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0000829323-23-000020:q12023finalpr.htm | 0000829323-23-000020 | 829,323 | 829,323 | Inuvo, Inc. (INUV) (CIK 0000829323) | ['INUV'] | 8-K | 8-K | 2023-05-04 | 2023-05-04 | 001-32442 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-32442&action=getcompany | 23,889,422 | EX-99.1 | EX-99.1 | 2.02,7.01,9.01 | https://www.sec.gov/Archives/edgar/data/829323/000082932323000020 | https://www.sec.gov/Archives/edgar/data/829323/000082932323000020/0000829323-23-000020-index.html | https://www.sec.gov/Archives/edgar/data/829323/000082932323000020/q12023finalpr.htm | EX-99.1 2 q12023finalpr.htm EX-99.1 DocumentInuvo Announces Financial Results for First Quarter of 2023Hosting a Webinar on Friday, May 5, 2023, at 9:00 A.M. Eastern Time; Unveiling New Developments Powered by its Generative AI TechnologyLITTLE ROCK, AR, May 4, 2023 (GLOBE NEWSWIRE) -- Inuvo, Inc. (NYSE American: INUV), a leading provider of marketing technology, powered by artificial intelligence (AI) that serves brands and agencies, today provided a business update, and announced its financial results for the first quarter ended March 31, 2023.Richard Howe, CEO of Inuvo, stated, “The Company had a strong fiscal 2022, growing 26.5% year-over-year to $76.5 million. As expected, and discussed on our March year-end call, we started 2023 lower compared with the prior year because of a softening in demand for advertising and the loss of a client. Nevertheless, we delivered $11.8 million of revenue in the first quarter, a seasonally weaker period. Importantly, we have a strong sales pipeline we look forward to converting over the next few months. We attribute this demand to the growing obsolescence of identity and data technologies in the wake of the cookie’s demise and the superiority of the technology we have now demonstrated across many clients.” Mr. Howe continued, “The launch of ChatGPT and Google Bard this year signals that we have entered the age of artificial intelligence. This category of generative AI is differentiated from all other forms of AI by a language model trained on a large corpus of data. We have invested over $50 million dollars in developing, implementing, and patenting exactly this type of system over many years, which is extremely unique and proprietary to Inuvo. We anticipated this AI future and, as a result, we are well ahead of any AdTech competitors. Tomorrow morning, we will demonstrate how the IntentKey AI can generate marketable audiences, at-will, with unprecedented relevance and without persistent and intrusive consumer tracking, identity or data.”Mr. Howe concluded, “As a technology company at the forefront of artificial intelligence, we continue to make significant advancements to our platform. We have been working aggressively behind the scenes on new initiatives that we believe will transform both the Company and the industry, which we look forward to sharing in the upcoming webinar and press releases.”Financial Results for the Three Months Ended March 31, 2023Net revenue for the first quarter of 2023 totaled $11.8 million, compared to $18.6 million for the same period last year. The lower revenue is due to the loss of a Direct customer in the fourth quarter of last year and a general softening of demand for ad placements across the Internet. Revenue from Indirect clients increased 1% over the same quarter last year.Cost of revenue for the first quarter of 2023, totaled $3.2 million, compared to $8.7 million for the same period last year. The decrease in the cost of revenue for the three months ended March 31, 2023, as compared to the same period last year, was primarily related to the lower revenue in the current quarter. Gross profit for the first quarter of 2023 totaled $8.7 million as compared to $9.9 million for the same period last year. The higher gross margin in the current year quarter, 73.1% compared to 53.5% in the same quarter last year is due to revenue mix, where a greater percent of the revenue this year was from Indirect customers which typically have higher gross margins. Direct client margins also increased in the first quarter versus both the fourth and first quarters in 2022. Operating expenses for the first quarter of 2023 totaled $12.1 million, largely unchanged from the same period last year. Marketing costs for the three months ended March 31, 2023, was relatively flat compared to the same period in 2022 in spite of lower overall revenue. Compensation expense was higher for the three months ended March 31, 2023, compared to the same time period in 2022 due primarily to higher salary expense and commission expense. General and administrative costs for the three months ended March 31, 2023, decreased 8% compared to the same period in 2022 due primarily to lower professional fees and depreciation and amortization expense.Net loss for the first quarter of 2023 was $3.4 million, or $0.03 per basic and diluted share, as compared to net loss of $2.1 million, or $0.02 per basic and diluted share, for the same period last year. Adjusted EBITDA [see reconciliation table below] was a loss of approximately $2.3 million in the first quarter of 2023, compared to an Adjusted EBITDA loss of approximately $703 thousand for the same period last year. Liquidity and Capital Resources:On March 31, 2023, Inuvo had $2.0 million in cash and cash equivalents, $732 thousand of working capital, and a working capital facility of $5.0 million with $593 thousand drawn down.As of March 31, 2023, Inuvo had 121,640,362 common shares issued and outstanding.The Company will host a webinar unveiling new developments powered by its generative AI technology on Friday, May 5, 2023, at 9:00 a.m. Eastern Time.Webinar: Date: May 5, 2023Time: 9:00 am (EDT)Webcast Link: https://zoom.us/webinar/register/WN_EpHm22OrQOWkdZjBNBVhgw#/registrationWebinar Replay: www.inuvo.com/investor/About InuvoInuvo®, Inc. (NYSE American: INUV) is a market leader in Artificial Intelligence built for advertising. Its IntentKey AI solution is a first-of-its-kind proprietary and patented technology capable of identifying and actioning to the reasons why consumers are interested in products, services, or brands, not who those consumers are. To learn more, visit www.inuvo.com.Safe Harbor / Forward-Looking StatementsThis press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding Inuvo’s quarter-end financial close process and preparation of financial statements for the quarter that are subject to risks and uncertainties that could cause results to be materially different than expectations. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including, without limitation risks detailed from time to time in our filings with the Securities and Exchange Commission (the “SEC”), and represent our views only as of the date they are made and should not be relied upon as representing our views as of any subsequent date. You are urged to carefully review and consider any cautionary statements and other disclosures, including the statements made under the heading "Risk Factors" in Inuvo, Inc.'s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 as filed on March 10, 2023, and our other filings with the SEC. Additionally, forward looking statements are subject to certain risks, trends, and uncertainties including the continued impact of Covid-19 on Inuvo’s business and operations. Inuvo cannot provide assurances that the assumptions upon which these forward-looking statements are based will prove to have been correct. Should one of these risks materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those expressed or implied in any forward-looking statements, and investors are cautioned not to place undue reliance on these forward-looking statements, which are current only as of this date. Inuvo does not intend to update or revise any forward-looking statements made herein or any other forward-looking statements as a result of new information, future events or otherwise. Inuvo further expressly disclaims any written or oral statements made by a third party regarding the subject matter of this press release. The information, which appears on our websites and our social media platforms is not part of this press release.Inuvo Company Contact: Wally Ruiz Chief Financial Officer Tel (501) 205-8397 wallace.ruiz@inuvo.comInvestor Relations:David Waldman / Natalya RudmanCrescendo Communications, LLCTel: (212) 671-1020inuv@crescendo-ir.com (Tables follow)Reconciliation of Operating Loss to EBITDA and Adjusted EBITDA We present EBITDA and Adjusted EBITDA as a supplemental measure of our performance. We defined EBITDA as Net loss plus (i) interest expense, (ii) depreciation, and (iii) amortization. We further define Adjusted EBITDA as EBITDA plus (iv) stock-based compensation and (v) certain identified expenses that are not expected to recur or be representative of future ongoing operation of the business. These adjustments are itemized above. You are encouraged to evaluate these adjustments and the reasons we consider them appropriate for supplemental analysis. In evaluating EBITDA and Adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same or similar to some of the adjustments in the presentation. Our presentation of EBITDA and Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. |
0001120970-24-000048:exhibit991-2024x4x29genmat.htm | 0001120970-24-000048 | 1,120,970 | 1,120,970 | Comstock Inc. (LODE) (CIK 0001120970) | ['LODE'] | 8-K | 8-K | 2024-04-30 | 2024-04-25 | 001-35200 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-35200&action=getcompany | 24,897,558 | EX-99.1 | EX-99.1 | 1.01,9.01 | https://www.sec.gov/Archives/edgar/data/1120970/000112097024000048 | https://www.sec.gov/Archives/edgar/data/1120970/000112097024000048/0001120970-24-000048-index.html | https://www.sec.gov/Archives/edgar/data/1120970/000112097024000048/exhibit991-2024x4x29genmat.htm | EX-99.1 3 exhibit991-2024x4x29genmat.htm EX-99.1 DocumentExhibit 99.1COMSTOCK’S PHYSICS-BASED AI INVESTMENT EMERGES FROM STEALTHAchieves Key Technical Milestones; Comstock Realigns Investment to Enable Third Party FinancingVIRGINIA CITY, NEVADA, April 29, 2024 – Comstock Inc. (NYSE: LODE) (“Comstock” and the “Company”) today announced the realization of a series of key milestones by Comstock’s strategic investee, Quantum Generative Materials LLC (“GenMat”), including commencement of early adopter sales, qualifying GenMat for significant additional financing at increased valuations that capitalizes on broadly increased investment interest in developers of generative artificial intelligence technologies. Comstock and GenMat have accordingly entered into an agreement that realigns existing equity investment agreements while simplifying and positioning GenMat for accelerated growth.Key Highlights•GenMat’s physics-based AI software for high throughput materials discovery is now proven to simulate tens of thousands of new material properties with unique structures at upwards of more than 98% accuracy, dramatically reducing trial and error cycles and accelerating months of development time down to hours.•GenMat is in discussions with several early adopters, including globally recognized stakeholders in high value applications, for commercializing across several industries starting with batteries and semiconductors.•GenMat’s hyperspectral orbital imaging satellite the GENMAT-1 successfully launched into Low Earth Orbit (LEO) and has established continuous contact with GenMat’s proprietary Mission Control Software (MCS).•GenMat developed ready for use generative AI-based software that predicts relevant information pertaining to precious mineral deposits, validated on USGS and Comstock data, and is also currently commercializing.•GenMat’s realization of these and other confidential technical milestones by GenMat’s world-class technical team mark a pivotal moment in GenMat’s evolution from conception to maturity, as GenMat’s technology transitions to a technology readiness level of 6 (prototype demonstration in relevant environments).•Comstock’s prior investment agreements called for a milestone-based investment of $50,000,000 for 50% of GenMat’s fully diluted equity, of which approximately $15,000,000 has now been paid.•Comstock and GenMat have agreed to realign the investment agreement based on GenMat’s significant achievements to date and current strategic, technical, and commercial development plans as follows:oComstock’s previously paid $15,000,000 at a circa-2021 post-money valuation of about $46,000,000, now represents approximately 32% of GenMat’s fully diluted equity;oComstock has committed up to another $25,000,000 over four years at a current post-money valuation of $200,000,000, increasing Comstock’s stake to up to 40% of GenMat’s fully diluted equity, until such time as GenMat accesses outside capital (expected for later this year); and,oComstock’s overall commitment is reduced from $50,000,000 to $40,000,000, with participation and drag-along rights on future financing and liquidity events by GenMat.•Comstock will license GenMat’s technologies on a modified non-exclusive early adopter basis in mining applications and on an exclusive early adopter basis for biofuels development and applications.Maturing RapidlyOpenAI's ChatGPT employs a generative large language model to generate new, valuable information for a wide range of use cases at orders of magnitude faster than what was previously possible. GenMat's AI operates similarly, but instead of generating words and language for a wide range of use cases, it generates new atoms, molecules, and physical systems for a wide range of materials applications, harnessing aspects of humanity's collective knowledge of physics and chemistry combined with proprietary synthetic datasets to discover new materials in an exponentially shorter time than traditional methods have allowed. To put this into perspective, new material discovery typically takes decades and tens to hundreds of millions of dollars. GenMat's AI can simulate tens of thousands of unique new materials in some cases at more than 98% precision and accuracy within just a matter of hours.“GenMat has built an exceptional team, a remarkable data infrastructure and platform, and achieved a series of critical technical milestones and readiness surrounding its physics-based AI, simulation, engineering, and satellite remote sensing technology, remarkably, with less than $15 million to date, and they are now actively commercializing its solutions with sophisticated, industry leading technical, industrial and governmental partners,” said Corrado De Gasperis, Comstock Executive Chairman and Chief Executive Officer. “GenMat’s technologies are maturing much faster than anticipated when we first invested in 2021, qualifying GenMat for significant additional financing at increased valuations that capitalize on broadly increased investment interest in developers of generative AI-based technologies. The realignment and simplification of our investment agreements positions GenMat to accelerate its commercialization and monetization efforts in every way while we retain our rights in the biofuels and mining fields.”Comstock’s operations primarily involve the innovation, development, commercialization, and monetization of intellectual properties and related assets, with teams focused on each core function in dedicated lines of business. Comstock also makes, owns, and manages investments in strategic technology developers to support its businesses, as recently demonstrated with significant realized and unrealized gains in Comstock’s metals investments.Comstock’s investment in GenMat was and remains highly strategic to the expansion and monetization of our mineral estate and the advancements in the production of breakthrough renewable replacements for fossil crude at cost parity.About Quantum Generative Materials LLCQuantum Generative Materials LLC (“GenMat”) was founded in 2021 to develop and commercialize generative artificial intelligence models for the discovery of new materials and minerals. GenMat is a strategic investee of Comstock Inc. (NYSE: LODE), an innovator of technologies that enable systemic decarbonization and net zero circularity. GenMat is expanding the advancement of simulation and manipulation of matter for the discovery and development of new materials and minerals. GenMat has also built next generation physics software libraries that, when coupled with our generative AI, can dramatically accelerate materials development. These libraries and preloaded physics-models are customized, scaling and evolving. To learn more, please visit www.genmat.xyz.About Comstock Inc.Comstock Inc. (NYSE: LODE) commercializes innovative technologies that contribute to global decarbonization by efficiently converting under-utilized natural resources, primarily, woody biomass into net zero renewable fuels, end-of- life metal extraction, and generative AI-enabled advanced materials synthesis and mineral discovery. To learn more, please visit www.comstock.inc.Comstock Social Media PolicyComstock Inc. has used, and intends to continue using, its investor relations link and main website at www.comstock.inc in addition to its Twitter, LinkedIn and YouTube accounts, as means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD.CONTACTS:For investor inquiries:RB Milestone Group LLCTel (203) 487-2759ir@comstockinc.comFor media inquiries or questions:Comstock Inc., Zach SpencerTel (775) 847-7532questions@comstockinc.comForward Looking StatementsThis press release and any related calls or discussions may include 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. All statements, other than statements of historical facts, are forward-looking statements. The words “believe,” “expect,” “anticipate,” “estimate,” “project,” “plan,” “should,” “intend,” “may,” “will,” “would,” “potential” and similar expressions identify forward-looking statements but are not the exclusive means of doing so. Forward-looking statements include statements about matters such as: future market conditions; future explorations or acquisitions; future changes in our research, development and exploration activities; future financial, natural, and social gains; future prices and sales of, and demand for, our products and services; land entitlements and uses; permits; production capacity and operations; operating and overhead costs; future capital expenditures and their impact on us; operational and management changes (including changes in the Board of Directors); changes in business strategies, planning and tactics; future employment and contributions of personnel, including consultants; future land and asset sales; investments, acquisitions, joint ventures, strategic alliances, business combinations, operational, tax, financial and restructuring initiatives, including the nature, timing and accounting for restructuring charges, derivative assets and liabilities and the impact thereof; contingencies; litigation, administrative or arbitration proceedings; environmental compliance and changes in the regulatory environment; offerings, limitations on sales or offering of equity or debt securities, including asset sales and associated costs; business opportunities, growth rates, future working capital, needs, revenues, variable costs, throughput rates, operating expenses, debt levels, cash flows, margins, taxes and earnings. These statements are based on assumptions and assessments made by our management in light of their experience and their perception of historical and current trends, current conditions, possible future developments and other factors they believe to be appropriate. Forward-looking statements are not guarantees, representations or warranties and are subject to risks and uncertainties, many of which are unforeseeable and beyond our control and could cause actual results, developments, and business decisions to differ materially from those contemplated by such forward-looking statements. Some of those risks and uncertainties include the risk factors set forth in our filings with the SEC and the following: adverse effects of climate changes or natural disasters; adverse effects of global or regional pandemic disease spread or other crises; global economic and capital market uncertainties; the speculative nature of gold or mineral exploration, and lithium, nickel and cobalt recycling, including risks of diminishing quantities or grades of qualified resources; operational or technical difficulties in connection with exploration, metal recycling, processing or mining activities; costs, hazards and uncertainties associated with precious and other metal based activities, including environmentally friendly and economically enhancing clean mining and processing technologies, precious metal exploration, resource development, economic feasibility assessment and cash generating mineral production; costs, hazards and uncertainties associated with metal recycling, processing or mining activities; contests over our title to properties; potential dilution to our stockholders from our stock issuances, recapitalization and balance sheet restructuring activities; potential inability to comply with applicable government regulations or law; adoption of or changes in legislation or regulations adversely affecting our businesses; permitting constraints or delays; challenges to, or potential inability to, achieve the benefits of business opportunities that may be presented to, or pursued by, us, including those involving battery technology and efficacy, quantum computing and generative artificial intelligence supported advanced materials development, development of cellulosic technology in bio-fuels and related material production; commercialization of cellulosic technology in bio-fuels and generative artificial intelligence development services; ability to successfully identify, finance, complete and integrate acquisitions, joint ventures, strategic alliances, business combinations, asset sales, and investments that we may be party to in the future; changes in the United States or other monetary or fiscal policies or regulations; interruptions in our production capabilities due to capital constraints; equipment failures; fluctuation of prices for gold or certain other commodities (such as silver, zinc, lithium, nickel, cobalt, cyanide, water, diesel, gasoline and alternative fuels and electricity); changes in generally accepted accounting principles; adverse effects of war, mass shooting, terrorism and geopolitical events; potential inability to implement our business strategies; potential inability to grow revenues; potential inability to attract and retain key personnel; interruptions in delivery of critical supplies, equipment and raw materials due to credit or other limitations imposed by vendors; assertion of claims, lawsuits and proceedings against us; potential inability to satisfy debt and lease obligations; potential inability to maintain an effective system of internal controls over financial reporting; potential inability or failure to timely file periodic reports with the Securities and Exchange Commission; potential inability to list our securities on any securities exchange or market or maintain the listing of our securities; and work stoppages or other labor difficulties. Occurrence of such events or circumstances could have a material adverse effect on our business, financial condition, results of operations or cash flows, or the market price of our securities. All subsequent written and oral forward-looking statements by or attributable to us or persons acting on our behalf are expressly qualified in their entirety by these factors. Except as may be required by securities or other law, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Neither this press release nor any related calls or discussions constitutes an offer to sell, the solicitation of an offer to buy or a recommendation with respect to any securities of the Company, the fund, or any other issuer. Neither this press release nor any related calls or discussions constitutes an offer to sell, the solicitation of an offer to buy or a recommendation with respect to any securities of the Company, the fund, or any other issuers. |
0001104659-24-108087:tm2426034d1_ex99-2.htm | 0001104659-24-108087 | 1,864,531 | 1,864,531 | VSEE HEALTH, INC. (VSEE, VSEEW) (CIK 0001864531) | ['VSEE', 'VSEEW'] | 8-K | 8-K | 2024-10-11 | 2024-10-08 | 001-41015 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-41015&action=getcompany | 241,368,116 | EX-99.2 | EXHIBIT 99.2 | 7.01,9.01 | https://www.sec.gov/Archives/edgar/data/1864531/000110465924108087 | https://www.sec.gov/Archives/edgar/data/1864531/000110465924108087/0001104659-24-108087-index.html | https://www.sec.gov/Archives/edgar/data/1864531/000110465924108087/tm2426034d1_ex99-2.htm | EX-99.2 3 tm2426034d1_ex99-2.htm EXHIBIT 99.2 Exhibit 99.2 VSee Health Co-CEO Among Keynote Speakers at iA-MED 2024: Future of Artificial Intelligence Symposium for healthcare professionals assembles international experts to discuss digital health and AI applications to transform the practice of healthcare BOCA RATON, Fla., October 09, 2024 -- VSee Health, Inc. (Nasdaq: VSEE), a provider of comprehensive telehealth services that customize workflow streams and enhance patient care, announced today that co-CEO Milton Chen, PhD, will be a keynote speaker at iA-Med 2024, a groundbreaking symposium dedicated to exploring the latest advancements in artificial intelligence (AI) for healthcare professionals Presented by ProntoMedic, an early-stage incubator, the event will take place at Auditorio FEPADE in San Salvador on October 16, 2024. Attendees include a diverse audience of physicians, nurses, administrative health professionals, students and representatives from hospitals, pharmaceutical companies and laboratories. iA-MED 2024 is sponsored by Banco Agrícola, Applaudo Studios and VSee Health, and aims to promote innovation, collaboration and decision-making by healthcare professionals in the age of AI. Held under the theme of integrating AI into modern healthcare, the symposium will address key topics including predictive diagnostics, personalized treatments and the future of AI-driven healthcare solutions. Event Highlights: Keynote Speakers ·Milton Chen, PhD, founder of VSee Health. Dr. Chen is a leading voice in telemedicine technology, impacting underserved communities globally through humanitarian efforts and high-profile collaborations with organizations including NASA and McKesson. ·Jesús Seáñez, PhD, co-founder of Hera Diagnostics, a pioneer in using optoelectronics and AI for early cancer detection. With over a decade of experience, Dr. Seáñez’s innovative devices, such as InstaPAP® and HeraFem®, are revolutionizing cancer diagnostics. ·Alejandro Castillo, technology business leader and entrepreneur with over 20 years of experience working with Fortune 100 companies and tech startups. Mr. Castillo is MIT-Certified AI for Business and holds a postgraduate degree in AI from the University of Texas, Austin. Agenda ·The Present and Future of Healthcare: An introduction to healthcare trends, future predictions and the growing role of AI. ·Introduction to AI: An overview of machine learning, deep learning and generative AI with a specific focus on healthcare applications. ·AI in Healthcare: A session on the impact of AI on diagnostics, treatment plans and patient outcomes, covering real-world examples as well as critical issues like data privacy and cybersecurity. ·Expert Panel Discussion: A lively discussion on the ethical and practical implications of AI in healthcare, followed by an audience Q&A session. ·Generative AI Applications in Healthcare**: A look at how generative AI is transforming the healthcare discovery process. Date: October 16, 2024 Time: 3:00 p.m. - 6:00 p.m. Location: Auditorio FEPADE, San Salvador For more information and to purchase tickets, please scan the QR code or contact: social.media@prontotecsa.com About ProntoMedic ProntoMedic is an early-stage incubator of innovative digital healthcare solutions, strategically positioned at the crossroads of Latin American and global healthcare systems. With operational hubs in Austin, Texas, and San Salvador, El Salvador, we are dedicated to advancing the future of healthcare through generative AI and machine learning technologies. Our mission is to develop cutting-edge, culturally attuned solutions that meet the unique needs of the Latin American population, while bridging the gap between regional healthcare systems and international standards. About VSee Health VSee Health is a software-as-a-service (SaaS) platform that enables clinicians and enterprises to create their telehealth workflows without programming. VSee Health’s system allows a telehealth mobile app to be created or a telehealth system to be integrated into existing hospital operations in days. With a focus on patient disease state telemedicine and turnkey billing services, VSee Health has integrated an intensive care, critical care and neuro solution, powered by iDoc Telehealth Solutions, as its initial module for the VSee Health software platform. This technology encompasses a set of integrated telehealth technologies and a team of neurointensivists, neurologists, and tele-radiologists that treat and coordinate care for acutely ill patients 24/7/365 in the neurointensive care unit (Neuro-ICU), cardiac surgery intensive care unit (CS-ICU) and the intensive care unit (ICU) for stroke, brain trauma and a wide range of neurological conditions. For more information, please visit www.vseehealth.com. Contacts Investor Contact: LHA Investor Relations Tirth T. Patel 212-201-6614 tpatel@lhai.com Media Contact: VSee Health Anne Chang Media Coordinator 626-513-1824 media@vsee.com |
0001157523-23-001401:a53550258_ex991.htm | 0001157523-23-001401 | 713,425 | 713,425 | AMERICAN SOFTWARE INC (AMSWA) (CIK 0000713425) | ['AMSWA'] | 8-K | 8-K | 2023-09-07 | 2023-09-05 | 000-12456 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=000-12456&action=getcompany | 231,241,061 | EX-99.1 | EXHIBIT 99.1 | 1.01,7.01,9.01 | https://www.sec.gov/Archives/edgar/data/713425/000115752323001401 | https://www.sec.gov/Archives/edgar/data/713425/000115752323001401/0001157523-23-001401-index.html | https://www.sec.gov/Archives/edgar/data/713425/000115752323001401/a53550258_ex991.htm | EX-99.1 3 a53550258_ex991.htm EXHIBIT 99.1 Exhibit 99.1 Logility Acquires AI Forecasting Pioneer Garvis “Exhibit 99.1” Combination of Generative AI and Machine Learning Insights Delivers New Supply Chain Planning Paradigm ATLANTA – September 7, 2023 – Logility, Inc., a leader in prescriptive supply chain planning solutions, today announced it has signed a definitive agreement to acquire Garvis, a visionary SaaS startup that combines large language models (ChatGPT) with AI-native demand forecasting. The combined organization will enable a new supply chain planning paradigm with DemandAI+ that moves beyond conventional methods to plan demand and inventory at the speed of the market. Instead of relying on traditional models, Garvis designed from the ground up an AI-first forecasting solution now called DemandAI+. Fusing Generative AI with machine learning algorithms, DemandAI+ creates a modern, more inclusive, and intuitive planning paradigm that quickly digitizes supply chain relationships and exposes that data to any stakeholder across the organization. By simply asking questions planners, executives, and non-planners alike get answers to unanticipated queries in real-time, providing transparency for more informed decisions that saves precious planning time. DemandAI+, built for the cloud, will be embedded into the Logility® Digital Supply Chain Platform as the solution for demand forecasting. The acquisition, which is expected to be accretive within 12 months, advances Logility as the only supply chain planning platform leveraging Generative AI, advanced AI-driven algorithms, and machine learning. This innovative approach addresses base demand, promotional lift, causal forecasts, external data, and user insights within a single solution improving forecast accuracy and aligning organizations in today’s dynamic market. “We are at the precipice of a significant transformation in supply chain planning with advancements in technology, generational shifts of planners, and the significant speed of market changes and disruptions,” said Allan Dow, president of Logility. “With an AI-driven approach at their core, Garvis revolutionized the way companies forecast demand in very dynamic market. We’re bringing them into Logility’s portfolio to accelerate our shared vision to break the boundaries of traditional myopic supply chain planning solutions.” Proven over 70 implementations, clients have been translating buying behavior, market dynamics, and other events into forecasts across products, locations, and customers. DemandAI+ allows companies to understand how to react to changes as they happen – ultimately improving forecast accuracy and service levels, even for heavily promoted, highly seasonal, or intermittent products. “Our clients have realized epic results by using AI-driven algorithms and natural language interfaces to gain insights into the peaks and troughs of demand and quickly communicate that knowledge to the rest of the organization,” said Piet Buyck, CEO, Garvis. “Results have included a 70% savings of weekly planning time, 15-30% reduction in forecast error and improved inventory management – all with ridiculously fast implementation times,” continued Buyck. Logility clients have the immediate opportunity to leverage the ability of AI-driven insights for supply chain planning. To learn more about this opportunity to achieve a rapid return on investment, visit https://www.logility.com/logility-acquires-ai-forecasting-pioneer-garvis. Worldwide Headquarters | 470 East Paces Ferry Road, N.E. | Atlanta, Georgia 30305 | 800.762.5207 | www.logility.com About Logility Logility’s Digital Supply Chain Platform delivers prescriptive demand, inventory, manufacturing, and supply plans – helping to provide executives the confidence and control to increase margins and service levels, while delivering sustainable supply chains. Designed for speed and agility, Logility’s (SaaS) cloud-based platform provides an innovative blend of artificial intelligence (AI) and predictive analytics to help deliver integrated planning and operations across the end-to-end supply chain. Our engineered approach drives team alignment for over 800 customers in 80 countries with prioritized outcomes that assure demonstrable value. Logility is a wholly-owned subsidiary of American Software, Inc. (NASDAQ: AMSWA). Learn more at logility.com. About Garvis Founded in 2020 in Antwerp, Belgium, Garvis is a revolutionary SaaS company on a mission to change demand planning by leveraging artificial intelligence to make forecasting easy, accessible, and explainable while keeping it in the planners’ control. Using Generative AI, external data, and AI-driven algorithms, Garvis challenges the industry to re-think the process, re-start the design, and re-build the solution all while delivering a rapid ROI. By translating customer behavior, market dynamics and other events into digital components and relationships Garvis helps clients in consumers goods, food and beverage, chemicals, pharmaceuticals, and other industries better understand and react to changes as they happen. If you’re interested in a new approach to demand planning, visit www.garvis.ai. Forward-Looking Statements This press release contains forward-looking statements that are subject to substantial risks and uncertainties. References below to the company means Logility, Inc. There are a number of factors that could cause actual results or performance to differ materially from what is anticipated by statements made herein. These factors include, but are not limited to, continuing U.S. and global economic uncertainty and the timing and degree of business recovery; the irregular pattern of the Company’s revenues; dependence on particular market segments or clients; competitive pressures; market acceptance of the Company’s products and services; technological complexity; undetected software errors; potential product liability or warranty claims; risks associated with new product development; the challenges and risks associated with integration of acquired product lines, companies and services; uncertainty about the viability and effectiveness of strategic alliances; American Software, Inc.’s ability to satisfy in a timely manner all Securities and Exchange Commission (SEC) required filings and the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 and the rules and regulations adopted under that Section; as well as a number of other risk factors that could affect the Company’s future performance. For further information about risks the Company and American Software could experience as well as other information, please refer to American Software, Inc.’s current Form 10-K and other reports and documents subsequently filed with the SEC. For more information, contact: Kevin Liu, American Software, Inc., (626) 657-0013 or email kliu@amsoftware.com. Logility® is a registered trademark of Logility, Inc. Other products mentioned in this document are registered, trademarked or service marked by their respective owners. Contact: Heather Coyle Press@Logility.com Worldwide Headquarters | 470 East Paces Ferry Road, N.E. | Atlanta, Georgia 30305 | 800.762.5207 | www.logility.com |
0001213900-23-081931:ea187563ex99-1_realphatech.htm | 0001213900-23-081931 | 1,859,199 | 1,859,199 | reAlpha Tech Corp. (AIRE) (CIK 0001859199) | ['AIRE'] | 8-K | 8-K | 2023-11-01 | 2023-11-01 | 001-41839 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-41839&action=getcompany | 231,366,592 | EX-99.1 | PRESS RELEASE, DATED NOVEMBER 1, 2023 | 8.01,9.01 | https://www.sec.gov/Archives/edgar/data/1859199/000121390023081931 | https://www.sec.gov/Archives/edgar/data/1859199/000121390023081931/0001213900-23-081931-index.html | https://www.sec.gov/Archives/edgar/data/1859199/000121390023081931/ea187563ex99-1_realphatech.htm | EX-99.1 2 ea187563ex99-1_realphatech.htm PRESS RELEASE, DATED NOVEMBER 1, 2023 Exhibit 99.1 reAlpha Announces Commercial Launch of GENA, a Product for Property Listing Descriptions Powered by Generative-AI Dublin, OHIO (November 1, 2023) – reAlpha Tech Corp. (“reAlpha”) (NASDAQ: AIRE), a real estate technology company focused on developing, utilizing and commercializing real estate-focused artificial intelligence to drive efficiency, sustainability and growth, today announced the commercial launch of GENA, formerly known as BnBGPT, a novel tool that enhances residential property listings in multiple online real estate marketplaces through the integration of personalized generative AI descriptions. In an increasingly competitive residential real estate market, property owners, agents and managers are seeking innovative technology solutions to support their businesses and drive positive outcomes. As an owner of, and investor in, residential real estate, reAlpha understands the complexities involved in marketing properties efficiently and effectively, including the time it takes to develop property listing descriptions for platforms such as Airbnb. To that end, reAlpha developed GENA, which leverages reAlpha’s industry knowledge and generative AI technology to enhance or create property descriptions. “Introducing GENA advances our long-term strategy to deliver transformative real estate AI solutions that have the potential to redefine the broader real estate landscape,” said Giri Devanur, CEO of reAlpha. “With GENA, we were able to synergize our existing proprietary AI model with the latest advancements in large language models to create a groundbreaking product that meets the need of a large and growing market. In addition to our organic growth initiatives, we are also evaluating potential strategic acquisitions to enhance our capabilities.” GENA is capable of crafting descriptions that accurately reflect the unique characteristics of each property, allowing residential real estate owners and investors to save time, achieve differentiation and facilitate entry into the market. GENA caters to a diverse spectrum of real estate needs, serving short-term rentals, long-term rentals and residential sales. Whether a property is included in marketplaces such as Airbnb, VRBO, Zillow, Realtor or MLS, GENA can tailor detailed descriptions for each platform, as applicable. “Our AI has analyzed an incredible amount of data tied to property listings, giving us valuable insights into what works and what doesn’t,” said Jorge Aldecoa, COO of reAlpha. “By revolutionizing the property description creation process with AI, we are helping GENA’s end-users bolster their prospects for success by keeping pace with the evolving market and ensuring their listings captivate their desired audiences.” To celebrate the commercial launch of GENA and its recent public listing, reAlpha’s executive team will ring the NASDAQ Stock Market Closing Bell this afternoon. For more information on GENA, visit gena.realpha.com. About reAlpha reAlpha Tech Corp. (NASDAQ: AIRE) is a real estate technology company with a mission to develop, utilize and commercialize real-estate focused artificial intelligence to drive efficiency, sustainability and growth. Founded with a focus on short-term rental properties, reAlpha’s strategy involves developing and buying technologies aimed at democratizing access to this asset class. In addition to providing individual investors with access to short-term rentals, reAlpha plans to make some of its technologies available for commercial use on a licensing fee basis, pay-per-use basis or other fee arrangements. For more information about reAlpha, visit www.realpha.com. Forward-Looking Statements The information in this press release includes “forward-looking statements”. Forward-looking statements include, among other things, statements about: reAlpha’s ability to anticipate the future needs of the short-term rental market; future trends in the real estate, technology and artificial intelligence (“AI”) industries, generally; and reAlpha’s future growth strategy and growth rate. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “could”, “might”, “plan”, “possible”, “project”, “strive”, “budget”, “forecast”, “expect”, “intend”, “will”, “estimate”, “anticipate”, “believe”, “predict”, “potential” or “continue”, or the negatives of these terms or variations of them or similar terminology. These forward-looking statements include, without limitation, statements regarding the satisfaction of required conditions for the listing of the reAlpha common stock. Factors that may cause actual results to differ materially from current expectations include, but are not limited to: reAlpha’s limited operating history and that reAlpha has not yet fully developed its AI-based technologies; reAlpha’s ability to commercialize its developing AI-based technologies; whether reAlpha’s technology and products will be accepted and adopted by its customers and intended users; the inability to maintain and strengthen reAlpha’s brand and reputation; the inability to accurately forecast demand for short-term rentals and AI-based real estate focused products; the inability to execute business objectives and growth strategies successfully or sustain reAlpha’s growth; the inability of reAlpha’s customers to pay for reAlpha’s services; changes in applicable laws or regulations, and the impact of the regulatory environment and complexities with compliance related to such environment; and other risks and uncertainties indicated in reAlpha’s U.S. Securities and Exchange Commission (“SEC”) filings. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those anticipated in the forward-looking statements. Although reAlpha believes that the expectations reflected in the forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. reAlpha’s future results, level of activity, performance or achievements may differ materially from those contemplated, expressed or implied by the forward-looking statements, and there is no representation that the actual results achieved will be the same, in whole or in part, as those set out in the forward-looking statements. For more information about the factors that could cause such differences, please refer to reAlpha’s filings with the SEC. Readers are cautioned not to put undue reliance on forward-looking statements, and reAlpha does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Media ICR on behalf of reAlpha media@realpha.com |
0001907982-24-000088:exh991.htm | 0001907982-24-000088 | 1,907,982 | 1,907,982 | D-Wave Quantum Inc. (QBTS, QBTS-WT) (CIK 0001907982) | ['QBTS', 'QBTS-WT'] | 8-K | 8-K | 2024-07-29 | 2024-07-29 | 001-41468 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-41468&action=getcompany | 241,148,825 | EX-99.1 | EX-99.1 | 7.01,9.01 | https://www.sec.gov/Archives/edgar/data/1907982/000190798224000088 | https://www.sec.gov/Archives/edgar/data/1907982/000190798224000088/0001907982-24-000088-index.html | https://www.sec.gov/Archives/edgar/data/1907982/000190798224000088/exh991.htm | EX-99.1 2 exh991.htm EX-99.1 DocumentExhibit 99.1D-Wave Announces Roadmap To Extend Leap Quantum Cloud Service For AI/MLIncluding support for quantum-enhanced and energy efficient AI model training as well as integrating AI and optimization to address important customer use casesPALO ALTO, Calif. – July 29, 2024 – D-Wave Quantum Inc. (NYSE: QBTS) (“D-Wave” or the “Company”), a leader in quantum computing systems, software, and services and the world’s first commercial supplier of quantum computers, today announced it is strengthening the connection between quantum optimization, artificial intelligence (AI), and machine learning (ML), by extending its product development roadmap with enhancements to the Leap™ quantum cloud service that will bring new Quantum AI solutions to market. The roadmap is intended to help customers address a variety of AI/ML workloads including pre-training optimization, more accurate and efficient model training, and opening new AI business use cases that require the integration of AI and business optimization, such as quantum supply chain optimization to support AI-predicted product demand requirements.In response to growing demand from its customers, D-Wave’s Quantum AI development initiative comes at a time when the broader AI industry is confronting a computing crunch. The amount of compute and the associated energy costs needed to satisfy a growing set of use cases is rapidly escalating. D-Wave’s Quantum AI solutions aim to leverage annealing quantum computing’s unique capability in solving optimization problems to help customers discover better, faster and more energy efficient AI and ML workloads.D-Wave is announcing a new Quantum AI extension to its product development roadmap, focused on three key development areas:•Quantum Distributions for Generative AI: Development in this area is focused on designing novel, modern generative AI architectures that directly use quantum processing unit (QPU) samples from quantum distributions that cannot be generated classically. Initially focused on molecular discovery use cases, we believe there is immense potential in harnessing quantum distributions for a broad array of generative AI applications.•Restricted Boltzmann Machine (RBM) Architectures: A growing set of customers are exploring new RBM architectures that directly leverage D-Wave’s QPU for applications ranging from cybersecurity to drug discovery and high-energy physics data analysis, which could potentially lead to reduced energy consumption in training and running AI models. D-Wave plans to ensure that the quantum and hybrid-quantum solvers available in the Leap cloud service support these emerging applications.•GPU Integration with the Leap Quantum Cloud Service: D-Wave is augmenting the Leap quantum cloud service by incorporating additional graphics processing unit (GPU) resources for the training and support of AI models alongside optimization workloads. In addition, efforts are underway to further reduce latency between QPUs and classical computing resources, a critical step in enabling hybrid-quantum technology for AI/ML.Specific customer use cases related to D-Wave’s Quantum AI solutions include:•As a pioneering example of improving biological data analysis, researchers in Julich, Germany, used D-Wave’s quantum technology to develop a machine learning tool that predicts protein-DNA binding with greater accuracy than traditional methods. The team integrated quantum computing with support vector machines to achieve improved results in various metrics, significantly enhancing classification performance. •TRIUMF, Canada's particle accelerator center, and its partner institutions, are showing significant speed-ups of D-Wave’s QPU over classical approaches for simulating high-energy particle-calorimeter interactions – potentially leading to major efficiencies where the AI model is used to create synthetic data. •Honda Innovation Lab and Tohoku University developed a method to fine-tune D-Wave’s quantum computers to generate highly accurate samples for training RBMs. This approach yielded better results than traditional algorithms and significant improvements in model performance.“We’re seeing early evidence that annealing quantum computing could play a key role in helping AI/ML with more efficient model training, reduced energy consumption and faster time-to-solution,” said Dr. Alan Baratz, CEO of D-Wave. “With results demonstrating our annealing quantum computer’s ability to outperform classical techniques, coupled with rapidly increasing demand from our customers for Quantum AI solutions that integrate with their business optimization requirements, we believe the impact of D-Wave’s Quantum AI solutions could be transformative, bringing a powerful new set of new computing tools for generative AI.”About D-Wave Quantum Inc.D-Wave is a leader in the development and delivery of quantum computing systems, software, and services, and is the world’s first commercial supplier of quantum computers—and the only company building both annealing quantum computers and gate-model quantum computers. Our mission is to unlock the power of quantum computing today to benefit business and society. We do this by delivering customer value with practical quantum applications for problems as diverse as logistics, artificial intelligence, materials sciences, drug discovery, scheduling, cybersecurity, fault detection, and financial modeling. D-Wave’s technology has been used by some of the world’s most advanced organizations including Mastercard, Deloitte, Davidson Technologies, ArcelorMittal, Siemens Healthineers, Unisys, NEC Corporation, Pattison Food Group Ltd., DENSO, Lockheed Martin, Forschungszentrum Jülich, University of Southern California, and Los Alamos National Laboratory.Forward-Looking StatementsCertain statements in this press release are forward-looking, as defined in the Private Securities Litigation Reform Act of 1995. These statements involve risks, uncertainties, and other factors that may cause actual results to differ materially from the information expressed or implied by these forward-looking statements and may not be indicative of future results. These forward-looking statements are subject to a number of risks and uncertainties, including, among others, various factors beyond management’s control, including the risks set forth under the heading “Risk Factors” discussed under the caption “Item 1A. Risk Factors” in Part I of our most recent Annual Report on Form 10-K or any updates discussed under the caption “Item 1A. Risk Factors” in Part II of our Quarterly Reports on Form 10-Q and in our other filings with the SEC. Undue reliance should not be placed on the forward-looking statements in this press release in making an investment decision, which are based on information available to us on the date hereof. We undertake no duty to update this information unless required by law.Media Contact:D-WaveAlex Daiglemedia@dwavesys.com |
0000950170-25-096670:phun-ex99_1.htm | 0000950170-25-096670 | 1,665,300 | 1,665,300 | Phunware, Inc. (PHUN) (CIK 0001665300) | ['PHUN'] | 8-K | 8-K | 2025-07-17 | 2025-07-13 | 001-37862 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-37862&action=getcompany | 251,131,556 | EX-99.1 | EX-99.1 | 1.01,5.02,7.01,9.01 | https://www.sec.gov/Archives/edgar/data/1665300/000095017025096670 | https://www.sec.gov/Archives/edgar/data/1665300/000095017025096670/0000950170-25-096670-index.html | https://www.sec.gov/Archives/edgar/data/1665300/000095017025096670/phun-ex99_1.htm | EX-99.1 4 phun-ex99_1.htm EX-99.1 EX-99.1 Phunware Announces Updates to Senior Leadership TeamJeremy Krol Appointed as Interim Chief Executive Officer and Rahul Mewawalla Appointed as Executive Chairman and Chief AI ArchitectAUSTIN, TX – July 14, 2025 – Phunware, Inc. (NASDAQ: PHUN) (“Phunware” or the “Company”), today announced a leadership update, effective immediately. The Board has appointed Mr. Jeremy Krol, the Company’s current Chief Operating Officer, as its new Interim CEO, effective today, replacing Mr. Stephen Chen. Mr. Krol has spent his career optimizing business operations, integrating technology with market needs, and leading high-performing teams through complex transitions. He has served as the Company’s fractional Chief Operating Officer from June 2024 to February 2025, at which time he joined the Company in a full-time capacity as Chief Operating Officer. From 2019 to 2024, Mr. Krol served as a startup advisor for Platform Calgary, which is a technology accelerator hub for technology startups.In addition, the Company has appointed Mr. Rahul Mewawalla, a member of the Company’s Board of Directors, as the Company’s Executive Chairman and Chief Artificial Intelligence (AI) Architect. In this dual role, Mr. Mewawalla as Executive Chairman will focus on working along with the Company’s interim CEO on high-priority strategic and operational matters and as Chief AI Architect, on advancing the Company’s artificial intelligence priorities and overall AI enterprise activities.Mr. Mewawalla is a technology, digital, product, and business leader with extensive strategic and operational leadership experience with enterprise and consumer companies across artificial intelligence, computing, technology, internet, telecom, financial services, and digital markets. He has served as a Nasdaq-listed public company chairman, public company CEO, public company President, EVP of platforms and technology businesses, and has held leadership positions at a number of global technology companies such as Yahoo, Nokia, and General Electric Company. Mr. Mewawalla is a frequent speaker and panelist at global artificial intelligence (AI) summits and a regular author on AI and accelerated computing in publications such as Forbes and Fast Company.“We are confident that with Jeremy as interim CEO and Rahul as Executive Chairman and as Chief AI Architect, advancing our AI priorities, the Company is well positioned for enhanced innovation and continued growth,” said Elliot Han, Chair of the Compensation Committee and Quyen Du, Chair of the Nominating and Governance Committee, on behalf of the Company’s Board of Directors. These updates reflect the Company’s continued commitment to strengthening its leadership team, advancing its capabilities, and accelerating execution of the Company’s long-term vision and strategic goals.About PhunwarePhunware, Inc. (NASDAQ: PHUN) is an enterprise software company specializing in mobile app solutions with integrated intelligent capabilities. We provide businesses with the tools to create, implement, and manage custom mobile applications, analytics, digital advertising, and location-based services. Phunware is transforming mobile engagement by delivering scalable, personalized, and data-driven mobile app experiences.Phunware’s mission is to achieve unparalleled connectivity and monetization through the widespread adoption of Phunware mobile technologies, leveraging brands, consumers, partners, and market participants. Phunware is poised to expand its software products and services audience through a new Generative AI platform which is in development, utilize and monetize its patents and other intellectual property, and focus on serving its enterprise customers and partners.For more information on Phunware, please visit www.phunware.com. To better understand and leverage generative AI and Phunware’s mobile app technologies, visit ai.phunware.com.Safe Harbor / Forward-Looking StatementsThis press release includes forward-looking statements. All statements other than statements of historical facts contained in this press release, including statements regarding our future results of operations and financial position, business strategy and plans, and our objectives for future operations, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “will,” and similar expressions are intended to identify forward-looking statements. For example, Phunware is using forward-looking statements when it discusses the adoption and impact of emerging technologies and their use across mobile engagement platforms.The forward-looking statements contained in this press release are based on our current expectations and beliefs concerning future developments and their potential effects on us. These forward-looking statements involve risks, uncertainties, and other assumptions that may cause actual results to differ materially from those expressed or implied. These risks and uncertainties include, but are not limited to, those factors described under the heading “Risk Factors” in our filings with the SEC. We undertake no obligation to update any forward-looking statements.By their nature, forward-looking statements involve risks and uncertainties. We caution you that forward-looking statements are not guarantees of future performance and that our actual results may differ materially from those expressed or implied by these forward-looking statements.Investor Relations Contact:Chris Tyson, Executive Vice PresidentMZ Group - MZ North America949-491-8235PHUN@mzgroup.uswww.mzgroup.us Phunware Media Contact:Joe McGurk, Managing Director917-259-6895PHUN@mzgroup.us |
0001213900-24-069319:ea021150801ex99-1_realpha.htm | 0001213900-24-069319 | 1,859,199 | 1,859,199 | reAlpha Tech Corp. (AIRE) (CIK 0001859199) | ['AIRE'] | 8-K | 8-K | 2024-08-15 | 2024-08-15 | 001-41839 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-41839&action=getcompany | 241,210,524 | EX-99.1 | PRESS RELEASE, DATED AUGUST 15, 2024 | 8.01,9.01 | https://www.sec.gov/Archives/edgar/data/1859199/000121390024069319 | https://www.sec.gov/Archives/edgar/data/1859199/000121390024069319/0001213900-24-069319-index.html | https://www.sec.gov/Archives/edgar/data/1859199/000121390024069319/ea021150801ex99-1_realpha.htm | EX-99.1 2 ea021150801ex99-1_realpha.htm PRESS RELEASE, DATED AUGUST 15, 2024 Exhibit 99.1 reAlpha Tech Corp. Launches reAlpha AI Labs New research and development initiative empowers startups with potential funding and strategic partnerships Dublin, Ohio, August 15, 2024 – reAlpha Tech Corp. (“reAlpha”), (Nasdaq: AIRE) a real estate technology company developing and commercializing artificial intelligence (“AI”) technologies, today announced the launch of reAlpha AI Labs, a research and development initiative to develop, partner with and potentially invest in AI startups. This strategic initiative will provide a platform for early-stage companies, enabling them to accelerate their growth. We expect that the products and services developed by the incubated startups will be used to enhance Claire, reAlpha’s generative AI-powered, commission-free home buying platform. The AI sector saw a remarkable $25.2 billion global investment in generative AI in 20231, nearly nine times that of 2022, highlighting the accelerating interest and heightened development pace in this industry. As the AI world advances towards “Artificial General Intelligence,” reAlpha AI Labs will drive innovation through four key stages: (1) developing foundational AI infrastructure; (2) pioneering generative AI for real estate; (3) leveraging “Internet of Things,” or IoT, and advanced analytics for smarter property acquisition solutions; and (4) integrating blockchain and fintech tools and solutions for enhanced transaction security and efficiency when acquiring a property. By working through these four key stages, reAlpha AI Labs intends to foster a culture of continuous innovation and technological advancement, which reAlpha believes will advance their goal to be at the forefront of AI-driven real estate solutions. Additionally, reAlpha plans to partner with universities through reAlpha AI Labs to further enhance its research and development capabilities, as well as to foster collaboration and drive forward-thinking initiatives in the real estate industry. “We are committed to pushing the boundaries of AI advancements. The rapid pace of innovation in the AI industry presents unparalleled opportunities for us to stay ahead and continuously enhance our product offerings,” said Mike Logozzo, Chief Operating Officer, President and Interim Chief Financial Officer of reAlpha. “We remain dedicated to continue working towards the development of emerging technologies and acceleration of progress in the industry.” “Our goal is to create an ecosystem where innovative startups can thrive by leveraging our resources and established market presence,” said Vinayak Grover, Associate Vice President at reAlpha. “By focusing on strategic partnerships and investments, we intend to drive growth and innovation throughout our entire portfolio of product offerings.” Startups interested in partnering with reAlpha AI Labs are invited to connect with reAlpha and explore collaborative opportunities. For more details and to discover how to get involved in driving AI innovation, visit the reAlpha AI Labs website at https://ai-labs.realpha.com/. 1https://www.lexology.com/library/detail.aspx?g=e246c259-d962-450c-8bb9-029101f5d207#:~:text=Unsurprisingly%2C%20AI%20investment%20skewed%20heavily,times%20the%20amount%20in%202019. About reAlpha Tech Corp. reAlpha Tech Corp. (Nasdaq: AIRE) is a real estate technology company developing an end-to-end commission-free homebuying platform. Utilizing the power of AI and an acquisition-led growth strategy, reAlpha’s goal is to offer a more affordable, streamlined experience for those on the journey to homeownership. For more information, visit www.realpha.com. About Claire Claire, announced on April 24, 2024, is reAlpha’s generative AI-powered, zero-commission homebuying platform. The tagline: No fees. Just keys.TM – reflects reAlpha’s dedication to eliminating traditional barriers and making homebuying more accessible and transparent. Claire’s introduction aligns with major shifts in the real estate sector after the National Association of Realtors (“NAR”) agreed to settle certain lawsuits upon being found to have violated antitrust laws, resulting in inflated fees paid to buy-side agents. This development is expected to result in the end of the standard six percent sales commission, which equates to approximately $100 billion in realtor fees paid annually. Claire offers a cost-free alternative for homebuyers by utilizing an AI-driven workflow that assists them through the home buying process. Homebuyers can use Claire’s conversational interface to guide them through every step of their journeys, from property search to closing the deal. By offering support 24/7, Claire is poised to make the homebuying process more efficient, enjoyable and cost-efficient. Claire matches buyers with their dream homes using over 400 data attributes and provides insights into market trends and property values. Additionally, Claire can assist with questions, booking property tours, submitting offers, and negotiations. Currently, Claire is under limited availability for homebuyers located in Palm Beach, Miami-Dade and Broward counties in South Florida, but reAlpha is actively seeking new MLS and brokerage licenses that will enable expansion into more U.S. states. For more information on Claire, please visit www.reAlpha.com. 2 Forward-Looking Statements The information in this press release includes “forward-looking statements”. Forward-looking statements include, among other things, statements about the reAlpha AI Labs initiative; the anticipated benefits of the reAlpha AI Labs; reAlpha’s ability to anticipate the future needs of the short-term rental market; future trends in the real estate, technology and artificial intelligence industries, generally; and reAlpha’s future growth strategy and growth rate. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “could”, “might”, “plan”, “possible”, “project”, “strive”, “budget”, “forecast”, “expect”, “intend”, “will”, “estimate”, “anticipate”, “believe”, “predict”, “potential” or “continue”, or the negatives of these terms or variations of them or similar terminology. Factors that may cause actual results to differ materially from current expectations include, but are not limited to: reAlpha’s limited operating history and that reAlpha has not yet fully developed its AI-based technologies; reAlpha’s ability to commercialize its developing AI-based technologies; whether reAlpha’s technology and products will be accepted and adopted by its customers and intended users; reAlpha’s ability to leverage reAlpha AI Labs’ initiative into its existing business and the anticipated demand for reAlpha AI Labs collaborations and partnerships; the inability to maintain and strengthen reAlpha’s brand and reputation; the inability to accurately forecast demand for short-term rentals and AI-based real estate focused products; the inability to execute business objectives and growth strategies successfully or sustain reAlpha’s growth; the inability of reAlpha’s customers to pay for reAlpha’s services; changes in applicable laws or regulations, and the impact of the regulatory environment and complexities with compliance related to such environment; and other risks and uncertainties indicated in reAlpha’s U.S. Securities and Exchange Commission (“SEC”) filings. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those anticipated in the forward-looking statements. Although reAlpha believes that the expectations reflected in the forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. reAlpha’s future results, level of activity, performance or achievements may differ materially from those contemplated, expressed or implied by the forward-looking statements, and there is no representation that the actual results achieved will be the same, in whole or in part, as those set out in the forward-looking statements. For more information about the factors that could cause such differences, please refer to reAlpha’s filings with the SEC. Readers are cautioned not to put undue reliance on forward-looking statements, and reAlpha does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Media irlabs on behalf of reAlpha Fatema Bhabrawala fatema@irlabs.ca 3 |
0001193125-23-229092:d539142dex992.htm | 0001193125-23-229092 | 1,843,714 | 1,843,714 | Andretti Acquisition Corp. (ZPTA, ZPTAW) (CIK 0001843714) | ['ZPTA', 'ZPTAW'] | 8-K | 8-K | 2023-09-06 | 2023-09-06 | 001-41218 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-41218&action=getcompany | 231,237,838 | EX-99.2 | EX-99.2 | 1.01,7.01,9.01 | https://www.sec.gov/Archives/edgar/data/1843714/000119312523229092 | https://www.sec.gov/Archives/edgar/data/1843714/000119312523229092/0001193125-23-229092-index.html | https://www.sec.gov/Archives/edgar/data/1843714/000119312523229092/d539142dex992.htm | EX-99.2 5 d539142dex992.htm EX-99.2 EX-99.2 Exhibit 99.2 The Industrial Generative AI Company ZAPATA COMPUTING INC. Cautionary Notes This presentation (“Presentation”) is provided for informational purposes only and has been prepared to assist interested Forward Looking Statements parties in making their own evaluation with respect to a potential business combination between Andretti Acquisition Corp. (“Andretti”) and Zapata Computing, Inc. (“Zapata AI”, “we”, “us” or ”our”) and related transactions (the “Business Certain statements included in this Presentation that are not historical facts are forward-looking statements for Combination”) and for no other purpose. This Presentation does not constitute (i) a solicitation of a proxy, consent or purposes of the safe harbor provisions under the United States Private Securities Litigation Reform Act of 1995. authorization with respect to any securities or in respect of the proposed Business Combination, or (ii) an offer to sell, or Forward-looking statements generally are accompanied by words such as “believe,” “may,” “will,” “estimate,” the solicitation of an offer to buy, or a recommendation to purchase, any securities, nor shall there be any sale of “continue,” “anticipate” “intend,” “expect,” “should,” “would,” “plan,” “predict,” “potential,” “seem” “seek” “future” securities in any states or jurisdiction in which such offer, solicitation or sale would be unlawful. “outlook,” and similar expressions that predict or indicate future events or trends or that are not statements of historical matters. Neither the Securities and Exchange Commission (the “SEC”) nor any securities commission of any other U.S. or non- U.S. jurisdiction has approved or disapproved of the Business Combination, or determined that this Presentation is These forward-looking statements include, but are not limited to, statements regarding estimates and forecasts of truthful or complete. No representations or warranties, express or implied, are given in, or in respect of, this financial and performance metrics and projections of market opportunity. These statements are based on various Presentation. To the fullest extent permitted by law, in no circumstances will Zapata AI, Andretti or any of their respective assumptions, whether or not identified in this Presentation, and on the current expectations of the management of subsidiaries, stockholders, affiliates, representatives, directors, officers, employees, advisers or agents be responsible or Zapata AI and Andretti, as the case may be, and are not predictions of actual performance. These forward-looking liable for any direct, indirect or consequential loss or loss of profit arising from the use of this Presentation, its contents, statements are provided for illustrative purposes only and are not intended to serve as, and must not be relied on by its omissions, reliance on the information contained within it, or on opinions communicated in relation thereto or an investor as, a guarantee, an assurance, a prediction or a definitive statement of fact or probability. Actual events otherwise arising in connection therewith. Industry and market data used in this Presentation have been obtained from third-party industry publications and sources as well as from research reports prepared for other purposes. Neither and circumstances are beyond the control of Zapata AI and Andretti. These forward-looking statements are subject to Zapata AI nor Andretti has independently verified the data obtained from these sources and cannot assure you of the a number of risks and uncertainties, including changes in domestic and foreign business, market, financial, political data’s accuracy or completeness. This data is subject to change. In addition, this Presentation does not purport to be all- and legal conditions, the inability of Zapata AI or Andretti to successfully or timely consummate the Business inclusive or to contain all of the information that may be required to make a full analysis of Zapata AI or the Business Combination, including the risk that any regulatory approvals are not obtained, are delayed or are subject to Combination. Viewers of this Presentation should each make their own evaluation of Zapata AI and of the relevance and unanticipated conditions that could adversely affect the expected benefits of the Business Combination, the adequacy of the information and should make such other investigations as they deem necessary. References in this occurrence of any event, change or other circumstances that could give rise to the termination of negotiations and Presentation to our “partners” or “partnerships” with technology companies, governmental entities, universities or others any subsequent definitive agreements with respect to the Business Combination; the outcome of any legal do not denote that our relationship with any such party is in a legal partnership form but rather is a generic reference to proceedings that may be instituted against Andretti, Zapata AI, the combined company or others following the our relationship with such party. announcement of the Business Combination and any definitive agreements with respect thereto; the inability to complete the Business Combination due to the failure to obtain approval of the stockholders of Andretti, the ability to meet stock exchange listing standards following the consummation of the Business Combination; the risk that the Business Combination disrupts current plans and operations of Zapata AI as a result of the announcement and consummation of the Business Combination, failure to realize the anticipated benefits of the Business Combination, risks relating to the uncertainty of the projected financial information, risks related to the performance of Zapata AI’s business and the timing of expected business or revenue milestones, and the effects of competition on Zapata AI’s business. If any of these risks materialize or our assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. In addition, forward-looking statements reflect Zapata AI’s expectations, plans or forecasts of future events and views as of the date of this Presentation. Zapata AI anticipates that subsequent events and developments will cause Zapata AI’s assessments to change. Neither Andretti nor Zapata AI undertakes or accepts any obligation to release publicly any updates or revisions to any forward-looking statements to reflect any change in its expectations or any change in events, conditions or circumstances on which any such statement is based. These forward-looking statements should not be relied upon as representing Andretti’s or Zapata AI’s assessments of any date subsequent to the date of this Presentation. Accordingly, undue reliance should not be placed upon the forward-looking statements. ZAPATA COMPUTING INC. Cautionary Notes (continued) Use of Data No Offer or Solicitation The data contained herein is derived from various internal and external sources. No representation is made as to This presentation is for informational purposes only and shall not constitute a proxy statement or solicitation of a proxy, the reasonableness of the assumptions made within or the accuracy of completeness of any projects or consent, or authorization with respect to any securities or in respect of the Business Combination. This presentation modeling or any other information contained herein. Any data on past performance or modeling contained herein shall also not constitute an offer to sell or a solicitation of an offer to buy any securities, nor shall there be any sale, is not an indication as to future performance. Neither Andretti nor Zapata AI assumes no obligation to update the issuance, or transfer of securities in any state or jurisdiction in which such offer, solicitation, or sale would be unlawful information in this Presentation except as may be required by law. prior to registration or qualification under the securities laws of any such state or jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, Additional Information About the Business Combination and Where to Find It as amended, or an exemption therefrom. In connection with the contemplated transaction, Andretti intends to file a registration statement on Form S-4 (the “Registration Statement”), which will include a proxy statement/prospectus, with the SEC. Additionally, Andretti will file other relevant materials with the SEC in connection with the transaction. A definitive proxy statement/final prospectus will also be sent to the stockholders of Andretti, seeking any required stockholder approval. This Presentation is not a substitute for the Registration Statement, the definitive proxy statement/final prospectus, or any other document that Andretti will send to its stockholders. Before making any voting or investment decision, investors and security holders of Andretti are urged to carefully read the entire Registration Statement and proxy statement/prospectus, when they become available, and any other relevant documents filed with the SEC as well as any amendments or supplements to these documents, because they will contain important information about the transaction. Stockholders will also be able to obtain copies of such documents, without charge, once available, at the SEC’s website at www.sec.gov. In addition, the documents filed by Andretti may be obtained free of charge from Andretti at andrettiacquisition.com. Alternatively, these documents, when available, can be obtained free of charge from Andretti upon written request to Andretti Acquisition Corp., 7615 Zionsville Road, Indianapolis, Indiana 46268, or by calling (317) 872-2700. The information contained on, or that may be accessed through, the websites referenced in this Presentation is not incorporated by reference into, and is not a part of, this Presentation. Participants in the Solicitation Andretti, Andretti’s sponsors, Zapata AI and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the stockholders of Andretti, in connection with the Business Combination. Information regarding Andretti’s directors and executive officers is contained in Andretti’s Annual Report on Form 10-K for the year ended December 31, 2023, which is filed with the SEC. Additional information regarding the interests of those participants, the directors and executive officers of Zapata AI and other persons who may be deemed participants in the transaction may be obtained by reading the Registration Statement and the proxy statement/prospectus and other relevant documents filed with the SEC when they become available. Free copies of these documents may be obtained as described above. ZAPATA COMPUTING INC. Industrial Software for the Generative AI Revolution ORIGIN Spun out of Harvard in 2017 Industrial solutions that uniquely process both text and numbers 1. Zapata AI Prose™ for Large Language Models (LLMs) GENERATIVE AI 2. Zapata AI Sense™ for complex mathematical models OFFERING ® Orquestra full-stack software platform to build, train, fine-tune, and deploy Industrial Generative AI applications Customers have leveraged proprietary Generative AI/ML, optimization, and quantum algorithms and models CUSTOMERS Integrations and Alliances across the AI and Quantum Computing ecosystem PARTNERS 4 ZAPATA COMPUTING INC. Oversubscribed $230M SPAC IPO (NYSE: “WNNR”) • Former Chairman of the National Ready-Mixed Concrete Association Led by Legendary Andretti Racing Family and Best • Independent Director at Comfort Systems USA (NYSE: FIX) and Knife River Corporation (NYSE: KNF) in Class Public Company Executives • Former Chairman & CEO of U.S. Concrete (NASDAQ: USCR) William J. (Bill) Sandbrook Chairman and Co-Chief Executive Officer • Management has decades of public company operating and acquisition experience along with a history of producing long-term value creation • IndyCar World Champion • Founder, CEO, and Chairman of Andretti Autosport • During U.S. Concrete CEO tenure, Bill Sandbrook produced 25x • Founder of Andretti Technologies market value creation, grew EBITDA 24x, executed 35+ Michael Andretti • Investor and Advisor for DUZY, a Video Technology acquisitions (17 with Matt Brown) Co-Chief Executive Officer and Director • Merger partner gets access to vast network of relationships, industry connectivity, proprietary deal flow, and can • Former CEO of Rocky Mountain Industrials leverage Andretti brand • Former EVP and CFO of Forterra (NASDAQ: FRTA) • The Andretti brand is well recognized • Former SVP and CFO of U.S. Concrete (NASDAQ: USCR) • Andretti Autosport has portfolio of 120+ world-class sponsors, William M. (Matt) Brown • Former U.S. Navy SEAL Officer President and Chief including Honda, Konica Minolta, Accura, Group 1001 and Financial Officer AutoNation • Curated Board, including Current CEO of McLaren Racing, • One of the most successful drivers in the history of motorsports, Andretti is one Current Chief Audit Executive of AT&T, Former CEO of 7-Eleven, of only three drivers to have won races in Formula One, IndyCar, the World Former President of NYSE Euronext Sportscar Championship, and NASCAR Mario Andretti Special Advisor 5 ZAPATA COMPUTING INC. Companies are racing to find the “killer apps” for Generative AI Healthcare Chatbots and applications can provide simple language descriptions of medical information and treatment Customer Service Education recommendations. Improve chatbot intent Create personal learning identification, summarize experience, like tutors. Gartner Poll Finds 45% of Executives conversations, answer Generate learning plans and customer questions from a custom learning materials. search, directing customers to Say ChatGPT Has Prompted an Increase resources. 1 in AI Investment INDUSTRY EXAMPLES 70% of Organizations Currently in Exploration Sales & Marketing Software Development 2 Mode with Generative AI Engage with potential Engage with potential customers on website or in a customers on website or in a chatbot. Provide chatbot. Provide recommendations. Provide recommendations. Provide product descriptions. product descriptions. Personal Assistants Customize emails. Customize emails. Manage schedules, summarize emails, compose emails (and chains), replies, and summaries, draft common documents. Notes: 1. Gartner Press Release, Gartner Poll Finds 45% of Executives Say ChatGPT has Prompted an Increase in AI Investment, May 3, 2023. 2. Gartner Webinar, Beyond the Hype: Enterprise Impact of ChatGPT and Generative AI, March 2023. 6 ZAPATA COMPUTING INC. Problems with LLMs and other Generative AI models INCONSISTENT TOO BIG (AND COSTLY) OTHER CHALLENGES Data privacy and model security Training data quality and bias Integration with existing systems Continuous monitoring and feedback loop Ethical and legal considerations Focus on Language 7 ZAPATA COMPUTING INC. Industrial Generative AI: enterprise software that harnesses language and numerical models for domain-specific, industrial-scale applications. ZAPATA COMPUTING INC. Big Tech makes one-size-fits-all Generative AI (e.g. ChatGPT). Zapata AI adapts language and text models for Industry GENERATIVE AI INDUSTRIAL GENERATIVE AI Unreliable; trained on general data Accurate; trained on customer-specific data Privacy issues Customer’s private environment Massive, costly, inefficient models Models optimized for speed, cost, accuracy Locked into vendor’s compute & cloud choice(s) Flexibility to choose best models, hardware, clouds Language models not useful for numerical problems Translates numerical data into accurate prose Leverages quantum generative models Uses classical machine learning and statistics and their statistical advantages over classical 9 ZAPATA COMPUTING INC. Our team has worked on Generative AI since founding Encoding equality First-ever high-resolution images Synergy between quantum constraints in tensor Generator-enhanced First quantum generative generated on a quantum device using circuits and tensor network generative optimization of 1 3 5 7 9 Generative AI techniques networks models manufacturing plants AI IP filing 2019 2020 2021 2022 2023 First gate model quantum heuristic Generator enhanced Improved generalization Novel generative AI- Quantum-enhanced 2 4 8 for generative modeling optimization (GEO) metrics for generative inferred automotive data generative models for drug 6 10 models molecule design Notes: Timeline not to scale.1 US20200410384A1 - Hybrid quantum-classical generative models for learning data distributions - Google Patents 2. Anschuetz & Cao, Realizing Quantum Boltzmann Machines Through Eigenstate Thermalization, March 2019. 3. Generation of High-Resolution Handwritten Digits with an Ion-Trap Quantum Computer, Dec 2020. 4. Alcazar et. al., GEO: Enhancing Combinatorial Optimization with Classical and Quantum Generative Models, Jan 2021. 5. Rudolph et. al., Synergy Between Quantum Circuits and Tensor Networks, Aug 2022. 6. Perdomo-Ortiz et. al., Evaluating generalization in quantum and classical generative models, Jan 2022. 7. Perdomo-Ortiz et. Al., Evaluating Generalization in Classical and Quantum Generative Models, Jan 2022. 8. Andretti Autosport customer work. 9. Banner et. al., Quantum Inspired Optimization for Industrial Scale Problems, May 2023. 10. Cao et. al., Exploring the Advantages of Quantum Generative Adversarial Networks in Generative Chemistry, May 2023. 10 ZAPATA COMPUTING INC. Quantum statistics for AI are superior to classical statistics— and don’t require quantum hardware Quantum models can outperform classical models in two ways: 1. GENERALIZATION: Better at extrapolating missing information 2. EXPRESSIBILITY: Greater range of possible solutions QUANTUM MODEL DISTRIBUTIONS CLASSICAL MODEL Zapata AI has proprietary methods built from our deep quantum expertise. 11 ZAPATA COMPUTING INC. Globally ranked IP portfolio includes Industrial Generative AI and other advanced enterprise computing algorithms #5 most active in Quantum-inspired AI patent One of world’s largest quantum software patent portfolios: + 2 applications between 2020-2021. We have 50 US patent families & applications (100 worldwide). 1 created Generative AI IP since 2018. BREAKDOWN FOR MOST ACTIVE APPLICATIONS RELATED TO QUANTUM COMPUTING AND ARTIFICIAL INTELLIGENCE/MACHINE LEARNING, FOR 2020-2021 Generative AI Differential 30% Equations & Optimization 22% PATENT PORTFOLIO 10% Hardware Optimization 38% Algorithms & Software Notes: 1. European Patent Office, Quantum Computing Insight Report, January 2023. Link to report. 2. Intellectual Property as of June 2023. 12 ZAPATA COMPUTING INC. Zapata AI compresses Large Language Models (LLMs) to reduce 1 compute costs, shrink carbon footprints, and speed up runtimes Compressed models are more accurate than — and show better generalization with unseen uncompressed models of the same size validation data. 0.9 0.8 0.81 0.7 0.805 0.6 0.8 0.5 0.4 0.795 0.3 0.79 0.2 0.785 0.1 0 0.78 459 918 1377 1836 2295 2754 3213 3672 4131 4590 0.775 TRAINING STEP GPT2-Small GPT2-XL Compressed GPT2-XL GPT2-Small GPT2-XL Compressed GPT2-XL MODEL As this chart shows, the compressed model has the most stable performance during GPT2-Small and Compressed GPT2-XL are the same size, but the compressed version of GPT2-XL is more accurate. training, achieving more consistent accuracy with fewer training steps. Compressed GPT2-XL requires 300x fewer tokens to achieve the same performance as GPT2-XL. Notes: 1. Zapata data. 13 ZAPATA COMPUTING INC. F1 MEASURE (ACCURACY) F1 MEASURE (ACCURACY) Zapata AI’s technology gets 8,400x speedup and better accuracy in 1 large models Faster alternative to Monte Carlo simulation • Model converges faster than traditional Monte Carlo approach by orders of magnitude, especially for multi-asset problems. • Plot shows European options pricing with 10 assets. Similar behavior for 20 assets. Notes: 1. Zapata data. 14 ZAPATA COMPUTING INC. Industrial Generative AI for Andretti Autosport’s next-generation 1 race analytics Industrial Generative AI predicts behavior that cannot be measured directly, generating “virtual sensors” in automotive and other industries. 2 ANDRETTI USE CASES ANALOGOUS USE CASES SYNTHETIC GENERATED DATA COMPARES WELL WITH REAL DATA (GROUND TRUTH) Tire Logistics, Supply Degradation Chain, Manufacturing – Real Data – Synthetic Data GENERATIVE AI-INFERRED CHANNEL Race Finance, Energy & Strategy Utilities Predictive Modeling Finance, Insurance, IT Notes: Labels removed for confidentiality. 1. Zapata Data 2. Error less than 1%. This plot indicates the data generated by our generative AI model was almost indistinguishable from the actual car data. 15 ZAPATA COMPUTING INC. Zapata AI’s Industrial Generative AI optimization solutions apply to use 1 cases across industries Generator Enhanced Optimization (GEO), uses generative AI to suggest solutions to complex optimization problems that classical methods alone do not. 2 PORTFOLIO OPTIMIZATION EXAMPLE : GEO generated lower-risk financial portfolios than state-of-the-art optimizers. Notes: 1. Zapata Data 2. Alcazar and Perdomo-Ortiz. GEO: Enhancing Combinatorial Optimization with Quantum Generative Models (arXiv2101.06250). 16 ZAPATA COMPUTING INC. Optimizing BMW´s manufacturing plant scheduling with Industrial Generative AI Challenge: Optimize worker schedule to achieve production targets while minimizing idle hours. Approach: Zapata AI’s GEO algorithm tied or outperformed state-of-the-art solvers 1 in 71% of configurations . 2% 2.5% 5% 1.5% 100% 2% 2.5% 5% 100% noDEV noDEV noDEV yesDEV noDEV yesDEV yesDEV yesDEV yesDEV SOLUTION SPACE SIZE IN COLLABORATION WITH GEO outperformed seed optimizer GEO tied seed optimizer Notes: 1. Banner et. al. Quantum-Inspired Optimization for Industrial Scale Traditional optimizer outperformed GEO GEO had best performance for problem configuration (column). Problems (arXiv:2305.02179). 17 ZAPATA COMPUTING INC. SEED OPTIMIZER PT SA GAU GA2 GA1 ® Orquestra : The full-stack software platform for Industrial Generative AI 1 1 Notes: 1. Compatible with these systems. 18 ZAPATA COMPUTING INC. Value proposition: Faster, cheaper, and more accurate Generative AI FASTER & CHEAPER Smaller Large Language Models (LLMs) with comparable performance. MODELS 1 Demonstrating over 1000x speed-up on complex computational models. MORE ACCURATE Generative AI to create novel solutions to enterprise problems that get better results (e.g., MODELS model fit) than existing solutions. PROPRIETARY Globally competitive patent portfolio of quantum-inspired Generative AI algorithms. TECHNIQUES Massive-scale, full-stack model development and deployment. PLATFORM Train models with customer data, in customer-controlled environments. Notes: 1. Zapata Data. 19 ZAPATA COMPUTING INC. Industrial Generative AI and advanced algorithms have potential to create significant business value in key verticals Existing and Prospective Case Studies Potential to use LLMs to generate FDA forms Applying Generative AI for predictive analytics from clinical trial data using advanced automotive sensor data In development Generative AI & ML for materials discovery, value Risk optimization for derivative pricing chain optimization Generative AI for optimizing manufacturing Optimizing downstream R&D plant scheduling Optimizing sales, scheduling and delivery 2 DARPA awards to benchmark utility of quantum operations computing Notes: Case studies available at: https://zapata.ai/customer-case-studies/ 20 ZAPATA COMPUTING INC. Zapata AI participates in an enormous potential TAM where we believe we can create substantial value for Industry Generative AI Software and its adjacencies have the potential Value of potential disruption for enterprise estimated 3 to provide an extensive addressable market opportunity. up to $4.4T. Estimated Total Addressable Market and BUSINESS FUNCTION EST. GLOBAL P&L IMPACT- $B * 1 Low – High Serviceable Obtainable Market (SOM) by 2032: Sales & Marketing 760 1,200 Software Engineering 580 1,200 Supply Chain & $1.3T 550 Operations 290 470 Customer Operations 340 420 Product R&D 230 260 Risk & Legal 180 a 260 Strategy & Finance 120 90 Talent & Organization 60 2 $366B 50 Corporate IT 40 $2.6T $4.4T McKinsey estimates 63 generative AI use cases spanning 16 business functions across industries could deliver P&L impact in the range of $2.6-$4.4 trillion, before accounting for productivity gains. Notes: 1. Bloomberg Intelligence, Generative AI to Become a $1.3 Trillion Market by 2032, Research Finds, June 2023. 2. Zapata AI’s potential SOM is not limited to these estimates. Estimated SOM projections include $280B Generative AI Software and $86B Generative AI IT Services. 3. McKinsey, The Economic Potential of Generative AI, June 2023. *Estimated numbers are rounded. 21 ZAPATA COMPUTING INC. Revenue Model and Sales Strategy Expand Two Sales Channels Land 1. DIRECT • Initial Industrial Generative AI • Contracts deliver recurring multi- • C-level relationships application year subscription revenue • Global sales force, plans to expand • 6+ month agreements• Expand average revenue per account (ARPA) 2. PARTNER ECOSYSTEM EXAMPLES: • Consulting & Services Top 5 Global Consultancy Bundled Offering of Software and Scientific Algorithm Expertise Contracts recognized ratably (recurring revenue) • Software, Cloud & Networking Microsoft Azure, Nvidia • Hardware IBM, IonQ • Academia & Research MIT, University of Toronto 22 ZAPATA COMPUTING INC. Pioneering a new category: Industrial Generative AI ESTABLISH CATEGORY & THOUGHT LEADERSHIP BUILD BRAND THROUGH CUSTOMER SUCCESS STORIES CASE STUDIES Automotive SUPPORT EXPANSION White Papers & IN KEY VERTICALS Reports Chemicals & Materials Social Defense Web & Email INDUSTRIAL Energy & GENERATIVE AI Utilities Event Keynotes Finance Logistics Analysts, Media, PR Pharma Notes: Depicts immediate Go-to-market strategy; We expect Demand Generation and Product Marketing will increase in the future if current is proven successful using defined metrics. 23 ZAPATA COMPUTING INC. Transaction Summary Transaction Highlights Implied Sources & Uses Sources ($M) Uses • $283M pro forma enterprise value ($M) Cash in Trust $50 Cash to Balance Sheet $48 • Implied pre-money equity value of $200M 3 Bridge Financing $20 Transaction Expenses $12 • Implied pro-forma equity value of $331M Zapata Rollover $200 Zapata Rollover $200 • $48M of cash held on the pro-forma balance sheet Growth Capital $10 • Zapata shareholders rolling 100% of their equity, will own ~61% of the combined Total company Total $270 $270 1 Pro Forma Valuation Pro Forma Ownership Shares % 4 Pro-Forma Equity Value ($M) $331 (M) Own. 7.2% Zapata Rollover Equity 1 20.0 61.0% 3 (+) Existing Debt $0 2 Public Shareholders 4.7 14.3% 17.5% (-) PF Cash $48 2 3 Founder Shares 5.8 17.5% Pro Forma Ownership 3 61.0% Pro-Forma Enterprise Value ($M) $283 4 Bridge Investors 2.4 7.2% 14.3% 2 1 Notes: 1. $10/share shown for all holders is illustrative, and the SPAC cash in trust of $84.2M and 7.9M shares implies $10.66/share for public SPAC holders. 2. Andretti Acquisition Corp.’s sponsors and certain investors that own or have the right to receive founder shares will own a combined 5.8 million shares. 3. Bridge investors are providers of a convertible note priced at 15% discount to DeSPAC; does not account for PIK interest accruing ahead of conversion at DeSPAC. Assumed issuance of up to $14.5M in convertible notes, exclusive of $5.5M of Zapata convertible debt currently outstanding Note: pro forma ownership excludes impact of warrants; assumes 40% redemption from cash in trust. SPAC cash amount subject to change depending on the actual redemption levels and interest earned in the trust 24 ZAPATA COMPUTING INC. World-class team with deep expertise across Generative AI, quantum science, enterprise software and management 2 LEADERSHIP BOARD OF DIRECTORS INVESTORS Alan Aspuru-Guzik, Ph.D.* Rhonda Germany Christopher Savoie, Ph.D., Chief Executive Officer* Ballintyn Zapata Scientific Advisor, Two decades of experience in the technology industry; inventor of the Natural Language Professor, Univ. of Toronto, Former Chief Strategy & Understanding (NLU) behind Apple’s Siri Canada 150 Research Chair, Marketing Officer, Honeywell CIFAR AI Chair Clark Golestani Dana Jones Managing Director, C Sensei CEO, RealPage, Former Group, Former Global CIO, CEO, Sparta Systems Merck Yudong Cao, Ph.D. Mimi Flanagan Tim Stanley Nicole Fitchpatric Chief Technology Officer* Chief Financial Officer Vice President, Global Sales General Counsel, Ethics & Compliance Officer Mark Cupta Gil Beyda Ten years of experience in Two decades of experience 25+ years of sales strategy & Managing Director, Founder, Managing Partner, various areas of AI & across executive finance roles Twelve years experience in execution in enterprise Prelude Ventures Genacast Ventures, Former quantum computing; 2.4K+ in the technology industry architecture, data protection, various industries Managing Director, Comcast citations; 30 patents & connected workplace, ERP, Ventures applications CRM, SCM; active in Space Force and National Guard community Jeff Huber William Klitgaard Founding CEO of GRAIL, Former CIO & CFO, Covance, Former SVP of Google Ads, now LabCorp Apps, Maps and Google X 1 3 60 Employees // 41 Scientists & Engineers // 24 PhDs // ~85K Citations $64M raised to date Notes: 1. Employee breakdown as of August 28, 2023. Total headcount of all full-time employees and contractors in countries where Zapata does not have a legal entity. Does not include interns. 2. In addition to Christopher. 3. Includes approximately 57.5K Citations attributable to Alan Aspuru-Guzik, a Zapata AI founder and scientific advisor. * Zapata founders in addition to Peter Johnson, Ph.D., Jonny Olson, Ph.D., and Jhonathan Romero Fontalvo, Ph.D. 25 ZAPATA COMPUTING INC. Summary: Opportunity to invest in transformational Generative AI technology Large and rapidly growing total addressable market (TAM) for AI/ML (Artificial Intelligence/Machine Learning) 1 software, with a focus in Generative AI. Proprietary Generative AI techniques and algorithms for today’s most advanced classical and high- performance compute hardware. Demonstrating up to 10X-1000X speed-up on Large Language Models and 2 1 other complex computational models. ® Orquestra : Proprietary full-stack software platform that is hardware- and cloud-agnostic to enable Industrial 3 Generative AI solutions across multiple end markets. Substantial potential near-term enterprise revenue opportunity with Large Language Models and other large 4 models in AI, simulation, optimization. 5 Pioneering, founder-led, and visionary management team with track record of innovation and execution. Notes: 1. Zapata Data. Magnitude of speedup depends on additional implementation factors. 26 ZAPATA COMPUTING INC. ZAPATA COMPUTING INC. |
0001628280-23-040913:ex991-fy24xq2earnings.htm | 0001628280-23-040913 | 1,577,526 | 1,577,526 | C3.ai, Inc. (AI) (CIK 0001577526) | ['AI'] | 8-K | 8-K | 2023-12-06 | 2023-12-06 | 001-39744 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-39744&action=getcompany | 231,470,334 | EX-99.1 | EX-99.1 | 2.02,9.01 | https://www.sec.gov/Archives/edgar/data/1577526/000162828023040913 | https://www.sec.gov/Archives/edgar/data/1577526/000162828023040913/0001628280-23-040913-index.html | https://www.sec.gov/Archives/edgar/data/1577526/000162828023040913/ex991-fy24xq2earnings.htm | EX-99.1 2 ex991-fy24xq2earnings.htm EX-99.1 DocumentC3 AI Announces Second Quarter Fiscal 2024 Financial ResultsRevenue accelerated 17% year-over-year; Increased traction in C3 Generative AICustomer engagement increased 81% year-over-yearREDWOOD CITY, Calif. — December 6, 2023 — C3.ai, Inc. (“C3 AI,” “C3,” or the “Company”) (NYSE: AI), the Enterprise AI application software company, today announced financial results for its fiscal second quarter ended October 31, 2023.“It was a solid quarter, with total revenue growing 17% year-over-year to $73.2 million, and customer engagement growing by 81% year-over-year. We saw unprecedented interest and traction in our generative AI offerings. Importantly, we are seeing a return to accelerating revenue growth as we continue our transition to a consumption-based pricing model,” said C3 AI CEO and Chairman Thomas M. Siebel. “In the trailing four quarters, we have seen top line year-over-year revenue growth increase from -4% in Q3 FY23, to 0% in Q4 FY23, to 11% in Q1 FY24, to 17% in Q2 FY24.”Fiscal Second Quarter 2024 Financial Highlights•Revenue: Total revenue for the quarter was $73.2 million, an increase of 17% compared to $62.4 million one year ago.•Subscription Revenue: Subscription revenue for the quarter was $66.4 million, constituting 91% of total revenue, an increase of 12% compared to $59.5 million one year ago.•Gross Profit: GAAP gross profit for the quarter was $41.1 million, representing a 56% gross margin. Non-GAAP gross profit for the quarter was $50.4 million, representing a 69% non-GAAP gross margin.•Net Loss per Share: GAAP net loss per share was $(0.59). Non-GAAP net loss per share was $(0.13).•Cash Reserves: $762.3 million in cash, cash equivalents, and investments.•Customer Engagement: Customer Engagement for the quarter was 404, an increase of 81% compared to 223 one year ago. [See FY23-Q4 Investor Supplemental for more details on Customer Engagement methodology.]Key CustomersDuring the quarter, C3 AI closed 62 agreements including 36 pilots. •The Company entered into new agreements with GSK, Indorama, and First Business Bank, and expanded agreements with Con Edison, Roche, Nucor Corporation, and Hewlett Packard Enterprise, among others.•C3 AI’s federal business continues to show significant strength with federal bookings representing almost half of total bookings, up nearly 187% from the year prior. C3 AI signed 20 new federal agreements, including five agreements for C3 Generative AI.•The Company closed new and expanded deals with the U.S. Navy, the Office of the Director of National Intelligence, Joint Staff J8, the Defense Logistics Agency, and the Administration for Children & Families, a division of the Department of Health & Human Services.Customer Success Stories•Building on its success in the manufacturing sector, C3 AI continues to work with Nucor to optimize production schedules across several mills, expanding the largest U.S. steel producer’s AI program. This expansion with Nucor also included two new use cases initiated in Q2: AI to improve forecasting, and generative AI targeted at facilitating proper health and safety procedures.•Con Edison, a customer since 2017, continues to expand its use of C3 AI applications, most recently with C3 Generative AI to help workers quickly find answers to questions and analysis related to smart meter, service, and infrastructure data. In the second quarter, Con Edison completed two pilots of the newest application, which have since converted to production.•C3 AI also converted two pilots and expanded its federal business within the U.S. Department of Defense at the Defense Logistics Agency (“DLA”), which provides logistical, acquisition, and technical support for the Army, Navy, Air Force, Marine Corps and other federal agencies and allies. C3 AI is helping the DLA improve efficiency, visibility, and readiness across the supply chain predicting consumption, inventory, and transportation of critical goods such as parts, components, and fuel.•In Q2, the Administration for Children and Families (“ACF”), a division of the U.S. Department of Health and Human Services, has made the first order to C3 AI under a $90 million blanket purchase agreement. As a critical civilian agency, the ACF works to help unaccompanied children who cross the U.S. border find temporary shelter or permanent homes. The ACF will use the C3 AI Platform to perform complex data analysis more efficiently, examining the scope and resource landscape for children within the agency’s care, including staffing needs and how long these children are with their case managers — and ultimately use the resulting insights to inform decision makers on resource allocation and needs.Key News•The C3 AI partner ecosystem continues to drive significant growth. In Q2, the Company closed 40 agreements through its partner network, which partner network includes AWS, Baker Hughes, Booz Allen, Google Cloud, and Microsoft. The qualified opportunity pipeline with partners has increased by 75% in the past year.•C3 AI and AWS expanded their Strategic Collaboration Agreement (“SCA”). Under the expanded SCA, C3 AI and AWS will focus on continuing to offer advanced generative AI solutions for enterprises.•To meet market demand, C3 AI has announced and released a no-code, self-service generative AI application in AWS Marketplace, C3 Generative AI: AWS Marketplace Edition.•In Q2, C3 AI was recognized multiple times for its innovation in the AI space. C3 AI has been named to Fortune 50 AI Innovators list and was recognized as a top 10 AI partner by Everest Group in its inaugural ‘Artificial Intelligence Top 50’ list of global market-leading AI-first technology providers.•For the fourth year in a row, Constellation Research named C3 AI as a “solution to know” on its ShortListTM for Artificial Intelligence and Machine Learning Cloud Platforms in Q3 2023.Pilot GrowthDuring the quarter, C3 AI closed 62 agreements including 36 pilots. The 36 pilots represented an increase from 24 pilots in the first quarter and 13 pilots in the year-ago quarter. Notably, 20 of these pilots were Generative AI pilots, an increase from eight in the first quarter.Consumption PricingIn Q1 FY23, C3 AI introduced a transition to a consumption-based pricing model to fuel growth, which the Company believes it is becoming the standard among enterprise SaaS companies in the industry. The consumption-based pricing model is based on vCPU/hour, in line with industry-standard cloud software pricing standards. The transition has been met with great reception among C3 AI’s prospects, customers, and partners. Since this transition, the Company has closed over 100 pilots on the new consumption pricing model. The Company believes traction with C3 Generative AI: AWS Marketplace Edition will further accelerate the Company’s consumption pricing adoption and customer engagement metrics.C3 Generative AIRecent estimates suggest that the market for Enterprise AI applications is bigger and expanding faster than certain experts previously anticipated. Bloomberg Intelligence estimates that generative AI will become a $1.3 trillion market by 2032. Goldman Sachs predicts that AI could increase corporate profits by 30% in the next decade, and that generative AI alone could raise the global GDP by 7%. C3 AI believes it is in a prime position to see a significant increase in opportunities for Enterprise AI, and the Company is also well-positioned to accelerate growth, gain market share, attain sustainable non-GAAP profitability and establish a market-leading position globally. As such, the Company plans to further accelerate its investment in generative AI, deepening its investments in lead generation, branding, market awareness, and customer success.C3 AI closed 20 new agreements for C3 Generative AI in the second quarter. C3 Generative AI is addressing use cases across multiple industries including manufacturing, financial services, and defense & intelligence.•The generative AI qualified pipeline grew to over 225 in Q2, an increase of more than 55% from Q1.•C3 AI has announced a no-code, self-service generative AI application in AWS Marketplace, C3 Generative AI: AWS Marketplace Edition, allowing users of all technical levels to begin using generative AI in minutes in their enterprise. The application provides a starting point for customers and can be quickly scaled across the enterprise and can be used together with all other C3 AI applications. C3 Generative AI: AWS Marketplace Edition is now available under a 14-day free trial in AWS Marketplace via private preview. Financial Outlook:The Company’s guidance includes GAAP and non-GAAP financial measures.The following table summarizes C3 AI’s guidance for the third quarter of fiscal 2024 and full-year fiscal 2024:(in millions)Third Quarter Fiscal 2024GuidanceFull Year Fiscal 2024 GuidanceTotal revenue$74.0 - $78.0$295.0 - $320.0Non-GAAP loss from operations$(40.0) - $(46.0)$(115.0) - $(135.0)A reconciliation of non-GAAP guidance measures to corresponding GAAP measures is not available on a forward-looking basis without unreasonable effort due to the uncertainty regarding, and the potential variability of, expenses that may be incurred in the future. Stock-based compensation expense-related charges, including employer payroll tax-related items on employee stock transactions, are impacted by the timing of employee stock transactions, the future fair market value of our common stock, and our future hiring and retention needs, all of which are difficult to predict and subject to constant change. We have provided a reconciliation of GAAP to non-GAAP financial measures in the financial statement tables for our historical non-GAAP results included in this press release. Our fiscal year ends April 30, and numbers are rounded for presentation purposes.Conference Call Details What:C3 AI Second Quarter Fiscal 2024 Financial Results Conference CallWhen:Wednesday, December 6, 2023Time:2:00 p.m. PT / 5:00 p.m. ETParticipant Registration:https://register.vevent.com/register/BIe37b9b099bea488eb9570b24243fce69 (live call)Webcast:https://edge.media-server.com/mmc/p/zc6c5s27/ (live and replay)Investor Presentation DetailsAn investor presentation providing additional information and analysis can be found at our investor relations page at ir.c3.ai.Statement Regarding Use of Non-GAAP Financial MeasuresThe Company reports the following non-GAAP financial measures, which have not been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”), in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.•Non-GAAP gross profit, non-GAAP gross margin, non-GAAP loss from operations, and non-GAAP net loss per share. Our non-GAAP gross profit, non-GAAP gross margin, non-GAAP loss from operations, and non-GAAP net loss per share exclude the effect of stock-based compensation expense-related charges and employer payroll tax expense related to employee stock-based compensation. We believe the presentation of operating results that exclude these non-cash items provides useful supplemental information to investors and facilitates the analysis of our operating results and comparison of operating results across reporting periods.We use these non-GAAP financial measures internally for financial and operational decision-making purposes and as a means to evaluate period-to-period comparisons. Non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP financial measures and should be read only in conjunction with our condensed consolidated financial statements prepared in accordance with GAAP. Our presentation of non-GAAP financial measures may not be comparable to similar measures used by other companies. We encourage investors to carefully consider our results under GAAP, as well as our supplemental non-GAAP information and the reconciliation between these presentations, to more fully understand our business. Please see the tables included at the end of this release for the reconciliation of GAAP to non-GAAP financial measures.Use of Forward-Looking StatementsThis press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this press release other than statements of historical facts, including our market leadership position, anticipated benefits from our partnerships and investments, financial outlook, our expectations relating to our new consumption-pricing model and the impact to our results of operations, the expected benefits of our offerings (including the potential benefits of our C3 Generative AI offerings), our business strategies, plans, and objectives for future operations, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “estimate,” “expect,” “intend,” “may,” “will” and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks and uncertainties, including difficulties in evaluating our prospects and future results of operations given our operating history, our dependence on a limited number of existing customers that account for a substantial portion of our revenue, our ability to attract new customers and retain existing customers, market awareness and acceptance of enterprise AI solutions in general and our products in particular, and our history of operating losses. Some of these risks are described in greater detail in our filings with the Securities and Exchange Commission, including our Quarterly Reports on Form 10-Q for the fiscal quarters ended July 31, 2023 and, when available, October 31, 2023, although new and unanticipated risks may arise. The future events and trends discussed in this press release may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, achievements, or events and circumstances reflected in the forward-looking statements will occur. Except to the extent required by law, we do not undertake to update any of these forward-looking statements after the date of this press release to conform these statements to actual results or revised expectations.About C3.ai, Inc.C3.ai, Inc. (NYSE:AI) is the Enterprise AI application software company. C3 AI delivers a family of fully integrated products including the C3 AI Platform, an end-to-end platform for developing, deploying, and operating enterprise AI applications, C3 AI applications, a portfolio of industry-specific SaaS enterprise AI applications that enable the digital transformation of organizations globally, and C3 Generative AI, a suite of domain-specific generative AI offerings for the enterprise.Investor Contactir@c3.aiC3 AI Public RelationsCheryl Sanclemente415-988-4960pr@c3.aiSource: C3.ai, Inc.C3.AI, INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except per share data)(Unaudited)Three Months Ended October 31,Six Months Ended October 31,2023202220232022RevenueSubscription(1)$66,449 $59,508 $127,801 $116,534 Professional services(2)6,780 2,900 17,790 11,182 Total revenue73,229 62,408 145,591 127,716 Cost of revenueSubscription30,937 19,165 61,371 33,257 Professional services1,179 1,587 2,558 5,901 Total cost of revenue32,116 20,752 63,929 39,158 Gross profit41,113 41,656 81,662 88,558 Operating expensesSales and marketing(3)49,895 44,936 93,780 87,923 Research and development50,399 50,051 101,267 105,928 General and administrative20,215 18,635 40,104 39,882 Total operating expenses120,509 113,622 235,151 233,733 Loss from operations(79,396)(71,966)(153,489)(145,175)Interest income10,480 4,224 20,602 6,762 Other (expense) income, net(638)(945)(877)(1,966)Loss before provision for income taxes(69,554)(68,687)(133,764)(140,379)Provision for income taxes226 163 374 342 Net loss$(69,780)$(68,850)$(134,138)$(140,721)Net loss per share attributable to Class A and Class B common stockholders, basic and diluted$(0.59)$(0.63)$(1.15)$(1.30)Weighted-average shares used in computing net loss per share attributable to Class A and Class B common stockholders, basic and diluted118,656 108,876 117,125 107,885 (1) Including related party revenue of $10,581 and $35,568 for the six months ended October 31, 2023 and 2022, respectively, and $19,238 for the three months ended October 31, 2022.(2) Including related party revenue of $5,804 and $150 for the six months ended October 31, 2023 and 2022, respectively, and $21 for the three months ended October 31, 2022.(3) Including related party sales and marketing expense of $810 and $7,031 for the six months ended October 31, 2023 and 2022, respectively, and $3,531 for the three months ended October 31, 2022.C3.AI, INC.CONDENSED CONSOLIDATED BALANCE SHEETS(In thousands, except for share and per share data)(Unaudited)October 31, 2023April 30, 2023AssetsCurrent assetsCash and cash equivalents$149,009 $284,829 Marketable securities613,260 446,155 Accounts receivable, net of allowance of $359 and $359 as of October 31, 2023 and April 30, 2023, respectively(1)143,153 134,586 Prepaid expenses and other current assets(2)25,662 23,309 Total current assets931,084 888,879 Property and equipment, net92,651 84,578 Goodwill625 625 Long-term investments— 81,418 Other assets, non-current(3)46,754 47,528 Total assets$1,071,114 $1,103,028 Liabilities and stockholders’ equityCurrent liabilitiesAccounts payable(4)$25,740 $24,610 Accrued compensation and employee benefits37,648 46,513 Deferred revenue, current(5)40,486 47,846 Accrued and other current liabilities(6)10,280 17,070 Total current liabilities114,154 136,039 Deferred revenue, non-current68 4 Other long-term liabilities45,616 37,320 Total liabilities159,838 173,363 Commitments and contingenciesStockholders’ equityClass A common stock116 110 Class B common stock3 3 Additional paid-in capital1,856,307 1,740,174 Accumulated other comprehensive loss(775)(385)Accumulated deficit(944,375)(810,237)Total stockholders’ equity911,276 929,665 Total liabilities and stockholders’ equity$1,071,114 $1,103,028 (1) Including amounts from a related party of $74,620 as of April 30, 2023.(2) Including amounts from a related party of $4,983 as of April 30, 2023.(3) Including amounts from a related party of $11,279 as of April 30, 2023.(4) Including amounts from a related party of $2,200 as of April 30, 2023.(5) Including amounts from a related party of $249 as of April 30, 2023.(6) Including amounts from a related party of $2,448 as of April 30, 2023.C3.AI, INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands)(Unaudited)Six Months Ended October 31,20232022Cash flows from operating activities:Net loss$(134,138)$(140,721)Adjustments to reconcile net loss to net cash used in operating activitiesDepreciation and amortization6,220 2,413 Non-cash operating lease cost454 1,101 Stock-based compensation expense104,049 112,643 Accretion of discounts on marketable securities(8,755)(582)Other— 186 Changes in operating assets and liabilitiesAccounts receivable(1)(8,567)(14,668)Prepaid expenses, other current assets and other assets(2)(665)(3,204)Accounts payable(3)(2,918)(28,197)Accrued compensation and employee benefits(2,551)(1,050)Operating lease liabilities7,804 650 Other liabilities(4)1,709 (882)Deferred revenue(5)(7,296)(18,534)Net cash used in operating activities(44,654)(90,845)Cash flows from investing activities:Purchases of property and equipment(16,631)(39,978)Capitalized software development costs(2,750)(1,000)Purchases of marketable securities(489,871)(384,024)Maturities and sales of marketable securities412,554 455,534 Net cash (used in) provided by investing activities(96,698)30,532 Cash flows from financing activities:Proceeds from issuance of Class A common stock under employee stock purchase plan5,055 — Proceeds from exercise of Class A common stock options10,163 1,782 Taxes paid related to net share settlement of equity awards(9,686)(3,375)Net cash provided by (used in) financing activities5,532 (1,593)Net decrease in cash, cash equivalents and restricted cash(135,820)(61,906)Cash, cash equivalents and restricted cash at beginning of period297,395 352,519 Cash, cash equivalents and restricted cash at end of period$161,575 $290,613 Cash and cash equivalents$149,009 $277,622 Restricted cash included in other assets12,566 12,566 Restricted cash included in prepaid expenses and other current assets— 425 Total cash, cash equivalents and restricted cash$161,575 $290,613 Supplemental disclosure of cash flow information—cash paid for income taxes$281 $136 Supplemental disclosures of non-cash investing and financing activities:Purchases of property and equipment included in accounts payable and accrued liabilities$7,293 $18,361 Right-of-use assets obtained in exchange for lease obligations (including remeasurement of right-of-use assets and lease liabilities due to changes in the timing of receipt of lease incentives)$778 $— Unpaid liabilities related to intangible purchases$— $1,500 Vesting of early exercised stock options$294 $561 (1)Including changes in related party balances of $12,444 and $18,023 for the six months ended October 31, 2023 and 2022, respectively.(2)Including changes in related party balances of $(810) and $(2,431) for the six months ended October 31, 2023 and 2022, respectively.(3)Including changes in related party balances of $248 and $(16,396) for the six months ended October 31, 2023 and 2022, respectively.(4)Including changes in related party balances of $(2,448) and $(2,510) for the six months ended October 31, 2023 and 2022, respectively.(5)Including changes in related party balances of $(46) and $255 for the six months ended October 31, 2023 and 2022, respectively.C3.AI, INC.RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES(In thousands, except percentages)(Unaudited)Three Months Ended October 31,Six Months Ended October 31,2023202220232022Reconciliation of GAAP gross profit to non-GAAP gross profit:Gross profit on a GAAP basis$41,113$41,656$81,662$88,558Stock-based compensation expense (1)8,9935,96517,50911,308Employer payroll tax expense related to employee stock-based compensation (2)297186838572Gross profit on a non-GAAP basis$50,403$47,807$100,009$100,438Gross margin on a GAAP basis56%67%56%69%Gross margin on a non-GAAP basis69%77%69%79%Reconciliation of GAAP loss from operations to non-GAAP loss from operations:Loss from operations on a GAAP basis$(79,396)$(71,966)$(153,489)$(145,175)Stock-based compensation expense (1)53,16956,013104,049112,643Employer payroll tax expense related to employee stock-based compensation (2)1,2749913,7743,033Loss from operations on a non-GAAP basis$(24,953)$(14,962)$(45,666)$(29,499)Reconciliation of GAAP net loss per share to non-GAAP net loss per share:Net loss on a GAAP basis$(69,780)$(68,850)$(134,138)$(140,721)Stock-based compensation expense (1)53,16956,013104,049112,643Employer payroll tax expense related to employee stock-based compensation (2)1,2749913,7743,033Net loss on a non-GAAP basis$(15,337)$(11,846)$(26,315)$(25,045)GAAP net loss per share attributable common shareholders, basic and diluted$(0.59)$(0.63)$(1.15)$(1.30)Non-GAAP net loss per share attributable common shareholders, basic and diluted$(0.13)$(0.11)$(0.22)$(0.23)Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted118,656 108,876 117,125 107,885 (1)Stock-based compensation expense for gross profits and gross margin includes costs of subscription and cost of professional services as follows. Stock-based compensation expense for loss from operations includes total stock-based compensation expense as follows:Three Months Ended October 31,Six Months Ended October 31,2023202220232022Cost of subscription$8,514 $5,486 $16,570 $9,758 Cost of professional services479 479 939 1,550 Sales and marketing18,226 19,080 35,005 35,859 Research and development16,685 23,905 33,718 49,122 General and administrative9,265 7,063 17,817 16,354 Total stock-based compensation expense$53,169 $56,013 $104,049 $112,643 (2) Employer payroll tax expense related to employee stock-based compensation for gross profits and gross margin includes costs of subscription and cost of professional services as follows. Employer payroll tax expense related to employee stock-based compensation for loss from operations includes total employer payroll tax expense related to employee stock-based compensation as follows:Three Months Ended October 31,Six Months Ended October 31,2023202220232022Cost of subscription$282 $170 $791 $456 Cost of professional services15 16 47 116 Sales and marketing463 356 1,468 886 Research and development415 386 1,232 1,329 General and administrative99 63 236 246 Total employer payroll tax expense$1,274 $991 $3,774 $3,033 |
0001213900-24-070890:ea021184801ex99-1_realph.htm | 0001213900-24-070890 | 1,859,199 | 1,859,199 | reAlpha Tech Corp. (AIRE) (CIK 0001859199) | ['AIRE'] | 8-K | 8-K | 2024-08-20 | 2024-08-20 | 001-41839 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-41839&action=getcompany | 241,222,554 | EX-99.1 | PRESS RELEASE, DATED AUGUST 20, 2024 | 7.01,8.01,9.01 | https://www.sec.gov/Archives/edgar/data/1859199/000121390024070890 | https://www.sec.gov/Archives/edgar/data/1859199/000121390024070890/0001213900-24-070890-index.html | https://www.sec.gov/Archives/edgar/data/1859199/000121390024070890/ea021184801ex99-1_realph.htm | EX-99.1 2 ea021184801ex99-1_realph.htm PRESS RELEASE, DATED AUGUST 20, 2024 Exhibit 99.1 reAlpha Launches AI-Powered Real Estate Super AppTM on Tailwinds of Effectiveness of NAR Rule Changes on August 17, 2024 Recent NAR rule changes make buying a home using a traditional buyer’s agent more expensive. reAlpha brings their end-to-end commission-free homebuying platform to mobile devices, aiming to provide an easy and affordable way to buy a home completely by phone. Dublin, Ohio—reAlpha Tech Corp. (Nasdaq: AIRE) (“reAlpha”), a real estate technology company developing and commercializing artificial intelligence (“AI”) technologies, announces today the launch of reAlpha (previously, “Claire”) (the “Super App”) for mobile devices. The Super App brings an end-to-end, commission-free, real estate experience to users’ mobile devices in addition to its online version, combining Claire, reAlpha’s generative-AI buyer’s agent, licensed human agent support and a suite of homebuying tools, which currently includes title and escrow agent services. In connection with the launch of the Super App for mobile devices, reAlpha changed the name of the Super App from “Claire,” to “reAlpha.” Claire will remain as the generative-AI buyer’s agent that will be integrated within the Super App, while providing the same services it did for users utilizing the platform under its previous name. The Super App will continue to be available online in addition to its mobile app version. This launch is timed to coincide with the real estate industry's shift in light of the National Association of Realtors’ (“NAR”) recent settlement to eliminate the standard six percent sales commission when purchasing a home. These rule changes went into effect August 17, and reAlpha believes such changes make its commission-free offering to be even more compelling for property buyers. AI-Driven Homebuying Experience The Super App brings reAlpha’s AI-powered capabilities to home buyers, allowing users to search for and purchase homes through their mobile phone. Key features include: ●Commission-free homebuying: The Super App does not charge buyer’s commission fees, making home ownership more affordable and transparent. ●Claire, the AI Real Estate Agent: Users can interact with Claire, a generative AI-powered buyer’s agent, to receive 24/7 real-time support and answers to questions related to purchasing a property. ●AI-Generated Search and Recommendations: The Super App utilizes AI algorithms to provide personalized property matches and recommendations, further assisting users to find their ideal home. Also, with Claire’s natural language search, you can describe your perfect home, and it will quickly find matches, with no filters needed. ●AI Document Review and Analysis: The Super App’s “Review with Claire” feature allows homebuyers to get clear, concise summaries of detailed real estate documents like inspection and settlement reports, making complex information easier to understand and navigate through. ●Expert Guidance: For customized needs, users will be able to rely on a dedicated team of licensed real estate agents, on a no-cost and no-obligation basis, who will provide personalized support and guidance. These agents step in to augment Claire’s AI capabilities, allowing homebuyers to be confident in their decisions when buying a home, while also building trust between the agents and buyers throughout their home purchasing journey. ●End-to-end Transactions: All steps of a standard homebuying process can be completed in the Super App, even if the Super App does not provide the services itself, as reAlpha’s licensed real estate agents will be available to step in and assist in those steps until the Super App integrates those services within the platform. Buyers will be guided through finding their home, negotiating an offer, getting a mortgage, among others, all the way through title services and closing. One Platform for All Homebuying Needs Following the acquisition of Hyperfast, announced July 29, 2024, reAlpha now offers integrated title services, allowing the Super App to offer those services directly to its users. While our licensed real estate agents can assist homebuyers if they need assistance with certain services the Super App does not currently provide, reAlpha plans to expand the Super App’s capabilities to integrate every aspect of a standard homebuying process in this one platform by eventually providing mortgage brokerage services and home insurance to buyers utilizing the Super App, whether online or via mobile device. “At reAlpha, we know buying a home is the biggest and most important decision many people will ever make. We believe in leveraging AI to create a more personalized and supportive homebuying experience,” said Mike Logozzo, President and Chief Operating Officer of reAlpha. “The reAlpha Super App is designed to provide homebuyers with all the tools and support they may need to find their dream home, at a great price and with the best experience, all from their mobile device.” As reAlpha continues to work towards innovating the real estate industry, the launch of the Super App for mobile devices marks a significant milestone in the company's mission to bring the real estate industry to the digital era. By integrating its generative-AI technology and homebuying services, reAlpha believes the Super App can transform the way people buy homes, while making the process more intuitive and efficient. The Super App is now available for download on iOS devices. For more information and to download the Super App, please visit our App Store page. 2 About reAlpha reAlpha (previously called “Claire”), announced on April 24, 2024, is reAlpha’s generative AI-powered, commission-free, homebuying platform. The tagline: No fees. Just keys.TM – reflects reAlpha’s dedication to eliminating traditional barriers and making homebuying more accessible and transparent. reAlpha’s introduction aligns with major shifts in the real estate sector after the NAR agreed to settle certain lawsuits upon being found to have violated antitrust laws, resulting in inflated fees paid to buy-side agents. This development is expected to result in the end of the standard six percent sales commission, which equates to approximately $100 billion in realtor fees paid annually. reAlpha offers a cost-free alternative for homebuyers by utilizing an AI-driven workflow that assists them through the home buying process. Homebuyers using reAlpha’s conversational interface will be able to interact with Claire, reAlpha’s AI buyer’s agent, to guide them through every step of their homebuying journey, from property search to closing the deal. By offering support 24/7, Claire is poised to make the homebuying process more efficient, enjoyable, and cost-efficient. Claire matches buyers with their dream homes using over 400 data attributes and provides insights into market trends and property values. Additionally, Claire can assist with questions, booking property tours, submitting offers, and negotiations. Currently, reAlpha is under limited availability for homebuyers located in 20 counties in Florida, but reAlpha is actively seeking new MLS and brokerage licenses that will enable expansion into more U.S. states. For more information, please visit www.reAlpha.com. About reAlpha Tech Corp. reAlpha Tech Corp. (Nasdaq: AIRE) is a real estate technology company developing an end-to-end commission-free homebuying platform. Utilizing the power of AI and an acquisition-led growth strategy, reAlpha’s goal is to offer a more affordable, streamlined experience for those on the journey to homeownership. For more information, visit www.reAlpha.com. 3 Forward-Looking Statements The information in this press release includes “forward-looking statements”. Forward-looking statements include, among other things, statements about the NAR rule changes; the anticipated benefits of the NAR rule changes; statements about the Super App; the anticipated demand for the Super App in mobile devices and online; reAlpha’s ability to anticipate the future needs of the short-term rental market; future trends in the real estate, technology and artificial intelligence industries, generally; and reAlpha’s future growth strategy and growth rate. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “could”, “might”, “plan”, “possible”, “project”, “strive”, “budget”, “forecast”, “expect”, “intend”, “will”, “estimate”, “anticipate”, “believe”, “predict”, “potential” or “continue”, or the negatives of these terms or variations of them or similar terminology. Factors that may cause actual results to differ materially from current expectations include, but are not limited to: reAlpha’s limited operating history and that reAlpha has not yet fully developed its AI-based technologies; reAlpha’s ability to commercialize its developing AI-based technologies; whether reAlpha’s technology and products will be accepted and adopted by its customers and intended users; reAlpha’s ability to capitalize on the NAR rules change development to create more demand for its products and services, including the Super App; reAlpha’s ability to generate revenues through the Super App and services provided therein; reAlpha’s ability to acquire, collaborate with and/or partner with mortgage brokerage firms and home insurance providers, as well as other service providers to further enhance the Super App’s capabilities and services provided therein; reAlpha’s ability to generate revenue through its title services and any other services it may offer to Super App users in the future, both in mobile devices and online; the inability to maintain and strengthen reAlpha’s brand and reputation; the inability to accurately forecast demand for short-term rentals and AI-based real estate focused products; the inability to execute business objectives and growth strategies successfully or sustain reAlpha’s growth; the inability of reAlpha’s customers to pay for reAlpha’s services; changes in applicable laws or regulations, and the impact of the regulatory environment and complexities with compliance related to such environment; and other risks and uncertainties indicated in reAlpha’s U.S. Securities and Exchange Commission (“SEC”) filings. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those anticipated in the forward-looking statements. Although reAlpha believes that the expectations reflected in the forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. reAlpha’s future results, level of activity, performance or achievements may differ materially from those contemplated, expressed or implied by the forward-looking statements, and there is no representation that the actual results achieved will be the same, in whole or in part, as those set out in the forward-looking statements. For more information about the factors that could cause such differences, please refer to reAlpha’s filings with the SEC. Readers are cautioned not to put undue reliance on forward-looking statements, and reAlpha does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Investor Relations Contact investorrelations@realpha.com Media irlabs on behalf of reAlpha Fatema Bhabrawala fatema@irlabs.ca 4 |
0001045810-24-000113:q1fy25pr.htm | 0001045810-24-000113 | 1,045,810 | 1,045,810 | NVIDIA CORP (NVDA) (CIK 0001045810) | ['NVDA'] | 8-K | 8-K | 2024-05-22 | 2024-05-22 | 000-23985 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=000-23985&action=getcompany | 24,973,579 | EX-99.1 | Q1FY25 PRESS RELEASE | 2.02,8.01,9.01 | https://www.sec.gov/Archives/edgar/data/1045810/000104581024000113 | https://www.sec.gov/Archives/edgar/data/1045810/000104581024000113/0001045810-24-000113-index.html | https://www.sec.gov/Archives/edgar/data/1045810/000104581024000113/q1fy25pr.htm | EX-99.1 2 q1fy25pr.htm Q1FY25 PRESS RELEASE DocumentFOR IMMEDIATE RELEASE:NVIDIA Announces Financial Results for First Quarter Fiscal 2025 •Record quarterly revenue of $26.0 billion, up 18% from Q4 and up 262% from a year ago•Record quarterly Data Center revenue of $22.6 billion, up 23% from Q4 and up 427% from a year ago•Ten-for-one forward stock split effective June 7, 2024•Quarterly cash dividend raised 150% to $0.01 per share on a post-split basisSANTA CLARA, Calif.—May 22, 2024―NVIDIA (NASDAQ: NVDA) today reported revenue for the first quarter ended April 28, 2024, of $26.0 billion, up 18% from the previous quarter and up 262% from a year ago.For the quarter, GAAP earnings per diluted share was $5.98, up 21% from the previous quarter and up 629% from a year ago. Non-GAAP earnings per diluted share was $6.12, up 19% from the previous quarter and up 461% from a year ago.“The next industrial revolution has begun — companies and countries are partnering with NVIDIA to shift the trillion-dollar traditional data centers to accelerated computing and build a new type of data center — AI factories — to produce a new commodity: artificial intelligence,” said Jensen Huang, founder and CEO of NVIDIA. “AI will bring significant productivity gains to nearly every industry and help companies be more cost- and energy-efficient, while expanding revenue opportunities.“Our data center growth was fueled by strong and accelerating demand for generative AI training and inference on the Hopper platform. Beyond cloud service providers, generative AI has expanded to consumer internet companies, and enterprise, sovereign AI, automotive and healthcare customers, creating multiple multibillion-dollar vertical markets.“We are poised for our next wave of growth. The Blackwell platform is in full production and forms the foundation for trillion-parameter-scale generative AI. Spectrum-X opens a brand-new market for us to bring large-scale AI to Ethernet-only data centers. And NVIDIA NIM is our new software offering that delivers enterprise-grade, optimized generative AI to run on CUDA everywhere — from the cloud to on-prem data centers and RTX AI PCs — through our expansive network of ecosystem partners.”NVIDIA also announced a ten-for-one forward stock split of NVIDIA’s issued common stock to make stock ownership more accessible to employees and investors. The split will be effected through an amendment to NVIDIA’s Restated Certificate of Incorporation, which will result in a proportionate increase in the number of shares of authorized common stock. Each record holder of common stock as of the close of market on Thursday, June 6, 2024, will receive nine additional shares of common stock, to be distributed after the close of market on Friday, June 7, 2024. Trading is expected to commence on a split-adjusted basis at market open on Monday, June 10, 2024.NVIDIA is increasing its quarterly cash dividend by 150% from $0.04 per share to $0.10 per share of common stock. The increased dividend is equivalent to $0.01 per share on a post-split basis and will be paid on Friday, June 28, 2024, to all shareholders of record on Tuesday, June 11, 2024.Q1 Fiscal 2025 SummaryGAAP($ in millions, except earnings per share)Q1 FY25Q4 FY24Q1 FY24Q/QY/YRevenue$26,044$22,103$7,192Up 18%Up 262%Gross margin78.4 %76.0 %64.6 %Up 2.4 ptsUp 13.8 ptsOperating expenses$3,497$3,176$2,508Up 10%Up 39%Operating income$16,909$13,615$2,140Up 24%Up 690%Net income$14,881$12,285$2,043Up 21%Up 628%Diluted earnings per share$5.98$4.93$0.82Up 21%Up 629%Non-GAAP($ in millions, except earnings per share)Q1 FY25Q4 FY24Q1 FY24Q/QY/YRevenue$26,044$22,103$7,192Up 18%Up 262%Gross margin78.9 %76.7 %66.8 %Up 2.2 ptsUp 12.1 ptsOperating expenses$2,501$2,210$1,750Up 13%Up 43%Operating income$18,059$14,749$3,052Up 22%Up 492%Net income$15,238$12,839$2,713Up 19%Up 462%Diluted earnings per share$6.12$5.16$1.09Up 19%Up 461%OutlookNVIDIA’s outlook for the second quarter of fiscal 2025 is as follows:•Revenue is expected to be $28.0 billion, plus or minus 2%.•GAAP and non-GAAP gross margins are expected to be 74.8% and 75.5%, respectively, plus or minus 50 basis points. For the full year, gross margins are expected to be in the mid-70% range.•GAAP and non-GAAP operating expenses are expected to be approximately $4.0 billion and $2.8 billion, respectively. Full-year operating expenses are expected to grow in the low-40% range.•GAAP and non-GAAP other income and expense are expected to be an income of approximately $300 million, excluding gains and losses from non-affiliated investments.•GAAP and non-GAAP tax rates are expected to be 17%, plus or minus 1%, excluding any discrete items.HighlightsNVIDIA achieved progress since its previous earnings announcement in these areas:Data Center•First-quarter revenue was a record $22.6 billion, up 23% from the previous quarter and up 427% from a year ago.•Unveiled the NVIDIA Blackwell platform to fuel a new era of AI computing at trillion-parameter scale and the Blackwell-powered DGX SuperPOD™ for generative AI supercomputing.•Announced NVIDIA Quantum and NVIDIA Spectrum™ X800 series switches for InfiniBand and Ethernet, respectively, optimized for trillion-parameter GPU computing and AI infrastructure.•Launched NVIDIA AI Enterprise 5.0 with NVIDIA NIM inference microservices to speed enterprise app development.•Announced TSMC and Synopsys are going into production with NVIDIA cuLitho to accelerate computational lithography, the semiconductor manufacturing industry’s most compute-intensive workload.•Announced that nine new supercomputers worldwide are using Grace Hopper Superchips to ignite new era of AI supercomputing.•Unveiled that Grace Hopper Superchips power the top three machines on the Green500 list of the world’s most energy-efficient supercomputers.•Expanded collaborations with AWS, Google Cloud, Microsoft and Oracle to advance generative AI innovation.•Worked with Johnson & Johnson MedTech to bring AI capabilities to support surgery.Gaming and AI PC•First-quarter Gaming revenue was $2.6 billion, down 8% from the previous quarter and up 18% from a year ago.•Introduced new AI gaming technologies at GDC for NVIDIA ACE and Neural Graphics.•Unveiled new AI performance optimizations and integrations for Windows to deliver maximum performance on NVIDIA GeForce RTX AI PCs and workstations.•Announced more blockbuster games that will incorporate RTX technology, including Star Wars Outlaws and Black Myth Wukong.•Added support for new models, including Google’s Gemma, for ChatRTX, which brings chatbot capabilities to RTX-powered Windows PCs and workstations.Professional Visualization•First-quarter revenue was $427 million, down 8% from the previous quarter and up 45% from a year ago.•Introduced NVIDIA RTX™ 500 and 1000 professional Ada generation laptop GPUs for AI-enhanced workflows.•Unveiled NVIDIA RTX A400 and A1000 GPUs for desktop workstations, based on the NVIDIA Ampere architecture, to bring AI to design and productivity workflows.•Introduced NVIDIA Omniverse™ Cloud APIs to power industrial digital twin software tools, including an expanded Siemens partnership, and a new framework for the Apple Vision Pro.•Announced the adoption of the new Earth-2 cloud APIs by The Weather Company and the Central Weather Administration of Taiwan for high-resolution global climate simulations.Automotive and Robotics•First-quarter Automotive revenue was $329 million, up 17% from the previous quarter and up 11% from a year ago.•Announced BYD, XPENG, GAC’s AION Hyper, Nuro and others have chosen the next-generation NVIDIA DRIVE Thor™ platform, which now features Blackwell GPU architecture, to power their next-generation consumer and commercial electric vehicle fleets.•Revealed U.S. and China electric vehicle makers Lucid and IM Motors are using the NVIDIA DRIVE Orin™ platform for vehicle models targeting the European market.•Announced an array of partners are using NVIDIA generative AI technologies to transform in-vehicle experiences.•Introduced the Project GR00T foundation model for humanoid robots and major Isaac robotics platform updates.CFO CommentaryCommentary on the quarter by Colette Kress, NVIDIA’s executive vice president and chief financial officer, is available at https://investor.nvidia.com.Conference Call and Webcast InformationNVIDIA will conduct a conference call with analysts and investors to discuss its first quarter fiscal 2025 financial results and current financial prospects today at 2 p.m. Pacific time (5 p.m. Eastern time). A live webcast (listen-only mode) of the conference call will be accessible at NVIDIA’s investor relations website, https://investor.nvidia.com. The webcast will be recorded and available for replay until NVIDIA’s conference call to discuss its financial results for its second quarter of fiscal 2025.Non-GAAP MeasuresTo supplement NVIDIA’s condensed consolidated financial statements presented in accordance with GAAP, the company uses non-GAAP measures of certain components of financial performance. These non-GAAP measures include non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP income from operations, non-GAAP other income (expense), net, non-GAAP net income, non-GAAP net income, or earnings, per diluted share, and free cash flow. For NVIDIA’s investors to be better able to compare its current results with those of previous periods, the company has shown a reconciliation of GAAP to non-GAAP financial measures. These reconciliations adjust the related GAAP financial measures to exclude stock-based compensation expense, acquisition-related and other costs, other, gains and losses from non-affiliated investments, interest expense related to amortization of debt discount, and the associated tax impact of these items where applicable. Free cash flow is calculated as GAAP net cash provided by operating activities less both purchases related to property and equipment and intangible assets and principal payments on property and equipment and intangible assets. NVIDIA believes the presentation of its non-GAAP financial measures enhances the user’s overall understanding of the company’s historical financial performance. The presentation of the company’s non-GAAP financial measures is not meant to be considered in isolation or as a substitute for the company’s financial results prepared in accordance with GAAP, and the company’s non-GAAP measures may be different from non-GAAP measures used by other companies.About NVIDIANVIDIA (NASDAQ: NVDA) is the world leader in accelerated computing.###For further information, contact:Simona JankowskiMylene MangalindanInvestor RelationsCorporate CommunicationsNVIDIA CorporationNVIDIA Corporationsjankowski@nvidia.commmangalindan@nvidia.comCertain statements in this press release including, but not limited to, statements as to: companies and countries building AI factories with NVIDIA accelerated computing to produce artificial intelligence; accelerating demand for generative AI training and inference on the Hopper platform; the expanding reach of generative AI; generative AI expanding to consumer internet companies, and enterprise, sovereign AI, automotive, and healthcare customers, creating multiple multibillion-dollar vertical markets; NVIDIA being poised for the next wave of growth; the Blackwell platform in full production and forming the foundation for trillion-parameter-scale generative AI; Spectrum-X opening a brand-new market for NVIDIA to bring large-scale AI to Ethernet-only data centers; NVIDIA NIM as NVIDIA’s new software offering that delivers enterprise-grade, optimized generative AI run on CUDA everywhere — from the cloud, to on-prem data centers and RTX AI PCs — through NVIDIA’s expansive network of ecosystem partners; NVIDIA's forward stock split; NVIDIA’s next quarterly cash dividend; gross margins being in the mid-70% range for the full year; full-year operating expenses growing in the low-40% range; and NVIDIA’s financial outlook and expected tax rates for the second quarter of fiscal 2025 are forward-looking statements that are subject to risks and uncertainties that could cause results to be materially different than expectations. Important factors that could cause actual results to differ materially include: global economic conditions; our reliance on third parties to manufacture, assemble, package and test our products; the impact of technological development and competition; development of new products and technologies or enhancements to our existing product and technologies; market acceptance of our products or our partners’ products; design, manufacturing or software defects; changes in consumer preferences or demands; changes in industry standards and interfaces; and unexpected loss of performance of our products or technologies when integrated into systems, as well as other factors detailed from time to time in the most recent reports NVIDIA files with the Securities and Exchange Commission, or SEC, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q. Copies of reports filed with the SEC are posted on the company’s website and are available from NVIDIA without charge. These forward-looking statements are not guarantees of future performance and speak only as of the date hereof, and, except as required by law, NVIDIA disclaims any obligation to update these forward-looking statements to reflect future events or circumstances.© 2024 NVIDIA Corporation. All rights reserved. NVIDIA, the NVIDIA logo, GeForce NOW, NVIDIA DGX SuperPOD, NVIDIA DRIVE, NVIDIA DRIVE Orin, NVIDIA DRIVE Thor, NVIDIA RTX and NVIDIA Spectrum are trademarks and/or registered trademarks of NVIDIA Corporation in the U.S. and/or other countries. Other company and product names may be trademarks of the respective companies with which they are associated. Features, pricing, availability and specifications are subject to change without notice.NVIDIA CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME(In millions, except per share data)(Unaudited) Three Months Ended April 28,April 30,20242023Revenue$26,044 $7,192 Cost of revenue 5,638 2,544 Gross profit20,406 4,648 Operating expensesResearch and development 2,720 1,875 Sales, general and administrative777 633 Total operating expenses3,497 2,508 Operating income16,909 2,140 Interest income359 150 Interest expense(64)(66)Other, net75 (15)Other income (expense), net370 69 Income before income tax17,279 2,209 Income tax expense2,398 166 Net income$14,881 $2,043 Net income per share:Basic$6.04 $0.83 Diluted$5.98 $0.82 Weighted average shares used in per share computation:Basic2,462 2,470 Diluted2,489 2,490 NVIDIA CORPORATIONCONDENSED CONSOLIDATED BALANCE SHEETS(In millions)(Unaudited)April 28,January 28,20242024ASSETSCurrent assets:Cash, cash equivalents and marketable securities$31,438 $25,984 Accounts receivable, net12,365 9,999 Inventories5,864 5,282 Prepaid expenses and other current assets4,062 3,080 Total current assets53,729 44,345 Property and equipment, net4,006 3,914 Operating lease assets1,532 1,346 Goodwill4,453 4,430 Intangible assets, net986 1,112 Deferred income tax assets7,798 6,081 Other assets 4,568 4,500 Total assets$77,072 $65,728 LIABILITIES AND SHAREHOLDERS' EQUITYCurrent liabilities:Accounts payable$2,715 $2,699 Accrued and other current liabilities11,258 6,682 Short-term debt1,250 1,250 Total current liabilities15,223 10,631 Long-term debt8,460 8,459 Long-term operating lease liabilities1,281 1,119 Other long-term liabilities2,966 2,541 Total liabilities27,930 22,750 Shareholders' equity49,142 42,978 Total liabilities and shareholders' equity$77,072 $65,728 NVIDIA CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(In millions)(Unaudited)Three Months EndedApril 28,April 30,20242023Cash flows from operating activities: Net income$14,881 $2,043 Adjustments to reconcile net income to net cashprovided by operating activities:Stock-based compensation expense1,011 735 Depreciation and amortization410 384 Realized and unrealized (gains) losses on investments in non-affiliated entities, net(69)14 Deferred income taxes(1,577)(1,135)Other(145)(34)Changes in operating assets and liabilities, net of acquisitions:Accounts receivable(2,366)(252)Inventories(577)566 Prepaid expenses and other assets(726)(215)Accounts payable(22)11 Accrued and other current liabilities4,202 689 Other long-term liabilities323 105 Net cash provided by operating activities15,345 2,911 Cash flows from investing activities:Proceeds from maturities of marketable securities4,004 2,512 Proceeds from sales of marketable securities149 — Purchases of marketable securities(9,303)(2,801)Purchase related to property and equipment and intangible assets(369)(248)Acquisitions, net of cash acquired(39)(83)Investments in non-affiliated entities(135)(221)Net cash used in investing activities(5,693)(841)Three Months EndedApril 28,April 30,20242023Cash flows from financing activities:Proceeds related to employee stock plans285 246 Payments related to repurchases of common stock(7,740)— Payments related to tax on restricted stock units(1,752)(507)Dividends paid(98)(99)Principal payments on property and equipment and intangible assets(40)(20)Net cash used in financing activities(9,345)(380)Change in cash and cash equivalents307 1,690 Cash and cash equivalents at beginning of period7,280 3,389 Cash and cash equivalents at end of period$7,587 $5,079 NVIDIA CORPORATIONRECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (In millions, except per share data) (Unaudited) Three Months Ended April 28,January 28,April 30,202420242023GAAP gross profit$20,406 $16,791 $4,648 GAAP gross margin78.4 %76.0 %64.6 %Acquisition-related and other costs (A)119 119 119 Stock-based compensation expense (B)36 45 27 Other (C)(1)4 8 Non-GAAP gross profit$20,560 $16,959 $4,802 Non-GAAP gross margin78.9 %76.7 %66.8 %GAAP operating expenses$3,497 $3,176 $2,508 Stock-based compensation expense (B)(975)(948)(708)Acquisition-related and other costs (A)(21)(18)(54)Other (C) — — 4 Non-GAAP operating expenses$2,501 $2,210 $1,750 GAAP operating income$16,909 $13,615 $2,140 Total impact of non-GAAP adjustments to operating income1,150 1,134 912 Non-GAAP operating income$18,059 $14,749 $3,052 GAAP other income (expense), net$370 $491 $69 (Gains) losses from non-affiliated investments(69)(260)14 Interest expense related to amortization of debt discount1 1 1 Non-GAAP other income (expense), net$302 $232 $84 GAAP net income$14,881 $12,285 $2,043 Total pre-tax impact of non-GAAP adjustments1,082 875 927 Income tax impact of non-GAAP adjustments (D)(725)(321)(257)Non-GAAP net income $15,238 $12,839 $2,713 Three Months EndedApril 28,January 28,April 30,202420242023Diluted net income per shareGAAP$5.98 $4.93 $0.82 Non-GAAP $6.12 $5.16 $1.09 Weighted average shares used in diluted net income per share computation2,489 2,490 2,490 GAAP net cash provided by operating activities$15,345 $11,499 $2,911 Purchases related to property and equipment and intangible assets(369)(253)(248)Principal payments on property and equipment and intangible assets(40)(29)(20)Free cash flow$14,936 $11,217 $2,643 (A) Acquisition-related and other costs are comprised of amortization of intangible assets and transaction costs, and are included in the following line items:Three Months Ended April 28,January 28,April 30,202420242023Cost of revenue$119 $119 $119 Research and development$12 $12 $12 Sales, general and administrative$8 $6 $42 (B) Stock-based compensation consists of the following:Three Months EndedApril 28,January 28,April 30,202420242023Cost of revenue$36 $45 $27 Research and development$727 $706 $524 Sales, general and administrative$248 $242 $184 (C) Other consists of IP-related costs and assets held for sale related adjustments.(D) Income tax impact of non-GAAP adjustments, including the recognition of excess tax benefits or deficiencies related to stock-based compensation under GAAP accounting standard (ASU 2016-09).NVIDIA CORPORATIONRECONCILIATION OF GAAP TO NON-GAAP OUTLOOKQ2 FY2025Outlook($ in millions)GAAP gross margin74.8 %Impact of stock-based compensation expense, acquisition-related costs, and other costs0.7 %Non-GAAP gross margin75.5 %GAAP operating expenses$3,950 Stock-based compensation expense, acquisition-related costs, and other costs(1,150)Non-GAAP operating expenses$2,800 |
0001683168-24-001310:radnet_ex9901.htm | 0001683168-24-001310 | 790,526 | 790,526 | RadNet, Inc. (RDNT) (CIK 0000790526) | ['RDNT'] | 8-K | 8-K | 2024-03-05 | 2024-02-29 | 001-33307 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-33307&action=getcompany | 24,719,604 | EX-99.1 | PRESS RELEASE | 2.02,9.01 | https://www.sec.gov/Archives/edgar/data/790526/000168316824001310 | https://www.sec.gov/Archives/edgar/data/790526/000168316824001310/0001683168-24-001310-index.html | https://www.sec.gov/Archives/edgar/data/790526/000168316824001310/radnet_ex9901.htm | EX-99.1 2 radnet_ex9901.htm PRESS RELEASE Exhibit 99.1 FOR IMMEDIATE RELEASE RadNet Reports Fourth Quarter 2023 Results, Including Record Revenue and Adjusted EBITDA(1), Releases 2024 Financial Guidance and Forms a New Digital Health Reporting Segment ·Revenue increased 9.5% to a record $420.4 million in the fourth quarter of 2023 from $383.9 million in the fourth quarter of 2022; Excluding Revenue from the Artificial Intelligence (“AI”) reporting segment, Revenue from the Imaging Center reporting segment in the fourth quarter of 2023 was $415.3 million, an increase of 8.6% from last year’s fourth quarter ·Excluding losses from the AI reporting segment, Adjusted EBITDA(1) from the Imaging Center reporting segment was a record $68.3 million as compared with $61.6 million in the fourth quarter of 2022, an increase of 11.0% ·Adjusting for unusual or one-time items impacting Net Income in the quarter, Adjusted Earnings Per Share(3) was $0.20 for the fourth quarter of 2023; This compares with Adjusted Earnings Per Share(3) of $0.11 for the fourth quarter of 2022 ·Aggregate procedural volumes increased 7.9% and same-center procedural volumes increased 5.5% compared with the fourth quarter of 2022 ·Fourth Quarter AI revenue was $5.1 million, an increase of 278.4% from the fourth quarter of 2022 ·RadNet announces the formation of a Digital Health financial reporting segment by combining its software and informatics businesses with its AI operations ·Announced earlier this week, RadNet has signed a definitive agreement to enter the Houston, Texas market through a platform acquisition consisting of seven imaging centers ·RadNet announces 2024 guidance ranges, anticipating increases in Revenue, Adjusted EBITDA(1) and Free Cash Flow(2) for 2024 over 2023 in both the Imaging Center and Digital Health reporting segments; Within the Digital Health reporting segment, AI Revenue is expected to increase over 65% from 2023 and AI Adjusted EBITDA(1) is projected to achieve break-even by year end 2024 LOS ANGELES, California, February 29, 2024 – RadNet, Inc. (NASDAQ: RDNT), a national leader in providing high-quality, cost-effective, fixed-site outpatient diagnostic imaging services through a network of 366 owned and/or operated outpatient imaging centers, today reported financial results for its fourth quarter and full year ended December 31, 2023. Dr. Howard Berger, President and Chief Executive Officer of RadNet, commented, “Record Revenue and Adjusted EBITDA(1) in the fourth quarter enabled us to exceed our 2023 full-year revised guidance ranges, ranges that were increased several times throughout 2023. The performance was the result of a continuation of strong industry trends and execution on a multi-pronged growth strategy focused on driving same-center performance, the expansion of existing and establishment of new health system partnerships and investments made in de novo imaging centers and newer technologies (including equipment, software and AI that drive improved throughput and efficiency). In the fourth quarter, the core Imaging Center segment experienced same-center procedural volume growth of 5.5%, Revenue growth of 8.6% and Adjusted EBITDA(1) growth of 11.0% as compared with the fourth quarter of 2022. Adjusted EBITDA(1) margins in the Imaging Center segment improved in the fourth quarter of 2023 relative to 2022 by 30 basis points, from 16.1% to 16.4%.” 1 “During 2023, we carefully managed liquidity and financial leverage. This was highlighted with our completion of a successful stock offering in June of 2023, adding approximately $245 million of net proceeds to our balance sheet and enabling a discretionary debt repayment of $30 million in October 2023. As a result of these actions and a focus on margins and Adjusted EBITDA(1) growth, at year-end 2023, net debt to Adjusted EBITDA(1) fell below 2.0x. Liquidity at the end of 2023 remained strong, with a $342 million cash balance and Days Sales Outstanding (DSO’s) of 32.0, which we believe to be among the best in the industry,” added Dr. Berger. “The demand for diagnostic imaging remains robust moving into 2024. Our solid financial position and multifaceted operating model have presented us with opportunities to expand our business, particularly through the construction of new centers to meet the growing demand and utilization in our target markets. We project to open approximately a dozen new facilities during 2024, and believe these sites should be positive contributors to our performance. Additionally, we expect to continue expanding existing health system joint ventures and partnerships and establish new ones during 2024, explained Dr. Berger.” “Earlier this week, we were pleased to announce a new platform acquisition in Houston, which represents our first new geographic expansion since 2020. The Houston metropolitan marketplace, encompassing about 7.3 million people, is the fourth most populous city and the second fastest growing metropolitan area in the United States. In our commitment to improving and expanding patient access and services, we will look to grow in this market in various ways, including through de novo build-outs, health system partnerships and introducing our AI and leading edge clinical and operating digital health solutions. In the future, we may enter additional new markets when conditions and opportunities support such moves,” added Dr. Berger. Dr. Berger concluded, “We remain enthusiastic about the initiatives in information technology and digital health. These include migrating our proprietary software solutions to the cloud, creating the new DeepHealth OS suite of solutions, new projects leveraging generative AI to improve operating efficiency and lower costs and the expansion of AI-enhanced programs in breast, lung and prostate screening domestically and abroad. The AI Revenue almost tripled in 2023 as compared with 2022, and if the continued implementation of the Enhanced Breast Cancer Diagnostic (EBCD) screening mammography program progresses as planned, AI Revenue could almost double in 2024 relative to 2023.” Financial Results Fourth Quarter Report: For the fourth quarter of 2023, RadNet reported Revenue from its Imaging Center reporting segment of $415.3 million and Adjusted EBITDA(1) of $68.3 million, which excludes Revenue and Adjusted EBITDA(1) Losses from the AI reporting segment. As compared with last year’s fourth quarter, Revenue increased $32.8 million (or 8.6%) and Adjusted EBITDA(1) increased $6.7 million (or 11.0%). Including our AI reporting segment, total company Revenue was $420.4 million in the fourth quarter of 2023, an increase of 9.5% from $383.9 million in last year’s fourth quarter. Including the Adjusted EBITDA(1) losses of the AI reporting segment of $2.5 million in the fourth quarter of 2023 and $4.3 million in the fourth quarter of 2022, total company Adjusted EBITDA(1) was $65.8 million in the fourth quarter of 2023 and $57.2 million in the fourth quarter of 2022, a growth of 15.0%. On an unadjusted basis, for the fourth quarter of 2023, RadNet reported a Net Loss of $1.9 as compared with a net loss of $934,000 for the fourth quarter of 2022. Net Loss Per Share for the fourth quarter of 2023 was $(0.03), compared with a Net Loss per share of $(0.02) in the fourth quarter of 2022, based upon a weighted average number of diluted shares outstanding of 67.9 million shares in 2023 and 57.0 million shares in 2022. Adjusting for a number of unusual or one-time items impacting the fourth quarter of 2023, Adjusted Earnings(3) from the Imaging Center reporting segment was $13.7 million and diluted Adjusted Earnings Per Share(3) was $0.20 during the fourth quarter of 2023 as compared with $0.11 during the fourth quarter of 2022. The unusual or one-time items impacting the fourth quarter of 2023 excluded in calculating Adjusted Earnings(3) were as follows: $7.2 million of non-cash loss from interest rate swaps (excluding the amortization of the accumulation of the changes in fair value out of Other Comprehensive Income); $621,000 of severance paid in connection with headcount reductions related to cost savings initiatives; $880,000 expense related to leases for de novo facilities under construction that have yet to open their operations; $222,000 acquisition transaction costs; $429,000 gain from a valuation adjustment for contingent consideration related to acquisitions; $1.3 million of non-capitalized research and development investment in DeepHealth Cloud OS and generative AI; $5.1 million loss on lease abandonment; and $5.0 million of pre-tax losses related to our AI reporting segment. 2 Also, affecting Net Income in the fourth quarter of 2023 were certain non-cash expenses and unusual items including: $5.4 million of non-cash employee stock compensation expense resulting from the vesting of certain options and restricted stock; $1.0 million loss on the disposal of certain capital equipment; and $747,000 of non-cash amortization of deferred financing costs and loan discounts related to financing fees paid as part of our existing credit facilities. For the fourth quarter of 2023, as compared with the prior year’s fourth quarter, MRI volume increased 13.2%, CT volume increased 11.3% and PET/CT volume increased 18.5%. Overall volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased 7.9% over the prior year’s fourth quarter. On a same-center basis, including only those centers which were part of RadNet for both the fourth quarters of 2023 and 2022, MRI volume increased 10.8%, CT volume increased 8.2% and PET/CT volume increased 17.4%. Overall same-center volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased 5.5% over the prior year’s same quarter. Annual Report: For full-year 2023, RadNet reported Revenue from its Imaging Center reporting segment of $1,604 million and Adjusted EBITDA(1) Excluding Losses from the AI reporting segment of $245.1 million. In 2023, Revenue increased $178.5 million (or 12.5%) and Adjusted EBITDA(1) increased $36.1 million (or 17.2%) as compared with 2022. Including our AI reporting segment Revenue of $12.5 million, total company Revenue was $1,617 million for full-year 2023, an increase of 13.0% from $1,430 million in 2022. Including Adjusted EBITDA(1) losses from the AI segment of $12.8 million, total company Adjusted EBITDA(1) for 2023 was $232.3 million as compared with $192.5 million in 2022, an increase of 20.7%. For 2023, RadNet reported Net Income of $3.0 million, a decrease of approximately $7.6 million over 2022. Per share diluted Net Income for the full year of 2023 was $0.05, compared to a diluted Net Income per share of $0.17 in 2022 (based upon a weighted average number of diluted shares outstanding of 64.7 million in 2023 and 57.3 million in 2022). Affecting Net Income in 2023 were certain non-cash expenses and unusual items including: $8.2 million of non-cash loss from interest rate swaps; $3.8 million of severance paid in connection with headcount reductions related to cost savings initiatives; $3.6 million expense related to leases for our de novo facilities under construction that have yet to open their operations; $22.6 million of pre-tax losses related to our AI reporting segment; $26.8 million of non-cash employee stock compensation expense resulting from the vesting of certain options and restricted stock; $2.2 million loss on the disposal of certain capital equipment; $5.1 million of lease abandonment charges; and $16.8 million gain from the contribution of imaging centers into a joint venture; $1.3 million of non-capitalized research and development investment in DeepHealth Cloud OS and generative AI; $4.0 million non-cash charge for intangible adjustments; $4.1 million non-cash gain on contingent consideration; $3.0 million of non-cash amortization of deferred financing costs and loan discounts related to financing fees paid as part of our existing credit facilities. Actual 2023 Results vs. 2023 Guidance The following compares the Company’s 2023 performance with previously announced guidance levels: Imaging Center Segment Original Guidance Range Revised Guidance Range After Q3 Results 2023 Actual Results Total Net Revenue $1,525 - $1,575 million $1,575 - $1,610 million $1,604.2 million Adjusted EBITDA(1) $220 - $230 million $235 - $245 million $245.2 million Capital Expenditures(a) $105 - $115 million $115 - $125 million $153.0 million Cash Interest Expense(c) $35 - $40 million $45 - $50 million $38.3 million Free Cash Flow (b)(2) $70 - $80 million $65 - $75 million $53.9 million 3 Artificial Intelligence Segment Original Guidance Range Revised Guidance Range After Q3 Results 2023 Actual Results Total Net Revenue $16 - $18 million $11 - $13 million $12.5 million Adjusted EBITDA(1) $(9) - $(11) million $(11) - $(13) million $(12.8) million (a)Net of proceeds from the sale of equipment, imaging centers and joint venture interests, New Jersey Imaging Network capital expenditures of $18.6 million, a $19.8 million one-time purchase with a promissory note of equipment previously leased under operating leases and a $5 million purchase of software and other intellectual property from a vender. (b)Defined by the Company as Adjusted EBITDA(1) less Capital Expenditures and Cash Interest Expense. (c)Excludes payments to and from counterparties on interest rate swaps and nets interest income from our cash balance recorded in Other Income. Formation of New Digital Health Reporting Segment For its 2024 fiscal year, RadNet is changing its operating segments, which will impact reportable segments. Specifically, the eRAD Radiology Information Systems (RIS) and Picture Archiving and Communication Systems (PACS) and related health informatics businesses that were reported as part of the Imaging Center reportable segment through 2023, will now be combined with the Artificial Intelligence reportable segment through 2023 to form a new Digital Health financial reportable segment for 2024. With respect to 2023, the eRAD financial results embedded in the Imaging Center segment consisted of $37.1 million of Revenue, $16.4 million of Operating Expenses and $20.7 million of Adjusted EBITDA(1). Below, we illustrate what 2023 selected operating results would have been if RadNet had operated under the two new reporting segments – Imaging Center and Digital Health: 2023 Imaging Center Segment Including eRAD Businesses 2023 eRAD Businesses 2023 Imaging Center Segment Excluding eRAD Businesses Total Net Revenue $1,604.2 million $37.1 million $1,567.1 million Adjusted EBITDA(1) $245.2 million $20.7 million $224.5 million Capital Expenditures(a) $153.0 million $1.2 million $151.8 million Cash Interest Expense(c) $38.3 million $0 million $38.3 million Free Cash Flow(b) $53.9 million $19.5 million $34.4 million 2023 AI Segment 2023 eRAD Businesses 2023 Digital Health Segment (AI+eRAD Businesses) Total Net Revenue $12.5 million $37.1 million $49.6 million Adjusted EBITDA(1) $(12.8) million $20.7 million $7.9 million (a)Net of proceeds from the sale of equipment, imaging centers and joint venture interests, New Jersey Imaging Network capital expenditures of $18.6 million, a $19.8 million one-time purchase with a promissory note of equipment previously leased under operating leases in 2023 and a $5 million purchase of software and other intellectual property from a vender in 2023. (b)Defined by the Company as Adjusted EBITDA(1) less Capital Expenditures and Cash Interest Expense. (c)Excludes payments to and from counterparties on interest rate swaps and nets interest income from our cash balance recorded in Other Income. 4 2024 Guidance RadNet reports 2024 guidance ranges as follows: Imaging Center Segment 2023 Actual Results Restated for New Imaging Center Segment 2024 Guidance Range 2023-2024 Implied Growth Total Net Revenue $1,567.1 million $1,650 - $1,700 million 5.3% - 8.5% Adjusted EBITDA(1) $224.5 million $250 - $260 million 11.4% - 15.8% Capital Expenditures(a) $151.8 million $125 - $135 million Cash Interest Expense(c) $38.3 million $40 - $45 million Free Cash Flow(b) $34.4 million $65 - $75 million (a)Net of proceeds from the sale of equipment, imaging centers and joint venture interests and New Jersey Imaging Network capital expenditures. (b)Defined by the Company as Adjusted EBITDA(1) less Capital Expenditures and Cash Interest Expense. (c)Excludes payments to and from counterparties on interest rate swaps and nets interest income from our cash balance recorded in Other Income. Digital Health Segment 2023 Actual Results Restated For New Digital Health Segment 2024 Guidance Range 2023-2024 Implied Growth Total Net Revenue $49.6 million $60 - $70 million 21.0% - 41.2% Adjusted EBITDA(1) Before Non-Capitalized R&D - DeepHealth Cloud OS & Generative AI $7.9 million $12 - $14 million 51.4% - 76.6% Non-Capitalized R&D - DeepHealth Cloud OS & Generative AI $1.4 million $11 - $13 million Capital Expenditures $1.2 million $3 - $5 million Free Cash Flow(a) Before Non-Capitalized R&D - DeepHealth Cloud OS & Generative AI $6.7 million $8 - $10 million Free Cash Flow(a) After Non-Capitalized R&D - DeepHealth Cloud OS & Generative AI $5.3 million $(2) - $(5) million (a)Defined by the Company as Adjusted EBITDA(1) less Capital Expenditures and Cash Interest Expense. Dr. Berger noted, “We are particularly excited to announce the formation of the Digital Health reporting segment. This new segment combines our informatics businesses (eRAD and related solutions) with our AI operations. While the software solutions of this operating segment are critical to the success of the imaging center business, the Digital Health segment has over 500 outside customers and has its own unique opportunities for growth and expansion. We have conviction that the Digital Health solutions can positively impact how radiology and imaging are practiced, and we have attracted experienced talent to lead this new segment who have successfully developed, commercialized and sold imaging-related information technology solutions in the past.” 5 Dr Berger added, “Taking into account all the current initiatives in progress within both operating segments, our guidance reflects significant growth in 2024. Within the Imaging Center segment, we expect to benefit from a continued focus on same-center performance, tuck-in acquisitions, increased reimbursement, expanded and new health system joint ventures and de novo center openings. Combining these opportunities with diligent expense management, we are projecting to drive double digit growth in Imaging Center Adjusted EBITDA(1) in 2024. As a result, despite a continued commitment to capital expenditures in 2024, primarily on de novo center openings, we anticipate doubling our free cash flow as compared with 2023 results from our core Imaging Center segment.” “Within the new Digital Health segment, we are expecting significant growth in 2024 primarily from anticipated incremental AI revenue from both the continued Enhanced Breast Cancer Detection (EBCD) implementation and from our lung and prostate AI licensing business, particularly in Europe. We further anticipate that by year end 2024, our AI businesses will collectively be on a run-rate of positive Adjusted EBITDA(1). Our guidance also reflects the substantial investment we are making in the development of our DeepHealth OS cloud-based operating system and the generative AI modules that could lower our costs and increase efficiency in the areas of patient scheduling, pre-authorization, insurance verification and revenue cycle. We believe this research and development investment will pay dividends both in our core imaging center business and for the current and future customers outside of RadNet.” concluded Dr. Berger. Conference Call for Today Dr. Howard Berger, President and Chief Executive Officer, and Mark Stolper, Executive Vice President and Chief Financial Officer, will host a conference call tomorrow, March 1st, at 10:30 a.m. Eastern Time. During the call, management will discuss the Company's 2023 fourth quarter and year-end results. Conference Call Details: Date: Friday, March 1, 2024 Time: 10:30 a.m. ET Dial In-Number: 844-826-3035 International Dial-In Number: 412-317-5195 There will also be simultaneous and archived webcasts available at https://viavid.webcasts.com/starthere.jsp?ei=1657167&tp_key=5b49295358 or http://www.radnet.com under the “About RadNet” menu section and “News & Press Releases” sub-menu of the website. An archived replay of the call will also be available and can be accessed by dialing 844-512-2921 from the U.S., or 412-317-6671 for international callers, and using the passcode 10186577. About RadNet, Inc. RadNet, Inc. is the leading national provider of freestanding, fixed-site diagnostic imaging services and related information technology solutions (including artificial intelligence) in the United States based on the number of locations and annual imaging revenue. RadNet has a network of 366 owned and/or operated outpatient imaging centers. RadNet's markets include California, Maryland, Delaware, New Jersey, New York, Florida and Arizona. Together with affiliated radiologists, and inclusive of full-time and per diem employees and technologists, RadNet has a total of approximately 9,700 employees. For more information, visit http://www.radnet.com. Forward Looking Statements This press release contains “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are expressions of our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, and anticipated future conditions, events and trends. Forward-looking statements can generally be identified by words such as: “anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,” “project,” “estimate,” “expect,” “strategy,” “future,” “likely,” “may,” “should,” “will” and similar references to future periods. Forward-looking statements in this press release include, among others, statements we make regarding response to and the expected future impacts of COVID-19, including statements about our anticipated business results, balance sheet and liquidity and our future liquidity, burn rate and our continuing ability to service or refinance our current indebtedness. Forward-looking statements are neither historical facts nor assurances of future performance. Because forward-looking statements relate to the future, they are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not place undue reliance on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following: 6 ·changes in general economic conditions nationally and regionally in the markets in which we operate, including their effects on the cost and availability of labor; ·our ability to service our indebtedness, make principal and interest payments as those payments become due and remain in compliance with applicable debt covenants, in addition to our ability to refinance such indebtedness on acceptable terms; ·the availability and terms of capital to fund the expansion of our business and improvements to our existing facilities; ·our ability to maintain our current credit rating and the impact on our funding costs and competitive position if we do not do so; ·volatility in interest and exchange rates, or credit markets; ·the adequacy of our cash flow and earnings to fund our current and future operations; ·changes in service mix, revenue mix and procedure volumes; ·delays in receiving payments for services provided; ·increased bankruptcies among our partner physicians or joint venture partners; ·the impact of the political environment and related developments on the current healthcare marketplace and on our business, including with respect to the future of the Affordable Care Act; ·the extent to which the ongoing implementation of healthcare reform, or changes in or new legislation, regulations or guidance, enforcement thereof by federal and state regulators or related litigation result in a reduction in coverage or reimbursement rates for our services, or other material impacts to our business; ·closures or slowdowns and changes in labor costs and labor difficulties, including stoppages affecting either our operations or our suppliers' abilities to deliver supplies needed in our facilities; ·the occurrence of hostilities, political instability or catastrophic events; ·the emergence or reemergence of and effects related to future pandemics, epidemics and infectious diseases; and ·noncompliance by us with any privacy or security laws or any cybersecurity incident or other security breach by us or a third party involving the misappropriation, loss or other unauthorized use or disclosure of confidential information. Any forward-looking statement contained in this current report is based on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that we may make from time to time, whether as a result of changed circumstances, new information, future developments or otherwise, except as required by applicable law. Regulation G: GAAP and Non-GAAP Financial Information This release contains certain financial information not reported in accordance with GAAP. The Company uses both GAAP and non-GAAP metrics to measure its financial results. The Company believes that, in addition to GAAP metrics, these non-GAAP metrics assist the Company in measuring its cash-based performance. The Company believes this information is useful to investors and other interested parties because it removes unusual and nonrecurring charges that occur in the affected period and provides a basis for measuring the Company's financial condition against other quarters. Such information should not be considered as a substitute for any measures calculated in accordance with GAAP, and may not be comparable to other similarly titled measures of other companies. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Reconciliation of this information to the most comparable GAAP measures is included in this release in the tables which follow. CONTACTS: RadNet, Inc. Mark Stolper, 310-445-2800 Executive Vice President and Chief Financial Officer 7 RADNET, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA) December 31, 2023 December 31, 2022 (unaudited) ASSETS CURRENT ASSETS Cash and Cash equivalents $342,570 $127,834 Accounts receivable 163,707 166,357 Due from affiliates 25,342 18,971 Prepaid expenses and other current assets 47,657 54,022 Total current assets 579,276 367,184 PROPERTY, EQUIPMENT AND RIGHT-OF-USE ASSETS Property and equipment, net 604,401 565,961 Operating lease right-of-use assets 596,032 603,524 Total property, plant, equipment and right-of-use assets 1,200,433 1,169,485 OTHER ASSETS Goodwill 679,463 677,665 Other intangible assets 90,615 106,228 Deferred financing costs 1,643 2,280 Investment in joint ventures 92,710 57,893 Deposits and other 46,333 53,172 Total assets $2,690,473 $2,433,907 LIABILITIES AND EQUITY CURRENT LIABILITIES Accounts payable, accrued expenses and other $342,940 $369,595 Due to affiliates 15,910 23,100 Deferred revenue 4,647 4,021 Current operating lease liability 55,981 57,607 Current portion of notes payable 17,974 12,400 Total current liabilities 437,452 466,723 LONG-TERM LIABILITIES Long-term operating lease liability 605,097 604,117 Notes payable, net of current portion 812,068 839,344 Deferred tax liability, net 15,776 9,256 Other non-current liabilities 6,721 23,015 Total liabilities 1,877,114 1,942,455 EQUITY RadNet, Inc. stockholders' equity: Common stock - $.0001 par value, 200,000,000 shares authorized; 67,956,318 and 57,723,125 shares issued and outstanding at December 31, 2023 and December 31, 2022, respectively 7 6 Additional paid-in-capital 722,750 436,288 Accumulated other comprehensive loss (12,484) (20,677) Accumulated deficit (79,578) (82,622) Total RadNet, Inc.'s stockholders equity 630,695 332,995 Noncontrolling interests 182,664 158,457 Total equity 813,359 491,452 Total liabilities and equity $2,690,473 $2,433,907 8 RADNET, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (IN THOUSANDS EXCEPT FOR SHARE AND PER SHARE DATA) (unaudited) Years Ended December 31, 2023 2022 2021 REVENUE Service fee revenue $1,463,197 $1,278,016 $1,166,743 Revenue under capitation arrangements 153,433 152,045 148,334 Total service revenue 1,616,630 1,430,061 1,315,077 Provider relief funding – – 9,110 OPERATING EXPENSES Cost of operations, excluding depreciation and amortization 1,395,239 1,264,346 1,123,274 Lease abandonment charges 5,146 – 19,675 Depreciation and amortization 128,391 115,877 96,694 (Gain) on contribution of imaging centers into joint venture (16,808) – – Loss (gain) on sale and disposal of equipment and other 2,187 2,529 1,246 Severance costs 3,778 946 744 Total operating expenses 1,517,933 1,383,698 1,241,633 INCOME (LOSS) FROM OPERATIONS 98,697 46,363 82,554 OTHER INCOME AND EXPENSES Interest expense 64,483 50,841 48,830 Equity in earnings of joint ventures (6,427) (10,390) (10,967) Non-cash change in fair value of interest rate hedge 8,185 (39,621) (21,670) Debt restructuring and extinguishment expenses – 731 6,044 Other expenses (income) (6,354) 1,833 1,438 Total other expense (income) 59,887 3,394 23,675 INCOME (LOSS) BEFORE INCOME TAXES 38,810 42,969 58,879 Provision for income taxes (8,473) (9,361) (14,560) NET INCOME (LOSS) 30,337 33,608 44,319 Net income (loss) attributable to noncontrolling interests 27,293 22,958 19,592 NET INCOME (LOSS) ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS $3,044 $10,650 $24,727 BASIC NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS $0.05 $0.19 $0.47 DILUTED NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS $0.05 $0.17 $0.46 WEIGHTED AVERAGE SHARES OUTSTANDING Basic 63,580,059 56,293,336 52,496,679 Diluted 64,658,299 57,320,870 53,421,033 9 RADNET, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASHFLOWS (IN THOUSANDS) (unaudited) Years Ended December 31, 2023 2022 2021 CASH FLOWS FROM OPERATING ACTIVITIES Netincome (loss) $30,337 $33,608 $44,319 Adjustments to reconcile net incometo net cash provided by operating activities: Depreciation and amortization 128,391 115,877 96,694 Amortization of operating right-of-use assets 61,102 68,847 73,967 Non-cash portion for amortization of operating lease right-of-use assets and related charges due to facilities abandonment 5,146 – 19,675 Equity in earnings of joint ventures (6,427) (10,390) (10,967) Distributions from joint ventures 15,603 4,438 4,707 Amortization and write off of deferred financing costs and loan discount 2,987 2,693 3,254 (Gain) on contribution of imaging centers into joint venture (16,808) – – Loss on sale and disposal of equipment 2,187 2,529 1,246 Gain on extinguishment of debt – – 1,496 Loss on impairment 3,949 – – Amortization of cash flow hedge 3,576 3,687 3,695 Non-cash change in fair value of interest rate hedge 8,185 (39,621) (21,670) Stock-based compensation 26,785 23,770 25,203 Change in value of contingent consideration (3,880) (325) – Changes in operating assets and liabilities, net of assets acquired and liabilities assumed in purchase transactions: Accounts receivable 2,650 (30,078) (5,890) Other current assets (8,441) (3,327) (15,777) Other assets (1,484) (12,166) 662 Deferred taxes 6,056 13,356 19,834 Operating lease liability (54,763) (68,943) (72,553) Deferred revenue 626 (7,316) (28,319) Accounts payable, accrued expenses and other 15,086 49,778 9,915 Net cash provided by operating activities 220,863 146,417 149,491 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of imaging centers and other operations (10,918) (129,961) (77,691) Purchase of property and equipment (176,600) (119,451) (137,874) Purchase of intangible assets – – (5,130) Proceeds from sale of equipment 83 3,904 625 Equity contributions in existing and purchase of interest in joint ventures (14,035) (1,441) (1,441) Net cash used in investing activities (201,470) (246,949) (221,511) CASH FLOWS FROM FINANCING ACTIVITIES Principal payments on notes and leases payable (2,930) – (3,302) Payments on senior notes (41,063) (53,750) (619,529) Additional deferred finance costs on revolving loan amendment – – (938) Proceeds from debt issuance, net of issuance costs – 147,996 717,307 Distributions paid to noncontrolling interests (5,972) (893) (2,426) Proceeds from sale of noncontrolling interest – – 13,073 Proceeds from revolving credit facility – – 128,300 Payments on revolving credit facility – – (128,300) Sale of non-controlling interests 5,121 – – Payments on contingent consideration (5,495) – – Proceeds from issuance of stock 245,832 – – Proceeds from issuance of common stock upon exercise of options 142 294 488 Net cash provided by (used in)financing activities 195,635 93,647 104,673 EFFECT OF EXCHANGE RATE CHANGES ON CASH (292) 113 (65) NET INCREASE IN CASH AND CASH EQUIVALENTS 214,736 (6,772) 32,588 CASH AND CASH EQUIVALENTS, beginning of period 127,834 134,606 102,018 CASH AND CASH EQUIVALENTS, end of period $342,570 $127,834 $134,606 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid during the period for interest $64,695 $39,151 $29,042 Cash paid during the period for income taxes $1,587 $587 $1,950 10 RADNET, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (IN THOUSANDS EXCEPT FOR SHARE AND PER SHARE DATA) (unaudited) Three Months Ended December 31, 2023 2022 REVENUE Service fee revenue $384,932 $346,197 Revenue under capitation arrangements 35,451 37,679 Total service revenue 420,383 383,876 OPERATING EXPENSES Cost of operations, excluding depreciation and amortization 356,592 329,589 Lease abandonment charges 5,146 – Depreciation and amortization 32,686 30,668 (Gain) on contribution of imaging centers into joint venture – – Loss (gain) on sale and disposal of equipment and other 1,002 1,567 Severance costs 621 450 Total operating expenses 396,047 362,274 INCOME (LOSS) FROM OPERATIONS 24,336 21,602 OTHER INCOME AND EXPENSES Interest expense 16,607 15,443 Equity in earnings of joint ventures (2,492) (2,040) Non-cash change in fair value of interest rate hedge 7,236 (45) Debt restructuring and extinguishment expenses – 731 Other expenses (income) (3,745) 269 Total other expense (income) 17,606 14,358 INCOME (LOSS) BEFORE INCOME TAXES 6,730 7,244 Provision for income taxes (732) (2,274) NET INCOME (LOSS) 5,998 4,970 Net income (loss) attributable to noncontrolling interests 7,856 5,903 NET INCOME (LOSS) ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS $(1,858) $(933) BASIC NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS $(0.03) $(0.02) DILUTED NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS $(0.03) $(0.02) WEIGHTED AVERAGE SHARES OUTSTANDING Basic 67,904,999 57,040,622 Diluted 67,904,999 57,040,622 11 RADNET, INC. AND SUBSIDIARIES RECONCILIATION OF GAAP NET INCOME ATTRIBUTABLE TO RADNET, INC. COMMON SHAREHOLDERS TO ADJUSTED EBITDA (IN THOUSANDS) Three Months Ended December 31, Twelve Months Ended December 31, 2023 2022 2023 2022 Net income (loss) attributable to Radnet, Inc. common stockholders $(1,858) $(933) $3,044 $10,650 Income taxes 732 2,274 8,473 9,361 Interest expense 16,607 15,443 64,483 50,841 Severance costs 621 450 3,778 946 Depreciation and amortization 32,686 30,668 128,391 115,877 Non-cash employee stock-based compensation 5,404 4,658 26,785 23,770 (Gain) loss on sale and disposal of equipment and other 1,002 1,567 2,187 2,529 Non-cash change in fair value of interest rate hedge 7,236 (45) 8,185 (39,621) Debt restructuring and loss on extinguishment expenses – 731 – 731 Gain on contribution of imaging centers into joint venture – – (16,808) – Other expenses (3,745) 269 (6,354) 1,833 Lease abandonment charges 5,146 – 5,146 – Legal settlements – – – 2,197 Non-cash change to contingent consideration (429) 47 (4,075) 47 Non-Capitalized R&D - DeepHealth Cloud OS & Generative AI 1,308 – 1,308 – Change in estimate related to refund liability – – – 8,089 Acquisition transaction costs 222 927 222 927 Acquisition related non-cash intangible adjustment – – 3,950 – Non-operational rent expenses 880 1,177 3,629 4,297 Adjusted EBITDA Including EBITDA Losses from AI Segment $65,812 $57,233 $232,344 $192,474 EBITDA Losses from AI Segment 2,483 4,320 12,764 16,575 Adjusted EBITDA excluding EBITDA Losses from AI Segment $68,295 $61,553 $245,108 $209,049 12 RADNET, INC. AND SUBSIDIARIES SCHEDULE OF ADJUSTED EARNINGS AND EARNINGS PER SHARE (3) (IN THOUSANDS EXCEPT SHARE DATA) (unaudited) Three Months Ended December 31, 2023 2022 NET (LOSS) INCOME ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS $(1,858) $(933) Add severance costs 621 450 Add loss on lease abandonment/impairment 5,146 – Add debt restructuring and loss on extinguishment expenses – 731 Add non-operational rent expenses (i) 880 1,177 Add AI Segment losses (iv) 4,973 6,060 Add acquisition transaction costs 222 927 Add valuation adjustment for contingent consideration (429) 47 Add Non-Capitalized R&D - DeepHealth Cloud OS & Generative AI 1,308 – Add/Subtract non-cash change in fair value of swap valuation (ii) 7,236 (45) Total adjustments - loss (gain) 19,957 9,347 Subtract tax impact of Adjustments (iii) 4,357 2,031 TOTAL ADJUSTMENT TO NET INCOME ATTRIBUTABLE TO RADNET, INC. COMMON SHAREHOLDERS 15,600 7,316 ADJUSTED NET INCOME ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS 13,742 6,383 WEIGHTED AVERAGE SHARES OUTSTANDING Diluted 68,895,322 58,164,555 ADJUSTED DILUTED NET INCOME PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS $0.20 $0.11 (i)Represents rent expense associated with de novo sites under construction prior to them becoming operational. (ii)Impact from the change in fair value of the swaps during the quarter. Excludes the amortization of the accumulation of the changes in fair value out of Other Comprehensive Income that existed prior to the hedges becoming ineffective. (iii)Tax effected using 21.83% and 21.73% blended federal and state effective tax rate for 2023 and 2022, respectively. (iv)Represents pre-tax net losses before income taxes from Artificial Intelligence reporting segment. 13 PAYOR CLASS BREAKDOWN Fourth Quarter 2023 Commercial Insurance 58.0% Medicare 22.8% Capitation 8.4% Medicaid 2.9% Workers Compensation/Personal Injury 2.8% Other 5.0% Total 100.0% RADNET PAYMENTS BY MODALITY Fourth Quarter Full Year Full Year Full Year 2023 2023 2022 2021 MRI 36.9% 36.8% 36.8% 36.0% CT 16.6% 16.8% 17.5% 17.2% PET/CT 6.3% 6.4% 5.8% 5.5% X-ray 6.3% 6.5% 6.7% 3.9% Ultrasound 12.9% 12.9% 12.6% 12.7% Mammography 16.5% 16.0% 15.3% 16.1% Nuclear Medicine 0.7% 0.8% 0.9% 1.0% Other 3.8% 3.9% 4.5% 4.6% 100.0% 100.0% 100.0% 100.0% PROCEDURES BY MODALITY* Fourth Quarter Fourth Quarter 2023 2023 MRI 398,625 352,009 CT 237,937 213,716 PET/CT 15,825 13,359 Nuclear Medicine 8,120 8,550 Ultrasound 617,301 578,238 Mammography 483,687 459,068 X-ray and Other 804,225 752,055 Total 2,565,720 2,376,995 * Volumes include wholy owned and joint venture centers. 14 Footnotes (1) The Company defines Adjusted EBITDA as earnings before interest, taxes, depreciation and amortization, each from continuing operations and excludes losses or gains on the disposal of equipment, other income or loss, loss on debt extinguishments, bargain purchase gains and non-cash equity compensation. Adjusted EBITDA includes equity earnings in unconsolidated operations and subtracts allocations of earnings to non-controlling interests in subsidiaries, and is adjusted for non-cash and extraordinary events which took place during the period. Adjusted EBITDA is reconciled to its nearest comparable GAAP financial measure. Adjusted EBITDA is a non-GAAP financial measure used as analytical indicator by RadNet management and the healthcare industry to assess business performance, and is a measure of leverage capacity and ability to service debt. Adjusted EBITDA should not be considered a measure of financial performance under GAAP, and the items excluded from Adjusted EBITDA should not be considered in isolation or as alternatives to net income, cash flows generated by operating, investing or financing activities or other financial statement data presented in the consolidated financial statements as an indicator of financial performance or liquidity. As Adjusted EBITDA is not a measurement determined in accordance with GAAP and is therefore susceptible to varying methods of calculation, this metric, as presented, may not be comparable to other similarly titled measures of other companies. (2) As noted above, the Company defines Free Cash Flow as Adjusted EBITDA less total Capital Expenditures (whether completed with cash or financed) and Cash Interest paid. Free Cash Flow is a non-GAAP financial measure. The Company uses Free Cash Flow because the Company believes it provides useful information for investors and management because it measures our capacity to generate cash from our operating activities. Free Cash Flow does not represent total cash flow since it does not include the cash flows generated by or used in financing activities. In addition, our definition of Free Cash Flow may differ from definitions used by other companies. Free Cash Flow should not be considered a measure of financial performance under GAAP, and the items excluded from Adjusted EBITDA should not be considered in isolation or as alternatives to net income, cash flows generated by operating, investing or financing activities or other financial statement data presented in the consolidated financial statements as an indicator of financial performance or liquidity. As Adjusted EBITDA is not a measurement determined in accordance with GAAP and is therefore susceptible to varying methods of calculation, this metric, as presented, may not be comparable to other similarly titled measures of other companies. (3) The Company defines Adjusted Earnings Per Share as net income or loss attributable to RadNet, Inc. common stockholders and excludes losses or gains on the disposal of equipment, loss on debt extinguishments, bargain purchase gains, severance costs, loss on impairment, loss or gain on swap valuation, gain on extinguishment of debt, unusual or non-recurring entries that impact the Company’s tax provision, pre-tax loss or gain from AI segment and any other non-recurring or unusual transactions recorded during the period. Adjusted Earnings Per Share is reconciled to its nearest comparable GAAP financial measure. Adjusted Earnings Per Share is a non-GAAP financial measure used as analytical indicator by RadNet management and the healthcare industry to assess business performance. Adjusted Earnings Per Share should not be considered a measure of financial performance under GAAP, and the items excluded from Adjusted Earnings Per Share should not be considered in isolation or as alternatives to net income, cash flows generated by operating, investing or financing activities or other financial statement data presented in the consolidated financial statements as an indicator of financial performance or liquidity. As Adjusted Earnings Per Share is not a measurement determined in accordance with GAAP and is therefore susceptible to varying methods of calculation, this metric, as presented, may not be comparable to other similarly titled measures of other companies. 15 |
