Phunware Reports Third Quarter 2021 Financial Results

Phunware, Inc.
14 min read
0
In this article:

The Company Records 50% Increase in Quarter-over-Quarter Net Revenues

AUSTIN, Texas, Nov. 11, 2021 (GLOBE NEWSWIRE) -- Phunware, Inc. (NASDAQ: PHUN) (“Phunware” or “the Company”), a fully-integrated enterprise cloud platform for mobile that provides products, solutions, data and services for brands worldwide, today announced financial results for its third quarter ended September 30, 2021.

“We are extremely excited to post 50% sequential organic growth in net revenues quarter-over-quarter, demonstrating that we are now reaping the benefits of our direct and indirect go-to-market strategies for our MaaS enterprise cloud platform for mobile,” said Alan S. Knitowski, President, CEO and Co-Founder of Phunware. “Our team executed strongly over the past quarter on multiple fronts, executing deals with several prominent new customers and partners across different verticals, including scaling our dual token economy while actively pursuing our inorganic growth strategy and closing the acquisition of Lyte Technology. In conjunction with the organic growth announced, the closing of Lyte also adds immediate profitability, backlog and growth that will allow us to leverage a new, strategic distribution network to consumers to further scale and accelerate our blockchain initiatives. This past year has certainly been a pivotal and encouraging period for Phunware and I am confident that as we head into 2022, we will be firing on all cylinders with a dynamic organic and inorganic growth strategy that will have us poised for immense growth.”

Third Quarter 2021 Summary Financial Results

  • Net Revenues for the quarter totaled $2.2 million

  • Multiscreen-as-a-Service (MaaS) Platform Subscriptions and Services Revenues were $1.8 million

  • Net Income was $0.4 million

  • Net Income per Share was $0.01

  • Non-GAAP Adjusted EBITDA Loss was $(2.5) million

“We are pleased with the momentum achieved in the third quarter and are positioned well to finish the year with a great fourth quarter,” said Matt Aune, CFO of Phunware. “As we look forward to 2022, we are excited to have a fully funded operating plan that gives us the ability to drive organic and inorganic growth. In addition to executing on our operational objectives, the Company successfully raised more than $65 million and now holds approximately 129 bitcoin. Rolling forward, we are committed to not only growing our digital currency holdings in the future, but we also expect to add Decentralized Finance (DeFi) to our corporate treasury activities.”

Recent Business Highlights

Conference Call Information

Phunware management will host a conference call today (November 11, 2021) at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) to discuss its financial results for the third quarter ended September 30, 2021.

Interested parties may access the conference call by dialing 877-545-0523 in the United States, or 973-528-0016 from international locations with access code: 948061. The conference call will be broadcast live and available for replay here and via the investor relations section of the Company’s website at investors.phunware.com.

Safe Harbor Clause and Forward-Looking Statements

This press release includes forward-looking statements. All statements other than statements of historical facts contained in this press release, including statements regarding our future results of operations and financial position, business strategy and plans, and our objectives for future operations, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “expose,” “intend,” “may,” “might,” “opportunity,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “will,” “would” and similar expressions that convey uncertainty of future events or outcomes are intended to identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.

The forward-looking statements contained in this press release are based on our current expectations and beliefs concerning future developments and their potential effects on us. Future developments affecting us may not be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) and other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the heading “Risk Factors” in our filings with the Securities and Exchange Commission (the “SEC”), including our reports on Forms 10-K, 10-Q, 8-K and other filings that we make with the SEC from time to time. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. These risks and others described under “Risk Factors” in our SEC filings may not be exhaustive.

By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and developments in the industry in which we operate may differ materially from those made in or suggested by the forward-looking statements contained in this press release. In addition, even if our results or operations, financial condition and liquidity, and developments in the industry in which we operate are consistent with the forward-looking statements contained in this press release, those results or developments may not be indicative of results or developments in subsequent periods.

Disclosure Information

Phunware uses and intends to continue to use its Investor Relations website as a means of disclosing material nonpublic information and for complying with its disclosure obligations under Regulation FD. Accordingly, investors should monitor the Company’s Investor Relations website, in addition to following the Company’s press releases, SEC filings, public conference calls, presentations and webcasts.

