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Phunware Announces 2019 Financial Results

AUSTIN, Texas–(BUSINESS WIRE)–Phunware, Inc. (NASDAQ: PHUN) (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 fiscal year ended December 31, 2019, and provided an update on recent business developments.

“Today we are pleased to share our trailing financial results for the Company, which included a dramatic year-over-year revenue transformation from one-time, non-recurring application transactions revenue to annual and multi-year recurring platform subscriptions and services revenue tied to the licensing and use of our Multiscreen-as-a-Service (MaaS) enterprise cloud platform for mobile,” said Alan S. Knitowski, President, CEO and Co-Founder of Phunware. ”More importantly, and specific to the subsequent events and recent operational actions taken to address our go-forward business activities while the ongoing COVID-19 coronavirus pandemic continues to unfold worldwide, we have announced a $3 million structured debt financing to address our balance sheet and a furlough of 37 Phunware employees to address our cost structure during the existing governmental stay-in-place orders unique to our business facilities and operations in Central Texas, Southern California and Southern Florida.”

Full Year 2019 Financial Highlights

  • Net revenues for the year totaled $19.2 million
  • Platform subscriptions and services revenue were $17.2 million
  • Gross margin was 52.9%
  • Net loss was ($12.9) million
  • Net loss per share was ($0.35)
  • Non-GAAP adjusted EBITDA loss was ($10.2) million

“While we are releasing our full year financial results for last year as part of today’s announcement and filing requirements, our executive team, board and staff are extremely hyper-focused on our existing and pending activities for the current and future quarters in light of the realities that we and all other businesses face with the unknown macro and operating environment unique to COVID-19,” said Matt Aune, CFO of Phunware. “We are executing against our existing customer contracts and are aggressively pursuing new business opportunities where our mobile, cloud, big data and remote expertise intersects directly with the needs of our Fortune 1000 customers, including remote telehealth and telemedicine triage for healthcare patient capacity management, virtual rallies for political advocacy during a Presidential election year, remote work optimization for corporate campuses and social distance policy enforcement, communications and people and asset tracking for smart cities and government organizations at the local, state and federal level alike.”

Recent Business Highlights and Announcements

Transcript Information

A transcript will be made available today at 1:30pm Pacific / 3:30pm Central / 4:30pm Eastern discussing the Company’s financial results, product announcements and business highlights. The transcript will be accessible on the Phunware Investor Relations 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 (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 www.phunware.com, www.phuncoin.com, www.phuntoken.com, and follow @phunware, @phuncoin and @phuntoken on all social media platforms.

 
 
 
 

Phunware, Inc.

Consolidated Balance Sheets

(In thousands, except per share information)

 

 

December 31,
2019

 

December 31,
2018

Assets

 

 

 

Current assets:

 

 

 

Cash

$

276

 

 

 

$

844

 

Accounts receivable, net

1,671

 

 

 

3,606

 

Prepaid expenses and other current assets

368

 

 

 

272

 

Total current assets

2,315

 

 

 

4,722

 

 

 

 

 

Property and equipment, net

24

 

 

 

66

 

Goodwill

25,857

 

 

 

25,821

 

Intangible assets, net

253

 

 

 

521

 

Deferred tax asset – long term

241

 

 

 

64

 

Restricted cash

86

 

 

 

5,500

 

Other assets

276

 

 

 

187

 

Total assets

$

29,052

 

 

 

$

36,881

 

 

 

 

 

Liabilities, redeemable convertible preferred stock, and stockholders’ equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

10,159

 

 

 

$

9,890

 

Accrued expenses and other

4,035

 

 

 

3,028

 

Deferred revenue

3,360

 

 

 

2,629

 

PhunCoin deposits

1,202

 

 

 

Factored receivables payable

1,077

 

 

 

2,434

 

Short term notes payable – related party

 

 

1,993

 

Total current liabilities

19,833

 

 

 

19,974

 

 

 

 

 

Debt

1,105

 

 

 

Deferred tax liability

241

 

 

 

64

 

Deferred revenue

3,764

 

