iCAD Reports Financial Results for Third Quarter Ended September 30, 2024
iCAD reported Q3 2024 financial results with total revenue of $4.2 million, up 4% year-over-year. Annual Recurring Revenue (ARR) reached $9.3 million, showing a 10% increase. The company achieved an 86% gross profit margin and closed 13 cloud deals, including partnerships with UCSD and Charlotte Radiology. Notable developments include FDA clearance of ProFound Detection v4.0, delivering 22% improvement in detecting challenging cancer subtypes and 18% reduction in false positives. The company reported a GAAP net loss of ($1.8) million or ($0.07) per share. Cash position stands at $18.8 million, which management believes is sufficient for planned operations.
iCAD ha riportato i risultati finanziari del terzo trimestre del 2024, con un fatturato totale di 4,2 milioni di dollari, in aumento del 4% rispetto all’anno precedente. Il fatturato annuale ricorrente (ARR) ha raggiunto 9,3 milioni di dollari, mostrando un incremento del 10%. L’azienda ha ottenuto un margine di profitto lordo dell’86% e ha concluso 13 contratti cloud, tra cui collaborazioni con UCSD e Charlotte Radiology. Tra gli sviluppi degni di nota vi è l'approvazione della FDA per ProFound Detection v4.0, che offre un miglioramento del 22% nella rilevazione di sottotipi di cancro difficili e una riduzione del 18% nei falsi positivi. L’azienda ha registrato una perdita netta GAAP di ($1,8) milioni, ovvero ($0,07) per azione. La posizione di cassa si attesta a 18,8 milioni di dollari, ritenuta sufficiente dalla direzione per le operazioni pianificate.
iCAD informó los resultados financieros del tercer trimestre de 2024, con ingresos totales de 4.2 millones de dólares, un aumento del 4% interanual. Los ingresos anuales recurrentes (ARR) alcanzaron los 9.3 millones de dólares, lo que representa un incremento del 10%. La empresa logró un margen de beneficio bruto del 86% y cerró 13 acuerdos en la nube, incluyendo asociaciones con UCSD y Charlotte Radiology. Los desarrollos notables incluyen la aprobación de la FDA para ProFound Detection v4.0, que proporciona una mejora del 22% en la detección de subtipos de cáncer desafiantes y una reducción del 18% en falsos positivos. La empresa reportó una pérdida neta GAAP de ($1.8) millones o ($0.07) por acción. La posición de efectivo es de 18.8 millones de dólares, que la dirección considera suficiente para las operaciones planeadas.
iCAD는 2024년 3분기 재무 결과를 보고했으며, 총 수익은 420만 달러로, 지난해 대비 4% 증가했습니다. 연간 재발 수익 (ARR)은 930만 달러에 도달해 10% 증가했습니다. 회사는 86%의 총 이익률을 달성했으며, UCSD 및 Charlotte Radiology와의 파트너십을 포함하여 13건의 클라우드 거래를 성사시켰습니다. 주목할 만한 발전 사항으로는 ProFound Detection v4.0의 FDA 승인이 있으며, 이는 어려운 암 아형을 감지하는 데 22% 개선과 허위 양성율을 18% 감소시킵니다. 회사는 GAAP 기준으로 ($1.8) 백만 달러 또는 주당 ($0.07)의 순손실을 기록했습니다. 현금 보유액은 1880만 달러로, 경영진은 계획된 운영에 충분하다고 판단하고 있습니다.
iCAD a publié ses résultats financiers pour le troisième trimestre 2024, avec un chiffre d'affaires total de 4,2 millions de dollars, en hausse de 4 % par rapport à l'année précédente. Le revenu récurrent annuel (ARR) a atteint 9,3 millions de dollars, affichant une augmentation de 10 %. L'entreprise a réalisé une marge brute de 86 % et a conclu 13 contrats cloud, y compris des partenariats avec UCSD et Charlotte Radiology. Parmi les développements notables figure l'approbation de la FDA pour ProFound Detection v4.0, qui permet d'améliorer de 22 % la détection de sous-types de cancer difficiles et de réduire les faux positifs de 18 %. L'entreprise a annoncé une perte nette GAAP de ($1,8) million, soit ($0,07) par action. La position de trésorerie s'élève à 18,8 millions de dollars, jugée suffisante par la direction pour les opérations prévues.