About Phunware, Inc.

Everything You Need to Succeed on Mobile — Transforming Digital Human Experience

Phunware, Inc. (NASDAQ: PHUN), is the pioneer of Multiscreen-as-a-Service (MaaS), an award-winning, fully integrated enterprise cloud platform for mobile that provides companies the products, solutions, data and services necessary to engage, manage and monetize their mobile application portfolios and audiences globally at scale. Phunware’s Software Development Kits (SDKs) include location-based services, mobile engagement, content management, messaging, advertising, loyalty (PhunCoin & Phun) and analytics, as well as a mobile application framework of pre-integrated iOS and Android software modules for building in-house or channel-based mobile application and vertical solutions. Phunware helps the world’s most respected brands create category-defining mobile experiences, with more than one billion active devices touching its platform each month. For more information about how Phunware is transforming the way consumers and brands interact with mobile in the virtual and physical worlds, visit https://www.phunware.com, https://www.phuncoin.com, https://www.phuntoken.com, and follow @phunware, @phuncoin and @phuntoken on all social media platforms.

Phunware PR & Media Inquiries:
Email: press@phunware.com
Phone: (512) 693-4199

Phunware Investor Relations:
Matt Glover and John Yi
Gateway Investor Relations
Email: PHUN@gatewayir.com
Phone: (949) 574-3860


Consolidated Balance Sheets
(In thousands, except share and per share information)

September 30,
2021

December 31,
2020

(Unaudited)

Assets

Current assets:

Cash

$

882

$

3,940

Accounts receivable, net of allowance for doubtful accounts of $606 and $356 at September 30, 2021 and December 31, 2020, respectively

1,223

664

Digital currencies

789

—

Prepaid expenses and other current assets

745

304

Total current assets

3,639

4,908

Property and equipment, net

—

13

Goodwill

25,883

25,900

Intangible assets, net

38

111

Deferred tax asset

537

537

Restricted cash

91

91

Right-of-use asset

1,486

—

Other assets

276

276

Total assets

$

31,950

$

31,836

Liabilities and stockholders’ equity (deficit)

Current liabilities:

Accounts payable

$

7,085

$

8,462

Accrued expenses

2,417

5,353

Accrued legal settlement

—

3,000

Lease liability

486

—

Deferred revenue

1,815

2,397

PhunCoin deposits

1,202

1,202

Current maturities of long-term debt, net

83

4,435

Warrant liability

1,762

1,614

Total current liabilities

14,850

26,463

Long-term debt

849

3,762

Long-term debt - related party

195

195

Deferred tax liability

537

537

Deferred revenue

1,262

2,678

Lease liability

1,232

—

Deferred rent

—

180

Total liabilities

18,925

33,815

Stockholders’ equity (deficit)

Common stock, $0.0001 par value; 1,000,000,000 shares authorized at September 30, 2021 and December 31, 2020; 75,556,118 and 56,380,111 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively

8

6

Additional paid-in capital

180,887

144,156

Accumulated other comprehensive loss

(356

)

(338

)

Accumulated deficit

(167,514

)

(145,803

)

Total stockholders’ equity (deficit)

13,025

(1,979

)

Total liabilities and stockholders’ equity (deficit)

$

31,950

$

31,836



Consolidated Statements of Operations and Comprehensive Income (Loss)
(In thousands, except per share information)

Three Months Ended
September 30,

Nine Months Ended
September 30,

2021

2020

2021

2020

Net revenues

$

2,160

$

3,130

$

5,242

$

7,983

Cost of revenues

1,026

898

2,842

2,757

Gross profit

1,134

2,232

2,400

5,226

Operating expenses:

Sales and marketing

715

383

1,910

1,265

General and administrative

3,296

4,276

9,075

11,981

Research and development

1,160

572

3,058

1,811

Legal settlement

—

4,500

—

4,500

Total operating expenses

5,171

9,731

14,043

19,557

Operating loss

(4,037

)