 

 

5,622

 

Deferred rent

83

 

 

 

17

 

Total liabilities

25,026

 

 

 

25,677

 

 

 

 

 

Commitments and contingencies

 

 

 

 

Redeemable convertible preferred stock, $0.0001 par value

 

 

5,377

 

 

 

 

 

Stockholders’ equity

 

 

 

Common stock, $0.0001 par value

4

 

 

 

3

 

Additional paid-in capital

128,008

 

 

 

118,062

 

Accumulated other comprehensive loss

(382

)

 

 

(418

)

Accumulated deficit

(123,604

)

 

 

(111,820

)

Total stockholders’ equity

4,026

 

 

 

5,827

 

Total liabilities, redeemable convertible preferred stock, and stockholders’ equity

$

29,052

 

 

 

$

36,881

 

 
 
 
 
 

Phunware, Inc.

Consolidated Statements of Operations and Comprehensive Income (Loss)

(In thousands, except per share information)

(Unaudited)

 

 

Year Ended

December 31,

 

2019

 

2018

Net revenues

$

19,150

 

 

$

30,883

 

Cost of revenues

9,020

 

 

11,802

 

Gross profit

10,130

 

 

19,081

 

Operating expenses:

 

 

 

Sales and marketing

2,706

 

 

5,417

 

General and administrative

15,403

 

 

13,562

 

Research and development

4,333

 

 

6,965

 

Total operating expenses

22,442

 

 

25,944

 

Operating loss

(12,312

)

 

(6,863

)

Other income (expense):

 

 

 

Interest expense

(581

)

 

(724

)

Fair value adjustment for warrant liabilities

 

(54

)

Impairment of digital currencies

 

(334

)

Other income (expense)

27

 

 

(2,202

)

Total other expense

(554

)

 

(3,314

)

Loss before taxes

(12,866

)

 

(10,177

)

Income tax (provision) benefit

(5

)

 

374

 

Net loss

(12,871

)

 

(9,803

)

Cumulative translation adjustment

36

 

 

(71

)

Comprehensive loss

$

(12,835

)

 

$

(9,874

)

 

 

 

 

Loss per share, basic and diluted

$

(0.35

)

 

$

(0.38

)

 

 

 

 

Weighted-average common shares used to compute loss per share, basic and diluted

36,879

 

 

25,556

 

 
 
 
 
 

Phunware, Inc.

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

Year Ended December 31,

 

2019

 

2018

Operating activities

 

 

 

Net loss

$

(12,871

)

 

$

(9,803

)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

Depreciation

59

 

 

62

 

Loss on sale of digital currencies

4

 

 

21

 

Bad debt expense

114

 

 

167

 

Amortization of acquired intangibles

268

 

 

372

 

Change in fair value of warrants

 

1,329

 

Impairment of digital currencies

 

334

 

Stock-based compensation

1,784

 

 

450

 

Deferred income taxes

 

(387

)

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

1,817

 

 

2,439

 

Prepaid expenses and other assets

184

 

 

15

 

Accounts payable

740

 

 

4,156

 

Accrued expenses

1,133

 

 

(5,789

)

Deferred revenue

581

 

 

42

 

Net cash used by operating activities

(6,187

)

 

(6,592

)

 

 

 

 

Investing activities

 

 

 

Proceeds received from sale of digital currencies

88

 

 

913

 

Payments for note receivable

 

(536

)

Capital expenditures

(18

)

 

Net cash provided by investing activities

70

 

 

377

 

 

 

 

 

Financing activities

 

 

 

Proceeds from convertible notes

1,105

 

 

Proceeds from PhunCoin deposits

212

 

 

Net (repayments) proceeds from factoring agreement

(1,357

)

 

618

 

Proceeds from common stock subscriptions, net of issuance costs

 

5,448

 

Proceeds from warrant exercises

6,092

 

 

Proceeds from exercise of options to purchase common stock

287

 

 

152

 

(Redemptions, dividend payments) and issuances of Series A convertible preferred stock

(6,240

)

 

6,000

 

