribution from newly-acquired DigiCore to the
Company's fourth quarter financial results:
Revenue |
$14 million - $17 million |
Non-GAAP Gross Margin |
68% - 71% |
Adjusted EBITDA |
$2.0 million - $2.5 million |
Conference Call Information
Novatel Wireless will host a conference call and live webcast
for analysts and investors today at 5:00 p.m. ET. To access the
conference call:
- In the United States, call 1-800-860-2442
- International parties can access the call at
1-412-858-4600
Novatel Wireless will offer a live webcast of the conference
call, which will be accessible from the "Investors" section of the
Company's website at www.novatelwireless.com. A telephonic replay
of the conference call will also be available one hour after the
call and will be available until November 17, 2015. To hear the
replay, parties in the United States may call 1-877-344-7529 and
enter access code 10075142#. International parties may call
1-412-317-0088 and enter the same code.
ABOUT NOVATEL WIRELESS
Novatel Wireless, Inc. (Nasdaq: MIFI) is a leader in the design
and development of M2M wireless products and solutions based on 3G
and 4G technologies. The Company delivers Internet of Things (IoT)
and SaaS services to carriers, distributors, retailers,
governments, OEMs and vertical markets worldwide. Product lines
include MiFi® Mobile Hotspots, embedded modules, FW IoT appliances
and project-based manufacturing, CTrack™ fleet and vehicle
telematics, mobile tracking and asset tracking solutions, and
robust and scalable SaaS offerings for M2M and telematics
applications. These innovative products provide anywhere, anytime
communications solutions for consumers and enterprises. Novatel
Wireless is headquartered in San Diego, California. For more
information please visit www.novatelwireless.com. @MIFI
Cautionary Note Regarding Forward-Looking
Statements
Some of the information presented in this news release may
constitute forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. In this context,
forward-looking statements often address expected future business
and financial performance and often contain words such as "may,"
"estimate," "anticipate," "believe," "expect," "intend," "plan,"
"project," "will" and similar words and phrases indicating future
results. The information presented in this news release related to
our outlook for the fourth quarter ending December 31, 2015,
future demand for our products, the expected impact of acquisition
activity, the anticipated cost savings from our restructuring
actions, and the expected treatment of DigiCore's financial
performance under GAAP, including statements made by Sue Swenson,
as well as other statements that are not purely statements of
historical fact, are forward-looking in nature. These
forward-looking statements are made on the basis of management's
current expectations, assumptions, estimates and projections and
are subject to significant risks and uncertainties that could cause
actual results to differ materially from those anticipated in such
forward-looking statements. We therefore cannot guarantee future
results, performance or achievements. Actual results could differ
materially from our expectations.
Factors that could cause actual results to differ materially
from Novatel Wireless' expectations are set forth as risk factors
in the Company's SEC reports and filings and include (1) the
future demand for wireless broadband access to data, (2) the
growth of wireless wide-area networking, (3) changes in
commercially adopted wireless transmission standards and
technologies including 3G and 4G standards, (4) continued
customer and end user acceptance of the Company's current products
and market demand for the Company's anticipated new product
offerings, (5) increased competition and pricing pressure from
current or future wireless market participants, (6) dependence
on third party manufacturers in Asia and key component suppliers
worldwide, (7) the Company's ability to successfully integrate
FW, DigiCore and any other businesses, products, technologies or
personnel that we may acquire in the future, (8) unexpected
liabilities or expenses, (9) the Company's ability to
introduce new products in a timely manner, (10) litigation,
regulatory and IP developments related to our products or component
parts of our products, (11) dependence on a small number of
customers, (12) the effect of changes in accounting standards
and in aspects of our critical accounting policies and
(13) the Company's plans and expectations relating to
acquisitions, strategic relationships, international expansion,
software and hardware developments, personnel matters and cost
containment initiatives.
These factors, as well as other factors described in the reports
filed by the Company with the SEC (available at www.sec.gov), could
cause actual results to differ materially from those expressed in
the Company's forward-looking statements. Novatel Wireless assumes
no obligation to update publicly any forward-looking statements for
any reason, even if new information becomes available or other
events occur in the future, except as otherwise required pursuant
to applicable law and our on-going reporting obligations under the
Securities Exchange Act of 1934, as amended.
