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Boingo Wireless Reports Fourth Quarter and Full Year 2019 Financial Results

·19 mins read

Record annual revenue of $263.8 million increased 5.2% year-over-year

2019 DAS access fee revenue of $36.4 million increased 49.8% year-over-year

Launched 15 new DAS venues to total 73 live in 2019

Boingo Wireless (NASDAQ: WIFI), the leading distributed antenna system ("DAS") and Wi-Fi provider that serves carriers, consumers, property owners and advertisers worldwide, today announced the Company's financial results for the fourth quarter and full year ended December 31, 2019.

Fourth Quarter 2019 Financial Highlights

  • Revenue of $64.1 million decreased 5.5% compared to $67.8 million in the fourth quarter of 2018. Revenue reflected growth in military/multifamily and wholesale Wi-Fi which was offset by declines in DAS, advertising and other and retail revenue.

    • Military/multifamily revenue of $24.0 million increased 2.5% compared to $23.4 million in the fourth quarter of 2018.

    • Wholesale Wi-Fi revenue of $11.1 million increased 0.6% compared to $11.1 million in the fourth quarter of 2018.

  • Net loss attributable to common stockholders was $(5.2) million, or $(0.12) per diluted share, compared to net income of $0.4 million, or $0.01 per diluted share, in the fourth quarter of 2018.

  • Adjusted EBITDA of $19.8 million decreased 14.5% compared to $23.2 million in the fourth quarter of 2018. Adjusted EBITDA, which is a non-GAAP financial measure, is defined below and is reconciled to net (loss) income attributable to common stockholders, the most comparable measure under GAAP, in the schedule entitled "Reconciliation of Net (Loss) Income Attributable to Common Stockholders to Adjusted EBITDA."

  • Net cash provided by operating activities of $27.6 million increased 22.9% compared to $22.5 million in the fourth quarter of 2018.

  • Free cash flow was $(4.6) million compared to $(13.7) million in the fourth quarter of 2018. Free cash flow, which is a non-GAAP financial measure, is defined below and is reconciled to net cash provided by operating activities, the most comparable measure under GAAP, in the schedule entitled "Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flows."

Full Year 2019 Financial Highlights

  • Revenue of $263.8 million increased 5.2% compared to $250.8 million in 2018. Growth was driven by strength in military/multifamily and DAS.

    • Military/multifamily revenue of $97.9 million increased 26.0% compared to $77.7 million in 2018.

    • DAS revenue of $97.4 million increased 2.3% compared to $95.2 million in 2018. DAS revenue for the year was comprised of $61.0 million of build-out project revenue and $36.4 million of access fee revenue. DAS access fee revenue increased 49.8% year-over-year.

  • Net loss attributable to common stockholders was $(10.3) million, or $(0.23) per diluted share, compared to a net loss of $(1.2) million, or $(0.03) per diluted share, in 2018.

  • Adjusted EBITDA of $82.6 million decreased 10.0% compared to $91.8 million in 2018.

  • Net cash provided by operating activities of $108.7 million increased 16.5% compared to $93.3 million in 2018.

  • Free cash flow was $(25.0) million compared to $(15.4) million in 2018.

Corporate Developments

  • Management is not commenting on rumors regarding the recent news story speculating the Company is exploring a potential sale. The Company has received multiple inquiries regarding a potential strategic transaction. Accordingly, the Company’s Board of Directors has engaged advisors to assess these opportunities. As a result, the Company is suspending forward-looking financial guidance until further notice.

  • On December 11, 2019, the Company’s Board of Directors approved a plan to restructure the business to drive long-term sustainable revenue growth, better align resources, improve operational efficiencies and increase profitability. The realignment plan enables the Company to focus efforts on the core businesses which include providing services to the wireless carriers, generating business on military bases and growing the multifamily business. The remaining legacy businesses, including retail and advertising, will be managed to maximize profitability. The Company expects the restructuring will decrease operating costs by approximately $11.0 million on an annualized basis beginning in 2020.

Business Highlights

  • The Company launched 15 new DAS venue locations with Tier One carriers during 2019, including two in the fourth quarter of 2019. As of December 31, 2019, the Company had 73 DAS venues live comprised of 38,100 DAS nodes and an additional 11,700 nodes in backlog. This compares to 58 DAS venues live comprised of 29,900 DAS nodes as of December 31, 2018.

