Bsquare Reports Second Quarter 2020 Financial Results
SEATTLE, Aug. 13, 2020 /PRNewswire/ -- Bsquare Corporation (NASDAQ: BSQR) today announced financial results for the second quarter of 2020. For the second quarter of 2020, revenue was $8.9 million, net loss was $1.1 million, adjusted EBITDAS was negative $0.8 million, and cash increased by $1.9 million.
"COVID-19 and seasonal ordering patterns ended our three-quarter trend of increasing revenue. Partner Solutions segment revenue, which was strong in Q1 2020, was particularly affected as customer ordering slowed and magnified the quarter over quarter decrease. The challenges of the pandemic, however, did drive a higher level of collaboration that allowed us to strengthen relationships and retain our customers. Aggressive expense and cash management for the past several quarters enabled us to bolster our cash reserves," said Ralph C, Derrickson, CEO and President of Bsquare.
Added Derrickson: "The COVID-19 pandemic is driving rapid change in every corner of life and work, creating new requirements for the systems we all rely on. As our customers are responding we are seeing evidence that there is a significant role for Bsquare's intelligent device and system services, and we remain confident that our technology will be part of the answer."
Second Quarter 2020 Financial Highlights
-- Cash, cash equivalents, restricted cash, and short-term investments
totaled $12.6 million on June 30, 2020, an increase of approximately
$1.9 million from March 31, 2020.
-- Revenue for Q2 2020 was $8.9 million, down $7.8 million from Q1 2020.
Revenue declines were driven by pandemic-related reductions in demand on
top of normal seasonality in the Partner Solutions segment, while
Edge-to-Cloud segment revenue remained steady.
-- Gross margin for Partner Solutions was 14%, lower than the atypical
gross margin of Q1 2020 and returning to a level consistent with prior
periods. Edge-to-cloud margin improved sequentially but continues to
reflect the cost of addressing customer requirements for previously
delivered software.
-- Operating expenses for the quarter were at their lowest level since the
first?quarter of 2019 and operating expenses, excluding restructuring
costs, declined for the sixth consecutive quarter.
-- Net loss for the current quarter was $1.1 million, or $0.08 per diluted
share, compared to net loss of $0.5 million, or $0.04 per diluted share,
in the first quarter of 2020.
-- Adjusted EBITDAS was approximately negative $0.8 million, compared to
approximately break-even results in the first quarter of 2020.
Details as follows (unaudited, in thousands except percentages and per share amounts):
Three Months Ended
June 30, March 31, Quarter- June 30, Year-over-
2020 2020 over- 2019 Year
Quarter Change
Change
Revenue:
Partner Solutions $
8,110 $
15,905 $
(7,795) $
11,684 $
(3,574)
Edge to Cloud 814 824 (10) 2,496 (1,682)
Total revenue 8,924 16,729 (7,805) 14,180 (5,256)
Total gross profit $
1,046 $
2,585 $
(1,539) $
2,423 $
(1,377)
Gross margins (1):
Partner Solutions 14 17 (3) 15 (1)
% % % % %
Edge to Cloud (15) (20) 5 27 (42)
% % % % %
Total gross margin 12 15 (3) 17 (5)
% % % % %
Total operating
expenses 2,121 3,024 (903) 6,352 (4,231)
Total operating
expenses excluding
restructuring costs
(2) 2,121 3,024 (903) 4,976 (2,855)
Net loss (1,073) (474) (599) (3,868) 2,795
Per diluted share (0.08) (0.04) (0.04) (0.30) 0.22
Net loss excluding
restructuring costs
(2) (1,073) (474) (599) (2,492) 1,419
Per diluted share
excluding
restructuring costs
(2) (0.08) (0.04) (0.04) (0.20) 0.12
Adjusted EBITDAS (2) (806) (28) (778) (2,252) 1,446
Cash, restricted cash,
cash equivalents and
short-term
investments $
12,582 $
10,644 $
1,938 $
12,560 $
22
Notes:
(1) Quarter-over-quarter change and
year-over-year change represent
percentage point change.
