WaveDancer Releases First Quarter 2022 Results

Rhea-AI Summary

WaveDancer (NASDAQ: WAVD) announced its Q1 2022 results, reporting a 12.4% decrease in total revenues to $3.0 million compared to the previous year. Professional fees also declined by 15.3% to $2.1 million, with gross profit dropping to $0.4 million. The company is focusing on transitioning from low-margin distribution to higher-margin professional services. Despite increased investments in its software development and sales team, WaveDancer recorded a net loss of $(2.1) million and an adjusted EBITDA of $(1.7) million. CEO Jamie Benoit anticipates revenue growth starting in Q2 2022.

Positive

• Shift towards higher-margin professional services.
• Increased investment in software development and sales team.
• New partnerships and acquisition agreements.

Negative

• Total revenues decreased 12.4% to $3.0 million.
• Professional fees decreased 15.3% to $2.1 million.
• Gross profit fell to $0.4 million.
• Net loss of $(2.1) million compared to net income of $0.3 million.
• Adjusted EBITDA of $(1.7) million.

Investments In Transformation Continue-Expected to Begin Driving Revenue Growth in 2Q 2022

FAIRFAX, Va., May 16, 2022 (GLOBE NEWSWIRE) -- WaveDancer (NASDAQ: WAVD), today reported its results for the first quarter ended March 31, 2022, which was characterized by continued investment in the WaveDancer’s software development and sales team. This included new hires, board appointments, partnerships, and a definitive acquisition agreement as WaveDancer strives to become a leader in the zero trust, blockchain, and secure supply chain market.

WaveDancer CEO Jamie Benoit commented, “Our first quarter 2022 saw the company continue to prioritize investments in key operational areas.   In addition to the recent additions, we have made at the board and senior leadership levels, we have also added three new blockchain sales professionals as well as six engineers and developers.”

Mr. Benoit continued, “Our lower revenue over first quarter 2021 is a result of our continued effort in the Tellenger business to move away from low margin distribution and reselling and towards higher margin professional services opportunities.”

First Quarter 2022 Financial Highlights (all comparisons to prior year period unless otherwise noted)

• Total revenues decreased 12.4% to $3.0 million, compared with $3.4 million.
• Professional fees decreased 15.3% to $2.1 million down from $2.4 million.
• Gross profit decreased to $0.4 million, compared with $1.0 million.
• Gross margin expanded to 12.6%; higher-margin professional fees accounted for 69.0% of revenues.
• Net loss of $(2.1) million, compared with net income of $0.3 million.
• Adjusted EBITDA¹ of ($1.7) million, compared with $0.4 million.

About WaveDancer

WaveDancer (www.wavedancer.com), headquartered in Fairfax, Virginia, is a provider of zero trust software solutions, specializing in secure blockchain supply chain management (SCM), asset tracking and security. Our technologies are deployed and being used to help organizations manage very complex supply chain challenges. Initially developed to secure a complex international supply chain for a global U.S. Government (USG) national security organization, the technology has matured to address multiple operational capabilities. Customers are using the WaveDancer platform to gain unprecedented levels of accountability, auditability, and predictability from their data, while giving insights to their partners and suppliers through a controlled, distributed ledger that is immutable and can be trusted by all parties. The sophisticated blockchain technology is now available to the entirety of the USG through GovCloud.

_______________________________

¹ Please see non-GAAP reconciliation on page 6

Additional information for investors
This release may contain forward-looking statements regarding the Company's business, customer prospects, or other factors that may affect future earnings or financial results. Such statements involve risks and uncertainties which could cause actual results to vary materially from those expressed in the forward-looking statements. Investors should read and understand the risk factors detailed in the Company's 10-K for the fiscal year ended December 31, 2021 and in other filings with the Securities and Exchange Commission.

For additional information contact:
Jeremy Hellman, CFA
Vice President
The Equity Group
(212) 836-9626
jhellman@equityny.com

WAVEDANCER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME

	Three Months Ended March 31,
	2022				2021
Revenues
Professional fees	$	2,066,690			$	2,439,259
Software sales		928,822				980,321
Total revenues		2,995,512				3,419,580
Cost of revenues
Cost of professional fees		1,712,015				1,467,699
Cost of software sales		907,432				932,231
Total cost of revenues		2,619,447				2,399,930
Gross profit		376,065				1,019,650
Selling, general and administrative expenses		2,714,342				680,250
Acquisition costs		434,702				70,530
(Loss) income from operations		(2,772,979	)			268,870
Other income (expense):
Interest expense		(19,319	)			(1,459	)
Other income (expense), net		(12,015	)			3,404
(Loss) income before provision for income taxes		(2,804,313	)			270,815
Income tax benefit		(726,006	)			-
Net (loss) income	$	(2,078,307	)		$	270,815
Comprehensive (loss) income	$	(2,078,307	)		$	270,815
Basic (loss)/earnings per share	$	(0.12	)		$	0.02
Diluted (loss)/earnings per share	$	(0.12	)		$	0.02
Weighted average common shares outstanding
Basic		17,294,808				11,282,671
Diluted		17,294,808				12,286,216