0001907982-25-000070:japantobaccoandd-waveannou.htm | 0001907982-25-000070 | 1,907,982 | 1,907,982 | D-Wave Quantum Inc. (QBTS, QBTS-WT) (CIK 0001907982) | ['QBTS', 'QBTS-WT'] | 8-K | 8-K | 2025-03-31 | 2025-03-31 | 001-41468 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-41468&action=getcompany | 25,788,813 | EX-99.1 | EX-99.1 | 7.01,9.01 | https://www.sec.gov/Archives/edgar/data/1907982/000190798225000070 | https://www.sec.gov/Archives/edgar/data/1907982/000190798225000070/0001907982-25-000070-index.html | https://www.sec.gov/Archives/edgar/data/1907982/000190798225000070/japantobaccoandd-waveannou.htm | EX-99.1 2 japantobaccoandd-waveannou.htm EX-99.1 DocumentJapan Tobacco and D-Wave Announce Quantum Proof-of-Concept Outperforms Classical Results for LLM Training in Drug DiscoveryQuantum computing project aims to enhance the speed and quality of drug development processes to create first-in-class small molecule pharmaceuticalsPALO ALTO, Calif. – March 31, 2025 – D-Wave Quantum Inc. (NYSE: QBTS) (“D-Wave” or the “Company”), a leader in quantum computing systems, software, and services, and the pharmaceutical division of Japan Tobacco Inc. (“JT”) today announced the completion of a joint proof-of-concept project that used quantum computing technology and artificial intelligence (AI) in the drug discovery process. JT and D-Wave enhanced large language models (LLMs) with a quantum-hybrid workflow to increase their generative capabilities and enable JT to produce novel, more ‘drug-like’ molecular structures beyond those found in the training datasets for the quantum-hybrid generative AI system.The work demonstrated that LLM hybrid models that used classical computation together with D-Wave’s quantum processing unit (QPU) resulted in more valid generated molecules when compared to classical methods alone. In addition, the molecules generated by QPU-assisted LLM training showed a higher quantitative estimate of drug-likeness compared to the training dataset and the models trained with classical computation-driven LLM training methods. This indicates that the QPU provided the teams with higher quality, lower energy samples, highlighting the potential benefits of quantum computing in generative AI for drug discovery. The goal of this project is to accelerate the discovery of first-in-class small-molecule compounds while improving quality and speed in various processes. In this proof-of-concept, D-Wave’s annealing quantum computing technology was used in JT’s AI technology framework to train LLMs such as a transformer architecture — the same engine behind ChatGPT — for the exploration of chemical space. This enabled the teams to evaluate the feasibility of building a machine learning framework capable of handling a broader range of molecular properties and activities of compounds, which, in our view, initiates a new stage in the use of Quantum AI technologies for drug discovery. By combining AI and quantum computing technologies, the project further confirmed the potential for facilitating the small-molecule compound discovery process in both quality and speed of drug development.“We are excited by the results we are seeing from our proof-of-concept project with D-Wave. In the experiment, with support from D-Wave’s professional services and product R&D teams, we utilized D-Wave’s annealing quantum computer to train JT’s AI model,” said Dr. Masaru Tateno, Chief Scientific Officer of Central Pharma Research Institute. “Our quantum-hybrid AI system shifted generated compounds to a more ‘drug-like’ molecular ensemble than the training dataset, without imposing any driving factors of molecular properties in our AI model. To the best of our knowledge, this is the first work for annealing quantum computation to outperform classical results concerning LLM training in drug discovery. This validation has also revealed that annealing quantum computing systems can deliver high quality, low energy samples that could drive enhanced performance in generative AI architectures. So, moving forward, with D-Wave’s quantum annealing machines, we aim to maximize the use of quantum computing hardware characteristics and accelerate our efforts in achieving Quantum AI-driven drug discovery.”“AI has made impressive advancements but faces a computational challenge due to escalating power needs and costs,” said Dr. Alan Baratz, CEO of D-Wave. “Quantum computing’s integration with AI and machine learning could offer scalable, energy-efficient solutions to address these issues and potentially offer enhanced AI capabilities. We believe that our work with JT is an important demonstration and validation of quantum’s integration with AI. When used together, these powerful technologies can help customers build more efficient, rapid, and energy-saving AI and machine learning workloads. While we are just at the beginning of exploring Quantum AI’s potential impact, in our view, this work is a resounding step forward.”Following the proof-of-concept project, the pharmaceutical division of JT plans to further advance the development of Quantum AI-driven drug discovery technology and then use quantum computing technology for molecular design.About JT Pharmaceutical divisionJT commenced its pharmaceutical business in 1987 with its mission to create original and innovative drugs for patients suffering from diseases around the world. To learn more, visit https://www.jt.com/about/division/pharma/index.htmlAbout D-Wave Quantum Inc.D-Wave is a leader in the development and delivery of quantum computing systems, software, and services. We are the world’s first commercial supplier of quantum computers, and the only company building both annealing and gate-model quantum computers. Our mission is to help customers realize the value of quantum, today. Our 5,000+ qubit Advantage™ quantum computers, the world’s largest, are available on-premises or via the cloud, supported by 99.9% availability and uptime. More than 100 organizations trust D-Wave with their toughest computational challenges. With over 200 million problems submitted to our Advantage systems and Advantage2TM prototypes to date, our customers apply our technology to address use cases spanning optimization, artificial intelligence, research and more. Learn more about realizing the value of quantum computing today and how we’re shaping the quantum-driven industrial and societal advancements of tomorrow: www.dwavequantum.com.Forward-Looking StatementsCertain statements in this press release are forward-looking, as defined in the Private Securities Litigation Reform Act of 1995. These statements involve risks, uncertainties, and other factors that may cause actual results to differ materially from the information expressed or implied by these forward-looking statements and may not be indicative of future results. These forward-looking statements are subject to a number of risks and uncertainties, including, among others, various factors beyond management’s control, including the risks set forth under the heading “Risk Factors” discussed under the caption “Item 1A. Risk Factors” in Part I of our most recent Annual Report on Form 10-K or any updates discussed under the caption “Item 1A. Risk Factors” in Part II of our Quarterly Reports on Form 10-Q and in our other filings with the SEC. Undue reliance should not be placed on the forward-looking statements in this press release in making an investment decision, which are based on information available to us on the date hereof. We undertake no duty to update this information unless required by law. Media Contacts:D-WaveAlex Daiglemedia@dwavesys.com |
0001907982-24-000081:exh_9911.htm | 0001907982-24-000081 | 1,907,982 | 1,907,982 | D-Wave Quantum Inc. (QBTS, QBTS-WT) (CIK 0001907982) | ['QBTS', 'QBTS-WT'] | 8-K | 8-K | 2024-07-08 | 2024-07-08 | 001-41468 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-41468&action=getcompany | 241,105,578 | EX-99.1 | EX-99.1 | 7.01 | https://www.sec.gov/Archives/edgar/data/1907982/000190798224000081 | https://www.sec.gov/Archives/edgar/data/1907982/000190798224000081/0001907982-24-000081-index.html | https://www.sec.gov/Archives/edgar/data/1907982/000190798224000081/exh_9911.htm | EX-99.1 2 exh_9911.htm EX-99.1 DocumentZapata AI and D-Wave Quantum Announce Expanded Partnership to Accelerate Development and Delivery of Generative AI PlatformsPartnership leverages Zapata’s leading AI software and development platform to enhance D-Wave’s Leap™ cloud service to support quantum, hybrid quantum, and classical Generative AI solutionsBOSTON, MA; PALO ALTO, CA — July 8, 2024 — Zapata Computing Holdings Inc. (“Zapata AI”) (Nasdaq: ZPTA), a leader in Industrial Generative AI software solutions, and D-Wave Quantum Inc. (NYSE: QBTS) (“D-Wave”), a leader in quantum computing systems, software, and services, and the world’s first commercial supplier of quantum computers, today announced a significant expansion to their joint commercial partnership, designed to accelerate the development and delivery of integrated quantum and generative AI solutions in D-Wave’s Leap cloud platform. The new agreement leverages Zapata’s proprietary Universal Generative AI software for rapid development and builds upon D-Wave’s Leap™ real-time quantum cloud service to support quantum, hybrid quantum, and classical AI solutions. The joint development work will focus on improved and more energy efficient model training, more performant models, and the synergistic use of Generative AI and quantum optimization. “We are pleased to expand our go-to-market and technology partnership with a visionary leader in quantum computing, and to deepen the strategic collaboration between our teams,” said Christopher Savoie, CEO and co-founder of Zapata AI. “In addition to the business value we’re delivering to customers through our Universal Generative AI solutions, which combine time-series data computational models and large language model (LLM) optimization, this agreement also enables Zapata to provide the precious compute capacity which enterprises are so desperate for as they deepen their investment in generative AI applications to solve complex business problems.”The expanded partnership comes as quantum computing is beginning to demonstrate how it could enable more accurate and efficient AI model training, as well as leveraging the predictive capabilities of AI to deliver better-optimized business processes. Quantum computing stands to supercharge AI for certain enterprise use cases and drive sustainability, lower cost, and operational efficiency. This means quantum computing could help boost AI advancement for complex, massively scaled computational models, deep learning, natural language processing, and computer vision – without consuming enormous amounts of energy.“Our strategic relationship with Zapata AI brings us another step closer to delivering to our customers the transformative combined power of Universal Generative AI and quantum computing in a single cloud platform,” said Dr. Alan Baratz, CEO of D-Wave. “Zapata AI has been pioneering quantum-based generative modeling for over five years, well before generative AI stole headlines and became a mainstream enterprise priority. We are excited to deepen our partnership with Zapata and leverage their industry-leading algorithmic capabilities and scientific expertise to bring a quantum-enabled generative AI platform to market.”The commercial expansion includes a one-year Enterprise subscription license to Orquestra®, Zapata AI’s robust software development and collaboration platform for building and deploying Universal Generative AI applications at scale, along with Enterprise Solutions support for use case research, prototype configuration, and application piloting.About Zapata AIZapata AI (Nasdaq: ZPTA) is the Industrial Generative AI company, revolutionizing how enterprises solve complex operational challenges with its powerful suite of generative AI software applications and its cutting-edge Orquestra® platform. By combining time series data and text-based computational models and custom software applications to power industrial-scale solutions, Zapata AI enables enterprises and government entities to drive growth, operational efficiency, and critical business insights. With Zapata’s proprietary enterprise and scientific solutions, and the Orquestra® platform, Zapata AI is accelerating Generative AI’s impact across industries by delivering products which are higher performing, less costly, more accurate and expressive than current, classical approaches to AI. The Company was founded in 2017 and is headquartered in Boston, Massachusetts with offices around the world.About D-Wave Quantum Inc.D-Wave is a leader in the development and delivery of quantum computing systems, software, and services, and is the world’s first commercial supplier of quantum computers—and the only company building both annealing quantum computers and gate-model quantum computers. Our mission is to unlock the power of quantum computing today to benefit business and society. We do this by delivering customer value with practical quantum applications for problems as diverse as logistics, artificial intelligence, materials sciences, drug discovery, scheduling, cybersecurity, fault detection, and financial modelling. D-Wave’s technology has been used by some of the world’s most advanced organizations including Mastercard, Deloitte, Davidson Technologies, ArcelorMittal, Siemens Healthineers, Unisys, NEC Corporation, Pattison Food Group Ltd., DENSO, Lockheed Martin, Forschungszentrum Jülich, University of Southern California, and Los Alamos National Laboratory.Forward-Looking StatementsThis press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended, that are subject to risks and uncertainties and are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements generally are accompanied by words such as “aim,” “believe,” “may,” “will,” “intend,” “evolve,” “expect,” “should,” “would,” “plan,” “predict,” “potential,” “progress,” “seem,” “seek,” “future,” “outlook,” and similar expressions that predict or indicate future events or trends or that are not statements of historical matters. With respect to Zapata AI, these forward-looking statements include, but are not limited to, statements regarding anticipated interest by telecommunication companies in its offerings and the ability of its technology to transform the telecommunications industry. These statements are based on the current expectations of Zapata AI’s management and are not predictions of actual performance. With respect to D-Wave, these forward-looking statements include, among others, various factors beyond D-Wave’s management’s control, including the risks set forth under the heading “Risk Factors” discussed under the caption “Item 1A. Risk Factors” in Part I of its most recent Annual Report on Form 10-K or any updates discussed under the caption “Item 1A. Risk Factors” in Part II of its Quarterly Reports on Form 10-Q and in its other filings with the Securities and Exchange Commission. The inclusion of forward-looking statements should not be regarded as a representation that such plans, estimates and expectations will be achieved. Readers are cautioned not to place undue reliance on the forward-looking statements contained herein, which speak only as of the date hereof. Neither Zapata nor D-Wave undertakes any obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law. Risks and uncertainties that could cause Zapata’s actual results to materially differ from those described in the forward-looking statements include, but are not limited to, (i) failure to realize the benefits expected from the business combination; (ii) its ability to successfully market and deploy its Generative AI solutions to telecommunications companies (iii) a decline in the price of its securities if it fails to meet the expectations of investors or securities analysts; (iv) its ability to attract new customers, retain existing customers, and grow; competition in the generative AI industry; (v) its ability to raise additional capital on non-dilutive terms or at all; (vi) its ability to improve its operational, financial and management controls; (vii) failure to maintain and enhance awareness of its brand; (viii) increased costs associated with operating as a public company; (ix) protection of proprietary rights; intellectual property infringement, data protection and other losses; and (x) other risks and uncertainties described in its filings with the Securities and Exchange Commission. Contacts:For Zapata AIMedia: press@zapata.ai Investors: investors@zapata.ai For D-Wave QuantumMedia: media@dwavesys.comInvestors: ir@dwavesys.com |
0000950170-24-114883:phun-ex99_1.htm | 0000950170-24-114883 | 1,665,300 | 1,665,300 | Phunware, Inc. (PHUN) (CIK 0001665300) | ['PHUN'] | 8-K | 8-K | 2024-10-16 | 2024-10-16 | 001-37862 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-37862&action=getcompany | 241,373,859 | EX-99.1 | EX-99.1 | 7.01,9.01 | https://www.sec.gov/Archives/edgar/data/1665300/000095017024114883 | https://www.sec.gov/Archives/edgar/data/1665300/000095017024114883/0000950170-24-114883-index.html | https://www.sec.gov/Archives/edgar/data/1665300/000095017024114883/phun-ex99_1.htm | EX-99.1 2 phun-ex99_1.htm EX-99.1 EX-99.1 Phunware Issues Letter to Stockholders and Announces Business Update Phunware Announces Next Generation AI-Driven SaaS Platform Targets expansion into the Global Mobile App Market expected to exceed $420 Billion by 2028 Austin, TX - October 16, 2024 - Phunware, Inc. (NASDAQ: PHUN) ("Phunware" or the "Company"), a leader in cloud enterprise solutions for mobile applications and related technologies, today issued a letter to stockholders from Mike Snavely, the Chief Executive Officer of Phunware, providing an update on Phunware's existing and new business units and performance and achievements during 2024. The letter provides insight into Phunware's transition to a new generative AI-based software development platform and several other new business initiatives, and its avenues for continued growth and success in 2025. Dear Fellow Stockholders: A letter to Stockholders is often written after the end of the year to reflect on successes and challenges and to share insights for the road ahead. However, the past few years have been anything but a normal path for Phunware and as I reflect on my first year as CEO, I felt the time was right to update you on 2024 and to share our vision for 2025 and beyond. Our primary focus is to create value for our stockholders. One key measure of that is our market capitalization which has varied from $12M late last year to a high of about $120M in the first quarter, settling at about $55M as of the writing of this letter. It’s certain that some of our stockholders’ positions have benefited from this price volatility and some have not. We acknowledge this by saying that we have always acted, and will continue to act, in what we see as the best long-term interests of our stockholders. Often, volatility drives opportunity, and over the months we have used the trading volume and price volatility to raise capital to stabilize the balance sheet and to provide the capital required to think bigger. This letter explains what we intend to do with that capital. We couldn’t be more optimistic about our future, and I want to briefly share what we have been doing to strengthen our core business, enhance our operations and right-size our cost structure in service of our strategic vision. More importantly, I am excited to highlight new initiatives we are launching. I believe these steps will help the market at large see why we believe we are a great investment and that our best days are ahead of us. I’ll remind you of our recent performance: so far this year, we have lowered our cash burn by more than half and have increased sales by two orders of magnitude in the first half of 2024 as compared to the same period in 2023. Phunware PR - Shareholder Letter (October 2024).v5 Six Months Ended 2024 2023 Change Bookings (contracts executed) $ 1,746 $ 168 939% Revenue 1,932 2,640 -27% Gross profit 994 610 63% Net loss from: Continuing operations (4,923) (8,126) 39% Discontinued operations (2,667) 100% Loss per share from: Continuing operations (0.65) (3.90) 83% Discontinued operations (1.28) 100% We believe our sales engine is just getting underway As we move toward the end of the year and into 2025, we continue to do the blocking and tackling to continue to sell and grow revenue. We have been able to recruit seasoned sales and marketing talent to help us get our message out to more customers and to win more deals. We are also announcing various initiatives to unlock additional markets and to position ourselves as the most advanced and highest potential company in mobile globally. Our Software Business continues to evolve to pick up new efficiencies and to unlock new markets Phunware PR - Shareholder Letter (October 2024) candidate final2 Phunware is a market leader in providing enterprise cloud solutions for mobile applications. Our location-based services and patented wayfinding technology sets us apart from our competitors, providing real-time indoor navigation with unmatched precision and customization. Our technology for seamless transition from indoor wayfinding to outdoor location sharing and geofencing is best in class. Phunware is widely known for creating first rate custom mobile applications for large enterprise customers with complex needs to engage with their end users and to facilitate profitable engagements and experiences. Our software development platform for mobile applications is currently designed to create fully customizable apps and provide related services for larger enterprises. In the first half of 2024, we have seen dramatic growth (939% over the comparable period in 2023) in bookings. Our customers like what we do for them and notably we are getting terrific word of mouth references, accelerating our growth in major customers. Finally, we have added new features and functionalities to our existing products, including artificial intelligence features like an AI Personal Concierge for property guests and Intelligent Reporting for property owners. Leveraging the Power of Generative AI, our Platform Will Enable Rapid Development and Monetization of Custom Mobile App Solutions Today, we are announcing the development of a new generative AI-based platform designed to democratize access to world-class design, user experience and content creation so that businesses of any size can design, create, build, and deploy high-quality custom mobile applications in days or even hours. By leveraging generative AI, we believe that the new platform will simplify mobile app design and content creation and drastically reduce the need for expensive and time-consuming design and development investments. This platform marks the next chapter in Phunware’s evolution, building on a decade and a half of providing custom mobile app solutions to several thousand U.S. and global customers, including some of the most recognized Fortune 100 & 500 brands. The platform is designed to harness and integrate the power of generative AI to enable all businesses to quickly develop and monetize custom mobile app solutions, making them accessible to small and medium-sized businesses. We also expect to add new AI-related features and functionalities to all of Phunware’s mobile app offerings, reinforcing our position as a leader and innovator in the continually-growing mobile app market. Phunware’s Competitive Advantages in a Multi-Billion Dollar Global Mobile App Market Our planned incorporation of AI into our SaaS platform is driven by our view that consumer engagement with mobile-first solutions and artificial intelligence technology will continue to play a critical role across industries. Key competitive advantages of this platform will include: Phunware PR - Shareholder Letter (October 2024) candidate final3 ▪AI-Driven Customization: Generative AI frameworks provide customizable templates for rapid mobile app creation, reducing development costs and accelerating time-to-market, and include important features and functionalities such as AI-powered personal concierge and contextual engagement. ▪End-to-End Modular Design: Our independent software modules, such as location-based services, digital advertising tools such as programmatic advertising and real-time data analytics support flexible audience building and engagement strategies. ▪Advanced Location-Based Services (LBS): Our market leading indoor navigation and outdoor geofencing systems continue to offer even more precise geopositioning and collection of user data using a combination of GPS, Wi-Fi, BLE, and sensor data for customized on-venue user engagement in sectors such as hospitality, healthcare, retail, residential, sports and convention centers, gaming facilities and other verticals involving large real properties or portfolios of properties. ▪Data Analytics: Our enhanced review and analysis of data of mobile app usage and user behaviors support assessment of intent and other metrics to drive user engagement, conversion and retention. ▪Multi-Industry Capability: Our platform is designed to provide low- or no-code custom mobile apps across a range of sectors, from hospitality and healthcare to other verticals such as advocacy, retail and ecommerce in the U.S. and other leading economies including China, Brazil and India. The adoption of our generative AI-powered SaaS platform is expected tol benefit our existing customers and all industry verticals and create meaningful opportunities for accessing new markets. Our platform is designed to automate the development intake process, reduce development costs and time-to-market, and enable innovation and user engagement through AI. We are leading the way to make AI-powered mobile applications accessible to enterprise and small- and medium business customers alike. We expect our new AI-powered SaaS platform will launch mid-2025. We also expect to further integrate AI and machine learning capabilities into our new platform in 2025. We intend to integrate AI-driven predictive analytics into the platform by Q3 2025, providing businesses with advanced tools for analyzing customer data to predict future behaviors. We also expect the new platform to offer seamless integrations of its mobile apps with additional cloud service providers, ensuring modern scalability, flexibility, efficiency and security for businesses of all sizes. Digital Advertising Business We also have a growing business in providing digital advertising campaigns for a range of customers. We work with agencies and directly with our own customers, from public companies to non-profit organizations to governmental entities. We place general awareness, Phunware PR - Shareholder Letter (October 2024) candidate final4 performance-based and retargeting advertising campaigns for our customers, enabling them to successfully reach their audiences and achieve their marketing objectives. We have provided digital advertising and related placements to hundreds of customer campaigns 2024 to date and continue to see strong demand for these services. We plan to expand our digital advertising platform in several additional ways. We intend to relaunch our programmatic advertising capabilities into our core mobile platform. This will enable us to help our customers conduct more efficient, scalable digital advertising campaigns through our platform and through partnerships or alliances with one or more third-party programmatic advertising platforms. The integrated solution will be designed to utilize generative AI to help our customers personalize their digital advertising campaigns to individual users based on behavior, preferences and demographics to enhance user engagement and increase conversions. Finally, we intend to serve a global audience with these capabilities, tied to our mobile application portfolio growth. Voter / Advocacy Engagement Business We are also planning to invest in the application of our AI-powered platform to advocacy and voter engagement. You will recall that we developed and implemented the Donald J. Trump 2020 Presidential Campaign app, a highly regarded and well received voter / advocacy engagement app. We think this was just the tip of the iceberg. Every election cycle, candidates set new records in spending and we believe that our AI-powered platform can help make that spend more impactful. Further, we believe that it is more important than ever for Phunware to help political candidates and voters connect, engage and participate in the voting process, and for individuals and organizations to become knowledgeable about, educate others about, and advocate for events, causes and issues that are important to them. Our platform can help them do just that. We plan to continue to use our AI-powered platform to develop custom mobile apps for election campaigns, political action committees, and other organizations to identify, engage and turn out voters. Our mobile advertising solutions will be a part of driving voter engagement as well. We may invest in and partner with other technology providers and organizations that use mobile technologies to drive voter and advocacy engagement. We will likely pursue these opportunities both in the U.S. and with strategic partners and alliances globally. Financial Strength Our spend has been adjusted to fit the size of our business today and to focus investment on the future. We believe that sober execution against our business plan is the right way to deliver long-term stockholder value and we are focused on the careful stewardship of the company to bring our vision to life. A.We have zero debt and believe we have adequate access to the necessary resources to support our investments and sustain our business as we invest in the evolution and growth of our company Phunware PR - Shareholder Letter (October 2024) candidate final5 B.We have seen dramatic improvement to our year-to-date software and advertising business bookings which we believe demonstrates a growing demand for our software and advertising offerings C.We are judiciously investing in sales, engineering, AI, marketing and business development to fulfill our vision for the company’s future We have not said much in the markets recently. In retrospect, we’ve probably said too little. Moving ahead, we intend to continue to provide our stockholders with additional updates on our businesses and products from time to time. Our focus will remain on platform launch, product roadmaps and timelines; innovation; operational efficiency; building thought leadership; and inorganic growth, including tactical and strategic acquisitions, investments, partnerships and alliances. And we will endeavor to keep stockholders advised of significant occurrences every step of the way. I’ll end where I started…I believe Phunware’s best days are ahead. We look forward to continuing to create and enhance value for our stockholders, customers, employees and the consumers who use our products. Thank you for your ongoing support. Mike Snavely Chief Executive Officer About Phunware Phunware, Inc. (NASDAQ: PHUN) is an enterprise software company specializing in mobile app solutions. We provide businesses with the tools to create, implement and manage custom mobile applications and analytics, digital advertising and location-based services. Phunware is transforming mobile engagement by delivering scalable and personalized mobile app experiences. Phunware’s mission is to achieve unparalleled connectivity and monetization through widespread adoption of Phunware mobile technologies, by leveraging brands, consumers, partners and digital asset holders and market participants. Phunware is poised to expand its software products and services audience and industry verticals through its new platform, utilize and monetize its patents and other intellectual property rights and interests, and update and reintroduce its digital asset ecosystem for existing holders and new market participants. For more information, please visit https://www.ai.phunware.com or contact: Phunware PR - Shareholder Letter (October 2024) candidate final6 MZ Group, North America Joe McGurk, Managing Director917-259-6895PHUN@mzgroup.us Phunware Investor Relations: CORE IR516-222-2560investorrelations@phunware.com Safe Harbor / Forward-Looking Statements This press release includes forward-looking statements. All statements other than statements of historical facts contained in this press release, including statements regarding our future results of operations and financial position, business strategy and plans, and our objectives for future operations, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “expose,” “intend,” “may,” “might,” “opportunity,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “will,” “would” and similar expressions that convey uncertainty of future events or outcomes are intended to identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. For example, Phunware is using forward-looking statements when it discusses the proposed offering and the timing and terms of such offering and its intended use of proceeds from such offering should it occur. The forward-looking statements contained in this press release are based on our current expectations and beliefs concerning future developments and their potential effects on us. Future developments affecting us may not be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) and other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the heading “Risk Factors” in our filings with the SEC, including our reports on Forms 10-K, 10-Q, 8-K and other filings that we make with the SEC from time to time. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. These risks and others described under “Risk Factors” in our SEC filings may not be exhaustive. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and developments in the industry in which we operate Phunware PR - Shareholder Letter (October 2024) candidate final7 may differ materially from those made in or suggested by the forward-looking statements contained in this press release. In addition, even if our results or operations, financial condition and liquidity, and developments in the industry in which we operate are consistent with the forward-looking statements contained in this press release, those results or developments may not be indicative of results or developments in subsequent periods. Phunware PR - Shareholder Letter (October 2024) candidate final8 |
0001973047-25-000011:ex99_1.htm | 0001973047-25-000011 | 1,973,047 | 1,973,047 | MARKY CORP. (MRKY) (CIK 0001973047) | ['MRKY'] | 8-K | 8-K | 2025-05-30 | 2025-05-30 | 000-56668 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=000-56668&action=getcompany | 251,010,324 | EX-99.1 | EXHIBIT 99.1 | 1.01,7.01,9.01 | https://www.sec.gov/Archives/edgar/data/1973047/000197304725000011 | https://www.sec.gov/Archives/edgar/data/1973047/000197304725000011/0001973047-25-000011-index.html | https://www.sec.gov/Archives/edgar/data/1973047/000197304725000011/ex99_1.htm | EX-99.1 3 ex99_1.htm EXHIBIT 99.1 MARKY Corp. Announces Strategic Partnership to Develop Generative AI-Driven Tools On May 28, 2025, MARKY Corp. ("the Company") entered into a strategic partnership with Shenzhen Wanhongxin Trading Co., Ltd, a leading innovator in the fashion-industry based in Shenzhen, China, to develop a suite of generative AI-driven tools. This collaboration aims to leverage generative artificial intelligence to create innovative tools capable of generating or modifying content such as images and text. The partnership combines MARKY Corp.'s hardware support with Shenzhen Wanhongxin Trading Co., Ltd's technical expertise and development capabilities to jointly research, design, and develop generative AI software. Objective: The partnership focuses on developing generative AI tools that utilize patterns and relationships learned from vast datasets to create new content based on prompts or instructions. Roles and Contributions: MARKY Corp. will provide necessary hardware support. Shenzhen Wanhongxin Trading Co., Ltd will supply technical expertise and development capabilities. Both parties will collaborate on the research, design, and development of the generative AI software. Next Steps: The parties will work toward a detailed cooperation agreement within six months from the signing of this strategic agreement, outlining specific terms, timelines, and responsibilities for the development and deployment of the AI tools. Forward-looking statements This press release contains forward-looking statements that involve risks and uncertainties. These statements reflect MARKY Corp.’s current expectations regarding future events and are based on management’s beliefs and assumptions. Actual results could differ materially from those projected due to various factors, including market conditions, competition, and the successful integration of acquired operations. Investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. MARKY Corp. undertakes no obligation to update or revise any forward-looking statements, except as required by law. Investor Relations Contact Email: DickyChung_mrky@outlook.com (Chung Ling Cheong Dicky, the Chief Executive Officer and Director) |
0001477932-25-000732:nexscient_ex991.htm | 0001477932-25-000732 | 1,976,663 | 1,976,663 | Nexscient, Inc. (NXNT) (CIK 0001976663) | ['NXNT'] | 8-K | 8-K | 2025-02-05 | 2025-02-05 | 333-274532 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=333-274532&action=getcompany | 25,594,303 | EX-99.1 | PRESS RELEASE | 8.01,9.01 | https://www.sec.gov/Archives/edgar/data/1976663/000147793225000732 | https://www.sec.gov/Archives/edgar/data/1976663/000147793225000732/0001477932-25-000732-index.html | https://www.sec.gov/Archives/edgar/data/1976663/000147793225000732/nexscient_ex991.htm | EX-99.1 2 nexscient_ex991.htm PRESS RELEASE nexscient_ex991.htmEXHIBIT 99.1 PRESS RELEASE Nexscient® Signs LOI for Acquisition of Generative AI Application AI-Powered Media Toolkit for Content Creation LOS ANGELES, CA / ACCESSWIRE / FEBRUARY 5, 2025 / -- Nexscient, Inc. (OTCQB: NXNT), a leading innovator in artificial intelligence (“AI”) applications and intelligent enterprise solutions, today announced the signing of a non-binding Letter of Intent (“LOI”) to acquire AI Media Toolkit, a software application that offers seamless access to a consolidated array of Generative AI (“GenAI”) tools. Facilitated by its NXNT Labs division, Nexscient plans to incorporate AI Media Toolkit into a Software-as-a-Service (“SaaS”) platform that will offer clients a flexible subscription service to a unified suite of GenAI tools. The SaaS platform expects to deliver a simplified user experience, allowing subscribers to access advanced GenAI capabilities, such as text generation, image creation, video synthesis, and audio production, all through an intuitive interface. This approach eliminates the need for expensive infrastructure or extensive technical expertise, enabling organizations to quickly integrate AI-driven solutions into their workflows. Additionally, the subscription model will offer businesses the ability to scale their usage based on demand, making it a cost-effective solution for enterprises navigating the dynamic landscape of content creation. "The addition of AI Media Toolkit to our portfolio marks a significant milestone in our mission to revolutionize enterprise solutions with cutting-edge artificial intelligence,” stated Fred E. Tannous, CEO of Nexscient, Inc. “As the demand for GenAI tools continues to grow, this strategic move positions Nexscient as a key player in enabling businesses to harness the power of AI for seamless, efficient, and innovative content creation. We are excited about the opportunities this acquisition will bring, not only for our company but also for the industries we serve." The demand for AI-powered content creation tools has surged in recent years, driven by the rapid expansion of digital media, e-commerce, and personalized marketing. According to a research report published by Custom Market Insights, the Global AI Powered Content Creation Market was valued at $2.3 Billion in 2024 and is expected to reach $7.9 Billion by 2033, growing at a Compounded Annual Growth Rate (“CAGR”) of 7.7% during the forecast period, reflecting the growing reliance on advanced technologies to meet the needs of a dynamic and competitive digital landscape. Businesses are increasingly seeking scalable, cost-effective solutions to generate high-quality content for social media, websites, advertising campaigns, and customer engagement. By offering the AI Media Toolkit as a unified subscription service, Nexscient is not only simplifying access to cutting-edge AI tools but also building a recurring revenue stream that supports the company’s long-term growth strategy. This move further underscores Nexscient’s dedication to democratizing AI technologies and empowering enterprises to achieve greater creativity, efficiency, and scalability in their content creation processes. 1 About Nexscient, Inc. Nexscient® is an emerging-growth company that’s building a collaborative network of intelligent enterprise applications and technologies through internal development, synergistic acquisitions, and capital investments in companies involved in machine learning, artificial intelligence, and the Industrial Internet of Things technologies. Our flagship product, AegisOne, introduces a subscription-based, Software-as-a-Service platform that incorporates innovative technologies to offer intelligent enterprise solutions for businesses across several industries. As part of our growth strategy, we also seek to acquire and integrate synergistic companies and technologies into our collaborative network, further expanding our service offerings while enhancing shareholder value. For more information, please visit https://nexscient.ai. Forward-Looking Statements This release contains statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements appear in a number of places in this release and include all statements that are not statements of historical fact regarding the intent, belief or current expectations of Nexscient, Inc., its directors or its officers with respect to, among other things: (i) financing plans; (ii) trends affecting its financial condition or results of operations; (iii) growth strategy and operating strategy; and (iv) performance of our products and services. You can identify these statements by the use of the words “may,” “will,” “could,” “should,” “would,” “plans,” “expects,” “anticipates,” “continue,” “estimate,” “project,” “intend,” “likely,” “forecast,” “probable,” “potential,” and similar expressions and variations thereof are intended to identify forward-looking statements. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, many of which are beyond Nexscient, Inc.’s ability to control, and actual results may differ materially from those projected in the forward-looking statements as a result of various factors. These risks and uncertainties also include such additional risk factors as are discussed in the Company’s filings with the U.S. Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended June 30, 2024, Forms 10-Q and 8-K, and in other filings we make with the Securities and Exchange Commission from time to time. These documents are available on the SEC Filings section of the Investor Relations section of our website at https://nexscient.ai. The Company cautions readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made. ####### COMPANY CONTACT: Investor Relations ir@nexscient.com (800) 785-6070 2 |
0001193125-23-139405:d469463dex991.htm | 0001193125-23-139405 | 1,819,404 | 1,819,404 | Nerdy Inc. (NRDY) (CIK 0001819404) | ['NRDY'] | 8-K | 8-K | 2023-05-09 | 2023-05-09 | 001-39595 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-39595&action=getcompany | 23,901,976 | EX-99.1 | EX-99.1 | 2.02,9.01 | https://www.sec.gov/Archives/edgar/data/1819404/000119312523139405 | https://www.sec.gov/Archives/edgar/data/1819404/000119312523139405/0001193125-23-139405-index.html | https://www.sec.gov/Archives/edgar/data/1819404/000119312523139405/d469463dex991.htm | EX-99.1 2 d469463dex991.htm EX-99.1 EX-99.1 Exhibit 99.1 nerbyQ1 | 2023 Earnings Release Guided Study Hall Wednesdays, 3-4PM (ET) Intro to Geometry Thursdays, 4:30-5:30PM (ET) A Note to Our Shareholders I am pleased to share that in the first quarter: One year ago, we unveiled an ambitious plan to evolve our products and revenue model toward long-term recurring ‘always-on’ relationships with our customers. We created new subscription and recurring revenue products, including Learning Memberships for Consumers and Teacher Assigned and On Demand products for Institutional customers, that were built specifically to address the ongoing support we believed both types of customers needed and desired. We shared that we believed these new models would provide a superior platform for innovation by allowing us to bring together multiple different product capabilities we had developed into a comprehensive all-access offering that enabled Learners to receive the help they need across multiple learning formats, thousands of subjects, and multiple academic calendar years. In addition to allowing us to provide a better and more personalized experience to Learners, the new operating model would be far more efficient to operate, allowing us to drive operating leverage, simplify our sales model, and shift additional resources toward net new innovation, including the application of AI for HI® or Artificial Intelligence for Human Interaction. To get to this evolved state we shared that this new model would require trading off revenue recognition in the short-term because our Package model had more front-loaded revenue recognition than the Learning Membership model where subscription revenue is recognized linearly over time. We expected that by the start of the second quarter in 2023 the cumulative build of recurring revenue from Learning Membership customers would cause us to return to growth in our Consumer business, as well as for the total company, but now with a product suite and revenue model we believed would position us for higher levels of growth, profitability, and predictability in the years to come. We stated that we expected our new business model to deliver substantial operating efficiencies and that we anticipated achieving adjusted EBITDA profitability by the end of 2023. ● We exited the ‘J-Curve’ business model transition and returned to growth delivering $49.2 million of revenue, above our guidance range of $45-47 million. ● Learning Membership subscriptions accounted for 60% of total company recognized revenue, up from nearly 0% in the first quarter last year, demonstrating strong product market fit. ● Our Institutional business delivered record revenue of $8.5 million, an increase of 32% year-over-year, representing 17% of total revenue in the first quarter. ● Our evolution to Learning Memberships and the application of AI drove continued growth and improvement in customer lifetime values relative to our package model (as visualized later in this letter) and together were a key contributor to our strong operating results and improved profitability. ● We achieved Adjusted EBITDA profitability in the first quarter, nine months earlier than our stated goal of the fourth quarter of 2023, delivering nearly 1,700 bps of improvement year-over-year and $1.4 million of adjusted EBITDA. ● We delivered $6.8 million of positive operating cash flow, and $5.8 million of free cash flow. ● We recently achieved a major milestone by surpassing 10 million hours of live one-on-one tutoring delivered on our Live Learning Platform since launch. ● We made substantial progress on acceleratingthe use of AI throughout our business, includinglaunching two new customer-facing productsthat leverage generative AI, as well asaccelerating the use of AI to drive substantialoperating efficiencies and internal productivityimprovements. ● We saw positive new customer addition andengagement trends in the first quarter that havecontinued into April and May and comparefavorably to our normal seasonality and internalexpectations. Q1 Earnings Release 2023 2 AI for HI® Artificial Intelligence for Human Interaction is Transforming and Enhancing our Business at a Rapid Pace As we shared with you in our prospectus two years ago when we made our intention to become a publicly listed company known, we’ve long believed that AI can fundamentally transform how people learn. Over the past six plus years we have been applying AI to our business, products, and operational processes. AI has been foundational to our ability to improve quality, enhance personalization, and decrease the cost of our offerings. AI powers our ability to identify the highest quality Experts, assess Learners’ foundational knowledge, help ensure the right Expert-Learner match, and drive operational efficiency, among many other use cases. We described the proprietary technology infrastructure we were building as AI for HI® or Artificial Intelligence for Human Interaction, and outlined the core foundational capabilities we apply to live learning to enhance the interaction in ways that were not previously possible. Through the application of AI, we provide Experts and Learners with superpowers that are transforming live online learning. We credit our orientation around AI for HI® for allowing us to reach the milestone of having recently delivered our 10 millionth hour of live, one-on-one tutoring on our Live Learning Platform and, more broadly, for allowing us to make good on delivering high-quality, relationship-based live online learning at scale. Q1 Earnings Release 2023 3 As we shared in our prospectus two years ago: There are specific groupings of core competencies, or layers, highlighted below, that we believe to be particularly differentiated and powerful. We collectively call them AI for HI® short for Artificial Intelligence for Human Interaction. The four layers collectively form our operating system that is engineered for learning. Data Lake: We have built a rich database of learning interactions, capturing years of critical Learner and Expert data that we use to optimize learning on our platform. We have accumulated millions of hours of recorded live instruction, instrumented every interaction, captured a multitude of individualized attributes for Learners and Experts, and have built an adaptive self-study platform that records every practice problem and answer. We leverage technology and software to take our vast dataset to build personalized learning pathways and to enhance the learning experience. As the platform grows, the dataset and our cumulative intelligence grows. This enables even more personalization and unlocks powerful network effects that serve as a competitive advantage that is difficult for others to replicate. Curation Layer: The curation layer of the platform utilizes our database of past learning interactions, built over several years through over 100,000 hours of recorded video interviews, to identify critical traits, knowledge, and experience in Experts that correlate to better learning outcomes, which allows us to be highly selective and source the best Experts. Matching Layer: Our AI-powered Learner-Expert matching engine analyzes over 100 high dimensional features per Learner and Expert to identify the Learner-to-Expert combination with the highest projected probability of a successful interaction. Since 2012 our platform has identified over 800,000 successful Learner-to-Expert matches based on over 80 million usable data points generated from Learner and Expert attributes, past matching, learning interactions, website and marketing event interactions, and self- study interactions. Adaptive Learning Layer: Our platform delivers personalized learning at scale. The system adapts after every learning interaction, which matures and compounds its intelligence to deliver increasingly better guidance to the Learner. Model-derived insights using our rich database of past interactions and Learner attributes continuously adapt the sequencing of the content and learning after every learning interaction, which personalizes the learning path to mastery. Interaction Layers: We have designed our platform to optimize the Learner-Expert interaction through two-way video, collaborative workspaces purpose-built for learning, a companion app to enhance the interactivity of sessions in real- time, reference tools, proprietary and third party content integrations, and additional subject-specific tools. These features enable effective on-demand, integrated and personalized live learning interaction that increases engagement and Learner satisfaction. Our interactive learning platform serves multiple learning formats meeting the individual preferences of each Learner and empowering them to acquire knowledge in any chosen subject. Q1 Earnings Release 2023 4 Two years and many product enhancements later, these layers continue to serve as our operating system for delivering live online learning. As a result of the investments we have made in instrumentation and data capture over the past 10 million hours of live face-to-face tutoring, as well as our practical experience driving both enhanced personalized learning interactions and business outcomes like revenue growth and operating efficiency through the application of AI, we believe we stand to benefit tremendously from the latest advancements in generative AI. The speed of innovation occurring at Nerdy is both stunning and invigorating and we are actively infusing generative AI into our products to supercharge human interaction, deliver on the promise of hyper-personalized online learning and instruction, drive operating efficiency, and generally enhance the effectiveness and efficiency of our platform. What has maybe been most exciting is seeing how the pace of innovation and what our internal teams have accomplished over the last 90 days. As internal access to generative AI tools has expanded, we are seeing it enhance our team’s quality of work, the speed it takes to complete said work, and open up new possibilities for products and process improvements in a way that previously would not have been feasible or were cost prohibitive. To illustrate the speed of innovation, here is progress we’ve made leveraging AI in just the last quarter: Improved Expert-Learner Matching We first started applying machine learning matching algorithms six plus years ago to begin to detect patterns that no human possibly could to better inform the match between a Learner and an Expert. With thousands of Experts available for a given Learner, taking a technology-first approach to programmatically identifying patterns that were predictive of better learner experiences and outcomes has proven highly effective. Today, we simultaneously test competing machine learning algorithms until one is named the statistical victor and flipped to 100% of the volume for a given segment, then the process repeats. This capability was further enhanced in the second half of 2022 with the completion of ‘thunderdome’, our internal ‘multi-algo’ testing platform. As we capture and better leverage data to inform the Learner Expert match, the quality of the match will continue to improve for both Learners and Experts, in turn leading to a far better learning experience, ultimately driving better customer satisfaction, better learning outcomes, and higher customer lifetime value. Expansion of Learning Formats and Content Our growth flywheel, which we first shared publicly in January 2021, reflects additional learning formats beyond one-on-one as a key contributor to what attracts new Learners to the platform. These additional learning formats, combined with relevant content to the subject being learned, create personalized learning experiences that drive engagement and retention of Learners on the platform. During the first quarter, we leveraged generative AI to launch two previously announced products, AI-Enabled Chat Tutoring and AI Lesson Plan Generator, both of which we believe will be further accelerants to our growth flywheel. Additionally, we have steadily enhanced the availability of asynchronous content on the platform in areas like self-study and computer adaptive diagnostic testing, which has driven higher levels of engagement and customer satisfaction. However, due to the unlimited possibilities of subject, age, complexity, and even nuances between school curriculums, it was not feasible nor possible to have rich levels of content in every single subject that someone could conceivably want to learn. Thanks to advances in generative AI that has now changed and we stand to be a huge beneficiary of being able to infuse high-quality, hyper-personalized content into every conceivable learning experience. We’ve already begun rapidly expanding the depth and breadth of asynchronous content available inside of the platform, which we believe will further meet the recurring needs of our Learners and when combined with live instruction further enhance the value we can deliver. Increased Productivity and Operating Efficiency As of this writing, approximately 30% of our software code is being written by AI; all of our employees have access to in-line generative AI capabilities like GPT-4 and are both encouraged and expected to use it in their work; and we’re now using generative AI to more efficiently solve customer support interactions and automate operational processes, including now broadly leveraging AI-powered support bots across Learner-facing, Expert-facing, and even internally-facing interactions. Our use of AI for customer support call evaluation and feedback has saved us more than $1 million annualized and is leading to higher quality interactions that manifest in either more customers on the platform or more customers electing to continue to learn with us. Looking ahead, we expect to see further wins driving both conversion and retention, as well as improvement in operational efficiency as a result of continued investments in generative AI across our business. Q1 Earnings Release 2023 5 Scaling Learning Memberships We continue to see substantial evidence that validates our belief that the Learning Membership model leads to more attractive unit-level economics, longer duration and higher lifetime value customer relationships, higher gross margin, and a more scalable and efficient operating model. We also remain convinced that this ‘all-access’ business model serves as a better platform for innovation, allowing us to better capture and then apply our proprietary data across product interactions, subjects, and school years to drive better personalization for Learners, a compounding relationship that has allowed us to drive meaningful increases to customer lifetime values over many years. Learning Membership revenue continued to grow at a rapid pace during the first quarter: • Learning Memberships revenue reached an annualized run-rate of approximately $143 million as of March 31, 2023, an increase from $87 million as of December 31, 2022, and nearly $0 in the first quarter of 2022. • Active Members grew to 32.9K as of March 31, 2023, up from 20.2K as of December 31, 2022. • Revenue recognized in the first quarter from Learning Memberships grew to $29.7 million, an $8.9 million or 43% increase from the fourth quarter. • Higher engagement and retention among Learning Membership customers, and an Average Revenue per Member per Month (ARPM) of more than $350 during the first quarter combined to drive continued lifetime value expansion and an accelerated sales and marketing payback period. • Learning Memberships drove significant sales and marketing efficiency gains as a percentage of revenue, improving by over 1,700 bps year-over-year. We continued to execute at a high level during the quarter to further enhance Learning Memberships by extending them to more audiences, testing new membership offerings, and by adding additional products into Learning Memberships. As we look ahead we will continue to improve upon the customer experience, drive higher levels of discoverability across learning modalities, and innovate at a rapid pace. Extending Learning Memberships to More Audiences: During the first quarter, we expanded Learning Memberships to new customer audiences by fully transitioning any purchases by existing Package customers into Learning Memberships, as well as moving 100% of new Test Prep audience customers into Learning Memberships. We plan to transition the Professional audience to Learning Memberships by the end of the year, which will represent a transition to 100% of new customers to our Consumer business to ‘always on’ recurring revenue products. Q1 Earnings Release 2023 6 Testing New Membership Offerings: During the first quarter, we introduced month-to-month Learning Memberships, which are driving higher levels of conversion by alleviating friction in the member experience while increasing the average monthly subscription fee and accelerating the marketing payback period. We also tested into and created additional Learning Membership offerings across our Language and Test Prep audiences. All of these enhancements are oriented around increasing retention and lifetime value by better aligning Learning Memberships to evolving customer needs. Additional Products Added to Learning Memberships: In the first quarter, we also delivered on our commitment to enhance the value provided in Learning Memberships by providing unlimited access to two new products. • AI-Enabled Chat Tutoring enables Learners to receive help from an AI tutor and also involve a live human tutor with the click of a button. Learners are able to get help faster and learn in the way that best suits their needs and objectives at that moment. After piloting this capability in early Q1 and receiving positive feedback and engagement data, we recently expanded access to all Learners on the platform. The primary use case we have seen thus far involves Q&A and shorter and more transactional interactions that are additive to self-study, with students leveraging live video-based learning for their normal lessons but increasing their interaction on the platform in totality via AI-Enabled Chat Tutoring. It is also a good example of how generative AI has enhanced our ability to build a product, in this case encompassing Q&A and homework help, that historically would have required substantial investments in content but now can be done for effectively free and served up to the customer “in-line” at the right moment in the learning journey to keep them learning efficiently and effectively. We consider this modality of engagement to be additive to our suite of learning formats including live one-on-one, small group classes, live stream, on-demand video, asynchronous self- study, and more that make Learning Memberships a comprehensive solution and a compelling offering. • AI-Generated Lesson Plans. In the first quarter, we made substantial progress in taking the AI Lesson Plan Generator from idea, to minimum viable product, to a fully built and value-adding capability deployed across our whole platform and available to all Experts as of late April. With this product, we use generative AI to pre-generate lesson plans, including practice problems and other curriculum content, in advance of tutoring sessions. The lesson plan generator is embedded in the user interface in the Live Learning Platform itself as a dynamic and editable pane that is ever-present during the live video-based tutoring sessions. Experts can use the Lesson plan ‘as is’, or edit it to the needs of the Learner on the fly to further enhance and personalize the content in real time to the needs of the Learner. We consider the ability to create hyper-relevant, hyper-personalized content spanning any subject and any age level Learner an example of a superpower we plan to make available to Experts and Learners that previously would have either been impossible or cost prohibitive. Multi-format engagement has historically been highly correlated with higher retention, higher lifetime value, and customer satisfaction. We also know that high- quality and hyper-relevant content can be additive to live tutoring and can make sessions more productive and effective. With the addition of these new products, we continue to grow the percentage of Learning Membership customers engaging in a non-tutoring format during the first quarter to over 27%, the highest of any full quarter yet. Improving Product Discovery and the Customer Experience: Looking ahead, we’re working to make it easier for Learners to more fully engage with their Learning Membership by improving discovery in an all new member portal. This will include personalized, AI generated learning recommendations that predict and suggest the next product interaction across learning formats and subjects that are most likely to drive engagement and customer value. For this summer, we’ve created compelling content for Learning Members to keep learning over the summer through increased engagement with Academic, College Prep, and Enrichment subjects. Our Summer learning series will feature rich levels of live instruction and content available for anyone in the household and will offer relevant topics to appeal across all age segments like coding, video game creation, college admissions, and financial literacy. We’re also making it easy for Members to manage their membership and tutoring frequency, including the development of new self-service capabilities, which we expect will both enhance the customer experience and drive operating efficiency. Q1 Earnings Release 2023 7 Learning Memberships Monthly recurring revenue product that provides all-inclusive access to our suite of products. As visualized in the chart below, recent cohorts’ cumulative Learning Membership average revenue per customer continues to expand and separate from the historical amount an average Consumer customer would spend over time under our historical package model. We believe these results clearly demonstrate the superior lifetime value of our Learning Membership model. Quarterly Membership Cohorts vs. 2021 Average Monthly Consumer Customer Cohort (by Cumulative Average Revenue per Customer) Learning Membership Product Roadmap Q2 2022 Launch 1-on-1 Tutoring Added in Q3 2022 Unlimited Live Group Classes Starcourse Live and On-Demand Lessons Adaptive Assessments Self Study Modules Added in Q4 2022 Tutor Chat Essay Review Codeverse Month 0 Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Added in Q1 2023 AI-Generated Lesson Plans AI-Enabled Chat Tutoring CONSUMER METRIC S $143M Annualized Run Rate Learning Membership Revenue as of 3/31/2023 32.9K Active Learning Members as of 3/31/2023 $350+ Average Revenue Per Learning Membership Per Month (ARPM) During the First Quarter 27%+ Learning Membership customers engaged in a non- tutoring product during Q1 2023 Q1 Earnings Release 2023 8 Varsity Tutors for Schools During the first quarter, our enhancements to our product suite of High-Dosage Tutoring, Teacher Assigned, and On-Demand, coupled with prior investments in Varsity Tutors for Schools sales and go-to-market organization, resulted in record Institutional revenue of $8.5 million, an increase of 32% year-over-year, and representing 17% of total revenue in the first quarter. Varsity Tutors for Schools executed a record 97 contracts totaling $6.3 million of bookings during the first quarter. Varsity Tutors for Schools engagement trends, including for our new Teacher Assigned product, significantly exceeded our expectations and provide us with confidence that the solutions we have built have strong product market fit and are well suited for meeting the needs of school district partners, teachers, and students and helping students learn at an unprecedented scale. Teacher Assigned continues to deliver against our vision for delivering personalized live learning at district-wide scale while providing unparalleled support and agency for educators. These substantial levels of engagement are occurring across a wide variety of grade levels and subjects; and teacher feedback has been enthusiastic and that they love it. In particular, teachers see Teacher Assigned as a “Co-Teacher” in the classroom empowering them to help more students, ensuring each teacher’s unique insights of individual students and their understanding of classroom curriculum, are all incorporated into one-on-one tutoring sessions. These strong results and continued momentum to start the year give us increased confidence that Varsity Tutors for Schools is well positioned to provide solutions that administrators, teachers and students are seeking to support their evolving needs. As we move throughout the key back-to-school selling season, we expect our Teacher Assigned and On Demand products will represent a growing proportion of Institutional bookings as we remain focused on district- wide bundled solutions and partnerships with larger school districts. In Closing Live human instruction that inspires and motivates, when coupled with AI, is enhancing the state of learning. With recent advances in generative AI, the ability to deliver personalized live instruction at scale for all students is within reach. We look forward to remaining at the forefront of product innovation to enhance our ability to meet the needs of both Consumer and Institutional Learners. We appreciate your continued interest in our Company. CHUCK COHN Founder, Chairman & CEO Q1 Earnings Release 2023 9 Financial Highlights • Revenue Outperforms Guidance – In the first quarter, Nerdy delivered revenue of $49.2 million, above the top end of our guidance range of $45-47 million, and represented an increase of 5% from $46.9 million during the same period in 2022. Revenue growth was driven by the continued evolution towards ‘always on’ recurring revenue products, strong adoption of Learning Memberships, lifetime value expansion, and a return to year-over-year growth in our Consumer business (having exited the J-Curve) coupled with the continued scaling of our Institutional business. • Learning Memberships Deliver Strong Results – Revenue recognized in the first quarter from Learning Memberships grew to $29.7 million or 60% of total revenue, up from 50% of total company revenue recognized in the fourth quarter of 2022. Learning Membership revenue grew to an annualized run rate of $143 million as of March 31, 2023, an increase from $87 million as of December 31, 2022, and nearly $0 in the first quarter of 2022. • Institutional Business Continues to Scale – In the first quarter, Varsity Tutors for Schools executed a record 97 contracts, yielding $6.3 million of bookings. Record Institutional revenue of $8.5 million increased 32% year-over-year and represented 17% of total revenue in the first quarter. Our diversified product portfolio is resonating with school district partners setting us up for continued growth. • Gross Profit Expansion – Gross profit of $33.9 million in the first quarter increased 3% year-over-year. Gross margin of 68.9% for the three months ended March 31, 2023, was approximately 90 bps lower than gross margin of 69.8% during the comparable period in 2022. The increase in gross profit was driven by gross margin expansion across our Consumer audience which was offset by higher than anticipated engagement with our new products in our Institutional business. • Positive Non-GAAP Adjusted Net Earnings and Adjusted EBITDA Achieved – Net loss was $32.2 million in the first quarter versus net loss of $31.7 million in the first quarter of 2022. Excluding non-cash stock compensation expenses and mark-to-market derivative adjustments, adjusted net earnings was $0.5 million for the first quarter of 2023 compared to an adjusted net loss of $8.2 million in the first quarter of 2022. Nerdy delivered adjusted EBITDA of $1.4 million, a nearly 1,700 bps improvement year-over-year in the first quarter (more than 9 months ahead of our stated target) beating our guidance range of an adjusted EBITDA loss of $3.0 million to breakeven. This compares to an adjusted EBITDA loss of $6.6 million in the same period one year ago. Adjusted EBITDA outperformance was driven by higher revenues, sales and marketing efficiency gains, and the pull through of automation and workforce reduction actions stemming from our business model changes that streamline operations. • Free Cash Flow and Liquidity – Cash provided by operating activities was positive $6.8 million in the first quarter of 2023 compared to cash used in operating activities of $0.9 million in the prior year period, resulting in cash and cash equivalent balances increasing by $5.8 million during the quarter ended March 31, 2023. With no debt and $96.5 million of cash on our balance sheet, we believe Nerdy has ample liquidity to fund the business and pursue growth initiatives. • See page 16 for reconciliations of non-GAAP measures to the most directly comparable GAAP financial measure. Q1 Earnings Release 2023 10 2023 Outlook Revenue Guidance For the second quarter and full year, we expect revenue growth will be driven by the continued evolution towards recurring revenue streams, the corresponding build in the number of Learning Membership subscribers, and higher Institutional revenues. Our positive momentum provides us with increased visibility into and confidence in our expectation that we will deliver sequential year-over-year revenue growth each quarter as we move throughout 2023. • For the second quarter of 2023, we expect revenue in a range of $45-47 million. • For the full year 2023, we are raising our revenue targets to $193-200 million; representing 21% growth at the midpoint vs. our 2022 revenue of $162.7 million. Full year revenue guidance reflects our decision to shift 100% of the Consumer business to Learning Memberships by the end of 2023, including the remaining Professional audience. Revenue guidance also reflects normal summer seasonality, including anticipated lower levels of new customer acquisition, consumption, and Learning Membership retention during the summer months when K12 schools and universities are out of session. Additionally, revenue guidance reflects a higher level of High-Dosage Tutoring program utilization by school districts in the spring semester and a return to the normal seasonal pattern of starting new implementations in the fall when school starts (thus shifting revenue into the first two quarters vs. our prior expectation of consistent use throughout the summer). Adjusted EBITDA Guidance Our adjusted EBITDA guidance for both the second quarter and full year reflects the continuing benefits from our recurring revenue products which focus on long-term relationships with higher value customers, an improving gross margin profile, and operating efficiencies stemming from our continued shift to recurring revenue business models. • For the second quarter of 2023, we expect an adjusted EBITDA loss in a range of $3 million to breakeven. • For the full year 2023, we are raising our targets to an adjusted EBITDA loss in the range of $7 million to breakeven. Full year adjusted EBITDA guidance reflects the impact of normal summer seasonality and higher variable costs in the third quarter as we ramp into the back-to-school selling season followed by a return to positive Adjusted EBITDA in the fourth quarter, consistent with prior guidance. Financial Discussion Revenue Revenue for the three months ended March 31, 2023 was $49.2 million, an increase of 5% from $46.9 million during the same period in 2022. Revenue growth was driven by the continued evolution towards ‘always on’ recurring revenue products, strong adoption of Learning Memberships, lifetime value expansion, and a return to year-over-year growth in our Consumer business (having exited the J-Curve) coupled with the continued scaling of our Institutional business. Gross Profit and Gross Margin Gross profit of $33.9 million for the three months ended March 31, 2023 increased by $1.1 million or 3% compared to the same period in 2022. Gross margin of 68.9% for the three months ended March 31, 2023, was approximately 90 bps lower than gross margin of 69.8% during the comparable period in 2022. The increase in first quarter gross profit was primarily driven by gross margin expansion across our Consumer audience which was offset by lower Institutional gross margin primarily due to higher than anticipated engagement with our new offerings. As we evolve towards a greater mix of Learning Memberships revenue, we expect Consumer gross margin to expand throughout 2023. Sales and Marketing Sales and marketing expenses for the three months ended March 31, 2023 on a GAAP basis were $15.6 million, a decrease of $7.4 million from $23.0 million in the same period in 2022. Excluding non-cash stock compensation, sales and marketing expenses for the three months ended March 31, 2023 were $14.7 million, or 30% of revenue, compared to $21.9 million, or 47% of revenue in the same period in 2022, an improvement of approximately 1,700 bps year-over-year. Q1 Earnings Release 2023 11 Sales and marketing spend and efficiency improvements were driven by the transition to Learning Memberships, including the continued expansion of lifetime value, our focus on optimizing the level of marketing spend, and a more efficient operating model in our Consumer business. We also delivered substantial Varsity Tutors for School revenue growth, yielding efficiencies from prior investments in the Institutional sales and go-to-market organization. Consistent with our prior guidance, as Learning Memberships become a greater percentage of total revenue and the Institutional business continues to scale, we expect to yield durable sales and marketing improvements as the business delivers sequential year- over-year revenue growth each quarter as we move throughout 2023. Sales and marketing expenses as a percentage of revenue may fluctuate from quarter to quarter based on Learning Membership sales, the size and volume of Institutional contracts, bookings, consumption patterns that drive revenue levels, seasonality, and the timing of our investments in marketing activities. General and Administrative General and administrative expenses for the three months ended March 31, 2023 on a GAAP basis were $29.7 million, a decrease of $0.8 million from $30.5 million in the same period in 2022. Excluding non-cash stock compensation expenses, general and administrative expenses for the three months ended March 31, 2023 were $19.5 million, or 40% of revenue, compared to $19.1 million, or 41% of revenue in the first quarter of 2022, an improvement of approximately 100 bps year-over-year. Our investments in product development and our platform-oriented approach to growth have allowed us to launch a suite of ‘always on’ subscription products including Learning Memberships for consumers, and our Teacher Assigned and On Demand offerings for Institutional customers. Subscription offerings simplify both the sales process and the operating model needed to support customers. Combined with our ongoing efforts in automation, self-service capabilities, and the application of artificial intelligence and machine learning in our business, we have been able to generate operating efficiencies and remove significant costs from the business. We believe we will be able to further simplify our operating model while growing our business as we move throughout 2023. Net Loss, Non-GAAP Adjusted Net Earnings (Loss), and Non-GAAP Adjusted EBITDA Net loss on a GAAP basis was $32.2 million for the three months ended March 31, 2023, compared to a net loss of $31.7 million in the same period in 2022. Excluding non-cash stock compensation expenses and mark-to- market derivative adjustments, adjusted net earnings was $0.5 million for the first quarter of 2023 compared to an adjusted net loss of $8.2 million in the first quarter of 2022. Non-GAAP adjusted EBITDA was $1.4 million in the first quarter of 2023 compared to an adjusted EBITDA loss of $6.6 million in the first quarter of 2022. For both non-GAAP adjusted net earnings and non- GAAP adjusted EBITDA profitability outperformance was driven by higher revenues, sales and marketing efficiency gains, and the pull through of automation and workforce reduction actions stemming from our business model changes that streamline operations. See page 16 for reconciliations of non-GAAP measures to the most directly comparable GAAP financial measure. Liquidity and Capital Resources As of March 31, 2023, the Company’s principal sources of liquidity were cash and cash equivalents of $96.5 million. Our strong balance sheet provides us with ample liquidity to operate against our plan and pursue growth initiatives. Conference Call Details Nerdy’s management will host a conference call to discuss its financial results on Tuesday, May 9, 2023 at 5:00 p.m. Eastern Time. Interested parties in the U.S. may listen to the call by dialing 1-833-470-1428. International callers can dial 1-929-526-1599. The Access Code is 501332. A live webcast of the call will also be available on Nerdy’s investor relations website at https://www.nerdy.com/investors. A replay of the webcast will be available on Nerdy’s website for one year following the event and a telephonic replay of the call will be available until May 16, 2023 by dialing 1-866-813-9403 from the U.S. or 44-204-525-0658 from all other locations, and entering the Access Code 315153. Contacts press@nerdy.com investors@nerdy.com Q1 Earnings Release 2023 12 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except per share data) Three Months EndedMarch 31, 2023 2022 Revenue $ 49,180 $ 46,925 Cost of revenue 15,290 14,152 Gross Profit 33,890 32,773 Sales and marketing expenses 15,560 22,946 General and administrative expenses 29,700 30,509 Operating Loss (11,370 ) (20,682 ) Unrealized loss on derivatives, net 21,682 11,042 Interest income (833 ) (7 ) Other expense, net 11 17 Loss before Income Taxes (32,230 ) (31,734 ) Income tax expense 23 13 Net Loss (32,253 ) (31,747 ) Net loss attributable to noncontrolling interests (13,322 ) (14,902 ) Net Loss Attributable to Class A Common Stockholders $ (18,931 ) $ (16,845 ) Loss per share of Class A Common Stock: Basic and Diluted $ (0.21 ) $ (0.21 ) Weighted-Average Shares of Class A Common Stock Outstanding: Basic and Diluted 91,776 79,619 REVENUE (Unaudited) (in thousands) Three Months EndedMarch 31, 2023 % 2022 % Consumer $ 40,335 82 % $ 38,918 83 % Institutional 8,540 17 % 6,475 14 % Other (a) 305 1 % 1,532 3 % Revenue $ 49,180 100 % $ 46,925 100 % (a) Other consists of EduNation Limited, a company incorporated in England and Wales (“First Tutors UK”) and other services. Q1 Earnings Release 2023 13 CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (in thousands) March 31,2023 December 31,2022 ASSETS Current Assets Cash and cash equivalents $ 96,520 $ 90,715 Accounts receivable, net 6,333 11,596 Other current assets 4,182 5,345 Total Current Assets 107,035 107,656 Fixed assets, net 12,456 12,504 Goodwill 5,717 5,717 Intangible assets, net 3,465 3,574 Other assets 2,884 3,241 Total Assets $ 131,557 $ 132,692 LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities Accounts payable $ 4,148 $ 3,199 Deferred revenue 22,254 25,539 Other current liabilities 9,157 8,593 Total Current Liabilities 35,559 37,331 Other liabilities 35,594 14,311 Total Liabilities 71,153 51,642 Stockholders’ Equity Class A common stock 10 9 Class B common stock 7 7 Additional paid-in capital 529,410 522,031 Accumulated deficit (494,038 ) (475,107 ) Accumulated other comprehensive income (loss) 8 (12 ) Total Stockholders’ Equity Excluding Noncontrolling Interests 35,397 46,928 Noncontrolling interests 25,007 34,122 Total Stockholders’ Equity 60,404 81,050 Total Liabilities and Stockholders’ Equity $ 131,557 $ 132,692 Q1 Earnings Release 2023 14 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands) Three Months EndedMarch 31, 2023 2022 Cash Flows From Operating Activities Net Loss $ (32,253 ) $ (31,747 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation & amortization 1,553 1,422 Amortization of intangibles 150 157 Unrealized loss on derivatives, net 21,682 11,042 Non-cash stock-based compensation expense 11,049 12,490 Other changes in operating assets and liabilities: Decrease in accounts receivable, net 5,263 841 Decrease in other current assets 1,163 575 Decrease in other assets 357 344 Increase in accounts payable 949 2,503 (Decrease) increase in deferred revenue (3,285 ) 804 Increase in other current liabilities 686 1,764 Decrease in other liabilities (520 ) (1,126 ) Net Cash Provided by (Used In) Operating Activities 6,794 (931 ) Cash Flows From Investing Activities Capital expenditures (982 ) (1,264 ) Net Cash Used In Investing Activities (982 ) (1,264 ) Cash Flows From Financing Activities Payments to legacy Nerdy holders — (767 ) Other — (49 ) Net Cash Used In Financing Activities — (816 ) Effect of Exchange Rate Change on Cash, Cash Equivalents, and Restricted Cash (7 ) (5 ) Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash 5,805 (3,016 ) Cash, Cash equivalents, and Restricted Cash, Beginning of Year 91,547 145,879 Cash, Cash Equivalents, and Restricted Cash, End of Period $ 97,352 $ 142,863 Supplemental Cash Flow Information Non-cash stock-based compensation included in capitalized internal use software $ 524 $ 606 Purchase of fixed assets included in accounts payable — 88 Q1 Earnings Release 2023 15 RECONCILIATION OF GAAP TO NON-GAAP SALES AND MARKETING EXPENSE (Unaudited) (in thousands) Three Months EndedMarch 31, 2023 2022 Sales and marketing expenses $ 15,560 $ 22,946 Less: Non-cash stock-based compensation expense 838 1,075 Non-GAAP sales and marketing expenses $ 14,722 $ 21,871 RECONCILIATION OF GAAP TO NON-GAAP GENERAL AND ADMINISTRATIVE EXPENSE (Unaudited) (in thousands) Three Months EndedMarch 31, 2023 2022 General and administrative expenses $ 29,700 $ 30,509 Less: Non-cash stock-based compensation expense 10,211 11,415 Non-GAAP general and administrative expenses $ 19,489 $ 19,094 RECONCILIATION OF GAAP NET LOSS TO NON-GAAP ADJUSTED EBITDA (LOSS) (Unaudited) (in thousands) Three Months EndedMarch 31, 2023 2022 Net Loss $ (32,253 ) $ (31,747 ) Add: Interest income (833 ) (7 ) Income taxes 23 13 Depreciation and amortization 1,703 1,579 Non-cash stock-based compensation expense 11,049 12,490 Unrealized loss on derivatives, net 21,682 11,042 Adjusted EBITDA (Loss) $ 1,371 $ (6,630 ) RECONCILIATION OF GAAP NET LOSS TO NON-GAAP ADJUSTED NET EARNINGS (LOSS) (Unaudited) (in thousands) Three Months EndedMarch 31, 2023 2022 Net Loss $ (32,253 ) $ (31,747 ) Add: Stock-based compensation 11,049 12,490 Unrealized loss on derivatives, net 21,682 11,042 Adjusted Net Earnings (Loss) $ 478 $ (8,215 ) Q1 Earnings Release 2023 16 CAPITALIZATION RECONCILIATION (Unaudited) (in thousands) March 31,2023 Class A Common Shares 93,284 Combined Interests that can be converted into shares of Class A Common Stock 65,900 Total outstanding share count, excluding earnouts 159,184 Earnouts 7,964 Total outstanding share count, end of period 167,148 Q1 Earnings Release 2023 17 We monitor the following key operating metrics to evaluate the growth of our business, measure our performance, identify trends affecting our business, formulate business plans, and make strategic decisions. We continue to make substantial progress in our transition from our Package model to Learning Memberships within our Consumer business. As a result of this transition, we are presenting Active Members as a new key operating metric. As Learning Memberships were first broadly sold in the second quarter of 2022, comparable Active Member counts for prior year periods will not be provided until the second quarter of 2023. Active Members exclude EduNation Limited, a company incorporated in England and Wales (“First Tutors UK”) and our Institutional business. Active Experts include our Institutional business, but excludes First Tutors UK. KEY OPERATING METRICS Active Members in thousands March 31,2023 Active Members 32.9 Three Months EndedMarch 31, Change Active Experts in thousands: favorable/(unfavorable) 2023 2022 % Active Experts 10.2 11.3 (10 )% Q1 Earnings Release 2023 18 Key Performance Metrics and Non-GAAP Financial Measures This earnings release includes non-GAAP financial measures for non-GAAP sales and marketing expenses, non-GAAP general and administrative expenses, non-GAAP adjusted EBITDA (loss), and non-GAAP adjusted net earnings (loss). Non-GAAP sales and marketing expenses exclude non-cash stock compensation expenses and restructuring costs. Non-GAAP general and administrative expenses exclude non-cash stock compensation expenses, restructuring costs, and transaction related costs. Non-GAAP adjusted EBITDA (loss) is defined as net income or net loss, as applicable, before net interest income (expense), taxes, depreciation and amortization expense, non-cash stock-based compensation expenses, gain or loss on mark-to-market derivative financial instruments, and other non-recurring one-time items. Non-GAAP adjusted net earnings or loss is defined as net income or net loss, as applicable, excluding non-cash stock-based compensation expenses, gain or loss on mark-to-market derivative financial instruments, and other non-recurring one-time items. Sales and marketing expenses consist of salaries and benefits for our employees engaged in our consultative sales process. General and administrative expenses are recorded in the period in which they are incurred and include salaries, benefits, and non-cash stock-based compensation expense for certain employees as well as support services, finance, legal, human resources, other administrative employees, information technology expenses, outside services, legal and accounting services, depreciation expense, and other costs required to support our operations. Net loss per share is computed by dividing net loss by the weighted average number of ordinary shares outstanding during the period as calculated using the treasury stock method. Non-GAAP measures are in addition, and not a substitute for or superior to measures of financial performance prepared in accordance with GAAP and should not be considered as an alternative to sales, net income, operating income, cash flows from operations, or any other performance measures derived in accordance with GAAP. Other companies may calculate these non-GAAP financial measures differently, and therefore such financial measures may not be directly comparable to similarly titled measures of other companies. The Company believes that these non- GAAP measures of financial results provide useful supplemental information. The Company’s management uses these non-GAAP measures to evaluate the Company’s operating performance, trends, and to compare it against the performance of other companies. There are, however, a number of limitations related to the use of these non-GAAP measures and their nearest GAAP equivalents. See the table above regarding reconciliation of non-GAAP measures to the most directly comparable GAAP measures. Active Members is defined as the number of Learners with an active Learning Membership as of the date presented. Variations in the number of Active Members are due to changes in demand for our solutions, seasonality, testing schedules, the extension of Learning Memberships to additional Consumer audiences, and the launch of new Learning Membership options. As a result, Active Members is a key indicator of our ability to attract, engage and retain Learners. Active Experts is defined as the number of Experts who have instructed one or more sessions in a given period. ARPM is defined as average revenue per Learning Membership per month in a given period. Sessions is defined as the total number of one-on-one sessions in a given period. Annualized run-rate is defined as the number of Learning Members at the end of the period multiplied by average revenue per Learning Membership per month multiplied by twelve months. This recurring revenue customer base provides us with increased forecasting visibility into future periods. Bookings represent contracted amounts in the next 12 months for Varsity Tutors for Schools. Management and our board of directors use these metrics as supplemental measures of our performance that are not required by or presented in accordance with GAAP because they assist us in comparing our operating performance on a consistent basis, as they remove the impact of items not directly resulting from our core operations. We also use Q1 Earnings Release 2023 19 these metrics for planning purposes, including the preparation of our internal annual operating budget and financial projections, to evaluate the performance and effectiveness of our strategic initiatives and to evaluate our capacity to expand our business and the capital expenditures required for that expansion. Non-GAAP sales and marketing expenses, non-GAAP general and administrative expenses, non-GAAP adjusted EBITDA (loss), and non-GAAP adjusted net income or loss should not be considered in isolation, as an alternative to, or superior to net loss, revenue, cash flows or other performance measure derived in accordance with GAAP. We believe these metrics are frequently used by analysts, investors, and other interested parties to evaluate companies in our industry. Management believes that the presentation of non-GAAP metrics is an appropriate measure of operating performance because they eliminate the impact of expenses that do not relate directly to the performance of our underlying business. These non-GAAP metrics should not be construed as an implication that our future results will be unaffected by unusual or other items. We are not able to provide a reconciliation of non-GAAP adjusted EBITDA (loss) guidance for future periods to net loss, the comparable GAAP measure, because certain items that are excluded from non-GAAP adjusted EBITDA (loss) cannot be reasonably predicted or are not in our control. In particular, we are unable to forecast the timing or magnitude for gains or losses on mark-to-market derivative financial instruments, or share based compensation without unreasonable efforts, and these items could significantly impact, either individually or in the aggregate, net income or loss in the future. See the tables above regarding reconciliations of these non- GAAP measures to the most directly comparable GAAP measures for historical periods. Forward-Looking Statements The information included herein and in any oral statements made in connection herewith may include “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. Forward-looking statements include, but are not limited to, statements regarding our or our management team’s expectations, hopes, beliefs, intentions, or strategies regarding the future, including our expectations with respect to: the guidance with respect to our financial performance; continued improvements in sales and marketing leverage; the growth of our Institutional business; simplifying our operations model while growing our business; and the sufficiency of our cash to fund future operations. Additionally, any statements that refer to projections, forecasts, or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipates,” “approximately,” “believes,” “contemplates,” “continues,” “could,” “estimates,” “expects,” “intends,” “may,” “might,” “outlook,” “plans,” “possible,” “potential,” “predicts,” “projects,” “should,” “seeks,” “will,” “would,” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. The forward-looking statements made herein relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of this press release or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. There are a significant number of factors that could cause actual results to differ materially from statements made herein or in connection herewith, including but not limited to, our limited operating history, which makes it difficult to predict our future financial and operating results; our history of net losses; risks associated with our shift to the Learning Membership model; risks associated with scaling up our Institutional business, risks associated with our intellectual property, including claims that we infringe on a third party’s intellectual property rights; risks associated with our classification of some individuals and entities we contract with as independent contractors; risks associated with the liquidity and trading of our securities; risks associated with payments that we may be required to make under the tax receivable agreement; risks associated with the terms of our warrants; litigation, regulatory and reputational risks arising from the fact that many of our Learners are minors; changes in applicable law or regulation; the possibility of cyber-related incidents and their related impacts on our business and results of operations; the possibility that we may be adversely affected by other economic, business, and/or competitive factors; and risks associated with managing our rapid growth. Our actual results could differ materially from those stated or implied in forward-looking statements due to a number of factors, including but not limited to, risks detailed in our filings with the SEC, including our Annual Report on Form 10-K filed on February 28, 2023, as well as other filings that we may make from time to time with the SEC. Q1 Earnings Release 2023 20 |
0001683168-24-007907:radnet_ex9901.htm | 0001683168-24-007907 | 790,526 | 790,526 | RadNet, Inc. (RDNT) (CIK 0000790526) | ['RDNT'] | 8-K | 8-K | 2024-11-12 | 2024-11-10 | 001-33307 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-33307&action=getcompany | 241,449,477 | EX-99.1 | PRESS RELEASE | 2.02,9.01 | https://www.sec.gov/Archives/edgar/data/790526/000168316824007907 | https://www.sec.gov/Archives/edgar/data/790526/000168316824007907/0001683168-24-007907-index.html | https://www.sec.gov/Archives/edgar/data/790526/000168316824007907/radnet_ex9901.htm | EX-99.1 2 radnet_ex9901.htm PRESS RELEASE Exhibit 99.1 FOR IMMEDIATE RELEASE RadNet Reports Third Quarter Financial Results with Record Quarterly Revenue and Adjusted EBITDA(1) and Revises Upwards 2024 Financial Guidance Ranges ·Total Company Revenue increased 14.7% to $461.1 million in the third quarter of 2024 from $402.0 million in the third quarter of 2023; Revenue from the Digital Health reportable segment (inclusive of intersegment revenue) increased 34.3% to $16.4 million in the third quarter of 2024 from $12.2 million in the third quarter of 2023 ·Digital Health Revenue growth resulted in part from a $2.2 million (or 75.8%) increase in AI Revenue, which climbed to $5.1 million during the third quarter of 2024 from $2.9 million in the third quarter of 2023 ·Total Company Adjusted EBITDA(1) was $73.7 million in the third quarter of 2024 as compared with $57.9 million in the third quarter of 2023, an increase of 27.2%; Digital Health reportable segment Adjusted EBITDA(1) increased 41.7% to $3.3 million in the third quarter of 2024 from $2.3 million in the third quarter of 2023 ·Total Company Adjusted EBITDA(1) margins increased by 156 bps to 16.0% in the third quarter of 2024 as compared with 14.4% in the third quarter of 2023 ·Adjusting for unusual or one-time items in the quarter, Adjusted Diluted Earnings Per Share(3) was $0.18 for the third quarter of 2024; This compares with Adjusted Earnings Per Share(3) of $0.13 for the third quarter of 2023 ·Aggregate procedural volumes in the third quarter of 2024 increased 9.0% and same-center procedural volumes increased 5.5% compared with the third quarter of 2023 ·As of September 30, 2024, we had a cash balance of $748.9 million and Net Debt to Adjusted EBITDA(1) ratio of below 1.0x ·On pace for the commercial launch of DeepHealth OS on December 1st at the Radiological Society of North America (RSNA) conference ·RadNet revises full-year 2024 guidance levels to increase Revenue, Adjusted EBITDA(1) and Free Cash Flow(2) ranges LOS ANGELES, California, November 10, 2024 – RadNet, Inc. (NASDAQ: RDNT), a national leader in providing high-quality, cost-effective, fixed-site outpatient diagnostic imaging services through a network of 399 owned and operated outpatient imaging centers, today reported financial results for its third quarter of 2024. Dr. Howard Berger, President and Chief Executive Officer of RadNet, commented, “We continue to demonstrate strong growth and record results in each of our Imaging Center and Digital Health reportable operating segments. Total Company Revenue grew 14.7% as compared with last year’s third quarter to a record $461.1 million. The Digital Health segment Revenue of $16.4 million increased 34.3% from last year’s same quarter. The strong growth in Digital Health was, in part, driven by the AI businesses, whose Revenue increased 75.8% as compared with last year’s third quarter, mainly from the continuing success of the rollout of the Enhanced Breast Cancer Detection (EBCD) DeepHealth AI-powered screening mammography program.” “Despite continued inflation in staffing costs, improved reimbursement from commercial and capitated payors, strong demand for advanced imaging modalities, the growth of the Digital Health businesses and effective cost controls resulted in an increase to Adjusted EBITDA(1) margins. Total Company Adjusted EBITDA(1) margin of 16.0% during this third quarter increased by 156 basis points over last year’s third quarter.” added Dr. Berger. “Given the positive trends we continue to experience in virtually all aspects of our business and the strong financial performance of the third quarter, we are revising upwards certain guidance levels in anticipation of financial results that we believe will exceed both our original expectations and the adjustments we made to the guidance ranges upon releasing our first and second quarter 2024 results. We have increased 2024 guidance ranges for Revenue, Adjusted EBITDA(1) and Free Cash Flow(2),” added Dr. Berger. 1 Dr. Berger continued, “In response to continued high demand for our services and notable patient backlogs in many of RadNet’s local markets, we continue to expand capacity through the development and construction of new imaging centers. Since the start of the year, we have opened five new centers, and we anticipate opening an additional three centers before year end. Furthermore, we have 15 centers in various stages of construction and development which we intend to open during 2025.” “We remain on pace for the commercial launch of DeepHealth OS at the RSNA convention this year taking place December 1st through 4th in Chicago. At our DeepHealth booth, we will be demonstrating the capabilities of the DeepHealth OS integrated end-to-end workflow solutions as well as our clinical AI tools. Last week, we announced our first customer for the DeepHealth OS software platform, and we are eager to introduce our DeepHealth solutions to prospective customers and partners at the convention, explained Dr. Berger. “RadNet’s balance sheet continues to strengthen as our focus remains on driving same-center revenue performance and effective cost management. At quarter end, we had a cash balance of $748.9 million, and our leverage ratio of Net Debt to Adjusted EBITDA(1) was at a record low, slightly below 1.0,” concluded Dr. Berger. Third Quarter Financial Results For the third quarter of 2024, RadNet reported Total Company Revenue of $461.1 million and Adjusted EBITDA(1) of $73.7 million. Revenue increased $59.2 million (or 14.7%) and Adjusted EBITDA(1) increased $15.7 million (or 27.2%) as compared with the third quarter of 2023. For the third quarter of 2024, RadNet reported Digital Health Revenue (inclusive of intersegment revenue) of $16.4 million and Adjusted EBITDA(1) of $3.2 million. Revenue increased $4.2 million (or 34.3%) and Adjusted EBITDA(1) increased $950,000 (or 41.7%) as compared with the third quarter of 2023. Digital Health Revenue and Adjusted EBITDA(1) growth was due in part from a $2.2 million (or 75.8%) increase in AI Revenue, which climbed to $5.1 million during the third quarter of 2024. Unadjusted for unusual or one-time items impacting the third quarter, Total Company Net Income for the third quarter of 2024 was $3.2 million as compared with a Total Company Net Income of $17.5 million for the third quarter of 2023. Fully diluted Net Income Per Share for the third quarter of 2024 was $0.04, compared with a fully diluted Net Income per share of $0.25 in the third quarter of 2023, based upon a weighted average number of diluted shares outstanding of 75.2 million shares in 2024 and 68.8 million shares in 2023. There were a number of unusual or one-time items impacting the third quarter including: $8.1 million of non-cash loss from interest rate swaps; $304,000 in severance expense related to cost-savings initiatives; $1.3 million expense related to leases for de novo facilities under construction that have yet to open their operations; $3.3 million of non-capitalized research and development expenses related to the DeepHealth Cloud OS and generative AI; $417,000 of acquisition transaction costs; and $147,000 loss in conjunction with extinguishment of debt and related expenses. Adjusting for the above items, Total Company Adjusted Earnings(3) was $13.3 million and diluted Adjusted Earnings Per Share(3) was $0.18 during the third quarter of 2024. This compares with Total Company Adjusted Earnings(3) of $8.8 million and diluted Adjusted Earnings Per Share(3) of $0.13 during the third quarter of 2023. For the third quarter of 2024, as compared with the prior year’s third quarter, MRI volume increased 14.6%, CT volume increased 15.5% and PET/CT volume increased 23.8%. Overall volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased 9.0% over the prior year’s third quarter. On a same-center basis, including only those centers which were part of RadNet for both the third quarters of 2024 and 2023, MRI volume increased 9.9%, CT volume increased 9.8% and PET/CT volume increased 16.8%. Overall same-center volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased 5.5% over the prior year’s same quarter Nine Month Financial Results For the first nine months of 2024, RadNet reported Total Company Revenue of $1,352.6 million and Adjusted EBITDA(1) of $204.5 million. Revenue increased $156.3 million (or 13.1%) and Adjusted EBITDA(1) increased $37.9 million (or 22.8%) as compared with the first nine months of 2023. For the first nine months of 2024, RadNet reported Digital Health Revenue (inclusive of intersegment revenue) of $46.9 million and Adjusted EBITDA(1) of $10.0 million. Revenue increased $12.0 million (or 34.4%) and Adjusted EBITDA(1) increased $6.3 million (or 171.6%) as compared with the first nine months of 2023. Digital Health Revenue and Adjusted EBITDA(1) growth was due in part to a $8.0 million (or 107.8%) increase in AI Revenue, which climbed to $15.4 million during the nine month period of 2024. 2 Unadjusted for one-time or unusual items, Total Company Net Loss for the first nine months of 2024 was $2.6 million as compared with a Total Company Net Income of $4.9 million for the first nine months of 2023. Fully diluted Net Loss Per Share for the nine month period of 2024 was $(0.04), compared with a Net Income per share of $0.08 in the nine month period of 2023, based upon a weighted average number of diluted shares outstanding of 72.6 million shares in 2024 and 63.2 million shares in 2023. 2024 Guidance Update RadNet amends its previously announced guidance levels as follows: Imaging Center Segment Original Guidance Range Revised Guidance Range After Q1 Results Revised Guidance Range After Q2 Results Revised Guidance Range After Q3 Results Total Net Revenue $1,650 - $1,700 million $1,675 - $1,725 million $1,685 - $1,735 million $1,710 - $1,760 million Adjusted EBITDA(1) $250 - $260 million $255 - $265 million $257 - $267 million $262 - $270 million Capital Expenditures(a) $125 - $135 million $130 - $140 million $135 - $145 million $145 - $155 million Cash Interest Expense(b) $40 - $45 million $37 - $42 million $32 - $37 million $25 - $30 million Free Cash Flow (2) $65 - $75 million $68 - $78 million $72 - $80 million $83 - $93 million (a)Net of proceeds from the sale of equipment, imaging centers and joint venture interests and New Jersey Imaging Network capital expenditures. (b)Includes payments to and from counterparties on interest rate swaps and nets interest income from our cash balance as recorded in Other Income. Digital Health Segment Original Guidance Range Revised Guidance Range After Q1 Results Revised Guidance Range After Q2 Results Revised Guidance Range After Q3 Results Total Net Revenue (inclusive of intersegment revenue) $60 - $70 million $60 - $70 million $60 - $70 million $60 - $70 million Adjusted EBITDA(1) Before Non-Capitalized R&D - DeepHealth Cloud OS & Generative AI $12 - $14 million $13 - $15 million $13 - $15 million $13 - $15 million Non-Capitalized R&D - DeepHealth Cloud OS & Generative AI $11 - $13 million $12 - $14 million $12 - $14 million $13 - $15 million Capital Expenditures(i) $3 - $5 million $3 - $5 million $3 - $5 million $3 - $5 million Free Cash Flow(2) Before Non-Capitalized R&D - DeepHealth Cloud OS & Generative AI $8 - $10 million $8 - $10 million $8 - $10 million $8 - $10 million Free Cash Flow(2) After Non-Capitalized R&D - DeepHealth Cloud OS & Generative AI $(2) - $(5) million $(2) - $(5) million $(2) - $(5) million $(2) - $(5) million (i)Excludes a $9 million purchase of software code and other intellectual property from a vender. 3 “Based upon the consistent outperformance of the first three quarters of this year relative to our projections, we have increased guidance ranges of our core Imaging Center reporting segment for Revenue and Adjusted EBITDA(1). Furthermore, despite increasing the Capital Expenditures guidance range by $10 million, we are expecting Free Cash Flow(2) to be higher for the year. This is the result of the projected increase in Adjusted EBITDA(1) and lower Cash Interest Expense. With respect to the Digital Health reportable segment, we remain on track to meet our original guidance levels for Revenue, Adjusted EBITDA(1) and Free Cash Flow(2).” Conference Call for Tomorrow Dr. Howard Berger, President and Chief Executive Officer, and Mark Stolper, Executive Vice President and Chief Financial Officer, will host a conference call to discuss its third quarter 2024 results on Monday, November 11th, 2024 at 7:30 a.m. Pacific Time (10:30 a.m. Eastern Time). Conference Call Details: Date: Monday, November 11, 2024 Time: 10:30 a.m. Eastern Time Dial In-Number: 844-826-3035 International Dial-In Number: 412-317-5195 It is recommended that participants dial in approximately 5 minutes prior to the start of the 10:30 a.m. call. There will also be simultaneous and archived webcasts available at https://viavid.webcasts.com/starthere.jsp?ei=1691984&tp_key=8cbf05cc88 or http://www.radnet.com under the “Investors” menu section and “News Releases” sub-menu of the website. An archived replay of the call will also be available and can be accessed by dialing 844-512-2921 from the U.S., or 412-317-6671 for international callers, and using the passcode 10193306. About RadNet, Inc. RadNet, Inc., is the leading national provider of freestanding, fixed-site diagnostic imaging services and related information technology solutions (including artificial intelligence) in the United States based on the number of locations and annual imaging revenue. RadNet has a network of 399 owned and/or operated outpatient imaging centers. RadNet’s markets include Arizona, California, Delaware, Florida, Maryland, New Jersey, New York and Texas. In addition, RadNet provides radiology information technology and artificial intelligence solutions marketed under the DeepHealth brand and other related products and services to customers in the diagnostic imaging industry. Together with affiliated radiologists, and inclusive of full-time and per diem employees and technologists, RadNet has a total of over 10,000 employees. For more information, visit http://www.radnet.com. Forward Looking Statements This press release contains “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are expressions of our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, and anticipated future conditions, events and trends. Forward-looking statements can generally be identified by words such as: “anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,” “project,” “estimate,” “expect,” “strategy,” “future,” “likely,” “may,” “should,” “will” and similar references to future periods. Forward-looking statements in this press release include, among others, statements about our anticipated business results, balance sheet and liquidity and our future liquidity, burn rate and our continuing ability to service or refinance our current indebtedness. Forward-looking statements are neither historical facts nor assurances of future performance. Because forward-looking statements relate to the future, they are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not place undue reliance on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following: 4 ·the availability and terms of capital to fund our business; ·our ability to service our indebtedness, make principal and interest payments as those payments become due and remain in compliance with applicable debt covenants, in addition to our ability to refinance such indebtedness on acceptable terms; ·changes in general economic conditions nationally and regionally in the markets in which we operate; ·the availability and terms of capital to fund the expansion of our business and improvements to our existing facilities; ·our ability to maintain our current credit rating and the impact on our funding costs and competitive position if we do not do so; ·our ability to acquire, develop, implement and monetize technology, digital health initiatives, artificial intelligence algorithms and applications; ·volatility in interest and exchange rates, or credit markets; ·the adequacy of our cash flow and earnings to fund our current and future operations; ·changes in service mix, revenue mix and procedure volumes; ·delays in receiving payments for services provided; ·increased bankruptcies among our partner physicians or joint venture partners; ·the impact of the political environment and related developments on the current healthcare marketplace and on our business, including with respect to the future of the Affordable Care Act; ·the extent to which the ongoing implementation of healthcare reform, or changes in or new legislation, regulations or guidance, enforcement thereof by federal and state regulators or related litigation result in a reduction in coverage or reimbursement rates for our services, or other material impacts to our business; ·closures or slowdowns and changes in labor costs and labor difficulties, including stoppages affecting either our operations or our suppliers' abilities to deliver supplies needed in our facilities; ·the occurrence of hostilities, political instability or catastrophic events; ·the emergence or reemergence of and effects related to future pandemics, epidemics and infectious diseases; and ·noncompliance by us with any privacy or security laws or any cybersecurity incident or other security breach by us or a third party involving the misappropriation, loss or other unauthorized use or disclosure of confidential information. Any forward-looking statement contained in this current report is based on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that we may make from time to time, whether as a result of changed circumstances, new information, future developments or otherwise, except as required by applicable law. Regulation G: GAAP and Non-GAAP Financial Information This release contains certain financial information not reported in accordance with GAAP. The Company uses both GAAP and non-GAAP metrics to measure its financial results. The Company believes that, in addition to GAAP metrics, these non-GAAP metrics assist the Company in measuring its cash-based performance. The Company believes this information is useful to investors and other interested parties because it removes unusual and nonrecurring charges that occur in the affected period and provides a basis for measuring the Company's financial condition against other quarters. Such information should not be considered as a substitute for any measures calculated in accordance with GAAP, and may not be comparable to other similarly titled measures of other companies. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Reconciliation of this information to the most comparable GAAP measures is included in this release in the tables which follow. CONTACTS: RadNet, Inc. Mark Stolper, 310-445-2800 Executive Vice President and Chief Financial Officer 5 RADNET, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA) September 30, 2024 December 31, 2023 (unaudited) ASSETS CURRENT ASSETS Cash and Cash equivalents $748,916 $342,570 Accounts receivable 199,076 163,707 Due from affiliates 30,210 25,342 Prepaid expenses and other current assets 38,051 47,657 Total current assets 1,016,253 579,276 PROPERTY, EQUIPMENT AND RIGHT-OF-USE ASSETS Property and equipment, net 663,867 604,401 Operating lease right-of-use assets 646,750 596,032 Total property, plant, equipment and right-of-use assets 1,310,617 1,200,433 OTHER ASSETS Goodwill 711,841 679,463 Other intangible assets 84,441 90,615 Deferred financing costs 2,416 1,643 Investment in joint ventures 104,514 92,710 Deposits and other 45,260 46,333 Total Assets $3,275,342 $2,690,473 LIABILITIES AND EQUITY CURRENT LIABILITIES Accounts payable, accrued expenses and other $338,737 $342,940 Due to affiliates 44,872 15,910 Deferred revenue 4,392 4,647 Current operating lease liability 58,751 55,981 Current portion of notes payable 23,378 17,974 Total current liabilities 470,130 437,452 LONG-TERM LIABILITIES Long-term operating lease liability 658,434 605,097 Notes payable, net of current portion 996,272 812,068 Deferred tax liability, net 20,795 15,776 Other non-current liabilities 10,077 6,721 Total liabilities 2,155,708 1,877,114 EQUITY RadNet, Inc. stockholders' equity: Common stock - $0.0001 value, 200,000,000 shares authorized; 73,976,284 and 67,956,318 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively 7 7 Additional paid-in-capital 979,279 722,750 Accumulated other comprehensive loss (1,843) (12,484) Accumulated deficit (82,130) (79,578) Total RadNet, Inc.'s Stockholders' equity: 895,313 630,695 Noncontrolling interests 224,321 182,664 Total Equity 1,119,634 813,359 Total liabilities and equity $3,275,342 $2,690,473 6 RADNET, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (IN THOUSANDS EXCEPT FOR SHARE AND PER SHARE DATA) (unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 REVENUE Service fee revenue $427,579 $361,927 $1,247,513 $1,078,265 Revenue under capitation arrangements 33,563 40,041 105,050 117,982 Total service revenue 461,142 401,968 1,352,563 1,196,247 OPERATING EXPENSES Cost of operations, excluding depreciation and amortization 391,800 341,635 1,169,113 1,038,647 Depreciation and amortization 34,979 32,210 101,822 95,705 Loss (gain) on sale and disposal of equipment and other 148 527 735 1,183 Loss (gain) on contribution of imaging centers into joint venture – (16,808) – (16,808) Severance costs 304 1,153 797 3,157 Total operating expenses 427,231 358,717 1,272,467 1,121,884 INCOME (LOSS) FROM OPERATIONS 33,911 43,251 80,096 74,363 OTHER INCOME AND EXPENSES Interest expense 19,427 16,115 61,776 47,876 Equity in earnings of joint ventures (3,595) (1,084) (11,308) (3,935) Non-cash change in fair value of interest rate hedge 6,755 1,015 7,429 949 Debt restructuring and extinguishment expenses 147 – 8,909 – Other expenses (income) (5,414) (4,081) (16,248) (2,609) Total other (income) expenses 17,320 11,965 50,558 42,281 INCOME (LOSS) BEFORE INCOME TAXES 16,591 31,286 29,538 32,082 Provision for income taxes (4,335) (7,220) (4,927) (7,741) NET INCOME (LOSS) 12,256 24,066 24,611 24,341 Net income (loss) attributable to noncontrolling interests 9,047 6,526 27,163 19,437 NET INCOME (LOSS) ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS $3,209 $17,540 $(2,552) $4,904 BASIC NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS $0.04 $0.26 $(0.04) $0.08 DILUTED NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS $0.04 $0.25 $(0.04) $0.08 WEIGHTED AVERAGE SHARES OUTSTANDING Basic 73,494,709 67,793,404 72,587,321 62,113,707 Diluted 75,165,435 68,809,818 72,587,321 63,221,251 7 RADNET, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASHFLOWS (IN THOUSANDS) (unaudited) Nine Months Ended September 30, 2024 2023 CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $24,611 $24,341 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 101,822 95,705 Amortization of operating lease assets 45,516 47,542 Equity in earnings of joint ventures (10,308) 5,012 Amortization deferred financing costs and loan discount 2,336 2,240 Loss (Gain) on sale and disposal of equipment 735 1,183 Loss on extinguishment of debt 2,080 – Gain on contribution of imaging centers into joint venture – (16,808) Amortization of cash flow hedge 8,242 2,765 Non-cash change in fair value of interest rate hedge 7,429 949 Stock-based compensation 21,368 21,380 Loss on impairment 1,200 3,949 Change in fair value of contingent consideration 1,974 (4,112) Changes in operating assets and liabilities, net of assets acquired and liabilities assumed in purchase transactions: Accounts receivable (35,369) (1,379) Other current assets 4,738 5,754 Other assets (7,388) (16,641) Deferred taxes 4,834 7,389 Operating lease liability (40,497) (43,390) Deferred revenue (255) 1,155 Accounts payable, accrued expenses and other 57,426 (5,091) Net cash provided by operating activities 190,494 131,943 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of imaging facilities and other acquisitions (37,748) (10,915) Purchase of property and equipment and other (145,164) (136,537) Proceeds from sale of equipment 151 82 Equity contributions in existing and purchase of interest in joint ventures (1,496) (5,453) Net cash used in investing activities (184,257) (152,823) CASH FLOWS FROM FINANCING ACTIVITIES Principal payments on notes and leases payable (4,296) (1,929) Payments on Term Loan Debt (688,375) (11,062) Proceeds from issuance of new debt, net of issuing costs 863,815 – Contribution from noncontrolling interests 7,569 – Payments on contingent consideration (3,614) (3,390) Distributions paid to noncontrolling interests (2,423) (3,523) Proceeds from sale of economic interests in majority owned subsidiary, net of taxes 8,641 5,102 Proceeds from issuance of common stock 218,385 245,831 Proceeds from issuance of common stock upon exercise of options 367 72 Net cash provided by financing activities 400,069 231,101 EFFECT OF EXCHANGE RATE CHANGES ON CASH 40 (171) NET DECREASE IN CASH AND CASH EQUIVALENTS 406,346 210,050 CASH AND CASH EQUIVALENTS, beginning of period 342,570 127,834 CASH AND CASH EQUIVALENTS, end of period 748,916 337,884 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid during the period for interest $51,520 $59,421 Cash paid during the period for income taxes $2,202 $225 8 RADNET, INC. AND SUBSIDIARIES RECONCILIATION OF GAAP NET INCOME ATTRIBUTABLE TO RADNET, INC. COMMON SHAREHOLDERS TO ADJUSTED EBITDA (IN THOUSANDS) Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Net income (loss) attributable to Radnet, Inc. common stockholders $3,209 $17,540 $(2,552) $4,904 Income taxes 4,335 7,220 4,927 7,741 Interest expense 19,427 16,115 61,776 47,876 Severance costs 304 1,153 797 3,157 Depreciation and amortization 34,979 32,210 101,822 95,705 Non-cash employee stock-based compensation 4,723 4,325 21,369 21,381 Loss (gain) on sale and disposal of equipment and other 148 527 735 1,183 Non-cash change in fair value of interest rate hedge 6,755 1,015 7,429 949 Other expenses (income) (5,414) (4,081) (16,248) (2,609) Non-Capitalized R&D - DeepHealth Cloud OS & Generative AI 3,345 – 9,977 – Loss (gain) on contribution of imaging centers into joint venture – (16,808) – (16,808) Loss (gain) on extinguishment of debt and related expenses 147 – 8,909 – Non-cash change to contingent consideration – (6,276) 1,974 (3,646) Acquisition related non-cash intangible adjustment – 3,950 – 3,950 Non-operational rent expenses 1,287 1,030 3,119 2,748 Acquisition transaction costs 417 – 417 – Adjusted EBITDA Including EBITDA from Digital Health $73,662 $57,920 $204,451 $166,531 EBITDA from Digital Health 3,229 2,279 10,018 3,689 Adjusted EBITDA excluding EBITDA from Digital Health $70,433 $55,641 $194,433 $162,842 9 PAYMENTS BY PAYOR CLASS Third Quarter 2024 Commercial Insurance 57.7% Medicare 22.3% Capitation 7.3% Medicaid 2.4% Workers Compensation/Personal Injury 2.2% Other* 8.2% Total 100.0% * Includes management fee, teleradiology and Digital Health financial reporting unit revenue. PAYMENTS BY MODALITY Third Quarter Full Year Full Year Full Year 2024 2023 2022 2021 MRI 37.1% 36.8% 36.8% 36.0% CT 16.0% 16.8% 17.5% 17.2% PET/CT 7.1% 6.4% 5.8% 5.5% X-ray 6.1% 6.5% 6.7% 3.9% Ultrasound 13.7% 12.9% 12.6% 12.7% Mammography 16.2% 16.0% 15.3% 16.1% Nuclear Medicine 1.0% 0.8% 0.9% 1.0% Other 2.7% 3.9% 4.5% 4.6% 100.0% 100.0% 100.0% 100.0% PROCEDURES BY MODALITY* Third Quarter Third Quarter 2024 2023 MRI 446,596 389,566 CT 265,874 230,276 PET/CT 18,844 15,216 Nuclear Medicine 9,282 8,533 Ultrasound 650,322 607,995 Mammography 484,357 452,756 X-ray and Other 862,732 806,677 Total 2,738,007 2,511,019 * Volumes include wholy owned and joint venture centers. 10 RADNET, INC. AND SUBSIDIARIES SCHEDULE OF ADJUSTED EARNINGS AND EARNINGS PER SHARE (3) (IN THOUSANDS EXCEPT SHARE DATA) (unaudited) Three Months Ended September 30, September 30, 2024 2023(v) NET INCOME (LOSS) ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS $3,209 $17,540 Add non-cash impact of cash flow hedges (i) 8,111 2,260 Add severance costs 304 1,153 Subtract gain on contribution of imaging centers into joint venture – (16,808) Add non-operational rent expenses (iii) 1,287 1,030 Non-capitalized R&D - DeepHealth cloud OS & generative AI 3,345 – Acquisition transaction costs 417 – Debt amendment fee 147 – Subtract non-cash change to contingent consideration - Heart Lung Health – 915 Total adjustments - loss (gain) 13,611 (11,450) Subtract tax impact of Adjustments (ii) (3,552) 2,759 Tax effected impact of adjustments 10,059 (8,691) TOTAL ADJUSTMENT TO NET INCOME ATTRIBUTABLE TO RADNET, INC. COMMON SHAREHOLDERS 10,059 (8,691) ADJUSTED NET INCOME (LOSS) ATTRIBUTABLE TO RADNET, INC. 13,268 8,849 COMMON STOCKHOLDERS WEIGHTED AVERAGE SHARES OUTSTANDING Diluted 75,165,435 68,809,818 ADJUSTED DILUTED NET INCOME PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS $0.18 $0.13 (i)Impact is the combination of (a) the loss in fair value of the hedges during the quarter of $6,755 in 2024 and loss of $1,015 in 2023 and (b) the amortization of the accumulation of the changes in fair value out of Other Comprehensive Income that existed prior to the hedges becoming ineffective of $1,356 in 2024 and $1,245 in 2023. (ii)Tax effected using 26.1% blended federal and state effective tax rate for 2023 and 24.1% for 2023. (iii)Represents rent expense associated with de novo sites under construction prior to them becoming operational. (iv)Represents pre-tax net income losses before income taxes from Artificial Intelligence reporting segment. (v)Restated from what was presented in 2023 to include the losses of the AI businesses (ie, not add the losses back to earnings as was the case in 2023). The restated Adjusted Earnings for 2023 is due to the fact that AI is no longer its own reportable operating segment and is now embedded in the Digital Health reportable operating segment. 11 Footnotes (1) The Company defines Adjusted EBITDA as earnings before interest, taxes, depreciation and amortization, each from continuing operations and adjusted for losses or gains on the sale of equipment, other income or loss, debt extinguishments and non-cash equity compensation. Adjusted EBITDA includes equity earnings in unconsolidated operations and subtracts allocations of earnings to non-controlling interests in subsidiaries, and is adjusted for non-cash or extraordinary and one-time events taken place during the period. Adjusted EBITDA is reconciled to its nearest comparable GAAP financial measure. Adjusted EBITDA is a non-GAAP financial measure used as analytical indicator by RadNet management and the healthcare industry to assess business performance, and is a measure of leverage capacity and ability to service debt. Adjusted EBITDA should not be considered a measure of financial performance under GAAP, and the items excluded from Adjusted EBITDA should not be considered in isolation or as alternatives to net income, cash flows generated by operating, investing or financing activities or other financial statement data presented in the consolidated financial statements as an indicator of financial performance or liquidity. As Adjusted EBITDA is not a measurement determined in accordance with GAAP and is therefore susceptible to varying methods of calculation, this metric, as presented, may not be comparable to other similarly titled measures of other companies. (2) As noted above, the Company defines Free Cash Flow as Adjusted EBITDA less total Capital Expenditures (whether completed with cash or financed) and Cash Interest Expense. Free Cash Flow is a non-GAAP financial measure. The Company uses Free Cash Flow because the Company believes it provides useful information for investors and management because it measures our capacity to generate cash from our operating activities. Free Cash Flow does not represent total cash flow since it does not include the cash flows generated by or used in financing activities. In addition, our definition of Free Cash Flow may differ from definitions used by other companies. Free Cash Flow should not be considered a measure of financial performance under GAAP, and the items excluded from Adjusted EBITDA should not be considered in isolation or as alternatives to net income, cash flows generated by operating, investing or financing activities or other financial statement data presented in the consolidated financial statements as an indicator of financial performance or liquidity. As Adjusted EBITDA is not a measurement determined in accordance with GAAP and is therefore susceptible to varying methods of calculation, this metric, as presented, may not be comparable to other similarly titled measures of other companies. (3) The Company defines Adjusted Earnings (Loss) Per Share as net income or loss attributable to RadNet, Inc. common stockholders and excludes losses or gains on the disposal of equipment, loss on debt extinguishments, bargain purchase gains, severance costs, loss on impairment, loss or gain on swap valuation, gain on extinguishment of debt, unusual or non-recurring entries that impact the Company’s tax provision and any other non-recurring or unusual transactions recorded during the period. Adjusted Earnings (Loss) Per Share is reconciled to its nearest comparable GAAP financial measure. Adjusted Earnings (Loss) Per Share is a non-GAAP financial measure used as analytical indicator by RadNet management and the healthcare industry to assess business performance. Adjusted Earnings Per Share should not be considered a measure of financial performance under GAAP, and the items excluded from Adjusted Earnings Per Share should not be considered in isolation or as alternatives to net income, cash flows generated by operating, investing or financing activities or other financial statement data presented in the consolidated financial statements as an indicator of financial performance or liquidity. As Adjusted Earnings Per Share is not a measurement determined in accordance with GAAP and is therefore susceptible to varying methods of calculation, this metric, as presented, may not be comparable to other similarly titled measures of other companies. 12 |
0001907982-24-000015:d-wavezapataaixpressrele.htm | 0001907982-24-000015 | 1,907,982 | 1,907,982 | D-Wave Quantum Inc. (QBTS, QBTS-WT) (CIK 0001907982) | ['QBTS', 'QBTS-WT'] | 8-K | 8-K | 2024-02-08 | 2024-02-08 | 001-41468 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-41468&action=getcompany | 24,609,610 | EX-99.1 | EX-99.1 | 8.01 | https://www.sec.gov/Archives/edgar/data/1907982/000190798224000015 | https://www.sec.gov/Archives/edgar/data/1907982/000190798224000015/0001907982-24-000015-index.html | https://www.sec.gov/Archives/edgar/data/1907982/000190798224000015/d-wavezapataaixpressrele.htm | EX-99.1 2 d-wavezapataaixpressrele.htm EX-99.1 d-wavezapataaixpressrele D-Wave and Zapata AI Announce Strategic Technical and Commercial Collaboration to Advance Quantum-Enabled Machine Learning Partnership brings together powerful generative AI and quantum computing technologies focused on building applications for accelerating new discoveries and solving complex optimization problems PALO ALTO, Calif., BURNABY, B.C., BOSTON, Mass. -- February 8, 2024 -- D-Wave Quantum Inc. (NYSE: QBTS) (“D-Wave”), a leader in quantum computing systems, software, and services and the world’s first commercial supplier of quantum computers, and Zapata Computing, Inc. (operating as Zapata AI), the Industrial Generative AI software company that develops solutions and applications to solve enterprises’ difficult, industrial-scale problems, have announced a multi-year strategic partnership to develop and bring to market commercial applications that combine the power of generative AI and quantum computing technologies. The partnership centers on joint technical development and commercial deployment of applications for customers faced with computationally complex problems. Using quantum-enabled machine learning algorithms, these applications will leverage the power of D-Wave’s quantum technologies, which have been proven to perform coherent quantum annealing with 5,000+ qubits, pushing beyond the boundaries of what is possible with today’s classical computers. The results of this collaboration will initially focus on building quantum generative AI models that accelerate the discovery of new molecules. Bringing together the deep technical expertise of two industry leaders in quantum computing and generative AI, this collaboration gives Zapata AI access to D-Wave’s powerful Advantage™ annealing quantum computing systems, quantum-hybrid solvers, and development resources. The companies anticipate this joint effort will accelerate commercial application development as well as provide the production access and resources to take these applications to Zapata’s customers. The collaboration also supports joint go-to-market efforts that will include the exclusive availability of the commercial applications via a solver hosted in D-Wave’s Leap™ real-time quantum cloud service. “We’re thrilled to work with our long-time partner D-Wave to bring together the power of our generative AI software with D-Wave’s annealing quantum computing technologies to develop industrial grade machine learning applications,” said Dr. Christopher Savoie, CEO and co-founder of Zapata AI. “By combining forces, we are accelerating quantum plus AI development that we believe will unlock previously unattainable value for customers.” “Our agreement with Zapata AI marks a significant step toward realizing the potential of combining two of today’s most transformative technologies — generative AI and quantum computing — to help tackle our society’s most computationally complex problems,” said Dr. Alan Baratz, CEO of D-Wave. “Our companies share a common vision — to accelerate exploration, adoption, and commercial use of emerging technologies to fuel innovation and transformation. Together, we believe D-Wave and Zapata AI will usher in the commercial era of quantum machine learning.” About Zapata AI Zapata AI is an Industrial Generative AI company, revolutionizing how enterprises solve complex problems with its powerful suite of Generative AI software. By combining numerical and text-based solutions, Zapata AI empowers industrial-scale commercial, government and military/defense enterprises to leverage large language models and numerical generative models better, faster, and more efficiently delivering solutions to drive growth, savings and unprecedented insight. With proprietary science and engineering techniques and the Orquestra® platform, Zapata AI is accelerating Generative AI’s impact in Industry. The Company was founded in 2017 and is headquartered in Boston, Massachusetts. On September 6, 2023, Zapata AI entered into a definitive business combination agreement with Andretti Acquisition Corp. (NYSE: WNNR). . About D-Wave Quantum Inc. D-Wave is a leader in the development and delivery of quantum computing systems, software, and services, and is the world’s first commercial supplier of quantum computers—and the only company building both annealing quantum computers and gate-model quantum computers. Our mission is to unlock the power of quantum computing today to benefit business and society. We do this by delivering customer value with practical quantum applications for problems as diverse as logistics, artificial intelligence, materials sciences, drug discovery, scheduling, cybersecurity, fault detection, and financial modelling. D-Wave’s technology has been used by some of the world’s most advanced organizations including Mastercard, Deloitte, Davidson Technologies, ArcelorMittal, Siemens Healthineers, Unisys, NEC Corporation, Pattison Food Group Ltd., DENSO, Lockheed Martin, Forschungszentrum Jülich, University of Southern California, and Los Alamos National Laboratory. Forward-Looking Statements Certain statements in this press release are forward-looking, as defined in the Private Securities Litigation Reform Act of 1995. These statements involve risks, uncertainties, and other factors that may cause actual results to differ materially from the information expressed or implied by these forward-looking statements and may not be indicative of future results. Forward-looking statements in this press release include, but are not limited to, statements regarding the goals and potential results of the collaboration between D-Wave and Zapata AI; the joint go-to-market efforts of the parties; the availability of a potential commercial application; and the potential value attributable to quantum+AI development. These forward-looking statements are subject to a number of risks and uncertainties, including, among others, various factors beyond management’s control, including unexpected challenges related to collaboration and/or the commercial application; the risk that the value attributable to quantum+AI development is not what management anticipates; general economic conditions and other risks; D-Wave's ability to expand its customer base and the customer adoption of its solutions; risks within D-Wave’s industry, including anticipated trends, growth rates, and challenges for companies engaged in the business of quantum computing and the markets in which they operate; the outcome of any legal proceedings that may be instituted against D-Wave or Zapata AI; risks related to the performance of the companies’ respective business and the timing of expected business or financial milestones; unanticipated technological or project development challenges, including with respect to the cost and/or timing thereof; the performance of the companies’ products; the effects of competition on the companies’ businesses; the risk that either company, or both, will need to raise additional capital to execute its business plan, which may not be available on acceptable terms or at all; the risk that neither company may ever achieve or sustain profitability; the risk that the companies are unable to secure or protect their respective intellectual property; volatility in the price of D-Wave’s securities; the risk that D-Wave’s securities will not maintain the listing on the NYSE; the risk that D-Wave’s restatement of certain previously issued audited and unaudited financial statements or material weaknesses in internal controls could negatively affect investor confidence and raise reputational issues; with respect to D-Wave, the numerous other factors set forth in D-Wave’s Annual Report on Form 10-K for its fiscal year ended December 31, 2022 and other filings with the Securities and Exchange Commission, and with respect to Zapata AI, those factors discussed in Andretti Acquisition Corp.’s Form 10-K for the year ended December 31, 2022, under Risk Factors in Part I, Item 1A, Registration Statement on Form S-4, as amended, first filed with the SEC on October 27, 2023, and other documents of Andretti Acquisition Corp. filed, or to be filed, with the SEC. Undue reliance should not be placed on the forward-looking statements in this press release in making an investment decision, which are based on information available to the companies on the date hereof. Neither D-Wave nor Zapata AI undertakes any duty to update this information unless required by law. Investor Contacts: Zapata AI investors@zapata.ai D-Wave Kevin Hunt ir@dwavesys.com Media Contacts: Zapata AI press@zapata.ai D-Wave Alex Daigle media@dwavesys.com ### |
0001213900-24-076696:ea021386501ex99-1_realpha.htm | 0001213900-24-076696 | 1,859,199 | 1,859,199 | reAlpha Tech Corp. (AIRE) (CIK 0001859199) | ['AIRE'] | 8-K | 8-K | 2024-09-09 | 2024-09-08 | 001-41839 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-41839&action=getcompany | 241,285,757 | EX-99.1 | PRESS RELEASE, DATED SEPTEMBER 9, 2024 | 1.01,2.01,3.02,8.01,9.01 | https://www.sec.gov/Archives/edgar/data/1859199/000121390024076696 | https://www.sec.gov/Archives/edgar/data/1859199/000121390024076696/0001213900-24-076696-index.html | https://www.sec.gov/Archives/edgar/data/1859199/000121390024076696/ea021386501ex99-1_realpha.htm | EX-99.1 3 ea021386501ex99-1_realpha.htm PRESS RELEASE, DATED SEPTEMBER 9, 2024 Exhibit 99.1 reAlpha Acquires Mortgage Brokerage Company Be My Neighbor Strategic acquisition strengthens reAlpha’s vertically integrated real estate technology platform. DUBLIN, Ohio, September 9, 2024 – reAlpha Tech Corp. (“reAlpha”) (Nasdaq: AIRE), a real estate technology company developing and commercializing artificial intelligence (“AI”) technologies, today announced the acquisition of Be My Neighbor, a mortgage brokerage company founded by veterans licensed to operate in 26 U.S. states. This strategic acquisition adds mortgage lending and refinancing services under the reAlpha umbrella of real estate services and enhances the capabilities of its generative AI-powered, commission-free homebuying platform. Specifically, Be My Neighbor will enable reAlpha to provide integrated mortgage services to consumers who utilize the reAlpha platform to purchase homes. “We are excited to announce the acquisition of Be My Neighbor and add its capabilities to reAlpha’s AI-driven platform,” said Brent Miller, Chief Financial Officer of reAlpha. “This acquisition furthers our long-term plan of developing a full-service commission-free homebuying and financing technology platform powered by our proprietary AI technology and dedicated professionals.” Acquiring mortgage services aligns with reAlpha’s goal of vertically integrating the homebuying process, which reAlpha expects to result in a more seamless customer experience and increased revenue opportunities. Be My Neighbor will continue to operate under its brand by co-founders Christopher Griffith, Isabel Williams, and Nathan Knottingham, while benefiting from reAlpha’s resources and generative AI platform. “The acquisition of Be My Neighbor represents a strategic move to deepen our vertical integration within the real estate industry,” said Sureet Pabbi, Vice President of M&A at reAlpha. “By acquiring a mortgage brokerage company, we’re capturing additional revenue stream opportunities and enhancing our control over a critical part of the homebuying process.” Christopher Griffith, Chief Executive Officer of Be My Neighbor, added: “We believe reAlpha is accelerating the evolution of the $20.2 trillion i mortgage industry into the digital age. reAlpha is transforming legacy processes into one comprehensive, online, commission-free, buyer-centered experience. We see great promise in reAlpha’s long-term strategy and are excited to help carry out their vision.” For additional details concerning the terms of this acquisition, please reference reAlpha’s Current Report on Form 8-K, which will be filed with the U.S. Securities and Exchange Commission (the “SEC”). About Be My Neighbor Debt Does Deals, LLC (d/b/a Be My Neighbor) is a mortgage brokerage company operating in 26 states. The company believes that one house has the power to make a life-changing impact for a family and future generations. Their mission is to bring humanity back into the biggest financial real estate decision that a person will make in their lifetime by showing them how to build generational wealth through smart real estate decisions and actually enjoy the process along the way. About reAlpha Tech Corp. reAlpha Tech Corp. (Nasdaq: AIRE) is a real estate technology company developing an end-to-end commission-free homebuying platform. Utilizing the power of AI and an acquisition-led growth strategy, reAlpha’s goal is to offer a more affordable, streamlined experience for those on the journey to homeownership. For more information, visit www.reAlpha.com. ihttps://www.statista.com/statistics/274636/combined-sum-of-all-holders-of-mortgage-debt-outstanding-in-the-us/ About the reAlpha Platform reAlpha (previously called “Claire”), announced on April 24, 2024, is reAlpha’s generative AI-powered, commission-free, homebuying platform. The tagline: No fees. Just keys.TM – reflects reAlpha’s dedication to eliminating traditional barriers and making homebuying more accessible and transparent. reAlpha’s introduction aligns with major shifts in the real estate sector after the National Association of Realtors agreed to settle certain lawsuits upon being found to have violated antitrust laws, resulting in inflated fees paid to buy-side agents. This development is expected to result in the end of the standard six percent sales commission, which equates to approximately $100 billion in realtor fees paid annually. The reAlpha platform offers a cost-free alternative for homebuyers by utilizing an AI-driven workflow that assists them through the homebuying process. Homebuyers using the reAlpha platform’s conversational interface will be able to interact with Claire, reAlpha’s AI buyer’s agent, to guide them through every step of their homebuying journey, from property search to closing the deal. By offering support 24/7, Claire is poised to make the homebuying process more efficient, enjoyable, and cost-efficient. Claire matches buyers with their dream homes using over 400 data attributes and provides insights into market trends and property values. Additionally, Claire can assist with questions, booking property tours, submitting offers, and negotiations. Currently, the reAlpha platform is under limited availability for homebuyers located in 20 counties in Florida, but reAlpha is actively seeking new MLS and brokerage licenses that will enable expansion into more U.S. states. For more information, please visit www.reAlpha.com. Forward-Looking Statements The information in this press release includes “forward-looking statements”. Forward-looking statements include, among other things, statements about the Be My Neighbor acquisition; the anticipated benefits of the Be My Neighbor acquisition, reAlpha’s ability to anticipate the future needs of the short-term rental market; future trends in the real estate, technology and artificial intelligence industries, generally; and reAlpha’s future growth strategy and growth rate. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “could”, “might”, “plan”, “possible”, “project”, “strive”, “budget”, “forecast”, “expect”, “intend”, “will”, “estimate”, “anticipate”, “believe”, “predict”, “potential” or “continue”, or the negatives of these terms or variations of them or similar terminology. Factors that may cause actual results to differ materially from current expectations include, but are not limited to: reAlpha’s limited operating history and that reAlpha has not yet fully developed its AI-based technologies; reAlpha’s ability to commercialize its developing AI-based technologies; whether reAlpha’s technology and products will be accepted and adopted by its customers and intended users; reAlpha’s ability to integrate the business of Be My Neighbor into its existing business and the anticipated demand for Be My Neighbor’s services; the inability to maintain and strengthen reAlpha’s brand and reputation; the inability to accurately forecast demand for short-term rentals and AI-based real estate focused products; the inability to execute business objectives and growth strategies successfully or sustain reAlpha’s growth; the inability of reAlpha’s customers to pay for reAlpha’s services; changes in applicable laws or regulations, and the impact of the regulatory environment and complexities with compliance related to such environment; and other risks and uncertainties indicated in reAlpha’s SEC filings. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those anticipated in the forward-looking statements. Although reAlpha believes that the expectations reflected in the forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. reAlpha’s future results, level of activity, performance or achievements may differ materially from those contemplated, expressed or implied by the forward-looking statements, and there is no representation that the actual results achieved will be the same, in whole or in part, as those set out in the forward-looking statements. For more information about the factors that could cause such differences, please refer to reAlpha’s filings with the SEC. Readers are cautioned not to put undue reliance on forward-looking statements, and reAlpha does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Investor Relations Contact investorrelations@realpha.com Media Contact irlabs on behalf of reAlpha Fatema Bhabrawala fatema@irlabs.ca |
0000950142-24-000254:eh230443815_ex9901.htm | 0000950142-24-000254 | 1,805,284 | 1,805,284 | Rocket Companies, Inc. (RKT) (CIK 0001805284) | ['RKT'] | 8-K | 8-K | 2024-02-01 | 2024-02-01 | 001-39432 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-39432&action=getcompany | 24,585,200 | EX-99.1 | EXHIBIT 99.1 | 5.02,7.01,9.01 | https://www.sec.gov/Archives/edgar/data/1805284/000095014224000254 | https://www.sec.gov/Archives/edgar/data/1805284/000095014224000254/0000950142-24-000254-index.html | https://www.sec.gov/Archives/edgar/data/1805284/000095014224000254/eh230443815_ex9901.htm | EX-99.1 2 eh230443815_ex9901.htm EXHIBIT 99.1 EXHIBIT 99.1 Rocket Companies Appoints AI and Fintech Expert Alex Rampell to Board of Directors This appointment of Rampell, along with the recent addition of CEO Varun Krishna to the Board, furthers the Company’s fintech and AI-driven vision. DETROIT, February 1, 2024 – Rocket Companies (NYSE: RKT), the Detroit-based fintech platform company including mortgage, real estate and other financial services businesses, today announced that Alex Rampell has been appointed as an independent director to the Company’s Board of Directors. Rampell currently serves as General Partner at Andreessen Horowitz, focusing on fintech investments. A noted serial entrepreneur, he cofounded many tech-driven financial companies including Affirm, one of the largest businesses in the rapidly growing ‘buy-now-pay-later’ space, which went public in early 2021. He also cofounded TrialPay, a transactional advertising and payments company serving some of the world’s largest digital goods and e-commerce clients, which was acquired by Visa in 2015. Most recently, Rampell has been an advocate of the responsible use of artificial intelligence (AI), forecasting that generative AI will usher in significant transformation and disruption in the financial services space. “Alex possesses a rare and remarkable perspective on the intersection of technology, finance and emerging trends. For nearly three decades, he has been creating tech products that simplify the payments and financial processes for a number of large companies,” said Dan Gilbert, Founder and Chairman of Rocket Companies. “One of the world’s leading experts on artificial intelligence, he is also a highly sought-after consultant for many successful businesses. As Alex joins our Board, I look forward to his insight and having his influence on our business as we continue pursuing our mission of AI-powered homeownership.” Varun Krishna, Rocket Companies CEO, also joined the Board of Directors in December 2023. With more than 20 years of experience, Varun brings a wealth of knowledge and perspective into the fintech space. Now, combined with the addition of Alex Rampell, Rocket Companies has significantly bolstered its product and fintech expertise to complement the skills and experience of the existing Board. “When I heard Varun speak about the AI tools Rocket is creating, and the massive amount of data at their fingertips, I was simply blown away. The impact that Rocket can have for North Americans who are working toward their dream of homeownership is monumental,” said Rampell. “I’m looking forward to working closely with leadership and the Board to learn even more about how we can make Rocket the leader in using AI to simplify the process of buying, selling and financing homes.” Rampell is a tech visionary who has been a software engineer and innovator since childhood. At just 10 years old, he began developing “shareware” programs that were posted across the internet. After paper checks started filling his mailbox as payment for his software, he realized there had to be a way to better send and receive funds. This frustration led to his first foray into the fintech space, as he pioneered a way to receive payments through email. He continued building disruptive technology through high school and college, before founding many innovative startups. He joins at a key time for Rocket. The Company is well positioned to lead the transformation of the homebuying space through generative AI, using the technology to automate routine and complex tasks with the goal of driving a superior homebuying experience. In just a single year, Rocket used AI to generate approximately 3.7 billion customer interactions and decisions. Rampell also serves on the boards of several Andreessen Horowitz portfolio companies, including Branch, Brightside, Descript, Divvy, Earnin, FlyHomes, Loft, Mercury, Point, Propel, Sentilink, Super Evil Mega Corp, Wise Ltd and Very Good Security. He holds a BA in Applied Mathematics and Computer Science from Harvard University. # # # About Rocket Companies Founded in 1985, Rocket Companies (NYSE: RKT) is a Detroit-based fintech platform company including personal finance and consumer technology brands including Rocket Mortgage, Rocket Homes, Amrock, Rocket Money, Rocket Loans, Rocket Mortgage Canada, Lendesk, Core Digital Media and Rocket Connections. The Company helps clients achieve the goal of home ownership and financial freedom through industry-leading client experiences powered by its simple, fast and trusted digital solutions. J.D. Power has ranked Rocket Mortgage #1 in client satisfaction for both primary mortgage origination and servicing a total of 21 times. For more information, please visit the Rocket Companies Website or Investor Relations Website. |
0001013762-24-001780:ea021013701ex99-1_realpha.htm | 0001013762-24-001780 | 1,859,199 | 1,859,199 | reAlpha Tech Corp. (AIRE) (CIK 0001859199) | ['AIRE'] | 8-K | 8-K | 2024-07-29 | 2024-07-24 | 001-41839 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-41839&action=getcompany | 241,148,737 | EX-99.1 | PRESS RELEASE, DATED JULY 29, 2024 | 8.01,9.01 | https://www.sec.gov/Archives/edgar/data/1859199/000101376224001780 | https://www.sec.gov/Archives/edgar/data/1859199/000101376224001780/0001013762-24-001780-index.html | https://www.sec.gov/Archives/edgar/data/1859199/000101376224001780/ea021013701ex99-1_realpha.htm | EX-99.1 2 ea021013701ex99-1_realpha.htm PRESS RELEASE, DATED JULY 29, 2024 Exhibit 99.1 reAlpha Completes Strategic Acquisition of Controlling Interest of Hyperfast Title, Unlocking Title Capabilities and New Growth Opportunities Strategic purchase serves to vertically integrate the homebuying process Dublin, Ohio, July 29, 2024 – reAlpha Tech Corp. (“reAlpha” or the “Company”) (Nasdaq: AIRE), a real estate technology company developing and commercializing artificial intelligence (“AI”) technologies, today announced the acquisition of 85% of the outstanding membership interests of Hyperfast Title, LLC (“Hyperfast” or “Hyperfast Title”), a title company licensed to operate in Florida, Virginia and Tennessee, from the owners of Madison Settlement Services, LLC, a national title agency (“Madison Settlement Services”). This strategic acquisition adds title and settlement services under the reAlpha umbrella of real estate services and enhances the capabilities of Claire, its generative AI-powered, commission-free homebuying platform, powered through reAlpha Realty, LLC. Specifically, Hyperfast will enable reAlpha to provide title services to consumers who utilize Claire to purchase homes. “We are thrilled to welcome Hyperfast to the reAlpha family,” said Mike Logozzo, President and Chief Operating Officer of reAlpha. “This acquisition underscores our commitment to creating an integrated, easy-to-use full-service homebuying solution powered by our proprietary AI technology and talented professionals. We believe what we are building at reAlpha is truly unique and that this acquisition positions us for meaningful growth.” Acquiring title services aligns with reAlpha’s goal of vertically integrating the homebuying process, which we anticipate will result in a more seamless customer experience and increased revenue opportunities. reAlpha is also partnering with Madison Settlement Services to expand Claire into new geographic markets, leveraging their network of offices serving 33 U.S. states to offer real estate services nationwide. Hyperfast will continue to operate under its brand by co-founders David Breschi and Kristen Britton while benefiting from reAlpha’s resources and generative AI platform. “The purchase of Hyperfast Title aligns with our strategy of integrating highly complementary businesses into reAlpha to support our long-term growth,” said Sureet Pabbi, Associate Vice President of M&A at reAlpha. “Title services alone is a $23 billion industry1, and we will continue to diligently search for strategic acquisition opportunities and prudently deploy capital into companies we believe can help take reAlpha to the next level.” David Breschi, Chief Executive Officer of Madison Settlement Services added: “We believe that Claire marks the natural evolution of real estate transactions into the digital age – taking a process that for decades has been centered upon real estate agents and expensive real estate agent commissions to an online buyer-centered experience empowered through AI technology. We’re confident reAlpha is the future of real estate transactions, and we are honored to be part of the team.” About reAlpha Tech Corp. reAlpha Tech Corp. (NASDAQ: AIRE) is a real estate technology company developing an end-to-end commission-free homebuying platform. Utilizing the power of AI and an acquisition-led growth strategy, reAlpha’s goal is to offer a more affordable, streamlined experience for those on the journey to homeownership. For more information, visit www.realpha.com. About Claire Claire, announced on April 24, 2024, is reAlpha’s generative AI-powered, zero-commission homebuying platform. The tagline: No fees. Just keys.TM – reflects reAlpha’s dedication to eliminating traditional barriers and making homebuying more accessible and transparent. Claire’s introduction aligns with major shifts in the real estate sector2 after the National Association of Realtors (“NAR”) agreed to settle certain lawsuits upon being found to have violated antitrust laws, resulting in inflated fees paid to buy-side agents. This development is expected to result in the end of the standard six percent sales commission, which equates to approximately $100 billion in realtor fees paid annually. Claire offers a cost-free alternative for homebuyers by utilizing an AI-driven workflow that assists them through the home buying process. Homebuyers can use Claire’s conversational interface to guide them through every step of their journeys, from property search to closing the deal. By offering support 24/7, Claire is poised to make the homebuying process more efficient, enjoyable and cost-efficient. Claire matches buyers with their dream homes using over 400 data attributes and provides insights into market trends and property values. Additionally, Claire can assist with questions, booking property tours, submitting offers, and negotiations. Currently, Claire is under limited availability for homebuyers located in Palm Beach, Miami-Dade and Broward counties in South Florida, but reAlpha is actively seeking new MLS and brokerage licenses that will enable expansion into more U.S. states. For more information on Claire, please visit www.reAlpha.com. About Hyperfast Hyperfast was originally founded as a subsidiary of Madison Settlement Services, a 30-year-old real estate title company licensed in over 30 states that has served over 80,000 customers. 2 Forward-Looking Statements The information in this press release includes “forward-looking statements”. Forward-looking statements include, among other things, statements about the Hyperfast acquisition; the anticipated benefits of the Hyperfast acquisition, reAlpha’s ability to anticipate the future needs of the short-term rental market; future trends in the real estate, technology and artificial intelligence industries, generally; and reAlpha’s future growth strategy and growth rate. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “could”, “might”, “plan”, “possible”, “project”, “strive”, “budget”, “forecast”, “expect”, “intend”, “will”, “estimate”, “anticipate”, “believe”, “predict”, “potential” or “continue”, or the negatives of these terms or variations of them or similar terminology. Factors that may cause actual results to differ materially from current expectations include, but are not limited to: reAlpha’s limited operating history and that reAlpha has not yet fully developed its AI-based technologies; reAlpha’s ability to commercialize its developing AI-based technologies; whether reAlpha’s technology and products will be accepted and adopted by its customers and intended users; reAlpha’s ability to integrate the business of Hyperfast into its existing business and the anticipated demand for Hyperfast services; the inability to maintain and strengthen reAlpha’s brand and reputation; the inability to accurately forecast demand for short-term rentals and AI-based real estate focused products; the inability to execute business objectives and growth strategies successfully or sustain reAlpha’s growth; the inability of reAlpha’s customers to pay for reAlpha’s services; changes in applicable laws or regulations, and the impact of the regulatory environment and complexities with compliance related to such environment; and other risks and uncertainties indicated in reAlpha’s U.S. Securities and Exchange Commission (“SEC”) filings. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those anticipated in the forward-looking statements. Although reAlpha believes that the expectations reflected in the forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. reAlpha’s future results, level of activity, performance or achievements may differ materially from those contemplated, expressed or implied by the forward-looking statements, and there is no representation that the actual results achieved will be the same, in whole or in part, as those set out in the forward-looking statements. For more information about the factors that could cause such differences, please refer to reAlpha’s filings with the SEC. Readers are cautioned not to put undue reliance on forward-looking statements, and reAlpha does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Media irLabs on behalf of reAlpha Fatema Bhabrawala fatema@irlabs.ca 1https://www.ibisworld.com/united-states/market-research-reports/title-insurance-industry/ 2https://www.nar.realtor/magazine/real-estate-news/nar-practice-changes-to-take-effect-august-17 3 |