(7,499

)

(11,643

)

(14,331

)

Other income (expense):

Interest income (expense)

7

(1,362

)

(4,057

)

(1,923

)

Loss on extinguishment of debt

—

(950

)

(7,952

)

(1,031

)

Impairment of digital currency

—

—

(776

)

—

Gain (loss) on change in fair value of warrant liability

1,501

1,244

(148

)

1,244

Gain on forgiveness of PPP loan

2,850

—

2,850

—

Other income

51

—

15

—

Total other income (expense)

4,409

(1,068

)

(10,068

)

(1,710

)

Income (loss) before taxes

372

(8,567

)

(21,711

)

(16,041

)

Income tax expense

—

—

—

—

Net income (loss)

372

(8,567

)

(21,711

)

(16,041

)

Other comprehensive income (loss):

Cumulative translation adjustment

(33

)

47

(18

)

(28

)

Comprehensive income (loss)

$

339

$

(8,520

)

$

(21,729

)

$

(16,069

)

Net income (loss) per common share, basic

$

0.01

$

(0.19

)

$

(0.31

)

$

(0.38

)

Net income (loss) per common share, diluted

$

—

$

(0.19

)

$

(0.31

)

$

(0.38

)

Weighted-average common shares used to compute net income (loss) per share, basic

74,347

44,304

70,185

42,089

Weighted-average common shares used to compute net income (loss) per share, diluted

74,699

44,304

70,185

42,089



Consolidated Statements of Cash Flows
(In thousands)

Nine Months Ended
September 30,

2021

2020

Operating activities

Net loss

$

(21,711

)

$

(16,041

)

Adjustments to reconcile net loss to net cash used in operating activities:

Amortization of debt discount and deferred financing costs

2,770

1,217

Loss (gain) on change in fair value of warrant liability

148

(1,244

)

Loss on extinguishment of debt

7,952

1,031

Impairment of digital currencies

776

—

Gain on forgiveness of PPP loan

(2,850

)

—

Stock-based compensation

3,933

3,458

Other adjustments

297

145

Changes in operating assets and liabilities:

Accounts receivable

(272

)

551

Prepaid expenses and other assets

(345

)

(94

)

Accounts payable

(1,236

)

536

Accrued expenses

(2,891

)

1,332

Accrued legal settlement

(3,000

)

4,500

Lease liability payments

(662

)

—

Deferred revenue

(1,998

)

(1,906

)

Net cash used in operating activities

(19,089

)

(6,515

)

Investing activities

Purchase of digital currencies

(1,497

)

—

Net cash used in investing activities

(1,497

)

—

Financing activities

Proceeds from borrowings, net of issuance costs

9,980

10,207

Proceeds from related party bridge loans

—

560

Payments on senior convertible notes

(25,116

)

(3,948

)

Payments on related party notes

—

(200

)

Net repayments on factoring agreement

—

(638

)

Proceeds from exercise of options to purchase common stock

73

95

Proceeds from sales of common stock, net of issuance costs

32,610

1,341

Net cash provided by financing activities

17,547

7,417

Effect of exchange rate on cash and restricted cash

(19

)

(30

)

Net (decrease) increase in cash and restricted cash

(3,058

)

872

Cash and restricted cash at the beginning of the period

4,031

362

Cash and restricted cash at the end of the period

$

973

$

1,234

Interest paid

$

1,315

$

681

Income taxes paid

$

—

$

—


Nine Months Ended
September 30,

2021

2020

Supplemental disclosures of non-cash financing activities:

Proceeds not yet received for sales of common stock

$

97

$

—

Issuance of common stock for payment of legal, earned bonus and board of director fees

$

66

$

1,239

Issuance of common stock upon partial conversions of senior convertible note

$

—

$

2,266

Reacquisition of equity component of senior convertible note

$

—

$

(1,388

)