Non-GAAP Financial Measures
Novatel Wireless has provided in this news release financial
information that has not been prepared in accordance with GAAP.
Non-GAAP gross profit, gross margin, operating expenses, adjusted
EBITDA, net loss and net loss per share exclude restructuring
charges, share-based compensation expense, charges associated with
a non-cash change in an acquisition-related escrow account for the
purchase of DigiCore and a non-cash change in fair value of a
Company-issued warrant to purchase common stock, amortization of
the debt discount and debt issuance costs associated with the
Company's convertible notes, charges related to estimated
contingent earn-out payments related to the acquisition of FW and
adjustments to the inventory valuation for FW based on the fair
value of finished goods, and professional fees and transactional
expenses related to the acquisition of DigiCore. Adjusted EBITDA
also excludes interest, taxes, depreciation and amortization
(unrelated to acquisitions and the convertible debt).
Non-GAAP gross profit, gross margin, operating expenses,
adjusted EBITDA, net loss and net loss per share are supplemental
measures of our performance that are not required by, or presented
in accordance with, GAAP. These non-GAAP financial measures are not
intended to be used in isolation and, moreover, they should not be
considered as a substitute for gross margin, operating expenses,
net loss, net loss per share or any other performance measure
determined in accordance with GAAP. We present non-GAAP gross
profit, gross margin, operating expenses, adjusted EBITDA, net loss
and net loss per share because we consider each to be an important
supplemental measure of our performance.
Management uses these non-GAAP financial measures to make
operational decisions, evaluate the Company's performance, prepare
forecasts and determine compensation. Further, management believes
that both management and investors benefit from referring to these
non-GAAP financial measures in assessing the Company's performance
when planning, forecasting and analyzing future periods. The
stock-based compensation expenses are expected to vary depending on
the number of new grants issued to both current and new employees,
and changes in the Company's stock price, stock market volatility,
expected option life and risk-free interest rates, all of which are
difficult to estimate. In calculating non-GAAP gross profit, gross
margin, operating expenses, adjusted EBITDA, net loss and net loss
per share, management excludes certain non-cash and one-time items
in order to facilitate comparability of the Company's operating
performance on a period-to-period basis because such expenses are
not, in management's review, related to the Company's ongoing
operating performance. Management uses this view of its operating
performance for purposes of comparison with its business plan and
individual operating budgets and allocation of resources.
We further believe that these non-GAAP financial measures are
useful to investors in providing greater transparency to the
information used by management in its operational decision-making.
We believe that the use of non-GAAP gross profit, gross margin,
operating expenses, adjusted EBITDA, net loss and net loss per
share also facilitates a comparison of our underlying operating
performance with that of other companies in our industry, which use
similar non-GAAP financial measures to supplement their GAAP
results.
Calculations of non-GAAP gross profit, gross margin, operating
expenses, adjusted EBITDA, net loss and net loss per share have
limitations as an analytical tool, and you should not consider
these measures in isolation or as substitutes for GAAP metrics. In
the future, we expect to continue to incur expenses similar to the
non-GAAP adjustments described above, and exclusion of these items
in the presentation of our non-GAAP financial measures should not
be construed as an inference that these costs are unusual,
infrequent or non-recurring. Investors and potential investors are
cautioned that there are material limitations associated with the
use of non-GAAP financial measures as an analytical tool.
Limitations in relying on non-GAAP financial measures include, but
are not limited to, the fact that other companies, including other
companies in our industry, may calculate non-GAAP financial
measures differently than we do, limiting their usefulness as a
comparative tool.
Investors and potential investors are encouraged to review the
reconciliation of non-GAAP financial measures contained within this
news release with our GAAP financial results.
(C) 2015 Novatel Wireless, Inc. All rights reserved. The Novatel
Wireless name and logo are trademarks of Novatel Wireless, Inc.