0000071691-25-000098:pressrelease03312025.htm | 0000071691-25-000098 | 71,691 | 71,691 | NEW YORK TIMES CO (NYT) (CIK 0000071691) | ['NYT'] | 8-K | 8-K | 2025-05-07 | 2025-05-07 | 001-05837 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-05837&action=getcompany | 25,919,226 | EX-99.1 | EX-99.1 | 2.02,9.01 | https://www.sec.gov/Archives/edgar/data/71691/000007169125000098 | https://www.sec.gov/Archives/edgar/data/71691/000007169125000098/0000071691-25-000098-index.html | https://www.sec.gov/Archives/edgar/data/71691/000007169125000098/pressrelease03312025.htm | EX-99.1 2 pressrelease03312025.htm EX-99.1 Document The New York Times Company Reports First-Quarter 2025 Results NEW YORK, May 7, 2025 – The New York Times Company (NYSE: NYT) announced today first-quarter 2025 results.Key Highlights•The Company added approximately 250,000 net digital-only subscribers compared with the end of the fourth quarter of 2024, bringing the total number of subscribers to 11.66 million.•Total digital-only average revenue per user (“ARPU”) increased 3.6 percent year-over-year to $9.54 largely driven by subscribers transitioning from promotional to higher prices and price increases on tenured non-bundled subscribers.•Growth in both digital subscribers and ARPU drove a year-over-year increase in digital subscription revenues of 14.4 percent.•Digital advertising revenues increased 12.4 percent year-over-year primarily due to areas of strong marketer demand and new advertising supply.•Affiliate, licensing and other revenues increased 3.7 percent year-over-year as a result of higher Wirecutter affiliate referral revenues and licensing revenues.•Operating costs increased 5.8 percent and adjusted operating costs (defined below) increased 4.9 percent year-over-year, largely as a result of higher cost of revenue, product development and general and administrative expenses.•Operating profit increased 21.3 percent year-over-year to $58.6 million, while adjusted operating profit (defined below) increased 21.9 percent year-over-year to $92.7 million.•Operating profit margin for the quarter was 9.2 percent and adjusted operating profit margin (defined below) was 14.6 percent, a year-over-year increase of approximately 110 and 180 basis points, respectively.•Diluted earnings per share for the quarter was $.30, a $.06 increase year-over-year and adjusted diluted earnings per share (defined below) was $.41, a $.10 increase year-over-year.Meredith Kopit Levien, president and chief executive officer, The New York Times Company, said, “As our first quarter results show, we've had a strong start to the year. Our strategy is working and our business is growing and demonstrating resilience amidst the current economic and geopolitical uncertainty. We have a diverse portfolio of world-class news coverage and leading lifestyle products; multiple, complementary revenue lines across subscriptions, advertising, affiliate and licensing; and a model that generates significant free cash flow and a strong balance sheet. All of which makes us confident we are continuing to build a larger, more profitable New York Times company.”Summary of Quarterly Results(In millions, except percentages, subscriber metrics (in thousands), ARPU and per share data)Q1 2025Q4 2024Q3 2024Q2 2024Q1 2024Total subscribers(1)11,660 11,430 11,090 10,840 10,550 Digital-only subscribers(1)11,060 10,820 10,470 10,210 9,910 Digital-only subscribers quarterly net additions(1)250 350 260 300 210 Total digital-only ARPU$9.54 $9.65 $9.45 $9.34 $9.21 % change year-over-year3.6 %4.4 %1.8 %2.1 %1.9 %Digital-only subscription revenues$335.0 $334.9 $322.2 $304.5 $293.0 % change year-over-year14.4 %16.0 %14.2 %12.9 %13.2 %Digital advertising revenues$70.9 $117.9 $81.6 $79.6 $63.0 % change year-over-year12.4 %9.5 %8.8 %7.8 %2.9 %Total revenues$635.9 $726.6 $640.2 $625.1 $594.0 % change year-over-year7.1 %7.5 %7.0 %5.8 %5.9 %Total operating costs$577.3 $580.0 $563.5 $545.7 $545.7 % change year-over-year5.8 %6.0 %5.4 %2.0 %2.4 %Adjusted operating costs(2)$543.2 $556.2 $536.0 $520.4 $518.0 % change year-over-year4.9 %6.5 %5.4 %4.4 %2.2 %Operating profit$58.6 $146.6 $76.7 $79.4 $48.3 Operating profit margin %9.2 %20.2 %12.0 %12.7 %8.1 %Adjusted operating profit (“AOP”) - NYTG$89.8 $167.0 $101.5 $107.1 $84.7 AOP margin % - NYTG15.3 %24.6 %17.0 %18.3 %15.2 %AOP - The Athletic$2.9 $3.5 $2.6 $(2.4)$(8.7)AOP(2)$92.7 $170.5 $104.2 $104.7 $76.1 AOP margin %(2)14.6 %23.5 %16.3 %16.7 %12.8 %Diluted earnings per share (“EPS”)$0.30 $0.75 $0.39 $0.40 $0.24 Adjusted diluted EPS(2)$0.41 $0.80 $0.45 $0.45 $0.31 Diluted shares164.9 165.3 165.8 165.5 165.6 (1) Subscribers (including net subscriber additions) are rounded to the nearest ten thousand.(2) Non-GAAP financial measure. See “Comparisons”, “Non-GAAP Financial Measures” and “Reconciliation of Non-GAAP Financial Measures” for more details.2ComparisonsUnless otherwise noted, all comparisons are for the first quarter of 2025 to the first quarter of 2024.The Company has changed the revenue caption on its Condensed Consolidated Statement of Operations from “Other” to “Affiliate, licensing and other” effective for the quarter ended March 31, 2025.As of the first quarter of 2025 we have updated our discussion of digital advertising revenue and no longer distinguish between “core” and “other” digital advertising. Digital advertising consists of display (which includes website and mobile applications), audio, email and video advertising revenue from advertisements that are sold either directly to marketers by our advertising sales teams or, currently for a smaller proportion, through programmatic auctions run by third-party ad exchanges. Digital advertising revenue also includes creative services fees.There was one fewer day in the first quarter of 2025 compared with the first quarter of 2024 as a result of 2024 being a leap year.First quarter 2025 results included the following special items:•A $4.5 million charge ($3.3 million or $0.02 per share after tax) related to a multiemployer pension plan liability adjustment.•$4.4 million of pre-tax litigation-related costs ($3.2 million or $0.02 per share after tax) in connection with a lawsuit against Microsoft Corporation and Open AI Inc. and various of its corporate affiliates alleging unlawful and unauthorized copying and use of the Company’s journalism and other content in connection with their development of generative artificial intelligence products (“Generative AI Litigation Costs”). Management determined to report Generative AI Litigation Costs as a special item beginning in the first quarter of 2024 because, unlike other litigation expenses, the Generative AI Litigation Costs arise from a discrete, complex and unusual proceeding and do not, in management’s view, reflect the Company’s ongoing business operational performance.First quarter 2024 results included the following special item:•$1.0 million of Generative AI Litigation Costs ($0.7 million or $0.0 per share after tax).This release refers to certain non-GAAP financial measures, including adjusted operating profit, adjusted operating costs, adjusted diluted EPS and free cash flow. See “Non-GAAP Financial Measures” and “Reconciliation of Non-GAAP Financial Measures” for more details, including a discussion of management’s reasons for the presentation of these non-GAAP financial measures and reconciliations to the most comparable GAAP financial measures.3Consolidated ResultsSubscribers and Net AdditionsThe Company ended the first quarter of 2025 with approximately 11.66 million subscribers to its print and digital products, including approximately 11.06 million digital-only subscribers. Of the 11.06 million digital-only subscribers, approximately 5.76 million were bundle and multiproduct subscribers.Compared with the end of the fourth quarter of 2024, there was a net increase of 250,000 digital-only subscribers. Compared with the end of the first quarter of 2024, there was a net increase of 1,150,000 digital-only subscribers.Average Revenue Per UserAverage revenue per user or “ARPU,” a metric we calculate to track the revenue generation of our digital subscriber base, represents the average revenue per digital subscriber over a 28-day billing cycle during the applicable quarter. For more information, please refer to the Supplemental Subscriber, ARPU and Subscriptions Revenues Information in the exhibits.Total digital-only ARPU was $9.54 for the first quarter of 2025, an increase of 3.6 percent compared with the first quarter of 2024 driven primarily by subscribers transitioning from promotional to higher prices and price increases on tenured non-bundled subscribers.Subscription RevenuesTotal subscription revenues increased 8.2 percent to $464.3 million in the first quarter of 2025. Subscription revenues from digital-only products increased 14.4 percent to $335.0 million due to an increase in bundle and multiproduct revenues and an increase in other single-product subscription revenues, partially offset by a decrease in news-only subscription revenues. Print subscription revenues decreased 5.0 percent to $129.2 million, primarily due to lower domestic home-delivery revenues.Advertising RevenuesFirst-quarter 2025 total advertising revenues increased 4.2 percent to $108.1 million while digital advertising revenues increased 12.4 percent and print advertising revenues decreased 8.5 percent.Digital advertising revenues were $70.9 million, or 65.6 percent of total Company advertising revenues, compared with $63.0 million, or 60.8 percent, in the first quarter of 2024. Digital advertising revenues increased primarily due to areas of strong marketer demand and new advertising supply. Print advertising revenues decreased primarily due to declines in the entertainment and luxury categories.Affiliate, Licensing and Other RevenuesAffiliate, licensing and other revenues increased 3.7 percent to $63.6 million in the first quarter of 2025, primarily as a result of higher Wirecutter affiliate referral revenues and licensing revenues.Total RevenuesIn the aggregate, subscription, advertising and affiliate, licensing and other revenues for the first quarter of 2025 increased 7.1 percent to $635.9 million from $594.0 million in the first quarter of 2024.4Operating CostsTotal operating costs increased 5.8 percent in the first quarter of 2025 to $577.3 million compared with $545.7 million in the first quarter of 2024. Operating costs in the first quarter of 2025 included, as special items, Generative AI Litigation Costs of $4.4 million and a multiemployer pension plan liability adjustment of $4.5 million. Operating costs in the first quarter of 2024 included, as a special item, Generative AI Litigation Costs of $1.0 million. Adjusted operating costs increased 4.9 percent to $543.2 million from $518.0 million in the first quarter of 2024.Cost of revenue increased 5.6 percent to $334.6 million compared with $316.9 million in the first quarter of 2024 due mainly to higher journalism costs, higher subscriber servicing costs, and higher digital content delivery costs.Sales and marketing costs increased 1.3 percent to $66.0 million compared with $65.1 million in the first quarter of 2024 due mainly to higher marketing and promotion costs. Media expenses, a component of sales and marketing costs that primarily represents the cost to promote our subscription business, increased 4.7 percent to $31.3 million in the first quarter of 2025 from $29.9 million in the first quarter of 2024.Product development costs increased 5.3 percent to $66.5 million compared with $63.2 million in the first quarter of 2024, primarily due to higher compensation and benefits expenses.General and administrative costs increased 1.4 percent to $79.9 million compared with $78.8 million in the first quarter of 2024, largely due to higher expenses from professional services and compensation and benefits, partially offset by lower severance expenses.5Business Segment ResultsWe have two reportable segments: NYTG and The Athletic. Management uses adjusted operating profit (loss) by segment in assessing performance and allocating resources. The Company includes in its presentation revenues and adjusted operating costs to arrive at adjusted operating profit (loss) by segment. Adjusted operating costs are defined as operating costs before depreciation and amortization, severance, multiemployer pension plan withdrawal costs and special items. Adjusted operating profit is defined as operating profit before depreciation and amortization, severance, multiemployer pension plan withdrawal costs and special items. Refer to Segment Information in the exhibits for more information on these segment measures.The New York Times GroupNYTG revenues increased 5.7 percent in the first quarter of 2025 to $588.9 million from $557.4 million in the first quarter of 2024. Subscription revenues increased 7.5 percent to $431.5 million from $401.4 million in the first quarter of 2024, primarily due to growth in subscription revenues from digital-only products, partially offset by decreases in print subscription revenues. Advertising revenues decreased 0.4 percent to $97.7 million from $98.0 million in the first quarter of 2024, due to lower revenues from print advertising which more than offset higher revenues from digital advertising. Affiliate, licensing and other revenues increased 3.0 percent to $59.7 million from $58.0 million in the first quarter of 2024, due to higher Wirecutter affiliate referral revenues.NYTG adjusted operating costs increased 5.6 percent in the first quarter of 2025 to $499.1 million from $472.7 million in the first quarter of 2024, primarily due to higher journalism, subscriber servicing, general and administrative and sales and marketing costs.NYTG adjusted operating profit increased 6.0 percent to $89.8 million from $84.7 million in the first quarter of 2024. This was primarily the result of higher digital subscription revenues, digital advertising revenues and affiliate, licensing and other revenues, partially offset by higher adjusted operating costs and lower print subscription and print advertising revenues.The AthleticThe Athletic revenues increased 27.9 percent in the first quarter of 2025 to $47.6 million from $37.2 million in the first quarter of 2024. Subscription revenues increased 18.5 percent to $32.7 million from $27.6 million in the first quarter of 2024, primarily due to growth in the number of subscribers with access to The Athletic (including through bundle subscriptions). Advertising revenues increased 82.5 percent to $10.4 million from $5.7 million in the first quarter of 2024, primarily due to higher revenues from display advertising. Affiliate, licensing and other revenues increased 14.7 percent to $4.4 million from $3.8 million in the first quarter of 2024, primarily due to an increase in licensing revenues.The Athletic adjusted operating costs decreased 2.6 percent in the first quarter of 2025 to $44.7 million from $45.9 million in the first quarter of 2024. The decrease was mainly due to lower sales and marketing costs and general and administrative costs, partially offset by higher journalism and product development costs.The Athletic adjusted operating profit increased $11.6 million to $2.9 million from a loss of $8.7 million in the first quarter of 2024. This was primarily the result of higher digital subscription revenues, higher digital advertising revenues and lower adjusted operating costs.6Consolidated Other DataInterest Income and Other, netInterest income and other, net in the first quarter of 2025 was $10.0 million compared with $8.4 million in the first quarter of 2024. The increase was primarily a result of higher interest rates on cash and marketable securities.Income TaxesThe Company had income tax expense of $14.4 million in the first quarter of 2025 compared with $15.2 million in the first quarter of 2024. The effective income tax rate was 22.5 percent in the first quarter of 2025 and 27.4 percent in the first quarter of 2024. The decrease in income tax expense in the first quarter of 2025 was due to a tax benefit in 2025 from stock appreciation on stock-based awards that settled in the quarter, partially offset by an increase in pre-tax income in the first quarter of 2025. The decrease in the effective income tax rate compared to the first quarter of 2024 was primarily attributable to a tax benefit from stock-based awards that settled in the first quarter of 2025.Earnings Per ShareDiluted EPS in the first quarter of 2025 was $.30 compared with $.24 in the same period of 2024. The increase in diluted EPS was primarily driven by higher operating profit and higher interest income. Adjusted diluted EPS was $.41 in the first quarter of 2025 compared with $.31 in the first quarter of 2024.LiquidityAs of March 31, 2025, the Company had cash and marketable securities of $902.3 million, a decrease of $9.5 million from $911.9 million as of December 31, 2024.The Company has a $350 million unsecured revolving line of credit. As of March 31, 2025, there were no outstanding borrowings under this credit facility, and the Company did not have other outstanding debt.Net cash provided by operating activities in the first quarter of 2025 was $99.1 million compared with $53.1 million in the same period of 2024. Free cash flow in the first quarter of 2025 was $89.9 million compared with $46.7 million in the same period of 2024. Net cash provided by operating activities in the first quarter of 2025 included net proceeds of approximately $33 million in connection with the lease and subsequent sale of approximately four acres of excess land at our printing and distribution facility in College Point, N.Y., which was finalized in February 2025.Shares RepurchasesDuring the quarter ended March 31, 2025, the Company repurchased 1,180,186 shares of its Class A Common Stock for an aggregate purchase price of approximately $58.9 million. As of May 2, 2025, approximately $443.0 million remains available and authorized for repurchases.Capital ExpendituresCapital expenditures totaled approximately $8 million in the first quarter of 2025 compared with approximately $7 million in the first quarter of 2024.7OutlookBelow is the Company’s guidance for revenues and adjusted operating costs for the second quarter of 2025 compared with the second quarter of 2024. The New York Times CompanyDigital-only subscription revenuesincrease 13 - 16%Total subscription revenuesincrease 8 - 10%Digital advertising revenuesincrease high-single-digitsTotal advertising revenuesflat to increase low-single-digitsAffiliate, licensing and other revenuesincrease mid-single-digitsAdjusted operating costsincrease 5 - 6%The Company expects the following on a pre-tax basis in 2025:•Depreciation and amortization: approximately $80 million•Interest income and other, net: approximately $40 million, and•Capital expenditures: approximately $40 million.Conference Call Information The Company’s first-quarter 2025 earnings conference call will be held on Wednesday, May 7, 2025, at 8:00 a.m. E.T.A live webcast of the earnings conference call will be available at investors.nytco.com.Participants can pre-register for the conference call at https://dpregister.com/sreg/10198896/fef35a3730, which will generate dial-in instructions allowing participants to bypass an operator at the time of the call. Alternatively, to access the call without pre-registration, dial 844-413-3940 (in the U.S.) or 412-858-5208 (international).An archive of the webcast will be available beginning about two hours after the call at investors.nytco.com. An audio replay will also be available at 877-344-7529 (in the U.S.) and 412-317-0088 (international) beginning approximately two hours after the call until 11:59 p.m. E.T. on Wednesday, May 21. The passcode for accessing the audio replay via phone is 4727904.About The New York Times CompanyThe New York Times Company (NYSE: NYT) is a trusted source of quality, independent journalism whose mission is to seek the truth and help people understand the world. With more than 11 million subscribers across a diverse array of print and digital products — from news to cooking to games to sports — The Times Company has evolved from a local and regional news leader into a diversified media company with curious readers, listeners and viewers around the globe. Follow news about the company at NYTCo.com.8Forward-Looking StatementsExcept for the historical information contained herein, the matters discussed in this press release are 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. Terms such as “aim,” “anticipate,” “believe,” “confidence,” “contemplate,” “continue,” “conviction,” “could,” “drive,” “estimate,” “expect,” “forecast,” “future,” “goal,” “guidance,” “intend,” “likely,” “may,” “might,” “objective,” “opportunity,” “optimistic,” “outlook,” “plan,” “position,” “potential,” “predict,” “project,” “seek,” “should,” “strategy,” “target,” “will,” “would” or similar statements or variations of such words and other similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such terms. Forward-looking statements are based upon our current expectations, estimates and assumptions and involve risks and uncertainties that change over time; actual results could differ materially from those predicted by such forward-looking statements. These risks and uncertainties include, but are not limited to: significant competition in all aspects of our business; our ability to grow the size and profitability of our subscriber base; our dependence on third-party platforms for attracting, retaining and monetizing a significant portion of our users; our dependence on user and other metrics that are subject to inherent challenges in measurement; numerous factors that affect our advertising revenues, including market dynamics, evolving digital advertising trends and the evolution of our strategy; damage to our brand or reputation from negative perceptions or publicity or otherwise; risks associated with generative artificial intelligence technology; economic, market and political conditions or other events; risks associated with the international scope of our business and foreign operations; significant disruptions in our newsprint supply chain or newspaper printing and distribution channels or a significant increase in the costs to print and distribute our newspaper; risks associated with environmental, social and governance matters; risks associated with litigation or governmental investigations; our ability to protect our intellectual property; claims against us of intellectual property infringement; our ability to improve and scale our technical and data infrastructure; security incidents and other network and information systems disruptions; our ability to comply with laws and regulations with respect to privacy, data protection and consumer marketing and subscriptions practices; payment processing risk; our dependence on continued and unimpeded access to the internet and cloud-based hosting services we utilize; risks associated with attracting and maintaining a talented and diverse workforce; the impact of labor negotiations and collective bargaining agreements; potential limits on our operating flexibility due to the nature of our employee-related costs; the effects of the size and volatility of our pension plan obligations; liabilities that may result from our participation in multiemployer pension plans; risks associated with acquisitions, divestitures, investments and similar transactions; the risks and challenges associated with investments we make in new and existing products and services; our ability to meet our publicly announced guidance and/or targets; the effects of restrictions on our operations as a result of the terms of our credit facility; potential limits on our future access to capital markets and other financing options; and the concentration of control of our company due to our dual-class capital structure.More information regarding these risks and uncertainties and other important factors that could cause actual results to differ materially from those in the forward-looking statements is set forth in the Company’s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2024, and subsequent filings. Investors are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.9Non-GAAP Financial MeasuresThis release refers to certain non-GAAP financial measures, including adjusted operating profit, defined as operating profit before depreciation, amortization, severance, multiemployer pension plan withdrawal costs and special items; adjusted operating profit margin, defined as adjusted operating profit divided by revenues; adjusted operating costs, defined as operating costs before depreciation, amortization, severance and multiemployer pension plan withdrawal costs and special items; adjusted diluted EPS, defined as diluted EPS excluding amortization of acquired intangible assets, severance, non-operating retirement costs and special items; and free cash flow, defined as net cash provided by operating activities less capital expenditures. Refer to “Reconciliation of Non-GAAP Financial Measures” in the exhibits for a discussion of management’s reasons for the presentation of these non-GAAP financial measures and reconciliations to the most comparable GAAP financial measures. Certain guidance is provided on a non-GAAP basis and not reconciled to the most directly comparable GAAP measure because we are unable to provide, without unreasonable effort, a calculation or estimation of amounts necessary for such reconciliation due to the inherent difficulty of forecasting such amounts.Exhibits:Condensed Consolidated Statements of OperationsFootnotesSupplemental Subscriber and ARPU InformationSegment InformationReconciliation of Non-GAAP Financial MeasuresContacts:Media:Danielle Rhoades Ha, 212-556-8719; danielle.rhoades-ha@nytimes.comInvestors:Anthony DiClemente, 212-556-7661; anthony.diclemente@nytimes.com10THE NEW YORK TIMES COMPANYCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(Dollars and shares in thousands, except per share data)First Quarter 20252024% ChangeRevenuesSubscription(a)$464,257 $429,005 8.2 %Advertising(b)108,076 103,711 4.2 %Affiliate, licensing and other(c)63,577 61,299 3.7 %Total revenues635,910 594,015 7.1 %Operating costsCost of revenue (excluding depreciation and amortization)334,637 316,867 5.6 %Sales and marketing65,959 65,134 1.3 %Product development66,539 63,185 5.3 %General and administrative79,913 78,815 1.4 %Depreciation and amortization21,378 20,706 3.2 %Generative AI Litigation Costs(d)4,397 989 *Multiemployer pension plan liability adjustment(e)4,453 — *Total operating costs577,276 545,696 5.8 %Operating profit58,634 48,319 21.3 %Other components of net periodic benefit costs(4,638)(1,051)*Interest income and other, net9,972 8,387 18.9 %Income before income taxes63,968 55,655 14.9 %Income tax expense14,417 15,238 (5.4)%Net income$49,551 $40,417 22.6 %Average number of common shares outstanding:Basic163,779 164,632 (0.5)%Diluted164,908 165,630 (0.4)%Basic earnings per share attributable to common stockholders$0.30 $0.25 20.0 %Diluted earnings per share attributable to common stockholders$0.30 $0.24 25.0 %Dividends declared per share$0.18 $0.13 38.5 %* Represents a change equal to or in excess of 100% or not meaningful.See footnotes pages for additional information.11THE NEW YORK TIMES COMPANYFOOTNOTES(Dollars in thousands)(a) The following table summarizes digital and print subscription revenues for the first quarters of 2025 and 2024:First Quarter20252024% ChangeDigital-only subscription revenues(1)$335,026 $292,978 14.4 %Print subscription revenues(2)129,231 136,027 (5.0)%Total subscription revenues$464,257 $429,005 8.2 %(1)Includes revenue from bundled subscriptions and standalone subscriptions to our news product, as well as to The Athletic and to our Audio, Cooking, Games and Wirecutter products.(2)Includes domestic home-delivery subscriptions, which include access to our digital products. Also includes single-copy, NYT International and Other subscription revenues.(b) The following table summarizes digital and print advertising revenues for the first quarters of 2025 and 2024:First Quarter20252024% ChangeDigital advertising revenues$70,866 $63,026 12.4 %Print advertising revenues37,210 40,685 (8.5)%Total advertising revenues$108,076 $103,711 4.2 %(c)Affiliate, licensing and other revenues include revenues from licensing, Wirecutter affiliate referrals, commercial printing, the leasing of floors in the Company headquarters, retail commerce and our live events business. Digital affiliate, licensing and other revenues, which consist primarily of Wirecutter affiliate referral revenue and digital licensing revenues, totaled $40.1 million and $35.8 million for the first quarter of 2025 and 2024, respectively.(d)In the first quarters of 2025 and 2024, the Company recorded $4.4 million ($3.2 million or $0.02 per share after tax) and $1.0 million ($0.7 million or $0.0 per share after tax), respectively, of pre-tax litigation-related costs in connection with a lawsuit against Microsoft and Open AI Inc. alleging unlawful and unauthorized copying and use of the Company’s journalism and other content in connection with their development of generative artificial intelligence products.(e)In the first quarter of 2025, the Company recorded a $4.5 million charge ($3.3 million or $0.02 per share after tax) related to a multiemployer pension plan liability adjustment.12THE NEW YORK TIMES COMPANYSUPPLEMENTAL SUBSCRIBER AND ARPU INFORMATION(Amounts in thousands, except for ARPU)We offer a digital subscription package (or “bundle”) that includes access to our digital news product (which includes our news website, NYTimes.com, and mobile applications), as well as to The Athletic and to our Audio, Cooking, Games and Wirecutter products. Our subscriptions also include standalone digital subscriptions to each of these products.The following tables present information regarding the number of subscribers to the Company’s products as well as certain additional metrics. A subscriber is defined as a user who has subscribed (and provided a valid method of payment) for the right to access one or more of the Company’s products. Subscribers with a domestic home-delivery print subscription to The New York Times, which includes access to our digital products, are excluded from digital-only subscribers.The following table sets forth subscribers as of the end of the five most recent fiscal quarters:Q1 2025Q4 2024Q3 2024Q2 2024Q1 2024Digital-only subscribers:Bundle and multiproduct(1)(2)5,760 5,440 5,120 4,830 4,550 News-only(2)(3)1,790 1,930 2,110 2,290 2,500 Other single-product(2)(4)3,500 3,450 3,240 3,100 2,860 Total digital-only subscribers(2)(5)11,060 10,820 10,470 10,210 9,910 Print subscribers(6)600 610 620 630 640 Total subscribers11,660 11,430 11,090 10,840 10,550 (1)Subscribers with a bundle subscription or standalone digital-only subscriptions to two or more of the Company’s products.(2)Includes group corporate and group education subscriptions, which collectively represented approximately 6% of total digital-only subscribers as of the end of the first quarter of 2025. The number of group subscribers is derived using the value of the relevant contract and a discounted subscription rate.(3)Subscribers with only a digital-only news product subscription.(4)Subscribers with only one digital-only subscription to The Athletic or to our Audio, Cooking, Games or Wirecutter products.(5)Subscribers with digital-only subscriptions to one or more of our news product, The Athletic, or our Audio, Cooking, Games and Wirecutter products.(6)Subscribers with a domestic home-delivery or mail print subscription to The New York Times, which includes access to our digital products, or a print subscription to our Book Review or Large Type Weekly products.The sum of individual metrics may not always equal total amounts indicated due to rounding. Subscribers (including net subscriber additions) are rounded to the nearest ten thousand.The following table sets forth ARPU metrics relating to the above digital-only subscriber categories for the five most recent fiscal quarters:Q1 2025Q4 2024Q3 2024Q2 2024Q1 2024Digital-only ARPU:Bundle and multiproduct$12.38 $12.53 $12.35 $11.96 $11.79 News-only$12.12 $11.95 $11.48 $11.26 $10.88 Other single-product$3.54 $3.58 $3.59 $3.65 $3.59 Total digital-only ARPU$9.54 $9.65 $9.45 $9.34 $9.21 ARPU metrics are calculated by dividing the digital subscription revenues in the quarter by the average number of digital-only subscribers divided by the number of days in the quarter multiplied by 28 to reflect a 28-day billing cycle. In calculating ARPU metrics, for our subscriber categories (Bundle and multiproduct, News-only and Other single-product), we use the monthly average number of digital-only subscribers (calculated as the sum of the number of subscribers in each category at the beginning and end of the month, divided by two) and for Total digital-only ARPU, we use the daily average number of digital-only subscribers.13THE NEW YORK TIMES COMPANYSEGMENT INFORMATION(Dollars in thousands)We have two reportable segments: NYTG and The Athletic. Management uses adjusted operating profit (loss) by segment in assessing performance and allocating resources. The Company includes in its presentation revenues and adjusted operating costs to arrive at adjusted operating profit (loss) by segment. Adjusted operating costs are defined as operating costs before depreciation and amortization, severance, multiemployer pension plan withdrawal costs and special items. Adjusted operating profit is defined as operating profit before depreciation and amortization, severance, multiemployer pension plan withdrawal costs and special items. Adjusted operating profit expressed as a percentage of revenues is referred to as adjusted operating profit margin.Subscription revenues from and expenses associated with our bundle are allocated to NYTG and The Athletic.We allocate 10% of all bundle subscription revenues to The Athletic based on management’s view of The Athletic’s relative value to the bundle, which we derived based on analysis of various metrics.We allocate 10% of product development, marketing and subscriber servicing expenses (including direct variable expenses such as credit card fees, third party fees and sales taxes) associated with the bundle to The Athletic, and the remaining costs are allocated to NYTG, in each case, in line with the revenues allocations.First Quarter20252024% ChangeRevenuesNYTG$588,913$557,3945.7 %The Athletic47,56037,18427.9 %Intersegment eliminations(1)(563)(563)— Total revenues$635,910$594,0157.1 %Adjusted operating costsNYTG$499,091$472,6505.6 %The Athletic44,68445,874(2.6)%Intersegment eliminations(1)(563)(563)— Total adjusted operating costs$543,212$517,9614.9 %Adjusted operating profit (loss)NYTG$89,822$84,7446.0 %The Athletic2,876(8,690)*Total adjusted operating profit$92,698$76,05421.9 %AOP margin % - NYTG15.3 %15.2 %10 bps(1)Intersegment eliminations (“I/E”) related to content licensing.* Represents a change equal to or in excess of 100% or not meaningful.14THE NEW YORK TIMES COMPANYSEGMENT INFORMATION(Dollars in thousands)Revenues detail by segmentFirst Quarter20252024% ChangeNYTGSubscription$431,520 $401,370 7.5 %Advertising97,658 98,004 (0.4)%Affiliate, licensing and other59,735 58,020 3.0 %Total$588,913 $557,394 5.7 %The Athletic Subscription$32,737 $27,635 18.5 %Advertising10,418 5,707 82.5 %Affiliate, licensing and other4,405 3,842 14.7 %Total$47,560 $37,184 27.9 %I/E(1)$(563)$(563)— The New York Times CompanySubscription$464,257 $429,005 8.2 %Advertising108,076 103,711 4.2 %Affiliate, licensing and other63,577 61,299 3.7 %Total$635,910 $594,015 7.1 %(1)Intersegment eliminations (“I/E”) related to content licensing recorded in Affiliate, licensing and other revenues.* Represents a change equal to or in excess of 100% or not meaningful.15THE NEW YORK TIMES COMPANYSEGMENT INFORMATION(Dollars in thousands)Adjusted operating costs (operating costs before depreciation and amortization, severance, multiemployer pension plan withdrawal costs and special items) detail by segmentFirst Quarter20252024% ChangeNYTGCost of revenue (excluding depreciation and amortization)$307,260 $292,457 5.1 %Sales and marketing59,982 55,481 8.1 %Product development57,249 54,865 4.3 %Adjusted general and administrative(1)74,600 69,847 6.8 %Total$499,091 $472,650 5.6 %The Athletic Cost of revenue (excluding depreciation and amortization)$27,940 $24,973 11.9 %Sales and marketing5,977 9,653 (38.1)%Product development9,290 8,320 11.7 %Adjusted general and administrative(2)1,477 2,928 (49.6)%Total$44,684 $45,874 (2.6)%I/E(3)$(563)$(563)— The New York Times CompanyCost of revenue (excluding depreciation and amortization)$334,637 $316,867 5.6 %Sales and marketing65,959 65,134 1.3 %Product development66,539 63,185 5.3 %Adjusted general and administrative76,077 72,775 4.5 %Total$543,212 $517,961 4.9 %(1)Excludes severance of $2.6 million and multiemployer pension withdrawal costs of $1.2 million for the first quarter of 2025. Excludes severance of $4.0 million and multiemployer pension withdrawal costs of $1.6 million for the first quarter of 2024.(2)Excludes severance of $0.4 million for the first quarter of 2024. There were no severance costs in the first quarter of 2025.(3)Intersegment eliminations (“I/E”) related to content licensing recorded in Cost of revenue (excluding depreciation and amortization).* Represents a change equal to or in excess of 100% or not meaningful.16THE NEW YORK TIMES COMPANYRECONCILIATION OF NON-GAAP FINANCIAL MEASURESIn this release, the Company has referred to non-GAAP financial information with respect to adjusted diluted EPS, defined as diluted EPS excluding amortization of acquired intangible assets, severance, non-operating retirement costs and special items; adjusted operating profit, defined as operating profit before depreciation, amortization, severance, multiemployer pension plan withdrawal costs and special items; adjusted operating profit margin, defined as adjusted operating profit divided by revenues; adjusted operating costs, defined as operating costs before depreciation, amortization, severance, multiemployer pension withdrawal costs and special items; and free cash flow, defined as net cash provided by operating activities less capital expenditures. The Company has included these non-GAAP financial measures because management reviews them on a regular basis and uses them to evaluate and manage the performance of the Company’s operations. Management believes that, for the reasons outlined below, these non-GAAP financial measures provide useful information to investors as a supplement to reported diluted earnings/(loss) per share, operating profit/(loss) and operating costs. However, these measures should be evaluated only in conjunction with the comparable GAAP financial measures and should not be viewed as alternative or superior measures of GAAP results.Adjusted diluted EPS provides useful information in evaluating the Company’s period-to-period performance because it eliminates items that the Company does not consider to be indicative of earnings from ongoing operating activities. Adjusted operating profit and adjusted operating profit margin are useful in evaluating the ongoing performance of the Company’s business as they exclude the significant non-cash impact of depreciation and amortization as well as items not indicative of ongoing operating activities. Total operating costs include depreciation, amortization, severance, multiemployer pension plan withdrawal costs and special items. Adjusted operating costs provide investors with helpful supplemental information on the Company’s underlying operating costs that is used by management in its financial and operational decision-making.Management considers special items, which may include impairment charges, pension settlement charges, acquisition-related costs, and beginning in the first quarter of 2024, Generative AI Litigation Costs, as well as other items that arise from time to time, to be outside the ordinary course of our operations. Management believes that excluding these items provides a better understanding of the underlying trends in the Company’s operating performance and allows more accurate comparisons of the Company’s operating results to historical performance. Management determined to report Generative AI Litigation Costs as a special item and thus exclude them beginning in the first quarter of 2024 because, unlike other litigation expenses which are not excluded, the Generative AI Litigation Costs arise from a discrete, complex and unusual proceeding and do not, in management’s view, reflect the Company’s ongoing business operational performance. In addition, management excludes severance costs, which may fluctuate significantly from quarter to quarter, because it believes these costs do not necessarily reflect expected future operating costs and do not contribute to a meaningful comparison of the Company’s operating results to historical performance.The Company considers free cash flow as providing useful information to management and investors about the amount of cash that is available to be used to strengthen the Company’s balance sheet, for strategic opportunities, including investing in the Company’s business and strategic acquisitions, and/or for the return of capital to stockholders in the form of dividends and stock repurchases.Non-operating retirement costs include (i) interest cost, expected return on plan assets, amortization of actuarial gains and loss components and amortization of prior service credits of single-employer pension expense, (ii) interest cost, amortization of actuarial gains and loss components and (iii) all multiemployer pension plan withdrawal costs. These non-operating retirement costs are primarily tied to financial market performance including changes in market interest rates and investment performance. Management considers non-operating retirement costs to be outside the performance of the business and believes that presenting adjusted diluted EPS excluding non-operating retirement costs and presenting adjusted operating results excluding multiemployer pension plan withdrawal costs, in addition to the Company’s GAAP diluted EPS and GAAP operating results, provide increased transparency and a better understanding of the underlying trends in the Company’s operating business performance.Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are set out in the tables below.17THE NEW YORK TIMES COMPANYRECONCILIATION OF NON-GAAP FINANCIAL MEASURES(Dollars in thousands, except per share data)Reconciliation of diluted EPS excluding amortization of acquired intangible assets, severance, non-operating retirement costs and special items (or adjusted diluted EPS)First Quarter20252024% ChangeDiluted EPS$0.30 $0.24 25.0 %Add:Amortization of acquired intangible assets0.04 0.04 — Severance0.02 0.03 (33.3)%Non-operating retirement costs: Multiemployer pension plan withdrawal costs0.01 0.01 — Other components of net periodic benefit costs0.03 0.01 *Special items:Generative AI Litigation Costs0.03 0.01 *Multiemployer pension plan liability adjustment0.03 — *Income tax expense of adjustments(0.04)(0.02)*Adjusted diluted EPS(1)$0.41 $0.31 32.3 %(1)Amounts may not add due to rounding.* Represents a change equal to or in excess of 100% or not meaningful.Reconciliation of operating profit before depreciation and amortization, severance, multiemployer pension plan withdrawal costs and special items (or adjusted operating profit)First Quarter20252024% ChangeOperating profit$58,634$48,31921.3 %Add:Depreciation and amortization21,37820,7063.2 %Severance2,6074,428(41.1)%Multiemployer pension plan withdrawal costs1,2291,612(23.8)%Generative AI Litigation Costs4,397989*Multiemployer pension plan liability adjustment4,453—*Adjusted operating profit$92,698$76,05421.9 %Divided by:Revenues$635,910$594,0157.1 %Operating profit margin9.2 %8.1 %110 bpsAdjusted operating profit margin14.6 %12.8 %180 bps* Represents a change equal to or in excess of 100% or not meaningful.18THE NEW YORK TIMES COMPANYRECONCILIATION OF NON-GAAP FINANCIAL MEASURES(Dollars in thousands)Reconciliation of total operating costs before depreciation and amortization, severance, multiemployer pension plan withdrawal costs and special items (or adjusted operating costs)First Quarter20252024NYTGThe AthleticI/E(1)TotalNYTGThe AthleticI/E(1)Total% ChangeTotal operating costs$526,558 $51,281 $(563)$577,276 $493,275 $52,984 $(563)$545,696 5.8 %Less:Depreciation and amortization14,781 6,597 — 21,378 14,025 6,681 — 20,706 3.2 %Severance2,607 — — 2,607 3,999 429 — 4,428 (41.1)%Multiemployer pension plan withdrawal costs1,229 — — 1,229 1,612 — — 1,612 (23.8)%Generative AI Litigation Costs4,397 — — 4,397 989 — — 989 *Multiemployer pension plan liability adjustment4,453 — — 4,453 — — — — *Adjusted operating costs$499,091 $44,684 $(563)$543,212 $472,650 $45,874 $(563)$517,961 4.9 %(1)Intersegment eliminations (“I/E”) related to content licensing.* Represents a change equal to or in excess of 100% or not meaningful.Reconciliation of net cash provided by operating activities before capital expenditures (or free cash flow)Three Months20252024Net cash provided by operating activities(1)$99,088 $53,079 Less: Capital expenditures(9,237)(6,424)Free cash flow$89,851 $46,655 (1)Net cash provided by operating activities in the first quarter of 2025 included net proceeds of approximately $33 million in connection with the lease and subsequent sale of approximately four acres of excess land at our printing and distribution facility in College Point, N.Y., which was finalized in February 2025.19 |
0000829323-23-000026:inuvoirdeck2023.htm | 0000829323-23-000026 | 829,323 | 829,323 | Inuvo, Inc. (INUV) (CIK 0000829323) | ['INUV'] | 8-K | 8-K | 2023-05-22 | 2023-05-22 | 001-32442 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-32442&action=getcompany | 23,945,246 | EX-99.2 | EX-99.2 | 5.03,5.07,9.01 | https://www.sec.gov/Archives/edgar/data/829323/000082932323000026 | https://www.sec.gov/Archives/edgar/data/829323/000082932323000026/0000829323-23-000026-index.html | https://www.sec.gov/Archives/edgar/data/829323/000082932323000026/inuvoirdeck2023.htm | EX-99.2 5 inuvoirdeck2023.htm EX-99.2 inuvoirdeck2023 May 2023 Investor Presentation Using Generative Artificial Intelligence based on a large language model to redefine how audiences are discovered & actioned for a privacy-first future. Safe Harbor Statement / Non-Disclosure This presentation includes or incorporates by reference statements that constitute 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 statements relate to future events or to our future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause the Company’s actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. These statements include, but are not limited to, information or assumptions about expenses, capital and other expenditures, financing plans, capital structure, cash flow, liquidity, management’s plans, goals and objectives for future operations and growth. In some cases, you can identify forward-looking statements by the use of words such as “may,” “could,” “expect,” “intend,” “plan,” “seek,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue,” or the negative of these terms or other comparable terminology. You should not place undue reliance on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and which could cause actual performance or results to differ materially from those expressed in or suggested by forward-looking statements. These statements are based on the current expectations or beliefs of the Company’s management and are subject to various known and unknown risks that could cause actual results to differ materially from those described in the forward-looking statements, including, but not limited to, product demand, pricing, market acceptance, changing economic conditions, risks in product and technology development, the effect of the Company's accounting policies, increasing competition, the Company’s ability to integrate companies and businesses acquired by it and certain other risk factors, including those that are set forth from time to time in the Company's filings with the United States Securities and Exchange Commission, which may cause the actual results, performance and achievements of the Company to be materially different from any future results, performance and achievements implied by such forward-looking statements. Artificial Intelligence Audience Discovery & Execution 95 associates with offices in San Jose and Little Rock $76.5M TTM Revenue @ 26.5% YOY growth $50M invested 27 Patents/Pending The Leaders that invented the technology of the last marketing paradigm have invented the new paradigm Richard Howe Chairman/CEO Charles Morgan Director, Investor InfoBase AbiliTec Personicx INUV (NYSE American) Investment Highlights Rapid Revenue Growth The demand for Advertising Technology not dependent on identity and consumer data has fueled the 26% YOY growth in 2022. Proven Client Performance Inuvo delivers unmatched campaign performance that has outperformed client branding and performance goals on average by 50%. Disruptive AI Technology $200 billion dollars of media spend is expected to be significantly impacted by the obsolescence of using the cookie & consumer data. Inuvo poised to take market share, having invested ~$50M in proprietary AI. Scalable Software & Services Inuvo’s platforms offer scalability by adding/servicing Fortune 3000 clients, combined with the high margins/recurring revenue associated with a SaaS business model. Balance Sheet Inuvo had $2M cash and a NWC ratio of 1.1 @ 03-31- 23. Inuvo has a receivables-based facility of $5M Solid & Growing IP Portfolio Inuvo’s intellectual property is protected by 19 issued and 8 pending patents. % Information in this presentation is considered confidential and proprietary to Inuvo and should not be disclosed or shared with others without Inuvo’s permission. Information in this presentation is considered confidential and proprietary to Inuvo and should not be disclosed or shared with others without Inuvo’s permission. Incumbent Media / AdTech companies are using third- party cookie IDs to persistently track and target audiences. Less than 33% of all media available remains targetable this way. Incumbent Media / AdTech companies are proposing to use first-party cookie IDs to track and target audiences. Less than 3% of all media available is targetable this way. Media / AdTech companies require IP address to link devices. This linkage significantly hinders the ability to respond to ad opportunities within 7ms and browsers are now beginning to mask IP address. Consumers, in record numbers, are adopting VPN and incognito browsing solutions that eliminate the ability to identify and target consumers using their personal data. An Opportunity to Leapfrog Competitors Using technology & services designed around targeting people is obsolete. Apple is now blocking all the identity mechanisms (cookies, IP and eMail addresses) "The demise of third-party cookies and identifiers. How this big shift will threaten the U.S. digital advertising industry – and compel its transformation." Information in this presentation is considered confidential and proprietary to Inuvo and should not be disclosed or shared with others without Inuvo’s permission. Inuvo Proprietary AI Optimizes Media JIT across Channels: • Uses historical spend within each individual channel + the success metric being optimized (e.g., ROAS) • Finds, isolates, and automatically creates rule sets that isolate patterns • Confidently exposes these patterns that define the contribution of each channel • Allows for optimization of spend across channels to maximize success metric Example: You spend $1M/month across TikTok, Facebook, AdWords, Cable TV, Connected TV, Display and Online Video. The AI recommends a distribution of spend optimized at 5%, 20%, 30%, 10%, 20%, 10% & 5%. Audience Discovery, Targeting & Attribution The cornerstone of online advertising is crumbling along with the cookie. Example: You sell audio-based sleep aids. Among the many potential audiences, the AI finds & targets pug owners because their notorious breathing difficulties tend to keep owners awake at night. Inuvo Proprietary Generative AI Finds and Actions Audiences: • Finds audiences base on why not who is interested in product, service or brand. • Trained on the collective wisdom of humanity as represented by the collective content of the internet - A Large Language Model • Instantly understands the association between every concept on a page with every other concept that exists • Each client has its own custom AI capable of discovering its audiences. No more competing with everyone else for a finite list of cookie IDs. Information in this presentation is considered confidential and proprietary to Inuvo and should not be disclosed or shared with others without Inuvo’s permission. Data Suppliers: Consumer data requires a cookie ID. Cookie- based technologies are becoming obsolete. DMP & Data Aggregators: The purpose is to store consumer data for use in targeting audiences. See Data Suppliers. Media Planning & Attribution: Attribution technologies based on identity / cookie are becoming obsolete. Retargeting: Based on targeting cookie IDs that are fast becoming obsolete. *Creative, Social & Publisher: Can be Powered by Inuvo AI insights not identity. *Holding Companies: Billions of dollars spent purchasing identity & data companies and technology. AI capable of discovering and actioning audiences replaces identity-based technologies which Inuvo believes are becoming obsolete. Inuvo’s Strategic Impact on the Industry AI AI AI AI AI Artificial Intelligence that Models the Brain SleepBuds Information in this presentation is considered confidential and proprietary to Inuvo and should not be disclosed or shared with others without Inuvo’s permission. Snoring dog keeps owner up Northern sun keeps people awake Healthy body improves sleep Need Alternative to pills / devices Exploring sleep options Trained on billions pages of content, Language model generative AI understands Audiences at the Conceptual level Identifying the Reasons WHY, Not WHO Urban Living Married With Two Children (10 And 8) Male Age 30-45 Dual HHI Income: $140,000 College Degree Interested in Technology Interested In Fashion Frequent Business Traveler Competitors all buying the same curated WHO based Prospecting Audiences Custom Prospecting Audiences based on JIT signals associated with WHY they are interested. Sleep Aid Product Technology that shifts the paradigm to an audience made up of concepts not identities Owns a Pug Dog Noisy Pets Needs Noise Canceling Headphones Wants to Improve Sleep Quality Listens to Music Needs Study Aids Live in Northern Geo's Has Sleep Apnea Has Trouble Sleeping Brachy Syndrome Pugs Lives in a Big City Business Traveler Short Snout Dogs Noise Cancel Information in this presentation is considered confidential and proprietary to Inuvo and should not be disclosed or shared with others without Inuvo’s permission. Tell me WHY people purchase eBikes?ChatGPT: Tell me WHY people purchase eBikes?INUVO AI: Media Actionable? NO Media Actionable? YES IP/Cookie ? Not Req’d Consumer Data? Not Req’d People who want to purchase an eBike can come from a wide range of backgrounds and demographics. However, some common characteristics of eBike buyers include: • Environmental Consciousness: eBikes are seen as a greener alternative to traditional gas-powered vehicles, as they produce zero emissions and can reduce a person's carbon footprint. • Health and Fitness: While eBikes still require pedaling, the electric motor can make it easier to travel longer distances or tackle hilly terrain, which can be appealing to people who are looking to improve their health and fitness • Cost Savings: eBikes can be a cost-effective alternative to owning a car or using public transportation. They also require less maintenance and can be less expensive to operate than a car. • Adventure: eBikes can be a fun and exciting way to explore new areas or go on outdoor adventures. • Commuting: eBikes can be a convenient mode of transportation for people who want to commute to work or run errands without the hassle of finding parking or dealing with traffic congestion. • Overall, people who want to purchase an eBike are often looking for a sustainable, healthy, and convenient mode of transportation that can fit into their lifestyle Audience Demand/Supply • 4m potential prospects • 240m daily in-market ad impressions A I D er iv ed A ud ie nc e D em og ra ph ic s 0% 10% 20% 30% 40% 50% College No College Education 0% 10% 20% 0-17 25-34 45-54 65+ Age 0% 20% 40% 60% 80% African American Asian Caucasian Hispanic Other Ethnicity 0% 50% $0K-50K $100K-150K $150K+ $50K-100K Income AI Derived Audience Geographical Interest Actionable Concepts Exhibited by Your Audience Folding ebikes Folding electric bike Shimano City riding Traffic chaos Pedal assist Longer commute Bike for everyone Integrated lighting Aluminum frame Ride longer Dependable power 48V Quality Battery Hydraulic disc breaks Derailleur Actionable TV Audiences • The Last Alaskans • Sunrise Earth • Going RV …….. Actionable #Hashtags Audiences • #ebikelife • #electricbikes • #fatbike ……… Delivering media more effectively without requiring a consumer's identity or data Audience Discovery Never Before Possible Information in this presentation is considered confidential and proprietary to Inuvo and should not be disclosed or shared with others without Inuvo’s permission. Visitors want Vegan choices The AI determines the reasons WHY a product is being purchased The AI actions based on WHY a consumer is in front of a screen at this exact moment The AI continuously categorizes the individual reasons WHY Snoring dog keeps owner up The Best Dog Food Vegan Choices Shifting the approach from identifying WHO people are to actioning WHY they are interested Intelligence based Audience Activation Theranos Fraud 17,000,000 pages referenced 1,000,000 pages referenced 118,000 pages referenced Information in this presentation is considered confidential and proprietary to Inuvo and should not be disclosed or shared with others without Inuvo’s permission. Media Targeting The AI isolates & targets WHY the Audience wants the products Artificial Intelligence Powered Services 1 25 4 3 The AI can explore ANY Audience to INFORM product features Research & Design Media Attribution The AI can OPTIMIZE media across channels AI Audience insights power every step Content The AI insights can DRIVE content engagement strategies Creative The AI insights can INFLUENCE creative asset design A Sampling of Brands Served We have a simple philosophy. Everything we do has to work. Results for clients in 2022 exceeded their goals on average by almost 50% across brand, product, and service advertising for both B2B and B2C. That trend is continuing in 2023. $44.6 $59.8 $75.6 $0 $10 $20 $30 $40 $50 $60 $70 $80 2020 2021 2022 A nn ua l R ev en ue in M ill io ns $2M cash, a NWC ratio of 1.1 and a $5M borrowing facility with $600K drawn Inuvo’s Revenue Trends 26% YOY Growth in 2022 INUV (NYSE American) Key Statistics 2022 Revenue $75.6M Year-over-Year Growth Rate 26% 2022 Gross Profit Margin 60% Cash, Cash Equivalents and Marketable Securities @ 03/30/23 $2M Receivables Based Borrowing Facility $5.0M Long-term Debt @ 03/30/23 $0K Share Price @ 05/22/23 $0.37 Common Shares Outstanding 121.6M Market Capitalization @ 05/22/23 $44.5M Insider Ownership ~10% Estimated Gross Profit Margin and Estimated EBITDA Margin are the Company’s estimate as of the date of this presentation of these items if the specified revenue levels are achieved; the estimates are not a representation or warranty that we will achieve the targets or the specified revenue levels in any specified time frame, or at all. Get in Touch Richard Howe, CEO Richard.Howe@inuvo.com Wally Ruiz, CFO Wallace.Ruiz@inuvo.com Investor Relations: David K. Waldman/Natalya Rudman Crescendo Communications, LLC Email: INUV@crescendo-ir.com Tel: (212) 671-1021 |
0001477932-25-000982:nexscient_ex991.htm | 0001477932-25-000982 | 1,976,663 | 1,976,663 | Nexscient, Inc. (NXNT) (CIK 0001976663) | ['NXNT'] | 8-K | 8-K | 2025-02-14 | 2025-02-14 | 333-274532 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=333-274532&action=getcompany | 25,625,165 | EX-99.1 | PRESS RELEASE | 1.01,3.02,7.01,9.01 | https://www.sec.gov/Archives/edgar/data/1976663/000147793225000982 | https://www.sec.gov/Archives/edgar/data/1976663/000147793225000982/0001477932-25-000982-index.html | https://www.sec.gov/Archives/edgar/data/1976663/000147793225000982/nexscient_ex991.htm | EX-99.1 3 nexscient_ex991.htm PRESS RELEASE nexscient_991.htmEXHIBIT 99.1 PRESS RELEASE Nexscient® Acquires Generative AI Software Application Unified Subscription Service for AI-Powered Content Creation Platform LOS ANGELES, CA / ACCESSWIRE / FEBRUARY 14, 2025 / -- Nexscient, Inc. (OTCQB: NXNT), a leading innovator in artificial intelligence (“AI”) applications and intelligent enterprise solutions, today announced the signing of definitive agreements for the acquisition of AI Media Toolkit. This acquisition marks a significant step forward in Nexscient’s commitment to becoming a leading provider of cutting-edge enterprise AI solutions. Nexscient, through its NXNT Labs division, has entered into a formal agreement to acquire and integrate AI Media Toolkit into a Software-as-a-Service (“SaaS”) platform. The new offering will be available as a flexible subscription-based service, enabling businesses and content creators to seamlessly leverage the power of Generative AI (“GenAI”) to enhance their content production capabilities. The SaaS platform will feature an intuitive user interface that simplifies access to a unified suite of GenAI tools, including: · Text Generation – AI-assisted writing for marketing copy, blogs, articles, and more. · Image Creation – AI-generated graphics, illustrations, and creative visuals. · Video Synthesis – Automated video production tools for digital storytelling. · Audio Production – AI-driven voiceovers, sound design, and music composition. By consolidating these advanced AI capabilities into a single, accessible platform, Nexscient eliminates the need for expensive infrastructure and technical expertise, allowing businesses to streamline AI-driven content creation seamlessly into their workflows. The subscription model also enables users to scale their AI usage based on demand, providing a cost-effective solution for enterprises operating in today’s fast-paced digital landscape. "This acquisition represents a key milestone for Nexscient as we expand our GenAI capabilities and establish our position as a leader in AI-powered solutions," said Fred E. Tannous, CEO of Nexscient, Inc. "With the acquisition of AI Media Toolkit, we will not only be providing businesses with access to a comprehensive set of powerful GenAI tools but also enabling them to unlock new levels of creativity, efficiency, and innovation in their content creation processes. This strategic move aligns with our vision of democratizing AI technology and making it accessible to enterprises of all sizes." The demand for AI-powered content solutions has experienced significant growth, fueled by the increasing reliance on digital media, e-commerce, and data-driven marketing. According to industry research, the Global AI-Powered Content Creation Market is projected to reach $7.9 billion by 2033, growing at a CAGR of 7.7%, underscoring the rising adoption of AI-driven solutions in content production. With this acquisition, Nexscient will be well-positioned to capitalize on this growing market by offering a subscription service that not only enhances its standing in the marketplace as a solutions provider but also fosters long-term revenue growth through recurring subscriptions. As businesses seek scalable, AI-powered solutions for content generation across social media, advertising, and customer engagement, Nexscient’s service offering is poised to become the go-to platform for those looking to stand out in an increasingly crowded arena. 1 About Nexscient, Inc. Nexscient® is an emerging-growth company that’s building a collaborative network of intelligent enterprise applications and technologies through internal development, synergistic acquisitions, and capital investments in companies involved in machine learning, artificial intelligence, and the Industrial Internet of Things technologies. Our flagship product, AegisOne, introduces a subscription-based, Software-as-a-Service platform that incorporates innovative technologies to offer intelligent enterprise solutions for businesses across several industries. As part of our growth strategy, we also seek to acquire and integrate synergistic companies and technologies into our collaborative network, further expanding our service offerings while enhancing shareholder value. For more information, please visit https://nexscient.ai. Forward-Looking Statements This release contains statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements appear in a number of places in this release and include all statements that are not statements of historical fact regarding the intent, belief or current expectations of Nexscient, Inc., its directors or its officers with respect to, among other things: (i) financing plans; (ii) trends affecting its financial condition or results of operations; (iii) growth strategy and operating strategy; and (iv) performance of our products and services. You can identify these statements by the use of the words “may,” “will,” “could,” “should,” “would,” “plans,” “expects,” “anticipates,” “continue,” “estimate,” “project,” “intend,” “likely,” “forecast,” “probable,” “potential,” and similar expressions and variations thereof are intended to identify forward-looking statements. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, many of which are beyond Nexscient, Inc.’s ability to control, and actual results may differ materially from those projected in the forward-looking statements as a result of various factors. These risks and uncertainties also include such additional risk factors as are discussed in the Company’s filings with the U.S. Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended June 30, 2024, Forms 10-Q and 8-K, and in other filings we make with the Securities and Exchange Commission from time to time. These documents are available on the SEC Filings section of the Investor Relations section of our website at https://nexscient.ai. The Company cautions readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made. ####### COMPANY CONTACT: Investor Relations ir@nexscient.com (800) 785-6070 2 |
0001213900-23-038689:ea178438ex99-3_faraday.htm | 0001213900-23-038689 | 1,805,521 | 1,805,521 | FARADAY FUTURE INTELLIGENT ELECTRIC INC. (FFIE, FFIEW) (CIK 0001805521) | ['FFIE', 'FFIEW'] | 8-K | 8-K | 2023-05-12 | 2023-05-11 | 001-39395 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-39395&action=getcompany | 23,913,010 | EX-99.3 | INVESTOR PRESENTATION, DATED MAY 11, 2023 | 2.02,7.01,9.01 | https://www.sec.gov/Archives/edgar/data/1805521/000121390023038689 | https://www.sec.gov/Archives/edgar/data/1805521/000121390023038689/0001213900-23-038689-index.html | https://www.sec.gov/Archives/edgar/data/1805521/000121390023038689/ea178438ex99-3_faraday.htm | EX-99.3 4 ea178438ex99-3_faraday.htm INVESTOR PRESENTATION, DATED MAY 11, 2023 Exhibit 99.3 Use Roboto here Faraday Future Intelligent Electric Inc. First Quarter 2023 Earnings Release May 11, 2023 Exhibit 99.3 © 2023 FARADAY FUTURE PROPRIETARY AND CONFIDENTIAL 2 Legal Disclaimers Forward Looking Statements This presentation includes “forward looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. When used in this presentation, the words “estimates,” “projected,” “expects,” “anticipates,” “forecasts,” “plans,” “intends,” “believes,” “seeks,” “may,” “will,” “should,” “future,” “propose” and variations of these words or similar expressions (or the negative versions of such words or expressions) are intended to identify forward - looking statements. These forward - looking statements, which include among other things, statements regarding the Company’s projected timeline, are not guarantees of future performance, conditions or results, and involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside the Company’s control, that could cause actual results or outcomes to differ materially from those discussed in the forward - looking statements. Important factors, among others, that may affect actual results or outcomes include whether the Company’s Amended Shareholder Agreement with FF Top Holding LLC complies with Nasdaq listing requirements, the market performance of the Company’s Common Stock; the Company’s ability to regain compliance with, and thereafter continue to comply with, the Nasdaq listing requirements; the Company’s ability to satisfy the conditions precedent and close on the various financings described in this presentation and disclosed elsewhere by the Company, the result of any future financing efforts, the failure of any of which could result in the Company seeking protection under the Bankruptcy Code; the Company’s ability to amend its certificate of incorporation to permit sufficient authorized shares to be issued in connection with the Company’s existing and contemplated financings; whether the Company and the City of Huanggang could agree on definitive documents to effectuate the Cooperation Framework Agreement; the Company’s ability to remain in compliance with its public filing requirements under the Securities Exchange Act of 1934, as amended; the outcome of the Securities and Exchange Commission (SEC) investigation relating to the matters that were the subject of the Special Committee investigation and other litigation involving the Company; the Company’s ability to execute on its plans to develop and market its vehicles and the timing of these development programs; the Company’s estimates of the size of the markets for its vehicles and cost to bring those vehicles to market; the rate and degree of market acceptance of the Company’s vehicles; the success of other competing manufacturers; the performance and security of the Company’s vehicles; potential litigation involving the Company; general economic and market conditions impacting demand for the Company’s products; recent cost, headcount and salary reduction actions may not be sufficient or may not achieve their expected results; and the ability of the Company to attract and retain directors and employees. The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties described in the “Risk Factors” section of the Company’s registration statement on Form S - 1 filed on May 5, 2023, and other documents filed by the Company from time to time with the SEC. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward - looking statements. Forward - looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward - looking statements, and the Company does not undertake any obligation to update or revise any forward - looking statements, whether as a result of new information, future events or otherwise, except as required by law. No Offer or Solicitation This communication shall neither constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which the offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction. Trademarks This presentation contains trademarks, service marks, trade names and copyrights of Faraday and other companies, which are the property of their respective owners. © 2023 FARADAY FUTURE P RO P RIE T A RY A N D C ON F ID EN T IA L 3 Table of Contents 1. Company Overview 2. Business Update 3. The FF 91 Futurist 4. Financials 5. Imagery © 2023 F A RA D A Y F U T U RE P RO P RIE T A RY A N D C ON F ID EN T IA L 4 01 – Company Overview © 2023 FARADAY FUTURE PROPRIETARY AND CONFIDENTIAL 5 Company Introduction Faraday Future (FF) is the pioneer of the ultimate intelligent TechLuxury ultra spire market in the intelligent EV era, and a disruptor of the traditional ultra - luxury car civilization © 2023 FARADAY FUTURE PROPRIETARY AND CONFIDENTIAL 6 Ultimate Intelligent TechLuxury Products — In a world of ultra luxury cars, FF stands alone as a true Ultimate Intelligent TechLuxury EV — FF is pioneering ultra spire market segment with a class - defining product — All FF products redefine ultra luxury in both the physical, comfort and digital connected realms Faraday Future — Core Pillars (1 of 2) Emotive Design — FF redefined the traditional vehicle, creating a new concept that addresses how vehicle use is changing. The FF 91 is not a sports car, an SUV or a sedan, but is something timeless that embodies our brand values and commitment to innovation — FF’s iconic Design language sparks the imagination and redefines the luxury vehicle space. The FF 91’s interior and exterior design express intelligence and functionality, enabling a best - in - class experience, and birthing a radically functional proportion © 2023 FARADAY FUTURE PROPRIETARY AND CONFIDENTIAL 7 Faraday Future — Core Pillars (2 of 2) Unique Artificial Intelligence (AI) Experience — Natural Language and voice - first interface adapts to users needs — Multiple user interface displays for every seated occupant — Triple modem 5G connectivity to ensure uninterrupted, high - speed internet access — FF’s Generative AI product stack will offer the first ever generative AI capability in the automotive sector for in - vehicle usage Leading Performance — EPA rated range of 381 miles — 0 — 60mph in 2.27 seconds — Top - end hyper car drive and handling — Industry leading compute hardware and software to drive the ultimate AI experience © 2023 F A RA D A Y F U T U RE P RO P RIE T A RY A N D C ON F ID EN T IA L 8 02 – Business Update © 2023 FARADAY FUTURE P RO P RIE T A RY A N D C ON F ID EN T IA L 9 On March 29, 2023, FFIE Announced the Start of Production of the FF 91 Futurist Alliance at its FF ieFactory California FF Design to review © 2023 FARADAY FUTURE P RO P RIE T A RY A N D C ON F ID EN T IA L 10 On April 14, 2023, Faraday Future’s First Production FF 91 Vehicle Came off the Line at its FF ieFactory California © 2023 FARADAY FUTURE PROPRIETARY AND CONFIDENTIAL 11 Faraday Future’s Three - Phase Delivery Plan Allows Flexibility for our Manufacturing Operations and Helps Mitigate Production Shortfalls versus Anticipated Market Demand While Delivering the Best Product to our Users Futurist Product Officer (FPO) Co - Creation Delivery Industry Expert Futurist Product Officer (FPO) Co - Creation Delivery Full Co - Creation Delivery — In this first phase, the Industry Expert FPO(s) will get the first look and opportunity to pay in full and reserve and experience these FF 91 Futurist vehicles — The Industry Expert FPO(s) will take possession of the reserved FF 91 Futurist vehicle at the beginning of the second phase (1) — The Company expects this first phase to begin at the end of May — In this second phase, FPO(s) will pay in full for the FF 91 Futurist vehicles and will take possession of the FF 91 Futurist vehicles — In this third phase, the Company will deliver FF 91 Futurist vehicles to all spire users that pay in full for t h e FF 9 1 F u t ur is t ve h icl e s (2) (1) Phase 2 of the Three - Phase Delivery plan is contingent on receiving parts on our required timeframes and completion of requisite tests. (2) Phase 3 of the Three - Phase Delivery plan is contingent on securing the necessary financing and receiving parts on our required timeframes. 03 – The FF 91 Futurist © 2023 FARADAY FUTURE PROPRIETARY AND CONFIDENTIAL 13 FF 91 Futurist — Extreme Technology, Ultimate Intelligent User Experience and a Complete Ecosystem © 2023 FARADAY FUTURE PROPRIETARY AND CONFIDENTIAL 14 Significant Upgrades of Key Components — FF 91 Futurist is a Competitive TechLuxury Offering © 2023 FARADAY FUTURE PROPRIETARY AND CONFIDENTIAL 15 — NASA inspired zero gravity rear passenger seats with industry leading 60 degree recline and leg room — FF AI supports complex voice commands for comfort, productivity, entertainment and navigation — Advanced safety, autonomous driving (2) and parking — Spa mode function for passenger wellness — User experience is carried from seat - to - seat and vehicle - to - vehicle via the user’s unique FFID (3) — Facial recognition in each seat position configures product preferences and settings for each passenger — Seamless mobile 5G connectivity for vehicle controls, productivity & entertainment — Intuitive on - screen gesture control for distraction free driving — Driver, passenger, rear passenger displays provide a truly unique and immersive digital experience for every individual Imme r sive C o nne c t ed Intui t ive FF 91 Futurist Experience (1) All statements shown reflect expected performance / capabilities for production ready vehicles. Actual performance / capabilities may be different. Please see Risk Factors within the Form S - 1 filed with the SEC on May 05, 2023 (1) Some of the functionality may not be not available at launch (2) FF 91 hardware at start of delivery capable of supporting L3 autonomous driving (3) FFID is a unique Faraday Future user profile that ensures a consistent experience across the FF Ecosystem, recognizing the user no matter where they are or which FF vehicle they are driving © 2023 FARADAY FUTURE PROPRIETARY AND CONFIDENTIAL 16 FF’s Generative Artificial Intelligence (AI) Product Stack will Offer the First Ever Generative AI Capability in the Automotive Sector for In - vehicle Usage — The product stack combines FF’s foundational capabilities such as its industry - leading computing platform, advanced operating system, ultra - fast internet connectivity, AI and natural language processing abilities, multiple displays, with demonstrated generative AI capability to give extraordinary abilities to users — FF is taking a significant step toward transforming the future of mobility. As users gain access to limitless possibilities, the car becomes an evolving, intelligent, and interactive companion, setting a new benchmark in automotive innovation — The Company is excited to be at the forefront of this transformation and looks forward to sharing more information in the near future “We have been investing in software, AI, and human machine interaction for a long time and that places us in a unique position to utilize these advances in AI. To use generative AI in a car, you need a powerful computing platform, robust operating system, internet connectivity, and suitable displays . The FF 91 has such an industry - leading computing platform, advanced operating system, ultra - high - speed internet connectivity, AI and natural language processing ability, with over 100 inches of displays , and a Generative AI Product Stack that will empower users to gradually utilize advanced generative models for a range of personalized applications in the vehicle – from complex text and voice queries, to image and video generation, stock analysis, live translations, search, entertainment, education, ecommerce, and more. The possibilities are limitless ” Prashant Gulati Head of Corporate Strategy at Faraday Future 04 – Financials © 2023 FARADAY FUTURE PROPRIETARY AND CONFIDENTIAL 18 Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) — Unaudited ( i Three Months Ended March 31, 2022 2023 n thousands, except share and per share data) Operating expenses $ 114,935 $ 46,160 Research and development 6,186 5,585 Sales and marketing 27,880 27,584 General and administrative — 3,698 Loss on disposal of property and equipment 149,001 83,027 Total operating expenses (149,001) (83,027) Loss from operations 1,186 94,917 Change in fair value measurements — (3,021) Loss on settlement of notes payable (3,746) (4,651) Interest expense (622) (140) Related party interest expense (915) 2,409 Other income (expense), net (153,098) 6,487 Income (loss) before income taxes — — Income tax provision $ (153,098) $ 6,487 Net income (loss) Per share information: Net income (loss) per share of Common Stock attributable to common stockholders: $ (0.48) $ 0.01 Basic (0.48) (0.07) Diluted Weighted average shares used in computing net income (loss) per share of Common Stock: 322,211,392 657,565,442 Basic 322,211,392 988,638,662 Diluted Total comprehensive income (loss): $ (153,098) $ 6,487 Net income (loss) (564) (555) Change in foreign currency translation adjustment $ (153,662) $ 5,932 Total comprehensive income (loss) © 2023 FARADAY FUTURE PROPRIETARY AND CONFIDENTIAL 19 Condensed Consolidated Balance Sheets — Unaudited ( i December 31, 2022 March 31, 2023 n thousands) Assets Current assets $ 16,968 $ 31,769 Cash 1,546 1,505 Res tri c te d cash 26,804 55,405 Deposits 21,087 14,717 Other current assets 66,405 103,396 Total current assets 417,803 446,524 Property and equipment, net 19,588 18,911 Operating lease right - of - use assets 6,492 6,458 Other non - current assets $ 510,288 $ 575,289 Total assets Liabilities and stockholders’ equity Current liabilities $ 87,376 $ 76,926 Accounts payable 65,709 66,980 Accrued expenses and other current liabilities 95,130 28,521 Bridge Warrants 1,864 2,505 Accrued interest — 140 Related party accrued interest 2,538 2,609 Operating lease liabilities, current portion 1,364 1,390 Finance lease liabilities, current portion 8,406 8,643 Related party notes payable 5,097 5,159 Notes payable, current portion 267,484 192,873 Total current liabilities 6,570 6,209 Finance lease liabilities, less current portion 18,044 17,398 Operating lease liabilities, less current portion 9,429 9,758 Other liabilities 26,008 92,665 Notes payable, less current portion 327,535 318,903 Total liabilities Commitments and contingencies Stockholders’ equity 56 82 Class A Common Stock 6 6 Class B Common Stock 3,655,771 3,723,446 Additional paid - in capital 3,505 2,950 Accumulated other comprehensive gain (3,476,585) (3,470,098) Accumulated deficit 182,753 256,386 Total stockholders’ equity $ 510,288 $ 575,289 Total liabilities and stockholders’ equity © 2023 FARADAY FUTURE PROPRIETARY AND CONFIDENTIAL 20 Condensed Consolidated Statements of Cash Flows – Unaudited (1 of 2) ( i Three Months Ended March 31, 2022 2023 n thousands) $ (1 5 3 , 098) Cash flows from operating activities $ 6,487 Net income / (loss) Adjustments to reconcile net loss to net cash used in operating activities 4,853 1,103 Depreciation and amortization expense 3,347 15,102 Stock - based compensation — 3,698 Loss on disposal of property and equipment (1,186) (79,462) Change in fair value measurement of related party notes payable and notes payable — (12,434) Change in fair value measurement of warrant liability — (2,764) Change in fair value measurement of earnout liability — 736 Amortization of operating lease right - of - use assets and intangible assets 894 686 Loss on foreign exchange 2,319 4,533 Non - cash interest expense — (3,021) Loss on settlement of notes payable 108 337 Other Changes in operating assets and liabilities: 6,840 (29,370) Deposits 2,095 6,368 Other current and non - current assets 5,747 (10,367) Accounts payable 14,527 (4,098) Accrued expenses and other current liabilities (882) (542) Operating lease liabilities (7,928) (197) Accrued interest expense $ (1 2 2 , 364) $ (1 0 3 , 205) Net cash used in operating activities Cash flows from investing activities $ (44,398) $ (16,873) Payments for property and equipment $ (44,398) $ (16,873) Net cash used in investing activities Cash flows from financing activities — 131,800 Proceeds from notes payable, net of original issuance discount — 4,079 Proceeds from exercise of warrants (87,065) (6) Payments of notes payable — (1,139) Settlement of notes payable transaction costs (466) (335) Payments of finance lease obligations 1,855 44 Proceeds from exercise of stock options $ (85,676) $ 134,443 Net cash (used in) provided by financing activities (653) 395 Effect of exchange rate changes on cash and restricted cash $ (253,091) $ 14,760 Net (decrease) increase in cash and restricted cash 530,477 18,514 Cash and restricted cash, beginning of period 277,386 33,274 Cash and restricted cash, end of period © 2023 FARADAY FUTURE PROPRIETARY AND CONFIDENTIAL 21 Condensed Consolidated Statements of Cash Flows – Unaudited (2 of 2) ( i Three Months Ended March 31, 2022 2023 n thousands) $ 276,374 $ 31,769 Cash 1,012 1,505 Res tri c te d cash $ 277,386 $ 33,274 Total cash and restricted cash, end of period Supplemental disclosure of cash flow information $ 10,040 $ 324 Cash paid for interest Supplemental disclosure of noncash investing and financing activities $ 1,881 $ 17,249 Additions of property and equipment included in accounts payable and accrued expenses — 66,609 Issuance of Warrants — 8,977 Reclassification of liability for insufficient authorized shares related to stock options and RSUs — 5,014 Reclassification of earnout shares liability to equity as part of authorized share increase — 46,296 Conversion of notes payable and accrued interest into Class A Common Stock 41,000 Issuance of convertible notes pursuant to the Exchange Agreement — 6,811 Change in classification of warrants from Additional paid - in capital to liability pursuant to the Warrant Exchange 8,206 — Recognition of operating right of use assets and lease liabilities upon adoption of ASC 842 and for new leases entered into in 2022 © 2023 FARADAY FUTURE PROPRIETARY AND CONFIDENTIAL 22 Additional Financing Commitments is Expected to Provide Sufficient Funding to Reach the Anticipated Start of Phase 2 of the Three Phase Delivery Plan by the End of June 2023 — On February 05, 2023, FFIE announced $135.0 million financing commitments under the SPA (of which the C o m pa n y h a s re ceived $ 120.0 mi l l ion ) (1) — Investors in Tranche A of the SPA have funded optional notes of an aggregate amount of $38 million — On May 09, 2023, FFIE announced an additional $100.0 million financing commitments through unsecured convertible notes (1) with a portion funded earlier as a show of support — Additional flexibility with equity line of credit (ELOC) of up to $350.0 million (1) , $35.0 million financing commitments in the secured convertible notes (1) and optional convertible notes (2) in an aggregate amount of ~$242.0 million — On May 02, 2023, FFIE received an additional 180 - days extension from NASDAQ to meet NASDAQ minimum bid price requirement (1) Financing under Secured Convertible Notes, Unsecured Convertible Notes and Equity Line of Credit are subject to certain closing conditions and, as applicable, limitations of enforceability. Such closing conditions, as applicable, include, among others, an Capital Markets — Implemented cost - cutting initiatives that has allowed the Company to focus on core budget items that are essential to delivering the FF 91 Futurist — Developing business and system processes and implementing internal control to strengthen corporate governance — We reiterate our goal to create a profitable business with operating cash flow breakeven in 2025 Finance and Cost Control — SEC filings up to date — Registrations statements for a portion of financings are on file (effective and pending) — A substantial portion (55.6%) of operating expenses was allocated to Research and Development, emphasizing Company's commitment to creating industry leading products and technologies SEC Filings effective registration statement with respect to the underlying shares, sufficient authorized, unissued and uncommitted Class A shares of common stock, and the Company meeting certain delivery milestones (2) Investors in the $135 million Secured Convertible Notes have the option to invest additional funding of up to 50.0% of the initial principal amount of Tranche C (an additional $67.5 million); Investors in Tranche A of the Securities Purchase Agreement have the option to subscribe for Tranche B Notes in an amount not to exceed 100.0% of the initial principal amount of the Tranche A Notes (an additional $74.0 million); The Company may receive up to 100.0% of committed financing (an additional $100.0 million) under the Unsecured Convertible Notes at the discretion of the investors. Also assumes investors fund as per the funding schedule © 2023 F A RA D A Y F U T U RE P RO P RIE T A RY A N D C ON F ID EN T IA L 23 05 – Imagery © 2023 FARADAY FUTURE PROPRIETARY AND CONFIDENTIAL 24 © 2023 FARADAY FUTURE PROPRIETARY AND CONFIDENTIAL 25 26 Alternate outro image Thank you R e s e r ve y ou rs to d ay — htt p s://w w w .ff. c o m /us/pr eo r de r/ |
0001193125-23-251131:d541426dex991.htm | 0001193125-23-251131 | 1,571,996 | 1,571,996 | Dell Technologies Inc. (DELL) (CIK 0001571996) | ['DELL'] | 8-K | 8-K | 2023-10-05 | 2023-10-05 | 001-37867 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-37867&action=getcompany | 231,309,883 | EX-99.1 | EX-99.1 | 7.01,8.01,9.01 | https://www.sec.gov/Archives/edgar/data/1571996/000119312523251131 | https://www.sec.gov/Archives/edgar/data/1571996/000119312523251131/0001193125-23-251131-index.html | https://www.sec.gov/Archives/edgar/data/1571996/000119312523251131/d541426dex991.htm | EX-99.1 2 d541426dex991.htm EX-99.1 EX-99.1 Dell Technologies Securities Analyst Meeting Exhibit 99.1 Rob Williams Senior Vice President, Investor Relations Disclosures and Agenda Disclosures NON-GAAP FINANCIAL MEASURES This presentation includes information about non-GAAP revenue, net revenue excluding VMware adjusted for estimated reseller revenue, non-GAAP FY19 pro forma revenue, non-GAAP net income, non-GAAP net income attributable to Dell Technologies Inc. - basic, non-GAAP net income attributable to Dell Technologies Inc. – diluted, adjusted non-GAAP net income attributable to Dell Technologies Inc. – basic, adjusted non-GAAP net income attributable to Dell Technologies Inc. – diluted, non-GAAP earnings per share – basic, non-GAAP earnings per share - diluted, adjusted non-GAAP earnings per share – basic, adjusted non-GAAP earnings per share – diluted, free cash flow, adjusted free cash flow, free cash flow before impact from DFS related items, VMware free cash flow, and free cash flow excluding VMware and before impact from DFS related items (collectively the “non-GAAP financial measures”), which are not measurements of financial performance prepared in accordance with U.S. generally accepted accounting principles. We have provided a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures in Appendix B and Appendix C. SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS Statements in this presentation that relate to future results and events, including, but not limited to, statements regarding Dell Technologies’ expectations concerning long-term revenue and non-GAAP diluted EPS growth, adjusted free cash flow generation, and long-term capital return to stockholders through share repurchases or dividends, are forward-looking statements and are based on Dell Technologies' current expectations. In some cases, you can identify these statements by such forward-looking words as “anticipate,” “believe,” “could,” “estimate,” “expect,” “target,” “intend,” “confidence,” “may,” “plan,” “potential,” “should,” “will” and “would,” or similar expressions. Actual results and events in future periods may differ materially from those expressed or implied by these forward-looking statements because of a number of risks, uncertainties and other factors, including those discussed in Dell Technologies’ periodic reports filed with the Securities and Exchange Commission. Dell Technologies assumes no obligation to update its forward-looking statements. Dell Technologies Securities Analyst Meeting Agenda Strategy & Trends Infrastructure Solutions Group Strategy Client Solutions Group Strategy Company Vision Value Creation Framework Q&A Michael Dell Jeff Clarke Sam Burd Yvonne McGill Dell Executive Team Arthur Lewis Company Vision Michael Dell Chairman and Chief Executive Officer Key messages We are growing revenue, cash flow and earnings backed by operational excellence Our strategy, operational advantages and track record of execution have us well positioned We are committed to driving long-term value with growing capital return Data and technology are central to everything we do, and Dell is thriving Leveraging our strengths to extend our leadership and capture new growth Technology is central to everything we do, and Dell is thriving Almost four decades of growth and execution 1) Revenue presented as of the most recently filed, publicly available information. Please refer to relevant filings for basis of presentation. $B Dell revenue1 Managing through the eras Strong track record of adapting to technology trends over last four decades Navigating PC cycles, mobile wave, virtualization, public cloud Growing revenue and cash flow organically and inorganically Client-server Mobile Public cloud AI Internet Virtualization Data Strong cash flow generation with demonstrated capital returns Profitable growth with strong cash flow over time and a commitment to capital returns We have delivered nearly $0.5T of revenue, $36B of adj. FCF2 and $30 non-GAAP diluted EPS2 over the last five years Since we last met two years ago, we’ve grown non-GAAP diluted EPS2 at a 10% CAGR and generated $10.8B of adj. FCF2 Since the VMware spin-off, we’ve returned $5.5B to shareholders We have returned over 90% of adj. FCF to shareholders since initiating our capital return framework 1) Graph not to scale. 2) Non-GAAP Diluted Earnings Per Share presented as of the most recently publicly available information. Adjusted Free Cash Flow includes VMW up through the date of the spin-off for the periods presented. See supplemental slides in Appendix B for reconciliation of non-GAAP measures to their most directly comparable GAAP measures. Trailing 5 Year financials1 Long-term performance Shareholder commitment We are committed to driving long-term value creation VMware spin-off ü Boomi and RSA divestitures ü De-levered to investment grade ü Instituted long-term value creation framework ü Programmatic & opportunistic share repurchase ü Raised annual dividend ü Ellen Kullman elected by our board as Lead Independent Director1 ü Steve Mollenkopf appointed as newest independent director ü Six of eight board members now independent; All board committees independent ü Enhancing governance Commitment to long-term value creation and capital returns Simplifying and streamlining our corporate and capital structures Value Creation September 2021 – October 2023 Growing revenue and EPS Delivering adjusted FCF in excess of net income Returning capital to shareholders Committed to growing the dividend Long-term value creation and capital allocation 1) See description of responsibilities in the 2023 annual meeting proxy statement. Looking to the future Simple and powerful strategy aligned with customer priorities Customer Priorities Leveraging our strengths to extend our leadership and capture new growth Artificial Intelligence Edge Multicloud Security Workforce Experience Strategy & Trends Jeff Clarke Vice Chairman and Chief Operating Officer Key messages GenAI is an inflection point that drives growth across the technology landscape Workloads and usage patterns are trending in our favor Dell Technologies Strategy: leverage our strengths to extend our leadership and capture new growth Data and technology are central to everything Our digital world is generating exponential data growth Technology comprises a growing share of GDP Data is continuing to grow 1) IDC, Worldwide IDC Global DataSphere Forecast, 2023-2027: It's a Distributed, Diverse, and Dynamic (3D) DataSphere, April 2023 2) IHS Markit Macroeconomic Report, IDC Black Book 2023, GDP data is constant currency based on 2010 exchange rates. Technology is necessary to generate, capture, and unlock business value from data Global IT Spend $3.6T $4.7T $6.2T 2027 +70bps +80bps IT Spend as a percentage of GDP2 2017 2027 Global data generated1 Data and technology are central to everything +25% CAGR 64% of business leaders believe GenAI provides a competitive edge1 1) KPMG, Generative AI: From Buzz to Business Value, May 2023. 2) Revenue presented as of the most recently filed, publicly available information. Please refer to relevant filings for basis of presentation. $B Dell revenue2 AI will speed innovation Changes how we work, serve customers and innovate Drives a wave of growth across the technology landscape Accelerates distribution of data and compute GenAI is an inflection point Client-server Mobile Public cloud AI Internet Virtualization Data AI TAM projected to grow at an 18% CAGR over the next four years to $120B+ Growing AI TAM across hardware and services AI Hardware and Services TAM1 Hardware Services 2023 2025 2027 GenAI growth opportunity for Dell $4.4T Potential addition to global GDP due to increased productivity2 20% Increase in productivity due to access to GenAI tools and use of LLMs2 10% Global data produced by GenAI by 20253 100x Increase in tokens generated annually to one quadrillion tokens by 20284 50% Of spending on GPU-accelerated servers expected to be on-prem or at the edge6 1) IDC Worldwide Semiannual Artificial Intelligence Tracker, v2022 H2, July 2023. 2) McKinsey – The economic potential of generative AI: The next productivity frontier, June 2023. 3) BofA Global Research – Artificial Intelligence & telco primer – game changing returns, April 2023. 4) Tirias Research – Forecast TCO Background, 2023. 5) Gartner, IT Key Metrics Data 2023: Infrastructure Measures – Storage Analysis, December 2022. 6) IDC, The Infrastructure Market for Generative AI, IDC #US50626823, May 2023. +18% CAGR AI is expanding the TAM for technology spending 83% Of all data resides in on-prem data centers5 US workers are expected to work in a hybrid model by 20265 Increase in deployment of edge computing platforms by private mobile networks4 Organizations use private or both public & private infrastructure for GenAI work1 Creates new opportunities to innovate and serve our customers Dell’s markets are expected to continue to grow Data era trends in our favor 1) SiliconANGLE & ETR, July 2023. 2) Flexera, 2023 State of the Cloud Report, n=750. 3) Gartner, 12 Data and Analytics Trends for Times of Uncertainty, 2022. 4) 20% deployment by 2025 up from 5% in 2022. Gartner, Predicts 2023: Edge Computing Delivery and Control Options Extend Functionality, December 2022. 5) Gartner, Forecast Analysis: Knowledge Employees, Hybrid, Fully Remote and On-Site Work Styles, Worldwide, Jan 2023. 6) Dell internal estimate based on the following: August 2023 IDC ICT Spending Guide (Extended TAM includes IaaS, Telecom Networking, Technology Outsourcing, Data Management & System Infrastructure SW, and Hardware Deploy & Support), Dell CSG TAM estimate (Peripherals – includes Printers), July 2023 IDC Black Book (PC includes PC and Tablet, Monitors included in Peripherals), IDC (Server, Storage), Dell’Oro (IT Networking). 4x 68% 50% Enterprise data created at the edge (outside data center) by 20253 87% Companies are adopting a multicloud strategy2 60% Dell Technologies targeted markets6 2027 $T $T +$900B PC Peripherals Server Storage IT Networking HW Deploy and Support Workloads and usage patterns are trending in our favor Dell Technologies strategy Leverage our strengths to extend our leadership and capture new growth Unique operating model Innovation Culture Customer-centricity Leading end-to-end solutions #1 Commercial PC Workstations PC Monitors High-end Gaming Server External Storage Storage Software Data Protection HCI Leading end-to-end solutions1 Industry’s largest GTM engine Broad global technology ecosystem of partners Largest direct salesforce in the industry Modern online and consumption experiences Industry-leading supply chain Resilient, agile, sustainable & global scale 700+ global distribution & logistics centers Automated and AI-driven Unmatched global services 2K+ service centers around the world Global footprint of direct services & support AI-driven support and experiences Commercial PC (Revenue) - IDC WW Quarterly PC Device Tracker CY23Q2; Workstations (Units) - IDC WW Quarterly Workstation Tracker CY23Q2; PC Monitors (Units) - IDC WW Quarterly Monitor Tracker CY23Q2; High-end Gaming (Units) - IDC Quarterly Gaming Tracker, CY23Q2, $1,500+ price band; Server (Units) - IDC WW Quarterly Server Tracker CY23Q2; External Storage (Revenue) - IDC WW Quarterly Enterprise Storage Systems Tracker CY23Q2; Data Protection – IDC WW Data Replication and Protection Software and PBBA HW estimates CY23Q2. "Data Protection" refers to Data Replication & Protection software plus Purpose-Built Backup Appliance (PBBA) revenue; HCI (Revenue) - IDC WW Quarterly Converged Systems Tracker CY23Q2. There is no stopping the pace of innovation Each era builds on the next 1) Revenue presented as of the most recently filed, publicly available information. Please refer to relevant filings for basis of presentation. $B Client-server Mobile Public cloud AI Dell revenue1 Internet Virtualization Data On the horizon Machine learning automation Digital twins Quantum computing Neuromorphic computing Infrastructure Solutions Group Strategy Arthur Lewis President, Infrastructure Solutions Group ISG executive summary We have demonstrated strong long-term growth and profitability across financial cycles Technology trends and workloads continue to evolve in our direction, and we are well positioned to capture growth and drive profitability We are innovating across our portfolio to extend our leadership positions and capture new growth Generative AI will drive a wave of growth across our business Steady financial performance & strong leadership positions Long-term growth across financial cycles, well positioned to capture growth and increase profitability ISG P&L performance1 Strong #1 leadership positions2 Revenue Opinc Innovating around technology trends to drive growth and increase profitability ~3% CAGR +$9B in sustained revenue growth since the start of the pandemic $3.1B$4.2B$3.9B $3.8B $3.7B $5.0B $4.7B Opinc Rate 9.9%11.3%11.5%11.4%10.9%13.2% 13.2% ~8% CAGR Well positioned to win in AI … both server & storage Higher ASPs through richer configurations Margin accretion opportunity through storage and software mix ISG P&L performance measures presented as of the most recently filed, publicly available information. Please refer to relevant filings for basis of presentation. x86 and Mainstream Server (Units) - IDC WW Quarterly Server Tracker CY23Q2; External, High End, AFA Storage (Revenue) - IDC WW Quarterly Enterprise Storage Systems Tracker CY23Q2; HCI (Revenue) - IDC WW Quarterly Converged Systems Tracker CY23Q2; #1 in Unstructured External Storage based on Dell’s 44% share of the worldwide NAS market in 1HCY23 per IDC Quarterly Enterprise Storage Systems Tracker, 2023Q1 Final Historical, September 7, 2023; Data Protection – IDC WW Data Replication and Protection Software and PBBA HW estimates CY23Q2. "Data Protection" refers to Data Replication & Protection software plus Purpose-Built Backup Appliance (PBBA) revenue. positions in: #1 Servers: x86 Mainstream Storage: External RAID Block, File, Object HCI, AFA, Unstructured Data Protection Extending our leadership position in servers Market leader (#1 in x86 and Mainstream), innovator and structural share gainer Mainstream server share1 +980 bps share gain over the past 10 years Innovation 16G Servers Purpose built to support a wide range of workloads Advanced automation with built-in security Cyber Resilient AI Optimized Compute Optimal design to support training and inferencing High speed fabric for enhanced performance DTC liquid cooled GPUs/CPUs maximizes performance and power utilization Dell accounts for 43% of new industry revenue over the past 10 years2 – greater than top four competitors combined Market leading profitability3 XE9680 fastest ramping Dell platform ever - $2B of orders in backlog as of Q2 earnings Growth 1) Mainstream Server Revenue - IDC WW Quarterly Server Tracker CY23Q2. Mainstream Server includes Tower, Blade, Standard Rack Optimized and Large Systems. 2) Period is 2012-2022. 3) Market leading profitability calculated by Dell Technologies primarily by utilizing other server OEM's financial public filings, as of Q2 FY24. Extending our leadership position in storage Market leader in Data Storage (#1 in external RAID storage), innovator and share consolidator External storage share1 +250 bps share gain since the EMC acquisition Innovation Power Portfolio Leading purpose-built portfolio PowerMax & PowerStore Leading software defined portfolio PowerFlex, PowerScale, Object Scale 500 feature releases over the past 12 months in Primary Storage Magic Quadrant leader in unstructured – optimized for AI Designed for Hybrid deployments Dell accounts for 38% of new industry revenue over the past five years2 – greater than the top three competitors combined 8 consecutive quarters of growth for PowerFlex 12 consecutive quarters of PowerStore growth Growth 1) External RAID Storage - IDC WW Quarterly Enterprise Storage Systems Tracker CY23Q2. 2) Period is 2017-2022. Growing global ISG TAM1 and macro trends 1) Storage includes Core Storage, Data Protection, and HCI; Server is total server less HCI HW; Dell estimates based on data from IDC (Server, Storage) and Dell’Oro (Networking), September 2023. Macro trends shaping our opportunity 2027 $199B $229B $265B +7% CAGR Multicloud Adoption Distributed IT (Edge) Telco Open-Source Tools & Frameworks Cloud-like Experience ISG TAM including AI Technology trends continue to evolve in our direction and create opportunities for margin expansion AI will drive a wave of growth 75% of organizations are increasing budgets to pursue AI1 AI HW & services represent a $124B opportunity by 20272 2023 2025 2027 $B $91B $124B Hardware Services Our three-pronged approach Purpose-built solutions Strategic partnerships and ecosystems AI consulting and professional services +18% CAGR 1) Dell Technologies Generative AI Pulse Survey, August and September 2023. 2) IDC Worldwide Semiannual Artificial Intelligence Tracker, v2022 H2, July 2023. Client Solutions Group Strategy Sam Burd President, Client Solutions Group CSG executive summary We have demonstrated strong performance across financial cycles and remain well-positioned to capitalize on the next set of growth opportunities Not all PCs are created equal; we remain focused on the most profitable segments while extending our leadership and capturing new growth We expect trends around new AI-driven workloads and hybrid work to continue to play to our strengths and drive our future growth and profitability Steady financial performance & strong leadership positions Long-term growth across financial cycles, well positioned to capture growth and increase profitability CSG P&L performance1 Strong leadership positions Revenue Strong share gain track record #1 ~5% CAGR ~9pt increase Monitors6 ~10pt increase Commercial PC3 Client Revenue2 High-End Gaming PC5 Monitors6 North America PC3 5.2%4.5%6.8%6.9%7.1%6.6%6.9% $2.0B$2.0B$3.1B$3.3B$4.4B$3.8B$3.6B ~10% CAGR 1) CSG P&L performance measures presented as of the most recently filed, publicly available information. Please refer to relevant filings for basis of presentation. 2) Client PC & upsell revenue calculated by Dell Technologies by utilizing other PC OEMs’ financial public filings, as of Q2 FY24. 3) Per IDC WW Quarterly PC Device Tracker, CY23Q2 – excluding Chrome. 4) Per IDC WW Quarterly Workstation Tracker CY23Q2. 5) Per IDC Quarterly Gaming Tracker, CY23Q2, $1,500+ price band. 6) Per IDC WW Quarterly Monitor Tracker CY23Q2. Workstations4 positions in: + #1 Opinc Opinc Rate We focus on the most valuable segments Not all PCs are created equal; we focus on Commercial PCs, Workstations, Premium Consumer PCs and Gaming Our unique business model drives differentiated results Our total revenue per unit (TRU) is nearly 2x primary competitors Primary Competitors TRU2 Dell CSG TRU2 1) Per IDC WW Quarterly PC Device Tracker, CY23Q2, last 4 quarters trailing (2022Q3-2023Q2). Premium Consumer includes units with ASP > $800; Mainstream Consumer includes units with ASP <= $800. 2) TRU calculated by Dell Technologies by utilizing PC OEMs’ financial public filings and IDC WW Quarterly PC Device Tracker, as of Q2 FY24. 3) Primary competitors refers to HP Inc. and Lenovo Ltd. Mainstream Consumer PCs Chrome Premium Consumer PCs Commercial PCs Industry vs Dell Units1 (IDC) Dell CSG Primary Competitors3 Our TRUs are growing at a substantial premium to the market TRU $1,220 +$245 since Q4 2019 $670 ~+$45 since Q4 2019 FY20 FY21 FY22 FY23 FY24 Commercial installed base is largest in history and ready for a refresh AI workloads and assistants will require richer configurations and accelerate refresh rates The ecosystem around the PC is more important than ever to support hybrid work AI-driven workloads & hybrid work support continued TAM growth Both PCs and Peripherals will benefit from hybrid work and AI-driven workloads We anticipate long-term TAM growth Industry growth levers play to our strengths 1) Dell internal estimate based on the following: July 2023 IDC Black Book (PC includes PC and Tablet, Monitors included in Peripherals), Dell CSG TAM estimate (Peripherals – includes Printers). CSG Target TAM1 ~2% CAGR Investing in our Client Peripherals strategy Enhance end-user productivity and simplify IT with comprehensive Dell-on-Dell client ecosystem Extend leadership position in $30B displays industry to $40B+ core Client Peripherals industry1 Organically build compelling portfolio of productivity-enhancing, close-to-the-PC peripherals Leverage largest GTM engine in industry to simplify ecosystem purchase experience for customers Differentiate end-user experience with software and AI via Dell Optimizer and Dell Peripheral Manager 1) Dell estimates based on IDC data, including IDC Black book, 2023. Value Creation & Capital Allocation Yvonne McGill Executive Vice President & Chief Financial Officer Long-term value creation framework Expect 3-4% revenue growth, outpacing GDP1, as we extend our leadership positions and capture new growth Expect 8%+ non-GAAP diluted EPS2 growth driven by profitable growth in both ISG and CSG over time Expect net income to adj. FCF conversion of 100% or better, driven by revenue growth and profitability coupled with disciplined working capital management Target returning 80%+ of adj. FCF to shareholders while maintaining 1.5x core leverage target3 Target 10%+ dividend growth per year through FY284 IMF WEO April 2023, OECD Economic Outlook March 2023, Fitch Credit Rating Agency, S&P Rating Agency GDP growth forecasts. See supplemental slides in Appendix B for reconciliation of non-GAAP measures to their most directly comparable GAAP measures. Core leverage ratio is calculated as Core debt / ((TTM adj. EBITDA) - (TTM DFS adj. EBITDA)). Subject to ongoing board evaluation and approval. GDP+ revenue growth target of 3-4% supported by our unique operating model, ability to extend our leadership and capture new growth Revenue Growth +3.6% CAGR FY18-FY24E Non-GAAP Revenue ($B)1 +15% +1% +2% +17% 3-4% DELL TECH LONG-TERM REVENUE CAGR #1 position Client revenue3 Focused on most profitable and fastest growing segments Grown commercial revenue mix more than 8 pts from pre-pandemic #1 position in data storage, larger than #2, #3, and #4 combined5 Leading unstructured external storage portfolio6, optimized for all things AI Focus on high-margin Dell IP Software assets and next-gen storage architectures #1 in Mainstream Servers for 21 consecutive quarters4 Portfolio designed to support all levels of AI Richer configurations continue drive higher ASPs GTM model driving large ecosystem around hardware Focus on extending share positions across our peripheral's portfolio Services attach PC PC Ecosystem Server Storage +1% -12% See supplemental slides in Appendix B for reconciliation of non-GAAP measures to their most directly comparable GAAP measures. FY24 non-GAAP revenue represents full year guidance as of Q2, our most recent earnings release. Client PC & upsell revenue statistic calculated by Dell Technologies primarily by utilizing other PC OEMs’ financial public filings, as of Q2 FY24. Per IDC WW Quarterly Server Tracker CY23Q2 TTM. IDC Quarterly Enterprise Storage Systems Tracker, 2023Q2, based on CY22 revenue. IDC Quarterly Converged Systems Tracker 2023Q2, based on CY22 revenue. #1 in Unstructured External Storage based on Dell’s 44% share of the worldwide NAS market in 1HCY23. Source: IDC Quarterly Enterprise Storage Systems Tracker, 2023Q1 Final Historical, September 7, 2023. Leveraging our unique operating model Client Solutions Group Infrastructure Solutions Group 2-3% 6-8% CAGR CAGR 2 EPS target supported by our ability to pull multiple levers to generate strong performance across economic cycles EPS Growth Multiple levers to drive EPS growth Cumulative share repurchases 8%+ DELL TECH LONG-TERM DILUTED EPS CAGR +6.5% CAGR FY20-FY24E Non-GAAP Diluted EPS1 Share Repurchase Gross Margin Cost Management Increased mix towards profitable segments ISG, Commercial PC, Peripherals Contribution from innovative software portfolio Disciplined cost management Operating expenses down ~$1.4B since FY204 Continue to invest in accretive growth ~$3.4B of share repurchases since instituting our dividend Increased share repurchase authorization by $5B5 +6% +28% +22% -17% See supplemental slides in Appendix B for reconciliation of non-GAAP measures to their most directly comparable GAAP measures. See supplemental slides in Appendix C for reconciliation of non-GAAP measures to their most directly comparable GAAP measures. FY24 non-GAAP diluted EPS represents full year guidance as of Q2, our most recent earnings release. Comparing FY23 Operating Expenses to FY20. Approved by Board of Directors. Disciplined and opportunistic management ($B) 2,3 Executing a business model that has consistently delivered strong cash flow Cash Flow $18.5B Adj. FCF generated over last 4 years 115% Avg. net income to adj. FCF conversion over last 4 years1 $4.6B Average Adjusted Free Cash Flow ($B)2 GDP/GDP+ Revenue Growth Industry’s largest GTM engine Track record of structural share gain Investments centered on technology tailwinds to capture new growth Financial Discipline Price discipline Profitable share gain Supply chain scale Cost management Working Capital Focus Negative cash conversion cycle Lean inventory model Direct model FY20-FY23. See supplemental slides in Appendix B for reconciliation of non-GAAP measures to their most directly comparable GAAP measures. Adjusted free cash flow represents historical adjusted free cash flow excluding VMware. Driven by a strong cash flow engine Returning more to shareholders, 80%+ of Adjusted FCF through share repurchases & dividends Target return of adjusted FCF to shareholders Drive growth while maintaining investment grade rating Committed to IG rating & 1.5x core leverage target Disciplined, tuck-in M&A that accelerates our strategy Long-Term Framework Return cash to shareholders Dividends Target to grow the dividend annually at 10%+ through FY281 Share Repurchase Increased share repurchase authorization by $5B $18.5B Adj. FCF generated over last 4 years2,3 ~90% % of Adj. FCF return to shareholders since dividend inception ~$5B Returned to shareholders since dividend inception 80%+ Remaining FCF Subject to ongoing board evaluation and approval. FY20-FY23. See supplemental slides in Appendix B for reconciliation of non-GAAP measures to their most directly comparable GAAP measures. Adjusted free cash flow represents historical adjusted free cash flow excluding VMware. Capital Allocation Our strategy, operating model and track record of execution have us well positioned Committed to long-term value creation Attractive long-term financial framework 3 - 4% Revenue growth 8%+ Diluted EPS growth 100%+ NI to adj. FCF Conversion 80%+ Target return of adj. FCF to shareholders 10%+ Dividend growth rate FY24-FY28 Gross Margins Cost Share Count + + = EPS Growth $4.6B Avg CSG 2-3% CAGR ISG 6-8% CAGR DELL TECH 3-4% CAGR Leading end-to-end solutions and broadest portfolio in the industry Demonstrated structural share gains Opportunities to capture new growth Growth & operational excellence driving cash generation … $4.6B avg. over last four years Averaged 115% conversion over the past four years2 Increased mix towards profitable segments … ISG, Commercial PC, Peripherals Demonstrated cost discipline Commitment to return over 80% of adjusted FCF to shareholders Return via share repurchases and dividends Committed to IG rating and 1.5x core leverage target Targeted M&A that accelerates our strategy Remaining FCF 80%+ Target to grow the dividend at 10% or better annually through FY283 Targeted Dividend Payout Operational Capital Return 10%+ FY20-FY23. See supplemental slides in Appendix B for reconciliation of non-GAAP measures to their most directly comparable GAAP measures. Adjusted free cash flow represents historical adjusted free cash flow excluding VMware. Subject to ongoing board evaluation and approval. Adjusted Free Cash Flow ($B)1 Closing Remarks Michael Dell Chairman and Chief Executive Officer Strategy and closing thoughts We are growing revenue, cash flow and earnings backed by operational excellence Our strategy, operational advantages and track record of execution have us well positioned We are committed to driving long-term value with growing capital return Data and technology are central to everything we do, and Dell is thriving Leveraging our strengths to extend our leadership and capture new growth Debt Summary Appendix A Debt summary 1) Amounts are based on underlying data and may not visually foot due to rounding. 2) Principal Face Value. 3) Core debt represents the total principal amount of our debt, less: (a) public subsidiary debt, (b) DFS related debt, and (c) other debt. Consolidated GAAP and non-GAAP financial statements Appendix B Supplemental non-GAAP measures Non-GAAP revenue FY18 This amount includes non-cash purchase accounting adjustments primarily related to the EMC merger transaction in 3Q17. This represents Dell Technologies non-GAAP net revenue, excluding VMware, adjusted to include the impact of currently estimated VMware reseller revenue. Supplemental non-GAAP measures Non-GAAP revenue FY19-FY24E Amounts are based on underlying data and may not visually foot due to rounding. This amount includes non-cash purchase accounting adjustments primarily related to the EMC merger transaction in 3Q17. FY19 revenue represents unaudited pro forma financial information, presented in accordance with Regulation S-X Article 11 as filed in Exhibit 99.1 to the Company's Form 8-K/A filed with the Securities and Exchange Commission on November 5, 2021. FY19 non-GAAP revenue represents a management estimated pro forma financial measure and is not presented in accordance with Regulation S-X Article 11. FY24 revenue represents full year guidance as of Q2, our most recent earnings release. Supplemental non-GAAP measures Non-GAAP net income FY19 Q3 and Q4 This amount includes non-cash purchase accounting adjustments primarily related to the EMC merger transaction in 3Q17. Consists of acquisition, integration, and divestiture-related costs, as well as the costs incurred in the Class V transaction. Consists of goodwill impairment charges, severance and facility action costs, and stock-based compensation expense. Consists of the gain (loss) on strategic investments, which includes recurring fair value adjustments on equity investments. Consists of the tax effects of non-GAAP adjustments, as well as an adjustment for discrete tax items. Supplemental non-GAAP measures Non-GAAP net income FY20 and FY21 This amount includes non-cash purchase accounting adjustments primarily related to the EMC merger transaction in 3Q17. Consists of acquisition, integration, and divestiture-related costs and gains. Consists of severance, facilities action and impairment charges, incentive charges related to equity investments, other costs, and effective 1Q23, payroll taxes associated with stock-based compensation. Consists of the gain (loss) on strategic investments, which includes recurring fair value adjustments on equity investments. Consists of the tax effects of non-GAAP adjustments, as well as an adjustment for discrete tax items. Supplemental non-GAAP measures Non-GAAP net income FY22 This amount includes non-cash purchase accounting adjustments primarily related to the EMC merger transaction in 3Q17. Consists of acquisition, integration, and divestiture-related costs and gains. Consists of severance, facilities action and impairment charges, incentive charges related to equity investments, other costs, and effective 1Q23, payroll taxes associated with stock-based compensation. Consists of the gain (loss) on strategic investments, which includes recurring fair value adjustments on equity investments. Consists of the tax effects of non-GAAP adjustments, as well as an adjustment for discrete tax items. Supplemental non-GAAP measures Non-GAAP net income FY23 to FY24 Q2 This amount includes non-cash purchase accounting adjustments primarily related to the EMC merger transaction in 3Q17. Consists of acquisition, integration, and divestiture-related costs and gains. Consists of severance, facilities action and impairment charges, incentive charges related to equity investments, other costs, and effective 1Q23, payroll taxes associated with stock-based compensation. Consists of the gain (loss) on strategic investments, which includes recurring fair value adjustments on equity investments. Consists of the tax effects of non-GAAP adjustments, as well as an adjustment for discrete tax items. Supplemental non-GAAP measures Non-GAAP earnings per share FY19 Q3 and Q4 Adjustments give effects of the Class V transaction, including the elimination of investment income related to the liquidation of VMware’s cash, cash equivalents, and investments in order to fund the special dividend and interest expense related to the debt financing as if they occurred on February 3, 2018, the first day of fiscal year 2019. The incremental dilution from VMware attributable to Dell Technologies Inc. represents the impact of VMware Inc.’s dilutive securities on the diluted earnings per share of Dell Technologies and is calculated by multiplying the difference between VMware’s basic and diluted earnings per share by the number of shares of VMware Inc. common stock held by Dell Technologies. Assumes static share count for each quarter in FY19. Calculated by adding 150 million shares primarily driven by the incremental Class C shares issued upon closing of the Class V transaction to the 567 million shares as of 3Q19 per slide 35. Assumes static share count for each quarter in FY19 and potentially dilutive awards of 30 million. Also assumes average closing stock price of $49.65, the closing stock price of February 1, 2019. Supplemental non-GAAP measures Non-GAAP earnings per share FY20 to FY22 Supplemental non-GAAP measures Non-GAAP earnings per share FY23 to FY24 Q2 Supplemental non-GAAP measures Adjusted Free Cash Flow FY19 Q3 and Q4 Amounts are based on underlying data and may not visually foot due to rounding. Supplemental non-GAAP measures Adjusted Free Cash Flow FY20 to FY22 Amounts are based on underlying data and may not visually foot due to rounding. Amount represents change in net carrying value of equipment for DFS operating leases. Supplemental non-GAAP measures Adjusted Free Cash Flow FY23 to FY24 Q2 Amounts are based on underlying data and may not visually foot due to rounding. Amount represents change in net carrying value of equipment for DFS operating leases. Guidance Appendix C Supplemental non-GAAP measures Financial Guidance1 Amounts are subject to change with no obligation to reconcile these estimates. Amounts may not visually foot due to underlying data. No estimates are included for 3Q-4QFY24 guidance purposes on potential fair value adjustments on strategic investments given the potential volatility of either gains or losses on those equity investments. Impact of purchase accounting and amortization of intangibles represents an estimate for acquisitions completed as of August 4, 2023 and does not include estimates for potential acquisitions, if any, during the remainder of FY24. Consists of acquisition, integration, divestiture-related, and other costs. No estimate is included for 3Q-4QFY24 severance expense as it cannot be reasonably estimated at this time. The aggregate adjustment for income taxes is the estimated combined income tax effect for the adjustments shown above as well as an adjustment for discrete tax items. |
0001144879-23-000216:technicaloverview1012202.htm | 0001144879-23-000216 | 1,144,879 | 1,144,879 | Applied Digital Corp. (APLD) (CIK 0001144879) | ['APLD'] | 8-K | 8-K | 2023-10-12 | 2023-10-12 | 001-31968 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-31968&action=getcompany | 231,323,428 | EX-99.2 | EX-99.2 | 7.01,9.01 | https://www.sec.gov/Archives/edgar/data/1144879/000114487923000216 | https://www.sec.gov/Archives/edgar/data/1144879/000114487923000216/0001144879-23-000216-index.html | https://www.sec.gov/Archives/edgar/data/1144879/000114487923000216/technicaloverview1012202.htm | EX-99.2 3 technicaloverview1012202.htm EX-99.2 technicaloverview1012202 Leading Provider of Next-Gen Datacenters for High-Performance Computing Applications October 2023 Technical Overview DISCLAIMER This presentation has been designed to provide general information about Applied Digital Corporation (“APLD” or the “Company”). Any information contained or referenced herein is suitable only as an introduction to the Company. The information contained in this presentation is for informational purposes only. The information contained in this presentation is not investment or financial product advice and is not intended to be used as the basis for making an investment decision. Neither the Company or any of its affiliates make any representation or warranty, express or implied as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of any of the information or opinions contained in this presentation. This presentation has been prepared without taking into account the investment objectives, financial situation particular needs of any particular person. The trademarks included herein are the property of the owners thereof and are used for reference purposes only. Such use should not be construed as an endorsement of the platform and solutions of Applied Digital. Forward-Looking Statements This presentation contains forward-looking statements that reflect the Company’s current expectations and projections with respect to, among other things, its financial condition, results of operations, plans, objectives, future performance and business. When used in this presentation, the words “could,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. Forward-looking statements include all statements that are not historical facts. Forward-looking statements are based on information available at the time those statements are made and/or management’s good faith beliefs and assumptions as of that time with respect to future events. Such forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. Forward-looking statements may include statements about the Company’s future financial performance, including the Company’s expectations regarding net revenue, operating expenses, and its ability to achieve and maintain future profitability; the Company’s business plan and ability to effectively manage growth; anticipated trends, growth rates, and challenges in the Company’s business, the cryptoeconomy, and in the markets in which the Company operates; further development and market acceptance of cryptoasset networks and other cryptoassets; further development of the Company’s co-hosting facilities including for crypto, AI, machine learning and HPC and cloud computing offerings, and the customer base for each such service; beliefs and objectives for future operations; the value of Bitcoin, Ether and other cryptoassets, which may be subject to pricing risk has historically been subject to wide swings; the Company’s expectations concerning relationships with third parties; the effects of increased competition in the Company’s markets and the Company’s ability to compete effectively; the Company’s ability to stay in compliance with laws and regulations that currently apply or become applicable to its business both in the United States and internationally; economic and industry trends, projected growth, or trend analysis; trends in revenue, cost of revenue, and gross margin; trends in operating expenses, including technology and development expenses, sales and marketing expenses, and general and administrative expenses, and expectations regarding these expenses as a percentage of revenue; increased expenses associated with being a public company; and other statements regarding the Company’s future operations, financial condition, and prospects and business strategies. There is no assurance that any forward-looking statements will materialize. You are cautioned not to place undue reliance on forward-looking statements, which reflect expectations only as of this date. Applied Digital undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. Market and Industry Data This presentation includes information concerning economic conditions, the Company’s industry, the Company’s markets and the Company’s competitive position that is based on a variety of sources, including information from independent industry analysts and publications, as well as Applied Digital’s own estimates and research. Applied Digital estimates are derived from publicly available information released by third party sources, as well as data from its internal research, and are based on such data and the Company’s knowledge of its industry, which the Company believes to be reasonable. Any independent industry publications used in this presentation were not prepared on the Company’s behalf. This information involves many assumptions and limitations, and you are cautioned not to give undue weight to these estimates. The Company has not independently verified the accuracy or completeness of the data contained in these industry publications and other publicly available information. Accordingly, we make no representations as to the accuracy or completeness of that data nor do we undertake to update such data after the date of this presentation. An investment in the Company entails a high degree of risk and no assurance can be given that the Company’s objective will be achieved or that investors will receive a return on their investment. Recipients of this presentation should make their own investigations and evaluations of any information referenced herein. This presentation is available on Applied Digital Corporation’s website at www.applieddigital.com/news-events/presentations. 2 Michael Maniscalco CTO • Serial entrepreneur with multiple startups and exits, and prior experience with StanleyX and Fortune 1000 companies. • Over 20 years of diverse experience in IT, IoT, financial, telecommunications, AI, and healthcare industries. • Holds a degree in Computer Science from the Georgia Institute of Technology. Introduction A I E x p l o s i o n AI Race To Dominance Generative AI Foundational Models Exponential Innovation General Artificial Intelligence World-Changing Implications In A World Where Innovation Races Against Time Super Compute Resources Large Models Drive Demand For Supercomputer Level GPU Clusters AI Explosion The ChatGPT Effect. Digital Infrastructure Where Innovation Can Flourish Physical Space & Power AI Clusters Hungry For Power, Specialized Space, And Efficient Cooling A I I n n o v a t o r s N e e d P o w e r , S p a c e , a n d C o m p u t e Power & Scale D E L I V E R I N G O N T H E I M P O S S I B L E • Supercomputer Scale Clusters • Power Hungry GPU Clusters • Cooling For AI Level Compute Network T R A I N I N G , I N F E R E N C E , A N D I N F I N I B A N D • Delivering Large Cohesive Ultra- low Latency Networks • Tailoring Network To AI Workload Requirements • Enabling Speed And Flexibility AI Compute G P U S U P E R C O M P U T E & I N F E R E N C E • World-class Supercompute For Generative AI And LLM Training • Alleviating The Complexities That Come With Supercomputer Scale A t A p p l i e d D i g i t a l - W e D o n ’ t F e a r C o m p l e x i t y We Build Bridges Where There Have Been Only Gaps We offer a wide range of digital infrastructure and services for compute intensive applications ACCELERATED COMPUTE-AS-A-SERVICE1 Providing Graphics Processing Unit (GPU) Cloud Services Applicable to Artificial Intelligence SUPERCOMPUTE-AS-A-SERVICE2 Providing Supercomputer Scale Clusters As A Turnkey Service Offering NEXT-GEN HPC DATACENTERS3 Providing Power-Efficient HPC Datacenters and Cost-Effective Colocation Services W E A R E T H E A R C H I T E C T S O F A C C E L E R A T I O N IN A WORLD WHERE SPEED TO MARKET MATTERS APLD HGX H100 SuperPod Applied Digital’s team delivers supercomputer clusters designed using Nvidia’s HGX reference architecture that offer cutting-edge compute, storage, and networking TURNING STATE-OF-THE-ART SUPERCOMPUTERS INTO CATAPULTS OF TRANSFORMATION APLD Compute Clusters are deployed in Nvidia SuperPod configurations ranging from 256 – 5,000+ Nvidia H100 SXM GPUs We Turn Pipes And Air Into Threads Of Opportunity Internet Pipes Considerations • Training • Inference • Time to deployment Local Network Fabric • Ultra-low latency • State of the art architectures • Workload flexibility Fact: An APLD 5,000 H100 GPU cluster consists of 250km of fiber interconnecting all GPUs for a total of 15k+ InfiniBand cables Applied Digital H100 SXM Cluster With InfiniBand Power – The Primary Ingredient Of Innovation Created with MidJourney AI /imagine a large data center campus with multiple mulit-story data center buildings in a rural location near a wind turbine farm Power Needs For AI Compute Increasing • An ”AI Brain In A Building” require compute density. • For the largest clusters we provide high-density compute racks (100kw/rack +) • State-of-the-art cooling: Beyond air cooling constraints at ~60kw/rack with liquid cooling • Power at the source: For cost-effective, rapid development and ESG optimized compute • Rethinking data center SLAs for rapid and cost- effective deployment • Delivering Datacenter campuses eyeing gigawatt scale Power & Scale D E L I V E R I N G O N T H E I M P O S S I B L E • Supercomputer Scale Clusters • Power Hungry GPU Clusters • Cooling For AI Level Compute Network T R A I N I N G , I N F E R E N C E , A N D I N F I N I B A N D • Delivering Large Cohesive Ultra- Low Latency Networks • Tailoring Network To AI Workload Requirements • Enabling Speed And Flexibility AI Compute G P U S U P E R C O M P U T E & I N F E R E N C E • World-class Supercompute For Generative AI And LLM Training • Alleviating The Complexities That Come With Supercomputer Scale A t A p p l i e d D i g i t a l - W e D o n ’ t F e a r C o m p l e x i t y We Build Bridges Where There Have Been Only Gaps Leading Provider of Next-Gen Datacenters for High-Performance Computing Applications THANK YOU In a world where speed to market matters. We are the architects of acceleration. Applied Digital doesn’t just build data centers. We construct forces of progress, and design digital infrastructure where innovation can flourish Whether it’s high-performance computing or world-changing AI. This is where ideas transcend and the limit on what’s possible expands. We are for empowered visionaries. First-mover innovators and digital dreamers. We don’t fear complexity. We build bridges where there have been only gaps. More than designers of infrastructure, we are catalysts for the digital age. We turn pipes and air into threads of opportunity… State-of-the-art supercomputers into catapults of transformation. Power – isn’t just a tool – it’s the primary ingredient of innovation. And in a world where innovation races against time, we supply the fuel for possibility. Applied Digital Manifesto |
0000950170-24-103550:zeta-ex99_1.htm | 0000950170-24-103550 | 1,851,003 | 1,851,003 | Zeta Global Holdings Corp. (ZETA) (CIK 0001851003) | ['ZETA'] | 8-K | 8-K | 2024-09-04 | 2024-09-04 | 001-40464 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-40464&action=getcompany | 241,278,762 | EX-99.1 | EX-99.1 | 7.01,9.01 | https://www.sec.gov/Archives/edgar/data/1851003/000095017024103550 | https://www.sec.gov/Archives/edgar/data/1851003/000095017024103550/0000950170-24-103550-index.html | https://www.sec.gov/Archives/edgar/data/1851003/000095017024103550/zeta-ex99_1.htm | EX-99.1 2 zeta-ex99_1.htm EX-99.1 EX-99.1 Exhibit 99.1 September 4, 2024 Zeta Increases 3Q’24 Guidance NEW YORK – Zeta Global (NYSE: ZETA), the AI-Powered Marketing Cloud, today announced increased third quarter 2024 guidance. “The Zeta Marketing Platform with data and Artificial Intelligence at our core is fueling our growth,” said David A. Steinberg, Co-Founder, Chairman, and CEO of Zeta. “Through our strong competitive positioning, we see an acceleration in the marketing cloud replacement cycle. Coupled with increasing adoption of generative AI, we believe this gives us continued momentum.” “The combination of accelerating growth through the first two months of the quarter along with high visibility across our customer base gives us confidence to increase our guidance,” said Chris Greiner, Zeta’s CFO. “We believe the uplift we are seeing reflects new growth that is not the result of pull forward activity from the fourth quarter and we are pleased with the momentum we are experiencing.” Guidance* Third Quarter 2024 •Increasing revenue guidance to at least $255 million, up $15.8 million from the midpoint of the prior guidance of $239.2 million. The revised guidance represents year-over-year growth of at least 35%. •Increasing revenue guidance from political candidates to at least $10 million, up $5 million from the prior guidance of $5 million. Excluding political candidate revenue, the revised revenue guidance represents year-over-year growth of at least 30%. •Increasing Adjusted EBITDA guidance to at least $50.2 million, up $3.1 million from the midpoint of the prior guidance of $47.1 million. The revised guidance represents year-over-year growth of at least 49% and at these values implies an Adjusted EBITDA margin of 19.7%. Prior 3Q’24 Guidance (midpoint)As of 7/31/24 Updated 3Q’24 GuidanceAs of 9/4/24 Revenue $239.2M at least $255M % Growth Y/Y 27% 35% Political Candidate Revenue $5M $10M Revenue ex-Political Candidate Revenue $234.2M at least $245M % Growth Y/Y ex-Political Candidate Rev. 24% 30% Adjusted EBITDA $47.1M at least $50.2M % Growth Y/Y 39% 49% Adjusted EBITDA Margin 19.7% 19.7%** **Based on values in the table We are not updating our full year 2024 guidance at this time. We do not believe that the uplift we are experiencing in our business in the third quarter was driven by projected revenues from the fourth quarter being pulled forward. We expect to discuss our fourth quarter and full year guidance with our third quarter earnings release, once our actual results for the third quarter are finalized. * This press release does not include a reconciliation of forward-looking Adjusted EBITDA and Adjusted EBITDA margin to forward-looking GAAP net income (loss) and net income (loss) margin, respectively, because the Company is unable, without making unreasonable efforts, to provide a meaningful or reasonably accurate calculation or estimation of certain reconciling items which could be significant to the Company’s results. About Zeta Zeta Global (NYSE: ZETA) is the AI-Powered Marketing Cloud that leverages advanced artificial intelligence (AI) and trillions of consumer signals to make it easier for marketers to acquire, grow, and retain customers more efficiently. Through the Zeta Marketing Platform (ZMP), our vision is to make sophisticated marketing simple by unifying identity, intelligence, and omnichannel activation into a single platform – powered by one of the industry’s largest proprietary databases and AI. Our enterprise customers across multiple verticals are empowered to personalize experiences with consumers at an individual level across every channel, delivering better results for marketing programs. Zeta was founded in 2007 by David A. Steinberg and John Sculley and is headquartered in New York City with offices around the world. Forward-Looking Statements This press release, together with other statements and information publicly disseminated by the Company, contains certain 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. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and includes this statement for purposes of complying with these safe harbor provisions. Any statements made in this press release that are not statements of historical fact, including statements about our third quarter 2024 guidance, our expected growth, the acceleration of the marketing cloud replacement cycle, rebound in automotive and insurance verticals, and generative AI adoption, and our strong competitive position are forward-looking statements and should be evaluated as such. Forward-looking statements include information concerning our anticipated future financial performance, our market opportunities and our expectations regarding our business plan and strategies. These statements often include words such as “anticipate,” “believe,” “could,” “estimates,” “expect,” “forecast,” “guidance,” “intend,” “may,” “outlook,” “plan,” “projects,” “should,” “suggests,” “targets,” “will,” “would” and other similar expressions. We base these forward-looking statements on our current expectations, plans and assumptions that we have made in light of our experience in the industry, as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances at such time. Although we believe that these forward-looking statements are based on reasonable assumptions at the time they are made, you should be aware that many factors could affect our business, results of operations and financial condition and could cause actual results to differ materially from those expressed in the forward-looking statements. These statements are not guarantees of future performance or results. The forward-looking statements are subject to and involve risks, uncertainties and assumptions, and you should not place undue reliance on these forward-looking statements. Factors that may materially affect such forward-looking statements include, but are not limited to: global supply chain disruptions; macroeconomic and industry trends and adverse developments in the debt, consumer credit and financial services markets and other macroeconomic factors beyond Zeta’s control; increases in our borrowing costs as a result of changes in interest rates and other factors; the impact of inflation on us and on our customers; potential fluctuations in our operating results, which could make our future operating results difficult to predict; underlying circumstances, including cash flows, cash position, financial performance, market conditions and potential acquisitions; prevailing stock prices, general economic and market condition; the impact of future pandemics, epidemics and other health crises on the global economy, our customers, employees and business; the war in Ukraine and escalating geopolitical tensions as a result of Russia’s invasion of Ukraine; the escalating conflict in Israel, Gaza and in the surrounding areas; our ability to innovate and make the right investment decisions in our product offerings and platform; the impact of new generative AI capabilities and the proliferation of AI on our business; our ability to attract and retain customers, including our scaled and super-scaled customers; our ability to manage our growth effectively; our ability to collect and use data online; the standards that private entities and inbox service providers adopt in the future to regulate the use and delivery of email may interfere with the effectiveness of our platform and our ability to conduct business; a significant inadvertent disclosure or breach of confidential and/or personal information we process, or a security breach of our or our customers’, suppliers’ or other partners’ computer systems; and any disruption to our third-party data centers, systems and technologies. These cautionary statements should not be construed by you to be exhaustive and the forward-looking statements are made only as of the date of this press release. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements. The third quarter 2024 guidance provided herein is based on Zeta’s current estimates and assumptions and is not a guarantee of future performance. The guidance provided is subject to significant risks and uncertainties, including the risk factors discussed in the Company's reports on file with the Securities and Exchange Commission (“SEC”), that could cause actual results to differ materially. There can be no assurance that the Company will achieve the results expressed by this guidance or the targets. Non-GAAP Measures In order to assist readers of our consolidated financial statements in understanding the core operating results that our management uses to evaluate the business and for financial planning purposes, we describe our non-GAAP measures below. We believe these non-GAAP measures are useful to investors in evaluating our performance by providing an additional tool for investors to use in comparing our financial performance over multiple periods. •Adjusted EBITDA is a non-GAAP financial measure defined as net loss adjusted for interest expense, depreciation and amortization, stock-based compensation, income tax (benefit) / provision, acquisition related expenses, restructuring expenses, change in fair value of warrants and derivative liabilities, certain dispute settlement expenses, gain on extinguishment of debt, certain non-recurring IPO related expenses, including the payroll taxes related to vesting of restricted stock and restricted stock units upon the completion of the IPO, and other expenses. Acquisition related expenses and restructuring expenses primarily consist of severance and other employee-related costs which we do not expect to incur in the future as acquisitions of businesses may distort the comparability of the results of operations. Change in fair value of warrants and derivative liabilities is a non-cash expense related to periodically recording “mark-to-market” changes in the valuation of derivatives and warrants. Other expenses consist of non-cash expenses such as changes in fair value of acquisition related liabilities, gains and losses on extinguishment of acquisition related liabilities, gains and losses on sales of assets and foreign exchange gains and losses. In particular, we believe that the exclusion of stock-based compensation, certain dispute settlement expenses and non-recurring IPO related expenses that are not related to our core operations provides measures for period-to-period comparisons of our business and provides additional insight into our core controllable costs. We exclude these charges because these expenses are not reflective of ongoing business and operating results. •Adjusted EBITDA margin is a non-GAAP financial measure defined as Adjusted EBITDA divided by the total revenues for the same period. Adjusted EBITDA and Adjusted EBITDA margin provide us with useful measures for period-to-period comparisons of our business as well as comparison to our peers. We believe that these non-GAAP financial measures are useful to investors in analyzing our financial and operational performance. Nevertheless our use of Adjusted EBITDA and Adjusted EBITDA margin has limitations as an analytical tool, and you should not consider these measures in isolation or as a substitute for analysis of our financial results as reported under GAAP. Other companies may calculate similarly-titled non-GAAP financial measures differently than us, thereby limiting the usefulness of these non-GAAP financial measures as a comparative tool. Because of these and other limitations, you should consider our non-GAAP measures only as supplemental to other GAAP-based financial performance measures, including revenues and net loss. We calculate forward-looking Adjusted EBITDA and Adjusted EBITDA margin based on internal forecasts that omit certain amounts that would be included in forward-looking GAAP net income (loss). We do not attempt to provide a reconciliation of forward-looking Adjusted EBITDA and Adjusted EBITDA margin guidance to forward looking GAAP net income (loss) and GAAP net income (loss) margin, respectively, because forecasting the timing or amount of items that have not yet occurred and are out of our control is inherently uncertain and unavailable without unreasonable efforts. Further, we believe that such reconciliations would imply a degree of precision and certainty that could be confusing to investors. Such items could have a substantial impact on GAAP measures of financial performance. Contacts: Investor Relations Scott Schmitz ir@zetaglobal.com Press James A. Pearson press@zetaglobal.com |
0001582961-24-000095:exhibit991-cptoannouncement.htm | 0001582961-24-000095 | 1,582,961 | 1,582,961 | DigitalOcean Holdings, Inc. (DOCN) (CIK 0001582961) | ['DOCN'] | 8-K | 8-K | 2024-06-17 | 2024-06-17 | 001-40252 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-40252&action=getcompany | 241,047,001 | EX-99.1 | EX-99.1 | 7.01,9.01 | https://www.sec.gov/Archives/edgar/data/1582961/000158296124000095 | https://www.sec.gov/Archives/edgar/data/1582961/000158296124000095/0001582961-24-000095-index.html | https://www.sec.gov/Archives/edgar/data/1582961/000158296124000095/exhibit991-cptoannouncement.htm | EX-99.1 2 exhibit991-cptoannouncement.htm EX-99.1 DocumentExhibit 99.1DigitalOcean Appoints Bratin Saha as Chief Product and Technology OfficerAs CPTO, Saha will accelerate the Company’s product strategy and development NEW YORK—June 17, 2024—DigitalOcean Holdings, Inc. (NYSE: DOCN), the developer cloud optimized for startups and growing technology businesses, today announced Bratin Saha has joined the company as its Chief Product and Technology Officer (CPTO). In this new executive role, Saha will lead product strategy, development, infrastructure, and security with a focus on making DOCN the best cloud for developers and growing technology businesses. Saha joins from Amazon Web Services (AWS), where he served as Vice President and General Manager of Artificial Intelligence (AI), Machine Learning (ML), and Data Infrastructure. He led the creation of one of the fastest growing businesses in AWS history and helped to build the multi-billion-dollar annual recurring revenue (ARR) generative AI business. Prior to his time at Amazon, Saha was Vice President of Software Infrastructure at Nvidia. He is an alumnus of Indian Institute of Technology and Harvard Business School. Saha received a Ph.D. in Computer Science from Yale University. He has more than 70 patents granted, more than 30 conference/journal papers, and Harvard Business School has written three case studies on his work.“AI innovation is powering the next evolution of software, and startups are at the heart of building the future,” said Paddy Srinivasan, CEO DigitalOcean. “Adding Bratin and his unparalleled experience in AI and ML will enable DigitalOcean to continue playing a pivotal role as the premier developer cloud optimized for startups and growing technology companies.”Saha’s expertise spans across a wide range of domains, including generative AI, machine learning, cloud computing, distributed processing, and hardware design. He has a proven track record of leveraging cutting-edge technologies to solve complex problems and drive innovation across various sectors. “I am thrilled to join DigitalOcean today to lead the product and technology teams,” said Saha. “DigitalOcean has a strong developer following and is well poised for path breaking innovation. By applying the latest breakthroughs such as generative AI, we will differentiate ourselves as the simplest and most productive platform for developers and growing technology businesses.”About DigitalOceanDigitalOcean simplifies cloud computing so businesses can spend more time creating software that changes the world. With its mission-critical infrastructure and fully managed offerings, DigitalOcean helps developers at startups and growing technology businesses rapidly build, deploy and scale, whether creating a digital presence or building digital products. DigitalOcean combines the power of simplicity, security, community and customer support so customers can spend less time managing their infrastructure and more time building innovative applications that drive business growth. For more information, visit digitalocean.com.Forward-Looking StatementsThis press release may contain 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 may be identified by their use of terms and phrases such as “anticipate,” “enable,” “expect,” “will,” “believe,” “continue” and other similar terms and phrases. The outcome of the events described in these forward-looking statements is subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from the results anticipated by these forward-looking statements, including those factors contained in the “Risk Factors” section of our SEC filings. It is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this release. The results, events and circumstances reflected in the forward-looking statements may not be achieved or occur.MediaMeghan Larsonpress@digitalocean.comInvestorsMelanie Strateinvestors@digitalocean.com |
0001144879-23-000191:applieddigital-companyov.htm | 0001144879-23-000191 | 1,144,879 | 1,144,879 | Applied Digital Corp. (APLD) (CIK 0001144879) | ['APLD'] | 8-K | 8-K | 2023-08-21 | 2023-08-21 | 001-31968 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-31968&action=getcompany | 231,189,851 | EX-99.1 | EX-99.1 | 7.01,9.01 | https://www.sec.gov/Archives/edgar/data/1144879/000114487923000191 | https://www.sec.gov/Archives/edgar/data/1144879/000114487923000191/0001144879-23-000191-index.html | https://www.sec.gov/Archives/edgar/data/1144879/000114487923000191/applieddigital-companyov.htm | EX-99.1 2 applieddigital-companyov.htm EX-99.1 applieddigital-companyov Company Overview August 2023 W H O W E A R E Applied Digital (NASDAQ: APLD) is a U.S. based operator of next- generation digital infrastructure, providing cost-competitive solutions to High-Performance Compute (HPC) and Artificial Intelligence (AI). E X P E R I E N C E D L E A D E R S H I P T E A M Wes Cummins CHAIRMAN & CEO • Holds a BSBA from Washington University in St. Louis where he majored in Finance and Accounting • B. Riley Asset Management, 2021 – Present, President • 272 Capital L.P., 2020 – Present, Founder and CEO • Nokomis Capital, 2012 – 2020, Technology Lead • B. Riley & Co, 2002 – 2011, President • Current Board Member at Vishay Precision Group, Inc. (NYSE: VPG), and Sequans Communications (NYSE: SQNS) Former Board Member at Telenav (NASDAQ:TNAV) Jason Zhang CO-FOUNDER • Holds a bachelor’s degree in Economics from Harvard College • Angel Investor, Startup Advisor, Serial Entrepreneur • Sequoia Capital, 2017 – 2019, Investment analyst • MSD Capital (Michael Dell family office), 2015 – 2017, Investment analyst David Rench CFO • Holds a BBA from the Neeley School of Business at Texas Christian University in Fort Worth, Texas, and an MBA from the Cox School of Business at Southern Methodist University. • Hirzel Capital, 2017 – 2020, CFO • Ihiji (acquired by Control4 – NASDAQ: CTRL), 2010 – 2017, Co-founder, VP of Finance and Operations Mike Maniscalco CTO • Holds a degree in Computer Science from the Georgia Institute of Technology. • A serial entrepreneur with multiple startups and exits, and prior experience with StanleyX and Fortune 1000 companies. • Over 20 years of experience in web3, IoT, financial, telecommunications, and healthcare industries. O R G A N I Z A T I O N A L C H A R T Wes Cummins David Rench Mike Maniscalco Jason Zhang Operations (103) Real Estate (7)HR (6) Finance (3) EH&S (3) Technology (17) Accounting (5) C O R P O R A T E T I M E L I N E $16.5m Preferred Stock A P R I L 2 0 2 1 Jamestown Facility Begins Energizing J A N U A R Y 2 0 2 2 Applied Digital Launches Cloud Service (Sai Computing) & Signs First Major Customer M A Y 2 0 2 3 Break Ground On 2nd Facility (Garden City, Tx) A P R I L 2 0 2 2 Strategic Name Change To “Applied Digital” N O V E M B E R 2 0 2 2 Ipo And Nasdaq Up-listing A P R I L 2 0 2 2 Break Ground On 3rd Facility - Ellendale, Nd S E P T E M B E R 2 0 2 2 Break Ground On Hpc Facility In Jamestown, Nd D E C E M B E R 2 0 2 2 Began To Energize Ellendale. M A R C H 2 0 2 3 Enters A Strategic Collaboration With Hewlett Packard Enterprise To Deliver Ai Cloud Service J U N E 2 0 2 3 Second Ai Cloud Service Customer J U N E 2 0 2 3 Applied Digital Teams With Supermicro M A Y 2 0 2 3 Onboarding Of First Major Cloud Service Customer J U L Y 2 0 2 3 $32.5m Preferred Stock J U L Y 2 0 2 1 Successful Intergrated Systems Test At Jamestown For Hpc Deployment J U N E 2 0 2 3 20222021 2023 W H A T W E P R O V I D E Industry Leading Infrastructure Solutions We offer a wide range of solutions and services for compute intensive applications AI BASED CLOUD SERVICES1 Providing Graphics Processing Unit (GPU) Cloud Services Applicable to Artificial Intelligence under Sai Computing NEXT-GEN HPC DATACENTERS2 Providing Power-Efficient HPC Datacenters and Cost-Effective Colocation Services BLOCKCHAIN DATACENTERS3 Providing Infrastructure and Colocation Services to Blockchain Network Operators Generative AI is experiencing an explosive growth globally. This widespread adoption can be attributed from these applications increasing the speed, accuracy and quality of key processes and enhancing creativity and innovation across multiple industries. M A R K E T O V E R V I E W Current Adoption 1 Year Aspirational Adoption 1 Year Incremental Interest Software Development Customer Service Marketing Product Development & Management M A R K E T O V E R V I E W Consequently, this exponential growth of adoption is driving demand for compatible datacenters and computational resources to train these models and run inferences. 2022 2023 2024 2025 2026 2027 2028 2029 2030 Range Including Generative AI Baseline Datacenter Absorption “ We estimate lower bound of generative AI impact could increase global DC absorption by 44% in 2027. A “bull” case could see DC absorption more than double (+120%) by 2027.” Applied Digital works as the foundation for providing the infrastructural layer that is needed to stay ahead of the changing demands of GPU clusters and power consumption by continuously investing in research and development, enabling us to offer cutting-edge solutions that meet state of the art industry requirements. Demand Overview Key Considerations Examples Generative AI Workload Type Public cloud deployments Adjacency to existing large scale cloud infrastructure Inference and Training started in markets with abundant cloud infrastructure • Public Cloud Regions • AWS, MSFT single A-Z regions in major metros • CDNs across major metros • Blockchain Network Colocation Proximity to end-user demand in a well-connected DC Low cost of power subject to “baseline” infrastructure req’s Small public cloud nodes Set up specific metro areas to serve specific use cases Large storage/mining farms Deployed to serve use cases that do not require end-user proximity LOCATION SPECIFIC LOCATION-AGNOSTIC Inference: Long-Term, Location-Agnostic Core + Edge A I W O R K L O A D S W I L L B E L O C A T I O N A G N O S T I C W I T H E X T R E M E L Y L A T E N C Y S E N S I T I V E I N F E R E N C E D E P L O Y E D I N D E N S E P O P U L A T I O N C E N T E R S W O R K L O A D R E Q U I R E M E N T S : I N F R A S T R U C T U R E D I F F E R E N C E S Accommodating AI will require large-scale high-density computing, potentially even at the edge, in well-connected facilities. Cluster Location Typical Size Typical Density Rack Set-up Server Configuration Interconnects Bandwidth Typical Cloud Core Cluster Cloud Region Cloud Region or Low-Cost Market Cloud Region or Edge Market Cloud Region or Edge Market 6 - 24MW 6 - 12kW ~ 20 Servers Limited 800 GB / Rack ∙ 1x or 2x CPU ∙ 2x 600W CPRS ∙ 2x CPU (~1,200W) ∙ 8x GPU (~6,200W) ∙ 2x CPU (~1,200W) ∙ 2-4x GPU (~3,000W) ∙ 1x CPU (~600W) ∙ 1-2x GPU (~1,000W) 50MW+ 50MW+ ~ 4 - 7 Servers Photonic-based Server-Server Interconnection 12.8 Tbps / Rack 5MW - 10MW 5MW - 10MW ~ 4- 12 Servers Photonic-based Server-Server + Carrier IX < 12.8 Tbps / Rack 1MW - 3MW 1MW - 3MW ~ 15 Servers Carrier IX 6 TB / Rack Model Training Large Model Inference Small Model Inference C O M M E N T A R Y Cluster Sizes Suggest Significant Near-term “Training” Demand For New Mega Deployments, And Significant “Edge” Impact Once Inference Picks Up. Training And Large Inference Will Require Significant Retrofitting, Mostly To Accommodate Liquid Or Immersion Cooling. Still, Subset Of Demand May Operate At Lower Densities And Require Standard Cooling, Limited Retrofitting. On-site IX Requirements At Scale Mean Large Sized Well-connected Facilities Are The Primary Ones In Contention To Capture This Demand AI Cloud Services Sai Computing, a wholly-owned subsidiary of Applied Digital, offers cloud services that provide high-performance computing power for AI applications, including large language model training, inference, graphics rendering, and more. C L O U D S E R V I C E S T E A M • A serial entrepreneur with multiple startups and exits, and prior experience with StanleyX and Fortune 1000 companies. • Over 20 years of experience in web3, IoT, financial, telecommunications, and healthcare industries. • Holds a degree in Computer Science from the Georgia Institute of Technology. Michael Maniscalco CHIEF TECHNOLOGY OFFICER Erik Grundstrom VP OF HPC INFRASTRUCTURE • Over 20 years of experience HPC and Datacenters • Formerly Director FAE & Business Development at Supermicro • Delivered diverse workloads such as deep learning, seismic analysis, high-frequency trading, computational fluid dynamics, electron microscopy, etc. VP CYBERSECURITY & COMPLIANCE Terry Koenn • Formerly Director Information Security & Compliance at Experian • Nearly 30 years in security, compliance and networking • US Marine Corps Veteran 16 ENGINEERS - HPC, SYSTEMS, NETWORK, SOFTWARE 81 DATACENTER EMPLOYEES - DATACENTER OPERATIONS TEAM Our team has worked for or on HPC Systems for companies including: The Bare Metal Service model gives a gold standard to a deployment as a purpose-built dedicated physical infrastructure to a client's on-site server room. This service offers a full stack of network, storage, compute in one deployment with a cloud-like capability to deliver hardware at the speed of software. Bare Metal GPU Cloud Services 1. Dedicated Systems Resources 2. Reduction of the Noisy Neighbor effect in Datacenter deployments 3. Faster Deployments and Scalability 4.Ability to interchange between Training > Inference Models 5. Ability to switch hardware – more dynamic 6. Custom Access – Direct IP, API Bare Metal Advantages: Performance and Reliability • Unparalleled Processing Power: Our GPU Cloud boasts state-of-the-art Graphics Processing Units (GPUs) that deliver unmatched computational power. With thousands of cores and high memory bandwidth, these GPUs can handle massive parallel processing tasks, enabling swift execution of data-intensive operations. APLD Infrastructure and Sai Services Designed for Performance, High Availability, Security and Reliability. • Data Security and Privacy: We prioritize the security and privacy of your data. Our GPU Cloud employs industry-leading encryption standards and follows strict compliance protocols to safeguard sensitive information from unauthorized access or breaches. • Reliability and Uptime: We understand that mission-critical applications cannot afford downtime. That is the reason why our GPU Cloud is built on a robust and fault-tolerant architecture. Redundancy measures, load balancing, and failover mechanisms ensure high availability, minimizing the risk of service disruptions. • Optimized for AI and ML Workloads: AI and machine learning tasks often require iterative training processes that demand significant computing resources. Our GPU Cloud is tuned to efficiently handle such workloads, reducing training times and improving the accuracy of models. • Expert Support and Monitoring: Our team of experienced professionals is dedicated to providing high standard support and monitoring services. From initial setup to ongoing maintenance, we are committed to assisting you throughout your journey on our GPU Cloud. NVidia Ampere GPUs • A40 • A6000 • A100 • H100 80GB SXM • H100 80GB PCIE Future Offerings • L40S • Grace Hopper GH200 GPUs Offered GPU COMPUTE OPTIONS InfiniBand Fabric Storage Storage UFM 1 Storage UFM 2 InfiniBand Fabric Compute Compute UFM 1 Compute UFM 2Jump Box (Optional) High-Speed Storage System Storage Home Filesystem Head Node 1 Login Node 1 Head Node 2 Login Node 2 Hot-Spare Management Nodes In-Band Network Fabric Out-of-Band Network Fabric HGX H100 SuperPod APLD Datacenter designed using NVidia’s HGX Reference Architecture offering Cutting Edge Compute, Storage, & Networking T E C H N I C A L A R C H I T E C T U R E Compute Nodes APLD's OEM Equipment Partners Support The team comes from a background of hyperscalers, world class HPC centers, and innovative tech startups enabling strong support for sophisticated users of compute. Bare Metal For highest levels of performance and flexibility, Sai offers customers server bare metal access. Sai and its partners have alternatives for customers who need CLI or Web UI access. NVidia H100 Highly Competitive AI Teams require access to state-of-the-art GPU Clusters. Sai was one of the first large scale cloud providers in the World to bring NVidia H100 online for customers. Key areas that differentiate our GPU Cloud services from competitors GPU COMPUTE OPTIONS Reserved Compute S T A N D A R D C L U S T E R D E P L O Y M E N T 1 0 2 4 X G P U S • 6 Month Minimum Term • Upto 72 Month Term Contracts • Fixed Price • Support + NVidia Architecture Burst Compute S M A L L T O M E D I U M C L U S T E R S • Immediate Bulk Compute Needs • Short Term Reserve for Hourly Compute • Variable Pricing based on Availability Short Term M A R K E T P L A C E • Per GPU per Hour • Per Server Per Hour Cloud Service Offering Overview O V E R V I E W Product Roadmap Partnerships Bare Metal GPU Clusters Visualization, Containerization, Orchestration Data Science Solution Based Partnerships Bare Metal Command Line Interface Web Management Interface Partnerships with several companies for simplified interfaces • For Data Science & ML Teams (Small & Lean) • Location Agnostic or Specific Requirements • Doesn’t Require System Engineers or Admins • GPUs by the Hour • Command Line Interfaces • Web Interfaces R-STEALTH Next-Gen HPC Datacenter Colocation Services C O L O C A T I O N S E R V I C E S T E A M Our team has worked for or on datacenter projects for companies including: Head of Procurement Power Engineering Lead Sr. Project Manager Design Lead Site Managers Logistics Coordinator Purchasing Agent Construction Project Manager VP of Datacenter Ops Operational Control Center Manager Brad Barton EVP OF RE DEVELOPMENT • Has executed over $2.5 billion in mission critical datacenter projects in the US and Mexico • More recently, he delivered multiple hyperscale, wholesale, and collocation datacenters totaling over 150 megawatts for large REITs, social media clients and financial institutions Nick Phillips EVP OF DC OPERATIONS • Core Scientific, 2017-2018, Chief Operating Officer • Led the buildout of the first sites, including locating power sites, finding contractors, sourcing equipment, building the team, working with local and state governments, etc Etienne Snyman EVP OF POWER • ATOC Power Canada Ltd, 2012 – 2017, developer builder, and operator of power generation facilities • Leadership roles at China National Offshore Oil Corporation, and ENMAX Energy Corporation • Hut 8 Mining Corp (NASDAQ: HUT), Head of Power Roland Davidson EVP OF ENGINEERING • Spent the last 4 years designing and building HPC facilities, including for HUT 8 Mining Corp (NASDAQ: HUT) • Specializes in commissioning, procuring, testing of power system components O V E R V I E W Applied Digital HPC-Centric Datacenters Solutions PROBLEM • Nvidia HGX Servers Require 10kW+ per server and 40kW+ per rack for large clusters • Traditional Datacenter "High-Density" is <15kw/rack • Traditional air-cooled datacenters are inefficient and hit scale points at 45-50kw/rack • Cutting edge supercomputing centers are pushing 200kw/rack today • Large training clusters need close physical proximity and greater density SOLUTION • Design higher density racks and datacenters to maximize space and minimize cabling distances, thereby expanding the cluster sizing • Higher density requires specialized facilities, equipment and design • Highest density clusters require liquid cooling. Applied's datacenters are engineered to support advanced liquid cooled infrastructure for the most demanding future density requirements S T A T E - O F - T H E - A R T I N F R A S T R U C T U R E Applied Digital Datacenters focus on massive compute loads, high-density deployments and efficiency. A P L D ’ S C A M P U S I N C L U D E : o Dedicated Substation o Custom Office Space o Dedicated 24/7 Security Team o Customizable Access Controls o Cutting Edge Video Monitoring leveraging AI and Edge Analytics o Loading dock with Burn-In o Customer Storage Area o Centralized Operations Command Center D A T A H A L L F L O O R S D E S I G N E D F O R F L E X I B I L I T Y o Tailored to customer requirements for InfiniBand friendly deployments o Rack Densities from 45KW to 120KW can be deployed in a contiguous space o Cost effective electrical and mechanical fit out models o Data halls can be securely subdivided o Industry leading Power Utilization Efficiency AI Generated Image Regions Minnesota MN Datacenter Region Minneapolis-Saint Paul Datacenter Code MSP North Dakota ND Datacenter Region Fargo Datacenter Code FAR Colorado CO Datacenter Region Denver Datacenter Code DEN Utah UT Datacenter Region Salt Lake City Datacenter Code SLC Nevada NV Datacenter Region Las Vegas Datacenter Code LV info@saicomputing.com info@applieddigital.com |
