SYTA: Siyata Mobile reports 2nd quarter 2023 financial and operating results which showed triple digit revenue growth.
NASDAQ:SYTA
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Siyata Mobile (NASDAQ:SYTA) reported 2nd quarter 2023 results on August 14th which showed strong revenue growth and reduced operating losses as the rugged handset business continued to gain traction. Revenues increased to $2.7 million compared to $0.97 million for the 2nd quarter of 2022. This increase was primarily due to sales of the SD7 in the quarter of $1.9 million, offset by a decrease in sales of the legacy products and boosters.
Gross profit increased to $804,490 (29.7% gross margin) compared to $108,673 (11.2% gross margin) in the prior year period. The increase in gross profit dollars and margin was primarily due to increased sales of SD7 handsets which carry a higher gross margin compared to fewer low gross margin legacy devices last year.
Adjusted EBITDA was ($2.0) million, an improvement from ($3.4) million in the prior year period. Net loss was ($2.3) million as compared to a net loss of ($4.3) million in the same period in the prior year.
As of June 30, 2023, the company had cash balances of $2.0 million and working capital of $3.7 million. There was $719,623 of outstanding debt which was a factoring line of credit related to outstanding receivables. The company raised $3.6 million in equity capital during the 1st quarter due to the exercise of 18.0 million outstanding warrants. In the 2nd quarter, the company raised $2.25 million in capital through a share issuance at $0.045 per share. Subsequent to the end of the 2nd quarter, the company raised an additional $2.2 million in equity capital. After the end of the 2nd quarter, the company executed 100-1 reverse stock split. Total outstanding shares were 185,393,404 pre-split and 1,853,955.
CEO and Founder Marc Seelenfreund stated, “Growth continued to accelerate in the second quarter with a 180% year-over-year increase in revenue on strengthening sales of our mission-critical PoC (MCPTT) SD7 solution. Adoption of our critical communications devices is expanding. We have received purchase orders for SD7 handset and its accessories of more than $5 million since the start of 2023, and our resellers also anticipate an increase in demand. Just as important, the increase in orders reaches beyond emergency services to include education, healthcare, industrial and enterprise use cases among others. Given our performance in the first half of the year and our expanding sales pipeline, we are increasingly optimistic that 2023 will be a strong growth sales year for Siyata.”
Recent Business Highlights
Siyata’s distribution network now includes developed relationships with leading North American cellular carriers including AT&T, FirstNet, T-Mobile, Verizon, Bell and US Cellular. The company recently added KPN Royal Dutch Telecom as a distribution partner which expands the company’s reach in Europe.
In late 2022, the company announced a new rugged handset, the SD7+, which features a wide-angle camera coupled with 4G cellular connectivity that will have traditional body camera functionality. It will also encompass real-time situational and positional tracking capabilities. The SD7+ will be powered with Visual Labs’ body camera software. Visual Labs is a privately held company and a leading developer of Android-based bodycam and dashcam software. Visual Labs provides its software to public safety, private security and other customers throughout the U.S. and internationally. The company expects to bring the SD7+ to market in late 2023.
Specific business announcements in 2023 include:
➢ On January 9, 2023, the company announced that T-Mobile US planned to launch Siyata’s rugged SD7 device onto T-Mobile’s U.S. IoT network in the first quarter of 2023.
➢ On January 18, 2023, the company announced that it received follow-on orders from an existing customer, a leading Saudi Arabian cellular carrier, for the Uniden® UV350 product, a 4G/LTE all-in-one in-vehicle communication device.
➢ On January 23, 2023, the company announced that it had received an order for its next-generation mission critical push to-talk solution, which includes its SD7 device and related accessories, from a multi-billion-dollar, integrated resort and residential property development located in The Bahamas.
➢ On February 21, 2023, the company announced that it had received an order for $750,000 for its next-generation MCPTT solution to equip an independent emergency management service provider. The order included the Company’s SD7 devices and related accessories.
➢ On February 27, 2023, the company announced that it had launched the Siyata T600 Cellular Booster for T-Mobile 5G enterprise customers.
➢ On March 6, 2023, the company announced that it had successfully donated and deployed its mission critical push to-talk solution for security and volunteer personnel at the 2023 Special Olympics New York Winter Games in Syracuse, New York.
➢ In March 2023, the company hosted an exhibitor’s booth at the International Wireless Communications Expo, or IWCE in Las Vegas. Siyata showcased the new SD7 Mission Critical Push-ToTalk solution as well as the SD7+ MCPTT with built in body camera and accessories.
