Altigen Communications, Inc. Reports Fourth Quarter and Full-Year Fiscal 2022 Results

Fourth Quarter Cloud and Professional Services Revenue Increases 47%

MILPITAS, CA / ACCESSWIRE / December 15, 2022 / Altigen Communications, Inc. (OTCQB:ATGN), a Silicon Valley-based cloud solutions provider for the Unified Communications as a Service (UCaaS), Contact Center as a Service (CCaaS) and our Customer Engagement as a Service (CEaaS) markets, announced today its financial results for the fourth quarter and year ended September 30, 2022.

"Fiscal 2022 was a critical year for Altigen, marking the transition to our new Customer Experience Cloud Solutions portfolio," said Jerry Fleming, chairman and CEO of Altigen. "During the year we made significant enhancements to our CoreInteract Customer Engagement as a Service (CEaaS) platform, established a beachhead base of CoreInteract customers, launched the new FrontStage Contact Center as a Service (CCaaS) solution for our FinTech Customers, and deployed our new geo-redundant MaxCloud Unified Communications as a Service (UCaaS) platform to over 30 customers.

"In addition, we also acquired ZAACT Consulting, a leading Microsoft solutions partner, which added valuable Microsoft technical expertise required by our enterprise customers. All in all, I believe the steps taken during fiscal 2022 mark a key catalyst in our evolution that will enable Altigen to take advantage of today's Digital Transformation market opportunities within the Microsoft Teams platform, Fiserv's significant customer base and our third-party channel."

Fourth Quarter Highlights (Fiscal 2022 versus Fiscal 2021)

• Net Revenue increased 28% to $3.6 million;

• Cloud services revenue decreased 1.0% to $1.9 million;

• Professional services and other revenue increased 706% to $1.2 million;

• Service support and software revenue decreased 31% to $0.5 million;

• Gross margin decreased to 63.8%, compared with 71.4%;

• GAAP net loss was $0.8 million and diluted EPS of ($0.03);

• Non-GAAP net income and non-GAAP diluted EPS of $0.2 million and $0.01, respectively, compared to $0.4 million and $0.01, respectively.

Full Year Highlights (Fiscal 2022 versus Fiscal 2021)

• Net Revenue increased 8% to $11.9 million;

• Cloud services revenue was $7.6 million, relatively flat to the prior year;

• Professional services and other revenue increased 295% to $1.9 million;

• Service support and software revenue decreased 20% to $2.3 million;

• Gross margin decreased to 68.1%, compared with 72.0%;

• GAAP net loss was $0.7 million and diluted EPS of ($0.03);

• Non-GAAP net income and non-GAAP diluted EPS of $1.1 million and $0.04, respectively, compared to $1.3 million and $0.05, respectively.

Select Financial Metrics: Fiscal 2022 versus Fiscal 2021
(in thousands, except for EPS and percentages)	Fiscal 4Q22			Fiscal 4Q21			Change		YTD FY22			YTD FY21			Change
Total Revenue	$	3,571		$	2,794		27.8%		$	11,891		$	10,990		8.2%
Cloud Services		1,943			1,970		-1.4%			7,639			7,630		0.1%
Professional and Other Services		1,161			144		706.3%			1,979			501		295.0%
Legacy Products		467			680		-31.3%			2,273			2,859		-20.5%
Software Assurance		417			523		-20.3%			1,867			2,283		-18.2%
Perpetual Software License		50			157		-68.2%			406			576		-29.5%
GAAP Operating (Loss)/Income	$	(659)		$	71		nm		$	(580)		$	(20)		nm
Operating Margin		-18.5%			2.5%					-4.9%			-0.2%
Non-GAAP Operating (Loss)/Income	$	(62)		$	121		nm		$	99		$	436		-77.3%
Non-GAAP Operating Margin		-1.7%			4.3%					0.8%			4.0%
GAAP Net Loss	$	(764)		$	(1,193)		-36.0%		$	(697)		$	(491)		-42.0%
Non-GAAP Net Income	$	205		$	358		-42.7%		$	1,084		$	1,284		-15.6%
Non-GAAP Diluted Earnings Per Share	$	0.01		$	0.01		0.0%		$	0.04		$	0.05		-20.0%
Adjusted EBITDA(1)	$	204		$	360		-43.3%		$	1,082		$	1,285		-15.8%
Cash Flow from Operations	$	(8)		$	352		nm		$	(84)		$	589		nm
nm = not measurable/meaningful; *may not add up due to rounding

1. Throughout this release, the use of non-GAAP financial measures is 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.