iCAD hat die Finanzzahlen für das dritte Quartal 2024 bekannt gegeben, mit einem Gesamterlös von 4,2 Millionen Dollar, was einem Anstieg von 4 % im Vergleich zum Vorjahr entspricht. Der jährlich wiederkehrende Umsatz (ARR) erreichte 9,3 Millionen Dollar und zeigt damit einen Anstieg von 10 %. Das Unternehmen erzielte eine Bruttogewinnmarge von 86 % und schloss 13 Cloud-Verträge, darunter Partnerschaften mit UCSD und Charlotte Radiology. Zu den bemerkenswerten Entwicklungen gehört die FDA-Zulassung von ProFound Detection v4.0, die eine Verbesserung von 22 % bei der Erkennung herausfordernder Krebsuntertypen sowie eine Reduktion der falsch positiven Ergebnisse um 18 % bietet. Das Unternehmen meldete einen GAAP-Nettoverlust von ($1,8) Millionen oder ($0,07) pro Aktie. Die Liquiditätsposition beläuft sich auf 18,8 Millionen Dollar, was der Geschäftsführer für ausreichend hält, um die geplanten Abläufe sicherzustellen.
- Total revenue increased 4% YoY to $4.2 million
- ARR grew 10% YoY to $9.3 million
- Product revenue increased 14.1% YoY to $2.5 million
- Maintained strong gross profit margin of 86%
- Cash position of $18.8 million deemed sufficient for operations
- Services revenue declined 8.9% YoY to $1.7 million
- Operating expenses increased 19% YoY to $5.6 million
- Net loss widened to ($1.8) million from ($1.0) million YoY
- Adjusted EBITDA loss increased to ($1.5) million from ($0.8) million YoY
Insights
iCAD's Q3 2024 results show mixed performance with some positive trends but ongoing challenges. Total revenue grew 4% YoY to
Key concerns include widening losses, with GAAP net loss increasing to
The FDA clearance of ProFound Detection v4.0 and expansion into new markets could drive future growth, but current financials suggest continued pressure on profitability despite top-line improvements.
The FDA clearance of ProFound Detection v4.0 represents a significant technological advancement with
The company's expanding geographic footprint through new regulatory clearances and partnerships in multiple countries positions it well for market penetration. The timing aligns with new FDA regulations on breast density reporting, potentially accelerating adoption of iCAD's Density and Detection solutions.
The shift to cloud-based solutions, evidenced by 13 new cloud deals, indicates strong market acceptance of their SaaS platform, suggesting improved scalability and recurring revenue potential.
NASHUA, N.H., Nov. 13, 2024 (GLOBE NEWSWIRE) -- iCAD, Inc. (NASDAQ: ICAD) ("iCAD" or the "Company") a global leader on a mission to create a world where cancer can’t hide by providing clinically proven AI-powered breast health solutions, today reported its financial and operating results for the three and nine months ended September 30, 2024.
Third Quarter 2024 Highlights (Year over Year Performance):
- Total ARR was
$9.3 million , up10% year over year - Total revenues were
$4.2 million , up4% year over year - Gross Profit Margin was
86% , consistent with prior year - 13 cloud deals closed during the quarter, key wins include:
- University California San Diego (UCSD) signed a 3-year Cloud deal
- Charlotte Radiology signed a 3-year Cloud deal; another imaging provider for US Radiology, one of the country’s premier providers of diagnostic imaging services with more than 175 outpatient imaging centers across 13 states.
