ATLANTA, Nov. 14,
2022 /PRNewswire/ -- KORE Group Holdings,
Inc. (NYSE: KORE, KORE WS)
("KORE" or the "Company"), a global leader in Internet of Things
(IoT) solutions and worldwide IoT Connectivity-as-a-Service
("CaaS"), today reported financial and operational results for the
quarter ended September 30, 2022.
KORE: Company Highlights
- Third quarter revenue of $66.6
million exceeded our expectations bringing year-to-date
revenue to $205.9 million, an
increase of 12% over the first nine months of 2021.
- The Company is increasing its 2022 revenue guidance to a range
of $265-$267
million and maintaining adjusted EBITDA, a non-GAAP
metric1, guidance of $63-$64
million.
- KORE generated $9.8 million in
cash flow from operations in the third quarter of 2022 and
$20.5 million in the first nine
months of 2022.
- KORE and Ericsson announced a strategic alliance creating the
opportunity to provide over 8,500 enterprise customers
headquartered in over 35 countries with seamless connectivity when
they want to deploy IoT assets in the U.S.
- KORE has begun disclosing business development metrics: as of
September 30, 2022, KORE's sales
funnel, which KORE defines as opportunities the KORE sales team is
actively pursuing, included over 1,300 opportunities with an
estimated potential Total Contract Value (TCV)2 of over
$400 million.
"Third quarter revenue came in stronger than anticipated, and we
are increasing our 2022 revenue guidance. As we expected and
previously communicated, total revenue in the third quarter
declined year-over-year, owing to the difficult comparison to the
third quarter of 2021. However, I am pleased to report that third
quarter 2022 gross margin increased 500 basis points from the third
quarter of 2021," said Romil Bahl,
President, and CEO of KORE. "Given our year-to-date results and
outlook for the fourth quarter, we are increasing our 2022 revenue
guidance to a range of $265-$267 million,
even as the adverse headwind from foreign currency exchange rates
has doubled from what we estimated after the second quarter, to an
estimated $5 million," Bahl
continued.
Financial Performance for Third Quarter 2022, Compared to the
Same Period of 2021:
- Total revenue decreased by 1.8% to $66.6
million, compared to $67.9
million.
- IoT Connectivity revenue of $43.4
million increased by 4.4%, despite an estimated 2.5%
headwind from unfavorable foreign exchange rates. This compared to
$41.5 million in the third quarter of
2021.
- IoT Solutions' revenue declined 11.7% to $23.3 million, compared to $26.3 million. A difficult year-over-year
comparison drove the decline in IoT Solutions. The third quarter of
2021 included a significant amount of revenue related to the
one-time LTE transition project at our largest customer; this
project was completed in the second quarter of 2022.
- Net loss increased to $13.0
million, or $0.17 per share,
compared to $4.5 million, or
$0.26 per share. The primary drivers
for the increase in net loss were an increase in SG&A expense,
including public company costs, depreciation and amortization from
the BMP-Simon acquisition, and interest expense, which increased
primarily due to the rise in interest rates and a higher debt level
from the addition of the senior exchangeable notes issued in
September and October 2021.
- Adjusted EBITDA declined 2.0% to $15.6
million, compared to $15.9
million.
- Net cash provided by operating activities was $9.8 million in the third quarter of 2022, versus
$4.9 million in the third quarter of
2021.
Financial Performance for Nine Months Ending September 30, 2022, Compared to the Same Period
of 2021:
- Total revenue increased 12.0% to $205.9
million, compared to $183.9
million.
- IoT Connectivity revenue increased 6.2% to $133.4 million, compared to $125.6 million.
- IoT Solutions revenue increased 24.4% to $72.5 million, compared to $58.3 million. This significant revenue lift was
driven in large part by the BMP-Simon acquisition.
- Net loss increased to $35.1
million, or $0.46 per share,
compared to $12.5 million, or
$0.98 per share.
- Adjusted EBITDA increased slightly to $47.1 million, compared to $47.0 million.
- Net cash provided by operating activities was $20.5 million in the first nine months of 2022,
versus net cash used in operating activities of $9.4 million in the first nine months of
2021.
