GAAP Net Income increased to $0.1 million compared to ($0.3) last year; GAAP diluted EPS increased to break even compared to ($0.01) million last year
Non-GAAP Net Income increased 43.1%, Adjusted EBITDA increased 43.7%
Introduced several new CXaaS products during the quarter for MS Teams that will drive future revenue growth
MILPITAS, CA / ACCESSWIRE / May 12, 2022 / Altigen Communications, Inc. (OTCQB:ATGN), a Silicon Valley based Microsoft ISV and Cloud Solutions provider, announced today its financial results for the second quarter ended March 31, 2022.
"While not yet showing up in our financials, we achieved a number of milestones in the second quarter that will help drive the next leg of our growth," said Jerry Fleming, chairman and CEO of Altigen. "We introduced several of our next-generation CXaaS solutions that will enhance the customer experience for both Microsoft Teams and Fiserv customers. In addition, we announced the acquisition of ZAACT Consulting, which we subsequently closed in early May. This acquisition well positions Altigen to successfully deliver our solutions to the enterprise market by offering the professional services needed to support these businesses. This, in turn, will drive revenue and profits on a stand-alone basis, in addition to the synergies available to cross-sell to each other's customers."
Second-Quarter Highlights (Fiscal 2022 versus Fiscal 2021)
- Net Revenue decreased 4.8% to $2.5 million;
- Gross margin decreased to 70.2%, compared with 72.7%;
- Cloud services revenue increased 1.3% to $1.9 million;
- GAAP net income and diluted EPS increased to $0.1 million and $0.00, compared to GAAP net loss and net loss per share of $0.3 million and $0.01, respectively;
- Non-GAAP net income and diluted EPS of $0.3 million and $0.01, respectively, compared to $0.2 million and $0.01, respectively;
- Adjusted EBITDA increased to 43.7% to $0.3 million;
- Cash flow from operations increased to $0.5 million, compared to $0.0 million.
| Select Financial Metrics: Fiscal 2022 versus Fiscal 2021 | ||||||||||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||
(in thousands, except for EPS and percentages) | March 31, 2022 | March 31, 2021 | Change | March 31, 2022 | March 31, 2021 | Change | ||||||||||||||||||
Total Revenue | $ | 2,558 | $ | 2,687 | -4.8 | % | $ | 5,290 | $ | 5,348 | -1.1 | % | ||||||||||||
Cloud Services | 1,880 | 1,855 | 1.3 | % | 3,790 | 3,696 | 2.5 | % | ||||||||||||||||
Professional and Other Services | 124 | 75 | 65.3 | % | 263 | 146 | 80.1 | % | ||||||||||||||||
Legacy Products | 554 | 757 | -26.8 | % | 1,237 | 1,506 | -17.9 | % | ||||||||||||||||
Software Assurance | 471 | 577 | -18.4 | % | 976 | 1,210 | -19.3 | % | ||||||||||||||||
Perpetual Software License | 83 | 180 | -53.9 | % | 261 | 296 | -11.8 | % | ||||||||||||||||
GAAP Operating Income/(loss) | $ | 79 | $ | (325 | ) | -124.3 | % | $ | 89 | $ | (270 | ) | -133.0 | % | ||||||||||
Operating Margin | 3.1 | % | -12.1 | % | 1.7 | % | -5.0 | % | ||||||||||||||||
Non-GAAP Operating Income | $ | 92 | $ | 21 | 338.1 | % | $ | 158 | $ | 98 | 61.2 | % | ||||||||||||
Non-GAAP Operating Margin | 3.6 | % | 0.8 | % | 3.0 | % | 1.8 | % | ||||||||||||||||
GAAP Net Income/(loss) | $ | 65 | $ | (336 | ) | -119.3 | % | $ | 76 | $ | (280 | ) | -127.1 | % | ||||||||||
Non-GAAP Net Income | $ | 342 | $ | 239 | 43.1 | % | $ | 655 | $ | 474 | 38.2 | % | ||||||||||||
Non-GAAP Diluted Earnings Per Share | $ | 0.01 | $ | 0.01 | 0.0 | % | $ | 0.03 | $ | 0.02 | 50.0 | % | ||||||||||||
Adjusted EBITDA(1) | $ | 342 | $ | 238 | 43.7 | % | $ | 654 | $ | 473 | 38.3 | % | ||||||||||||
Cash Flow from Operations | $ | 557 | $ | 12 | nm | $ | 669 | $ | (300 | ) | nm | |||||||||||||
nm = not measurable/meaningful; *may not add up due to rounding
- Throughout this release, the use of Adjusted EBITDA and other non-GAAP financial measures are intended to provide useful information that supplements Altigen's results in accordance with GAAP. Please refer to the Reconciliation of Non-GAAP Financial Measure at the end of this release for an explanation of Altigen's formulation of Adjusted EBITDA and reconciliations to the most directly comparable GAAP measure.