- ProFound Detection v4.0 received FDA clearance, delivers
22% improvement in detecting challenging and aggressive cancer subtypes
"We made continued progress during the third quarter highlighted by growing market interest which resulted in the close of 52 perpetual deals, 20 subscription deals, and 13 cloud deals in the quarter. Our ProFound Cloud SaaS platform, launched at the end of the first quarter of 2024, is achieving adoption rates ahead of our expectations, and as a result, annual recurring revenue increased by
"Likewise, we expanded our presence across key markets to extend our geographic reach, reflecting new regulatory clearances in South Africa and partnerships in the Dominican Republic, France, Spain, Turkey, and the United Arab Emirates. Additionally, during the quarter, the FDA’s new regulations around breast density reporting in the U.S. came into effect, and we believe this development will bolster demand for our Density and Detection solutions. We remain focused on continuing to position iCAD to strengthen our market leadership in AI-powered breast cancer detection and drive the global scalability of our solutions."
The chart below illustrates the growth of ARR (Annual Recurring Revenue) between the first quarter of 2022, when subscription sales first began, and the third quarter of 2024:
| ARR Change Since Start of Subscription Sales | ||||||||||||
| (in 000’s) | ||||||||||||
| Q1 22 | Q3 24 | $ Change | ||||||||||
| Maintenance Services ARR (M-ARR) | $ | 6,655 | $ | 6,750 | $ | 95 | ||||||
| Subscription ARR (S-ARR) | — | 2,143 | 2,143 | |||||||||
| Cloud ARR (C-ARR) | — | 369 | 369 | |||||||||
| Total ARR (T-ARR) | $ | 6,655 | $ | 9,261 | $ | 2,606 | ||||||
| % Change Since Start of Subscription Sales | 39 | % | ||||||||||
Three Months Ended September 30, 2024 Financial Results
Total revenue for the third quarter of 2024 was
| (in 000’s) | Three months ended September 30, | |||||||||||||||
| 2024 | 2023 | $ Change | % Change | |||||||||||||
| Product revenue | $ | 2,508 | $ | 2,198 | $ | 310 | 14.1 | % | ||||||||
| Services revenue | 1,709 | 1,875 | (166 | ) | -8.9 | % | ||||||||||
| Total revenue | $ | 4,217 | $ | 4,073 | $ | 144 | 3.5 | % | ||||||||
Gross Profit: Gross profit for the third quarter of 2024 was
Operating Expenses: Total operating expenses for the third quarter of 2024 were
GAAP Net Loss from continuing operations: Net loss from continuing operations for the third quarter of 2024 was (
Non-GAAP Adjusted Net Loss from continuing operations: Non-GAAP Adjusted Net Loss from continuing operations, a non-GAAP financial measure as defined below, for the third quarter of 2024 was (
Non-GAAP Adjusted EBITDA: Non-GAAP Adjusted EBITDA, a non-GAAP financial measure as defined below, for the third quarter of 2024 was a loss of (
Nine Months Ended September 30, 2024 Financial Results
Total revenue for the nine months ended September 30, 2024 was approximately
| (in 000’s) | Nine months ended September 30, | |||||||||||||||
| 2024 | 2023 | $ Change | % Change | |||||||||||||
| Product revenue | $ | 8,864 | $ | 6,961 | $ | 1,903 | 27.3 | % | ||||||||
| Services revenue | 5,336 | 5,617 | (281 | ) | -5.0 | % | ||||||||||
| Total revenue | $ | 14,200 | $ | 12,578 | $ | 1,622 | 12.9 | % | ||||||||
Gross Profit: Gross profit for the nine months ended September 30, 2024 was
Operating Expenses: Total operating expenses for the nine months ended September 30, 2024 were
GAAP Net Loss from continuing operations: Net loss from continuing operations for the nine months ended September 30, 2024 was (
Non-GAAP Adjusted Net Loss from continuing operations: Non-GAAP Adjusted Net Loss from continuing operations, a non-GAAP financial measure as defined below, for the nine months ended September 30, 2024 was (
Non-GAAP Adjusted EBITDA: Non-GAAP Adjusted EBITDA, a non-GAAP financial measure as defined below, for the nine months ended September 30, 2024 was a loss of (
Cash and cash equivalents: Cash and cash equivalents were
Conference Call:
The company will host a conference call at 4:30 PM Eastern Time on Wednesday, November 13, 2024.
