DecisionPoint Systems Announces Fourth Quarter and Full Year 2023 Results
- Total revenue increased by 25% for the fourth quarter and 19% for the full year 2023.
- Software and Services revenue surged by 208% and 130% for the quarter and full year respectively.
- Strategic investments in business development professionals to drive future growth.
- Focus on expanding services and software offerings for recurring revenue.
- Positive outlook for 2024 with continued investment in organic growth and M&A.
- Gross margin decreased by 130 basis points in the fourth quarter.
- GAAP net income and diluted EPS decreased by 20.1% and 21.3% for the full year 2023.
- Short-term and long-term debt increased due to the acquisition of Macro Integration Services (MIS).
Insights
Observing DecisionPoint Systems' reported financials reveals a strategic pivot towards higher-margin services and software, which is a common trend in the tech industry to foster stable, recurring revenue streams. The substantial growth in this segment, particularly a 208% quarterly increase, signifies aggressive market penetration and successful product or service adoption. Nonetheless, the 18.3% decline in hardware solutions revenue could indicate a shift in consumer demand or possibly a strategic de-emphasis on lower-margin hardware sales.
From a financial health perspective, the reduction of debt by $6.2 million post the MIS acquisition is a positive signal to creditors and investors alike. It demonstrates fiscal responsibility and enhances the company's creditworthiness. However, the reported GAAP net loss in Q4 and the decrease in GAAP net income and diluted EPS year-over-year may raise concerns about the company's profitability and expense management, particularly in the context of their recent investments and repositioning efforts.
The emphasis on software and services, especially with the introduction of PointCare Services, aligns with broader market trends where enterprise clients seek comprehensive, managed solutions. This shift is likely in response to market demand for more integrated and managed service offerings, which can provide DecisionPoint with a competitive edge in the enterprise mobility and point of sale sectors. The mention of industry-experienced business development professionals suggests a strategic effort to deepen market penetration and enhance customer acquisition.
While the expansion into services and software may offer a buffer against hardware volatility, it's important to monitor how these changes align with customer needs and industry trends. The company's proactive approach to realigning its cost structure could mitigate risks associated with the investments made in MIS, PointCare and Vision. The potential for these investments to contribute to a more significant, higher-margin source of recurring revenue in 2025 could be a pivotal factor in the company's long-term success.
The reported financial performance of DecisionPoint Systems offers insights into the economic forces at play within the niche of enterprise services and solutions. The strategic move to bolster higher-margin services and software is indicative of a response to economic pressures for efficiency and profitability. The company's ability to pay down debt amidst these investments is a strong indicator of financial acumen and could signal to investors a robust economic standing.
However, the decline in hardware solutions revenue and the short-term impact on profitability due to recent investments should be carefully weighed against the potential for long-term gains. The company's strategy appears to hinge on the anticipation of continued economic growth and enterprise investment in technology solutions, which may be subject to macroeconomic factors such as corporate spending trends and overall economic health.
Total quarterly and full-year revenue, up
Software and Services quarterly and full-year revenue increased
Steve Smith, chief executive officer of DecisionPoint Systems, commented: “We finished off a record year on a high note, with revenue growth coming from both services and software and a hardware solutions project in the fourth quarter. This performance demonstrates that our strategy to bolster our higher-margin services and software portfolio is working and has provided a level of differentiation for DecisionPoint within our industry. Additionally, during the quarter, we further invested in driving long-term, higher-margin organic growth by adding several industry-experienced business development professionals to help drive growth in services and software as we head into 2024. While this investment will impact our profitability over the near term, we believe the medium to longer-term rewards will benefit shareholders.”