The tables below summarize our revenue and specific key
metrics.
|
Three Months Ended
September 30,
|
Revenue3
|
2022
|
|
2021
|
IoT
Connectivity
|
$
43,377
|
|
65 %
|
|
$
41,542
|
|
61 %
|
IoT
Solutions
|
23,263
|
|
35 %
|
|
26,336
|
|
39 %
|
Total
Revenue
|
$
66,640
|
|
100 %
|
|
$
67,878
|
|
100 %
|
Period End Total
Connections4
|
15.3 million
|
|
13.6 million
|
Average Total
Connections for the Period
|
15.3 million
|
|
13.5 million
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30,
|
Revenue3
|
2022
|
|
2021
|
IoT
Connectivity
|
$
133,402
|
|
65 %
|
|
$
125,590
|
|
68 %
|
IoT
Solutions
|
72,532
|
|
35 %
|
|
58,329
|
|
32 %
|
Total
Revenue
|
$
205,935
|
|
100 %
|
|
$
183,919
|
|
100 %
|
Period End Total
Connections4
|
15.3 million
|
|
13.6 million
|
Average Total
Connections for the Period
|
15.2 million
|
|
13.1 million
|
|
|
|
|
|
|
|
|
|
Third Quarter 2022 Key Metrics and Business
Successes
- KORE grew total connected devices to approximately 15.3 million
Total Connections, a year-over-year increase of 12.5%.
- DBNER4 was 100% for the twelve month period ending
September 30, 2022, compared to 114%
for the twelve months ending September 30,
2021.
- KORE's business development funnel includes over 1,300 revenue
opportunities with an estimated potential Total Contract Value
(TCV) of $407 million as of
September 30, 2022.
- Year-to-date in 2022, KORE has signed customer contracts worth
over $72 million in estimated
TCV.
- KORE announced a strategic alliance whereby KORE will join
Ericsson's IoT Accelerator platform and have the opportunity to
provide over 8,500 enterprise customers headquartered in over 35
countries with seamless connectivity when they want to deploy IoT
assets in the U.S.
- KORE launched the KORE Connected Hub, a telemetry device
peripheral that streamlines the integration of connected medical
devices and sensors into KORE's Connected Health solutions.
- KORE was named a 2022 Competitive Strategy Leader for the
Global IoT Industry by Frost & Sullivan. This is a testament to
KORE's commitment to taking a leadership position in simplifying
the complexities of IoT deployment.
2022 Financial Outlook
For the twelve months ending December 31,
2022, the Company expects the following:
- Revenue of $265 to $267 million, an increase from prior guidance of
$260 million to $265 million.
- Adjusted EBITDA of $63 million to
$64 million, representing a margin of
approximately 24%.
"Since becoming a publicly traded company a little over a year
ago, KORE has delivered on what we said we would do and exceeded
our go-public forecast. As evidenced by our increased 2022 revenue
guidance, we have a recession-resistant business model, which
generates over 80% recurring revenue. This gives us confidence that
we can continue to grow even in the face of the various
macro-economic factors ahead, fueled by IoT industry tailwinds,"
Bahl said.
Bahl continued, "The fourth quarter is seasonally our lowest
revenue quarter, and I am confident we will grow in 2023 from this
trough quarter. In fact, we are positioned to grow organic revenue
in the mid-to-high single-digits in 2023, and with the 2G/3G
headwinds behind us, we are targeting to double that growth rate in
2024, putting us on track to achieve our targeted 20% top-line
growth in 2025, while generating an adjusted EBITDA margin in the
range of 20%."
Conference Call Details
KORE management will hold a conference call today (November 14, 2022) at 5:00
p.m. Eastern time (2:00 p.m. Pacific
time) to discuss its financial results, business highlights,
and outlook. President and CEO Romil
Bahl and CFO Paul Holtz will
host the call, followed by a question-and-answer session.
Webcast: Link
U.S. dial-in: (877) 407-3039
International dial-in: (215) 268-9922
Conference ID: 13732888
The conference call and a supplemental slide presentation to
accompany management's prepared remarks will be available via the
webcast link and for download via the investor relations section of
the Company's website at ir.korewireless.com.