Trended Financial Information* | ||||||||||||||||||||||||||||||||
(in thousands, except for EPS and percentages) | 1Q21 | 2Q21 | 3Q21 | 4Q21 | 1Q22 | 2Q22 | FY 2021 | FYTD 2022 | ||||||||||||||||||||||||
Period Ended: | 12/31/2020 | 3/31/2021 | 6/30/2021 | 9/30/2021 | 12/31/2021 | 3/31/2022 | ||||||||||||||||||||||||||
Total Revenue | $ | 2,661 | $ | 2,687 | $ | 2,848 | $ | 2,794 | $ | 2,732 | $ | 2,558 | $ | 10,990 | $ | 5,290 | ||||||||||||||||
Cloud Services | 1,841 | 1,855 | 1,964 | 1,970 | 1,910 | 1,880 | 7,630 | 3,790 | ||||||||||||||||||||||||
Professional and Other Services | 71 | 75 | 211 | 144 | 139 | 124 | 501 | 263 | ||||||||||||||||||||||||
Legacy Products | 749 | 757 | 673 | 680 | 683 | 554 | 2,859 | 1,237 | ||||||||||||||||||||||||
Software Assurance | 633 | 577 | 550 | 523 | 505 | 471 | 2,283 | 976 | ||||||||||||||||||||||||
Perpetual Software License | 116 | 180 | 123 | 157 | 178 | 83 | 576 | 261 | ||||||||||||||||||||||||
GAAP Operating Income/(loss) | $ | 55 | $ | (325 | ) | $ | 179 | $ | 71 | $ | 10 | $ | 79 | $ | (20 | ) | $ | 89 | ||||||||||||||
Operating Margin | 2.1 | % | -12.1 | % | 6.3 | % | 2.5 | % | 0.4 | % | 3.1 | % | -0.2 | % | 1.7 | % | ||||||||||||||||
Non-GAAP Operating Income | $ | 77 | $ | 21 | $ | 217 | $ | 121 | $ | 66 | $ | 92 | $ | 436 | $ | 158 | ||||||||||||||||
Non-GAAP Operating Margin | 2.9 | % | 0.8 | % | 7.6 | % | 4.3 | % | 2.4 | % | 3.6 | % | 4.0 | % | 3.0 | % | ||||||||||||||||
GAAP Net Income (loss) | $ | 56 | $ | (336 | ) | $ | 982 | $ | (1,193 | ) | $ | 11 | $ | 65 | $ | (491 | ) | $ | 76 | |||||||||||||
Non-GAAP Net Income | $ | 235 | $ | 239 | $ | 452 | $ | 358 | $ | 313 | $ | 342 | $ | 1,284 | $ | 655 | ||||||||||||||||
Non-GAAP Diluted Earnings Per Share | $ | 0.01 | $ | 0.01 | $ | 0.02 | $ | 0.01 | $ | 0.01 | $ | 0.01 | $ | 0.05 | $ | 0.03 | ||||||||||||||||
Adjusted EBITDA (1) | $ | 235 | $ | 238 | $ | 452 | $ | 360 | $ | 312 | $ | 342 | $ | 1,285 | $ | 654 | ||||||||||||||||
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.