Fourth Quarter Highlights (2023 versus 2022)
-
Revenue increased
24.8% to$30.5 million -
Gross Profit increased
18.7% to$7.5 million 24.6% ; -
GAAP Operating Income increased
3.7% at$0.7 million -
GAAP Net Loss and Diluted Loss per Share of
( and ($0.3) million $0.03 -
Non-GAAP Net Income1 and Non-GAAP Diluted EPS1 of
$0.0 million $0.00 -
Adjusted EBITDA1 increased
8.4% to$1.9 million
Full Year 2023 Highlights (versus 2022)
-
Revenue increased
18.7% to$115.6 million -
Gross Profit increased
24.8% to$28.8 million 24.9% ; -
GAAP Operating Income increased
7.4% to$4.8 million -
GAAP Net Income and Diluted EPS decreased
20.1% and21.3% to$2.5 million $0.32 -
Non-GAAP Net Income and Non-GAAP Diluted EPS decreased
11.4% and12.4% to$3.6 million $0.47 -
Adjusted EBITDA increased
12.9% to$8.9 million -
Paid down
$6.2 million
1See GAAP to non-GAAP explanations and reconciliations at the end of this release
Select Financial Metrics: 2023 versus 2022 |
||||||||||||||||
(in $M except for EPS) |
|
4Q23 |
|
|
4Q22 |
|
Change |
FY23 |
FY22 |
Change |
||||||
Total Revenue |
$ |
30.5 |
$ |
24.5 |
24.8 |
% |
$ |
115.6 |
$ |
97.4 |
18.7 |
% |
||||
Hardware Solutions Revenue |
$ |
16.2 |
|
$ |
19.8 |
|
-18.3 |
% |
$ |
73.5 |
|
$ |
79.1 |
|
-7.1 |
% |
Software and Services Revenue |
$ |
14.4 |
|
$ |
4.7 |
|
207.5 |
% |
$ |
42.1 |
|
$ |
18.3 |
|
129.6 |
% |
Gross Profit |
$ |
7.5 |
|
$ |
6.3 |
|
18.7 |
% |
$ |
28.8 |
|
$ |
23.1 |
|
24.8 |
% |
Operating Income |
$ |
0.7 |
|
$ |
0.7 |
|
3.7 |
% |
$ |
4.8 |
|
$ |
4.4 |
|
7.4 |
% |
GAAP Net Income |
$ |
(0.3 |
) |
$ |
0.4 |
|
nm |
$ |
2.5 |
|
$ |
3.1 |
|
-20.1 |
% |
|
GAAP Diluted Earnings Per Share |
$ |
(0.03 |
) |
$ |
0.07 |
|
nm |
$ |
0.32 |
|
$ |
0.41 |
|
-21.3 |
% |
|
Non-GAAP Net Income |
$ |
0.0 |
|
$ |
0.7 |
|
nm |
$ |
3.6 |
|
$ |
4.1 |
|
-11.4 |
% |
|
Non-GAAP Diluted EPS |
$ |
0.00 |
|
$ |
0.11 |
|
nm |
$ |
0.47 |
|
$ |
0.54 |
|
-12.4 |
% |
|
Adjusted EBITDA |
$ |
1.9 |
|
$ |
1.8 |
|
8.4 |
% |
$ |
8.9 |
|
$ |
7.8 |
|
12.9 |
% |
*numbers may not add due to rounding |
||||||||||||||||
nm = not measurable/meaningful |
||||||||||||||||
Balance Sheet and Liquidity as of December 31, 2023
Cash and cash equivalents were
2024 Commentary
Smith commented: “2023 was a year of investment, repositioning DecisionPoint for continued long-term revenue growth, gross margin expansion and higher profitability with our operating leverage. The combined acquisition of MIS, our release of the Vision Portal and preparing for the recent January introduction of PointCare Services were key elements in this repositioning, as the former significantly increased our software and services mix, while the latter will form the basis of our nascent Mobile Managed Services (MMS) offering.