For the conference call, please dial-in 5-10 minutes prior to
the start time, and an operator will register your name and
organization, or you can register here. If you have any difficulty
with the conference call, please contact Gateway at (949) 574-3860.
A conference call replay will be available approximately three
hours after the conference end time and may be accessed by calling
(877) 660-6853 or (201) 612-7415 using access code 13732888.
About KORE
KORE is a pioneer, leader, and trusted advisor delivering
mission critical IoT solutions and services. We empower
organizations of all sizes to improve operational and business
results by simplifying the complexity of IoT. Our deep IoT
knowledge and experience, global reach, purpose-built solutions,
and deployment agility accelerate and materially impact our
customers' business outcomes. For more information, visit
www.korewireless.com.
Non-GAAP Financial Measures
In addition to our results determined in accordance with GAAP,
we believe the following non-GAAP measures are useful in evaluating
our operational performance. We use the following non-GAAP
financial information to evaluate our ongoing operations and for
internal planning and forecasting purposes. We believe that
non-GAAP financial information, when taken collectively, may be
helpful to investors in assessing our operating performance.
EBITDA and Adjusted EBITDA
"EBITDA" is defined as net income (loss) before other
non-operating expense or income, income tax expense or benefit, and
depreciation and amortization. "Adjusted EBITDA" is defined as
EBITDA adjusted for unusual and other significant items that
management views as distorting the operating results from period to
period. Such adjustments may include stock-based compensation,
integration and acquisition-related charges, tangible and
intangible asset impairment charges, certain contingent liability
reversals, transformation, and foreign currency transaction gains
and losses. EBITDA and Adjusted EBITDA are intended as supplemental
measures of our performance that are neither required by, nor
presented in accordance with, GAAP. We believe that the use of
EBITDA and Adjusted EBITDA provides an additional tool for
investors to use in evaluating ongoing operating results and trends
and in comparing the Company's financial measures with those of
comparable companies, which may present similar non-GAAP financial
measures to investors. However, you should be aware that when
evaluating EBITDA and Adjusted EBITDA we may incur future expenses
similar to those excluded when calculating these measures. In
addition, our presentation of these measures should not be
construed as an inference that our future results will be
unaffected by unusual or non-recurring items. Our computation of
Adjusted EBITDA may not be comparable to other similarly titled
measures computed by other companies, because all companies may not
calculate Adjusted EBITDA in the same fashion.
Because of these limitations, EBITDA and Adjusted EBITDA should
not be considered in isolation or as a substitute for performance
measures calculated in accordance with GAAP. We compensate for
these limitations by relying primarily on our GAAP results and
using EBITDA and Adjusted EBITDA on a supplemental basis. You
should review the reconciliation of net loss to EBITDA and Adjusted
EBITDA below and not rely on any single financial measure to
evaluate our business.
We have not provided the forward-looking GAAP equivalents for
the forward-looking non-GAAP financial measures Adjusted EBITDA and
Adjusted EBITDA margin or a GAAP reconciliation as a result of the
uncertainty regarding, and the potential variability of,
reconciling items including but not limited to stock-based
compensation expense, foreign currency loss or gain and acquisition
and integration-related expenses. Accordingly, a reconciliation of
these non-GAAP guidance metrics to their corresponding GAAP
equivalents is not available without unreasonable effort. However,
it is important to note that material changes to reconciling items
could have a significant effect on future GAAP results and, as
such, we also believe that any reconciliations provided would imply
a degree of precision that could be confusing or misleading to
investors.
Key Metrics
KORE reviews a number of metrics to measure our performance,
identify trends affecting our business, prepare financial
projections, and make strategic decisions. The calculation of the
key metrics and other measures discussed below may differ from
other similarly titled metrics used by other companies, securities
analysts, or investors.
Number of Customer Connections
Total Customer Connections or "Total Connections" constitutes
the total of all KORE Connectivity services connections, including
both CaaS and CEaaS connections, but excluding certain connections
where mobile carriers license KORE's subscription management
platform from KORE. Total Connections include the contribution of
eSIMs and is the principal measure used by management to assess the
performance of the business on a periodic basis.