Equity classified cash conversion feature of senior convertible note

$

—

$

219


Non-GAAP Financial Measures and Reconciliation

Our non-GAAP financial measures include adjusted gross profit, adjusted gross margin and adjusted earnings before interest, taxes, depreciation and amortization ("EBITDA") (our "non-GAAP financial measures"). Our non-GAAP financial measures should be considered in addition to, not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. They are not measurements of our financial performance under GAAP and should not be considered as alternatives to revenue or net loss, as applicable, or any other performance measures derived in accordance with GAAP and may not be comparable to other similarly titled measures of other businesses. Our non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our operating results as reported under GAAP. Some of these limitations include: (i) Non-cash compensation is and will remain a key element of our overall long-term incentive compensation package, although we exclude it as an expense when evaluating its ongoing operating performance for a particular period, (ii) Our non-GAAP financial measures do not reflect the impact of certain charges resulting from matters we consider not to be indicative of ongoing operations, and (iii) other companies in our industry may calculate our non-GAAP financial measures differently than we do, limiting their usefulness as comparative measures.

We compensate for these limitations to our non-GAAP financial measures by relying primarily on our GAAP results and using our non-GAAP financial measures only for supplemental purposes. Our non-GAAP financial measures include adjustments for items that may not occur in future periods. However, we believe these adjustments are appropriate because the amounts recognized can vary significantly from period to period, do not directly relate to the ongoing operations of our business and complicate comparisons of our internal operating results and operating results of other peer companies over time. Each of the normal recurring adjustments and other adjustments described in this paragraph help management with a measure of our operating performance over time by removing items that are not related to day-to-day operations or are non-cash expenses.


Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, except percentages)

Three Months Ended
September 30,

Nine Months Ended
September 30,

(in thousands)

2021

2020

2021

2020

Net income (loss)

$

372

$

(8,567

)

$

(21,711

)

$

(16,041

)

Add back: Depreciation and amortization

17

33

75

120

(Less) Add back: Interest (income) expense

(7

)

1,362

4,057

1,923

EBITDA

382

(7,172

)

(17,579

)

(13,998

)

Add back: Stock-based compensation

1,495

1,708

3,933

3,458

Add back: Legal settlement

—

4,500

—

4,500

Add back: Loss on extinguishment of debt

—

950

7,952

1,031

Add back: Impairment of digital currencies

—

—

776

—

Less: gain on forgiveness of PPP loan

(2,850

)

—

(2,850

)

—

(Less) add back: (Gain) loss on change in fair value of warrant liability

(1,501

)

(1,244

)

148

(1,244

)

Adjusted EBITDA

$

(2,474

)

$

(1,258

)

$

(7,620

)

$

(6,253

)


Three Months Ended
September 30,

Nine Months Ended
September 30,

(in thousands, except percentages)

2021

2020

2021

2020

Gross profit

$

1,134

$

2,232

$

2,400

$

5,226

Add back: Amortization of intangibles

—

4

7

17

Add back: Stock-based compensation

352

104

884

217

Adjusted gross profit

$

1,486

$

2,340

$

3,291

$

5,460

Adjusted gross margin

68.8

%

74.8

%

62.8

%

68.4

%


Supplemental Information
(In thousands, except percentages)

Three Months Ended
September 30,

Change

(in thousands, except percentages)

2021

2020

Amount

%

Net Revenues

Platform subscriptions and services

$

1,771

$

2,860

$

(1,089

)

(38.1)%

Application transaction

389

270

119

44.1%

Net revenues

$

2,160

$

3,130

$

(970

)

(31.0)%

Platform subscriptions and services as a percentage of net revenues

82.0

%

91.4

%

Application transactions as a percentage of net revenues

18.0

%

8.6

%


Nine Months Ended
September 30, 2021

Change

(in thousands, except percentages)

2021

2020

Amount

%

Net Revenues

Platform subscriptions and services

$

4,472

$

7,274

$

(2,802

)

(38.5)%

Application transaction

770

709

61

8.6%

Net revenues

$

5,242

$

7,983

$

(2,741

)

(34.3)%

Platform subscriptions and services as a percentage of net revenues

85.3

%

91.1

%

Application transactions as a percentage of net revenues

14.7

%

8.9

%


Advertisement

Recommended Stories