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

Secures initial customers for each of its new CoreInteract, MaxCloud and FrontStage platforms

MILPITAS, CA / ACCESSWIRE / August 18, 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 third quarter ended June 30, 2022.

“I’m excited to say that customer interest in our new UCaaS, CCaaS and CEaaS platforms has been substantial, and, in fact, we signed our first customers for each during the second quarter,” said Jerry Fleming, chairman and CEO of Altigen. “Additionally, we made great strides towards building a robust pipeline of opportunities and further advancing our new product roadmap, both of which we believe will drive higher revenue growth and profitability in fiscal 2023 and beyond.

“Looking to the future, we have a tremendous opportunity ahead in the UCaaS, CCaaS and CEaaS markets. In addition to CoreInteract (CEaaS) recently being named a Microsoft Preferred Solution, to date, we have closed over a dozen customers for our CoreInteract products for Microsoft Teams. Additionally, our pipeline continues to grow, and we now have about 50 potential opportunities for which we have submitted proposals. We are also continuing to enhance CoreInteract with new features and functionality that customers are requesting for this market.

“I am also very optimistic about our relationship with fintech giant Fiserv for our MaxCloud (UCaaS) and FrontStage (CCaaS) platforms, both of which were recently deployed for a mid-size regional bank. There is a large opportunity here to upgrade existing Fiserv customers to MaxCloud as well as introduce these new solutions to new customers. Additionally, there is a strong demand for contact center solutions by Fiserv customer base, presenting a large upsell opportunity for FrontStage over time.

“Finally, we are seeing customer wins in our third-party channel, whether it be converting our roughly 500 on premise clients to the cloud first model or upgrading our existing base of 350 cloud customers to MaxCloud. We anticipate converting most of these existing customers over the next 18-24 months, which we expect will be an incremental contributor to revenue growth while reducing our costs to service these customers.”

Third-Quarter Highlights (Fiscal 2022 versus Fiscal 2021)

  • Net Revenue increased 6.4% to $3.0 million;
  • Cloud services revenue decreased (3.0%) to $1.9 million;
  • Professional services and other revenue increased 163.0% to $0.6 million;
  • Gross margin decreased to 67.8%, compared with 70.0%;
  • GAAP net loss was $0.01 million and diluted EPS of ($0.01);
  • Non-GAAP net income1 and non-GAAP diluted EPS1 of $0.2 million and $0.01, respectively, compared to $0.5 million and $0.02, respectively;
  • Cash flow from operations increased to $1.0 million, compared to $0.5 million.
Altigen Communications, Inc., Thursday, August 18, 2022, Press release picture

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.

Altigen Communications, Inc., Thursday, August 18, 2022, Press release picture

Subsequent News

Chief Strategy Officer Ryan Day will transition from his current role to a consulting role on August 19, 2022.

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 (888) 506-0062 (domestic) or (973) 528-0011 (international), conference ID #272165. 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 #46350. 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 grow revenue and profitability in fiscal 2023 and beyond, our ability to accelerate business opportunities and to achieve increased market acceptance for our service offerings, our ability to drive the adoption of our next generation cloud solutions, our ability to accelerate business opportunities with Fiserv, and to 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
[email protected]

ALTIGEN COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, amounts in thousands)

June 30, 2022 September 30, 2021
Cash and cash equivalents
$ 3,448 $ 6,799
Accounts receivable, net
801 596
Other current assets
303 145
Property and equipment, net
15 27
Operating lease right-of-use
660 826
Intangible assets, net
5,256 433
Capitalized software, net
1,482 1,669
Deferred tax asset
6,597 6,597
Other long-term assets
37 45
Total assets
$ 18,599 $ 17,137
Current liabilities
$ 3,099 $ 1,931
Long-term liabilities
547 736
Stockholders’ equity
14,953 14,470
Total liabilities and stockholders’ equity
$ 18,599 $ 17,137

ALTIGEN COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in thousands, except per share data)