DBNER
DBNER (Dollar Based Net Expansion Rate) tracks the combined
effect of cross-sales of IoT Solutions to KORE's existing
customers, its customer retention and the growth of its existing
business. KORE calculates DBNER by dividing the revenue for a given
period ("given period") from existing go-forward customers by the
revenue from the same customers for the same period measured one
year prior ("base period"). The revenue included in the current
period excludes revenue from (i) customers that are non-go-forward
customers, meaning customers that have either communicated to KORE
before the last day of the current period their intention not to
provide future business to KORE or customers that KORE has
determined are transitioning away from KORE based on a sustained
multi-year time period of declines in revenue and (ii) new
customers that started generating revenue after the end of the base
period. For example, to calculate our DBNER for the trailing 12
months ended September 30, 2022, we
divide (i) revenue, for the trailing 12 months ended September 30, 2022, from go-forward customers
that started generating revenue on or before September 30, 2022, by (ii) revenue, for the
trailing 12 months ended September 30,
2021, from the same cohort of customers. For the purposes of
calculating DBNER, if KORE acquires a company during the given
period or the base period, then the revenue of a customer before
the acquisition but during either the given period or the base
period is included in the calculation. Further, it is often
difficult to ascertain which customers should be deemed not to be
go-forward customers for purposes of calculating DBNER. Customers
are not required to give notice of their intention to transition
off of the KORE platform, and a customer's exit from the KORE
platform can take months or longer, and total connections of any
particular customer can at any time increase or decrease for any
number of reasons, including pricing, customer satisfaction or
product fit – accordingly, a decrease in total connections may not
indicate that a customer is intending to exit the KORE platform,
particularly if that decrease is not sustained over a period of
several quarters. DBNER would be lower if it were calculated using
revenue from non-go-forward customers.
As of September 30, 2022, and
September 30, 2021, DBNER excludes
connections from non-go-forward customers, the vast majority of
which are connections from Non-Core Customers. KORE defines
"Non-Core Customers" to be customers that management has judged to
be lost as a result of the integration of Raco Wireless, Wyless and
other acquisitions completed during in the 2014-2017 period, but
which continue to have some connections (and account for some
revenue) each year with KORE. Non-Core Customers are a subset of
non-go-forward customers.
DBNER is used by management as a measure of growth at KORE's
existing customers (i.e., "same store" growth). It is not intended
to capture the effect of either new customer wins or the declines
from non go-forward customers on KORE's total revenue growth. This
is because DBNER excludes new customers which started generating
revenue after the base period, and also excludes any customers
which are non go-forward customers on the last day of the current
period. Revenue increases from new customer wins, and a decline in
revenue from non go-forward customers are also important factors in
assessing KORE's revenue growth, but these factors are independent
of DBNER.
Total Contract Value (TCV)
Total Contract Value (TCV) represents KORE's estimated value of
a revenue opportunity. TCV for an IoT Connectivity opportunity is
calculated by multiplying by forty the estimated revenue expected
to be generated during the twelfth month of production. TCV for an
IoT Solutions opportunity is either the actual total expected
revenue opportunity, or if it is a longer-term "programmatically
recurring revenue" program, calculated for the first 36 months of
the delivery period.
Cautionary Note on Forward-Looking Statements
This
press release includes certain statements that are not historical
facts but are forward-looking statements for purposes of the safe
harbor provisions under the United States Private Securities
Litigation Reform Act of 1995. Forward-looking statements generally
are accompanied by words such as "believe," "may," "will,"
"estimate," "continue," "anticipate," "intend," "expect," "should,"
"would," "plan," "predict," "potential," "seem," "seek," "future,"
"outlook," "target" and similar expressions that predict or
indicate future events or trends or that are not statements of
historical matters. These forward-looking statements include, but
are not limited to, statements regarding estimates and forecasts of
revenue and other financial and performance metrics, future capital
availability, projections regarding recent customer engagements,
projections of market opportunity and conditions, the total
contract value (TCV) of signed contracts and potential revenue
opportunities in KORE's sales funnel, and related expectations.