Trended Financial Information
(in thousands, except for EPS and percentages)	Fiscal 1Q21	Fiscal 2Q21	Fiscal 3Q21	Fiscal 4Q21	Fiscal 1Q22	Fiscal 2Q22	Fiscal 3Q22	Fiscal 4Q22	FY 21	FY22
Total Revenue	$ 2,661	$ 2,687	$ 2,848	$ 2,794	$ 2,733	$ 2,558	$ 3,029	$ 3,571	$ 10,990	$ 11,891
Cloud Services	1,841	1,855	1,964	1,970	1,910	1,880	1,906	1,943	7,630	7,639
Professional and Other Services	71	75	211	144	139	124	555	1,161	501	1,979
Legacy Products	749	757	673	680	684	554	568	467	2,859	2,273
Software Assurance	633	577	550	523	506	471	473	417	2,283	1,867
Perpetual Software License	116	180	123	157	178	83	95	50	576	406
GAAP Operating Income/(Loss)	$ 55	$ (325)	$ 179	$ 71	$ 10	$ 78	$ (9)	$ (659)	$ (20)	$ (580)
Operating Margin	2.1%	-12.1%	6.3%	2.5%	0.4%	3.0%	-0.3%	-18.5%	-0.2%	-4.9%
Non-GAAP Operating Income/(Loss)	$ 77	$ 21	$ 217	$ 121	$ 66	$ 92	$ 3	$ (62)	$ 436	$ 99
Non-GAAP Operating Margin	2.9%	0.8%	7.6%	4.3%	2.4%	3.6%	0.1%	-1.7%	4.0%	0.8%
GAAP Net Income/(Loss)	$ 56	$ (336)	$ 982	$ (1,193)	$ 11	$ 65	$ (9)	$ (764)	$ (491)	$ (697)
Non-GAAP Net Income	$ 235	$ 238	$ 453	$ 358	$ 313	$ 342	$ 224	$ 205	$ 1,284	$ 1,084
Non-GAAP Diluted Earnings Per Share	$ 0.01	$ 0.01	$ 0.02	$ 0.01	$ 0.01	$ 0.01	$ 0.01	$ 0.01	$ 0.05	$ 0.04
Adjusted EBITDA(1)	$ 235	$ 238	$ 452	$ 360	$ 312	$ 342	$ 224	$ 204	$ 1,285	$ 1,082

nm = not measurable/meaningful; *may not add up due to rounding

1. Throughout this release, the use of non-GAAP financial measures is 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.

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 a.m. ET). The conference call can be accessed by dialing (888) 506-0062 (domestic) or (973) 528-0011 (international), conference ID #948950. 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 #47302. 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 including, but not limited to, statements regarding our ability to successfully integrate acquired businesses and technologies, our ability to accelerate business opportunities and to achieve increased market acceptance for our service offerings, and our ability to penetrate new markets. 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
Senior Managing Director
Hayden IR
(346) 396-8696
brian@haydenir.com

ALTIGEN COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, amounts in thousands)
	September 30, 2022			September 30, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	3,232		$	6,799
Accounts receivable, net		1,220			596
Other current assets		206			145
Total current assets		4,658			7,540
Property and equipment, net		7			27
Operating lease right-of-use assets		572			826
Goodwill		2,725			-
Intangible assets, net		1,882			433
Capitalized software development cost, net		1,331			1,669
Deferred tax asset		6,493			6,597
Other long-term assets		37			45
Total assets	$	17,705		$	17,137
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	53		$	86
Accrued compensation and benefits		364			251
Accrued expenses		530			587
Acquisition-related contingent consideration - current		500			-
Operating lease liabilities, current		383			311
Deferred revenue - current		566			696
Total current liabilities		2,396			1,931
Contingent consideration on acquired business - long-term		670			-
Operating lease liabilities - long-term		233			570
Deferred revenue - long-term		206			166
Total liabilities		3,505			2,667
Stockholders' equity:
Common stock		24			24
Treasury stock		(1,565)			(1,565)
Additional paid-in capital		72,671			72,243
Accumulated deficit		(56,930)			(56,232)
Total stockholders' equity		14,200			14,470
Total liabilities and stockholders' equity	$	17,705		$	17,137

ALTIGEN COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share data)
		Three Months Ended						Twelve Months Ended
		September 30,						September 30,
		2022			2021			2022			2021
Net revenue		$	3,571		$	2,794		$	11,891		$	10,990
Gross profit			2,277			1,996			8,093			7,916
Operating expenses:
Research and development			1,497			1,108			4,651			3,848
Selling, general & administrative			1,439			817			4,022			3,775
Litigation			-			-			-			313
Operating (loss)/income			(659)			71			(580)			(20)
Gain on extinguishment of debt - PPP loan forgiveness (1)			-			-			-			804
Other income, net			-			-			1			-
Net (loss) income before provision for income taxes			(659)			71			(579)			784
Income tax benefit (expense) (2)			(105)			(1,264)			(119)			(1,275)
Net loss		$	(764)		$	(1,193)		$	(698)		$	(491)
Per share data:
Basic		$	(0.03)		$	(0.05)		$	(0.03)		$	(0.02)
Diluted		$	(0.03)		$	(0.05)		$	(0.03)		$	(0.02)
Weighted average shares outstanding:
Basic			24,223			23,556			24,016			23,279
Diluted			25,701			25,474			25,561			25,232

