Castellum, Inc. Announces 2023 Financial Results
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Insights
The year-over-year increase in revenue for Castellum, Inc. indicates a growing demand for cybersecurity and related services, a sector that has been expanding due to heightened digital threats. The uptick from $42.2 million to $45.2 million, although modest, reflects the company's ability to scale in a competitive environment. However, the net loss widening from $15.0 million to $17.9 million, including a substantial non-cash goodwill impairment charge, raises concerns about the company's valuation and the potential overestimation of its assets in previous periods.
Investors should note the use of Non-GAAP financial measures like Recurring Cash Operating Profit (RCOP), which management highlights as a better representation of operational performance. The quarter-over-quarter growth in RCOP suggests an improving operational efficiency, which could be a positive signal for future profitability. Nevertheless, the reliance on non-GAAP metrics can sometimes obscure the true financial health of a company and thus it's essential to consider both GAAP and non-GAAP results when evaluating investment potential.
Castellum's focus on the federal government as a client base provides a level of stability due to the long-term nature of government contracts. The reported qualified sales pipeline of over $600 million is a robust indicator of potential future revenue, assuming these opportunities can be converted into actual contracts. The company's strategic positioning within the cybersecurity, electronic warfare and software engineering sectors aligns with growing government expenditure in these areas, which could benefit Castellum in the long run.
The stock market's reaction to these financial results will likely hinge on investor confidence in the company's ability to capitalize on its sales pipeline and improve its RCOP. However, the reported goodwill impairment may affect investor sentiment as it suggests a previous overvaluation of the company's assets, which could lead to stock price volatility in the short term.
The cybersecurity industry is known for rapid innovation and the constant evolution of threats, which necessitates ongoing investment in research and development. Castellum's increase in annual revenue is indicative of its ability to keep pace with industry demands. However, the goodwill impairment suggests a need to reassess the company's strategic assets and possibly a realignment of its service offerings to match market valuation.
Given the technical complexity of cybersecurity services, Castellum's future success will depend on its ability to not only secure government contracts but also to deliver cutting-edge solutions that address emerging threats. The company's focus on improving its recurring cash operating profit is a sign that it is working to establish a sustainable financial model amidst the challenges of a rapidly changing industry landscape.
BETHESDA, Md., March 21, 2024 (GLOBE NEWSWIRE) -- Castellum, Inc. (NYSE-American: CTM), a cybersecurity, electronic warfare, and software engineering services company focused on the federal government, announces its results for the year ended December 31, 2023.
Revenue for 2023 was a record
Management uses a Non-GAAP financial measure, Recurring Cash Operating Profit (“RCOP”), as an important measure of the Company’s operating performance. RCOP increased in each quarter during 2023. From a GAAP 4th quarter operating loss of (
“We are pleased to once again report record annual revenue along with an improving recurring cash operating profit,” said Mark Fuller, President and Chief Executive Officer of Castellum. “Our operating performance improved throughout 2023 both in terms of RCOP as well as building our qualified sales pipeline which stands at over
About Castellum, Inc. (NYSE-American: CTM):
Castellum, Inc. is a cybersecurity, electronic warfare, and software engineering services company focused on the federal government - http://castellumus.com/.
Cautionary Statement Concerning Forward-Looking Statements:
This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements represent the Company’s expectations or beliefs concerning future events and can generally be identified by the use of statements that include words such as “estimate,” “project,” “believe,” “anticipate,” “shooting to,” “intend,” “plan,” “foresee,” “likely,” “will,” “would,” “appears,” “goal,” “target” or similar words or phrases. Forward-looking statements include, but are not limited to, statements regarding the Company’s expectations for revenue growth and new customer opportunities, improvements to cost structure, and profitability. These forward-looking statements are subject to risks, uncertainties, and other factors, many of which are outside of the Company’s control, that could cause actual results to differ materially from the results expressed or implied in the forward-looking statements, including, among others: the Company’s ability to compete against new and existing competitors; its ability to effectively integrate and grow its acquired companies; its ability to identify additional acquisition targets and close additional acquisitions; the impact on the Company’s revenue due to a delay in the U.S. Congress approving a federal budget; and the Company’s ability to maintain the listing of its common stock on the NYSE American LLC. For a more detailed description of these and other risk factors, please refer to the Company’s Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q and other filings with the Securities and Exchange Commission (“SEC”) which can be viewed at www.sec.gov. All forward-looking statements are inherently uncertain, based on current expectations and assumptions concerning future events or future performance of the Company. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. The Company expressly disclaims any intent or obligation to update any of the forward-looking statements made in this release or in any of its SEC filings except as may be otherwise stated by the Company.
Non-GAAP Financial Measures and Key Performance Metrics:
This press release contains Non-GAAP Recurring Cash Operating Profit, which is a Non-GAAP financial measure that is used by management to measure the Company’s operating performance. A reconciliation of this measure to the most directly comparable GAAP financial measure is contained herein. To the extent required, statements disclosing the definition, utility, and purpose of this measure are also set forth herein.
Definition:
Non-GAAP Recurring Cash Operating Profit represents the Company’s GAAP operating loss excluding non-cash charges such as stock-based compensation, depreciation and amortization, and change in value of contingent earnout, as well as non-recurring charges related to the Company’s uplisting or other non-recurring charges.
Utility and Purpose:
The Company discloses Non-GAAP Recurring Cash Operating Profit because this Non-GAAP measure is used by management to evaluate our business, measure its operating performance, and make strategic decisions. We believe Non-GAAP Recurring Cash Operating Profit is useful for investors and others in understanding and evaluating our operating results in the same manner as its management. However, Non-GAAP Recurring Cash Operating Profit is not a financial measure calculated in accordance with GAAP and should not be considered as a substitute for GAAP operating loss or any other operating performance measure calculated in accordance with GAAP. Using this Non-GAAP measure to analyze our business would have material limitations because the calculations are based on the subjective determination of management regarding the nature and classification of events and circumstances that investors may find significant. In addition, although other companies in our industry may report a measure titled Non-GAAP Recurring Cash Operating Profit, this measure may be calculated differently from how we calculate this Non-GAAP financial measure, which reduces its overall usefulness as a comparative measure. Because of these inherent limitations, you should consider Non-GAAP Recurring Cash Operating Profit alongside other financial performance measures, including net loss and our other financial results presented in accordance with GAAP.
| Castellum, Inc. | |||
| Reconciliation of unaudited Non-GAAP Recurring Cash Operating Profit to Operating Loss | |||
| Three Months Ended December 31, 2023 | |||
| Revenues | $ | 11,089,833 | |
| Gross profit | 4,588,252 | ||
| Operating loss | (1,532,241 | ) | |
| Non-cash charges: | |||
| Depreciation and amortization | 662,975 | ||
| Stock based compensation | 1,383,578 | ||
| Change in value of contingent earnout | (157,000 | ) | |
| Total non-cash charges | 1,889,553 | ||
| Non-GAAP Recurring Cash Operating Profit | $ | 357,313 | |
Contact:
Mark Fuller, President and Chief Executive Officer
Phone: (301) 961-4895
Contact: Info@castellumus.com
A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/06ff9361-79e5-48b2-9b0d-6fd276b8691a
FAQ
What was Castellum Inc.'s revenue for 2023?
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What is the current qualified sales pipeline for Castellum Inc.?
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