0000071691-25-000117:pressrelease06302025.htm | 0000071691-25-000117 | 71,691 | 71,691 | NEW YORK TIMES CO (NYT) (CIK 0000071691) | ['NYT'] | 8-K | 8-K | 2025-08-06 | 2025-08-06 | 001-05837 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-05837&action=getcompany | 251,187,391 | EX-99.1 | EX-99.1 | 2.02,9.01 | https://www.sec.gov/Archives/edgar/data/71691/000007169125000117 | https://www.sec.gov/Archives/edgar/data/71691/000007169125000117/0000071691-25-000117-index.html | https://www.sec.gov/Archives/edgar/data/71691/000007169125000117/pressrelease06302025.htm | EX-99.1 2 pressrelease06302025.htm EX-99.1 Document The New York Times Company Reports Second-Quarter 2025 Results NEW YORK, August 6, 2025 – The New York Times Company (NYSE: NYT) announced today second-quarter 2025 results.Key Highlights•The Company added approximately 230,000 net digital-only subscribers compared with the end of the first quarter of 2025, bringing the total number of subscribers to 11.88 million.•Total digital-only average revenue per user (“ARPU”) increased 3.2 percent year-over-year to $9.64 largely driven by subscribers transitioning from promotional to higher prices and price increases on certain tenured subscribers.•Growth in both digital subscribers and ARPU drove a year-over-year increase in digital subscription revenues of 15.1 percent.•Digital advertising revenues increased 18.7 percent year-over-year primarily due to new advertising supply in areas of strong marketer demand.•Affiliate, licensing and other revenues increased 5.8 percent year-over-year as a result of higher licensing revenues and Wirecutter affiliate referral revenues.•Operating costs increased 6.2 percent and adjusted operating costs (defined below) increased 6.1 percent year-over-year, largely as a result of higher cost of revenue, sales and marketing and general and administrative expenses.•Operating profit increased 34.2 percent year-over-year to $106.6 million, while adjusted operating profit (defined below) increased 27.8 percent year-over-year to $133.8 million.•Operating profit margin for the quarter was 15.5 percent and adjusted operating profit margin (defined below) was 19.5 percent, a year-over-year increase of approximately 280 basis points for each metric.•Diluted earnings per share for the quarter was $.50, a $.10 increase year-over-year and adjusted diluted earnings per share (defined below) was $.58, a $.13 increase year-over-year.Meredith Kopit Levien, president and chief executive officer, The New York Times Company, said, “We had a great second quarter across the board, and our strategy continues to work as designed. We grew all of our major revenue lines and we’re generating significant free cash flow. That, combined with a strong balance sheet, means we can keep investing in the unparalleled journalism and best-in-class product portfolio that we see as our enduring advantage. All of which makes us confident that continued execution against our strategy will deliver even more value to even more people, and result in a larger and more profitable business.”Summary of Quarterly Results(In millions, except percentages, subscriber metrics (in thousands), ARPU and per share data)Q2 2025Q1 2025Q4 2024Q3 2024Q2 2024Total subscribers(1)11,880 11,660 11,430 11,090 10,840 Digital-only subscribers(1)11,300 11,060 10,820 10,470 10,210 Digital-only subscribers quarterly net additions(1)230 250 350 260 300 Total digital-only ARPU$9.64 $9.54 $9.65 $9.45 $9.34 % change year-over-year3.2 %3.6 %4.4 %1.8 %2.1 %Digital-only subscription revenues$350.4 $335.0 $334.9 $322.2 $304.5 % change year-over-year15.1 %14.4 %16.0 %14.2 %12.9 %Digital advertising revenues$94.4 $70.9 $117.9 $81.6 $79.6 % change year-over-year18.7 %12.4 %9.5 %8.8 %7.8 %Total revenues$685.9 $635.9 $726.6 $640.2 $625.1 % change year-over-year9.7 %7.1 %7.5 %7.0 %5.8 %Total operating costs$579.3 $577.3 $580.0 $563.5 $545.7 % change year-over-year6.2 %5.8 %6.0 %5.4 %2.0 %Adjusted operating costs(2)$552.1 $543.2 $556.2 $536.0 $520.4 % change year-over-year6.1 %4.9 %6.5 %5.4 %4.4 %Operating profit$106.6 $58.6 $146.6 $76.7 $79.4 Operating profit margin %15.5 %9.2 %20.2 %12.0 %12.7 %Adjusted operating profit (“AOP”) - NYTG$128.0 $89.8 $167.0 $101.5 $107.1 AOP margin % - NYTG20.2 %15.3 %24.6 %17.0 %18.3 %AOP - The Athletic$5.8 $2.9 $3.5 $2.6 $(2.4)AOP(2)$133.8 $92.7 $170.5 $104.2 $104.7 AOP margin %(2)19.5 %14.6 %23.5 %16.3 %16.7 %Diluted earnings per share (“EPS”)$0.50 $0.30 $0.75 $0.39 $0.40 Adjusted diluted EPS(2)$0.58 $0.41 $0.80 $0.45 $0.45 Diluted shares164.3 164.9 165.3 165.8 165.5 (1) Subscribers (including net subscriber additions) are rounded to the nearest ten thousand.(2) Non-GAAP financial measure. See “Comparisons”, “Non-GAAP Financial Measures” and “Reconciliation of Non-GAAP Financial Measures” for more details.2ComparisonsUnless otherwise noted, all comparisons are for the second quarter of 2025 to the second quarter of 2024.As of the first quarter of 2025, we updated our discussion of digital advertising revenue and no longer distinguish between “core” and “other” digital advertising. Digital advertising consists of display (which includes website and mobile applications), audio, email and video advertising revenue from advertisements that are sold either directly to marketers by our advertising sales teams or, currently for a smaller proportion, through programmatic auctions run by third-party ad exchanges. Digital advertising revenue also includes creative services fees.Second quarter 2025 results included the following special items:•$3.5 million of pre-tax litigation-related costs ($2.6 million or $0.02 per share after tax) in connection with a lawsuit against Microsoft Corporation and Open AI Inc. and various of its corporate affiliates alleging unlawful and unauthorized copying and use of the Company’s journalism and other content in connection with their development of generative artificial intelligence products (“Generative AI Litigation Costs”). Management determined to report Generative AI Litigation Costs as a special item beginning in the first quarter of 2024 because, unlike other litigation expenses, the Generative AI Litigation Costs arise from a discrete, complex and unusual proceeding and do not, in management’s view, reflect the Company’s ongoing business operational performance.Second quarter 2024 results included the following special item:•$2.0 million of Generative AI Litigation Costs ($1.5 million or $0.01 per share after tax).This release refers to certain non-GAAP financial measures, including adjusted operating profit, adjusted operating costs, adjusted diluted EPS and free cash flow. See “Non-GAAP Financial Measures” and “Reconciliation of Non-GAAP Financial Measures” for more details, including a discussion of management’s reasons for the presentation of these non-GAAP financial measures and reconciliations to the most comparable GAAP financial measures.3Consolidated ResultsSubscribers and Net AdditionsThe Company ended the second quarter of 2025 with approximately 11.88 million subscribers to its print and digital products, including approximately 11.30 million digital-only subscribers. Of the 11.30 million digital-only subscribers, approximately 6.02 million were bundle and multiproduct subscribers.Compared with the end of the first quarter of 2025, there was a net increase of 230,000 digital-only subscribers. Compared with the end of the second quarter of 2024, there was a net increase of 1,080,000 digital-only subscribers.Average Revenue Per UserAverage revenue per user or “ARPU,” a metric we calculate to track the revenue generation of our digital subscriber base, represents the average revenue per digital subscriber over a 28-day billing cycle during the applicable quarter. For more information, please refer to the Supplemental Subscriber, ARPU and Subscriptions Revenues Information in the exhibits.Total digital-only ARPU was $9.64 for the second quarter of 2025, an increase of 3.2 percent compared with the second quarter of 2024 driven primarily by subscribers transitioning from promotional to higher prices and price increases on certain tenured subscribers.Subscription RevenuesTotal subscription revenues increased 9.6 percent to $481.4 million in the second quarter of 2025. Subscription revenues from digital-only products increased 15.1 percent to $350.4 million due to an increase in bundle and multiproduct revenues and an increase in other single-product subscription revenues, partially offset by a decrease in news-only subscription revenues. Print subscription revenues decreased 2.8 percent to $131.1 million, primarily due to lower domestic home-delivery revenues.Advertising RevenuesTotal advertising revenues increased 12.4 percent to $134.0 million in the second quarter of 2025. Digital advertising revenues increased 18.7 percent to $94.4 million due mainly to new advertising supply in areas of strong marketer demand. Print advertising revenues decreased 0.1 percent to $39.6 million.Affiliate, Licensing and Other RevenuesAffiliate, licensing and other revenues increased 5.8 percent to $70.5 million in the second quarter of 2025, primarily as a result of higher licensing revenues and Wirecutter affiliate referral revenues.Total RevenuesIn the aggregate, subscription; advertising; and affiliate, licensing and other revenues for the second quarter of 2025 increased 9.7 percent to $685.9 million from $625.1 million in the second quarter of 2024.4Operating CostsTotal operating costs increased 6.2 percent in the second quarter of 2025 to $579.3 million compared with $545.7 million in the second quarter of 2024. Operating costs in the second quarters of 2025 and 2024 included Generative AI Litigation Costs of $3.5 million and $2.0 million, respectively. Adjusted operating costs increased 6.1 percent to $552.1 million from $520.4 million in the second quarter of 2024.Cost of revenue increased 5.0 percent to $338.8 million compared with $322.8 million in the second quarter of 2024 due mainly to higher journalism costs, higher subscriber servicing costs and higher digital content delivery costs.Sales and marketing costs increased 12.8 percent to $69.2 million compared with $61.3 million in the second quarter of 2024 due mainly to higher marketing and promotion costs. Media expenses, a component of sales and marketing costs that primarily represents the cost to promote our subscription business, increased 15.9 percent to $31.9 million in the second quarter of 2025 from $27.5 million in the second quarter of 2024.Product development costs increased 2.8 percent to $63.9 million compared with $62.2 million in the second quarter of 2024, primarily due to higher expenses from outside services.General and administrative costs increased 7.4 percent to $82.6 million compared with $76.9 million in the second quarter of 2024, largely due to higher expenses from professional services, unrealized losses from foreign currency cash flow hedges and an asset impairment charge.5Business Segment ResultsWe have two reportable segments: NYTG and The Athletic. In the third quarter of 2025, the Company expects to update its internal reporting to reflect how the Chief Operating Decision Maker intends to manage the business going forward, and as a result, the Company expects to have one reportable segment. Management uses adjusted operating profit (loss) by segment in assessing performance and allocating resources. The Company includes in its presentation revenues and adjusted operating costs to arrive at adjusted operating profit (loss) by segment. Adjusted operating costs are defined as operating costs before depreciation and amortization, severance, multiemployer pension plan withdrawal costs and special items. Adjusted operating profit is defined as operating profit before depreciation and amortization, severance, multiemployer pension plan withdrawal costs and special items. Refer to Segment Information in the exhibits for more information on these segment measures.The New York Times GroupNYTG revenues increased 8.1 percent in the second quarter of 2025 to $632.4 million from $585.2 million in the second quarter of 2024. Subscription revenues increased 9.0 percent to $446.8 million from $410.0 million in the second quarter of 2024, primarily due to growth in subscription revenues from digital-only products, partially offset by decreases in print subscription revenues. Advertising revenues increased 7.0 percent to $119.9 million from $112.1 million in the second quarter of 2024, due to higher revenues from digital advertising. Affiliate, licensing and other revenues increased 4.2 percent to $65.7 million from $63.1 million in the second quarter of 2024, due to higher licensing revenues and Wirecutter affiliate referral revenues.NYTG adjusted operating costs increased 5.5 percent in the second quarter of 2025 to $504.4 million from $478.1 million in the second quarter of 2024, primarily due to higher sales and marketing, general and administrative, journalism and subscriber servicing costs.NYTG adjusted operating profit increased 19.5 percent to $128.0 million from $107.1 million in the second quarter of 2024. This was primarily the result of higher digital subscription revenues; digital advertising revenues; and affiliate, licensing and other revenues, partially offset by higher adjusted operating costs and lower print subscription revenues.The AthleticThe Athletic revenues increased 33.4 percent in the second quarter of 2025 to $54.0 million from $40.5 million in the second quarter of 2024. Subscription revenues increased 18.1 percent to $34.6 million from $29.3 million in the second quarter of 2024, primarily due to growth in the number of subscribers with access to The Athletic (including through bundle subscriptions). Advertising revenues increased 98.8 percent to $14.1 million from $7.1 million in the second quarter of 2024, primarily due to higher revenues from display advertising. Affiliate, licensing and other revenues increased 30.1 percent to $5.4 million from $4.1 million in the second quarter of 2024, primarily due to an increase in licensing revenues.The Athletic adjusted operating costs increased 12.5 percent in the second quarter of 2025 to $48.3 million from $42.9 million in the second quarter of 2024. The increase was mainly due to higher journalism and product development costs.The Athletic adjusted operating profit increased $8.2 million to $5.8 million from a loss of $2.4 million in the second quarter of 2024. This was primarily the result of higher advertising revenues; subscription revenues; and affiliate, licensing and other revenues, partially offset by higher adjusted operating costs.6Consolidated Other DataInterest Income and Other, netInterest income and other, net in the second quarter of 2025 was $9.8 million compared with $8.7 million in the second quarter of 2024. The increase was primarily a result of higher cash and marketable securities balances and higher interest rates.Income TaxesThe Company had income tax expense of $28.7 million in the second quarter of 2025 compared with $21.5 million in the second quarter of 2024. The effective income tax rate was 25.7 percent in the second quarter of 2025 and 24.7 percent in the second quarter of 2024. The increase in income tax expense in the second quarter of 2025 was primarily due to higher pre-tax income. The increase in the effective income tax rate compared to the second quarter of 2024 was primarily attributable to a decrease in federal tax credits in 2025.Earnings Per ShareDiluted EPS in the second quarter of 2025 was $.50 compared with $.40 in the same period of 2024. The increase in diluted EPS was primarily driven by higher operating profit and higher interest income. Adjusted diluted EPS was $.58 in the second quarter of 2025 compared with $.45 in the second quarter of 2024.LiquidityAs of June 30, 2025, the Company had cash and marketable securities of $951.5 million, an increase of $39.7 million from $911.9 million as of December 31, 2024.The Company has an unsecured revolving line of credit. On June 13, 2025, the Company entered into an amendment and restatement of the credit facility that increased the committed amount from $350 million to $400 million and extended the maturity date from July 27, 2027, to June 13, 2030. As of June 30, 2025, there were no outstanding borrowings under this credit facility, and the Company did not have other outstanding debt.Net cash provided by operating activities in the first six months of 2025 was $212.7 million compared with $133.3 million in the same period of 2024. Free cash flow in the first six months of 2025 was $193.2 million compared with $119.3 million in the same period of 2024. Net cash provided by operating activities in the first six months of 2025 included net proceeds of approximately $33 million in connection with the lease and subsequent sale of approximately four acres of excess land at our printing and distribution facility in College Point, N.Y., which was finalized in February 2025.Shares RepurchasesDuring the quarter ended June 30, 2025, the Company repurchased 460,136 shares of its Class A Common Stock for an aggregate purchase price of approximately $23.6 million. As of August 1, 2025, approximately $422.2 million remains available and authorized for repurchases.Capital ExpendituresCapital expenditures totaled approximately $10 million in the second quarter of 2025 compared with approximately $9 million in the second quarter of 2024.7OutlookBelow is the Company’s guidance for revenues and adjusted operating costs for the third quarter of 2025 compared with the third quarter of 2024.The New York Times CompanyDigital-only subscription revenuesincrease 13 - 16%Total subscription revenuesincrease 8 - 10%Digital advertising revenuesincrease low-double-digitsTotal advertising revenuesincrease low-to-mid-single-digitsAffiliate, licensing and other revenuesincrease high-single-digitsAdjusted operating costsincrease 5 - 6%The Company expects the following on a pre-tax basis in 2025:•Depreciation and amortization: approximately $80 million, which includes approximately $28 million of acquired intangible assets amortization,•Interest income and other, net: approximately $40 million, and•Capital expenditures: approximately $40 million.Conference Call Information The Company’s second-quarter 2025 earnings conference call will be held on Wednesday, August 6, 2025, at 8:00 a.m. E.T.A live webcast of the earnings conference call will be available at investors.nytco.com.Participants can pre-register for the conference call at https://dpregister.com/sreg/10201502/ff92508fc2, which will generate dial-in instructions allowing participants to bypass an operator at the time of the call. Alternatively, to access the call without pre-registration, dial 844-413-3940 (in the U.S.) or 412-858-5208 (international). An archive of the webcast will be available beginning about two hours after the call at investors.nytco.com. An audio replay will also be available at 877-344-7529 (in the U.S.) and 412-317-0088 (international) beginning approximately two hours after the call until 11:59 p.m. E.T. on Wednesday, August 20. The passcode for accessing the audio replay via phone is 1514756.About The New York Times CompanyThe New York Times Company (NYSE: NYT) is a trusted source of quality, independent journalism whose mission is to seek the truth and help people understand the world. With more than 11 million subscribers across a diverse array of print and digital products — from news to cooking to games to sports — The Times Company has evolved from a local and regional news leader into a diversified media company with curious readers, listeners and viewers around the globe. Follow news about the Company at NYTCo.com.8Forward-Looking StatementsExcept for the historical information contained herein, the matters discussed in this press release are 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. Terms such as “aim,” “anticipate,” “believe,” “confidence,” “contemplate,” “continue,” “conviction,” “could,” “drive,” “estimate,” “expect,” “forecast,” “future,” “goal,” “guidance,” “intend,” “likely,” “may,” “might,” “objective,” “opportunity,” “optimistic,” “outlook,” “plan,” “position,” “potential,” “predict,” “project,” “seek,” “should,” “strategy,” “target,” “will,” “would” or similar statements or variations of such words and other similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such terms. Forward-looking statements are based upon our current expectations, estimates and assumptions and involve risks and uncertainties that change over time; actual results could differ materially from those predicted by such forward-looking statements. These risks and uncertainties include, but are not limited to: significant competition in all aspects of our business; our ability to grow the size and profitability of our subscriber base; our dependence on third-party platforms for attracting, retaining and monetizing a significant portion of our users; our dependence on user and other metrics that are subject to inherent challenges in measurement; numerous factors that affect our advertising revenues, including market dynamics, evolving digital advertising trends and the evolution of our strategy; damage to our brand or reputation from negative perceptions or publicity or otherwise; risks associated with generative artificial intelligence technology; economic, market and political conditions or other events; risks associated with the international scope of our business and foreign operations; significant disruptions in our newsprint supply chain or newspaper printing and distribution channels or a significant increase in the costs to print and distribute our newspaper; risks associated with environmental, social and governance matters; risks associated with litigation or governmental investigations; our ability to protect our intellectual property; claims against us of intellectual property infringement; our ability to improve and scale our technical and data infrastructure; security incidents and other network and information systems disruptions; our ability to comply with laws and regulations with respect to privacy, data protection and consumer marketing and subscriptions practices; payment processing risk; our dependence on continued and unimpeded access to the internet and cloud-based hosting services we utilize; risks associated with attracting and maintaining a talented and diverse workforce; the impact of labor negotiations and collective bargaining agreements; potential limits on our operating flexibility due to the nature of our employee-related costs; the effects of the size and volatility of our pension plan obligations; liabilities that may result from our participation in multiemployer pension plans; risks associated with acquisitions, divestitures, investments and similar transactions; the risks and challenges associated with investments we make in new and existing products and services; our ability to meet our publicly announced guidance and/or targets; the effects of restrictions on our operations as a result of the terms of our credit facility; potential limits on our future access to capital markets and other financing options; and the concentration of control of our company due to our dual-class capital structure.More information regarding these risks and uncertainties and other important factors that could cause actual results to differ materially from those in the forward-looking statements is set forth in the Company’s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2024, and subsequent filings. Investors are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.9Non-GAAP Financial MeasuresThis release refers to certain non-GAAP financial measures, including adjusted operating profit, defined as operating profit before depreciation, amortization, severance, multiemployer pension plan withdrawal costs and special items; adjusted operating profit margin, defined as adjusted operating profit divided by revenues; adjusted operating costs, defined as operating costs before depreciation, amortization, severance and multiemployer pension plan withdrawal costs and special items; adjusted diluted EPS, defined as diluted EPS excluding amortization of acquired intangible assets, severance, non-operating retirement costs and special items; and free cash flow, defined as net cash provided by operating activities less capital expenditures. Refer to “Reconciliation of Non-GAAP Financial Measures” in the exhibits for a discussion of management’s reasons for the presentation of these non-GAAP financial measures and reconciliations to the most comparable GAAP financial measures. Certain guidance is provided on a non-GAAP basis and not reconciled to the most directly comparable GAAP measure because we are unable to provide, without unreasonable effort, a calculation or estimation of amounts necessary for such reconciliation due to the inherent difficulty of forecasting such amounts.Exhibits:Condensed Consolidated Statements of OperationsFootnotesSupplemental Subscriber and ARPU InformationSegment InformationReconciliation of Non-GAAP Financial MeasuresContacts:Media:Danielle Rhoades Ha, 212-556-8719; danielle.rhoades-ha@nytimes.comInvestors:Anthony DiClemente, 212-556-7661; anthony.diclemente@nytimes.com10THE NEW YORK TIMES COMPANYCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(Dollars and shares in thousands, except per share data)Second QuarterSix Months 20252024% Change20252024% ChangeRevenuesSubscription(a)$481,420 $439,322 9.6 %$945,677 $868,327 8.9 %Advertising(b)133,974 119,163 12.4 %242,050 222,874 8.6 %Affiliate, licensing and other(c)70,479 66,612 5.8 %134,056 127,911 4.8 %Total revenues685,873 625,097 9.7 %1,321,783 1,219,112 8.4 %Operating costsCost of revenue (excluding depreciation and amortization)338,779 322,774 5.0 %673,416 639,641 5.3 %Sales and marketing69,165 61,303 12.8 %135,124 126,437 6.9 %Product development63,940 62,220 2.8 %130,479 125,405 4.0 %General and administrative82,552 76,870 7.4 %162,465 155,685 4.4 %Depreciation and amortization21,396 20,537 4.2 %42,774 41,243 3.7 %Generative AI Litigation Costs(d)3,490 1,983 76.0 %7,887 2,972 *Multiemployer pension plan liability adjustment(e)— — — 4,453 — *Total operating costs579,322 545,687 6.2 %1,156,598 1,091,383 6.0 %Operating profit106,551 79,410 34.2 %165,185 127,729 29.3 %Other components of net periodic benefit costs(4,639)(1,023)*(9,277)(2,074)*Interest income and other, net9,752 8,696 12.1 %19,724 17,083 15.5 %Income before income taxes111,664 87,083 28.2 %175,632 142,738 23.0 %Income tax expense28,719 21,543 33.3 %43,136 36,781 17.3 %Net income$82,945 $65,540 26.6 %132,496 105,957 25.0 %Average number of common shares outstanding:Basic163,331 164,540 (0.7)%163,576 164,592 (0.6)%Diluted164,346 165,514 (0.7)%164,787 165,716 (0.6)%Basic earnings per share attributable to common stockholders$0.51 $0.40 27.5 %$0.81 $0.64 26.6 %Diluted earnings per share attributable to common stockholders$0.50 $0.40 25.0 %$0.80 $0.64 25.0 %Dividends declared per share$0.18 $0.13 38.5 %$0.36 $0.26 38.5 %* Represents a change equal to or in excess of 100% or not meaningful.See footnotes pages for additional information.11THE NEW YORK TIMES COMPANYFOOTNOTES(Dollars in thousands)(a) The following table summarizes digital and print subscription revenues for the second quarters and first six months of 2025 and 2024:Second QuarterSix Months20252024% Change20252024% ChangeDigital-only subscription revenues(1)$350,353 $304,501 15.1 %$685,379 $597,479 14.7 %Print subscription revenues(2)131,067 134,821 (2.8)%260,298 270,848 (3.9)%Total subscription revenues$481,420 $439,322 9.6 %$945,677 $868,327 8.9 %(1)Includes revenue from bundled subscriptions and standalone subscriptions to our news product, as well as to The Athletic and to our Audio, Cooking, Games and Wirecutter products.(2)Includes domestic home-delivery subscriptions, which include access to our digital products. Also includes single-copy, NYT International and Other subscription revenues.(b) The following table summarizes digital and print advertising revenues for the second quarters and first six months of 2025 and 2024:Second QuarterSix Months20252024% Change20252024% ChangeDigital advertising revenues$94,422 $79,575 18.7 %$165,287 $142,602 15.9 %Print advertising revenues39,552 39,588 (0.1)%76,763 80,272 (4.4)%Total advertising revenues$133,974 $119,163 12.4 %$242,050 $222,874 8.6 %(c)Affiliate, licensing and other revenues include revenues from licensing, Wirecutter affiliate referrals, commercial printing, the leasing of floors in the Company headquarters, our live events business and retail commerce. Digital affiliate, licensing and other revenues, which consist primarily of Wirecutter affiliate referral revenue and digital licensing revenues, totaled $45.4 million and $85.6 million for the second quarter and first six months of 2025, respectively.(d)In the second quarter and first six months of 2025, the Company recorded $3.5 million ($2.6 million or $0.02 per share after tax) and $7.9 million ($5.8 million or $0.04 per share after tax), respectively, of pre-tax litigation-related costs in connection with a lawsuit against Microsoft and Open AI Inc. alleging unlawful and unauthorized copying and use of the Company’s journalism and other content in connection with their development of generative artificial intelligence products. In the second quarter and first six months of 2024, the Company recorded $2.0 million ($1.5 million or $0.01 per share after tax) and $3.0 million ($2.2 million or $0.02 per share after tax), respectively, of pre-tax litigation-related costs. (e)In the first six months of 2025, the Company recorded a $4.5 million charge ($3.3 million or $0.02 per share after tax) related to a multiemployer pension plan liability adjustment.12THE NEW YORK TIMES COMPANYSUPPLEMENTAL SUBSCRIBER AND ARPU INFORMATION(Amounts in thousands, except for ARPU)We offer a digital subscription package (or “bundle”) that includes access to our digital news product (which includes our news website, NYTimes.com, and mobile applications), as well as to The Athletic and to our Audio, Cooking, Games and Wirecutter products. Our subscriptions also include standalone digital subscriptions to each of these products.The following tables present information regarding the number of subscribers to the Company’s products as well as certain additional metrics. A subscriber is defined as a user who has subscribed (and for whom a valid method of payment has been provided) for the right to access one or more of the Company’s products. Subscribers with a domestic home-delivery print subscription to The New York Times, which includes access to our digital products, are excluded from digital-only subscribers.The following table sets forth subscribers as of the end of the five most recent fiscal quarters:Q2 2025Q1 2025Q4 2024Q3 2024Q2 2024Digital-only subscribers:Bundle and multiproduct(1)(2)(3)6,020 5,760 5,440 5,120 4,830 News-only(2)(4)1,690 1,790 1,930 2,110 2,290 Other single-product(2)(3)(5)3,590 3,500 3,450 3,240 3,100 Total digital-only subscribers(2)(3)(6)11,300 11,060 10,820 10,470 10,210 Print subscribers(7)580 600 610 620 630 Total subscribers11,880 11,660 11,430 11,090 10,840 (1)Subscribers with a bundle subscription or standalone digital-only subscriptions to two or more of the Company’s products.(2)Includes group corporate and group education subscriptions, which collectively represented approximately 6% of total digital-only subscribers as of the end of the second quarter of 2025. The number of group subscribers is derived using the value of the relevant contract and a discounted subscription rate. (3)As of the second quarter of 2025, includes subscribers related to Family Subscriptions. Each Family Subscription is priced higher than a comparable individual subscription and is counted as one billed subscriber and one additional subscriber to reflect the additional entitlements in these subscriptions. The additional subscribers represented a de minimis percentage of total digital-only subscribers as of the end of the second quarter of 2025.(4)Subscribers with only a digital-only news product subscription.(5)Subscribers with only one digital-only subscription to The Athletic or to our Audio, Cooking, Games or Wirecutter products.(6)Subscribers with digital-only subscriptions to one or more of our news product, The Athletic, or our Audio, Cooking, Games and Wirecutter products.(7)Subscribers with a domestic home-delivery or mail print subscription to The New York Times, which includes access to our digital products, or a print subscription to our Book Review or Large Type Weekly products.The sum of individual metrics may not always equal total amounts indicated due to rounding. Subscribers (including net subscriber additions) are rounded to the nearest ten thousand.The following table sets forth ARPU metrics relating to the above digital-only subscriber categories for the five most recent fiscal quarters:Q2 2025Q1 2025Q4 2024Q3 2024Q2 2024Digital-only ARPU:Bundle and multiproduct$12.52 $12.38 $12.53 $12.35 $11.96 News-only$12.28 $12.12 $11.95 $11.48 $11.26 Other single-product$3.51 $3.54 $3.58 $3.59 $3.65 Total digital-only ARPU$9.64 $9.54 $9.65 $9.45 $9.34 ARPU metrics are calculated by dividing the digital subscription revenues in the quarter by the average number of digital-only subscribers divided by the number of days in the quarter multiplied by 28 to reflect a 28-day billing cycle. In calculating ARPU metrics, for our subscriber categories (Bundle and multiproduct, News-only and Other single-product), we use the monthly average number of digital-only subscribers (calculated as the sum of the number of subscribers in each category at the beginning and end of the month, divided by two) and for Total digital-only ARPU, we use the daily average number of digital-only subscribers.13THE NEW YORK TIMES COMPANYSEGMENT INFORMATION(Dollars in thousands)We have two reportable segments: NYTG and The Athletic. Management uses adjusted operating profit (loss) by segment in assessing performance and allocating resources. The Company includes in its presentation revenues and adjusted operating costs to arrive at adjusted operating profit (loss) by segment. Adjusted operating costs are defined as operating costs before depreciation and amortization, severance, multiemployer pension plan withdrawal costs and special items. Adjusted operating profit is defined as operating profit before depreciation and amortization, severance, multiemployer pension plan withdrawal costs and special items. Adjusted operating profit expressed as a percentage of revenues is referred to as adjusted operating profit margin.Subscription revenues from and expenses associated with our bundle are allocated to NYTG and The Athletic.We allocate 10% of all bundle subscription revenues to The Athletic based on management’s view of The Athletic’s relative value to the bundle, which we derived based on analysis of various metrics.We allocate 10% of product development, marketing and subscriber servicing expenses (including direct variable expenses such as credit card fees, third party fees and sales taxes) associated with the bundle to The Athletic, and the remaining costs are allocated to NYTG, in each case, in line with the revenues allocations.Second QuarterSix Months20252024% Change20252024% ChangeRevenuesNYTG$632,397$585,1568.1 %$1,221,310$1,142,5516.9 %The Athletic54,03840,50433.4 %101,59877,68630.8 %Intersegment eliminations(1)(562)(563)*(1,125)(1,125)— Total revenues$685,873$625,0979.7 %$1,321,783$1,219,1128.4 %Adjusted operating costsNYTG$504,410$478,0545.5 %$1,003,501$950,7035.6 %The Athletic48,25042,90612.5 %92,93488,7804.7 %Intersegment eliminations(1)(562)(563)*(1,125)(1,125)— Total adjusted operating costs$552,098$520,3976.1 %$1,095,310$1,038,3585.5 %Adjusted operating profit (loss)NYTG$127,987$107,10219.5 %$217,809$191,84813.5 %The Athletic5,788(2,402)*8,664(11,094)*Total adjusted operating profit$133,775$104,70027.8 %$226,473$180,75425.3 %AOP margin % - NYTG20.2 %18.3 %190 bps17.8 %16.8 %100 bps(1)Intersegment eliminations (“I/E”) related to content licensing.* Represents a change equal to or in excess of 100% or not meaningful.14THE NEW YORK TIMES COMPANYSEGMENT INFORMATION(Dollars in thousands)Revenues detail by segmentSecond QuarterSix Months20252024% Change20252024% ChangeNYTGSubscription$446,809 $410,015 9.0 %$878,329 $811,386 8.3 %Advertising119,910 112,088 7.0 %217,568 210,092 3.6 %Affiliate, licensing and other65,678 63,053 4.2 %125,413 121,073 3.6 %Total$632,397 $585,156 8.1 %$1,221,310 $1,142,551 6.9 %The Athletic Subscription$34,611 $29,307 18.1 %$67,348 $56,941 18.3 %Advertising14,064 7,075 98.8 %24,482 12,782 91.5 %Affiliate, licensing and other5,363 4,122 30.1 %9,768 7,963 22.7 %Total$54,038 $40,504 33.4 %$101,598 $77,686 30.8 %I/E(1)$(562)$(563)*$(1,125)$(1,125)— The New York Times CompanySubscription$481,420 $439,322 9.6 %$945,677 $868,327 8.9 %Advertising133,974 119,163 12.4 %242,050 222,874 8.6 %Affiliate, licensing and other70,479 66,612 5.8 %134,056 127,911 4.8 %Total$685,873 $625,097 9.7 %$1,321,783 $1,219,112 8.4 %(1)Intersegment eliminations (“I/E”) related to content licensing recorded in Affiliate, licensing and other revenues.* Represents a change equal to or in excess of 100% or not meaningful.15THE NEW YORK TIMES COMPANYSEGMENT INFORMATION(Dollars in thousands)Adjusted operating costs (operating costs before depreciation and amortization, severance, multiemployer pension plan withdrawal costs and special items) detail by segmentSecond QuarterSix Months20252024% Change20252024% ChangeNYTGCost of revenue (excluding depreciation and amortization)$309,273 $298,419 3.6 %$616,533 $590,875 4.3 %Sales and marketing62,566 54,457 14.9 %122,548 109,938 11.5 %Product development53,810 53,579 0.4 %111,059 108,444 2.4 %Adjusted general and administrative(1)78,761 71,599 10.0 %153,361 141,446 8.4 %Total$504,410 $478,054 5.5 %$1,003,501 $950,703 5.6 %The Athletic Cost of revenue (excluding depreciation and amortization)$30,068 $24,918 20.7 %$58,008 $49,891 16.3 %Sales and marketing6,599 6,846 (3.6)%12,576 16,499 (23.8)%Product development10,130 8,641 17.2 %19,420 16,961 14.5 %Adjusted general and administrative(2)1,453 2,501 (41.9)%2,930 5,429 (46.0)%Total$48,250 $42,906 12.5 %$92,934 $88,780 4.7 %I/E(3)$(562)$(563)*$(1,125)$(1,125)— The New York Times CompanyCost of revenue (excluding depreciation and amortization)$338,779 $322,774 5.0 %$673,416 $639,641 5.3 %Sales and marketing69,165 61,303 12.8 %135,124 126,437 6.9 %Product development63,940 62,220 2.8 %130,479 125,405 4.0 %Adjusted general and administrative80,214 74,100 8.3 %156,291 146,875 6.4 %Total$552,098 $520,397 6.1 %$1,095,310 $1,038,358 5.5 %(1)Excludes severance of $1.0 million and $3.6 million for the second quarter and first six months of 2025, respectively. Excludes multiemployer pension withdrawal costs of $1.3 million and $2.6 million for the second quarter and first six months of 2025, respectively. Excludes severance of $1.5 million and $5.5 million for the second quarter and first six months of 2024, respectively. Excludes multiemployer pension withdrawal costs of $1.3 million and $2.9 million for the second quarter and first six months of 2024, respectively.(2)There were no severance costs for the second quarter and first six months of 2025. Excludes severance of $0.4 million for the first six months of 2024. There were no severance costs for the second quarter of 2024.(3)Intersegment eliminations (“I/E”) related to content licensing recorded in Cost of revenue (excluding depreciation and amortization).* Represents a change equal to or in excess of 100% or not meaningful.16THE NEW YORK TIMES COMPANYRECONCILIATION OF NON-GAAP FINANCIAL MEASURESIn this release, the Company has referred to non-GAAP financial information with respect to adjusted diluted EPS, defined as diluted EPS excluding amortization of acquired intangible assets, severance, non-operating retirement costs and special items; adjusted operating profit, defined as operating profit before depreciation, amortization, severance, multiemployer pension plan withdrawal costs and special items; adjusted operating profit margin, defined as adjusted operating profit divided by revenues; adjusted operating costs, defined as operating costs before depreciation, amortization, severance, multiemployer pension withdrawal costs and special items; and free cash flow, defined as net cash provided by operating activities less capital expenditures. The Company has included these non-GAAP financial measures because management reviews them on a regular basis and uses them to evaluate and manage the performance of the Company’s operations. Management believes that, for the reasons outlined below, these non-GAAP financial measures provide useful information to investors as a supplement to reported diluted earnings/(loss) per share, operating profit/(loss) and operating costs. However, these measures should be evaluated only in conjunction with the comparable GAAP financial measures and should not be viewed as alternative or superior measures of GAAP results.Adjusted diluted EPS provides useful information in evaluating the Company’s period-to-period performance because it eliminates items that the Company does not consider to be indicative of earnings from ongoing operating activities. Adjusted operating profit and adjusted operating profit margin are useful in evaluating the ongoing performance of the Company’s business as they exclude the significant non-cash impact of depreciation and amortization as well as items not indicative of ongoing operating activities. Total operating costs include depreciation, amortization, severance, multiemployer pension plan withdrawal costs and special items. Adjusted operating costs provide investors with helpful supplemental information on the Company’s underlying operating costs that is used by management in its financial and operational decision-making.Management considers special items, which may include impairment charges, pension settlement charges, acquisition-related costs, and beginning in the first quarter of 2024, Generative AI Litigation Costs, as well as other items that arise from time to time, to be outside the ordinary course of our operations. Management believes that excluding these items provides a better understanding of the underlying trends in the Company’s operating performance and allows more accurate comparisons of the Company’s operating results to historical performance. Management determined to report Generative AI Litigation Costs as a special item and thus exclude them beginning in the first quarter of 2024 because, unlike other litigation expenses which are not excluded, the Generative AI Litigation Costs arise from a discrete, complex and unusual proceeding and do not, in management’s view, reflect the Company’s ongoing business operational performance. In addition, management excludes severance costs, which may fluctuate significantly from quarter to quarter, because it believes these costs do not necessarily reflect expected future operating costs and do not contribute to a meaningful comparison of the Company’s operating results to historical performance.The Company considers free cash flow as providing useful information to management and investors about the amount of cash that is available to be used to strengthen the Company’s balance sheet, for strategic opportunities, including investing in the Company’s business and strategic acquisitions, and/or for the return of capital to stockholders in the form of dividends and stock repurchases.Non-operating retirement costs include (i) interest cost, expected return on plan assets, amortization of actuarial gains and loss components and amortization of prior service credits of single-employer pension expense, (ii) interest cost, amortization of actuarial gains and loss components and (iii) all multiemployer pension plan withdrawal costs. These non-operating retirement costs are primarily tied to financial market performance including changes in market interest rates and investment performance. Management considers non-operating retirement costs to be outside the performance of the business and believes that presenting adjusted diluted EPS excluding non-operating retirement costs and presenting adjusted operating results excluding multiemployer pension plan withdrawal costs, in addition to the Company’s GAAP diluted EPS and GAAP operating results, provide increased transparency and a better understanding of the underlying trends in the Company’s operating business performance.Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are set out in the tables below.17THE NEW YORK TIMES COMPANYRECONCILIATION OF NON-GAAP FINANCIAL MEASURES(Dollars in thousands, except per share data)Reconciliation of diluted EPS excluding amortization of acquired intangible assets, severance, non-operating retirement costs and special items (or adjusted diluted EPS)Second QuarterSix Months20252024% Change20252024% ChangeDiluted EPS$0.50 $0.40 25.0 %$0.80 $0.64 25.0 %Add:Amortization of acquired intangible assets0.04 0.04 — 0.08 0.08 — Severance0.01 0.01 — 0.02 0.04 (50.0)%Non-operating retirement costs: Multiemployer pension plan withdrawal costs0.01 0.01 — 0.02 0.02 — Other components of net periodic benefit costs0.03 0.01 *0.06 0.01 *Special items:Generative AI Litigation Costs0.02 0.01 *0.05 0.02 *Multiemployer pension plan liability adjustment— — — 0.03 — *Income tax expense of adjustments(0.03)(0.02)50.0 %(0.07)(0.04)75.0 %Adjusted diluted EPS(1)$0.58 $0.45 28.9 %$0.99 $0.76 30.3 %(1)Amounts may not add due to rounding.* Represents a change equal to or in excess of 100% or not meaningful.Reconciliation of operating profit before depreciation and amortization, severance, multiemployer pension plan withdrawal costs and special items (or adjusted operating profit)Second QuarterSix Months20252024% Change20252024% ChangeOperating profit$106,551$79,41034.2 %$165,185$127,72929.3 %Add:Depreciation and amortization21,39620,5374.2 %42,77441,2433.7 %Severance1,0001,473(32.1)%3,6075,901(38.9)%Multiemployer pension plan withdrawal costs1,3381,2973.2 %2,5672,909(11.8)%Generative AI Litigation Costs3,4901,98376.0 %7,8872,972*Multiemployer pension plan liability adjustment——— 4,453—*Adjusted operating profit$133,775$104,70027.8 %$226,473$180,75425.3 %Divided by:Revenues$685,873$625,0979.7 %$1,321,783$1,219,1128.4 %Operating profit margin15.5 %12.7 %280 bps12.5%10.5%200 bpsAdjusted operating profit margin19.5 %16.7 %280 bps17.1%14.8%230 bps* Represents a change equal to or in excess of 100% or not meaningful.18THE NEW YORK TIMES COMPANYRECONCILIATION OF NON-GAAP FINANCIAL MEASURES(Dollars in thousands)Reconciliation of total operating costs before depreciation and amortization, severance, multiemployer pension plan withdrawal costs and special items (or adjusted operating costs)Second Quarter20252024NYTGThe AthleticI/E(1)TotalNYTGThe AthleticI/E(1)Total% ChangeTotal operating costs$525,035 $54,849 $(562)$579,322 $496,747 $49,503 $(563)$545,687 6.2 %Less:Depreciation and amortization14,797 6,599 — 21,396 13,940 6,597 — 20,537 4.2 %Severance1,000 — — 1,000 1,473 — — 1,473 (32.1)%Multiemployer pension plan withdrawal costs1,338 — — 1,338 1,297 — — 1,297 3.2 %Generative AI Litigation Costs3,490 — — 3,490 1,983 — — 1,983 76.0 %Adjusted operating costs$504,410 $48,250 $(562)$552,098 $478,054 $42,906 $(563)$520,397 6.1 %Six Months20252024NYTGThe AthleticI/E(1)TotalNYTGThe AthleticI/E(1)Total% ChangeTotal operating costs$1,051,593 $106,130 $(1,125)$1,156,598 $990,022 $102,486 $(1,125)$1,091,383 6.0 %Less:Depreciation and amortization29,578 13,196 — 42,774 27,966 13,277 — 41,243 3.7 %Severance3,607 — — 3,607 5,472 429 — 5,901 (38.9)%Multiemployer pension plan withdrawal costs2,567 — — 2,567 2,909 — — 2,909 (11.8)%Generative AI Litigation Costs7,887 — — 7,887 2,972 — — 2,972 *Multiemployer pension plan liability adjustment4,453 — — 4,453 — — — — *Adjusted operating costs$1,003,501 $92,934 $(1,125)$1,095,310 $950,703 $88,780 $(1,125)$1,038,358 5.5 %(1)Intersegment eliminations (“I/E”) related to content licensing.* Represents a change equal to or in excess of 100% or not meaningful.19Reconciliation of net cash provided by operating activities before capital expenditures (or free cash flow)Six Months20252024Net cash provided by operating activities(1)$212,726 $133,310 Less: Capital expenditures(19,573)(14,054)Free cash flow$193,153 $119,256 (1)Net cash provided by operating activities for the six months ended 2025 included net proceeds of approximately $33 million in connection with the lease and subsequent sale of approximately four acres of excess land at our printing and distribution facility in College Point, N.Y., which was finalized in February 2025.20 |
0001213900-25-016325:ea023160601ex99-1_realpha.htm | 0001213900-25-016325 | 1,859,199 | 1,859,199 | reAlpha Tech Corp. (AIRE) (CIK 0001859199) | ['AIRE'] | 8-K | 8-K | 2025-02-24 | 2025-02-20 | 001-41839 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-41839&action=getcompany | 25,654,308 | EX-99.1 | PRESS RELEASE, DATED FEBRUARY 24, 2025 | 1.01,3.02,3.03,5.03,7.01,9.01 | https://www.sec.gov/Archives/edgar/data/1859199/000121390025016325 | https://www.sec.gov/Archives/edgar/data/1859199/000121390025016325/0001213900-25-016325-index.html | https://www.sec.gov/Archives/edgar/data/1859199/000121390025016325/ea023160601ex99-1_realpha.htm | EX-99.1 4 ea023160601ex99-1_realpha.htm PRESS RELEASE, DATED FEBRUARY 24, 2025 Exhibit 99.1 reAlpha Acquires GTG Financial, Inc. reAlpha Strengthens Mortgage Operations with Acquisition of GTG Financial, Inc. DUBLIN, Ohio, February 24, 2025 (GLOBE NEWSWIRE) – reAlpha Tech Corp. (“reAlpha”) (Nasdaq: AIRE), a real estate technology company developing and commercializing artificial intelligence (“AI”) technologies, today announced the acquisition of GTG Financial, Inc. (“GTG Financial”), a mortgage brokerage company founded by Glenn Groves, a U.S. Marine and industry leader. GTG Financial is licensed to operate in seven U.S. states, including California, which will expand reAlpha’s geographic footprint to a total of 28 U.S. states and strengthen its operational capacity. The acquisition of GTG Financial marks another step in reAlpha’s strategy to further enhance its mortgage operations and provide a more seamless home financing experience within the reAlpha platform, its AI-powered real estate platform. By incorporating GTG Financial’s experience in the real estate industry and its added workforce of loan officers, reAlpha anticipates that it will be able to bolster its overall operational capacity, expand its loan processing capabilities and offer mortgage lending and refinancing services to homebuyers more efficiently. “We are excited to welcome GTG Financial to the reAlpha group,” said Piyush Phadke, Chief Financial Officer of reAlpha. “This acquisition will strengthen our mortgage operations, allowing us to scale and more efficiently provide lending services through our AI-powered homebuying platform. By acquiring GTG Financial, we are continuing to advance our vision of a fully streamlined, technology-driven real estate experience.” GTG Financial will retain its brand identity under the leadership of its founder, Glenn Groves, while leveraging reAlpha’s resources and generative AI platform, which is expected to enhance loan processing efficiency and support a more seamless home financing experience. Glenn Groves, Chief Executive Officer of GTG Financial, added: “I believe that reAlpha’s AI-driven platform is redefining real estate by simplifying and eliminating traditional barriers in the homebuying process. We’re proud to be part of this transformation and committed to driving its long-term success. GTG Financial will be officially powered by Be My Neighbor, one of reAlpha’s subsidiaries, strengthening our mortgage services and operational efficiency.” Christopher Griffith, Chief Executive Officer of Be My Neighbor, and a fellow U.S. Marine, echoed the sentiment: “Real success in M&A comes from aligned leadership. I believe that, as Marines, Glenn and I share the same values of discipline, integrity and execution, making this partnership a natural fit.” For additional details concerning the terms of the acquisition of GTG Financial, please refer to reAlpha’s Current Report on Form 8-K, which will be filed with the U.S. Securities and Exchange Commission (the “SEC”). About GTG Financial Inc. GTG Financial, Inc. is a mortgage brokerage company founded by Glenn Groves, committed to helping individuals and families achieve their homeownership dreams, with a focus on transparency, customer service, and financial empowerment. About reAlpha Tech Corp. reAlpha Tech Corp. (Nasdaq: AIRE) is a real estate technology company developing an end-to-end commission-free homebuying platform. Utilizing the power of AI and an acquisition-led growth strategy, reAlpha aims to offer an affordable, streamlined experience for homebuyers. For more information, visit www.reAlpha.com. About the reAlpha Platform reAlpha’s AI-powered, commission-free homebuying platform enables buyers to navigate the homebuying process with ease. With the tagline “No Fees. Just Keys.™”, reAlpha is dedicated to eliminating traditional barriers and making homeownership more accessible and transparent. The platform’s generative AI assistant, “Claire,” supports homebuyers throughout the journey, from property search to closing, offering insights, market trends, and 24/7 assistance. Forward-Looking Statements The information in this press release includes “forward-looking statements”. Forward-looking statements include, among other things, statements about the GTG Financial acquisition; the anticipated benefits of the GTG Financial acquisition; reAlpha’s ability to anticipate the future needs of the short-term rental market; future trends in the real estate, technology and artificial intelligence industries, generally; and reAlpha’s future growth strategy and growth rate. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “could”, “might”, “plan”, “possible”, “project”, “strive”, “budget”, “forecast”, “expect”, “intend”, “will”, “estimate”, “anticipate”, “believe”, “predict”, “potential” or “continue”, or the negatives of these terms or variations of them or similar terminology. Factors that may cause actual results to differ materially from current expectations include, but are not limited to: reAlpha’s limited operating history and that reAlpha has not yet fully developed its AI-based technologies; reAlpha’s ability to commercialize its developing AI-based technologies; whether reAlpha’s technology and products will be accepted and adopted by its customers and intended users; reAlpha’s ability to integrate the business of GTG Financial into its existing business and the anticipated demand for GTG Financial’s services; reAlpha’s ability to successfully enter new geographic markets; reAlpha’s ability to obtain the necessary regulatory and legal approvals to expand into additional U.S. states and maintain, or obtain, brokerage licenses in such states; reAlpha’s ability to generate additional sales or revenue from having access to, or obtaining, additional U.S. states brokerage licenses; reAlpha’s ability to enhance its, and its subsidiaries’, loan processing efficiency by leveraging its AI-powered platform and overall resources; reAlpha’s ability to expand its loan processing capabilities through the acquisition of GTG Financial; reAlpha’s ability to offer mortgage lending and refinancing services to homebuyers more efficiently through its platform as a result of the acquisition of GTG Financial; the inability to maintain and strengthen reAlpha’s brand and reputation; reAlpha’s ability to scale its operational capabilities to expand into additional geographic markets; the potential loss of key employees of its acquired companies; reAlpha’s inability to accurately forecast demand for short-term rentals and AI-based real estate focused products; the inability to execute business objectives and growth strategies successfully or sustain reAlpha’s growth; the inability of reAlpha’s customers to pay for reAlpha’s services; changes in applicable laws or regulations, and the impact of the regulatory environment and complexities with compliance related to such environment; and other risks and uncertainties indicated in reAlpha’s SEC filings. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those anticipated in the forward-looking statements. Although reAlpha believes that the expectations reflected in the forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. reAlpha’s future results, level of activity, performance or achievements may differ materially from those contemplated, expressed or implied by the forward-looking statements, and there is no representation that the actual results achieved will be the same, in whole or in part, as those set out in the forward-looking statements. For more information about the factors that could cause such differences, please refer to reAlpha’s filings with the SEC. Readers are cautioned not to put undue reliance on forward-looking statements, and reAlpha does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Investor Relations Contact: Adele Carey, VP of Investor Relations investorrelations@realpha.com Media Contact: Fatema Bhabrawala, Director of Public Relations fbhabrawala@allianceadvisors.com |
0001058290-24-000013:exhibit99112312023.htm | 0001058290-24-000013 | 1,058,290 | 1,058,290 | COGNIZANT TECHNOLOGY SOLUTIONS CORP (CTSH) (CIK 0001058290) | ['CTSH'] | 8-K | 8-K | 2024-02-06 | 2024-02-06 | 000-24429 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=000-24429&action=getcompany | 24,600,310 | EX-99.1 | EX-99.1 | 2.02,7.01,9.01 | https://www.sec.gov/Archives/edgar/data/1058290/000105829024000013 | https://www.sec.gov/Archives/edgar/data/1058290/000105829024000013/0001058290-24-000013-index.html | https://www.sec.gov/Archives/edgar/data/1058290/000105829024000013/exhibit99112312023.htm | EX-99.1 2 exhibit99112312023.htm EX-99.1 DocumentExhibit 99.1COGNIZANT REPORTS FOURTH QUARTER AND FULL-YEAR 2023 RESULTS •Full-year revenue of $19.4 billion declined 0.4% year-over-year, or declined 0.3% in constant currency1, which was within our guidance range•Full-year operating margin of 13.9% and Adjusted Operating Margin1 of 15.1%, which was 40 basis points above our guidance•Full-year operating cash flow of $2.3 billion; free cash flow1 of $2.0 billion was 95% of net income•Trailing 12-month bookings of $26.3 billion, up 9% year-over-year•$1.7 billion returned to shareholders through share repurchases and dividends in 2023•Cash dividend increased 3% to $0.30 per share for Q1 2024•2024 revenue growth guidance of (2%) to 2% in constant currency •2024 Adjusted Operating Margin guidance 15.3-15.5%, an expansion of 20 to 40 basis pointsTEANECK, N.J., February 6, 2024 - Cognizant (Nasdaq: CTSH), one of the world’s leading professional services companies, today announced its fourth quarter and full-year 2023 financial results. “I’m grateful to our nearly 350,000 employees for their tremendous year-long work enhancing our strength as industry experts, collaborative partners and passionate innovators for our clients,” said Ravi Kumar S, Chief Executive Officer. “We delivered Q4 revenue within our guided range and we’ve maintained our commercial momentum. Full-year bookings of $26.3 billion represent an increase of 9% year-over-year, driven by new clients and large deals. To keep advancing our ability to design and deliver solutions, we continue to invest in generative AI, cloud, data modernization, digital engineering and IoT. I believe Cognizant is now in a significantly stronger position than a year ago to help our clients transform their businesses to prepare for the future as they navigate ongoing macro-economic pressures."$ in millions, except per share dataQ4 2023Q4 2022FY 2023FY 2022Revenue$4,758 $4,839 $19,353 $19,428 Y/Y Change(1.7 %)1.3%(0.4 %)5.0%Y/Y Change CC1(2.4 %)4.1 % (0.3 %)7.5 % GAAP Operating Margin15.2 %14.2 %13.9 %15.3 %Adjusted Operating Margin116.1 %14.2 %15.1 %15.3 %GAAP Diluted EPS$1.11 $1.02 $4.21$4.41Adjusted Diluted EPS1$1.18 $1.01 $4.55$4.40Operating cash flow$737 $702 $2,330 $2,568 Free cash flow1 $659 $612 $2,013 $2,236 1 Constant currency ("CC") revenue growth, Adjusted Operating Margin, Adjusted Diluted Earnings Per Share ("Adjusted Diluted EPS") and free cash flow are not measures of financial performance prepared in accordance with GAAP. A full reconciliation of Adjusted Operating Margin guidance to the corresponding GAAP measure on a forward-looking basis cannot be provided without unreasonable efforts. See “About Non-GAAP Financial Measures and Performance Metrics” for more information and, as applicable, reconciliations to the most directly comparable GAAP financial measures.“Fourth quarter’s sequential improvement in adjusted operating margin to 16.1% reflects our ongoing operational rigor and our NextGen cost optimization program, which have enabled us to exceed our margin commitment and continue to invest in our strategy to improve future revenue growth. We were also pleased to deliver full-year free cash flow of $2 billion, which represented 95% of net income,” said Jatin Dalal, Chief Financial Officer. “We remain committed to adjusted operating margin expansion of 20 to 40 basis points in 2024 and to our balanced capital allocation framework, which includes share repurchases, inorganic investments to support our strategic priorities, and today’s announced dividend increase.”BookingsBookings in the fourth quarter declined 6% year-over-year. For the full year, bookings grew 9% year-over-year to $26.3 billion, which represented a book-to-bill of approximately 1.4x. Employee MetricsTotal headcount at the end of the fourth quarter was 347,700, an increase of 1,100 from Q3 2023 and a decrease of 7,600 from Q4 2022. Voluntary attrition - Tech Services for the year ended December 31, 2023 was 13.8% as compared to 25.6% for the year ended December 31, 2022.Return of Capital to ShareholdersThe Company repurchased 4.2 million shares for $298 million during the fourth quarter under its share repurchase program. As of December 31, 2023, there was $1.8 billion remaining under the share repurchase authorization. In February 2024, the Company declared a quarterly cash dividend of $0.30 per share, a 3% increase year-over-year, for shareholders of record on February 20, 2024 This dividend will be payable on February 28, 2024. First Quarter and Full-Year 2024 Guidance (all growth rates year-over-year)•First quarter revenue is expected to be $4.68 - $4.76 billion, a decline of 2.7% to 1.2%, or a decline of 3.0% to 1.5% in constant currency.•Full-year 2024 revenue is expected to be $19.0 - $19.8 billion, a decline of 1.8% to growth of 2.2% as reported, or a decline of 2.0% to growth of 2.0% in constant currency. •Full-year 2024 Adjusted Operating Margin2 is expected to be in the range of 15.3% to 15.5%, or 20 to 40 basis points of expansion. •Full-year 2024 Adjusted EPS2 is expected to be in the range of $4.50 to $4.68.2 A full reconciliation of Adjusted Operating Margin and Adjusted Diluted EPS guidance to the corresponding GAAP measures on a forward-looking basis cannot be provided without unreasonable efforts. See “About Non-GAAP Financial Measures and Performance Metrics” for more information and a partial reconciliation at the end of this release.Select Client and Partnership Announcements•Announced an expanded agreement with Takeda, a global biopharmaceutical company, to support the company's digital transformation strategy. Cognizant will support Takeda in transforming its modern infrastructure and application management approaches, as well as identifying and hiring key talent to support the company's data, digital and technology ambitions.•Announced a collaboration with ServiceNow to enhance the Cognizant WorkNEXT™ modern workplace services solution with generative AI capabilities. With the enhanced offering, clients can benefit from significantly reduced lead time for deploying and training AI systems.•In collaboration with Microsoft, unveiled Innovation Assistant, a generative AI-powered tool built on Microsoft Azure OpenAI Service. Cognizant's Innovation Assistant is designed to enable greater creativity and innovation among Cognizant employees and will augment Cognizant's internal innovation program, Bluebolt.•Announced that Fortrea, a leading global provider of clinical development and patient access solutions to the life sciences industry, selected Cognizant as its strategic technology transformation provider. In June 2023, Fortrea successfully completed its spin-off from its former parent company, and Cognizant will play a fundamental role in facilitating Fortrea's transition to newly established global infrastructure while providing application management and end-user services.•Partnered with Oxford Economics to quantify generative AI's impact on productivity and the future of work. According to our research, generative AI could inject the US GDP with up to $1 trillion in additional annual value by 2032; as many as 13% of companies could be leveraging the technology in three to four years; and most jobs (90%) will be disrupted in some way by generative AI in the next 10 years. The results of our research and a description of its methodology are available on our website.•Signed a multi-year contract with Cambridge University Press & Assessment (Cambridge), a leader in assessment, education, research and academic publishing. The renewed five-year relationship will see Cognizant and Cambridge drive digital transformation and leverage AI technology with the goal of improving operational effectiveness, maintaining exam results integrity and staying competitive in the evolving education sector. •Selected by Alm. Brand Group (Alm), a leading insurance company in Denmark, to provide a range of business processes previously outsourced by Alm to other vendors. Cognizant expects to automate a range of processes including insurance policies and administrative tasks, which are traditionally manual and repetitive actions, and to also help identify further automation opportunities alongside Alm's own automation specialists. •Selected to implement Amazon's Just Walk Out Technology for Canberra Institute of Technology Student Association (CITSA) to enable nearly 24/7 access for students at its Student Association store. Just Walk Out technology is designed to transform the retail experience by leveraging advanced technologies such as artificial intelligence like computer vision and deep learning, including generative AI, to create a frictionless shopping experience. •Announced that Cognizant was selected by The University of Melbourne to help implement the Tealium Customer Data Platform (CDP) to support the creation of data-led and personalized experiences for students, staff and alumni as it looks to enhance meaningful constituent engagement.•Appointed by Riyadh Airports Company (RAC) to enhance the capabilities of RAC's Enterprise Resource Planning (ERP) and business processes automation capabilities in the domains of finance, human resources, procurement, and planning, ultimately enhancing the traveler experience. In the initial phase, Cognizant will leverage the SAP Appian framework to establish a robust process automation for airport operations. Select Analyst Ratings, Company Recognition and Announcements•Acquired Thirdera, an Elite ServiceNow Partner, to enhance cross-industry digital transformation with ServiceNow and create one of the world's largest, most credentialed ServiceNow partners. This announcement builds on Cognizant and ServiceNow’s previously announced strategic partnership in AI-driven automation across industries.•Announced Cognizant FlowsourceTM, a generative AI-enabled platform that aims to fuel the next generation of software engineering for enterprises. The platform integrates all stages of the software delivery lifecycle to help cross-functional engineering teams deliver high quality code faster, and with increased control and transparency.•Unveiled Shakti, a unified framework of women-centric programs and policies to accelerate careers and boost women leadership in technology. Additionally, Cognizant has partnered with NASSCOM (National Association of Software and Service Companies) to establish and prioritize best practices with a shared goal of making diversity and inclusion a key differentiator of India's tech sector.•Earned a top score in Human Rights Campaign Foundation’s 2023-2024 Corporate Equality Index, the leading US benchmarking survey and report measuring corporate policies and practices related to LGBTQ+ workplace equality.•Recognized as a "Gold" employer, the highest rating awarded, by the India Workplace Equality Index (IWEI) 2023 for ensuring an inclusive culture and workplace for lesbian, gay, bisexual, transgender, queer, non-binary and intersex (LGBTQ+) employees and demonstrating long-term and in-depth commitment towards the LGBTQ+ community.•Recognized as a Leader by Everest Group® in:•Digital Workplace Services North America PEAK Matrix® Assessment, 2023•Data and Analytics Services PEAK Matrix® Assessment, 2023•Cloud Services In Insurance PEAK Matrix® Assessment, 2023•Next Gen Quality Engineering Services PEAK Matrix® Assessment, 2023•Revenue Cycle Management (RCM) Platforms PEAK Matrix® Assessment, 2023•MedTech Operations PEAK Matrix® Assessment, 2023•Healthcare Payer Digital Services PEAK Matrix® Assessment, 2023•Lending IT Services PEAK Matrix® Assessment, 2023•Artificial Intelligence (AI) Services PEAK Matrix® Assessment, 2023•Leadership in IDC MarketScapes: •Worldwide Life Science R&D Strategic Consulting Services Vendor Assessment, 2023 - 2024•Worldwide Hospitality, Dining & Travel Omnichannel Guest Experience Services Providers, 2023•Worldwide Experience Build Services Vendor Assessment, 2023–2024•Market Leader in HFS Horizon 3:•Life Sciences Service Providers, 2023•Retail and CPG Service Providers, 2023•Leadership in ISG Provider Lens™:•Oracle Cloud & Technology Ecosystem, 2023•Oil and Gas Industry - Services and Solutions, 2023•Insurance Services, 2023•Manufacturing Industry Services, 2023•Analytics Services, 2023•Telecom, Media & Entertainment, 2023•Next-Gen ADM Services, 2023•Leadership in Avasant RadarView™: •Claims Processing Business Process Transformation, 2023•Tech Enabled Sustainability Services, 2023–2024•Workday HCM Services, 2023–2024•Data Center Managed Services, 2023–2024•Intelligent IT Ops Services, 2023–2024•UK Digital Services, 2023–2024•Data Management and Advanced Analytics Services, 2023•Recognized as a Global Leader in Constellation’s 2023 ShortList Reports: •Public Cloud Transformation Services•AI Services•Experience (CX) Operations Services•Digital Transformation Services (DTX)Conference CallCognizant will host a conference call on February 6, 2024, at 5:00 p.m. (Eastern) to discuss the Company’s fourth quarter 2023 results. To listen to the conference call, please dial (877) 810-9510 (domestic) or +1 (201) 493-6778 (international) and provide the following conference passcode: “Cognizant Call.”The conference call will also be available live on the Investor Relations section of the Cognizant website at http://investors.cognizant.com. An earnings supplement will also be available on the Cognizant website at the time of the conference call.For those who cannot access the live broadcast, a replay will be available. To listen to the replay, please dial (877) 660-6853 (domestically) or +1 (201) 612-7415 (internationally) and enter 13743343 beginning two hours after the end of the call until 11:59 p.m. (Eastern) on Tuesday, February 20, 2024. The replay will also be available at Cognizant’s website www.cognizant.com for 60 days following the call.About CognizantCognizant (Nasdaq: CTSH) engineers modern businesses. We help our clients modernize technology, reimagine processes and transform experiences so they can stay ahead in our fast-changing world. Together, we’re improving everyday life. See how at www.cognizant.com or @cognizant. Forward-Looking StatementsThis press release includes statements that may constitute forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, the accuracy of which are necessarily subject to risks, uncertainties and assumptions as to future events that may not prove to be accurate. These statements include, but are not limited to, express or implied forward-looking statements relating to our strategy, strategic partnerships and collaborations, competitive position and opportunities in the marketplace, investment in and growth of our business, the pace and magnitude of change and client needs related to generative AI, the effectiveness of our recruiting and talent efforts and related costs, labor market trends, the anticipated amount of capital to be returned to shareholders and our anticipated financial performance. These statements are neither promises nor guarantees, but are subject to a variety of risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from those contemplated in these forward-looking statements. Existing and prospective investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Factors that could cause actual results to differ materially from those expressed or implied include general economic conditions, the competitive and rapidly changing nature of the markets we compete in, the competitive marketplace for talent and its impact on employee recruitment and retention, our ability to successfully implement our NextGen program and the amount of costs, timing of incurring costs and ultimate benefits of such plans, our ability to successfully use AI-based technologies, legal, reputational and financial risks resulting from cyberattacks, changes in the regulatory environment, including with respect to immigration and taxes, and the other factors discussed in our most recent Annual Report on Form 10-K and other filings with the Securities and Exchange Commission. Cognizant undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required under applicable securities law.About Non-GAAP Financial Measures and Performance MetricsNon-GAAP Financial MeasuresTo supplement our financial results presented in accordance with GAAP, this press release includes references to the following measures defined by the Securities and Exchange Commission as non-GAAP financial measures: Adjusted Operating Margin, Adjusted Diluted EPS, free cash flow, net cash and constant currency revenue growth. These non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles and should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and may be different from non-GAAP financial measures used by other companies. In addition, these non-GAAP financial measures should be read in conjunction with our financial statements prepared in accordance with GAAP. The reconciliations of our non-GAAP financial measures to the corresponding GAAP measures should be carefully evaluated.Our non-GAAP financial measures Adjusted Operating Margin and Adjusted Income from Operations excludes unusual items, such as NextGen charges. Our non-GAAP financial measure Adjusted Diluted EPS excludes unusual items, such as Nextgen charges and the effect of recognition in the third quarter of 2022 of an income tax benefit related to a specific uncertain tax position that was previously unrecognized in our prior-year consolidated financial statements, and net non-operating foreign currency exchange gains or losses and the tax impact of all the applicable adjustments. The income tax impact of each item excluded from Adjusted Diluted EPS is calculated by applying the statutory rate and local tax regulations in the jurisdiction in which the item was incurred. Free cash flow is defined as cash flows from operating activities net of purchases of property and equipment. Net cash is defined as cash and cash equivalents and short-term investments less short-term and long-term debt. Constant currency revenue growth is defined as revenues for a given period restated at the comparative period’s foreign currency exchange rates measured against the comparative period's reported revenues.Management believes providing investors with an operating view consistent with how we manage the Company provides enhanced transparency into our operating results. For our internal management reporting and budgeting purposes, we use various GAAP and non-GAAP financial measures for financial and operational decision-making, to evaluate period-to-period comparisons, to determine portions of the compensation for our executive officers and for making comparisons of our operating results to those of our competitors. Accordingly, we believe that the presentation of our non-GAAP measures, which exclude certain costs, when read in conjunction with our reported GAAP results, can provide useful supplemental information to our management and investors regarding financial and business trends relating to our financial condition and results of operations. A limitation of using non-GAAP financial measures versus financial measures calculated in accordance with GAAP is that non-GAAP financial measures do not reflect all of the amounts associated with our operating results as determined in accordance with GAAP and may exclude costs that are recurring such as our net non-operating foreign currency exchange gains or losses. In addition, other companies may calculate non-GAAP financial measures differently than us, thereby limiting the usefulness of these non-GAAP financial measures as a comparative tool. We compensate for these limitations by providing specific information regarding the GAAP amounts excluded from our non-GAAP financial measures to allow investors to evaluate such non-GAAP financial measures.Performance MetricsBookings are defined as total contract value (or TCV) of new contracts, including new contract sales as well as renewals and expansions of existing contracts. Bookings can vary significantly quarter to quarter depending in part on the timing of the signing of a small number of large contracts. Our book-to-bill ratio is defined as bookings for the trailing twelve months divided by revenue for the same period. Measuring bookings involves the use of estimates and judgments and there are no independent standards or requirements governing the calculation of bookings. The extent and timing of conversion of bookings to revenues may be impacted by, among other factors, the types of services and solutions sold, contract duration, the pace of client spending, actual volumes of services delivered as compared to the volumes anticipated at the time of sale, and contract modifications, including terminations, over the lifetime of a contract. The majority of our contracts are terminable by the client on short notice often without penalty, and some without notice. We do not update our bookings for subsequent terminations, reductions or foreign currency exchange rate fluctuations. Information regarding our bookings is not comparable to, nor should it be substituted for, an analysis of our reported revenues. However, management believes that it is a key indicator of potential future revenues and provides a useful indicator of the volume of our business over time. Investor Relations Contact:Media Contact:Tyler ScottJeff DeMarraisVP, Investor RelationsVP, Corporate Communications +1 551-220-8246 +1 475-223-2298Tyler.Scott@cognizant.comJeff.DeMarrais@cognizant.com- tables to follow -COGNIZANT TECHNOLOGY SOLUTIONS CORPORATIONCONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in millions, except per share data)Three Months EndedDecember 31,Twelve Months EndedDecember 31, 2023202220232022 Revenues $4,758 $4,839 $19,353 $19,428 Operating expenses: Cost of revenues (exclusive of depreciation and amortization expense shown separately below)3,081 3,152 12,664 12,448 Selling, general and administrative expenses 786 860 3,252 3,443 Restructuring charges 40 — 229 — Depreciation and amortization expense 127 141 519 569 Income from operations 724 686 2,689 2,968 Other income (expense), net: Interest income 34 27 126 59 Interest expense (11)(8)(41)(19) Foreign currency exchange gains (losses), net (1)8 2 7 Other, net 3 1 11 1 Total other income (expense), net 25 28 98 48 Income before provision for income taxes 749 714 2,787 3,016 Provision for income taxes (195)(193)(668)(730) Income (loss) from equity method investment 4 — 7 4 Net income$558 $521 $2,126 $2,290 Basic earnings per share $1.12 $1.02 $4.21 $4.42 Diluted earnings per share $1.11 $1.02 $4.21 $4.41 Weighted average number of common shares outstanding - Basic500 512 505 518 Dilutive effect of shares issuable under stock-based compensation plans1 1 — 1 Weighted average number of common shares outstanding - Diluted501 513 505 519 COGNIZANT TECHNOLOGY SOLUTIONS CORPORATIONCONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Unaudited)(in millions, except par values)December 31,2023December 31, 2022AssetsCurrent assets:Cash and cash equivalents$2,621 $2,191 Short-term investments14 310 Trade accounts receivable, net3,849 3,796 Other current assets1,022 969 Total current assets7,506 7,266 Property and equipment, net1,048 1,101 Operating lease assets, net611 876 Goodwill6,085 5,710 Intangible assets, net1,149 1,168 Deferred income tax assets, net993 642 Long-term investments435 427 Other noncurrent assets656 662 Total assets$18,483 $17,852 Liabilities and Stockholders’ EquityCurrent liabilities:Accounts payable$337 $360 Deferred revenue385 398 Short-term debt33 8 Operating lease liabilities153 174 Accrued expenses and other current liabilities2,425 2,407 Total current liabilities3,333 3,347 Deferred revenue, noncurrent42 19 Operating lease liabilities, noncurrent523 714 Deferred income tax liabilities, net226 180 Long-term debt606 638 Long-term income taxes payable157 283 Other noncurrent liabilities369 362 Total liabilities5,256 5,543 Stockholders’ equity:Preferred stock, $0.10 par value, 15 shares authorized, none issued— — Class A common stock, $0.01 par value, 1,000 shares authorized, 498 and 509 shares issued and outstanding as of December 31, 2023 and 2022, respectively5 5 Additional paid-in capital15 15 Retained earnings13,301 12,588 Accumulated other comprehensive income (loss)(94)(299)Total stockholders’ equity13,227 12,309 Total liabilities and stockholders’ equity$18,483 $17,852 COGNIZANT TECHNOLOGY SOLUTIONS CORPORATIONReconciliations of Non-GAAP Financial Measures (Unaudited) (dollars in millions, except per share amounts)Three Months EndedDecember 31,Twelve Months EndedDecember 31,Guidance 2023202220232022Full Year 2024 (1)GAAP income from operations$724 $686 $2,689 $2,968 NextGen charges(a)40 — 229 — Adjusted Income From Operations$764 $686 $2,918 $2,968 GAAP operating margin15.2 %14.2 %13.9 %15.3 %NextGen charges0.9 — 1.2 — 0.3% - 0.4%Adjusted Operating Margin16.1 %14.2 %15.1 %15.3 %15.3% - 15.5%GAAP diluted earnings per share$1.11 $1.02 $4.21 $4.41 Effect of NextGen charges, pre-tax0.08 — 0.45 — 0.14Non-operating foreign currency exchange (gains) losses, pre-tax(b)— (0.02)— (0.01)(b)Tax effect of above adjustments(c)(0.01)0.01 (0.11)0.07 (a) (b)Effect of recognition of income tax benefit related to an uncertain tax position(d)— — — (0.07)—Adjusted Diluted Earnings Per Share$1.18 $1.01 $4.55 $4.40 $4.50 - $4.68(1) A full reconciliation of Adjusted Operating Margin and Adjusted Diluted Earnings Per Share guidance to the corresponding GAAP measures on a forward-looking basis cannot be provided without unreasonable efforts, as we are unable to provide reconciling information with respect to unusual items, net non-operating foreign currency exchange gains or losses and the tax effects of these adjustments, and such adjustments may be significant.Notes:(a)NextGen charges for the three months ended December 31, 2023 include $22 million of employee separation costs, $16 million of facility exit costs and $2 million of third party and other costs. NextGen charges for the year ended December 31, 2023 include $115 million of employee separation costs, $108 million of facility exit costs and $6 million of third party and other costs. In 2024, we expect to incur $70 million of expenses in connection with the NextGen program, which is expected to bring the total charges under the program to approximately $300 million. The total costs related to the NextGen program are reported in "Restructuring charges" in our unaudited consolidated statements of operations. Our guidance anticipates pre-tax charges of approximately $0.14 per diluted share for the full year 2024. The tax effect of these charges is expected to be approximately $0.04 per diluted share for the full year 2024. (b)Non-operating foreign currency exchange gains and losses, inclusive of gains and losses on related foreign exchange forward contracts not designated as hedging instruments for accounting purposes, are reported in "Foreign currency exchange gains (losses), net" in our unaudited consolidated statements of operations. Non-operating foreign currency exchange gains and losses are subject to high variability and low visibility and therefore cannot be provided on a forward-looking basis without unreasonable efforts.(c)Presented below are the tax impacts of our non-GAAP adjustment to pre-tax income for the: (in millions)Three Months EndedDecember 31,Twelve Months Ended December 31,2023202220232022Non-GAAP income tax benefit (expense) related to:NextGen charges$10 $— $59 $— Foreign currency exchange gains and losses(4)(4)(6)(39)The effective tax rate related to non-operating foreign currency exchange gains and losses varies depending on the jurisdictions in which such income and expenses are generated and the statutory rates applicable in those jurisdictions. As such, the income tax effect of non-operating foreign currency exchange gains and losses shown in the above table may not appear proportionate to the net pre-tax foreign currency exchange gains and losses reported in our unaudited consolidated statements of operations.(d)As previously reported in our Annual Report on Form 10-K, during the three months ended September 30, 2022, we recognized an income tax benefit of $36 million related to a specific uncertain tax position that was previously unrecognized in our prior-year consolidated financial statements. The recognition of the benefit in the third quarter of 2022 was based on management’s reassessment regarding whether this unrecognized tax benefit met the more-likely-than-not threshold in light of the lapse in the statute of limitations as to a portion of such benefit.Reconciliations of Net Cash(Unaudited)(in millions)December 31, 2023December 31, 2022Cash and unrestricted cash equivalents$2,621 $2,191 Short-term investments14 310 Less:Short-term debt33 8 Long-term debt606 638 Net cash$1,996 $1,855 The above tables serve to reconcile the Non-GAAP financial measures to the most directly comparable GAAP measures. Refer to the “About Non-GAAP Financial Measures and Performance Metrics” section of our press release for further information on the use of these Non-GAAP measures. COGNIZANT TECHNOLOGY SOLUTIONS CORPORATIONRevenue by Business Segment and Geography(Unaudited) (dollars in millions)Three Months Ended December 31, 2023Year over Year $ % of total % ChangeConstant Currency % Change (a)Revenues by Segment:Financial Services$1,395 29.3 %(5.8)%(6.6)%Health Sciences1,396 29.3 %(2.1)%(2.7)%Products and Resources1,163 24.5 %1.3 %0.3 %Communications, Media and Technology 804 16.9 %2.6 %2.0 %Total Revenues$4,758 (1.7)%(2.4)%Revenues by Geography:North America$3,530 74.2 %(1.6)%(1.7)%United Kingdom448 9.4 %(1.1)%(5.8)%Continental Europe470 9.9 %3.8 %(1.0)%Europe - Total918 19.3 %1.3 %(3.4)%Rest of World310 6.5 %(9.9)%(7.9)%Total Revenues$4,758 (1.7)%(2.4)% Twelve Months Ended December 31, 2023Year over Year $ % of total % ChangeConstant Currency % Change (a)Revenues by Segment:Financial Services$5,809 30.0 %(4.3)%(4.2)%Health Sciences5,674 29.3 %0.8 %0.5 %Products and Resources4,628 23.9 %1.4 %1.5 %Communications, Media and Technology3,242 16.8 %2.6 %3.1 %Total Revenues$19,353 (0.4)%(0.3)%Revenues by Geography:North America$14,263 73.7 %(1.2)%(1.1)%United Kingdom1,885 9.7 %4.1 %3.5 %Continental Europe1,909 9.9 %6.4 %4.3 %Europe - Total3,794 19.6 %5.2 %3.9 %Rest of World1,296 6.7 %(6.6)%(2.6)%Total Revenues$19,353 (0.4)%(0.3)%Notes:(a)Constant currency revenue growth is not a measure of financial performance prepared in accordance with GAAP. See “About Non-GAAP Financial Measures and Performance Metrics” section of our press release for further information.COGNIZANT TECHNOLOGY SOLUTIONS CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)(in millions)Three Months EndedDecember 31,Twelve Months EndedDecember 31,2023202220232022Cash flows from operating activities:Net income$558 $521 $2,126 $2,290 Adjustments for non-cash income and expenses71 18 393 602 Changes in assets and liabilities108 163 (189)(324)Net cash provided by operating activities737 702 2,330 2,568 Cash flows from investing activities:Purchases of property and equipment(78)(90)(317)(332)Net maturities of investments246 379 395 565 Proceeds from sales of businesses— — — 28 Payments for business combinations, net of cash acquired— (367)(409)(367)Net cash provided by (used in) investing activities168 (78)(331)(106)Cash flows from financing activities:Repurchases of common stock(313)(315)(1,064)(1,422)Net change in term loan borrowings and finance lease and earnout obligations(10)8 (25)(39)Dividends paid(146)(139)(591)(564)Issuance of common stock under stock-based compensation plans14 15 71 86 Net cash (used in) financing activities(455)(431)(1,609)(1,939)Effect of exchange rate changes on cash, cash equivalents and restricted cash and cash equivalents63 59 33 (21)Increase in cash, cash equivalents and restricted cash and cash equivalents513 252 423 502 Cash, cash equivalents and restricted cash, beginning of period2,204 2,042 2,294 1,792 Cash, cash equivalents and restricted cash and cash equivalents, end of period $2,717 $2,294 $2,717 $2,294 SUPPLEMENTAL CASH FLOW INFORMATION(in millions)Three Months EndedDecember 31,Stock Repurchases under Board of Directors' authorized stock repurchase program:20232022Number of shares repurchased4.2 5.2 Remaining authorized balance as of December 31, 2023$1,777 Reconciliation of Free Cash Flow Non-GAAP Financial Measure (in millions)Three Months EndedDecember 31,Twelve Months EndedDecember 31,2023202220232022Net cash provided by operating activities$737 $702 $2,330 $2,568 Purchases of property and equipment(78)(90)(317)(332)Free cash flow$659 $612 $2,013 $2,236 |
0001683168-24-003246:radnet_ex9901.htm | 0001683168-24-003246 | 790,526 | 790,526 | RadNet, Inc. (RDNT) (CIK 0000790526) | ['RDNT'] | 8-K | 8-K | 2024-05-13 | 2024-05-08 | 001-33307 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-33307&action=getcompany | 24,936,504 | EX-99.1 | PRESS RELEASE DATED MAY 8, 2024. | 2.02,9.01 | https://www.sec.gov/Archives/edgar/data/790526/000168316824003246 | https://www.sec.gov/Archives/edgar/data/790526/000168316824003246/0001683168-24-003246-index.html | https://www.sec.gov/Archives/edgar/data/790526/000168316824003246/radnet_ex9901.htm | EX-99.1 2 radnet_ex9901.htm PRESS RELEASE DATED MAY 8, 2024. Exhibit 99.1 FOR IMMEDIATE RELEASE RadNet Reports First Quarter Financial Results with Record First Quarter Revenue, Adjusted EBITDA(1) and Adjusted Earnings(3) and Revises Upwards 2024 Financial Guidance Ranges ·Total Company Revenue increased 10.5% to $431.7 million in the first quarter of 2024 from $390.6 million in the first quarter of 2023; Revenue from the Digital Health reportable segment increased 32.3% to $14.7 million in the first quarter of 2024 from $11.1 million in the first quarter of 2023 ·Digital Health Revenue growth resulted in part from a $2.5 million (or 118.8%) increase in AI Revenue, which climbed to $4.7 million during the first quarter of 2024 from $2.1 million in the first quarter of 2023 ·Total Company Adjusted EBITDA(1) was $58.5 million in the first quarter of 2024 as compared with $48.2 million in the first quarter of 2023, an increase of 21.4%; Digital Health reportable segment Adjusted EBITDA(1) increased to $3.5 million in the first quarter of 2024 from $20,000 in the first quarter of 2023 ·Total Company Adjusted EBITDA(1) margins increased by 1.2% to 13.5% in the first quarter of 2024 as compared with 12.3% in the first quarter of 2023 ·Adjusting for unusual or one-time items in the quarter, Adjusted Diluted Earnings Per Share(3) was $0.07 for the first quarter of 2024; This compares with Adjusted Loss Per Share(3) of $(0.22) for the first quarter of 2023 ·Aggregate procedural volumes increased 5.7% and same-center procedural volumes increased 3.8% compared with the first quarter of 2023 ·Completed the acquisition of Houston Medical Imaging on April 1st, 2024 and announced a second Houston acquisition of American Health Imaging centers, set to close during the second quarter of 2024 ·RadNet revises full-year 2024 guidance levels to increase Revenue, Adjusted EBITDA(1) and Free Cash Flow(2) ranges LOS ANGELES, California, May 8, 2024 – RadNet, Inc. (NASDAQ: RDNT), a national leader in providing high-quality, cost-effective, fixed-site outpatient diagnostic imaging services through a network of 375 owned and operated outpatient imaging centers, today reported financial results for its first quarter of 2024. Dr. Howard Berger, President and Chief Executive Officer of RadNet, commented, “Despite experiencing some adverse impact from severe winter weather conditions during the first quarter, both the Imaging Center and newly established Digital Health reportable operating segments demonstrated strong growth and achieved first quarter record results. Total Company Revenue grew 10.5% as compared with last year’s first quarter to a record $431.7 million. The Digital Health segment Revenue of $14.7 million increased 32.3% from last year’s same quarter. The strong growth in Digital Health was, in part, driven by our AI businesses, whose Revenue increased 118% as compared with last year’s first quarter, mainly on the continuing success of the rollout of our Enhanced Breast Cancer Detection (EBCD) DeepHealth AI-powered screening mammography program.” 1 “Improved reimbursement from commercial and capitated payors, ongoing efforts toward greater operating efficiency and effective cost controls resulted in an increase to Adjusted EBITDA(1) margins by 120 basis points over last year’s first quarter. We believe there is further room for improvement, especially as we continue to disproportionally grow the higher margin Digital Health businesses and lean into both clinical and generative AI,” added Dr. Berger. Dr. Berger continued, “At the end of the first quarter, we announced a new joint venture in the northern and eastern parts of the San Fernando Valley of Los Angeles with Providence Health System. As of quarter end, we had 137 of our 375 centers (or 36.5%) held in partnership with leading health systems. These partnerships allow us to play a more integral role within the local healthcare communities we serve by increasing access, disseminating new technologies and improving the quality of patient care.” “Given the positive trends we are experiencing in virtually all aspects of our business and the strong financial performance of the first quarter, we are revising upwards certain guidance levels in anticipation of financial results that we believe will exceed our original expectations. Most significantly, we have increased 2024 guidance ranges for Revenue, Adjusted EBITDA(1) and Free Cash Flow(2),” added Dr. Berger. Dr. Berger continued, “We believe strong growth is sustainable as we continue to execute on various initiatives. In response to high demand and patient backlogs in many of RadNet’s local markets, we embarked over a year ago on a program to expand capacity through the development and construction of new imaging centers. We anticipate opening approximately a dozen new centers by year end 2024, and are working with prospective and existing health system partners to expand joint venture offerings. Digital Health initiatives continue to expand, including the further rollout of the EBCD program along with other clinical AI for lung and prostate cancers. Development of our DeepHealth OS technology platform is driving toward implementation within RadNet beginning in the third quarter of this year and within external customers as early as the first quarter of 2025. This DeepHeatlh OS will integrate new generative AI capabilities to help us and external customers automate and drive efficiencies for many of the back-office and support functions involved with running imaging centers.” “RadNet’s balance sheet continues to strengthen. In March, we completed an offering of common stock, where we raised net proceeds of approximately $219 million, which contributed to the $527 million cash balance at quarter end. Additionally, subsequent to the quarter’s end, we completed a successful debt refinancing transaction, resulting in a reduction of our interest rates, an extension of maturities and the funding of additional cash to the balance sheet of approximately $168 million. At quarter end, our leverage ratio of Net Debt to Adjusted EBITDA(1) was at a record low, slightly above 1.0x,” concluded Dr. Berger. Financial Results For the first quarter of 2024, RadNet reported Total Company Revenue of $431.7 million and Adjusted EBITDA(1) of $58.5 million. Revenue increased $41.1 million (or 10.5%) and Adjusted EBITDA(1) increased $10.3 million (or 21.4%) as compared with the first quarter of 2023. For the first quarter of 2024, RadNet reported Imaging Center Revenue of $417.0 million and Adjusted EBITDA(1) of $54.9 million. Revenue increased $37.6 million (or 9.9%) and Adjusted EBITDA(1) increased $6.8 million (or 14.1%) as compared with the first quarter of 2023. For the first quarter of 2024, RadNet reported Digital Health Revenue of $14.7 million and Adjusted EBITDA(1) of $3.5 million. Revenue increased $3.6 million (or 32.3%) and Adjusted EBITDA(1) increased $3.5 million (or 17,500%) as compared with the first quarter of 2023. Digital Health Revenue and Adjusted EBITDA(1) growth was due in part from a $2.5 million (or 118.8%) increase in AI Revenue, which climbed to $4.7 million during the first quarter of 2023. 2 Total Company Net Loss for the first quarter of 2024 was $2.8 million as compared with a Total Company Net Loss of $21.0 million for the first quarter of 2023. Net Loss Per Share for the first quarter of 2024 was $(0.04), compared with a Net Loss per share of $(0.36) in the first quarter of 2023, based upon a weighted average number of diluted shares outstanding of 69.3 million shares in 2024 and 57.7 million shares in 2023. There were a number of unusual or one-time items impacting the first quarter including: $1.2 million of non-cash gain from interest rate swaps; $1.0 million expense related to leases for our de novo facilities under construction that have yet to open their operations; $2.0 million non-cash increase to contingent consideration related to completed acquisitions; and $3.3 million of non-capitalized research and development expenses with respect to our DeepHealth Cloud OS and generative AI. Adjusting for the above items, Total Company Adjusted Earnings(3) was $5.0 million and diluted Adjusted Earnings Per Share(3) was $0.07 during the first quarter of 2024. This compares with Total Company Adjusted Loss(3) of $13.0 million and diluted Adjusted Loss Per Share(3) of $(0.22) during the first quarter of 2023. For the first quarter of 2024, as compared with the prior year’s first quarter, MRI volume increased 11.7%, CT volume increased 9.1% and PET/CT volume increased 17.5%. Overall volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased 5.7% over the prior year’s first quarter. On a same-center basis, including only those centers which were part of RadNet for both the first quarters of 2024 and 2023, MRI volume increased 9.9%, CT volume increased 6.5% and PET/CT volume increased 15.3%. Overall same-center volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased 3.8% over the prior year’s same quarter 2024 Revised Guidance RadNet amends its previously announced guidance levels as follows: Imaging Center Segment Original Guidance Range Revised Guidance Range Total Net Revenue $1,650 - $1,700 million $1,675 - $1,725 million Adjusted EBITDA(1) $250 - $260 million $255 - $265 million Capital Expenditures(a) $125 - $135 million $130 - $140 million Cash Interest Expense(b) $40 - $45 million $37 - $42 million Free Cash Flow(2) $65 - $75 million $68 - $78 million (a)Net of proceeds from the sale of equipment, imaging centers and joint venture interests and New Jersey Imaging Network capital expenditures. (b)Includes payments to and from counterparties on interest rate swaps and nets interest income from our cash balance recorded in Other Income. 3 Digital Health Segment Original Guidance Range Revised Guidance Range Total Net Revenue $60 - $70 million $60 - $70 million Adjusted EBITDA(1) Before Non-Capitalized R&D - DeepHealth Cloud OS & Generative AI $12 - $14 million $13 - $15 million Non-Capitalized R&D - DeepHealth Cloud OS & Generative AI $11 - $13 million $12 - $14 million Capital Expenditures $3 - $5 million $3 - $5 million Free Cash Flow(2) Before Non-Capitalized R&D - DeepHealth Cloud OS & Generative AI $8 - $10 million $8 - $10 million Free Cash Flow(2) After Non-Capitalized R&D - DeepHealth Cloud OS & Generative AI $(2) - $(5) million $(2) - $(5) million Financial Results Conference Call Dr. Howard Berger, President and Chief Executive Officer, and Mark Stolper, Executive Vice President and Chief Financial Officer, will host a conference call to discuss its first quarter 2024 results on Thursday, May 9th, 2024 at 7:30 a.m. Pacific Time (10:30 a.m. Eastern Time). Conference Call Details: Date: Thursday, May 9, 2024 Time: 10:30 a.m. Eastern Time Dial In-Number: 844-826-3035 International Dial-In Number: 412-317-5195 It is recommended that participants dial in approximately 5 to 10 minutes prior to the start of the 10:30 a.m. call. There will also be simultaneous and archived webcasts available at https://viavid.webcasts.com/starthere.jsp?ei=1667758&tp_key=222b4e91a8 or http://www.radnet.com under the “Investors” menu section and “News Releases” sub-menu of the website. An archived replay of the call will also be available and can be accessed by dialing 844-512-2921 from the U.S., or 412-317-6671 for international callers, and using the passcode 10188629. 4 About RadNet, Inc. RadNet, Inc. is the leading national provider of freestanding, fixed-site diagnostic imaging services in the United States based on the number of locations and annual imaging revenue. RadNet has a network of 375 owned and/or operated outpatient imaging centers. RadNet's markets include California, Maryland, Delaware, New Jersey, New York, Florida, Texas and Arizona. In addition, RadNet provides radiology information technology and artificial intelligence solutions, teleradiology professional services and other related products and services to customers in the diagnostic imaging industry. Together with affiliated radiologists, and inclusive of full-time and per diem employees and technologists, RadNet has a total of over 9,700 employees. For more information, visit http://www.radnet.com. Forward Looking Statements This press release contains “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are expressions of our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, and anticipated future conditions, events and trends. Forward-looking statements can generally be identified by words such as: “anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,” “project,” “estimate,” “expect,” “strategy,” “future,” “likely,” “may,” “should,” “will” and similar references to future periods. Forward-looking statements are neither historical facts nor assurances of future performance. Because forward-looking statements relate to the future, they are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not place undue reliance on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following: ·the impact of a pandemic, significant deterioration in the broader economy, severe acts of nature or other exogenous factors on our business, suppliers, payors, customers, referral sources, partners, patients and employees; ·the availability and terms of capital to fund our business; ·our ability to service our indebtedness, make principal and interest payments as those payments become due and remain in compliance with applicable debt covenants, in addition to our ability to refinance such indebtedness on acceptable terms; ·changes in general economic conditions nationally and regionally in the markets in which we operate; ·the availability and terms of capital to fund the expansion of our business and improvements to our existing facilities; ·our ability to maintain our current credit rating and the impact on our funding costs and competitive position if we do not do so; ·our ability to acquire, develop, implement and monetize artificial intelligence algorithms and applications; ·volatility in interest and exchange rates, or credit markets; ·the adequacy of our cash flow and earnings to fund our current and future operations; ·changes in service mix, revenue mix and procedure volumes; ·delays in receiving payments for services provided; ·increased bankruptcies among our partner physicians or joint venture partners; ·the impact of the political environment and related developments on the current healthcare marketplace and on our business, including with respect to the future of the Affordable Care Act; ·the extent to which the ongoing implementation of healthcare reform, or changes in or new legislation, regulations or guidance, enforcement thereof by federal and state regulators or related litigation result in a reduction in coverage or reimbursement rates for our services, or other material impacts to our business; ·closures or slowdowns and changes in labor costs and labor difficulties, including stoppages affecting either our operations or our suppliers' abilities to deliver supplies needed in our facilities; ·the occurrence of hostilities, political instability or catastrophic events; ·the emergence or reemergence of and effects related to future pandemics, epidemics and infectious diseases; and ·noncompliance by us with any privacy or security laws or any cybersecurity incident or other security breach by us or a third party involving the misappropriation, loss or other unauthorized use or disclosure of confidential information. 5 Any forward-looking statement contained in this current report is based on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that we may make from time to time, whether as a result of changed circumstances, new information, future developments or otherwise, except as required by applicable law. Regulation G: GAAP and Non-GAAP Financial Information This release contains certain financial information not reported in accordance with GAAP. The Company uses both GAAP and non-GAAP metrics to measure its financial results. The Company believes that, in addition to GAAP metrics, these non-GAAP metrics assist the Company in measuring its cash-based performance. The Company believes this information is useful to investors and other interested parties because it removes unusual and nonrecurring charges that occur in the affected period and provides a basis for measuring the Company's financial condition against other quarters. Such information should not be considered as a substitute for any measures calculated in accordance with GAAP, and may not be comparable to other similarly titled measures of other companies. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Reconciliation of this information to the most comparable GAAP measures is included in this release in the tables which follow. CONTACTS: RadNet, Inc. Mark Stolper, 310-445-2800 Executive Vice President and Chief Financial Officer 6 RADNET, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA) March 31, 2024 December 31, 2023 (unaudited) ASSETS CURRENT ASSETS Cash and Cash equivalents $526,980 $342,570 Accounts receivable 189,572 163,707 Due from affiliates 34,269 25,342 Prepaid expenses and other current assets 45,007 47,657 Total current assets 795,828 579,276 PROPERTY, EQUIPMENT AND RIGHT-OF-USE ASSETS Property and equipment, net 618,926 604,401 Operating lease right-of-use assets 621,612 596,032 Total property, plant, equipment and right-of-use assets 1,240,538 1,200,433 OTHER ASSETS Goodwill 694,292 679,463 Other intangible assets 86,883 90,615 Deferred financing costs 1,483 1,643 Investment in joint ventures 97,034 92,710 Deposits and other 53,497 46,333 Total assets $2,969,555 $2,690,473 LIABILITIES AND EQUITY CURRENT LIABILITIES Accounts payable, accrued expenses and other $324,578 $342,940 Due to affiliates 20,494 15,910 Deferred revenue 4,475 4,647 Current operating lease liability 58,138 55,981 Current portion of notes payable 20,202 17,974 Total current liabilities 427,887 437,452 LONG-TERM LIABILITIES Long-term operating lease liability 630,348 605,097 Notes payable, net of current portion 814,442 812,068 Deferred tax liability, net 14,479 15,776 Other non-current liabilities 5,074 6,721 Total liabilities 1,892,230 1,877,114 EQUITY RadNet, Inc. stockholders' equity: Common stock - $0.0001 par value, 200,000,000 shares authorized; 73,901,654 and 67,956,318 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively 7 7 Additional paid-in-capital 969,248 722,750 Accumulated other comprehensive loss (13,943) (12,484) Accumulated deficit (82,357) (79,578) Total RadNet, Inc.'s stockholders equity 872,955 630,695 Noncontrolling interests 204,370 182,664 Total equity 1,077,325 813,359 Total liabilities and equity $2,969,555 $2,690,473 7 RADNET, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (IN THOUSANDS EXCEPT FOR SHARE AND PER SHARE DATA) (unaudited) Three Months Ended March 31, 2024 2023 REVENUE Service fee revenue $397,189 $352,420 Revenue under capitation arrangements 34,518 38,144 Total service revenue 431,707 390,564 OPERATING EXPENSES Cost of operations, excluding depreciation and amortization 387,589 351,865 Depreciation and amortization 32,368 31,315 Loss (gain) on sale and disposal of equipment and other 186 579 Severance costs 225 134 Total operating expenses 420,368 383,893 INCOME (LOSS) FROM OPERATIONS 11,339 6,671 OTHER INCOME AND EXPENSES Interest expense 16,267 15,722 Equity in earnings of joint ventures (4,324) (1,428) Non-cash change in fair value of interest rate hedge (1,216) 4,093 Other expenses (income) (2,934) 1,432 Total other expense (income) 7,793 19,819 INCOME (LOSS) BEFORE INCOME TAXES 3,546 (13,148) Benefit from (Provision for) income taxes 1,864 (1,135) NET INCOME (LOSS) 5,410 (14,283) Net income (loss) attributable to noncontrolling interests 8,189 6,722 NET INCOME (LOSS) ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS $(2,779) $(21,005) BASIC NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS $(0.04) $(0.36) DILUTED NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS $(0.04) $(0.36) WEIGHTED AVERAGE SHARES OUTSTANDING Basic 69,307,078 57,701,439 Diluted 69,307,078 57,701,439 8 RADNET, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS) (unaudited) Three Months Ended March 31, 2024 2023 CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $5,410 $(14,283) Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 32,368 31,315 Amortization of operating lease assets 14,711 15,699 Equity in earnings of joint ventures (4,324) (1,428) Distributions from joint ventures – (407) Amortization deferred financing costs and loan discount 748 746 Loss (Gain) non sale and disposal of equipment 186 579 Amortization of cash flow hedge 739 922 Non-cash change in fair value of interest rate hedge (1,216) 4,093 Stock-based compensation 11,897 12,185 Change in fair value of contingent consideration 1,974 2,335 Changes in operating assets and liabilities, net of assets acquired and liabilities assumed in purchase transactions: Accounts receivable (25,865) (9,997) Other current assets (6,277) (1,691) Other assets (5,892) (2,726) Deferred taxes (1,158) 942 Operating leases (12,883) (15,080) Deferred revenue (172) 335 Accounts payable, accrued expenses and other 6,839 9,077 Net cash provided by operating activities 17,085 32,616 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of imaging facilities and other acquisitions (3,530) (9,644) Purchase of property and equipment and other (57,409) (55,915) Proceeds from sale of equipment 2 3 Net cash used in investing activities (60,937) (65,556) CASH FLOWS FROM FINANCING ACTIVITIES Principal payments on notes and leases payable (1,102) (184) Payments on Term Loan Debt (1,875) (3,688) Contribution from noncontrolling partners 4,169 – Proceeds from sale of economic interests in majority owned subsidiary, net of taxes 8,713 – Proceeds from issuance of common stock 218,385 – Proceeds from issuance of common stock upon exercise of options 8 51 Net cash provided by (used in) financing activities 228,298 (3,821) EFFECT OF EXCHANGE RATE CHANGES ON CASH (36) (229) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 184,410 (36,990) CASH AND CASH EQUIVALENTS, beginning of period 342,570 127,834 CASH AND CASH EQUIVALENTS, end of period $526,980 $90,844 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid during the period for interest $18,285 $21,471 Cash paid during the period for income taxes $1 $40 10 RADNET, INC. AND SUBSIDIARIES RECONCILIATION OF GAAP NET INCOME ATTRIBUTABLE TO RADNET, INC. COMMON SHAREHOLDERS TO ADJUSTED EBITDA (IN THOUSANDS) Three Months Ended March 31, 2024 2023 Net income (loss) attributable to Radnet, Inc. common stockholders $(2,779) $(21,005) Income taxes (1,864) 1,135 Interest expense 16,267 15,722 Severance costs 225 134 Depreciation and amortization 32,368 31,315 Non-cash employee stock-based compensation 11,897 12,185 (Gain) loss on sale and disposal of equipment and other 186 579 Non-cash change in fair value of interest rate hedge (1,216) 4,093 Other (income) expenses (2,934) 1,432 Non-Capitalized R&D - DeepHealth Cloud OS & Generative AI 3,315 – Non-cash change to contingent consideration 1,974 1,616 Non-operational rent expenses 1,023 959 Adjusted EBITDA - Total Company $58,462 $48,165 Adjusted EBITDA - Digital Health Segment 3,520 20 Adjusted EBITDA - Imaging Center Segment $54,942 $48,145 11 PAYOR CLASS BREAKDOWN First Quarter 2024 Commercial Insurance 58.4% Medicare 21.7% Capitation 8.0% Medicaid 2.5% Workers Compensation/Personal Injury 2.7% Other 6.7% Total 100.0% RADNET PAYMENTS BY MODALITY First Quarter Full Year Full Year Full Year 2024 2023 2022 2021 MRI 37.0% 36.8% 36.8% 36.0% CT 16.5% 16.8% 17.5% 17.2% PET/CT 6.6% 6.4% 5.8% 5.5% X-ray 6.3% 6.5% 6.7% 3.9% Ultrasound 13.6% 12.9% 12.6% 12.7% Mammography 16.4% 16.0% 15.3% 16.1% Nuclear Medicine 0.9% 0.8% 0.9% 1.0% Other 2.7% 3.9% 4.5% 4.6% 100.0% 100.0% 100.0% 100.0% PROCEDURES BY MODALITY* First Quarter First Quarter 2024 2023 MRI 412,821 369,556 CT 250,365 229,379 PET/CT 16,594 14,126 Nuclear Medicine 8,595 9,258 Ultrasound 639,221 608,986 Mammography 472,514 455,479 X-ray and Other 846,841 817,851 Total 2,646,951 2,504,635 * Volumes include wholly owned and joint venture centers. 12 RADNET, INC. AND SUBSIDIARIES SCHEDULE OF ADJUSTED EARNINGS AND EARNINGS PER SHARE (3) (IN THOUSANDS EXCEPT SHARE DATA) (unaudited) Three Months Ended March 31, 2024 2023 (iv) NET (LOSS) INCOME ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS $(2,779) $(21,005) Subtract non-cash change in fair value of interest rate hedges (i) (1,216) 4,093 Legal Settlement – – Non-operational rent expenses (iii) 1,023 959 Contingent consideration 1,974 1,616 Non-Capitalized R&D - DeepHealth Cloud OS & Generative AI 3,305 – Holdback Re-valuation Adjustments - Quantib and Heart & Lung Health – 719 Total adjustments - loss (gain) 5,086 7,387 Subtract tax impact of Adjustments (ii) 2,670 637 Tax effected impact of adjustments 7,756 8,024 TOTAL ADJUSTMENT TO NET INCOME (LOSS) ATTRIBUTABLE TO RADNET, INC. COMMON SHAREHOLDERS 7,756 8,024 ADJUSTED NET LOSS ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS 4,977 (12,981) WEIGHTED AVERAGE SHARES OUTSTANDING Diluted 71,048,153 57,701,439 ADJUSTED DILUTED NET LOSS PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS $0.07 $(0.22) (i) Impact from the change in fair value of the hedges during the quarter. Excludes the amortization of the accumulation of the changes in fair value out of Other Comprehensive Income that existed prior to the hedges becoming ineffective. (ii) Tax effected using - 8.63% and -52.5% blended federal and state effective tax rate for the first quarter of 2023 and 2024, respectively. (iii) Represents rent expense associated with de novo sites under construction prior to them becoming operational. (iv) Restated from what was presented in 2023 to include the losses of the AI businesses (ie, not add the losses back to earnings as was the case in 2023). The restated Adjusted Earnings for 2023 is due to the fact that AI is no longer its own reportable operating segment and is now embedded in the Digital Health reportable operating segment. 13 Footnotes (1) The Company defines Adjusted EBITDA as earnings before interest, taxes, depreciation and amortization, each from continuing operations and adjusted for losses or gains on the sale of equipment, other income or loss, debt extinguishments and non-cash equity compensation. Adjusted EBITDA includes equity earnings in unconsolidated operations and subtracts allocations of earnings to non-controlling interests in subsidiaries, and is adjusted for non-cash or extraordinary and one-time events taken place during the period. Adjusted EBITDA is reconciled to its nearest comparable GAAP financial measure. Adjusted EBITDA is a non-GAAP financial measure used as analytical indicator by RadNet management and the healthcare industry to assess business performance, and is a measure of leverage capacity and ability to service debt. Adjusted EBITDA should not be considered a measure of financial performance under GAAP, and the items excluded from Adjusted EBITDA should not be considered in isolation or as alternatives to net income, cash flows generated by operating, investing or financing activities or other financial statement data presented in the consolidated financial statements as an indicator of financial performance or liquidity. As Adjusted EBITDA is not a measurement determined in accordance with GAAP and is therefore susceptible to varying methods of calculation, this metric, as presented, may not be comparable to other similarly titled measures of other companies. (2) As noted above, the Company defines Free Cash Flow as Adjusted EBITDA less total Capital Expenditures (whether completed with cash or financed) and Cash Interest paid. Free Cash Flow is a non-GAAP financial measure. The Company uses Free Cash Flow because the Company believes it provides useful information for investors and management because it measures our capacity to generate cash from our operating activities. Free Cash Flow does not represent total cash flow since it does not include the cash flows generated by or used in financing activities. In addition, our definition of Free Cash Flow may differ from definitions used by other companies. Free Cash Flow should not be considered a measure of financial performance under GAAP, and the items excluded from Adjusted EBITDA should not be considered in isolation or as alternatives to net income, cash flows generated by operating, investing or financing activities or other financial statement data presented in the consolidated financial statements as an indicator of financial performance or liquidity. As Adjusted EBITDA is not a measurement determined in accordance with GAAP and is therefore susceptible to varying methods of calculation, this metric, as presented, may not be comparable to other similarly titled measures of other companies. (3) The Company defines Adjusted Earnings (Loss) Per Share as net income or loss attributable to RadNet, Inc. common stockholders and excludes losses or gains on the disposal of equipment, loss on debt extinguishments, bargain purchase gains, severance costs, loss on impairment, loss or gain on swap valuation, gain on extinguishment of debt, unusual or non-recurring entries that impact the Company’s tax provision and any other non-recurring or unusual transactions recorded during the period. Adjusted Earnings (Loss) Per Share is reconciled to its nearest comparable GAAP financial measure. Adjusted Earnings (Loss) Per Share is a non-GAAP financial measure used as analytical indicator by RadNet management and the healthcare industry to assess business performance. Adjusted Earnings Per Share should not be considered a measure of financial performance under GAAP, and the items excluded from Adjusted Earnings Per Share should not be considered in isolation or as alternatives to net income, cash flows generated by operating, investing or financing activities or other financial statement data presented in the consolidated financial statements as an indicator of financial performance or liquidity. As Adjusted Earnings Per Share is not a measurement determined in accordance with GAAP and is therefore susceptible to varying methods of calculation, this metric, as presented, may not be comparable to other similarly titled measures of other companies. 14 |
0001058290-24-000115:exhibit9913312024.htm | 0001058290-24-000115 | 1,058,290 | 1,058,290 | COGNIZANT TECHNOLOGY SOLUTIONS CORP (CTSH) (CIK 0001058290) | ['CTSH'] | 8-K | 8-K | 2024-05-01 | 2024-05-01 | 000-24429 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=000-24429&action=getcompany | 24,902,886 | EX-99.1 | EX-99.1 | 2.02,7.01,9.01 | https://www.sec.gov/Archives/edgar/data/1058290/000105829024000115 | https://www.sec.gov/Archives/edgar/data/1058290/000105829024000115/0001058290-24-000115-index.html | https://www.sec.gov/Archives/edgar/data/1058290/000105829024000115/exhibit9913312024.htm | EX-99.1 2 exhibit9913312024.htm EX-99.1 DocumentExhibit 99.1COGNIZANT REPORTS FIRST QUARTER 2024 RESULTS •Revenue of $4.8 billion declined 1.1% year-over-year, or declined 1.2% in constant currency1, which was above the high-end of our guidance range•Operating margin of 14.6%, flat year-over-year, and Adjusted Operating Margin1 of 15.1%, which expanded 50 basis points year-over-year•Trailing 12-month bookings of $25.9 billion; book-to-bill of 1.3x•$284 million returned to shareholders through share repurchases and dividends•2024 revenue guidance unchanged at (2.0%) to 2.0% in constant currency •2024 Adjusted Operating Margin guidance unchanged at 15.3-15.5%, representing year-over-year expansion of 20 to 40 basis pointsTEANECK, N.J., May 1, 2024 - Cognizant (Nasdaq: CTSH), one of the world’s leading professional services companies, today announced its first quarter 2024 financial results. “During the first quarter, we delivered revenue above the high-end of our guidance range and continued to make progress against our strategic priorities,” said Ravi Kumar S, Chief Executive Officer. “We have built upon our large deal momentum of 2023, signing eight deals during the quarter, each with a total contract value of at least $100 million. As our clients navigate an uncertain economic environment, we are adapting to the market dynamics by helping them achieve operational efficiencies, supporting their innovation agendas, and preparing them for AI-driven transformation across their businesses."$ in billions, except per share dataQ1 2024Q1 2023Revenue$4.76 $4.81 Y/Y Change(1.1 %)(0.3%)Y/Y Change CC1(1.2 %)1.5 % GAAP Operating Margin14.6 %14.6 %Adjusted Operating Margin115.1 %14.6 %GAAP Diluted EPS$1.10 $1.14 Adjusted Diluted EPS1$1.12 $1.11 “The first quarter’s adjusted operating margin of 15.1% expanded by 50 basis points year-over-year, driven by our NextGen program. We remain focused on operational excellence and cost discipline as our clients continue to limit discretionary spending,” said Jatin Dalal, Chief Financial Officer. "Our recently completed acquisition of Thirdera, an industry-leading ServiceNow partner, is already opening new growth opportunities and expanding our pipeline. As part of our balanced capital allocation strategy, we continue to seek organic and inorganic investment opportunities to accelerate our growth profile, expand our capabilities, and diversify our portfolio mix.”1 Constant currency ("CC") revenue growth, Adjusted Operating Margin, and Adjusted Diluted Earnings Per Share ("Adjusted Diluted EPS") are not measures of financial performance prepared in accordance with GAAP. A full reconciliation of Adjusted Operating Margin guidance to the corresponding GAAP measure on a forward-looking basis cannot be provided without unreasonable efforts. See “About Non-GAAP Financial Measures and Performance Metrics” for more information and, as applicable, reconciliations to the most directly comparable GAAP financial measures.BookingsBookings in the first quarter declined 6% year-over-year. On a trailing-twelve-month basis, bookings grew 1% year-over-year to $25.9 billion, which represented a book-to-bill of approximately 1.3x. Employee MetricsTotal headcount at the end of the first quarter was 344,400, a decrease of 3,300 from Q4 2023 and a decrease of 7,100 from Q1 2023. Voluntary attrition - Tech Services on a trailing-twelve months basis was 13.1% as compared to 23.1% for the period ended March 31, 2023.Return of Capital to ShareholdersThe Company repurchased 1.4 million shares for $110 million during the first quarter under its share repurchase program. As of March 31, 2024, there was $1.7 billion remaining under the share repurchase authorization. In April 2024, the Company declared a quarterly cash dividend of $0.30 per share for shareholders of record on May 20, 2024. This dividend will be payable on May 29, 2024. Second Quarter and Full-Year 2024 Guidance2 (all growth rates year-over-year)•Second quarter revenue is expected to be $4.75 - $4.82 billion, a decline of 2.9% to a decline of 1.4%, or a decline of 2.5% to a decline of 1.0% in constant currency.•Full-year 2024 revenue is expected to be $18.9 - $19.7 billion, a decline of 2.2% to growth of 1.8% as reported, or a decline of 2.0% to growth of 2.0% in constant currency. This assumes up to 100 basis points of inorganic contribution.•Full-year 2024 Adjusted Operating Margin3 is expected to be in the range of 15.3% to 15.5%, or 20 to 40 basis points of expansion. •Full-year 2024 Adjusted EPS3 is expected to be in the range of $4.50 to $4.68.2 Guidance as of May 1, 20243 A full reconciliation of Adjusted Operating Margin and Adjusted Diluted EPS guidance to the corresponding GAAP measures on a forward-looking basis cannot be provided without unreasonable efforts. See “About Non-GAAP Financial Measures and Performance Metrics” for more information and a partial reconciliation at the end of this release.Select Client and Partnership Announcements•Signed agreement with Telstra, Australia’s leading telecommunications and technology company, to elevate their software engineering capabilities and enhance their customers’ experience. We will leverage our AI tools to drive innovation, enable more efficient software engineering and IT operations and decommission legacy systems to improve operational efficiency and support their employee experience. •Expanded partnership with Microsoft that will leverage Microsoft Copilot and Cognizant's advisory and digital transformation services to help employees and enterprise customers operationalize generative AI and realize strategic business transformation. The partnership aims to make Microsoft’s generative AI and Copilots available to millions of users, to transform enterprise business operations, enhance employee experiences and accelerate cross-industry innovation. As part of the partnership, Cognizant purchased 25,000 Microsoft 365 Copilot seats for Cognizant associates, along with 500 Sales Copilot seats and 500 Services Copilot seats to enhance productivity, streamline workflows and transform customer experiences. •Announced a collaboration with Microsoft to infuse generative AI into healthcare administration. The TriZetto Assistant on Facets will leverage Azure OpenAI Service and Semantic Kernel to provide access to generative AI within the TriZetto user interface. This new collaboration aims to increase productivity and efficiency for healthcare payers and providers, while ensuring timely responses and improved care for patients. •Announced a planned collaboration with FICO, a leading analytics software company, to launch a cloud-based real-time payment fraud prevention solution powered by FICO® Falcon® Fraud Manager. The joint offering would leverage both firms' artificial intelligence and machine learning (ML) capabilities to help banks and other payment service providers in North America protect their customers from fraud in the growing world of instant digital payments.•Announced a strategic alliance with Shopify and Google Cloud to drive digital transformation and platform modernization for global retailers and brands. By utilizing Shopify's commerce operating system, built on Google Cloud, along with the expansive suite of Google Cloud offerings, retailers are expected to have the foundational technology needed to enable Cognizant to execute impactful digital transformation services and deliver benefits across a range of retail scenarios.•Signed a new agreement to transform and manage the global technology infrastructure of McCormick & Company, Inc., a global leader in flavor with a portfolio of category-leading brands. The new agreement is expected to deliver predictable business outcomes powered by AI automated tools. Cognizant is expected to deliver several key capabilities for McCormick over the next five years, including new self-service capabilities, improved service productivity and significant cost savings.•Extended strategic agreement with LexisNexis® Legal & Professional, a leading global provider of information and analytics. Cognizant will provide cloud and digital engineering services to enhance customer experience on LexisNexis' next-gen legal research solution in the U.S. and Canada.•Extended a strategic partnership with CNO Financial Group, Inc., a leading provider of insurance, financial services and workforce benefits solutions to middle-income America. Cognizant will leverage generative AI technologies designed to deliver improvements and drive efficiencies for CNO's technology landscape across infrastructure, applications, enterprise software, and engineering.•Announced the combination of Cognizant's generative AI technology with the NVIDIA BioNeMo gen AI platform to solve complex challenges of drug discovery in the life sciences industry, such as improving productivity in the development process and increasing the speed at which new, life-saving treatments can be brought to market.•Unveiled an Advanced Artificial Intelligence Lab based in San Francisco that will focus on advancing the science and practice of AI through innovation and development of intellectual property and AI-enablement technologies. Staffed by a team of researchers and developers, including AI pioneers and PhDs, the lab will collaborate with research institutions, customers, and startups.•Renewed Cognizant's long-standing relationship with Pon IT, which is part of the Dutch family-owned multinational Pon Holdings. The collaboration will enable Cognizant to continue providing cloud managed services for Pon IT across its suite of operating companies. During the next phase of the collaboration, Cognizant will continue to implement further optimizations that are expected to enable Pon IT to benefit from an agile, intuitive, and integrated cloud platform.•Selected by Clario, a healthcare research technology company that delivers leading endpoint technology solutions for clinical trials, to support its global IT infrastructure and applications. Cognizant services will provide automation and digital technologies that can reduce cost of service and speed time to market.•Renewed Cognizant's collaboration with Cermaq Group AS, a leading global salmon producer driving the transition of systems towards healthier and more climate-friendly foods. The renewal comes after an existing ten-year relationship between the two companies that has enabled Cognizant to reliably act as a strategic ally on Cermaq's path towards digital modernization.Select Analyst Ratings, Company Recognition and Announcements•Announced our Bluebolt grassroots innovation program, which launched a year ago in April 2023, has driven more than $150 million in estimated annualized client cost savings across more than 1,100 client implementations. We introduced Bluebolt to empower our global associates to devise and submit ideas – large and small – with the goal of advancing clients' success. Cognizant associates have submitted more than 130,000 ideas to date, of which more than 23,000 ideas have been implemented.•Named as one of "America's Most Innovative Companies 2024" by Fortune Magazine, the world-leading statistics portal and industry ranking provider. Cognizant was recognized for its innovative products and services, processes, and culture for the second consecutive year.•Secured a number three ranking on the LinkedIn Top Companies in India 2024 list, which spotlights 25 leading workplaces with more than 5,000 employees globally. The recognition acknowledges our commitment to prioritizing associate experience, fostering skilling, facilitating career growth and championing gender diversity. •Recognized as a Leader by Everest Group® in:◦Retail IT Services PEAK Matrix® Assessment, 2024◦Pega Services PEAK Matrix® Assessment, 2024 ◦Financial Crime and Compliance (FCC) Operations Services PEAK Matrix® Assessment, 2024 ◦CPG IT Services PEAK Matrix® Assessment, 2024 ◦Intelligent Process Automation Services PEAK Matrix® Assessment, 2024 ◦Marketing Services PEAK Matrix® Assessment, 2024 •A Leader in IDC MarketScape: ◦Worldwide Professional Services in Railways and Airlines 2024 Vendor Assessment, doc #US51421623, February 2024 •Market Leader in HFS Horizon 3:◦Assuring the Generative Enterprise™, 2024 ◦Customer Experience Service Providers, 2024 •Leadership in ISG Provider Lens™: ◦Intelligent Automation Services and Solutions, 2023 ◦Sustainability and ESG Services, 2024 ◦Mainframe Services, 2024 ◦Salesforce Ecosystem Partners, 2024 – US & UK •Leadership in Avasant RadarViewTM: ◦Life Sciences Digital Services, 2024 ◦Airlines and Airports Digital Services, 2024 ◦Hybrid Enterprise Cloud Services, 2024 ◦Intelligent Automation Services, 2024 ◦Healthcare Payor Digital Services, 2024 ◦Retail Digital Services, 2024 ◦Manufacturing Digital Services, 2024 •Leadership in NelsonHall NEAT Reports:◦Salesforce Services, 2024 Conference CallCognizant will host a conference call on May 1, 2024, at 5:00 p.m. (Eastern) to discuss the Company’s first quarter 2024 results. To listen to the conference call, please dial (877) 810-9510 (domestic) or +1 (201) 493-6778 (international) and provide the following conference passcode: “Cognizant Call.”The conference call will also be available live on the Investor Relations section of the Cognizant website at http://investors.cognizant.com. An earnings supplement will also be available on the Cognizant website at the time of the conference call. For those who cannot access the live broadcast, a replay will be available. To listen to the replay, please dial (877) 660-6853 (domestically) or +1 (201) 612-7415 (internationally) and enter 13744823 beginning two hours after the end of the call until 11:59 p.m. (Eastern) on Tuesday, May 15, 2024. The replay will also be available at Cognizant’s website www.cognizant.com for 60 days following the call.About CognizantCognizant (Nasdaq: CTSH) engineers modern businesses. We help our clients modernize technology, reimagine processes and transform experiences so they can stay ahead in our fast-changing world. Together, we’re improving everyday life. See how at www.cognizant.com or @cognizant. Forward-Looking StatementsThis press release includes statements that may constitute forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, the accuracy of which is necessarily subject to risks, uncertainties and assumptions as to future events that may not prove to be accurate. These statements include, but are not limited to, express or implied forward-looking statements relating to our strategy, strategic partnerships and collaborations, competitive position and opportunities in the marketplace, investment in and growth of our business, the pace and magnitude of change and client needs related to generative AI, the effectiveness of our recruiting and talent efforts and related costs, labor market trends, the anticipated amount of capital to be returned to shareholders and our anticipated financial performance. These statements are neither promises nor guarantees, but are subject to a variety of risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from those contemplated in these forward-looking statements. Existing and prospective investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Factors that could cause actual results to differ materially from those expressed or implied include general economic conditions, the competitive and rapidly changing nature of the markets we compete in, the competitive marketplace for talent and its impact on employee recruitment and retention, our ability to successfully implement our NextGen program and the amount of costs, timing of incurring costs and ultimate benefits of such plans, our ability to successfully use AI-based technologies, legal, reputational and financial risks resulting from cyberattacks, changes in the regulatory environment, including with respect to immigration and taxes, and the other factors discussed in our most recent Annual Report on Form 10-K and other filings with the Securities and Exchange Commission. Cognizant undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required under applicable securities law.About Non-GAAP Financial Measures and Performance MetricsNon-GAAP Financial MeasuresTo supplement our financial results presented in accordance with GAAP, this press release includes references to the following measures defined by the Securities and Exchange Commission as non-GAAP financial measures: Adjusted Operating Margin, Adjusted Diluted EPS, free cash flow, net cash and constant currency revenue growth. These non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles and should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and may be different from non-GAAP financial measures used by other companies. In addition, these non-GAAP financial measures should be read in conjunction with our financial statements prepared in accordance with GAAP. The reconciliations of our non-GAAP financial measures to the corresponding GAAP measures should be carefully evaluated.Our non-GAAP financial measures Adjusted Operating Margin and Adjusted Income from Operations excludes unusual items, such as NextGen charges. Our non-GAAP financial measure Adjusted Diluted EPS excludes unusual items, such as NextGen charges, net non-operating foreign currency exchange gains or losses and the tax impact of all the applicable adjustments. The income tax impact of each item excluded from Adjusted Diluted EPS is calculated by applying the statutory rate and local tax regulations in the jurisdiction in which the item was incurred. Free cash flow is defined as cash flows from operating activities net of purchases of property and equipment. Net cash is defined as cash and cash equivalents and short-term investments less short-term and long-term debt. Constant currency revenue growth is defined as revenues for a given period restated at the comparative period’s foreign currency exchange rates measured against the comparative period's reported revenues.Management believes providing investors with an operating view consistent with how we manage the Company provides enhanced transparency into our operating results. For our internal management reporting and budgeting purposes, we use various GAAP and non-GAAP financial measures for financial and operational decision-making, to evaluate period-to-period comparisons, to determine portions of the compensation for our executive officers and for making comparisons of our operating results to those of our competitors. Accordingly, we believe that the presentation of our non-GAAP measures, which exclude certain costs, when read in conjunction with our reported GAAP results, can provide useful supplemental information to our management and investors regarding financial and business trends relating to our financial condition and results of operations. A limitation of using non-GAAP financial measures versus financial measures calculated in accordance with GAAP is that non-GAAP financial measures do not reflect all of the amounts associated with our operating results as determined in accordance with GAAP and may exclude costs that are recurring such as our net non-operating foreign currency exchange gains or losses. In addition, other companies may calculate non-GAAP financial measures differently than us, thereby limiting the usefulness of these non-GAAP financial measures as a comparative tool. We compensate for these limitations by providing specific information regarding the GAAP amounts excluded from our non-GAAP financial measures to allow investors to evaluate such non-GAAP financial measures.Performance MetricsBookings are defined as total contract value (or TCV) of new contracts, including new contract sales as well as renewals and expansions of existing contracts. Bookings can vary significantly quarter to quarter depending in part on the timing of the signing of a small number of large contracts. Our book-to-bill ratio is defined as bookings for the trailing twelve months divided by revenue for the same period. Measuring bookings involves the use of estimates and judgments and there are no independent standards or requirements governing the calculation of bookings. The extent and timing of conversion of bookings to revenues may be impacted by, among other factors, the types of services and solutions sold, contract duration, the pace of client spending, actual volumes of services delivered as compared to the volumes anticipated at the time of sale, and contract modifications, including terminations, over the lifetime of a contract. The majority of our contracts are terminable by the client on short notice often without penalty, and some without notice. We do not update our bookings for subsequent terminations, reductions or foreign currency exchange rate fluctuations. Information regarding our bookings is not comparable to, nor should it be substituted for, an analysis of our reported revenues. However, management believes that it is a key indicator of potential future revenues and provides a useful indicator of the volume of our business over time. Investor Relations Contact:Media Contact:Tyler ScottJeff DeMarraisVP, Investor RelationsVP, Corporate Communications +1 551-220-8246 +1 475-223-2298Tyler.Scott@cognizant.comJeff.DeMarrais@cognizant.com- tables to follow -COGNIZANT TECHNOLOGY SOLUTIONS CORPORATIONCONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in millions, except per share data)Three Months EndedMarch 31, 20242023 Revenues $4,760 $4,812 Operating expenses: Cost of revenues (exclusive of depreciation and amortization expense shown separately below)3,146 3,143 Selling, general and administrative expenses 765 835 Restructuring charges 23 — Depreciation and amortization expense 131 132 Income from operations 695 702 Other income (expense), net: Interest income 30 30 Interest expense (11)(9) Foreign currency exchange gains (losses), net 6 12 Other, net 2 3 Total other income (expense), net 27 36 Income before provision for income taxes 722 738 Provision for income taxes (179)(158) Income (loss) from equity method investment 3 — Net income$546 $580 Basic earnings per share $1.10 $1.14 Diluted earnings per share $1.10 $1.14 Weighted average number of common shares outstanding - Basic497 509 Dilutive effect of shares issuable under stock-based compensation plans1 — Weighted average number of common shares outstanding - Diluted498 509 COGNIZANT TECHNOLOGY SOLUTIONS CORPORATIONCONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Unaudited)(in millions, except par values)March 31, 2024December 31, 2023AssetsCurrent assets:Cash and cash equivalents$2,231 $2,621 Short-term investments12 14 Trade accounts receivable, net3,822 3,849 Other current assets1,021 1,022 Total current assets7,086 7,506 Property and equipment, net1,036 1,048 Operating lease assets, net589 611 Goodwill6,393 6,085 Intangible assets, net1,171 1,149 Deferred income tax assets, net993 993 Long-term investments83 435 Other noncurrent assets1,057 656 Total assets$18,408 $18,483 Liabilities and Stockholders’ EquityCurrent liabilities:Accounts payable$291 $337 Deferred revenue449 385 Short-term debt33 33 Operating lease liabilities143 153 Accrued expenses and other current liabilities2,096 2,425 Total current liabilities3,012 3,333 Deferred revenue, noncurrent36 42 Operating lease liabilities, noncurrent503 523 Deferred income tax liabilities, net201 226 Long-term debt598 606 Long-term income taxes payable157 157 Other noncurrent liabilities411 369 Total liabilities4,918 5,256 Stockholders’ equity:Preferred stock, $0.10 par value, 15 shares authorized, none issued— — Class A common stock, $0.01 par value, 1,000 shares authorized, 497 and 498 shares issued and outstanding as of December 31, 2023 and 2022, respectively5 5 Additional paid-in capital20 15 Retained earnings13,621 13,301 Accumulated other comprehensive income (loss)(156)(94)Total stockholders’ equity13,490 13,227 Total liabilities and stockholders’ equity$18,408 $18,483 COGNIZANT TECHNOLOGY SOLUTIONS CORPORATIONReconciliations of Non-GAAP Financial Measures (Unaudited) (dollars in millions, except per share amounts)Three Months EndedMarch 31,Guidance 20242023Full Year 2024 (1)GAAP income from operations$695 $702 NextGen charges(a)23 — Adjusted Income From Operations$718 $702 GAAP operating margin14.6 %14.6 %NextGen charges0.5 — 0.3% - 0.4%Adjusted Operating Margin15.1 %14.6 %15.3% - 15.5%GAAP diluted earnings per share$1.10 $1.14 Effect of NextGen charges, pre-tax0.05 — 0.14Non-operating foreign currency exchange (gains) losses, pre-tax(b)(0.01)(0.02)(b)Tax effect of above adjustments(c)(0.02)(0.01)(a) (b)Adjusted Diluted Earnings Per Share$1.12 $1.11 $4.50 - $4.68(1) A full reconciliation of Adjusted Operating Margin and Adjusted Diluted Earnings Per Share guidance to the corresponding GAAP measures on a forward-looking basis cannot be provided without unreasonable efforts, as we are unable to provide reconciling information with respect to unusual items, net non-operating foreign currency exchange gains or losses and the tax effects of these adjustments, and such adjustments may be significant.Notes:(a)NextGen charges for the three months ended March 31, 2024 include $8 million of employee separation costs, $14 million of facility exit costs and $1 million of third party and other costs. We expect to incur approximately $70 million of costs in 2024 in connection with the NextGen program. The total costs related to the NextGen program are reported in "Restructuring charges" in our unaudited consolidated statements of operations. Our guidance anticipates pre-tax charges of approximately $0.14 per diluted share for the full year 2024. The tax effect of these charges is expected to be approximately $0.04 per diluted share for the full year 2024. (b)Non-operating foreign currency exchange gains and losses, inclusive of gains and losses on related foreign exchange forward contracts not designated as hedging instruments for accounting purposes, are reported in "Foreign currency exchange gains (losses), net" in our unaudited consolidated statements of operations. Non-operating foreign currency exchange gains and losses are subject to high variability and low visibility and therefore cannot be provided on a forward-looking basis without unreasonable efforts.(c)Presented below are the tax impacts of our non-GAAP adjustment to pre-tax income for the: (in millions)Three Months EndedMarch 31,20242023Non-GAAP income tax benefit (expense) related to:NextGen charges$5 $— Foreign currency exchange gains and losses(1)5 The effective tax rate related to non-operating foreign currency exchange gains and losses varies depending on the jurisdictions in which such income and expenses are generated and the statutory rates applicable in those jurisdictions. As such, the income tax effect of non-operating foreign currency exchange gains and losses shown in the above table may not appear proportionate to the net pre-tax foreign currency exchange gains and losses reported in our unaudited consolidated statements of operations.Reconciliations of Net Cash(Unaudited)(in millions)March 31, 2024December 31, 2023Cash and unrestricted cash equivalents$2,231 $2,621 Short-term investments12 14 Less:Short-term debt33 33 Long-term debt598 606 Net cash$1,612 $1,996 The above tables serve to reconcile the Non-GAAP financial measures to the most directly comparable GAAP measures. Refer to the “About Non-GAAP Financial Measures and Performance Metrics” section of our press release for further information on the use of these Non-GAAP measures. COGNIZANT TECHNOLOGY SOLUTIONS CORPORATIONRevenue by Business Segment and Geography(Unaudited) (dollars in millions)Three Months Ended March 31, 2024Year over Year $ % of total % ChangeConstant Currency % Change (a)Revenues by Segment:Financial Services$1,385 29.1 %(6.2)%(6.5)%Health Sciences1,416 29.7 %(1.2)%(1.3)%Products and Resources1,133 23.8 %1.3 %0.9 %Communications, Media and Technology 826 17.4 %5.2 %5.7 %Total Revenues$4,760 (1.1)%(1.2)%Revenues by Geography:North America$3,521 74.0 %(0.7)%(0.7)%United Kingdom456 9.6 %(4.6)%(7.7)%Continental Europe483 10.1 %4.8 %3.1 %Europe - Total939 19.7 %— %(2.4)%Rest of World300 6.3 %(8.5)%(3.7)%Total Revenues$4,760 (1.1)%(1.2)%Notes:(a)Constant currency revenue growth is not a measure of financial performance prepared in accordance with GAAP. See “About Non-GAAP Financial Measures and Performance Metrics” section of our press release for further information.COGNIZANT TECHNOLOGY SOLUTIONS CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)(in millions)Three Months EndedMarch 31,20242023Cash flows from operating activities:Net income$546 $580 Adjustments for non-cash income and expenses181 187 Changes in assets and liabilities(632)(38)Net cash provided by operating activities95 729 Cash flows from investing activities:Purchases of property and equipment(79)(98)Net maturities of investments262 292 Payments for business combinations, net of cash acquired(421)(409)Net cash (used in) investing activities(238)(215)Cash flows from financing activities:Issuance of common stock under stock-based compensation plans20 23 Repurchases of common stock(133)(222)Net change in term loan borrowings and earnout and finance lease obligations (40)(1)Dividends paid(151)(150)Net cash (used in) financing activities(304)(350)Effect of exchange rate changes on cash, cash equivalents and restricted cash and cash equivalents(39)— (Decrease) increase in cash, cash equivalents and restricted cash and cash equivalents(486)164 Cash, cash equivalents and restricted cash and cash equivalents, beginning of period2,717 2,294 Cash, cash equivalents, end of period $2,231 $2,458 SUPPLEMENTAL CASH FLOW INFORMATION(in millions)Three Months EndedMarch 31,Stock Repurchases under Board of Directors' authorized stock repurchase program:20242023Number of shares repurchased1.4 3.2 Remaining authorized balance as of March 31, 2024$1,667 Reconciliation of Free Cash Flow Non-GAAP Financial Measure (in millions)Three Months EndedMarch 31,20242023Net cash provided by operating activities$95 $729 Purchases of property and equipment(79)(98)Free cash flow$16 $631 |
0001213900-24-070401:ea021170201ex99-1_realpha.htm | 0001213900-24-070401 | 1,859,199 | 1,859,199 | reAlpha Tech Corp. (AIRE) (CIK 0001859199) | ['AIRE'] | 8-K | 8-K | 2024-08-19 | 2024-08-19 | 001-41839 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-41839&action=getcompany | 241,218,200 | EX-99.1 | PRESS RELEASE, DATED AUGUST 19, 2024 | 7.01,9.01 | https://www.sec.gov/Archives/edgar/data/1859199/000121390024070401 | https://www.sec.gov/Archives/edgar/data/1859199/000121390024070401/0001213900-24-070401-index.html | https://www.sec.gov/Archives/edgar/data/1859199/000121390024070401/ea021170201ex99-1_realpha.htm | EX-99.1 2 ea021170201ex99-1_realpha.htm PRESS RELEASE, DATED AUGUST 19, 2024 Exhibit 99.1 NAR Rule Changes - reAlpha’s Growth Opportunities Dublin, Ohio - (Newsfile Corp. - August 19, 2024) - reAlpha Tech Corp. (Nasdaq: AIRE) (“reAlpha” or the “Company”), a real estate technology company developing and commercializing artificial intelligence (“AI”) technologies, announces today that the changes to the National Association of Realtors’ (“NAR”) rules became effective on August 17, 2024, and reAlpha expects that this change will positively affect the business landscape for real estate technology companies that provide alternative home buying methods. These changes to the NAR rules were a result of a $418 million settlement announced in March 2024 by the NAR. Previously, home sellers were typically responsible for paying both the seller’s and buyer’s real estate agents commissions, which usually amounted to 6% of the home price. In 2023, this amounted to around $100 billion in the U.S. market. Further, buyers will now need to sign a separate agreement if they choose to use a buyer’s agent, which will result in overall higher home purchase costs for a buyer if a seller decides not to cover these costs. Considered a material change to the U.S. residential real estate industry, reAlpha anticipates that this change may open up opportunities for real estate technology companies that are able to offer commission-free home buying services, such as Claire, reAlpha’s generative AI-powered, commission-free homebuying platform. “reAlpha welcomes these game-changing industry changes,” stated Mike Logozzo, President and Chief Operating Officer of reAlpha. “We believe that the general perception is that buy-side commissions are free because previously they have been paid by the seller. Now that buy-side agents aren’t actually ‘free,’ we expect that many home buyers will turn to alternative real estate platforms and solutions offering commission-free, yet full-service experiences, such as what we have to offer through Claire.” Claire is currently available to assist homebuyers in 20 Counties in Florida. reAlpha is actively seeking expansion into new counties and states. Its capabilities are complemented and supported by a team of licensed agents all powered by reAlpha Realty, LLC (“reAlpha Realty”), reAlpha’s fully licensed and insured real estate brokerage based in Miramar, Florida. These agents are readily available, if needed, on a no-obligation and commission-free basis, to assist homebuyers using Claire. Importantly, reAlpha Realty will provide a rebate to the buyer from any buy-side commissions earned whenever offered, helping to offset a portion of the cost of the home. The development and launch of Claire aligns with reAlpha’s mission to bring the multi-trillion-dollar global real estate industry to the digital era. reAlpha envisions that, over time, Claire could set a new benchmark for efficiency, accessibility, and reliability in the home-buying process, which reAlpha believes will empower buyers to make more informed and confident decisions when purchasing a home. reAlpha expects to generate revenues by providing title services through Claire and reAlpha’s plan is to position itself to eventually generate additional revenues from value-added services required in a typical home purchase process, such as mortgage brokering and home insurance, once those services have been incorporated through future acquisitions, joint ventures or partnerships. About reAlpha Tech Corp. reAlpha Tech Corp. (Nasdaq: AIRE) is a real estate technology company developing an end-to-end commission-free homebuying platform. Utilizing the power of AI and an acquisition-led growth strategy, reAlpha’s goal is to offer a more affordable, streamlined experience for those on the journey to homeownership. For more information, visit www.realpha.com. About Claire Claire, announced on April 24, 2024, is reAlpha’s generative AI-powered, zero-commission homebuying platform. The tagline: No fees. Just keys.TM – reflects reAlpha’s dedication to eliminating traditional barriers and making homebuying more accessible and transparent. Claire’s introduction aligns with major shifts in the real estate sector after the National Association of Realtors (“NAR”) agreed to settle certain lawsuits upon being found to have violated antitrust laws, resulting in inflated fees paid to buy-side agents. This development is expected to result in the end of the standard six percent sales commission, which equates to approximately $100 billion in realtor fees paid annually. Claire offers a cost-free alternative for homebuyers by utilizing an AI-driven workflow that assists them through the home buying process. Homebuyers can use Claire’s conversational interface to guide them through every step of their journeys, from property search to closing the deal. By offering support 24/7, Claire is poised to make the homebuying process more efficient, enjoyable and cost-efficient. Claire matches buyers with their dream homes using over 400 data attributes and provides insights into market trends and property values. Additionally, Claire can assist with questions, booking property tours, submitting offers, and negotiations. Currently, Claire is under limited availability for homebuyers located in 20 counties in Florida, but reAlpha is actively seeking new MLS and brokerage licenses that will enable expansion into more U.S. states. For more information on Claire, please visit www.reAlpha.com. Forward-Looking Statements The information in this press release includes “forward-looking statements”. Forward-looking statements include, among other things, statements about the NAR rule changes; the anticipated benefits of the NAR rule changes; reAlpha’s ability to anticipate the future needs of the short-term rental market; future trends in the real estate, technology and artificial intelligence industries, generally; and reAlpha’s future growth strategy and growth rate. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “could”, “might”, “plan”, “possible”, “project”, “strive”, “budget”, “forecast”, “expect”, “intend”, “will”, “estimate”, “anticipate”, “believe”, “predict”, “potential” or “continue”, or the negatives of these terms or variations of them or similar terminology. Factors that may cause actual results to differ materially from current expectations include, but are not limited to: reAlpha’s limited operating history and that reAlpha has not yet fully developed its AI-based technologies; reAlpha’s ability to commercialize its developing AI-based technologies; whether reAlpha’s technology and products will be accepted and adopted by its customers and intended users; reAlpha’s ability to capitalize on the NAR rules change development to create more demand for its products and services; reAlpha’s ability to acquire, collaborate with and/or partner with mortgage brokerage firms and home insurance providers; reAlpha’s ability to generate revenue through its title services and any other services it may offer to Claire users in the future; the inability to maintain and strengthen reAlpha’s brand and reputation; the inability to accurately forecast demand for short-term rentals and AI-based real estate focused products; the inability to execute business objectives and growth strategies successfully or sustain reAlpha’s growth; the inability of reAlpha’s customers to pay for reAlpha’s services; changes in applicable laws or regulations, and the impact of the regulatory environment and complexities with compliance related to such environment; and other risks and uncertainties indicated in reAlpha’s U.S. Securities and Exchange Commission (“SEC”) filings. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those anticipated in the forward-looking statements. Although reAlpha believes that the expectations reflected in the forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. reAlpha’s future results, level of activity, performance or achievements may differ materially from those contemplated, expressed or implied by the forward-looking statements, and there is no representation that the actual results achieved will be the same, in whole or in part, as those set out in the forward-looking statements. For more information about the factors that could cause such differences, please refer to reAlpha’s filings with the SEC. Readers are cautioned not to put undue reliance on forward-looking statements, and reAlpha does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Investor Relations Contact investorrelations@realpha.com Media irlabs on behalf of reAlpha Fatema Bhabrawala fatema@irlabs.ca |
0001062993-25-014635:exhibit99-1.htm | 0001062993-25-014635 | 1,498,148 | 1,498,148 | Artificial Intelligence Technology Solutions Inc. (AITX) (CIK 0001498148) | ['AITX'] | 8-K | 8-K | 2025-08-19 | 2025-08-19 | 000-55079 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=000-55079&action=getcompany | 251,230,012 | EX-99.1 | EXHIBIT 99.1 | 8.01,9.01 | https://www.sec.gov/Archives/edgar/data/1498148/000106299325014635 | https://www.sec.gov/Archives/edgar/data/1498148/000106299325014635/0001062993-25-014635-index.html | https://www.sec.gov/Archives/edgar/data/1498148/000106299325014635/exhibit99-1.htm | EX-99.1 2 exhibit99-1.htm EXHIBIT 99.1 Artificial Intelligence Technology Solutions, Inc.: Exhibit 99.1 - Filed by newsfilecorp.com Exhibit 99.1 AITX's RAD-G Announces Security-Centric Proprietary 'ChatGPT-Like' Vision-Language Model for Security Industry Applications New AI Model Offers Licensing Opportunities and Real-Time Intelligence for Security Providers Detroit, Michigan, August 19, 2025 -- Artificial Intelligence Technology Solutions, Inc. (the "Company") (OTCID:AITX), a global leader in AI-driven security and productivity solutions for enterprise clients, along with its wholly owned subsidiary Robotic Assistance Devices Group, Inc. (RAD-G) (collectively, the "Companies"), today announced the development of a proprietary Vision-Language Model (VLM) purpose-built for security applications. Unlike off-the-shelf models such as ChatGPT, Claude and Meta's Llama[1], this VLM has been engineered in-house to deliver precise, real-time generative AI for action and analysis of visual and textual data specifically tuned for security professionals. The Company sees the need for a security-specific VLM that has greater transparency and control than the mass-market LLMs currently available. "Security end users and manufacturers absolutely require LLMs and VLMs where they have greater control and transparency related to generative AI's operations," said Steve Reinharz, CEO/CTO and founder of AITX and RAD-G. "After nearly a year of building the fundamental technology, we are ready to announce this effort with a prospective launch date before the end of this calendar year." A VLM is a type of artificial intelligence that can both "see" and "understand". It processes images and video along with written and spoken language at the same time. In simple terms, it is the technology that lets the Company's devices watch what is happening, interpret it in context, and then respond in methods people can easily understand. Designed for integration and licensing, this solution provides organizations with a streamlined, high-performance tool to enhance situational awareness and drive progress across the security sector. This breakthrough follows the Company's success with SARA™, RAD-G's widely acclaimed agentic AI-powered video monitoring and action solution and further extends the reach of AITX's advanced security technologies. The Companies expect to deliver this solution to the industry at prices comparable to the current pricing structure of the major LLM service providers. As development has been underway for some time this project will be launched without adding costs to existing SG&A. Because AITX and RAD-G have developed and own this VLM outright, the Companies can offer flexible licensing arrangements to security providers, integrators, and enterprise clients. This level of control ensures rapid adaptation to evolving security needs, streamlined integration with a variety of platforms, and the ability for partners to tailor the technology to their specific environments. By making the VLM available for licensing, the Company is enabling a new standard of intelligence, agility, and responsiveness in the security industry. Organizations interested in bringing the RAD-G VLM to their security operations or exploring licensing opportunities are encouraged to contact the Company for more information. As the security industry continues to move forward, AITX remains focused on providing advanced solutions that create tangible results for clients, partners, and the sector as a whole. AITX, through its primary subsidiary, Robotic Assistance Devices, Inc. (RAD), is redefining the nearly $50 billion (US) security and guarding services industry[2] through its broad lineup of innovative, AI-driven Solutions-as-a-Service business model. RAD solutions are specifically designed to provide cost savings to businesses of between 35%-80% when compared to the industry's existing and costly manned security guarding and monitoring model. RAD delivers these tremendous cost savings via a suite of stationary and mobile robotic solutions that complement, and at times, directly replace the need for human personnel in environments better suited for machines. All RAD technologies, AI-based analytics and software platforms are developed in-house. The Company's operations and internal controls have been validated through successful completion of its SOC 2 Type 2 audit, reinforcing the Company's credibility with enterprise and government clients who require strict data protection and security compliance. RAD has a prospective sales pipeline of over 35 Fortune 500 companies and numerous other client opportunities. RAD expects to continue to attract new business as it converts its existing sales opportunities into deployed clients generating a recurring revenue stream. Each Fortune 500 client has the potential of making numerous reorders over time. About Artificial Intelligence Technology Solutions (AITX) AITX is an innovator in the delivery of artificial intelligence-based solutions that empower organizations to gain new insight, solve complex challenges and fuel new business ideas. Through its next-generation robotic product offerings, AITX's RAD, RAD-R, RAD-M and RAD-G companies help organizations streamline operations, increase ROI, and strengthen business. AITX technology improves the simplicity and economics of patrolling and guard services and allows experienced personnel to focus on more strategic tasks. Customers augment the capabilities of existing staff and gain higher levels of situational awareness, all at drastically reduced cost. AITX solutions are well suited for use in multiple industries such as enterprises, government, transportation, critical infrastructure, education, and healthcare. To learn more, visit www.aitx.ai, www.radsecurity.com, www.stevereinharz.com, www.radgroup.ai, www.raddog.ai, and www.radlightmyway.com, or follow Steve Reinharz on X @SteveReinharz. CAUTIONARY DISCLOSURE ABOUT FORWARD-LOOKING STATEMENTS The information contained in this publication does not constitute an offer to sell or solicit an offer to buy securities of Artificial Intelligence Technology Solutions, Inc. (the "Company"). This publication contains forward-looking statements, which are not guarantees of future performance and may involve subjective judgment and analysis. The information provided herein is believed to be accurate and reliable, however the Company makes no representations or warranties, expressed or implied, as to its accuracy or completeness. The Company has no obligation to provide the recipient with additional updated information. No information in this publication should be interpreted as any indication whatsoever of the Company's future revenues, results of operations, or stock price. ### Doug Clemons248-270-8273doug.c@radsecurity.com ________________________ [1] References to OpenAI's ChatGPT, Anthropic's Claude, and Meta's Llama are for identification purposes only and do not imply any affiliation with or endorsement by their respective owners. All trademarks and product names mentioned are the property of their respective owners. [2] https://www.ibisworld.com/united-states/market-research-reports/security-services-industry/ |
0001628280-24-015673:exhibit991.htm | 0001628280-24-015673 | 1,577,526 | 1,577,526 | C3.ai, Inc. (AI) (CIK 0001577526) | ['AI'] | 8-K | 8-K | 2024-04-11 | 2024-04-09 | 001-39744 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-39744&action=getcompany | 24,836,893 | EX-99.1 | EX-99.1 | 5.02,9.01 | https://www.sec.gov/Archives/edgar/data/1577526/000162828024015673 | https://www.sec.gov/Archives/edgar/data/1577526/000162828024015673/0001628280-24-015673-index.html | https://www.sec.gov/Archives/edgar/data/1577526/000162828024015673/exhibit991.htm | EX-99.1 2 exhibit991.htm EX-99.1 DocumentExhibit 99.1Alan Murray Joins C3 AI Board of DirectorsREDWOOD CITY, Calif. — April 9, 2024 — C3 AI (NYSE: AI), the Enterprise AI application software company, today announced that Alan Murray, CEO of Fortune Media, will join its board of directors, effective May 1, 2024. Murray brings a wealth of experience in business journalism, leadership, and corporate strategy to the board.In his role as a board member, Murray will collaborate closely with C3 AI’s leadership team to provide strategic guidance as the company continues to grow and drive innovation in enterprise AI across industries.Thomas M. Siebel, Chairman and CEO, C3 AI, expressed his enthusiasm about Murray’s appointment, stating, “Alan Murray is a highly respected leader with a proven track record of thought leadership in management and innovation. His deep understanding of global business trends and dynamics will be invaluable as we continue to expand our market presence and help organizations harness the power of artificial intelligence at scale.”Alan Murray commented on his appointment, saying, “I am thrilled to join the board of C3 AI, a company at the forefront of the AI revolution. I have long admired C3 AI’s commitment to delivering transformative AI solutions that enable businesses to thrive in today’s rapidly evolving digital landscape. I look forward to working closely with Tom and the rest of the board to help shape C3 AI’s strategic direction and drive sustained success.”Prior to his role as CEO of Fortune Media, Murray served as Chief Content Officer at Time Inc., Editor-in-Chief of Fortune, and Executive Editor of The Wall Street Journal.About C3.ai, Inc. C3 AI is the Enterprise AI application software company. C3 AI delivers a family of fully integrated products including the C3 AI Platform, an end-to-end platform for developing, deploying, and operating enterprise AI applications, C3 AI applications, a portfolio of industry-specific SaaS enterprise AI applications that enable the digital transformation of organizations globally, and C3 Generative AI, a suite of domain-specific generative AI offerings for the enterprise.C3 AI Public Relations Edelman Lisa Kennedy 415-914-8336 pr@c3.ai Investor Relations IR@C3.ai |
0001840856-23-000042:soun-20230808ex991.htm | 0001840856-23-000042 | 1,840,856 | 1,840,856 | SOUNDHOUND AI, INC. (SOUN, SOUNW) (CIK 0001840856) | ['SOUN', 'SOUNW'] | 8-K | 8-K | 2023-08-08 | 2023-08-08 | 001-40193 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-40193&action=getcompany | 231,151,729 | EX-99.1 | EX-99.1 | 2.02,9.01 | https://www.sec.gov/Archives/edgar/data/1840856/000184085623000042 | https://www.sec.gov/Archives/edgar/data/1840856/000184085623000042/0001840856-23-000042-index.html | https://www.sec.gov/Archives/edgar/data/1840856/000184085623000042/soun-20230808ex991.htm | EX-99.1 2 soun-20230808ex991.htm EX-99.1 DocumentExhibit 99.1SoundHound AI Reports Second Quarter Revenue Increase of 42%, Adjusted EBITDA Improves 50%, Strong Increase in Cash Position, Investment in Generative AI Foundation ModelSANTA CLARA, Calif.--(BUSINESS WIRE)--SoundHound AI, Inc. (Nasdaq: SOUN), a global leader in voice artificial intelligence, today reported its financial results for the second quarter of 2023.“We mark another quarter of strong growth, with our AI powering millions of devices and services and billions of successful interactions per year. We expect our unique Generative AI integration will result in faster adoption and even greater capabilities,” said Keyvan Mohajer, CEO and Co-Founder of SoundHound. “And now, we are combining our vast amounts of experience and data to create the first of its kind, multimodal foundation model, supporting speech-to-meaning and enabling incredible new experiences.” Financial Highlights•Reported revenue was $8.8 million, an increase of 42% year-over-year •Gross margin was 79%, an improvement of approximately 1,900 basis points compared to 60% in the prior year•Operating loss was $16.4 million, an improvement of 43% year over year•Net loss was $21.9 million, an improvement of 28% year over year•Earnings per share was a net loss of ($0.10), compared to ($0.19) in the previous year •Adjusted EBITDA (non-GAAP) was a loss of ($9.9) million, a year-over-year improvement of 50% •Significantly strengthened balance sheet, the company has approximately $130 million in total cash as of June 30, 2023“In the second quarter we significantly improved our liquidity position and continued our strong growth trajectory, all while making the business more efficient,” said Nitesh Sharan, CFO of SoundHound. “We are judiciously balancing between our profit objectives and the massive growth opportunities in front of us.”Business Highlights - Second Quarter and Recent Highlights•Generative AI Foundation Model: training an innovative multi-modal foundation model supporting both audio and text, combining the power of Large Language Models with SoundHound’s Speech-to-Meaning® technology using over a million hours of field data and billions of conversations in tens of languages•Announced a significant expansion of White Castle partnership, including plans to rollout voice AI drive-thru service to over 100 lanes by the end of 2024•Strong customer adoption of Smart Ordering. Examples include: Beef O’Bradys, Kneaders bakeries, Hot Table, Naz’s Halal, Slim & Husky’s, Crust Pizza, Kumori Sushi, Noi Thai, Bozelli’s Italian Deli and Dialog Cafe, among many others, adding to the hundreds of others already signed up•Dynamic Interaction: Rolling out Dynamic Interaction with a fast growing large privately held hospitality and foodservice franchiser that operates in 30 states and has over 200 restaurants•Introduced SoundHound Chat AI for Automotive, giving drivers and passengers seamless access to a vast array of information domains enabled by complex conversational capabilities, generative AI, and live content domains•Multiple automotive brands began live pilots of SoundHound Chat AI for Automotive, with the goal of upgrading by the end of the year •Announced that SoundHound’s voice AI technology will be available on, and can be integrated with, Oracle MICROS Simphony Point-of-Sale for Restaurants•Joined with Meta on its Llama 2 announcement, partnering to support an open and responsible approach to AI innovation•Joined the Russell 2000 and 3000 Indexes•Attended National Restaurant Association conference and named by Nation’s Restaurant News as one of the most exciting companies on the show floor•Ranked among Technology Magazine’s top 10 companies advancing Natural Language Processing •Named as a finalist at Webby Awards: “Best Use of Voice Technology” Financial Results in DetailSecond Quarter 2023 Financial MeasuresThree Months Ended(thousands, except per share data)June 30, 2023June 30, 2022Change in %Cumulative bookings backlog1$339,207 $283,431 20 %Revenues$8,751 $6,152 42 %Operating expenses:Cost of revenues$1,830 $2,488 (26)%Sales and marketing5,078 4,370 16 %Research and development11,736 18,862 (38)%General and administrative6,377 9,362 (32)%Restructuring166 — #DIV/0!Total operating expenses$25,187 $35,082 (28)%Operating loss$(16,436)$(28,930)(43)%Net loss$(21,932)$(30,668)(28)%Net loss per share$(0.10)$(0.19)$0.09 Adjusted EBITDA2$(9,926)$(20,015)(50)%1)Cumulative bookings backlog is prior quarter end balance plus new bookings in the current quarter minus associated revenue recognized. Bookings are derived from committed customer contracts and reflect revenue expected to be realized over the life of such contracts.2)Please see table below for a reconciliation from GAAP to non-GAAP.Summary of Liquidity and Cash FlowsThe company’s total cash was approximately $130 million at June 30, 2023. In April, SoundHound secured $100 million of minimally dilutive debt financing. The company also raised $43 million through its committed equity facility in the second quarter. Condensed Cash Flow StatementSix Months Ended(thousands)June 30,2023June 30,2022Cash flows:Net cash used in operating activities$(33,651)$(46,767)Net cash used in investing activities(293)(982)Net cash provided by financing activities154,008 90,167 Net change in cash and cash equivalents$120,064 $42,418 Business Outlook 2023SoundHound continues to expect 2023 revenue to be in a range of $43 to $50 million. The company also continues to expect to be adjusted EBITDA positive in the fourth quarter of 2023.Additional InformationSoundHound expects to file its Form 10-Q for second quarter 2023, by August 14, 2023. For more information please see the company’s SEC filings which can be obtained on the company’s website at investors.soundhound.com.Conference Call and WebcastKeyvan Mohajer, Co-Founder and CEO, and Nitesh Sharan, CFO will host a live audio conference call and webcast today at 2:30 p.m. Pacific Time/5:30 p.m. Eastern Time. A live webcast will also be accessible at investors.soundhound.com and a replay of the webcast will be available for 90 days following the session. 2About SoundHoundSoundHound (Nasdaq: SOUN), a global leader in conversational intelligence, offers voice AI solutions that let businesses offer incredible conversational experiences to their customers. Built on proprietary technology, SoundHound’s voice AI delivers best-in-class speed and accuracy in numerous languages to product creators across automotive, TV, and IoT, and to customer service industries via groundbreaking AI-driven products like Smart Answering, Smart Ordering, and Dynamic Interaction™, a real-time, multimodal customer service interface. Along with SoundHound Chat AI, a powerful voice assistant with integrated Generative AI, SoundHound powers millions of products and services, and processes billions of interactions each year for world class businesses.Forward Looking StatementsThis press release contains forward-looking statements, which are not historical facts, 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. In some cases, you can identify forward-looking statements by the use of words such as “may,” “could,” “expect,” “intend,” “plan,” “seek,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue,” “likely,” “will,” “would” and variations of these terms and similar expressions, or the negative of these terms or similar expressions. These forward-looking statements include, but are not limited to, statements concerning our expected financial performance, our ability to implement our business strategy and anticipated business and operations, including our ability to improve our Generative AI Foundation Model, expand our White Castle partnership and roll out our AI drive thru service, roll out our Dynamic Interaction, Chat AI for Automotive, and expand the number of platforms on which our voice AI technology will be available, the potential utility of and market for our products and services, our ability to achieve revenue from our bookings backlog, guidance for financial results for 2023 and our ability to timely file our quarterly report on Form 10-Q. Such forward-looking statements are necessarily based upon estimates and assumptions that, while considered reasonable by us and our management, are inherently uncertain. As a result, readers are cautioned not to place undue reliance on these forward-looking statements. Our actual results may differ materially from those expressed or implied by these forward-looking statements as a result of risks and uncertainties impacting SoundHound’s business including, our ability to successfully launch and commercialize new products and services and derive significant revenue, our ability to develop the bespoke products and services required under the contracts included in our bookings backlog, including, but not limited to, our ability to convert customer adoption of Smart Ordering into realized revenue, our ability to predict or measure supply chain disruptions at our customers, our market opportunity and our ability to acquire new customers and retain existing customers, the timing and impact of our growth initiatives, level of product service failures that could lead our customers to use competitors’ services, the impact of our announced restructuring, our ability to predict direct and indirect customer demand for our existing and future products, our ability to hire, retain and motivate employees, the effects of competition, including price competition within our industry segment. technological, regulatory and legal developments that uniquely or disproportionately impact our industry segment, developments in the economy and financial markets and those other factors described in our risk factors set forth in our filings with the Securities and Exchange Commission from time to time, including our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. We do not intend to update or alter our forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.Non-GAAP Measures of Financial PerformanceTo supplement the company’s financial statements, which are presented on the basis of U.S. generally accepted accounting principles (GAAP), the following non-GAAP measure of financial performance is included in this release: adjusted EBITDA. We define Adjusted EBITDA as the company’s GAAP net loss excluding (i) interest and other expense, net, (ii) depreciation and amortization expense, (iii) income taxes, (iv) stock-based compensation, and (v) restructuring expense. A reconciliation of GAAP to this adjusted non-GAAP financial measure is included below. When analyzing the company's operating results, investors should not consider non-GAAP measures as substitutes for the comparable financial measures prepared in accordance with GAAP.3Reconciliation of GAAP Net Loss to Non-GAAP Adjusted EBITDAThree Months Ended(thousands)June 30,2023June 30,2022GAAP net profit (loss)$(21,932)$(30,668)Adjustments:Interest and other expense, net$5,079 $1,349 Income taxes417 389 Depreciation and amortization703 1,052 Stock-based compensation5,641 7,863 Restructuring166 — Adjusted EBITDA1$(9,926)$(20,015)1)Includes other income/(expense) of $0.5 and $0.2 million for the three months ended June 30, 2023 and 2022, respectively.4 |
0001213900-23-042515:ea179171ex99-1_faraday.htm | 0001213900-23-042515 | 1,805,521 | 1,805,521 | FARADAY FUTURE INTELLIGENT ELECTRIC INC. (FFIE, FFIEW) (CIK 0001805521) | ['FFIE', 'FFIEW'] | 8-K | 8-K | 2023-05-24 | 2023-05-23 | 001-39395 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-39395&action=getcompany | 23,950,493 | EX-99.1 | PRESS RELEASE OF THE COMPANY, DATED MAY 23, 2023 | 7.01,9.01 | https://www.sec.gov/Archives/edgar/data/1805521/000121390023042515 | https://www.sec.gov/Archives/edgar/data/1805521/000121390023042515/0001213900-23-042515-index.html | https://www.sec.gov/Archives/edgar/data/1805521/000121390023042515/ea179171ex99-1_faraday.htm | EX-99.1 2 ea179171ex99-1_faraday.htm PRESS RELEASE OF THE COMPANY, DATED MAY 23, 2023 Exhibit 99.1 Faraday Future Launches Survey to Solicit Opinions on Ticker Symbol Change from FFIE to FFAI Los Angeles, CA (May 23, 2023) -- Faraday Future Intelligent Electric Inc. (Nasdaq: FFIE) (“Faraday Future”, “FF” or “Company”), a California-based global shared intelligent electric mobility ecosystem company, today announced that it is seeking public opinion through an online survey on changing FF’s stock ticker from “FFIE” to “FFAI.” On May 2nd of this year, FF announced its Generative AI Product Stack to the public. The product stack combines FF’s foundational capabilities such as the Company’s computing platform, advanced operating system, ultra-fast internet connectivity, AI and natural language processing abilities, multiple displays, with generative AI capability designed to give extraordinary abilities to users. FF is one of the first automotive manufacturers to integrate and demonstrate generative AI capabilities in a vehicle. Vehicle I.A.I (Internet, Autonomous Driving, Intelligence) and artificial intelligence research and development have always been FF’s core strategic focus. Today, these research and development achievements have become core highlights of the Company’s flagship FF 91. The Company intends to announce more details regarding its AI strategy at its FF 91 Final Launch & Faraday Future 2.0 event, set to occur on May 30th. The “FFAI” ticker was the Company’s first choice when FF went public in 2021 on Nasdaq, but it was not available then. The Company recently learned that “FFAI” has become available again and management feels this name more accurately aligns with the core vision for the Company. Co-creation and sharing have always been the core principles upheld by FF, therefore the Company would like to solicit opinions from all stakeholders, enthusiasts, and other interested parties on whether to change the stock ticker to FFAI. If you would like to express your opinion on this matter, please fill out the survey in the following link: US http://app-us.ff.com/ff-v3/forms/10ABC9?lang=en-US CN http://app-cn.faradayfuturecn.com/ff-v3/forms/10ABCS?lang=zh-CN We will consolidate all opinions and submit proposed recommendations to the board of directors for their reference before making the final decision. As intelligent electric vehicles become super robots, the driving experience and digital cockpit will be fully intelligent. FF believes AI will become the core competitiveness of the future mobility ecology and redefine the usage scenarios of future mobility products. As one of the world’s first intelligent electric vehicle manufacturers, FF has been committed to the research and development of AI technology platforms, applied to autonomous driving platforms and the third intelligent internet space. Users can preorder an FF 91 vehicle via the FF Intelligent App or through our website (English): https://www.ff.com/us/preorder/ or (Chinese): https://www.ff.com/cn/preorder/ Download the new FF Intelligent App (English): https://apps.apple.com/us/app/id1454187098 or https://play.google.com/store/apps/details?id=com.faradayfuture.online, (Chinese): http://appdownload.ff.com ABOUT FARADAY FUTURE FF is the pioneer of the Ultimate Intelligent TechLuxury ultra spire market in the intelligent EV era, and a disruptor of the traditional ultra-luxury car industry. FF is not just an EV company, but also a software-driven company of intelligent internet AI product. FOLLOW FARADAY FUTURE: https://www.ff.com/ https://www.ff.com/us/mobile-app/ https://twitter.com/FaradayFuture https://www.facebook.com/faradayfuture/ https://www.instagram.com/faradayfuture/ www.linkedin.com/company/faradayfuture/ FORWARD LOOKING STATEMENTS This press release “forward looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. When used in this press release, the words “estimates,” “projected,” “expects,” “anticipates,” “forecasts,” “plans,” “intends,” “believes,” “seeks,” “may,” “will,” “should,” “future,” “propose” and variations of these words or similar expressions (or the negative versions of such words or expressions) are intended to identify forward-looking statements. These forward-looking statements, which include statements regarding the Company’s ability to integrate generative AI capabilities in a vehicle and the Company’s ability to continue its research and development of AI technology platforms as applied to autonomous driving platforms and the third intelligent internet space, and the Company’s ability to meet its future production and delivery plan, and the development and success of Mission Farad and the Company’s co-creation and benefits co-sharing program, are not guarantees of future performance, conditions or results, and involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside the Company’s control, that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements. Important factors, among others, that may affect actual results or outcomes include whether the FF Top Holdings LLC Shareholder Agreement complies with Nasdaq listing requirements, including Nasdaq Listing Rule 5640 regarding voting rights, the market performance of the Company’s Common Stock, the Company’s ability to regain compliance with the Nasdaq listing requirements and the Company’s ability to execute definitive documentation in connection with and/or satisfy the conditions precedent and close on the various financings previously disclosed by the Company and anticipated additional financings, the failure of any of which could result in the Company seeking protection under the Bankruptcy Code; the Company’s ability to amend its certificate of incorporation to permit sufficient authorized shares to be issued in connection with the Company’s existing and contemplated financings; the ability of the Company to agree on definitive documents to effectuate the non-binding City of Huanggang Framework Agreement; the Company’s ability to remain in compliance with its public filing requirements under the Securities Exchange Act of 1934, as amended, and Nasdaq listing requirements and to continue to be listed on Nasdaq (including following the execution of the Shareholder Agreement); the outcome of the Securities and Exchange Commission (the “SEC”) investigation relating to the matters that were the subject of the Special Committee investigation and other litigation involving the Company; the Company’s ability to execute on its plans to develop and market its vehicles and the timing of these development programs (including timely receipt of parts and completion of crash tests); the Company’s estimates of the size of the markets for its vehicles and cost to bring those vehicles to market; the rate and degree of market acceptance of the Company’s vehicles; the success of other competing manufacturers; the performance and security of the Company’s vehicles; potential litigation involving the Company; the result of future financing efforts and general economic and market conditions impacting demand for the Company’s products; potential cost, headcount and salary reduction actions may not be sufficient or may not achieve their expected results; and the ability of the Company to attract and retain employees. The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties described in the “Risk Factors” section of the Company’s registration statement on Form S-1 filed with the SEC on May 4, 2023, the “Risk Factors” section of the Company’s Form 10-Q filed with the SEC on May 10, 2023, the “Risk Factors” section of the Company’s Annual Report on Form 10-K filed with the SEC on March 9, 2023, and other documents filed by the Company from time to time with the SEC. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and the Company does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Investors (English): ir@faradayfuture.com Investors (Chinese): cn-ir@faradayfuture.com Media: john.schilling@ff.com ### |
