Inpixon
Q2 2019 Earnings Call Transcript

Published: 14 Aug 2019

[Operator:]

Good afternoon, and welcome to the Inpixon’s Earnings Conference Call for the Second Quarter Ended June 30, 2019. All participants will be in listen-only mode. [Operator Instructions] Participants on this call are advised that the audio of this conference call is being broadcast live over the Internet and is also being recorded for playback purposes. A replay of the call will be available approximately 1 hour after the end of this call through September 14, 2019.I would now like to turn the conference over to Scott Arnold, President of CORE IR, the company’s Investor Relations firm. Mr. Arnold, please go ahead.

[Scott Arnold:]

Thank you, Anita. Thank for joining today’s conference call to discuss Inpixon’s corporate developments and financial results for the second quarter ended June 30, 2019. With us today are Nadir Ali, the company’s CEO; and Wendy Loundermon, VP of Finance. At 4

[Nadir Ali:]

Thanks, Scott, and good afternoon everyone. Welcome to our second quarter 2019 earnings call and corporate update. To start, I’m pleased to report that our second quarter results reflect another quarter of significant progress as compared to the prior-year period serving as what I believe is validation at the company’s strategic efforts towards transforming Inpixon into a leading pure-play provider in a rapidly growing Indoor Positioning Analytics industry is being realized.Our second quarter revenue of $1.5 million is a 78% increase over the prior year period and the fourth sequential quarterly increase in revenue. In fact, we are at 69% growth year-over-year for the first half of 2019 versus the first half of 2018. In addition, we have maintained over 70% gross margins through the first two quarters of 2019.Management continues to be focused on increased revenue growth, both organically and through strategic acquisitions, with the goal of getting to positive cash flow as soon as possible. We have what we believe is a robust pipeline and anticipate that our sales cycles will improve in coming quarters as customers continue to recognize the value of indoor positioning data.Just as the outdoor locational data from GPS is a ubiquitous part of our daily lives, we foresee a similar trend in IPS, or indoor positioning systems, where people spend over 80% of their time indoors. Our customers need this data to remain competitive. This data that we capture from indoor positioning can be used in hundreds of applications like security, marketing, staff optimization, tracking assets, theft, et cetera, and in a variety of diverse verticals, including government, corrections, high tech, retail, finance, hospitality, education, and telecom.Our goal is to become recognized as the premier indoor data company, offering the most comprehensive solution in the market. In order to accomplish this, we are heavily engaged in product innovation from adding ultra-wideband detection capabilities to our location sensors, to incorporating new predictive analytics in our data analytics platform.We are also pursuing the acquisition of complementary technologies that can expand our product offering. For example, during the second quarter of 2019, we began offering video management system integration technology as a result of our acquisition of Locality Systems. This technology enhances traditional security video feed by combining with our device location data to deliver a more formidable security product.We also acquired a broad portfolio of GPS technology assets and licenses allowing us to bridge the market’s indoor and outdoor positioning gap. These assets will expand the breadth of GPS tracking solutions we can offer to enterprise, schools, and other customers that have multiple buildings on a campus and want to track assets in and out of these buildings.Many of you may be aware that we recently announced, we signed a definitive agreement to acquire Jibestream Inc., a premier provider of indoor mapping and location technology. Jibestream’s intelligent indoor mapping platform allows customers to manage, visualize, and analyze data in the context of an indoor map, making it a perfect match to Inpixon’s precise locationing technology. Customers can go to one place to get what we believe is the most accurate positioning on the most dynamic and interactive mapping platform currently available.The completion of this acquisition will assist in increasing our total revenue and add marquee customers such as Mall of America, The Pentagon, Westfield World Trade Center, San Francisco International Airport, and others to our customer base. Even more importantly, the Jibestream acquisition will strengthen Inpixon’s capabilities as a result of the addition of an amazingly talented team of mapping experts, designers, customer success, and solution engineers, sales and marketing and more.In a fragmented marketplace, where a plethora of small vendors are crowding to offer various kinds of point solutions, apps, and rudimentary [ph] analytics to be a perplexed customer base. This market needs a clearly defined, comprehensive scalable solution to deliver a set of requirements that have been identified and are much sought-after, including IoT security, visitor analytics, wayfinding, asset tracking, and occupancy to name a few. With these acquisitions and its own proprietary technology, Inpixon believes it has the most comprehensive integrated platform available to deliver these purpose-built applications to customers worldwide.In the coming quarters, we need to tell you more about this new integrated indoor location data platform and the opportunities it creates for Inpixon, opportunities that we believe are validated by companies like Yelp and WeWork, who have recently made their own acquisitions to capture indoor data in restaurants and office buildings, respectively. We may have been early to market, but the market now appears to be ready and we are looking to position ourselves as the leader.With that, I will now turn the call over to Wendy to discuss our financial results for the quarter ended June 30, 2019, and then I’ll wrap up with a few closing comments. Wendy?

[Wendy Loundermon:]

Thank you, Nadir, and welcome to the call, everyone. Revenues for the three months ended June 30, 2019 were approximately $1.5 million compared to $839,000 for the comparable period in the prior year for an increase of $652,000 or approximately 78%. Revenues increased in the second quarter of 2019 as a result of increased focus on the IPA product line. Gross profit margin for the three months ended June 30, 2019 were 74% compared to 69% for the three months ended June 30, 2018. This increase in margin is primarily due to the increase in higher-margin IPA revenue during these periods.Loss from operations for the three months ended June 30, 2019, was $4.7 million as compared to $4.5 million for the comparable period in the prior year. This increase of approximately $0.2 million was primarily attributable to the higher gross margin offset by higher operating expenses, including acquisition costs, legal fees, and stock-based compensation during the three months ended June 30, 2019.This concludes my comments, and now I’d like to turn the call back over to Nadir.

[Nadir Ali:]

Thanks, Wendy. The importance of momentum in any organization cannot be understated, and we are building it here at Inpixon. Our progress this quarter and thus far this year indicates that our continued initiatives to position ourselves as an emerging leader in the indoor positioning arena have begun to take hold. As a reminder, we are an early participant in an industry that is expected to reach $54.6 billion by 2026, according to Stratistics MRC in a report published on April 9, 2019. We are excited about the future and are confident that we have the products and services for a growing market to become the most sought-after indoor data company in the world.As always, thank you for your time and continued support.

[Operator:]

This conference has concluded. Thank you for attending today’s presentation. You may now disconnect.