NOVATEL WIRELESS,
INC. |
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS |
(In thousands, except per share
data) |
(Unaudited) |
|
|
|
|
|
|
Three Months
Ended September 30, |
Nine Months Ended
September 30, |
|
2015 |
2014 |
2015 |
2014 |
Net revenues |
$ 54,577 |
$ 44,330 |
$ 162,886 |
$ 129,884 |
Cost of net revenues |
40,109 |
33,844 |
120,461 |
105,343 |
Gross profit |
14,468 |
10,486 |
42,425 |
24,541 |
Operating costs and expenses: |
|
|
|
|
Research and development |
7,687 |
7,006 |
28,135 |
24,164 |
Sales and marketing |
3,948 |
2,790 |
12,403 |
9,816 |
General and administrative |
9,110 |
3,381 |
23,462 |
12,881 |
Amortization of purchased
intangible assets |
273 |
141 |
1,096 |
421 |
Restructuring charges |
953 |
1,064 |
789 |
7,480 |
Total operating costs and
expenses |
21,971 |
14,382 |
65,885 |
54,762 |
Operating loss |
(7,503) |
(3,896) |
(23,460) |
(30,221) |
Other income (expense): |
|
|
|
|
Change in fair value of warrant
liability |
— |
(4,788) |
— |
(4,788) |
Non-cash change in
acquisition-related escrow |
(10,533) |
— |
(10,317) |
— |
Interest expense, net |
(2,407) |
(63) |
(3,319) |
(28) |
Other expense, net |
(359) |
(61) |
(658) |
(118) |
Loss before income taxes |
(20,802) |
(8,808) |
(37,754) |
(35,155) |
Income tax provision |
45 |
24 |
139 |
73 |
Net loss |
$ (20,847) |
$ (8,832) |
$ (37,893) |
$ (35,228) |
|
|
|
|
|
Per share data: |
|
|
|
|
Net loss per share: |
|
|
|
|
Basic and diluted |
$ (0.38) |
$ (0.23) |
$ (0.73) |
$ (0.99) |
Weighted average shares used in computation
of net loss per share: |
|
|
|
|
Basic and diluted |
55,181 |
38,167 |
51,648 |
35,568 |
|
NOVATEL WIRELESS,
INC. |
CONDENSED CONSOLIDATED BALANCE
SHEETS |
(In thousands) |
|
|
|
|
|
|
|
September 30,
2015 |
December 31,
2014 |
|
(Unaudited) |
|
ASSETS |
|
|
Current assets: |
|
|
Cash and cash equivalents |
$ 10,219 |
$ 17,853 |
Accounts receivable, net |
34,145 |
24,213 |
Inventories |
40,197 |
37,803 |
Prepaid expenses and other |
9,297 |
7,912 |
Total current assets |
93,858 |
87,781 |
Property and equipment, net |
3,869 |
5,279 |
Intangible assets, net |
18,945 |
1,493 |
Acquisition-related escrow |
77,957 |
— |
Goodwill |
3,194 |
— |
Other assets |
201 |
467 |
Total assets |
$ 198,024 |
$ 95,020 |
LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
Current liabilities: |
|
|
Accounts payable |
$ 28,057 |
$ 34,540 |
Accrued expenses |
24,483 |
23,844 |
Total current liabilities |
52,540 |
58,384 |
Long-term liabilities: |
|
|
Convertible senior notes, net |
80,350 |
— |
Revolving credit facility |
— |
5,158 |
Other long-term liabilities |
15,851 |
932 |
Total liabilities |
148,741 |
64,474 |
Stockholders' equity: |
|
|
Common stock |
53 |
46 |
Additional paid-in capital |
498,288 |
466,665 |
Accumulated deficit |
(449,058) |
(411,165) |
|
49,283 |
55,546 |
Treasury stock at cost |
— |
(25,000) |
Total stockholders' equity |
49,283 |
30,546 |
Total liabilities and
stockholders' equity |
$ 198,024 |
$ 95,020 |
|
NOVATEL WIRELESS,
INC. |
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS |
(In thousands) |
(Unaudited) |
|
|
|
|
|
|
Three Months
Ended September 30, |
Nine Months Ended
September 30, |
|
2015 |
2014 |
2015 |
2014 |
Cash flows from operating activities: |
|
|
|
|
Net loss |
$ (20,847) |
$ (8,832) |
$ (37,893) |
$ (35,228) |
Adjustments to reconcile net
loss to net cash used in operating activities: |
|
|
|
|
Depreciation and
amortization |
1,505 |
1,848 |
4,484 |
5,889 |