Acquisition-related amortization
Acquisition-related amortization consists of customer relationships recorded in connection with our acquisition of Blue Panda Communications in September 2020. We exclude acquisition-related amortization as we believe the amount of such non-cash expenses in any specific period may not directly correlate to the underlying performance of our business operations.
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) 545-0320 (domestic) or (973) 528-0002 (international), conference ID #265924. 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 #45519. 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 provider of Cloud-based Unified Communications solutions built on Microsoft technologies. Altigen's all software solutions include hosted PBX, enterprise routing and queuing, call recording, and complete omni-channel contact center solutions. We also provide cost-effective integrated SIP communications services in conjunction with our solutions in order to deliver a complete end-to-end, fully managed cloud service for our customers and partners. 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 including, but not limited to, statements regarding our ability to successfully release our next generation cloud solutions, our ability to accelerate business opportunities and drive the adoption of our next generation cloud solutions, and our ability to achieve increased market acceptance for our service offerings. 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:
Brian Siegel, IRC, MBA
Managing Director
Hayden IR
(346) 396-8696
[email protected]
ALTIGEN COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, amounts in thousands)
| March 31, 2022 | September 30, 2021 | |||||||
Cash and cash equivalents | $ | 7,227 | $ | 6,799 | ||||
Accounts receivable, net | 489 | 596 | ||||||
Other current assets | 260 | 145 | ||||||
Property and equipment, net | 18 | 27 | ||||||
Operating lease right-of-use | 621 | 826 | ||||||
Intangible assets, net | 418 | 433 | ||||||
Capitalized software, net | 1,473 | 1,669 | ||||||
Deferred tax asset | 6,597 | 6,597 | ||||||
Other long-term assets | 37 | 45 | ||||||
Total assets | $ | 17,140 | $ | 17,137 | ||||
Current liabilities | $ | 1,895 | $ | 1,931 | ||||
Long-term liabilities | 595 | 736 | ||||||
Stockholders' equity | 14,650 | 14,470 | ||||||
Total liabilities and stockholders' equity | $ | 17,140 | $ | 17,137 | ||||
ALTIGEN COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in thousands, except per share data)
| Three Months Ended | Six Months Ended | |||||||||||||||
| March 31, | March 31, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
Net revenue | $ | 2,558 | $ | 2,687 | $ | 5,290 | $ | 5,348 | ||||||||
Gross profit | 1,796 | 1,955 | 3,763 | 3,925 | ||||||||||||
Operating expenses: | ||||||||||||||||
Research and development | 880 | 1,034 | 1,902 | 1,785 | ||||||||||||
Selling, general & administrative | 838 | 934 | 1,772 | 2,097 | ||||||||||||
Litigation | - | 313 | - | 313 | ||||||||||||
Operating income (loss) | 78 | (326 | ) | 89 | (270 | ) | ||||||||||
Other income/(expense), net | 1 | - | 1 | - | ||||||||||||
Net income (loss) before provision for income taxes | 79 | (326 | ) | 90 | (270 | ) | ||||||||||
Income tax benefit (expense) | (14 | ) | (10 | ) | (14 | ) | (10 | ) | ||||||||
Net income (loss) | $ | 65 | $ | (336 | ) | $ | 76 | $ | (280 | ) | ||||||
Per share data: | ||||||||||||||||
Basic | $ | 0.00 | $ | (0.01 | ) | $ | 0.00 | $ | (0.01 | ) | ||||||
Diluted | $ | 0.00 | $ | (0.01 | ) | $ | 0.00 | $ | (0.01 | ) | ||||||
Weighted average shares outstanding: | ||||||||||||||||
Basic | 23,975 | 23,164 | 23,857 | 23,099 | ||||||||||||