  • The Company deployed wireless infrastructure to cover an additional 11,000 military beds in 2019, bringing the total footprint to 355,000 military beds on 64 military bases.

Management Commentary

"2019 was a year of significant progress as we laid the foundation to help position Boingo for long-term growth which we believe will drive enhanced shareholder value," commented Mike Finley, Chief Executive Officer of Boingo Wireless. "Carrier services, which is comprised of DAS, Wi-Fi offload, and macro towers, remains the most important driver of long-term value for our business. We deployed 15 new DAS venues in 2019, including two in the fourth quarter, with another 61 DAS venues in backlog. Two venues in the backlog include the MTA Long Island Rail Road and Grand Central Terminal East Side Access projects in New York City, which we expect to be the largest DAS deployments in Boingo’s history. We believe our long-term wireless rights in key strategic venues, coupled with our neutral-host approach and long-standing relationships with the carriers, give us a unique ability to deliver the next generation of convergence."

Conference Call Information

Members of Boingo Wireless’ management will host a conference call to discuss their fourth quarter and full year 2019 financial results beginning at 4:30 p.m. ET (1:30 p.m. PT), today, March 2, 2020. To participate in the conference call, investors from the U.S. and Canada should dial (877) 407-9716 and enter the passcode: 13698609 ten minutes prior to the scheduled start time. International callers should dial +1 (201) 493-6779 and enter the same passcode. The conference call will be broadcast live over the Internet in the Investor Relations section of the Company’s website at http://investors.boingo.com. In addition, a supplement reflecting the Company’s key business metrics will be made available in the Investor Relations section of the Company’s website. The supplement and webcast will be archived online upon completion of the conference call.

Use of Non-GAAP Financial Measures

To supplement Boingo Wireless’ financial statements presented on a GAAP basis, Boingo Wireless provides Adjusted EBITDA and free cash flow as supplemental measures of its performance.

The Company defines Adjusted EBITDA as net (loss) income attributable to common stockholders plus depreciation and amortization of property and equipment, stock-based compensation expense, amortization of intangible assets, income tax benefit, interest expense and amortization of debt discount, interest income and other expense, net, non-controlling interests, and excludes charges or gains that are nonrecurring, infrequent, or unusual. Boingo Wireless believes Adjusted EBITDA is useful to investors in evaluating its operating performance. Boingo's management uses Adjusted EBITDA in conjunction with accounting principles generally accepted in the United States, or GAAP, and other operating performance measures as part of its overall assessment of the Company's performance for planning purposes, including the preparation of its annual operating budget, to evaluate the effectiveness of its business strategies and to communicate with its board of directors concerning its financial performance. Adjusted EBITDA should not be considered as an alternative financial measure to net (loss) income attributable to common stockholders, which is the most directly comparable financial measure calculated in accordance with GAAP, or any other measure of financial performance calculated in accordance with GAAP.

The Company defines free cash flow as net cash provided by operating activities, less purchases of property and equipment. Boingo Wireless believes that free cash flow provides investors with additional useful information to measure operating liquidity because it reflects the amount of cash generated by the Company's operations after the purchases of property and equipment that can be used for strategic opportunities. Free cash flow should not be considered as an alternative financial measure to net cash provided by operating activities, which is the most directly comparable financial measure calculated in accordance with GAAP, or any other measure of financial performance calculated in accordance with GAAP.

Lease Changes

On January 1, 2019, the Company adopted ASC 842, Leases, using the modified retrospective transition method. Results for reporting periods beginning on January 1, 2019 are presented under ASC 842, while prior period amounts are not adjusted and continue to be reported in accordance with ASC 840, Leases. Adoption of the new standard resulted in the recording of $16.9 million of operating lease right-of-use assets and $22.3 million of operating lease liabilities as of January 1, 2019.

About Boingo Wireless

Boingo Wireless, Inc. (NASDAQ: WIFI) helps the world stay connected. Our vast footprint of DAS, Wi-Fi and small cells reaches more than a billion people annually, making Boingo one of the largest providers of indoor wireless networks. You’ll find Boingo connecting people at airports, stadiums, military bases, convention centers, multifamily communities and commercial properties. To learn more about the Boingo story, visit www.boingo.com.

