Phunware Announces First Quarter 2019 Financial Results

Revenue Growth and Strong Gross Margin Expansion Lead to Narrowed Net
Loss per Share

AUSTIN, Texas–(BUSINESS WIRE)–lt;a href=”https://twitter.com/search?q=%24coin&src=ctag” target=”_blank”gt;$coinlt;/agt; lt;a href=”https://twitter.com/hashtag/Blockchain?src=hash” target=”_blank”gt;#Blockchainlt;/agt;–Today Phunware,
Inc. (NASDAQ: PHUN), a fully-integrated enterprise cloud platform
for mobile that provides products, solutions, data and services for
brands worldwide, announced financial results for its first quarter
ended March 31, 2019, and provided an update on recent business
developments.


First Quarter 2019 Financial Highlights


Net revenues increased 6.7% year-over-year to $5.3 million


Platform subscriptions and services revenue increased 20.4%
year-over-year to $4.8 million


Gross profit margin was 50.8%, representing 8.4 percentage points
higher than the prior year


Non-GAAP Adjusted EBITDA improved by $3.5 million to ($3.2) million,
or 52.1% improvement over the prior year


Net loss per share improved $0.17 per share to ($0.12) compared to
($0.29), or 58.6% improvement year-over-year


“We are very excited with the financial performance underlying our first
full quarter as a public company,” said Alan S. Knitowski, CEO and
Co-Founder of Phunware. “Not only did we achieve continued revenue
growth alongside strong gross margins and lower net losses in the first
quarter, but we also established a positive backdrop for the second
quarter as we anticipate launching our blockchain-enabled data exchange
and mobile loyalty ecosystem in parallel with our new initiatives
specific to patent licensing and intellectual property monetization.”


First Quarter 2019 Business Highlights


Closed new and expansion contracts with customers from healthcare,
media and entertainment, real estate, political, and travel and
hospitality verticals


Named by Columbia-IBM
Center for Blockchain and Data Transparency as Global
Top 10 Category-Winning Enterprise-Grade Blockchain Business Networks


Announced data.world
and Rifiniti
partnerships, expanding our global partner network for the data
and location
services offerings within our Multiscreen-as-a-Service
(MaaS) platform


Launched the Phunware Phenom
Certified Developer Program, with Applaudo Studios becoming the first
Phunware Phenom Certified Developer


Awarded 3 patents for (i) Indoor
/ Outdoor Mobile Device Location Monitoring, (ii) Enterprise
Branded Application Frameworks for Mobile and Other Environments,
and (iii) Mobile
Device Localization Based on Relative Signal Strength Indicators,
bringing our intellectual property portfolio to a total of 16 awarded
patents and 6 patents-pending


Launched the PhunCoin Launch
Alliance in conjunction with our blockchain-enabled data exchange
and mobile loyalty ecosystem


Continued a Reg
D, 506(c) token sale for accredited investors, including KYC / AML
verification via CoinList


Commenced a Reg CF PhunCoin token sale to unaccredited investors via Republic
crowdfunding portal


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 the investor relations section on its website, https://www.phunware.com,
as a means of complying with its disclosure obligations under Regulation
FD. Accordingly, we recommend that investors should monitor the investor
relations section on Phunware’s website in addition to following
Phunware’s press releases, SEC filings, and public conference calls 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), a 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,
analytics, loyalty and rewards (PhunCoin),
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. 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
and https://www.phuncoin.com
and follow @phunware and @phuncoin on all social media platforms.


Financial Results


 


Phunware, Inc.


