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Pareteum Announces First Quarter 2019 Financial Results

Q1 Revenue of $23 Million Drives Growth of 460% Year-over-Year

Q1 Adjusted EBITDA of $5.2 Million

Net Dollar-Based Expansion Rate of 144% Year-over-Year

Increases Full Year 2019 Guidance - Projecting 255-285% Year-over-Year Revenue Growth

NEW YORK, May 7, 2019 /PRNewswire/ -- Pareteum Corporation (TEUM), a rapidly growing global cloud software communications platform company with a mission to connect every person and every(thing)™, today announced operating and financial results for the first quarter ended March 31, 2019.

Pareteum Corporation Logo.

"We are very pleased with our strong first quarter results, delivering 460% revenue growth in Q1 2019 compared to Q1 2018. Pareteum's core business, pre-acquisitions, has grown 33% over the prior quarter," commented Hal Turner, Pareteum's Founder, Executive Chairman and Principal Executive Officer. "We are proud of the significant business transformation we have achieved over the past few years. Pareteum is a fast-growing and profitable SaaS and communications service provider. Our software and platform solutions are unique in the market, our global TEUM is executing, we are well positioned to capture the large market opportunity, and we are committed to our mission to connect every person and every(thing)™."

FIRST QUARTER 2019 FINANCIAL RESULTS:

(Unless otherwise noted, all comparisons are made to the first quarter of 2018)

  • Total revenues increased 460% to $23 million
  • Adjusted EBITDA increased 1,723% to $5.2 million
  • Non-GAAP EPS of $0.02 cents
  • Artilium and iPass financials are consolidated and accretive in Pareteum's first quarter results
  • Net Dollar-based expansion rate represented 144% growth
  • Increase in total assets from $27.2 million at March 31, 2018 to $236.9 million at March 31, 2019
  • Cash balance of $10.7 million

KEY FIRST QUARTER OF 2019 OPERATIONAL METRICS:

  • 36-Month Contractual Revenue Backlog increased to $938 million for the first quarter of 2019, up from $200 million in the first quarter of 2018 with a conversion rate to revenue of 101%
  • Connections increased 441% to 12,012,000 for the first quarter of 2019, and grew 161% sequentially in the first quarter of 2019
  • First quarter average annualized revenue per employee of $390,000, an increase of 55% year over year

 















Sequential Quarterly Key Metrics













($000's)


Q1 2019


Q4 2018


Q3 2018


Q2 2018


Q1 2018


REVENUE


23,040


14,312


8,008


6,003


4,113














YEAR-OVER-YEAR REVENUE GROWTH

18,927

460%

10,297

256%

4,509

129%

2,764

85%

1,318

47%













GROSS MARGIN  


12,972

56%

9,085

63%

5,879

73%

4,223

70%

2,918

71%













ADJUSTED EBITDA

5,156


2,339


1,782


1,297


283














EBITDA


(2,485)


(3,093)


(5,851)


597


(869)














CASH BALANCE


10,699


6,052


18,865


19,205


15,759














36 MONTH CONTRACTUAL REVENUE BACKLOG

938,000


615,000


403,000


276,000


200,000














CONNECTIONS


12,012


4,609


2,903


2,714


2,220














RECENT BUSINESS HIGHLIGHTS:

  • In February 2019, Pareteum completed the acquisition of iPass, delivering key strategic benefits including an intelligent Wi-Fi connectivity platform; deep relationships with marquee enterprise customers; strong process, procedures and system enhancements; and strong talent particularly on the technology development side
  • The Company announced a new sales transaction with Citrix Systems to migrate employees to a cloud-based deployment of Pareteum's iPass SmartConnectTM solution, which has been fully integrated with Citrix's existing single sign-on solution to provide users with an enhanced security experience. A phased rollout is currently underway
  • The Company closed a $50 million credit facility with Post Road Group in February 2019.  An initial draw of $25 million will be used to repay the debt and transaction costs associated with the iPass transaction and to facilitate accelerated organic growth and potential M&A transactions

2019 FULL YEAR GUIDANCE:

We expect revenue to be between $115 million and $125 million for the full year of 2019. Adjusted EBITDA and Cash Flow, net of restructuring and acquisition costs will be positive for the year.

We are expecting 2019 revenue growth in the range of 255% to 285% year-over-year, outpacing the market growth rate fivefold to be updated quarterly.