0001683168-23-003132:radnet_ex9902.htm | 0001683168-23-003132 | 790,526 | 790,526 | RadNet, Inc. (RDNT) (CIK 0000790526) | ['RDNT'] | 8-K | 8-K | 2023-05-11 | 2023-05-09 | 001-33307 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-33307&action=getcompany | 23,907,918 | EX-99.2 | TRANSCRIPT OF CONFERENCE CALL | 2.02,9.01 | https://www.sec.gov/Archives/edgar/data/790526/000168316823003132 | https://www.sec.gov/Archives/edgar/data/790526/000168316823003132/0001683168-23-003132-index.html | https://www.sec.gov/Archives/edgar/data/790526/000168316823003132/radnet_ex9902.htm | EX-99.2 3 radnet_ex9902.htm TRANSCRIPT OF CONFERENCE CALL Exhibit 99.2 1 C O R P O R A T E P A R T I C I P A N T S Mark Stolper, Executive Vice President and Chief Financial Officer Dr. Howard Berger, MD, President and Chief Executive Officer C O N F E R E N C E C A L L P A R T I C I P A N T S Brian Tanquilut, Jefferies John Ransom, Raymond James Larry Solow, CJS Securities P R E S E N T A T I O N Operator Good morning, and welcome to RadNet, Inc. First Quarter 2023 Financial Results Call. All participants will be in a listen-only mode. (Operator Instructions). Please note, this event is being recorded. I would now like to turn the conference over to Mark Stolper, Executive Vice President and Chief Financial Officer at RadNet, Inc. Please go ahead. Mark Stolper Thank you. Good morning, ladies and gentlemen, and thank you for joining Dr. Howard Berger and me today to discuss RadNet’s first quarter 2023 results. 2 Before we begin today, we'd like to remind everyone of the Safe Harbor statement under the Private Securities Litigation Reform Act of 1995. This presentation contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Specifically, statements concerning anticipated future financial and operating performance, RadNet’s ability to continue to grow the business by generating patient referrals and contracts with radiology practices, recruiting and retaining technologists, receiving third-party reimbursement for diagnostic imaging services, successfully integrating acquired operations, generating revenue and Adjusted EBITDA for the acquired operations as estimated among others are forward-looking statements within the meaning of the Safe Harbor. Forward-looking statements are based on Management's current preliminary expectations and are subject to risks and uncertainties, which may cause RadNet’s actual results to differ materially from the statements contained herein. These risks and uncertainties include those risks set forth in RadNet’s reports filed with the SEC from time to time, including RadNet's Annual Report on Form 10-K for the year ended December 31, 2022. Undue reliance should not be placed on forward-looking statements, especially guidance on future financial performance, which speaks only as of the date it is made. RadNet undertakes no obligation to update publicly any forward-looking statements to reflect new information, events or circumstances after the date they were made or to reflect the occurrence of unanticipated events. With that, I'd like to turn the call over to Dr. Berger. Dr. Howard Berger Thank you, Mark. Good morning, everyone, and thank you for joining us today. On today's call, Mark and I plan to provide you with highlights from our first quarter 2023 results, give you more insight into factors which affected this performance and discuss our future strategy. After our prepared remarks, we will open the call to your questions. I'd like to thank all of you for your interest in our company and for dedicating a portion of your day to participate in our conference call this morning. Let's begin. I am very pleased with our performance in the first quarter. It was the strongest first quarter in our company's history with record revenue and EBITDA. Relative to last year's first quarter, our core imaging center segment revenue increased 13.9% and imaging center EBITDA increased 26.2% from last year's first quarter. This strong performance resulted in improved EBITDA margins increasing from 12.2% in the first quarter of 2022 to 13.6% in the first quarter of 2023, an improvement of 140 basis points. This improvement was the combination of strong volumes, careful management of expenses, and an improving labor market. With respect to volumes, we are experiencing heavy demand in virtually all of our markets. Aggregate procedural volumes increased 14.0% and same center procedural volumes increased 9.3% compared with the first quarter of 2022. This performance is the result of a combination of several factors. First, the aging and growing population in our markets is driving increasing utilization for diagnostic imaging services. As people age, we rely on diagnostic imaging with greater frequency. On average, for example, senior and Medicare patients utilize imaging two to three times more frequently than patients under the age of 65. As baby boomers continue to age and life expectancy continues to increase, we expect this utilization trend to continue. 3 Second, technology in our industry continues to evolve and improve, creating additional medical indications for ordering diagnostic imaging procedures. Advances in MRI technology and post-processing software have shortened scanning times and improved image quality. New contrast materials and radioactive pharmaceuticals are driving novel applications such as PMSA or prostate-specific membrane antigen, PET scans, and Alzheimer's imaging. Lastly, and perhaps most significant, we are benefiting from a shift in sight of care. More and more outpatient volumes are being shifted from hospital-based facilities towards free-standing outpatient facilities where the cost to patients and the insurance companies are substantially less. Not only is the cost lower, but we strongly believe the quality and the patient experience is improved in well-run outpatient facilities like the ones we operate. We do not see an end in sight to these industry trends that are driving procedural volumes and believe that these trends will continue to help drive our consistent same-store performance for years to come. On the labor front, we are experiencing some stability and improvement. We have been more successful in filling open positions and have been reducing our reliance on expensive temporary staffing services and overtime hours of our existing team members. While attracting new talent and retaining our existing employee base remains challenging, we are no longer being plagued by service interruptions from staffing issues like those we faced for most of last year. We have seen a 12% reduction in open positions since the end of the fourth quarter of last year. While hiring and retaining technologists remains our biggest challenge, we have been refining and increasing our visibility in the marketplace by repositioning our brand, utilizing our scale and the industry leadership to better leverage partnerships with local trade schools and colleges, and have been adjusting compensation practices to meet the demands of the marketplace. We are engaging in direct mailing campaigns, partnering with accrediting bodies to identify qualified candidates, hosting open houses and hiring events, and instituting incentives such as referral payments inside and on bonuses. There has been no magic formula for success. However, these grassroot efforts are slowly paying dividends. As a result of the strong performance in this year's first quarter and the confidence we are feeling from the remainder of the year, we have elected to increase key financial guidance levels for 2023. Though we remain vigilant about the economic environment, labor shortages, supply chain disruptions, inflation, and COVID-19, we are executing on opportunities to expand operations in all of our markets, both organically and through new acquisitions and joint ventures, resulting in what we believe will be stronger results for the year than originally projected. Mark in his prepared remarks will review the increases we've made to our revenue and EBITDA guidance levels upon releasing our financial results this morning. Twenty twenty-three will also be a year of reinvestment in our business to accelerate future growth. We currently have 13 de novo facilities in various stages of development, which will open for operations in the second half of 2023 and throughout 2024. These facilities are located in markets where we have patient backlogs, require additional capacity or in locations where we currently lack access points to service identified patient populations. Six of these de novo facilities are scheduled to open in the second half of 2023 and early 2024, and another seven facilities should be producing revenue in the second half of next year. While these projects are requiring us to make capital investments above our normal spending, we are confident that these centers will be material contributors to our long-term performance and growth. We continue to grow our hospital and health system joint venture business. Currently, 121 of our 363 centers or 33% are held within health system partnerships. Our partners are some of the strongest and most successful systems in our geographies. Partners include RWJBarnabas, MemorialCare, Dignity Health, LifeBridge, University of Maryland Medical System, Adventist, Cedars-Sinai and others. These and other health systems are seeking solutions for long-term strategies around outpatient imaging and have recognized that cost effective and efficient free-standing centers will continue to capture market share from hospitals as payers and patients migrate their site of care towards lower cost high quality solutions. 4 We are in the process of expanding our joint venture business with both existing as well as new health systems. We expect that by year end, our joint venture centers could represent closer to 40% of our total center count, and we believe that we could reach 50% in the coming years. Our hospital and health system partners have been instrumental in increasing our procedural volumes through influence on their physician partners to send patients into our jointly owned centers, which we otherwise might not have seen. Additionally, our joint venture partners are helpful in providing support if needed in establishing long-term equitable outpatient reimbursement rates for our services. We continue to make progress with our artificial intelligence initiatives. Our Enhanced Breast Cancer Diagnostic Program in mammography offering continues its rollout within our East Coast markets. We are refining the program as we learn from our early rollouts. We are testing different levels of pricing, various service offerings, new marketing collateral, and local market sales and marketing strategies. While there is much work to be done to optimize the program, we are experiencing positive results. We are identifying cancers that otherwise would not have been found until at later stages and more advanced stages. Since the inception of the EBCD program, we have diagnosed over 300 breast cancers that without the intervention of artificial intelligence would have gone undetected. Detecting cancer sooner allows for better patient outcomes through earlier treatment and intervention, and reduces cost to the healthcare delivery system. Furthermore, we are reducing callback rates for patients through the use of artificial intelligence by being more definitive with the initial screening exam. This saves time and money for our patients and their insurance companies and enables our radiologists to be more efficient as well as reducing stress on our patients. We are currently experiencing approximately 20% adoption rate from our mammography screening patients and believe we will see greater uptake as we get better at communicating and marketing the benefits to our patients and their referring physicians. The recognition our centers are receiving from offering this unique program has benefited our local branding and distinguished our quality from our competitive centers who do not offer similar capabilities. We expect to see an increase in this business throughout the remainder of 2023 and into 2024 and look forward to providing updates each quarter with our progress. Consistent with our efforts throughout the pandemic, we continued to carefully manage our liquidity and financial leverage. Despite having front-loaded capital expenditures in the first quarter, which included liberal spending to fund our de novo centers in development at first quarter’s end excluding the losses in our artificial intelligence reporting segment, our leverage was 3.4 times net debt to trailing 12 months EBITDA. Our liquidity also remained strong. We ended the first quarter with $90.8 million of cash and we were undrawn on our $195 million revolving credit facility. Our day sale outstanding at March, 2023 was 35.6 days, which we believe to be one of the best in the industry. While we are committed to growing and expanding our business, we will also continue to follow a methodical and disciplined approach to managing our financial leverage. Our low leverage, lower cost of capital, and strong liquidity relative to many other industry operators position us to capitalize on acquisition opportunities. With the significant rise in interest rates over the past 12 months, along with the challenging labor market, there are many struggling operators in our industry. Some of these operators will be unable to compete for acquisitions that may arise, while others may be targets of consolidation themselves. We remain patient and disciplined in our approach to acquisition, focused first on our core markets where we bring unique synergies and cost savings. While we are interested in expanding our geographic reach with larger platform acquisitions and new geographies, those acquisitions must come with scale, have a path to organic growth and be actionable without causing our leverage to increase materially. At this time, I'd like to turn the call back over to Mark to discuss some of the highlights of our first quarter 2023 performance. When he is finished, I will make some closing remarks. 5 Mark Stolper Thank you, Howard. I'm now going to briefly review our first quarter 2023 performance and attempt to highlight what I believe to be some material items. I will also give some further explanation of certain items in our financial statements as well as provide some insights into some of the metrics that drove our first quarter performance. I will also provide an update to our 2023 financial guidance levels, which were released in conjunction with our 2022 year-end results in March. In my discussion, I will use the term Adjusted EBITDA, which is a non-GAAP financial measure. The Company defines Adjusted EBITDA as earnings before interest, taxes, depreciation and amortization, and excludes losses or gains on the disposal of equipment, other income or loss, loss on debt extinguishments and non-cash equity compensation. Adjusted EBITDA includes equity earnings in unconsolidated operations and subtracts allocations of earnings to non-controlling interests in subsidiaries and is adjusted for non-cash or extraordinary and one-time events taking place during the period. A full quantitative reconciliation of Adjusted EBITDA to net income or loss attributed to RadNet, Inc. common shareholders is included in our earnings release. With that said, I'd now like to review our first quarter 2023 results. For the first quarter of 2023, RadNet reported revenue from its imaging center reporting segment of $388.4 million and Adjusted EBITDA, excluding losses from the AI reporting segment of $52.7 million. Revenue increased $47.3 million or 13.9% and Adjusted EBITDA excluding losses from the AI reporting segment increased $10.9 million or 26.2%. Including our AI reporting segment, revenue of $2.1 million, revenue was $390.6 million in the first quarter of 2023, an increase of 14.3% from $341.8 million in last year's first quarter. Unadjusted for AI reporting segment Adjusted EBITDA losses of $4.5 million in the first quarter of 2023 and $3.6 million in the first quarter of 2022, Adjusted EBITDA for the first quarter of 2023 was $48.2 million as compared with $38.1 million in the first quarter of last year. Net loss for the first quarter of 2023 was $21 million as compared with diluted net income of $3 million for the first quarter of ‘22. Net loss per share for the first quarter of 2023 was negative $0.36 compared with a diluted net income per share of $0.05 in the first quarter of 2022. Based upon a weighted average number of diluted shares outstanding of 57.7 million shares in 2023 and 56.4 million shares in 2022. There were a number of unusual or one-time items impacting the first quarter, including the following: $4.1 million of non-cash loss from interest rate swaps; $959,000 expense related to leases for our de novo facilities under construction that have yet to open their operations; $1.6 million of non-cash increase to contingent consideration related to completed acquisitions; $719,000 expense related to the revaluation of holdbacks related to completed acquisitions, and $7.6 million of net pre-tax expenses related to our AI division. Adjusting for the above items, adjusted loss from imaging center reporting segment was $4.7 million, and diluted adjusted loss per share was negative $0.08 during the first quarter of ‘23. This compares with adjusted loss from imaging center operations reporting segment of $7.6 million and diluted adjusted loss per share of negative $0.13 during the first quarter of 2022. Also, affecting net income in the first quarter of 2023 were certain non-cash expenses and unusual items, including the following: $12.2 million of non-cash employee stock compensation expense resulting from the vesting of certain options and restricted stock; $134,000 of severance paid in connection with headcount reductions related to cost savings initiatives, and $746,000 of non-cash amortization of deferred financing costs and loan discounts related to financing fees paid as part of our existing credit facilities. For the first quarter of 2023, as compared with the prior year's first quarter, MRI volume increased 16.7%, CT volume increased 16.8%, and PET/CT volume increased 20.9%. Overall volume, taking into account routine imaging exams inclusive of X-ray, ultrasound, mammography, and all other exams increased 14% over the prior year's first quarter. 6 On a same-center basis, including only those centers which were part of RadNet for both the first quarters of 2023 and 2022. MRI volume increased 11.9%. CT volume increased 10.6% and PET/CT volume increased 20.5%. Overall same-center volume, taking into account routine imaging exams inclusive of X-ray, ultrasound, mammography and other exams increased 9.3% over the prior year same quarter. In the first quarter of 2023, we performed 2,504,635 total procedures. The procedures were consistent with our multi-modality approach, whereby 75.5% of all the work we did by volume was from routine imaging. Our procedures in the first quarter of 2023 were as follows: 369,556 MRIs as compared with 316,784 MRIs in the first quarter of 2022; 229,379 CTs as compared with 196,461 CTs in the first quarter of 2022; 14,126 PET/CTs as compared with 11,683 PET/CTs in the first quarter of ‘22 and 1,891,574 routine imaging exams compared with 1,672,257 of all these exams in the first quarter of 2022. Overall GAAP interest expense for the first quarter of 2023 was $15.7 million. This compares with GAAP interest expense in the first quarter of 2022 of $11.6 million. The higher interest expense resulted from an almost 500 basis point increase on our unswapped debt exposure as well as the additional debt we have at our NJIN, New Jersey Imaging Network joint venture from its refinancing transaction last year. With regards to our balance sheet, as of March 31, 2023, unadjusted for bond and term loan discounts, we had $789.2 million of net debt, which is our total debt at par value less our cash balance. This compares with $693.8 million of net debt at March 31, 2022. Note that this debt balance includes New Jersey Imaging Network's debt of $148.1 million for which RadNet is neither a borrower nor guarantor. As of March 31, 2023, we were undrawn on our $195 million revolving line of credit and had a cash balance of $90.8 million. At March 31, 2023, our accounts receivable balance was $176.4 million, an increase of $10 million from year-end 2022. The increase in accounts receivable is mainly the result of the increase in our procedural volumes and revenue, particularly during the second half of March, as well as the normal first quarter effect on cash collections from the resetting of patient deductibles each year in January. Our days sales outstanding or DSO remains near the lowest levels of our company's history at 35.6 days at March 31, 2023. Through March 31, 2023, we had capital expenditures, net of proceeds of the sale of imaging equipment of $75.7 million. This total includes $19.8 million spent under capital leases and the remainder spent in cash. Additionally, the total includes approximately $38 million spent to purchase imaging equipment already in service, which we were renting on operating leases. Note that each year we front load the majority of our capital decisions into the first part of the year. CapEx is disproportionately higher in the first half of the year. At this time, I'd like to update and revise our 2023 financial guidance levels, which we released in conjunction with our fourth quarter and year-end 2022 results. We amend our previously announced guidance levels as follows: for revenue, we increase both the low end and the top end of our guidance level by $25 million to $1.550 billion to $1.600 billion; for Adjusted EBITDA, we increase the bottom and the top ends of our previously announced guidance ranges by $5 million to $225 million to $235 million; for capital expenditures, we're increasing our low end and high-end ranges by $5 million to $110 million to $120 million for the year; for cash paid for interest, we're increasing the low and high ends of our range by $10 million to $45 million to $50 million; and for free cash flow generation, we're decreasing our guidance ranges at the low end and the high end by $5 million to $65 million to $70 million. For our artificial intelligence segment, our guidance levels remain unchanged. We've increased our guidance ranges for revenue and Adjusted EBITDA to reflect the first quarter's strong financial results as compared with our original budget. Though we remain vigilant about the economic environment, supply chain disruptions, inflation, and the possibility of further variants of COVID-19, we have opportunities to expand our operations in all of our markets, both organically and through new acquisitions and joint ventures. We are also increasing our guidance levels for cash interest expense and capital expenditures to account for both the rising cost of interest on that portion of our debt, which is not subject to our interest rate swaps, and to fund the completion of certain of our de novo facilities scheduled to open during the remainder of 2023 and the first half of 2024. 7 With respect to Medicare reimbursement for 2023, there's nothing to report at this time. As is typical each year, we are expecting CMS to release a preliminary rate schedule sometime in June or July. At which time we will analyze CMS’s proposal and our industry’s lobbying group, the Association for Quality Imaging, will provide CMS our industry's feedback. At the time of our second quarter financial results call, we will be in a position to comment on CMS's proposal and its impact, if any, upon RadNet’s future results. I'd now like to turn the call back to Dr. Berger, who will make some closing remarks. Dr. Howard Berger Thank you, Mark. As we move towards the midpoint of 2023, we are excited about the initiatives we have for the remainder of the year. The demand for diagnostic imaging is greater than ever. Technology embedded in state-of-the-art imaging equipment continues to improve. Contrast materials and radioactive pharmaceuticals for PET scanning are being advanced. Significant progress has been made in post-processing software. These factors and others are driving increased clinical indications for ordering diagnostic imaging procedures. As a result, our centers are extremely busy and we are pursuing expansion opportunities in all of our core markets through a focus on same-center performance, de novo centers, health system partnerships and tuck-in acquisitions. To meet the heavy demand for our services, we are investing substantial capital to continue construction of de novo facilities in core markets. Our acquisition pipeline remains active for tuck-in acquisitions in our core markets, and we are in various stages with new potential health system partnerships as well as expanding existing joint ventures. In addition, we are advancing our AI strategy and now have algorithms to address three of the top four most prevalent cancers. We expect to have tools that lower the cost and increase the accuracy and early detection of cancer diagnosis in a form that can be created to influence widespread population health initiatives. While this artificial intelligence can serve to lower our costs of delivering our services, more importantly, artificial intelligence could create substantial new revenue streams for our company. We have already begun deploying our breast artificial intelligence and anticipate accelerating its growth for the remainder of 2023. Furthermore, in addition to this clinically focused artificial intelligence, we believe artificial intelligence could have a material impact in almost every facet of our business processes in the areas such as patient scheduling, clinical reporting, medical coding, sales, marketing and workflow improvement with the adoption of Generative AI through ChatGPT algorithms. In conclusion, we are excited and enthusiastic about the opportunities that lie ahead for RadNet, and we look forward to updating you further in the coming quarters regarding our progress. Operator, we are now ready for the question-and-answer portion of the call. Operator Thank you. (Operator Instructions). Our first question comes from Brian Tanquilut with Jefferies. Please go ahead. 8 Brian Tanquilut Hey, good morning, guys. Congrats on a really, really solid quarter. I guess, Mark, I'll start or maybe for Howard too, volumes are obviously strong. I see the strength also specifically in advanced imaging. Is this the proof that side of service shift is really accelerating now? I know, Howard, you said that this is something that you expect will continue. Maybe without going to like a long-term guidance situation, any color, any way you want us to be thinking about kind of like how we should be modeling organic growth maybe on a two-to-three-year horizon? Thanks. Dr. Howard Berger Good morning, Brian. Thank you. Yes, I think that part of the significant increase that we had in our first quarter volume, while it's due to many factors, given the conversations that we're having with payors, we see a definite and more active effort on the part of virtually every commercial payor trying to shift business away from hospitals. I might add that I don't think this is just an issue about reimbursement differences. I think it's also the preference of patients who prefer the more stable and less complicated environment of outpatient imaging centers to enhance a patient experience. I think patients are becoming more aware of the difference both in the quality of service as well as the cost, which is being made abundantly clear by the commercial payors. I think what portion of increases from that, I don't know. I think this is a slow process because it still requires interaction with the referring physicians who by and large control for the most part, where patients are directed for their outpatient imaging. But clearly, these efforts on the part of commercial payors through plan design initiatives, which we're seeing more and more to encourage the patients into outpatient centers is being accelerated. I expect this process to continue for quite some time, both because it'll be a slow process, as one that is almost inexorable. I think the continued growth of our joint venture strategy with our hospital systems is indicative of the fact that they recognize that this is an inevitable change, and by partnering with RadNet, they provide themselves an outpatient strategy to at least benefit from that transition of those services, as well as bringing them into an environment, which has better cost controls on managing these patients rather than in hospital settings. Mark Stolper I would just add to that, Brian, that it's not only just the payors—the differential in pricing and the plan design that the payors are instituting that might have different copays for hospital-based imaging versus freestanding outpatient imaging. But they're also doing it through preauthorization processes where today, most utilization is managed either internally with preauthorization processes at the payors or through third-party services such as radiology benefit managers. Once the preauthorization occurs, they are directing the patients to the lower cost sites of care, meaning the freestanding centers and the patients also—we've heard a lot of anecdotal stories from patients about how appreciative they are in coming into the outpatient settings because many of them—and more and more over the last five, 10 years, many more patients have elected to go into higher deductible programs. When the patients themselves are shouldering more of the burden of their healthcare costs, they really experience the benefit of coming into outpatient freestanding settings where the cost could be anywhere between half the price and a quarter of the price. The patients are over time—and this is part of the slow process that Dr. Berger just mentioned—the patients are getting educated over time as to the differential in the pricing discrepancy just as much as the payors have been become educated on that. Brian Tanquilut Got it. Then maybe shifting to AI, obviously, a key emerging part of your story. Maybe Howard, if you can give us some color or updates on where things stand. I know you've had some announcements and some FDA approvals recently. But also, in your prepared remarks, you touched on business processes, and that's kind of new to me. Any color or any updates you can share would be great? Thank you. 9 Dr. Howard Berger Well, good question, Brian. I think I'll touch on it somewhat in this close call—earnings call. But we'll have more to say about it in the very near future. But it's clear that artificial intelligence is on everybody's lips and minds these days. I think despite the fact that maybe there are some aspects about artificial intelligence that people are concerned and leery about inside healthcare and particularly in the imaging space, I see it as an evolutionary development in the delivery of radiology and imaging services. Really it falls into two different categories that we’re broaching. One which we've already made substantial progress in, and that is clinical applications, particularly in the field of cancer screening with breast, lung, and prostate for which we believe much like mammography, there will be screening tools for these three cancers that will be used far more regularly in the future as we and others roll out opportunities for both men and women to get these tests and diagnose cancer at an earlier stage, which ultimately leads to a better outcome for the patients as well as the healthcare system. As we noted recently, we had another FDA approval in our prostate screening tool to their 3.0 level software. The significance of that is that it's now ready for a better adoption by our radiologists to improve their accuracy and workflow. We are working aggressively on that inside of RadNet where we do more prostate MRI scanning than any other organization in the country, and which as we showed you in our results are MRI and PET/CT volume have increased dramatically primarily as a result of the increased prostate screening and detection tools. But in addition to that, this lays the framework for us to advance the prostate tool much as we have with breast and which we are doing with lung into a screening tool for men and women who want to come in and test for early high-risk patients for both prostate and lung cancer. I think you can—and we'll see a lot more from that, both in terms of the development as well as the adoption of these tools as they roll out to our patients in our regions. But the other side, which we now are getting equally excited about is really generative artificial intelligence. It appears to us that there isn't anything that we do on the operational side that couldn't be improved with the adoption of Generative AI and otherwise known as—for this discussion at least as ChatGPT—whether it is scheduling of patients or reporting tools, coding, workflow, sales and marketing, every part of what we do could be improved by artificial intelligence. I think as we'll be talking about in the later part of the second quarter here, we will be positioning ourselves to take advantage of what we've been doing for the last 15 years in developing our own internal information systems and expanding those onto new platforms that not only are far more efficient in their use, but then will be adopting some of these new tools to improve our workflows and processes, which in and of itself will help us address some of the workflow as well as labor shortages that we have. This is a big focus of the Company, which, as I mentioned, we hope they have more information about later in the quarter, and one that is very exciting, not only for us, but what it could represent for the entirety of the radiology and imaging community. Mark Stolper Yes. On that front, Brian, we just got some very good news this morning that the U.S. Preventive Services Task Force, which advises CMS and other payors are now recommending that mammography should start at the age of 40. They had come out with a pretty controversial decision in 2009 to recommend that women over the age of 50 should start getting mammography exams. This is a big deal because we think that—well, what they're saying is that this could lower the mortality for breast cancer by over 20% by recommending that women age 40 and over get their annual screenings. I think it's going to obviously be very positive for our business and for the industry. Brian Tanquilut Awesome. Thanks, guys, and congrats again. 10 Operator Next question comes from John Ransom with Raymond James. Please go ahead. John Ransom Hey, good morning. I just wanted to probe a little bit on your guidance for the rest of the year. It seemed like you didn't really raise your EBITDA outlook for the next three quarters. Should we think about that as conservatism? Or is there something factoring into the algorithm that we haven't thought about in our model? Dr. Howard Berger I think it's conservative, John. We are very pleased with our first quarter results. Part of those results were helped by less weather-related issues in the Northeast and mid-Atlantic that we generally experience. I think before we become more aggressive, we want to see what the second quarter looks like, which is one that is generally not challenged by weather conditions. We felt prudent to show upward direction, both on the revenue side and on the EBITDA side and feel that if we can continue the trends that we've seen here in the first quarter, I believe we can look forward to continuing to increase our guidance at the end of this second quarter. Mark Stolper I'll add, we are seeing the same strength in April that we experienced in the first quarter. We're pretty optimistic and upbeat. John Ransom Great. The second question I have is just trying to find a correlation—maybe it does or doesn't exist. I know most of what you do is diagnostic, but it's hard not to notice that your jump in revenue starting in the fourth quarter and continuing, also, correlated with the big upsurge in first quarter across the board with surgeries, particularly orthopedic surgeries. Is there a line we can draw all the parts of tailwinds and volume? Do you think the uptick in people just getting screened for orthopedic and other surgeries is also helping your volume story? Dr. Howard Berger Well, I think if anything, John, that may be more a reflection of post-COVID return to normal. As you're probably aware, elective surgeries were put off throughout the past three years and many people delayed getting elective surgeries, particularly orthopedic surgeries, which generally tend not to be as urgent as some others. I think now that people are returning back to more normal physician visitation, more active, whether it’s through sports or other activities that got somewhat curtailed, I think we're seeing the after effects of that. We would expect that volume to continue to increase. I might say that there is more and more reliance on, particularly for sports injuries and orthopedic issues, more and more reliance on MRI scanning. As the quality of the MRI scans improve, as well as the scanning time shortened for better patient experience, we're finding more and more people are willing to undergo these procedures which have become very small in the total cost of care for orthopedic conditions. John Ransom Just a ballpark. I mean, for every 100 scans that you do across all your modalities, approximately what percent of those would you say are kind of pre-surgical scans versus just routine or ongoing diagnostic scans like the breast cancer scans? 11 Dr. Howard Berger Well, in the case—if you're talking about advanced imaging and in particular MRI scanning, I would say that the preponderance of what we do are neurologic and musculoskeletal applications. Probably, I'm going to say about 80% of what we do falls into one of those two categories. The rest of the MRI scanning, which comprises maybe perhaps 20% is for the rest of the body. Of that 80% that is either neurological or musculoskeletal related, I'm going to guess that it's probably two-thirds musculoskeletal and one-third neuro application. It is a huge part of the industry in terms of its overall value in the treatment of musculoskeletal problems. John Ransom Okay. I'm probably looking for a problem that doesn't exist, but has this uptick in utilization pressured any of your capitation economics in California? Dr. Howard Berger No. Our capitation contracts are something we negotiate regularly and are a reflection of utilization. Capitation is really as much as anything else, a form of payment that makes it easier, both for our contracted parties and ourselves to reduce billing costs and whatnot. But as utilization increases, that cost eventually gets passed on to our capitation party. It may lag a little behind, and I think there's more—we're more aggressive about it now than we used to be and we're having very good success in those conversations. John Ransom A couple more kind of model stuff. Exactly as we think, let's just pick fourth quarter, for example. How should we think about the core labor inflation once you sort of have lapsed your catch-up payments for lack of a better word? How are you thinking about your core labor inflation once we get through the full reset? Dr. Howard Berger Well, we've built into our modeling, John, an increased cost of our labor expense as it relates to our employees, both physician and non-physician. What we're hoping for is, even though we've built in the continued cost of using temporary agencies and some overtime, we hope that the improved labor conditions that will allow us to fill open positions will—and even if those come at higher costs, which we believe they will, we will have some offset of that to the lowering our costs and dependence on overtime and temporary agencies. We've built that in and in our first quarter model, we were pretty accurate with our prediction of our employee expense costs. Mark Stolper Yes. We… John Ransom I guess what I'm getting at, should we think about like maybe a mid-single digit kind of underlying core inflation rate asking all the puts and takes with temp staffing? Or we're just looking for a number there? Dr. Howard Berger I would—as it relates to employees and salaries, John? Is that what you mean? 12 John Ransom Yes. Dr. Howard Berger Yes, I think that's reasonable. But again, we very much hope because we've built into our model continued use of temporary agencies. We hope that is somewhat offset, but I think that kind of increase is certainly reasonable. John Ransom I know there's probably not one answer here, but let's say we again look same-store—if you were to do say, 5% to 7% growth in underlying volume, what's the variable cost associated? I know it's probably a stair step and depends on the capacity of the individual center, but we're just trying to think about the operating leverage fixed versus variable. Because you really haven't operated at this level of volume growth before. I don't know that we have a real roadmap. Dr. Howard Berger Yes. It's a good question and one that we continue to wrestle with all the time because of increased costs that were experienced that we did in the past. What I would point you towards, which we're very pleased with, is the significant improvement in our margin in the first quarter where we went from 12.2% to 13.6% in our EBITDA margin. We do have significantly higher costs in our first quarter, as most companies do related to employee expenses and from withholding and other benefits as well as most of our bonuses for the year are expensed in our first quarter. That number will go down. We're confident that we can continue to improve our margins. But I will tell you that I believe part of the improvement in margins we're hoping can come from increasing in our reimbursement rates, which we're actively pursuing in every market that we're in. I think some of these increased costs are just a fact of life for every business today. But I think we have tools to offset that and I'll harken back to the comments I made about artificial intelligence, which I think can have both improvement in our efficiencies with our radiologists and our patient throughput as well as attacking and approaching virtually every aspect of our business through algorithms related to Generative AI. John Ransom Great. Thanks so much. Dr. Howard Berger Thank you, John. Mark Stolper Thanks, John. Operator Next question comes from Larry Solow with CJS Securities. Please go ahead. 13 Larry Solow Great. Thanks. Good morning, and congrats on a good start to the year. Just a few follow-ups, I guess on the margin question for starters. How much does mix—and I realize it's probably a slow improvement, but obviously mix and turn to much higher margin advanced imaging including rapid growth and PET/CT in the last couple quarters—how much does that play into margin? Maybe over time—I know it's been pretty slow improvement over the last few years, but could that potentially pick up as especially like this PET/CT, which is growing really rapidly continues to drive more of your revenue contributions? Dr. Howard Berger Hi Larry, and welcome to the family. Larry Solow Very appreciate it. Dr. Howard Berger I think we have to look at this in a couple of different ways. When we talk about mix, there's two—and I think you're talking about modality mix... Larry Solow Correct. Dr. Howard Berger Versus payor mix, right? Larry Solow Correct. Dr. Howard Berger Okay. Because payor mix has remained pretty stable for a long time with us. I think you're right that the modality mix is shifting. But even if there's an increase in some of these exams like the PET/CT huge increase that we saw particularly related to prostate screening and scanning, it still represents a relatively small percentage of our total volume. I think, Mark, correct me if I'm wrong, it's maybe... Mark Stolper It's under 1%. Dr. Howard Berger Under 1%... 14 Mark Stolper Representing about 5% to 6% of our revenue. Dr. Howard Berger Yes. That will also be a slow adoption. The margins on that are higher to be sure, but we see opportunities there, not just from what we're doing today, but what we expect to do tomorrow. We're hopeful that the Alzheimer's adoption, which we believe is a great tool, not necessarily for just diagnosing Alzheimer's, but monitoring the treatment of the new drugs, which all seem to have potential neurologic and primarily brain impact, but we see those as increasing. To that end, we have upgraded a substantial number and will continue to upgrade a substantial number of our PET/CT scanners, both to improve the quality, but more importantly and much like we're seeing with CT and MRI, the new equipment and new software that can be adapted to these has had a substantial improvement in scanning time. What we may wind up seeing is that the shift is not so much because we're getting a lot more demand, but we're able to access our backlogs by improving our throughput on our equipment with the investment that—the capital investment we're making in hardware and software to shorten scan times and to improve the image quality. Both of those in and of itself could have a significant impact on our margins, given the fact that the relative cost of our overhead remains pretty flat as we can improve our patient throughput. I think it's a very dynamic issue that we'll continue to monitor and given some early results of how effective it has been to reduce the scan time, particularly with MRI, we have accelerated some of the software, which are relatively nominal costs to us, relative to the total cost of an MRI system for greater adoption in the second half of this year. Larry Solow Got it. Appreciate all that color. Then just a second question, just a follow-up on the Enhanced Breast Cancer Detection. You mentioned you're refining that program a little bit, some new pricing. Can you just give us a little—an update on where you stand there? I think if I'm not mistaken, I believe you guys are charging $50 to $60 per patient there. Can you also just—I think you mentioned 20% sort of penetration at the centers you're now offering this at. Can you sort of just update where we stand there? Is it just on the East Coast today and when do you expect to have it across your centers? Dr. Howard Berger Yes. Thanks for the question, Larry. Larry Solow Sure. Dr. Howard Berger We have intentionally delayed rollout to really get a sense of what we need to do to make this new technology and this clinical tool, if you will. I want to emphasize that it's a clinical tool and not just an artificial intelligence tool because it involves utilizing our radiologists to look at the results of artificial intelligence and compare it with their initial reading and make certain that everybody gets a sense of what the most accurate diagnosis at that moment and time should be. 15 As a result, we're finding that by looking at focus groups, looking at various comments back from the patients that we see, that this is not something that everybody is just going to come in and adopt, given that there's an educational process to this that we have found both for the patients as well as their referring physicians. We've intentionally delayed the rollout. We might be a little bit behind that. We currently have it rolled out in about 80% of our markets on the East Coast. Two of our biggest opportunities we've—for the rollout on the East Coast, we've delayed based on some initial feedback here. We think that the price point on this is somewhere between $60 and $75 that patients who enroll in it are very comfortable with. Actually, some are surprised that we're not charging more. I think part of what we're also doing is trying to provide other tools in this early Breast Cancer Detection that will further enhance the risk assessment that patients have for getting cancer well before it may even be diagnosed by artificial intelligence. We're excited about this, the announcement today that the U.S. Public Service Task Force has finally lowered the recommendation for when women begin getting their screening mamos from 50 to 40. The importance of that is that that's what a lot of the commercial payors have adopted. They're clearly going to change and now put an emphasis on this. There's 20 million women between that age group that now should be getting their mammography—some of which already have. I don't want to say that it's been that black and white. But clearly, now as it gets adopted into the health plans and preventative health for our patients, we expect that an increase, a substantial increase in our mammography screening business and therefore greater adoption of artificial intelligence and clinical tools for assessing early Breast Cancer Detection. I can't emphasize enough of how valuable and how important that is and I'll emphasize something that we've talked about. When breast cancer is diagnosed in the earliest stages, however, you want to find it, Stage 0 or Stage 1, there's a 99% five-year survival rate. Effectively, if everybody that should be getting mammography screening was getting it, nobody would die from breast cancer because it's not a fatal disease, if it's caught early. It's one of those things that modern medicine with its diagnostic tools is whether its treatment tools has had an enormous impact and should have an even greater one going into the future with the adoption of artificial intelligence. We think we're on the cusp of something that not only will be, I think, very transformative for breast cancer, but also for prostate and lung cancer. It's getting everybody on board with the value that these tools can provide that ultimately will lead to a better outcome for all the stakeholders in the healthcare system. Larry Solow Got it. Great. I appreciate that. Then just lastly on the—just on de novos. Can you just clarify? I think you had 15 de novos, I think, lined up, right? Two I think opened last late in ’22 and then you have still the six and then of the remaining 13, six respect to open, I guess more like back half of this year, early next year, and then the remaining seven in ‘24. Is that right? Dr. Howard Berger Yes. That's right, Larry. Larry Solow Okay. Feels like I thought it was a little bit—I thought some expect to open up a little bit earlier this year. Regardless, I guess your guidance hasn't changed. This is probably not a bad thing. But is it a little bit slower the ramp of these or maybe I was just missing something? 16 Dr. Howard Berger Yes. Everything has become more complicated. Larry Solow A little slower. Sure. Dr. Howard Berger Post-COVID, most of the building departments in virtually every market that we're in have reduced staff or are slower to turn around permits, slower to get inspections. Unfortunately, some of the projects have been delayed. But that won't deter us. We're actually looking beyond 2024 at other de novos that we're going to start talking about and become actionable primarily because this is taking us longer than we anticipated and the need for greater capacity to scan not only the cases that are being asked of us today, but as we increase screening for various cancers and increase the amount of business there, we don't want to let what should be a fundamental shift in the treatment—diagnosis and ultimately treatment of cancer be delayed because there isn't enough capacity of equipment and personnel. These are things that we're actively looking at every day. Larry Solow Got it. Great. I appreciate all that. Thanks so much. Dr. Howard Berger Thanks, Larry. Operator This concludes our question-and-answer session. I would like to turn the conference back over to Dr. Howard Berger for any closing remarks. Dr. Howard Berger Again, I would like to take the opportunity to thank all of our shareholders for their continued support, and the employees of RadNet for their dedication and hard work. Management will continue to do its endeavor to be a market leader that provides great services with an appropriate return on investment for all stakeholders. We eagerly look forward to our next call where we believe we'll have more information about the continued success and growth of the Company as it exists now, as well as other opportunities to have a substantial impact, not only in radiology, but in healthcare. Wishing you all a good day. Operator The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. ViaVid has made considerable efforts to provide an accurate transcription. There may be material errors, omissions, or inaccuracies in the reporting of the substance of the conference call. This transcript is being made available for information purposes only. 1-888-562-0262 1-604-929-1352 www.viavid.com 17 |
0001683168-23-005434:radnet_ex9902.htm | 0001683168-23-005434 | 790,526 | 790,526 | RadNet, Inc. (RDNT) (CIK 0000790526) | ['RDNT'] | 8-K | 8-K | 2023-08-09 | 2023-08-04 | 001-33307 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-33307&action=getcompany | 231,153,414 | EX-99.2 | TRANSCRIPT OF CONFERENCE CALL | 2.02,5.02,9.01 | https://www.sec.gov/Archives/edgar/data/790526/000168316823005434 | https://www.sec.gov/Archives/edgar/data/790526/000168316823005434/0001683168-23-005434-index.html | https://www.sec.gov/Archives/edgar/data/790526/000168316823005434/radnet_ex9902.htm | EX-99.2 4 radnet_ex9902.htm TRANSCRIPT OF CONFERENCE CALL Exhibit 99.2 C O R P O R A T E P A R T I C I P A N T S Howard Berger, President, Chief Executive Officer Mark Stolper, Chief Financial Officer C O N F E R E N C E C A L L P A R T I C I P A N T S Brian Tanquilut, Jefferies Nathan Malewicki, Raymond James Yuan Zhi, B. Riley Securities Mitra Ramgopal, Sidoti P R E S E N T A T I O N Operator Good day, and welcome to the RadNet Second Quarter 2023 Financial Results Call. (Operator Instructions) Please note today’s event is being recorded. I would now like to turn the conference over to Mark Stolper, Chief Financial Officer. Please go ahead, sir. Mark Stolper Thank you. Good morning ladies and gentlemen, and thank you for joining Dr. Howard Berger and me today to discuss RadNet’s second quarter 2023 results. Before we begin today, we'd like to remind everyone of the Safe Harbor statement under the Private Securities Litigation Reform Act of 1995. This presentation contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Specifically, statements concerning anticipated future financial and operating performance, RadNet’s ability to continue to grow the business by generating patient referrals and contracts with radiology practices, recruiting and retaining technologists, receiving third party reimbursement for diagnostic imaging services, successfully integrating acquired operations, generating revenue and Adjusted EBITDA for the acquired operations as estimated, among others, are forward-looking statements within the meaning of the Safe Harbor. 2 Forward-looking statements are based on Management's current preliminary expectations and are subject to risks and uncertainties which may cause RadNet’s actual results to differ materially from the statements contained herein. These risks and uncertainties include those risks set forth in RadNet’s reports filed with the SEC from time to time, including RadNet's annual report on Form 10-K for the year ended December 31, 2022. Undue reliance should not be placed on forward-looking statements, especially guidance on future financial performance which speaks only as of the date it is made. RadNet undertakes no obligation to publicly update any forward-looking statements to reflect new information, events or circumstances after the date they were made, or to reflect the occurrence of unanticipated events. With that, I'd like to turn the call over to Dr. Berger. Howard Berger Thank you Mark. Good morning everyone, and thank you for joining us today. On today's call, Mark and I plan to provide you with highlights from our second quarter 2023 results, give you more insight into factors which affected this performance and discuss our future strategy. After our prepared remarks, we will open the call to your questions. I'd like to thank all of you for your interest in our Company and for dedicating a portion of your day to participate in our conference call this morning. I am very pleased with our performance in the second quarter. It was the strongest quarter in our Company’s history with record revenue and Adjusted EBITDA. Relative to last year’s second quarter, our core imaging center segment revenue increased 13.8% and imaging center Adjusted EBITDA increased 14.7%. This performance was driven in part by heavy demand in virtually all of our markets. Aggregate procedural volumes increased 11.4% and same center procedural volumes increased 7.1% compared with the second quarter of 2022. This heavy demand is being driven by a number of factors that we have highlighted in recent quarters which we believe will continue to create strong growth for years to come. First within the healthcare delivery system, there is a growing focus on preventative non-invasive medicine with keen interest in the earlier and more accurate detection of diseases. As managed care grows, risk-based provider models become more common and population health screening becomes more prevalent, diagnostic imaging will grow in its importance. Second, as the population expands and ages, diagnostic imaging is used with greater frequency. In fact, Medicare lives utilize imaging two to three times more often than younger commercial lives. Third, technology in our industry continues to evolve and improve, creating additional medical indications for ordering diagnostic imaging tests. Advances in MRI technology and post-processing software have shortened scanning times, increased throughput and capacity, and improved imaging quality. New contrast materials and radioactive (inaudible) are driving novel applications such as PSMA, or prostate specific membrane antigen, PET scans and Alzheimer’s imaging. While these factors explain the steady growth in our industry, there is also a market shift taking place within diagnostic imaging that is also working in RadNet’s favor. Increasingly, patient volumes are being directed away from expensive hospital-based imaging facilities towards more cost effective ambulatory outpatient settings. Freestanding outpatient centers offer more convenient and lower cost services that are preferred by patients, referring physicians and payors. We believe these favorable trends will continue to help drive our future same center performance and present growth opportunities for years to come. To address these trends, we’ve opened one new facility and we currently have 12 de novo facilities in various stages of development which will open for operation in the second half of 2023 and throughout 2024. These facilities are located in markets where we have patient backlogs, require additional capacity, or where we currently lack access points to service patient populations in need. While these projects require us to make capital investments above our normal spending, we are confident these centers will be material contributors to our long-term performance and growth. While the labor market remains challenging, we have been more successful in filling open positions and have been reducing our reliance on expensive temporary staffing services and overtime hours of our existing team members. 3 We continue our efforts to grow our hospital and health system partnership initiatives. Currently 120 of our 353 centers, or 33% are held within health system partnerships. Our partnerships are some of the largest and most successful systems in our geographies, including RWJBarnabas, Memorial Care, Dignity Health, Lifebridge, University of Maryland Medical System, the Adventist Health System, Cedars Sinai, and others. These and other health systems are seeking solutions for long term strategies around outpatient imaging and have recognized that cost effective and efficient freestanding imaging centers will continue to capture market share from hospitals as payors and patients migrate their site of care towards lower cost high quality solutions. We expect by year end, our JV centers could represent closer to 40% of our total center accounts. Our hospital and health system partners have been instrumental in increasing our procedural volumes through their relationships with physician partners. Additionally, our JV partners are helpful in providing support, if needed, in establishing long term, equitable outpatient reimbursement rates for our services. As a result of the strong performance in the first half of this year and the confidence we are feeling for the remainder of the 2023 period, we have elected to increase key financial guidance levels in our core imaging center operating segment for 2023. Mark in his prepared remarks will review the increases we made to our revenue and Adjusted EBITDA guidance levels upon releasing our financial results this morning. Lastly, we continue to make progress with our AI and digital health initiatives. You may have seen a recent press release announcing two additions to our executive team who will be focused on driving growth in our digital health businesses to include both clinical and generative AI opportunities as well as opportunities in our eRADIMAGING, informatics and related software businesses. Sham Sokka and Sanjog Misra will be focused on commercialization partnerships, product development and operations in our digital health platform. While they assist us with continued progress in DeepHealth, Aidence and Quantib, Sham and Sanjog will also be launching a number of initiatives in generative AI designed to improve efficiency and lower cost of many of our core business processes, such as contact centers, scheduling, insurance verification, front office functions, reporting tools, revenue cycle, and many more. Generative AI should be as transformative to the core functions of our imaging center business as clinical or predictive AI will be to the delivery of our professional radiology services and population health screening. In the coming quarters, we will share the initiatives that we are undertaking, a number of which we have been prioritizing to help us address the challenges of the current labor market. I’m also pleased to announce that Dr. Greg Sorensen, the founder of DeepHealth, the first AI company we purchased over three years ago, has assumed the role of Chief Science Officer and has joined the Board of Directors at RadNet. The investments we are making in digital health technology and personnel underscore our commitment to our digital health initiatives and highlight their growing importance to RadNet’s future strategic direction and priorities. We are experiencing strong growth with our digital health platform. In the first six months of this year, our AI revenue grew 109% from last year’s same period, driven predominantly by the launch of our enhanced breast cancer detection EBCD mammography offering, which we continue to implement across our networks. We expect this growth to accelerate in the second half of this year as we expand EBCD to more of our women’s centers throughout our markets, particularly within our west coast operations. The results of the program and the feedback we are receiving from our patients, referring physicians and hospital partners have been excellent. Since the inception of the EBCD program, we have diagnosed over 450 breast cancers that without the intervention of artificial intelligence might have gone otherwise undetected. Detecting cancers sooner allows for better patient outcomes through earlier treatment and intervention and reduces cost to the healthcare system. Furthermore, we are reducing the callback rates for patients through the use of AI by being more definitive with the initial screening exam. We currently are experiencing approximately 30% enrolment in the EBCD mammography screening program and believe we will see greater uptake as we improve communicating and marketing the benefits to our patients and their referring physicians. 4 Finally, I would like to comment on RadNet’s liquidity position and financial leverage. On June 16, we completed an equity offering where we raised $246 million of net proceeds to de-leverage our balance sheet and position us to accelerate growth. This offering along with strong operating performance resulted in a net debt to Adjusted EBITDA ratio of approximately two times at quarter end. We currently have the lowest leverage and strongest liquidity position in our Company’s history. As of June 30, we had $357 million of cash on our balance sheet and were undrawn on our $195 million revolving line of credit. Our days sales outstanding - DSOs at June was 35.4 days, which we believe to be one of the best in the industry. While we are committed to growing and expanding our business, we will also continue to follow our methodical and disciplined approach to managing our financial leverage. Our low leverage, lower cost of capital and strong liquidity relative to many of our other industry operators positions us to capitalize on acquisition opportunities and other business opportunities where capitalization is advantageous. We remain patient and disciplined in our approach to acquisitions, focused first on our core markets where we bring unique synergies and cost savings. At this time, I’d like to turn the call back over to Mark to discuss some of the highlights of our second quarter 2023 performance. When he is finished, I will make some closing remarks. Mark Stolper Thank you Howard. I’m now going to briefly review our second quarter 2023 performance and attempt to highlight what I believe to be some material items. I will also give some further explanation of certain items in our financial statement as well as provide some insights into some of the metrics that drove our second quarter performance. I will also provide an update to 2023 financial guidance levels which were released in conjunction with our 2022 year-end results in March, and which we amended in May upon releasing our first quarter financial results. In my discussion, I will use the term Adjusted EBITDA, which is a non-GAAP financial measure. The Company defines Adjusted EBITDA as earnings before interest, taxes, depreciation and amortization, and excludes losses or gains on the disposal of equipment, other income or loss, loss on debt extinguishments, and non-cash equity compensation. Adjusted EBITDA includes equity and earnings of unconsolidated operations and subtracts allocations of earnings to non-controlling interest and subsidiaries, and is adjusted for non-cash or extraordinary and one-time events taking place during the period. A full quantitative reconciliation of Adjusted EBITDA to net income or loss attributable to RadNet Inc. common shareholders is included in our earnings release. With that said, I’d now like to review our second quarter 2023 results. For the second quarter of 2023, RadNet reported revenue from its imaging centers reporting segment of $401.3 million and Adjusted EBITDA of $63.7 million, which excludes revenue and losses from the AI reporting segment. As compared with last year’s second quarter, RadNet revenue increased $48.5 million or 13.8% and Adjusted EBITDA increased $8.2 million or 14.7%. Including our AI reporting segment, revenue was $403.7 million in the second quarter of 2023, an increase of 13.9% from $354.4 million in last year’s second quarter. Including the losses of the AI reporting segment, Adjusted EBITDA was $60.4 million in the second quarter of 2023 and $51.3 million in the second quarter of 2022, an increase of 17.7%. For the second quarter of 2023, RadNet reported net income of $8.4 million as compared with $7.9 million for the second quarter of 2022. Diluted net income per share for the second quarter of 2023 was $0.12 compared with a diluted net income per share of $0.13 in the second quarter of 2022, based upon a weighted average number of diluted shares outstanding of 60.9 million shares in 2023 and 57 million shares in 2022. There were a number of unusual or one-time items impacting the second quarter, including the following: $4.2 million of non-cash gain from interest rate swaps, $1 million expense related to the change in valuation of contingent consideration related to completed acquisitions, $759,000 of expense related to leases for our de novo facilities under construction that have yet to open their operations, and $8.7 million of pre-tax losses related to our AI reporting segment. Adjusting for the above items, adjusted earnings from the imaging center reporting segment was $14.9 million and diluted adjusted earnings per share was $0.24 during the second quarter of ’23. This compares with adjusted earnings of $8.6 million and diluted adjusted earnings per share of $0.15 during the second quarter of 2022. 5 Also affecting net income in the second quarter of 2023 were certain non-cash expenses and unusual items, including the following: $4.9 million of non-cash employee stock compensation expense resulting from the vesting of certain options and restricted stock; $1.9 million of severance paid in connection with headcount reductions related to cost savings initiatives; $77,000 of disposal of certain capital equipment; and $748,000 of non-cash amortization of deferred financing costs and loan discounts related to financing fees as part of our existing credit facilities. For the second quarter of 2023 as compared with the prior year second quarter, MRI volume increased 11.8%, CT volume increased 11.3%, and PET CT volume increased 18.3%. Overall volume taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and all other exams, increased 11.4% over the prior year second quarter. On a same center basis, including only those centers which were part of RadNet for both the second quarters of 2023 and 2022, MRI volume increased 7.3%, CT volume increased 6.3%, and PET CT volume increased 18.8%. Overall, same center volume taking into account all routine imaging exams increased 7.1% over the prior year same quarter. In the second quarter of 2023, we performed 2,551,382 total procedures. The procedures were consistent with our multi-modality approach whereby 75% of all the work we did by volume was from routine imaging. Our procedures in the second quarter of 2023 were as follows: 387,619 MRIs as compared with 346,598 MRIs in the second quarter of 2022; 235,138 CTs as compared with 211,221 CTs in the second quarter of 2022; 15,036 PET CTs as compared with 12,710 PET CTs in the second quarter of 2022; and 1,913,589 routine imaging exams as compared with 1,719,647 of all these exams in the second quarter of 2022. Overall GAAP interest expense for the second quarter of 2023 was $16 million. This compares with GAAP interest expense in the second quarter of 2021 of $11.4 million. The higher interest expense is predominantly the result of the upsized New Jersey Imaging Network credit facility completed in October of last year in conjunction with NJIN’s acquisition of Montclair Radiology. Cash paid for interest during the period, which excludes non-cash deferred financing expense and accrued interest, was $17.8 million. Cash paid for interest net of interest earned on our cash balance and interest rate swap payments received was $12.4 million for the three month period ended June 30, 2023, and $29.9 million for that same period last year. With regards to our balance sheet, as of June 30, unadjusted for bond and term loan discounts, we had $518.9 million of net debt, which is our total debt at par value less our cash balance. This compares with $662.1 million of net debt at June 30, 2022. Note that this debt balance includes New Jersey Imaging Network’s debt of $146.3 million for which RadNet is neither a borrower nor guarantor. As of June 30, 2023, we were undrawn on our $195 million revolving line of credit and had a cash balance of $357 million. At June 30, 2023, our accounts receivable balance was $174.5 million, an increase of $8.1 million from year end 2022. The increase in accounts receivable is mainly the result of the significant increase in our procedural volumes over the last quarter. Our days sales outstanding, or DSO remains near the lowest levels in our Company’s history at 35.4 days as of June 30, 2023. Through June 30, 2023, we had cash capital expenditures net of asset dispositions and sales imaging center assets in joint venture interests of $86.9 million. This excludes $8.4 million of cash capital expenditures at our New Jersey Imaging Network joint venture. At this time, I’d like to update and revise our 2023 fiscal year guidance levels, which we released in conjunction with our fourth quarter and year end 2022 results and amended after reporting our first quarter 2023 financial results. 6 For total net revenue, we have increased our guidance range by $25 million at the low end and $10 million at the high end to $1.575 billion to $1.610 billion. For Adjusted EBITDA, we have increased both the low end and the high end of our guidance by $7 million to $232 million to $242 million. We have left our capital expenditure, cash interest expense and free cash flow guidance levels unchanged as amended after the first quarter results, and for the artificial intelligence segment, due to the delay that Dr. Berger spoke about in our implementation of that program, we have lowered the revenue guidance by $5 million both at the low end and the high end to $11 million to $13 million, and our Adjusted EBITDA loss projection for the year has increased by $2 million at both the low end and the high end to $11 million to $13 million loss for the year. In our core imaging center reporting segment, we have increased our guidance ranges for revenue and Adjusted EBITDA to reflect the strong financial results of the first half of 2023 as compared with our initial budget. We have lowered our guidance ranges for revenue and Adjusted EBITDA for the AI segment and, as Dr. Berger mentioned, we have been refining the EBCD program and have been testing different levels of pricing, various service offerings, new marketing collateral, local market sales, and marketing strategies. We estimate that this optimization process has resulted in a 90 to 120-day delay in the progress of the program. Though the new revenue guidance levels fall short of our original estimates, it represents almost a tripling of our business from 2022 levels. We remain incredibly excited about the growth in AI and we continue to believe that we can breakeven in the AI segment before the end of 2024. I’ll now take a few minutes to give you an update on 2024 reimbursement and discuss what we know with regards to 2024 anticipated Medicare rates. As a reminder, Medicare represents about 22% of our business mix. With respect to Medicare reimbursement, several weeks ago we received a matrix for proposed rates by CPT code which is typical as part of the physician fee schedule proposal that is released about this time every year. We have completed an initial analysis and compared those rates to 2023 rates. We volume-weight our analysis using expected 2024 procedural volumes. As you may recall, three years ago CMS moved forward with increased reimbursement for evaluation and management CPT codes which favor certain physician specialties that regularly bill for these services, particularly primary care doctors. CMS proposed doing so with budget neutrality, meaning that it proposed to reallocate reimbursement from physicians who rarely bill for E&M codes to physicians who regularly bill for these codes. As a result, radiology and most other specialties experienced cuts in reimbursement during 2021, 2022 and 2023, cuts meant to be phased in over a several year period. The cuts we faced in 2023 were substantially mitigated by legislation that was passed at the end of last year as part of the Consolidated Appropriations Act. In this year’s proposed ruling governing 2024 reimbursement, Medicare appears to effectively be phasing in any remainder of the E&N code related cut avoided last year as a result of the Consolidated Appropriations Act. The cut proposed for 2024 results from a decrease in the conversion factor in the Medicare fee schedule by about 3.4% from $33.89 to $32.75, along with certain minor changes to the RVUs - the relative value units of certain radiology CPT codes. Our initial analysis of the proposal for next year implies that RadNet on roughly $1.6 billion in revenue would face an approximately $7 million to $9 million revenue hit in 2024 from its Medicare business. Because the proposed decrease in the conversion factor affects all physicians, not just radiologists, there are many lobbying groups from the various medical specialties aggressively opposing the cut, including radiology’s two main lobbying forces, the Association for Quality Imaging, or AQI, and the American College of Radiology, the ACR. At this time, our experts believe there is a high probability that the final rule to be released in November will be less severe than the current proposal as a result of Congressional action that could take place later this year, similar to what happened last year. 7 In November during our third quarter financial results call, we hope to have more of an update to give you about this matter. While the $7 million to $9 million cut to RadNet’s revenue next year is not insignificant, we have reimbursement increases completed or scheduled from capitated and commercial payors that will fully mitigate this Medicare reduction, which should go into effect in the currently proposed period. I’d now like to turn the call back to Dr. Berger, who will make some closing remarks. Howard Berger Thank you Mark. Technology has always been a driver for change in our industry. This appears to be truer today than ever before. Artificial intelligence, both clinical and generative, is in its nascent stage within the field of radiology. Everything that we do today will be impacted by technology innovation and artificial intelligence in the coming years. Our business is an information technology business. Almost every process we perform, including collection of patient information, scheduling, preauthorization, insurance verification, creation of radiology reports, billing and collecting, medical coding, and processing the patient payments can be enhanced by data algorithms and management tools. Artificial intelligence and informatics either already play or will play important roles in all of these business processes. RadNet has always been on the leading edge of technology, which has been a key to our success. In the past, we have both adopted solutions from others that benefited our business and created our own solution in areas we felt were imperative for us to control. This philosophy has not changed. In 2010, we began a journey to design our own radiology information system and image management system, which has become core to our data work flow. Much of what we do at the operating level and the efficiencies we have created in operating our 363 centers have been the result of our ability to control our IT infrastructure. As we move into the next generation of innovation driven primarily by AI, we see even more opportunity to bring efficiencies, cost savings and improved margins to RadNet through investments in our digital health initiatives. As demonstrated by our second quarter results, our core operating business is healthy and growing, supported by heavy and expanding procedural volumes. The next stage of RadNet’s growth and development will be to bring these technological solutions to our business and to the broader radiology marketplace that makes servicing this accelerating demand possible. I believe we have assembled many of the components, including the management talent to take our business and industry to the next level of innovation, elevating radiology and our diagnostic capabilities to an even more important and critical role in healthcare delivery. We’re excited to keep our stakeholders informed of our progress in these areas while continuing to execute on driving growth in our core business through our focus on same center performance, hospital and health system partnerships, tuck-in acquisitions and de novo expansion. Operator, we are now ready for the question and answer portion of the call. 8 Operator Thank you. (Operator instructions) Today’s first question comes from Brian Tanquilut with Jefferies. Please go ahead. Brian Tanquilut Hey, good morning guys. I guess my first question for Howard, and maybe Mark too, obviously the core business is strong and volume performance was really compelling. Just curious how you’re thinking about the sustainability of strong demand trends and your ability to maintain healthy organic growth rates going forward. Howard Berger Good morning Brian, thank you. I think the key to sustaining our growth is really the investment that I’ve talked about in our digital health platform. The advent of generative AI as well as the faster and easier development of new algorithms will allow us to transform all of the processes that we use to operate our imaging centers considerably more efficiently and with less dependence on the labor issues that we currently face, much as everybody in healthcare and, for that matter, the general economy. We expect the growth in the imaging sector of our business to continue to grow, but that the ability for us to scale up and perform the necessary tasks and demands that we have will be imperative for us to use these tools that can create these efficiencies and lessen our dependence on an already overstretched or stretched labor market. As we move into the latter part of this year and certainly by the first quarter, we’ll be able to perhaps talk a little bit more specifically about these initiatives, but as we demonstrated in the press release that we made about a week or so ago, with the new executives added to this team, we feel that we are in excellent position to drive this transformational change and control the processes that have allowed us to operate all 363 of our centers on a single platform, regardless of what market that we’re in. While I like to think that we can be proud of what we’ve achieved to this point, I think the best is yet to come in terms of the technological innovation and transformation which radiology and imaging are probably better suited for than virtually any other specialty in the healthcare industry. Mark Stolper Brian, I’ll just add one other thing here. Another key to our continued growth and success is the ability to increase our capacity, and the 12 de novo centers that we have currently under construction, I think five of which will open by year end or should open by year end, the other seven sometime in 2024, will also be instrumental in our ability to create the capacity that we need to better service the heavy demand that we have right now in virtually all of our markets, where we’re experiencing significant backlogs, which is obviously a high class problem but one that is still indeed a problem as we try to get patients into our centers expeditiously and try to provide great service to our referring physician community. I think the de novo strategy and driving that level of capacity in addition to the technology advances that Dr. Berger talked about, as well as some additional technology that we’ve licensed that allow for shorter scan times for MRI scanning with post-processing software that allows for greater throughput and obviously greater capacity at our centers. All these things are important to continue to be able to grow like we have been, because the demand for imaging services is there and that’s clear in all of our markets. 9 Brian Tanquilut Understand, appreciate that. I guess my second question, as we think about AI, and I understand the reasons for the delay or the pushing some of the targets out, I guess two questions. As I think about—you know, Mark, you said you think you’ll still hit breakeven by the end of 2024. Maybe you can remind us, how does that compare to your original outlook for the business, and then second, maybe taking a step back, how are you thinking about or where does your confidence come from in your ability to get the AI side of the business where you want it to be in the time frame that you’ve outlined? Howard Berger Hi Brian, I’ll take that one and Mark can fill in if he thinks I’ve missed anything, like he did so nicely just in the question before this. I think we’re as confident and perhaps even more confident in our AI division for two reasons. Number one, we have been successful in about 30% of our screening mammography cases, having our patients enroll in what is increasingly being recognized as a very valuable addition to the breast screening process, and this is—since we’re going direct to consumer, since there is no reimbursement for AI at this point in time, this is a different strategy than most anything that we’ve attempted in the past, although our prior effort in this was also successful some eight years ago, I think it was, when 2D mammography got converted to 3D mammography, and we had a similar process that we implemented to have patients pay for this before it was reimbursed. We expect a similar process to unfold here, so that the direct to consumer, we hope is just a stopgap here until it’s adopted by not only more and more of the payors, but more and more employees--employers, I should say, that recognize this kind of wellness screening can certainly benefit them, as well as their employees. I’d like to pivot on that, that while that’s been a slow learning process for us, what I don’t think will be slow will be the generative AI side of the initiatives that we have already begun embarking on, that we think can be transformative in the way that radiology is practiced and managed. I think that in some respects may even become more important in the short term here, given a number of the issues that I mentioned in my opening remarks with difficulties that we have in the labor market. I think you’ll see from us in upcoming quarters more specifics about how these tools can be implemented, and perhaps one of the more exciting methods that the new AI tools on the generative side are capable of is that we don’t have to rewrite everything all at one time. We can take specific core needs that we have, like our contact centers and scheduling and insurance verification, and focus on them as segments that we can layer on when they’re ready, rather than have to retool the entire platform that we have. This is a huge difference from the way that we and others have operated in the past, that gives us a lot of enthusiasm about the impact that we can have on our operational processes here in the very near future. In fact, we hope that some of these may be implemented as early as the first quarter of 2024. I think what you’ll hear more and more from us is the continued efforts that we make, not only in our breast screening program but also in lung screening and prostate screening, as we become more comfortable with the self-pay and direct-to-consumer marketing, as well as the initiatives to take control of our operational processes through generative AI algorithms to not only create efficiencies but to create a better patient experience for all of our people that choose to get their scans done in the RadNet locations. 10 Brian Tanquilut Got it. Then maybe Mark, last question from me, thank you for giving color on your view on reimbursement. Remind me, if I’m thinking of this correctly, this is about the same level that you see in terms of proposed cuts every year, and am I right in thinking that Congress has stepped in to kind of block or mitigate this over the last three or four years? Mark Stolper Yes, so this, we believe, is the result--the proposed cut is the result of a phase-in of the budget neutrality aspect of increasing the E&N codes that primary care docs and family practice medicine docs bill under, which occurred several years ago, and they’ve been phasing in this cut in not just radiology but every specialty in order to pay for those E&N increases. We’ve faced these cuts for the last few years. It was a little bit higher the last couple of years but then was ultimately mitigated by this Appropriations Act that was passed in December. In both December of last year and the December of the prior year, it was a bipartisan bill that was sponsored by two Congressmen, one Republican, one Democrat from both California and Indiana - this is Bera and Bucshon, and so a lot of our experts and lobbyists not only within radiology but within healthcare in general, because remember this cut is being faced not just by radiologists, it’s being faced by everybody, that there’s a lot of support to try to get these cuts either reversed or mitigated. We have some level of confidence that again this year, some of the proposed cut here in the Medicare communication that we got several weeks ago will likely be mitigated. But regardless of whether it’s mitigated or not, and we’re estimating the total impact to be the $7 million to $9 million range in our revenue, we’ve got more than that in terms of reimbursement increases that have either already gone into place in 2023 that will increase our reimbursement in 2024, or that will be scheduled to go into place both within our capitation contracts, as well as our commercial contracts. Regardless, we’re not overly concerned about this level of reimbursement cut, but we do have some level of optimism that part of the Medicare cut will be mitigated. Howard Berger Brian, let me add one other thing, which I’m sure you’re aware of, which may make the drive away from hospitals even stronger than it is right now. As I’m sure you’re—as you’ve seen, that the new hospital outpatient prospective payment system has increased the reimbursement to hospitals for their Medicare patients, further widening the reimbursement that’s paid for hospitals for the same services that we provide on a freestanding outpatient basis. I think it’s interesting to see that the very thing that has been a big driver in moving the patients away from hospitals into outpatient centers, which was primarily from the commercial payors, in the extraordinary difference in reimbursement is now being seen also on the Medicare side of it, and in the times that we exist with inflation and expenses going up, it will be even more imperative for our patients to be very mindful of where they get their place of service. Mark Stolper To that point, Brian, the HOP schedule now has over a 30% premium relative to the outpatient Medicare fee schedule, which makes no sense whatsoever, particularly because Medicare supposedly is interested in site neutrality with respect to its reimbursement. As this spread widens, I think you’re going to have more and more Medicare patients, particularly ones that have a 20% co-pay, which is very typical in the Medicare fee-for-service landscape, start directing their business out of hospitals, just like the private payors and commercial insurance plans are doing. 11 Brian Tanquilut Got it, thank you guys. Operator Thank you. Our next question today comes from Nathan Malewicki with Raymond James. Please go ahead. Nathan Malewicki Hey, you’ve got on Nate here, stepping in for John. First on the labor environment, last we heard, contract labor costs were running at about 50% of last year’s levels, so any update on contract labor and anything you can quantify there? Just more broadly on the labor environment, has that and will that continue to improve in the second half and then in the foreseeable future? Mark Stolper Sure, hi Nate, I’ll take this one. What we’ve said in the first quarter, what we did say in the first quarter is that our reliance on contract labor as well as our reliance on paying our own employee base overtime is about at 50% of what it was last year. It’s not that the cost of outside labor, of these staffing companies has gone down by 50%, it’s just that we’re relying less on them as we’ve become more successful in filling open positions. If you remember, our number of open positions hit its height in September of last year, and throughout last year we were mightily struggling with filling staff at our facility—at the facility level and keeping our centers open long enough to service the heavy demand. We’ve been much more successful this year and there has been some stabilization in general in the labor market in being able to staff our centers appropriately, to keep the centers open to fill more of this backlog. It’s not that the pricing has gone down, it’s just our reliance on outside services that’s gone down. Nathan Malewicki Got you, thanks for that. Then just on seasonality here, is it safe to assume that this year features kind of similar trends as pre-pandemic periods, so maybe, I don’t know, 24%, 25% of total EBITDA in 3Q and then a bit of a step-up there in 4Q? Mark Stolper Well, we typically do see seasonality in our business. The first quarter tends to be our most challenged quarter primarily for two reasons, first being winter weather conditions in the northeastern United States where roughly 35% of our business is, and we’re impacted by storms that close facilities or power lines going down, power outages, things of that nature. The second reason the first quarter is a little slower is the reset of patient deductibles tends to create a phenomenon where patients utilize healthcare services less at the beginning of the year and then are more liberal with their spending as they move through their deductibles towards latter parts of the year. We tend to see the first quarter and the first half of the year a little lighter than what we see in the third and fourth quarters. Also, summer vacations tend to impact the second quarter, and in the fourth quarter as patients have moved through deductibles, tends to be a high utilization quarter, and then you also have higher utilization of mammography in the fourth quarter which coincides with the October month, which is breast cancer awareness. 12 I would expect, all things being equal, although we can never really tell, that the second half of the year tends to be stronger than the first half, and 2023 should be no different. Nathan Malewicki Awesome, thanks. Then just to squeeze in one more here, on the equity earnings of joint ventures line, it looks like that came in lighter than our model, and it was about $1.5 million this quarter, kind of a bit of a deviation from historical trends. Anything to read through there in terms of JV consolidation or just the overall JV strategy, and then just how to think about that line item moving forward? That’s all I’ve got, thank you. Mark Stolper Yes, nothing I can think of that would be a trend. Obviously one quarter, a trend doesn’t make, so I would expect that line to even out. I have to go back to see what impacted the quarter in that respect at our unconsolidated JV level, which is what you’re talking about in terms of equity and earnings, but yes, I wouldn’t—there’s nothing that’s gone on there that would make that sustainable, that change. Operator Thank you, and our next question today comes from Yuan Zhi with B. Riley Securities. Please go ahead. Yuan Zhi Good morning. Congrats on another strong quarter, and thank you for taking our questions. First, a follow-up on Brian’s question, maybe more for Mark. I noticed the same center volume year-over-year growth rate was 7.1% versus 9.3% last quarter. The overall volume growth was 11.4% versus 14% last quarter. This might be a repeat from the last question, but especially for your 2023 guidance, your modeling assumptions, do you anticipate the volume growth in the second half to be similar to what you have observed in 2Q, and it would be great if you can comment on what you have observed so far regarding the patient flow in July. Thank you. Mark Stolper Sure, sure. Thank you Yuan, nice to talk to you. We have had very strong same center performance for the first half of the year. We’ve always said historically that we felt over the long run, given the growth in the industry and our growth in our markets and taking share away from competitors, that we felt that we could sustainably grow in the 3% to 5% same store sales growth over the long period of time. As there has been significant growth not only in the industry from some of the newer technologies, such as PSMA that Dr. Berger spoke about on the prostate side, and other things that are driving new applications and new indications for ordering these tests, the industry has been growing nicely and we’ve been growing faster, because we’re also benefiting from the shift in hospital-based—from hospital-based outpatient imaging to freestanding center imaging. Our growth over the last year or two has been exceeding that kind of 3% to 5% range that we’ve talked about. 13 Now, in the first quarter, we had extraordinary growth, as you mentioned, at 9.3%, and we talked about it then and I’ll emphasize this now, we don’t believe 9.3% is necessarily a sustainable number. We were impacted positively by two things in the first quarter that was extraordinary, the first being that we had a much more mild winter this year relative to the winter in the first quarter of 2022, and that benefited us in the first quarter. The second extraordinary impact was that the first quarter of 2022 was impacted by the omnicron variant of COVID, where not only patients were impacted extensively but our employee base was also impacted, to the tune of having over 8% of our employee base on COVID leave for the first couple weeks of January of last year. The 9.3% this year in the first quarter was better than it normally would have been but for those two situations that I just described. The second quarter here was a much cleaner, what I’d call same store sales comparison with last year, where we weren’t being impacted by weather, we weren’t being impacted by omnicron in 2022, and it was, I think, a more fair comparison. To your question directly about the second half of the year, I would hope that we could exceed or be towards the high end of that 3% to 5% growth—you know, same store sales growth that we’ve talked about in the past, and would hope that it would look more like the second quarter going forward because of all the reasons that I’ve talked about, which is driving our growth. Yuan Zhi Got it. Maybe a quick follow-up there, it would be great if you could comment on what you have observed so far of the patient flow in July. Howard Berger July was a good month for us. July is always a bit of a challenge, given the July 4th holiday and what day of the week it falls on, which this year it fell on a Tuesday, which is not necessarily most advantageous for us given that the Monday is almost like an extension of the holiday weekend, and also the vacation schedule. But relative to last year’s July volumes, we’re pleased with what the early results in July look like and where August appears, at least for the first week, it appears to be also holding well within our expectations. Yuan Zhi Got it, thanks for the additional color there. Maybe Howard or Mark, can you provide more color on your capacity right now for MRI and PET scans, the current procedure close to 90% of your capacity? I’m asking because the comments from Biogene and (inaudible) that are targeting to treat 10,000 Alzheimer disease patients by the end of March 2024. Assuming there is this increasing demand, I’m curious what do you view as the rate limiting factors for you to meet this demand, such as the numbers of imaging instruments you have, the staffing to support the procedure, or even the supply of imaging agents. Thank you. Howard Berger Great question. I’ll be happy to answer that one. The demand that we have is not exceeding the capacity of our equipment, it’s exceeding the ability of us to staff up to levels that allow us to use our equipment on the extended hours and times when we can see these patients. That’s our biggest challenge and it’s particularly apparent in the MRI modalities. What we’re doing to address that, which again is somewhat novel to the RadNet core strategy and platform, is that there is new technology, called remote operation command centers, that allow a technologist to operate more than one MRI piece of equipment remotely, and what we have found is that in certain markets, for example in Florida or in Arizona, where the shortage is not as serious as it is, let’s say in New York, we are gaining better acceptance and hiring of technologists that can run those systems remotely from other of our markets. That is probably the near-term ability for us to address some of these additional capacity issues. 14 As Mark mentioned, we’re also building more centers to add capacity, and in some cases we have begun to buy our own mobile scanners that allow us, particularly more so on the west coast, to move those around to areas that are being particularly challenged. We do have a lot of tools in the tool kit, not the least of which also is that the newer MRI scanners or upgrades that we can make to existing scanners have had a remarkable impact on reducing the scan time, which for many of our MRIs has been reduced from 20 to 30 minutes down to 10 minutes or, in some cases, even less, has allowed us to increase our throughput at capacity in that manner. There’s a number of ways to address these problems, and all of it by and large is really driven by the use of technology, both from an artificial intelligence standpoint and some of these other remote tools and other algorithms that just help us increase our capacity without necessarily having to increase our staffing. Mark Stolper And Yuan, I’ll address the second part of your question, which was specifically about Alzheimer’s imaging and what you’re hearing out of Biogen and Lily and others. The initial PET CT, which is one of the key ways of detecting the presence of these amyloid plaques, which is necessary to get these patients onto the newer therapies that have come out by some of these pharmaceutical companies, that could be a huge opportunity for diagnostic imaging and obviously for us. With respect to capacity, which I think was the question that you had asked as it relates to Alzheimer’s imaging, we currently have 67 PET scanners that are doing on average—well, doing in total 60,000 scans per year, give or take. When you do the math over 255 workdays, each PET CT scanner that we have is doing less than four PET CTs per day. The rest of the day, those scanners are very busy doing routine CT work. If we had--if there were a flood of PET CT demand in relation to these Alzheimer’s drugs, what we would do is to utilize our existing PET CT capacity and each PET CT—a busy PET CT can be doing 13, 14, 15 scans a day, so we have a lot of PET CT capacity in our existing installed base. The challenge we would have at that point is then moving routine CT work to either other scanners, expanding hours, or having to buy additional CTs to take over that level of volume, but we do have a fair bit of PET CT capacity even within our own installed base at this point. Yuan Zhi Got it. Appreciate all the helpful color there. Thank you. Operator Thank you, and our next question today comes from Mitra Ramgopal with Sidoti. Please go ahead. Mitra Ramgopal Yes, hi. Good morning. Thanks for taking the questions. Most of mine have already been answered, but I just had a quick one in terms of the cash on the balance sheet in light of the equity raise. How should we think of the capital allocation priorities in terms of growing the Company via M&A, de novos, investments in technology and personnel versus maybe looking to reduce debt, given the high interest rate environment? Howard Berger I would say all of the above might be the best way for me to answer that, Mitra. I think one of the benefits of the equity raise that we accomplished was giving us the opportunity to look at ways that we could deploy that capital in the best interests of the Company’s growth. As we said, one of our shorter term possibilities is the pay down of some of our debt, but given the Company’s projected cash flow for the rest of this year and next year, I think you’ll find that we’ll be investing in the de novos, upgrading technology of existing equipment, replacing older equipment with newer equipment. We used to use in the past operating leases as a way of minimizing the amount of cash outlay. We have essentially eliminated that and now are (inaudible) cash for virtually all of our capital equipment investment, so I think that will also help our margins and help the growth of the Company. 15 Lastly, we are looking to use the capital we raised to invest in our new digital health initiatives, which we think may have the best returns on investment given the long term prospects that we’re tending towards a capital light business that can have substantially better margins than the imaging center sector. We’ll look to continue to utilize our capital in any way that can help the business grow, and we’ll look forward to discussing some of those with more detail as the rest of this year unfolds. Mark Stolper When we completed the equity offering, because you can imagine prospective investors were very interested in this very question, what we said was part of the reason why we were raising the money was that in October of this year, one of our interest rate swaps rolls off and gives us more exposure to floating rate debt, and we intend—and that’s $100 million of notional exposure that rolls off in October of this year, and so our intention is to take $100 million from our cash balance at that time and repay debt, so that we don’t have more floating rate exposure. That’s still our intention to do that, and the only reason why we wouldn’t do that is if there were some extraordinary use of proceeds before that time, like an M&A opportunity that would take its place, but that’s not the intention in terms of utilizing it for M&A at this point. There’s nothing that’s a foregone conclusion. Mitra Ramgopal Thanks, and congrats on a great quarter again. Howard Berger Thanks Mitra. Operator Thank you. Ladies and gentlemen, this concludes our question-and-answer session. I’d like to turn the conference back over to the Management Team for any final remarks. Howard Berger Again, I would like to take this opportunity to thank all of our shareholders for their continued support and the employees of RadNet for their dedication and hard work. Management will continue its endeavor to be a market leader that provides great services with an appropriate return on investment for all stakeholders. Thank you for your time today, and I look forward to our next call. Good day. Operator Thank you sir. This concludes today’s conference call. We thank you all for attending today’s presentation. You may now disconnect your lines and have a wonderful day. ViaVid has made considerable efforts to provide an accurate transcription. There may be material errors, omissions, or inaccuracies in the reporting of the substance of the conference call. This transcript is being made available for information purposes only. 1-888-562-0262 1-604-929-1352 www.viavid.com 16 |
0001437749-24-034946:ex_747982.htm | 0001437749-24-034946 | 1,120,970 | 1,120,970 | Comstock Inc. (LODE) (CIK 0001120970) | ['LODE'] | 8-K | 8-K | 2024-11-13 | 2024-11-06 | 001-35200 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-35200&action=getcompany | 241,455,137 | EX-99.1 | EXHIBIT 99.1 | 1.01,1.02,9.01 | https://www.sec.gov/Archives/edgar/data/1120970/000143774924034946 | https://www.sec.gov/Archives/edgar/data/1120970/000143774924034946/0001437749-24-034946-index.html | https://www.sec.gov/Archives/edgar/data/1120970/000143774924034946/ex_747982.htm | EX-99.1 3 ex_747982.htm EXHIBIT 99.1 ex_747982.htm Exhibit 99.1 COMSTOCK COMPLETES GENMAT TRANSACTION Strategic Investment in Artificial Intelligence for Materials Discovery in Energy Applications VIRGINIA CITY, NEVADA, November 13, 2024 – Comstock Inc. (NYSE: LODE) (“Comstock” and the “Company”) today announced the acquisition of 100% of the equity of GenMat Licensing LLC (“AICo”) in exchange for 100% of the Company’s equity in Quantum Generative Materials LLC (“GenMat”). AICo holds a non-exclusive end user right and license (“EULA”) to use GenMat’s now and hereafter existing artificial intelligence (“AI”) for materials science technologies, services and products, as well as all current satellite imaging and other data, analytics, and artificial intelligence and other models relating to Comstock’s mining properties in Nevada. AICo also holds a credit against the amounts payable under the EULA equal to 100% of the Company’s cumulative historical investments in GenMat. “Our interest in artificial intelligence reflects the critical need to develop and use artificial intelligence for materials science and mineral discovery, especially for breakthrough energy applications in our current and future addressable markets,” said Corrado De Gasperis, Comstock’s executive chairman and chief executive officer. “Artificial intelligence is even more critical today, as rapidly evolving AI platforms have begun to accelerate the pace of global innovation and redefine industries and competitive requirements. We look forward to further developing and integrating these solutions into our businesses.” GenMat is expected to continue developing its commercial materials science discovery platform (“ZENOMDP”) and its proprietary artificial general physics intelligence technologies (“AGPI”). In the meantime, the capabilities of commercially available AI technologies are accelerating at increasing rates, including the creation of generative, physics-based AI technologies such as GenMat’s ZenoMDP, that are new and demonstrate high potential for harnessing known science and enhancing the innovation, commercialization, and scaling of new technologies in exponentially shorter cycle times. Important and promising use cases for developing, commercially available physics-based AI technologies include materials science applications with new arrangements of atoms, molecules, and physical systems, as well as enhancing industrial chemical processes. Each application offers tremendous potential for Comstock’s existing lines of business, such as by accelerating new catalysts, decreasing carbon intensities, decreasing development costs, decreasing capital costs and increasing throughput and profitability. Kevin Kreisler, Comstock’s chief technology officer, added, “Incorporating the bleeding edge of emerging physics-based AI technologies into our focused and purposeful innovation efforts will dramatically enhance our capacity to rapidly develop and scale solutions for producing, distributing, storing, and using energy more effectively, expediently and efficiently, thereby accelerating the rate that we commercialize our solutions, enabling systemic decarbonization and generate exceptional shareholder value.” Mr. Kreisler leads Comstock’s ongoing technology development and commercialization efforts, including as part of Comstock’s growing innovation capabilities, projects, and partner networks. About Comstock Inc. Comstock Inc. (NYSE: LODE) commercializes innovative technologies that contribute to global decarbonization and the clean energy transition by efficiently converting under-utilized natural resources, primarily, woody biomass into low-carbon renewable fuels, end-of-life metal extraction and renewal, and generative AI-enabled advanced materials synthesis and mineral discovery for sustainable mining. To learn more, please visit www.comstock.inc. Comstock Social Media Policy Comstock Inc. has used, and intends to continue using, its investor relations link and main website at www.comstock.inc in addition to its Twitter, LinkedIn and YouTube accounts, as means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD. Contacts For investor inquiries: RB Milestone Group LLC Tel (203) 487-2759 ir@comstockinc.com For media inquiries or questions: Comstock Inc., Tracy Saville Tel (775) 847-7573 questions@comstockinc.com Forward-Looking Statements This press release and any related calls or discussions may include 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. All statements, other than statements of historical facts, are forward-looking statements. The words “believe,” “expect,” “anticipate,” “estimate,” “project,” “plan,” “should,” “intend,” “may,” “will,” “would,” “potential” and similar expressions identify forward-looking statements but are not the exclusive means of doing so. Forward-looking statements include statements about matters such as: future market conditions; future explorations or acquisitions; future changes in our research, development and exploration activities; future financial, natural, and social gains; future prices and sales of, and demand for, our products and services; land entitlements and uses; permits; production capacity and operations; operating and overhead costs; future capital expenditures and their impact on us; operational and management changes (including changes in the Board of Directors); changes in business strategies, planning and tactics; future employment and contributions of personnel, including consultants; future land and asset sales; investments, acquisitions, joint ventures, strategic alliances, business combinations, operational, tax, financial and restructuring initiatives, including the nature, timing and accounting for restructuring charges, derivative assets and liabilities and the impact thereof; contingencies; litigation, administrative or arbitration proceedings; environmental compliance and changes in the regulatory environment; offerings, limitations on sales or offering of equity or debt securities, including asset sales and associated costs; business opportunities, growth rates, future working capital, needs, revenues, variable costs, throughput rates, operating expenses, debt levels, cash flows, margins, taxes and earnings. These statements are based on assumptions and assessments made by our management in light of their experience and their perception of historical and current trends, current conditions, possible future developments and other factors they believe to be appropriate. Forward-looking statements are not guarantees, representations or warranties and are subject to risks and uncertainties, many of which are unforeseeable and beyond our control and could cause actual results, developments, and business decisions to differ materially from those contemplated by such forward-looking statements. Some of those risks and uncertainties include the risk factors set forth in our filings with the SEC and the following: adverse effects of climate changes or natural disasters; adverse effects of global or regional pandemic disease spread or other crises; global economic and capital market uncertainties; the speculative nature of gold or mineral exploration, and lithium, nickel and cobalt recycling, including risks of diminishing quantities or grades of qualified resources; operational or technical difficulties in connection with exploration, metal recycling, processing or mining activities; costs, hazards and uncertainties associated with precious and other metal based activities, including environmentally friendly and economically enhancing clean mining and processing technologies, precious metal exploration, resource development, economic feasibility assessment and cash generating mineral production; costs, hazards and uncertainties associated with metal recycling, processing or mining activities; contests over our title to properties; potential dilution to our stockholders from our stock issuances, recapitalization and balance sheet restructuring activities; potential inability to comply with applicable government regulations or law; adoption of or changes in legislation or regulations adversely affecting our businesses; permitting constraints or delays; challenges to, or potential inability to, achieve the benefits of business opportunities that may be presented to, or pursued by, us, including those involving battery technology and efficacy, quantum computing and generative artificial intelligence supported advanced materials development, development of cellulosic technology in bio-fuels and related material production; commercialization of cellulosic technology in bio-fuels and generative artificial intelligence development services; ability to successfully identify, finance, complete and integrate acquisitions, joint ventures, strategic alliances, business combinations, asset sales, and investments that we may be party to in the future; changes in the United States or other monetary or fiscal policies or regulations; interruptions in our production capabilities due to capital constraints; equipment failures; fluctuation of prices for gold or certain other commodities (such as silver, zinc, lithium, nickel, cobalt, cyanide, water, diesel, gasoline and alternative fuels and electricity); changes in generally accepted accounting principles; adverse effects of war, mass shooting, terrorism and geopolitical events; potential inability to implement our business strategies; potential inability to grow revenues; potential inability to attract and retain key personnel; interruptions in delivery of critical supplies, equipment and raw materials due to credit or other limitations imposed by vendors; assertion of claims, lawsuits and proceedings against us; potential inability to satisfy debt and lease obligations; potential inability to maintain an effective system of internal controls over financial reporting; potential inability or failure to timely file periodic reports with the Securities and Exchange Commission; potential inability to list our securities on any securities exchange or market or maintain the listing of our securities; and work stoppages or other labor difficulties. Occurrence of such events or circumstances could have a material adverse effect on our business, financial condition, results of operations or cash flows, or the market price of our securities. All subsequent written and oral forward-looking statements by or attributable to us or persons acting on our behalf are expressly qualified in their entirety by these factors. Except as may be required by securities or other law, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Neither this press release nor any related calls or discussions constitutes an offer to sell, the solicitation of an offer to buy or a recommendation with respect to any securities of the Company, the fund, or any other issuer. |
0001683168-24-005428:radnet_ex9901.htm | 0001683168-24-005428 | 790,526 | 790,526 | RadNet, Inc. (RDNT) (CIK 0000790526) | ['RDNT'] | 8-K | 8-K | 2024-08-09 | 2024-08-07 | 001-33307 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-33307&action=getcompany | 241,193,161 | EX-99.1 | PRESS RELEASE | 2.02,9.01 | https://www.sec.gov/Archives/edgar/data/790526/000168316824005428 | https://www.sec.gov/Archives/edgar/data/790526/000168316824005428/0001683168-24-005428-index.html | https://www.sec.gov/Archives/edgar/data/790526/000168316824005428/radnet_ex9901.htm | EX-99.1 2 radnet_ex9901.htm PRESS RELEASE Exhibit 99.1 FOR IMMEDIATE RELEASE RadNet Reports Second Quarter Financial Results with Record Quarterly Revenue and Adjusted EBITDA(1) and Revises Upwards 2024 Financial Guidance Ranges ·Total Company Revenue increased 13.9% to $459.7 million in the second quarter of 2024 from $403.7 million in the second quarter of 2023; Revenue from the Digital Health reportable segment (inclusive of intersegment revenue) increased 36.4% to $15.8 million in the second quarter of 2024 from $11.6 million in the second quarter of 2023 ·Digital Health Revenue growth resulted in part from a $3.2 million (or 136.6%) increase in AI Revenue, which climbed to $5.6 million during the second quarter of 2024 from $2.4 million in the second quarter of 2023 ·Total Company Adjusted EBITDA(1) was $72.3 million in the second quarter of 2024 as compared with $60.4 million in the second quarter of 2023, an increase of 19.7%; Digital Health reportable segment Adjusted EBITDA(1) increased 135.2% to $3.3 million in the second quarter of 2024 from $1.4 million in the second quarter of 2023 ·Total Company Adjusted EBITDA(1) margins increased by 76 bps to 15.7% in the second quarter of 2024 as compared with 15.0% in the second quarter of 2023 ·Adjusting for unusual or one-time items in the quarter, Adjusted Diluted Earnings Per Share(3) was $0.16 for the second quarter of 2024; This compares with Adjusted Earnings Per Share(3) of $0.10 for the second quarter of 2023 ·Aggregate procedural volumes increased 9.2% and same-center procedural volumes increased 6.1% compared with the second quarter of 2023 ·Completed a successful refinancing of our senior secured Term Loan and Revolver, reducing borrowing costs, extending maturities and funding approximately $168 million of additional cash to the balance sheet ·As of June 30, 2024, we had a cash balance of $741.7 million and Net Debt to Adjusted EBITDA(1) ratio of 1.1 ·Previously announced acquisition of six American Health Imaging centers in Houston was completed on June 1, 2024; RadNet has begun the integration of these centers into the previously purchased Houston Medical Imaging operations ·RadNet revises full-year 2024 guidance levels to increase Revenue, Adjusted EBITDA(1) and Free Cash Flow(2) ranges LOS ANGELES, California, August 7, 2024 – RadNet, Inc. (NASDAQ: RDNT), a national leader in providing high-quality, cost-effective, fixed-site outpatient diagnostic imaging services through a network of 398 owned and operated outpatient imaging centers, today reported financial results for its second quarter of 2024. Dr. Howard Berger, President and Chief Executive Officer of RadNet, commented, “Both the Imaging Center and Digital Health reportable operating segments demonstrated strong growth and achieved record quarterly results. Total Company Revenue grew 13.9% as compared with last year’s second quarter to a record $459.7 million. The Digital Health segment Revenue of $15.8 million increased 36.4% from last year’s same quarter. The strong growth in Digital Health was, in part, driven by the AI businesses, whose Revenue increased 136.6% as compared with last year’s second quarter, mainly from the continuing success of the rollout of the Enhanced Breast Cancer Detection (EBCD) DeepHealth AI-powered screening mammography program.” 1 “Improved reimbursement from commercial and capitated payors, continued strong demand for advanced imaging modalities, the growth of the Digital Health businesses and effective cost controls resulted in an increase to Adjusted EBITDA(1) margins. Total Company EBITDA(1) margin of 15.7% during this second quarter increased by 76 basis points over last year’s second quarter.” added Dr. Berger. Dr. Berger continued, “Including the recently announced joint venture with Providence Health System, a recent expansion of the Ventura County, California partnership with Dignity Health and certain new de novo centers we have opened within existing joint ventures, as of the end of this second quarter, we had 149 of our 398 centers (or 37.4%) held in partnership with leading health systems. These partnerships allow us to play a more integral role within the local healthcare communities we serve by increasing access, disseminating new technologies and improving the quality of patient care.” “Given the positive trends we continue to experience in virtually all aspects of our business and the strong financial performance of the second quarter, we are revising upwards certain guidance levels in anticipation of financial results that we believe will exceed both our original expectations and the amendments we made to the guidance ranges upon releasing our first quarter 2024 results in May. We have increased 2024 guidance ranges for Revenue, Adjusted EBITDA(1) and Free Cash Flow(2),” added Dr. Berger. Dr. Berger continued, “In response to high demand and patient backlogs in many of RadNet’s local markets, we continue to pursue expanding capacity through the development and construction of new imaging centers. We anticipate opening approximately six new centers by year end 2024 and an additional 15 centers in 2025. Approximately half of these new centers will be within existing health system partnerships. Within Digital Health, but for Houston, we are substantially complete with implementing the EBCD program. Continued development of the DeepHealth OS technology platform places us on-track towards beginning implementation within RadNet in the coming months and within external customers as early as the first quarter of 2025. The DeepHealth OS integrates generative AI capabilities to help us and external customers automate and drive efficiencies for many of the back-office and support functions involved with running imaging centers.” “RadNet’s balance sheet continues to strengthen. In April, we completed a successful refinancing of our term loan and revolving line of credit, resulting in a reduction of interest rates, an extension of maturities and the funding of additional cash to the balance sheet of approximately $168 million. At quarter end, we had a cash balance of $741.7 million, and our leverage ratio of Net Debt to Adjusted EBITDA(1) was at a record low, slightly above 1.0,” concluded Dr. Berger. Second Quarter Financial Results For the second quarter of 2024, RadNet reported Total Company Revenue of $459.7 million and Adjusted EBITDA(1) of $72.3 million. Revenue increased $56.0 million (or 13.9%) and Adjusted EBITDA(1) increased $11.9 million (or 19.7%) as compared with the second quarter of 2023. For the second quarter of 2024, RadNet reported Digital Health Revenue (inclusive of intersegment revenue) of $15.8 million and Adjusted EBITDA(1) of $3.3 million. Revenue increased $4.2 million (or 36.4%) and Adjusted EBITDA(1) increased $1.9 million (or 135.2%) as compared with the second quarter of 2023. Digital Health Revenue and Adjusted EBITDA(1) growth was due in part from a $3.2 million (or 136.6%) increase in AI Revenue, which climbed to $5.6 million during the second quarter of 2024. Unadjusted for unusual or one-time items impacting the second quarter, Total Company Net Loss for the second quarter of 2024 was $3.0 million as compared with a Total Company Net Income of $8.4 million for the second quarter of 2023. Net Loss Per Share for the second quarter of 2024 was $(0.04), compared with a Net Income per share of $0.12 in the second quarter of 2023, based upon a weighted average number of diluted shares outstanding of 73.4 million shares in 2024 and 60.9 million shares in 2023. 2 There were a number of unusual or one-time items impacting the second quarter including: $1.9 million of non-cash loss from interest rate swaps; $5.6 million of non-cash interest expense related to extraordinary interest rate swap Other Comprehensive Income amortization, $0.8 million expense related to leases for de novo facilities under construction that have yet to open their operations; $8.8 million of debt restructuring and extinguishment expenses related to the April 2024 successful debt refinancing transaction; and $3.3 million of non-capitalized research and development expenses related to the DeepHealth Cloud OS and generative AI. Adjusting for the above items, Total Company Adjusted Earnings(3) was $12.0 million and diluted Adjusted Earnings Per Share(3) was $0.16 during the second quarter of 2024. This compares with Total Company Adjusted Earnings(3) of $5.9 million and diluted Adjusted Earnings Per Share(3) of $0.10 during the second quarter of 2023. For the second quarter of 2024, as compared with the prior year’s second quarter, MRI volume increased 16.0%, CT volume increased 14.8% and PET/CT volume increased 20.4%. Overall volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased 9.2% over the prior year’s second quarter. On a same-center basis, including only those centers which were part of RadNet for both the second quarters of 2024 and 2023, MRI volume increased 11.7%, CT volume increased 9.9% and PET/CT volume increased 13.7%. Overall same-center volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased 6.1% over the prior year’s same quarter Six Month Financial Results For the first six months of 2024, RadNet reported Total Company Revenue of $891.4 million and Adjusted EBITDA(1) of $130.8 million. Revenue increased $97.1 million (or 12.2%) and Adjusted EBITDA(1) increased $22.2 million (or 20.4%) as compared with the first six months of 2023. For the first six months of 2024, RadNet reported Digital Health Revenue (inclusive of intersegment revenue) of $30.5 million and Adjusted EBITDA(1) of $6.8 million. Revenue increased $7.8 million (or 34.4%) and Adjusted EBITDA(1) increased $5.4 million (or 381.5%) as compared with the first six months of 2023. Digital Health Revenue and Adjusted EBITDA(1) growth was due in part to a $5.8 million (or 128.2%) increase in AI Revenue, which climbed to $10.3 million during the six month period of 2024. Unadjusted for one-time or unusual items, Total Company Net Loss for the first six months of 2024 was $5.8 million as compared with a Total Company Net Loss of $12.6 million for the first six months of 2023. Net Loss Per Share for the six month period of 2024 was $(0.08), compared with a Net Loss per share of $(0.21) in the six month period of 2023, based upon a weighted average number of diluted shares outstanding of 71.8 million shares in 2024 and 59.2 million shares in 2023. 2024 Guidance Update RadNet amends its previously announced guidance levels as follows: Imaging Center Segment Original Guidance Range Revised Guidance Range After Q1 Results Revised Guidance Range After Q2 Results Total Net Revenue $1,650 - $1,700 million $1,675 - $1,725 million $1,685 - $1,735 million Adjusted EBITDA(1) $250 - $260 million $255 - $265 million $257 - $267 million Capital Expenditures(a) $125 - $135 million $130 - $140 million $135 - $145 million Cash Interest Expense(b) $40 - $45 million $37 - $42 million $32 - $37 million Free Cash Flow (2) $65 - $75 million $68 - $78 million $72 - $80 million (a)Net of proceeds from the sale of equipment, imaging centers and joint venture interests and New Jersey Imaging Network capital expenditures. (b)Includes payments to and from counterparties on interest rate swaps and nets interest income from our cash balance recorded in Other Income. 3 Digital Health Segment Original Guidance Range Revised Guidance Range After Q1 Results Revised Guidance Range After Q2 Results Total Net Revenue (inclusive of intersegment revenue) $60 - $70 million $60 - $70 million $60 - $70 million Adjusted EBITDA(1) Before Non-Capitalized R&D - DeepHealth Cloud OS & Generative AI $12 - $14 million $13 - $15 million $13 - $15 million Non-Capitalized R&D - DeepHealth Cloud OS & Generative AI $11 - $13 million $12 - $14 million $12 - $14 million Capital Expenditures $3 - $5 million $3 - $5 million $3 - $5 million Free Cash Flow(2) Before Non-Capitalized R&D - DeepHealth Cloud OS & Generative AI $8 - $10 million $8 - $10 million $8 - $10 million Free Cash Flow(2) After Non-Capitalized R&D - DeepHealth Cloud OS & Generative AI $(2) - $(5) million $(2) - $(5) million $(2) - $(5) million “We have increased guidance ranges of our core Imaging Center reporting segment for Revenue and Adjusted EBITDA(1). Furthermore, despite increasing the Capital Expenditures guidance range by $5 million, we are expecting Free Cash Flow(2) to be higher for the year. This is the result of the projected increase in Adjusted EBITDA(1) and lower Cash Interest Expense. With respect to the Digital Health reportable segment, we remain on track to meet our original guidance levels.” Conference Call for Tomorrow Dr. Howard Berger, President and Chief Executive Officer, and Mark Stolper, Executive Vice President and Chief Financial Officer, will host a conference call to discuss its second quarter 2024 results on Thursday, August 8th, 2024 at 7:30 a.m. Pacific Time (10:30 a.m. Eastern Time). Conference Call Details: Date: Thursday, August 8, 2024 Time: 10:30 a.m. Eastern Time Dial In-Number: 844-826-3035 International Dial-In Number: 412-317-5195 It is recommended that participants dial in approximately 5 minutes prior to the start of the 10:30 a.m. call. There will also be simultaneous and archived webcasts available at https://viavid.webcasts.com/starthere.jsp?ei=1680804&tp_key=197206db18 or http://www.radnet.com under the “Investors” menu section and “News Releases” sub-menu of the website. An archived replay of the call will also be available and can be accessed by dialing 844-512-2921 from the U.S., or 412-317-6671 for international callers, and using the passcode 10191154. 4 About RadNet, Inc. RadNet, Inc., is the leading national provider of freestanding, fixed-site diagnostic imaging services and related information technology solutions (including artificial intelligence) in the United States based on the number of locations and annual imaging revenue. RadNet has a network of 398 owned and/or operated outpatient imaging centers. RadNet's markets include Arizona, California, Delaware, Florida, Maryland, New Jersey, New York and Texas. Together with affiliated radiologists, inclusive of full-time and per diem employees and technologists, RadNet has a total of over 10,000 employees. For more information, visit http://www.radnet.com. Forward Looking Statements This press release contains “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are expressions of our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, and anticipated future conditions, events and trends. Forward-looking statements can generally be identified by words such as: “anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,” “project,” “estimate,” “expect,” “strategy,” “future,” “likely,” “may,” “should,” “will” and similar references to future periods. Forward-looking statements in this press release include, among others, statements about our anticipated business results, balance sheet and liquidity and our future liquidity, burn rate and our continuing ability to service or refinance our current indebtedness. Forward-looking statements are neither historical facts nor assurances of future performance. Because forward-looking statements relate to the future, they are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not place undue reliance on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following: ·the availability and terms of capital to fund our business; ·our ability to service our indebtedness, make principal and interest payments as those payments become due and remain in compliance with applicable debt covenants, in addition to our ability to refinance such indebtedness on acceptable terms; ·changes in general economic conditions nationally and regionally in the markets in which we operate; ·the availability and terms of capital to fund the expansion of our business and improvements to our existing facilities; ·our ability to maintain our current credit rating and the impact on our funding costs and competitive position if we do not do so; ·our ability to acquire, develop, implement and monetize technology, digital health initiatives, artificial intelligence algorithms and applications; ·volatility in interest and exchange rates, or credit markets; ·the adequacy of our cash flow and earnings to fund our current and future operations; ·changes in service mix, revenue mix and procedure volumes; ·delays in receiving payments for services provided; ·increased bankruptcies among our partner physicians or joint venture partners; ·the impact of the political environment and related developments on the current healthcare marketplace and on our business, including with respect to the future of the Affordable Care Act; ·the extent to which the ongoing implementation of healthcare reform, or changes in or new legislation, regulations or guidance, enforcement thereof by federal and state regulators or related litigation result in a reduction in coverage or reimbursement rates for our services, or other material impacts to our business; 5 ·closures or slowdowns and changes in labor costs and labor difficulties, including stoppages affecting either our operations or our suppliers' abilities to deliver supplies needed in our facilities; ·the occurrence of hostilities, political instability or catastrophic events; ·the emergence or reemergence of and effects related to future pandemics, epidemics and infectious diseases; and ·noncompliance by us with any privacy or security laws or any cybersecurity incident or other security breach by us or a third party involving the misappropriation, loss or other unauthorized use or disclosure of confidential information. Any forward-looking statement contained in this current report is based on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that we may make from time to time, whether as a result of changed circumstances, new information, future developments or otherwise, except as required by applicable law. Regulation G: GAAP and Non-GAAP Financial Information This release contains certain financial information not reported in accordance with GAAP. The Company uses both GAAP and non-GAAP metrics to measure its financial results. The Company believes that, in addition to GAAP metrics, these non-GAAP metrics assist the Company in measuring its cash-based performance. The Company believes this information is useful to investors and other interested parties because it removes unusual and nonrecurring charges that occur in the affected period and provides a basis for measuring the Company's financial condition against other quarters. Such information should not be considered as a substitute for any measures calculated in accordance with GAAP, and may not be comparable to other similarly titled measures of other companies. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Reconciliation of this information to the most comparable GAAP measures is included in this release in the tables which follow. CONTACTS: RadNet, Inc. Mark Stolper, 310-445-2800 Executive Vice President and Chief Financial Officer 6 RADNET, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA) June 30, 2024 December 31, 2023 (unaudited) ASSETS CURRENT ASSETS Cash and Cash equivalents $741,679 $342,570 Accounts receivable 195,288 163,707 Due from affiliates 29,221 25,342 Prepaid expenses and other current assets 38,536 47,657 Total current assets 1,004,724 579,276 PROPERTY, EQUIPMENT AND RIGHT-OF-USE ASSETS Property and equipment, net 652,882 604,401 Operating lease right-of-use assets 624,081 596,032 Total property, equipment and right-of-use assets 1,276,963 1,200,433 OTHER ASSETS Goodwill 708,980 679,463 Other intangible assets 84,049 90,615 Deferred financing costs 2,505 1,643 Investment in joint ventures 100,844 92,710 Deposits and other 51,358 46,333 Total Assets $3,229,423 $2,690,473 LIABILITIES AND EQUITY CURRENT LIABILITIES Accounts payable, accrued expenses and other $353,898 $342,940 Due to affiliates 32,375 15,910 Deferred revenue 4,462 4,647 Current operating lease liability 59,251 55,981 Current portion of notes payable 24,215 17,974 Total current liabilities 474,201 437,452 LONG-TERM LIABILITIES Long-term operating lease liability 632,385 605,097 Notes payable, net of current portion 1,002,392 812,068 Deferred tax liability, net 17,471 15,776 Other non-current liabilities 10,134 6,721 Total liabilities 2,136,583 1,877,114 EQUITY RadNet, Inc. stockholders' equity: Common stock - $0.0001 par value, 200,000,000 shares authorized; 73,968,042 and 67,956,318 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively 7 7 Additional paid-in-capital 974,355 722,750 Accumulated other comprehensive loss (8,057) (12,484) Accumulated deficit (85,339) (79,578) Total RadNet, Inc.'s Stockholders' equity: 880,966 630,695 Noncontrolling interests 211,874 182,664 Total Equity 1,092,840 813,359 Total liabilities and equity $3,229,423 $2,690,473 7 RADNET, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (IN THOUSANDS EXCEPT FOR SHARE AND PER SHARE DATA) (unaudited) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 REVENUE Service fee revenue $422,745 $363,918 $819,934 $716,338 Revenue under capitation arrangements 36,969 39,797 71,487 77,941 Total service revenue 459,714 403,715 891,421 794,279 OPERATING EXPENSES Cost of operations, excluding depreciation and amortization 389,724 345,147 777,313 697,012 Depreciation and amortization 34,475 32,180 66,843 63,495 Loss (gain) on sale and disposal of equipment and other 401 77 587 656 Severance costs 268 1,870 493 2,004 Total operating expenses 424,868 379,274 845,236 763,167 INCOME (LOSS) FROM OPERATIONS 34,846 24,441 46,185 31,112 OTHER INCOME AND EXPENSES Interest expense 26,082 16,039 42,349 31,761 Equity in earnings of joint ventures (3,389) (1,423) (7,713) (2,851) Non-cash change in fair value of interest rate hedge 1,890 (4,159) 674 (66) Debt restructuring and extinguishment expenses 8,762 – 8,762 – Other expenses (income) (7,900) 40 (10,834) 1,472 Total other (income) expenses 25,445 10,497 33,238 30,316 INCOME (LOSS) BEFORE INCOME TAXES 9,401 13,944 12,947 796 Provision for income taxes (2,456) 614 (592) (521) NET INCOME (LOSS) 6,945 14,558 12,355 275 Net income (loss) attributable to noncontrolling interests 9,927 6,189 18,116 12,911 NET INCOME (LOSS) ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS $(2,982) $8,369 $(5,761) $(12,636) BASIC NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS $(0.04) $0.14 $(0.08) $(0.21) DILUTED NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS $(0.04) $0.12 $(0.08) $(0.21) WEIGHTED AVERAGE SHARES OUTSTANDING Basic 73,419,124 59,880,803 71,795,080 59,221,453 Diluted 73,419,124 60,916,985 71,795,080 59,221,453 8 RADNET, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASHFLOWS (IN THOUSANDS) (unaudited) Six Months Ended June 30, 2024 2023 CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $12,355 $275 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 66,843 63,495 Amortization of operating lease assets 30,006 31,601 Equity in earnings of joint ventures (6,713) 6,096 Amortization deferred financing costs and loan discount 1,541 1,494 Loss (Gain) on sale and disposal of equipment 587 656 Loss on extinguishment of debt 2,080 – Amortization of cash flow hedge 7,256 1,844 Non-cash change in fair value of interest rate hedge 674 (66) Stock-based compensation 16,645 17,055 Change in fair value of contingent consideration 1,974 3,098 Changes in operating assets and liabilities, net of assets acquired and liabilities assumed in purchase transactions: Accounts receivable (31,581) (8,124) Other current assets 5,242 4,703 Other assets (5,553) (6,590) Deferred taxes 1,791 (2,249) Operating lease liability (27,707) (28,582) Deferred revenue (185) 1,033 Accounts payable, accrued expenses and other 57,835 14,952 Net cash provided by operating activities 133,090 100,691 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of imaging facilities and other acquisitions (32,771) (10,315) Purchase of property and equipment and other (104,095) (95,380) Proceeds from sale of equipment 9 73 Equity contributions in existing and purchase of interest in joint ventures (1,421) (288) Net cash used in investing activities (138,278) (105,910) CASH FLOWS FROM FINANCING ACTIVITIES Principal payments on notes and leases payable (2,624) (1,052) Payments on Term Loan Debt (682,438) (7,376) Proceeds from issuance of new debt, net of issuing costs 863,869 – Contribution from noncontrolling interests 4,169 – Payments on contingent consideration (3,614) – Distributions paid to noncontrolling interests (2,423) (3,523) Proceeds from sale of economic interests in majority owned subsidiary, net of taxes 8,713 – Proceeds from issuance of common stock 218,385 246,202 Proceeds from issuance of common stock upon exercise of options 367 51 Net cash provided by financing activities 404,404 234,302 EFFECT OF EXCHANGE RATE CHANGES ON CASH (107) (266) NET DECREASE IN CASH AND CASH EQUIVALENTS 399,109 228,817 CASH AND CASH EQUIVALENTS, beginning of period 342,570 127,834 CASH AND CASH EQUIVALENTS, end of period 741,679 356,651 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid during the period for interest $34,203 $39,301 Cash paid during the period for income taxes $705 $201 10 RADNET, INC. AND SUBSIDIARIES RECONCILIATION OF GAAP NET INCOME ATTRIBUTABLE TO RADNET, INC. COMMON SHAREHOLDERS TO ADJUSTED EBITDA (IN THOUSANDS) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Net income (loss) attributable to Radnet, Inc. common stockholders $(2,982) $8,369 $(5,761) $(12,636) Income taxes 2,456 (614) 592 521 Interest expense 26,082 16,039 42,349 31,761 Severance costs 268 1,870 493 2,004 Depreciation and amortization 34,475 32,180 66,843 63,495 Non-cash employee stock-based compensation 4,749 4,871 16,646 17,056 Loss (gain) on sale and disposal of equipment and other 401 77 587 656 Non-cash change in fair value of interest rate hedge 1,890 (4,159) 674 (66) Other expenses (income) (7,900) 40 (10,834) 1,472 Non-Capitalized R&D - DeepHealth Cloud OS & Generative AI 3,317 – 6,632 – Loss (gain) on extinguishment of debt and related expenses 8,762 – 8,762 – Non-cash change to contingent consideration – 1,014 1,974 2,630 Non-operational rent expenses 809 759 1,832 1,718 Adjusted EBITDA Including EBITDA from Digital Health $72,327 $60,446 $130,789 $108,611 EBITDA from Digital Health 3,269 1,390 6,789 1,410 Adjusted EBITDA excluding EBITDA from Digital Health $69,058 $59,056 $124,000 $107,201 11 PAYMENTS BY PAYOR CLASS Second Quarter 2024 Commercial Insurance 58.5% Medicare 22.1% Capitation 8.0% Medicaid 2.4% Workers Compensation/Personal Injury 2.4% Other* 6.5% Total 100.0% * Includes management fee, teleradiology and Digital Health financial reporting unit revenue. PAYMENTS BY MODALITY Second Quarter Full Year Full Year Full Year 2024 2023 2022 2021 MRI 37.2% 36.8% 36.8% 36.0% CT 15.8% 16.8% 17.5% 17.2% PET/CT 7.1% 6.4% 5.8% 5.5% X-ray 6.2% 6.5% 6.7% 3.9% Ultrasound 13.9% 12.9% 12.6% 12.7% Mammography 16.1% 16.0% 15.3% 16.1% Nuclear Medicine 1.0% 0.8% 0.9% 1.0% Other 2.7% 3.9% 4.5% 4.6% 100.0% 100.0% 100.0% 100.0% PROCEDURES BY MODALITY* Second Quarter Second Quarter 2024 2023 MRI 449,781 387,619 CT 269,939 235,138 PET/CT 18,107 15,036 Nuclear Medicine 9,610 9,463 Ultrasound 664,043 620,660 Mammography 483,510 450,747 X-ray and Other 890,814 832,719 Total 2,785,804 2,551,382 * Volumes include wholy owned and joint venture centers. 13 RADNET, INC. AND SUBSIDIARIES SCHEDULE OF ADJUSTED EARNINGS AND EARNINGS PER SHARE (3) (IN THOUSANDS EXCEPT SHARE DATA) (unaudited) Three Months Ended June 30, 2024 2023(iv) NET INCOME ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS (2,982) $8,369 Add/Subtract non-cash change in fair value of interest rate swaps (i) 1,890 (4,159) Non-cash interest expense from extraordinary interest rate swap OCI amortization 5,559 – Non-operational rent expenses (iii) 809 759 Contingent consideration – 1,014 Non-Capitalized R&D - DeepHealth Cloud OS & Generative AI 3,317 – Debt restructing and extinguishment expenses (v) 8,762 – Total adjustments - loss (gain) 20,337 (2,386) Subtract tax impact of Adjustments (ii) (5,308) (105) Tax effected impact of adjustments 15,029 (2,491) TOTAL ADJUSTMENT TO NET INCOME ATTRIBUTABLE TO RADNET, INC. COMMON SHAREHOLDERS 15,029 (2,491) ADJUSTED NET INCOME ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS 12,047 5,878 WEIGHTED AVERAGE SHARES OUTSTANDING Diluted 74,944,366 60,916,985 ADJUSTED DILUTED NET INCOME PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS 0.16 $0.10 (i) Impact from the change in fair value of the swpas during the quarter. Excludes the recurring amortization of the accumulation of the changes in fair value out of Other Comprehensive Income that existed prior to the hedges becoming ineffective. (ii) Tax effected using 26.1% and (4.40)% blended federal and state effective tax rate for the second quarter of 2024 and 2023, respectively. (iii) Represents rent expense associated with de novo sites under construction prior to them becoming operational. (iv) Restated from what was presented in 2023 to include the losses of the AI businesses (ie, not add the losses back to earnings as was the case in 2023). The restated Adjusted Earnings for 2023 is due to the fact that AI is no longer its own reportable operating segment and is now embedded in the Digital Health reportable operating segment. (v) Extraordinary expense related to the Company's successful April 2024 debt refinancing transaction. 14 Footnotes (1) The Company defines Adjusted EBITDA as earnings before interest, taxes, depreciation and amortization, each from continuing operations and adjusted for losses or gains on the sale of equipment, other income or loss, debt extinguishments and non-cash equity compensation. Adjusted EBITDA includes equity earnings in unconsolidated operations and subtracts allocations of earnings to non-controlling interests in subsidiaries, and is adjusted for non-cash or extraordinary and one-time events taken place during the period. Adjusted EBITDA is reconciled to its nearest comparable GAAP financial measure. Adjusted EBITDA is a non-GAAP financial measure used as analytical indicator by RadNet management and the healthcare industry to assess business performance, and is a measure of leverage capacity and ability to service debt. Adjusted EBITDA should not be considered a measure of financial performance under GAAP, and the items excluded from Adjusted EBITDA should not be considered in isolation or as alternatives to net income, cash flows generated by operating, investing or financing activities or other financial statement data presented in the consolidated financial statements as an indicator of financial performance or liquidity. As Adjusted EBITDA is not a measurement determined in accordance with GAAP and is therefore susceptible to varying methods of calculation, this metric, as presented, may not be comparable to other similarly titled measures of other companies. (2) As noted above, the Company defines Free Cash Flow as Adjusted EBITDA less total Capital Expenditures (whether completed with cash or financed) and Cash Interest Expense. Free Cash Flow is a non-GAAP financial measure. The Company uses Free Cash Flow because the Company believes it provides useful information for investors and management because it measures our capacity to generate cash from our operating activities. Free Cash Flow does not represent total cash flow since it does not include the cash flows generated by or used in financing activities. In addition, our definition of Free Cash Flow may differ from definitions used by other companies. Free Cash Flow should not be considered a measure of financial performance under GAAP, and the items excluded from Adjusted EBITDA should not be considered in isolation or as alternatives to net income, cash flows generated by operating, investing or financing activities or other financial statement data presented in the consolidated financial statements as an indicator of financial performance or liquidity. As Adjusted EBITDA is not a measurement determined in accordance with GAAP and is therefore susceptible to varying methods of calculation, this metric, as presented, may not be comparable to other similarly titled measures of other companies. (3) The Company defines Adjusted Earnings (Loss) Per Share as net income or loss attributable to RadNet, Inc. common stockholders and excludes losses or gains on the disposal of equipment, loss on debt extinguishments, bargain purchase gains, severance costs, loss on impairment, loss or gain on swap valuation, gain on extinguishment of debt, unusual or non-recurring entries that impact the Company’s tax provision and any other non-recurring or unusual transactions recorded during the period. Adjusted Earnings (Loss) Per Share is reconciled to its nearest comparable GAAP financial measure. Adjusted Earnings (Loss) Per Share is a non-GAAP financial measure used as analytical indicator by RadNet management and the healthcare industry to assess business performance. Adjusted Earnings Per Share should not be considered a measure of financial performance under GAAP, and the items excluded from Adjusted Earnings Per Share should not be considered in isolation or as alternatives to net income, cash flows generated by operating, investing or financing activities or other financial statement data presented in the consolidated financial statements as an indicator of financial performance or liquidity. As Adjusted Earnings Per Share is not a measurement determined in accordance with GAAP and is therefore susceptible to varying methods of calculation, this metric, as presented, may not be comparable to other similarly titled measures of other companies. 15 |
0001683168-25-005844:radnet_ex9901.htm | 0001683168-25-005844 | 790,526 | 790,526 | RadNet, Inc. (RDNT) (CIK 0000790526) | ['RDNT'] | 8-K | 8-K | 2025-08-11 | 2025-08-10 | 001-33307 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-33307&action=getcompany | 251,200,009 | EX-99.1 | PRESS RELEASE | 2.02,9.01 | https://www.sec.gov/Archives/edgar/data/790526/000168316825005844 | https://www.sec.gov/Archives/edgar/data/790526/000168316825005844/0001683168-25-005844-index.html | https://www.sec.gov/Archives/edgar/data/790526/000168316825005844/radnet_ex9901.htm | EX-99.1 2 radnet_ex9901.htm PRESS RELEASE Exhibit 99.1 FOR IMMEDIATE RELEASE RadNet Reports Second Quarter Financial Results with Record Quarterly Revenue and Adjusted EBITDA(1) and Revises Upwards 2025 Financial Guidance Ranges ·Total Company Revenue increased 8.4% to a quarterly record of $498.2 million in the second quarter of 2025 from $459.7 million in the second quarter of 2024; Revenue from the Digital Health reportable segment (inclusive of intersegment revenue) increased 30.9% to a quarterly record of $20.7 million in the second quarter of 2025 from $15.8 million in the second quarter of 2024 ·Total Company Adjusted EBITDA(1) was a quarterly record of $81.2 million in the second quarter of 2025 as compared with $72.3 million in the second quarter of 2024, an increase of 12.3%; Digital Health reportable segment Adjusted EBITDA(1) increased 4.1% to $3.4 million in the second quarter of 2025 from $3.3 million in the second quarter of 2024 ·Total Company Adjusted EBITDA(1) margins increased by 57 basis points to 16.3% in the second quarter of 2025 as compared with 15.7% in the second quarter of 2024 ·As a percentage of total procedural volumes, advanced imaging increased to 27.5% in the second quarter of 2025 from 26.5% in the second quarter of 2024, an increase of 102 basis points ·Adjusting for unusual or one-time items in the quarter, Adjusted Earnings(3) was $23.8 million and Adjusted Earnings Per Share(3) was $0.31 for the second quarter of 2025; This compares with Adjusted Earnings(3) of $12.0 million and Adjusted Earnings Per Share(3) of $0.16 for the second quarter of 2024 ·In the second quarter of 2025, aggregate advanced imaging (MRI, CT and PET/CT) procedural volumes increased 9.0% and same-center advanced imaging procedural volumes increased 6.6% as compared with the second quarter of 2024 ·As of June 30, 2025, balance sheet cash was $833.2 million and Net Debt to Adjusted EBITDA(1) ratio was 0.96x ·RadNet revises full-year 2025 guidance levels to increase Revenue and Adjusted EBITDA(1) guidance ranges LOS ANGELES, California, August 11, 2025 – RadNet, Inc. (NASDAQ: RDNT), a national leader in providing high-quality, cost-effective, fixed-site outpatient diagnostic imaging services through a network of 405 owned and operated outpatient imaging centers, today reported financial results for its second quarter of 2025. Dr. Howard Berger, President and Chief Executive Officer of RadNet, commented, “Both the Imaging Center and Digital Health reportable operating segments demonstrated strong growth and achieved record quarterly results. In the second quarter of 2025, total Company Revenue grew 8.4% and Digital Health segment Revenue increased 30.9% from last year’s same quarter. Growth was driven by strong increases in aggregate and same center procedural volumes, improved reimbursement from commercial and capitated payors, a continuing shift in procedural volumes towards advanced imaging modalities and incremental Digital Health sales and licenses of workflow software and AI solutions.” 1 Dr. Berger continued, “Our focus has been on driving more advanced imaging procedures (MRI, CT and PET/CT) and increasing advanced imaging capacity at the imaging centers through a variety of initiatives. Within MRI, the 9.0% aggregate and 6.6% same center growth in the second quarter as compared with last year’s second quarter is partially the result of capacity created from investments made in MRI software upgrades and operating protocols which enable shorter scan times. CT programs have expanded on both coasts to offer more complex procedures, such as Cardiac CT Angiography, which is often enhanced with AI-assisted analytics. Within PET/CT, our fastest growing modality with 22.4% growth from last year’s second quarter, emphasis has been on newer diagnostic and screening offerings for prostate cancer, Alzheimer’s disease and dementia and new procedures with leading-edge tumor-specific radioactive tracers. The growth in advanced imaging, particularly MRI, has been furthered by the implementation of Digital Health’s TechLiveTM, our remote screening technology recently cleared by the FDA. TechLiveTM is assisting with ongoing technologist staffing challenges by enabling remote control of advanced imaging equipment to expand hours of operation and by staffing exam rooms which otherwise would have been closed.” “The growth in advanced imaging from these initiatives along with effective cost management contributed to an increase in our Adjusted EBITDA(1) margin to 16.3% during the second quarter of 2025, which compares with 15.7% in last year’s second quarter, an improvement of 57 basis points. Adjusted EBITDA(1) during the second quarter of 2025 increased by 12.3% to $81.2 million from $72.3 million in last year’s second quarter,” added Dr. Berger. Dr. Berger continued, “In response to high demand and patient backlogs in many of RadNet’s local markets, we continue to pursue capacity expansion through the development and construction of new imaging centers. One new facility was opened during the second quarter in East Brunswick, New Jersey, and nine additional de novo facility openings are projected for the remainder of 2025. Within Digital Health, we continue to see growth from the nationwide expansion of the AI-powered Enhanced Breast Cancer Detection program, where today almost 45% of RadNet screening mammography patients are electing to participate for a $40 out-of-pocket charge. We continue to make progress with the internal RadNet implementation of the TechLiveTM remote scanning solution, elements of the DeepHealth Operations and Diagnostic suites and the newly acquired See-Mode ultrasound AI capabilities.” “Given the sustainable positive trends we are experiencing and the strong financial performance of the second quarter, we are revising upwards 2025 guidance levels for Revenue and Adjusted EBITDA(1) in anticipation of financial results that we believe will exceed both our original expectations and the amendments we made to the guidance ranges upon releasing first quarter 2025 results in May,” concluded Dr. Berger. Second Quarter Financial Results For the second quarter of 2025, RadNet reported Total Company Revenue of $498.2 million and Adjusted EBITDA(1) of $81.2 million. Revenue increased $38.5 million (or 8.4%) and Adjusted EBITDA(1) increased $8.9 million (or 12.3%) as compared with the second quarter of 2024. For the second quarter of 2025, RadNet reported Digital Health Revenue (inclusive of intersegment revenue) of $20.7 million and Adjusted EBITDA(1) of $3.4 million. Revenue increased $4.9 million (or 30.9%) and Adjusted EBITDA(1) increased $134,000 (or 4.1%) as compared with the second quarter of 2024. 2 Unadjusted for unusual or one-time items impacting the second quarter of 2025, Total Company Net Income for the second quarter of 2025 was $14.5 million as compared with a Total Company Net Loss of $3.0 million for the second quarter of 2024. Net Income Per Share for the second quarter of 2025 was $0.19, compared with a Net Loss per share of $(0.04) in the second quarter of 2024, based upon a weighted average number of diluted shares outstanding of 75.5 million shares in 2025 and 73.4 million shares in 2024. There were a number of unusual or one-time items impacting the second quarter including: $2.0 million of non-cash loss from interest rate swaps; $496,000 expense related to leases for de novo facilities under construction that have yet to open their operations; $123,000 of lease abandonment charge; $2.3 million of acquisition transaction costs; and $4.8 million of non-capitalized research and development expenses related to the DeepHealth Cloud OS and generative AI. Adjusting for the above items, Total Company Adjusted Earnings(3) was $23.8 million and diluted Adjusted Earnings Per Share(3) was $0.31 during the second quarter of 2025. This compares with Total Company Adjusted Earnings(3) of $12.0 million and diluted Adjusted Earnings Per Share(3) of $0.16 during the second quarter of 2024. For the second quarter of 2025, as compared with the prior year’s second quarter, MRI volume increased 9.0%, CT volume increased 8.1%, PET/CT volume increased 22.4% and routine imaging (inclusive of nuclear medicine, ultrasound, mammography, x-ray and other exams) increased 3.5% over the prior year’s second quarter. On a same-center basis, including only those centers which were part of RadNet for both the second quarters of 2025 and 2024, MRI volume increased 6.6%, CT volume increased 5.9%, PET/CT volume increased 16.2% and routine imaging increased 1.4% over the prior year’s second quarter. Six Month Financial Results For the first six months of 2025, RadNet reported Total Company Revenue of $969.6 million and Adjusted EBITDA(1) of $127.6 million. Revenue increased $78.2 million (or 8.8%) and Adjusted EBITDA(1) decreased $3.1 million (or 2.4%) as compared with the first six months of 2024. The decrease in Adjusted EBITDA(1) was primarily the result of the previously estimated loss of $15 million of Adjusted EBITDA(1) as a result of the California wildfires and severe winter weather conditions impacting the first quarter of 2025. For the first six months of 2025, RadNet reported Digital Health Revenue (inclusive of intersegment revenue) of $39.9 million and Adjusted EBITDA(1) of $7.1 million. Revenue increased $9.5 million (or 31.0%) and Adjusted EBITDA(1) increased $325,000 (or 4.8%) as compared with the first six months of 2024. Unadjusted for one-time or unusual items, Total Company Net Loss for the first six months of 2025 was $23.5 million as compared with a Total Company Net Loss of $5.8 million for the first six months of 2024. Net Loss Per Share for the six-month period of 2025 was $(0.32), compared with a Net Loss per share of $(0.08) in the six-month period of 2024, based upon a weighted average number of diluted shares outstanding of 74.1 million shares in 2025 and 71.8 million shares in 2024. 3 2025 Guidance Update RadNet updates guidance levels as follows: Imaging Center Segment Original Guidance Range Revised Guidance Range After Q1 Results Revised Guidance Range After Q2 Results Total Net Revenue $1,825 - $1,875 million $1,835 - $1,885 million $1,850 - $1,900 million Adjusted EBITDA(1) $265 - $273 million $268 - $276 million $271 - $279 million Capital Expenditures(a) $140 - $150 million $145 - $155 million $152 - $162 million Cash Interest Expense(b) $35 - $40 million $35 - $40 million $35 - $40 million Free Cash Flow (2) $70 - $80 million $70 - $80 million $70 - $80 million (a)Net of proceeds from the sale of equipment and New Jersey Imaging Network capital expenditures. (b)Net of payments from counterparties on interest rate swaps and interest income from our cash balance recorded in Other Income. Digital Health Segment Original Guidance Range Revised Guidance Range After Q1 Results Revised Guidance Range After Q2 Results Total Net Revenue (inclusive of intersegment revenue) $80 - $90 million $80 - $90 million $80 - $90 million Adjusted EBITDA(1) Before Non-Capitalized R&D - DeepHealth Cloud OS & Generative AI $15 - $17 million $15 - $17 million $15 - $17 million Non-Capitalized R&D - DeepHealth Cloud OS & Generative AI $16 - $18 million $16 - $18 million $17 - $19 million Capital Expenditures $3 - $5 million $3 - $5 million $2 - $4 million Free Cash Flow(2) Before Non-Capitalized R&D - DeepHealth Cloud OS & Generative AI $11 - $13 million $11 - $13 million $11 - $13 million Free Cash Flow(2) After Non-Capitalized R&D - DeepHealth Cloud OS & Generative AI $(5) - $(8) million $(5) - $(8) million $(5) - $(8) million 4 Conference Call for Tomorrow Dr. Howard Berger, President and Chief Executive Officer, and Mark Stolper, Executive Vice President and Chief Financial Officer, will host a conference call to discuss its second quarter 2025 results on Monday, August 11th, 2025 at 7:30 a.m. Pacific Time (10:30 a.m. Eastern Time). Conference Call Details: Date: Monday, August 11, 2025 Time: 10:30 a.m. Eastern Time Dial In-Number: 844-826-3035 International Dial-In Number: 412-317-5195 It is recommended that participants dial in approximately 5 minutes prior to the start of the 10:30 a.m. call. There will also be simultaneous and archived webcasts available at https://viavid.webcasts.com/starthere.jsp?ei=1729070&tp_key=3a3e8702a3 or http://www.radnet.com under the “Investors” menu section and “News Releases” sub-menu of the website. An archived replay of the call will also be available and can be accessed by dialing 844-512-2921 from the U.S., or 412-317-6671 for international callers, and using the passcode 10201853. About RadNet, Inc. RadNet, Inc. is a leading national provider of freestanding, fixed-site diagnostic imaging services in the United States based on the number of locations and annual imaging revenue. RadNet has a network of 405 owned and/or operated outpatient imaging centers. RadNet’s markets include Arizona, California, Delaware, Florida, Maryland, New Jersey, New York and Texas. In addition, RadNet provides radiology information technology and artificial intelligence solutions marketed under the DeepHealth brand, teleradiology professional services and other related products and services to customers in the diagnostic imaging industry. Together with contracted radiologists, and inclusive of full-time and per diem employees and technologists, RadNet has a total of over 11,000 team members. For more information, visit http://www.radnet.com. Forward Looking Statements This press release contains “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are expressions of our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, and anticipated future conditions, events and trends. Forward-looking statements can generally be identified by words such as: “anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,” “project,” “estimate,” “expect,” “strategy,” “future,” “likely,” “may,” “should,” “will” and similar references to future periods. Forward-looking statements in this press release include, among others, statements about our anticipated business results, balance sheet and liquidity and our future liquidity, burn rate and our continuing ability to service or refinance our current indebtedness. 5 Forward-looking statements are neither historical facts nor assurances of future performance. Because forward-looking statements relate to the future, they are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not place undue reliance on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following: ·the availability and terms of capital to fund our business; ·our ability to service our indebtedness, make principal and interest payments as those payments become due and remain in compliance with applicable debt covenants, in addition to our ability to refinance such indebtedness on acceptable terms; ·changes in general economic conditions nationally and regionally in the markets in which we operate; ·the availability and terms of capital to fund the expansion of our business and improvements to our existing facilities; ·our ability to maintain our current credit rating and the impact on our funding costs and competitive position if we do not do so; ·our ability to acquire, develop, implement and monetize technology, digital health initiatives, artificial intelligence algorithms and applications; ·volatility in interest and exchange rates, or credit markets; ·the adequacy of our cash flow and earnings to fund our current and future operations; ·changes in service mix, revenue mix and procedure volumes; ·delays in receiving payments for services provided; ·increased bankruptcies among our partner physicians or joint venture partners; ·the impact of the political environment and related developments on the current healthcare marketplace and on our business, including with respect to the future of the Affordable Care Act; ·the extent to which the ongoing implementation of healthcare reform, or changes in or new legislation, regulations or guidance, enforcement thereof by federal and state regulators or related litigation result in a reduction in coverage or reimbursement rates for our services, or other material impacts to our business; ·closures or slowdowns and changes in labor costs and labor difficulties, including stoppages affecting either our operations or our suppliers' abilities to deliver supplies needed in our facilities; ·the occurrence of hostilities, political instability or catastrophic events; ·the emergence or reemergence of and effects related to future pandemics, epidemics and infectious diseases; and ·noncompliance by us with any privacy or security laws or any cybersecurity incident or other security breach by us or a third party involving the misappropriation, loss or other unauthorized use or disclosure of confidential information. Any forward-looking statement contained in this current report is based on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that we may make from time to time, whether as a result of changed circumstances, new information, future developments or otherwise, except as required by applicable law. 6 Regulation G: GAAP and Non-GAAP Financial Information This release contains certain financial information not reported in accordance with GAAP. The Company uses both GAAP and non-GAAP metrics to measure its financial results. The Company believes that, in addition to GAAP metrics, these non-GAAP metrics assist the Company in measuring its cash-based performance. The Company believes this information is useful to investors and other interested parties because it removes unusual and nonrecurring charges that occur in the affected period and provides a basis for measuring the Company's financial condition against other quarters. Such information should not be considered as a substitute for any measures calculated in accordance with GAAP, and may not be comparable to other similarly titled measures of other companies. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Reconciliation of this information to the most comparable GAAP measures is included in this release in the tables which follow. CONTACTS: RadNet, Inc. Mark Stolper, 310-445-2800 Executive Vice President and Chief Financial Officer 7 RADNET, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA) June 30, 2025 December 31, 2024 (unaudited) ASSETS CURRENT ASSETS Cash and Cash equivalents $833,152 $740,020 Accounts receivable 199,991 185,821 Due from affiliates 12,959 41,869 Prepaid expenses and other current assets 48,277 51,542 Total current assets 1,094,379 1,019,252 PROPERTY, EQUIPMENT AND RIGHT-OF-USE ASSETS Property and equipment, net 741,382 694,791 Operating lease right-of-use assets 666,054 639,740 Total property, plant, equipment and right-of-use assets 1,407,436 1,334,531 OTHER ASSETS Goodwill 751,514 710,663 Other intangible assets 91,078 81,351 Deferred financing costs 1,974 2,265 Investment in joint ventures 125,804 104,057 Deposits and other 42,781 34,571 Total Assets $3,514,966 $3,286,690 LIABILITIES AND EQUITY CURRENT LIABILITIES Accounts payable, accrued expenses and other $406,689 $351,464 Due to affiliates 51,067 43,650 Deferred revenue 3,433 3,288 Current operating lease liability 59,537 56,618 Current portion of notes payable 25,484 24,692 Total current liabilities 546,210 479,712 LONG-TERM LIABILITIES Long-term operating lease liability 678,783 655,979 Notes payable, net of current portion 1,077,251 991,574 Deferred tax liability, net 21,441 22,230 Other non-current liabilities 12,020 3,785 Total liabilities 2,335,705 2,153,280 EQUITY RadNet, Inc. stockholders' equity: Common stock - $0.0001 value, 200,000,000 shares authorized; 75,067,102 and 74,036,993 shares issued and outstanding at June 30, 2025 and December 31, 2024, respectively 8 7 Additional paid-in-capital 1,025,936 988,147 Accumulated other comprehensive loss 6,627 (9,061) Accumulated deficit (100,257) (76,785) Total RadNet, Inc.'s Stockholders' equity: 932,314 902,308 Noncontrolling interests 246,947 231,102 Total Equity 1,179,261 1,133,410 Total liabilities and equity $3,514,966 $3,286,690 8 RADNET, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (IN THOUSANDS EXCEPT FOR SHARE AND PER SHARE DATA) (unaudited) Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 REVENUE Service fee revenue $468,063 $422,745 $907,412 $819,934 Revenue under capitation arrangements 30,167 36,969 62,217 71,487 Total service revenue 498,230 459,714 969,629 891,421 OPERATING EXPENSES Cost of operations, excluding depreciation and amortization 429,085 389,724 882,565 777,313 Lease abandonment charges 123 – 5,511 – Depreciation and amortization 35,993 34,475 71,476 66,843 Loss (gain) on sale and disposal of equipment and other 1,724 401 2,126 587 Severance costs 426 268 1,173 493 Total operating expenses 467,351 424,868 962,851 845,236 INCOME (LOSS) FROM OPERATIONS 30,879 34,846 6,778 46,185 OTHER INCOME AND EXPENSES Interest expense 17,189 26,082 34,428 42,349 Equity in earnings of joint ventures (4,356) (3,389) (6,955) (7,713) Non-cash change in fair value of interest rate hedge 1,956 1,890 4,062 674 Debt restructuring and extinguishment expenses – 8,762 – 8,762 Other (income) expenses (7,764) (7,900) (15,476) (10,834) Total other (income) expenses 7,025 25,445 16,059 33,238 INCOME (LOSS) BEFORE INCOME TAXES 23,854 9,401 (9,281) 12,947 Provision for income taxes (820) (2,456) 2,578 (592) NET INCOME (LOSS) 23,034 6,945 (6,703) 12,355 Net income (loss) attributable to noncontrolling interests 8,580 9,927 16,769 18,116 NET INCOME (LOSS) ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS $14,454 $(2,982) $(23,472) $(5,761) BASIC NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS $0.19 $(0.04) $(0.32) $(0.08) DILUTED NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS $0.19 $(0.04) $(0.32) $(0.08) WEIGHTED AVERAGE SHARES OUTSTANDING Basic 74,352,498 73,419,124 74,070,438 71,795,080 Diluted 75,531,743 73,419,124 74,070,438 71,795,080 9 RADNET, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASHFLOWS (IN THOUSANDS) (unaudited) Six Months Ended June 30, 2025 2024 CASH FLOWS FROM OPERATING ACTIVITIES Net (loss) income $(6,703) $12,355 Adjustments to reconcile net (loss) income to net cash provided by operating activities: Depreciation and amortization 71,476 66,843 Noncash operating lease expense 29,356 30,006 Equity in earnings of joint ventures, net of dividends (1,267) (6,713) Amortization of deferred financing costs and loan discount 1,471 1,541 Loss on sale and disposal of equipment 2,126 587 Loss on extinguishment of debt – 2,080 Lease abandonment charges 5,511 – Amortization of cash flow hedge 2,712 7,256 Non-cash change in fair value of interest rate swap 4,062 674 Stock-based compensation 37,235 16,645 Change in fair value of contingent consideration – 1,974 Changes in operating assets and liabilities, net of assets acquired and liabilities assumed in purchase transactions: Accounts receivable (14,159) (31,581) Other current assets 22,381 5,242 Other assets (2,544) (5,553) Deferred taxes (3,511) 1,791 Operating leases (34,726) (27,707) Deferred revenue 145 (185) Accounts payable, accrued expenses and other 48,264 57,835 Net cash provided by operating activities 161,829 133,090 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of imaging facilities and other acquisitions, net of cash acquired (31,985) (32,771) Purchase of property and equipment and other (101,776) (104,095) Proceeds from sale of equipment 40 9 Equity contributions in existing and purchase of interest in joint ventures (20,480) (1,421) Net cash used in investing activities (154,201) (138,278) CASH FLOWS FROM FINANCING ACTIVITIES Principal payments on notes and leases payable (3,461) (2,624) Payments on Term Loan Debt (10,252) (682,438) Proceeds from issuance of new debt, net of issuing costs 99,001 863,869 Purchase of noncontrolling interests by third party 2,389 4,169 Payments on contingent consideration and holdbacks – (3,614) Distributions paid to noncontrolling interests (3,313) (2,423) Proceeds from sale of economic interests in majority owned subsidiary, net of taxes – 8,713 Proceeds from issuance of common stock – 218,385 Proceeds from issuance of common stock upon exercise of options 554 367 Net cash provided by financing activities 84,918 404,404 EFFECT OF EXCHANGE RATE CHANGES ON CASH 586 (107) NET INCREASE IN CASH AND CASH EQUIVALENTS 93,132 399,109 CASH AND CASH EQUIVALENTS, beginning of period 740,020 342,570 CASH AND CASH EQUIVALENTS, end of period 833,152 741,679 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid during the period for interest $35,018 $34,203 Cash paid during the period for income taxes $2,428 $705 10 RADNET, INC. AND SUBSIDIARIES RECONCILIATION OF GAAP NET INCOME ATTRIBUTABLE TO RADNET, INC. COMMON SHAREHOLDERS TO ADJUSTED EBITDA (IN THOUSANDS) Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Net income (loss) attributable to Radnet, Inc. common stockholders $14,454 $(2,982) $(23,472) $(5,761) Income taxes 820 2,456 (2,578) 592 Interest expense 17,189 26,082 34,428 42,349 Severance costs 426 268 1,173 493 Depreciation and amortization 35,993 34,475 71,476 66,843 Non-cash employee stock-based compensation 8,741 4,749 37,235 16,646 Loss (gain) on sale and disposal of equipment and other 1,724 401 2,126 587 Non-cash change in fair value of interest rate hedge 1,956 1,890 4,062 674 Other expenses (income) (7,764) (7,900) (15,476) (10,834) Non-Capitalized R&D - DeepHealth Cloud OS & Generative AI 4,787 3,317 8,349 6,632 Lease abandonment charges 123 – 5,511 – Loss (gain) on extinguishment of debt and related expenses – 8,762 – 8,762 Non-cash change to contingent consideration – – – 1,974 Non-operational rent expenses 496 809 1,838 1,832 Acquisition transaction costs 2,301 – 2,973 – Adjusted EBITDA - Radnet, Inc. $81,246 $72,327 $127,645 $130,789 NOTE Adjusted EBITDA - Imaging Center Segment 77,843 69,058 120,531 124,000 Adjusted EBITDA - Digital Health Segment 3,403 3,269 7,114 6,789 11 PAYMENTS BY PAYOR CLASS Second Quarter 2025 Commercial Insurance 58.3% Medicare 23.3% Capitation 6.1% Medicaid 2.5% Workers Compensation/Personal Injury 2.1% Other* 7.6% Total 100.0% * Includes Management Fees, Digital Health Revenue and Heart Lung Health Revenue. RADNET PAYMENTS BY MODALITY Second Quarter Full Year Full Year Full Year 2025 2024 2023 2022 MRI 37.3% 37.1% 36.8% 36.8% CT 15.7% 15.9% 16.8% 17.5% PET/CT 8.7% 7.2% 6.4% 5.8% X-ray 5.6% 6.0% 6.5% 6.7% Ultrasound 13.6% 13.6% 12.9% 12.6% Mammography 15.8% 16.4% 16.0% 15.3% Nuclear Medicine 0.9% 1.0% 0.8% 0.9% Other 2.5% 2.7% 3.9% 4.5% 100.0% 100.0% 100.0% 100.0% PROCEDURES BY MODALITY* Second Quarter Second Quarter 2025 2024 MRI 490,299 449,781 CT 291,820 269,939 PET/CT 22,155 18,107 Nuclear Medicine 9,377 9,610 Ultrasound 701,917 664,043 Mammography 508,000 483,510 X-ray and Other 900,095 890,814 Total 2,923,663 2,785,804 * Volumes include wholly owned and joint venture centers. 12 RADNET, INC. AND SUBSIDIARIES SCHEDULE OF ADJUSTED EARNINGS AND EARNINGS PER SHARE (3) (IN THOUSANDS EXCEPT SHARE DATA) (unaudited) Three Months Ended June 30, 2025 2024 NET INCOME ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS $14,454 $(2,982) Add/Subtract non-cash change in fair value of interest rate swaps (i) 1,956 1,890 Non-cash interest expense from extraordinary interest rate swap OCI amortization – 5,559 Non-operational rent expenses (iii) 496 809 Contingent consideration – – Non-Capitalized R&D - DeepHealth Cloud OS & Generative AI 4,787 3,317 Lease abandonment charge 123 – Acquisition transaction costs 2,301 – Debt restructing and extinguishment expenses (iv) – 8,762 Total adjustments - loss (gain) 9,663 20,337 Subtract tax impact of Adjustments (ii) (332) (5,308) Tax effected impact of adjustments 9,331 15,029 TOTAL ADJUSTMENT TO NET INCOME ATTRIBUTABLE TO RADNET, INC. COMMON SHAREHOLDERS 9,331 15,029 ADJUSTED NET INCOME ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS 23,785 12,047 WEIGHTED AVERAGE SHARES OUTSTANDING Diluted 75,531,743 74,944,366 ADJUSTED DILUTED NET INCOME PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS $ 0.31 $ 0.16 (i) Impact from the change in fair value of the swaps during the quarter. Excludes the recurring amortization of the accumulation of the changes in fair value out of Other Comprehensive Income that existed prior to the hedges becoming ineffective. (ii) Tax effected using 3.44% and 26.10% blended federal and state effective tax rate for the second quarter of 2025 and 2024, respectively. (iii) Represents rent expense associated with de novo sites under construction prior to them becoming operational. (iv) Extraordinary expense related to the Company's successful April 2024 debt refinancing transaction. 13 Footnotes (1) The Company defines Adjusted EBITDA as earnings before interest, taxes, depreciation and amortization, each from continuing operations and adjusted for losses or gains on the sale of equipment, other income or loss, debt extinguishments and non-cash equity compensation. Adjusted EBITDA includes equity earnings in unconsolidated operations and subtracts allocations of earnings to non-controlling interests in subsidiaries, and is adjusted for non-cash or extraordinary and one-time events taken place during the period. Adjusted EBITDA is reconciled to its nearest comparable GAAP financial measure. Adjusted EBITDA is a non-GAAP financial measure used as analytical indicator by RadNet management and the healthcare industry to assess business performance, and is a measure of leverage capacity and ability to service debt. Adjusted EBITDA should not be considered a measure of financial performance under GAAP, and the items excluded from Adjusted EBITDA should not be considered in isolation or as alternatives to net income, cash flows generated by operating, investing or financing activities or other financial statement data presented in the consolidated financial statements as an indicator of financial performance or liquidity. As Adjusted EBITDA is not a measurement determined in accordance with GAAP and is therefore susceptible to varying methods of calculation, this metric, as presented, may not be comparable to other similarly titled measures of other companies. (2) As noted above, the Company defines Free Cash Flow as Adjusted EBITDA less total Capital Expenditures (whether completed with cash or financed) and Cash Interest Expense. Free Cash Flow is a non-GAAP financial measure. The Company uses Free Cash Flow because the Company believes it provides useful information for investors and management because it measures our capacity to generate cash from our operating activities. Free Cash Flow does not represent total cash flow since it does not include the cash flows generated by or used in financing activities. In addition, our definition of Free Cash Flow may differ from definitions used by other companies. Free Cash Flow should not be considered a measure of financial performance under GAAP, and the items excluded from Adjusted EBITDA should not be considered in isolation or as alternatives to net income, cash flows generated by operating, investing or financing activities or other financial statement data presented in the consolidated financial statements as an indicator of financial performance or liquidity. As Adjusted EBITDA is not a measurement determined in accordance with GAAP and is therefore susceptible to varying methods of calculation, this metric, as presented, may not be comparable to other similarly titled measures of other companies. (3) The Company defines Adjusted Earnings (Loss) Per Share as net income or loss attributable to RadNet, Inc. common stockholders and excludes losses or gains on the disposal of equipment, loss on debt extinguishments, bargain purchase gains, severance costs, loss on impairment, loss or gain on swap valuation, gain on extinguishment of debt, unusual or non-recurring entries that impact the Company’s tax provision and any other non-recurring or unusual transactions recorded during the period. Adjusted Earnings (Loss) Per Share is reconciled to its nearest comparable GAAP financial measure. Adjusted Earnings (Loss) Per Share is a non-GAAP financial measure used as analytical indicator by RadNet management and the healthcare industry to assess business performance. Adjusted Earnings Per Share should not be considered a measure of financial performance under GAAP, and the items excluded from Adjusted Earnings Per Share should not be considered in isolation or as alternatives to net income, cash flows generated by operating, investing or financing activities or other financial statement data presented in the consolidated financial statements as an indicator of financial performance or liquidity. As Adjusted Earnings Per Share is not a measurement determined in accordance with GAAP and is therefore susceptible to varying methods of calculation, this metric, as presented, may not be comparable to other similarly titled measures of other companies. 14 |