Three Months Ended Nine Months Ended
June 30, June 30,
2022 2021 2022 2021
Net revenue
$ 3,029 $ 2,848 $ 8,320 $ 8,196
Gross profit
2,054 1,995 5,816 5,920
Operating expenses:
Research and development
1,252 955 3,153 2,740
Selling, general & administrative
811 861 2,583 2,959
Litigation
313
Operating (loss)/income
(9 ) 179 80 (92 )
Gain on extinguishment of debt – PPP loan forgiveness (1)
804 804
Other income/(expense), net
1
Net (loss) income before provision for income taxes
(9 ) 983 81 712
Income tax benefit (expense)
(1 ) (14 ) (11 )
Net (loss)/income
$ (9 ) $ 982 $ 67 $ 701
Per share data:
Basic
$ 0.00 $ 0.04 $ 0.00 $ 0.03
Diluted
$ 0.00 $ 0.04 $ 0.00 $ 0.03
Weighted average shares outstanding:
Basic
24,124 23,360 23,946 23,186
Diluted
24,124 25,669 25,509 25,507

(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.

ALTIGEN COMMUNICATIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, amounts in thousands)

Nine Months Ended
June 30,
2022 2021
Cash flows from operating activities:
Net income
$ 67 $ 701
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization
12 23
Amortization of intangible assets
131 131
Amortization of capitalized software
573 456
Stock-based compensation
82 94
Gain from extinguishment of debt – PPP loan forgiveness
(804 )
Changes in operating assets and liabilities:
Accounts receivable and unbilled accounts receivable
(205 ) (91 )
Prepaid expenses and other current assets
(158 ) (35 )
Other long-term assets
8 (15 )
Accounts payable
(12 ) 8
Accrued expenses
1,154 (62 )
Deferred revenue
3 (169 )
Net cash provided by operating activities
1,655 237
Cash flows from investing activities:
Purchase of property and equipment
(11 )
Acquisition of business
(4,655 )
Capitalized software development costs
(386 ) (500 )
Net cash used in investing activities
(5,041 ) (511 )
Cash flows from financing activities:
Proceeds from issuances of common stock
35 71
Net cash provided by financing activities
35 71
Net decrease in cash and cash equivalents
(3,351 ) (203 )
Cash and cash equivalents, beginning of period
6,799 6,659
Cash and cash equivalents, end of period
$ 3,448 $ 6,456

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.

Gain on forgiveness of PPP loan

Gain on forgiveness of PPP loan has been excluded because this is a one-time forgiveness of debt that is not recurring across all periods, and we believe inclusion of the gain is not representative of operating performance.

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.

ALTIGEN COMMUNICATIONS, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(amounts in thousands, except per share data)

Three Months Ended Nine Months Ended
June 30, June 30,
2022 2021 2022 2021
Reconciliation of GAAP to Non-GAAP Gross Profit:
GAAP gross profit
$ 2,054 $ 1,995 $ 5,816 $ 5,920
Amortization of capitalized software
153 131 482 321
Acquisition related expenses
43 43 131 131
Non-GAAP gross profit
$ 2,250 $ 2,169 $ 6,429 $ 6,372
Reconciliation of GAAP to Non-GAAP Expenses:
GAAP operating expenses
$ 2,063 $ 1,816 $ 5,736 $ 6,012
Litigation
313
Depreciation and amortization
3 6 12 23
Amortization of capitalized software
20 56 91 135
Stock-based compensation
13 38 82 94
Non-GAAP operating expenses
$ 2,027 $ 1,716 $ 5,551 $ 5,447
Reconciliation of GAAP to Non-GAAP Net Income:
GAAP net (loss) income
$ (9 ) $ 982 $ 67 $ 701
Litigation
313
Depreciation and amortization
3 6 12 23
Amortization of capitalized software
173 187 573 456
Stock-based compensation
13 38 82 94
Acquisition related expenses
43 43 131 131
Gain on extinguishment of PPP Loan (1)
(804 ) (804 )
Deferred tax asset valuation allowance
1 14 11
Non-GAAP net income
$ 223 $ 453 $ 879 $ 925
Per share data:
Basic
$ 0.01 $ 0.02 $ 0.04 $ 0.04
Diluted
$ 0.01 $ 0.02 $ 0.03 $ 0.04
Weighted average shares outstanding:
Basic
24,124 23,360 23,946 23,186
Diluted
25,599 25,669 25,509 25,507

(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.

SOURCE: Altigen Communications, Inc.

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https://www.accesswire.com/712673/Altigen-Communications-Inc-Reports-Third-Quarter-Results-for-Fiscal-Year-2022

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