➢ On March 20, 2023, the company announced the successful certification and approval of its mission critical PoC SD7 solution by Telstra, Australia’s largest wireless carrier.
➢ On March 22, 2023, the company announced the hiring of Zoila Hernandez as Director of Sales. Ms. Hernandez served as Development Manager for AT&T FirstNet®, a nationwide wireless communications network that was designed and built specifically for first responders.
➢ On March 27, 2023, Siyata announced it is collaborating with CrisisGo to introduce cellular-based paging services.
➢ On April 3, 2023, the company announced it had received an order from a US school district, its largest order to date in the Education vertical.
➢ On April 17, 2023, Siyata announced that Entropia Investments, a leading provider of secure mobile mission-critical communications services in the Netherlands, northern Belgium and the U.K., is to begin selling the company’s SD7 solution in the 2nd quarter of 2023.
➢ On April 24, 2023, Siyata announced it has expanded its reseller network for SD7 with the addition of a leading US distributor called Two Way Direct which serves the two-way radio market.
➢ On May 3, 2023, the company announced its wholly owned subsidiary, Signifi Mobile, received a purchase order for over $900,000 to supply a U.S. public school district with its mission critical PoC SD7 handsets and accessories.
➢ On June 1, 2023, the company announced that it received an order for its UV350 In-Vehicle Devices and ‘Siyata Real Time View,' the Company's newest product, valued at over $1.2 million. The order is expected to begin shipping and recurring revenue to commence in the 2nd quarter of 2023.
➢ On June 5, 2023, Siyata announced aggregate orders of $400,000 for its SD7 Handset and VK7 Vehicle Kit from the verticals of healthcare, education, and construction.
➢ On June 12, 2023, Siyata announced that Minnesota Coaches, Inc, a privately held motor coach and school bus transportation company, has taken delivery of its first order of SD7 Handsets and VK7 Vehicle Kits.
➢ On June 14, 2023, Siyata announced a new product called the Siyata Mobile Command Center for in-field communications for EMS organizations.
➢ On June 15, 2023, Siyata announced its participation to showcase its SD7 Handset and VK7 Vehicle Kit in the Minnesota School Bus Operators Association’s Annual Summer Conference in Alexandria, Minnesota on June 19 to 21, 2023.
➢ On June 20, 2023, Siyata announced that Mobile Tornado Group Plc will offer its robust PTT application on the Siyata SD7 Handset.
➢ On June 21, 2023, Siyata announced its participation with CrisisGo to show its Mission Critical PTT and Emergency Response Management capabilities at NASRO 2023, a National School Safety Conference in Indianapolis, Indiana on June 28 to 29, 2023.
➢ On June 22, 2023, Siyata announced new aggregate orders of approximately $600,000 for its Siyata SD7 Handset and VK7 Vehicle Kit in the vertical markets of education, construction, and logistics.
➢ On July 6, 2023, Siyata announced the receipt of its single largest order for SD7 Handsets of $1.4 million, to be delivered in the second half of 2023.
➢ On July 18, 2023, Siyata announced it had received orders from two large North American waste management companies for its SD7 Handset and VK7 Vehicle Kit, and for its UV350 In-Vehicle Device.
➢ On July 20, 2023, Siyata announced its participation in APCO 2023, which is APCO’s International Annual Conference and Expo for public safety communications officials to be held on August 6 to 9, 2023, in Nashville, Tennessee.
➢ On July 25, 2023, Siyata names public safety advocate and Business Development executive Doug Clark, formerly from AT&T FirstNet, as its new Assistant Vice President, Sales and Marketing.
Valuation and Estimates
Based on the 2nd quarter results and management commentary, we adjust our 2023 revenue estimates to $11.2 million and adjust our 2023 EPS estimate to a loss of ($17.70) after taking into account the reverse stock split. Our 2024 estimates are approximately $20.0 million in revenues and an EPS loss of ($2.35).
We believe Siyata Mobile is on track to generate strong double-digit revenue growth rates going forward. We expected overall gross margins to increase steadily from current levels as volume levels increase.
Our primary valuation tool utilizes a Discounted Cash Flow (DCF) process and incorporates a relatively high discount rate to account for uncertainties in the timing of the company achieving net profitability. We believe that revenue growth rates could average 20%-22% over the next 10 years and that consolidated gross margins could reach 35% by 2026.
Under this scenario, we arrive at a price target of $10.00 for SYTA stock.
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