Cautionary Statement Regarding Forward-Looking Statements

This press release contains "forward-looking statements" that involves risks, uncertainties and assumptions. Forward-looking statements can be identified by words such as "anticipates," "intends," "plans," "seeks," "believes," "estimates," "expects" and similar references to future periods. These forward-looking statements include the quotations from management in this press release, as well as any statements regarding Boingo's future growth opportunities, strategic plans and transactions and any future guidance. Forward-looking statements are based on the Company's current expectations and assumptions regarding its business, the economy and other future conditions. Since forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. The Company's actual results may differ materially from those contemplated by the forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include the Company's ability to maintain its existing relationships and establish new relationships with venue partners, its ability to complete build-outs and sign venue contracts, its ability to maintain revenue growth and achieve profitability, its ability to execute on its strategic and business plans, its ability to successfully compete with new technologies and adapt to changes in the wireless industry, as well as other risks and uncertainties described more fully in documents filed with or furnished to the Securities and Exchange Commission (SEC), including Boingo's Form 10-K for the year ended December 31, 2019 filed with the SEC on March 2, 2020, which the Company incorporates by reference into this press release. Any forward-looking statement made by Boingo in this press release speaks only as of the date on which it is made. Factors or events that could cause the Company's actual results to differ may emerge from time to time, and it is not possible for Boingo to predict all of them. Boingo undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

Boingo, Boingo Wi-Finder, Boingo Broadband, and the Boingo Wireless Logo are registered trademarks of Boingo Wireless, Inc. All other trademarks are the properties of their respective owners.

Boingo Wireless, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands, except per share amounts)

Three Months Ended
December 31,

Year Ended
December 31,

2019

2018

2019

2018

Revenue

$

64,056

$

67,808

$

263,790

$

250,821

Costs and operating expenses:

Network access

29,245

33,646

119,613

113,572

Network operations

14,954

13,386

57,027

52,215

Development and technology

9,041

8,489

34,575

31,372

Selling and marketing

6,661

6,157

24,443

22,647

General and administrative

6,935

8,084

27,265

30,302

Amortization of intangible assets

1,206

1,203

4,571

3,710

Total costs and operating expenses

68,042

70,965

267,494

253,818

Loss from operations

(3,986

)

(3,157

)

(3,704

)

(2,997

)

Interest expense and amortization of debt discount

(1,877

)

(2,342

)

(8,618

)

(2,400

)

Interest income and other expense, net

417

606

2,017

513

Loss before income taxes

(5,446

)

(4,893

)

(10,305

)

(4,884

)

Income tax benefit

282

5,351

28

5,153

Net (loss) income

(5,164

)

458

(10,277

)

269

Net income attributable to non-controlling interests

8

42

19

1,489

Net (loss) income attributable to common stockholders

$

(5,172

)

$

416

$

(10,296

)

$

(1,220

)

Net (loss) income per share attributable to common stockholders:

Basic

$

(0.12

)

$

0.01

$

(0.23

)

$

(0.03

)

Diluted

$

(0.12

)

$

0.01

$

(0.23

)

$

(0.03

)

Weighted average shares used in computing net (loss) income per share attributable to common stockholders:

Basic

44,194

42,591

43,977

42,066

Diluted

44,194

45,660

43,977

42,066

Boingo Wireless, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except per share amounts)

December 31,

2019

2018

Assets

Current assets:

Cash and cash equivalents

$

40,401

$

149,412

Marketable securities

40,214

Accounts receivable, net

33,350

42,766

Prepaid expenses and other current assets

8,235

7,815

Total current assets

122,200

199,993

Property and equipment, net

380,243

314,179

Operating lease right-of-use assets, net(1)

15,196

Goodwill

58,579

59,640

Intangible assets, net

14,940

19,152

Other assets

9,309

9,936

Total assets

$

600,467

$

602,900

Liabilities and stockholders’ equity

Current liabilities:

Accounts payable

$

24,298

$

21,543

Accrued expenses and other liabilities

65,152

62,653

Deferred revenue

61,229

80,383

Current portion of operating leases(1)