0000071691-24-000130:pressrelease06302024.htm | 0000071691-24-000130 | 71,691 | 71,691 | NEW YORK TIMES CO (NYT) (CIK 0000071691) | ['NYT'] | 8-K | 8-K | 2024-08-07 | 2024-08-07 | 001-05837 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-05837&action=getcompany | 241,181,360 | EX-99.1 | EX-99.1 | 2.02,9.01 | https://www.sec.gov/Archives/edgar/data/71691/000007169124000130 | https://www.sec.gov/Archives/edgar/data/71691/000007169124000130/0000071691-24-000130-index.html | https://www.sec.gov/Archives/edgar/data/71691/000007169124000130/pressrelease06302024.htm | EX-99.1 2 pressrelease06302024.htm EX-99.1 Document The New York Times Company Reports Second-Quarter 2024 ResultsNEW YORK, August 7, 2024 – The New York Times Company (NYSE: NYT) announced today second-quarter 2024 results. Key Highlights•The Company added approximately 300,000 net digital-only subscribers compared with the end of the first quarter of 2024, driven by bundle and multiproduct subscriber additions as well as other single product subscriber additions.•Total digital-only average revenue per user (“ARPU”) increased 2.1 percent year-over-year to $9.34 primarily as a result of subscribers transitioning from promotional to higher prices and price increases on tenured non-bundled subscribers.•Growth in both digital subscribers and ARPU drove a year-over-year increase in digital subscription revenues of 12.9 percent.•Digital advertising revenues increased 7.8 percent year-over-year largely as a result of higher revenues from display advertising at The Athletic and The New York Times Group (“NYTG”). •Other revenue increased 4.9 percent year-over-year as a result of higher Wirecutter affiliate referral and licensing revenues.•Operating costs increased 2.0 percent and adjusted operating costs (defined below) increased 4.4 percent year-over-year, largely as a result of higher journalism, product development and general and administrative expenses. •Operating profit increased 42.4 percent year-over-year to $79.4 million, while adjusted operating profit (defined below) increased 13.6 percent year-over-year to $104.7 million, primarily as a result of higher digital subscription revenues partially offset by higher adjusted operating costs.•Operating profit margin for the quarter was 12.7 percent and adjusted operating profit margin (defined below) was 16.7 percent, a year-over-year increase of approximately 110 basis points.•Diluted earnings per share for the quarter was $.40, a $.12 increase year-over-year and adjusted diluted earnings per share (defined below) was $.45, a $.07 increase year-over-year.Meredith Kopit Levien, president and chief executive officer, The New York Times Company, said, “It was a strong second quarter for The Times – one in which we made further progress on the path to grow our subscriber base and become the essential subscription for every curious person seeking to understand and engage with the world. The combination of our world-class news destination plus market-leading lifestyle products means we have complementary offerings in big spaces, each with multiple growth levers fueling multiple revenue streams. Together we believe these make The Times resilient in a changing media landscape and well positioned for continued value creation.”Summary of Quarterly Results(In millions, except percentages, subscriber metrics (in thousands), ARPU and per share data)Q2 2024Q1 2024Q4 2023Q3 2023Q2 2023Total subscribers(1)10,840 10,550 10,360 10,080 9,880 Digital-only subscribers(1)10,210 9,910 9,700 9,410 9,190 Digital-only subscribers quarterly net additions(1)300 210 300 210 180 Total digital-only ARPU$9.34 $9.21 $9.24 $9.28 $9.15 % change year-over-year2.1 %1.9 %3.5 %4.6 %3.6 %Digital-only subscription revenues$304.5 $293.0 $288.7 $282.2 $269.8 % change year-over-year12.9 %13.2 %7.2 %15.7 %13.0 %Digital advertising revenues$79.6 $63.0 $107.7 $75.0 $73.8 % change year-over-year7.8 %2.9 %(3.7)%6.7 %6.5 %Total revenues$625.1 $594.0 $676.2 $598.3 $590.9 % change year-over-year5.8 %5.9 %1.3 %9.3 %6.3 %Total operating costs(2)$545.7 $545.7 $547.2 $534.8 $535.1 % change year-over-year(2)2.0 %2.4 %(4.8)%7.7 %6.2 %Adjusted operating costs(3)$520.4 $518.0 $522.3 $508.6 $498.7 % change year-over-year4.4 %2.2 %(0.7)%6.2 %4.0 %Operating profit$79.4 $48.3 $129.0 $63.6 $55.8 Operating profit margin %12.7 %8.1 %19.1 %10.6 %9.4 %Adjusted operating profit (“AOP”) - NYTG$107.1 $84.7 $158.4 $97.7 $100.0 AOP margin % - NYTG18.3 %15.2 %24.8 %17.3 %17.8 %AOP - The Athletic$(2.4)$(8.7)$(4.4)$(7.9)$(7.8)AOP(3)$104.7 $76.1 $154.0 $89.8 $92.2 AOP margin %(3)16.7 %12.8 %22.8 %15.0 %15.6 %Diluted earnings per share (“EPS”)$0.40 $0.24 $0.66 $0.32 $0.28 Adjusted diluted EPS(3)$0.45 $0.31 $0.70 $0.37 $0.38 Diluted shares165.5 165.6 165.9 165.4 165.0 (1) Subscribers (including net subscriber additions) are rounded to the nearest ten thousand.(2) Q1 2023 and Q2 2023 were recast to conform to the current presentation of total operating costs. See “Comparisons” for more details.(3) Non-GAAP financial measure. See “Comparisons”, “Non-GAAP Financial Measures” and “Reconciliation of Non-GAAP Financial Measures” for more details.2ComparisonsUnless otherwise noted, all comparisons are for the second quarter of 2024 to the second quarter of 2023. Beginning with the third quarter of 2023, we have updated our presentation of operating costs to include operating items that are outside the ordinary course of our operations (special items). We recast operating costs for the prior periods in order to present comparable financial results. In connection with this change, we updated the definition of adjusted operating costs to exclude special items from operating costs. These changes did not have an impact on reported operating profit, adjusted operating profit or adjusted operating costs.Second quarter 2024 results included the following special item:•$2.0 million of pre-tax litigation-related costs ($1.5 million or $0.01 per share after tax) in connection with a lawsuit against Microsoft Corporation and Open AI Inc. and various of its corporate affiliates alleging unlawful and unauthorized copying and use of the Company’s journalism and other content in connection with their development of generative artificial intelligence products (“Generative AI Litigation Costs”). Management determined to report Generative AI Litigation Costs as a special item beginning in the first quarter of 2024 because, unlike other litigation expenses, the Generative AI Litigation Costs arise from a discrete, complex and unusual proceeding and do not, in management’s view, reflect the Company’s ongoing business operational performance.Second quarter 2023 results included the following special item:•A $12.7 million impairment charge ($9.3 million or $0.06 per share after tax) related to excess leased office space that is being marketed for sublet (the “lease-related impairment”).This release refers to certain non-GAAP financial measures, including adjusted operating profit, adjusted operating costs, adjusted diluted EPS and free cash flow. See “Non-GAAP Financial Measures” and “Reconciliation of Non-GAAP Financial Measures” for more details, including a discussion of management’s reasons for the presentation of these non-GAAP financial measures and reconciliations to the most comparable GAAP financial measures. 3Consolidated ResultsSubscribers and Net AdditionsThe Company ended the second quarter of 2024 with approximately 10.84 million subscribers to its print and digital products, including approximately 10.21 million digital-only subscribers. Of the 10.21 million digital-only subscribers, approximately 4.83 million were bundle and multiproduct subscribers.Compared with the end of the first quarter of 2024, there was a net increase of 300,000 digital-only subscribers. Average Revenue Per UserAverage revenue per user or “ARPU,” a metric we calculate to track the revenue generation of our digital subscriber base, represents the average revenue per digital subscriber over a 28-day billing cycle during the applicable quarter. For more information, please refer to the Supplemental Subscriber, ARPU and Subscriptions Revenues Information in the exhibits.Total digital-only ARPU was $9.34 for the second quarter of 2024, an increase of 2.1 percent compared with the second quarter of 2023 driven primarily by subscribers transitioning from promotional to higher prices and price increases on tenured non-bundled subscribers.Subscription RevenuesTotal subscription revenues increased 7.3 percent to $439.3 million in the second quarter of 2024. Subscription revenues from digital-only products increased 12.9 percent to $304.5 million due to an increase in bundle and multiproduct revenues and an increase in other single-product subscription revenues, partially offset by a decrease in news-only subscription revenues. Print subscription revenues decreased 3.6 percent to $134.8 million, primarily due to lower domestic home-delivery revenues.Advertising RevenuesSecond-quarter 2024 total advertising revenues increased 1.2 percent to $119.2 million while digital advertising revenues increased 7.8 percent and print advertising revenues decreased 10.0 percent.Digital advertising revenues were $79.6 million, or 66.8 percent of total Company advertising revenues, compared with $73.8 million, or 62.7 percent, in the second quarter of 2023. Digital advertising revenues increased due to higher revenues from display advertising at both The Athletic and NYTG. Print advertising revenues decreased primarily due to declines in the technology and luxury categories.Other RevenuesOther revenues increased 4.9 percent to $66.6 million in the second quarter of 2024, primarily as a result of higher Wirecutter affiliate referral and licensing revenues, partially offset by lower books, television, and film revenues.Total RevenuesIn the aggregate, subscription, advertising and other revenues for the second quarter of 2024 increased 5.8 percent to $625.1 million from $590.9 million for the second quarter of 2023.4Operating CostsTotal operating costs increased 2.0 percent in the second quarter of 2024 to $545.7 million compared with $535.1 million in the second quarter of 2023. Operating costs in the second quarter of 2024 included Generative AI Litigation Costs of $2.0 million. Operating costs in second quarter of 2023 included a $12.7 million impairment charge related excess leased office space that is being marketed for sublet. Adjusted operating costs increased 4.4 percent to $520.4 million from $498.7 million in the second quarter of 2023.Cost of revenue increased 4.1 percent to $322.8 million compared with $309.9 million in the second quarter of 2023 due mainly to higher journalism expenses and higher subscriber and advertiser servicing costs, partially offset by lower print production and distribution costs.Sales and marketing costs decreased 1.5 percent to $61.3 million compared with $62.2 million in the second quarter of 2023 due mainly to lower marketing and promotion costs. Media expenses, a component of sales and marketing costs that represents the cost to promote our subscription business, decreased 1.7 percent to $27.5 million in the second quarter of 2024 from $28.0 million in the second quarter of 2023.Product development costs increased 11.0 percent to $62.2 million compared with $56.0 million in the second quarter of 2023, primarily due to higher compensation and benefits expenses.General and administrative costs increased 6.4 percent to $76.9 million compared with $72.3 million in the second quarter of 2023, largely due to higher compensation and benefits expenses.5Business Segment ResultsWe have two reportable segments: NYTG and The Athletic. Management uses adjusted operating profit (loss) by segment in assessing performance and allocating resources. The Company includes in its presentation revenues and adjusted operating costs to arrive at adjusted operating profit (loss) by segment. Adjusted operating costs are defined as operating costs before depreciation and amortization, severance, multiemployer pension plan withdrawal costs and special items. Adjusted operating profit is defined as operating profit before depreciation and amortization, severance, multiemployer pension plan withdrawal costs and special items. Refer to Segment Information in the exhibits for more information on these segment measures.The New York Times GroupNYTG revenues grew 4.4 percent in the second quarter of 2024 to $585.2 million from $560.5 million in the second quarter of 2023. Subscription revenues increased 6.5 percent to $410.0 million from $385.0 million in the second quarter of 2023, primarily due to growth in subscription revenues from digital-only products, partially offset by decreases in print subscription revenues. Advertising revenues decreased 0.2 percent to $112.1 million from $112.3 million in the second quarter of 2023, due to declines in print advertising revenues partially offset by higher revenues from digital advertising. Other revenues were $63.1 million in the second quarter of 2024, flat compared to prior year.NYTG adjusted operating costs increased 3.8 percent in the second quarter of 2024 to $478.1 million from $460.5 million in the second quarter of 2023, primarily due to higher journalism, product development and general and administrative costs.NYTG adjusted operating profit increased 7.1 percent to $107.1 million from $100.0 million in the second quarter of 2023. This was primarily the result of higher digital subscription and advertising revenues, partially offset by higher adjusted operating costs and lower print subscription and print advertising revenues.The AthleticThe Athletic revenues grew 33.4 percent in the second quarter of 2024 to $40.5 million from $30.4 million in the second quarter of 2023. Subscription revenues increased 19.4 percent to $29.3 million from $24.6 million in the second quarter of 2023, primarily due to growth in the number of subscribers with The Athletic. We provide all bundle subscribers with the ability to access The Athletic and all bundle subscribers are included in this metric. Advertising revenues increased 30.0 percent to $7.1 million from $5.4 million in the second quarter of 2023, primarily due to higher revenues from display advertising. Other revenue increased to $4.1 million from $0.4 million in the second quarter of 2023, primarily due to an increase in licensing revenue from an Apple licensing deal.The Athletic adjusted operating costs increased 12.4 percent in the second quarter of 2024 to $42.9 million from $38.2 million in the second quarter of 2023. The increase was mainly due to higher product development and journalism costs, partially offset by lower sales and marketing costs.The Athletic adjusted operating loss decreased 69.2 percent to $2.4 million from $7.8 million in the second quarter of 2023. This was primarily the result of higher revenues, partially offset by higher adjusted operating costs.6Consolidated Other DataInterest Income and Other, netInterest income and other, net in the second quarter of 2024 was $8.7 million compared with $4.5 million in the second quarter of 2023. The increase was primarily a result of higher interest rates on cash and marketable securities.Income TaxesThe Company had income tax expense of $21.5 million in the second quarter of 2024 compared with $14.4 million in the second quarter of 2023. The effective income tax rate was 24.7 percent in the second quarter of 2024 and 23.6 percent in the second quarter of 2023. The increase in income tax expense was primarily due to higher pre-tax income in the second quarter of 2024. The effective income tax rate was lower in the second quarter of 2023 primarily due to a reduction in the Company’s reserve for uncertain tax positions in that quarter.Earnings Per ShareDiluted EPS in the second quarter of 2024 was $.40 compared with $.28 in the same period of 2023. The increase in diluted EPS was primarily driven by higher operating profit and higher interest income. Adjusted diluted EPS was $.45 in the second quarter of 2024 compared with $.38 in the second quarter of 2023. LiquidityAs of June 30, 2024, the Company had cash and marketable securities of $724.0 million, an increase of $14.8 million from $709.2 million as of December 31, 2023.The Company has a $350 million unsecured revolving line of credit. As of June 30, 2024, there were no outstanding borrowings under this credit facility, and the Company did not have other outstanding debt.Net cash provided by operating activities in the second quarter of 2024 was $133.3 million compared with $119.8 million in the same period of 2023. Free cash flow in the second quarter of 2024 was $119.3 million compared with $109.0 million in the same period of 2023.Shares RepurchasesDuring the quarter ended June 30, 2024, the Company repurchased 208,083 shares of its Class A Common Stock for an aggregate purchase price of approximately $9.5 million. As of August 2, 2024, approximately $201.5 million remains available and authorized for repurchases.Capital ExpendituresCapital expenditures totaled approximately $9 million in the second quarter of 2024 compared with approximately $5 million in the second quarter of 2023. The increase in capital expenditures in 2024 was primarily driven by higher expenditures at the Company’s College Point, N.Y., printing and distribution facility, improvements in the Company headquarters and investments in technology to support strategic initiatives.7OutlookBelow is the Company’s guidance for revenues and adjusted operating costs for the third quarter of 2024 compared with the third quarter of 2023. The New York Times CompanyDigital-only subscription revenuesincrease 12 - 15%Total subscription revenuesincrease 7 - 9%Digital advertising revenuesincrease high-single-digitsTotal advertising revenuesflat to increase low-single-digitsOther revenueincrease 9 - 11%Adjusted operating costsincrease 5 - 6%The Company expects the following on a pre-tax basis in 2024:•Depreciation and amortization: approximately $80 million•Interest income and other, net: approximately $35 million, and•Capital expenditures: approximately $40 million.Conference Call Information The Company’s second-quarter 2024 earnings conference call will be held on Wednesday, August 7, 2024, at 8:00 a.m. E.T. A live webcast of the earnings conference call will be available at investors.nytco.com. Participants can pre-register for the telephone conference at https://dpregister.com/sreg/10190931/fd138994d9, which will generate dial-in instructions allowing participants to bypass an operator at the time of the call. Alternatively, to access the call without pre-registration, dial 844-413-3940 (in the U.S.) or 412-858-5208 (international callers). An archive of the webcast will be available beginning about two hours after the call at investors.nytco.com. The archive will be available for approximately three months. An audio replay will be available at 877-344-7529 (in the U.S.) and 412-317-0088 (international callers) beginning approximately two hours after the call until 11:59 p.m. E.T. on Wednesday, August 21. The passcode is 5666502.About The New York Times CompanyThe New York Times Company (NYSE: NYT) is a trusted source of quality, independent journalism whose mission is to seek the truth and help people understand the world. With more than 10 million subscribers across a diverse array of print and digital products — from news to cooking to games to sports — The Times Company has evolved from a local and regional news leader into a diversified media company with curious readers, listeners and viewers around the globe. Follow news about the company at NYTCo.com.8Forward-Looking StatementsExcept for the historical information contained herein, the matters discussed in this press release are 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. Terms such as “aim,” “anticipate,” “believe,” “confidence,” “contemplate,” “continue,” “conviction,” “could,” “drive,” “estimate,” “expect,” “forecast,” “future,” “goal,” “guidance,” “intend,” “likely,” “may,” “might,” “objective,” “opportunity,” “optimistic,” “outlook,” “plan,” “position,” “potential,” “predict,” “project,” “seek,” “should,” “strategy,” “target,” “will,” “would” or similar statements or variations of such words and other similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such terms. Forward-looking statements are based upon our current expectations, estimates and assumptions and involve risks and uncertainties that change over time; actual results could differ materially from those predicted by such forward-looking statements. These risks and uncertainties include, but are not limited to: significant competition in all aspects of our business; our ability to grow the size and profitability of our subscriber base; our dependence on user and other metrics that are subject to inherent challenges in measurement; numerous factors that affect our advertising revenues, including market dynamics, evolving digital advertising trends and the evolution of our strategy; damage to our brand or reputation; risks associated with generative artificial intelligence technology; economic, market, geopolitical and public health conditions or other events; risks associated with the international scope of our business and foreign operations; significant disruptions in our newsprint supply chain or newspaper printing and distribution channels or a significant increase in the costs to print and distribute our newspaper; risks associated with environmental, social and governance matters and any related reporting obligations; adverse results from litigation or governmental investigations; risks associated with acquisitions (including The Athletic), divestitures, investments and similar transactions; the risks and challenges associated with investments we make in new and existing products and services; risks associated with attracting and maintaining a talented and diverse workforce; the impact of labor negotiations and agreements; potential limits on our operating flexibility due to the nature of significant portions of our expenses; the effects of the size and volatility of our pension plan obligations; liabilities that may result from our participation in multiemployer pension plans; our ability to improve and scale our technical and data infrastructure; security incidents and other network and information systems disruptions; our ability to comply with laws and regulations with respect to privacy, data protection and consumer marketing and subscription practices; payment processing risk; defects, delays or interruptions in the cloud-based hosting services we utilize; our ability to protect our intellectual property; claims against us of intellectual property infringement; our ability to meet our publicly announced guidance and/or targets; the effects of restrictions on our operations as a result of the terms of our credit facility; our future access to capital markets and other financing options; and the concentration of control of our company due to our dual-class capital structure. More information regarding these risks and uncertainties and other important factors that could cause actual results to differ materially from those in the forward-looking statements is set forth in the Company’s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2023, and subsequent filings. Investors are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.9Non-GAAP Financial MeasuresThis release refers to certain non-GAAP financial measures, including adjusted operating profit, defined as operating profit before depreciation, amortization, severance, multiemployer pension plan withdrawal costs and special items; adjusted operating profit margin, defined as adjusted operating profit divided by revenues; adjusted operating costs, defined as operating costs before depreciation, amortization, severance and multiemployer pension plan withdrawal costs and special items; adjusted diluted EPS, defined as diluted EPS excluding amortization of acquired intangible assets, severance, non-operating retirement costs and special items; and free cash flow, defined as net cash provided by operating activities less capital expenditures. Refer to “Reconciliation of Non-GAAP Financial Measures” in the exhibits for a discussion of management’s reasons for the presentation of these non-GAAP financial measures and reconciliations to the most comparable GAAP financial measures. Certain guidance is provided on a non-GAAP basis and not reconciled to the most directly comparable GAAP measure because we are unable to provide, without unreasonable effort, a calculation or estimation of amounts necessary for such reconciliation due to the inherent difficulty of forecasting such amounts.Exhibits:Condensed Consolidated Statements of OperationsFootnotesSupplemental Subscriber, ARPU and Subscription Revenues InformationSegment InformationReconciliation of Non-GAAP Financial MeasuresContacts:Media:Danielle Rhoades Ha, 212-556-8719; danielle.rhoades-ha@nytimes.comInvestors:Anthony DiClemente, 212-556-7661; anthony.diclemente@nytimes.com10THE NEW YORK TIMES COMPANYCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(Dollars and shares in thousands, except per share data)Second QuarterSix Months 20242023% Change20242023% ChangeRevenuesSubscription(a)$439,322 $409,590 7.3 %$868,327 $807,132 7.6 %Advertising(b)119,163 117,770 1.2 %222,874 224,011 (0.5)%Other(c)66,612 63,493 4.9 %127,911 120,449 6.2 %Total revenues625,097 590,853 5.8 %1,219,112 1,151,592 5.9 %Operating costsCost of revenue (excluding depreciation and amortization)322,774 309,923 4.1 %639,641 616,775 3.7 %Sales and marketing61,303 62,241 (1.5)%126,437 129,275 (2.2)%Product development62,220 56,047 11.0 %125,405 113,109 10.9 %General and administrative76,870 72,273 6.4 %155,685 153,324 1.5 %Depreciation and amortization20,537 21,858 (6.0)%41,243 42,698 (3.4)%Generative AI Litigation Costs1,983 — *2,972 — *Impairment charge— 12,736 *— 12,736 *Total operating costs(1)545,687 535,078 2.0 %1,091,383 1,067,917 2.2 %Operating profit79,410 55,775 42.4 %127,729 83,675 52.6 %Other components of net periodic benefit (costs)/income(1,023)684 *(2,074)1,369 *Interest income and other, net8,696 4,517 92.5 %17,083 7,690 *Income before income taxes87,083 60,976 42.8 %142,738 92,734 53.9 %Income tax expense21,543 14,402 49.6 %36,781 23,839 54.3 %Net income$65,540 $46,574 40.7 %$105,957 $68,895 53.8 %Average number of common shares outstanding:Basic164,540 164,714 (0.1)%164,592 164,844 (0.2)%Diluted165,514 165,037 0.3 %165,716 165,325 0.2 %Basic earnings per share attributable to common stockholders$0.40 $0.28 42.9 %$0.64 $0.42 52.4 %Diluted earnings per share attributable to common stockholders$0.40 $0.28 42.9 %$0.64 $0.42 52.4 %Dividends declared per share$0.13 $0.11 18.2 %$0.26 $0.22 18.2 %(1) Second quarter and first six months of 2023 were recast to conform to the current presentation of total operating costs. See “Comparisons” for more details.* Represents a change equal to or in excess of 100% or not meaningful.See footnotes pages for additional information. 11THE NEW YORK TIMES COMPANYFOOTNOTES(Dollars in thousands)(a) The following table summarizes digital and print subscription revenues for the second quarters and first six months of 2024 and 2023:Second QuarterSix Months20242023% Change20242023% ChangeDigital-only subscription revenues(1)$304,501 $269,774 12.9 %$597,479 $528,541 13.0 %Print subscription revenues(2)134,821 139,816 (3.6)%270,848 278,591 (2.8)%Total subscription revenues$439,322 $409,590 7.3 %$868,327 $807,132 7.6 %(1) Includes revenue from bundled and standalone subscriptions to our news product, as well as to The Athletic and to our Cooking, Games and Wirecutter products.(2) Includes domestic home-delivery subscriptions, which include access to our digital products. Also includes single-copy, NYT International and Other subscription revenues.(b) The following table summarizes digital and print advertising revenues for the second quarters and first six months of 2024 and 2023:Second QuarterSix Months20242023% Change20242023% ChangeAdvertising revenues:Digital$79,575 $73,804 7.8 %$142,602 $135,075 5.6 %Print39,588 43,966 (10.0)%80,272 88,936 (9.7)%Total advertising$119,163 $117,770 1.2 %$222,874 $224,011 (0.5)%(c) Other revenues primarily consist of revenues from licensing, Wirecutter affiliate referrals, commercial printing, the leasing of floors in the Company headquarters, retail commerce, books, television and film, our live events business and our student subscription sponsorship program. Digital other revenues, which consist primarily of Wirecutter affiliate referral revenue and digital licensing revenues, totaled $40.6 million and $76.4 million for the second quarter and first six months of 2024, respectively.12THE NEW YORK TIMES COMPANYSUPPLEMENTAL SUBSCRIBER, ARPU AND SUBSCRIPTION REVENUES INFORMATION(Amounts in thousands, except for ARPU)We offer a digital subscription package (or “bundle”) that includes access to our digital news product (which includes our news website, NYTimes.com, and mobile and Audio applications), as well as to The Athletic and to our Cooking, Games and Wirecutter products. Our subscriptions also include standalone digital subscriptions to our digital news product, as well as to The Athletic, and our Cooking, Games and Wirecutter products.The following tables present information regarding the number of subscribers to the Company’s products as well as certain additional metrics. A subscriber is defined as a user who has subscribed (and provided a valid method of payment) for the right to access one or more of the Company’s products. Subscribers with a domestic home-delivery print subscription to The New York Times, which includes access to our digital products, are excluded from digital-only subscribers. The following table sets forth subscribers as of the end of the five most recent fiscal quarters:Q2 2024Q1 2024Q4 2023Q3 2023Q2 2023Digital-only subscribers:Bundle and multiproduct(1)(2)4,830 4,550 4,220 3,790 3,300 News-only(2)(3)2,290 2,500 2,740 3,020 3,320 Other single-product(2)(4)3,100 2,860 2,740 2,600 2,580 Total digital-only subscribers(2)(5)10,210 9,910 9,700 9,410 9,190 Print subscribers(6)630 640 660 670 690 Total subscribers10,840 10,550 10,360 10,080 9,880 (1) Subscribers with a bundle subscription or standalone digital-only subscriptions to two or more of the Company’s products.(2) Includes group corporate and group education subscriptions, which collectively represented approximately 6% of total digital-only subscribers as of the end of the second quarter of 2024. The number of group subscribers is derived using the value of the relevant contract and a discounted subscription rate.(3) Subscribers with only a digital-only news product subscription.(4) Subscribers with only one digital-only subscription to The Athletic or to our Cooking, Games or Wirecutter products.(5) Subscribers with digital-only subscriptions to one or more of our news product, The Athletic, or our Cooking, Games and Wirecutter products.(6) Subscribers with a domestic home-delivery or mail print subscription to The New York Times, which includes access to our digital products, or a print subscription to our Book Review or Large Type Weekly products.The sum of individual metrics may not always equal total amounts indicated due to rounding. Subscribers (including net subscriber additions) are rounded to the nearest ten thousand.The following table sets forth ARPU metrics relating to the above digital-only subscriber categories for the five most recent fiscal quarters:Q2 2024Q1 2024Q4 2023Q3 2023Q2 2023Digital-only ARPU:Bundle and multiproduct$11.96 $11.79 $12.13 $12.81 $13.40 News-only$11.26 $10.88 $10.38 $10.05 $9.29 Other single-product$3.65 $3.59 $3.56 $3.48 $3.57 Total digital-only ARPU$9.34 $9.21 $9.24 $9.28 $9.15 ARPU metrics are calculated by dividing the digital subscription revenues in the quarter by the average number of digital-only subscribers divided by the number of days in the quarter multiplied by 28 to reflect a 28-day billing cycle. In calculating ARPU metrics, for our subscriber categories (Bundle and multiproduct, News-only and Other single-product), we use the monthly average number of digital-only subscribers (calculated as the sum of the number of subscribers in each category at the beginning and end of the month, divided by two) and for Total digital-only ARPU, we use the daily average number of digital-only subscribers.13THE NEW YORK TIMES COMPANYSUPPLEMENTAL SUBSCRIBER, ARPU AND SUBSCRIPTION REVENUES INFORMATION(Amounts in thousands)The following table sets forth the subset of subscribers above who have a digital-only standalone subscription to The Athletic or a bundle subscription that includes the ability to access The Athletic as of the end of the five most recent fiscal quarters:Q2 2024Q1 2024Q4 2023Q3 2023Q2 2023Digital-only subscribers with The Athletic(1)(2)5,280 4,990 4,650 4,180 3,640 (1) We provide all bundle subscribers with the ability to access The Athletic and all bundle subscribers are included in this metric.(2) Subscribers (including net subscriber additions) are rounded to the nearest ten thousand.14THE NEW YORK TIMES COMPANYSEGMENT INFORMATION(Dollars in thousands)We have two reportable segments: NYTG and The Athletic. Management uses adjusted operating profit (loss) by segment in assessing performance and allocating resources. The Company includes in its presentation revenues and adjusted operating costs to arrive at adjusted operating profit (loss) by segment. Adjusted operating costs are defined as operating costs before depreciation and amortization, severance, multiemployer pension plan withdrawal costs and special items. Adjusted operating profit is defined as operating profit before depreciation and amortization, severance, multiemployer pension plan withdrawal costs and special items. Adjusted operating profit expressed as a percentage of revenues is referred to as adjusted operating profit margin.Subscription revenues from and expenses associated with our bundle are allocated to NYTG and The Athletic.We allocate 10% of bundle revenues to The Athletic based on management’s view of The Athletic’s relative value to the bundle, which is derived based on analysis of various metrics. We allocate 10% of product development, marketing and subscriber servicing expenses (including direct variable expenses such as credit card fees, third party fees and sales taxes) associated with the bundle to The Athletic, and the remaining costs are allocated to NYTG, in each case, in line with the revenues allocations.Second QuarterSix Months20242023% Change20242023% ChangeRevenuesNYTG$585,156$560,4944.4 %$1,142,551$1,093,2764.5 %The Athletic40,50430,35933.4 %77,68658,31633.2 %Intersegment eliminations(1)(563)—*(1,125)—*Total revenues$625,097$590,8535.8 %$1,219,112$1,151,5925.9 %Adjusted operating costsNYTG$478,054$460,5253.8 %$950,703$928,0202.4 %The Athletic42,90638,16212.4 %88,78077,43114.7 %Intersegment eliminations(1)(563)—*(1,125)—*Total adjusted operating costs$520,397$498,6874.4 %$1,038,358$1,005,4513.3 %Adjusted operating profit (loss)NYTG$107,102$99,9697.1 %$191,848$165,25616.1 %The Athletic(2,402)(7,803)(69.2)%(11,094)(19,115)(42.0)%Total adjusted operating profit$104,700$92,16613.6 %$180,754$146,14123.7 %AOP margin % - NYTG18.3 %17.8 %50 bps16.8 %15.1 %170 bps(1) Intersegment eliminations (“I/E”) related to content licensing.* Represents a change equal to or in excess of 100% or not meaningful.15THE NEW YORK TIMES COMPANYSEGMENT INFORMATION(Dollars in thousands)Revenues detail by segmentSecond QuarterSix Months20242023% Change20242023% ChangeNYTGSubscription$410,015 $385,037 6.5 %$811,386 $759,193 6.9 %Advertising112,088 112,329 (0.2)%210,092 214,419 (2.0)%Other63,053 63,128 (0.1)%121,073 119,664 1.2 %Total$585,156 $560,494 4.4 %$1,142,551 $1,093,276 4.5 %The Athletic Subscription$29,307 $24,553 19.4 %$56,941 $47,939 18.8 %Advertising7,075 5,441 30.0 %12,782 9,592 33.3 %Other4,122 365 *7,963 785 *Total$40,504 $30,359 33.4 %$77,686 $58,316 33.2 %I/E(1)$(563)$— *$(1,125)$— *The New York Times CompanySubscription$439,322 $409,590 7.3 %$868,327 $807,132 7.6 %Advertising119,163 117,770 1.2 %222,874 224,011 (0.5)%Other66,612 63,493 4.9 %127,911 120,449 6.2 %Total$625,097 $590,853 5.8 %$1,219,112 $1,151,592 5.9 %(1) Intersegment eliminations (“I/E”) related to content licensing recorded in Other revenues.* Represents a change equal to or in excess of 100% or not meaningful.16THE NEW YORK TIMES COMPANYSEGMENT INFORMATION(Dollars in thousands)Adjusted operating costs (operating costs before depreciation and amortization, severance, multiemployer pension plan withdrawal costs and special items) detail by segmentSecond QuarterSix Months20242023% Change20242023% ChangeNYTGCost of revenue (excluding depreciation and amortization)$298,419 $287,789 3.7 %$590,875 $572,112 3.3 %Sales and marketing54,457 54,247 0.4 %109,938 113,179 (2.9)%Product development53,579 50,049 7.1 %108,444 100,880 7.5 %Adjusted general and administrative(1)71,599 68,440 4.6 %141,446 141,849 (0.3)%Total$478,054 $460,525 3.8 %$950,703 $928,020 2.4 %The Athletic Cost of revenue (excluding depreciation and amortization)$24,918 $22,134 12.6 %$49,891 $44,663 11.7 %Sales and marketing6,846 7,994 (14.4)%16,499 16,096 2.5 %Product development8,641 5,998 44.1 %16,961 12,229 38.7 %Adjusted general and administrative(2)2,501 2,036 22.8 %5,429 4,443 22.2 %Total$42,906 $38,162 12.4 %$88,780 $77,431 14.7 %I/E(3)$(563)$— *$(1,125)$— *The New York Times CompanyCost of revenue (excluding depreciation and amortization)$322,774 $309,923 4.1 %$639,641 $616,775 3.7 %Sales and marketing61,303 62,241 (1.5)%126,437 129,275 (2.2)%Product development62,220 56,047 11.0 %125,405 113,109 10.9 %Adjusted general and administrative74,100 70,476 5.1 %146,875 146,292 0.4 %Total$520,397 $498,687 4.4 %$1,038,358 $1,005,451 3.3 %(1) Excludes severance of $1.5 million and $5.5 million for the second quarter and first six months of 2024, respectively. Excludes multiemployer pension withdrawal costs of $1.3 million and $2.9 million for the second quarter and first six months of 2024, respectively. Excludes severance of $3.3 million for the first six months of 2023. There were no severance costs for the second quarter of 2023. Excludes multiemployer pension withdrawal costs of $1.1 million and $2.5 million for the second quarter and first six months of 2023, respectively.(2) Excludes severance of $0.4 million for the first six months of 2024. There were no severance costs for the second quarter of 2024. Excludes severance of $0.7 million and $1.2 million for the second quarter and first six months of 2023, respectively. (3) Intersegment eliminations (“I/E”) related to content licensing recorded in Cost of revenue (excluding depreciation and amortization).* Represents a change equal to or in excess of 100% or not meaningful.17THE NEW YORK TIMES COMPANYRECONCILIATION OF NON-GAAP FINANCIAL MEASURESIn this release, the Company has referred to non-GAAP financial information with respect to adjusted diluted EPS, defined as diluted EPS excluding amortization of acquired intangible assets, severance, non-operating retirement costs and special items; adjusted operating profit, defined as operating profit before depreciation, amortization, severance, multiemployer pension plan withdrawal costs and special items; adjusted operating profit margin, defined as adjusted operating profit divided by revenues; adjusted operating costs, defined as operating costs before depreciation, amortization, severance, multiemployer pension withdrawal costs and special items; and free cash flow, defined as net cash provided by operating activities less capital expenditures. The Company has included these non-GAAP financial measures because management reviews them on a regular basis and uses them to evaluate and manage the performance of the Company’s operations. Management believes that, for the reasons outlined below, these non-GAAP financial measures provide useful information to investors as a supplement to reported diluted earnings/(loss) per share, operating profit/(loss) and operating costs. However, these measures should be evaluated only in conjunction with the comparable GAAP financial measures and should not be viewed as alternative or superior measures of GAAP results.Adjusted diluted EPS provides useful information in evaluating the Company’s period-to-period performance because it eliminates items that the Company does not consider to be indicative of earnings from ongoing operating activities. Adjusted operating profit and adjusted operating profit margin are useful in evaluating the ongoing performance of the Company’s business as they exclude the significant non-cash impact of depreciation and amortization as well as items not indicative of ongoing operating activities. Total operating costs include depreciation, amortization, severance, multiemployer pension plan withdrawal costs and special items. Adjusted operating costs provide investors with helpful supplemental information on the Company’s underlying operating costs that is used by management in its financial and operational decision-making.Management considers special items, which may include impairment charges, pension settlement charges, acquisition-related costs, and beginning in the first quarter of 2024, Generative AI Litigation Costs, as well as other items that arise from time to time, to be outside the ordinary course of our operations. Management believes that excluding these items provides a better understanding of the underlying trends in the Company’s operating performance and allows more accurate comparisons of the Company’s operating results to historical performance. Management determined to report Generative AI Litigation Costs as a special item and thus exclude them beginning in the first quarter of 2024 because, unlike other litigation expenses which are not excluded, the Generative AI Litigation Costs arise from a discrete, complex and unusual proceeding and do not, in management’s view, reflect the Company’s ongoing business operational performance. In addition, management excludes severance costs, which may fluctuate significantly from quarter to quarter, because it believes these costs do not necessarily reflect expected future operating costs and do not contribute to a meaningful comparison of the Company’s operating results to historical performance. The Company considers free cash flow as providing useful information to management and investors about the amount of cash that is available to be used to strengthen the Company’s balance sheet, for strategic opportunities, including investing in the Company’s business and strategic acquisitions, and/or for the return of capital to stockholders in the form of dividends and stock repurchases.Non-operating retirement costs include (i) interest cost, expected return on plan assets, amortization of actuarial gains and loss components and amortization of prior service credits of single-employer pension expense, (ii) interest cost, amortization of actuarial gains and loss components and (iii) all multiemployer pension plan withdrawal costs. These non-operating retirement costs are primarily tied to financial market performance including changes in market interest rates and investment performance. Management considers non-operating retirement costs to be outside the performance of the business and believes that presenting adjusted diluted EPS excluding non-operating retirement costs and presenting adjusted operating results excluding multiemployer pension plan withdrawal costs, in addition to the Company’s GAAP diluted EPS and GAAP operating results, provide increased transparency and a better understanding of the underlying trends in the Company’s operating business performance.Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are set out in the tables below.18THE NEW YORK TIMES COMPANYRECONCILIATION OF NON-GAAP FINANCIAL MEASURES(Dollars in thousands, except per share data)Reconciliation of diluted EPS excluding amortization of acquired intangible assets, severance, non-operating retirement costs and special items (or adjusted diluted EPS)Second QuarterSix Months20242023% Change20242023% ChangeDiluted EPS$0.40 $0.28 42.9 %$0.64 $0.42 52.4 %Add:Amortization of acquired intangible assets0.04 0.04 *0.08 0.09 (11.1 %)Severance0.01 — *0.04 0.03 33.3 %Non-operating retirement costs: Multiemployer pension plan withdrawal costs0.01 0.01 *0.02 0.02 *Other components of net periodic benefit costs0.01 — *0.01 (0.01)*Special items:Generative AI Litigation Costs0.01 — *0.02 — *Impairment charge— 0.08 *— 0.08 *Income tax expense of adjustments(0.02)(0.03)*(0.04)(0.05)(20.0)%Adjusted diluted EPS(1)$0.45 $0.38 18.4 %$0.76 $0.56 35.7 %(1) Amounts may not add due to rounding.* Represents a change equal to or in excess of 100% or not meaningful.Reconciliation of operating profit before depreciation and amortization, severance, multiemployer pension plan withdrawal costs and special items (or adjusted operating profit)Second QuarterSix Months20242023% Change20242023% ChangeOperating profit$79,410$55,77542.4 %$127,729$83,67552.6 %Add:Depreciation and amortization20,53721,858(6.0)%41,24342,698(3.4)%Severance1,473713*5,9014,49331.3 %Multiemployer pension plan withdrawal costs1,2971,08419.6 %2,9092,53914.6 %Generative AI Litigation Costs1,983—*2,972—*Impairment charge—12,736*—12,736*Adjusted operating profit$104,700$92,16613.6 %$180,754$146,14123.7 %Divided by:Revenues$625,097$590,8535.8 %$1,219,112$1,151,5925.9 %Operating profit margin12.7 %9.4 %330 bps10.5%7.3%320 bpsAdjusted operating profit margin16.7 %15.6 %110 bps14.8%12.7%210 bps* Represents a change equal to or in excess of 100% or not meaningful.19THE NEW YORK TIMES COMPANYRECONCILIATION OF NON-GAAP FINANCIAL MEASURES(Dollars in thousands)Reconciliation of total operating costs before depreciation and amortization, severance, multiemployer pension plan withdrawal costs and special items (or adjusted operating costs)Second Quarter20242023(1)NYTGThe AthleticI/E(2)TotalNYTGThe AthleticTotal% ChangeTotal operating costs$496,747 $49,503 $(563)$545,687 $489,381 $45,697 $535,078 2.0 %Less:Depreciation and amortization13,940 6,597 — 20,537 15,036 6,822 21,858 (6.0)%Severance1,473 — — 1,473 — 713 713 *Multiemployer pension plan withdrawal costs1,297 — — 1,297 1,084 — 1,084 19.6 %Generative AI Litigation Costs1,983 — — 1,983 — — — *Impairment charge— — — — 12,736 — 12,736 *Adjusted operating costs$478,054 $42,906 $(563)$520,397 $460,525 $38,162 $498,687 4.4 %Six Months20242023(1)NYTGThe AthleticI/E(2)TotalNYTGThe AthleticTotal% ChangeTotal operating costs$990,022 $102,486 $(1,125)$1,091,383 $975,667 $92,250 $1,067,917 2.2 %Less:Depreciation and amortization27,966 13,277 — 41,243 29,043 13,655 42,698 (3.4)%Severance5,472 429 — 5,901 3,329 1,164 4,493 31.3 %Multiemployer pension plan withdrawal costs2,909 — — 2,909 2,539 — 2,539 14.6 %Generative AI Litigation Costs2,972 — — 2,972 — — — *Impairment charge— — — — 12,736 — 12,736 *Adjusted operating costs$950,703 $88,780 $(1,125)$1,038,358 $928,020 $77,431 $1,005,451 3.3 %(1) Recast to conform to the current presentation of total operating costs. See “Comparisons” for more detail.(2) Intersegment eliminations (“I/E”) related to content licensing.* Represents a change equal to or in excess of 100% or not meaningful.Reconciliation of net cash provided by operating activities before capital expenditures (or free cash flow)Six Months20242023Net cash provided by operating activities$133,310 $119,782 Less: Capital expenditures(14,054)(10,792)Free cash flow$119,256 $108,990 20 |
0001364954-23-000119:a9901-financialresultsq220.htm | 0001364954-23-000119 | 1,364,954 | 1,364,954 | CHEGG, INC (CHGG) (CIK 0001364954) | ['CHGG'] | 8-K | 8-K | 2023-08-07 | 2023-08-07 | 001-36180 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-36180&action=getcompany | 231,147,682 | EX-99.01 | EX-99.01 | 2.02,9.01 | https://www.sec.gov/Archives/edgar/data/1364954/000136495423000119 | https://www.sec.gov/Archives/edgar/data/1364954/000136495423000119/0001364954-23-000119-index.html | https://www.sec.gov/Archives/edgar/data/1364954/000136495423000119/a9901-financialresultsq220.htm | EX-99.01 2 a9901-financialresultsq220.htm EX-99.01 DocumentEXHIBIT 99.01 Chegg Reports Second Quarter 2023 EarningsChegg accelerates and enhances personalized learning assistant leveraging advancements in AISANTA CLARA, Calif., August 7, 2023 /BUSINESS WIRE/ -- Chegg, Inc. (NYSE:CHGG), the leading student-first connected learning platform, today reported financial results for the three months ended June 30, 2023.“Chegg outperformed guidance for both revenue and adjusted EBITDA in Q2 and saw year-over-year customer acquisition and retention rates improve during the quarter,” said Dan Rosensweig, CEO & President of Chegg, Inc. “We launched the beta version of our initial generative AI experience in May and feedback has been very positive. We believe we are in an unrivaled position to deliver a unique, personalized learning experience for students because we have the assets, the vision, and the balance sheet that no one else has.”Second Quarter 2023 Highlights•Total Net Revenues of $182.9 million, a decrease of 6% year-over-year•Subscription Services Revenues decreased 5% year-over-year to $165.9 million, or 91% of total net revenues, compared to 90% in Q2 2022 •Net Income was $24.6 million•Non-GAAP Net Income was $37.8 million •Adjusted EBITDA was $59.8 million •4.8 million Subscription Services subscribers, a decrease of 9% year-over-yearTotal net revenues include revenues from Subscription Services and Skills and Other. Subscription Services includes revenues from our Chegg Study Pack, Chegg Study, Chegg Writing, Chegg Math, and Busuu offerings. Skills and Other includes revenues from Skills, Advertising, and any other revenues not included in Subscription Services.For more information about non-GAAP net income and adjusted EBITDA, and a reconciliation of non-GAAP net income to net income, and adjusted EBITDA to net income, see the sections of this press release titled, “Use of Non-GAAP Measures,” “Reconciliation of Net Income to EBITDA and Adjusted EBITDA,” and “Reconciliation of GAAP to Non-GAAP Financial Measures.”Business OutlookThird Quarter 2023 •Total Net Revenues in the range of $151 million to $153 million•Subscription Services Revenues in the range of $135 million to $137 million •Gross Margin between 68% and 69% •Adjusted EBITDA in the range of $34 million to $36 millionFor more information about the use of forward-looking non-GAAP measures, a reconciliation of forward-looking net loss to EBITDA and adjusted EBITDA for the third quarter 2023, see the below sections of the press release titled “Use of Non-GAAP Measures,” and “Reconciliation of Forward-Looking Net Loss to EBITDA and Adjusted EBITDA.”An updated investor presentation and an investor data sheet can be found on Chegg’s Investor Relations website https://investor.chegg.com.Prepared Remarks - Dan Rosensweig, CEO & President Chegg, Inc.Thank you, Tracey and welcome everyone to our 2023 Q2 earnings call. Our team executed well, outperforming guidance for both revenue and adjusted EBITDA. As the second quarter progressed, we saw year-over-year trends for customer acquisition and retention rates improve, which drove the upside in our results. We’re entering an exciting new chapter for Chegg, catalyzed by the advances in artificial intelligence. To take advantage of these new opportunities, Chegg has rapidly pivoted because we believe that category-defining companies with strong brand loyalty, sought-after services, and highly valuable data sets, can leverage AI to grow and will create outsized returns. It’s still early, and since we last reported, we’ve gained greater insights into students’ use and perceptions of AI and how it relates to Chegg. Our recent survey shows, students see ChatGPT and Chegg as complementary with very different use cases. The latest YPulse survey states that while, “GenZ students are using AI to improve their education…they are not comfortable with the exact information ChatGPT puts out.” And it’s become clear to us that a simple, high quality, accurate, personal learning assistant, is needed and we feel we are uniquely positioned to deliver a world class personal learning assistant. We are moving fast, and launched the beta version of our initial generative experience in May. Feedback has been very positive. Specifically, our students like our simple user interface, which is conversational, and they have always trusted the quality, accuracy, and relevance of our proprietary step-by-step solutions. Our research also shows that 86% of students said that they prefer study help that is reviewed by human subject-matter experts, and 85% said they want it to be personalized to their individual learning needs. So, it is no surprise that engagement from our beta testers is extremely high, and they are interacting more with each question, and are staying for significantly longer sessions. We appreciate that speed and execution are critical to our success. Our partnership with Scale AI, announced today, will allow us to accelerate our ability to deliver the new Chegg experience starting in the fall and rolling out over the course of the next two semesters. The new Chegg will combine the best of generative AI with Chegg’s proprietary high-quality solutions and demonstrated ability to improve student outcomes. They can expect to see a much simpler conversational user interface, personalized learning pathways, more in-depth content, and the ability to transform it automatically into innovative study tools, such as practice tests, study guides, and flash cards.In order to further enhance our competitive moat and lower our costs, we are building our own large language models which gives us the ability to train them specifically for education. Our LLMs will be trained with our unique data sets, and with the help of our 150,000 subject matter experts. We expect to deliver a significantly enhanced and differentiated learning experience for students compared to the generic models that are available today. And this is just the beginning. I want to give you a sense of how big we believe this TAM-expanding opportunity can be, and how we plan to capture it. We intend to build the largest connected community of learners around the world with a truly scalable, affordable, adaptive learning assistant, by combining the tools, pathways, and the accuracy that students depend on. Chegg’s proven learning taxonomy, along with our deep history of data from schools, classes, and professors, sets us apart. We have said for years that students’ challenges go way beyond the academic needs and now, by leveraging advancements in artificial intelligence, we believe we can make a significant impact on reducing the nearly 40% of students who drop out of the higher education system, and the more than 50% that never enter. Increasingly students are connecting their academic journey with their skills-based needs in order to be employable in today’s economy. Chegg is developing integrated skills pathways that will help students assess their current proficiency, identify their gaps, and then help them acquire those skills. We are in a great position to do this by leveraging our skills offerings, where we continue to see excellent growth. We also appreciate that students today face a wide variety of personal challenges that can get in the way of graduating on time or at all. We know that if we can connect students to solutions that address some of these issues, such as mental health, food insecurity and financial barriers, we can improve their chances of finishing their education and thriving. We have created a concept video for you which illustrates how this may all come together, which you can review within our Investor deck posted on our IR website.More than 50% of the world’s population is below the age of 30, and they have increasingly turned online to advantage themselves academically and professionally. Now, aided further by the proliferation of AI, the opportunity for Chegg to serve them, is bigger than ever. And with that I will turn it over to Andy… Prepared Remarks - Andy Brown, CFO Chegg, Inc.Thanks Dan and good afternoon everyone.Q2 was a good quarter as we exceeded our revenue and adjusted EBITDA guidance, and also delivered strong cash flow. Total revenue was $183 million, driven by Subscription Services revenue of $166 million. During the quarter we had approximately 4.8 million subscribers on our platform. Skills and Other revenue was $17 million, driven by strong growth in Skills, offset primarily by the change in the Required Materials model, which is now a revenue share. Gross margin of 74% came in slightly higher than expected. This along with the revenue beat, contributed to adjusted EBITDA beating guidance, which came in at $60 million, or a 33% margin. Free cash flow was $56 million, the result of strong operating performance and higher interest rates, with interest income contributing $10.7 million in the quarter, an increase of $8.7 million from last year. We had several items that impacted our GAAP net income for the quarter. These included a gain of $53.8 million from the repurchase of some of our outstanding convertible debt, which was partially offset by a restructuring charge of $5.7 million we announced during the quarter, and a loss contingency of $7.0 million we accrued related to a previous gain taken on an equity investment.We continue to have a strong balance sheet and drive significant free cash flow. We ended the quarter with $808 million of cash and investments, with total convertible debt outstanding of $773 million at par value, representing $35 million of net cash. As mentioned earlier, we repurchased $427 million of our outstanding convertible debt for $369 million, and used some of the net savings to retire 3.4 million shares of our common stock for approximately $35 million. We continue to believe the combination of our operating model, balance sheet, and cash flows are among the strongest in the education industry and will allow us to deliver attractive results for our shareholders. As Dan mentioned, we are rapidly realigning our resources around AI efforts, including partnering with Scale AI to develop the large language models required for our students to have a fully generative, conversational experience rolling out over the next two semesters. We believe our approach of developing and owning these models, versus solely relying on third-party providers will create a truly differentiated and better experience for students at a lower cost. Now, moving on to guidance. For Q3 we expect:•Total revenue to be between $151 and $153 million,•With Subscription Services revenue between $135 and $137 million,•Gross margin between 68% and 69%, •And adjusted EBITDA between $34 and $36 million. It is worth noting that we typically experience seasonally lower revenue and margins in Q3. We also have an elevated level of content depreciation from recently acquired professor-led material, which is impacting gross margins. We expect the impact of this to moderate in Q4 and margins to improve. In closing, we expect the development of AI will allow Chegg to embrace a much larger opportunity over time. We believe there is nobody better equipped to meet the current or future needs of students, than Chegg. We have an industry-leading brand, proprietary data, strong operating model and balance sheet to extend our leadership in the future. With that, I’ll turn the call over to the operator for your questions. Conference Call and Webcast InformationTo access the call, please dial 1-877-407-4018, or outside the U.S. +1-201-689-8471, five minutes prior to 1:30 p.m. Pacific Daylight Time (or 4:30 p.m. Eastern Daylight Time). A live webcast of the call will also be available at https://investor.chegg.com under the Events & Presentations menu. An audio replay will be available beginning at 4:30 p.m. Pacific Daylight Time (or 7:30 p.m. Eastern Daylight Time) on August 7, 2023, until 8:59 p.m. Pacific Standard Time (or 11:59 p.m. Eastern Standard Time) on August 14, 2023, by calling 1-844-512-2921, or outside the U.S. +1-412-317-6671, with Conference ID 13739864. An audio archive of the call will also be available at https://investor.chegg.com.Use of Investor Relations Website for Regulation FD PurposesChegg also uses its media center website, https://www.chegg.com/press, as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD. Accordingly, investors should monitor https://www.chegg.com/press, in addition to following press releases, Securities and Exchange Commission filings and public conference calls and webcasts.About CheggMillions of people all around the world Learn with Chegg. Our mission is to improve learning and learning outcomes by putting students first. We support life-long learners starting with their academic journey and extending into their careers. The Chegg platform provides products and services to support learners to help them better understand their academic course materials, and also provides personal and professional development skills training, to help them achieve their learning goals. Chegg is a publicly held company based in Santa Clara, California and trades on the NYSE under the symbol CHGG. For more information, visit www.chegg.com.Media Contact: Emma McCulloch, press@chegg.comInvestor Contact: Tracey Ford, IR@chegg.comUse of Non-GAAP MeasuresTo supplement Chegg’s financial results presented in accordance with generally accepted accounting principles in the United States (GAAP), this press release and the accompanying tables and the related earnings conference call contain non-GAAP financial measures, including adjusted EBITDA, non-GAAP operating expenses, non-GAAP income from operations, non-GAAP net income, non-GAAP weighted average shares, non-GAAP net income per share, and free cash flow. For reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures, please see the section of the accompanying tables titled, “Reconciliation of Net Income to EBITDA and Adjusted EBITDA,” “Reconciliation of GAAP to Non-GAAP Financial Measures,” “Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow,” and “Reconciliation of Forward-Looking Net Loss to EBITDA and Adjusted EBITDA.”The presentation of these non-GAAP financial measures is not intended to be considered in isolation from, as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP, and may be different from non-GAAP financial measures used by other companies. Chegg defines (1) adjusted EBITDA as earnings before interest, taxes, depreciation and amortization, or EBITDA, adjusted for print textbook depreciation expense and to exclude share-based compensation expense, other income, net, acquisition-related compensation costs, restructuring charges, loss contingency, transitional logistic charges, and impairment of lease related assets; (2) non-GAAP operating expenses as operating expenses excluding share-based compensation expense, amortization of intangible assets, acquisition-related compensation costs, restructuring charges, loss contingency and impairment of lease related assets; (3) non-GAAP income from operations as (loss) income from operations excluding share-based compensation expense, amortization of intangible assets, acquisition-related compensation costs, restructuring charges, loss contingency, transitional logistic charges, and impairment of lease related assets; (4) non-GAAP net income as net income excluding share-based compensation expense, amortization of intangible assets, acquisition-related compensation costs, amortization of debt issuance costs, restructuring charges, loss contingency, transitional logistic charges, the gain on early extinguishment of debt, the income tax effect of non-GAAP adjustments, and impairment of lease related assets; (5) non-GAAP weighted average shares outstanding as weighted average shares outstanding adjusted for the effect of shares for stock plan activity and shares related to our convertible senior notes, to the extent such shares are not already included in our weighted average shares outstanding; (6) non-GAAP net income per share is defined as non-GAAP net income divided by non-GAAP weighted average shares outstanding; and (7) free cash flow as net cash provided by operating activities adjusted for purchases of property and equipment, purchases of textbooks and proceeds from disposition of textbooks. To the extent additional significant non-recurring items arise in the future, Chegg may consider whether to exclude such items in calculating the non-GAAP financial measures it uses.Chegg believes that these non-GAAP financial measures, when taken together with the corresponding GAAP financial measures, provide meaningful supplemental information regarding Chegg’s performance by excluding items that may not be indicative of Chegg’s core business, operating results or future outlook. Chegg management uses these non-GAAP financial measures in assessing Chegg’s operating results, as well as when planning, forecasting and analyzing future periods and believes that such measures enhance investors’ overall understanding of our current financial performance. These non-GAAP financial measures also facilitate comparisons of Chegg’s performance to prior periods.As presented in the “Reconciliation of Net Income to EBITDA and Adjusted EBITDA,” “Reconciliation of GAAP to Non-GAAP Financial Measures,” “Reconciliation of Forward-Looking Net Loss to EBITDA and Adjusted EBITDA,” and “Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow,” tables below, each of the non-GAAP financial measures excludes or includes one or more of the following items:Share-based compensation expense.Share-based compensation expense is a non-cash expense that varies in amount from period to period and is dependent on market forces that are often beyond Chegg's control. As a result, management excludes this item from Chegg's internal operating forecasts and models. Management believes that non-GAAP measures adjusted for share-based compensation expense provide investors with a basis to measure Chegg's core performance against the performance of other companies without the variability created by share-based compensation as a result of the variety of equity awards used by other companies and the varying methodologies and assumptions used.Amortization of intangible assets.Chegg amortizes intangible assets, including those that contribute to generating revenues, that it acquires in conjunction with acquisitions, which results in non‑cash expenses that may not otherwise have been incurred. Chegg believes excluding the expense associated with intangible assets from non-GAAP measures allows for a more accurate assessment of its ongoing operations and provides investors with a better comparison of period-over-period operating results. No corresponding adjustments have been made related to revenues generated from acquired intangible assets.Acquisition-related compensation costs.Acquisition-related compensation costs include compensation expense resulting from the employment retention of certain key employees established in accordance with the terms of the acquisitions. In most cases, these acquisition-related compensation costs are not factored into management's evaluation of potential acquisitions or Chegg's performance after completion of acquisitions, because they are not related to Chegg's core operating performance. In addition, the frequency and amount of such charges can vary significantly based on the size and timing of acquisitions and the maturities of the businesses being acquired. Excluding acquisition-related compensation costs from non-GAAP measures provides investors with a basis to compare Chegg’s results against those of other companies without the variability caused by purchase accounting.Amortization of debt issuance costs.The difference between the effective interest expense and the contractual interest expense are excluded from management's assessment of our operating performance because management believes that these non-cash expenses are not indicative of ongoing operating performance. Chegg believes that the exclusion of the non-cash interest expense provides investors with a better comparison of period-over-period operating results.Restructuring chargesRestructuring charges represent expenses incurred in conjunction with a reduction in workforce to better position the Company to execute against its AI strategy and to create long-term, sustainable value for its students and investors. Chegg believes that it is appropriate to exclude them from non-GAAP financial measures because it is the result of an event that is not considered a core-operating activity and we believe its exclusion provides investors with a better comparison of period-over-period operating results.Loss contingencyThe loss contingency represents a one-time accrual in connection with a demand for repayment of certain investment proceeds received by the Company in its capacity as an investor in TAPD, Inc. (more commonly known as “Frank”). The loss contingency is excluded from non-GAAP financial measures because they are the result of discrete events that are not considered core-operating activities. Chegg believes that it is appropriate to exclude the loss contingency from non-GAAP financial measures because it enables the comparison of period-over-period operating results.Transitional logistics charges.The transitional logistics charges represent incremental expenses incurred as we transition our print textbooks to a third party. Chegg believes that it is appropriate to exclude them from non-GAAP financial measures because it is the result of an event that is not considered a core-operating activity and we believe its exclusion provides investors with a better comparison of period-over-period operating results.Impairment of lease related assets.The impairment of lease related assets represents impairment charge recorded on the ROU asset and leasehold improvements associated with the closure of our San Francisco office. The impairment of lease related assets is a one-time event that is not considered a core-operating activity and we believe its exclusion provides investors with a better comparison of period-over-period operating results.Gain on early extinguishment of debtThe gain on early extinguishment of debt is not considered a core-operating activity and we believe its exclusion provides investors with a better comparison of period-over-period operating results.Income tax effect of non-GAAP adjustments.In the periods following the release of our U.S. valuation allowance, we utilize a non-GAAP effective tax rate of 24% for evaluating our operating results, which is based on our current mid-term projections. This non-GAAP tax rate could change for various reasons including, but not limited to, significant changes resulting from tax legislation, changes to our corporate structure and other significant events. Chegg believes that the inclusion of a non-GAAP provision for income tax adjustments provides investors with a better comparison of period-over-period operating results. Effect of shares for stock plan activity.The effect of shares for stock plan activity represents the dilutive impact of outstanding stock options, RSUs, and PSUs calculated under the treasury stock method. Effect of shares related to convertible senior notes.The effect of shares related to convertible senior notes represents the dilutive impact of our convertible senior notes, to the extent such shares are not already included in our weighted average shares outstanding as they were antidilutive on a GAAP basis.Free cash flow.Free cash flow represents net cash provided by operating activities adjusted for purchases of property and equipment and purchases of textbooks and including proceeds from the disposition of textbooks. Chegg considers free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business after the purchases of property and equipment and textbooks, which can then be used to, among other things, invest in Chegg's business and make strategic acquisitions. A limitation of the utility of free cash flow as a measure of financial performance is that it does not represent the total increase or decrease in Chegg's cash balance for the period.Forward-Looking StatementsThis press release contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, which include, without limitation, statements regarding our future growth and the future of learning, the impact of artificial intelligence (AI) technology on our financial condition and results of operations, our unrivaled position to deliver a unique, personalized learning experience for students because we have the assets, the vision, and the balance sheet that no one else has, our ability to build and utilize AI tools, our belief that category-defining companies with strong brand loyalty, sought-after services, and highly valuable data sets can leverage AI to grow and will create outsized returns, our views on students use of ChatGPT and Chegg as complementary, our unique position to deliver a world class personal learning assistant, our partnership with Scale AI, our ability to accelerate the delivery of the new Chegg experience, the development and features of new Chegg offerings, capabilities and experiences, the timeline for the availability of our new offerings, capabilities and experiences (including our ability to deliver the new Chegg experience starting in the fall and rolling out over the course of the next two semesters), what the new Chegg will include (such as the combination of the best of generative AI with Chegg's proprietary high-quality solutions and demonstrated ability to improve student outcomes), the features of the new Chegg experience, including a much simpler conversational user interface, personalized learning pathways, more in-depth content, and the ability to transform such content automatically into innovative study tools, such as practice tests, study guides, and flash cards, the development of our own large language models (LLMs) and ability to train them specifically for education with our unique data sets and subject matter experts, our LLMs' potential enhancement of our competitive moat, reduction of costs, the delivery of a significantly enhanced and differentiated learning experience compared to generic models, the TAM-expanding opportunity of the new Chegg experience and how we plan to capture it, our intention to build the largest community of learners around the world with a truly scalable, affordable, adaptive learning assistant with the tools, pathways and accuracy that students depend on, our ability to leverage AI to make a significant impact on reducing the number of students who drop out of or never enter the higher education system, our ability to connect students' academic journey with their skills-based needs, our development and integration of skills pathways that will help students assess their proficiency, identify skills gaps and acquire skills, our ability to improve students' educational outcomes by connecting them to solutions that address personal challenges such as mental health, food insecurity and financial barriers, the size of Chegg's opportunity to serve its students, the content of our concept video, expectations regarding Chegg's execution against its strategic and financial objectives and guidance, our ability to deliver attractive results for our shareholders through a combination of our operating model, balance sheet and cash flows, our belief that our approach of developing and owning our own LLMs, versus solely relying on third-party providers, will create a truly differentiated and better experience for students at a lower cost, our expectation regarding seasonality with lower revenue and margins in Q3 and improved margins in Q4, our expectation that the development of AI will allow Chegg to embrace a much larger opportunity over time, our belief that nobody is better equipped to meet the current or future needs of student than Chegg, our ability to extend our leadership in the future through our industry-leading brand, proprietary data, strong operating model and balance sheet, our financial guidance, as well as those included in the investor presentation referenced above, those included in the “Prepared Remarks” sections above, and all statements about Chegg’s outlook under “Business Outlook.” The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “project,” “endeavor,” “will,” “should,” “future,” “transition,” “outlook” and similar expressions, as they relate to Chegg, are intended to identify forward-looking statements. These statements are not guarantees of future performance, and are based on management’s expectations as of the date of this press release and assumptions that are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to differ materially from any future results, performance or achievements. Important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements include the following: the effects of AI technology on Chegg’s business and the economy generally; Chegg’s ability to attract new, and retain existing, students, to increase student engagement, and to increase monetization; Chegg’s brand and reputation; changes in employment and wages and the uncertainty surrounding the evolving educational landscape, enrollment and student behavior; Chegg’s ability to expand internationally; changes in search engine methodologies that modify Chegg’s search result page rankings, resulting in decreased student engagement on Chegg’s website; the success of Chegg’s new product offerings, including the new Chegg generative AI experience and personal learning assistant; competition in aspects of Chegg’s business, and Chegg's expectation that such competition will increase; Chegg’s ability to innovate in response to technological and market developments, including artificial intelligence; Chegg’s ability to maintain its services and systems without interruption, including as a result of technical issues, cybersecurity threats, or cyber-attacks; third-party payment processing risks; adoption of government regulation of education unfavorable to Chegg; the rate of adoption of Chegg’s offerings; mobile app stores and mobile operating systems making Chegg’s apps and mobile website available to students and to grow Chegg’s user base and increase their engagement; colleges and governments restricting online access or access to Chegg’s services; Chegg’s ability to strategically take advantage of new opportunities; competitive developments, including pricing pressures and other services targeting students; Chegg’s ability to build and expand its services offerings; Chegg’s ability to integrate acquired businesses and assets; the impact of seasonality and student behavior on the business; the outcome of any current litigation and investigations; Chegg’s ability to effectively control operating costs; regulatory changes, in particular concerning privacy, marketing, and education; changes in the education market, including as a result of AI technology and COVID-19; and general economic, political and industry conditions, including inflation, recession and war. All information provided in this release and in the conference call is as of the date hereof, and Chegg undertakes no duty to update this information except as required by law. These and other important risk factors are described more fully in documents filed with the Securities and Exchange Commission, including Chegg's Annual Report on Form 10-K for the year ended December 31, 2022 filed with the Securities and Exchange Commission on February 21, 2023, and could cause actual results to differ materially from expectations.CHEGG, INC.CONDENSED CONSOLIDATED BALANCE SHEETS(in thousands, except for number of shares and par value)(unaudited) June 30,2023December 31,2022AssetsCurrent assets Cash and cash equivalents$175,368 $473,677 Short-term investments209,686 583,973 Accounts receivable, net of allowance of $224 and $394 at June 30, 2023 and December 31, 2022, respectively20,670 23,515 Prepaid expenses18,620 28,481 Other current assets22,372 34,754 Total current assets446,716 1,144,400 Long-term investments422,758 216,233 Property and equipment, net198,318 204,383 Goodwill629,564 615,093 Intangible assets, net67,630 78,333 Right of use assets28,267 18,838 Deferred tax assets146,790 167,524 Other assets28,492 20,612 Total assets$1,968,535 $2,465,416 Liabilities and stockholders' equity Current liabilities Accounts payable$12,954 $12,367 Deferred revenue53,200 56,273 Accrued liabilities76,657 70,234 Total current liabilities142,811 138,874 Long-term liabilities Convertible senior notes, net767,043 1,188,593 Long-term operating lease liabilities21,253 13,375 Other long-term liabilities2,427 7,985 Total long-term liabilities790,723 1,209,953 Total liabilities933,534 1,348,827 Commitments and contingenciesStockholders' equity: Preferred stock, $0.001 par value per share, 10,000,000 shares authorized, no shares issued and outstanding— — Common stock, $0.001 par value per share: 400,000,000 shares authorized; 115,177,618 and 126,473,827 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively115 126 Additional paid-in capital1,121,820 1,244,504 Accumulated other comprehensive loss(43,179)(57,488)Accumulated deficit(43,755)(70,553)Total stockholders' equity1,035,001 1,116,589 Total liabilities and stockholders' equity$1,968,535 $2,465,416 CHEGG, INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(in thousands, except per share amounts)(unaudited)Three Months Ended June 30,Six Months Ended June 30,2023202220232022Net revenues$182,853 $194,721 $370,454 $396,965 Cost of revenues(1)47,412 45,684 96,562 100,769 Gross profit135,441 149,037 273,892 296,196 Operating expenses:Research and development(1)52,872 52,480 99,779 104,895 Sales and marketing(1)30,956 35,279 67,973 77,777 General and administrative(1)70,309 53,935 129,282 100,805 Total operating expenses154,137 141,694 297,034 283,477 (Loss) income from operations(18,696)7,343 (23,142)12,719 Interest expense, net and other income, net:Interest expense, net(1,114)(1,616)(2,382)(3,213)Other income, net64,103 1,809 76,179 7,989 Total interest expense, net and other income, net62,989 193 73,797 4,776 Income before provision for income taxes44,293 7,536 50,655 17,495 Provision for income taxes(19,681)(60)(23,857)(4,277)Net income$24,612 $7,476 $26,798 $13,218 Net income (loss) per shareBasic$0.21 $0.06 $0.22 $0.10 Diluted$(0.11)$0.06 $(0.08)$0.10 Weighted average shares used to compute net income (loss) per shareBasic117,977 126,272 120,828 129,201 Diluted132,944 149,574 137,416 129,934 (1) Includes share-based compensation expense as follows:Cost of revenues$560 $669 $1,087 $1,292 Research and development11,968 10,006 22,882 21,782 Sales and marketing2,182 4,019 4,681 8,405 General and administrative21,210 16,393 41,016 32,692 Total share-based compensation expense$35,920 $31,087 $69,666 $64,171 CHEGG, INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(in thousands)(unaudited) Six Months Ended June 30, 20232022Cash flows from operating activities Net income$26,798 $13,218 Adjustments to reconcile net income to net cash provided by operating activities:Share-based compensation expense69,666 64,171 Other depreciation and amortization expense52,027 41,921 Deferred income taxes20,142 (303)Gain on early extinguishment of debt(53,777)— Restructuring charges5,704 — Loss contingency7,000 — Operating lease expense, net3,009 3,242 Amortization of debt issuance costs1,988 2,779 Loss from write-off of property and equipment450 2,767 Gain on foreign currency remeasurement of purchase consideration— (4,628)Print textbook depreciation expense— 1,610 Impairment on lease related assets— 3,411 Gain on textbook library, net— (4,967)Other non-cash items(1,083)470 Change in assets and liabilities, net of effect of acquisition of business: Accounts receivable3,081 3,227 Prepaid expenses and other current assets15,082 28,768 Other assets5,470 13,058 Accounts payable(671)(5,246)Deferred revenue(3,634)4,256 Accrued liabilities(7,140)(21,034)Other liabilities(8,205)(2,965)Net cash provided by operating activities135,907 143,755 Cash flows from investing activities Purchases of property and equipment(33,864)(57,286)Purchases of textbooks— (3,815)Proceeds from disposition of textbooks9,787 2,494 Purchases of investments(552,409)(356,553)Maturities of investments476,862 522,466 Proceeds from sale of investments238,681 — Purchase of strategic equity investment(9,604)— Acquisition of business, net of cash acquired— (401,125)Net cash provided by (used in) investing activities129,453 (293,819)Cash flows from financing activities Proceeds from common stock issued under stock plans, net3,081 4,558 Payment of taxes related to the net share settlement of equity awards(11,068)(10,221)Repurchases of common stock(186,368)(300,450)Repayment of convertible senior notes(369,761)— Proceeds from exercise of convertible senior notes capped call297 — Net cash used in financing activities(563,819)(306,113)Effect of exchange rate changes197 4,628 Net decrease in cash, cash equivalents and restricted cash(298,262)(451,549)Cash, cash equivalents and restricted cash, beginning of period475,854 855,893 Cash, cash equivalents and restricted cash, end of period$177,592 $404,344 Six Months Ended June 30, 20232022Supplemental cash flow data:Cash paid during the period for: Interest$517 $437 Income taxes, net of refunds$6,171 $3,915 Cash paid for amounts included in the measurement of lease liabilities:Operating cash flows from operating leases$4,909 $3,869 Right of use assets obtained in exchange for lease obligations:Operating leases$12,407 $3,244 Non-cash investing and financing activities: Accrued purchases of long-lived assets$4,518 $4,057 June 30,20232022Reconciliation of cash, cash equivalents and restricted cash:Cash and cash equivalents$175,368 $402,089 Restricted cash included in other current assets60 64 Restricted cash included in other assets2,164 2,191 Total cash, cash equivalents and restricted cash$177,592 $404,344 CHEGG, INC.RECONCILIATION OF NET INCOME TO EBITDA AND ADJUSTED EBITDA(in thousands)(unaudited)Three Months Ended June 30,Six Months Ended June 30,2023202220232022Net income$24,612 $7,476 $26,798 $13,218 Interest expense, net1,114 1,616 2,382 3,213 Provision for income taxes19,681 60 23,857 4,277 Print textbook depreciation expense— 89 — 1,610 Other depreciation and amortization expense26,484 21,636 52,027 41,921 EBITDA71,891 30,877 105,064 64,239 Print textbook depreciation expense— (89)— (1,610)Share-based compensation expense35,920 31,087 69,666 64,171 Other income, net(64,103)(1,809)(76,179)(7,989)Acquisition-related compensation costs3,417 3,628 5,877 6,707 Restructuring charges5,704 — 5,704 — Loss contingency7,000 — 7,000 — Transitional logistics charges— 1,221 253 1,569 Impairment of lease related assets— 3,411 — 3,411 Adjusted EBITDA$59,829 $68,326 $117,385 $130,498 CHEGG, INC.RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES(in thousands, except percentages and per share amounts)(unaudited)Three Months Ended June 30,Six Months Ended June 30,2023202220232022Operating expenses$154,137 $141,694 $297,034 $283,477 Share-based compensation expense(35,360)(30,418)(68,579)(62,879)Amortization of intangible assets(2,977)(2,987)(5,888)(5,788)Acquisition-related compensation costs(3,410)(3,616)(5,865)(6,685)Restructuring charges(5,692)— (5,692)— Loss contingency(7,000)— (7,000)— Impairment of lease related assets— (3,411)— (3,411)Non-GAAP operating expenses$99,698 $101,262 $204,010 $204,714 (Loss) income from operations$(18,696)$7,343 $(23,142)$12,719 Share-based compensation expense35,920 31,087 69,666 64,171 Amortization of intangible assets6,359 6,772 12,609 13,214 Acquisition-related compensation costs3,417 3,628 5,877 6,707 Restructuring charges5,704 — 5,704 — Loss contingency7,000 — 7,000 — Transitional logistics charges— 1,221 253 1,569 Impairment of lease related assets— 3,411 — 3,411 Non-GAAP income from operations$39,704 $53,462 $77,967 $101,791 Net income$24,612 $7,476 $26,798 $13,218 Share-based compensation expense35,920 31,087 69,666 64,171 Amortization of intangible assets6,359 6,772 12,609 13,214 Acquisition-related compensation costs3,417 3,628 5,877 6,707 Amortization of debt issuance costs931 1,397 1,988 2,779 Restructuring charges5,704 — 5,704 — Loss contingency7,000 — 7,000 — Gain on early extinguishment of debt(53,777)— (53,777)— Income tax effect of non-GAAP adjustments7,671 — (184)— Transitional logistics charges— 1,221 253 1,569 Impairment of lease related assets— 3,411 — 3,411 Non-GAAP net income$37,837 $54,992 $75,934 $105,069 Weighted average shares used to compute net (loss) income per share, diluted132,944 149,574 137,416 129,934 Effect of shares for stock plan activity273 — 433 — Effect of shares related to convertible senior notes— — — 22,875 Non-GAAP weighted average shares used to compute non-GAAP net income per share, diluted133,217 149,574 137,849 152,809 Net (loss) income per share, diluted$(0.11)$0.06 $(0.08)$0.10 Adjustments0.39 0.31 0.63 0.59 Non-GAAP net income per share, diluted$0.28 $0.37 $0.55 $0.69 CHEGG, INC.RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW(in thousands)(unaudited)Six Months Ended June 30,20232022Net cash provided by operating activities$135,907 $143,755 Purchases of property and equipment(33,864)(57,286)Purchases of textbooks— (3,815)Proceeds from disposition of textbooks9,787 2,494 Free cash flow$111,830 $85,148 CHEGG, INC.RECONCILIATION OF FORWARD-LOOKING NET LOSS TO EBITDA AND ADJUSTED EBITDA(in thousands)(unaudited)Three Months Ending September 30, 2023Net loss$(11,800)Interest expense, net700 Provision for income taxes(1,300)Depreciation and amortization expense26,200 EBITDA13,800 Share-based compensation expense31,000 Other income, net(10,000)Acquisition-related compensation costs200 Adjusted EBITDA*$35,000 * Adjusted EBITDA guidance for the three months ending September 30, 2023 represent the midpoint of the range of $34 million to $36 million. |
0001840856-23-000054:soun-20231109ex9911.htm | 0001840856-23-000054 | 1,840,856 | 1,840,856 | SOUNDHOUND AI, INC. (SOUN, SOUNW) (CIK 0001840856) | ['SOUN', 'SOUNW'] | 8-K | 8-K | 2023-11-09 | 2023-11-09 | 001-40193 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-40193&action=getcompany | 231,393,252 | EX-99.1 | EX-99.1 | 2.02,9.01 | https://www.sec.gov/Archives/edgar/data/1840856/000184085623000054 | https://www.sec.gov/Archives/edgar/data/1840856/000184085623000054/0001840856-23-000054-index.html | https://www.sec.gov/Archives/edgar/data/1840856/000184085623000054/soun-20231109ex9911.htm | EX-99.1 2 soun-20231109ex9911.htm EX-99.1 DocumentExhibit 99.1SoundHound AI Reports Record Third Quarter, Revenue Increases to $13.3 Million, Adjusted EBITDA Improves 57% Year Over Year SANTA CLARA, Calif.--(BUSINESS WIRE)--SoundHound AI, Inc. (Nasdaq: SOUN), a global leader in voice artificial intelligence, today reported its financial results for the third quarter of 2023. The financial data presented in this press release should be considered preliminary until the company files its 10-Q.“Our third quarter was another milestone for revenue, and at the same time marked a significant ramping up of our business,” said Keyvan Mohajer, CEO and Co-Founder of SoundHound AI. “SoundHound Chat AI became the first ever voice assistant with generative AI capabilities to go live in European vehicles, and well-known restaurant brands are embracing our voice technology to alleviate pressure and delight consumers. Our combination of software engineering and generative AI is unique in the industry, resulting in increased interest and exciting growth opportunities.” Financial Highlights•$13.3 million in third quarter reported revenue, an increase of 52% sequentially and 19% year over year with a 73% gross margin•46% improvement in operating loss year over year•33% improvement in net loss year over year•40% improvement in net loss per share year over year•57% improvement in adjusted EBITDA (non-GAAP) year over year“With continued strong revenue momentum and sustained progress on the path to profitability, we are delivering against the key milestones we laid out earlier this year," said Nitesh Sharan, CFO of SoundHound. "Underpinning those financial results are a strengthening foundation of expanding automotive partnerships and enterprise restaurant customers that will help fuel our future.”Business Highlights - Third Quarter and Recent Highlights•Strong traction with enterprise restaurants: Partnering with Jersey Mike's and Krispy Kreme to integrate our voice AI ordering solutions to help automate in-store operations •Customer adoption of our AI restaurant solutions include: Bai Mai Thai, Bubbakoos Burritos, Chicken Shack, CoreLife Eatery, Dog Haus, Happy Endings Hospitality, Sam & Louie's, Tonyburgers, and Zeeks Pizza, among many others•SoundHound Chat AI is now deployed an extensive pilot with DS Automobiles, a Stellantis brand, making it the first in-vehicle voice assistant in Europe to have integrated generative AI capabilities•Fully branded AI voice assistant went live this quarter in a new line of vehicles from Togg, a Turkish EV car maker •New collaboration with Samsung to revolutionize next-gen display technology for voice AI drive-thrus, starting with White Castle•New integration with Olo, a leading restaurant SaaS platform, making SoundHound’s technology available to any of the approximately 77,000 locations using Olo’s solutions•Partnered with ChowNow, a leading online ordering and marketing platform, to give their restaurant customers access to SoundHound’s Smart Answering service•Launched a new Vehicle Intelligence domain that lets users of its in-vehicle voice AI platform access the car manual using natural speech.•Announced availability of fully automated Smart Answering service that lets any business handle customer service calls with voice AI•Ranked among the top 10 in the world of machine learning by Technology Magazine, in a market they estimate to be nearly $2 trillion by 2030•Named the 2023 Speech Industry Award winner with acknowledgement for bringing speech breakthroughs to the mainstreamFinancial Results in DetailThird Quarter 2023 Financial MeasuresThree Months Ended(thousands, except per share data)September 30, 2023September 30, 20223Change in %Cumulative bookings backlog1$341,721 $302,187 13 %Revenues$13,268 $11,186 19 %Operating expenses:Cost of revenues$3,590 $2,583 39 %Sales and marketing4,471 6,672 (33)%Research and development12,806 19,352 (34)%General and administrative6,931 9,651 (28)%Total operating expenses$27,798 $38,258 (27)%Operating loss$(14,530)$(27,072)(46)%Net loss$(20,197)$(30,061)(33)%Net loss per share$(0.09)$(0.15)(40)%Adjusted EBITDA2$(7,308)$(16,907)(57)%1)Cumulative bookings backlog is prior quarter end balance plus new bookings in the current quarter minus associated revenue recognized. Bookings are derived from committed customer contracts and reflect revenue expected to be realized over the life of such contracts.2)Please see table below for a reconciliation from GAAP to non-GAAP.3)Note: the Company identified corrections related to historical financial transactions for certain prior periods, which have been revised. These amounts were primarily related to other income and expenses and had no impact to revenue, EPS or adjusted EBITDA for the period noted. Specifically, general and admin was adjusted by $64 and net loss, which further included the result of changes to other income and expenses, was impacted by $1,075. Further details will be provided when the company's 10-Q is filed. Management is also continuing to assess the impact of these adjustments in the Company’s internal control over financial reporting.Summary of Liquidity and Cash FlowsThe company’s total cash was approximately $110 million at September 30, 2023. Condensed Cash Flow StatementNine Months Ended(thousands)September 30,2023September 30,2022Cash flows:Net cash used in operating activities$(54,395)$(73,605)Net cash used in investing activities(334)(1,188)Net cash provided by financing activities155,175 85,613 Net change in cash and cash equivalents$100,446 $10,820 Business Outlook 2023SoundHound expects fourth quarter 2023 revenue to be in a range of $16 to $20 million. The company also continues to expect to be adjusted EBITDA positive in the fourth quarter of 2023.Additional InformationFor more information please see the company’s SEC filings which can be obtained on the company’s website at investors.soundhound.com. The financial statements will be posted on the website, and will be included when we file our 10-Q.2Conference Call and WebcastKeyvan Mohajer, Co-Founder and CEO, and Nitesh Sharan, CFO will host a live audio conference call and webcast today at 2:00 p.m. Pacific Time/5:00 p.m. Eastern Time. A live webcast and replay will also be accessible at investors.soundhound.com. About SoundHoundSoundHound (Nasdaq: SOUN), a global leader in conversational intelligence, offers voice AI solutions that let businesses offer incredible conversational experiences to their customers. Built on proprietary technology, SoundHound’s voice AI delivers best-in-class speed and accuracy in numerous languages to product creators across automotive, TV, and IoT, and to customer service industries via groundbreaking AI-driven products like Smart Answering, Smart Ordering, and Dynamic Interaction™, a real-time, multimodal customer service interface. Along with SoundHound Chat AI, a powerful voice assistant with integrated Generative AI, SoundHound powers millions of products and services, and processes billions of interactions each year for world class businesses.Forward Looking StatementsThis press release contains forward-looking statements, which are not historical facts, 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. In some cases, you can identify forward-looking statements by the use of words such as “may,” “could,” “expect,” “intend,” “plan,” “seek,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue,” “likely,” “will,” “would” and variations of these terms and similar expressions, or the negative of these terms or similar expressions. These forward-looking statements include, but are not limited to, statements concerning our expected financial performance, our ability to implement our business strategy and anticipated business and operations, including our ability to improve our Generative AI Foundation Model, expand our White Castle partnership and roll out our AI drive thru service, roll out our Dynamic Interaction, Chat AI for Automotive, and expand the number of platforms on which our voice AI technology will be available, the potential utility of and market for our products and services, our ability to achieve revenue from our bookings backlog, guidance for financial results for fourth quarter 2023 and our ability to timely file our quarterly report on Form 10-Q. Such forward-looking statements are necessarily based upon estimates and assumptions that, while considered reasonable by us and our management, are inherently uncertain. As a result, readers are cautioned not to place undue reliance on these forward-looking statements. Our actual results may differ materially from those expressed or implied by these forward-looking statements as a result of risks and uncertainties impacting SoundHound’s business including, our ability to successfully launch and commercialize new products and services and derive significant revenue, our ability to develop the bespoke products and services required under the contracts included in our bookings backlog, including, but not limited to, our ability to convert customer adoption of Smart Ordering into realized revenue, our ability to predict or measure supply chain disruptions at our customers, our market opportunity and our ability to acquire new customers and retain existing customers, the timing and impact of our growth initiatives, level of product service failures that could lead our customers to use competitors’ services, our ability to predict direct and indirect customer demand for our existing and future products, our ability to hire, retain and motivate employees, the effects of competition, including price competition within our industry segment. technological, regulatory and legal developments that uniquely or disproportionately impact our industry segment, developments in the economy and financial markets and those other factors described in our risk factors set forth in our filings with the Securities and Exchange Commission from time to time, including our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. We do not intend to update or alter our forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.The financial data presented for the third quarter of 2023 should be considered preliminary and could be subject to change as these preliminary results are based on management's initial analysis of operations and are subject to further internal review. Actual results may differ materially from these preliminary unaudited results as a result of the completion of quarter-end closing procedures, final adjustments and other developments arising between now and the time that Company's financial results are finalized, and such changes could be material. In addition, these preliminary unaudited results are not a comprehensive statement of the Company's financial results for the year quarter ended September 30, 2023, should not be viewed as a substitute for full, unaudited financial statements prepared in accordance with generally accepted accounting principles, and are not necessarily indicative of the Company's results for any future period.Non-GAAP Measures of Financial PerformanceTo supplement the company’s financial statements, which are presented on the basis of U.S. generally accepted accounting principles (GAAP), the following non-GAAP measure of financial performance is included in this release: adjusted EBITDA. We define Adjusted EBITDA as the company’s GAAP net loss excluding (i) interest and other expense, net, (ii) 3depreciation and amortization expense, (iii) income taxes, (iv) stock-based compensation, and (v) restructuring expense. A reconciliation of GAAP to this adjusted non-GAAP financial measure is included below. When analyzing the company's operating results, investors should not consider non-GAAP measures as substitutes for the comparable financial measures prepared in accordance with GAAP. The Company does not present a quantitative reconciliation of the forward-looking non-GAAP financial measures and Adjusted EBITDA, to the most directly comparable GAAP financial measure (or otherwise present such forward-looking GAAP measures) because it is impractical to forecast certain items without unreasonable efforts due to the uncertainty and inherent difficulty of predicting, within a reasonable range, the occurrence and financial impact of and the periods in which such items may be recognized.Reconciliation of GAAP Net Loss to Non-GAAP Adjusted EBITDAThree Months Ended(thousands)September 30,2023September 30, 20221GAAP net profit (loss)$(20,197)$(30,061)Adjustments:Interest and other expense, net$4,106 $2,189 Income taxes1,561 864 Depreciation and amortization530 928 Stock-based compensation6,692 9,173 Adjusted EBITDA1$(7,308)$(16,907)1)Includes other income/(expense) of $1.3 and ($1.0) million for the three months ended September 30, 2023 and 2022, respectively. Note: as described in the ‘Third Quarter 2023 Financial Measures’ table above the interest and other expense, net was revised by $1,075 and general & admin expenses were adjusted for $64 for the period ending September 30, 2022. 4 |
0000950170-23-062465:alur-ex99_1.htm | 0000950170-23-062465 | 1,964,979 | 1,964,979 | ALLURION TECHNOLOGIES, INC. (ALUR, ALUR-WT) (CIK 0001964979) | ['ALUR', 'ALUR-WT'] | 8-K | 8-K | 2023-11-13 | 2023-11-13 | 001-41767 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-41767&action=getcompany | 231,395,207 | EX-99.1 | EX-99.1 | 2.02,9.01 | https://www.sec.gov/Archives/edgar/data/1964979/000095017023062465 | https://www.sec.gov/Archives/edgar/data/1964979/000095017023062465/0000950170-23-062465-index.html | https://www.sec.gov/Archives/edgar/data/1964979/000095017023062465/alur-ex99_1.htm | EX-99.1 2 alur-ex99_1.htm EX-99.1 EX-99.1 Exhibit 99.1 Allurion Reports Third Quarter 2023 Financial Results and Provides Business Update Completed NYSE listing and business combination generating $92M in net proceeds Generated 40% sequential revenue growth in first quarter as a public company Completed enrollment in AUDACITY FDA pivotal trial for Allurion Balloon Launched Coach Iris, a conversational, 24/7, and generative AI-powered weight loss coach Natick, MA – November 13, 2023 – Allurion Technologies, Inc. (NYSE: ALUR) (“Allurion”), a company dedicated to ending obesity, today announced its financial results for the third quarter ended September 30, 2023 and provided a business update. Third Quarter Highlights •Completed business combination with Compute Health Acquisition Corp. (“Compute Health”) and began trading on the New York Stock Exchange in August under the ticker ALUR. •Generated $18.2 million of revenue in the third quarter of 2023, representing a 40% sequential increase from the second quarter of 2023 and a 13% increase from $16.1 million in the third quarter of 2022. •Completed enrollment in the AUDACITY trial, a randomized, pivotal controlled trial designed to support a premarket approval application (PMA) for the Allurion Balloon to the U.S. Food and Drug Administration. •Launched Coach Iris, a conversational, 24/7, generative AI-powered weight loss coach powered by GPT and fine-tuned to Allurion’s proprietary behavior change program. •Strengthened the board of directors with the appointment of Omar Ishrak, former Chairman and CEO of Medtronic, serial entrepreneur Doug Hudson, founder of Tend and founding CEO of SmileDirectClub, and Nick Lewin, Chairman of Establishment Labs, Inc. •9 abstracts accepted for presentation at the International Federation for the Surgery of Obesity and Metabolic Disorders (IFSO), including new data on over 5,000 patients treated with the Allurion Program and combination therapy using Allurion and GLP-1 medications “The third quarter of 2023 was transformative for Allurion, as we made our debut as a public company on the New York Stock Exchange. With the capital we have raised, we are investing in the business, and I’m excited to see the results from that in 2024,” said Shantanu Gaur, Founder and Chief Executive Officer of Allurion. “In the past year, we have launched several initiatives to expand the distribution of the Allurion Program globally, advance our artificial intelligence platform, and improve patient outcomes. With unprecedented interest in weight loss globally, this is an ideal time to be pursuing these initiatives at Allurion.” “The market for cash-pay weight loss interventions is highly dynamic,” Gaur continued. “Increased consumer interest in weight loss due to the proliferation of GLP-1 drugs should be a strong net tailwind in the long run, but we are in the midst of some headwinds that are leading to a short-term reduction in demand for elective procedures, including lower consumer spending and higher interest rates leading to constraints in procedure financing. However, as we continue to see patients respond well to the Allurion Program, I am highly confident about our prospects for 2024 and beyond.” Third Quarter Financial Results Total revenue for the quarter ended September 30, 2023 was $18.2 million compared to $16.1 million for the same period in 2022, and $13.0 million for the second quarter of 2023. Gross profit for the third quarter was 77%, compared to 78% for the same period in 2022. Sales and marketing expenses for the third quarter decreased approximately $1.7 million to $14.0 million compared to $15.7 million for the same period in 2022, driven by our decision to delay investment while completing the business combination with Compute Health. Research and development expenses for the third quarter increased approximately $2.1 million to $7.2 million compared to $5.1 million for the same period in 2022, primarily due to an increase in costs related to the AUDACITY FDA trial. General and administrative expenses for the third quarter increased approximately $15.1 million to $18.9 million compared to $3.8 million in the third quarter of 2022. The increase in general and administrative expenses was primarily due to $10 million in transaction related expenses and stock-based compensation expense related to the business combination with Compute Health, and other administrative costs as we began to operate as a publicly traded company. Loss from operations for the third quarter was $26.2 million compared to $12.0 million in the same period in 2022. Loss from operations includes $10 million in transaction related expenses and stock-based compensation expenses incurred in connection with the business combination with Compute Health. Allurion’s cash balance on September 30, 2023, was $79.9 million. Cash increased $72.2 million from December 31, 2022 as a result of the completion of the business combination with Compute Health in August 2023. Revenue for the nine-month period ended September 30, 2023, was $45.2 million, essentially even with the same period of 2022. Conference Call and Webcast Details Allurion management will host a conference call at 8:30 a.m. ET today, November 13, 2023. To access the conference call by telephone, please dial (888) 330-3417 (domestic) or +1 646 960 0804 (international) and reference Access Code 1905455. To listen to the conference call via live audio webcast, please visit the Events section of Allurion’s Investor Relations website at https://investors.allurion.com. A replay of the conference call will be available by telephone by dialing (800) 770 2030 (domestic) or +1 647 362 9199 (international) and using Access Code 1905455. The archived webcast will also be available on Allurion’s Investor Relations website mentioned above. About Allurion Allurion is dedicated to ending obesity. The Allurion Program is a weight loss platform that features the Allurion Gastric Balloon, the world’s first and only swallowable, procedure-less intragastric balloon for weight loss, and offers access to the Allurion Virtual Care Suite including the Allurion Mobile App for consumers, Allurion Insights for health care providers featuring the Iris AI Platform, and the Allurion Connected Scale and Health Tracker devices. The Allurion Virtual Care Suite is also available to providers separately from the Allurion Program to help customize, monitor and manage weight loss therapy for patients regardless of their treatment plan: gastric balloon, surgical, medical or nutritional. For more information about Allurion and the Allurion Virtual Care Suite, please visit www.allurion.com. Allurion is a trademark of Allurion Technologies, Inc. in the United States and countries around the world. Special Note Regarding Forward-Looking Statements This press release contains forward-looking statements that are based on beliefs and assumptions and on information currently available. In some cases, you can identify forward-looking statements by the following words: “may,” “will,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “potential,” “continue,” “ongoing” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. These statements involve risks, uncertainties and other factors that may cause actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements. Although Allurion believes that it has a reasonable basis for each forward-looking statement contained in this press release, Allurion cautions you that these statements are based on a combination of facts and factors currently known by it and its projections of the future, about which it cannot be certain. Forward-looking statements in this press release include, but are not limited to, statements regarding: Allurion’s ability to complete the AUDACITY trial and support a PMA submission; the impact of investments and initiatives on distribution of the Allurion Program, advancement of its artificial intelligence platform, and improvement of patient outcomes; and the market for our products and weight-loss solutions, including GLP-1 drugs and elective procedures. Allurion cannot assure you that the forward-looking statements in this press release will prove to be accurate. These forward looking statements are subject to a number of risks and uncertainties, including, among others, general economic, political and business conditions; the ability of Allurion to maintain its listing on the New York Stock Exchange; the effect of COVID-19, the Russia and Ukraine war and the Israel-Hamas war on Allurion’s business and financial results; the outcome of any legal proceedings against Allurion; and those factors discussed under the heading “Risk Factors” in the Proxy Statement and Prospectus filed pursuant to Rule 424B(3) with the Securities and Exchange Commission (“SEC”) on July 7, 2023 and other filings with the SEC. Furthermore, if the forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that Allurion will achieve its objectives and plans in any specified time frame, or at all. The forward-looking statements in this press release represent Allurion’s views as of the date of this press release. Allurion anticipates that subsequent events and developments will cause its views to change. However, while Allurion may elect to update these forward-looking statements at some point in the future, Allurion has no current intention of doing so except to the extent required by applicable law. You should, therefore, not rely on these forward-looking statements as representing Allurion’s views as of any date subsequent to the date of this press release. US Media Brian RubyICR(203) 682-8268brian.ruby@icrinc.com Global MediaCedric DamourPR Manager+33 7 84 21 02 20cdamour@allurion.com Investor Contact Mike Cavanaugh, Investor RelationsICR Westwicke(617) 877-9641mike.cavanaugh@westwicke.com ALLURION TECHNOLOGIES, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS For the Three and Nine Months Ended September 30, 2023 and 2022 (dollars in thousands, except per share amounts) Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Revenue $ 18,200 $ 16,064 $ 45,232 $ 45,027 Cost of revenue 4,232 3,474 10,165 9,545 Gross profit 13,968 12,590 35,067 35,482 Operating expenses: Sales and marketing 13,989 15,686 36,127 35,464 Research and development 7,191 5,069 21,623 11,234 General and administrative 18,942 3,820 30,657 10,646 Total operating expenses: 40,122 24,575 88,407 57,344 Loss from operations (26,154 ) (11,985 ) (53,340 ) (21,862 ) Other (expense) income: Interest expense, net (2,586 ) (1,139 ) (7,331 ) (2,666 ) Changes in fair value of warrants 3,868 67 2,189 101 Changes in fair value of debt (6,008 ) — (3,751 ) — Changes in fair value of Revenue Interest Financing and PIPE Conversion Option (2,040 ) — (2,040 ) — Changes in fair value of earn-out liabilities 24,330 — 24,330 — Termination of convertible note side letters (9,466 ) — (17,598 ) — Loss on extinguishment of debt (3,929 ) — (3,929 ) — Other (expense) income, net 389 (420 ) 133 (874 ) Total other (expense) income: 4,558 (1,492 ) (7,997 ) (3,439 ) Loss before income taxes (21,596 ) (13,477 ) (61,337 ) (25,301 ) Provision for income taxes (34 ) (95 ) (90 ) (95 ) Net loss and comprehensive loss (21,630 ) (13,572 ) (61,427 ) (25,396 ) Cumulative undeclared preferred dividends (255 ) (733 ) (1,697 ) (2,175 ) Net loss attributable to common shareholders $ (21,885 ) $ (14,305 ) $ (63,124 ) $ (27,571 ) Net loss per share Basic and diluted $ (0.54 ) $ (0.53 ) $ (2.00 ) $ (1.03 ) Weighted-average shares outstanding 40,335,457 26,930,318 31,558,538 26,888,896 Basic and diluted ALLURION TECHNOLOGIES, INC. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (dollars in thousands) September 30,2023 December 31,2022 Assets Current assets: Cash and cash equivalents $ 79,866 $ 7,685 Accounts receivable, net of allowance of doubtful accounts of $5,694 and $741, respectively 27,644 29,346 Inventory, net 4,019 3,865 Prepaid expenses and other current assets 2,288 2,487 Total current assets 113,817 43,383 Property and equipment, net 3,300 2,382 Right-of-use asset 3,217 2,899 Other long-term assets 354 2,706 Total assets $ 120,688 $ 51,370 Liabilities and Stockholders’ Deficit Current liabilities: Accounts payable $ 9,362 $ 5,809 Current portion of term loan 57,677 53,360 Current portion of lease liabilities 873 905 Accrued expenses and other current liabilities 19,316 15,793 Total current liabilities 87,228 75,867 Convertible notes payable, net of discounts — 3,103 Public warrant liabilities 12,018 — Revenue Interest Financing liability 36,600 — Earn-out liabilities 28,710 — Lease liabilities, net of current portion 2,514 2,163 Other liabilities 6,374 2,551 Total liabilities 173,444 83,684 Commitments and Contingencies Legacy convertible preferred stock — — Stockholders’ deficit: Preferred stock, $0.0001 par value — 100,000,000 shares authorized as of September 30, 2023; and no shares issued and outstanding as of September 30, 2023 and December 31, 2022 — — Common stock, $0.0001 par value — 1,000,000,000 shares authorized as of September 30, 2023; and 47,460,941 and 27,079,856 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively 5 3 Additional paid-in capital 140,858 99,875 Accumulated deficit (193,619 ) (132,192 ) Total stockholders’ deficit (52,756 ) (32,314 ) Total liabilities and stockholders’ deficit $ 120,688 $ 51,370 |
0001213900-24-065754:ea021074202ex99-1_bynordic.htm | 0001213900-24-065754 | 1,801,417 | 1,801,417 | byNordic Acquisition Corp (BYNO, BYNOU, BYNOW) (CIK 0001801417) | ['BYNO', 'BYNOU', 'BYNOW'] | 8-K | 8-K | 2024-08-06 | 2024-08-06 | 001-41273 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-41273&action=getcompany | 241,180,611 | EX-99.1 | PRESS RELEASE | 8.01,9.01 | https://www.sec.gov/Archives/edgar/data/1801417/000121390024065754 | https://www.sec.gov/Archives/edgar/data/1801417/000121390024065754/0001213900-24-065754-index.html | https://www.sec.gov/Archives/edgar/data/1801417/000121390024065754/ea021074202ex99-1_bynordic.htm | EX-99.1 2 ea021074202ex99-1_bynordic.htm PRESS RELEASE Exhibit 99.1 byNordic Acquisition Corporation Signs Letter of Intent for Business Combination with Sivers Semiconductors’ Wholly Owned Photonics Subsidiary Merger Expected to Unlock Significant Value as Independent US NASDAQ Listed Photonics Company New York , Aug. 06, 2024 (GLOBE NEWSWIRE) -- byNordic Acquisition Corporation (“byNordic”, Nasdaq: BYNO), a publicly traded special purpose acquisition company, has signed a non-binding Letter of Intent (LOI) with Sivers Semiconductors AB (“Sivers”, STO: SIVE), a leading supplier of wireless and photonic integrated chips and modules for communications and sensor solutions, to merge its wholly owned Sivers Photonics Ltd subsidiary (“Sivers Photonics”) with byNordic. Sivers Photonics designs and manufactures advanced semiconductor lasers for photonic devices, primarily targeted for Artificial Intelligence (AI) in large data centers, optical communications and optical sensing applications. These lasers are critical components for several current and future technologies, such as generative AI, high performance computing connectivity, autonomous vehicles and smart factories. Sivers Photonics is a leading company with tunable multi-wavelength lasers for direct on-chip integration. According to industry research, the number of sold GPUs for generative AI will grow substantially to approximately 18 million units, which management estimates will result in a total addressable market for chip-to-chip connectivity of $5 billion and a served addressable market of up to $1 billion by 2027. Demand for AI applications is projected to require staggering increases in processing capability and energy consumption. According to the Electric Power Research Institute, data centers could use up to 9% of total electricity generated in the United States by the end of the decade, more than doubling the current consumption. The application of silicon photonics, or SiPh, for data centers is the leading solution with the capacity to deliver the chip-to-chip connectivity needed to remove the bottlenecks for generative AI, while significantly reducing energy consumption. SiPh moves data with light rather than electrons in copper wire, resulting in faster data transmission, lower latency, and up to a 90% reduction in power consumption compared to copper wire solutions. In addition, Sivers Photonics is also addressing other large billion-dollar market opportunities, including biometric sensors and autonomous automotive applications. Sivers Photonics is currently engaged with some of the world’s largest technology companies, including Fortune 100 and leading hyperscalers. Further validating its position as a key potential supplier in generative AI, in 2023 Sivers Photonics received a milestone order from Ayar Labs for the qualification of volume production of its unique laser arrays. Sivers Photonics’ production facility located in Glasgow, UK is one of a few independent factories in the world that develops and manufactures specially adapted lasers and semiconductor optical amplifiers in chip and wafer form. Sivers Photonics currently has 80 global employees, including 12 PhDs, with three issued patents and 16 patents pending across the US, UK, Canada and the World Intellectual Property Organization. “The global market for innovative technologies that can efficiently process and significantly reduce power consumption across AI infrastructure is massive and rapidly expanding,” said Michael Hermansson, byNordic’s Chief Executive Officer. “We believe that Sivers Photonics is an ideal target for byNordic and that it is well positioned to capitalize on this significant market opportunity with exceptional growth potential. As a standalone publicly traded entity, Sivers Photonics will gain access to the U.S. capital markets and institutional investors while establishing a strong collaborative presence in the predominant geographical region of its current and targeted customers and partners. The proposed structure of this transaction is highly favorable to Sivers’ shareholders, and when combined with the expected demand for integrated photonics in AI infrastructure, biometric sensors and automotive markets, we believe that this combination represents a unique opportunity for both companies and our respective stakeholders.” Under the terms of the non-binding LOI, byNordic and Sivers intend to enter into a definitive agreement for the acquisition of Sivers Photonics. The completion of the business combination is subject to the completion of due diligence, the negotiation and execution of definitive documentation and satisfaction of the conditions contained therein, including (i) securing certain concurrent financing, (ii) completion of any required stock exchange and regulatory reviews and (ii) approval of the transaction by byNordic’s and Sivers Photonics’ Boards of Directors and stockholders. The terms of the proposed transaction provide that Sivers Photonics would be spun out and merged with byNordic, with the former equity holders of both Sivers Photonics and byNordic (following the completion of the Business Combination) holding equity in the combined publicly listed company, with Sivers holding majority ownership in the combined publicly listed company. Once the merger is finalized, the company plans to establish headquarters in Silicon Valley, CA with the manufacturing operations remaining in the U.K. Loeb & Loeb LLP is acting as legal counsel to byNordic, and Pillsbury Winthrop Shaw Pittman LLP and Setterwalls are acting as legal counsel to Sivers and Sivers Photonics on the proposed combination. FORWARD-LOOKING STATEMENTS The disclosure herein includes certain statements that are not historical facts but are forward-looking statements. Forward-looking statements generally are accompanied by words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “should,” “would,” “plan,” “predict,” “potential,” “seem,” “seek,” “future,” “outlook,” and similar expressions that predict or indicate future events or trends or that are not statements of historical matters. These forward-looking statements include, but are not limited to, statements regarding projections, estimates and forecasts of revenue and other financial and performance metrics and projections of market opportunity and expectations, byNordic’s ability to enter into a definitive agreement or consummate a transaction with the target company and byNordic’s ability to obtain the financing necessary to consummate the potential transaction. These statements are based on various assumptions and on the current expectations of byNordic’s management and are not predictions of actual performance. These forward-looking statements are provided for illustrative purposes only and are not intended to serve as, and must not be relied on by any investor as, a guarantee, an assurance, a prediction or a definitive statement of fact or probability. Actual events and circumstances are difficult or impossible to predict and will differ from assumptions. Many actual events and circumstances are beyond the control of byNordic and the target company. These forward-looking statements are subject to a number of risks and uncertainties, including: byNordic’s ability to enter into a definitive agreement with respect to the proposed business combination or consummate a transaction with the target company; the risk that the approval of the stockholders of byNordic for the potential transaction is not obtained; failure to realize the anticipated benefits of the potential transaction, including as a result of a delay in consummating the potential transaction; the amount of redemption requests made by byNordic’s stockholders and the amount of funds remaining in byNordic’s trust account after satisfaction of such requests; those factors discussed in byNordic’s prospectus for its initial public offering under the heading “Risk Factors,” and other documents of byNordic filed, or to be filed, with the SEC. If the risks materialize or assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. There may be additional risks that byNordic presently does not know or that byNordic currently believes are immaterial that could also cause actual results to differ from those contained in the forward-looking statements. In addition, forward-looking statements reflect byNordic’s expectations, plans or forecasts of future events and views as of the date hereof. byNordic anticipates that subsequent events and developments will cause byNordic’s assessments to change. However, while byNordic may elect to update these forward-looking statements at some point in the future, byNordic specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing byNordic’s assessments as of any date subsequent to the date of this press release. Accordingly, undue reliance should not be placed upon the forward-looking statements. byNordic undertakes no obligation to update these statements for revisions or changes after the date of this release, except as required by law. No Offer or Solicitation This press release shall not constitute a solicitation of a proxy, consent, or authorization with respect to any securities or in respect of the proposed business combination. This press release shall also not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any states or jurisdictions in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended, or an exemption therefrom. About byNordic Acquisition Corporation byNordic Acquisition Corporation, led by Chief Executive Officer Michael Hermansson, is a special purpose acquisition company formed with the purpose of entering into a business combination with one or more businesses. While the Company may pursue an initial business combination with a company in any sector or geography, has focused its search on high technology growth companies based in the northern part of Europe. About Sivers Semiconductors AB Sivers Semiconductors AB (SIVE.ST) is a leader in SATCOM, 5G, 6G, Photonics, and Silicon Photonics that drives innovation in global communications and sensor technology. Our business units, Photonics and Wireless, supply cutting-edge, integrated chips and modules critical for high-performance gigabit wireless and optical networks. Catering to a broad spectrum of industries from telecommunication to aerospace, we fulfill the increasing demand for computational speed and AI application performance, replacing electric with optical connections for a more sustainable world. Our wireless solutions are forging paths in advanced SATCOM/5G/6G systems, while our photonics expertise is revolutionizing custom semiconductor photonic devices for optical networks and optical sensing, making us a trusted partner to Fortune 100 companies as well as emerging unicorns. With innovation at our core, Sivers Semiconductors is committed to delivering bespoke, high-performance solutions for a better-connected and safer world. Discover our passion for perfection at www.sivers-semiconductors.com. Investor Relations Contacts: Shelton Group Leanne K. Sievers | Joel Achramowicz E: sheltonir@sheltongroup.com |
0001628280-23-017993:may15announcement.htm | 0001628280-23-017993 | 1,577,526 | 1,577,526 | C3.ai, Inc. (AI) (CIK 0001577526) | ['AI'] | 8-K | 8-K | 2023-05-15 | 2023-05-15 | 001-39744 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-39744&action=getcompany | 23,918,331 | EX-99.1 | EX-99.1 | 2.02,9.01 | https://www.sec.gov/Archives/edgar/data/1577526/000162828023017993 | https://www.sec.gov/Archives/edgar/data/1577526/000162828023017993/0001628280-23-017993-index.html | https://www.sec.gov/Archives/edgar/data/1577526/000162828023017993/may15announcement.htm | EX-99.1 2 may15announcement.htm EX-99.1 DocumentC3 AI Fiscal Fourth Quarter 2023 Preliminary Results Exceed GuidanceFree Cash Flow Positive. Revenue, Earnings Exceed GuidanceREDWOOD CITY, Calif. - May 15, 2023 - C3.ai, Inc. (“C3 AI,” “C3,” or the “Company”) (NYSE: AI), the Enterprise AI application software company, today announced preliminary results for its fourth fiscal quarter and fiscal year ended April 30, 2023. All numbers reported are unaudited preliminary estimates. Completed financial results, fiscal 2024 guidance, KPIs, and additional details will be provided on May 31, 2023.Fiscal Fourth Quarter 2023 Preliminary Business Update •Total revenue for the quarter was $72.1 million - $72.4 million, exceeding company guidance.•Net cash provided by operating activities was $28.1 million - $29.5 million. Positive Free cash flow was $18.0 million - $19.4 million.•GAAP loss from operations of ($75.9) million - ($77.1) million.•Non-GAAP loss from operations of ($23.7) million - ($23.9) million, exceeding guidance.We expect to report the following results for the fourth quarter and full fiscal year ended April 30, 2023:Three Months Ended April 30, 2023Prior Guidance(in millions)(in millions)Revenue$72.1 - $72.4$70.0 - $72.0GAAP loss from operations($75.9) - ($77.1)Non-GAAP loss from operations($23.7) - ($23.9)($24.0) - ($28.0)Net cash provided by operating activities$28.1 - $29.5Free cash flow$18.0 - $19.4Free cash flow adjusted for new C3 AI HQ$10.6 - $12.0Fiscal Year Ended April 30, 2023Prior Guidance(in millions)(in millions)Revenue$266.5 - $266.8$264.0 - $266.0GAAP loss from operations($293.1) - ($294.3)Non-GAAP loss from operations($68.2) - ($68.4)($69.0) - ($73.0)Net cash used in operating activities($113.3) - ($114.7)Free cash flow($184.2) - ($185.6)Free cash flow adjusted for new C3 AI HQ($134.4) - ($135.8)This news release and all information herein are preliminary, unaudited estimates.Comments on Fiscal Fourth Quarter Business ResultsOverall business environment for enterprise AI is more active than we have seen since the company’s inception and seems to be accelerating. Interest in applying predictive analytics to business processes has never been greater. This manifested in significantly increased business activity at C3 AI. During the quarter we closed 43 deals, including 19 pilots that were initiated in Q4 FY 23.The consumption-based pricing model continues to be well received by the customers and partners. Largely as a result, the number of qualified enterprise opportunities for closure within 12 months in our sales pipeline has increased by over 100% in the past year.Examples of pilot conversions include Dow, Alberta Treasury Branches (“ATB”), and Chief Digital and Artificial Intelligence Office (“CDAO”). Continued product additions and expansions at Shell, Koch Industries, Department of Defense Rapid Sustainment Office (“RSO”), PwC, Ball, Exxon Mobil, Con Edison, Missile Defense Agency, Defense Counterintelligence and Security Agency (“DCSA”), Baker Hughes, New York Power Authority, and others.Our partner ecosystem is increasingly effective at opening new doors, providing prospects the assurance of success, and providing customers with the highest quality service. We are particularly active with Google Cloud, AWS, Microsoft, Baker Hughes, and Booz Allen. Continued good progress with the Engie partnership that has now sold the Engie Ellipse solution – an enhancement of C3 AI Energy Management – to over 30 customers including: a large U.S. department store chain; a large U.S. retail chain; a large American automotive dealership group; a hotel and casino entertainment company; a Fortune 500 industrial supply company; a Fortune 500 office supply company; a multi-national chain of pet superstores; a multinational consumer electronics retail chain; and a global shipping and mailing company.C3 AI Federal business is increasingly strong, particularly in Defense and Intelligence. Importantly, the C3 AI predictive maintenance application, in production use for some years at NAVAIR Rapid Sustainment Office (“RSO”), was officially designated as the system of record for all predictive maintenance applications in the U.S. Air Force. Our growing partnership with Booz Allen is proving a significant competitive advantage.C3 Generative AI is being enthusiastically received by both existing C3 AI customers and new prospects. Now generally available, we signed three new C3 Generative AI application agreements with large enterprises in Q4 FY 23. See: https://c3.ai/products/c3-generative-ai-product-suite/.The company continues on track with its path to profitability, with the goal of achieving a non-GAAP profitable business by the end of fiscal year 2024, ending April 30, 2024. Positive results to date, estimated to generate $18.0 million to $19.4 million in free cash flow from business operations in Q4 FY 23, and ending the year with over $800 million in cash, cash equivalents and investments.CEO Remarks:“As we began the fiscal year on May 1, the company has never been better positioned,” said Thomas M. Siebel, C3 AI CEO. “I believe we now have broad consensus that the addressable market for Enterprise AI is extraordinarily large; we have nearly 1,000 talented, dedicated employees; the C3 AI Platform is increasingly recognized as the gold-standard in enterprise AI; we have over 40 production enterprise AI applications that offer the market rapid time to value; our C3 Generative AI offerings are being enthusiastically received; our growing market-partner ecosystem enables us to punch above our weight; with our tried, tested, and proven management team, our august and distinguished board of directors, our strong work ethic, and armed with over $800 million in cash – we are well positioned to accelerate growth, gain market share, attain sustainable non-GAAP profitability, and establish a market-leading position globally in enterprise AI. FY 2024 will be exciting.”Conference Call Details What:C3 AI Fourth Quarter Fiscal 2023 Financial Results Conference CallWhen:Wednesday, May 31, 2023Time:2:00 p.m. PT / 5:00 p.m. ETParticipant Registration:https://register.vevent.com/register/BI82803676bd9a45f486a3df9d2260d9a6 (live call)Webcast:https://edge.media-server.com/mmc/p/4mip8zax (live and replay)Investor Presentation DetailsAn investor presentation providing additional information and analysis can be found at our investor relations page at ir.c3.ai.Statement Regarding Use of Non-GAAP Financial MeasuresThe Company reports the following non-GAAP financial measures, which have not been prepared in accordance with generally accepted accounting principles in the United States (GAAP), in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.•Non-GAAP loss from operations. Our Non-GAAP loss from operations exclude the effect of stock-based compensation expense-related charges and employer payroll tax expense related to employee stock-based compensation. We believe the presentation of operating results that exclude these non-cash items provides useful supplemental information to investors and facilitates the analysis of our operating results and comparison of operating results across reporting periods.We use these non-GAAP financial measures internally for financial and operational decision-making purposes and as a means to evaluate period-to-period comparisons. Non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP financial measures and should be read only in conjunction with our condensed consolidated financial statements prepared in accordance with GAAP. Our presentation of non-GAAP financial measures may not be comparable to similar measures used by other companies. We encourage investors to carefully consider our results under GAAP, as well as our supplemental non-GAAP information and the reconciliation between these presentations, to more fully understand our business. Please see the tables included at the end of this release for the reconciliation of GAAP to non-GAAP financial measures. Use of Forward-Looking StatementsThese preliminary financial and operating results presented herein are an estimate and subject to the completion of the Company’s financial closing and other procedures and finalization of the Company’s consolidated financial statements for its year ended April 30, 2023, including the completion of the audit of the Company’s financial statements. Accordingly, actual financial and operating results that will be reflected in the Company’s Annual Report on Form 10-K for the year ended April 30, 2023, including its audited financial statements, when they are completed and publicly disclosed may differ from these preliminary results. In addition, any statements regarding the Company's estimated financial performance for the fourth quarter 2023 do not present all information necessary for an understanding of the Company's financial condition and results of operations as of and for the quarterly period ended April 30, 2023. This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this press release other than statements of historical facts, including our market leadership position, anticipated benefits from our partnerships and investments, financial outlook, our expectations relating to our new consumption-pricing model and the impact to our results of operations, our expectation to be operating profitably on a non-GAAP basis by the end of fiscal 2024, the expected benefits of our offerings, our business strategies, plans, and objectives for future operations, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “estimate,” “expect,” “intend,” “may,” “will” and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks and uncertainties, including difficulties in evaluating our prospects and future results of operations given our limited operating history, our dependence on a limited number of existing customers that account for a substantial portion of our revenue, our ability to attract new customers and retain existing customers, market awareness and acceptance of enterprise AI solutions in general and our products in particular, and our history of operating losses. Some of these risks are described in greater detail in our filings with the Securities and Exchange Commission, including our Quarterly Reports on Form 10-Q for the fiscal quarters ended July 31, 2022, October 31, 2022 and January 31, 2022, and other filings and reports we make with the Securities and Exchange Commission from time to time, including our Form 10-K that will be filed for the fiscal year ended April 30, 2023, although new and unanticipated risks may arise. The future events and trends discussed in this press release may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, achievements, or events and circumstances reflected in the forward-looking statements will occur. Except to the extent required by law, we do not undertake to update any of these forward-looking statements after the date of this press release to conform these statements to actual results or revised expectations.About C3.ai, Inc.C3.ai, Inc. (NYSE:AI) is the Enterprise AI application software company. C3 AI delivers a family of fully integrated products including the C3 AI Application Platform, an end-to-end platform for developing, deploying, and operating enterprise AI applications and C3 AI Applications, a portfolio of industry-specific SaaS enterprise AI applications that enable the digital transformation of organizations globally, and C3 Generative AI, a suite of large AI transformer models for the enterprise.Investor Contactir@c3.aiPress ContactLisa Kennedy (415) 914-8336pr@c3.aiSource: C3.ai, Inc.C3.AI, INC.RECONCILIATION OF PRELIMINARY GAAP TO PRELIMINARY NON-GAAP FINANCIAL MEASURES(In millions)(Unaudited)Range of Preliminary ResultsThree Months Ended April 30, 2023Fiscal Year Ended April 30, 2023Reconciliation of GAAP loss from operations to non-GAAP loss from operations:Loss from operations on a GAAP basis$(75.9)$(77.1)$(293.1)$(294.3)Estimated stock-based compensation expense50.451.4218.9219.9Estimated employer payroll tax expense related to employee stock-based compensation 1.81.86.06.0Loss from operations on a non-GAAP basis$(23.7)$(23.9)$(68.2)$(68.4)Reconciliation of free cash flow to the GAAP measure of net cash provided by (used in) operating activities:The following table below provides a reconciliation of free cash flow to the GAAP measure of net cash provided by (used in) operating activities for the periods presented:Range of Preliminary ResultsThree Months Ended April 30, 2023Fiscal Year Ended April 30, 2023Net cash provided by (used in) operating activities$28.1 $29.5 $(113.3)$(114.7)Less:Estimated purchases of property and equipment(10.1)(10.1)(69.9)(69.9)Estimated capitalized software development costs— — (1.0)(1.0)Free cash flow$18.0 $19.4 $(184.2)$(185.6) |
0001683168-25-003385:radnet_ex9901.htm | 0001683168-25-003385 | 790,526 | 790,526 | RadNet, Inc. (RDNT) (CIK 0000790526) | ['RDNT'] | 8-K | 8-K | 2025-05-12 | 2025-05-11 | 001-33307 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-33307&action=getcompany | 25,932,852 | EX-99.1 | PRESS RELEASE DATED MAY 11, 2025 | 2.02,9.01 | https://www.sec.gov/Archives/edgar/data/790526/000168316825003385 | https://www.sec.gov/Archives/edgar/data/790526/000168316825003385/0001683168-25-003385-index.html | https://www.sec.gov/Archives/edgar/data/790526/000168316825003385/radnet_ex9901.htm | EX-99.1 2 radnet_ex9901.htm PRESS RELEASE DATED MAY 11, 2025 Exhibit 99.1 FOR IMMEDIATE RELEASE RadNet Reports First Quarter Financial Results and Revises Upwards 2025 Financial Guidance Ranges for Revenue and Adjusted EBITDA(1) ·First quarter Revenue was negatively impacted by approximately $22 million and Adjusted EBITDA(1) was negatively impacted by approximately $15 million as a result of the Southern California wildfires and severe winter weather conditions ·Total Company Revenue increased 9.2% to $471.4 million in the first quarter of 2025 from $431.7 million in the first quarter of 2024 ·Revenue from the Digital Health reportable segment increased 31.1% to $19.2 million in the first quarter of 2025 from $14.7 million in the first quarter of 2024 ·Aggregate procedural volumes increased 3.6% and same-center procedural volumes decreased 0.3% compared with the first quarter of 2024 ·Total Company Adjusted EBITDA(1) was $46.4 million in the first quarter of 2025 as compared with $58.5 million in the first quarter of 2024, a decrease of 20.6%; Digital Health reportable segment Adjusted EBITDA(1) increased to $3.7 million in the first quarter of 2025 from $3.5 million in the first quarter of 2024 ·Adjusting for unusual or one-time items in the quarter, Adjusted Diluted Loss Per Share(3) was $(0.35) for the first quarter of 2025; This compares with Adjusted Earnings Per Share(3) of $0.07 for the first quarter of 2024 ·On April 15, 2025, RadNet announced that it signed a definitive agreement to acquire iCAD, Inc. (“iCAD”) to accelerate AI-powered early detection and diagnosis of breast cancer ·RadNet revises full-year 2025 guidance levels with increases to Revenue and Adjusted EBITDA(1) LOS ANGELES, California, May 12, 2025 – RadNet, Inc. (NASDAQ: RDNT), a national leader in providing high-quality, cost-effective, fixed-site outpatient diagnostic imaging services through a network of 401 owned and operated outpatient imaging centers, today reported financial results for its first quarter of 2025. Dr. Howard Berger, President and Chief Executive Officer of RadNet, commented, “In February, in conjunction with releasing 2024 fourth quarter results and 2025 guidance ranges, we announced that the first quarter of 2025 was going to be negatively impacted by the Southern California wildfires and the severe winter weather conditions in RadNet’s northeast and Houston markets. We report that the impact from these extraordinary events were as previously estimated. Our business significantly recovered in March and has continued to demonstrate strong procedural volumes and Revenue through April and early May.” 1 “Despite the challenges from the severe weather and Southern California fires during the first quarter, we advanced a number of important initiatives. We continued to implement the TechLiveTM remote scanning capability and have approximately 255 of our MRIs enabled, and we are beginning to test this technology on ultrasound systems. The Enhanced Breast Cancer Detection (EBCD) AI-powered breast cancer diagnostic program is now experiencing a blended adoption rate of over 40% nationwide and continues to find more cancer that otherwise would go undetected, while also making our radiologists more productive and accurate. In addition, conversations are progressing with commercial and capitated payors about adding reimbursement for EBCD, and we remain confident that we will see adoption by some third-party payors by year end. Furthermore, there has been gradual improvement in filling open positions, including technologists, decreasing our reliance on outside staffing agencies. Lastly, the strong growth in advanced imaging has continued in the first quarter despite challenges brought by the winter weather conditions and Southern California fires. Advanced imaging, as a percentage of total procedural volume, grew 1.26% relative to last year’s first quarter. Most notably, PET/CT procedural volume grew in aggregate almost 23% from last year’s same quarter, primarily the result of continued growth of prostate and brain imaging procedures. The cumulative strength of these trends has provided us the confidence to increase 2025 guidance ranges for Revenue and Adjusted EBITDA(1),” added Dr. Berger. Dr. Berger continued, “On April 15, RadNet announced the signing of a definitive agreement, subject to customary closing conditions, to acquire iCAD. The acquisition will unite complementary leading AI-powered cancer detection and workflow solutions focused on improving the accuracy and early detection of breast cancer. Upon completion of the acquisition, iCAD will contribute to our Digital Health division over 1,500 healthcare provider locations, facilitating over eight million annual mammograms in over 50 countries. This business combination is expected to accelerate our global leadership in and commitment to AI-powered breast cancer screening, and positions us to further advance population health.” “RadNet’s balance sheet continues to be among the strongest in the diagnostic imaging industry. At quarter end, we had a cash balance of $717 million and our leverage ratio of Net Debt to Adjusted EBITDA(1) was slightly above 1.0x. Our operating capabilities, scale and digital health tools and initiatives give us a unique perspective in identifying and recognizing value in potential strategic targets. We are encouraged with the pipeline of opportunities we are seeing and are confident we will be able to invest RadNet’s capital in value-creating ways,” concluded Dr. Berger. Financial Results For the first quarter of 2025, RadNet reported Total Company Revenue of $471.4 million and Adjusted EBITDA(1) of $46.4 million. Revenue increased $39.7 million (or 9.2%) and Adjusted EBITDA(1) decreased $12.1 million (or 20.6%) as compared with the first quarter of 2024. For the first quarter of 2025, RadNet reported Digital Health Revenue (inclusive of intersegment revenue) of $19.2 million and Adjusted EBITDA(1) of $3.7 million. Revenue increased $4.6 million (or 31.1%) and Adjusted EBITDA(1) increased $0.2 million (or 5.4%) as compared with the first quarter of 2024. Unadjusted for unusual or one-time items impacting the first quarter of 2025, Total Company Net Loss for the first quarter of 2025 was $37.9 million as compared with a Total Company Net Loss of $2.8 million for the first quarter of 2024. Net Loss Per Share for the first quarter of 2025 was $(0.51), compared with a Net Loss per share of $(0.04) in the first quarter of 2024, based upon a weighted average number of diluted shares outstanding of 74.4 million shares in 2025 and 69.3 million shares in 2024. There were a number of unusual or one-time items impacting the first quarter including: $2.1 million of non-cash gain from interest rate swaps; $1.3 million expense related to leases for our de novo facilities under construction that have yet to open their operations; $672,000 of acquisition transaction costs; $5.4 million of lease abandonment charges; and $3.6 million of non-capitalized research and development expenses with respect to our DeepHealth Cloud OS and generative AI. Adjusting for the above items, Total Company Adjusted Loss(3) was $26.2 million and diluted Adjusted Loss Per Share(3) was $(0.35) for the first quarter of 2025. This compares with Total Company Adjusted Earnings(3) of $5.0 million and diluted Adjusted Earnings Per Share(3) of $0.07 during the first quarter of 2024. For the first quarter of 2025, as compared with the prior year’s first quarter, MRI volume increased 8.4%, CT volume increased 8.3% and PET/CT volume increased 22.9%. Overall volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, increased 3.6% over the prior year’s first quarter. On a same-center basis, including only those centers which were part of RadNet for both the first quarters of 2025 and 2024, MRI volume increased 3.4%, CT volume increased 3.0% and PET/CT volume increased 12.2%. Overall same-center volume, taking into account routine imaging exams, inclusive of x-ray, ultrasound, mammography and other exams, decreased 0.3% over the prior year’s same quarter. 2 2025 Revised Guidance RadNet amends its previously announced guidance levels as follows: Imaging Center Segment Original Guidance Range Revised Guidance Range Total Net Revenue $1,825 - $1,875 million $1,835 - $1,885 million Adjusted EBITDA(1) $265 - $273 million $268 - $276 million Capital Expenditures(a) $140 - $150 million $145 - $155 million Cash Interest Expense(b) $35 - $40 million $35 - $40 million Free Cash Flow(2) $70 - $80 million $70 - $80 million (a)Net of proceeds from the sale of equipment and New Jersey Imaging Network capital expenditures. (b)Net of payments from counterparties on interest rate swaps and interest income from our cash balance recorded in Other Income. Digital Health Segment Original Guidance Range Revised Guidance Range Total Net Revenue $80 - $90 million $80 - $90 million Adjusted EBITDA(1) Before Non-Capitalized R&D - DeepHealth Cloud OS & Generative AI $15 - $17 million $15 - $17 million Non-Capitalized R&D - DeepHealth Cloud OS & Generative AI $16 - $18 million $16 - $18 million Capital Expenditures $3 - $5 million $3 - $5 million Free Cash Flow(2) Before Non-Capitalized R&D - DeepHealth Cloud OS & Generative AI $11 - $13 million $11 - $13 million Free Cash Flow(2) After Non-Capitalized R&D - DeepHealth Cloud OS & Generative AI $(5) - $(8) million $(5) - $(8) million 3 Financial Results Conference Call Dr. Howard Berger, President and Chief Executive Officer, and Mark Stolper, Executive Vice President and Chief Financial Officer, will host a conference call to discuss its first quarter 2025 results on Monday, May 12th, 2025 at 7:30 a.m. Pacific Time (10:30 a.m. Eastern Time). Conference Call Details: Date: Monday, May 12, 2025 Time: 10:30 a.m. Eastern Time Dial In-Number: 844-826-3035 International Dial-In Number: 412-317-5195 It is recommended that participants dial in approximately 5 to 10 minutes prior to the start of the 10:30 a.m. call. There will also be simultaneous and archived webcasts available at https://viavid.webcasts.com/starthere.jsp?ei=1717619&tp_key=f0980d090d or http://www.radnet.com under the “Investors” menu section and “News Releases” sub-menu of the website. An archived replay of the call will also be available and can be accessed by dialing 844-512-2921 from the U.S., or 412-317-6671 for international callers, and using the passcode 10199390. About RadNet, Inc. RadNet, Inc. is a leading national provider of freestanding, fixed-site diagnostic imaging services in the United States based on the number of locations and annual imaging revenue. RadNet has a network of 401 owned and/or operated outpatient imaging centers. RadNet’s markets include Arizona, California, Delaware, Florida, Maryland, New Jersey, New York and Texas. In addition, RadNet provides radiology information technology and artificial intelligence solutions marketed under the DeepHealth brand, teleradiology professional services and other related products and services to customers in the diagnostic imaging industry. Together with contracted radiologists, and inclusive of full-time and per diem employees and technologists, RadNet has a total of over 11,000 employees. For more information, visit http://www.radnet.com. No Offer or Solicitation This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. It does not constitute a prospectus or prospectus equivalent document. No offering or sale of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended (the “Securities Act”), and otherwise in accordance with applicable law. 4 Important Information about the Proposed Transaction and Where to Find It In connection with the proposed transaction between RadNet and iCAD, Inc., on May 6, 2025, RadNet filed with the Securities and Exchange Commission (“SEC”) a registration statement on Form S-4 that constitutes a prospectus of RadNet and will also include a proxy statement of iCAD. After the registration statement has been declared effective, iCAD will mail the proxy statement/prospectus to its stockholders. The proxy statement/prospectus filed with the SEC related to the proposed merger contains important information about RadNet, iCAD, the proposed transaction and related matters. RadNet and iCAD may also file other documents with the SEC regarding the proposed transaction. This communication is not a substitute for the proxy statement/prospectus or any other document which RadNet or iCAD may file with the SEC. Investors are urged to carefully read the proxy statement/prospectus and other documents filed or that will be filed with the SEC (or incorporated by reference into the proxy statement/prospectus), as well as any amendments or supplements to these documents, in connection with the proposed transaction, when available, because they will contain important information about the proposed transaction and related matters. Investors are able to obtain free copies of the registration statement on Form S-4 and the proxy statement/prospectus, and other documents filed by RadNet or iCAD with the SEC through the website maintained by the SEC at www.sec.gov. Copies of the documents filed with the SEC by RadNet can be obtained by contacting RadNet’s Investor Relations by telephone at (310) 445-2800 or by mail at 1510 Cotner Avenue, Los Angeles, California 90025. In addition, investors are able to obtain free copies of the documents filed with the SEC on RadNet’s website at www.radnet.com (which website is not incorporated herein by reference). Copies of the documents filed with the SEC by iCAD can be obtained by contacting iCAD’s Investor Relations by telephone at (608) 882-5200 or by mail at 2 Townsend West, Suite 6, Nashua, New Hampshire 03063. In addition, investors are able to obtain free copies of the documents filed with the SEC on iCAD’s website at www.icadmed.com (which website is not incorporated herein by reference). Participants in the Solicitation RadNet, iCAD and their respective directors and executive officers may be considered participants in the solicitation of proxies from iCAD’s stockholders in connection with the proposed transaction. Information about the directors and executive officers of RadNet is set forth in its proxy statement for its 2025 annual meeting of stockholders, which was filed with the SEC on April 28, 2025. Information about the directors and executive officers of iCAD is set forth in its Annual Report on Form 10-K/A for the year ended December 31, 2024, which was filed with the SEC on April 30, 2025. To the extent holdings of RadNet’s or iCAD’s securities by its directors or executive officers have changed since the amounts set forth in such filings, such changes have been or will be reflected on Initial Statements of Beneficial Ownership on Form 3 or Statements of Beneficial Ownership on Form 4 filed with the SEC. Other information regarding the participants in the proxy solicitations and a description of their direct and indirect interests, by security holdings or otherwise, and other information regarding the potential participants in the proxy solicitations, which may be different than those of RadNet’s stockholders and iCAD’s stockholders generally, have been or will be contained in the proxy statement/prospectus and other relevant materials that have been or that will be filed with the SEC regarding the proposed transaction. You may obtain these documents (when they become available) free of charge through the website maintained by the SEC at http://www.sec.gov and from the investor relations departments at RadNet or iCAD or from RadNet’s website or iCAD’s website, in each case, as described above. Forward Looking Statements This press release contains “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are expressions of our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, and anticipated future conditions, events and trends. Forward-looking statements can generally be identified by words such as: “anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,” “project,” “estimate,” “expect,” “strategy,” “future,” “likely,” “may,” “should,” “will” and similar references to future periods. 5 Forward-looking statements are neither historical facts nor assurances of future performance. Because forward-looking statements relate to the future, they are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not place undue reliance on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following: ·the impact of a pandemic, significant deterioration in the broader economy, severe acts of nature or other exogenous factors on our business, suppliers, payors, customers, referral sources, partners, patients and employees; ·the availability and terms of capital to fund our business; ·our ability to service our indebtedness, make principal and interest payments as those payments become due and remain in compliance with applicable debt covenants, in addition to our ability to refinance such indebtedness on acceptable terms; ·changes in general economic conditions nationally and regionally in the markets in which we operate; ·the availability and terms of capital to fund the expansion of our business and improvements to our existing facilities; ·our ability to maintain our current credit rating and the impact on our funding costs and competitive position if we do not do so; ·our ability to acquire, develop, implement and monetize artificial intelligence algorithms and applications; ·volatility in interest and exchange rates, or credit markets; ·the adequacy of our cash flow and earnings to fund our current and future operations; ·changes in service mix, revenue mix and procedure volumes; ·delays in receiving payments for services provided; ·the impact of the political environment and related developments on the current healthcare marketplace and on our business, including with respect to the future of the Affordable Care Act; ·the extent to which the ongoing implementation of healthcare reform, or changes in or new legislation, regulations or guidance, enforcement thereof by federal and state regulators or related litigation result in a reduction in coverage or reimbursement rates for our services, or other material impacts to our business; ·closures or slowdowns and changes in labor costs and labor difficulties, including stoppages affecting either our operations or our suppliers' abilities to deliver supplies needed in our facilities; ·the occurrence of hostilities, political instability or catastrophic events; ·the emergence or reemergence of and effects related to future pandemics, epidemics and infectious diseases; and ·noncompliance by us with any privacy or security laws or any cybersecurity incident or other security breach by us or a third party involving the misappropriation, loss or other unauthorized use or disclosure of confidential information. ·With respect to the iCAD merger: (1) the termination of or occurrence of any event, change or other circumstances that could give rise to the termination of the iCAD merger agreement or the inability to complete the proposed transaction on the anticipated terms and timetable, (2) the inability to complete the proposed transaction due to the failure to obtain approval of the stockholders of iCAD or to satisfy any other condition to closing in a timely manner or at all, or the risk that a regulatory approval that may be required for the proposed transaction is delayed, is not obtained or is obtained subject to conditions that are not anticipated, (3) the ability to recognize the anticipated benefits of the proposed transaction, which may be affected by, among other things, the ability of RadNet or iCAD to maintain relationships with its customers, patients, payers, physicians, and providers and retain its management and key employees, (4) the ability of RadNet following the proposed transaction to achieve the synergies contemplated by the proposed transaction or such synergies taking longer to realize than expected, (5) costs related to the proposed transaction, (6) the ability of RadNet following the proposed transaction to execute successfully its strategic plans, (7) the ability of RadNet following the proposed transaction to promptly and effectively integrate iCAD into its business, (8) the risk of litigation related to the proposed transaction, (9) the diversion of management's time and attention from ordinary course business operations to completion of the proposed transaction and integration matters, (10) the risk of legislative, regulatory, economic, competitive, and technological changes, (11) risks relating to the value of RadNet's securities to be issued in the proposed merger, and (12) the effect of the announcement, pendency or completion of the proposed transactions on the market price of the common stock of each of RadNet and iCAD. 6 The foregoing review of important factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included elsewhere. Additional information concerning risks, uncertainties and assumptions can be found in RadNet's filings with the SEC, including the risk factors discussed in RadNet's most recent Annual Report on Form 10-K, as updated by its Quarterly Reports on Form 10-Q and future filings with the SEC. Any forward-looking statement contained in this release is based on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that we may make from time to time, whether as a result of changed circumstances, new information, future developments or otherwise, except as required by applicable law. Regulation G: GAAP and Non-GAAP Financial Information This release contains certain financial information not reported in accordance with GAAP. The Company uses both GAAP and non-GAAP metrics to measure its financial results. The Company believes that, in addition to GAAP metrics, these non-GAAP metrics assist the Company in measuring its cash-based performance. The Company believes this information is useful to investors and other interested parties because it removes unusual and nonrecurring charges that occur in the affected period and provides a basis for measuring the Company's financial condition against other quarters. Such information should not be considered as a substitute for any measures calculated in accordance with GAAP, and may not be comparable to other similarly titled measures of other companies. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Reconciliation of this information to the most comparable GAAP measures is included in this release in the tables which follow. CONTACTS: RadNet, Inc. Mark Stolper, 310-445-2800 Executive Vice President and Chief Financial Officer 7 RADNET, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA) March 31, 2025 December 31, 2024 (unaudited) ASSETS CURRENT ASSETS Cash and Cash equivalents $717,323 $740,020 Accounts receivable 200,127 185,821 Due from affiliates 34,885 41,869 Prepaid expenses and other current assets 63,526 51,542 Total current assets 1,015,861 1,019,252 PROPERTY, EQUIPMENT AND RIGHT-OF-USE ASSETS Property and equipment, net 708,248 694,791 Operating lease right-of-use assets 665,754 639,740 Total property, plant, equipment and right-of-use assets 1,374,002 1,334,531 OTHER ASSETS Goodwill 717,480 710,663 Other intangible assets 79,736 81,351 Deferred financing costs 2,120 2,265 Investment in joint ventures 110,803 104,057 Deposits and other 36,262 34,571 Total Assets $3,336,264 $3,286,690 LIABILITIES AND EQUITY CURRENT LIABILITIES Accounts payable, accrued expenses and other $368,000 $351,464 Due to affiliates 51,410 43,650 Deferred revenue 3,416 3,288 Current operating lease liability 57,896 56,618 Current portion of notes payable 24,677 24,692 Total current liabilities 505,399 479,712 LONG-TERM LIABILITIES Long-term operating lease liability 678,029 655,979 Notes payable, net of current portion 985,454 991,574 Deferred tax liability, net 27,555 22,230 Other non-current liabilities 3,310 3,785 Total liabilities 2,199,747 2,153,280 EQUITY RadNet, Inc. stockholders' equity: Common stock - $0.0001 value, 200,000,000 shares authorized; 74,956,566 and 74,036,993 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively 7 7 Additional paid-in-capital 1,016,762 988,147 Accumulated other comprehensive loss (3,919) (9,061) Accumulated deficit (114,711) (76,785) Total RadNet, Inc.'s Stockholders' equity: 898,139 902,308 Noncontrolling interests 238,378 231,102 Total Equity 1,136,517 1,133,410 Total liabilities and equity $3,336,264 $3,286,690 8 RADNET, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (IN THOUSANDS EXCEPT FOR SHARE AND PER SHARE DATA) (unaudited) Three Months Ended March 31, 2025 2024 REVENUE Service fee revenue $439,349 $397,189 Revenue under capitation arrangements 32,050 34,518 Total service revenue 471,399 431,707 OPERATING EXPENSES Cost of operations, excluding depreciation and amortization 453,480 387,589 Lease abandonment charges 5,388 – Depreciation and amortization 35,483 32,368 Loss (gain) on sale and disposal of equipment and other 402 186 Severance costs 747 225 Total operating expenses 495,500 420,368 INCOME (LOSS) FROM OPERATIONS (24,101) 11,339 OTHER INCOME AND EXPENSES Interest expense 17,239 16,267 Equity in earnings of joint ventures (2,599) (4,324) Non-cash change in fair value of interest rate hedge 2,106 (1,216) Other (income) expenses (7,712) (2,934) Total other (income) expenses 9,034 7,793 INCOME (LOSS) BEFORE INCOME TAXES (33,135) 3,546 Provision for income taxes 3,398 1,864 NET INCOME (LOSS) (29,737) 5,410 Net income (loss) attributable to noncontrolling interests 8,189 8,189 NET INCOME (LOSS) ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS $(37,926) $(2,779) BASIC NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS $(0.51) $(0.04) DILUTED NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS $(0.51) $(0.04) WEIGHTED AVERAGE SHARES OUTSTANDING Basic 74,382,356 69,307,078 Diluted 74,382,356 69,307,078 9 RADNET, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASHFLOWS (IN THOUSANDS) (unaudited) Three Months Ended March 31, 2025 2024 CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $(29,737) $5,410 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 35,483 32,368 Noncash operating lease expense 14,431 14,711 Equity in earnings of joint ventures, net of dividends (2,599) (4,324) Amortization of deferred financing costs and loan discount 728 748 Loss on sale and disposal of equipment 402 187 Lease abandonment charges 5,388 – Amortization of cash flow hedge, net of taxes 1,033 739 Non-cash change in fair value of interest rate swap 2,106 (1,216) Stock-based compensation 28,494 11,897 Change in fair value of contingent consideration – 1,974 Changes in operating assets and liabilities, net of assets acquired and liabilities assumed in purchase transactions: Accounts receivable (14,306) (25,865) Other current assets (7,206) (6,277) Other assets (1,691) (5,892) Deferred taxes 5,137 (1,158) Operating leases (21,968) (12,883) Deferred revenue 128 (172) Accounts payable, accrued expenses and other 25,658 6,841 Net cash provided by operating activities 41,481 17,088 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of imaging facilities and other acquisitions (3,794) (3,531) Purchase of property and equipment and other (48,833) (57,409) Proceeds from sale of equipment 23 2 Equity contributions in existing and purchase of interest in joint ventures (4,147) – Net cash used in investing activities (56,751) (60,938) CASH FLOWS FROM FINANCING ACTIVITIES Principal payments on notes and leases payable (1,718) (1,102) Payments on Term Loan Debt (5,000) (1,875) Contribution from noncontrolling interests – 4,169 Distributions paid to noncontrolling interests (913) – Proceeds from sale of economic interests in majority owned subsidiary, net of taxes – 8,713 Proceeds from issuance of common stock – 218,383 Proceeds from issuance of common stock upon exercise of options 121 8 Net cash (used in) provided by financing activities (7,510) 228,296 EFFECT OF EXCHANGE RATE CHANGES ON CASH 83 (36) NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (22,697) 184,410 CASH AND CASH EQUIVALENTS, beginning of period 740,020 342,570 CASH AND CASH EQUIVALENTS, end of period $717,323 $526,980 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid during the period for interest $18,010 $18,285 Cash paid during the period for income taxes $272 $1 10 RADNET, INC. AND SUBSIDIARIES RECONCILIATION OF GAAP NET INCOME ATTRIBUTABLE TO RADNET, INC. COMMON SHAREHOLDERS TO ADJUSTED EBITDA (IN THOUSANDS) Three Months Ended March 31, 2025 2024 Net income (loss) attributable to Radnet, Inc. common stockholders $(37,926) $(2,779) Income taxes (3,398) (1,864) Interest expense 17,239 16,267 Severance costs 747 225 Depreciation and amortization 35,483 32,368 Non-cash employee stock-based compensation 28,494 11,897 Loss (gain) on sale and disposal of equipment and other 402 186 Non-cash change in fair value of interest rate hedge 2,106 (1,216) Other expenses (income) (7,712) (2,934) Non-Capitalized R&D - DeepHealth Cloud OS & Generative AI 3,562 3,315 Lease abandonment charges 5,388 – Non-cash change to contingent consideration – 1,974 Non-operational rent expenses 1,342 1,023 Acquisition transaction costs 672 – Adjusted EBITDA - Radnet, Inc. $46,399 $58,462 NOTE Adjusted EBITDA - Imaging Center Segment 42,688 54,942 Adjusted EBITDA - Digital Health Segment 3,711 3,520 11 PAYMENTS BY PAYOR CLASS First Quarter 2025 Commercial Insurance 58.0% Medicare 23.0% Capitation 6.8% Medicaid 2.5% Workers Compensation/Personal Injury 2.2% Other* 7.6% Total 100.0% * Includes management fee, Digital Health unit and Heart Lung Health revenue. RADNET PAYMENTS BY MODALITY First Quarter Full Year Full Year Full Year 2025 2024 2023 2022 MRI 36.8% 37.1% 36.8% 36.8% CT 15.7% 15.9% 16.8% 17.5% PET/CT 8.5% 7.2% 6.4% 5.8% X-ray 5.8% 6.0% 6.5% 6.7% Ultrasound 13.7% 13.6% 12.9% 12.6% Mammography 15.9% 16.4% 16.0% 15.3% Nuclear Medicine 1.0% 1.0% 0.8% 0.9% Other 2.5% 2.7% 3.9% 4.5% 100.0% 100.0% 100.0% 100.0% PROCEDURES BY MODALITY* First Quarter First Quarter 2025 2024 MRI 447,330 412,821 CT 271,170 250,365 PET/CT 20,389 16,594 Nuclear Medicine 9,577 8,595 Ultrasound 656,427 639,221 Mammography 476,378 472,514 X-ray and Other 861,702 846,841 Total 2,742,973 2,646,951 * Volumes include wholy owned and joint venture centers. 13 RADNET, INC. AND SUBSIDIARIES SCHEDULE OF ADJUSTED EARNINGS AND EARNINGS PER SHARE (3) (IN THOUSANDS EXCEPT SHARE DATA) (unaudited) Three Months Ended March 31, 2025 2024 NET (LOSS) INCOME ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS $(37,926) $(2,779) Non-cash change in fair value of interest rate hedges (i) 2,106 (1,216) Non-operational rent expenses (iii) 1,342 1,023 Acquisition transaction costs 672 – Lease abandonment charges 5,388 – Contingent consideration – 1,974 Non-Capitalized R&D - DeepHealth Cloud OS & Generative AI 3,562 3,315 Total adjustments - loss (gain) 13,070 5,096 Subtract tax impact of Adjustments (ii) (1,340) 2,675 Tax effected impact of adjustments 11,730 7,771 TOTAL ADJUSTMENT TO NET INCOME (LOSS) ATTRIBUTABLE TO RADNET, INC. COMMON SHAREHOLDERS 11,730 7,771 ADJUSTED NET LOSS ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS (26,196) 4,992 WEIGHTED AVERAGE SHARES OUTSTANDING Diluted 74,382,356 71,048,153 ADJUSTED DILUTED NET LOSS PER SHARE ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS $(0.35) $0.07 (i)Impact from the change in fair value of the hedges during the quarter. Excludes the amortization of the accumulation of the changes in fair value out of Other Comprehensive Income that existed prior to the hedges becoming ineffective. (ii)Tax effected using -52.5% and 10.25% blended federal and state effective tax rate for the first quarter of 2024 and 2025, respectively. (iii)Represents rent expense associated with de novo sites under construction prior to them becoming operational. 14 Footnotes (1) The Company defines Adjusted EBITDA as earnings before interest, taxes, depreciation and amortization, each from continuing operations and adjusted for losses or gains on the sale of equipment, other income or loss, debt extinguishments and non-cash equity compensation. Adjusted EBITDA includes equity earnings in unconsolidated operations and subtracts allocations of earnings to non-controlling interests in subsidiaries, and is adjusted for non-cash or extraordinary and one-time events taken place during the period. Adjusted EBITDA is reconciled to its nearest comparable GAAP financial measure. Adjusted EBITDA is a non-GAAP financial measure used as analytical indicator by RadNet management and the healthcare industry to assess business performance, and is a measure of leverage capacity and ability to service debt. Adjusted EBITDA should not be considered a measure of financial performance under GAAP, and the items excluded from Adjusted EBITDA should not be considered in isolation or as alternatives to net income, cash flows generated by operating, investing or financing activities or other financial statement data presented in the consolidated financial statements as an indicator of financial performance or liquidity. As Adjusted EBITDA is not a measurement determined in accordance with GAAP and is therefore susceptible to varying methods of calculation, this metric, as presented, may not be comparable to other similarly titled measures of other companies. (2) As noted above, the Company defines Free Cash Flow as Adjusted EBITDA less total Capital Expenditures (whether completed with cash or financed) and Cash Interest paid. Free Cash Flow is a non-GAAP financial measure. The Company uses Free Cash Flow because the Company believes it provides useful information for investors and management because it measures our capacity to generate cash from our operating activities. Free Cash Flow does not represent total cash flow since it does not include the cash flows generated by or used in financing activities. In addition, our definition of Free Cash Flow may differ from definitions used by other companies. Free Cash Flow should not be considered a measure of financial performance under GAAP, and the items excluded from Adjusted EBITDA should not be considered in isolation or as alternatives to net income, cash flows generated by operating, investing or financing activities or other financial statement data presented in the consolidated financial statements as an indicator of financial performance or liquidity. As Adjusted EBITDA is not a measurement determined in accordance with GAAP and is therefore susceptible to varying methods of calculation, this metric, as presented, may not be comparable to other similarly titled measures of other companies. (3) The Company defines Adjusted Earnings (Loss) Per Share as net income or loss attributable to RadNet, Inc. common stockholders and excludes losses or gains on the disposal of equipment, loss on debt extinguishments, bargain purchase gains, severance costs, loss on impairment, loss or gain on swap valuation, gain on extinguishment of debt, unusual or non-recurring entries that impact the Company’s tax provision and any other non-recurring or unusual transactions recorded during the period. Adjusted Earnings (Loss) Per Share is reconciled to its nearest comparable GAAP financial measure. Adjusted Earnings (Loss) Per Share is a non-GAAP financial measure used as analytical indicator by RadNet management and the healthcare industry to assess business performance. Adjusted Earnings Per Share should not be considered a measure of financial performance under GAAP, and the items excluded from Adjusted Earnings Per Share should not be considered in isolation or as alternatives to net income, cash flows generated by operating, investing or financing activities or other financial statement data presented in the consolidated financial statements as an indicator of financial performance or liquidity. As Adjusted Earnings Per Share is not a measurement determined in accordance with GAAP and is therefore susceptible to varying methods of calculation, this metric, as presented, may not be comparable to other similarly titled measures of other companies. 15 |