These statements are based on various assumptions and on the
current expectations of KORE's management. These forward-looking
statements are provided for illustrative purposes only and are not
intended to serve as and must not be relied on by any investor or
other person as, a guarantee, an assurance, a prediction or a
definitive statement of fact or probability. Actual events and
circumstances are difficult or impossible to predict and will
differ from assumptions. Many actual events and circumstances are
beyond the control of KORE. These forward-looking statements are
subject to a number of risks and uncertainties, including general
economic, financial, legal, political and business conditions and
changes in domestic and foreign markets; the potential effects of
COVID-19; risks related to the rollout of KORE's business and the
timing of expected business milestones; risks relating to the
integration of KORE's acquired companies, including Business
Mobility Partners Inc and Simon IoT LLC, changes in the assumptions
underlying KORE's expectations regarding its future business; our
ability to negotiate and sign a definitive contract with a customer
in our sales funnel; our ability to realize some or all of the
Total Contract Value (TCV) of customer contracts as revenue,
including any contractual options available to customers or
contractual periods that are subject to termination for convenience
provisions; the effects of competition on KORE's future business;
and the outcome of judicial proceedings to which KORE is, or may
become a party. If the risks materialize or assumptions prove
incorrect, actual results could differ materially from the results
implied by these forward-looking statements. There may be
additional risks that KORE presently does not know or that KORE
currently believes are immaterial that could also cause actual
results to differ materially from those contained in the
forward-looking statements. In addition, forward-looking statements
reflect KORE's expectations, plans or forecasts of future events
and views as of the date of this press release. KORE anticipates
that subsequent events and developments will cause these
assessments to change. However, while KORE may elect to update
these forward-looking statements at some point in the future, KORE
specifically disclaims any obligation to do so. These
forward-looking statements should not be relied upon as
representing KORE's assessments as of any date subsequent to the
date of this press release. Accordingly, undue reliance should not
be placed upon the forward-looking statements.
Contacts
KORE
Media and Investors:
Charley Brady
Vice President, Investor Relations
investors@korewireless.com
+1-678-392-2335
Investors:
Matt Glover, Alex Thompson
Gateway Group, Inc.
KORE@gatewayir.com
+1-949-574-3860
1
|
See "Non-GAAP Financial Measures" and "Reconciliation
of Net Loss to EBITDA to Adjusted EBITDA: below for more
information.
|
2
|
See "Key Metrics" below for more
information.
|
3
|
Amounts in thousands USD, except for Total
Connections
|
4
|
See "Key Metrics" below for
definitions
|
KORE Group
Holdings, Inc. and Subsidiaries
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