Condensed Consolidated Balance Sheets


(In thousands, except per share information)


 




 


March 31,


 


December 31,






2019




2018


Assets:




(Unaudited)






Current assets:










Cash




$


1,065






$


844




Accounts receivable, net






2,738








3,606




Prepaid expenses and other current assets




 


1,036


 




 


272


 


Total current assets






4,839








4,722












 


Property and equipment, net






50








66




Goodwill






25,846








25,821




Intangible assets, net






448








521




Deferred tax asset – long term






64








64




Restricted Cash






—








5,500




Other assets




 


187


 




 


187


 


Total assets




$


31,434


 




$


36,881


 










 


Liabilities, redeemable convertible preferred stock, and
stockholders’ equity










Current liabilities:










Accounts payable




$


8,600






$


9,890




Accrued expenses






2,968








3,028




Deferred revenue






2,904








2,629




Factored receivables payable






1,631








2,434




Short term notes payable – related party




 


—


 




 


1,993


 


Total current liabilities






16,103








19,974












 


Deferred tax liability






64








64




Deferred revenue






4,447








5,622




Deferred rent




 


13


 




 


17


 


Total liabilities




 


20,627


 




 


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






125,421








118,062




Accumulated other comprehensive loss






(391


)






(418


)


Accumulated deficit




 


(114,227


)




 


(111,820


)


Total stockholders’ equity




 


10,807


 




 


5,827


 


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




$


31,434


 




$


36,881


 


















 


 


Phunware, Inc.


Condensed Consolidated Statements of Operations and
Comprehensive Loss


(In thousands, except per share information)


(Unaudited)


 




 


Three Months Ended






March 31,






2019


 


2018










 


Net revenues




$


5,315






$


4,980




Cost of revenues




 


2,617


 




 


2,867


 


Gross profit






2,698








2,113












 


Operating expenses:










Sales and marketing






724








1,919




General and administrative






3,975








4,488




Research and development




 


1,309


 




 


2,300


 


Total operating expenses




 


6,008


 




 


8,707


 


Operating loss






(3,310


)






(6,594


)










 


Other income (expense):










Interest expense






(188


)






(202


)


Fair value adjustment for warrant liabilities






—








(54


)


Impairment of digital currencies






—








(313


)


Other income (expense)




 


4


 




 


(1


)


Total other expense




 


(184


)




 


(570


)


Loss before taxes






(3,494


)






(7,164


)


Income tax benefit




 


—


 




 


—


 


Net loss






(3,494


)






(7,164


)


Other comprehensive income










Cumulative translation adjustment




 


27


 




 


54


 


Comprehensive loss




$


(3,467


)




$


(7,110


)


Net loss per share, basic and diluted




$


(0.12


)




$


(0.29


)


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






30,264








24,952




















 


Non-GAAP Financial Measures and Reconciliation


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 revenue 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 EBITDA has limitations as an
analytical tool 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
EBITDA does 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 EBITDA
differently than we do, limiting their usefulness as comparative
measures.


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










 






Three Months EndedMarch 31,






2019




2018


Net loss




$


(3,494


)




$


(7,164


)


Add back: Depreciation and amortization






91








124




Add back: Interest expense






188








202




Less: Income tax benefit




 


–


 




 


–


 


EBITDA






(3,215


)






(6,838


)


Add Back: Stock-based compensation




 


11


 




 


149


 


Adjusted EBITDA




$


(3,204


)




$


(6,689


)


















 


 


Phunware, Inc.


Supplemental Information


(In thousands, except percentages)


(Unaudited)


 




 


Three Months Ended March 31,


 


Change






2019


 


2018




Amount


 


%


Revenue


















Platform subscriptions and services




$


4,821






$


4,004






$


817






20.4


%


Application transaction




 


494


 




 


976


 




 


(482


)




(49.4


)%


Total revenue




$


5,315






$


4,980






$


335






6.7


%


Platform subscriptions and services as a percentage of total revenue






90.7


%






80.4


%










Application transactions as a percentage of total revenue






9.3


%






19.6


%


































 


Contacts

PR & Media Inquiries:Sarah Millersmiller@axis-entertainment.comT:
310 276.2220


Investor Relations:Phunware, Inc.investorrelations@phunware.comT:
512 693.4199