The Glimpse Group, Inc.
Q1 2022 Earnings Call Transcript

Published: 15 Nov 2021

[Mark Schwalenberg:]

Hi everyone, and welcome to The Glimpse Group First Fiscal Quarter 2022 Financial Results Webinar. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. Before we begin the formal presentation, I’d like to remind everyone that statements made on today’s call and webcast, including those regarding future financial results and industry prospects are forward-looking and may be subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the call. Please refer to the company’s regulatory filings for a list of associated risks. And we will also refer you to the company’s website for more supporting industry information. I would now like to hand the call over to Lyron Bentovim, President and CEO of The Glimpse Group. Lyron, the floor is yours.

[Lyron Bentovim:]

Thank you, Mark, and thank you everyone for joining us. I’m pleased to welcome you to The Glimpse Group fiscal first quarter 2022 financial results investor call for quarter ended September 30, 2021. This is our first quarterly results conference as a NASDAQ company and being new to the public markets, I’d like to provide a quick overview of The Glimpse Group to anyone who is new to our story. The Glimpse Group is a diversified virtual reality and augmented reality platform company, comprised of multiple wholly owned integrated VR and AR enterprise-focused software and services subsidiary companies, providing investors an opportunity to invest directly into the emerging VR/AR industry via a diversified platform. We created Glimpse with the vision of cultivating companies in the emerging VR/AR industry, simplifying the challenges they face, creating a robust ecosystem, capturing wide IP, while creating scale and cost efficiencies rarely seen in early stage industries, and mitigating risks for investors and entrepreneurs. Glimpse was established in 2016, and over the last few years, we have been growing at a rapid scale. We own and operate 11 subsidiary companies covering multitude of industry segments. We have filed 13 patents with several issued so far and now have over 70 VR and AR software developers, engineers, and 3D artists in three continents, making us, I believe one of the largest independent software and services companies in the emerging VR and AR industry. For our fiscal first quarter, the three months ended September 30, we demonstrated remarkable progress highlighted by strong revenue growth, strategic accretive acquisitions, fortification of our balance sheet and establishment of key partnerships. Here are a few operational highlights. We saw strong top-line revenue growth of 292% year-over-year. This growth was primarily organic and the result of new customer engagements and existing customer of follow-on engagements, including several multi-year commitments. We continue to see strong organic revenue growth across all lines of business. And in particular, our core VR and AR software and services revenue, excluding project revenue, which grew 500% organically when compared to the same period a year ago. This resulted in a gross margin of approximately 85%. Our software license SaaS revenues grew by approximately 214% year-over-year. We have improved our adjusted EBITDA loss to $0.44 million a 15% year-over-year improvement and we continue to operate on a relatively low cash burn. Seizing on the opportunity of the macro level tailwinds following the Meta announcement, we completed a $15 million private placement of common stock and warrants. This was structured in a healthy way for the company with a select number of institutional investors and at a price that is approximately 43% above our recent July 1, 2021 IPO price and with warrants price of over 110% above our IPO price. We continue to strengthen and expand the Glimpse ecosystem while broadening our strategic positioning in various growth industries. During the quarter, we acquired Auggd, an Australian based provider of augmented reality software and services to the Architecture, Engineering & Construction (NYSE

[Maydan Rothblum:]