(In thousands USD,
except share and per share amounts) (unaudited)
|
|
|
For the three
months ended
|
|
For the nine
months ended
|
|
September
30,
|
|
September
30,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Revenue
|
|
|
|
|
|
|
|
Services
|
$
46,410
|
|
$
48,428
|
|
$
141,694
|
|
$
139,866
|
Products
|
20,230
|
|
19,450
|
|
64,240
|
|
44,053
|
Total
revenue
|
66,640
|
|
67,878
|
|
205,935
|
|
183,919
|
Cost of
revenue
|
|
|
|
|
|
|
|
Cost of
services
|
16,609
|
|
17,379
|
|
50,714
|
|
51,417
|
Cost of
products
|
14,960
|
|
17,585
|
|
49,701
|
|
37,258
|
Total cost of
revenue (exclusive of
depreciation and amortization shown
separately below)
|
31,569
|
|
34,964
|
|
100,415
|
|
88,675
|
Operating
expenses
|
|
|
|
|
|
|
|
Selling, general and
administrative
|
28,841
|
|
26,001
|
|
85,883
|
|
66,525
|
Depreciation and
amortization
|
13,709
|
|
12,440
|
|
40,679
|
|
37,947
|
Total operating
expenses
|
42,550
|
|
38,441
|
|
126,562
|
|
104,472
|
Operating income
(loss)
|
(7,479)
|
|
(5,527)
|
|
(21,043)
|
|
(9,228)
|
Interest expense,
including amortization of
deferred financing costs, net
|
8,206
|
|
5,589
|
|
22,127
|
|
16,155
|
Change in fair value
of warrant liability
|
(120)
|
|
(2,898)
|
|
(253)
|
|
(5,281)
|
Loss before income
taxes
|
(15,565)
|
|
(8,218)
|
|
(42,917)
|
|
(20,102)
|
Income tax expense
(benefit)
|
|
|
|
|
|
|
|
Current
|
669
|
|
179
|
|
3,031
|
|
569
|
Deferred
|
(3,209)
|
|
(3,889)
|
|
(10,875)
|
|
(8,197)
|
Total income tax
benefit
|
(2,540)
|
|
(3,710)
|
|
(7,844)
|
|
(7,628)
|
Net
loss
|
$
(13,025)
|
|
$
(4,508)
|
|
$
(35,073)
|
|
$
(12,474)
|
Loss per
share:
|
|
|
|
|
|
|
|
Basic
|
$
(0.17)
|
|
$
(0.26)
|
|
$
(0.46)
|
|
$
(0.98)
|
Diluted
|
$
(0.17)
|
|
$
(0.26)
|
|
$
(0.46)
|
|
$
(0.98)
|
Weighted average number
of shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
76,240,530
|
|
32,098,715
|
|
75,514,986
|
|
31,799,313
|
Diluted
|
76,240,530
|
|
32,098,715
|
|
75,514,986
|
|
31,799,313
|
KORE Group
Holdings, Inc. and Subsidiaries
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(In thousands USD,
except share and per share amounts) (unaudited)
|
|
|
September
30,
2022
|
|
December 31,
2021
|
|
|
|
|
Assets
|
|
|
|
Current
assets
|
|
|
|
Cash
|
$
42,925
|
|
$
85,976
|
Accounts receivable,
net of allowances for credits and doubtful accounts of $2,757
and $1,800, at September 30, 2022 and December
31, 2021, respectively
|
41,237
|
|
51,304
|
Inventories,
net
|
8,272
|
|
15,470
|
Income taxes
receivable
|
711
|
|
954
|
Prepaid expenses and
other current assets
|
13,316
|
|
7,448
|
Total current
assets
|
106,461
|
|
161,152
|
Non-current
assets
|
|
|
|
Restricted
cash
|
358
|
|
367
|
Property and
equipment, net
|
12,141
|
|
12,240
|
Intangibles assets,
net
|
201,260
|
|
203,474
|
Goodwill
|
425,604
|
|
381,962
|
Operating lease
right-of-use assets
|
10,430
|
|
—
|
Deferred tax
assets
|
566
|
|
—
|
Other long-term
assets
|
653
|
|
407
|
Total
assets
|
$
757,473
|
|
$
759,602
|
Liabilities and
stockholders' equity
|
|
|
|
Current
liabilities
|
|
|
|
Accounts
payable
|
$
18,201
|
|
$
16,004
|
Accrued
liabilities
|
14,290
|
|
21,502
|
Current portion of
operating lease liabilities
|
1,872
|
|
—
|
Income taxes
payable