- Earnings call details are as follows:
- Toll Free: 877-545-0320
- International: 973-528-0002
- Participant Access Code: 509249
- Webcast: https://www.webcaster4.com/Webcast/Page/2879/51509
Use of Non-GAAP Financial Measures
In its quarterly news releases, conference calls, slide presentations or webcasts, the Company may use or discuss non-GAAP financial measures as defined by SEC Regulation G. The GAAP financial measures most directly comparable to each non-GAAP financial measure used or discussed, and a reconciliation of the differences between each non-GAAP financial measure and the comparable GAAP financial measure, are included in this press release after the condensed consolidated financial statements. When analyzing the Company’s operating performance, investors should not consider these non-GAAP measures as a substitute for the comparable financial measures prepared in accordance with GAAP. The Company’s quarterly news releases containing such non-GAAP reconciliations can be found on the Investors section of the Company’s website at www.icadmed.com
About iCAD, Inc.
iCAD, Inc. (NASDAQ: ICAD) is a global leader on a mission to create a world where cancer can’t hide by providing clinically proven AI-powered solutions that enable medical providers to accurately and reliably detect cancer earlier and improve patient outcomes. Headquartered in Nashua, N.H., iCAD’s industry-leading ProFound Breast Health Suite provides AI-powered mammography analysis for breast cancer detection, density assessment and risk evaluation. Used by thousands of providers serving millions of patients, ProFound is available in over 50 countries. In the last five years alone, iCAD estimates reading more than 40 million mammograms worldwide, with nearly
Forward-Looking Statements
Certain statements contained in this News Release constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements about the expansion of access to the Company’s products, improvement of performance, acceleration of adoption, expected benefits of ProFound AI®, the benefits of the Company’s products, and future prospects for the Company’s technology platforms and products. Such forward-looking statements involve a number of known and unknown risks, uncertainties, and other factors that may cause the actual results, performance, or achievements of the Company to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements. Such factors include, but are not limited, to the Company’s ability to achieve business and strategic objectives, the willingness of patients to undergo mammography screening, whether mammography screening will be treated as an essential procedure, whether ProFound AI will improve reading efficiency, improve specificity and sensitivity, reduce false positives and otherwise prove to be more beneficial for patients and clinicians, the impact of supply and manufacturing constraints or difficulties on our ability to fulfill our orders, uncertainty of future sales levels, to defend itself in litigation matters, protection of patents and other proprietary rights, product market acceptance, possible technological obsolescence of products, increased competition, government regulation, changes in Medicare or other reimbursement policies, risks relating to our existing and future debt obligations, competitive factors, the effects of a decline in the economy or markets served by the Company; and other risks detailed in the Company’s filings with the Securities and Exchange Commission. The words “believe,” “demonstrate,” “intend,” “expect,” “estimate,” “will,” “continue,” “anticipate,” “likely,” “seek,” and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on those forward-looking statements, which speak only as of the date the statement was made. The Company is under no obligation to provide any updates to any information contained in this release. For additional disclosure regarding these and other risks faced by iCAD, please see the disclosure contained in our public filings with the Securities and Exchange Commission, available on the Investors section of our website at http://www.icadmed.com and on the SEC’s website at http://www.sec.gov.