0000950170-23-036073:crvl-ex99_1.htm | 0000950170-23-036073 | 874,866 | 874,866 | CORVEL CORP (CRVL) (CIK 0000874866) | ['CRVL'] | 8-K | 8-K | 2023-08-01 | 2023-08-01 | 000-19291 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=000-19291&action=getcompany | 231,129,072 | EX-99.1 | EX-99.1 | 2.02,9.01 | https://www.sec.gov/Archives/edgar/data/874866/000095017023036073 | https://www.sec.gov/Archives/edgar/data/874866/000095017023036073/0000950170-23-036073-index.html | https://www.sec.gov/Archives/edgar/data/874866/000095017023036073/crvl-ex99_1.htm | EX-99.1 2 crvl-ex99_1.htm EX-99.1 EX-99.1 Exhibit 99.1 Date: August 1, 2023 CorVel Corporation 5128 Apache Plume Road Suite 400 Fort Worth, TX 76109 FOR IMMEDIATE RELEASE Contact: Melissa Storan Phone: 949-851-1473 www.corvel.com CorVel Announces Revenues and Earnings FORT WORTH, Texas, August 1, 2023 — CorVel Corporation (NASDAQ: CRVL) announced the results for the quarter ended June 30, 2023. Revenues for the quarter were a record $190 million, an increase from $176 million in the same quarter of the previous year. Earnings per share for the quarter were also a record $1.14, compared to $0.94 in the same quarter of the prior year. CorVel’s 1st generative AI initiative will be released in the September quarter. The release will reduce mundane, repetitive tasks and provide decision support at critical inflection points. This automation will add to the existing machine-learning tools with increasing capabilities within the system. The Company also views generative AI as an effective tool to mitigate labor challenges and provide guidelines for future generations of professionals. In the quarter, investments in the foundational systems and workflow processes continued to strengthen the results achieved with CorVel’s products and services. The Company further showed its commitment to technological evolution with the expansion of service offerings within the health market at CERIS. This most recent development, in conjunction with the business development efforts of the team, resulted in significant new partnerships being added during the quarter. In the payables market, fraud remains a leading risk throughout the supply chain, in a large part due to increased M&A activity. Fraudulent vendor account information and payments can be difficult to detect within large volumes of financial transactions. Symbeo, the revenue cycle management arm of CorVel, provides a supplier onboarding offering to validate the authenticity of new suppliers and provides early warning fraud detection for every transaction throughout the payment process. The Workers' Compensation operations experienced improved performance in the June quarter due to enhancements in operational efficiencies, particularly the alignment of staffing and claim volumes. Revenue and gross profit increased during the quarter as a result of these efforts. About CorVel CorVel Corporation applies technology including artificial intelligence, machine learning and natural language processing to enhance the managing of episodes of care and the related health care costs. We partner with employers, third-party administrators, insurance companies and government agencies in managing workers’ compensation and health, auto and liability services. Our diverse suite of solutions combines our integrated technologies with a human touch. CorVel's customized services, delivered locally, are backed by a national team to support clients as well as their customers and patients. Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 All statements included in this press release, other than statements or characterizations of historical fact, are forward-looking statements. These forward-looking statements are based on the Company’s current expectations, estimates and projections about the Company, management’s beliefs, and certain assumptions made by the Company, and events beyond the Company’s control, all of which are subject to change. Such forward-looking statements include, but are not limited to, statements relating to our commercial health-focused operation, improved productivity resulting from automation and augmentation across enterprise business systems. These forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause the Company’s actual results to differ materially and adversely from those expressed in any forward-looking statement, including the risk that the impact of the COVID-19 pandemic on our business, results of operations and financial condition is greater than our initial assessment. The risks and uncertainties referred to above include but are not limited to factors described in this press release and the Company’s filings with the Securities and Exchange Commission, including but not limited to “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended March 31, 2023 and the Company’s Quarterly Report on Form 10-Q for the quarters ended June 30, 2022, September 30, 2022, and December 31, 2022. The forward-looking statements in this press release speak only as of the date they are made. The Company undertakes no obligation to revise or update publicly any forward-looking statement for any reason. CorVel Corporation Quarterly Results – Income Statement Quarters Ended June 30, 2023 (unaudited) and June 30, 2022 (unaudited) Quarter Ended June 30, 2023 June 30, 2022 Revenues $ 190,253,000 $ 176,307,000 Cost of revenues 148,375,000 136,438,000 Gross profit 41,878,000 39,869,000 General and administrative 16,450,000 18,671,000 Income from operations 25,428,000 21,198,000 Income tax provision 5,623,000 4,507,000 Net income $ 19,805,000 $ 16,691,000 Earnings Per Share: Basic $ 1.16 $ 0.95 Diluted $ 1.14 $ 0.94 Weighted Shares Basic 17,144,000 17,506,000 Diluted 17,385,000 17,803,000 CorVel Corporation Quarterly Results – Condensed Balance Sheet June 30, 2023 (unaudited) and March 31, 2023 June 30, 2023 March 31, 2023 Cash $ 86,593,000 $ 71,329,000 Customer deposits 84,755,000 80,022,000 Accounts receivable, net 84,176,000 81,034,000 Prepaid taxes and expenses 12,426,000 11,385,000 Property, net 84,276,000 82,770,000 Goodwill and other assets 39,228,000 39,662,000 Right-of-use asset, net 26,119,000 27,721,000 Total $ 417,573,000 $ 393,923,000 Accounts and taxes payable $ 20,419,000 $ 15,309,000 Accrued liabilities 167,312,000 152,578,000 Long-term lease liabilities 22,862,000 23,860,000 Paid-in capital 221,394,000 218,703,000 Treasury stock (765,887,000 ) (748,195,000 ) Retained earnings 751,473,000 731,668,000 Total $ 417,573,000 $ 393,923,000 |
0000071691-24-000103:pressrelease03312024.htm | 0000071691-24-000103 | 71,691 | 71,691 | NEW YORK TIMES CO (NYT) (CIK 0000071691) | ['NYT'] | 8-K | 8-K | 2024-05-08 | 2024-05-08 | 001-05837 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-05837&action=getcompany | 24,924,173 | EX-99.1 | EX-99.1 | 2.02,9.01 | https://www.sec.gov/Archives/edgar/data/71691/000007169124000103 | https://www.sec.gov/Archives/edgar/data/71691/000007169124000103/0000071691-24-000103-index.html | https://www.sec.gov/Archives/edgar/data/71691/000007169124000103/pressrelease03312024.htm | EX-99.1 2 pressrelease03312024.htm EX-99.1 Document The New York Times Company Reports First-Quarter 2024 ResultsNEW YORK, May 8, 2024 – The New York Times Company (NYSE: NYT) announced today first-quarter 2024 results.Key Highlights•The Company added approximately 210,000 net digital-only subscribers compared with the end of the fourth quarter of 2023, driven largely by bundle and multiproduct subscriber additions•Total digital-only average revenue per user (“ARPU”) increased 1.9 percent year-over-year to $9.21 primarily as a result of subscribers graduating from promotional to higher prices and price increases on tenured non-bundled subscribers•Growth in both digital subscribers and ARPU drove a year-over-year increase in digital subscription revenues of 13.2 percent•Digital advertising revenues increased 2.9 percent year-over-year largely as a result of higher revenues from display advertising at The Athletic and creative services, partially offset by lower revenue from display advertising at The New York Times Group “NYTG” and podcast advertising•Other revenue increased 7.6 percent year-over-year as a result of higher licensing and Wirecutter affiliate referral revenues, partially offset by lower books, television, and film revenues•Operating costs increased 2.4 percent year-over-year and adjusted operating costs (defined below) increased 2.2 percent, largely as a result of higher journalism and product development costs, partially offset by lower general and administrative and sales and marketing costs•Operating profit increased 73.2 percent year-over-year to $48.3 million, while adjusted operating profit (defined below) increased 40.9 percent year-over-year to $76.1 million, primarily as a result of higher digital subscription and other revenues, partially offset by higher adjusted operating costs and lower advertising revenues •Operating profit margin for the quarter was 8.1 percent and adjusted operating profit margin (defined below) was 12.8 percent, a year-over-year increase of approximately 320 basis points•Diluted earnings per share for the quarter was $.24, an $.11 increase year-over-year and adjusted diluted earnings per share (defined below) was $.31, a $.12 increase year-over-yearMeredith Kopit Levien, president and chief executive officer, The New York Times Company, said, "2024 is off to a strong start, as our results reflect the power of our strategy to be the essential subscription for every curious person seeking to understand and engage with the world, and as our world-class news and lifestyle products continue to attract huge and deeply engaged audiences. Our first quarter financial performance illustrates that our news-based, multi-product, multi-revenue subscription strategy continues to work as designed, and is on track to drive continued growth in revenue and earnings as well as generate healthy free cash flow in 2024." Summary of Quarterly Results(In millions, except percentages, subscriber metrics (in thousands), ARPU and per share data)Q1 2024Q4 2023Q3 2023Q2 2023Q1 2023Total subscribers(1)10,550 10,360 10,080 9,880 9,730 Digital-only subscribers(1)9,910 9,700 9,410 9,190 9,020 Digital-only subscribers quarterly net additions(1)210 300 210 180 190 Total digital-only ARPU$9.21 $9.24 $9.28 $9.15 $9.04 % change year-over-year1.9 %3.5 %4.6 %3.6 %(1.0)%Digital-only subscription revenues$293.0 $288.7 $282.2 $269.8 $258.8 % change year-over-year13.2 %7.2 %15.7 %13.0 %14.1 %Digital advertising revenues$63.0 $107.7 $75.0 $73.8 $61.3 % change year-over-year2.9 %(3.7)%6.7 %6.5 %(8.5)%Total revenues$594.0 $676.2 $598.3 $590.9 $560.7 % change year-over-year5.9 %1.3 %9.3 %6.3 %4.3 %Total operating costs(2)$545.7 $547.2 $534.8 $535.1 $532.8 % change year-over-year(2)2.4 %(4.8)%7.7 %6.2 %0.3 %Adjusted operating costs(3)$518.0 $522.3 $508.6 $498.7 $506.8 % change year-over-year2.2 %(0.7)%6.2 %4.0 %6.4 %Operating profit$48.3 $129.0 $63.6 $55.8 $27.9 Operating profit margin %8.1 %19.1 %10.6 %9.4 %5.0 %Adjusted operating profit (“AOP”) - NYTG(4)$84.7 $158.4 $97.7 $100.0 $65.3 AOP margin % - NYTG(4)15.2 %24.8 %17.3 %17.8 %12.3 %AOP - The Athletic(4)$(8.7)$(4.4)$(7.9)$(7.8)$(11.3)AOP(3)$76.1 $154.0 $89.8 $92.2 $54.0 AOP margin %(3)12.8 %22.8 %15.0 %15.6 %9.6 %Diluted earnings per share (“EPS”)$0.24 $0.66 $0.32 $0.28 $0.13 Adjusted diluted EPS(3)$0.31 $0.70 $0.37 $0.38 $0.19 Diluted shares165.6 165.9 165.4 165.0 165.4 (1) Subscribers (including net subscriber additions) are rounded to the nearest ten thousand.(2) Q1 2023 and Q2 2023 were recast to conform to the current presentation of total operating costs. See “Comparisons” for more details.(3) Non-GAAP financial measure. See “Comparisons”, “Non-GAAP Financial Measures” and “Reconciliation of Non-GAAP Financial Measures” for more details.(4) Q1 2023 was recast to reflect the Company’s updated bundle allocation methodology. See “Segment information” for more details.2ComparisonsUnless otherwise noted, all comparisons are for the first quarter of 2024 to the first quarter of 2023. There was one additional day in the first quarter of 2024 compared with the first quarter of 2023 as a result of 2024 being a leap year.Beginning with the third quarter of 2023, we have updated our presentation of operating costs to include operating items that are outside the ordinary course of our operations (special items). We recast operating costs for the prior periods in order to present comparable financial results. In connection with this change, we updated the definition of adjusted operating costs to exclude special items from operating costs. These changes did not have an impact on reported operating profit, adjusted operating profit or adjusted operating costs.First quarter 2024 results included the following special item:•$1.0 million of pre-tax litigation-related costs ($0.7 million or $0.0 per share after tax) in connection with a lawsuit against Microsoft Corporation and Open AI Inc. and various of its corporate affiliates alleging unlawful and unauthorized copying and use of the Company’s journalism and other content in connection with their development of generative artificial intelligence products (“Generative AI Litigation Costs”). Management determined to report Generative AI Litigation Costs as a special item beginning in the first quarter of 2024 because, unlike other litigation expenses, the Generative AI Litigation Costs arise from a discrete, complex and unusual proceeding and do not, in management’s view, reflect the Company’s ongoing business operational performance.There were no special items in the first quarter of 2023.This release refers to certain non-GAAP financial measures, including adjusted operating profit, adjusted operating costs, adjusted diluted EPS and free cash flow. See “Non-GAAP Financial Measures” and “Reconciliation of Non-GAAP Financial Measures” for more details, including a discussion of management’s reasons for the presentation of these non-GAAP financial measures and reconciliations to the most comparable GAAP financial measures. 3Consolidated ResultsSubscribers and Net AdditionsThe Company ended the first quarter of 2024 with approximately 10.55 million subscribers to its print and digital products, including approximately 9.91 million digital-only subscribers. Of the 9.91 million digital-only subscribers, approximately 4.55 million were bundle and multiproduct subscribers.Compared with the end of the fourth quarter of 2023, there was a net increase of 210,000 digital-only subscribers. Average Revenue Per UserAverage revenue per user or “ARPU,” a metric we calculate to track the revenue generation of our digital subscriber base, represents the average revenue per digital subscriber over a 28-day billing cycle during the applicable quarter. For more information, please refer to the Supplemental Subscriber, ARPU and Subscriptions Revenues Information in the exhibits.Total digital-only ARPU was $9.21 for the first quarter of 2024, an increase of 1.9 percent compared with the first quarter of 2023 driven primarily by subscribers graduating from promotional to higher prices and price increases on tenured non-bundled subscribers.Subscription RevenuesTotal subscription revenues increased 7.9 percent to $429.0 million in the first quarter of 2024. Subscription revenues from digital-only products increased 13.2 percent to $293.0 million due to an increase in bundle and multiproduct revenues and an increase in other single-product subscription revenues, partially offset by a decrease in news-only subscription revenues. Print subscription revenues decreased 2.0 percent to $136.0 million, primarily due to lower domestic home-delivery revenues.Advertising RevenuesFirst-quarter 2024 total advertising revenues decreased 2.4 percent to $103.7 million while digital advertising revenues increased 2.9 percent and print advertising revenues decreased 9.5 percent.Digital advertising revenues were $63.0 million, or 60.8 percent of total Company advertising revenues, compared with $61.3 million, or 57.7 percent, in the first quarter of 2023. Digital advertising revenues increased due to higher revenues from display advertising at The Athletic and creative services, partially offset by lower revenue from display advertising at NYTG and podcast advertising. Print advertising revenues decreased primarily due to declines in the media and entertainment and technology categories.Other RevenuesOther revenues increased 7.6 percent to $61.3 million in the first quarter of 2024, primarily as a result of higher licensing and Wirecutter affiliate referral revenues, partially offset by lower books, television, and film revenues.Total RevenuesIn the aggregate, subscription, advertising and other revenues for the first quarter of 2024 increased 5.9 percent to $594.0 million from $560.7 million for the first quarter of 2023.4Operating CostsTotal operating costs increased 2.4 percent in the first quarter of 2024 to $545.7 million compared with $532.8 million in the first quarter of 2023. Operating costs in the first quarter of 2024 included Generative AI Litigation Costs of $1.0 million. Adjusted operating costs increased 2.2 percent to $518.0 million from $506.8 million in the first quarter of 2023.Cost of revenue increased 3.3 percent to $316.9 million compared with $306.9 million in the first quarter of 2023 due mainly to higher compensation and benefits expenses and higher subscriber and advertiser servicing costs, partially offset by lower print production and distribution costs.Sales and marketing costs decreased 2.8 percent to $65.1 million compared with $67.0 million in the first quarter of 2023 due mainly to lower marketing and promotion costs. Media expenses, a component of sales and marketing costs that represents the cost to promote our subscription business, decreased 6.0 percent to $29.9 million in the first quarter of 2024 from $31.8 million in the first quarter of 2023.Product development costs increased 10.7 percent to $63.2 million compared with $57.1 million in the first quarter of 2023, primarily due to higher compensation and benefits expenses.General and administrative costs decreased 2.8 percent to $78.8 million compared with $81.1 million in the first quarter of 2023, largely due to lower building operations and maintenance expenses and a favorable change in the fair market value adjustment related to stock-based awards.5Business Segment ResultsWe have two reportable segments: NYTG and The Athletic. Management uses adjusted operating profit (loss) by segment in assessing performance and allocating resources. The Company includes in its presentation revenues and adjusted operating costs to arrive at adjusted operating profit (loss) by segment. Adjusted operating costs are defined as operating costs before depreciation and amortization, severance, multiemployer pension plan withdrawal costs and special items. Adjusted operating profit is defined as operating profit before depreciation and amortization, severance, multiemployer pension plan withdrawal costs and special items. Refer to Segment Information in the exhibits for more information on these segment measures and a discussion of our bundle allocation methodology, which we updated on April 1, 2023. The New York Times GroupNYTG revenues grew 4.6 percent in the first quarter of 2024 to $557.4 million from $532.8 million in the first quarter of 2023. Subscription revenues increased 7.3 percent to $401.4 million from $374.2 million in the first quarter of 2023, primarily due to growth in subscription revenues from digital-only products, partially offset by decreases in print subscription revenues. Advertising revenues decreased 4.0 percent to $98.0 million from $102.1 million in the first quarter of 2023, due to declines in print advertising revenues. Other revenues increased 2.6 percent in the first quarter of 2024 to $58.0 million from $56.5 million in the first quarter of 2023, due to higher Wirecutter affiliate referral revenues and licensing revenues, partially offset by lower book, television, and film revenues.NYTG adjusted operating costs increased 1.1 percent in the first quarter of 2024 to $472.7 million from $467.5 million in the first quarter of 2023, primarily due to higher journalism and product development costs, partially offset by lower general and administrative and sales and marketing costs.NYTG adjusted operating profit increased 29.8 percent to $84.7 million from $65.3 million in the first quarter of 2023. This was primarily the result of higher digital subscription and other revenues, partially offset by higher adjusted operating costs and lower print advertising revenues.The AthleticThe Athletic revenues grew 33.0 percent in the first quarter of 2024 to $37.2 million from $28.0 million in the first quarter of 2023. Subscription revenues increased 18.2 percent to $27.6 million from $23.4 million in the first quarter of 2023, primarily due to growth in the number of subscribers with The Athletic. Other revenue increased to $3.8 million from $0.4 million in the first quarter of 2023, primarily due to an increase in licensing revenue from an Apple licensing deal. Advertising revenues increased 37.5 percent to $5.7 million from $4.2 million in the first quarter of 2023, primarily due to higher revenues from display advertising.The Athletic adjusted operating costs increased 16.8 percent in the first quarter of 2024 to $45.9 million from $39.3 million in the first quarter of 2023. The increase was mainly due to higher product development, sales and marketing and journalism costs.The Athletic adjusted operating loss decreased 23.2 percent to $8.7 million from $11.3 million in the first quarter of 2023. This was primarily the result of higher revenues, partially offset by higher adjusted operating costs.6Consolidated Other DataInterest Income and Other, netInterest income and other, net in the first quarter of 2024 was $8.4 million compared with $3.2 million in the first quarter of 2023. The increase was primarily a result of higher interest rates on cash and marketable securities.Income TaxesThe Company had income tax expense of $15.2 million in the first quarter of 2024 compared with $9.4 million in the first quarter of 2023. The effective income tax rate was 27.4 percent in the first quarter of 2024 and 29.7 percent in the first quarter of 2023. The increase in income tax expense was primarily due to higher pre-tax income in the first quarter of 2024. The decrease in the effective income tax rate was primarily due to non-deductible items having a lower impact on the rate due to higher pre-tax income in the first quarter of 2024.Earnings Per ShareDiluted EPS in the first quarter of 2024 was $.24 compared with $.13 in the same period of 2023. The increase in diluted EPS was primarily driven by higher operating profit and higher interest income. Adjusted diluted EPS was $.31 in the first quarter of 2024 compared with $.19 in the first quarter of 2023. LiquidityAs of March 31, 2024, the Company had cash and marketable securities of $686.3 million, a decrease of $22.9 million from $709.2 million as of December 31, 2023.The Company has a $350 million unsecured revolving line of credit. As of March 31, 2024, there were no outstanding borrowings under this credit facility, and the Company did not have other outstanding debt.Net cash provided by operating activities in the first quarter of 2024 was $53.1 million compared with $50.7 million in the same period of 2023. Free cash flow in the first quarter of 2024 was $46.7 million compared with $44.7 million in the same period of 2023.Shares RepurchasesDuring the quarter ended March 31, 2024, the Company repurchased 703,468 shares of its Class A Common Stock for an aggregate purchase price of approximately $32.4 million. As of May 3, 2024, approximately $213.0 million remains available and authorized for repurchases.Capital ExpendituresCapital expenditures totaled approximately $7 million in the first quarter of 2024 compared with approximately $6 million in the first quarter of 2023. The increase in capital expenditures in 2024 was primarily driven by higher expenditures at the Company’s College Point, N.Y., printing and distribution facility, investments in technology to support strategic initiatives and improvements in the Company headquarters. The increase was partially offset by lower expenditures at a newsroom bureau.7OutlookBelow is the Company’s guidance for revenues and adjusted operating costs for the second quarter of 2024 compared with the second quarter of 2023. The New York Times CompanyDigital-only subscription revenuesincrease 11 - 14%Total subscription revenuesincrease 6 - 8%Digital advertising revenuesincrease high-single-digitsTotal advertising revenuesincrease low-single-digitsOther revenueflat to increase low-single-digitsAdjusted operating costsincrease 4 - 5%The Company expects the following on a pre-tax basis in 2024:•Depreciation and amortization: approximately $80 million•Interest income and other, net: approximately $30 million, and•Capital expenditures: approximately $40 million.Conference Call Information The Company’s first-quarter 2024 earnings conference call will be held on Wednesday, May 8, 2024, at 8:00 a.m. E.T. A live webcast of the earnings conference call will be available at investors.nytco.com. Participants can pre-register for the telephone conference at https://dpregister.com/sreg/10187956/fc21280bdc, which will generate dial-in instructions allowing participants to bypass an operator at the time of the call. Alternatively, to access the call without pre-registration, dial 844-413-3940 (in the U.S.) or 412-858-5208 (international callers).An archive of the webcast will be available beginning about two hours after the call at investors.nytco.com. The archive will be available for approximately three months. An audio replay will be available at 877-344-7529 (in the U.S.) and 412-317-0088 (international callers) beginning approximately two hours after the call until 11:59 p.m. E.T. on Wednesday, May 22. The passcode is 9726570.About The New York Times CompanyThe New York Times Company (NYSE: NYT) is a trusted source of quality, independent journalism whose mission is to seek the truth and help people understand the world. With more than 10 million subscribers across a diverse array of print and digital products — from news to cooking to games to sports — The Times Company has evolved from a local and regional news leader into a diversified media company with curious readers, listeners and viewers around the globe. Follow news about the company at NYTCo.com.8Forward-Looking StatementsExcept for the historical information contained herein, the matters discussed in this press release are 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. Terms such as “aim,” “anticipate,” “believe,” “confidence,” “contemplate,” “continue,” “conviction,” “could,” “drive,” “estimate,” “expect,” “forecast,” “future,” “goal,” “guidance,” “intend,” “likely,” “may,” “might,” “objective,” “opportunity,” “optimistic,” “outlook,” “plan,” “position,” “potential,” “predict,” “project,” “seek,” “should,” “strategy,” “target,” “will,” “would” or similar statements or variations of such words and other similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such terms. Forward-looking statements are based upon our current expectations, estimates and assumptions and involve risks and uncertainties that change over time; actual results could differ materially from those predicted by such forward-looking statements. These risks and uncertainties include, but are not limited to: significant competition in all aspects of our business; our ability to grow the size and profitability of our subscriber base; our dependence on user and other metrics that are subject to inherent challenges in measurement; numerous factors that affect our advertising revenues, including market dynamics, evolving digital advertising trends and the evolution of our strategy; damage to our brand or reputation; risks associated with generative artificial intelligence technology; economic, market, geopolitical and public health conditions or other events; risks associated with the international scope of our business and foreign operations; significant disruptions in our newsprint supply chain or newspaper printing and distribution channels or a significant increase in the costs to print and distribute our newspaper; risks associated with environmental, social and governance matters and any related reporting obligations; adverse results from litigation or governmental investigations; risks associated with acquisitions (including The Athletic), divestitures, investments and similar transactions; the risks and challenges associated with investments we make in new and existing products and services; risks associated with attracting and maintaining a talented and diverse workforce; the impact of labor negotiations and agreements; potential limits on our operating flexibility due to the nature of significant portions of our expenses; the effects of the size and volatility of our pension plan obligations; liabilities that may result from our participation in multiemployer pension plans; our ability to improve and scale our technical and data infrastructure; security incidents and other network and information systems disruptions; our ability to comply with laws and regulations with respect to privacy, data protection and consumer marketing and subscription practices; payment processing risk; defects, delays or interruptions in the cloud-based hosting services we utilize; our ability to protect our intellectual property; claims against us of intellectual property infringement; our ability to meet our publicly announced guidance and/or targets; the effects of restrictions on our operations as a result of the terms of our credit facility; our future access to capital markets and other financing options; and the concentration of control of our company due to our dual-class capital structure. More information regarding these risks and uncertainties and other important factors that could cause actual results to differ materially from those in the forward-looking statements is set forth in the Company’s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2023, and subsequent filings. Investors are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.9Non-GAAP Financial MeasuresThis release refers to certain non-GAAP financial measures, including adjusted operating profit, defined as operating profit before depreciation, amortization, severance, multiemployer pension plan withdrawal costs and special items; adjusted operating profit margin, defined as adjusted operating profit divided by revenues; adjusted operating costs, defined as operating costs before depreciation, amortization, severance and multiemployer pension plan withdrawal costs and special items; adjusted diluted EPS, defined as diluted EPS excluding amortization of acquired intangible assets, severance, non-operating retirement costs and special items; and free cash flow, defined as net cash provided by operating activities less capital expenditures. Refer to “Reconciliation of Non-GAAP Financial Measures” in the exhibits for a discussion of management’s reasons for the presentation of these non-GAAP financial measures and reconciliations to the most comparable GAAP financial measures. Certain guidance is provided on a non-GAAP basis and not reconciled to the most directly comparable GAAP measure because we are unable to provide, without unreasonable effort, a calculation or estimation of amounts necessary for such reconciliation due to the inherent difficulty of forecasting such amounts.Exhibits: Condensed Consolidated Statements of OperationsFootnotesSupplemental Subscriber, ARPU and Subscription Revenues InformationSegment InformationReconciliation of Non-GAAP Financial MeasuresContacts:Media: Danielle Rhoades Ha, 212-556-8719; danielle.rhoades-ha@nytimes.comInvestors: Anthony DiClemente, 212-556-7661; anthony.diclemente@nytimes.com10THE NEW YORK TIMES COMPANYCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(Dollars and shares in thousands, except per share data)First Quarter 20242023% ChangeRevenuesSubscription(a)$429,005 $397,542 7.9 %Advertising(b)103,711 106,241 (2.4)%Other(c)61,299 56,956 7.6 %Total revenues594,015 560,739 5.9 %Operating costsCost of revenue (excluding depreciation and amortization)316,867 306,852 3.3 %Sales and marketing65,134 67,034 (2.8)%Product development63,185 57,062 10.7 %General and administrative78,815 81,051 (2.8)%Depreciation and amortization20,706 20,840 (0.6)%Generative AI Litigation Costs989 — *Total operating costs(1)545,696 532,839 2.4 %Operating profit48,319 27,900 73.2 %Other components of net periodic benefit (costs)/income(1,051)685 *Interest income and other, net8,387 3,173 *Income before income taxes55,655 31,758 75.2 %Income tax expense15,238 9,437 61.5 %Net income$40,417 $22,321 81.1 %Average number of common shares outstanding:Basic164,632 164,975 (0.2)%Diluted165,630 165,398 0.1 %Basic earnings per share attributable to common stockholders$0.25 $0.14 78.6 %Diluted earnings per share attributable to common stockholders$0.24 $0.13 84.6 %Dividends declared per share$0.13 $0.11 18.2 %(1) First quarter 2023 was recast to conform to the current presentation of total operating costs. See “Comparisons” for more details.* Represents a change equal to or in excess of 100% or not meaningful.See footnotes pages for additional information. 11THE NEW YORK TIMES COMPANYFOOTNOTES(Dollars in thousands)(a) The following table summarizes digital and print subscription revenues for the first quarters of 2024 and 2023:First Quarter20242023% ChangeDigital-only subscription revenues(1)$292,978 $258,768 13.2 %Print subscription revenues(2)136,027 138,774 (2.0)%Total subscription revenues$429,005 $397,542 7.9 %(1) Includes revenue from bundled and standalone subscriptions to our news product, as well as to The Athletic and to our Cooking, Games and Wirecutter products.(2) Includes domestic home-delivery subscriptions, which include access to our digital products. Also includes single-copy, NYT International and Other subscription revenues.(b) The following table summarizes digital and print advertising revenues for the first quarters of 2024 and 2023:First Quarter20242023% ChangeAdvertising revenues:Digital$63,026 $61,271 2.9 %Print40,685 44,970 (9.5)%Total advertising$103,711 $106,241 (2.4)%(c) Other revenues primarily consist of revenues from licensing, Wirecutter affiliate referrals, commercial printing, the leasing of floors in the Company headquarters, retail commerce, our live events business, our student subscription sponsorship program and books, television and film. Digital other revenues, which consist primarily of Wirecutter affiliate referral revenue and digital licensing revenues, totaled $35.8 million and $26.1 million for the first quarter of 2024 and 2023, respectively.12THE NEW YORK TIMES COMPANYSUPPLEMENTAL SUBSCRIBER, ARPU AND SUBSCRIPTION REVENUES INFORMATION(Amounts in thousands, except for ARPU)We offer a digital subscription package (or “bundle”) that includes access to our digital news product (which includes our news website, NYTimes.com, and mobile and Audio applications), as well as to The Athletic and to our Cooking, Games and Wirecutter products. Our subscriptions also include standalone digital subscriptions to our digital news product, as well as to The Athletic, and our Cooking, Games and Wirecutter products.The following tables present information regarding the number of subscribers to the Company’s products as well as certain additional metrics. A subscriber is defined as a user who has subscribed (and provided a valid method of payment) for the right to access one or more of the Company’s products. Subscribers with a domestic home-delivery print subscription to The New York Times, which includes access to our digital products, are excluded from digital-only subscribers. The following table sets forth subscribers as of the end of the five most recent fiscal quarters:Q1 2024Q4 2023Q3 2023Q2 2023Q1 2023Digital-only subscribers:Bundle and multiproduct(1)(2)4,550 4,220 3,790 3,300 3,020 News-only(2)(3)2,500 2,740 3,020 3,320 3,580 Other single-product(2)(4)2,860 2,740 2,600 2,580 2,420 Total digital-only subscribers(2)(5)9,910 9,700 9,410 9,190 9,020 Print subscribers(6)640 660 670 690 710 Total subscribers10,550 10,360 10,080 9,880 9,730 (1) Subscribers with a bundle subscription or standalone digital-only subscriptions to two or more of the Company’s products.(2) Includes group corporate and group education subscriptions, which collectively represented approximately 6% of total digital-only subscribers as of the end of the first quarter of 2024. The number of group subscribers is derived using the value of the relevant contract and a discounted subscription rate.(3) Subscribers with only a digital-only news product subscription.(4) Subscribers with only one digital-only subscription to The Athletic or to our Cooking, Games or Wirecutter products.(5) Subscribers with digital-only subscriptions to one or more of our news product, The Athletic, or our Cooking, Games and Wirecutter products.(6) Subscribers with a domestic home-delivery or mail print subscription to The New York Times, which includes access to our digital products, or a print subscription to our Book Review or Large Type Weekly products.The sum of individual metrics may not always equal total amounts indicated due to rounding. Subscribers (including net subscriber additions) are rounded to the nearest ten thousand.The following table sets forth ARPU metrics relating to the above digital-only subscriber categories for the five most recent fiscal quarters:Q1 2024Q4 2023Q3 2023Q2 2023Q1 2023Digital-only ARPU:Bundle and multiproduct$11.79 $12.13 $12.81 $13.40 $14.33 News-only$10.88 $10.38 $10.05 $9.29 $8.69 Other single-product$3.59 $3.56 $3.48 $3.57 $3.67 Total digital-only ARPU$9.21 $9.24 $9.28 $9.15 $9.04 ARPU metrics are calculated by dividing the digital subscription revenues in the quarter by the average number of digital-only subscribers divided by the number of days in the quarter multiplied by 28 to reflect a 28-day billing cycle. In calculating ARPU metrics, for our subscriber categories (Bundle and multiproduct, News-only and Other single-product), we use the monthly average number of digital-only subscribers (calculated as the sum of the number of subscribers in each category at the beginning and end of the month, divided by two) and for Total digital-only ARPU, we use the daily average number of digital-only subscribers.13THE NEW YORK TIMES COMPANYSUPPLEMENTAL SUBSCRIBER, ARPU AND SUBSCRIPTION REVENUES INFORMATION(Amounts in thousands)The following table sets forth the subset of subscribers above who have a digital-only standalone subscription to The Athletic or a bundle subscription that includes the ability to access The Athletic as of the end of the five most recent fiscal quarters:Q1 2024Q4 2023Q3 2023Q2 2023Q1 2023Digital-only subscribers with The Athletic(1)(2)4,990 4,650 4,180 3,640 3,270 (1) We provide all bundle subscribers with the ability to access The Athletic and all bundle subscribers are included in this metric.(2) Subscribers (including net subscriber additions) are rounded to the nearest ten thousand.14THE NEW YORK TIMES COMPANYSEGMENT INFORMATION(Dollars in thousands)We have two reportable segments: NYTG and The Athletic. Management uses adjusted operating profit (loss) by segment in assessing performance and allocating resources. The Company includes in its presentation revenues and adjusted operating costs to arrive at adjusted operating profit (loss) by segment. Adjusted operating costs are defined as operating costs before depreciation and amortization, severance, multiemployer pension plan withdrawal costs and special items. Adjusted operating profit is defined as operating profit before depreciation and amortization, severance, multiemployer pension plan withdrawal costs and special items. Adjusted operating profit expressed as a percentage of revenues is referred to as adjusted operating profit margin.Subscription revenues from and expenses associated with our bundle are allocated to NYTG and The Athletic.Prior to April 1, 2023, we allocated bundle revenues first to our digital news product based on its standalone list price and then the remaining bundle revenues were allocated to the other products in the bundle, including The Athletic, based on their relative standalone list prices. Starting April 1, 2023, we allocate 10% of bundle revenues to The Athletic based on management’s view of The Athletic’s relative value to the bundle, which is derived based on analysis of various metrics. Prior to April 1, 2023, we allocated to NYTG and The Athletic direct variable expenses associated with the bundle, which include credit card fees, third party fees and sales taxes, based on a historical actual percentage of these costs to bundle revenues. Starting April 1, 2023, we allocate 10% of product development, marketing and subscriber servicing expenses (including the direct variable expenses referenced above) associated with the bundle to The Athletic, and the remaining costs are allocated to NYTG, in each case, in line with the revenues allocations.For comparison purposes, the Company previously recast segment results for the first quarter of 2023 to reflect the updated allocation methodology. First Quarter20242023(1)(2)% ChangeRevenuesNYTG$557,394$532,7824.6 %The Athletic37,18427,95733.0 %Intersegment eliminations(3)(563)—*Total revenues$594,015$560,7395.9 %Adjusted operating costsNYTG$472,650$467,4951.1 %The Athletic45,87439,26916.8 %Intersegment eliminations(3)(563)—*Total adjusted operating costs$517,961$506,7642.2 %Adjusted operating profit (loss)NYTG$84,744$65,28729.8 %The Athletic(8,690)(11,312)(23.2)%Total adjusted operating profit$76,054$53,97540.9 %AOP margin % - NYTG15.2 %12.3 %290 bps(1) Recast to reflect the Company’s updated bundle allocation methodology.(2) Recast to conform to the current presentation of total operating costs. See “Comparisons” for more detail.(3) Intersegment eliminations (“I/E”) related to content licensing.* Represents a change equal to or in excess of 100% or not meaningful.15THE NEW YORK TIMES COMPANYSEGMENT INFORMATION(Dollars in thousands)Revenues detail by segmentFirst Quarter20242023(1)% ChangeNYTGSubscription$401,370 $374,156 7.3 %Advertising98,004 102,090 (4.0)%Other58,020 56,536 2.6 %Total$557,394 $532,782 4.6 %The Athletic Subscription$27,635 $23,386 18.2 %Advertising5,707 4,151 37.5 %Other3,842 420 *Total$37,184 $27,957 33.0 %I/E(2)$(563)$— *The New York Times CompanySubscription$429,005 $397,542 7.9 %Advertising103,711 106,241 (2.4)%Other61,299 56,956 7.6 %Total$594,015 $560,739 5.9 %(1) Recast to reflect the Company’s updated bundle allocation methodology.(2) I/E related to content licensing recorded in Other revenues.* Represents a change equal to or in excess of 100% or not meaningful.16THE NEW YORK TIMES COMPANYSEGMENT INFORMATION(Dollars in thousands)Adjusted operating costs (operating costs before depreciation and amortization, severance, multiemployer pension plan withdrawal costs and special items) detail by segmentFirst Quarter20242023(1)% ChangeNYTGCost of revenue (excluding depreciation and amortization)$292,457 $284,323 2.9 %Sales and marketing55,481 58,932 (5.9)%Product development54,865 50,832 7.9 %Adjusted general and administrative(2)69,847 73,408 (4.9)%Total$472,650 $467,495 1.1 %The Athletic Cost of revenue (excluding depreciation and amortization)$24,973 $22,529 10.8 %Sales and marketing9,653 8,102 19.1 %Product development8,320 6,230 33.5 %Adjusted general and administrative(3)2,928 2,408 21.6 %Total$45,874 $39,269 16.8 %I/E(4)$(563)$— *The New York Times CompanyCost of revenue (excluding depreciation and amortization)$316,867 $306,852 3.3 %Sales and marketing65,134 67,034 (2.8)%Product development63,185 57,062 10.7 %Adjusted general and administrative72,775 75,816 (4.0)%Total$517,961 $506,764 2.2 %(1) Recast to reflect the Company’s updated bundle allocation methodology.(2) Excludes severance of $4.0 million and multiemployer pension withdrawal costs of $1.6 million for the first quarter of 2024. Excludes severance of $3.3 million and multiemployer pension withdrawal costs of $1.5 million for the first quarter of 2023.(3) Excludes severance of $0.4 million and $0.5 million for the first quarter of 2024 and 2023, respectively. (4) I/E related to content licensing recorded in Cost of revenue (excluding depreciation and amortization).* Represents a change equal to or in excess of 100% or not meaningful.17THE NEW YORK TIMES COMPANYRECONCILIATION OF NON-GAAP FINANCIAL MEASURESIn this release, the Company has referred to non-GAAP financial information with respect to adjusted diluted EPS, defined as diluted EPS excluding amortization of acquired intangible assets, severance, non-operating retirement costs and special items; adjusted operating profit, defined as operating profit before depreciation, amortization, severance, multiemployer pension plan withdrawal costs and special items; adjusted operating profit margin, defined as adjusted operating profit divided by revenues; adjusted operating costs, defined as operating costs before depreciation, amortization, severance, multiemployer pension withdrawal costs and special items; and free cash flow, defined as net cash provided by operating activities less capital expenditures. The Company has included these non-GAAP financial measures because management reviews them on a regular basis and uses them to evaluate and manage the performance of the Company’s operations. Management believes that, for the reasons outlined below, these non-GAAP financial measures provide useful information to investors as a supplement to reported diluted earnings/(loss) per share, operating profit/(loss) and operating costs. However, these measures should be evaluated only in conjunction with the comparable GAAP financial measures and should not be viewed as alternative or superior measures of GAAP results.Adjusted diluted EPS provides useful information in evaluating the Company’s period-to-period performance because it eliminates items that the Company does not consider to be indicative of earnings from ongoing operating activities. Adjusted operating profit and adjusted operating profit margin are useful in evaluating the ongoing performance of the Company’s business as they exclude the significant non-cash impact of depreciation and amortization as well as items not indicative of ongoing operating activities. Total operating costs include depreciation, amortization, severance, multiemployer pension plan withdrawal costs and special items. Adjusted operating costs provide investors with helpful supplemental information on the Company’s underlying operating costs that is used by management in its financial and operational decision-making.Management considers special items, which may include impairment charges, pension settlement charges, acquisition-related costs, and beginning in the first quarter of 2024, Generative AI Litigation Costs, as well as other items that arise from time to time, to be outside the ordinary course of our operations. Management believes that excluding these items provides a better understanding of the underlying trends in the Company’s operating performance and allows more accurate comparisons of the Company’s operating results to historical performance. Management determined to report Generative AI Litigation Costs as a special item and thus exclude them beginning in the first quarter of 2024 because, unlike other litigation expenses which are not excluded, the Generative AI Litigation Costs arise from a discrete, complex and unusual proceeding and do not, in management’s view, reflect the Company’s ongoing business operational performance. In addition, management excludes severance costs, which may fluctuate significantly from quarter to quarter, because it believes these costs do not necessarily reflect expected future operating costs and do not contribute to a meaningful comparison of the Company’s operating results to historical performance. The Company considers free cash flow as providing useful information to management and investors about the amount of cash that is available to be used to strengthen the Company’s balance sheet, for strategic opportunities, including investing in the Company’s business and strategic acquisitions, and/or for the return of capital to stockholders in the form of dividends and stock repurchases.Non-operating retirement costs include (i) interest cost, expected return on plan assets, amortization of actuarial gains and loss components and amortization of prior service credits of single-employer pension expense, (ii) interest cost, amortization of actuarial gains and loss components and (iii) all multiemployer pension plan withdrawal costs. These non-operating retirement costs are primarily tied to financial market performance including changes in market interest rates and investment performance. Management considers non-operating retirement costs to be outside the performance of the business and believes that presenting adjusted diluted EPS excluding non-operating retirement costs and presenting adjusted operating results excluding multiemployer pension plan withdrawal costs, in addition to the Company’s GAAP diluted EPS and GAAP operating results, provide increased transparency and a better understanding of the underlying trends in the Company’s operating business performance.Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are set out in the tables below.18THE NEW YORK TIMES COMPANYRECONCILIATION OF NON-GAAP FINANCIAL MEASURES(Dollars in thousands, except per share data)Reconciliation of diluted EPS excluding amortization of acquired intangible assets, severance, non-operating retirement costs and special items (or adjusted diluted EPS)First Quarter20242023% ChangeDiluted EPS$0.24 $0.13 84.6 %Add:Amortization of acquired intangible assets0.04 0.04 *Severance0.03 0.02 50.0 %Non-operating retirement costs: Multiemployer pension plan withdrawal costs0.01 0.01 *Other components of net periodic benefit costs0.01 — *Special items:Generative AI Litigation Costs0.01 — *Income tax expense of adjustments(0.02)(0.02)*Adjusted diluted EPS(1)$0.31 $0.19 63.2 %(1) Amounts may not add due to rounding.* Represents a change equal to or in excess of 100% or not meaningful.Reconciliation of operating profit before depreciation and amortization, severance, multiemployer pension plan withdrawal costs and special items (or adjusted operating profit)First Quarter20242023% ChangeOperating profit$48,319$27,90073.2 %Add:Depreciation and amortization20,70620,840(0.6)%Severance4,4283,78017.1 %Multiemployer pension plan withdrawal costs1,6121,45510.8 %Generative AI Litigation Costs989—*Adjusted operating profit$76,054$53,97540.9 %Divided by:Revenues$594,015$560,7395.9 %Operating profit margin8.1 %5.0 %310 bpsAdjusted operating profit margin12.8 %9.6 %320 bps* Represents a change equal to or in excess of 100% or not meaningful.19THE NEW YORK TIMES COMPANYRECONCILIATION OF NON-GAAP FINANCIAL MEASURES(Dollars in thousands)Reconciliation of total operating costs before depreciation and amortization, severance, multiemployer pension plan withdrawal costs and special items (or adjusted operating costs)First Quarter20242023(1)(2)NYTGThe AthleticI/E(3)TotalNYTGThe AthleticTotal% ChangeTotal operating costs$493,275 $52,984 $(563)$545,696 $486,285 $46,554 $532,839 2.4 %Less:Depreciation and amortization14,025 6,681 — 20,706 14,006 6,834 20,840 (0.6)%Severance3,999 429 — 4,428 3,329 451 3,780 17.1 %Multiemployer pension plan withdrawal costs1,612 — — 1,612 1,455 — 1,455 10.8 %Generative AI Litigation Costs989 — — 989 — — — *Adjusted operating costs$472,650 $45,874 $(563)$517,961 $467,495 $39,269 $506,764 2.2 %(1) Recast to reflect the Company’s updated bundle allocation methodology.(2) Recast to conform to the current presentation of total operating costs. See “Comparisons” for more detail.(3) I/E related to content licensing.* Represents a change equal to or in excess of 100% or not meaningful.Reconciliation of net cash provided by/(used in) operating activities before capital expenditures (or free cash flow)Three Months20242023Net cash provided by operating activities$53,079 $50,730 Less: Capital expenditures(6,424)(5,985)Free cash flow$46,655 $44,745 20 |
0001364954-23-000144:a9901-financialresultsq320.htm | 0001364954-23-000144 | 1,364,954 | 1,364,954 | CHEGG, INC (CHGG) (CIK 0001364954) | ['CHGG'] | 8-K | 8-K | 2023-10-30 | 2023-10-26 | 001-36180 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-36180&action=getcompany | 231,360,680 | EX-99.01 | EX-99.01 | 2.02,5.02,9.01 | https://www.sec.gov/Archives/edgar/data/1364954/000136495423000144 | https://www.sec.gov/Archives/edgar/data/1364954/000136495423000144/0001364954-23-000144-index.html | https://www.sec.gov/Archives/edgar/data/1364954/000136495423000144/a9901-financialresultsq320.htm | EX-99.01 2 a9901-financialresultsq320.htm EX-99.01 DocumentEXHIBIT 99.01 Chegg Reports Third Quarter 2023 EarningsChegg begins to roll out the first phase of its new AI-powered user experienceSANTA CLARA, Calif., October 30, 2023 /BUSINESS WIRE/ -- Chegg, Inc. (NYSE:CHGG), the leading student-first connected learning platform, today reported financial results for the three months ended September 30, 2023.“Chegg is in a great position to build the most impactful, scalable, AI-enabled, personal learning assistant, which will expand our opportunities to serve more students, in more ways, and at a lower cost per customer,” said Dan Rosensweig, CEO & President of Chegg, Inc. “We are moving quickly and have already started to roll out our new simple user interface and unified asking experience, delivering faster and more relevant solutions.”Third Quarter 2023 Highlights•Total Net Revenues of $157.9 million, a decrease of 4% year-over-year•Subscription Services Revenues of $139.9 million, or 89% of total net revenues, a decrease of 4% year-over-year•Gross Margin of 47% driven lower by a one-time content and related assets charge of $38.2 million •Non-GAAP Gross Margin of 74%•Net Loss was $18.3 million•Non-GAAP Net Income was $23.2 million •Adjusted EBITDA was $38.8 million •4.4 million Subscription Services subscribers, a decrease of 8% year-over-year Total net revenues include revenues from Subscription Services and Skills and Other. Subscription Services includes revenues from our Chegg Study Pack, Chegg Study, Chegg Writing, Chegg Math, and Busuu offerings. Skills and Other includes revenues from Skills, Advertising, and any other revenues not included in Subscription Services.For more information about non-GAAP net income, non-GAAP gross margin and adjusted EBITDA, and a reconciliation of non-GAAP net income to net (loss) income, gross margin to non-GAAP gross margin and adjusted EBITDA to net (loss) income, see the sections of this press release titled, “Use of Non-GAAP Measures,” “Reconciliation of Net (Loss) Income to EBITDA and Adjusted EBITDA,” and “Reconciliation of GAAP to Non-GAAP Financial Measures.”Business OutlookFourth Quarter 2023 •Total Net Revenues in the range of $185 million to $187 million•Subscription Services Revenues in the range of $164 million to $166 million •Gross Margin between 73% and 74% •Adjusted EBITDA in the range of $62 million to $64 millionFor more information about the use of forward-looking non-GAAP measures, a reconciliation of forward-looking net income to EBITDA and adjusted EBITDA for the fourth quarter 2023, see the below sections of the press release titled “Use of Non-GAAP Measures,” and “Reconciliation of Forward-Looking Net Income to EBITDA and Adjusted EBITDA.”An updated investor presentation and an investor data sheet can be found on Chegg’s Investor Relations website https://investor.chegg.com.Prepared Remarks - Dan Rosensweig, CEO & President Chegg, Inc.Thank you, Tracey and welcome everyone to our 2023 Q3 earnings call. Chegg had a good quarter, delivering better than expected results, as we saw stabilization in new accounts and increases in overall retention and in the take rate of Chegg Study Pack. In addition to our academic services, we continue to invest in skills where we are seeing very strong growth, all of which is good for the future of Chegg. Six months ago, leveraging the breakthroughs of artificial intelligence, we began to completely reinvent what we offer, how we offer it, and to whom we offer it. New technology platforms create a lot of hype and noise but, as the hype gives way to facts, we believe Chegg is in a great position to build the most impactful, scalable, AI enabled, personal learning assistant, which will expand our opportunities to serve more students, in more ways, and at a lower cost per customer.The history of the internet has shown us that verticals win. Leading companies with a strong brand, category expertise, scale, and resources, can invigorate growth and create new opportunities when they move quickly and embrace change. In the world of AI, Chegg has particularly valuable and proprietary assets for education and learning, including our student-first brand, a reputation for quality and accuracy, and our unique content and dataset. Chegg also has a proven track record for improving student outcomes and now, by combining the best of what Chegg has to offer with the advancements in artificial intelligence, we are creating new opportunities to better serve our students. It has been nearly a year since ChatGPT launched. We have all learned a lot and are experiencing how AI is impacting our lives. We know that students are using ChatGPT but what is interesting is that they are using it for a variety of things in addition to education. Because Chegg is verticalized for learning, what isn’t surprising is that when students try us and compare us to more general AI solutions, Chegg outperforms. That has led to incredibly high retention rates and we are maintaining high customer satisfaction, such as 91% of students report when they use Chegg they get better grades, 89% say Chegg helps them learn their course material, and 90% say they work more efficiently when using Chegg to understand their coursework. And we are now introducing new AI capabilities and features, which we expect will do even more for students. We are excited about what we are building, and we are moving quickly and rolling out the first phase of our new user experience. In September we started to show our first cohort of users the updated capabilities, with a new simple interface and unified asking experience. This means Chegg can provide answers from our proprietary database, our more than 150,000 subject matter experts and now with generative AI. We are focused on usage, quality, accuracy, and speed, and are on track to introduce our own large-language models trained on Chegg’s unique data. In the coming months, you will see us offer more features including multi-turn chat, which will create a simple and conversational experience, and introduce personalized AI enhanced learning aids, such as practice tests, assessments, study guides, and flashcards. We also plan to let students connect to each other and share content. Over time all of this is designed to expand our TAM and increase our relevancy to millions more students than we serve today. It’s truly an exciting time at Chegg. We are executing well against our plan and are on track to roll-out even more features to more students in Q1 of 2024.We have only one agenda - to serve the student. What we do is incredibly hard to replicate, giving us a powerful moat. The combination of our successful learning taxonomy, over 100 million solutions generated by Chegg’s subject matter experts, and now the ability to leverage artificial intelligence means we can do what generic AI platforms cannot do. Our vision for a truly personalized learning assistant is coming to life. To make it easier for you to see what we are building, we’ve created a video for you that is available on our IR website, where you can see how the product is evolving. We believe this will give you a sense of just how powerful Chegg can become, including our ability to blend our academic support and skills efforts, by integrating career pathways into the student experience.We are beginning to see the investments we have made in skills pay off. By leveraging the latest advances in AI to accelerate our program development, we are able to create relevant, customized, high-impact programs, faster and at a lower cost. We will also be releasing a suite of AI training programs over the coming months. Through our B2B partnerships and direct-to-student efforts we continue to see Chegg Skills grow and expect it to become a meaningful contributor in the years ahead. We are widening the aperture for Chegg and we hope to reach a much larger audience of learners – one that, historically, we haven’t been able to serve before. This is where much of our future growth will come from and our plan is to continue to execute each quarter towards this vision. And before I turn it over, I want to acknowledge Andy, as he plans to retire once we hire his replacement early next year. I am deeply grateful for the incredible contributions Andy has made during his 12-year tenure at Chegg. Under his leadership, we have grown from a physical textbook rental business to a global, online, learning platform that has supported more than 22 million students over the last decade. He guided us through our transition to a fully digital business and, in doing so, grew our digital revenue from $0 to over $700 million annually. In fact, when Andy took on the role of CFO, Chegg was unprofitable but today Chegg is profitable and is expected to generate nearly $220 million in adjusted EBITDA and approximately $170 million in free cash flow this year. These are remarkable accomplishments and none of them would have been possible without Andy’s leadership and vision. On a personal note, I want to thank Andy for his partnership, guidance, and friendship over the last decade. He has truly left an indelible mark on this company and will forever be a part of the Chegg and Rosensweig family. And with that I will turn it over to Andy… Prepared Remarks - Andy Brown, CFO Chegg, Inc.Thanks, Dan, for the kind words, it’s been an amazing journey over the past 12 plus years, and I am extremely thankful to you and the Chegg team and proud of what we have collectively accomplished. Also, a big shout out to Tracey and Diana, you are the best IR team I have had the pleasure to work with. You are just awesome. Our company has become an industry leader, a cherished brand that is loved by millions of students worldwide, with a future that is incredibly exciting. Having the opportunity to work for a mission-driven company that is integral to helping students learn has been super rewarding, and I thank you. Now back to business.Q3 was a good quarter, exceeding our revenue and adjusted EBITDA guidance, and as Dan mentioned, we are encouraged by continued positive trends, such as increasing retention rate and Chegg Study Pack take rate. Total revenue was $158 million, driven by Subscription Services revenue of $140 million, where we had 4.4 million subscribers during the quarter. Skills and Other revenue was $18 million, driven by strong growth in Skills, offset primarily by the change in the Required Materials model, which is now a revenue share, as well as some advertising softness. We remain disciplined on the expense side, aligning investments with our AI-focused strategy, which supported another adjusted EBITDA beat this quarter versus guidance, coming in at $39 million, or a 25% margin. We had two one-time items that impacted our GAAP gross margin and net income for the quarter. First, during the design of our new generative AI experience, we determined that certain content and system types were no longer necessary. As a result, we have taken a charge of $41.8 million, of which approximately $38.2 million was included in cost of goods sold, which impacted gross margin, and $3.6 million was included in G&A. The second item is that we recorded a gain of $32.1 million from the repurchase of some of our outstanding convertible debt at a discount during the quarter, which was recorded in Other Income.We have a strong balance sheet and drive significant free cash flow, which we expect will continue and for full year 2023, we now expect free cash flow to be approximately $170 million. We have opportunistically retired both convertible debt and equity, returning approximately $1.2 billion and $800 million, respectively, to investors through repurchases over the last three years. We ended the quarter with $674 million of cash and investments, with total convertible debt outstanding of $603 million at par value. We continue to believe that the combination of our operating model, balance sheet, and cash flows sets us up to deliver on our mission to serve students across the world, leverage AI to expand our offerings and our TAM, and ultimately return to growth while maintaining strong profitability.Now, moving on to guidance. For Q4 we expect:•Total revenue to be between $185 and $187 million,•With Subscription Services revenue between $164 and $166 million,•Gross margin between 73% and 74%, •And adjusted EBITDA between $62 and $64 million, or 34% margin. In closing, we expect the development of AI will allow Chegg to embrace a much larger opportunity over time. We believe there is nobody better equipped to meet the current or future needs of students, than Chegg. We have an industry-leading brand, proprietary data, strong operating model and balance sheet to extend our leadership in the future. With that, I’ll turn the call over to the operator for questions. Conference Call and Webcast InformationTo access the call, please dial 1-877-407-4018, or outside the U.S. +1-201-689-8471, five minutes prior to 1:30 p.m. Pacific Daylight Time (or 4:30 p.m. Eastern Daylight Time). A live webcast of the call will also be available at https://investor.chegg.com under the Events & Presentations menu. An audio replay will be available beginning at 4:30 p.m. Pacific Daylight Time (or 7:30 p.m. Eastern Daylight Time) on October 30, 2023, until 8:59 p.m. Pacific Standard Time (or 11:59 p.m. Eastern Standard Time) on November 6, 2023, by calling 1-844-512-2921, or outside the U.S. +1-412-317-6671, with Conference ID 13741760. An audio archive of the call will also be available at https://investor.chegg.com.Use of Investor Relations Website for Regulation FD PurposesChegg also uses its media center website, https://www.chegg.com/press, as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD. Accordingly, investors should monitor https://www.chegg.com/press, in addition to following press releases, Securities and Exchange Commission filings and public conference calls and webcasts.About CheggMillions of people all around the world Learn with Chegg. Our mission is to improve learning and learning outcomes by putting students first. We support life-long learners starting with their academic journey and extending into their careers. The Chegg platform provides products and services to support learners to help them better understand their academic course materials, and also provides personal and professional development skills training, to help them achieve their learning goals. Chegg is a publicly held company based in Santa Clara, California and trades on the NYSE under the symbol CHGG. For more information, visit www.chegg.com.Media Contact: Tonya B. Hudson, press@chegg.comInvestor Contact: Tracey Ford, IR@chegg.comUse of Non-GAAP MeasuresTo supplement Chegg’s financial results presented in accordance with generally accepted accounting principles in the United States (GAAP), this press release and the accompanying tables and the related earnings conference call contain non-GAAP financial measures, including adjusted EBITDA, non-GAAP cost of revenues, non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP income from operations, non-GAAP net income, non-GAAP weighted average shares, non-GAAP net income per share, and free cash flow. For reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures, please see the section of the accompanying tables titled, “Reconciliation of Net (Loss) Income to EBITDA and Adjusted EBITDA,” “Reconciliation of GAAP to Non-GAAP Financial Measures,” “Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow,” and “Reconciliation of Forward-Looking Net Income to EBITDA and Adjusted EBITDA.”The presentation of these non-GAAP financial measures is not intended to be considered in isolation from, as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP, and may be different from non-GAAP financial measures used by other companies. Chegg defines (1) adjusted EBITDA as earnings before interest, taxes, depreciation and amortization or EBITDA, adjusted for print textbook depreciation expense and to exclude share-based compensation expense, other income, net, acquisition-related compensation costs, content and related assets charge, restructuring charges, loss contingency, transitional logistic charges, and impairment of lease related assets; (2) non-GAAP cost of revenues as cost of revenues excluding content and related assets charge, amortization of intangible assets, share-based compensation expense, acquisition-related compensation costs, restructuring charges, and transitional logistic charges; (3) non-GAAP gross profit as gross profit excluding content and related assets charge, amortization of intangible assets, share-based compensation expense, acquisition-related compensation costs, restructuring charges, and transitional logistic charges; (4) non-GAAP gross margin is defined as non-GAAP gross profit divided by net revenues, (5) non-GAAP operating expenses as operating expenses excluding share-based compensation expense, amortization of intangible assets, acquisition-related compensation costs, content and related assets charge, restructuring charges, loss contingency and impairment of lease related assets; (6) non-GAAP income from operations as (loss) income from operations excluding share-based compensation expense, amortization of intangible assets, acquisition-related compensation costs, content and related assets charge, restructuring charges, loss contingency, transitional logistic charges, and impairment of lease related assets; (7) non-GAAP net income as net (loss) income excluding share-based compensation expense, amortization of intangible assets, acquisition-related compensation costs, amortization of debt issuance costs, the gain on early extinguishments of debt, content and related assets charge, the income tax effect of non-GAAP adjustments, restructuring charges, loss contingency, the tax benefit related to release of valuation allowance, transitional logistic charges, and impairment of lease related assets; (8) non-GAAP weighted average shares outstanding as weighted average shares outstanding adjusted for the effect of shares for stock plan activity and shares related to our convertible senior notes, to the extent such shares are not already included in our weighted average shares outstanding; (9) non-GAAP net income per share is defined as non-GAAP net income divided by non-GAAP weighted average shares outstanding; and (10) free cash flow as net cash provided by operating activities adjusted for purchases of property and equipment, purchases of textbooks and proceeds from disposition of textbooks. To the extent additional significant non-recurring items arise in the future, Chegg may consider whether to exclude such items in calculating the non-GAAP financial measures it uses.Chegg believes that these non-GAAP financial measures, when taken together with the corresponding GAAP financial measures, provide meaningful supplemental information regarding Chegg’s performance by excluding items that may not be indicative of Chegg’s core business, operating results or future outlook. Chegg management uses these non-GAAP financial measures in assessing Chegg’s operating results, as well as when planning, forecasting and analyzing future periods and believes that such measures enhance investors’ overall understanding of our current financial performance. These non-GAAP financial measures also facilitate comparisons of Chegg’s performance to prior periods.As presented in the “Reconciliation of Net (Loss) Income to EBITDA and Adjusted EBITDA,” “Reconciliation of GAAP to Non-GAAP Financial Measures,” “Reconciliation of Forward-Looking Net Income to EBITDA and Adjusted EBITDA,” and “Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow,” tables below, each of the non-GAAP financial measures excludes or includes one or more of the following items:Share-based compensation expense. Share-based compensation expense is a non-cash expense that varies in amount from period to period and is dependent on market forces that are often beyond Chegg's control. As a result, management excludes this item from Chegg's internal operating forecasts and models. Management believes that non-GAAP measures adjusted for share-based compensation expense provide investors with a basis to measure Chegg's core performance against the performance of other companies without the variability created by share-based compensation as a result of the variety of equity awards used by other companies and the varying methodologies and assumptions used.Amortization of intangible assets.Chegg amortizes intangible assets, including those that contribute to generating revenues, that it acquires in conjunction with acquisitions, which results in non‑cash expenses that may not otherwise have been incurred. Chegg believes excluding the expense associated with intangible assets from non-GAAP measures allows for a more accurate assessment of its ongoing operations and provides investors with a better comparison of period-over-period operating results. No corresponding adjustments have been made related to revenues generated from acquired intangible assets.Acquisition-related compensation costs.Acquisition-related compensation costs include compensation expense resulting from the employment retention of certain key employees established in accordance with the terms of the acquisitions. In most cases, these acquisition-related compensation costs are not factored into management's evaluation of potential acquisitions or Chegg's performance after completion of acquisitions, because they are not related to Chegg's core operating performance. In addition, the frequency and amount of such charges can vary significantly based on the size and timing of acquisitions and the maturities of the businesses being acquired. Excluding acquisition-related compensation costs from non-GAAP measures provides investors with a basis to compare Chegg’s results against those of other companies without the variability caused by purchase accounting.Content and related assets chargeAs part of the design and build of our new generative AI experience, in August 2023, we streamlined our product experiences. As a result, we elected to abandon certain content and software assets that did not align with our AI strategy. The content and related assets charge represents a one-time charge consisting primarily of accelerated depreciation of certain content and software assets of $34.2 million, the impairment of our indefinite-lived intangible asset of $3.6 million, the impairment of certain in progress software assets of $2.6 million and other costs associated with abandoning these content and software assets of $1.4 million. The one-time expense is excluded from non-GAAP financial measures because it is the result of a discrete event that is not considered core-operating activities. Chegg believes that it is appropriate to exclude the content and related assets charge from non-GAAP financial measures because it enables the comparison of period-over-period operating results.Amortization of debt issuance costs.The difference between the effective interest expense and the contractual interest expense are excluded from management's assessment of our operating performance because management believes that these non-cash expenses are not indicative of ongoing operating performance. Chegg believes that the exclusion of the non-cash interest expense provides investors with a better comparison of period-over-period operating results.Restructuring chargesRestructuring charges represent expenses incurred in conjunction with a reduction in workforce to better position the Company to execute against its AI strategy and to create long-term, sustainable value for its students and investors. Chegg believes that it is appropriate to exclude them from non-GAAP financial measures because it is the result of an event that is not considered a core-operating activity and we believe its exclusion provides investors with a better comparison of period-over-period operating results.Loss contingencyThe loss contingency represents a one-time accrual in connection with a demand for repayment of certain investment proceeds received by the Company in its capacity as an investor in TAPD, Inc. (more commonly known as “Frank”). The loss contingency is excluded from non-GAAP financial measures because they are the result of discrete events that are not considered core-operating activities. Chegg believes that it is appropriate to exclude the loss contingency from non-GAAP financial measures because it enables the comparison of period-over-period operating results.Gain on early extinguishment of debtThe difference between the carrying amount of early extinguished debt and the reacquisition price is excluded from management's assessment of our operating performance because management believes that these non-cash gains are not indicative of ongoing operating performance. Chegg believes that the exclusion of the gain on early extinguishment of debt provides investors with a better comparison of period-over-period operating results.Income tax effect of non-GAAP adjustments.In the periods following the release of our U.S. valuation allowance, we utilize a non-GAAP effective tax rate of 24% for evaluating our operating results, which is based on our current mid-term projections. This non-GAAP tax rate could change for various reasons including, but not limited to, significant changes resulting from tax legislation, changes to our corporate structure and other significant events. Chegg believes that the inclusion of a non-GAAP provision for income tax adjustments provides investors with a better comparison of period-over-period operating results. Tax benefit related to release of valuation allowance. The tax benefit related to the release of the valuation allowance on our U.S. and non-California state deferred tax assets is a result of our expectation that it is more likely than not that our operations will continue to be profitable. Chegg believes that it is appropriate to exclude this from non-GAAP financial measures because it is the result of an event that is not considered a core-operating activity and we believe its exclusion provides investors with a better comparison of period-over-period operating results.Transitional logistics charges.The transitional logistics charges represent incremental expenses incurred as we transition our print textbooks to a third party. Chegg believes that it is appropriate to exclude them from non-GAAP financial measures because it is the result of an event that is not considered a core-operating activity and we believe its exclusion provides investors with a better comparison of period-over-period operating results.Impairment of lease related assets.The impairment of lease related assets represents impairment charge recorded on the ROU asset and leasehold improvements associated with the closure of our San Francisco office. The impairment of lease related assets is a one-time event that is not considered a core-operating activity and we believe its exclusion provides investors with a better comparison of period-over-period operating results.Effect of shares for stock plan activity.The effect of shares for stock plan activity represents the dilutive impact of outstanding stock options, RSUs, and PSUs calculated under the treasury stock method. Effect of shares related to convertible senior notes.The effect of shares related to convertible senior notes represents the dilutive impact of our convertible senior notes, to the extent such shares are not already included in our weighted average shares outstanding as they were antidilutive on a GAAP basis.Free cash flow.Free cash flow represents net cash provided by operating activities adjusted for purchases of property and equipment and purchases of textbooks and including proceeds from the disposition of textbooks. Chegg considers free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business after the purchases of property and equipment and textbooks, which can then be used to, among other things, invest in Chegg's business and make strategic acquisitions. A limitation of the utility of free cash flow as a measure of financial performance is that it does not represent the total increase or decrease in Chegg's cash balance for the period.Forward-Looking StatementsThis press release contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, which include, without limitation, statements regarding our future growth and the future of learning, the impact of artificial intelligence (AI) technology on our financial condition and results of operations, our great position to build the most impactful, scalable, AI enabled, personal learning assistant, which will expand our opportunities to serve more students, in more ways, and at a lower cost per customer, our ability to leverage the breakthroughs of AI and build and utilize AI tools, the complete reinvention of what we offer, how we offer it, and to whom we offer it, our beliefs that verticals win and leading companies with strong brand, category expertise, scale and resources can invigorate growth and create new opportunities when they move quickly and embrace change, the value of our proprietary assets for education and learning in the world of AI (including our student-first brand, reputation for quality and accuracy and unique content and dataset), our creation of new opportunities to better serve students by combining the best of what Chegg has to offer with advancements in AI, our views on what students' use ChatGPT for in addition to education, Chegg's verticalization for learning and our outperformance of more general AI solutions, our ability to do more for students and serve learners in new ways as we introduce new AI capabilities and features, our ability to move quickly and roll out the first phase of our new user experience, our focus on usage, quality, accuracy and speed, the development and features of new Chegg offerings, capabilities and experiences, the timeline for the availability of our new offerings, capabilities and experiences (including our ability to deliver them in the coming months and fully roll-out our new generative product experience in Q1 of 2024), what the new Chegg will include, the features of the new Chegg experience (including multi-turn chat to create a simple and conversational experience, personalized AI-enhanced learning aids, such as practice tests, assessments, study guides and flash cards, and letting students connect to each other and share content), the development of our own large language models (LLMs) and ability to train them with our unique data, our ability to expand our TAM and increase our relevancy to millions more students than we serve today, our powerful competitive moat and the difficulty others face in replicating what we do, the combination of our successful learning taxonomy, nearly 100 million solutions generated by our subject matter experts and ability to leverage AI allowing us to do what generic AI platforms can't do, our vision for a truly personalized learning assistant coming to life, our belief of how powerful Chegg can become, our ability to blend our academic support and skills efforts by integrating career pathways into the student experience, our investments in Chegg Skills and the related impact on growth and the future of Chegg, our ability to leverage the latest advances in AI to accelerate our program development and create relevant, customized, high-impact programs faster and at a lower cost, our release of a suite of AI training programs over the coming months and Chegg Skills growth through our B2B partnerships and direct-to-student efforts, our expectation that Chegg Skills will become a meaningful contributor in the years ahead, our ability to widen the aperture for Chegg and reach a much larger audience of learners we historically haven't been able to serve and the related impact on our future growth, the size of Chegg's opportunity to serve its students, the content of our concept video, continued positive trends, such as increasing retention rate and Chegg Study Pack take rate, our alignment of investments with our AI-focused strategy, our determination that certain content and system types were no longer necessary, expectations regarding Chegg's execution against its strategic and financial objectives and guidance, expectations regarding maintaining a strong balance sheet and driving significant free cash flow, our belief that the combination of our operating model, balance sheet, and cash flows sets us up to deliver on our mission to serve students across the world, leverage AI to expand our offerings and our TAM and ultimately return to growth while maintaining strong profitability, our expectation that the development of AI will allow Chegg to embrace a much larger opportunity over time, our belief that nobody is better equipped to meet the current or future needs of students than Chegg, our ability to extend our leadership in the future through our industry-leading brand, proprietary data, strong operating model and balance sheet, our financial guidance, as well as those included in the investor presentation referenced above, those included in the “Prepared Remarks” sections above, and all statements about Chegg’s outlook under “Business Outlook.” The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “project,” “endeavor,” “will,” “should,” “future,” “transition,” “outlook” and similar expressions, as they relate to Chegg, are intended to identify forward-looking statements. These statements are not guarantees of future performance, and are based on management’s expectations as of the date of this press release and assumptions that are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to differ materially from any future results, performance or achievements. Important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements include the following: the effects of AI technology on Chegg’s business and the economy generally; Chegg’s ability to attract new, and retain existing, students, to increase student engagement, and to increase monetization; Chegg’s brand and reputation; changes in employment and wages and the uncertainty surrounding the evolving educational landscape, enrollment and student behavior; Chegg’s ability to expand internationally; changes in search engine methodologies that modify Chegg’s search result page rankings, resulting in decreased student engagement on Chegg’s website; the success of Chegg’s new product offerings, including the new Chegg generative AI experience and personal learning assistant; competition in aspects of Chegg’s business, and Chegg's expectation that such competition will increase; Chegg’s ability to innovate in response to technological and market developments, including artificial intelligence; Chegg’s ability to maintain its services and systems without interruption, including as a result of technical issues, cybersecurity threats, or cyber-attacks; third-party payment processing risks; adoption of government regulation of education unfavorable to Chegg; the rate of adoption of Chegg’s offerings; mobile app stores and mobile operating systems making Chegg’s apps and mobile website available to students and to grow Chegg’s user base and increase their engagement; colleges and governments restricting online access or access to Chegg’s services; Chegg’s ability to strategically take advantage of new opportunities; competitive developments, including pricing pressures and other services targeting students; Chegg’s ability to build and expand its services offerings; Chegg’s ability to integrate acquired businesses and assets; the impact of seasonality and student behavior on the business; the outcome of any current litigation and investigations; Chegg’s ability to effectively control operating costs; regulatory changes, in particular concerning privacy, marketing, and education; changes in the education market, including as a result of AI technology and COVID-19; and general economic, political and industry conditions, including inflation, recession and war. All information provided in this release and in the conference call is as of the date hereof, and Chegg undertakes no duty to update this information except as required by law. These and other important risk factors are described more fully in documents filed with the Securities and Exchange Commission, including Chegg's Annual Report on Form 10-K for the year ended December 31, 2022 filed with the Securities and Exchange Commission on February 21, 2023, and could cause actual results to differ materially from expectations.CHEGG, INC.CONDENSED CONSOLIDATED BALANCE SHEETS(in thousands, except for number of shares and par value)(unaudited) September 30,2023December 31,2022AssetsCurrent assets Cash and cash equivalents$94,419 $473,677 Short-term investments166,841 583,973 Accounts receivable, net of allowance of $245 and $394 at September 30, 2023 and December 31, 2022, respectively30,480 23,515 Prepaid expenses30,761 28,481 Other current assets25,195 34,754 Total current assets347,696 1,144,400 Long-term investments412,541 216,233 Property and equipment, net168,735 204,383 Goodwill617,690 615,093 Intangible assets, net56,638 78,333 Right of use assets26,568 18,838 Deferred tax assets145,807 167,524 Other assets28,964 20,612 Total assets$1,804,639 $2,465,416 Liabilities and stockholders' equity Current liabilities Accounts payable$18,187 $12,367 Deferred revenue58,906 56,273 Accrued liabilities73,133 70,234 Total current liabilities150,226 138,874 Long-term liabilities Convertible senior notes, net599,291 1,188,593 Long-term operating lease liabilities19,537 13,375 Other long-term liabilities2,236 7,985 Total long-term liabilities621,064 1,209,953 Total liabilities771,290 1,348,827 Commitments and contingenciesStockholders' equity: Preferred stock, $0.001 par value per share, 10,000,000 shares authorized, no shares issued and outstanding— — Common stock, $0.001 par value per share: 400,000,000 shares authorized; 115,671,820 and 126,473,827 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively116 126 Additional paid-in capital1,151,697 1,244,504 Accumulated other comprehensive loss(56,426)(57,488)Accumulated deficit(62,038)(70,553)Total stockholders' equity1,033,349 1,116,589 Total liabilities and stockholders' equity$1,804,639 $2,465,416 CHEGG, INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(in thousands, except per share amounts)(unaudited)Three Months Ended September 30,Nine Months Ended September 30,2023202220232022Net revenues$157,854 $164,739 $528,308 $561,704 Cost of revenues(1)83,575 45,203 180,137 145,972 Gross profit74,279 119,536 348,171 415,732 Operating expenses:Research and development(1)46,202 45,426 145,981 150,321 Sales and marketing(1)28,872 31,803 96,845 109,580 General and administrative(1)57,075 53,742 186,357 154,547 Total operating expenses132,149 130,971 429,183 414,448 (Loss) income from operations(57,870)(11,435)(81,012)1,284 Interest expense, net and other income, net:Interest expense, net(733)(1,525)(3,115)(4,738)Other income, net40,492 97,258 116,671 105,247 Total interest expense, net and other income, net39,759 95,733 113,556 100,509 (Loss) income before (provision for) benefit from income taxes(18,111)84,298 32,544 101,793 (Provision for) benefit from income taxes(172)167,264 (24,029)162,987 Net (loss) income$(18,283)$251,562 $8,515 $264,780 Net income (loss) per shareBasic$(0.16)$1.99 $0.07 $2.07 Diluted$(0.16)$1.23 $(0.24)$1.31 Weighted average shares used to compute net (loss) income per shareBasic115,407 126,132 119,001 128,166 Diluted115,407 148,045 121,876 151,221 (1) Includes share-based compensation expense as follows:Cost of revenues$598 $653 $1,685 $1,945 Research and development11,027 9,172 33,909 30,954 Sales and marketing2,435 2,771 7,116 11,176 General and administrative17,870 21,574 58,886 54,266 Total share-based compensation expense$31,930 $34,170 $101,596 $98,341 CHEGG, INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(in thousands)(unaudited) Nine Months Ended September 30, 20232022Cash flows from operating activities Net income$8,515 $264,780 Adjustments to reconcile net income to net cash provided by operating activities:Share-based compensation expense101,596 98,341 Other depreciation and amortization expense108,945 64,295 Deferred income taxes20,929 6,376 Gain on early extinguishment of debt(85,926)(93,519)Loss contingency7,000 — Operating lease expense, net4,535 4,746 Impairment of intangible asset3,600 — Loss from write-off of property and equipment3,578 3,117 Amortization of debt issuance costs2,610 4,084 Gain on foreign currency remeasurement of purchase consideration— (4,628)Tax benefit related to release of valuation allowance — (174,601)Print textbook depreciation expense— 1,610 Impairment on lease related assets— 3,411 Gain on textbook library, net— (4,976)Other non-cash items(389)619 Change in assets and liabilities, net of effect of acquisition of business: Accounts receivable(6,908)(2,259)Prepaid expenses and other current assets558 13,251 Other assets8,671 15,926 Accounts payable4,820 (1,728)Deferred revenue2,539 11,434 Accrued liabilities(6,149)(23,323)Other liabilities(9,810)(5,240)Net cash provided by operating activities168,714 181,716 Cash flows from investing activities Purchases of property and equipment(57,298)(79,242)Purchases of textbooks— (3,815)Proceeds from disposition of textbooks9,787 2,503 Purchases of investments(585,275)(534,008)Maturities of investments561,197 783,912 Proceeds from sale of investments238,681 — Purchase of strategic equity investment(11,853)(6,000)Acquisition of business, net of cash acquired— (401,125)Net cash provided by (used in) investing activities155,239 (237,775)Cash flows from financing activities Proceeds from common stock issued under stock plans, net3,108 4,558 Payment of taxes related to the net share settlement of equity awards(13,857)(12,776)Repurchases of common stock(186,368)(323,528)Repayment of convertible senior notes(505,986)(401,203)Proceeds from exercise of convertible senior notes capped call297 — Net cash used in financing activities(702,806)(732,949)Effect of exchange rate changes(379)4,628 Net decrease in cash, cash equivalents and restricted cash(379,232)(784,380)Cash, cash equivalents and restricted cash, beginning of period475,854 855,893 Cash, cash equivalents and restricted cash, end of period$96,622 $71,513 Nine Months Ended September 30, 20232022Supplemental cash flow data:Cash paid during the period for: Interest$741 $875 Income taxes, net of refunds$8,368 $5,530 Cash paid for amounts included in the measurement of lease liabilities:Operating cash flows from operating leases$7,037 $6,908 Right of use assets obtained in exchange for lease obligations:Operating leases$12,407 $7,603 Non-cash investing and financing activities: Accrued purchases of long-lived assets$5,879 $4,101 September 30,20232022Reconciliation of cash, cash equivalents and restricted cash:Cash and cash equivalents$94,419 $69,349 Restricted cash included in other current assets60 63 Restricted cash included in other assets2,143 2,101 Total cash, cash equivalents and restricted cash$96,622 $71,513 CHEGG, INC.RECONCILIATION OF NET (LOSS) INCOME TO EBITDA AND ADJUSTED EBITDA(in thousands)(unaudited)Three Months Ended September 30,Nine Months Ended September 30,2023202220232022Net (loss) income$(18,283)$251,562 $8,515 $264,780 Interest expense, net733 1,525 3,115 4,738 Provision for (benefit from) income taxes172 (167,264)24,029 (162,987)Print textbook depreciation expense— — — 1,610 Other depreciation and amortization expense(1)56,918 22,374 108,945 64,295 EBITDA39,540 108,197 144,604 172,436 Print textbook depreciation expense— — — (1,610)Share-based compensation expense31,930 34,170 101,596 98,341 Other income, net(40,492)(97,258)(116,671)(105,247)Acquisition-related compensation costs209 4,282 6,086 10,989 Content and related assets charge(1)7,647 — 7,647 — Restructuring charges— — 5,704 — Loss contingency— — 7,000 — Transitional logistics charges— 628 253 2,197 Impairment of lease related assets— — — 3,411 Adjusted EBITDA$38,834 $50,019 $156,219 $180,517 (1) The total content and related assets charge is $41.8 million consisting of $34.2 million of accelerated depreciation included within other depreciation and amortization expense and $7.6 million of the remaining associated charges included within content and related assets charge.CHEGG, INC.RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES(in thousands, except percentages and per share amounts)(unaudited)Three Months Ended September 30,Nine Months Ended September 30,2023202220232022Cost of revenues$83,575 $45,203 $180,137 $145,972 Content and related assets charge(38,242)— (38,242)— Amortization of intangible assets(3,138)(3,686)(9,859)(11,112)Share-based compensation expense(598)(653)(1,685)(1,945)Acquisition-related compensation costs(5)(7)(17)(29)Restructuring charges— — (12)— Transitional logistics charges— (628)(253)(2,197)Non-GAAP cost of revenues$41,592 $40,229 $130,069 $130,689 Gross profit$74,279 $119,536 $348,171 $415,732 Content and related assets charge38,242 — 38,242 — Amortization of intangible assets3,138 3,686 9,859 11,112 Share-based compensation expense598 653 1,685 1,945 Acquisition-related compensation costs5 7 17 29 Restructuring charges— — 12 — Transitional logistics charges— 628 253 2,197 Non-GAAP gross profit$116,262 $124,510 $398,239 $431,015 Gross margin %47 %73 %66 %74 %Non-GAAP gross margin %74 %76 %75 %77 %Operating expenses$132,149 $130,971 $429,183 $414,448 Share-based compensation expense(31,332)(33,517)(99,911)(96,396)Amortization of intangible assets(2,935)(2,843)(8,823)(8,631)Acquisition-related compensation costs(204)(4,275)(6,069)(10,960)Content and related assets charge(3,600)— (3,600)— Restructuring charges— — (5,692)— Loss contingency— — (7,000)— Impairment of lease related assets— — — (3,411)Non-GAAP operating expenses$94,078 $90,336 $298,088 $295,050 (Loss) income from operations$(57,870)$(11,435)$(81,012)$1,284 Share-based compensation expense31,930 34,170 101,596 98,341 Amortization of intangible assets6,073 6,529 18,682 19,743 Acquisition-related compensation costs209 4,282 6,086 10,989 Content and related assets charge41,842 — 41,842 — Restructuring charges— — 5,704 — Loss contingency— — 7,000 — Transitional logistics charges— 628 253 2,197 Impairment of lease related assets— — — 3,411 Non-GAAP income from operations$22,184 $34,174 $100,151 $135,965 Three Months Ended September 30,Nine Months Ended September 30,2023202220232022Net (loss) income$(18,283)$251,562 $8,515 $264,780 Share-based compensation expense31,930 34,170 101,596 98,341 Amortization of intangible assets6,073 6,529 18,682 19,743 Acquisition-related compensation costs209 4,282 6,086 10,989 Amortization of debt issuance costs622 1,305 2,610 4,084 Gain on early extinguishment of debt(32,149)(93,519)(85,926)(93,519)Content and related assets charge41,842 — 41,842 — Income tax effect of non-GAAP adjustments(7,081)— (7,265)— Restructuring charges— — 5,704 — Loss contingency— — 7,000 — Tax benefit related to release of valuation allowance— (174,601)— (174,601)Transitional logistics charges— 628 253 2,197 Impairment of lease related assets— — — 3,411 Non-GAAP net income$23,163 $30,356 $99,097 $135,425 Weighted average shares used to compute net (loss) income per share, diluted115,407 148,045 121,876 151,221 Effect of shares for stock plan activity198 — 424 — Effect of shares related to convertible senior notes10,280 — 10,378 — Non-GAAP weighted average shares used to compute non-GAAP net income per share, diluted125,885 148,045 132,678 151,221 Net (loss) income per share, diluted$(0.16)$1.23 $(0.24)$1.31 Adjustments0.34 (1.02)0.99 (0.41)Non-GAAP net income per share, diluted$0.18 $0.21 $0.75 $0.90 CHEGG, INC.RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW(in thousands)(unaudited)Nine Months Ended September 30,20232022Net cash provided by operating activities$168,714 $181,716 Purchases of property and equipment(57,298)(79,242)Purchases of textbooks— (3,815)Proceeds from disposition of textbooks9,787 2,503 Free cash flow$121,203 $101,162 CHEGG, INC.RECONCILIATION OF FORWARD-LOOKING NET INCOME TO EBITDA AND ADJUSTED EBITDA(in thousands)(unaudited)Three Months Ending December 31, 2023Net income$9,400 Interest expense, net500 Provision for income taxes6,300 Other depreciation and amortization expense21,300 EBITDA37,500 Share-based compensation expense33,000 Other income, net(7,700)Acquisition-related compensation costs200 Adjusted EBITDA*$63,000 * Adjusted EBITDA guidance for the three months ending December 31, 2023 represent the midpoint of the range of $62 million to $64 million, respectively. |
0001096906-25-001173:bsai_ex99z1.htm | 0001096906-25-001173 | 1,416,090 | 1,416,090 | BLUSKY AI INC. (BSAI) (CIK 0001416090) | ['BSAI'] | 8-K | 8-K | 2025-07-23 | 2025-07-22 | 000-55219 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=000-55219&action=getcompany | 251,142,571 | EX-99.1 | PRESS RELEASE DATED JULY 22, 2025 | 7.01,9.01 | https://www.sec.gov/Archives/edgar/data/1416090/000109690625001173 | https://www.sec.gov/Archives/edgar/data/1416090/000109690625001173/0001096906-25-001173-index.html | https://www.sec.gov/Archives/edgar/data/1416090/000109690625001173/bsai_ex99z1.htm | EX-99.1 2 bsai_ex99z1.htm PRESS RELEASE DATED JULY 22, 2025 FOR IMMEDIATE RELEASE BluSky AI Inc. Appoints Andrea Huels as Chief AI and Growth Officer Salt Lake City, Utah — July 22, 2025 (GLOBE NEWSWIRE) — BluSky AI Inc., a pioneer in modular AI infrastructure, proudly announces the appointment of Andrea Huels as Chief AI and Growth Officer. A globally recognized thought leader in artificial intelligence, Huels brings over 20 years of innovation leadership, including more than a decade driving AI strategy and adoption across Fortune 500 companies and building ecosystems that span infrastructure, edge, and enterprise applications. Huels previously led Lenovo’s Enterprise AI business in North America and held strategic roles at General Electric, ExxonMobil, and Dematic. In addition to her enterprise experience, she was a founding executive at Vody, a generative AI startup, and RadiusAI, a computer vision company. Recognized as one of the 50 Most Powerful Women in Technology, a Top 200 Business and Technology Innovator, and a Women Leader of Conversational AI, Huels is widely regarded as a leader in the field. Her expertise spans applied AI, edge computing, and go-to-market strategy, making her a formidable force in shaping the future of AI infrastructure. “Andrea’s arrival marks a defining moment for BluSky,” said Trent D’Ambrosio, CEO of BluSky AI Inc. “Her vision, energy, and deep industry insight will help us scale with precision and purpose. She doesn’t just understand AI—she knows how to build ecosystems that move markets. We’re thrilled to have her leading our next chapter.” In her new role, Huels will spearhead BluSky’s AI strategy, growth initiatives, and ecosystem partnerships, with a focus on expanding the company’s SkyMod modular data center deployments and advancing ESG-aligned innovation. “I’m excited to join BluSky at such a pivotal time,” said Huels. “AI infrastructure is becoming the most critical layer of the modern technology stack. As generative models advance and real-world adoption scales, demand for compute, power, and purpose-built capacity will become the defining force behind the next wave of technological progress. BluSky’s modular platform is ready to meet that demand, enabling organizations to deploy AI infrastructure faster, more efficiently, and where it’s needed most.” BluSky AI Inc. continues to redefine the future of compute with its plug-and-play SkyMod units, designed for rapid deployment, energy efficiency, and community-conscious design. Trent D’Ambrosio CEO, BluSky AI Inc. trentdambrosio@bluskyaidatacenters.com www.bluskyaidatacenters.com About BluSky AI Inc. Headquartered in Salt Lake City, Utah, BluSky AI Inc. delivers modular, rapidly deployable data center infrastructure purpose-built for artificial intelligence. These next generation scalable AI Factories provide speed-to-market, and energy optimization for entities requiring high-performance infrastructure to support machine learning workloads. BluSky AI empowers small, mid-sized, enterprise, and academic partners from start-up to scale-up to drive innovation without compromise. Forward-Looking Statements: This news release includes certain forward-looking statements or information. All statements other than statements of historical fact included in this release are forward-looking statements that involve various risks and uncertainties. Forward-looking statements in this news release include statements with respect to the potential impact for the Company. There can be no assurance statements will prove to be accurate and actual results and future events could differ materially from anticipated in such statements. BluSky AI Inc. disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events except as required by applicable securities legislation. |
0001193125-23-229092:d539142dex993.htm | 0001193125-23-229092 | 1,843,714 | 1,843,714 | Andretti Acquisition Corp. (ZPTA, ZPTAW) (CIK 0001843714) | ['ZPTA', 'ZPTAW'] | 8-K | 8-K | 2023-09-06 | 2023-09-06 | 001-41218 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-41218&action=getcompany | 231,237,838 | EX-99.3 | EX-99.3 | 1.01,7.01,9.01 | https://www.sec.gov/Archives/edgar/data/1843714/000119312523229092 | https://www.sec.gov/Archives/edgar/data/1843714/000119312523229092/0001193125-23-229092-index.html | https://www.sec.gov/Archives/edgar/data/1843714/000119312523229092/d539142dex993.htm | EX-99.3 6 d539142dex993.htm EX-99.3 EX-99.3 Exhibit 99.3 Zapata AI Business Combination with Andretti Acquisition Corp. Investor Conference Call Script September 6, 2023 Operator Good day, and welcome to the Zapata AI Business Combination with Andretti Acquisition Corp. Announcement Conference Call. All participants will be in listen-only mode for the entirety of the call. Before we begin, we remind you that certain comments made during this call may constitute forward-looking statements which are subject to significant risks and uncertainties that could cause the combined companies actual results to differ materially from expectations or historical performance. Please review the disclosure on forward looking statements included in Andretti Acquisition Corp.’s filings with the SEC for a discussion on these risks and uncertainties. A recorded replay of this call and related materials will be available on the Zapata investor page. Please be advised that statements are current only as of the date of this call and, while Andretti may choose to update these statements in the future, it is under no obligation to do so unless required by applicable law or regulation. The comments made during this call are copyrighted by Andretti. I will now turn the call over to Mr. Bill Sandbrook, Co-Chief Executive Officer and Chairman of Andretti Acquisition Corp. Please go ahead. Bill Sandbrook, Co-Chief Executive Officer & Chairman of the Board, Andretti Acquisition Corp. Thank you for joining us today. The team at Andretti Acquisition Corp. is incredibly excited about our proposed business combination announced with Zapata AI. I will touch on why we see this as a compelling acquisition, at a foundational time, before turning to Michael to say a few words on his and Andretti Autosport’s experience with Zapata’s technology in action. We see four main pillars for this transaction: 1. Generative AI is quickly expanding at a seemingly exponential rate across multiple verticals. 2. Zapata is a first mover in Generative AI 3. Zapata delivers products and solutions that are tailor-made for the specific needs and costs of their business customers 4. The transaction is aligned with Andretti Acquisition Corp’s goal of pushing emerging technologies into mobility, which stems from Michael Andretti’s visionary leadership of leveraging technology within motorsports. 1 To briefly elaborate. You have likely heard the buzz around Generative AI – it seems to be “the” focus of Big Tech, with some eye-popping estimates around its future Total Addressable Market, or TAM, size. It has been a topic of significant discussion during the past few earnings seasons, with Big Tech noting the positive impact it is having on their business outlooks. As a fun fact, Alphabet, the parent company of Google, mentioned AI an eye-catching 70 times1 on its July earnings call. The Zapata team will elaborate more on market size in a few minutes, but we think it is very important to note that generative AI’s applicability spans across many, many verticals and industries, including areas like automotive, pharmaceuticals, and finance, just to name a few. Building on this, Zapata is a well-known and respected first-mover in the Generative AI space, with some of the brightest scientists, engineers, and developers in the business, and an existing revenue base from some impressive Fortune 1000 customers and the U.S. Government. They’ve been working on Generative AI since 2018, with a strong patent portfolio. You’ll hear more on this from the Zapata team too. Further, the Zapata team is tackling the unique challenges posed by enterprises by deploying an Industrial AI tool. Businesses have very different needs from those of consumers. By combining, among other differentiating features, their background in quantum computing with their work in Generative AI, they can deliver products and solutions that are tailor-made for the specific needs and costs of their business customers. This very much fits in with our mission of identifying a company that displays technological leadership – a company with a business model that addresses or creates a market need that other companies have not. Lastly, Zapata is putting their tech into practice right in the “wheelhouse” of the Andretti brand – mobility, specifically motorsports — through their partnership with Andretti Autosport in the NTT INDYCAR Series. Pushing the limits of technology is key to success in motorsports, which has long been a part of the Andretti vision. As one such example, look no further than the formation of Andretti Technologies in 2015 to build electric powertrains for Formula E while the all-electric series was still in its infancy. For this reason, one of our goals with Andretti Acquisition Corp from day one has been to identify a partner that is pushing emerging technologies into mobility and, to the extent possible, motorsports. Zapata could not check this box any more firmly. The Zapata and Andretti Autosport teams entered into a commercial relationship in early 2022 to seek out ways to enhance results in their INDYCAR Program through Zapata’s advanced analytics. The partnership is strong and continues to build today, and who better to say a few words on it than Michael Andretti himself, so Michael, over to you. 1 https://www.pymnts.com/google/2023/google-reports-7-out-of-10-generative-ai-unicorns-are-cloud-customers/ 2 Michael Andretti, Co-Chief Executive Officer & Director, Andretti Acquisition Corp. Thank you, Bill. We are thrilled to announce this acquisition today. As Bill noted, I originally became aware of Zapata and their capabilities by having them as a technology partner with Andretti Autosport in the NTT INDYCAR SERIES. The relationship with Zapata on the Andretti Autosport side started in 2021. In February 2022, we announced a multi-year partnership with Zapata, including brand sponsorship and a multi-million-dollar agreement to use their enterprise software platform, Orquestra. In motorsports, every hundredth of a second counts, and every strategic decision counts. Races can be won or lost due to pit strategy and the timing of yellow flags. By deploying Orquestra in our racing operations, we believe we will be able to realize a real-time performance edge on race day. As an expert in their technology, I will let Christopher Savoie, CEO and Co-founder of Zapata, give more color on how they are helping us with their technology in a few minutes. Put simply, with Zapata, we are racing toward a winning future with generative AI. We are excited to bring the company and awareness of their technology to the public markets at what is an incredibly exciting time for generative AI. So with that said, let me turn the mic over to Christopher. Christopher? Christopher Savoie, Chief Executive Officer & Co-Founder, Zapata AI Thank you, Michael, Bill, and the team at Andretti Acquisition Corp., and hello to everyone listening in. Zapata AI is an enterprise software company building Industrial Generative AI. Industrial generative AI is similar to consumer generative AI tools like ChatGPT that generate text and images. But it’s tailored to enterprise use cases, taking the generative models behind these popular tools, and applying them to critical, industrial-scale applications involving both language and other forms of data. I’ll get into some examples in just a minute. Zapata has been working on generative AI since long before applications like ChatGPT even existed. Our first generative AI patent was filed in 2018. 3 Since then, we have built two core offerings: • The first is Zapata AI Prose: a set of large language model-based generative AI solutions similar to widely used generic chat applications but customized to an enterprise’s industry and its unique problems. Prose can help companies speed up time-consuming language tasks like filing for regulatory approvals or patents, filling in customs forms, or creating documents or reports. • We’ve also built a complementary solution called Zapata AI Sense that can handle complex mathematical models – something that is ubiquitously important for industry but somewhat under-appreciated due to the recent generative AI boom. Sense can help enterprise leaders make smarter decisions by enriching their business analytics with realistic, generated data to fill in the existing gaps in their data — including for variables that are not otherwise measurable. We’ll touch on the importance of this shortly with an example from our work with Andretti. Our generative AI solution set is “industrial”, meaning it is meant for use in a business context to address specific challenges or improve efficiencies. Again, this is not really the case with chatbot-like applications today. The stakes are much higher when doing things for business, which I will elaborate on in a bit as well. All of this is provided over our full-stack enterprise software platform — Orquestra — which allows us to train and deliver our complex models over various cloud solutions, including Azure Cloud, AWS Cloud, and others. One of Orquestra’s most impactful benefits is its flexibility, which allows our customers to experiment with different models on different types of computer hardware — and NOT be locked into any one specific cloud provider, which they tell us is very important to them. To date, we have worked with customers across various industries, including automotive, oil and gas, chemicals, and finance, to name a few. Our customers have included the likes of BASF, BP, the global bank BBVA, and DARPA, which is the innovation arm of the Department of Defense, and, of course, Andretti Autosport. Before getting into Zapata’s enterprise offering, I want to describe the basics of generative AI for anybody who has yet to sample a product like ChatGPT. Generative AI technology is a huge step forward compared to “traditional” AI. At a simple level, traditional AI answers a specific question or performs a relatively simple, or straightforward discriminative task. Generative AI, however, uses machine learning to generate what is, in effect, a new, original output or product. It will synthesize various inputs to distill and produce an original, creative output that is not just a regurgitation of the data it was trained on. For example, in a matter of seconds, it can draft a multi-paragraph answer to explain a concept with varying degrees of specificity depending on how the question was asked. Compare this to a search engine like Google simply pointing you to various sources, from which you would then have to synthesize and distill the information yourself. 4 This works well enough—most of the time. But as we all know, what seems like a simple inquiry can sometimes consume more time than any of us would like. While society has seen rapid growth in and awareness of generative AI among the general public due to applications like ChatGPT, it is essential to note that for Zapata, this is not an “overnight thing.” Since our first generative AI patent filing in 2018, Zapata has been, in effect, in a dead heat with its competitors in terms of the number of quantum-inspired AI patent applications on file. A 2021 insight report from the European Patent Office with a breakdown for most active applicants related to quantum computing and artificial intelligence /machine learning showed Zapata had nearly twice as many international patent application filings as Meta or Google that year. We have over 100 global patents and patent applications, covering various algorithms, use cases, and supporting software and hardware. We believe there isn’t any startup or other company out there that’s a pure play in this category, and none are in the process of going public aside from Zapata. One of the most important takeaways I want to leave you with is this: the applicability of industrial generative AI technology is truly vast. I say this because companies across the globe — and sectors — recognize this trend and are racing to find the “killer app” for industrial generative AI. Executive decision-makers are eager to know how to leverage this technology to improve their businesses. This is evidenced by a Gartner Poll from this past May that revealed that 45% of executives have noted that the deployment of ChatGPT merely six months earlier had prompted an increase in AI investment. More than 70% are actually in generative AI “exploration mode” already. We are experiencing this momentum every day at Zapata. As awareness and the popularity of Generative AI have drastically increased in the past few months, there has simultaneously been a significant increase in interest from — and conversations with — current and potential future customers. All that said, there are still several significant challenges with scaling up and commercializing generative AI “as is” today. From where we stand, it appears that Big Tech has, to this date, been focused on one-size-fits-all generative AI models that are trained on the entire internet and on general data. This means tremendous applicability in a consumer setting, but we don’t think it can really work in most business settings — at least not the way this technology is structured today: • For one, the potential for errors and inaccuracies is too high, which is unacceptable in many business contexts. For example, recent research found that GPT-4, the more powerful model behind the paid version of ChatGPT, has seen its mathematical accuracy drop from 97.6% in March to 2.4% in June2. 2 https://www.zdnet.com/article/gpt-4-is-getting-significantly-dumber-over-time-according-to-a-study/ 5 • Secondly, the costs can be enormous when you factor in how much compute time and resources are required to run and train large generative models. For example, a model like GPT-3 costs around $4.6 million to train on the cheapest available compute3, and the more powerful GPT-4 likely costs significantly more than that. • There are also legitimate issues around privacy and security, monitoring, ethics, and so on. Samsung, for instance, has banned staff from using ChatGPT after a leak of sensitive data4. Said differently, we believe businesses do not need massive, costly, inefficient generative AI models trained on the internet to do very specific, customized applications. They do not want general-purpose models with unreliable outputs for their domain-specific problems. They also do not — by and large — want to be locked into a single vendor’s compute and cloud choices. Rather, we believe enterprises want to keep their own data and their own models… they want to run these models on their own clouds and with their own security measures. They don’t want to worry that a Big Tech generative model trained on their private data and IP will expose this sensitive information or have it used against them by competitors. They want complete control over their generative AI applications, data, and models. This is where Zapata’s value proposition really comes into play. Put simply, we have developed a suite of custom industrial generative AI solutions that can harness the power of language and numerical models for critical, sensitive industrial-grade applications. Our solutions are fine-tuned for our customers’ domain-specific problems, optimized for cost, benchmarked to the highest level of accuracy and business impact possible, and run securely in our customers’ own environments. So, with that said, let’s dive a little deeper into our technology to demonstrate its advantages for generative AI. Our technology is derived from math-inspired quantum physics. And if you’re thinking, “You mean, like electrons and photons and things like that?” — you would be correct. The hard part is turning that discipline of physics into useful technology. Fortunately, our work in this area has many transferable and positive implications for generative AI. Being experts at quantum math —another one of Zapata’s differentiators given the robust staff of PhDs and physicists we employ — allows us to enhance key, desirable qualities of generative models. Namely, quantum statistics can enhance generative models’ ability to generalize — or extrapolate missing information and generate new, high-quality information — as well as their ability to generate a more varied range of solutions. This is called “expressibility”. 3 https://lambdalabs.com/blog/demystifying-gpt-3 4 https://www.bloomberg.com/news/articles/2023-05-02/samsung-bans-chatgpt-and-other-generative-ai-use-by-staff-after-leak#xj4y7vzkg 6 We recently demonstrated the advantages of quantum math for generative AI in research published with Foxconn, Insilico Medicine, and the University of Toronto — with significant implications for drug discovery. Our research showed that generative models enhanced with quantum components generated more desirable drug-like molecules than those generated by traditional generative models. Our technology is also efficient. Large language models, as the name suggests, are huge. This means they can use many computer processing resources — typically powered by Graphics Processing Unit chips, or GPUs as they are commonly called. These specialized chips are required to train and run models with the size and complexity of LLMs. And with GPUs comes high costs and large carbon footprints. We believe we have the largest language model compressed with quantum-inspired algorithms, and this ultimately means that Zapata will be able to deliver high-quality and significantly more cost effective and environmentally friendly products and solutions. Another very important factor is speed. A good example of an application that we can speed up is what’s called a Monte Carlo simulation. This is a type of model used to predict the probability of a variety of outcomes when the potential for random variables is present. It can be used across a variety of fields — examples include in finance to assess risks associated with an investment; and in project planning to arrive at informed views on the probability of completing a project within a certain timeframe. At Zapata, we have demonstrated an example whereby we ran very complex scenarios on both our technology and via a traditional Monte Carlo simulation. As part of our testing, we determined that our approach was 8400X faster — with the Zapata method arriving at a solution in three seconds versus the seven hours it took using the Monte Carlo model. We have found that the quantum inspired method is thousands of times faster and it is also more accurate. We understand this can be a challenging topic for many to fully understand and process, so let’s turn to some real-world examples of where this technology can be used. As touched on earlier, the origin of our relationship with Andretti Acquisition Corp is the strong partnership Zapata has had with Andretti Autosport for the past two seasons. There is no better or more exciting way to provide an example of real-world applicability than this unique and, frankly, fun case study, so here it goes. As any motorsports enthusiast knows, race cars are incredibly technologically advanced, and data is critical to performance. Races are often won or lost — sometimes by just milliseconds — based on strategy, and strategy relies on data. An INDYCAR is outfitted with many sensors that gather real-time data, including factors critical to performance. However, not everything important to performance can be measured in real-time with sensors while a car moves around a racetrack at speeds exceeding 200 miles per hour. 7 One such example of helpful information that cannot be measured via sensors is the slip angle of a car, which describes where the car is slipping while the car is lapping the track. This is important to understand how fast the vehicle will go around a given track and certain aspects such as tires may perform as a result. When the vehicle turns left, the car wants to go to the right because of the centrifugal force, which is extremely pronounced at high speeds. And other factors like downforce and the shock absorbers also alter the slip angle of the tires. The exact degrees of these various forces and how they evolve over a tire cycle impact tire performance, and thus impact lap time over that period. Knowing exactly how the tires are performing or how the slip angle is affecting the speed with sensors in real-time is impossible, but being able to accurately predict the slip angle with generative modeling could inform the team when the optimal time is to make a pit stop to change the tires, for example — and if there are adjustments to the car’s set-up that can be made to potentially improve tire performance and lap speed. With Zapata’s industrial generative AI offering, we are working to generate virtual sensors that gather this critical data that is otherwise unattainable in real-time, race-day conditions. Andretti Autosport’s team has collected terabytes of data over twenty years, and using generative models, the Zapata platform is working to accurately model the performance of the vehicle. In fact, when reviewing the data, the Andretti and Zapata teams have found that there is hardly any difference between the Zapata-predicted data – also known as synthetic data — and the actual performance data from the cars – with a less than 1% difference between the synthetic data from the generative model and the real data gathered. As you might imagine, the potential competitive edge allowed by having more accurate predictive models is most certainly game-changing. Zapata’s technology can also be used to suggest new solutions to industrial optimization problems, particularly when making complex industrial processes more efficient. Our proprietary technique, which we call Generator Enhanced Optimization, or GEO, uses generative models to learn the distributions of possible solutions and then propose better solutions. These generative models can use traditional computing — or what we call “classical computing” — quantum computing, or quantum-inspired architectures, thus providing a way to solve problems today with traditional and quantum-inspired computing and take advantage of the potential benefits of quantum approaches as quantum hardware matures. A helpful example of this in practice can be found in manufacturing plant optimization and the work we’ve done with BMW and MIT. 8 Automotive manufacturing is incredibly complex, with hundreds of parts from various suppliers, skilled labor trained to perform specific functions, and various union and labor laws that dictate when and how much employees can work. Given these multiple inputs that all need to be synced together, inefficiencies and lost productivity can quickly become a severe problem. Because of this, finding the most efficient worker schedules to achieve production targets while minimizing idle hours is imperative for plant managers. By partnering with BMW and MIT and deploying our GEO framework on our Orquestra platform across multiple BMW plants, we found that in 71% of cases, our algorithms could tie or outperform their existing state-of-the-art optimization algorithms, demonstrating that we can help them optimize their scheduling. As touched on earlier, we already work with — or have worked with — several very large and well-known companies across the automotive, chemicals, and finance industries, to name a few. To elaborate on the market and our go-to-market strategy, I’d like to now turn the call over to Mick Emmett, VP, Marketing & Communications. Please go ahead, Mick. Mick Emmett, VP, Marketing & Communications, Zapata AI Thank you, Christopher. When evaluating the market, it is imperative, we believe, to understand the potential benefit from generative AI in estimated dollar terms. The total addressable market for generative AI use cases and their adjacencies is expected to be $1.3 trillion by 2032, which includes a potential serviceable obtainable market of $280 billion in generative AI software and $86 billion in generative AI IT services. Even if off by an order of magnitude, this still represents a HUGE Total Addressable Market – or TAM, and serviceable obtainable market – or SOM. So, within that context, how will Zapata AI grow its business? We have two primary sales channels — a direct channel, where we approach companies with C-level relationships – and through a partner ecosystem. Today, we have a global salesforce in the U.S., Europe, and Asia, but we cannot be in the market speaking to every company – that would be impossible. As such, we have partnered with companies such as Microsoft Azure, IBM, and Nvidia, to name a few, as well as a top-5 global consultancy company to amplify our reach. In our view, the business model and how we generate revenues is straightforward. We sell our product as a bundled subscription of software and the scientific and engineering expertise and support necessary to build applications. If we can demonstrate the value of our technology, we convert these engagements into multi-year, multi-million-dollar contracts through a subscription model. We believe Zapata has credible industry and academic backing. You will see us at many academic and industrial conferences, discussing how we build our brand through various customer success stories. That said, given how hot the generative AI niche is, we must be prepared for this to be a competitive environment. 9 Turning to the Zapata team: we are proud of the people driving Zapata forward. Even before our proposed business combination came into being, we had — and currently have — a public-ready board comprised of operators and people with rich histories in the enterprise software industry. Some notable individuals include: • Jeff Huber, founding CEO of GRAIL and former SVP of Google Ads, Apps and Maps • Clark Golestani, the former Global CIO at Merck • Rhonda Germany Ballintyn, former Chief Marketing Officer and Chief Strategy Officer of Honeywell • Dana Jones, CEO of RealPage and the former CEO at Sparta Systems, a life sciences-focused next gen Software as a Service company that sold to Honeywell a few years ago To conclude, we believe Zapata is a pure-play company within the burgeoning and transformational industrial generative AI technology space. Through the proposed business combination with Andretti Acquisition Corp., we can become what we believe would be the first publicly traded, pure-play, industrial generative AI company. In a large and rapidly growing total addressable market, we have proprietary, industrial generative AI techniques and algorithms that we believe are at the leading edge of these new frontiers. Based on our data, we have determined that they are capable of demonstrating a 10X to 1000X improvement in modeling performance, and Zapata brings its proprietary, full-stack software platform to deliver these solutions. We believe we have substantial near-term enterprise revenue opportunities with large language models and other models in AI simulation and optimization and a pioneering, founder-led, and visionary management team and board with a track record of execution. With that said, I would now like to turn the call over to Matt Brown, President & CFO of Andretti Acquisition Corp., to provide a brief high-level overview of the transaction. Matt, please go ahead. Matt Brown, President & Chief Financial Officer, Andretti Acquisition Corp. Thank you, Mick. The transaction we are announcing today values Zapata at an implied pre-money equity value of $200 million, with existing Zapata shareholders set to roll over 100% of their equity into the combined entity. Andretti Acquisition Corp.’s sponsors and certain investors that own or have the right to receive founder shares will own a combined 5.8 million shares or an implied value of approximately $58 million. Andretti Acquisition Corp’s current public shareholders will own the remaining outstanding shares with the amount depending on the level of redemptions. 10 Andretti Acquisition Corp today has approximately $84 million in cash in trust at a $10.66 per share price, or approximately 7.9 million shares. Putting this all together, the pro forma equity value of the combined company is expected to be between $281 million and $365 million depending on the level of redemptions. We expect to incur approximately $12 million in transaction-related expenses. Lastly, we expect the transaction to close in the first quarter of 2024, with various factors outside of our control, such as the timing of the SEC review and approval process. All of us at Andretti Acquisition Corp. and Zapata are excited to bring this transaction to market, and we would like to thank you for your time today. We hope that you follow us along our journey in the coming months. Have a great day. Operator Thank you, you may now disconnect. 11 |
0001213900-25-068307:ea025051201ex99-1_linkhome.htm | 0001213900-25-068307 | 2,017,758 | 2,017,758 | Linkhome Holdings Inc. (LHAI) (CIK 0002017758) | ['LHAI'] | 8-K | 8-K | 2025-07-28 | 2025-07-23 | 001-42652 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-42652&action=getcompany | 251,156,705 | EX-99.1 | PRESS RELEASE OF THE COMPANY DATED AS OF JULY 24, 2025 | 1.01,7.01,9.01 | https://www.sec.gov/Archives/edgar/data/2017758/000121390025068307 | https://www.sec.gov/Archives/edgar/data/2017758/000121390025068307/0001213900-25-068307-index.html | https://www.sec.gov/Archives/edgar/data/2017758/000121390025068307/ea025051201ex99-1_linkhome.htm | EX-99.1 4 ea025051201ex99-1_linkhome.htm PRESS RELEASE OF THE COMPANY DATED AS OF JULY 24, 2025 Exhibit 99.1 Linkhome Holdings Inc. Announces Pricing of Upsized $6,000,000 Initial Public Offering Irvine, CA, July 24, 2025 (GLOBE NEWSWIRE) -- Linkhome Holdings Inc. (“Linkhome” or the “Company”) (Nasdaq: LHAI), a leading AI-powered real estate platform leveraging artificial intelligence and fintech to make homeownership simpler, faster, and more accessible for all Americans, today announced the pricing of its upsized initial public offering (the “Offering”). The Offering consists of 1,500,000 shares of common stock priced at a public offering price of $4 per share, for total gross proceeds of $6,000,000, before deducting underwriting discounts and offering expenses. The shares of common stock have been approved for listing on the Nasdaq Capital Market and are expected to commence trading on Jul 24, 2025, under the ticker symbol “LHAI.” The Company has granted the underwriters an option, within 45 days from the closing date of the Offering, to purchase up to an additional 225,000 shares of common stock at the public offering price, less underwriting discounts, to cover over-allotment, if any. The Offering is being conducted on a firm commitment basis. US Tiger Securities, Inc. is acting as the sole book-runner for the Offering. Winston & Strawn LLP is acting as U.S. counsel to the Company, and VCL Law LLP is acting as U.S. counsel to the underwriters, in connection with the Offering. The Company expects to deploy the net proceeds from this Offering primarily to broaden and intensify its marketing initiatives, accelerate the advancement of its HomeGPT artificial-intelligence platform and related technology, support the planned geographic rollout of its Cash Offer product, finance additional capital expenditures needed to scale operations., expand research and development, evaluate strategic opportunities and other working capital and general corporate purposes. Registration statements relating to these securities became effective on July 23, 2025. The Offering is being made only by means of a prospectus. Copies of the final prospectus related to the Offering may be obtained, when available, from US Tiger Securities, Inc. by email at ECM@ustigersecurities.com or via standard mail to US Tiger Securities, Inc.,437 Madison Avenue, FL 27, New York, NY 10022. In addition, a copy of the final prospectus, when available, can also be obtained via the U.S. Securities and Exchange Commission’s (the “SEC”) website at www.sec.gov. Before you invest, you should read the prospectus and other documents the Company has filed or will file with the SEC for more information about the Company and the Offering. This press release shall not constitute an offer to sell or the solicitation of an offer to buy the securities described herein, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction. About Linkhome Holdings Inc. Linkhome is an artificial-intelligence–driven property-technology company focused on redefining the residential real-estate experience. Through our proprietary real-estate AI model, HomeGPT, and a suite of integrated fintech solutions, we deliver an end-to-end platform that empowers consumers to buy, sell, finance, renovate, and manage homes with speed, transparency, and reduced cost. Operating initially through our licensed brokerage subsidiary, Linkhome Realty Group, we aggregate listings, data analytics, and transaction services on a single digital interface, enabling users to search properties, obtain interactive advice, schedule showings, calculate financing scenarios, and generate offers—all in real time. Our platform combines three core capabilities. First, HomeGPT leverages generative AI to provide data-driven pricing, bidding recommendations, and contract generation, materially streamlining agent and consumer workflows. Second, our proprietary Cash Offer product integrates fintech to convert a buyer’s offer into an all-cash proposal, increasing closing certainty for sellers while giving buyers a competitive edge in tight markets. Third, we offer complementary services— including brokerage, property management, home renovation, and mortgage referral—designed to create a seamless, one-stop real-estate solution. Sellers can also access our Flash Sell program, which allows homeowners to sell directly to Linkhome for cash, avoiding repairs, listing costs, and prolonged market exposure. Since initiating operations in 2021, Linkhome has facilitated more than $185 million in aggregate gross transaction value and, in 2024 alone, completed over $48 million in brokerage volume. We believe we are only at the beginning of AI’s transformative potential in real estate and plan to expand our technology, geographic footprint, and service offerings—such as title, mortgage, and insurance—to build the most trusted, scalable platform for residential property transactions across the United States. Guided by a mission to make homeownership simpler, faster, and more accessible for all, Linkhome seeks to empower millions of Americans with the confidence and capability to achieve their dream of owning a home. For more information, please visit https://ir.linkhome.com. Forward-Looking Statement This press release contains forward-looking statements. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts. When the Company uses words such as “may, “will, “intend,” “should,” “believe,” “expect,” “anticipate,” “project,” “estimate” or similar expressions that do not relate solely to historical matters, it is making forward-looking statements. These forward-looking statements include, without limitation, the Company’s statements regarding the expected trading of its shares of common stock on the Nasdaq Capital Market and the closing of the Offering. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties that may cause the actual results to differ materially from the Company’s expectations discussed in the forward-looking statements. These statements are subject to uncertainties and risks including, but not limited to, the uncertainties related to market conditions and the completion of the initial public offering on the anticipated terms or at all, and other factors discussed in the “Risk Factors” section of the registration statement filed with the SEC. For these reasons, among others, investors are cautioned not to place undue reliance upon any forward-looking statements in this press release. Additional factors are discussed in the Company’s filings with the SEC, which are available for review at www.sec.gov. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof. For investor and media inquiries, please contact: Investor and Media Contacts Linkhome Holdings Inc. Edward Frost Phone:(800) 680-9158 Email: Ir@linkhome.com Underwriter Inquiries: US Tiger Securities, Inc. 437 Madison Avenue, FL 27 New York, NY 10022 Email: ECM@ustigersecurities.com |
0001627475-23-000055:final_q323upworksharehol.htm | 0001627475-23-000055 | 1,627,475 | 1,627,475 | UPWORK, INC (UPWK) (CIK 0001627475) | ['UPWK'] | 8-K | 8-K | 2023-11-07 | 2023-11-07 | 001-38678 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-38678&action=getcompany | 231,383,737 | EX-99.1 | EX-99.1 | 2.02,8.01,9.01 | https://www.sec.gov/Archives/edgar/data/1627475/000162747523000055 | https://www.sec.gov/Archives/edgar/data/1627475/000162747523000055/0001627475-23-000055-index.html | https://www.sec.gov/Archives/edgar/data/1627475/000162747523000055/final_q323upworksharehol.htm | EX-99.1 2 final_q323upworksharehol.htm EX-99.1 final_q323upworksharehol Q3 2023 Shareholder Letter These include adding new features and functionality to the platform, bringing AI-enabled experiences and work to clients and talent, and engaging in valuable new partnerships that will deliver differentiated tools and resources to our customers to drive lasting shareholder value. One of our most ambitious growth goals is to foster the most AI-empowered independent professionals in the world. In pursuit of this, we greatly enhanced our AI Services hub, which has seen a 10x increase in average monthly visitors since its launch in the second quarter and, just yesterday, announced an extension of the hub with a new suite of generative AI apps, offers and educational content specially designed for talent. Our scale as the world’s work marketplace has aided us in creating a deep and diverse ecosystem of partners that span education, technology and special offers for clients and talent. New featured partnerships for AI-powered apps and offers for independent professionals include industry-leading companies like Adobe, Amazon, ClickUp and Miro that have advanced integration of generative AI into their tools and services, alongside educational AI skills-based courses and content from leading providers like Coursera, Jasper and Udemy that form a new Education Marketplace on Upwork Academy. We also launched limited access to Upwork Chat Pro, a new generative AI application embedded directly on Upwork’s platform and powered by GPT-4. Upwork Chat Pro utilizes unique insights from Upwork about independent professionals to provide specific, contextualized responses and recommendations that are relevant to the needs of professionals on Upwork, assisting them in starting, creating and completing projects more efficiently and effectively. In the third quarter of 2023, Upwork continued to drive durable, profitable growth, while advancing our position as the world’s work marketplace. We made significant progress on our goal to become the preeminent destination for AI-related talent and work, while also improving the efficiency, effectiveness, and speed to match on our platform through improvements to our core product experiences and capabilities. We achieved better-than-expected results across our financial goals, generating third-quarter 2023 revenue of $175.7 million, up 11% from a year ago. We recorded GAAP net income of $16.3 million and adjusted EBITDA of $31.2 million this quarter, demonstrating very rapid margin improvement compared to GAAP net loss of $(24.8) million and adjusted EBITDA loss of $(2.9) million in the third quarter of 2022. Our strong third-quarter adjusted EBITDA results are due to strong growth in revenue as well as the implementation of cost optimization programs across our business, resulting in unit cost improvements in transaction losses, sales and marketing, and other areas. Our focus on profitable growth has also strengthened our balance sheet, with cash from operating activities of $37 million in the third quarter. Due to our strong execution, we are raising our revenue and adjusted EBITDA guidance for 2023 to $680 million to $685 million in revenue, or 10% to 11% year-over-year growth, and $67 million to $71 million of adjusted EBITDA. We are also pleased to announce that our Board of Directors has approved a share repurchase program, with authorization to purchase up to $100 million of our outstanding shares of common stock. While we continue to capture opportunities for cost optimization, we also remain committed to investing in growth. We expect the third quarter to be the high point for adjusted EBITDA margin in 2023, as we continue to invest in near- and long-term growth opportunities. Dear Shareholders 2 With these initial steps, Upwork is progressing on our goal to be the next-generation platform for professionals and clients to get work done in the most advanced and efficient ways possible. Each new offering marks a step toward achieving our goal to become the preeminent destination for AI talent and work, and supports our conviction that the potent combination of humans and generative AI technologies unleashes potential that surpasses what humans or technology can achieve alone. We continue our work unlocking the vast opportunity in the Enterprise space with an increased focus on efficiency. Our Land team’s performance improved sequentially in the third quarter, adding 23 new Enterprise clients including notable new organizations like Dropbox, IT’SUGAR, Moderna, and Florida State University. We also drove substantive growth in our highest value cohort of customers, as the number of Enterprise clients in the third quarter spending $5 million or more over the trailing twelve months rose 43% quarter-over-quarter. We continue to be pleased with the progress we are making toward our long-term strategy of providing companies with the talent, skills and tools they need to get critical work done, through harnessing the power of generative AI on the platform; innovating on behalf of all our customers; optimizing our operations; and running our business to drive durable, profitable growth. We are on track to deliver a record year in 2023 in both revenue and adjusted EBITDA and believe we have set a steady course for sustained momentum and growth in the quarters ahead. 3 Career Innovator: Evan Fisher Evan Fisher is a pitch deck expert who has earned more than $1 million on Upwork helping his clients raise $5 billion total. With more than 14 years of capital markets experience, Evan has spent the majority of his career ensuring he is maximizing capital and profit, both for his customers and for his own business. Evan provided us with his take on Upwork’s recent pricing change: “It’s a win all around – and there’s never been a better time for beginners to get started on Upwork, and for existing freelancers to lean in heavily and up your game,” Evan says. ”Upwork has the most compelling value proposition to attract the best freelancers in the world,” Evan said. “Freelancers now have a better opportunity to excel and keep more of their earnings even if they’re early in their journey. A totally transparent fee structure that’s best in class, plus offering fast payments, plus being the largest talent marketplace makes Upwork a win. Finally, the impact on the top 1% of freelancers who are doing $10k+ projects won’t be big, and it’s an easy and quick fix to adjust. I bet most first-time Upwork clients will find that they love it, and more clients is a win for freelancers.” AI Enhancements That Benefit Our Customers We have strong conviction that growth opportunities in AI are a tailwind for our business, and providing access to new generative AI tools into the hands of our customers was again a top priority in the third quarter. We have continued advancing our approach to leveraging AI in three primary ways: 1. Innovating new AI-powered features and platform experiences across every category of work. 2. Giving talent on Upwork access to the most modern generative AI tools to supercharge their productivity and quality of work. 3. Serving clients with a singular destination for sourcing the full breadth of AI-focused talent they need. We focused on innovative ways to continue making professionals on Upwork the most AI-enabled talent in the world, which benefits talent’s productivity, quality of work and earnings, ultimately driving better outcomes for clients across all categories of work on our marketplace. By enabling professionals on Upwork to be even more efficient and effective, we continue to deepen and grow the pool of highly skilled talent that businesses can partner with and encourage repeat projects and client retention. Q3’23 Business Highlights 44 Along with the AI Services hub, we continue to add AI-based tools to better support clients in connecting with and evaluating talent, and support professionals in finding and securing work. The job post generator, which helps reduce friction for clients by aiding them in accurately describing their needs and increasing the speed with which they can post jobs, was released to new users and has continued to increase the quality of job posts and cut the time to post a job nearly in half for those using it. Early findings from the use of proposal tips, which aim to enhance the way professionals display their unique talent and differentiate themselves to win more work, show that freelancers using the tool secure work at a higher rate. The efficacy of these tools, along with our newly released Upwork Chat Pro, demonstrate our ability to integrate AI solutions directly into the most common workflows on our platform, rapidly improving our clients’ ability to post jobs and hire talent, and helping independent professionals find, land and complete projects 5 Career Innovator: Jennifer Davis Austin-based freelancer Jennifer Davis holds a PhD from Georgetown University. She currently works on Upwork as an AI and Machine Learning Consultant and teaches at Columbia University. Following a post-doctoral fellowship, Jennifer worked at the MD Anderson Cancer Center where she became very interested in supercomputing while conducting cancer research. She decided to accept a role with Accenture and fell in love with consulting. At IBM, she led teams and business development across the United States and Europe, oversaw and developed proposals for complex data science projects, and helped internally with the design of artificial intelligence products geared towards healthcare and pharmaceuticals. She was happy with what she was doing, but didn’t love traveling 80 percent of the time. That’s when she started finding work on Upwork. “Upwork was one of the best things that ever happened to me,” she said. Jennifer says her main focus on Upwork is helping customers solve problems that we “really can’t wait decades to solve.” That's where freelancers like Jennifer come in -- They are helping companies rethink the way they approach their biggest challenges and advance their most critical goals. Jennifer’s favorite type of client is one with a “blue sky project” that seems impossible but she knows isn't. “When it comes to AI, people think there’s no human in the loop. There is always going to be some human intervention in order for us to harness the power it offers,” Jennifer says. Ads Tools Lead to a More Efficient Marketplace We are building a Talent Marketplace that is efficient, equitable, and optimized for growth by matching talent and clients at scale to fill more jobs. We have been gradually building an ads products ecosystem to help high-intent talent find more personalized pathways to match with clients. We’re excited about the increased customer value and revenue growth we’ve seen from our ads products. The products introduced last year, such as Availability Badges and Boosted Proposals, have had clear and positive outcomes for those who use them. Talent using our Availability Badges have received 50% more invites, and clients are 62% more likely to get their invites accepted by these badged talent. The use of Boosted Proposals increases a boosted professional’s likelihood to get hired by 24%. Our suite of ads products is already leading to a more efficient and rewarding marketplace for our customers, and delivering significant opportunities to increase freelancer earnings and drive meaningful revenue growth for Upwork. Partnerships and Platform Improvements That Equip Talent and Fulfill Client Needs This year, we have worked to accelerate the expansion of our partner ecosystem. This lets Upwork engage in additive new partnerships that bring differentiated tools and value to our customers, generate new revenue streams and continue to attract high quality talent to our platform. 6 For example, our partnership with OpenAI announced in July provides clients with pre-vetted expert talent trained on OpenAI technologies. The partnership is delivering significant attention to our platform and attracting some of the top AI talent in the world, which is generating interest from companies operating on the cutting edge of implementing AI models. In the third quarter, we progressed our partnership strategy on equipping talent on Upwork with access to tools, certifications and education resources to help them win work, become force-multipliers and evolve into the world’s most AI-enabled independent professionals. In the third quarter, our newly launched partnerships included Adobe, Amazon, ClickUp, Coursera, Jasper, Miro, and Udemy, among others, differentiating Upwork by providing talent with access to a breadth of apps, offers and learning resources available on our platform. Learning and development opportunities via a new AI Education Library are critical to ensuring talent on Upwork are operating to their greatest potential. We see a strong correlation between completing an Upwork Academy learning path and getting hired. In fact, independent professionals who complete a learning path are up to three times more likely to be hired within a month of submitting their first proposal or project, compared to those who do not complete a learning path. Through these initiatives, Upwork is continuing to connect clients with faster, better and more flexible talent, while attracting skilled professionals by giving them access to the tools they want and need to supercharge their work, including training on how to fully leverage the tools provided through our platform. Beyond access to AI tools, partnerships and functionality, we continued to improve our core marketplace product in the third quarter by upgrading the search experience and implementing a full redesign of our client dashboard. The new dashboard provides personalized recommendations and actionable next steps, resulting in clients who used it spending over 5% more than those using the legacy version in early testing. Career Innovator: Megan Marcucci Megan Marcucci is a digital marketing project manager, content writer, and SEO expert, and a Top Rated Plus independent professional on Upwork. She first discovered Jasper while on boarding with a new client. “Our client had a high volume of duplicate product and meta descriptions—literally using the same description for hundreds and hundreds of products,” said Megan. “Our team needed to change the descriptions for these very specialized products while still capturing what the client wanted to say about each one. We couldn’t tell our writers to start from scratch, because they needed to have a baseline knowledge of each product. That’s one of the ways we really started leveraging Jasper. Instead of this project taking 2-3 weeks for the team to finish, it took us 2-3 days.” Jasper continues to make work more manageable for Megan, and helps free up her time to pursue other projects for her client. “I just went through a contract renegotiation with a client and they were so happy with my performance that they wanted me to start broadening my scope of work. With tools like Jasper, my team and I don’t have to spend as much time on tedious tasks, which allows us to pursue other projects for a client.” 7 Work Innovator: Chargebee Chargebee is a software as a service (SaaS) platform that makes it easy for companies to manage subscription billing, collect payments, and connect their critical financial systems. Deb Elias, Director of Product Strategy and Operations, needed more resources in order to keep up with the demand for an increasingly popular product. “Our challenge in hiring talent was the fact that everyone was stretched so thin—which was the whole reason we needed to hire. Our hiring managers didn’t have time to sift through hundreds of resumes or profiles,” Elias says. “So I worked with the Upwork sales team to really understand the Enterprise offering.” With legal and HR on board, Elias began identifying projects that didn’t require institutional knowledge of the Chargebee platform that could be handled by independent talent with specific expertise—and in specific locations. “Having a distributed team is really advantageous because we have so much more coverage in the day. We can start a project in the morning in one country and pass it off to talent in another time zone in the evening,” Elias says. As more Chargebee products move through the research and testing phases, though, Elias is continuing to explore how the company can leverage Upwork’s work marketplace—including exploring full-time hiring capabilities. “We were able to hire a contractor through Upwork who did such a great job that if we needed to continue with their work as a full-time role, and they wanted to work with us full-time, we would convert them,” Elias says. “Whether we’re hiring for a single project or long-term, Upwork is always a great way to get the talent we need.” Progress on Our Enterprise Strategy In the third quarter, sales rep productivity remained very strong, as our Land team added 23 new Enterprise clients, representing 21% improvement versus the second quarter of 2023. Land team productivity was up 50% quarter-over-quarter, as our team continues to identify high-quality opportunities with their narrowed focus. Enterprise and Managed Services revenue on a combined basis were flat in the third quarter of 2023 as compared to the same period last year. Last quarter, we saw strong sequential growth in our combined Enterprise and Managed Services business, as we worked to right-size and optimize our Enterprise-focused portfolio. We are pleased with the ongoing stable trends of this business sustained in the third quarter as we focus on efficiency in this area of the business. Take Rate Total take rate in the third quarter was 17.1%, up from 16.3% in the previous quarter and from 15.4% in the third quarter of 2022. Marketplace take rate for the third quarter of 2023 was 15.9%, up from 15.3% in the previous quarter and from 14.3% in the third quarter of 2022. The increase was largely due to the simplification of our freelancer pricing structure implemented in May 2023, as well as our ads products and other monetization strategies implemented to drive enhanced value and efficiency in our Marketplace business. Total Revenue Revenue grew 11% year-over-year to $175.7 million in the third quarter of 2023. Marketplace Revenue Marketplace revenue for the third quarter of 2023 was $161.7 million, also growing at 11% year-over-year. Total revenue growth was the result of take rate expansion driven by strength in our ads products and our move in 2023 to a simplified, flat-fee pricing structure. Q3’23 Financial Results 8 9 Managed Services Revenue Managed Services revenue grew 4% year-over-year in the third quarter to $14.0 million. Managed Services was positively impacted by a client moving from an Enterprise plan to a Managed Services plan. An offsetting impact can be observed in Enterprise revenue trends in Q3. Enterprise Revenue Enterprise revenue declined (3)% year-over-year to $12.1 million in the third quarter of 2023. The decline was due in part to movement of an Enterprise client from our Enterprise offering to our Managed Services solution. The offsetting benefit can be seen in our Managed Services revenue results for the quarter. New Enterprise Clients We signed 23 new Enterprise clients in the third quarter of 2023, a 21% sequential increase over new Enterprise client additions in the second quarter of 2023. 10 Gross Services Volume (GSV) GSV was $1 billion, flat both quarter-over-quarter and year-over-year, the result of lapping strong GSV growth in the previous two years. Active Clients Active Clients increased 2% year-over-year and quarter-over-quarter to approximately 836,000. Active Client growth was driven by improvements to our client retention, as well as improvements in acquisition of new clients. GSV per Active Client We saw strong active client growth in the third quarter and continue to see higher average spend growth from retained clients when compared to growth in spend from newly acquired clients. As a result, GSV per Active Client decreased (1)% year-over-year to $4,906 as of September 30, 2023. Gross Profit and Margin GAAP gross profit was $132.5 million for the third quarter of 2023, or 75% of revenue, compared with 74% of revenue in the prior year period. Non-GAAP gross profit was $133.0 million, or 76% of revenue, in the third quarter of 2023, compared with 75% in the third quarter of 2022. The increase in gross margin is primarily due to pricing changes and other platform monetization strategies we have implemented over the past 12 months. OPEX GAAP operating expenses for the third quarter of 2023 were $121.0 million, representing 69% of revenue, compared to 91% in the prior year period, with R&D expense increasing 12% year-over-year, while S&M decreased (25)% year-over-year, G&A decreased (9)% year-over-year and provision for transaction losses decreased (84)% year-over-year. Non-GAAP operating expenses for the third quarter of 2023 were $103.5 million, representing 59% of revenue, compared to 78% in the prior year period, with R&D expense increasing 16% year-over-year, while S&M decreased (26)% year-over-year, G&A decreased (2)% year-over-year, and provision for transaction losses decreased (84)% year-over-year. The strong improvements in operating costs were the result of aggressive management action to focus on efficiency and profitable growth. We will continue to identify ways to improve efficiency while investing in new innovations to grow our business. 11 Net Income (Loss) GAAP net income was $16.3 million in the third quarter of 2023 compared to GAAP net loss of $(24.8) million in the third quarter of 2022. GAAP net income turning positive in the third quarter reflects the progress made in both revenue growth and ongoing cost discipline. GAAP net income per basic and diluted share was $0.12 in the third quarter of 2023 as compared to GAAP net loss per basic and diluted share of $(0.19) in the third quarter of 2022. Non-GAAP net income was $28.9 million in the third quarter of 2023 compared to non-GAAP net loss of $(4.2) million in the third quarter of 2022. Our non-GAAP net income per basic and diluted share was $0.21 in the third quarter of 2023 as compared to non-GAAP net loss per basic and diluted share of $(0.03) in the third quarter of 2022. This rapid improvement is the result of dedicated company focus on driving durable, profitable growth. \ Adjusted EBITDA and Adjusted EBITDA Margin Adjusted EBITDA was $31.2 million in the third quarter of 2023, compared to $(2.9) million in the third quarter of 2022. Adjusted EBITDA margin was 18% in the third quarter of 2023, compared to adjusted EBITDA margin of (2)% in the third quarter of 2022. Our strong adjusted EBITDA results are due to the rapid execution of our strategy to focus on durable, profitable growth. Cash Flow and Balance Sheet Cash, cash equivalents, and marketable securities were approximately $555.2 million at the end of the third quarter of 2023. Our Board has recently approved a $100 million share repurchase program. 12 Guidance Based on the current trends in our business, we are increasing our full-year 2023 revenue guidance to between $680 million and $685 million, which is 10% year-over-year growth at the midpoint. We are guiding fourth-quarter 2023 revenue to be between $175 million and $180 million, which is a 10% year-over-year increase at the midpoint. We are increasing full-year 2023 adjusted EBITDA guidance to between $67 million and $71 million as we remain committed to focusing on profitable growth and increasing margins in 2023. We expect fourth-quarter adjusted EBITDA to be between $24 million and $28 million, which represents an adjusted EBITDA margin of 13.5% to 15.8%. We also expect to generate positive free cash flow going forward. We expect fourth-quarter 2023 non-GAAP diluted EPS to be between $0.16 and $0.18 and diluted weighted-average shares outstanding in the range of 143 million to 145 million. For full-year 2023, we now expect non-GAAP diluted EPS to be between $0.47 and $0.49 and diluted weighted-average shares outstanding in the range of 141 million to 143 million. We continue to expect stock-based compensation expense to be less than $20 million in the fourth quarter of 2023. We have not reconciled our adjusted EBITDA guidance to GAAP net income (loss), adjusted EBITDA margin guidance to GAAP net income (loss) margin, or non-GAAP diluted EPS guidance to GAAP diluted EPS because certain items that impact GAAP net income (loss), GAAP net income (loss) margin, and GAAP diluted EPS are uncertain or out of our control and cannot be reasonably predicted. In particular, stock-based compensation expense is impacted by the future fair market value of our common stock and other factors, all of which are difficult to predict, subject to frequent change, or not within our control. The actual amount of these expenses during 2023 will have a significant impact on our future GAAP financial results. Accordingly, a reconciliation of adjusted EBITDA guidance to GAAP net income (loss), adjusted EBITDA margin guidance to GAAP net income (loss) margin, and non-GAAP diluted EPS guidance to GAAP diluted EPS is not available without unreasonable effort. 13 Q4 2023 Guidance FY 2023 Guidance Revenue $175 million - $180 million $680 million - $685 million Adjusted EBITDA $24.0 million - $28.0 million $67.0 million - $71.0 million Diluted weighted-average shares outstanding 143.0 million - 145.0 million 141.0 million - 143.0 million Non-GAAP diluted EPS $0.16 - $0.18 $0.47 - $0.49 Upwork will host a conference call today, November 7, 2023, at 2 p.m. Pacific Time/5 p.m. Eastern Time to discuss the company’s third-quarter 2023 financial results. An audio webcast archive will be available following the live event for approximately one year at investors.upwork.com. We use our Investor Relations website (investors.upwork.com), our Blog (upwork.com/blog), our X (formerly Twitter) handle (twitter.com/Upwork), Hayden Brown’s X (formerly Twitter) handle (twitter.com/hydnbrwn) and LinkedIn profile (linkedin.com/in/haydenlbrown), and Erica Gessert’s LinkedIn profile (linkedin.com/in/erica-gessert) as means of disseminating or providing notification of, among other things, news or announcements regarding our business or financial performance, investor events, press releases, and earnings releases and as means of disclosing material nonpublic information and for complying with our disclosure obligations under Regulation FD. The content of our websites and information that we may post on or provide to online and social media channels, including those mentioned above, and information that can be accessed through our websites or these online and social media channels, are not incorporated by reference into this shareholder letter or in any report or document we file with the SEC, and any references to our websites or these online and social media channels are intended to be inactive textual references only. Q3 2023 Conference Call and Webcast Thank you, Hayden Brown President & CEO Erica Gessert Chief Financial Officer UPWORK INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except for per share data) (Unaudited) 15 Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Revenue Marketplace $ 161,739 $ 145,143 $ 466,458 $ 418,893 Managed services 13,994 13,498 38,744 37,983 Total revenue 175,733 158,641 505,202 456,876 Cost of revenue 43,273 40,470 124,582 119,243 Gross profit 132,460 118,171 380,620 337,633 Operating expenses Research and development 43,419 38,898 131,146 112,889 Sales and marketing 47,308 63,171 171,377 184,096 General and administrative 28,652 31,407 86,922 93,872 Provision for transaction losses 1,615 10,137 10,863 18,918 Total operating expenses 120,994 143,613 400,308 409,775 Income (loss) from operations 11,466 (25,442) (19,688) (72,142) Interest expense 711 1,117 2,525 3,362 Other income, net (6,477) (1,772) (55,273) (2,215) Income (loss) before income taxes 17,232 (24,787) 33,060 (73,289) Income tax provision (895) (40) (3,547) (96) Net income (loss) $ 16,337 $ (24,827) $ 29,513 $ (73,385) Net income (loss) per share: Basic $ 0.12 $ (0.19) $ 0.22 $ (0.56) Diluted $ 0.12 $ (0.19) $ (0.06) $ (0.56) Weighted-average shares used to compute net income (loss) per share Basic 135,450 130,830 134,152 130,083 Diluted 137,291 130,830 135,184 130,083 UPWORK INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) 16 September 30, 2023 December 31, 2022 ASSETS Current assets Cash and cash equivalents $ 146,827 $ 129,384 Marketable securities 408,417 557,230 Funds held in escrow, including funds in transit 177,970 161,457 Trade and client receivables, net 60,262 64,888 Prepaid expenses and other current assets 16,537 17,947 Total current assets 810,013 930,906 Property and equipment, net 26,659 22,063 Goodwill 118,219 118,219 Operating lease asset 5,168 7,603 Other assets, noncurrent 1,379 1,454 Total assets $ 961,438 $ 1,080,245 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Accounts payable $ 1,747 $ 7,549 Escrow funds payable 177,970 161,457 Accrued expenses and other current liabilities 52,111 53,611 Deferred revenue 21,237 25,075 Total current liabilities 253,065 247,692 Debt, noncurrent 355,626 564,261 Operating lease liability, noncurrent 6,932 11,177 Other liabilities, noncurrent 2,876 8,236 Total liabilities 618,499 831,366 Stockholders’ equity Common stock 14 13 Additional paid-in capital 654,754 592,900 Accumulated other comprehensive loss (393) (3,085) Accumulated deficit (311,436) (340,949) Total stockholders’ equity 342,939 248,879 Total liabilities and stockholders’ equity $ 961,438 $ 1,080,245 UPWORK INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 16,337 $ (24,827) $ 29,513 $ (73,385) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Provision for transaction losses 1,364 10,102 6,806 18,412 Depreciation 1,763 1,982 5,641 6,007 Amortization of debt issuance costs 460 740 1,637 2,221 Amortization of premium (accretion of discount) of purchases of marketable securities, net (3,678) (315) (9,832) 485 Amortization of operating lease asset 824 777 2,435 2,295 Tides Foundation common stock warrant expense 188 188 563 563 Stock-based compensation expense 17,811 20,404 56,148 56,119 Gain on early extinguishment of debt — — (38,945) — Changes in operating assets and liabilities: Trade and client receivables 4,319 (6,903) (2,638) (17,764) Prepaid expenses and other assets 2,951 1,586 1,487 380 Operating lease liability (1,509) (1,380) (4,375) (3,994) Accounts payable (2,431) (2) (5,802) 278 Accrued expenses and other liabilities 4,064 5,667 (1,077) 2,202 Deferred revenue (5,511) 2,007 (9,001) 4,285 Net cash provided by (used in) operating activities 36,952 10,026 32,560 (1,896) CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of marketable securities (195,061) (166,909) (449,180) (398,259) Proceeds from maturities of marketable securities 143,637 180,272 451,047 371,879 Proceeds from sale of marketable securities 9,716 — 159,575 — Purchases of property and equipment (423) (291) (558) (893) Internal-use software and platform development costs (3,107) (2,336) (9,179) (5,160) Net cash provided by (used in) investing activities (45,238) 10,736 151,705 (32,433) 18 Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 CASH FLOWS FROM FINANCING ACTIVITIES: Changes in escrow funds payable 316 (18,479) 16,513 9,153 Proceeds from exercises of stock options 1,006 291 1,941 1,335 Proceeds from employee stock purchase plan — — 2,564 2,462 Net cash paid for early extinguishment of debt — — (171,327) — Net cash provided by (used in) financing activities 1,322 (18,188) (150,309) 12,950 NET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH (6,964) 2,574 33,956 (21,379) Cash, cash equivalents, and restricted cash—beginning of period 336,151 328,105 295,231 352,058 Cash, cash equivalents, and restricted cash—end of period $ 329,187 $ 330,679 $ 329,187 $ 330,679 The following table reconciles cash, cash equivalents, and restricted cash as reported in the condensed consolidated balance sheets to the total of the same amounts shown in the condensed consolidated statements of cash flows as of the following (in thousands): September 30, 2023 December 31, 2022 Cash and cash equivalents $ 146,827 $ 129,384 Restricted cash 4,390 4,390 Funds held in escrow, including funds in transit 177,970 161,457 Total cash, cash equivalents, and restricted cash as shown in the condensed consolidated statement of cash flows $ 329,187 $ 295,231 UPWORK INC. COST OF REVENUE AND GROSS MARGIN (In thousands, except percentages) (Unaudited) 19 Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 Change 2023 2022 Change Cost of revenue $ 43,273 $ 40,470 $ 2,803 7% $ 124,582 $ 119,243 $ 5,339 4% Components of cost of revenue: Cost of talent services to deliver managed services 10,690 9,591 1,099 11% 29,364 27,822 1,542 6% Other components of cost of revenue 32,583 30,879 1,704 6% 95,218 91,421 3,797 4% Total gross margin 75% 74% 75% 74% 20 Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Net income (loss) $ 16,337 $ (24,827) $ 29,513 $ (73,385) Add back (deduct): Stock-based compensation expense 17,811 20,404 56,148 56,119 Depreciation 1,763 1,982 5,641 6,007 Interest expense 711 1,117 2,525 3,362 Other income, net (1) (6,477) (1,772) (55,273) (2,215) Income tax provision 895 40 3,547 96 Other (2)(3) 188 188 563 4,850 Adjusted EBITDA $ 31,228 $ (2,868) $ 42,664 $ (5,166) Profit margin 9% (16)% 6% (16)% Adjusted EBITDA margin 18% (2)% 8% (1)% Cost of revenue, GAAP $ 43,273 $ 40,470 $ 124,582 $ 119,243 Stock-based compensation expense (499) (376) (1,409) (962) Other (3) — — — (89) Cost of revenue, Non-GAAP 42,774 40,094 123,173 118,192 As a percentage of total revenue, GAAP 25% 26% 25% 26% As a percentage of total revenue, Non-GAAP 24% 25% 24% 26% Gross profit, GAAP $ 132,460 $ 118,171 $ 380,620 $ 337,633 Stock-based compensation expense 499 376 1,409 962 Other (3) — — — 89 Gross profit, Non-GAAP 132,959 118,547 382,029 338,684 Gross margin, GAAP 75% 74% 75% 74% Gross margin, Non-GAAP 76% 75% 76% 74% Research and development, GAAP $ 43,419 $ 38,898 $ 131,146 $ 112,889 Stock-based compensation expense (6,902) (7,337) (21,434) (19,517) Other (3) — — — (2,653) Research and development, Non-GAAP 36,517 31,561 109,712 90,719 As a percentage of total revenue, GAAP 25% 25% 26% 25% As a percentage of total revenue, Non-GAAP 21% 20% 22% 20% Sales and marketing, GAAP $ 47,308 $ 63,171 $ 171,377 $ 184,096 Stock-based compensation expense (3,106) (3,055) (9,672) (7,983) Other (3) — — — (260) UPWORK INC. RECONCILIATION OF GAAP TO NON-GAAP RESULTS (In thousands, except for percentages and share data) (Unaudited) 21 Sales and marketing, Non-GAAP 44,202 60,116 161,705 175,853 As a percentage of total revenue, GAAP 27% 40% 34% 40% As a percentage of total revenue, Non-GAAP 25% 38% 32% 38% General and administrative, GAAP $ 28,652 $ 31,407 $ 86,922 $ 93,872 Stock-based compensation expense (7,304) (9,636) (23,633) (27,657) Other (2)(3) (188) (188) (563) (1,848) General and administrative, Non-GAAP 21,160 21,583 62,726 64,367 As a percentage of total revenue, GAAP 16% 20% 17% 21% As a percentage of total revenue, Non-GAAP 12% 14% 12% 14% Total operating expenses, GAAP $ 120,994 $ 143,613 $ 400,308 $ 409,775 Stock-based compensation expense (17,312) (20,028) (54,739) (55,157) Other (2)(3) (188) (188) (563) (4,761) Total operating expenses, Non-GAAP 103,494 123,397 345,006 349,857 As a percentage of total revenue, GAAP 69% 91% 79% 90% As a percentage of total revenue, Non-GAAP 59% 78% 68% 77% Income (loss) from operations, GAAP $ 11,466 $ (25,442) $ (19,688) $ (72,142) Stock-based compensation expense 17,811 20,404 56,148 56,119 Other (2)(3) 188 188 563 4,850 Income (loss) from operations, Non-GAAP 29,465 (4,850) 37,023 (11,173) Net income (loss), GAAP $ 16,337 $ (24,827) $ 29,513 $ (73,385) Stock-based compensation expense 17,811 20,404 56,148 56,119 Gain on early extinguishment of debt (1) — — (38,945) — Tax effect of non-GAAP adjustments (5,447) — (5,602) — Other (2)(3) 188 188 563 4,850 Net income (loss), Non-GAAP 28,889 (4,235) 41,677 (12,416) Weighted-average shares outstanding used in computing earnings (loss) per share, GAAP Basic (in millions) 135.4 130.8 134.2 130.1 Diluted (in millions) 137.3 130.8 135.2 130.1 Basic net income (loss) per share, GAAP $ 0.12 $ (0.19) $ 0.22 $ (0.56) Diluted net loss per share, GAAP $ 0.12 $ (0.19) $ (0.06) $ (0.56) Weighted-average shares outstanding used in computing earnings (loss) per share, Non-GAAP Basic (in millions) 135.4 130.8 134.2 130.1 Diluted (in millions) 142.8 130.8 135.9 130.1 Basic net income (loss) per share, Non-GAAP $ 0.21 $ (0.03) $ 0.31 $ (0.10) Diluted net income ( loss) per share, Non-GAAP $ 0.21 $ (0.03) $ 0.31 $ (0.10) 22 (1) During the nine months ended September 30, 2023, we recognized a gain on the early extinguishment of debt of $38.9 million, which is included in other income, net. (2) During each of the three and nine months ended September 30, 2023 and 2022, we incurred $0.2 million and $0.6 million, respectively, related to our Tides Foundation warrant. (3) During the nine months ended September 30, 2022, in response to Russia’s invasion of Ukraine, we incurred certain incremental expenses associated with our humanitarian response efforts. These expenses are not representative of our ongoing operations, and, as a result, we excluded these costs from adjusted EBITDA for the nine months ended September 30, 2022. Represents (i) $1.4 million of special one-time bonuses to our team members in the region impacted by Russia’s invasion of Ukraine, (ii) $1.5 million of expenses incurred in connection with the relocation of our team members in the impacted region, (iii) $1.1 million of donations made to humanitarian aid organizations to support initiatives related to humanitarian response efforts in the impacted region, primarily to Direct Relief International, a humanitarian aid organization, and (iv) $0.4 million of payments of one-time service award bonuses (and associated taxes) to certain of our team members paid in recognition of contributions made by such team members to our humanitarian response efforts in the impacted region. 23 Three Months Ended September 30, 2021 December 31, 2021 March 31, 2022 June 30, 2022 September 30, 2022 December 31, 2022 March 31, 2023 June 30 2023 September 30, 2023 Net Income (loss) $ (9,311) $ (22,556) $ (24,738) $ (23,820) $ (24,827) $ (16,500) $ 17,167 $ (3,991) $ 16,337 Add back (deduct): Stock-based compensation expense 13,906 14,926 16,735 18,980 20,404 19,382 19,900 18,437 17,811 Depreciation 2,439 2,074 2,009 2,016 1,982 2,050 2,024 1,854 1,763 Interest expense 746 1,125 1,125 1,120 1,117 1,121 1,101 713 711 Other (income) expense, net (1) 222 (440) (68) (375) (1,772) (5,543) (44,101) (4,695) (6,477) Income tax provision 26 63 29 27 40 440 795 1,857 895 Other (2)(3)(4) 188 1,539 4,475 187 188 187 188 187 188 Adjusted EBITDA $ 8,216 $ (3,269) $ (433) $ (1,865) $ (2,868) $ 1,137 $ (2,926) $ 14,362 $ 31,228 (1) During the three months ended March 31, 2023, we recognized a gain on the early extinguishment of debt of $38.9 million, which is included in other (income) expense, net. (2) For all periods presented, we incurred $0.2 million related to our Tides Foundation warrant. (3) During the three months ended March 31, 2022, in response to Russia’s invasion of Ukraine, we incurred certain incremental expenses of $4.4 million associated with our humanitarian response efforts. (4) During the three months ended December 31, 2021, we incurred impairment charges of $1.3M. UPWORK INC. RECONCILIATION OF GAAP NET INCOME TO ADJUSTED EBITDA (In thousands) (Unaudited) Definitions 24 Active Clients We define an Active Client as a client that has had spend activity on our work marketplace during the 12 months preceding the date of measurement. Virtual tokens needed by talent to bid on projects and ads products on our work marketplace. Connects Adjusted EBITDA We define adjusted EBITDA as net income (loss) adjusted for stock-based compensation expense; depreciation and amortization; interest expense; other (income) expense, net; income tax (benefit) provision; and, if applicable, certain other gains, losses, benefits, or charges that are non-cash or are significant and the result of isolated events or transactions that have not occurred frequently in the past and are not expected to occur regularly in the future. We define an Enterprise Client as a client that has entered into a contract for its use of our Upwork Enterprise offering. Enterprise Client Enterprise Revenue We define Enterprise Revenue as revenue from our Upwork Enterprise offering, including all client fees, subscriptions, and talent service fees. We define gross services volume, or GSV, as the the total amount that clients spend on both our marketplace offerings and our managed services offering as well as additional fees we charge to users for other services. Gross Services Volume (GSV) GSV per Active Client is calculated by dividing total GSV during the four quarters ended on the date of measurement by the number of active clients on the date of measurement. GSV per Active Client Marketplace Take Rate Marketplace take rate measures the correlation between marketplace revenue and marketplace GSV and is calculated by dividing marketplace revenue by marketplace GSV. competition; challenges to contractor classification or employment status of talent on our work marketplace; the possibility that the market for talent and the services they offer will develop more slowly than we expect; user circumvention of our work marketplace; our ability to sell to large enterprise and clients with larger, longer-term independent talent needs; the success of our investments in our Enterprise sales organization and our related marketing efforts, and expectations for the ability for Enterprise sales to drive incremental revenue and GSV growth; changes in the amount and mix of services facilitated through our work marketplace from period to period; our ability to develop, maintain, and enhance our brand and reputation cost-effectively; changes in our level of investment in sales and marketing, research and development, and general and administrative expenses, and our hiring plans for sales personnel; the market for information technology; the impact of increased use of artificial intelligence; recent and future changes to our pricing model; payment and fraud risks, including our ability to reduce transaction losses; security breaches; privacy; litigation and related costs; changes in management; and other general market, political, economic, and business conditions. Ken Blanchard and Scott Blanchard About Upwork Upwork is the world’s largest work marketplace that connects businesses with independent talent from across the globe. We serve everyone from one-person startups to large, Fortune 100 enterprises with a powerful, trust-driven platform that enables companies and talent to work together in new ways that unlock their potential. Our talent community earned over $3.8 billion on Upwork in 2022 across more than 10,000 skills in categories including website & app development, creative & design, customer support, finance & accounting, consulting, and operations. Learn more at upwork.com and join us on LinkedIn, Twitter, Facebook, Instagram, and TikTok. Safe Harbor Statement This shareholder letter includes forward-looking statements within the meaning of the federal securities laws. Forward-looking statements include all statements other than statements of historical fact, including any statements regarding our future operating results and financial position, including expected financial results for the fourth quarter and full year 2023, information or predictions concerning the future of our business or strategy, anticipated events and trends, potential growth or growth prospects, competitive position, technological and market trends, including artificial intelligence, industry environment, the economy, our plans with respect to our share repurchase program, and other future conditions. Forward-looking statements are based upon various estimates and assumptions, as well as information known to Upwork as of the date of this shareholder letter, and are subject to risks and uncertainties, including: the impact of challenging macroeconomic conditions on our business; our ability to attract and retain a community of talent and clients; our limited operating history under our current business strategy and pricing model; our focus on the long term and our investments in durable, profitable growth; our ability to develop and release new products and services, and successful enhancements, features, and modifications to our existing products and services; the impact of new and existing laws and regulations; our ability to generate revenue from our marketplace offerings and the effects of fluctuations in our level of client spend retention; 25 Contact: Investor Relations investor@upwork.com Safe Harbor Statement Cont. Actual results could differ materially from those predicted or implied, and reported results should not be considered as an indication of future performance. Additionally, these forward-looking statements, particularly our guidance, involve risks, uncertainties, and assumptions, including those over which we have no control. Significant variation from the assumptions underlying our forward-looking statements could cause our actual results to vary, and the impact could be significant. Accordingly, undue reliance should not be placed on the forward-looking statements in this shareholder letter. Additional risks and uncertainties that could affect our financial results are included under the caption “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Quarterly Report on Form 10-Q for the six months ended June 30, 2023, filed with the SEC on August 2, 2023, and our other SEC filings, which are available on the Investor Relations page of our website at investors.upwork.com and on the SEC website at www.sec.gov. Additional information will also be set forth in our Quarterly Report on Form 10-Q for the three months ended September 30, 2023, when filed. All forward-looking statements contained herein are based on information available to us as of the date hereof, and we do not assume any obligation to update these statements as a result of new information or future events. 26 not reflect: (a) changes in, or cash requirements for, our working capital needs; (b) interest expense, or the cash requirements necessary to service interest or principal payments on our debt, which reduces cash available to us; (c) tax payments that may represent a reduction in cash available to us; (d) expense related to our common stock warrant issued to the Tides Foundation, which is recurring and will be reflected in our financial results for the foreseeable future; or (e), for 2022, certain incremental expenses associated with our humanitarian response efforts in response to the war in Ukraine, as these expenses are not representative of our ongoing operations. The non-GAAP measures we use may be different from non-GAAP financial measures used by other companies, including companies in our industry, limiting their usefulness for comparison purposes. We compensate for these limitations by providing specific information regarding the GAAP items excluded from these non-GAAP financial measures. Reconciliations of these non-GAAP measures to their most directly comparable GAAP financial measures have been provided in the financial statement tables included in this shareholder letter, and investors are encouraged to review the reconciliations and not rely on any single financial measure to evaluate our business. Non-GAAP Financial Measures To supplement our condensed consolidated financial statements, which are prepared in accordance with GAAP, we present non-GAAP cost of revenue (and as a percentage of revenue), non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses (total and each line item, and total and each non-GAAP operating expense item as a percentage of revenue), non-GAAP income (loss) from operations, non-GAAP net income (loss) (and on a per share basis), and adjusted EBITDA in this shareholder letter. We use these non-GAAP financial measures in conjunction with financial measures prepared in accordance with GAAP for planning purposes, including in the preparation of our annual operating budget, as a measure of our core operating results and the effectiveness of our business strategy, and in evaluating our financial performance. These measures provide consistency and comparability with past financial performance, facilitate period-to-period comparisons of core operating results, and also facilitate comparisons with other peer companies, many of which use similar non-GAAP financial measures to supplement their GAAP results. In addition, adjusted EBITDA is widely used by investors and securities analysts to measure a company’s operating performance. We exclude the following items from one or more of our non-GAAP financial measures: stock-based compensation expense (non-cash expense calculated by companies using a variety of valuation methodologies and subjective assumptions), depreciation and amortization (non-cash expense), interest expense, other (income) expense, net; income tax (benefit) provision; and, if applicable, certain other gains, losses, benefits, or charges that that are non-cash or are significant and the result of isolated events or transactions that have not occurred frequently in the past and are not expected to occur regularly in the future. Investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tools, and these measures should not be considered in isolation or as a substitute for analysis of financial results as reported under GAAP. In particular, (1) adjusted EBITDA excludes stock-based compensation expense, which has recently been, and will continue to be for the foreseeable future, a significant recurring expense for our business and an important part of our compensation strategy, (2) although depreciation and amortization expense are non-cash charges, the assets subject to depreciation and amortization may have to be replaced in the future, and adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements, and (3) adjusted EBITDA does 27 |