(2) Total operating expenses excluding
restructuring costs, net loss
excluding restructuring costs, net
loss per diluted share excluding
restructuring costs, and Adjusted
EBITDAS are non-GAAP financial
measures (reconciliation provided
after financial statement tables).
Financial Commentary on Second Quarter 2020 Results Compared to Second Quarter 2019
-- Partner Solutions revenue decreased for the comparative period, driven
by lower sales of Microsoft operating systems and other embedded
software.
-- Edge to Cloud revenue decreased when compared to the prior year second
quarter, primarily from completion of software consulting projects
during 2019 that did not recur in 2020.
-- Total operating expenses, both including and excluding restructuring
costs, decreased when compared to the second quarter of 2019 due to
announced spending reduction initiatives that reduced salary, benefit
and marketing costs.
-- Net loss for Q2 2020 was $1.1 million or $(0.08) per diluted share
compared to a loss of $3.9 million or $(0.30) per diluted share in Q2
2019, an improvement of $2.8 million or $0.22 per diluted share.
Conference Call
Management will host a conference call today, August 13, 2020, at 5 p.m. Eastern Time (2 p.m. Pacific Time). To access the call dial 1-866-248-8441 or?1-856-344-9206 for international callers, and reference "BSQUARE Corporation Second Quarter 2020 Earnings Conference Call." A replay will be available for two weeks following the call by dialing 1-844-512-2921, or 1-412-317-6671 for international callers; reference pin number 2721094. A live and replay Webcast of the call will be available at www.bsquare.com in the investor relations section.
About Bsquare Corporation
Bsquare builds technology that is powering the next generation of intelligent devices and the systems in which they operate. We believe the promise of IoT will be realized through the development of intelligent devices and intelligent systems that are cloud-enabled, contribute data, facilitate distributed control & decision making, and operate securely at scale. Bsquare's suite of services and software components allow our customers to create new revenue streams and operating models while providing new opportunities for lowering costs and improving operations. We serve a global customer base from offices in Seattle, Washington, and the United Kingdom. For more information, visit www.bsquare.com.
Cautionary Note Regarding Forward-Looking Statements
This release contains "forward-looking statements" within the meaning of the safe-harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as: "expect," "believe," "plan," "strategy," "future," "may," "should," "will," and similar references to future periods. Examples of forward-looking statements include, among others, statements we make regarding our preparation for and ability to service customers during the COVID-19 pandemic and our ability to achieve our business plans, strategies and expectations. Forward-looking statements are neither historical facts nor assurances about future performance. Instead, they are based on current beliefs, expectations and assumptions about the future of our business and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements.
Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others: our ability to execute our development initiatives and sales and marketing strategies; the extent to which we are successful in gaining new long-term customers and retaining existing ones; whether we are able to maintain our favorable relationship with Microsoft as a systems integrator and distributor; our success in leveraging strategic partnering initiatives with companies such as Microsoft, AWS and Intel; the impact of COVID-19 on our business; risks relating to our receipt of a PPP loan; and such other risk factors as discussed in our most recent Annual Report on Form 10-K and other filings with the Securities and Exchange Commission. Any forward-looking statement made by us in this release is based only on information currently available to us and speaks only as of the date on which it is made. Except as may be required by law, we undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.
BSQUARE Contact:
Investor Contact:
Christopher Wheaton, Chief Financial Officer
Leslie Phillips
BSQUARE Corporation
The Blueshirt Group
+1 425.519.5900
+ 1 415.217.5869
investorrelations@bsquare.com
leslie@blueshirtgroup.com
Bsquare and the Bsquare Logo are trademarks of Bsquare Corporation in the U.S. and other countries. Other names and brands herein may be trademarks of others.