Proceeds from Business Combination

 

98

 

Net cash provided for financing activities

99

 

 

12,316

 

 

 

 

 

Effect of exchange rate on cash and restricted cash

36

 

 

(65

)

Net (decrease) increase in cash and restricted cash

(5,982

)

 

6,036

 

Cash and restricted cash at the beginning of the period

6,344

 

 

308

 

Cash and restricted cash at the end of the period

$

362

 

 

$

6,344

 

 

 

 

 

Supplemental disclosure of cash flow information

 

 

 

Interest paid

$

603

 

 

$

712

 

Common stock issuances from subscription payable

$

 

$

3,243

 

Warrants issued in conjunction with Reverse Merger and Recapitalization

$

 

$

1,106

 

Issuance of common stock for payment of bonus and legal fees

$

562

 

 

$

Waiver of sponsor promissory note originally issued in conjunction with Reverse Merger and Recapitalization

$

1,993

 

 

$

 
 
 
 

Non-GAAP Financial Measures and Reconciliation

Adjusted Net Revenues and Adjusted EBITDA should be considered in addition to, not as a substitute for, or superior to, financial measures calculated in accordance with Generally Accepted Accounting Principles in the United States (“GAAP”). It is not a measurement of our financial performance under GAAP and should not be considered as an alternative to net revenues or net income (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. Adjusted Net Revenues and Adjusted EBITDA 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) Adjusted Net Revenues and Adjusted EBITDA do not reflect the impact of certain cash charges resulting from matters we consider not to be indicative of ongoing operations, and (iii) other companies in our industry may calculate Adjusted Net Revenues or Adjusted EBITDA differently than we do, limiting their usefulness as comparative measures.

We compensate for these limitations to Adjusted Net Revenues and Adjusted EBITDA by relying primarily on its GAAP results and using Adjusted Net Revenues and Adjusted EBITDA only for supplemental purposes. Adjusted Net Revenues and Adjusted EBITDA 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.

 
 
 
 
 

Phunware, Inc.

Reconciliation of GAAP to Non-GAAP Financial Measures

(In thousands)

(Unaudited)

 

 

Year Ended December 31,

 

2019

 

2018

 

(in thousands)

Net revenues

$

19,150

 

$

30,883

 

Less: One-time revenue adjustments

 

(8,428

)

Adjusted net revenues

$

19,150

 

$

22,455

 

 

 

Year Ended December 31,

 

2019

 

2018

 

(in thousands)

Net loss

$

(12,871

)

 

$

(9,803

)

Add back: Depreciation and amortization

328

 

 

434

 

Add back: Interest expense

581

 

 

724

 

Add back/less: Income tax (expense) benefit

5

 

 

(374

)

EBITDA

(11,957

)

 

(9,019

)

Less: One-time revenue adjustments

 

(8,428

)

Add Back: Stock-based compensation

1,784

 

 

450

 

Adjusted EBITDA

$

(10,173

)

 

$

(16,997

)

 
 
 
 
 

Phunware, Inc.

Supplemental Information

(In thousands)

(Unaudited)

 

 

 

Year Ended December 31,

 

 

2019

 

2018

 

 

(in thousands)

Platform subscription and services

 

$

17,243

 

$

19,409

 

Less: One-time revenue adjustments

 

 

 

 

(2,106

)

Adjusted platform subscription and services

 

$

17,243

 

$

17,303

 

Application transactions

 

$

1,907

 

$

11,474

 

Less: One-time revenue adjustments

 

 

 

 

(6,322

)

Adjusted application transactions

 

$

1,907

 

$

5,152

 

Net revenues

 

$

19,150

 

$

30,883

 

Less: One-time revenue adjustments

 

 

 

 

(8,428

)

Adjusted net revenues

 

$

19,150

 

$

22,455

 

 
 
 

 

Contacts

PR & Media Inquiries:
Lauren Beaubien

lbeaubien@phunware.com
T: (303) 434-1133

Investor Relations:
Brendhan Botkin

bbotkin@phunware.com
T: (512) 394-6837

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