______________________

1. During the third quarter of fiscal 2021, the Company recorded a non-cash gain on debt extinguishment of $804,200 related to the forgiveness of the Company's PPP loan which originated during the third quarter of fiscal 2020.

2. The Company's fourth quarter fiscal year 2022 and 2021 results include a non-cash tax expense of approximately $105,000 and $1.3 million, respectively, related to the Company's income tax rate which differs from its statutory rate primarily due to expired net operating losses.

ALTIGEN COMMUNICATIONS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited, amounts in thousands)
		Twelve Months Ended September 30,
		2022			2021
Cash flows from operating activities:
Net loss		$	(698)		$	(491)
Adjustments to reconcile net income to net cash from operating activities:
Impairment of capitalized software			189			92
Loss on disposal of property, equipment and other assets			5			-
Depreciation and amortization			15			28
Deferred income tax expense			104			1,308
Amortization of intangible assets			221			174
Amortization of capitalized software			743			646
Stock-based compensation			93			143
Gain from extinguishment of debt - PPP loan forgiveness			-			(804)
Changes in operating assets and liabilities:
Accounts receivable and unbilled accounts receivable			(624)			(183)
Prepaid expenses and other current assets			(61)			13
Other long-term assets			8			(15)
Accounts payable			(33)			(11)
Accrued expenses			44			(135)
Deferred revenue			(90)			(176)
Net cash provided by operating activities			(84)			589
Cash flows from investing activities:
Purchase of property and equipment			-			(11)
Acquisition of business			(2,925)			-
Capitalized software development costs			(594)			(603)
Net cash used in investing activities			(3,519)			(614)
Cash flows from financing activities:
Proceeds from issuances of common stock			36			165
Net cash provided by financing activities			36			165
Net decrease in cash and cash equivalents			(3,567)			140
Cash and cash equivalents, beginning of period			6,799			6,659
Cash and cash equivalents, end of period		$	3,232		$	6,799

ALTIGEN COMMUNICATIONS, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (Unaudited)
(In thousands, except per share data)
	Three Months Ended						Twelve Months Ended
	September 30,						September 30,
	2022			2021			2022			2021
Reconciliation of GAAP to Non-GAAP Gross Profit:
GAAP gross profit	$	2,277		$	1,996		$	8,093		$	7,916
Amortization of capitalized software		151			154			633			475
Amortization of acquired customer relationships		82			43			213			174
Non-GAAP gross profit	$	2,510		$	2,193		$	8,939		$	8,565
Reconciliation of GAAP to Non-GAAP Expenses:
GAAP operating expenses	$	2,936		$	1,925		$	8,673		$	7,936
Acquisition related expenses		587			-			587			-
Litigation		-			-			-			313
Depreciation and amortization		7			5			20			28
Amortization of capitalized software		18			36			109			171
Amortization of intangible assets		8			-			8			-
Stock-based compensation		11			49			93			143
Non-GAAP operating expenses	$	2,305		$	1,835		$	7,856		$	7,281
Reconciliation of GAAP to Non-GAAP Net Income:
GAAP net loss	$	(764)		$	(1,193)		$	(698)		$	(491)
Acquisition related expenses		587			-			587			-
Litigation		-			-			-			313
Depreciation and amortization		7			5			20			28
Amortization of capitalized software		169			190			743			646
Amortization of intangible assets		90			43			221			174
Stock-based compensation		11			49			93			143
Gain on extinguishment of PPP Loan		-			-			-			(804)
Deferred tax asset valuation allowance		105			1,264			119			1,275
Non-GAAP net income	$	205		$	358		$	1,085		$	1,284
Per share data:
Basic	$	0.01		$	0.02		$	0.05		$	0.06
Diluted	$	0.01		$	0.01		$	0.04		$	0.05
Weighted average shares outstanding:
Basic		24,223			23,556			24,016			23,279
Diluted		25,701			25,474			25,561			25,232

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. These non-GAAP financial measures exclude stock-based compensation expense, amortization of acquired intangible assets, depreciation and amortization expenses, acquisition-related costs, change in deferred tax asset valuation allowance, litigation costs and other non-recurring or unusual charges or benefits 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.

SOURCE: Altigen Communications, Inc.

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