Provision for bad debts, net of
recoveries |
105 |
78 |
62 |
187 |
Provision for excess and
obsolete inventory |
511 |
— |
810 |
3,033 |
Share-based compensation
expense |
1,254 |
377 |
3,227 |
1,616 |
Change in fair value of warrant
liability |
— |
4,788 |
— |
4,788 |
Non-cash change in
acquisition-related escrow |
10,533 |
— |
10,317 |
— |
Amortization of debt discount
and debt issuance costs |
2,112 |
— |
2,581 |
— |
Changes in assets and
liabilities: |
|
|
|
|
Accounts receivable |
(832) |
(2,641) |
(6,664) |
11,600 |
Inventories |
(1,100) |
(2,117) |
6,804 |
(3,379) |
Prepaid expenses and other
assets |
(1,339) |
(870) |
(574) |
1,300 |
Accounts payable |
1,048 |
3,013 |
(13,868) |
5,500 |
Accrued expenses, income taxes,
and other |
149 |
(6,165) |
4,417 |
(4,790) |
Net cash used in operating
activities |
(6,901) |
(10,521) |
(26,297) |
(9,484) |
Cash flows from investing activities: |
|
|
|
|
Acquisition-related escrow |
— |
— |
(88,274) |
— |
Acquisition, net of cash
acquired |
— |
— |
(9,063) |
— |
Purchases of property and
equipment |
(383) |
(272) |
(996) |
(1,513) |
Purchases of intangible
assets |
— |
(143) |
(224) |
(143) |
Purchases of marketable
securities |
— |
(429) |
— |
(1,255) |
Marketable securities
maturities / sales |
— |
8,568 |
— |
18,513 |
Net cash provided by (used in)
investing activities |
(383) |
7,724 |
(98,557) |
15,602 |
Cash flows from financing activities: |
|
|
|
|
Gross proceeds from the
issuance of convertible senior notes |
— |
— |
120,000 |
— |
Payment of issuance costs
related to convertible senior notes |
— |
— |
(3,540) |
— |
Proceeds from the exercise of
warrant to purchase common stock |
— |
— |
8,644 |
— |
Net repayments on revolving
credit facility |
— |
— |
(5,158) |
— |
Payoff of acquisition-related
assumed liabilities |
— |
— |
(2,633) |
— |
Proceeds from the issuance of
Series C preferred stock and common stock, net of issuance
costs |
— |
14,163 |
— |
14,163 |
Principal repayments of
short-term debt |
— |
— |
— |
(2,566) |
Proceeds from stock option
exercises and ESPP, net of taxes paid on vested restricted stock
units |
(58) |
(91) |
257 |
(375) |
Net cash provided by (used in)
financing activities |
(58) |
14,072 |
117,570 |
11,222 |
Effect of exchange rates on cash and cash
equivalents |
(352) |
(37) |
(350) |
(88) |
Net increase (decrease) in cash
and cash equivalents |
(7,694) |
11,238 |
(7,634) |
17,252 |
Cash and cash equivalents, beginning of
period |
17,913 |
8,925 |
17,853 |
2,911 |
Cash and cash equivalents, end of period |
$ 10,219 |
$ 20,163 |
$ 10,219 |
$ 20,163 |
|
NOVATEL WIRELESS,
INC. |
Reconciliation of GAAP Net
Income (Loss) to Non-GAAP Net Income (Loss) |
(In thousands, except per share
data) |
(Unaudited) |
|
|
|
|
|
|
Three Months
Ended September 30, 2015 |
Nine Months Ended
September 30, 2015 |
|
Net Income
(Loss) |
Income (Loss) Per
Share |
Net Income
(Loss) |
Income (Loss) Per
Share |
GAAP net loss |
$ (20,847) |
$ (0.38) |
$ (37,893) |
$ (0.73) |
Adjustments: |
|
|
|
|
Share-based compensation
expense (a) |
1,254 |
0.02 |
3,227 |
0.06 |
Purchased intangibles
amortization (b) |
585 |
0.01 |
1,408 |
0.03 |
Acquisition-related charges
(c) |
3,469 |
0.06 |
7,720 |
0.15 |
Convertible notes discount and
issuance costs amortization (d) |
2,112 |
0.04 |
2,581 |
0.05 |
Non-cash change in
acquisition-related escrow (e) |
10,533 |
0.19 |
10,317 |
0.2 |
Retention bonus (f) |
— |
— |
5,200 |
0.1 |
Restructuring charges (g) |
953 |
0.02 |
789 |
0.01 |