BSQUARE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
June 30, 2020 December 31, 2019
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $
11,982 $
7,712
Restricted cash 600 600
Short-term investments 2,249
Accounts receivable, net of allowance
for doubtful accounts of $69 and $31 at
June 30, 2020 and December 31, 2019,
respectively 6,243 9,216
Contract assets 638 494
Prepaid expenses and other current
assets 782 244
Total current assets 20,245 20,515
Equipment, furniture and leasehold
improvements, less accumulated
depreciation 294 252
Deferred tax assets 7 7
Intangible assets, less accumulated
amortization 120 169
Right-of-use lease asset, net 1,343 1,828
Other non-current assets 66 284
Total assets $
22,075 $
23,055
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Third-party software fees payable $
6,198 $
7,224
Accounts payable 371 408
Notes payable 695
Accrued compensation 643 1,001
Other accrued expenses 665 306
Deferred revenue 2,558 1,559
Operating lease 292 702
Total current liabilities 11,422 11,200
Deferred revenue, long-term 205 903
Operating lease, long-term 1,135 1,256
Notes payable, long-term 881
Shareholders' equity:
Preferred stock, no par: 10,000,000
shares authorized; no shares issued and
outstanding
Common stock, no par: 37,500,000 shares
authorized; 13,155,139 and 13,042,293
shares issued and outstanding at June
30, 2020 and December 31, 2019,
respectively 139,199 138,877
Accumulated other comprehensive loss (1,026) (987)
Accumulated deficit (129,741) (128,194)
Total shareholders' equity 8,432 9,696
Total liabilities and shareholders'
equity $
22,075 $
23,055
BSQUARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended June 30, Six Months Ended June 30,
2020 2019 2020 2019
Revenue:
Partner Solutions $
8,110 $
11,684 $
24,015 $
24,785
Edge to Cloud 814 2,496 1,638 4,491
Total revenue 8,924 14,180 25,653 29,276
Cost of revenue:
Partner Solutions 6,944 9,923 20,100 21,072
Edge to Cloud 934 1,834 1,922 3,390
Total cost of revenue 7,878 11,757 22,022 24,462
Gross profit 1,046 2,423 3,631 4,814
Operating expenses:
Selling, general and
administrative 2,067 3,082 4,964 6,016
Research and development 54 1,894 181 4,230
Restructuring costs 1,376 1,376
Total operating expenses 2,121 6,352 5,145 11,622
Loss from operations (1,075) (3,929) (1,514) (6,808)
Other income (loss), net 2 61 (33) 94
Loss before income taxes (1,073) (3,868) (1,547) (6,714)
Income taxes
Net loss $
(1,073) $
(3,868) $
(1,547) $
(6,714)
Basic loss per share $
(0.08) $
(0.30) $
(0.12) $
(0.52)
Diluted loss per share $
(0.08) $
(0.30) $
(0.12) $
(0.52)
Net loss excluding restructuring
costs (3) $
(1,073) $
(2,492) $
(1,547) $
(5,338)
Per diluted share excluding
restructuring costs (3) $
(0.08) $
(0.19) $
(0.12) $
(0.41)
Shares used in per share
calculations:
Basic 13,110 12,855 13,051 12,879
Diluted 13,110 12,855 13,051 12,879
BSQUARE CORPORATION
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO MOST DIRECTLY COMPARABLE GAAP FINANCIAL MEASURES
(In thousands, unaudited)
Adjusted EBITDAS
---
Three Months Ended Six Months Ended
June 30, June 30,
2020 2019 2020 2019
Loss from operations, as
reported $
(1,075) $
(3,929) $
(1,514) $
(6,808)
Depreciation and amortization 164 286 360 480
Stock-based compensation 105 15 320 183
Restructuring costs 1,376 1,376
Adjusted EBITDAS (1) $
(806) $
(2,252) $
(834) $
(4,769)
(1) Adjusted EBITDAS is a non-GAAP
financial measure that BSQUARE
defines as income (loss) from
operations before depreciation
expense on fixed assets and
amortization expense (including
impairment) on intangible assets,
stock-based compensation expense,
restructuring costs, and goodwill
impairment (when applicable).