“As we look to 2024, we will continue to focus on expanding our services and software offerings to drive recurring revenue and long-term growth through organic investment and M&A. A big part of our focus includes our recently released PointCare Services, a premier suite of deployment and managed services built to address all aspects of selecting, deploying and managing enterprise technology. PointCare Services integrates all of our service offerings to support enterprise mobility, point of sale and RFID technologies, including our Vision Portal, Vizitrace and other managed services. We also re-aligned our cost structure during the fourth quarter of 2023, which will help offset our investments in MIS, PointCare, and Vision, and the hiring of a seasoned team to build out our MMS strategy, product portfolio and go-to-market. We expect these investments will start to bear fruit for our top line in 2024 and become a more meaningful, higher-margin source of recurring revenue in 2025.
“From an industry perspective, we believe our high mix of services and software partially insulates us from the challenges other companies in our space are facing on the hardware side.”
| Trended Financial Information* | ||||||||||
| (in $M except for EPS) | 1Q22 |
2Q22 |
3Q22 |
4Q22 |
1Q23 |
2Q23 |
3Q23 |
4Q23 |
FY22 |
FY23 |
| Total Revenue |
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| Hardware Solutions Revenue |
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| Software and Services Revenue |
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| Gross Profit |
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| Operating Income |
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| GAAP Net Income |
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|
|
|
( |
|
|
| GAAP Diluted EPS |
|
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|
|
|
|
|
( |
|
|
| Non-GAAP Net Income |
|
|
|
|
|
|
|
|
|
|
| Non-GAAP Diluted EPS |
|
|
|
|
|
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|
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| Adjusted EBITDA |
|
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| nm = not measurable/meaningful | ||||||||||
| *numbers may not add due to rounding | ||||||||||
Earnings Conference Call and Webcast Information:
Date: Monday, April 1, 2024
Time: 11:00 a.m. Eastern Time
Toll-Free: 1-877-407-3982
Toll/International: 1-201-493-6780
Call me™: Click Call me Link for instant telephone access to the event (Call me™ link will be made active 15 minutes before the scheduled start time).
Webcast: https://viavid.webcasts.com/starthere.jsp?ei=1662460&tp_key=aff09932db
Replay Information:
Toll-Free: 1-844-512-2921
Toll/International: 1-412-317-6671
Replay Pin Number: 13742540
Replay Start: Monday, April 1, 2024, 2:00 p.m. ET
Replay Expiry: Monday, April 8, 2024 at 11:59 p.m. ET
About DecisionPoint Systems
DecisionPoint Systems Inc. delivers mobility-first enterprise managed services, in-store retail solutions centered around point-of-sale technologies, deployment, integration and support services to retail, supply chain, hospitality, healthcare and other verticals, enabling customers to make better and faster decisions in the moments that matter—the decision points. Our mission is to help businesses consistently deliver on those moments—improving customer service, accelerating growth, improving worker productivity and lowering risks and costs. For more information about DecisionPoint Systems, Inc., visit https://www.decisionpt.com.
Forward-Looking Statements
In this press release, all statements that are not purely about historical facts, including, but not limited to, those in which we use the words "believe," "anticipate," "expect," "plan," "intend," "estimate, "target" and similar expressions, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. While these forward-looking statements represent our current judgment of what may happen in the future, actual results may differ materially from the results expressed or implied by these statements due to numerous important factors, including, but not limited to, those described in our most recent report on SEC Form 10-K (under the headings "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations"), which may be revised or supplemented in subsequent reports on SEC Forms 10-Q and 8-K. We are under no obligation, and expressly disclaim any obligation, to update the forward-looking statements in this press release, whether as a result of new information, future events or otherwise.