Non-GAAP net loss |
$ (1,941) |
$ (0.04) |
$ (6,651) |
$ (0.13) |
|
|
|
|
|
(a)
Adjustments reflect share-based compensation expense recorded under
ASC Topic 718. |
|
|
|
(b)
Adjustments reflect amortization of purchased intangibles for
acquisitions. |
|
|
|
|
(c)
Adjustments reflect professional fees, including legal, due
diligence and other related charges for the FW and DigiCore
acquisitions and also include fair value adjustments of FW acquired
finished goods and contingent earn-out and other
acquisition-related expenses. |
(d)
Adjustments reflect debt discount and debt issuance costs
amortization on convertible notes. |
|
|
|
(e)
Adjustments reflect the non-cash change in an acquisition-related
escrow account for the purchase of DigiCore. |
|
|
(f)
Adjustments reflect accruals for an all-employee retention bonus
plan. |
|
|
|
|
(g) Adjustments
reflect restructuring charges, including employee severance and
facility exit related costs. |
|
|
|
|
|
|
|
See "Non-GAAP
Financial Measures" for information regarding our use of Non-GAAP
financial measures. |
|
|
|
|
NOVATEL WIRELESS,
INC. |
Reconciliation of GAAP
Operating Costs and Expenses to Non-GAAP Operating Costs and
Expenses |
Three Months Ended September
30, 2015 |
(In thousands) |
(Unaudited) |
|
|
|
|
|
|
|
|
GAAP |
Share-based compensation expense (a) |
Purchased intangibles amortization
(b) |
Restructuring charges (c) |
Acquisition- related charges
and inventory fair value adjustments (d) |
Non- GAAP |
Cost of net revenues |
$ 40,109 |
$ 49 |
$ 312 |
— |
$ 179 |
$ 39,569 |
Operating costs and expenses: |
|
|
|
|
|
|
Research and development |
7,687 |
196 |
— |
— |
— |
7,491 |
Sales and marketing |
3,948 |
135 |
— |
— |
— |
3,813 |
General and administrative |
9,110 |
874 |
— |
— |
3,290 |
4,946 |
Amortization of purchased
intangibles assets |
273 |
— |
273 |
— |
— |
— |
Restructuring charges |
953 |
— |
— |
953 |
— |
— |
Total operating costs and
expenses |
$ 21,971 |
1,205 |
273 |
953 |
3,290 |
$ 16,250 |
Total |
|
$ 1,254 |
$ 585 |
$ 953 |
$ 3,469 |
|
(a)
Adjustments reflect share-based compensation expense recorded under
ASC Topic 718. |
|
|
|
|
|
(b)
Adjustments reflect amortization of purchased intangibles for
acquisitions. |
|
|
|
|
|
|
(c)
Adjustments reflect restructuring charges, including employee
severance and facility exit related costs. |
|
|
|
(d)
Adjustments reflect professional fees, including legal, due
diligence and other related charges for the FW and DigiCore
acquisitions and also include fair value adjustments of FW acquired
finished goods and contingent earn-out and other
acquisition-related expenses. |
|
|
|
|
|
|
|
See "Non-GAAP
Financial Measures" for information regarding our use of Non-GAAP
financial measures. |
|
|
|
|
|
|
|
NOVATEL WIRELESS,
INC. |
Reconciliation of GAAP
Operating Costs and Expenses to Non-GAAP Operating Costs and
Expenses |
Nine Months Ended September 30,
2015 |
(In thousands) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
GAAP |
Share-based compensation expense (a) |
Purchased intangibles amortization
(b) |
Restructuring charges (c) |
Retention bonus (d) |
Acquisition- related charges
and inventory fair value adjustments (e) |
Non- GAAP |
Cost of net revenues |
$ 120,461 |
$ 107 |
$ 312 |
$ — |
$ 630 |
$ 765 |
$ 118,647 |
Operating costs and expenses: |
|
|
|
|
|
|
|
Research and development |
28,135 |
598 |
— |
— |
2,930 |
— |
24,607 |
Sales and marketing |
12,403 |
318 |
— |
— |
770 |
— |
11,315 |