CONTACTS
Media inquiries:
pr@icadmed.com
Investor Inquiries:
John Nesbett/Rosalyn Christian
IMS Investor Relations icad@imsinvestorrelations.com
| iCAD, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (In thousands, except for share data) (Unaudited) | ||||||||
| September 30, 2024 | December 31, 2023 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 18,793 | $ | 21,670 | ||||
| Trade accounts receivable, net of allowance for credit losses of as of September 30, 2024 and December 31, 2023, respectively | 5,415 | 6,392 | ||||||
| Inventory, net | 689 | 917 | ||||||
| Prepaid expenses and other current assets | 1,209 | 699 | ||||||
| Total current assets | $ | 26,106 | $ | 29,678 | ||||
| Property and equipment, net of accumulated depreciation of as of September 30, 2024 and December 31, 2023, respectively | 1,669 | 1,823 | ||||||
| Operating lease assets | 232 | 461 | ||||||
| Other assets | 549 | 849 | ||||||
| Intangible assets, net of accumulated amortization of September 30, 2024 and December 31, 2023, respectively | 111 | 148 | ||||||
| Goodwill | 8,362 | 8,362 | ||||||
| Deferred tax assets | 78 | 97 | ||||||
| Total assets | $ | 37,107 | $ | 41,418 | ||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 422 | $ | 712 | ||||
| Accrued and other expenses | 2,375 | 2,448 | ||||||
| Lease payable—current portion | 224 | 188 | ||||||
| Deferred revenue—current portion | 3,475 | 3,400 | ||||||
| Total current liabilities | 6,496 | 6,748 | ||||||
| Lease payable, net of current | 191 | 273 | ||||||
| Deferred revenue, net of current | 1,023 | 974 | ||||||
| Deferred tax | 7 | 6 | ||||||
| Other | 17 | — | ||||||
| Total liabilities | 7,734 | 8,001 | ||||||
| Commitments and Contingencies | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock, | — | — | ||||||
| Common stock, 26,540,030 as of both September 30, 2024 and December 31, 2023, respectively; outstanding 26,354,199 as of both September 30, 2024 and December 31, 2023, respectively. | 265 | 265 | ||||||
| Additional paid-in capital | 306,968 | 306,250 | ||||||
| Accumulated deficit | (276,445 | ) | (271,683 | ) | ||||
| Treasury stock at cost, 185,831 shares as of both September 30, 2024 and December 31, 2023 | (1,415 | ) | (1,415 | ) | ||||
| Total stockholders’ equity | 29,373 | 33,417 | ||||||
| Total liabilities and stockholders’ equity | $ | 37,107 | $ | 41,418 | ||||
| iCAD, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Operations (In thousands, except for per share data) (Unaudited) | ||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Revenue: | ||||||||||||||||
| Products | $ | 2,508 | $ | 2,198 | $ | 8,864 | $ | 6,961 | ||||||||
| Services | 1,709 | 1,875 | 5,336 | 5,617 | ||||||||||||
| Total revenue | 4,217 | 4,073 | 14,200 | 12,578 | ||||||||||||
| Cost of revenue: | — | — | — | — | ||||||||||||
| Products | 197 | 263 | 1,047 | 1,099 | ||||||||||||
| Services | 273 | 267 | 922 | 951 | ||||||||||||
| Amortization and depreciation | 113 | 22 | 266 | 65 | ||||||||||||
| Total cost of revenue | 583 | 552 | 2,235 | 2,115 | ||||||||||||
| Gross profit | 3,634 | 3,521 | 11,965 | 10,463 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Engineering and product development | 1,926 | 1,147 | 5,197 | 3,909 | ||||||||||||
| Marketing and sales | 1,861 | 1,495 | 6,210 | 5,690 | ||||||||||||
| General and administrative | 1,806 | 2,042 | 5,779 | 7,650 | ||||||||||||
| Amortization and depreciation | 56 | 56 | 182 | 186 | ||||||||||||
| Total operating expenses | 5,649 | 4,740 | 17,368 | 17,435 | ||||||||||||
| Loss from operations | (2,015 | ) | (1,219 | ) | (5,403 | ) | (6,972 | ) | ||||||||
| Other income/ (expense): | ||||||||||||||||
| Interest expense | — | — | — | (2 | ) | |||||||||||
| Interest income | 210 | 195 | 619 | 528 | ||||||||||||
| Other income (expense), net | 10 | (9 | ) | 41 | (8 | ) | ||||||||||
| Other income, net | 220 | 186 | 660 | 518 | ||||||||||||
| Loss before provision for income taxes | (1,795 | ) | (1,033 | ) | (4,743 | ) | (6,454 | ) | ||||||||
| Provision for tax expense | (6 | ) | (4 | ) | (19 | ) | (13 | ) | ||||||||