DecisionPoint Systems, Inc. Consolidated Balance Sheets (in thousands, except par value) |
||||||||
December 31, |
December 31, |
|||||||
2023 |
2022 |
|||||||
ASSETS |
|
|
|
|
||||
Current assets: |
||||||||
Cash |
$ |
4,300 |
|
$ |
7,642 |
|
||
Accounts receivable, net of allowance of |
23,768 |
|
17,085 |
|
||||
Inventory, net |
2,133 |
|
4,417 |
|
||||
Deferred costs |
3,826 |
|
2,729 |
|
||||
Prepaid expenses and other current assets |
|
630 |
|
|
399 |
|
||
Total current assets |
34,657 |
|
32,272 |
|
||||
Operating lease assets |
3,392 |
|
2,681 |
|
||||
Property and equipment, net |
2,973 |
|
1,817 |
|
||||
Deferred costs, net of current portion |
3,689 |
|
2,868 |
|
||||
Deferred tax assets, net |
1,161 |
|
848 |
|
||||
Intangible assets, net |
7,815 |
|
4,531 |
|
||||
Goodwill |
22,081 |
|
10,499 |
|
||||
Other assets |
|
172 |
|
|
41 |
|
||
Total assets |
$ |
75,940 |
|
$ |
55,557 |
|
||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ |
16,857 |
|
$ |
19,755 |
|
||
Accrued expenses and other current liabilities |
6,566 |
|
4,528 |
|
||||
Deferred revenue |
8,066 |
|
6,021 |
|
||||
Current portion of earnout consideration |
5,370 |
|
829 |
|
||||
Current portion of long-term debt |
1,003 |
|
3 |
|
||||
Current portion of operating lease liabilities |
|
874 |
|
|
529 |
|
||
Total current liabilities |
38,736 |
|
31,665 |
|
||||
Deferred revenue, net of current portion |
5,307 |
|
4,331 |
|
||||
Revolving line of credit |
1,300 |
|
- |
|
||||
Long-term debt, net of current portion |
3,639 |
|
143 |
|
||||
Noncurrent portion of operating lease liabilities |
3,093 |
|
2,706 |
|
||||
Long-term portion of earnout consideration |
4,316 |
|
- |
|
||||
Deferred tax liabilities |
- |
|
- |
|
||||
Other liabilities |
|
6 |
|
|
130 |
|
||
Total liabilities |
56,397 |
|
38,975 |
|
||||
Commitments and contingencies (Note 13) |
||||||||
Stockholders’ equity: |
||||||||
Preferred stock, |
- |
|
- |
|
||||
Common stock, |
8 |
|
7 |
|
||||
Additional paid-in capital |
38,902 |
|
38,429 |
|
||||
Accumulated deficit |
|
(19,367 |
) |
|
(21,854 |
) |
||
Total stockholders’ equity |
|
19,543 |
|
|
16,582 |
|
||
Total liabilities and stockholders’ equity |
$ |
75,940 |
|
$ |
55,557 |
|
||
DecisionPoint Systems, Inc. Consolidated Statements of Income and Comprehensive Income (in thousands, except per share data) |
|||||||||||||||
| Three Months | Year Ended | ||||||||||||||
| December 31, | December 31, | ||||||||||||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
| Net sales: | |||||||||||||||
| Product | $ | 16,146 |
|
$ | 19,820 |
|
$ | 73,494 |
|
$ | 79,079 |
|
|||
| Service | 14,357 |
|
4,655 |
|
42,100 |
|
18,336 |
|
|||||||
| Net sales | 30,503 |
|
24,475 |
|
115,594 |
|
97,415 |
|
|||||||
| Cost of sales: | |||||||||||||||
| Product | 13,402 |
|
15,001 |
|
59,607 |
|
62,214 |
|
|||||||
| Service | 9,558 |
|
3,135 |
|
27,162 |
|
12,106 |
|
|||||||
| Cost of sales | 22,960 |
|
18,136 |
|
86,769 |
|
74,320 |
|
|||||||
| Gross profit | 7,543 |
|
6,339 |
|
28,825 |
|
23,095 |
|
|||||||
| Operating expenses: | |||||||||||||||
| Sales and marketing expense | 2,969 |