CONFERENCE CALL INFORMATION:




Date:

Tuesday, May 7, 2019

Time:

4:30 PM EDT

Conference ID:

4614687

Domestic Dial-in Number:

1-800-263-0877

International Dial-in Number:

1-646-828-8143



Belgium Toll Free:

0800 58228

Netherlands Toll Free:

0800 023 1436

U.K. Toll Free:

0800 358 6377



Live webcast:

http://public.viavid.com/index.php?id=134075

A replay of the call will be available approximately one hour after the end of the call through May 6, 2020, and can be accessed at: http://public.viavid.com/index.php?id=134075

About Pareteum Corporation
Millions of people and devices are connected around the world using Pareteum's Global Cloud Communications Platform, enhancing their mobile experience. Pareteum unleashes the power of applications and mobile services, bringing secure, ubiquitous, scalable, and seamlessly available voice, video, SMS/text messaging, and data, media and content enablement to our customers, making worldwide communications services easily and economically accessible to everyone. By harnessing the value of our cloud communications platform, Pareteum serves enterprises, communications service providers, early stage innovators, developers, IoT, and telecommunications infrastructure providers Pareteum envisions a new mobile communications experience imagining what will be, and delivering now. Pareteum currently has offices in North America, South America, Spain, Bahrain, Singapore, Indonesia, Germany, Belgium, United Kingdom, Russia, and the Netherlands. For more information please visit: www.pareteum.com

36-Month Contractual Revenue Backlog Definition
36-Month Contractual Revenue Backlog (36MCRB), is a Non-GAAP financial measure. It is measured on a forward-looking 36-month snapshot view, monthly, and is generated by the Company's Communications Services Providers, Enterprises, and IoT customers who use communication as a service platform products and services from the company's portfolio. The Pareteum multi-year Software-as-a-Service agreements include service establishment and implementation fees, guaranteed minimum monthly recurring fees, as well as contractually scheduled subscribers (connections), in some cases including subscriber (connections) usage, during the term of the agreement, and, their resulting monthly recurring contractual revenue. There can be no assurances that we reach the total contract revenue backlog. Timing of revenue recognition may vary from actual results.

Discussion of Non-GAAP Financial Measures:
Pareteum's management believes that the non-GAAP measures of (1) "EBITDA" (2) "Adjusted EBITDA" (3) "Non-GAAP EPS (4) Cash from operating activities excluding expenditures from restructuring and acquisitions and (4) Contractual Revenue Backlog enhance an investor's understanding of Pareteum's financial and operating performance by presenting (i) a focus on core operating performance and (ii) comparable financial results over various periods. Pareteum 's management uses these financial measures for strategic decision making, forecasting future financial results and operating performance. The presentation of non-GAAP ("Generally Accepted Accounting Principles") financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

EBITDA and Adjusted EBITDA Definition:
"EBITDA" is a non-GAAP measure defined as earnings before interest, taxes, depreciation and amortization. "Adjusted EBITDA" is a non-GAAP measure defined by Pareteum as "EBITDA" excluding stock-based compensation, stock-based compensation taxes, restructuring costs, acquisition costs, nonrecurring expenditures and certain software and non-cash adjustments made during the 2016 restructuring that are not applicable in 2018 and 2019.

Non-GAAP Earnings and EPS Definition:
"Non-GAAP Earnings and EPS" is a non-GAAP measure defined as earnings per share excluding stock-based compensation, restructuring and acquisition costs, amortization of intangible assets and other nonrecurring expenditures in 2018 and 2019.

Net Dollar-Based Expansion Rate Definition
"Net Dollar-Based Expansion Rate" is measured for a particular quarter period by first identifying the cohort of customers, or Base Customers, that were live and in service on the first day of the given quarter. We then calculate our net dollar expansion rate by dividing the revenue we recognized for this cohort of customers in the reporting period to the revenue we recognized for the same group of customers in the same quarter in the prior year, expressed as a percentage of the revenue we recognized for the cohort in the prior year comparative period. A customer will not be considered a Base Customer unless such customer has been live and in service in both comparable periods.

Cash from operating activities excluding expenditures from restructuring and acquisitions:
Cash from operating activities excluding expenditures from restructuring and acquisitions is a Non-GAAP measure defined as cash flows from operating activities as adjusted for adjustments to deferred revenues, net billings in excess of revenues, restructuring costs primarily from prior periods and acquisition costs.

Forward Looking Statements:
Certain statements contained herein constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may include, without limitation, statements with respect to Pareteum's plans and objectives, projections, expectations and intentions. These forward-looking statements are based on current expectations, estimates and projections about Pareteum's industry, management's beliefs and certain assumptions made by management. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Because such statements involve risks and uncertainties, the actual results and performance of Pareteum may differ materially from the results expressed or implied by such forward-looking statements. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. Unless otherwise required by law, Pareteum also disclaims any obligation to update its view of any such risks or uncertainties or to announce publicly the result of any revisions to the forward-looking statements made here. Additional information concerning certain risks and uncertainties that could cause actual results to differ materially from those projected or suggested in Pareteum's filings with the Securities and Exchange Commission, copies of which are available from the SEC or may be obtained upon request from Pareteum Corporation.

