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Boxlight Reports Third Quarter 2019 ResultsBoxlight Corporation (Nasdaq: BOXL) ("Boxlight"), a leading provider of interactive technology solutions for the global education market, today announced the Company's financial results for the third quarter ended September 30, 2019. Key Financial Highlights for Q3 2019
Key Business Highlights for Q3 2019
2019 Outlook The current project roll-out implementation schedule, business pipeline, backlog and awarded contracts support our continued growth as revenues have increased 7% through the first nine months of the year, as compared to the same time period of 2018. As we increase revenue, our strategy to implement higher margin software and services has been successful, demonstrated by the strength in gross profit margin. Our gross margins have reached 30%, which we believe is sustainable with a goal of improving margins in future years. Management Commentary Boxlight's Chief Executive Officer, Mark Elliott, stated, "We are pleased with our quarterly and year-to-date revenue growth and gross profit margin improvement. Our total classroom solution of interactive learning technologies, products and services, continues to evolve and gain traction in the market. We are seeing success with both existing customers looking to expand, and new customers looking to join the technology transformation or replace dated or inferior solutions." Elliott continued, "Our strong third quarter growth was driven by newly awarded contracts and continued implementations across a number of school districts. As we mature as a company, our revenues are becoming more predictable and taking on a recurring nature. School districts and counties throughout the U.S. are typically on a five- to seven-year technology replacement cycles. The majority of significant, school-wide awarded contracts call for multi-year rollouts. Once with a school district, we are likely to attain additional business with new products and services and replacements, and we are in an ideal position for the next upgrade cycle. We continue to target large, high-profile sales opportunities, and given our high success rate, we feel extremely confident in our future growth prospects. With our expanding re-seller partner network, experienced management team and sales force, and the most comprehensive product suite in the market, we are uniquely positioned to be a leader in global education technology." Financial Results for the Three Months Ended September 30, 2019: Revenue for the three months ended September 30, 2019 was $11.6 million, an increase of $1.4 million or 14%, compared to $10.2 million for the three months ended September 30, 2018. The increase is primarily attributable to the increase in sales of hardware, software and professional development services. We are also beginning to see growth in our high margin product offerings including professional development, STEM and software. Gross profit for the three months ended September 30, 2019 was $3.4 million, an increase of $1.0 million, compared to $2.4 million for the three months ended September 30, 2018. The resulting gross margin was 30% for the three months ended September 30, 2019, compared to 24% for the three months ended September 30, 2018. General and administrative expenses for the three months ended September 30, 2019 was $4.3 million, relatively flat compared to $4.3 million for the three months ended September 30, 2018. Research and development expenses for the three months ended September 30, 2019 was $0.4 million, an increase of $0.3 million or 255%, compared to $0.1 million for the three months ended September 30, 2018. The increase was due primarily to software and engineering costs. Other income for the three months ended September 30, 2019 was $0.9 million, as compared to $0.7 million for the three months ended September 30, 2018. Other income mainly consists of interest expense and change in the fair value of derivative liabilities. The change in the fair value of derivative liability of $0.6 million was a result of the quarterly mark to market adjustment impacted by the change in the stock price. This was offset by the increase of $0.3 million in interest from a loan entered in 2019. Operating loss for the three months ended September 30, 2019 was $1.2 million, a decrease of $0.7 million, or 39%, compared to $1.9 million for the three months ended September 30, 2018. Net loss for the three months ended September 30, 2019 was $0.3 million, a decrease of $0.9 million, or 76%, compared to $1.2 million for the three months ended September 30, 2018. The resulting EPS loss for the three months ended September 30, 2019 was ($0.03) per diluted share, compared to ($0.12) per diluted share for the three months ended September 30, 2018. The decrease in the net loss was primarily due to increased revenue, a decrease in cost of sales as a percentage of revenue and change in fair value of derivative liabilities. Adjusted EBITDA loss for the three months ended September 30, 2019 was $0.4 million, a decrease of $0.8 million or 69% compared to $1.2 million for the three months ended September 30, 2018. The resulting adjusted EPS loss for the three months ended September 30, 2019 was $(0.03) per diluted share compared to ($0.11) per diluted share for the three months ended September 30, 2018. Financial Results for the Nine Months Ended September 30, 2019: Revenue for the nine months ended September 30, 2019 was $27.7 million, an increase of $1.8 million or 7%, compared to $25.9 million for the nine months ended September 30, 2018. Gross profit for the nine months ended September 30, 2019 was $8.3 million, an increase of $2.7 million, compared to $5.6 million for the nine months ended September 30, 2018. The resulting gross margin was 30% for the nine months ended September 30, 2019, compared to 22% for the nine months ended September 30, 2018. General and administrative expenses for the nine months ended September 30, 2019 was $11.9 million, an increase