2,695

Current portion of long-term debt

778

Current portion of finance leases

2,721

4,201

Current portion of notes payable

1,527

2,411

Total current liabilities

158,400

171,191

Deferred revenue, net of current portion

166,660

137,205

Long-term portion of operating leases(1)

17,357

Long-term debt

162,708

151,670

Long-term portion of finance leases

572

3,293

Long-term portion of notes payable

95

1,618

Deferred tax liabilities

993

1,073

Other liabilities

201

6,728

Total liabilities

506,986

472,778

Commitments and contingencies

Stockholders’ equity:

Preferred stock, $0.0001 par value; 5,000 shares authorized; no shares issued and outstanding

Common stock, $0.0001 par value; 100,000 shares authorized; 44,224 and 42,669 shares issued and outstanding for 2019 and 2018, respectively

4

4

Additional paid-in capital

234,638

259,132

Accumulated deficit

(140,973

)

(129,930

)

Accumulated other comprehensive loss

(1,426

)

(1,295

)

Total common stockholders’ equity

92,243

127,911

Non-controlling interests

1,238

2,211

Total stockholders’ equity

93,481

130,122

Total liabilities and stockholders’ equity

$

600,467

$

602,900

__________________________________

(1)

We adopted ASC 842 on January 1, 2019 using the modified retrospective transition method. Adoption of ASC 842 using the modified retrospective method required us to record operating lease right-of-use assets of $16,916 and operating lease liabilities of $22,338 on January 1, 2019.

Boingo Wireless, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

Year Ended December 31,

2019

2018

Cash flows from operating activities

Net (loss) income

$

(10,277

)

$

269

Adjustments to reconcile net (loss) income including non-controlling interests to net cash provided by operating activities:

Depreciation and amortization of property and equipment

70,862

78,837

Amortization of intangible assets

4,571

3,710

Impairment loss and loss on disposal of fixed assets and intangible assets held for sale, net

440

238

Stock-based compensation

8,596

12,268

Amortization of deferred financing costs and debt discount, net of amounts capitalized

8,412

2,261

Non-cash operating lease cost

2,350

Gains and amortization of premiums/discounts for marketable securities

(609

)

Change in fair value of contingent consideration

(961

)

Bad debt expense

181

363

Change in deferred income taxes

(80

)

(5,617

)

Changes in operating assets and liabilities, net of effect of acquisition:

Accounts receivable

9,184

(13,702

)

Prepaid expenses and other assets

1,233

(800

)

Accounts payable

426

(246

)

Accrued expenses and other liabilities

7,054

6,477

Deferred revenue

10,301

9,263

Operating lease liabilities

(2,973

)

Net cash provided by operating activities

108,710

93,321

Cash flows from investing activities

Purchases of marketable securities

(81,177

)

Proceeds from maturities of marketable securities

41,593

Purchases of property and equipment

(133,696

)

(108,730

)

Payments for asset and business acquisitions

(24,624

)

Net cash used in investing activities

(173,280

)

(133,354

)

Cash flows from financing activities

Proceeds from Convertible Notes offering, net of issuance costs

195,716

Payment for capped call options

(23,969

)

Proceeds from credit facility

3,500

15,000

Principal payments on credit facility

(778

)

(15,875

)

Payment of acquisition related consideration

(3,027

)

Proceeds from exercise of stock options

470

9,979

Repurchase of common stock for retirement

(747

)

Payments of finance leases and notes payable

(6,608

)

(6,181

)

Payments of withholding tax on net issuance of restricted stock units

(34,420

)

(10,536

)

Debt issuance costs

(1,815

)

(695

)

Payments to non-controlling interest

(1,003

)

(614

)

Net cash (used in) provided by financing activities

(44,428

)

162,825

Effect of exchange rates on cash.

(13

)

(65

)

Net (decrease) increase in cash and cash equivalents

(109,011

)

122,727

Cash and cash equivalents at beginning of year

149,412

26,685

Cash and cash equivalents at end of year

$

40,401

$

149,412

Supplemental disclosure of cash flow information

Cash paid for interest, net of amounts capitalized

$

154

$

Cash paid for taxes, net of refunds

$

(20

)

$

565

Supplemental disclosure of non-cash investing and financing activities

Property and equipment costs included in accounts payable, accrued expenses and other liabilities

$

39,037

$

37,275

Purchase of equipment and prepaid maintenance services under capital financing arrangements

$

$

5,068

Capitalized stock-based compensation included in property and equipment costs

$

860

$

789

Financed sale of intangible assets held for sale

$

290

$

Purchase price for asset and business acquisitions included in accrued expenses and other liabilities

$

$

4,913

Debt issuance costs included in accrued expenses and other liabilities

$

$

164

Tax effect on equity component of Convertible Notes

$

$

5,686

Boingo Wireless, Inc.

