Altigen Communications, Inc. Reports First Quarter Results for Fiscal Year 2021

MILPITAS, CA / ACCESSWIRE / January 25, 2021 / Altigen Communications, Inc. (OTCQB:ATGN), a Silicon Valley based Microsoft ISV and Cloud Solutions provider, announced today its financial results for the first quarter ended December 31, 2020.

First Quarter 2021 Results

Net Revenue: First quarter 2021 total revenue was $2.7 million, down 6% compared with $2.8 million in the first quarter of 2020, primarily as a result of the negative impacts of COVID-19. First quarter revenue consisted of:

• Cloud services revenue of $1.8 million, up 8% from $1.7 million in the comparable period last year.
• Software assurance revenue of $633,000, representing a decrease of 12% year-over-year.
• Software license revenue of $116,000, down 44% compared to the prior-year period.
• Professional services and other revenue of $71,000, representing a decrease of 67% compared to the same period in 2020.

Gross Margin: Gross margin in the first quarter of fiscal 2021 was 74.0%, compared to 77.6% in the prior-year quarter. The decrease was primarily driven by higher amortization of capitalized software and acquisition related costs, and to a lesser extent, a shift in our product mix.

GAAP Net Income: For the first quarter of fiscal 2021, GAAP net income was $56,000, or $0.00 per diluted share, compared with GAAP net income of $502,000, or $0.02 per diluted share in the same period in fiscal 2020. The year-over-year decline reflects a combination of lower net revenue, lower blended gross profit margin as a percentage of net revenue and an increase in operating expenses.

Non-GAAP Net Income: Non-GAAP net income for the first quarter of fiscal 2021 was $235,000, or $0.01 per diluted share, compared with non-GAAP net income of $621,000, or $0.02 per diluted share in the same period of the prior year. The decrease in non-GAAP net income was primarily the result of lower net revenue and higher operating expenses.

GAAP Operating Expenses: GAAP operating expenses totaled $1.9 million for the first quarter of fiscal 2021, compared with $1.7 million in the year-ago quarter, primarily due to an increase in headcount-related expenses and reduced capitalization of certain software development costs.

Non-GAAP Operating Expenses: First quarter non-GAAP operating expenses totaled $1.8 million, compared with $1.7 million in the comparable period last year. The increase in non-GAAP operating expenses was primarily the result of the aforementioned headcount-related expenses and the amount of product development costs included in operating expenses.

Balance Sheet: Total cash and cash equivalents at the end of the first quarter of 2021 was $6.2 million. Working capital was $4.3 million.

Non-GAAP Financial Measures

In calculating non-GAAP financial measures, we exclude certain items to facilitate a review of the comparability of our core operating performance on a period-to-period basis. The excluded items represent stock-based compensation expense, depreciation and amortization expenses and other non-recurring or unusual items that may arise from time to time that we do not consider to be directly related to core operating performance. We use non-GAAP measures to evaluate the core operating performance of our business and to perform financial planning. Since we find these measures to be useful, we believe that investors benefit from seeing results reviewed by management in addition to seeing GAAP results. We believe that these non-GAAP measures, when read in conjunction with our GAAP financials, provide useful information to investors by facilitating: (i) the comparability of our on-going operating results over the periods presented and (ii) the ability to identify trends in our underlying business.

The following are explanations of each type of adjustment that we incorporate into non-GAAP financial measures:

Stock-based compensation expense

Stock-based compensation expense is impacted by the Company's future hiring and retention needs and the future fair market value of the Company's common stock, all of which are difficult to predict and subject to constant change. Furthermore, stock-based compensation expense is generally fixed at the time of grant, then amortized over a period of several years, and generally cannot be changed or influenced by management after the grant. The Company believes that the exclusion of stock-based compensation expense assists investors in the comparisons of operating results to peer companies. Stock-based compensation expense can vary significantly based on the timing, size and nature of awards granted.

Depreciation and amortization expenses

Depreciation and amortization expense includes the depreciation of property and equipment, amortization of capitalized software, as well as amortization of intangible assets. Such expenses are fixed at the time of an acquisition, then amortized over a period of several years. While depreciation and amortization are considered operating costs under GAAP, these expenses primarily represent non-cash current period expense which vary widely from company to company. Management believes that the exclusion of depreciation and amortization expense provides a supplemental measure of the Company's ongoing operating performance.

Other non-recurring or unusual charges

The Company has excluded certain other expenses that are the result of other, non-comparable events to measure operating performance. These events arise outside of the ordinary course of continuing operations. Given the unique nature of the matters relating to these costs, the Company believes these items are not normal operating expenses. For example, legal settlements and judgments vary significantly, in their nature, size and frequency, and, due to this volatility, the Company believes the costs associated with legal settlements and judgments are not normal operating expenses. The Company believes that the exclusion of such out-of-the-ordinary-course amounts provides supplemental information to assist in the comparison of the financial results of the Company from period to period and, therefore, provides useful supplemental information to investors.

Non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation. They should be considered as a supplement to, not a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP.

Conference Call

Altigen will be discussing its financial results and outlook on a conference call today at 2:00 p.m. Pacific Time (5:00 p.m. ET). The conference call can be accessed by dialing (877) 407-8031 (domestic) or (201) 689-8031 (international). A live webcast will also be made available at www.altigen.com. To access the replay, dial (877) 481-4010 (domestic) or (919) 882-2331 (international), conference ID #39707. A web archive will be made available at www.altigen.com for 90 days following the call's conclusion.

About Altigen Communications

Altigen Communications Inc. (OTCQB: ATGN), based in Silicon Valley, is a leading Microsoft Cloud Solutions provider, delivering fully managed Cloud-based Unified Communications services based on the Microsoft platform. Our SIP trunk services, enterprise customer engagement and innovative cloud contact center solutions seamlessly integrate with Microsoft Teams to enhance and extend the business communications capabilities for our customers. Altigen's solutions are designed for high reliability, ease of use, seamless integration into Microsoft technologies, all delivered as fully managed cloud services. Our solutions are available through our global network of certified resellers. For more information, call 1-888-ALTIGEN or visit our website at www.altigen.com.

Safe Harbor Statement

This press release contains forward‐looking information. The statements are based on reasonable assumptions, beliefs and expectations of management and the Company provides no assurance that actual events will meet management's expectations. Furthermore, the forward-looking statements contained in this press release are based on the Company's views of future events and financial performances which are subject to known and unknown risks and uncertainties, many of which are outside the Company's control. There can be no assurances that the Company will achieve expected results, and actual results may be materially different than expectations and from those stated or implied in forward-looking statements.

Please refer to the Company's most recent Annual Report filed with the OTCQB over-the-counter market for a further discussion of risks and uncertainties. Any forward-looking statement made by us in this press release is based only on information currently available to us and speaks only as of the date on which it is made. The Company does not undertake any obligation to update any forward-looking statements.

Contact:
Carolyn David
Vice President of Finance
Altigen Communications, Inc.
Phone: 408-597-9033
www.altigen.com

ALTIGEN COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(amounts in thousands, except per share data)

ALTIGEN COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in thousands)

ALTIGEN COMMUNICATIONS, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(amounts in thousands, except per share data)

SOURCE: Altigen Communications, Inc.