Adjusted EBITDAS should not be
construed as a substitute for net
income (loss) or net cash provided
(used) by operating activities
(all as determined in accordance
with GAAP) for the purpose of
analyzing our operating
performance, financial position
and cash flows. Adjusted EBITDAS
has limitations, including that it
does not reflect our entire cost
structure to operate our business
(such as the cost of replacing
assets being depreciated or
amortized, capital expenditures,
and stock-based compensation
expenses which we expect to
continue being meaningful, and
income tax expense (benefit)) and
may not be comparable to similarly
titled measures used by other
companies. However, BSQUARE
regards Adjusted EBITDAS as a
complement to net income and other
GAAP financial performance
measures. BSQUARE uses Adjusted
EBITDAS to evaluate BSQUARE's
financial performance and the
effectiveness of its business
strategies on a consistent basis
across reporting periods, and
BSQUARE believes the measure is
often used by analysts, investors
and other interested parties to
evaluate comparable companies.
Total operating
expenses excluding
restructuring costs Three Months Ended Six Months Ended
June 30, June 30,
2020 2019 2020 2019
Total operating
expenses $
2,121 $
6,352 $
5,145 $
11,622
Restructuring costs 1,376 1,376
Total operating
expenses excluding
restructuring costs
(1) $
2,121 $
4,976 $
5,145 $
10,246
(1) Total operating expenses
excluding restructuring costs
and goodwill impairment is a
non-GAAP financial measure that
BSQUARE defines as total
operating expenses, plus an add-
back for restructuring costs
(and goodwill impairment, when
applicable). This measure should
not be construed as a substitute
for total operating loss for the
purpose of analyzing our
operating performance, and it
has limitations, including that
it does not reflect our entire
cost structure to operate our
business. However, BSQUARE
regards this measure as a
complement to GAAP operating
expenses because it excludes
costs that may not be indicative
of operating performance.
BSQUARE uses this measure to
evaluate its financial
performance and the
effectiveness of its business
strategies on a consistent basis
across reporting periods, and
BSQUARE believes the measure is
often used by analysts,
investors and other interested
parties to evaluate comparable
companies.
Net loss excluding
restructuring costs Three Months Ended Six Months Ended
June 30, June 30,
2020 2019 2020 2019
Net loss $
(1,073) $
(3,868) $
(1,547) $
(6,714)
Restructuring costs 1,376 1,376
Net loss excluding
restructuring costs
(1) $
(1,073) $
(2,492) $
(1,547) $
(5,338)
(1) Net loss excluding restructuring
costs is a non-GAAP financial
measure that BSQUARE defines as
net loss, plus an add-back for
restructuring costs (and
goodwill impairment, when
applicable). This measure should
not be construed as a substitute
for total operating loss for the
purpose of analyzing our
operating performance, and it
has limitations, including that
it does not reflect our entire
cost structure to operate our
business. However, BSQUARE
regards this measure as a
complement to GAAP net loss
because it excludes costs that
may not be indicative of
operating performance. BSQUARE
uses this measure to evaluate
its financial performance and
the effectiveness of its
business strategies on a
consistent basis across
reporting periods, and BSQUARE
believes the measure is often
used by analysts, investors and
other interested parties to
evaluate comparable companies.
Net loss per diluted
share excluding
restructuring costs Three Months Ended Six Months Ended
June 30, June 30,
2020 2019 2020 2019
Diluted loss per
share $
(0.08) $
(0.30) $
(0.12) $
(0.52)
Restructuring costs (0.10)
$ $
(0.10)
Net loss excluding
restructuring costs
(1) $
(0.08) $
(0.20) $
(0.12) $
(0.42)
(1) Net loss excluding restructuring
costs is a non-GAAP financial
measure that BSQUARE defines as
diluted loss per share, plus an
add-back for the per diluted
share amount of restructuring
costs (and goodwill impairment,
when applicable). Other than
being expressed on a per
diluted share basis, this
measure is the same as net loss
excluding restructuring costs,
has the same limitations, and
is used and disclosed by
BSQUARE for the same reasons.
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SOURCE Bsquare