WAVEDANCER, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

	March 31, 2022				December 31, 2021
ASSETS
Current assets
Cash and cash equivalents	$	2,999,201			$	4,931,302
Accounts receivable		1,672,072				1,664,862
Prepaid expenses and other current assets		458,719				276,990
Total current assets		5,129,992				6,873,154
Intangible assets, net of accumulated amortization of $201,032 and $0		7,699,075				8,048,968
Goodwill		7,585,269				7,585,269
Right-of-use operating lease asset		627,977				672,896
Property and equipment, net of accumulated depreciation and amortization of $347,886 and $312,320		103,577				105,256
Other assets		77,100				77,100
Total assets	$	21,222,990			$	23,362,643
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	302,323			$	650,499
Accrued payroll and related liabilities		611,497				524,055
Commissions payable		250,043				224,250
Other accrued liabilities		816,536				204,080
Contract liabilities		149,692				186,835
Operating lease liability- current		192,128				192,128
Total current liabilities		2,322,219				1,981,847
Operating lease liability - non-current		460,505				507,120
Deferred income taxes		441,498				1,167,504
Other liabilities		2,296,928				2,265,000
Total liabilities		5,521,150				5,921,471
Stockholders' equity
Common stock at $0.001 and $0.01 par value; 100,000,000 and 30,000,000 shares authorized, 18,882,313 and 12,904,376 shares issued, 17,239,697 and 11,261,760 shares outstanding, as of December 31, 2021 and 2020, respectively		18,987				18,882
Additional paid-in capital		32,128,334				31,789,464
Accumulated deficit		(15,515,270	)			(13,436,963	)
Treasury stock, 1,642,616 shares at cost		(930,211	)			(930,211	)
Total stockholders' equity		15,701,840				17,441,172
Total liabilities and stockholders' equity	$	21,222,990			$	23,362,643

Non-GAAP Financial Measures
In assessing the performance of our business, management utilizes a variety of financial and performance measures. The key measure is Adjusted EBITDA, a non-GAAP financial measure. We define Adjusted EBITDA as net income (loss) plus depreciation and amortization expense, net interest expense (income), and taxes, as further adjusted to eliminate the impact of, when applicable, expenses that are unusual or non-recurring that we believe do not reflect our core operating results. and non-cash stock-based compensation. We believe that Adjusted EBITDA is meaningful to our investors to enhance their understanding of our financial performance for the current period and our ability to generate cash flows from operations that are available for taxes, capital expenditures and debt service. We understand that Adjusted EBITDA is frequently used by securities analysts, investors and other interested parties as a measure of financial performance and to compare our performance with the performance of other companies that report Adjusted EBITDA. Our calculation of Adjusted EBITDA, however, may not be comparable to similarly titled measures reported by other companies. When assessing our operating performance, investors and others should not consider this data in isolation or as a substitute for net income (loss) calculated in accordance with GAAP. Further, the results presented by Adjusted EBITDA cannot be achieved without incurring the costs that the measure excludes. A reconciliation of net income (loss) to Adjusted EBITDA, the most comparable GAAP measure, is provided below.

Reconciliation of Net (loss) income to Adjusted EBITDA
(in thousands)	Three Months Ended March 31,
		2022				2021
Net (loss) income	$	(2,078	)		$	271
Adjustments:
Interest expense (income), net		19				(2	)
Tax (benefit) expense		(726	)			-
Depreciation		13				5
Amortization		350				-
EBITDA		(2,422	)			274
Non-cash stock-based compensation		312				28
Acquisition Costs		435				71
Post-employment agreement		-				36
Adjusted EBITDA	$	(1,675	)		$	408

FAQ

What were WaveDancer's Q1 2022 revenue results?

WaveDancer reported a total revenue of $3.0 million for Q1 2022, a decrease of 12.4% from the previous year.

What led to WaveDancer's net loss in Q1 2022?

WaveDancer reported a net loss of $(2.1) million in Q1 2022, attributed to a decrease in revenues and continued investments in its operations.

What is WaveDancer's strategy moving forward?

WaveDancer is focusing on transitioning from low-margin distribution to higher-margin professional services, aiming for revenue growth beginning in Q2 2022.

How did professional fees perform for WaveDancer in Q1 2022?

Professional fees decreased by 15.3% to $2.1 million during Q1 2022.

What are the expected outcomes from WaveDancer's recent investments?

WaveDancer expects its ongoing investments in development and personnel to begin driving revenue growth in Q2 2022.