| Loss from continuing operations | (1,801 | ) | (1,037 | ) | (4,762 | ) | (6,467 | ) | ||||||||
| Loss from discontinued operations | — | (337 | ) | — | (435 | ) | ||||||||||
| Net loss and comprehensive loss | $ | (1,801 | ) | $ | (1,374 | ) | $ | (4,762 | ) | $ | (6,902 | ) | ||||
| Net loss per share: | — | — | — | — | ||||||||||||
| Loss from continuing operations, basic and diluted | $ | (0.07 | ) | $ | (0.04 | ) | $ | (0.18 | ) | $ | (0.25 | ) | ||||
| Loss from discontinued operations, basic and diluted | $ | - | $ | (0.01 | ) | $ | - | $ | (0.02 | ) | ||||||
| Net loss per share, basic and diluted | $ | (0.07 | ) | $ | (0.05 | ) | $ | (0.18 | ) | $ | (0.27 | ) | ||||
| Weighted average number of shares used in computing loss per share: | 26,354 | 25,597 | 26,354 | 25,374 | ||||||||||||
| iCAD, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited) | ||||||||
| For the Nine Months ended September 30, | ||||||||
| 2024 | 2023 | |||||||
| Cash flow from operating activities: | ||||||||
| Net loss | $ | (4,762 | ) | $ | (6,902 | ) | ||
| Adjustments to reconcile net loss to net cash used for operating activities: | ||||||||
| Amortization | 37 | 142 | ||||||
| Depreciation | 412 | 202 | ||||||
| Non-cash lease expense | 166 | 409 | ||||||
| Impairment of operating lease asset | 184 | — | ||||||
| Bad debt provision | 21 | 189 | ||||||
| Stock-based compensation | 718 | 1,114 | ||||||
| Deferred tax | 20 | 12 | ||||||
| Other | 5 | — | ||||||
| Changes in operating assets and liabilities: | — | — | ||||||
| Accounts receivable | 956 | 1,903 | ||||||
| Inventory | 228 | 1,472 | ||||||
| Prepaid and other assets | (210 | ) | 38 | |||||
| Accounts payable | (290 | ) | (509 | ) | ||||
| Accrued and other expenses | (73 | ) | (1,022 | ) | ||||
| Lease liabilities | (150 | ) | (420 | ) | ||||
| Deferred revenue | 124 | (141 | ) | |||||
| Total adjustments | 2,148 | 3,389 | ||||||
| Net cash used for operating activities | (2,614 | ) | (3,513 | ) | ||||
| Cash flow from investing activities: | ||||||||
| Additions to property and equipment | (163 | ) | (487 | ) | ||||
| Capitalization of internal-use software | (100 | ) | (188 | ) | ||||
| Net cash used for investing activities | (263 | ) | (675 | ) | ||||
| Cash flow from financing activities: | ||||||||
| Proceeds from option exercises pursuant to stock option plans | — | 80 | ||||||
| Proceeds from issuance of common stock, net of issuance costs | — | 1,841 | ||||||
| Net cash provided by financing activities | — | 1,921 | ||||||
| Decrease in cash and cash equivalents | (2,877 | ) | (2,267 | ) | ||||
| Cash and cash equivalents, beginning of period | 21,670 | 21,313 | ||||||
| Cash and cash equivalents, end of period | $ | 18,793 | $ | 19,046 | ||||
| Supplemental disclosure of cash flow information: | ||||||||
| Interest paid | $ | — | $ | — | ||||
| Amendment to right-of-use assets obtained in exchange for operating lease liabilities | $ | 121 | $ | — | ||||
Reconciliation of Non-GAAP Financial Measures to Comparable GAAP Measures and Definitions of Metrics
The Company reports its financial results in accordance with United States generally accepted accounting principles, or GAAP. However, management believes that in order to understand the Company’s short-term and long-term financial and operational trends, investors may wish to consider the impact of certain non-cash or non-recurring items, when used as a supplement to financial performance measures in accordance with GAAP. These items result from facts and circumstances that vary in frequency and/or impact on continuing operations. Management also uses results of operations before such items to evaluate the operating performance of the Company and compare it against past periods, make operating decisions, and serve as a basis for strategic planning. These non-GAAP financial measures provide management with additional means to understand and evaluate the operating results and trends in the Company’s ongoing business by eliminating certain non-cash expenses and other items that management believes might otherwise make comparisons of the Company’s ongoing business with prior periods more difficult, obscure trends in ongoing operations or reduce management’s ability to make useful forecasts. Management believes that these non-GAAP financial measures provide additional means of evaluating period-over-period operating performance. In addition, management understands that some investors and financial analysts find this information helpful in analyzing the Company’s financial and operational performance and comparing this performance to its peers and competitors.
