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Altigen Communications, Inc. Reports Second Quarter Results for Fiscal Year 2022

·13 min read

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

  1. 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
brian@haydenir.com

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.



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https://www.accesswire.com/701164/Altigen-Communications-Inc-Reports-Second-Quarter-Results-for-Fiscal-Year-2022