|
381
|
|
467
|
Deferred
revenue
|
7,012
|
|
6,889
|
Current portion of
long-term debt and other borrowings, net
|
5,319
|
|
3,326
|
Total current
liabilities
|
47,075
|
|
48,188
|
Non-current
liabilities
|
|
|
|
Deferred tax
liabilities
|
29,926
|
|
36,722
|
Warrant
liability
|
33
|
|
286
|
Non-current portion of
operating lease liabilities
|
9,501
|
|
—
|
Long-term debt and
other borrowings, net
|
414,683
|
|
399,115
|
Other long-term
liabilities
|
4,794
|
|
3,148
|
Total
liabilities
|
$
506,012
|
|
$
487,459
|
Stockholders'
equity
|
|
|
|
Common stock, voting;
par value $0.0001 per share; 315,000,000 shares authorized,
76,289,741 and 72,027,743 shares issued and
outstanding at September 30, 2022
and December 31, 2021,
respectively
|
$
8
|
|
$
7
|
Additional paid-in
capital
|
432,897
|
|
413,646
|
Accumulated other
comprehensive loss
|
(8,491)
|
|
(3,331)
|
Accumulated
deficit
|
(172,953)
|
|
(138,179)
|
Total stockholders'
equity
|
251,461
|
|
272,143
|
Total liabilities
and stockholders' equity
|
$
757,473
|
|
$
759,602
|
KORE Group
Holdings, Inc. and Subsidiaries
|
CONSOLIDATED CASH
FLOW STATEMENTS
|
(In thousands USD)
(unaudited)
|
|
|
|
Nine Months
Ended
|
|
|
September
30,
|
|
|
2022
|
|
|
2021
|
Cash flows from
operating activities
|
|
|
|
|
|
Net loss
|
$
|
(35,073)
|
|
$
|
(12,474)
|
Adjustments to
reconcile net loss to net cash provided by (used in) operating
activities
|
|
|
|
|
|
Depreciation and
amortization
|
|
40,679
|
|
|
37,947
|
Amortization of
deferred financing costs
|
|
1,806
|
|
|
1,569
|
Non-cash reduction to
the operating lease right-of-use assets
|
|
1,678
|
|
|
—
|
Deferred income
taxes
|
|
(10,875)
|
|
|
(8,197)
|
Non-cash foreign
currency loss (gain)
|
|
1,566
|
|
|
(163)
|
Stock-based
compensation
|
|
7,570
|
|
|
4,564
|
Provision for doubtful
accounts
|
|
424
|
|
|
117
|
Change in fair value
of warrant liability
|
|
(253)
|
|
|
(5,281)
|
Change in operating
assets and liabilities, net of operating assets and liabilities
acquired:
|
|
|
|
|
|
Accounts
receivable
|
|
11,155
|
|
|
(12,792)
|
Inventories
|
|
8,192
|
|
|
(6,461)
|
Prepaid expenses and
other current assets
|
|
(1,934)
|
|
|
(5,054)
|
Accounts payable and
accrued liabilities
|
|
(3,756)
|
|
|
(2,366)
|
Deferred
revenue
|
|
252
|
|
|
(911)
|
Income taxes
payable
|
|
144
|
|
|
63
|
Operating lease
liabilities
|
|
(1,048)
|
|
|
—
|
Net cash provided by
(used in) operating activities
|
$
|
20,527
|
|
$
|
(9,439)
|
Cash flows used in
investing activities
|
|
|
|
|
|
Additions to
intangible assets
|
|
(9,027)
|
|
|
(6,626)
|
Additions to property
and equipment
|
|
(2,945)
|
|
|
(3,156)
|
Payments for
acquisitions, net of cash acquired
|
|
(46,002)
|
|
|
—
|
Net cash used in
investing activities
|
$
|
(57,974)
|
|
$
|
(9,782)
|
KORE Group
Holdings, Inc. and Subsidiaries
|
Consolidated
Statements of Cash Flows - Continued
|
(In thousands USD)
(unaudited)
|
|
|
|
Nine Months
Ended
|
|
|
September
30,
|
|
|
2022
|
|
|
2021
|
Cash flows from
financing activities
|
|
|
|
|
|
Proceeds from
revolving credit facility
|
|
—
|
|
|
25,000
|
Repayments on
revolving credit facility
|
|
—
|
|
|
(25,000)
|
Repayment of term
loan
|
|
(2,364)
|
|
|
(2,373)
|
Repayment of other