|
2,368 |
|
9,957 |
|
9,218 |
|
|||||||
| General and administrative expenses | 3,851 |
|
3,275 |
|
14,093 |
|
9,430 |
|
|||||||
| Total operating expenses | 6,820 |
|
5,643 |
|
24,050 |
|
18,648 |
|
|||||||
| Operating income | 723 |
|
696 |
|
4,775 |
|
4,447 |
|
|||||||
| Interest expense, net | (771 |
) |
(14 |
) |
(1,156 |
) |
(56 |
) |
|||||||
| Other expense | (23 |
) |
2 |
|
- |
|
(15 |
) |
|||||||
| Income before income taxes | (71 |
) |
684 |
|
3,619 |
|
4,376 |
|
|||||||
| Income tax expense | (197 |
) |
(257 |
) |
(1,132 |
) |
(1,265 |
) |
|||||||
| Net income and comprehensive income attributable to common stockholders | $ | (268 |
) |
$ | 427 |
|
$ | 2,487 |
|
$ | 3,111 |
|
|||
| Earnings per share attributable to stockholders (1): | |||||||||||||||
| Basic | $ | (0.03 |
) |
$ | 0.06 |
|
$ | 0.33 |
|
$ | 0.43 |
|
|||
| Diluted | $ | (0.03 |
) |
$ | 0.06 |
|
$ | 0.32 |
|
$ | 0.41 |
|
|||
| Weighted average common shares outstanding | |||||||||||||||
| Basic | 7,678 |
|
7,401 |
|
7,555 |
|
7,261 |
|
|||||||
| Diluted | 7,779 |
|
7,758 |
|
7,679 |
|
7,562 |
|
|||||||
DecisionPoint Systems, Inc. Consolidated Statements of Cash Flows (in thousands) |
|||||||
Years Ended |
|||||||
December 31, |
|||||||
2023 |
2022 |
||||||
Cash flows from operating activities |
|
|
|
|
|||
Net income |
$ |
2,487 |
|
$ |
3,111 |
|
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|||||||
Depreciation and amortization |
2,971 |
|
2,465 |
|
|||
Loss on fixed asset disposal |
- |
|
22 |
|
|||
Share-based compensation expense |
283 |
|
577 |
|
|||
Deferred income taxes, net |
(1,924 |
) |
254 |
|
|||
Provision for credit losses |
240 |
|
249 |
|
|||
Provision for inventory obsolescence |
89 |
|
- |
|
|||
Changes in operating assets and liabilities: |
|||||||
Accounts receivable |
3,201 |
|
(3,630 |
) |
|||
Inventory, net |
4,825 |
|
(2,177 |
) |
|||
Deferred costs |
(1,918 |
) |
(1,984 |
) |
|||
Prepaid expenses and other current assets |
(207 |
) |
(54 |
) |
|||
Accounts payable |
(5,707 |
) |
8,924 |
|
|||
Accrued expenses and other current liabilities |
(1,644 |
) |
914 |
|
|||
Operating lease liabilities |
(92 |
) |
543 |
|
|||
Deferred revenue |
|
1,877 |
|
3,095 |
|
||
Net cash provided by operating activities |
|
4,481 |
|
12,309 |
|
||
Cash flows from investing activities |
|||||||
Purchases of property and equipment |
(893 |
) |
(1,477 |
) |
|||
Cash paid for acquisitions, net of cash acquired |
|
(12,917 |
) |
(4,525 |
) |
||
Net cash used in investing activities |
|
(13,810 |
) |
(6,002 |
) |
||
Cash flows from financing activities |
|||||||
Proceeds from term loan |
5,000 |
|
- |
|
|||
Repayment of term debt |
(504 |
) |
(3 |
) |
|||
Line of credit, net |
1,300 |
|
- |
|
|||
Proceeds from exercise of warrants |
220 |
|
- |
|
|||
Taxes paid in lieu of shares issued for share-based compensation |
(67 |
) |
(1,403 |
) |
|||
Proceeds from exercise of stock options |
|
38 |
|
154 |
|
||
Net cash provided by (used in) financing activities |
|
5,987 |
|
(1,252 |
) |
||
Change in cash |
(3,342 |
) |
5,055 |
|
|||
Cash, beginning of year |
|
7,642 |
|
2,587 |
|
||