Management defines “Non-GAAP Adjusted EBITDA” as the sum of GAAP Net Loss before provisions for interest expense, other income, stock-based compensation expense, depreciation and amortization, tax expense, severance, gain on sale of assets, loss on disposal of assets, acquisition and litigation related expenses. Management considers this non-GAAP financial measure to be an indicator of the Company’s operational strength and performance of its business and a good measure of its historical operating trends, in particular the extent to which ongoing operations impact the Company’s overall financial performance.
The non-GAAP financial measures do not replace the presentation of the Company’s GAAP financial results and should only be used as a supplement to, not as a substitute for, the Company’s financial results presented in accordance with GAAP. The Company has provided a reconciliation of each non-GAAP financial measure used in its financial reporting and investor presentations to the most directly comparable GAAP financial measure.
Management excludes each of the items identified below from the applicable non-GAAP financial measure referenced above for the reasons set forth with respect to that excluded item:
- Interest expense: The Company excludes interest expense which includes interest from the facility agreement, interest on capital leases and interest on the convertible debentures from its non-GAAP Adjusted EBITDA calculation.
- Stock-based compensation expense: excluded as these are non-cash expenses that management does not consider part of ongoing operating results when assessing the performance of the Company’s business, and also because the total amount of expense is partially outside of the Company’s control as it is based on factors such as stock price volatility and interest rates, which may be unrelated to our performance during the period in which the expense is incurred.
- Amortization and Depreciation: Purchased assets and intangibles are amortized over a period of several years and generally cannot be changed or influenced by management after they are acquired. Accordingly, these non-cash items are not considered by management in making operating decisions, and management believes that such expenses do not have a direct correlation to future business operations. Thus, including such charges does not accurately reflect the performance of the Company’s ongoing operations for the period in which such charges are incurred.
- Severance and Furlough: The Company has incurred severance and furlough expenses in connection with restructuring and in connection with the separation of its former CEO. The Company excludes these items from its non-GAAP financial measures when evaluating its continuing business performance as such items can vary significantly and do not reflect expected future operating expenses. In addition, management believes that such items do not have a direct correlation to future business operations.
- Loss on fair value of convertible debentures. The Company excludes this non-cash item as it is not considered by management in making operating decisions, and management believes that such item does not have a direct correlation to future business operations.
- Litigation related: These expenses consist primarily of settlement, legal and other professional fees related to litigation. The Company excludes these costs from its non-GAAP measures primarily because the Company believes that these costs have no direct correlation to the core operations of the Company.
