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

Thursday, May 12, 2022 4:05 PM
Altigen Communications, Inc.
Topic:
Earnings

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
[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.

Topic:
Earnings
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