Cash, end of year |
$ |
4,300 |
|
$ |
7,642 |
|
|
Non-GAAP Financial Measures
To supplement our consolidated financial statements presented on a GAAP basis, we have provided certain non-GAAP financial measures, namely non-GAAP Net Income, non-GAAP diluted EPS and Adjusted EBITDA, all of which are considered by management to be performance measures. Non-GAAP Net Income is defined as net income (loss) before: (1) share-based compensation, (2) business acquisition costs, (3) integration costs, and (4) NYSE American uplisting costs, as applicable. Adjusted EBITDA is calculated as Non-GAAP Net Income before interest, taxes, depreciation and amortization. Non-GAAP diluted EPS is calculated as Non-GAAP Net Income divided by the diluted weighted-average number of common shares outstanding.
Management believes that these non-GAAP measures reflect the essential operating activities of the Company [because these non-GAAP measures exclude expenses and transactions that are not part of our core operations and may be one time in nature]. We believe that [by excluding such expenses and transactions] these non-GAAP measures provide investors with a better understanding of how the results relate to our historical performance and how our results compare to other publicly-traded companies. The presentation of non-GAAP financial measures is not meant to be considered in isolation or as a substitute for GAAP financials. Our non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies, as other companies may calculate non-GAAP financial measures differently. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures appears below:
Reconciliation of Select GAAP Financial Measures to Non-GAAP Financial Measures (in thousands, except per share data) (Unaudited) |
|||||||||||||||
Three Months Ended |
Year Ended |
||||||||||||||
December 31, |
December 31, |
||||||||||||||
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Net income (loss), as reported |
$ |
(268 |
) |
$ |
427 |
$ |
2,487 |
$ |
3,111 |
||||||
Share-based compensation |
|
22 |
|
|
251 |
|
|
283 |
|
|
577 |
|
|||
Business acquisition costs |
|
97 |
|
|
39 |
|
|
533 |
|
|
281 |
|
|||
Integration costs |
|
137 |
|
|
- |
|
|
291 |
|
|
- |
|
|||
NYSE American uplisting costs |
|
- |
|
|
88 |
|
|
- |
|
|
88 |
|
|||
Non-GAAP Net Income |
$ |
(12 |
) |
$ |
805 |
|
$ |
3,594 |
|
$ |
4,057 |
|
|||
Depreciation and amortization |
|
943 |
|
|
715 |
|
|
2,971 |
|
|
2,465 |
|
|||
Income taxes |
|
197 |
|
|
257 |
|
|
1,132 |
|
|
1,265 |
|
|||
Interest expense |
|
771 |
|
|
14 |
|
|
1,156 |
|
|
56 |
|
|||
Adjusted EBITDA |
$ |
1,899 |
|
$ |
1,791 |
|
$ |
8,853 |
|
$ |
7,843 |
|
|||
Diluted EPS, as reported |
$ |
(0.04 |
) |
$ |
0.05 |
|
$ |
0.32 |
|
$ |
0.41 |
|
|||
Non-GAAP Diluted EPS |
$ |
(0.00 |
) |
$ |
0.11 |
|
$ |
0.47 |
|
$ |
0.54 |
|
|||
View source version on businesswire.com: https://www.businesswire.com/news/home/20240401680091/en/
Investor Relations Contact:
Brian Siegel, IRC, MBA
Senior Managing Director, Hayden IR
(346) 396-8696
Brian@haydenir.com
Source: DecisionPoint Systems, Inc.
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