General and administrative |
23,462 |
2,204 |
— |
— |
870 |
6,955 |
13,433 |
Amortization of purchased
intangibles assets |
1,096 |
— |
1,096 |
— |
— |
— |
— |
Restructuring charges |
789 |
— |
— |
789 |
— |
— |
— |
Total operating costs and
expenses |
$ 65,885 |
3,120 |
1,096 |
789 |
4,570 |
6,955 |
$ 49,355 |
Total |
|
$ 3,227 |
$ 1,408 |
$ 789 |
$ 5,200 |
$ 7,720 |
|
|
|
|
|
|
|
|
|
(a)
Adjustments reflect share-based compensation expense recorded under
ASC Topic 718. |
|
|
|
|
|
|
(b)
Adjustments reflect amortization of purchased intangibles for
acquisitions. |
|
|
|
|
|
|
|
(c)
Adjustments reflect restructuring charges, including employee
severance and facility exit related costs. |
|
|
|
|
|
(d)
Adjustments reflect accruals for an all-employee retention bonus
plan. |
|
|
|
|
|
|
|
(e)
Adjustments reflect professional fees, including legal, due
diligence and other related charges for the FW and DigiCore
acquisitions and also include fair value adjustments of FW acquired
finished goods and contingent earn-out and other
acquisition-related expenses. |
|
|
|
|
|
|
|
|
See "Non-GAAP
Financial Measures" for information regarding our use of Non-GAAP
financial measures. |
|
|
|
|
|
|
|
|
NOVATEL WIRELESS,
INC. |
Reconciliation of GAAP Loss
before Income Taxes to Adjusted EBITDA |
(In thousands) |
(Unaudited) |
|
|
|
|
Three Months Ended September
30, 2015 |
Nine Months Ended September
30, 2015 |
Loss before income taxes |
$ (20,802) |
$ (37,754) |
Depreciation and amortization (a) |
1,505 |
4,484 |
Share-based compensation expense (b) |
1,254 |
3,227 |
Restructuring charges (c) |
953 |
789 |
Retention bonus (d) |
— |
5,200 |
Acquisition-related charges (e) |
3,469 |
7,720 |
Non-cash change in acquisition-related escrow
(f) |
10,533 |
10,317 |
Other expense (g) |
2,766 |
3,977 |
Adjusted EBITDA |
$ (322) |
$ (2,040) |
|
|
|
(a) Adjustments
reflect depreciation and amortization charges, including
amortization of purchased intangibles for acquisitions. |
(b) Adjustments reflect
share-based compensation expense recorded under ASC Topic 718. |
|
|
(c) Adjustments
reflect restructuring charges, including employee severance and
facility exit related costs. |
|
(d) Adjustments reflect
accruals for an all-employee retention bonus plan. |
|
|
(e) Adjustments
reflect professional fees, including legal, due diligence and other
related charges for the FW and DigiCore acquisitions and also
include fair value adjustments of FW acquired finished goods and
contingent earn-out and other acquisition-related expenses. |
(f) Adjustments
reflect the non-cash change in an acquisition-related escrow
account for the purchase of DigiCore. |
|
(g) Adjustments
reflect interest expense and debt discount and debt issuance costs
amortization on convertible notes, net of any interest income. |
|
|
|
See "Non-GAAP
Financial Measures" for information regarding our use of Non-GAAP
financial measures. |
|
|
|
NOVATEL WIRELESS,
INC. |
Net Revenues by Product
Category |
(In thousands) |
(Unaudited) |
|
|
|
|
|
|
Three Months
Ended September 30, |
Nine Months Ended
September 30, |
Product Category |
2015 |
2014 |
2015 |
2014 |
Mobile Computing Products |
$ 37,139 |
$ 34,788 |
$ 116,692 |
$ 98,483 |
M2M Products and Solutions |
17,438 |
9,542 |
46,194 |
31,401 |
Total |
$ 54,577 |
$ 44,330 |
$ 162,886 |
$ 129,884 |
CONTACT: Investor Relations Contact:
Michael Sklansky
(858) 431-0792
msklansky@nvtl.com
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