Thanks, Lyron. I will constrain my portion to a succinct review of our financial results. A full breakdown is available in our 10-Q and in the press release across the wire after market close today. Please note that I’ll refer to adjusted EBITDA and other non-GAAP measures. With our calculation of adjusted EBITDA and other non-GAAP measures, please refer to our MD&A section, which is available in our 10-Q filing, which you can find on our website under SEC filings. Total revenue for the three months ended September 30, 2021 was approximately $1.02 million compared to approximately $0.26 million for the three months ended September 30, 2020, an increase of approximately 292%. This growth was primarily due to the addition of new customers and was partially impacted by the delay of revenues for Q1 fiscal year 2021, into Q2 fiscal year 2021, due to COVID-19 constraints. Software license revenue was approximately $0.22 million for the three months ended September 30, 2021 compared to approximately $0.07 million for the three months ended September 30, 2020 an increase of approximately 214%. As the VR industry – as the VR and AR industries continue to mature, we expect our software license revenue and SaaS revenue to continue to grow on an absolute basis and as an overall percentage of total revenue. For the three months ended September 30, 2021 VR/AR software and related services revenue not including VR/AR projects was approximately $0.8 million compared to $0.14 million for the prior a year, an increase of approximately 500%. For the three months ended September 30, 2021 non-project revenue accounted for approximately 84% of total revenues compared to 54% of revenues for the previous year in the same period. Gross profit increased to $0.87 million or 85% of revenue for the three months ended September 30, 2021 as compared to a gross profit of $0.12 million or 46% of revenue in the previous year for the same period. This increase was driven by the increase in non-project revenue, which produces higher gross margin and improved management of our project revenue cost of goods sold. Operating expenses for the three months ended September 30, 2021were approximately $2.27 million compared to $1.36 million for the three months ended September 30, 2020, an increase of approximately 67%. This increase was driven by increased employee headcount to support growth and the incurrence of expenses specific to Glimpse becoming a public – publicly traded company. For the three months ended September 30, 2021 net loss from operations was approximately $1.4 million compared to a net loss of approximately of $1.24 million for the three months ended September 30, 2020, an increase of approximately 13% period-to period. We sustained a net loss of $1.66 million for the three months ended September 30, 2020 as compared to a net loss of $1.28 million for the prior period, a loss increase of $0.38 million or 30%. This reflects a period-over-period increase in revenue and related gross profit offset by an increase in operating expenses and the incurrence of non-cash loss on conversion of convertible notes, the common stock as a result of our July 1, 2021 IPO and the decrease in non-cash interest expense. As it relates to cash flow, we look at two main parameters. Net cash used in operating activities was $1.05 million for the three months ended September 30, 2021 compared to $0.16 million during the prior period, an increase of approximately $0.89 million. This includes one-time cash expenses of approximately $0.6 million related to Glimpse becoming a publicly traded company. For the three months ended September 30, 2021, our adjusted EBITDA loss, a non-GAAP measure improved by $0.08 million to negative $0.44 million or approximately 15% compared to negative $0.52 million for the three months ended September 30, 2020. Our net cash burn at current revenue levels is approximately $2 million annually, which is relatively low in our view, mostly variable in nature and under tight control. Net operating loss carry forwards, NOL were approximately $12.3 million at the end of the quarter. To recap, we ended our first quarter of our fiscal year with a strong balance sheet of approximately $12.5 million in cash that was bolstered by the $15 million private placement of which we received gross proceeds of approximately $13.6 million. As of today, we have over $25 million of cash on hand, no material liabilities, no preferred equity outstanding and no convertible debt. With a fortified balance sheet, strong revenue growth and low cost structure relative to a growth-tech company and a very positive fundamentals of our operations we remained well positioned for future growth. I’d now like to pass it to Lyron for some closing remarks after which we will begin our question-and-answer session.

[Lyron Bentovim:]

Thank you, Maydan. Looking ahead, this is an exciting time for Glimpse and the VR/AR industry, while it is still early in the industry’s lifecycle. We believe that the development of the VR/AR industry in general and the metaverse in particular is likely to accelerate given the recent surge in awareness, interest, funding, activity and adoption. Glimpse is well-positioned financially, operationally and strategically to leverage its unique platform model of diverse subsidiaries, targeting different industries segments to create scale and value. In parallel to our strong organic growth, we continue to look for additional accretive acquisitions that will fit into our ecosystem. Between these, our expectation is for a strong remainder to our fiscal 2022, October 2021 through June 2022. We would like to thank all of our shareholders for their ongoing support as we continue to push forward with creating a leading enterprise focused software and services company in the emerging XR space. I thank you for your interest in and support of the Glimpse Group. And now I’ll turn the call back to Mark to take some questions.

[Mark Schwalenberg:]

Does anyone have any questions before we proceed to closing remarks? Hopefully done, so at this time I will conclude Q&A and we’ll turn the call back to the ground for closing remarks.

[Lyron Bentovim:]

Thank you, Mark. I would like to thank each and every one of you for joining our earnings conference call. We look forward to continuing to update you on our ongoing progress and growth. If you are in need want to answer any of your questions, please reach out to us directly or through our IR Firm MZ Group. Thank you.

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