of $0.7 million or 7%, compared to $11.2 million for the nine months ended September 30, 2018. The increase was primarily attributable to the increase in employee salary of $0.6 million, increase in bonuses of $0.3 million and increase in contract services of $0.2 million, which was offset by a decrease in stock-based compensation of $0.7 million. Research and development expenses for the nine months ended September 30, 2019 was $0.9 million, an increase of $0.5 million or 147%, compared to $0.4 million for the nine months ended September 30, 2018. The increase in research and development expense was related to contract services primarily for software consultant costs of $0.3 million for Qwizdom and salaries of $0.1 million each for Qwizdom and Modern Robotics engineers. Other expense for the nine months ended September 30, 2019 was an $1.6 million, as compared to $0.7 million for the nine months ended September 30, 2018. Other expense increased primarily due to increased interest expense of $0.7 million from loans and a change in fair value of derivative liability of $0.2 million resulting from the quarterly mark to market adjustment driven by the change in the stock price. Operating loss for the nine months ended September 30, 2019 was $4.6 million, a decrease of $1.3 million, or 23%, compared to $5.9 million for the nine months ended September 30, 2018. Net loss for the nine months ended September 30, 2019 was $6.1 million, a decrease of $0.5 million, or 7%, compared to $6.6 million for the nine months ended September 30, 2018. The resulting EPS loss for the nine months ended September 30, 2019 was ($0.58) per diluted share, compared to ($0.66) per diluted share for the nine months ended September 30, 2018. Net cash used in operating activities for the nine months ended September 30, 2019 was $6.3 million, an increase of $2.5 million compared to $3.8 million for the nine months ended September 30, 2018. Adjusted EBITDA loss for the nine months ended September 30, 2019 was $2.8 million, a decrease of $0.7 million or 21% compared to $3.5 million for the nine months ended September 30, 2018. The resulting adjusted EPS loss for the nine months ended September 30, 2019 was $(0.26) per diluted share compared to ($0.35) per diluted share for the nine months ended September 30, 2018. Third Quarter 2019 Financial Results Conference Call Management will host a conference call to discuss the third quarter 2019 financial results on Tuesday, November 12, 2019 at 4:30 p.m. Eastern Time. The conference call details are as follows:
For those unable to participate during the live broadcast, a replay of the call will also be available from 7:30 p.m. Eastern Time on November 12, 2019 through 11:59 p.m. Eastern Time on February 12, 2020 by dialing 1-877-481-4010 (domestic) and 1-919-882-2331 (international) and referencing the replay pin number: 55398. Use of Non-GAAP Financial Measures To supplement Boxlight's financial statements presented on a GAAP basis, Boxlight provides EBITDA, Adjusted EBITDA and Adjusted EPS as supplemental measures of its performance. To provide investors with additional insight and allow for a more comprehensive understanding of the information used by management in its financial and decision-making surrounding pro forma operations, we supplement our consolidated financial statements presented on a basis consistent with U.S. generally accepted accounting principles, or GAAP, with EBITDA, Adjusted EBITDA and Adjusted EPS as non-GAAP financial measures of earnings. EBITDA represents net income before income tax expense (benefit), interest expense, depreciation and amortization. Adjusted EBITDA represents EBITDA plus stock-based compensation and change in fair value of derivative liabilities. Adjusted EPS represents Adjusted EBITDA divided by the number of fully diluted shares outstanding. Our management uses EBITDA, Adjusted EBITDA, and Adjusted EPS as financial measures to evaluate the profitability and efficiency of our business model. We use these non-GAAP financial measures to access the strength of the underlying operations of our business. These adjustments, and the non-GAAP financial measures that are derived from them, provide supplemental information to analyze our operations between periods and over time. We find this especially useful when reviewing pro forma results of operations, which include large non-cash amortizations of intangible assets from acquisitions and stock-based compensation. Investors should consider our non-GAAP financial measures in addition to, and not as a substitute for, financial measures prepared in accordance with GAAP. About Boxlight Corporation Boxlight Corporation (Nasdaq: BOXL) ("Boxlight") is a leading provider of technology solutions for the global education market. The company aims to improve learning and engagement in classrooms and to help educators enhance student outcomes, by developing the products they need. The company develops, sells, and services its integrated, interactive solution suite including software, classroom technologies, professional development and support services. For more information about the Boxlight story, visit http://www.boxlight.com. Forward Looking Statements This press release may contain information about Boxlight's view of its future expectations, plans and prospects that constitute forward-looking statements. Actual results may differ materially from historical results or those indicated by these forward-looking statements as a result of a variety of factors including, but not limited to, risks and uncertainties associated with its ability to maintain and grow its business, variability of operating results, its development and introduction of new products and services, marketing and other business development initiatives, competition in the industry, etc. Boxlight encourages you to review other factors that may affect its future results in Boxlight's filings with the Securities and Exchange Commission.
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