Diluted | 25,474 | 23,164 | 25,453 | 23,099 | ||||||||||||
ALTIGEN COMMUNICATIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, amounts in thousands)
Six Months Ended Months 31, | ||||||||
| 2022 | 2021 | |||||||
Cash flows from operating activities: | ||||||||
Net income (loss) | $ | 76 | $ | (280 | ) | |||
Adjustments to reconcile net income to net cash from operating activities: | ||||||||
Depreciation and amortization | 9 | 17 | ||||||
Amortization of intangible assets | 88 | 87 | ||||||
Amortization of capitalized software | 399 | 270 | ||||||
Stock-based compensation | 69 | 56 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable and unbilled accounts receivable | 107 | (107 | ) | |||||
Prepaid expenses and other current assets | (115 | ) | (7 | ) | ||||
Other long-term assets | 8 | (20 | ) | |||||
Accounts payable | 71 | (3 | ) | |||||
Accrued expenses | (88 | ) | (133 | ) | ||||
Deferred revenue | 45 | (180 | ) | |||||
Net cash provided by/(used in) operating activities | 669 | (300 | ) | |||||
Cash flows from investing activities: | ||||||||
Purchase of property and equipment | - | (11 | ) | |||||
Acquisitions | (73 | ) | - | |||||
Capitalized software development costs | (203 | ) | (331 | ) | ||||
Net cash used in investing activities | (276 | ) | (342 | ) | ||||
Cash flows from financing activities: | ||||||||
Proceeds from issuances of common stock | 35 | 70 | ||||||
Net cash provided by financing activities | 35 | 70 | ||||||
Net increase in cash and cash equivalents | 428 | (572 | ) | |||||
Cash and cash equivalents, beginning of period | 6,799 | 6,659 | ||||||
Cash and cash equivalents, end of period | $ | 7,227 | $ | 6,087 | ||||
ALTIGEN COMMUNICATIONS, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(amounts in thousands, except per share data)
| Three Months Ended | Six Months Ended | |||||||||||||||
| March 31, | March 31, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
Reconciliation of GAAP to Non-GAAP Gross Profit: | ||||||||||||||||
GAAP gross profit | $ | 1,796 | $ | 1,955 | $ | 3,763 | $ | 3,925 | ||||||||
Amortization of capitalized software | 166 | 120 | 328 | 191 | ||||||||||||
Acquisition related expenses | 44 | 44 | 88 | 88 | ||||||||||||
Non-GAAP gross profit | $ | 2,006 | $ | 2,119 | $ | 4,179 | $ | 4,204 | ||||||||
Reconciliation of GAAP to Non-GAAP Expenses: | ||||||||||||||||
GAAP operating expenses | $ | 1,718 | $ | 2,281 | $ | 3,674 | $ | 4,195 | ||||||||
Litigation | - | 313 | - | 313 | ||||||||||||
Depreciation and amortization | 5 | 8 | 9 | 17 | ||||||||||||
Amortization of capitalized software | 35 | 46 | 70 | 79 | ||||||||||||
Stock-based compensation | 13 | 34 | 69 | 56 | ||||||||||||
Non-GAAP operating expenses | $ | 1,665 | $ | 1,880 | $ | 3,526 | $ | 3,730 | ||||||||
Reconciliation of GAAP to Non-GAAP Net Income: | ||||||||||||||||
GAAP net (loss) income | $ | 65 | $ | (336 | ) | $ | 76 | $ | (280 | ) | ||||||
Litigation | - | 313 | - | 313 | ||||||||||||
Depreciation and amortization | 5 | 8 | 9 | 17 | ||||||||||||
Amortization of capitalized software | 201 | 166 | 399 | 270 | ||||||||||||
Stock-based compensation | 13 | 34 | 69 | 56 | ||||||||||||
Acquisition related expenses | 44 | 44 | 88 | 88 | ||||||||||||
Deferred tax asset valuation allowance | 14 | 10 | 14 | 10 | ||||||||||||
Non-GAAP net income | $ | 342 | $ | 239 | $ | 655 | $ | 474 | ||||||||
Per share data: | ||||||||||||||||
Basic | $ | 0.01 | $ | 0.01 | $ | 0.03 | $ | 0.02 | ||||||||
Diluted | $ | 0.01 | $ | 0.01 | $ | 0.03 | $ | 0.02 | ||||||||
Weighted average shares outstanding: | ||||||||||||||||
Basic | 23,957 | 23,164 | 23,857 | 23,099 | ||||||||||||
Diluted | 25,474 | 25,515 | 25,453 | 25,439 | ||||||||||||
SOURCE: Altigen Communications, Inc.