borrowings—notes payable
|
|
(507)
|
|
|
—
|
Proceeds from
convertible debt
|
|
—
|
|
|
82,351
|
Proceeds from equity
portion of convertible debt, net of issuance costs
|
|
—
|
|
|
12,510
|
Payment of deferred
financing costs, relating to convertible debt
|
|
—
|
|
|
(1,449)
|
Repayment of related
party note
|
|
—
|
|
|
(1,538)
|
Proceeds from CTAC and
PIPE financing, net of issuance costs
|
|
—
|
|
|
223,001
|
Settlement of
preferred shares
|
|
—
|
|
|
(229,915)
|
Equity financing
fees
|
|
(126)
|
|
|
—
|
Payment of deferred
financing costs
|
|
(452)
|
|
|
—
|
Payment of financing
lease obligations
|
|
(150)
|
|
|
—
|
Payment of capital
lease obligations
|
|
—
|
|
|
(815)
|
Net cash provided by
(used in) financing activities
|
$
|
(3,599)
|
|
$
|
81,772
|
Effect of exchange
rate change on cash
|
|
(2,014)
|
|
|
(188)
|
Change in cash and
restricted cash
|
|
(43,060)
|
|
|
62,363
|
Cash and restricted
cash, beginning of period
|
|
86,343
|
|
|
10,693
|
Cash and restricted
cash, end of period
|
$
|
43,283
|
|
$
|
73,056
|
KORE Group
Holdings, Inc. and Subsidiaries
|
Consolidated
Statements of Cash Flows - Continued
|
(In thousands USD)
(unaudited)
|
|
|
|
Nine Months
Ended
|
|
|
September
30,
|
|
|
2022
|
|
|
2021
|
Supplemental cash
flow information:
|
|
|
|
|
|
Interest
paid
|
$
|
22,134
|
|
$
|
14,762
|
Income taxes
paid
|
|
1,587
|
|
|
—
|
Non-cash investing
and financing activities:
|
|
|
|
|
|
Fair Value of
KORE common stock issued pursuant to acquisitions
|
|
23,295
|
|
|
—
|
ASU 2020-06
Adoption
|
|
15,163
|
|
|
—
|
Operating lease
right-of-use assets obtained in exchange for new operating lease
liabilities
|
|
9,604
|
|
|
—
|
Operating lease
right-of-use assets obtained in exchange for new operating lease
liabilities
|
|
3,409
|
|
|
—
|
Premium Finance
Agreement
|
|
3,621
|
|
|
|
Capital
leases
|
|
—
|
|
|
346
|
Equity financing fees
accrued
|
|
—
|
|
$
|
3,025
|
Common shares issued
to preferred shareholders
|
|
—
|
|
|
56,502
|
Equity financing fees
settled in common shares
|
|
—
|
|
|
1,863
|
Common shares issued
to warrant holders
|
|
—
|
|
|
10,663
|
KORE Group
Holdings, Inc. and Subsidiaries
|
RECONCILIATION OF
NET LOSS TO EBITDA TO ADJUSTED EBITDA
|
(In thousands USD)
(unaudited)
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Net
loss
|
$
(13,025)
|
|
$
(4,508)
|
|
$
(35,073)
|
|
$
(12,474)
|
Income tax
benefit
|
(2,540)
|
|
(3,710)
|
|
(7,844)
|
|
(7,628)
|
Interest
expense
|
8,206
|
|
5,589
|
|
22,127
|
|
16,155
|
Depreciation and
amortization
|
13,709
|
|
12,440
|
|
40,679
|
|
37,947
|
EBITDA
|
6,350
|
|
9,811
|
|
19,889
|
|
34,000
|
Change in Fair value
of warrant liability (non-cash)
|
(120)
|
|
(2,898)
|
|
(253)
|
|
(5,281)
|
Transformation
expenses
|
2,461
|
|
2,424
|
|
5,927
|
|
6,174
|
Acquisition and
integration-related restructuring costs
|
2,604
|
|
2,772
|
|
11,688
|
|
7,290
|
Stock-based
compensation (non-cash)
|
3,019
|
|
3,933
|
|
7,570
|
|
4,564
|
Foreign currency loss
(non-cash)
|
1,077
|
|
(240)
|
|
1,566
|
|
(163)
|
Other
|
180
|
|
94
|
|
715
|
|
390
|
Adjusted
EBITDA
|
$
15,571
|
|
$
15,896
|
|
$
47,101
|
|
$
46,974
|
|
|
|
|
|
|
|
|
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SOURCE KORE Wireless