Media Inquiries
Press@pareteum.com 

Pareteum Investor Relations Contacts:
Ted O'Donnell
Chief Financial Officer
+1 646 810 2182
InvestorRelations@pareteum.com

Michael Bloom
Investor Relations
michael.bloom@pareteum.com

Allise Furlani
The Blueshirt Group
blueshirt.group@pareteum.com

Carrie Howes
Rayleigh Capital
European- Global IR
+1 416 837 0075

PARETEUM CORPORATION AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(In thousands except for per share amounts)






Three Month Period Ended


March 31, 


March 31, 


2019


2018





REVENUES

23,040


4,113





COST AND OPERATING EXPENSES




Cost of revenues

10,068


1,195

Product development

2,198


727

Sales and marketing

2,565


689

General and administrative

7,614


2,297

Restructuring and acquisition costs

3,080


74

Depreciation and amortization 

2,843


965

  Total cost and operating expenses

28,370


5,947





LOSS FROM OPERATIONS

(5,330)


(1,834)





Total other (expense) 

(616)


(301)





LOSS BEFORE PROVISION FOR INCOME TAXES

(5,946)


(2,135)

Income tax benefit

(167)


(1)

NET LOSS

(5,779)


(2,134)





OTHER COMPREHENSIVE LOSS / INCOME




Foreign currency translation (loss) gain

(360)


104

COMPREHENSIVE LOSS

(6,138)


(2,030)





Net income/loss per common share - basic

$        (0.06)


$      (0.04)





Weighted average shares - basic

103,565,745


50,062,434





Non-GAAP Income/(Loss) Per Common Share

$         0.02


$      (0.02)





Weighted average shares basic and diluted common stock equivalents 

124,767,770


50,062,434





Non-GAAP Reconciliation

Three Month Period Ended


March 31, 


March 31, 


2019


2018





NET LOSS

(5,779)


(2,134)





Total interest and other income (expense)

616


301

Depreciation and amortization

2,843


965

Provision for income taxes 

(167)


(1)





EBITDA

(2,485)


(869)





Restructuring and acquisition costs

3,080


74

Stock based compensation

3,714


1,078

Stock based tax

847


0

Adjusted EBITDA

5,156


283





Non-GAAP Reconciliation








NET LOSS

(5,779)


(2,134)





Restructuring and acquisition costs

3,080


74

Stock based compensation

3,714


1,078

Amortization of Intangibles

1,652


0

NON-GAAP NET INCOME/(LOSS)

2,667


(982)

 

PARETEUM CORPORATION AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET INFORMATION

(In thousands)






March 31, 


December 31, 


2019


2018





Cash and cash equivalents 

10,699


6,052

Restricted cash

705


431

Accounts receivable

28,645


15,362

Prepaid expenses and other current assets 

3,634


2,084

Total current assets 

43,682


23,928





Intangible Assets

60,706


39,658

Goodwill

119,899


91,774

Lease Right of Use Assets

3,136


0

Other non-current assets

9,523


5,681





Total assets 

236,947


161,041





Total current liabilities

39,779


20,006

Total non-current liabilities

33,562


8,971

Total liabilities

73,341


28,977





Total stockholders' equity

163,606


132,065





Total liabilities and stockholders' equity

236,947


161,041









PARETEUM CORPORATION AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED CASH FLOW INFORMATION

(In thousands)


For the Three Months Ended


March 31, 


March 31, 


2019


2018





CASH FLOWS FROM OPERATING ACTIVITIES: 

(5,301)


29

CASH FLOWS FROM INVESTING ACTIVITIES: 

(3,365)


(434)

CASH FLOWS FROM FINANCING ACTIVITIES: 

14,121


2,525

EFFECT OF EXCHANGE RATES

(155)


101

NET INCREASE IN CASH & CASH EQUIVALENTS 

5,300


2,221









Non-GAAP OPERATING CASH FLOWS RECONCILIATION





CASH FLOWS FROM OPERATING ACTIVITIES: 

(5,301)


29









Increase in Net billings in excess of revenues

549


-

Increase  in accrued expenses and other payables

5,014


7,653





CASH FLOWS FROM OPERATING ACTIVITIES EXCLUDING 




EXPENDITURES FOR RESTRUCTURING AND ACQUISITIONS

262


7,682

 

Cision

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