- Loss on extinguishment of debt: The Company excludes this non-cash item as it is not considered by management in making operating decisions, and management believes that such item does not have a direct correlation to future business operations.
- Impairment of operating lease asset: The Company incurred a non-cash impairment charge as a result of executing a sublease for its corporate headquarters. The Company excludes this non-cash item as it is not considered by management in making operating decisions, and management believes that it has no direct correlation to future business operations.
On occasion in the future, there may be other items, such as loss on extinguishment of debt, significant asset impairments, restructuring charges or significant gains or losses from contingencies that the Company may exclude if it believes that doing so is consistent with the goal of providing useful information to investors and management.
Definitions of Metrics
Starting in the third quarter of 2023, the Company began reporting Annual Recurring Revenue (“ARR”) with each quarterly earnings announcement. The Company’s management believes this is a useful metric for purposes of assessing progress in transitioning to a subscription-based business model. ARR should be viewed independently of revenue and does not represent our revenue under U.S. GAAP on an annualized basis, as it is an operating metric that can be impacted by contract start dates, end dates, cancellations, and renewal rates. Subscription ARR is not intended to be a replacement for forecasts of revenue. The following are the variations of ARR the Company intends to present:
- Total ARR (T-ARR) represents the annualized value of subscription license, maintenance contracts and active cloud services at the end of a reporting period.
- Maintenance Services ARR (M-ARR) represents the annualized value of active perpetual license maintenance service contracts at the end of the reporting period.
- Subscription ARR (S-ARR) represents the annualized value of active subscription or term licenses at the end of a reporting period.
- Cloud ARR (C-ARR) represents the annualized value of active cloud services contracts at the end of a reporting period.
| Non-GAAP Adjusted EBITDA Set forth below is a reconciliation of the Company’s “Non-GAAP Adjusted EBITDA” (Unaudited) (In thousands except for per share data) | ||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| GAAP Net Loss from continuing operations | $ | (1,801 | ) | $ | (1,037 | ) | $ | (4,762 | ) | $ | (6,467 | ) | ||||
| Interest expense | — | — | — | 2 | ||||||||||||
| Interest income | (210 | ) | (195 | ) | (619 | ) | (528 | ) | ||||||||
| Other expense | (10 | ) | 9 | (41 | ) | 8 | ||||||||||
| Stock compensation | 214 | 303 | 718 | 1,114 | ||||||||||||
| Depreciation & amortization | 169 | 78 | 448 | 251 | ||||||||||||
| Severance and Furlough | 169 | — | 169 | 178 | ||||||||||||
| Tax expense | 6 | 4 | 19 | 13 | ||||||||||||
| Impairment of operating lease asset | — | — | 184 | — | ||||||||||||
| Non-GAAP Adjusted EBITDA | $ | (1,463 | ) | $ | (838 | ) | $ | (3,884 | ) | $ | (5,429 | ) | ||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| GAAP Net Loss from continuing operations | $ | (1,801 | ) | $ | (1,037 | ) | $ | (4,762 | ) | $ | (6,467 | ) | ||||
| Adjustments to Net Loss: | ||||||||||||||||
| Severance and Furlough | 169 | — | 169 | 178 | ||||||||||||
| Non-GAAP Adjusted Net Loss from continuing operations | $ | (1,632 | ) | $ | (1,037 | ) | $ | (4,593 | ) | $ | (6,289 | ) | ||||
| Net Loss per share from continuing operations —basic and diluted | ||||||||||||||||
| GAAP Loss from continuing operations, basic and diluted | $ | (0.07 | ) | $ | (0.04 | ) | $ | (0.18 | ) | $ | (0.25 | ) | ||||
| Adjustments to Net Loss (as detailed above) | — | — | — | 0.01 | ||||||||||||
| Non-GAAP Adjusted Loss per share from continuing operations | $ | (0.07 | ) | $ | (0.04 | ) | $ | (0.18 | ) | $ | (0.24 | ) | ||||
FAQ
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