Reconciliation of Net (Loss) Income Attributable to Common Stockholders to Adjusted EBITDA

(Unaudited)

(In thousands)

Three Months Ended
December 31,

Year Ended
December 31,

2019

2018

2019

2018

Net (loss) income attributable to common stockholders

$

(5,172

)

$

416

$

(10,296

)

$

(1,220

)

Depreciation and amortization of property and equipment

18,112

22,068

70,862

78,837

Stock-based compensation expense

2,162

3,041

8,596

12,268

Amortization of intangible assets

1,206

1,203

4,571

3,710

Income tax benefit

(282

)

(5,351

)

(28

)

(5,153

)

Interest expense and amortization of debt discount

1,877

2,342

8,618

2,400

Interest income and other expense, net

(417

)

(606

)

(2,017

)

(513

)

Non-controlling interests

8

42

19

1,489

Restructuring charges

2,298

2,298

Adjusted EBITDA

$

19,792

$

23,155

$

82,623

$

91,818

Boingo Wireless, Inc.

Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flows

(Unaudited)

(In thousands)

Three Months Ended
December 31,

Year Ended
December 31,

2019

2018

2019

2018

Net cash provided by operating activities

$

27,639

$

22,487

$

108,710

$

93,321

Purchases of property and equipment

(32,241

)

(36,199

)

(133,696

)

(108,730

)

Free cash flows

$

(4,602

)

$

(13,712

)

$

(24,986

)

$

(15,409

)

Boingo Wireless, Inc.

Revenue Summary

(Unaudited)

(In thousands)

Three Months Ended
December 31,

Year Ended
December 31,

2019

2018

2019

2018

Revenue:

Military/multifamily

$

23,965

$

23,387

$

97,899

$

77,721

DAS

22,016

25,276

97,447

95,216

Wholesale—Wi-Fi

11,114

11,053

44,052

47,481

Retail

3,309

3,666

14,728

17,630

Advertising and other

3,652

4,426

9,664

12,773

Total revenue

$

64,056

$

67,808

$

263,790

$

250,821

Boingo Wireless, Inc.

Key Business Metrics

(Unaudited)

(In thousands)

Three Months Ended
December 31,

Year Ended
December 31,

2019

2018

2019

2018

Key business metrics:

DAS nodes(1)

38.1

29.9

38.1

29.9

DAS nodes in backlog(2)

11.7

13.8

11.7

13.8

Subscribers—military(3)

133

138

133

138

Subscribers—retail(3)

81

122

81

122

Connects(4)

89,364

67,118

343,121

277,744

__________________________________

(1)

This metric represents the number of active DAS nodes as of the end of the period. A DAS node is a single communications endpoint, typically an antenna, which transmits or receives radio frequency signals wirelessly. This measure is an indicator of the reach of the Company’s DAS network.

(2)

This metric represents the number of DAS nodes under contract but not yet active as of the end of the period.

(3)

This metric represents the number of paying customers who are on a month-to-month subscription plan at a given period end.

(4)

This metric shows how often individuals connect to the Company’s global Wi-Fi network in a given period. The connects include wholesale and retail customers in both customer pay locations and customer free locations where Boingo is a paid service provider or receives sponsorship or promotion fees. The Company counts each connect as a single connect regardless of how many times that individual accesses the network at a given venue during their 24-hour period. This measure is an indicator of paid activity throughout Boingo’s network.

View source version on businesswire.com: https://www.businesswire.com/news/home/20200302005883/en/

Contacts

PRESS:
Melody Walker
Senior Director, Marketing Communications
mwalker@boingo.com
(424) 256-7036

INVESTORS:
Kimberly Orlando and Ariel Papermaster
ADDO Investor Relations
investors@boingo.com
(310) 829-5400