0000071691-25-000021:pressrelease12312024.htm | 0000071691-25-000021 | 71,691 | 71,691 | NEW YORK TIMES CO (NYT) (CIK 0000071691) | ['NYT'] | 8-K | 8-K | 2025-02-05 | 2025-02-05 | 001-05837 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-05837&action=getcompany | 25,590,854 | EX-99.1 | EX-99.1 | 2.02,9.01 | https://www.sec.gov/Archives/edgar/data/71691/000007169125000021 | https://www.sec.gov/Archives/edgar/data/71691/000007169125000021/0000071691-25-000021-index.html | https://www.sec.gov/Archives/edgar/data/71691/000007169125000021/pressrelease12312024.htm | EX-99.1 2 pressrelease12312024.htm EX-99.1 Document The New York Times Company Reports Fourth-Quarter and Full-Year 2024 ResultsNEW YORK, February 5, 2025 – The New York Times Company (NYSE: NYT) announced today fourth-quarter and full-year 2024 results.Key Highlights•The Company added approximately 350,000 net digital-only subscribers compared with the end of the third quarter of 2024, bringing the total number of subscribers to 11.43 million.•Total digital-only average revenue per user (“ARPU”) increased 4.4 percent year-over-year to $9.65 primarily as a result of subscribers transitioning from promotional to higher prices and price increases on tenured non-bundled subscribers.•Growth in both digital subscribers and ARPU drove a year-over-year increase in digital subscription revenues of 16.0 percent.•Digital advertising revenues increased 9.5 percent year-over-year largely as a result of higher revenues from direct-sold display advertising and programmatic advertising.•Other revenue increased 16.3 percent year-over-year as a result of higher Wirecutter affiliate referral and licensing revenues.•Operating costs increased 6.0 percent and adjusted operating costs (defined below) increased 6.5 percent year-over-year, largely as a result of higher cost of revenue, sales and marketing and product development expenses. •Operating profit increased 13.6 percent year-over-year to $146.6 million, while adjusted operating profit (defined below) increased 10.7 percent year-over-year to $170.5 million.•Operating profit margin for the quarter was 20.2 percent and adjusted operating profit margin (defined below) was 23.5 percent, a year-over-year increase of approximately 110 and 70 basis points, respectively.•Diluted earnings per share for the quarter was $.75, a $.09 increase year-over-year and adjusted diluted earnings per share (defined below) was $.80, a $.10 increase year-over-year.•Net cash from operating activities for full year 2024 was $410.5 million compared with $360.6 million in 2023, and free cash flow (defined below) for full year 2024 was $381.3 million compared with $337.9 million in 2023.•Board approves $350 million Class A share repurchase program and declares a 5 cent increase in the Company’s dividend to $0.18 per share.Meredith Kopit Levien, president and chief executive officer, The New York Times Company, said, “The fourth quarter capped another strong year for The Times in which we made further progress toward becoming the essential subscription for every curious person seeking to understand and engage with the world. Our market-leading news and premium lifestyle products proved more valuable to more people in 2024. Deep engagement fueled our multi-revenue stream model, and enhanced our durability even in a dynamic information ecosystem. Altogether, this momentum gives us confidence that we can deliver another year of healthy growth in subscribers, revenue, and profitability, as well as strong free cash flow.”Summary of Quarterly Results(In millions, except percentages, subscriber metrics (in thousands), ARPU and per share data)Q4 2024Q3 2024Q2 2024Q1 2024Q4 2023Total subscribers(1)11,430 11,090 10,840 10,550 10,360 Digital-only subscribers(1)10,820 10,470 10,210 9,910 9,700 Digital-only subscribers quarterly net additions(1)350 260 300 210 300 Total digital-only ARPU$9.65 $9.45 $9.34 $9.21 $9.24 % change year-over-year4.4 %1.8 %2.1 %1.9 %3.5 %Digital-only subscription revenues$334.9 $322.2 $304.5 $293.0 $288.7 % change year-over-year16.0 %14.2 %12.9 %13.2 %7.2 %Digital advertising revenues$117.9 $81.6 $79.6 $63.0 $107.7 % change year-over-year9.5 %8.8 %7.8 %2.9 %(3.7)%Total revenues$726.6 $640.2 $625.1 $594.0 $676.2 % change year-over-year7.5 %7.0 %5.8 %5.9 %1.3 %Total operating costs$580.0 $563.5 $545.7 $545.7 $547.2 % change year-over-year6.0 %5.4 %2.0 %2.4 %(4.8)%Adjusted operating costs(2)$556.2 $536.0 $520.4 $518.0 $522.3 % change year-over-year6.5 %5.4 %4.4 %2.2 %(0.7)%Operating profit$146.6 $76.7 $79.4 $48.3 $129.0 Operating profit margin %20.2 %12.0 %12.7 %8.1 %19.1 %Adjusted operating profit (“AOP”) - NYTG$167.0 $101.5 $107.1 $84.7 $158.4 AOP margin % - NYTG24.6 %17.0 %18.3 %15.2 %24.8 %AOP - The Athletic$3.5 $2.6 $(2.4)$(8.7)$(4.4)AOP(2)$170.5 $104.2 $104.7 $76.1 $154.0 AOP margin %(2)23.5 %16.3 %16.7 %12.8 %22.8 %Diluted earnings per share (“EPS”)$0.75 $0.39 $0.40 $0.24 $0.66 Adjusted diluted EPS(2)$0.80 $0.45 $0.45 $0.31 $0.70 Diluted shares165.3 165.8 165.5 165.6 165.9 (1) Subscribers (including net subscriber additions) are rounded to the nearest ten thousand.(2) Non-GAAP financial measure. See “Comparisons”, “Non-GAAP Financial Measures” and “Reconciliation of Non-GAAP Financial Measures” for more details.2ComparisonsUnless otherwise noted, all comparisons are for the fourth quarter of 2024 to the fourth quarter of 2023. Fourth quarter 2024 results included the following special items:•$3.2 million of pre-tax litigation-related costs ($2.4 million or $0.01 per share after tax) in connection with a lawsuit against Microsoft Corporation and Open AI Inc. and various of its corporate affiliates alleging unlawful and unauthorized copying and use of the Company’s journalism and other content in connection with their development of generative artificial intelligence products (“Generative AI Litigation Costs”). Management determined to report Generative AI Litigation Costs as a special item beginning in the first quarter of 2024 because, unlike other litigation expenses, the Generative AI Litigation Costs arise from a discrete, complex and unusual proceeding and do not, in management’s view, reflect the Company’s ongoing business operational performance.•A $3.0 million favorable adjustment ($2.2 million or $0.01 per share after tax) related to reductions in our multiemployer pension plan liabilities.Fourth quarter 2023 results included the following special items:•A $2.5 million gain ($1.8 million or $0.01 per share after tax) reflecting our proportionate share of a distribution from the liquidation of Madison Paper Industries (“Madison”), a partnership that previously operated a paper mill, in which the Company had an investment through a subsidiary.•A $1.7 million charge ($1.2 million or $0.01 per share after tax) in connection with the Company’s withdrawal from a multiemployer pension plan.This release refers to certain non-GAAP financial measures, including adjusted operating profit, adjusted operating costs, adjusted diluted EPS and free cash flow. See “Non-GAAP Financial Measures” and “Reconciliation of Non-GAAP Financial Measures” for more details, including a discussion of management’s reasons for the presentation of these non-GAAP financial measures and reconciliations to the most comparable GAAP financial measures. 3Consolidated ResultsSubscribers and Net AdditionsThe Company ended the fourth quarter of 2024 with approximately 11.43 million subscribers to its print and digital products, including approximately 10.82 million digital-only subscribers. Of the 10.82 million digital-only subscribers, approximately 5.44 million were bundle and multiproduct subscribers.Compared with the end of the third quarter of 2024, there was a net increase of 350,000 digital-only subscribers. Compared with the end of the fourth quarter of 2023, there was a net increase of 1,110,000 digital-only subscribers. Average Revenue Per UserAverage revenue per user or “ARPU,” a metric we calculate to track the revenue generation of our digital subscriber base, represents the average revenue per digital subscriber over a 28-day billing cycle during the applicable quarter. For more information, please refer to the Supplemental Subscriber, ARPU and Subscriptions Revenues Information in the exhibits.Total digital-only ARPU was $9.65 for the fourth quarter of 2024, an increase of 4.4 percent compared with the fourth quarter of 2023 driven primarily by subscribers transitioning from promotional to higher prices and price increases on tenured non-bundled subscribers.Subscription RevenuesTotal subscription revenues increased 8.4 percent to $466.6 million in the fourth quarter of 2024. Subscription revenues from digital-only products increased 16.0 percent to $334.9 million due to an increase in bundle and multiproduct revenues and an increase in other single-product subscription revenues, partially offset by a decrease in news-only subscription revenues. Print subscription revenues decreased 7.1 percent to $131.6 million, primarily due to lower domestic home-delivery revenues which was largely due to one less Sunday in the fourth quarter of 2024 compared to the fourth quarter of 2023.Advertising RevenuesFourth-quarter 2024 total advertising revenues increased 0.6 percent to $165.1 million while digital advertising revenues increased 9.5 percent and print advertising revenues decreased 16.4 percent.Digital advertising revenues were $117.9 million, or 71.4 percent of total Company advertising revenues, compared with $107.7 million, or 65.6 percent, in the fourth quarter of 2023. Digital advertising revenues increased due to higher revenues from direct-sold display advertising as well as higher revenues from programmatic advertising that were largely driven by new advertising supply across our products. Print advertising revenues decreased primarily due to declines in the luxury, classifieds, and entertainment categories.Other RevenuesOther revenues increased 16.3 percent to $95.0 million in the fourth quarter of 2024, primarily as a result of higher Wirecutter affiliate referral and licensing revenues.Total RevenuesIn the aggregate, subscription, advertising and other revenues for the fourth quarter of 2024 increased 7.5 percent to $726.6 million from $676.2 million in the fourth quarter of 2023.4Operating CostsTotal operating costs increased 6.0 percent in the fourth quarter of 2024 to $580.0 million compared with $547.2 million in the fourth quarter of 2023. Operating costs in the fourth quarter of 2024 included the following special items: Generative AI Litigation Costs of $3.2 million and favorable adjustments related to reductions in multiemployer pension plan liabilities of $3.0 million. Operating costs in the fourth quarter of 2023 included the following special item: a $1.7 million charge in connection with the Company’s withdrawal from a multiemployer pension plan. Adjusted operating costs increased 6.5 percent to $556.2 million from $522.3 million in the fourth quarter of 2023.Cost of revenue increased 5.3 percent to $338.0 million compared with $321.2 million in the fourth quarter of 2023 due mainly to higher journalism expenses, higher subscriber and advertiser servicing costs, and higher digital content delivery costs, partially offset by lower print production and distribution costs.Sales and marketing costs increased 21.3 percent to $82.9 million compared with $68.3 million in the fourth quarter of 2023 due mainly to higher marketing and promotion costs. Media expenses, a component of sales and marketing costs that represents the cost to promote our subscription business, increased 46.0 percent to $46.4 million in the fourth quarter of 2024 from $31.8 million in the fourth quarter of 2023.Product development costs increased 6.0 percent to $61.8 million compared with $58.3 million in the fourth quarter of 2023, primarily due to higher outside services and compensation and benefits expenses.General and administrative costs increased 0.3 percent to $76.0 million compared with $75.8 million in the fourth quarter of 2023.5Business Segment ResultsWe have two reportable segments: NYTG and The Athletic. Management uses adjusted operating profit (loss) by segment in assessing performance and allocating resources. The Company includes in its presentation revenues and adjusted operating costs to arrive at adjusted operating profit (loss) by segment. Adjusted operating costs are defined as operating costs before depreciation and amortization, severance, multiemployer pension plan withdrawal costs and special items. Adjusted operating profit is defined as operating profit before depreciation and amortization, severance, multiemployer pension plan withdrawal costs and special items. Refer to Segment Information in the exhibits for more information on these segment measures.The New York Times GroupNYTG revenues grew 6.1 percent in the fourth quarter of 2024 to $677.5 million from $638.4 million in the fourth quarter of 2023. Subscription revenues increased 7.6 percent to $434.4 million from $403.6 million in the fourth quarter of 2023, primarily due to growth in subscription revenues from digital-only products, partially offset by decreases in print subscription revenues. Advertising revenues decreased 0.4 percent to $153.5 million from $154.2 million in the fourth quarter of 2023, due to lower revenues from print advertising which more than offset higher revenues from digital advertising. Other revenues increased 11.2 percent to $89.6 million from $80.6 million in the fourth quarter of 2023, due to higher Wirecutter affiliate referral revenues.NYTG adjusted operating costs increased 6.4 percent in the fourth quarter of 2024 to $510.5 million from $480.0 million in the fourth quarter of 2023, primarily due to higher sales and marketing and journalism costs.NYTG adjusted operating profit increased 5.4 percent to $167.0 million from $158.4 million in the fourth quarter of 2023. This was primarily the result of higher digital subscription revenues, other revenues and digital advertising revenues, partially offset by higher adjusted operating costs and lower print subscription and print advertising revenues.The AthleticThe Athletic revenues grew 29.0 percent in the fourth quarter of 2024 to $49.7 million from $38.5 million in the fourth quarter of 2023. Subscription revenues increased 19.8 percent to $32.2 million from $26.9 million in the fourth quarter of 2023, primarily due to growth in the number of subscribers with The Athletic. We provide all bundle subscribers with the ability to access The Athletic and all bundle subscribers are included in this metric. Advertising revenues increased 16.4 percent to $11.5 million from $9.9 million in the fourth quarter of 2023, primarily due to higher revenues from direct-sold display advertising. Other revenue increased to $6.0 million from $1.7 million in the fourth quarter of 2023, primarily due to an increase in licensing revenue.The Athletic adjusted operating costs increased 7.6 percent in the fourth quarter of 2024 to $46.2 million from $42.9 million in the fourth quarter of 2023. The increase was mainly due to higher product development and journalism costs, partially offset by lower sales and marketing costs. The Athletic adjusted operating profit increased $7.9 million to $3.5 million from a loss of $4.4 million in the fourth quarter of 2023. This was primarily the result of higher digital subscription revenues, other revenues and digital advertising revenues, partially offset by higher adjusted operating costs.6Consolidated Other DataInterest Income and Other, netInterest income and other, net in the fourth quarter of 2024 was $10.0 million compared with $7.7 million in the fourth quarter of 2023. The increase was primarily a result of higher interest rates on cash and marketable securities.Income TaxesThe Company had income tax expense of $31.9 million in the fourth quarter of 2024 compared with $29.6 million in the fourth quarter of 2023. The effective income tax rate was 20.5 percent in the fourth quarter of 2024 and 21.2 percent in the fourth quarter of 2023. The increase in income tax expense was primarily due to higher pre-tax income in the fourth quarter of 2024. The effective income tax rate for the fourth quarter of 2024 was lower than the statutory tax rate primarily due to federal tax credits for research and experimentation in the quarter.Earnings Per ShareDiluted EPS in the fourth quarter of 2024 was $.75 compared with $.66 in the same period of 2023. The increase in diluted EPS was primarily driven by higher operating profit and higher interest income. Adjusted diluted EPS was $.80 in the fourth quarter of 2024 compared with $.70 in the fourth quarter of 2023. LiquidityAs of December 31, 2024, the Company had cash and marketable securities of $911.9 million, an increase of $202.7 million from $709.2 million as of December 31, 2023.The Company has a $350 million unsecured revolving line of credit. As of December 31, 2024, there were no outstanding borrowings under this credit facility, and the Company did not have other outstanding debt.Net cash provided by operating activities in 2024 was $410.5 million compared with $360.6 million in 2023. Free cash flow in 2024 was $381.3 million compared with $337.9 million in 2023.Shares Repurchases and DividendsDuring the quarter ended December 31, 2024, the Company repurchased 453,080 shares of its Class A Common Stock for an aggregate purchase price of approximately $24.7 million. As of January 31, 2025, approximately $155.7 million remains available and authorized for repurchases under the 2023 authorization by the Board of Directors.In February 2025, the Board of Directors approved a $350.0 million Class A share repurchase program in addition to the amount remaining under the 2023 authorization.The Company’s Board of Directors also declared an $.18 dividend per share on the Company’s Class A and Class B common stock, an increase of $.05 from the previous quarter. The dividend is payable on April 17, 2025, to shareholders of record as of the close of business on April 1, 2025.Capital ExpendituresCapital expenditures totaled approximately $9 million in the fourth quarter of 2024 compared with approximately $6 million in the fourth quarter of 2023.7OutlookBelow is the Company’s guidance for revenues and adjusted operating costs for the first quarter of 2025 compared with the first quarter of 2024. The New York Times CompanyDigital-only subscription revenuesincrease 14 - 17%Total subscription revenuesincrease 7 - 10%Digital advertising revenuesincrease high-single-digitsTotal advertising revenuesdecrease low-single-digits to increase low-single-digitsOther revenueincrease mid-single-digitsAdjusted operating costsincrease 5 - 6%The Company expects the following on a pre-tax basis in 2025:•Depreciation and amortization: approximately $80 million•Interest income and other, net: approximately $40 million, and•Capital expenditures: approximately $40 million.Conference Call Information The Company’s fourth-quarter and full-year 2024 earnings conference call will be held on Wednesday, February 5, 2025, at 8:00 a.m. E.T. A live webcast of the earnings conference call will be available at investors.nytco.com.Participants can pre-register for the conference call at https://dpregister.com/sreg/10195698/fe3d3c6006, which will generate dial-in instructions allowing participants to bypass an operator at the time of the call. Alternatively, to access the call without pre-registration, dial 844-413-3940 (in the U.S.) or 412-858-5208 (international).An archive of the webcast will be available beginning about two hours after the call at investors.nytco.com. An audio replay will also be available at 877-344-7529 (in the U.S.) and 412-317-0088 (international) beginning approximately two hours after the call until 11:59 p.m. E.T. on Wednesday, February 19. The passcode for accessing the audio replay via phone is 1545543.About The New York Times CompanyThe New York Times Company (NYSE: NYT) is a trusted source of quality, independent journalism whose mission is to seek the truth and help people understand the world. With more than 11 million subscribers across a diverse array of print and digital products — from news to cooking to games to sports — The Times Company has evolved from a local and regional news leader into a diversified media company with curious readers, listeners and viewers around the globe. Follow news about the company at NYTCo.com.8Forward-Looking StatementsExcept for the historical information contained herein, the matters discussed in this press release are 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. Terms such as “aim,” “anticipate,” “believe,” “confidence,” “contemplate,” “continue,” “conviction,” “could,” “drive,” “estimate,” “expect,” “forecast,” “future,” “goal,” “guidance,” “intend,” “likely,” “may,” “might,” “objective,” “opportunity,” “optimistic,” “outlook,” “plan,” “position,” “potential,” “predict,” “project,” “seek,” “should,” “strategy,” “target,” “will,” “would” or similar statements or variations of such words and other similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such terms. Forward-looking statements are based upon our current expectations, estimates and assumptions and involve risks and uncertainties that change over time; actual results could differ materially from those predicted by such forward-looking statements. These risks and uncertainties include, but are not limited to: significant competition in all aspects of our business; our ability to grow the size and profitability of our subscriber base; our dependence on user and other metrics that are subject to inherent challenges in measurement; numerous factors that affect our advertising revenues, including market dynamics, evolving digital advertising trends and the evolution of our strategy; damage to our brand or reputation; risks associated with generative artificial intelligence technology; economic, market, geopolitical and public health conditions or other events; risks associated with the international scope of our business and foreign operations; significant disruptions in our newsprint supply chain or newspaper printing and distribution channels or a significant increase in the costs to print and distribute our newspaper; risks associated with environmental, social and governance matters and any related reporting obligations; adverse results from litigation or governmental investigations; risks associated with acquisitions (including The Athletic), divestitures, investments and similar transactions; the risks and challenges associated with investments we make in new and existing products and services; risks associated with attracting and maintaining a talented and diverse workforce; the impact of labor negotiations and agreements; potential limits on our operating flexibility due to the nature of significant portions of our expenses; the effects of the size and volatility of our pension plan obligations; liabilities that may result from our participation in multiemployer pension plans; our ability to improve and scale our technical and data infrastructure; security incidents and other network and information systems disruptions; our ability to comply with laws and regulations with respect to privacy, data protection and consumer marketing and subscription practices; payment processing risk; defects, delays or interruptions in the cloud-based hosting services we utilize; our ability to protect our intellectual property; claims against us of intellectual property infringement; our ability to meet our publicly announced guidance and/or targets; the effects of restrictions on our operations as a result of the terms of our credit facility; our future access to capital markets and other financing options; and the concentration of control of our company due to our dual-class capital structure. More information regarding these risks and uncertainties and other important factors that could cause actual results to differ materially from those in the forward-looking statements is set forth in the Company’s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2023, and subsequent filings. Investors are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.9Non-GAAP Financial MeasuresThis release refers to certain non-GAAP financial measures, including adjusted operating profit, defined as operating profit before depreciation, amortization, severance, multiemployer pension plan withdrawal costs and special items; adjusted operating profit margin, defined as adjusted operating profit divided by revenues; adjusted operating costs, defined as operating costs before depreciation, amortization, severance and multiemployer pension plan withdrawal costs and special items; adjusted diluted EPS, defined as diluted EPS excluding amortization of acquired intangible assets, severance, non-operating retirement costs and special items; and free cash flow, defined as net cash provided by operating activities less capital expenditures. Refer to “Reconciliation of Non-GAAP Financial Measures” in the exhibits for a discussion of management’s reasons for the presentation of these non-GAAP financial measures and reconciliations to the most comparable GAAP financial measures. Certain guidance is provided on a non-GAAP basis and not reconciled to the most directly comparable GAAP measure because we are unable to provide, without unreasonable effort, a calculation or estimation of amounts necessary for such reconciliation due to the inherent difficulty of forecasting such amounts.Exhibits:Condensed Consolidated Statements of OperationsFootnotesSupplemental Subscriber and ARPU InformationSegment InformationReconciliation of Non-GAAP Financial MeasuresContacts:Media:Danielle Rhoades Ha, 212-556-8719; danielle.rhoades-ha@nytimes.comInvestors:Anthony DiClemente, 212-556-7661; anthony.diclemente@nytimes.com10THE NEW YORK TIMES COMPANYCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(Dollars and shares in thousands, except per share data)Fourth QuarterTwelve Months 20242023% Change20242023% ChangeRevenuesSubscription(a)$466,553 $430,444 8.4 %$1,788,207 $1,656,153 8.0 %Advertising(b)165,067 164,082 0.6 %506,311 505,206 0.2 %Other(c)95,009 81,689 16.3 %291,401 264,793 10.0 %Total revenues726,629 676,215 7.5 %2,585,919 2,426,152 6.6 %Operating costsCost of revenue (excluding depreciation and amortization)338,034 321,151 5.3 %1,309,514 1,249,061 4.8 %Sales and marketing82,857 68,317 21.3 %278,425 260,227 7.0 %Product development61,763 58,262 6.0 %248,198 228,804 8.5 %General and administrative76,036 75,845 0.3 %307,930 311,039 (1.0)%Depreciation and amortization21,071 21,942 (4.0)%82,936 86,115 (3.7)%Generative AI Litigation Costs(d)3,208 — *10,800 — *Impairment charges(e)— — — — 15,239 *Multiemployer pension plan liability adjustment(f)(2,980)1,668 *(2,980)(605)*Total operating costs579,989 547,185 6.0 %2,234,823 2,149,880 4.0 %Operating profit146,640 129,030 13.6 %351,096 276,272 27.1 %Other components of net periodic benefit (costs)/income(1,034)684 *(4,158)2,737 *Gain from joint ventures(g)— 2,477 *— 2,477 *Interest income and other, net10,036 7,676 30.7 %36,485 21,102 72.9 %Income before income taxes155,642 139,867 11.3 %383,423 302,588 26.7 %Income tax expense31,917 29,625 7.7 %89,598 69,836 28.3 %Net income123,725 110,242 12.2 %293,825 232,752 26.2 %Net income attributable to the noncontrolling interest— (365)*— (365)*Net income attributable to The New York Times Company common stockholders$123,725 $109,877 12.6 %$293,825 $232,387 26.4 %Average number of common shares outstanding:Basic164,093 164,625 (0.3)%164,425 164,721 (0.2)%Diluted165,312 165,851 (0.3)%165,802 165,663 0.1 %Basic earnings per share attributable to common stockholders$0.75 $0.67 11.9 %$1.79 $1.41 27.0 %Diluted earnings per share attributable to common stockholders$0.75 $0.66 13.6 %$1.77 $1.40 26.4 %Dividends declared per share$0.13 $0.11 18.2 %$0.52 $0.44 18.2 %* Represents a change equal to or in excess of 100% or not meaningful.See footnotes pages for additional information. 11THE NEW YORK TIMES COMPANYFOOTNOTES(Dollars in thousands)(a) The following table summarizes digital and print subscription revenues for the fourth quarters and twelve months of 2024 and 2023:Fourth QuarterTwelve Months20242023% Change20242023% ChangeDigital-only subscription revenues(1)$334,915 $288,670 16.0 %$1,254,592 $1,099,439 14.1 %Print subscription revenues(2)131,638 141,774 (7.1)%533,615 556,714 (4.1)%Total subscription revenues$466,553 $430,444 8.4 %$1,788,207 $1,656,153 8.0 %(1) Includes revenue from bundled and standalone subscriptions to our news product, as well as to The Athletic and to our Audio, Cooking, Games and Wirecutter products.(2) Includes domestic home-delivery subscriptions, which include access to our digital products. Also includes single-copy, NYT International and Other subscription revenues.(b) The following table summarizes digital and print advertising revenues for the fourth quarters and twelve months of 2024 and 2023:Fourth QuarterTwelve Months20242023% Change20242023% ChangeAdvertising revenues:Digital$117,926 $107,668 9.5 %$342,092 $317,744 7.7 %Print47,141 56,414 (16.4)%164,219 187,462 (12.4)%Total advertising$165,067 $164,082 0.6 %$506,311 $505,206 0.2 %(c) Other revenues primarily consist of revenues from Wirecutter affiliate referrals, licensing, commercial printing, the leasing of floors in the Company headquarters, our live events business, retail commerce, books, television and film and our student subscription sponsorship program. Digital other revenues, which consist primarily of Wirecutter affiliate referral revenue and digital licensing revenues, totaled $64.5 million and $186.1 million for the fourth quarter and twelve months of 2024, respectively.(d) In the fourth quarter and twelve months of 2024, the Company recorded $3.2 million ($2.4 million or $0.01 per share after tax) and $10.8 million ($8.0 million or $0.05 per share after tax), respectively, of pre-tax litigation-related costs in connection with a lawsuit against Microsoft and Open AI Inc. (e) In the second quarter of 2023, the Company recorded a $12.7 million impairment charge ($9.3 million or $0.06 per share after tax) related to excess leased office space that is being marketed for sublet (the “lease-related impairment”). In the third quarter of 2023, the Company recorded a $2.5 million impairment charge ($1.8 million or $0.01 per share after tax) related to an indefinite-lived intangible asset.(f) In the fourth quarter of 2024 and third quarter of 2023, the Company recorded favorable adjustments related to reductions in its multiemployer pension plan liabilities of $3.0 million ($2.2 million or $0.01 per share after tax) and $2.3 million ($1.7 million or $0.01 per share after tax), respectively. In the fourth quarter of 2023, the Company recorded a charge of $1.7 million ($1.2 million or $0.01 per share after tax), in connection with its withdrawal from a multiemployer pension plan.(g) In the fourth quarter of 2023, the Company recorded a $2.5 million gain ($1.8 million or $0.01 per share after tax) reflecting our proportionate share of a distribution from the liquidation of Madison.12THE NEW YORK TIMES COMPANYSUPPLEMENTAL SUBSCRIBER AND ARPU INFORMATION(Amounts in thousands, except for ARPU)We offer a digital subscription package (or “bundle”) that includes access to our digital news product (which includes our news website, NYTimes.com, and mobile applications), as well as to The Athletic and to our Audio, Cooking, Games and Wirecutter products. Our subscriptions also include standalone digital subscriptions to each of these products.The following tables present information regarding the number of subscribers to the Company’s products as well as certain additional metrics. A subscriber is defined as a user who has subscribed (and provided a valid method of payment) for the right to access one or more of the Company’s products. Subscribers with a domestic home-delivery print subscription to The New York Times, which includes access to our digital products, are excluded from digital-only subscribers.The following table sets forth subscribers as of the end of the five most recent fiscal quarters:Q4 2024Q3 2024Q2 2024Q1 2024Q4 2023Digital-only subscribers:Bundle and multiproduct(1)(2)5,440 5,120 4,830 4,550 4,220 News-only(2)(3)1,930 2,110 2,290 2,500 2,740 Other single-product(2)(4)3,450 3,240 3,100 2,860 2,740 Total digital-only subscribers(2)(5)10,820 10,470 10,210 9,910 9,700 Print subscribers(6)610 620 630 640 660 Total subscribers11,430 11,090 10,840 10,550 10,360 (1) Subscribers with a bundle subscription or standalone digital-only subscriptions to two or more of the Company’s products.(2) Includes group corporate and group education subscriptions, which collectively represented approximately 6% of total digital-only subscribers as of the end of the fourth quarter of 2024. The number of group subscribers is derived using the value of the relevant contract and a discounted subscription rate.(3) Subscribers with only a digital-only news product subscription.(4) Subscribers with only one digital-only subscription to The Athletic or to our Audio, Cooking, Games or Wirecutter products.(5) Subscribers with digital-only subscriptions to one or more of our news product, The Athletic, or our Audio, Cooking, Games and Wirecutter products.(6) Subscribers with a domestic home-delivery or mail print subscription to The New York Times, which includes access to our digital products, or a print subscription to our Book Review or Large Type Weekly products.The sum of individual metrics may not always equal total amounts indicated due to rounding. Subscribers (including net subscriber additions) are rounded to the nearest ten thousand.The following table sets forth ARPU metrics relating to the above digital-only subscriber categories for the five most recent fiscal quarters:Q4 2024Q3 2024Q2 2024Q1 2024Q4 2023Digital-only ARPU:Bundle and multiproduct$12.53 $12.35 $11.96 $11.79 $12.13 News-only$11.95 $11.48 $11.26 $10.88 $10.38 Other single-product$3.58 $3.59 $3.65 $3.59 $3.56 Total digital-only ARPU$9.65 $9.45 $9.34 $9.21 $9.24 ARPU metrics are calculated by dividing the digital subscription revenues in the quarter by the average number of digital-only subscribers divided by the number of days in the quarter multiplied by 28 to reflect a 28-day billing cycle. In calculating ARPU metrics, for our subscriber categories (Bundle and multiproduct, News-only and Other single-product), we use the monthly average number of digital-only subscribers (calculated as the sum of the number of subscribers in each category at the beginning and end of the month, divided by two) and for Total digital-only ARPU, we use the daily average number of digital-only subscribers.13THE NEW YORK TIMES COMPANYSUPPLEMENTAL SUBSCRIBER AND ARPU INFORMATION(Amounts in thousands)The following table sets forth the subset of subscribers above who have a digital-only standalone subscription to The Athletic or a bundle subscription that includes the ability to access The Athletic as of the end of the five most recent fiscal quarters. The Company plans to discontinue reporting this metric after the fourth quarter of 2024. Digital-only subscribers with The Athletic will continue to be included in our reported bundle and multiproduct and other single-product subscriber categories.Q4 2024Q3 2024Q2 2024Q1 2024Q4 2023Digital-only subscribers with The Athletic(1)(2)5,830 5,540 5,280 4,990 4,650 (1) We provide all bundle subscribers with the ability to access The Athletic and all bundle subscribers are included in this metric.(2) Subscribers (including net subscriber additions) are rounded to the nearest ten thousand.14THE NEW YORK TIMES COMPANYSEGMENT INFORMATION(Dollars in thousands)We have two reportable segments: NYTG and The Athletic. Management uses adjusted operating profit (loss) by segment in assessing performance and allocating resources. The Company includes in its presentation revenues and adjusted operating costs to arrive at adjusted operating profit (loss) by segment. Adjusted operating costs are defined as operating costs before depreciation and amortization, severance, multiemployer pension plan withdrawal costs and special items. Adjusted operating profit is defined as operating profit before depreciation and amortization, severance, multiemployer pension plan withdrawal costs and special items. Adjusted operating profit expressed as a percentage of revenues is referred to as adjusted operating profit margin.Subscription revenues from and expenses associated with our bundle are allocated to NYTG and The Athletic.We allocate 10% of bundle revenues to The Athletic based on management’s view of The Athletic’s relative value to the bundle, which is derived based on analysis of various metrics. We allocate 10% of product development, marketing and subscriber servicing expenses (including direct variable expenses such as credit card fees, third party fees and sales taxes) associated with the bundle to The Athletic, and the remaining costs are allocated to NYTG, in each case, in line with the revenues allocations.Fourth QuarterTwelve Months20242023% Change20242023% ChangeRevenuesNYTG$677,507$638,3586.1 %$2,416,084$2,295,5375.3 %The Athletic49,68438,51329.0 %172,085131,27131.1 %Intersegment eliminations(1)(562)(656)(14.3)%(2,250)(656)*Total revenues$726,629$676,2157.5 %$2,585,919$2,426,1526.6 %Adjusted operating costsNYTG$510,509$479,9856.4 %$1,955,699$1,874,2564.3 %The Athletic46,21442,9307.6 %177,068162,7018.8 %Intersegment eliminations(1)(562)(656)(14.3)%(2,250)(656)*Total adjusted operating costs$556,161$522,2596.5 %$2,130,517$2,036,3014.6 %Adjusted operating profit (loss)NYTG$166,998$158,3735.4 %$460,385$421,2819.3 %The Athletic3,470(4,417)*(4,983)(31,430)(84.1)%Total adjusted operating profit$170,468$153,95610.7 %$455,402$389,85116.8 %AOP margin % - NYTG24.6 %24.8 %(20) bps19.1 %18.4 %70 bps(1) Intersegment eliminations (“I/E”) related to content licensing.* Represents a change equal to or in excess of 100% or not meaningful.15THE NEW YORK TIMES COMPANYSEGMENT INFORMATION(Dollars in thousands)Revenues detail by segmentFourth QuarterTwelve Months20242023% Change20242023% ChangeNYTGSubscription$434,371 $403,575 7.6 %$1,667,948 $1,555,705 7.2 %Advertising153,531 154,170 (0.4)%472,947 477,261 (0.9)%Other89,605 80,613 11.2 %275,189 262,571 4.8 %Total$677,507 $638,358 6.1 %$2,416,084 $2,295,537 5.3 %The Athletic Subscription$32,182 $26,869 19.8 %$120,259 $100,448 19.7 %Advertising11,536 9,912 16.4 %33,364 27,945 19.4 %Other5,966 1,732 *18,462 2,878 *Total$49,684 $38,513 29.0 %$172,085 $131,271 31.1 %I/E(1)$(562)$(656)(14.3)%$(2,250)$(656)*The New York Times CompanySubscription$466,553 $430,444 8.4 %$1,788,207 $1,656,153 8.0 %Advertising165,067 164,082 0.6 %506,311 505,206 0.2 %Other95,009 81,689 16.3 %291,401 264,793 10.0 %Total$726,629 $676,215 7.5 %$2,585,919 $2,426,152 6.6 %(1) Intersegment eliminations (“I/E”) related to content licensing recorded in Other revenues.* Represents a change equal to or in excess of 100% or not meaningful.16THE NEW YORK TIMES COMPANYSEGMENT INFORMATION(Dollars in thousands)Adjusted operating costs (operating costs before depreciation and amortization, severance, multiemployer pension plan withdrawal costs and special items) detail by segmentFourth QuarterTwelve Months20242023% Change20242023% ChangeNYTGCost of revenue (excluding depreciation and amortization)$311,771 $297,185 4.9 %$1,209,078 $1,157,527 4.5 %Sales and marketing74,920 58,329 28.4 %248,300 223,464 11.1 %Product development52,832 52,003 1.6 %213,947 203,813 5.0 %Adjusted general and administrative(1)70,986 72,468 (2.0)%284,374 289,452 (1.8)%Total$510,509 $479,985 6.4 %$1,955,699 $1,874,256 4.3 %The Athletic Cost of revenue (excluding depreciation and amortization)$26,825 $24,622 8.9 %$102,686 $92,190 11.4 %Sales and marketing7,937 9,988 (20.5)%30,125 36,763 (18.1)%Product development8,931 6,259 42.7 %34,251 24,991 37.1 %Adjusted general and administrative(2)2,521 2,061 22.3 %10,006 8,757 14.3 %Total$46,214 $42,930 7.6 %$177,068 $162,701 8.8 %I/E(3)$(562)$(656)(14.3)%$(2,250)$(656)*The New York Times CompanyCost of revenue (excluding depreciation and amortization)$338,034 $321,151 5.3 %$1,309,514 $1,249,061 4.8 %Sales and marketing82,857 68,317 21.3 %278,425 260,227 7.0 %Product development61,763 58,262 6.0 %248,198 228,804 8.5 %Adjusted general and administrative73,507 74,529 (1.4)%294,380 298,209 (1.3)%Total$556,161 $522,259 6.5 %$2,130,517 $2,036,301 4.6 %(1) Excludes severance of $1.2 million and $6.6 million for the fourth quarter and twelve months of 2024, respectively. Excludes multiemployer pension withdrawal costs of $1.2 million and $6.0 million for the fourth quarter and twelve months of 2024, respectively. Excludes severance of $6.4 million for the twelve months of 2023. Severance costs were de minimis for the fourth quarter of 2023. Excludes multiemployer pension withdrawal costs of $1.3 million and $5.2 million for the fourth quarter and twelve months of 2023, respectively.(2) Excludes severance of $0.1 million and $0.9 million for the fourth quarter and twelve months of 2024, respectively. Excludes severance of $1.2 million for the twelve months of 2023. There were no severance costs for the fourth quarter of 2023. (3) Intersegment eliminations (“I/E”) related to content licensing recorded in Cost of revenue (excluding depreciation and amortization).* Represents a change equal to or in excess of 100% or not meaningful.17THE NEW YORK TIMES COMPANYRECONCILIATION OF NON-GAAP FINANCIAL MEASURESIn this release, the Company has referred to non-GAAP financial information with respect to adjusted diluted EPS, defined as diluted EPS excluding amortization of acquired intangible assets, severance, non-operating retirement costs and special items; adjusted operating profit, defined as operating profit before depreciation, amortization, severance, multiemployer pension plan withdrawal costs and special items; adjusted operating profit margin, defined as adjusted operating profit divided by revenues; adjusted operating costs, defined as operating costs before depreciation, amortization, severance, multiemployer pension withdrawal costs and special items; and free cash flow, defined as net cash provided by operating activities less capital expenditures. The Company has included these non-GAAP financial measures because management reviews them on a regular basis and uses them to evaluate and manage the performance of the Company’s operations. Management believes that, for the reasons outlined below, these non-GAAP financial measures provide useful information to investors as a supplement to reported diluted earnings/(loss) per share, operating profit/(loss) and operating costs. However, these measures should be evaluated only in conjunction with the comparable GAAP financial measures and should not be viewed as alternative or superior measures of GAAP results.Adjusted diluted EPS provides useful information in evaluating the Company’s period-to-period performance because it eliminates items that the Company does not consider to be indicative of earnings from ongoing operating activities. Adjusted operating profit and adjusted operating profit margin are useful in evaluating the ongoing performance of the Company’s business as they exclude the significant non-cash impact of depreciation and amortization as well as items not indicative of ongoing operating activities. Total operating costs include depreciation, amortization, severance, multiemployer pension plan withdrawal costs and special items. Adjusted operating costs provide investors with helpful supplemental information on the Company’s underlying operating costs that is used by management in its financial and operational decision-making.Management considers special items, which may include impairment charges, pension settlement charges, acquisition-related costs, and beginning in the first quarter of 2024, Generative AI Litigation Costs, as well as other items that arise from time to time, to be outside the ordinary course of our operations. Management believes that excluding these items provides a better understanding of the underlying trends in the Company’s operating performance and allows more accurate comparisons of the Company’s operating results to historical performance. Management determined to report Generative AI Litigation Costs as a special item and thus exclude them beginning in the first quarter of 2024 because, unlike other litigation expenses which are not excluded, the Generative AI Litigation Costs arise from a discrete, complex and unusual proceeding and do not, in management’s view, reflect the Company’s ongoing business operational performance. In addition, management excludes severance costs, which may fluctuate significantly from quarter to quarter, because it believes these costs do not necessarily reflect expected future operating costs and do not contribute to a meaningful comparison of the Company’s operating results to historical performance. The Company considers free cash flow as providing useful information to management and investors about the amount of cash that is available to be used to strengthen the Company’s balance sheet, for strategic opportunities, including investing in the Company’s business and strategic acquisitions, and/or for the return of capital to stockholders in the form of dividends and stock repurchases.Non-operating retirement costs include (i) interest cost, expected return on plan assets, amortization of actuarial gains and loss components and amortization of prior service credits of single-employer pension expense, (ii) interest cost, amortization of actuarial gains and loss components and (iii) all multiemployer pension plan withdrawal costs. These non-operating retirement costs are primarily tied to financial market performance including changes in market interest rates and investment performance. Management considers non-operating retirement costs to be outside the performance of the business and believes that presenting adjusted diluted EPS excluding non-operating retirement costs and presenting adjusted operating results excluding multiemployer pension plan withdrawal costs, in addition to the Company’s GAAP diluted EPS and GAAP operating results, provide increased transparency and a better understanding of the underlying trends in the Company’s operating business performance.Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are set out in the tables below.18THE NEW YORK TIMES COMPANYRECONCILIATION OF NON-GAAP FINANCIAL MEASURES(Dollars in thousands, except per share data)Reconciliation of diluted EPS excluding amortization of acquired intangible assets, severance, non-operating retirement costs and special items (or adjusted diluted EPS)Fourth QuarterTwelve Months20242023% Change20242023% ChangeDiluted EPS$0.75 $0.66 13.6 %$1.77 $1.40 26.4 %Add:Amortization of acquired intangible assets0.04 0.04 — 0.17 0.18 (5.6 %)Severance0.01 — *0.05 0.05 — Non-operating retirement costs: Multiemployer pension plan withdrawal costs0.01 0.01 — 0.04 0.03 33.3 %Other components of net periodic benefit costs0.01 — *0.03 (0.02)*Special items:Generative AI Litigation Costs0.02 — *0.07 — *Impairment charges— — — — 0.10 *Multiemployer pension plan liability adjustment(0.02)0.01 *(0.02)— *Gain from joint venture, net of noncontrolling interest— (0.01)*— (0.01)*Income tax expense of adjustments(0.02)(0.01)*(0.08)(0.08)— Adjusted diluted EPS(1)$0.80 $0.70 14.3 %$2.01 $1.63 23.3 %(1) Amounts may not add due to rounding.* Represents a change equal to or in excess of 100% or not meaningful.19THE NEW YORK TIMES COMPANYRECONCILIATION OF NON-GAAP FINANCIAL MEASURES(Dollars in thousands)Reconciliation of operating profit before depreciation and amortization, severance, multiemployer pension plan withdrawal costs and special items (or adjusted operating profit)Fourth QuarterTwelve Months20242023% Change20242023% ChangeOperating profit$146,640$129,03013.6 %$351,096$276,27227.1 %Add:Depreciation and amortization21,07121,942(4.0)%82,93686,115(3.7)%Severance1,2824*7,5127,582(0.9)%Multiemployer pension plan withdrawal costs1,2471,312(5.0)%6,0385,24815.1 %Generative AI Litigation Costs3,208—*10,800—*Impairment charges——— —15,239*Multiemployer pension plan liability adjustment(2,980)1,668*(2,980)(605)*Adjusted operating profit$170,468$153,95610.7 %$455,402$389,85116.8 %Divided by:Revenues$726,629$676,2157.5 %$2,585,919$2,426,1526.6 %Operating profit margin20.2 %19.1 %110 bps13.6%11.4%220 bpsAdjusted operating profit margin23.5 %22.8 %70 bps17.6%16.1%150 bps* Represents a change equal to or in excess of 100% or not meaningful.20THE NEW YORK TIMES COMPANYRECONCILIATION OF NON-GAAP FINANCIAL MEASURES(Dollars in thousands)Reconciliation of total operating costs before depreciation and amortization, severance, multiemployer pension plan withdrawal costs and special items (or adjusted operating costs)Fourth Quarter20242023NYTGThe AthleticI/E(1)TotalNYTGThe AthleticI/E(1)Total% ChangeTotal operating costs$527,618 $52,933 $(562)$579,989 $497,909 $49,932 $(656)$547,185 6.0 %Less:Depreciation and amortization14,472 6,599 — 21,071 14,940 7,002 — 21,942 (4.0)%Severance1,162 120 — 1,282 4 — — 4 *Multiemployer pension plan withdrawal costs1,247 — — 1,247 1,312 — — 1,312 (5.0)%Generative AI Litigation Costs3,208 — — 3,208 — — — — *Multiemployer pension plan liability adjustment(2,980)— — (2,980)1,668 — — 1,668 *Adjusted operating costs$510,509 $46,214 $(562)$556,161 $479,985 $42,930 $(656)$522,259 6.5 %Twelve Months20242023NYTGThe AthleticI/E(1)TotalNYTGThe AthleticI/E(1)Total% ChangeTotal operating costs$2,032,653 $204,420 $(2,250)$2,234,823 $1,959,191 $191,345 $(656)$2,149,880 4.0 %Less:Depreciation and amortization56,462 26,474 — 82,936 58,637 27,478 — 86,115 (3.7)%Severance6,634 878 — 7,512 6,416 1,166 — 7,582 (0.9)%Multiemployer pension plan withdrawal costs6,038 — — 6,038 5,248 — — 5,248 15.1 %Generative AI Litigation Costs10,800 — — 10,800 — — — — *Impairment charges— — — — 15,239 — — 15,239 *Multiemployer pension plan liability adjustment(2,980)— — (2,980)(605)— — (605)*Adjusted operating costs$1,955,699 $177,068 $(2,250)$2,130,517 $1,874,256 $162,701 $(656)$2,036,301 4.6 %(1) Intersegment eliminations (“I/E”) related to content licensing.* Represents a change equal to or in excess of 100% or not meaningful.21THE NEW YORK TIMES COMPANYRECONCILIATION OF NON-GAAP INFORMATION(Dollars in thousands)Reconciliation of net cash provided by operating activities before capital expenditures (or free cash flow)Twelve Months20242023Net cash provided by operating activities$410,512 $360,618 Less: Capital expenditures(29,173)(22,669)Free cash flow$381,339 $337,949 22 |
0001840856-23-000025:soun-20230331ex991.htm | 0001840856-23-000025 | 1,840,856 | 1,840,856 | SOUNDHOUND AI, INC. (SOUN, SOUNW) (CIK 0001840856) | ['SOUN', 'SOUNW'] | 8-K | 8-K | 2023-05-11 | 2023-05-11 | 001-40193 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-40193&action=getcompany | 23,911,829 | EX-99.1 | EX-99.1 | 9.01 | https://www.sec.gov/Archives/edgar/data/1840856/000184085623000025 | https://www.sec.gov/Archives/edgar/data/1840856/000184085623000025/0001840856-23-000025-index.html | https://www.sec.gov/Archives/edgar/data/1840856/000184085623000025/soun-20230331ex991.htm | EX-99.1 2 soun-20230331ex991.htm EX-99.1 DocumentExhibit 99.1SoundHound AI Reports First Quarter Revenue Increase of 56% Significantly Improves Cash Position and Operating Expenses; Reaffirms Full Year GuidanceSANTA CLARA, Calif.--(BUSINESS WIRE)--SoundHound AI, Inc. (Nasdaq: SOUN), a global leader in voice artificial intelligence, today reported its financial results for the first quarter of 2023.“The incredible surge in demand for conversational AI is giving SoundHound a unique advantage. As an established innovator with years of experience providing AI solutions to world class brands, we’re fast becoming an obvious partner for businesses looking to harness emerging capabilities,” said Keyvan Mohajer, CEO and Co-Founder of SoundHound. “Our SoundHound Chat AI platform now offers the most powerful voice assistant available today, and it’s one of many ways we’re helping new and existing customers build game-changing consumer experiences.” Financial Highlights•First quarter reported revenue was $6.7 million, an increase of 56% year-over-year •First quarter gross margin was 71%, an improvement of approximately 1,200 basis points compared to 59% in the prior year•First quarter earnings per share was a net loss of ($0.13), improving both year over year and sequentially•First quarter adjusted EBITDA (non-GAAP) was a loss of ($14.8) million, an improvement of 21% from the prior quarter and a year-over-year improvement of 13% •Significantly strengthened balance sheet through multiple financings, cumulatively raising over $150 million year-to-date through April•Drove meaningful operating efficiencies through corporate restructuring, resulting in 40% reduction to ongoing operating expense run-rate“In the first quarter we significantly strengthened our liquidity position while streamlining our costs. At the same time, our new innovations have driven positive customer reception that has meaningfully increased demand for our products and solutions,” said Nitesh Sharan, CFO of SoundHound. “Our top-line grew by 56% and every cost category improved sequentially, fueling steady progress towards profitability.”Business Highlights◦Announced that SoundHound’s voice AI technology will be available on, and can be integrated with, Oracle MICROS Simphony Point-of-Sale for Restaurants.◦Launched SoundHound Chat AI, a powerful new voice assistant that delivers best-in-class voice AI by combining SoundHound and third-party Generative AI models, like ChatGPT.◦Introduced SoundHound Chat AI for Automotive, which gives drivers and passengers seamless access to a vast array of information domains enabled by complex conversational capabilities, and can be integrated with the company’s publicly announced 20 automotive brands. ◦Debuted Dynamic Interaction with Generative AI, an extension of the company’s groundbreaking multimodal Dynamic Interaction interface, able to be integrated with any vehicle or smart device. ◦Joined the Toast ecosystem to provide best-in-class voice-ordering technology to restaurants using Toast’s Point-of-Sale system. ◦Qualcomm demonstrated SoundHound’s voice technology at NRF 2023. ◦Strong representation at CES with Qualcomm, Yobe, and LG. ◦Nominated for a 2023 Webby Award in the Best Use of Voice Technology category for Dynamic Interaction.Financial Results in DetailThree Months Ended(thousands, except per share data)March 31,2023March 31, 2022Change in %Cumulative bookings backlog1$335,967 $229,827 46 %Revenues$6,707 $4,290 56 %Operating expenses:Cost of revenues$1,976 $1,773 11 %Sales and marketing4,875 2,581 89 %Research and development14,184 16,650 (15)%General and administrative7,125 4,003 78 %Restructuring3,585 — #DIV/0!Total operating expenses$31,745 $25,007 27 %Operating loss$(25,038)$(20,717)21 %Net loss$(26,369)$(25,103)5 %Net loss per share$(0.13)$(0.36)$0.23 Adjusted EBITDA2$(14,775)$(16,961)(13)%1)Cumulative bookings backlog is prior quarter end balance plus new bookings in the current quarter minus associated revenue recognized.2)Please see table below for a reconciliation from GAAP to non-GAAP.Summary of Liquidity and Cash FlowsThe company’s cash and cash equivalents was $46.3 million at March 31, 2023. In January 2023, the company successfully raised $25 million in net proceeds from preferred equity financing. In February, the company’s ELOC became effective and it has leveraged this facility for additional proceeds. Additionally, in April, SoundHound secured $100 million of minimally dilutive debt financing. Through these financings, cumulatively the company raised over $150 million year-to-date through April, the proceeds of which were partly used to retire the company's existing debt.Three Months Ended(thousands)March 31,2023March 31,2022Cash flows:Net cash used in operating activities$(14,467)$(14,989)Net cash used in investing activities(15)(611)Net cash provided by financing activities51,568 1,955 Net change in cash and cash equivalents$37,086 $(13,645)Business OutlookSoundHound continues to expect 2023 revenue to be in a range of $43 to $50 million. The company continues to expect to be adjusted EBITDA positive in the fourth quarter of 2023.Additional InformationSoundHound expects to file its Form 10-Q for first quarter 2023, by May 15, 2023. For more information please see the company’s SEC filings which can be obtained on our website at investors.soundhound.com.If you wish to receive company email notifications, please register at investor.soundhound.com.2Conference Call and WebcastKeyvan Mohajer, Co-Founder and CEO, and Nitesh Sharan, CFO will host a live audio conference call and webcast today at 2:30 p.m. Pacific Time/5:30 p.m. Eastern Time. A live webcast will also be accessible at investors.soundhound.com and a replay of the webcast will be available for 90 days following the session. About SoundHoundSoundHound (Nasdaq: SOUN), a global leader in conversational intelligence, offers voice AI solutions that let businesses offer incredible conversational experiences to their customers. Built on proprietary technology, SoundHound’s voice AI delivers best-in-class speed and accuracy in numerous languages to product creators across automotive, TV, and IoT, and to customer service industries via groundbreaking AI-driven products like Smart Answering, Smart Ordering, and Dynamic Interaction™, a real-time, multimodal customer service interface. Along with SoundHound Chat AI, a powerful voice assistant with integrated Generative AI, SoundHound powers millions of products and services, and processes billions of interactions each year for world class businesses. Forward Looking StatementsThis press release contains forward-looking statements, which are not historical facts, 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. In some cases, you can identify forward-looking statements by the use of words such as “may,” “could,” “expect,” “intend,” “plan,” “seek,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue,” “likely,” “will,” “would” and variations of these terms and similar expressions, or the negative of these terms or similar expressions. These forward-looking statements include, but are not limited to, statements concerning the expected financial performance of the company, the company's ability to implement its business strategy and anticipated business and operations, including the launch of its chat AI service, the potential utility of and market for the company's products and services, guidance for financial results for 2023 and our ability to timely file our annual report on Form 10-Q. Such forward-looking statements are necessarily based upon estimates and assumptions that, while considered reasonable by us and our management, are inherently uncertain. As a result, readers are cautioned not to place undue reliance on these forward-looking statements. Our actual results, performance or achievements may differ materially from those expressed or implied by these forward-looking statements. Actual results may differ materially from those indicated by these forward-looking statements as a result of risks and uncertainties impacting SoundHound’s business including, current uncertainties associated with the COVID-19 pandemic, our inability to predict or measure supply chain disruptions at our customers resulting from the COVID-19 pandemic and other causes, the potential future revenue associated with our AI platform products and services; our projected rate of revenue growth; the impact of our announced restructuring; our ability to predict direct and indirect customer demand for our existing and future products and to secure adequate manufacturing capacity; our ability to hire, retain and motivate employees; the effects of competition, including price competition within our industry segment; technological, regulatory and legal developments that uniquely or disproportionately impact our industry segment; developments in the economy and financial markets and those other factors described in our risk factors set forth in our filings with the Securities and Exchange Commission from time to time, including our Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. We do not intend to update or alter our forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.Non-GAAP Measures of Financial PerformanceTo supplement our financial statements, which are presented on the basis of U.S. generally accepted accounting principles (GAAP), the following non-GAAP measure of financial performance is included in this release: adjusted EBITDA. We define Adjusted EBITDA as our GAAP net loss excluding (i) interest and other expense, net, (ii) depreciation and amortization expense, (iii) income taxes, (iv) stock-based compensation, and (v) restructuring expense. A reconciliation of GAAP to this adjusted non-GAAP financial measure is included below. When analyzing the company's operating results, investors should not consider non-GAAP measures as substitutes for the comparable financial measures prepared in accordance with GAAP.3Reconciliation of GAAP Net Loss to Non-GAAP Adjusted EBITDAThree Months Ended(thousands)March 31,2023March 31,2022GAAP net profit (loss)$(26,369)$(25,103)Adjustments:Interest and other expense, net$1,002 $4,034 Income taxes329 352 Depreciation and amortization708 1,292 Stock-based compensation5,970 2,464 Restructuring3,585 — Adjusted EBITDA$(14,775)$(16,961)1)Includes other (income)/expense of ($0.1) and $1.1 million for the three months ended March 31, 2023 and 2022, respectively.4 |
0000071691-24-000158:pressrelease09302024.htm | 0000071691-24-000158 | 71,691 | 71,691 | NEW YORK TIMES CO (NYT) (CIK 0000071691) | ['NYT'] | 8-K | 8-K | 2024-11-04 | 2024-11-04 | 001-05837 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-05837&action=getcompany | 241,420,727 | EX-99.1 | EX-99.1 | 2.02,9.01 | https://www.sec.gov/Archives/edgar/data/71691/000007169124000158 | https://www.sec.gov/Archives/edgar/data/71691/000007169124000158/0000071691-24-000158-index.html | https://www.sec.gov/Archives/edgar/data/71691/000007169124000158/pressrelease09302024.htm | EX-99.1 2 pressrelease09302024.htm EX-99.1 Document The New York Times Company Reports Third-Quarter 2024 ResultsNEW YORK, November 4, 2024 – The New York Times Company (NYSE: NYT) announced today third-quarter 2024 results. Key Highlights•The Company added approximately 260,000 net digital-only subscribers compared with the end of the second quarter of 2024 bringing the total number of subscribers to 11.09 million.•Total digital-only average revenue per user (“ARPU”) increased 1.8 percent year-over-year to $9.45 primarily as a result of subscribers transitioning from promotional to higher prices and price increases on tenured non-bundled subscribers.•Growth in both digital subscribers and ARPU drove a year-over-year increase in digital subscription revenues of 14.2 percent.•Digital advertising revenues increased 8.8 percent year-over-year largely as a result of higher revenues from open-market programmatic advertising, which was largely driven by new advertising supply across our products, and direct-sold display advertising.•Other revenue increased 9.3 percent year-over-year as a result of higher Wirecutter affiliate referral and licensing revenues.•Operating costs and adjusted operating costs (defined below) each increased 5.4 percent year-over-year, largely as a result of higher cost of revenue, sales and marketing and product development expenses, partially offset by lower general and administrative expenses. •Operating profit increased 20.7 percent year-over-year to $76.7 million, while adjusted operating profit (defined below) increased 16.1 percent year-over-year to $104.2 million, primarily as a result of higher digital subscription revenues partially offset by higher adjusted operating costs.•Operating profit margin for the quarter was 12.0 percent and adjusted operating profit margin (defined below) was 16.3 percent, a year-over-year increase of approximately 130 basis points.•Diluted earnings per share for the quarter was $.39, a $.07 increase year-over-year and adjusted diluted earnings per share (defined below) was $.45, a $.08 increase year-over-year.Meredith Kopit Levien, president and chief executive officer, The New York Times Company, said, “The third quarter was another strong one for The Times as we made further progress toward becoming the essential subscription for every curious person seeking to understand and engage with the world. We passed 11 million total subscribers in the quarter, more than five million of whom now subscribe to the bundle or multiple products. Our world-class news coverage and premium lifestyle products meet complementary user needs, and drive revenue growth across subscriptions, advertising, affiliate and licensing. We believe that portfolio, and our ability to keep adding value to it over time, is what makes The Times resilient in a changing media landscape, and well-positioned to become a larger, more profitable company.”Summary of Quarterly Results(In millions, except percentages, subscriber metrics (in thousands), ARPU and per share data)Q3 2024Q2 2024Q1 2024Q4 2023Q3 2023Total subscribers(1)11,090 10,840 10,550 10,360 10,080 Digital-only subscribers(1)10,470 10,210 9,910 9,700 9,410 Digital-only subscribers quarterly net additions(1)260 300 210 300 210 Total digital-only ARPU$9.45 $9.34 $9.21 $9.24 $9.28 % change year-over-year1.8 %2.1 %1.9 %3.5 %4.6 %Digital-only subscription revenues$322.2 $304.5 $293.0 $288.7 $282.2 % change year-over-year14.2 %12.9 %13.2 %7.2 %15.7 %Digital advertising revenues$81.6 $79.6 $63.0 $107.7 $75.0 % change year-over-year8.8 %7.8 %2.9 %(3.7)%6.7 %Total revenues$640.2 $625.1 $594.0 $676.2 $598.3 % change year-over-year7.0 %5.8 %5.9 %1.3 %9.3 %Total operating costs$563.5 $545.7 $545.7 $547.2 $534.8 % change year-over-year5.4 %2.0 %2.4 %(4.8)%7.7 %Adjusted operating costs(2)$536.0 $520.4 $518.0 $522.3 $508.6 % change year-over-year5.4 %4.4 %2.2 %(0.7)%6.2 %Operating profit$76.7 $79.4 $48.3 $129.0 $63.6 Operating profit margin %12.0 %12.7 %8.1 %19.1 %10.6 %Adjusted operating profit (“AOP”) - NYTG$101.5 $107.1 $84.7 $158.4 $97.7 AOP margin % - NYTG17.0 %18.3 %15.2 %24.8 %17.3 %AOP - The Athletic$2.6 $(2.4)$(8.7)$(4.4)$(7.9)AOP(2)$104.2 $104.7 $76.1 $154.0 $89.8 AOP margin %(2)16.3 %16.7 %12.8 %22.8 %15.0 %Diluted earnings per share (“EPS”)$0.39 $0.40 $0.24 $0.66 $0.32 Adjusted diluted EPS(2)$0.45 $0.45 $0.31 $0.70 $0.37 Diluted shares165.8 165.5 165.6 165.9 165.4 (1) Subscribers (including net subscriber additions) are rounded to the nearest ten thousand.(2) Non-GAAP financial measure. See “Comparisons”, “Non-GAAP Financial Measures” and “Reconciliation of Non-GAAP Financial Measures” for more details.2ComparisonsUnless otherwise noted, all comparisons are for the third quarter of 2024 to the third quarter of 2023. Third quarter 2024 results included the following special item:•$4.6 million of pre-tax litigation-related costs ($3.4 million or $0.03 per share after tax) in connection with a lawsuit against Microsoft Corporation and Open AI Inc. and various of its corporate affiliates alleging unlawful and unauthorized copying and use of the Company’s journalism and other content in connection with their development of generative artificial intelligence products (“Generative AI Litigation Costs”). Management determined to report Generative AI Litigation Costs as a special item beginning in the first quarter of 2024 because, unlike other litigation expenses, the Generative AI Litigation Costs arise from a discrete, complex and unusual proceeding and do not, in management’s view, reflect the Company’s ongoing business operational performance.Third quarter 2023 results included the following special items:•A $2.5 million charge ($1.8 million or $0.01 per share after tax) related to an impairment of an indefinite-lived intangible asset.•A $2.3 million favorable adjustment ($1.7 million or $0.01 per share after tax) related to a reduction in a multiemployer pension plan liability.This release refers to certain non-GAAP financial measures, including adjusted operating profit, adjusted operating costs, adjusted diluted EPS and free cash flow. See “Non-GAAP Financial Measures” and “Reconciliation of Non-GAAP Financial Measures” for more details, including a discussion of management’s reasons for the presentation of these non-GAAP financial measures and reconciliations to the most comparable GAAP financial measures. 3Consolidated ResultsSubscribers and Net AdditionsThe Company ended the third quarter of 2024 with approximately 11.09 million subscribers to its print and digital products, including approximately 10.47 million digital-only subscribers. Of the 10.47 million digital-only subscribers, approximately 5.12 million were bundle and multiproduct subscribers.Compared with the end of the second quarter of 2024, there was a net increase of 260,000 digital-only subscribers. Average Revenue Per UserAverage revenue per user or “ARPU,” a metric we calculate to track the revenue generation of our digital subscriber base, represents the average revenue per digital subscriber over a 28-day billing cycle during the applicable quarter. For more information, please refer to the Supplemental Subscriber, ARPU and Subscriptions Revenues Information in the exhibits.Total digital-only ARPU was $9.45 for the third quarter of 2024, an increase of 1.8 percent compared with the third quarter of 2023 driven primarily by subscribers transitioning from promotional to higher prices and price increases on tenured non-bundled subscribers.Subscription RevenuesTotal subscription revenues increased 8.3 percent to $453.3 million in the third quarter of 2024. Subscription revenues from digital-only products increased 14.2 percent to $322.2 million due to an increase in bundle and multiproduct revenues and an increase in other single-product subscription revenues, partially offset by a decrease in news-only subscription revenues. Print subscription revenues decreased 3.8 percent to $131.1 million, primarily due to lower domestic home-delivery revenues.Advertising RevenuesThird-quarter 2024 total advertising revenues increased 1.1 percent to $118.4 million while digital advertising revenues increased 8.8 percent and print advertising revenues decreased 12.6 percent.Digital advertising revenues were $81.6 million, or 68.9 percent of total Company advertising revenues, compared with $75.0 million, or 64.0 percent, in the third quarter of 2023. Digital advertising revenues increased due to higher revenues from open-market programmatic advertising, which was largely driven by new advertising supplyacross our products, and direct-sold display advertising. Print advertising revenues decreased primarily due to declines in the finance and classifieds categories.Other RevenuesOther revenues increased 9.3 percent to $68.5 million in the third quarter of 2024, primarily as a result of higher Wirecutter affiliate referral and licensing revenues.Total RevenuesIn the aggregate, subscription, advertising and other revenues for the third quarter of 2024 increased 7.0 percent to $640.2 million from $598.3 million for the third quarter of 2023.4Operating CostsTotal operating costs increased 5.4 percent in the third quarter of 2024 to $563.5 million compared with $534.8 million in the third quarter of 2023. Operating costs in the third quarter of 2024 included Generative AI Litigation Costs of $4.6 million. Operating costs in the third quarter of 2023 included a $2.5 million impairment charge related to an indefinite-lived intangible asset, as well as a $2.3 million favorable adjustment related to a reduction of our multiemployer pension plan liability. Adjusted operating costs increased 5.4 percent to $536.0 million from $508.6 million in the third quarter of 2023.Cost of revenue increased 6.7 percent to $331.8 million compared with $311.1 million in the third quarter of 2023 due mainly to higher journalism expenses and higher subscriber and advertiser servicing costs, partially offset by lower print production and distribution costs.Sales and marketing costs increased 10.4 percent to $69.1 million compared with $62.6 million in the third quarter of 2023 due mainly to higher marketing and promotion costs. Media expenses, a component of sales and marketing costs that represents the cost to promote our subscription business, increased 33.8 percent to $35.0 million in the third quarter of 2024 from $26.1 million in the third quarter of 2023.Product development costs increased 6.3 percent to $61.0 million compared with $57.4 million in the third quarter of 2023, primarily due to higher compensation and benefits expenses.General and administrative costs decreased 6.9 percent to $76.2 million compared with $81.9 million in the third quarter of 2023, largely due to lower severance and outside services expenses.5Business Segment ResultsWe have two reportable segments: NYTG and The Athletic. Management uses adjusted operating profit (loss) by segment in assessing performance and allocating resources. The Company includes in its presentation revenues and adjusted operating costs to arrive at adjusted operating profit (loss) by segment. Adjusted operating costs are defined as operating costs before depreciation and amortization, severance, multiemployer pension plan withdrawal costs and special items. Adjusted operating profit is defined as operating profit before depreciation and amortization, severance, multiemployer pension plan withdrawal costs and special items. Refer to Segment Information in the exhibits for more information on these segment measures.The New York Times GroupNYTG revenues grew 5.7 percent in the third quarter of 2024 to $596.0 million from $563.9 million in the third quarter of 2023. Subscription revenues increased 7.4 percent to $422.2 million from $392.9 million in the third quarter of 2023, primarily due to growth in subscription revenues from digital-only products, partially offset by decreases in print subscription revenues. Advertising revenues increased 0.6 percent to $109.3 million from $108.7 million in the third quarter of 2023, due to higher revenues from digital advertising partially offset by declines in print advertising revenues. Other revenues increased 3.6 percent to $64.5 million from $62.3 million in the third quarter of 2024, due to higher Wirecutter affiliate referral revenues.NYTG adjusted operating costs increased 6.1 percent in the third quarter of 2024 to $494.5 million from $466.2 million in the third quarter of 2023, primarily due to higher journalism and sales and marketing costs.NYTG adjusted operating profit increased 4.0 percent to $101.5 million from $97.7 million in the third quarter of 2023. This was primarily the result of higher digital subscription and digital advertising revenues, partially offset by higher adjusted operating costs and lower print advertising and print subscription revenues.The AthleticThe Athletic revenues grew 29.8 percent in the third quarter of 2024 to $44.7 million from $34.4 million in the third quarter of 2023. Subscription revenues increased 21.4 percent to $31.1 million from $25.6 million in the third quarter of 2023, primarily due to growth in the number of subscribers with The Athletic. We provide all bundle subscribers with the ability to access The Athletic and all bundle subscribers are included in this metric. Advertising revenues increased 7.2 percent to $9.0 million from $8.4 million in the third quarter of 2023, primarily due to higher revenues from direct-sold display advertising. Other revenue increased to $4.5 million from $0.4 million in the third quarter of 2023, primarily due to an increase in licensing revenue from an Apple licensing deal.The Athletic adjusted operating costs decreased 0.6 percent in the third quarter of 2024 to $42.1 million from $42.3 million in the third quarter of 2023. The decrease was mainly due to lower sales and marketing costs as some media spend was shifted to NYTG for bundle marketing, and was partially offset by higher journalism and product development costs.The Athletic adjusted operating profit increased $10.5 million to $2.6 million from a loss of $7.9 million in the third quarter of 2023. This was primarily the result of higher subscription and other revenues.6Consolidated Other DataInterest Income and Other, netInterest income and other, net in the third quarter of 2024 was $9.4 million compared with $5.7 million in the third quarter of 2023. The increase was primarily a result of higher interest rates on cash and marketable securities.Income TaxesThe Company had income tax expense of $20.9 million in the third quarter of 2024 compared with $16.4 million in the third quarter of 2023. The effective income tax rate was 24.6 percent in the third quarter of 2024 and 23.4 percent in the third quarter of 2023. The increase in income tax expense was primarily due to higher pre-tax income in the third quarter of 2024. The effective income tax rate was lower in the third quarter of 2023 primarily due to the benefit of additional tax credits in that quarter.Earnings Per ShareDiluted EPS in the third quarter of 2024 was $.39 compared with $.32 in the same period of 2023. The increase in diluted EPS was primarily driven by higher operating profit and higher interest income. Adjusted diluted EPS was $.45 in the third quarter of 2024 compared with $.37 in the third quarter of 2023. LiquidityAs of September 30, 2024, the Company had cash and marketable securities of $820.4 million, an increase of $111.2 million from $709.2 million as of December 31, 2023.The Company has a $350 million unsecured revolving line of credit. As of September 30, 2024, there were no outstanding borrowings under this credit facility, and the Company did not have other outstanding debt.Net cash provided by operating activities in the first nine months of 2024 was $258.8 million compared with $224.1 million in the same period of 2023. Free cash flow in the first nine months of 2024 was $237.7 million compared with $207.6 million in the same period of 2023.Shares RepurchasesDuring the quarter ended September 30, 2024, the Company repurchased 341,456 shares of its Class A Common Stock for an aggregate purchase price of approximately $18.3 million. As of November 1, 2024, approximately $183.0 million remains available and authorized for repurchases.Capital ExpendituresCapital expenditures totaled approximately $6 million in the third quarter of 2024 compared with approximately $7 million in the third quarter of 2023. The decrease in capital expenditures in 2024 was primarily driven by lower technology expenditures and lower expenditures at the Company’s College Point, N.Y., printing and distribution facility, partially offset by higher expenditures related to improvements in the Company headquarters.7OutlookBelow is the Company’s guidance for revenues and adjusted operating costs for the fourth quarter of 2024 compared with the fourth quarter of 2023. The New York Times CompanyDigital-only subscription revenuesincrease 14 - 17%Total subscription revenuesincrease 7 - 9%Digital advertising revenuesincrease high-single-digits to low-double-digitsTotal advertising revenuesincrease low-single-digitsOther revenueincrease 11 - 13%Adjusted operating costsincrease 5 - 6%The Company expects the following on a pre-tax basis in 2024:•Depreciation and amortization: approximately $80 million•Interest income and other, net: approximately $35 million, and•Capital expenditures: approximately $35 million.Conference Call Information The Company’s third-quarter 2024 earnings conference call will be held on Monday, November 4, 2024, at 8:00 a.m. E.T. A live webcast of the earnings conference call will be available at investors.nytco.com.Participants can pre-register for the conference call at https://dpregister.com/sreg/10193630/fdb71fe658, which will generate dial-in instructions allowing participants to bypass an operator at the time of the call. Alternatively, to access the call without pre-registration, dial 844-413-3940 (in the U.S.) or 412-858-5208 (international).An archive of the webcast will be available beginning about two hours after the call at investors.nytco.com. An audio replay will also be available at 877-344-7529 (in the U.S.) and 412-317-0088 (international) beginning approximately two hours after the call until 11:59 p.m. E.T. on Monday, November 18. The passcode for accessing the audio replay via phone is 8671250.About The New York Times CompanyThe New York Times Company (NYSE: NYT) is a trusted source of quality, independent journalism whose mission is to seek the truth and help people understand the world. With more than 11 million subscribers across a diverse array of print and digital products — from news to cooking to games to sports — The Times Company has evolved from a local and regional news leader into a diversified media company with curious readers, listeners and viewers around the globe. Follow news about the company at NYTCo.com.8Forward-Looking StatementsExcept for the historical information contained herein, the matters discussed in this press release are 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. Terms such as “aim,” “anticipate,” “believe,” “confidence,” “contemplate,” “continue,” “conviction,” “could,” “drive,” “estimate,” “expect,” “forecast,” “future,” “goal,” “guidance,” “intend,” “likely,” “may,” “might,” “objective,” “opportunity,” “optimistic,” “outlook,” “plan,” “position,” “potential,” “predict,” “project,” “seek,” “should,” “strategy,” “target,” “will,” “would” or similar statements or variations of such words and other similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such terms. Forward-looking statements are based upon our current expectations, estimates and assumptions and involve risks and uncertainties that change over time; actual results could differ materially from those predicted by such forward-looking statements. These risks and uncertainties include, but are not limited to: significant competition in all aspects of our business; our ability to grow the size and profitability of our subscriber base; our dependence on user and other metrics that are subject to inherent challenges in measurement; numerous factors that affect our advertising revenues, including market dynamics, evolving digital advertising trends and the evolution of our strategy; damage to our brand or reputation; risks associated with generative artificial intelligence technology; economic, market, geopolitical and public health conditions or other events; risks associated with the international scope of our business and foreign operations; significant disruptions in our newsprint supply chain or newspaper printing and distribution channels or a significant increase in the costs to print and distribute our newspaper; risks associated with environmental, social and governance matters and any related reporting obligations; adverse results from litigation or governmental investigations; risks associated with acquisitions (including The Athletic), divestitures, investments and similar transactions; the risks and challenges associated with investments we make in new and existing products and services; risks associated with attracting and maintaining a talented and diverse workforce; the impact of labor negotiations and agreements; potential limits on our operating flexibility due to the nature of significant portions of our expenses; the effects of the size and volatility of our pension plan obligations; liabilities that may result from our participation in multiemployer pension plans; our ability to improve and scale our technical and data infrastructure; security incidents and other network and information systems disruptions; our ability to comply with laws and regulations with respect to privacy, data protection and consumer marketing and subscription practices; payment processing risk; defects, delays or interruptions in the cloud-based hosting services we utilize; our ability to protect our intellectual property; claims against us of intellectual property infringement; our ability to meet our publicly announced guidance and/or targets; the effects of restrictions on our operations as a result of the terms of our credit facility; our future access to capital markets and other financing options; and the concentration of control of our company due to our dual-class capital structure. More information regarding these risks and uncertainties and other important factors that could cause actual results to differ materially from those in the forward-looking statements is set forth in the Company’s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2023, and subsequent filings. Investors are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.9Non-GAAP Financial MeasuresThis release refers to certain non-GAAP financial measures, including adjusted operating profit, defined as operating profit before depreciation, amortization, severance, multiemployer pension plan withdrawal costs and special items; adjusted operating profit margin, defined as adjusted operating profit divided by revenues; adjusted operating costs, defined as operating costs before depreciation, amortization, severance and multiemployer pension plan withdrawal costs and special items; adjusted diluted EPS, defined as diluted EPS excluding amortization of acquired intangible assets, severance, non-operating retirement costs and special items; and free cash flow, defined as net cash provided by operating activities less capital expenditures. Refer to “Reconciliation of Non-GAAP Financial Measures” in the exhibits for a discussion of management’s reasons for the presentation of these non-GAAP financial measures and reconciliations to the most comparable GAAP financial measures. Certain guidance is provided on a non-GAAP basis and not reconciled to the most directly comparable GAAP measure because we are unable to provide, without unreasonable effort, a calculation or estimation of amounts necessary for such reconciliation due to the inherent difficulty of forecasting such amounts.Exhibits:Condensed Consolidated Statements of OperationsFootnotesSupplemental Subscriber, ARPU and Subscription Revenues InformationSegment InformationReconciliation of Non-GAAP Financial MeasuresContacts:Media:Danielle Rhoades Ha, 212-556-8719; danielle.rhoades-ha@nytimes.comInvestors:Anthony DiClemente, 212-556-7661; anthony.diclemente@nytimes.com10THE NEW YORK TIMES COMPANYCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(Dollars and shares in thousands, except per share data)Third QuarterNine Months 20242023% Change20242023% ChangeRevenuesSubscription(a)$453,327 $418,577 8.3 %$1,321,654 $1,225,709 7.8 %Advertising(b)118,370 117,113 1.1 %341,244 341,124 — Other(c)68,481 62,655 9.3 %196,392 183,104 7.3 %Total revenues640,178 598,345 7.0 %1,859,290 1,749,937 6.2 %Operating costsCost of revenue (excluding depreciation and amortization)331,839 311,135 6.7 %971,480 927,910 4.7 %Sales and marketing69,131 62,635 10.4 %195,568 191,910 1.9 %Product development61,030 57,433 6.3 %186,435 170,542 9.3 %General and administrative76,209 81,870 (6.9)%231,894 235,194 (1.4)%Depreciation and amortization20,622 21,475 (4.0)%61,865 64,173 (3.6)%Generative AI Litigation Costs(d)4,620 — *7,592 — *Impairment charges(e)— 2,503 *— 15,239 *Multiemployer pension plan liability adjustment— (2,273)*— (2,273)*Total operating costs563,451 534,778 5.4 %1,654,834 1,602,695 3.3 %Operating profit76,727 63,567 20.7 %204,456 147,242 38.9 %Other components of net periodic benefit (costs)/income(1,050)684 *(3,124)2,053 *Interest income and other, net9,366 5,736 63.3 %26,449 13,426 97.0 %Income before income taxes85,043 69,987 21.5 %227,781 162,721 40.0 %Income tax expense20,900 16,372 27.7 %57,681 40,211 43.4 %Net income$64,143 $53,615 19.6 %$170,100 $122,510 38.8 %Average number of common shares outstanding:Basic164,419 164,568 (0.1)%164,535 164,752 (0.1)%Diluted165,847 165,406 0.3 %165,834 165,436 0.2 %Basic earnings per share attributable to common stockholders$0.39 $0.33 18.2 %$1.03 $0.74 39.2 %Diluted earnings per share attributable to common stockholders$0.39 $0.32 21.9 %$1.03 $0.74 39.2 %Dividends declared per share$0.13 $0.11 18.2 %$0.39 $0.33 18.2 %* Represents a change equal to or in excess of 100% or not meaningful.See footnotes pages for additional information. 11THE NEW YORK TIMES COMPANYFOOTNOTES(Dollars in thousands)(a) The following table summarizes digital and print subscription revenues for the third quarters and first nine months of 2024 and 2023:Third QuarterNine Months20242023% Change20242023% ChangeDigital-only subscription revenues(1)$322,198 $282,228 14.2 %$919,677 $810,770 13.4 %Print subscription revenues(2)131,129 136,349 (3.8)%401,977 414,939 (3.1)%Total subscription revenues$453,327 $418,577 8.3 %$1,321,654 $1,225,709 7.8 %(1) Includes revenue from bundled and standalone subscriptions to our news product, as well as to The Athletic and to our Cooking, Games and Wirecutter products.(2) Includes domestic home-delivery subscriptions, which include access to our digital products. Also includes single-copy, NYT International and Other subscription revenues.(b) The following table summarizes digital and print advertising revenues for the third quarters and first nine months of 2024 and 2023:Third QuarterNine Months20242023% Change20242023% ChangeAdvertising revenues:Digital$81,564 $75,001 8.8 %$224,166 $210,076 6.7 %Print36,806 42,112 (12.6)%117,078 131,048 (10.7)%Total advertising$118,370 $117,113 1.1 %$341,244 $341,124 — (c) Other revenues primarily consist of revenues from licensing, Wirecutter affiliate referrals, commercial printing, the leasing of floors in the Company headquarters, our live events business, books, television and film, retail commerce and our student subscription sponsorship program. Digital other revenues, which consist primarily of Wirecutter affiliate referral revenue and digital licensing revenues, totaled $43.6 million and $121.6 million for the third quarter and first nine months of 2024, respectively.(d) In the third quarter and first nine months of 2024, the Company recorded $4.6 million ($3.4 million or $0.03 per share after tax) and $7.6 million ($5.6 million or $0.05 per share after tax), respectively, of pre-tax litigation-related costs in connection with a lawsuit against Microsoft and Open AI Inc. (e) In the second quarter of 2023, the Company recorded a $12.7 million impairment charge ($9.3 million or $0.06 per share after tax) related to excess leased office space that is being marketed for sublet (the “lease-related impairment”). In the third quarter of 2023, the Company recorded a $2.5 million impairment charge ($1.8 million or $0.01 per share after tax) related to an indefinite-lived intangible asset.12THE NEW YORK TIMES COMPANYSUPPLEMENTAL SUBSCRIBER, ARPU AND SUBSCRIPTION REVENUES INFORMATION(Amounts in thousands, except for ARPU)We offer a digital subscription package (or “bundle”) that includes access to our digital news product (which includes our news website, NYTimes.com, and mobile and Audio applications), as well as to The Athletic and to our Cooking, Games and Wirecutter products. Our subscriptions also include standalone digital subscriptions to our digital news product, as well as to The Athletic, and our Cooking, Games and Wirecutter products.The following tables present information regarding the number of subscribers to the Company’s products as well as certain additional metrics. A subscriber is defined as a user who has subscribed (and provided a valid method of payment) for the right to access one or more of the Company’s products. Subscribers with a domestic home-delivery print subscription to The New York Times, which includes access to our digital products, are excluded from digital-only subscribers. The following table sets forth subscribers as of the end of the five most recent fiscal quarters:Q3 2024Q2 2024Q1 2024Q4 2023Q3 2023Digital-only subscribers:Bundle and multiproduct(1)(2)5,120 4,830 4,550 4,220 3,790 News-only(2)(3)2,110 2,290 2,500 2,740 3,020 Other single-product(2)(4)3,240 3,100 2,860 2,740 2,600 Total digital-only subscribers(2)(5)10,470 10,210 9,910 9,700 9,410 Print subscribers(6)620 630 640 660 670 Total subscribers11,090 10,840 10,550 10,360 10,080 (1) Subscribers with a bundle subscription or standalone digital-only subscriptions to two or more of the Company’s products.(2) Includes group corporate and group education subscriptions, which collectively represented approximately 6% of total digital-only subscribers as of the end of the third quarter of 2024. The number of group subscribers is derived using the value of the relevant contract and a discounted subscription rate.(3) Subscribers with only a digital-only news product subscription.(4) Subscribers with only one digital-only subscription to The Athletic or to our Cooking, Games or Wirecutter products.(5) Subscribers with digital-only subscriptions to one or more of our news product, The Athletic, or our Cooking, Games and Wirecutter products.(6) Subscribers with a domestic home-delivery or mail print subscription to The New York Times, which includes access to our digital products, or a print subscription to our Book Review or Large Type Weekly products.The sum of individual metrics may not always equal total amounts indicated due to rounding. Subscribers (including net subscriber additions) are rounded to the nearest ten thousand.The following table sets forth ARPU metrics relating to the above digital-only subscriber categories for the five most recent fiscal quarters:Q3 2024Q2 2024Q1 2024Q4 2023Q3 2023Digital-only ARPU:Bundle and multiproduct$12.35 $11.96 $11.79 $12.13 $12.81 News-only$11.48 $11.26 $10.88 $10.38 $10.05 Other single-product$3.59 $3.65 $3.59 $3.56 $3.48 Total digital-only ARPU$9.45 $9.34 $9.21 $9.24 $9.28 ARPU metrics are calculated by dividing the digital subscription revenues in the quarter by the average number of digital-only subscribers divided by the number of days in the quarter multiplied by 28 to reflect a 28-day billing cycle. In calculating ARPU metrics, for our subscriber categories (Bundle and multiproduct, News-only and Other single-product), we use the monthly average number of digital-only subscribers (calculated as the sum of the number of subscribers in each category at the beginning and end of the month, divided by two) and for Total digital-only ARPU, we use the daily average number of digital-only subscribers.13THE NEW YORK TIMES COMPANYSUPPLEMENTAL SUBSCRIBER, ARPU AND SUBSCRIPTION REVENUES INFORMATION(Amounts in thousands)The following table sets forth the subset of subscribers above who have a digital-only standalone subscription to The Athletic or a bundle subscription that includes the ability to access The Athletic as of the end of the five most recent fiscal quarters. The Company plans to discontinue reporting this metric after the fourth quarter of 2024. Digital-only subscribers with The Athletic will continue to be included in our reported bundle and multiproduct and other single-product subscriber categories.Q3 2024Q2 2024Q1 2024Q4 2023Q3 2023Digital-only subscribers with The Athletic(1)(2)5,540 5,280 4,990 4,650 4,180 (1) We provide all bundle subscribers with the ability to access The Athletic and all bundle subscribers are included in this metric.(2) Subscribers (including net subscriber additions) are rounded to the nearest ten thousand.14THE NEW YORK TIMES COMPANYSEGMENT INFORMATION(Dollars in thousands)We have two reportable segments: NYTG and The Athletic. Management uses adjusted operating profit (loss) by segment in assessing performance and allocating resources. The Company includes in its presentation revenues and adjusted operating costs to arrive at adjusted operating profit (loss) by segment. Adjusted operating costs are defined as operating costs before depreciation and amortization, severance, multiemployer pension plan withdrawal costs and special items. Adjusted operating profit is defined as operating profit before depreciation and amortization, severance, multiemployer pension plan withdrawal costs and special items. Adjusted operating profit expressed as a percentage of revenues is referred to as adjusted operating profit margin.Subscription revenues from and expenses associated with our bundle are allocated to NYTG and The Athletic.We allocate 10% of bundle revenues to The Athletic based on management’s view of The Athletic’s relative value to the bundle, which is derived based on analysis of various metrics. We allocate 10% of product development, marketing and subscriber servicing expenses (including direct variable expenses such as credit card fees, third party fees and sales taxes) associated with the bundle to The Athletic, and the remaining costs are allocated to NYTG, in each case, in line with the revenues allocations.Third QuarterNine Months20242023% Change20242023% ChangeRevenuesNYTG$596,028$563,9035.7 %$1,738,578$1,657,1794.9 %The Athletic44,71334,44229.8 %122,40092,75832.0 %Intersegment eliminations(1)(563)—*(1,688)—*Total revenues$640,178$598,3457.0 %$1,859,290$1,749,9376.2 %Adjusted operating costsNYTG$494,485$466,2496.1 %$1,445,188$1,394,2683.7 %The Athletic42,07542,341(0.6)%130,855119,7749.3 %Intersegment eliminations(1)(563)—*(1,688)—*Total adjusted operating costs$535,997$508,5905.4 %$1,574,355$1,514,0424.0 %Adjusted operating profit (loss)NYTG$101,543$97,6544.0 %$293,390$262,91111.6 %The Athletic2,638(7,899)*(8,455)(27,016)(68.7)%Total adjusted operating profit$104,181$89,75516.1 %$284,935$235,89520.8 %AOP margin % - NYTG17.0 %17.3 %(30) bps16.9 %15.9 %100 bps(1) Intersegment eliminations (“I/E”) related to content licensing.* Represents a change equal to or in excess of 100% or not meaningful.15THE NEW YORK TIMES COMPANYSEGMENT INFORMATION(Dollars in thousands)Revenues detail by segmentThird QuarterNine Months20242023% Change20242023% ChangeNYTGSubscription$422,192 $392,937 7.4 %$1,233,577 $1,152,130 7.1 %Advertising109,324 108,672 0.6 %319,416 323,091 (1.1)%Other64,512 62,294 3.6 %185,585 181,958 2.0 %Total$596,028 $563,903 5.7 %$1,738,578 $1,657,179 4.9 %The Athletic Subscription$31,135 $25,640 21.4 %$88,077 $73,579 19.7 %Advertising9,046 8,441 7.2 %21,828 18,033 21.0 %Other4,532 361 *12,495 1,146 *Total$44,713 $34,442 29.8 %$122,400 $92,758 32.0 %I/E(1)$(563)$— *$(1,688)$— *The New York Times CompanySubscription$453,327 $418,577 8.3 %$1,321,654 $1,225,709 7.8 %Advertising118,370 117,113 1.1 %341,244 341,124 — Other68,481 62,655 9.3 %196,392 183,104 7.3 %Total$640,178 $598,345 7.0 %$1,859,290 $1,749,937 6.2 %(1) Intersegment eliminations (“I/E”) related to content licensing recorded in Other revenues.* Represents a change equal to or in excess of 100% or not meaningful.16THE NEW YORK TIMES COMPANYSEGMENT INFORMATION(Dollars in thousands)Adjusted operating costs (operating costs before depreciation and amortization, severance, multiemployer pension plan withdrawal costs and special items) detail by segmentThird QuarterNine Months20242023% Change20242023% ChangeNYTGCost of revenue (excluding depreciation and amortization)$306,431 $288,228 6.3 %$897,306 $860,340 4.3 %Sales and marketing63,442 51,956 22.1 %173,380 165,135 5.0 %Product development52,672 50,930 3.4 %161,116 151,810 6.1 %Adjusted general and administrative(1)71,940 75,135 (4.3)%213,386 216,983 (1.7)%Total$494,485 $466,249 6.1 %$1,445,188 $1,394,268 3.7 %The Athletic Cost of revenue (excluding depreciation and amortization)$25,971 $22,907 13.4 %$75,862 $67,570 12.3 %Sales and marketing5,689 10,679 (46.7)%22,188 26,775 (17.1)%Product development8,358 6,503 28.5 %25,319 18,732 35.2 %Adjusted general and administrative(2)2,057 2,252 (8.7)%7,486 6,697 11.8 %Total$42,075 $42,341 (0.6)%$130,855 $119,774 9.3 %I/E(3)$(563)$— *$(1,688)$— *The New York Times CompanyCost of revenue (excluding depreciation and amortization)$331,839 $311,135 6.7 %$971,480 $927,910 4.7 %Sales and marketing69,131 62,635 10.4 %195,568 191,910 1.9 %Product development61,030 57,433 6.3 %186,435 170,542 9.3 %Adjusted general and administrative73,997 77,387 (4.4)%220,872 223,680 (1.3)%Total$535,997 $508,590 5.4 %$1,574,355 $1,514,042 4.0 %(1) Excludes severance of $5.5 million for the first nine months of 2024. There were no severance costs for the third quarter of 2024. Excludes multiemployer pension withdrawal costs of $1.9 million and $4.8 million for the third quarter and first nine months of 2024, respectively. Excludes severance of $3.1 million and $6.4 million for the third quarter and first nine months of 2023, respectively. Excludes multiemployer pension withdrawal costs of $1.4 million and $3.9 million for the third quarter and first nine months of 2023, respectively.(2) Excludes severance of $0.3 million and $0.8 million for the third quarter and first nine months of 2024, respectively. Excludes severance of $1.2 million for the first nine months of 2023. There were no severance costs for the third quarter of 2023. (3) Intersegment eliminations (“I/E”) related to content licensing recorded in Cost of revenue (excluding depreciation and amortization).* Represents a change equal to or in excess of 100% or not meaningful.17THE NEW YORK TIMES COMPANYRECONCILIATION OF NON-GAAP FINANCIAL MEASURESIn this release, the Company has referred to non-GAAP financial information with respect to adjusted diluted EPS, defined as diluted EPS excluding amortization of acquired intangible assets, severance, non-operating retirement costs and special items; adjusted operating profit, defined as operating profit before depreciation, amortization, severance, multiemployer pension plan withdrawal costs and special items; adjusted operating profit margin, defined as adjusted operating profit divided by revenues; adjusted operating costs, defined as operating costs before depreciation, amortization, severance, multiemployer pension withdrawal costs and special items; and free cash flow, defined as net cash provided by operating activities less capital expenditures. The Company has included these non-GAAP financial measures because management reviews them on a regular basis and uses them to evaluate and manage the performance of the Company’s operations. Management believes that, for the reasons outlined below, these non-GAAP financial measures provide useful information to investors as a supplement to reported diluted earnings/(loss) per share, operating profit/(loss) and operating costs. However, these measures should be evaluated only in conjunction with the comparable GAAP financial measures and should not be viewed as alternative or superior measures of GAAP results.Adjusted diluted EPS provides useful information in evaluating the Company’s period-to-period performance because it eliminates items that the Company does not consider to be indicative of earnings from ongoing operating activities. Adjusted operating profit and adjusted operating profit margin are useful in evaluating the ongoing performance of the Company’s business as they exclude the significant non-cash impact of depreciation and amortization as well as items not indicative of ongoing operating activities. Total operating costs include depreciation, amortization, severance, multiemployer pension plan withdrawal costs and special items. Adjusted operating costs provide investors with helpful supplemental information on the Company’s underlying operating costs that is used by management in its financial and operational decision-making.Management considers special items, which may include impairment charges, pension settlement charges, acquisition-related costs, and beginning in the first quarter of 2024, Generative AI Litigation Costs, as well as other items that arise from time to time, to be outside the ordinary course of our operations. Management believes that excluding these items provides a better understanding of the underlying trends in the Company’s operating performance and allows more accurate comparisons of the Company’s operating results to historical performance. Management determined to report Generative AI Litigation Costs as a special item and thus exclude them beginning in the first quarter of 2024 because, unlike other litigation expenses which are not excluded, the Generative AI Litigation Costs arise from a discrete, complex and unusual proceeding and do not, in management’s view, reflect the Company’s ongoing business operational performance. In addition, management excludes severance costs, which may fluctuate significantly from quarter to quarter, because it believes these costs do not necessarily reflect expected future operating costs and do not contribute to a meaningful comparison of the Company’s operating results to historical performance. The Company considers free cash flow as providing useful information to management and investors about the amount of cash that is available to be used to strengthen the Company’s balance sheet, for strategic opportunities, including investing in the Company’s business and strategic acquisitions, and/or for the return of capital to stockholders in the form of dividends and stock repurchases.Non-operating retirement costs include (i) interest cost, expected return on plan assets, amortization of actuarial gains and loss components and amortization of prior service credits of single-employer pension expense, (ii) interest cost, amortization of actuarial gains and loss components and (iii) all multiemployer pension plan withdrawal costs. These non-operating retirement costs are primarily tied to financial market performance including changes in market interest rates and investment performance. Management considers non-operating retirement costs to be outside the performance of the business and believes that presenting adjusted diluted EPS excluding non-operating retirement costs and presenting adjusted operating results excluding multiemployer pension plan withdrawal costs, in addition to the Company’s GAAP diluted EPS and GAAP operating results, provide increased transparency and a better understanding of the underlying trends in the Company’s operating business performance.Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are set out in the tables below.18THE NEW YORK TIMES COMPANYRECONCILIATION OF NON-GAAP FINANCIAL MEASURES(Dollars in thousands, except per share data)Reconciliation of diluted EPS excluding amortization of acquired intangible assets, severance, non-operating retirement costs and special items (or adjusted diluted EPS)Third QuarterNine Months20242023% Change20242023% ChangeDiluted EPS$0.39 $0.32 21.9 %$1.03 $0.74 39.2 %Add:Amortization of acquired intangible assets0.04 0.04 — 0.12 0.13 (7.7 %)Severance— 0.02 *0.04 0.05 (20.0 %)Non-operating retirement costs: Multiemployer pension plan withdrawal costs0.01 0.01 — 0.03 0.02 50.0 %Other components of net periodic benefit costs0.01 — *0.02 (0.01)*Special items:Generative AI Litigation Costs0.03 — *0.05 — *Impairment charges— 0.02 *— 0.10 *Multiemployer pension plan liability adjustment— (0.01)*— (0.01)*Income tax expense of adjustments(0.02)(0.02)— (0.07)(0.07)— Adjusted diluted EPS(1)$0.45 $0.37 21.6 %$1.21 $0.94 28.7 %(1) Amounts may not add due to rounding.* Represents a change equal to or in excess of 100% or not meaningful.Reconciliation of operating profit before depreciation and amortization, severance, multiemployer pension plan withdrawal costs and special items (or adjusted operating profit)Third QuarterNine Months20242023% Change20242023% ChangeOperating profit$76,727$63,56720.7 %$204,456$147,24238.9 %Add:Depreciation and amortization20,62221,475(4.0)%61,86564,173(3.6)%Severance3293,086(89.3)%6,2307,578(17.8)%Multiemployer pension plan withdrawal costs1,8831,39734.8 %4,7923,93621.7 %Generative AI Litigation Costs4,620—*7,592—*Impairment charges—2,503*—15,239*Multiemployer pension plan liability adjustment—(2,273)*—(2,273)*Adjusted operating profit$104,181$89,75516.1 %$284,935$235,89520.8 %Divided by:Revenues$640,178$598,3457.0 %$1,859,290$1,749,9376.2 %Operating profit margin12.0 %10.6 %140 bps11.0%8.4%260 bpsAdjusted operating profit margin16.3 %15.0 %130 bps15.3%13.5%180 bps* Represents a change equal to or in excess of 100% or not meaningful.19THE NEW YORK TIMES COMPANYRECONCILIATION OF NON-GAAP FINANCIAL MEASURES(Dollars in thousands)Reconciliation of total operating costs before depreciation and amortization, severance, multiemployer pension plan withdrawal costs and special items (or adjusted operating costs)Third Quarter20242023NYTGThe AthleticI/E(1)TotalNYTGThe AthleticTotal% ChangeTotal operating costs$515,012 $49,002 $(563)$563,451 $485,616 $49,162 $534,778 5.4 %Less:Depreciation and amortization14,024 6,598 — 20,622 14,654 6,821 21,475 (4.0)%Severance— 329 — 329 3,086 — 3,086 (89.3)%Multiemployer pension plan withdrawal costs1,883 — — 1,883 1,397 — 1,397 34.8 %Generative AI Litigation Costs4,620 — — 4,620 — — — *Impairment charges— — — — 2,503 — 2,503 *Multiemployer pension plan liability adjustment— — — — (2,273)— (2,273)*Adjusted operating costs$494,485 $42,075 $(563)$535,997 $466,249 $42,341 $508,590 5.4 %Nine Months20242023NYTGThe AthleticI/E(1)TotalNYTGThe AthleticTotal% ChangeTotal operating costs$1,505,034 $151,488 $(1,688)$1,654,834 $1,461,281 $141,414 $1,602,695 3.3 %Less:Depreciation and amortization41,990 19,875 — 61,865 43,697 20,476 64,173 (3.6)%Severance5,472 758 — 6,230 6,414 1,164 7,578 (17.8)%Multiemployer pension plan withdrawal costs4,792 — — 4,792 3,936 — 3,936 21.7 %Generative AI Litigation Costs7,592 — — 7,592 — — — *Impairment charges— — — — 15,239 — 15,239 *Multiemployer pension plan liability adjustment— — — — (2,273)— (2,273)*Adjusted operating costs$1,445,188 $130,855 $(1,688)$1,574,355 $1,394,268 $119,774 $1,514,042 4.0 %(1) Intersegment eliminations (“I/E”) related to content licensing.* Represents a change equal to or in excess of 100% or not meaningful.Reconciliation of net cash provided by operating activities before capital expenditures (or free cash flow)Nine Months20242023Net cash provided by operating activities$258,816 $224,100 Less: Capital expenditures(21,115)(16,539)Free cash flow$237,701 $207,561 20 |
0000950170-23-024016:crvl-ex99_1.htm | 0000950170-23-024016 | 874,866 | 874,866 | CORVEL CORP (CRVL) (CIK 0000874866) | ['CRVL'] | 8-K | 8-K | 2023-05-25 | 2023-05-25 | 000-19291 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=000-19291&action=getcompany | 23,955,620 | EX-99.1 | EX-99.1 | 2.02,9.01 | https://www.sec.gov/Archives/edgar/data/874866/000095017023024016 | https://www.sec.gov/Archives/edgar/data/874866/000095017023024016/0000950170-23-024016-index.html | https://www.sec.gov/Archives/edgar/data/874866/000095017023024016/crvl-ex99_1.htm | EX-99.1 2 crvl-ex99_1.htm EX-99.1 EX-99.1 Exhibit 99.1 Date: May 25, 2023 CorVel Corporation 5128 Apache Plume Road Suite 400 Fort Worth, TX 76109 FOR IMMEDIATE RELEASE Contact: Melissa Storan Phone: 949-851-1473 www.corvel.com CorVel Announces Revenues and Earnings FORT WORTH, Texas, May 25, 2023 — CorVel Corporation (NASDAQ: CRVL) announced the results for the quarter and fiscal year ended March 31, 2023. Revenues for the quarter were $185 million, an increase from $171 million in the same quarter of the previous year. Earnings per share for the quarter were $1.04, compared to $1.09 in the same quarter of the prior year. Revenues for the fiscal year ended March 31, 2023 were $719 million, compared to $646 million for the fiscal year ended March 31, 2022. Earnings per share for the fiscal year ended March 31, 2023 were $3.77, compared to $3.66 for the fiscal year ended March 31, 2022. During the quarter and fiscal year, CERIS expanded work with existing and developing partners in the commercial health market. The Company has increased investment in the CERIS team, SaaS platform, and R&D. With the application of advanced technologies, workflow efficiencies have increased, ROI has grown, and the competitive position in the market has strengthened. CERIS is well-positioned and prepared to scale for the additional business. In other areas, CorVel is moving forward quickly and intentionally, using generative AI in a closed-source data environment. The technology will be incorporated into CogencyIQ® service offerings and has extensive benefits. Most importantly, generative AI will elevate the work of claims professionals and allow more time to be spent interacting directly with injured workers. The reallocated time will ultimately improve the experience of injured workers and enhance partner outcomes. The Company has also introduced a new virtual mailbox interface in the Provider Portal, allowing documents to be uploaded securely. In addition to data security, the virtual mailbox confirms submission with receipt and tracking, requires no manual preprocessing, and provides same-day handling from any location. This project was designed for scalability; customers now using the interface are experiencing cost savings and cost avoidance. About CorVel CorVel Corporation applies technology including artificial intelligence, machine learning and natural language processing to enhance the managing of episodes of care and the related health care costs. We partner with employers, third-party administrators, insurance companies and government agencies in managing workers’ compensation and health, auto and liability services. Our diverse suite of solutions combines our integrated technologies with a human touch. CorVel's customized services, delivered locally, are backed by a national team to support clients as well as their customers and patients. Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 All statements included in this press release, other than statements or characterizations of historical fact, are forward-looking statements. These forward-looking statements are based on the Company’s current expectations, estimates and projections about the Company, management’s beliefs, and certain assumptions made by the Company, and events beyond the Company’s control, all of which are subject to change. Such forward-looking statements include, but are not limited to, statements relating to our commercial health-focused operation, improved productivity resulting from automation and augmentation across enterprise business systems. These forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause the Company’s actual results to differ materially and adversely from those expressed in any forward-looking statement, including the risk that the impact of the COVID-19 pandemic on our business, results of operations and financial condition is greater than our initial assessment. The risks and uncertainties referred to above include but are not limited to factors described in this press release and the Company’s filings with the Securities and Exchange Commission, including but not limited to “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended March 31, 2022 and the Company’s Quarterly Report on Form 10-Q for the quarters ended June 30, 2022, September 30, 2022, and December 31, 2022. The forward-looking statements in this press release speak only as of the date they are made. The Company undertakes no obligation to revise or update publicly any forward-looking statement for any reason. CorVel Corporation Quarterly Results – Income Statement Quarters and Fiscal Year Ended March 31, 2023 and March 31, 2022 Quarter Ended March 31, 2023 March 31, 2022 Revenues $ 185,443,000 $ 171,359,000 Cost of revenues 143,492,000 128,307,000 Gross profit 41,951,000 43,052,000 General and administrative 19,358,000 16,793,000 Income from operations 22,593,000 26,259,000 Income tax provision 4,424,000 6,622,000 Net income $ 18,169,000 $ 19,637,000 Earnings Per Share: Basic $ 1.06 $ 1.11 Diluted $ 1.04 $ 1.09 Weighted Shares Basic 17,176,000 17,618,000 Diluted 17,429,000 17,976,000 Fiscal Year Ended March 31, 2023 March 31, 2022 Revenues $ 718,562,000 $ 646,230,000 Cost of revenues 560,303,000 494,116,000 Gross profit 158,259,000 152,114,000 General and administrative 73,705,000 67,602,000 Income from operations 84,554,000 84,512,000 Income tax provision 18,189,000 18,102,000 Net income $ 66,365,000 $ 66,410,000 Earnings Per Share: Basic $ 3.83 $ 3.74 Diluted $ 3.77 $ 3.66 Weighted Shares Basic 17,328,000 17,753,000 Diluted 17,592,000 18,127,000 CorVel Corporation Quarterly Results – Condensed Balance Sheet March 31, 2023 and March 31, 2022 March 31, 2023 March 31, 2022 Cash $ 71,329,000 $ 97,504,000 Customer deposits 80,022,000 69,781,000 Accounts receivable, net 81,034,000 82,586,000 Prepaid taxes and expenses 11,385,000 15,123,000 Property, net 82,770,000 76,268,000 Goodwill and other assets 39,662,000 38,964,000 Right-of-use asset, net 27,721,000 35,020,000 Total $ 393,923,000 $ 415,246,000 Accounts and taxes payable $ 15,309,000 $ 14,431,000 Accrued liabilities 152,578,000 156,939,000 Deferred tax liability — 1,689,000 Long-term lease liabilities 23,860,000 29,792,000 Paid-in capital 218,703,000 201,612,000 Treasury stock (748,195,000 ) (654,520,000 ) Retained earnings 731,668,000 665,303,000 Total $ 393,923,000 $ 415,246,000 |
0001493152-24-026728:ex99-1.htm | 0001493152-24-026728 | 1,436,229 | 1,436,229 | BTCS Inc. (BTCS) (CIK 0001436229) | ['BTCS'] | 8-K | 8-K | 2024-07-10 | 2024-07-10 | 001-40792 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-40792&action=getcompany | 241,108,745 | EX-99.1 | null | 7.01,9.01 | https://www.sec.gov/Archives/edgar/data/1436229/000149315224026728 | https://www.sec.gov/Archives/edgar/data/1436229/000149315224026728/0001493152-24-026728-index.html | https://www.sec.gov/Archives/edgar/data/1436229/000149315224026728/ex99-1.htm | EX-99.1 2 ex99-1.htm Exhibit 99.1 BTCS Inc. Launches ChainQ: An AI-Powered Blockchain Analytics Platform Silver Spring, MD – (Globe Newswire – July 10, 2024) – BTCS Inc. (Nasdaq: BTCS) (“BTCS” or the “Company”), a blockchain technology-focused company, is proud to announce the launch of ChainQ, its pioneering blockchain analytics platform designed to revolutionize the exploration and comprehension of certain blockchain data. ChainQ represents a significant leap forward in simplifying the access, querying, and analysis of blockchain data, empowering users with unprecedented accessibility and insights. ChainQ leverages indexed data from BTCS’s blockchain infrastructure operations to provide access to otherwise hard-to-access public blockchain data, similar to Bloomberg for financial research or Westlaw for legal research. Unlike traditional blockchain explorers that offer cumbersome navigation and lack features like natural language queries and customizable searches, ChainQ simplifies and accelerates data exploration through its AI driven platform. “ChainQ signifies our commitment to innovation in the blockchain space,” said Charles Allen, CEO of BTCS. “We’re thrilled to introduce this cutting-edge platform that merges the power of artificial intelligence with advanced search functionalities to offer users an intuitive and comprehensive solution to navigate blockchain data. The initial beta version of ChainQ supports indexed data from the Cosmos (ATOM) blockchain network. While we are launching with data from Cosmos, a smaller blockchain by market cap, its complexity sets the stage for expansion into larger and less complex chains with more holders and broader market awareness. As global cryptocurrency ownership increased by 34% in 2023, rising from 432 million in January 2023 to 580 million in December 20231, we see a vast and growing addressable market for our solutions.” ChainQ offers a seamless user experience with its intuitive interface, powered by state-of-the-art generative AI technology. Users can effortlessly access and analyze blockchain data with a simple search bar, enabling natural language queries (NQL) to uncover detailed insights from indexed blockchain data. “ChainQ is more than just a tool; it’s a gateway to unlocking the full potential of blockchain data,” remarked Michal Handerhan, COO of BTCS. “With its user-friendly approach and powerful features, ChainQ empowers users of all technical levels to explore, organize, and understand blockchain data like never before.” Key features of ChainQ include: ● Fast access to blockchain data exceeding the capabilities of standard web search engines, and simplified compared to complex blockchain explorers. ● Cutting-edge generative AI technology. ● Intuitive search functionality with natural language queries. ● Customizable search panel for refined results. ● Insightful visualizations for enhanced data comprehension. ● Support for SQL queries, saved searches, and result exportation. For more information about ChainQ and to sign up for access to the platform, visit www.chainq.com. 1 Crypto.com January 22, 2024 Annual Crypto Market Sizing Report Further, in line with our commitment to shareholder and customer engagement we’ve updated our corporate website and corporate presentation to incorporate the addition ChainQ to the Company’s operations and better reflect our initiatives, strategies, and the evolving nature of our business. About BTCS: BTCS Inc. is a Nasdaq listed company operating in the blockchain technology sector since 2014 and is one of the only U.S. publicly traded companies with a primary focus on proof-of-stake blockchain infrastructure. We focus on driving scalable growth through our diverse business streams that leverage our core blockchain infrastructure operations which includes staking and operating validator nodes on various proof-of-stake networks, such as Ethereum. Built atop our blockchain infrastructure operations are: ChainQ, our AI-powered blockchain analytics platform, which provides a simple way for crypto holders to access otherwise hard-to-obtain data; StakeSeeker, offering an analytics-focused cryptocurrency dashboard and Staking-as-a-Service solution, and Builder+, an Ethereum block builder optimizing profit through block construction. For more information visit: www.btcs.com. Forward-Looking Statements: Certain statements in this press release, constitute “forward-looking statements” within the meaning of the federal securities laws including statements regarding our beliefs related to the growing addressable market for our solutions. Words such as “may,” “might,” “will,” “should,” “believe,” “expect,” “anticipate,” “estimate,” “continue,” “predict,” “forecast,” “project,” “plan,” “intend” or similar expressions, or statements regarding intent, belief, or current expectations, are forward-looking statements. While the Company believes these forward-looking statements are reasonable, undue reliance should not be placed on any such forward-looking statements, which are based on information available to us on the date of this release. These forward-looking statements are based upon assumptions and are subject to various risks and uncertainties, including without limitation regulatory issues, unexpected issues with Builder+, unexpected issues with ChainQ, and the reluctance of users to utilize solutions, as well as risks set forth in the Company’s filings with the Securities and Exchange Commission including its Form 10-K for the year ended December 31, 2023 which was filed on March 21, 2024. Thus, actual results could be materially different. The Company expressly disclaims any obligation to update or alter statements, whether as a result of new information, future events or otherwise, except as required by law. Investor Relations: ir@btcs.com |
0001493152-24-020150:ex99-1.htm | 0001493152-24-020150 | 1,829,247 | 1,829,247 | BullFrog AI Holdings, Inc. (BFRG, BFRGW) (CIK 0001829247) | ['BFRG', 'BFRGW'] | 8-K | 8-K | 2024-05-16 | 2024-05-16 | 001-41600 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-41600&action=getcompany | 24,953,875 | EX-99.1 | null | 7.01,9.01 | https://www.sec.gov/Archives/edgar/data/1829247/000149315224020150 | https://www.sec.gov/Archives/edgar/data/1829247/000149315224020150/0001493152-24-020150-index.html | https://www.sec.gov/Archives/edgar/data/1829247/000149315224020150/ex99-1.htm | EX-99.1 2 ex99-1.htm Exhibit 99.1 BullFrog AI and Lieber Institute for Brain Development Collaboration Identifies Novel Drug Targets for Neuropsychiatric Disorders Gaithersburg, MD – May 16, 2024 – BullFrog AI Holdings, Inc. (NASDAQ: BFRG; BFRGW) (“BullFrog AI” or the “Company”), a technology-enabled drug discovery company using artificial intelligence (AI) and machine learning to enable the successful discovery and development of pharmaceuticals and biologics, today announced significant advancements in its collaboration with the Lieber Institute for Brain Development (LIBD), including the identification of potential drug targets for multiple neuropsychiatric conditions. BullFrog AI and LIBD have made remarkable progress in identifying novel subgroups between and within neuropsychiatric disorders, including major depression, schizophrenia, and bipolar disorder. Utilizing a combination of ensemble machine learning, generative AI, and graph analytics, the team has successfully clustered patients by expression levels of gene isoforms across multiple brain regions. This innovative approach led to the identification of dozens of clusters of patients, each exhibiting differential enrichment of neuropsychiatric conditions, providing unprecedented insights into the biology of these disorders. These biological subtypes could ultimately lead to targeted therapeutics for a more precise treatment of psychiatric disorders. For each identified cluster, key genes have been pinpointed that explain cluster membership. These genes present new potential drug targets by revealing unique molecular mechanisms and pathways associated with each cluster. To prioritize these genes for wet lab validation, BullFrog AI is now applying Causal AI, a crucial step for confirming the therapeutic potential of the identified targets. “This collaboration continues to yield transformative insights into the biological underpinnings of neuropsychiatric disorders,” said Vin Singh, CEO of BullFrog AI. “The identification of these novel subgroups and key genes is a testament to the power of AI in advancing precision medicine. Importantly, our proprietary bfLEAP™ platform, combined with LIBD’s unparalleled brain data, is paving the way for the development of targeted and effective treatments, and we have initiated engagement with pharmaceutical companies with an objective of securing multiple strategic partnerships in the coming quarters.” Daniel R. Weinberger, M.D., Director and CEO of LIBD, added, “Our partnership with BullFrog AI has unlocked new pathways for understanding the complexities of brain disorders. These findings not only advance our scientific knowledge but also open new avenues for developing targeted therapies that can improve patient outcomes. We are excited about the potential impact this collaboration holds for the future of neuropsychiatric treatments.” The collaboration between BullFrog AI and LIBD, announced in September 2023, leverages the bfLEAP™ platform to mine LIBD’s comprehensive brain data. This data includes transcriptomic, genomic, DNA methylation, cell-line, clinical, and imaging data from over 2,800 brain samples. Early results announced in January 2024 highlighted the ability to stratify brain expression data, revealing biological subtypes within psychiatric disorders. The potential for new treatments for psychiatric disorders is vast and underserved. With increasing global awareness and demand for mental health solutions, this breakthrough presents a potential paradigm shift in treatment approaches. By identifying possible biological subtypes within disorders, BullFrog AI and LIBD are not only advancing scientific understanding, but also opening doors to novel therapeutic pathways and personalized treatment strategies. The three-year agreement between the organizations granted BullFrog AI a period of exclusive access to LIBD’s brain data with the potential to commercialize products or services derived from the collaboration. The partnership represents a unique synergy between AI-driven analyses and world-class neuropsychiatric research data, setting a new standard in the pursuit of effective treatments for brain disorders. About the Lieber Institute for Brain Development (LIBD) The mission of the Lieber Institute for Brain Development and the Maltz Research Laboratories is to translate the understanding of basic genetic and molecular mechanisms of schizophrenia and related developmental brain disorders into clinical advances that change the lives of affected individuals. LIBD is an independent, not-for-profit 501(c)(3) organization and a Maryland tax-exempt medical research institute. The Lieber Institute’s brain repository of more than 4,000 human brains is the largest collection of postmortem brains for the study of neuropsychiatric disorders in the world. About BullFrog AI BullFrog AI is a technology-enabled drug development company using Artificial Intelligence and machine learning to enable the successful development of pharmaceuticals and biologics. Through its collaborations with leading research institutions, BullFrog AI is at the forefront of AI-driven drug development using its proprietary bfLEAP™ artificial intelligence platform to create and analyze networks of biological, clinical, and real-world data spanning from early discovery to late-stage clinical trials. BullFrog AI is deploying bfLEAP™ for use at several critical stages of development with the intention of streamlining data analytics in therapeutics development, decreasing the overall development costs by decreasing failure rates for new therapeutics. For more information visit BullFrog AI at: Website: https://bullfrogai.com LinkedIn: https://www.linkedin.com/company/bullfrogai/ Safe Harbor Statement This press release contains forward-looking statements. We base these forward-looking statements on our expectations and projections about future events, which we derive from the information currently available to us. Such forward-looking statements relate to future events or our future performance, including: our financial performance and projections; our growth in revenue and earnings; and our business prospects and opportunities. You can identify forward-looking statements by those that are not historical in nature, particularly those that use terminology such as “may,” “should,” “expects,” “anticipates,” “contemplates,” “estimates,” “believes,” “plans,” “projected,” “predicts,” “potential,” or “hopes” or the negative of these or similar terms. In evaluating these forward-looking statements, you should consider various factors, including: our ability to change the direction of the Company; our ability to keep pace with new technology and changing market needs; and the competitive environment of our business. These and other factors may cause our actual results to differ materially from any forward-looking statement. Forward-looking statements are only predictions. The forward-looking events discussed in this press release and other statements made from time to time by us or our representatives, may not occur, and actual events and results may differ materially and are subject to risks, uncertainties, and assumptions about us. We are not obligated to publicly update or revise any forward-looking statement, whether as a result of uncertainties and assumptions, the forward-looking events discussed in this press release and other statements made from time to time by us or our representatives might not occur. Contact: Investors Dave Gentry RedChip Companies, Inc. BFRG@redchip.com 1-407-644-4256 SOURCE: BullFrog AI Holdings, Inc. |
0001193125-24-233891:d869370dex991.htm | 0001193125-24-233891 | 1,768,267 | 1,768,267 | Cerence Inc. (CRNC) (CIK 0001768267) | ['CRNC'] | 8-K | 8-K | 2024-10-07 | 2024-10-06 | 001-39030 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-39030&action=getcompany | 241,358,644 | EX-99.1 | EX-99.1 | 2.02,5.02,9.01 | https://www.sec.gov/Archives/edgar/data/1768267/000119312524233891 | https://www.sec.gov/Archives/edgar/data/1768267/000119312524233891/0001193125-24-233891-index.html | https://www.sec.gov/Archives/edgar/data/1768267/000119312524233891/d869370dex991.htm | EX-99.1 5 d869370dex991.htm EX-99.1 EX-99.1 Exhibit 99.1 Cerence Appoints Brian Krzanich as Chief Executive Officer Company Reaffirms Fourth Quarter Fiscal 2024 Guidance BURLINGTON, Mass., October, 7, 2024 – Cerence Inc. (NASDAQ: CRNC), AI for a world in motion, today announced that Brian Krzanich has been appointed Chief Executive Officer and a member of the Board of Directors, effective immediately. Mr. Krzanich succeeds Stefan Ortmanns, who is departing as CEO and resigning as a member of the Board. Mr. Krzanich is a seasoned executive with a track record of success at global public organizations. Most recently from 2018 to 2022, Mr. Krzanich served as CEO of CDK Global Inc., the leading supplier of software to the retail automotive industry. After stabilizing CDK’s business, he delivered ten consecutive quarters of growth and ultimately achieved a 2022 take-private exit to Brookfield Business Partners for $8.3 billion. Before CDK, Mr. Krzanich spent 36 years at Intel, including as CEO from 2013 to 2018. During his tenure, he led Intel into emerging areas ranging from cloud computing and artificial intelligence to autonomous driving as the business scaled from $52 billion to more than $70 billion in revenue. “Cerence has a strong generative AI product strategy and the opportunity to bring the promise of generative AI to the transportation industry,” said Arun Sarin, Chairman of the Cerence Board. “At this critical inflection point, we believe a leadership change is necessary to execute the next phase of the Company’s transformation. Brian is a proven public company CEO with a successful track record of driving large-scale business transformations, fostering innovation and achieving sustainable growth. His leadership skills and expertise in AI and cloud computing make Brian the right leader to guide Cerence through this transition, capitalize on Cerence’s growth opportunities and drive shareholder value.” “The fast-changing automotive industry and potential of generative AI present exciting opportunities for Cerence,” said Mr. Krzanich. “I look forward to partnering with the Board and management team as we work to advance the Company’s generative AI and voice interaction capabilities, drive efficiency to deliver a high level of customer satisfaction and generate meaningful and consistent growth.” Mr. Sarin continued, “On behalf of the Board, I want to thank Stefan for his many contributions to Cerence. Stefan helped stand up Cerence as a public company following the company’s separation from Nuance Communications in 2019, and played an important role in developing the Company’s next-gen AI roadmap. We wish him the best in his future endeavors.” “It has been an honor to lead Cerence and work with the exceptional team,” said Mr. Ortmanns. “I am proud of what we have accomplished together and believe the Company has the right mix of talent and cutting-edge products to achieve its goals.” Fourth Quarter Fiscal 2024 Guidance The company noted that it is reaffirming its fourth quarter fiscal 2024 guidance previously announced in conjunction with its third quarter fiscal 2024 financial results on August 8, 2024. For reference, for the fiscal quarter ending September 30, 2024, the company expects revenue in the range of $44 million to $50 million; GAAP net loss in the range of ($32) million to ($28) million; and Adjusted EBITDA in the range of approximately ($19) million to ($13) million. The adjusted EBITDA guidance excludes acquisition-related costs, amortization of acquired intangible assets, stock-based compensation, restructuring and other costs. The GAAP net income guidance excludes potential goodwill impairment. Contact Information Investors: Rich Yerganian | Tel: 617-987-4799 | Email: richard.yerganian@cerence.com Media: Kate Hickman | Tel: 339-215-4583 | Email: kate.hickman@cerence.com To learn more about Cerence, visit www.cerence.com, and follow the company on LinkedIn. About Brian Krzanich Brian Krzanich most recently served as President and Chief Executive Officer of CDK Global Inc. from 2018 to 2022. Mr. Krzanich began his career at Intel in 1982 as an engineer, became the company’s COO in 2012 where he oversaw Intel’s China strategy, and was named the company’s CEO in 2013. He currently serves as a director of SES AI. Mr. Krzanich holds a Bachelor of Science in Chemistry from San Jose State University. About Cerence Inc. Cerence (NASDAQ: CRNC) is the global industry leader in creating unique, moving experiences for the mobility world. As an innovation partner to the world’s leading automakers and mobility OEMs, it is helping advance the future of connected mobility through intuitive, AI-powered interaction between humans and their vehicles, connecting consumers’ digital lives to their daily journeys no matter where they are. Cerence’s track record is built on more than 20 years of knowledge and 500 million cars shipped with Cerence technology. Whether it’s connected cars, autonomous driving, e-vehicles, or two-wheelers, Cerence is mapping the road ahead. For more information, visit www.cerence.com. Forward Looking Statements Statements in this press release regarding: Cerence’s future performance, results and financial condition, including fourth quarter fiscal 2024 guidance (which does not reflect Cerence’s quarter-end closing and review process); leadership transition; strategy; transformation efforts; business, industry and market trends; growth opportunities; product strategy, innovation and new product offerings, including AI technology; and management’s future expectations, estimates, assumptions, beliefs, goals, objectives, targets, plans or prospects constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements that are not statements of historical fact (including statements containing the words “believes,” “plans,” “anticipates,” “projects,” “forecasts,” “expects,” “intends,” “continues,” “will,” “may,” or “estimates” or similar expressions) should also be considered to be forward-looking statements. Although we believe forward-looking statements are based upon reasonable assumptions, such statements involve known and unknown risk, uncertainties and other factors, which may cause actual results or performance of the company to be materially different from any future results or performance expressed or implied by such forward-looking statements including but not limited to: the highly competitive and rapidly changing market in which we operate; adverse conditions in the automotive industry, the related supply chain and semiconductor shortage, or the global economy more generally; automotive production delays; changes in customer forecasts; disruptions arising from transitions in management personnel; the inability to recruit and retain qualified personnel; our ability to control and successfully manage our expenses and cash position; escalating pricing pressures from our customers; the impact on our business of the transition to a lower level of fixed contracts, including the failure to achieve such a transition; our failure to win, renew or implement service contracts; the cancellation or postponement of existing contracts; the loss of business from any of our largest customers; effects of customer defaults; our inability to successfully introduce new products, applications and services; our strategies to increase cloud offerings and deploy generative AI and large language models (LLMs); the inability to expand into adjacent markets; cybersecurity and data privacy incidents; fluctuating currency rates and interest rates; inflation; the impacts of the COVID-19 pandemic on our and our customers’ businesses; the impact of the war in Ukraine, conflict between Israel and Hamas and attacks on commercial Contact Information Investors: Rich Yerganian | Tel: 617-987-4799 | Email: richard.yerganian@cerence.com Media: Kate Hickman | Tel: 339-215-4583 | Email: kate.hickman@cerence.com ships in the Red Sea by the Houthi groups on our and our customers’ businesses; and the other factors discussed in our most recent Annual Report on Form 10-K, quarterly reports on Form 10-Q, and other filings with the Securities and Exchange Commission. We disclaim any obligation to update any forward-looking statements as a result of developments occurring after the date of this document. Reconciliations of GAAP Financial Measures to Non-GAAP Financial Measures (unaudited - in thousands) Q4 2024 Low High GAAP net loss $ (32,200 ) $ (27,900 ) Stock-based compensation 4,000 4,000 Amortization of intangible assets 600 600 Restructuring and other costs, net 10,400 12,100 Goodwill impairment (1) — — Depreciation 2,200 2,200 Total other expense, net (2,000 ) (2,000 ) Benefit from income taxes (5,600 ) (5,600 ) Adjusted EBITDA $ (18,600 ) $ (12,600 ) (1) Does not include any potential impact of Goodwill impairment which remains subject to review. Discussion of Non-GAAP Financial Measures We believe that providing the non-GAAP information in addition to the GAAP presentation, allows investors to view the financial results in the way management views the operating results. We further believe that providing this information allows investors to not only better understand our financial performance, but more importantly, to evaluate the efficacy of the methodology and information used by management to evaluate and measure such performance. The non-GAAP information should not be considered superior to, or a substitute for, financial statements prepared in accordance with GAAP. We utilize a number of different financial measures, both GAAP and non-GAAP, in analyzing and assessing the overall performance of the business, for making operating decisions and for forecasting and planning for future periods. While our management uses these non-GAAP financial measures as a tool to enhance their understanding of certain aspects of our financial performance, our management does not consider these measures to be a substitute for, or superior to, the information provided by GAAP financial statements. Contact Information Investors: Rich Yerganian | Tel: 617-987-4799 | Email: richard.yerganian@cerence.com Media: Kate Hickman | Tel: 339-215-4583 | Email: kate.hickman@cerence.com Consistent with this approach, we believe that disclosing non-GAAP financial measures to the readers of our financial statements provides such readers with useful supplemental data that, while not a substitute for GAAP financial statements, allows for greater transparency in the review of our financial and operational performance. In assessing the overall health of the business during the three months ended June 30, 2024 and 2023, our management has either included or excluded the following items in general categories, each of which is described below. Adjusted EBITDA. Adjusted EBITDA is defined as net income attributable to Cerence Inc. before net income (loss) attributable to income tax (benefit) expense, other income (expense) items, net, depreciation and amortization expense, and excluding acquisition-related costs, amortization of acquired intangible assets, stock-based compensation, and restructuring and other costs, net or impairment charges related to fixed and intangible assets and gains or losses on the sale of long-lived assets, if any. From time to time we may exclude from Adjusted EBITDA the impact of events, gains, losses or other charges (such as significant legal settlements) that affect the period-to-period comparability of our operating performance. Other income (expense) items, net include interest expense, interest income, and other income (expense), net (as stated in our Condensed Consolidated Statement of Operations). Our management and Board of Directors use this financial measure to evaluate our operating performance. It is also a significant performance measure in our annual incentive compensation programs. Restructuring and other costs, net. Restructuring and other costs, net include restructuring expenses as well as other charges that are unusual in nature, are the result of unplanned events, and arise outside the ordinary course of our business such as employee severance costs, costs for consolidating duplicate facilities, third-party fees relating to the modification of our convertible debt, and the release of a pre-acquisition contingency. Amortization of acquired intangible assets. We exclude the amortization of acquired intangible assets from non-GAAP expense and income measures. These amounts are inconsistent in amount and frequency and are significantly impacted by the timing and size of acquisitions. Providing a supplemental measure which excludes these charges allows management and investors to evaluate results “as-if” the acquired intangible assets had been developed internally rather than acquired and, therefore, provides a supplemental measure of performance in which our acquired intellectual property is treated in a comparable manner to our internally developed intellectual property. Although we exclude amortization of acquired intangible assets from our non-GAAP expenses, we believe that it is important for investors to understand that such intangible assets contribute to revenue generation. Amortization of intangible assets that relate to past acquisitions will recur in future periods until such intangible assets have been fully amortized. Future acquisitions may result in the amortization of additional intangible assets. Contact Information Investors: Rich Yerganian | Tel: 617-987-4799 | Email: richard.yerganian@cerence.com Media: Kate Hickman | Tel: 339-215-4583 | Email: kate.hickman@cerence.com Non-cash expenses. We provide non-GAAP information relative to the following non-cash expenses: (i) stock-based compensation; and (ii) non-cash interest. These items are further discussed as follows: (i) Stock-based compensation. Because of varying valuation methodologies, subjective assumptions and the variety of award types, we exclude stock-based compensation from our operating results. We evaluate performance both with and without these measures because compensation expense related to stock-based compensation is typically non-cash and awards granted are influenced by the Company’s stock price and other factors such as volatility that are beyond our control. The expense related to stock-based awards is generally not controllable in the short-term and can vary significantly based on the timing, size and nature of awards granted. As such, we do not include such charges in operating plans. Stock-based compensation will continue in future periods. ii) Non-cash interest. We exclude non-cash interest because we believe that excluding this expense provides management, as well as other users of the financial statements, with a valuable perspective on the cash-based performance and health of the business, including the current near-term projected liquidity. Non-cash interest expense will continue in future periods. Other expenses. We exclude certain other expenses that result from unplanned events outside the ordinary course of continuing operations, in order to measure operating performance and current and future liquidity both with and without these expenses. By providing this information, we believe management and the users of the financial statements are better able to understand the financial results of what we consider to be our organic, continuing operations. Included in these expenses are items such as other charges (credits), net, losses from extinguishment of debt, and changes in indemnification assets corresponding with the release of pre-spin liabilities for uncertain tax positions. Adjustments to income tax provision. Adjustments to our GAAP income tax provision to arrive at non-GAAP net income is determined based on our non-GAAP pre-tax income. Additionally, as our non-GAAP profitability is higher based on the non-GAAP adjustments, we adjust the GAAP tax provision to remove valuation allowances and related effects based on the higher level of reported non-GAAP profitability. We also exclude from our non-GAAP tax provision certain discrete tax items as they occur. Contact Information Investors: Rich Yerganian | Tel: 617-987-4799 | Email: richard.yerganian@cerence.com Media: Kate Hickman | Tel: 339-215-4583 | Email: kate.hickman@cerence.com |
0001213900-24-018500:ea0200947ex99-1_sound.htm | 0001213900-24-018500 | 1,840,856 | 1,840,856 | SOUNDHOUND AI, INC. (SOUN, SOUNW) (CIK 0001840856) | ['SOUN', 'SOUNW'] | 8-K | 8-K | 2024-02-29 | 2024-02-29 | 001-40193 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-40193&action=getcompany | 24,703,850 | EX-99.1 | PRESS RELEASE, DATED FEBRUARY 29, 2024 | 2.02,9.01 | https://www.sec.gov/Archives/edgar/data/1840856/000121390024018500 | https://www.sec.gov/Archives/edgar/data/1840856/000121390024018500/0001213900-24-018500-index.html | https://www.sec.gov/Archives/edgar/data/1840856/000121390024018500/ea0200947ex99-1_sound.htm | EX-99.1 2 ea0200947ex99-1_sound.htm PRESS RELEASE, DATED FEBRUARY 29, 2024 Exhibit 99.1 SoundHound AI Reports Record Quarter with 80% Q4 Revenue Growth to $17.1 Million; Adjusted EBITDA Improved by 80% Year-Over-Year in Q4 Combined Cumulative Subscriptions & Bookings Backlog of $661 Million Represents a 2x increase Year-Over-Year SANTA CLARA, Calif.--(BUSINESS WIRE)--SoundHound AI, Inc. (Nasdaq: SOUN), a global leader in voice artificial intelligence, today reported its financial results for the fourth quarter and full year 2023. “This was a breakthrough year in which SoundHound rapidly integrated powerful new generative AI capabilities. Our real-world voice AI applications are already live and driving consumer engagement across vehicles, devices, and customer service businesses,” said Keyvan Mohajer, CEO and Co-Founder of SoundHound AI. “We also acquired SYNQ3, establishing SoundHound as the largest voice AI provider for restaurants. Our pace and agility amid this AI revolution has put us ahead of the field when it comes to delivering real commercial value.” Fourth Quarter and Full Year Financial Highlights ●Fourth quarter revenue was $17.1 million, an increase of 80% year-over-year ●Fourth quarter gross margin was 77%, an increase of 6 percentage points year-over-year ●Fourth quarter earnings per share was a net loss of ($0.07), compared to ($0.15) in the prior year, improved by 53% ●Adjusted EBITDA (non-GAAP) was ($3.7) million, compared to ($18.8) million in the prior year, improved by 80% ●Full year revenue was $45.9 million, an increase of 47% year-over-year ●Full year gross margin was 75%, an increase of 6 percentage points year-over-year ●Full year earnings per share was a net loss of ($0.40), compared to ($0.74) in the prior year, and improved by 46% ●Adjusted EBITDA (non-GAAP) was ($35.9) million, compared to ($72.8) million in the prior year, and improved by 51% ●Combined cumulative subscriptions and bookings backlog1 customer metric grew to $661 million, up 2x compared to the prior year comparable measure ●Achieved an annual run rate of ~3.5 billion queries, up roughly 50% year-over-year “We finished the year strong by accelerating revenue and meaningfully increasing our penetration in the marketplace,” said Nitesh Sharan, CFO of SoundHound AI. ”We have fortified our balance sheet and taken prudent measures to strengthen our bottom line to ensure we can continue to capitalize on the tremendous customer demand for our AI solutions.” Business Highlights Customer and partners announcements ●Notable, first-of-its-kind revenue contribution in Q4 from a preeminent AI chip company ●Signed contract with a large auto OEM to significantly extend and increase unit volumes through 2037 ●Won a deal with a prominent US-based EV maker to voice-enable their full fleet of market-leading vehicles ●SoundHound Chat AI was announced as the world’s first voice assistant with integrated generative AI to go into full production with an automaker. Stellantis’ DS Automobiles will be deploying the technology across all models in 13 languages across 18 countries ●Three additional automotive brands, Peugeot, Opel, and Vauxhall, announced SoundHound Chat AI pilots in Europe ●Custom branded AI voice assistant went live with a new line of vehicles from Togg, a growing Turkish EV car maker ●Telly’s revolutionary dual screen smart TV integrated SoundHound AI voice assistant ●Expanded our portfolio of renowned restaurant brands with enterprise restaurants brands: Jersey Mike's, Krispy Kreme, White Castle, and Church's Chicken ●Expanded agreement with White Castle to go live in 100 drive-thru lanes by the end of this year and announced partnership with Samsung to revolutionize next-gen display technology for voice AI drive-thrus ●In 2023, more than 100 customers adopted our AI restaurant solutions, including mid market brands such as Beef O’Brady’s, Blake’s Lotaburger, Bozzelli's Italian Deli, Bubbakoos Burritos, Chicken Shack, CoreLife Eatery, Dog Haus, Naz’s Halal, and Noi Thai ●Expanded our ecosystem for customer service by adding Oracle MICROS Simphony Point-of-Sale for Restaurants, Toast Point-of-Sale system, and integration with Olo, a leading restaurant SaaS platform 2 ●SoundHound AI is now working with audio experts HME to make its solutions compatible with its world class NEXEO® headsets. HME serves QSRs drive-thrus in over 140 countries, enabling them to fulfill more than 30 million orders every day Acquisition of SYNQ3 ●The combination with SYNQ3 expands SoundHound AI’s customer service offering, creating the largest voice AI provider for restaurants and extending the company’s market reach by an order of magnitude ●The newly joined entity beings nearly two decades of SoundHound’s innovation with decades of SYNQ3’s industry expertise and established customer relationships - accelerating the deployment of leading-edge generative AI capabilities to the industry ●SYNQ3 comes with more than 20 national and multinational chains, such as Chipotle, Casey’s, Applebees, Panda Express, Papa John’s, and Five Guys Product launches ●Dynamic Interaction with Generative AI, an extension of the company’s groundbreaking multimodal Dynamic Interaction interface ●Smart Answering became generally available, our service that lets any business handle customer service calls with voice AI ●Employee Assist, our voice AI product for restaurant employees using advanced voice technology to coach in-store employees through actions and provide fast answers to critical questions ●SoundHound Chat AI for Automotive, giving drivers and passengers seamless access to a vast array of information domains enabled by complex conversational capabilities ●Vehicle Intelligence, SoundHound’s voice AI-enabled solution for instant hands-free access to car manual ●SoundHound Chat AI, a powerful new voice assistant that delivers best-in-class voice AI by combining SoundHound and third-party Generative AI models 1)See section ‘Certain Defined Terms’ at the end of this press release for additional information. 3 Fourth Quarter 2023 Financial Measures Three Months Ended (thousands, except per share data) December 31, 2023 December 31, 20222 Change in % Revenues $17,147 $9,501 80% Operating expenses: Cost of revenues $3,911 $2,755 42% Sales and marketing 4,469 6,744 -34% Research and development 12,713 21,528 -41% General and administrative 7,641 7,427 3% Restructuring 806 - N/A Total operating expenses $29,540 $38,454 -23% Operating loss $(12,393) $(28,953) 57% Net loss $(18,003) $(30,881) 42% Net loss per share $(0.07) $(0.15) 0.08 Adjusted EBITDA1 $(3,676) $(18,821) 80% Full Year 2023 Financial Measures Twelve Months Ended (thousands, except per share data) December 31, 2023 December 31, 20222 Change in % Revenues $45,873 $31,129 47% Operating expenses: Cost of revenues $11,307 $9,599 18% Sales and marketing 18,893 20,367 -7% Research and development 51,439 76,392 -33% General and administrative 28,285 30,443 -7% Restructuring 4,557 - N/A Total operating expenses $114,481 $136,801 -16% Operating loss $(68,608) $(105,672) 35% Net loss $(88,937) $(116,713) 24% Net loss per share $(0.40) $(0.74) 0.34 Adjusted EBITDA1 $(35,896) $(72,843) 51% 1)Please see table below for a reconciliation from GAAP to non-GAAP. 2)Note: the Company identified corrections related to historical financial transactions for certain prior periods, which have been revised. These amounts had no impact on revenue, EPS or adjusted EBITDA for the period noted. Specifically, for the three months ended December 31, 2022, general and administrative expense and total net loss both increased by $201. For the 12 months ended December 31, 2022, general and administrative expense increased by $265 and other income and expense increased by $1,075, resulting in total net loss increasing by $1,340. Further details were included in the company's Form 10-Q filed on November 15, 2023 for the quarterly period ended September 30, 2023. 4 Summary of Liquidity and Cash Flows The company’s total cash was approximately $109 million at December 31, 2023. Current total cash balance is in excess of $200 million. Condensed Cash Flow Statement Year Ended (thousands) December 31, 2023 December 31, 2022 Cash flows: Net cash used in operating activities $(68,265) $(94,019) Net cash used in investing activities (392) (1,329) Net cash provided by financing activities 168,237 82,001 Net change in cash and cash equivalents1 $99,560 $(13,347) 1)Foreign exchange impact on cash of ($20K) for the period ending December 31, 2023 not shown on chart. Business Outlook 2024 and 2025 SoundHound expects full year 2024 revenue to be in a range of $63 to $77 million, with a midpoint target of $70 million. The company is also introducing a 2025 outlook, in which it expects its growth to accelerate with revenue exceeding $100 million in revenue and achieve positive adjusted EBITDA. Additional Information For more information please see the company’s SEC filings which can be obtained on the company’s website at investors.soundhound.com. The financial statements will be posted on the website, and will be included when we file our 10-K. The financial data presented in this press release should be considered preliminary until the company files its 10-K. Conference Call and Webcast Keyvan Mohajer, Co-Founder and CEO, and Nitesh Sharan, CFO will host a live audio conference call and webcast today at 2:00 p.m. Pacific Time/5:00 p.m. Eastern Time. A live webcast and replay will also be accessible at investors.soundhound.com. 5 About SoundHound AI SoundHound (Nasdaq: SOUN), a global leader in conversational intelligence, offers voice AI solutions that let businesses offer incredible conversational experiences to their customers. Built on proprietary technology, SoundHound’s voice AI delivers best-in-class speed and accuracy in numerous languages to product creators across automotive, TV, and IoT, and to customer service industries via groundbreaking AI-driven products like Smart Answering, Smart Ordering, and Dynamic Interaction™, a real-time, multimodal customer service interface. Along with SoundHound Chat AI, a powerful voice assistant with integrated Generative AI, SoundHound powers millions of products and services, and processes billions of interactions each year for world class businesses. Forward Looking Statements and Other Disclosures This press release contains forward-looking statements, which are not historical facts, 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. In some cases, you can identify forward-looking statements by the use of words such as “may,” “could,” “expect,” “intend,” “plan,” “seek,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue,” “likely,” “will,” “would” and variations of these terms and similar expressions, or the negative of these terms or similar expressions. These forward-looking statements include, but are not limited to, statements concerning our expected financial performance, our ability to implement our business strategy and anticipated business and operations, the potential utility of and market for our products and services, our ability to achieve revenue from our cumulative bookings backlog and subscription bookings backlog, and guidance for financial results for 2024 and 2025. Such forward-looking statements are necessarily based upon estimates and assumptions that, while considered reasonable by us and our management, are inherently uncertain. As a result, readers are cautioned not to place undue reliance on these forward-looking statements. Our actual results may differ materially from those expressed or implied by these forward-looking statements as a result of risks and uncertainties impacting SoundHound’s business including, our ability to successfully launch and commercialize new products and services and derive significant revenue, our ability to develop the bespoke products and services required under the contracts included in our bookings backlog, including, but not limited to, our ability to convert customer adoption of Smart Ordering into realized revenue, our ability to predict or measure supply chain disruptions at our customers, our market opportunity and our ability to acquire new customers and retain existing customers, the timing and impact of our growth initiatives, level of product service failures that could lead our customers to use competitors’ services, our ability to predict direct and indirect customer demand for our existing and future products, our ability to hire, retain and motivate employees, the effects of competition, including price competition within our industry segment, technological, regulatory and legal developments that uniquely or disproportionately impact our industry segment, developments in the economy and financial markets and those other factors described in our risk factors set forth in our filings with the Securities and Exchange Commission from time to time, including our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. We do not intend to update or alter our forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law. 6 Certain Defined Terms Cumulative Subscriptions & Bookings Backlog: The company has updated this metric to incorporate its customer subscriptions activity with previously disclosed cumulative bookings backlog. Cumulative bookings backlog takes into account the prior quarter end balance of bookings backlog plus new bookings in the current quarter minus associated revenue recognized from bookings from prior periods. Cumulative bookings backlog is derived from committed customer contracts and this definition remains the same as the previous one. Subscriptions backlog refers to potential revenue achievable for the company with current customers where the company is the leading or exclusive provider, and assuming a 4-year ramp up during which time our technologies are being implemented and assuming a successful full roll out of our technologies over a total 5-year duration. Reasonable assumptions about adoption percentages are included, with lower percentages applied to pilot and proof-of-concept customers. Non-GAAP Measures of Financial Performance To supplement the company’s financial statements, which are presented on the basis of U.S. generally accepted accounting principles (GAAP), the following non-GAAP measure of financial performance is included in this release: adjusted EBITDA. We define Adjusted EBITDA as the company’s GAAP net loss excluding (i) interest and other expense, net, (ii) depreciation and amortization expense, (iii) income taxes, (iv) stock-based compensation, (v) acquisition-related expenses, and (vi) restructuring expense. A reconciliation of GAAP to this adjusted non-GAAP financial measure is included below. When analyzing the company's operating results, investors should not consider non-GAAP measures as substitutes for the comparable financial measures prepared in accordance with GAAP. The Company does not present a quantitative reconciliation of the forward-looking non-GAAP financial measures and Adjusted EBITDA, to the most directly comparable GAAP financial measure (or otherwise present such forward-looking GAAP measures) because it is impractical to forecast certain items without unreasonable efforts due to the uncertainty and inherent difficulty of predicting, within a reasonable range, the occurrence and financial impact of and the periods in which such items may be recognized. 7 Fourth Quarter Reconciliation of GAAP Net Loss to Non-GAAP Adjusted EBITDA Three Months Ended (thousands) December 31, 2023 December 31, 2022 GAAP net loss $(18,003) $(30,881) Adjustments: OI&E and other1 $4,003 $644 Income taxes 1,607 1,284 Depreciation and amortization 372 840 Stock-based compensation 6,486 9,292 Restructuring 806 - Acquisition-related expenses 1,053 - Adjusted EBITDA (non-GAAP) $(3,676) $(18,821) 1)Includes other income/(expense) of $1.5 and $0.5 million for the three months ended December 31, 2023 and 2022, respectively. Full Year Reconciliation of GAAP Net Loss to Non-GAAP Adjusted EBITDA Year Ended (thousands) December 31, 2023 December 31, 2022 GAAP net loss $(88,937) $(116,713) Adjustments: OI&E and other2 $16,415 $8,152 Income taxes 3,914 2,889 Depreciation and amortization 2,313 4,037 Stock-based compensation 24,789 28,792 Restructuring 4,557 - Acquisition-related expenses 1,053 $- Adjusted EBITDA (non-GAAP) $(35,896) $(72,843) 2)Includes other income/(expense) of $1.2 and ($1.3) million for the years ended December 31, 2023 and 2022, respectively. Investors: Scott Smith 408-724-1498 IR@SoundHound.com Media: Fiona McEvoy 415-610-6590 PR@SoundHound.com 8 |
0001493152-24-001754:ex99-1.htm | 0001493152-24-001754 | 1,281,984 | 1,281,984 | Decentral Life, Inc. (WDLF) (CIK 0001281984) | ['WDLF'] | 8-K | 8-K | 2024-01-09 | 2024-01-09 | 000-55961 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=000-55961&action=getcompany | 24,521,651 | EX-99.1 | null | 8.01,9.01 | https://www.sec.gov/Archives/edgar/data/1281984/000149315224001754 | https://www.sec.gov/Archives/edgar/data/1281984/000149315224001754/0001493152-24-001754-index.html | https://www.sec.gov/Archives/edgar/data/1281984/000149315224001754/ex99-1.htm | EX-99.1 2 ex99-1.htm Exhibit 99.1 Decentral Life and LikeRE Announce Launch of an AI Virtual Business Assistant for Real Estate Professionals LikeRE.com is getting an artificial intelligence (AI)-powered upgrade from Decentral Life, Inc. GREENWOOD VILLAGE, COLORADO, January 8, 2024 — Decentral Life, Inc. (OTC: WDLF) announced today the official launch of a Generative AI Virtual Business Assistant, that is developed to help real estate business professionals offload the mundane task they face each day in running their business. “We continue to push the boundaries of what is possible in real estate marketing, sales, and daily operations,” said Decentral Life CEO, Ken Tapp. “We are once again pioneering change in the real estate industry, through our technology license agreement with LikeRE.com. By empowering real estate professionals with our newly launched generative AI tools, we expect to save them countless hours each week by offloading the mundane task they face in running their business. Given the accelerating complexity and speed of doing business in a digital-first real estate industry, we are seeing our licensed technologies to LikeRE become the essential tools for operating real estate companies in the future,” added Tapp. “The LikeRE AI Virtual Business Assistant for Real Estate Professionals will inevitably change the entire lifecycle of a new real estate professional entering the industry, and a seasoned professional evolving the way they do business. In fact, it’s probably already doing so,” said Beau LaPoint of LikeRE.com. “Forward-thinking Real Estate Professionals from the National Association of Real Estate Brokers (NAREB), our strategic partner at LikeRE.com, have already begun to implement our AI Virtual Business Assistant in their daily business tasks since our beta launch of Decentral Life’s AI system earlier last month. After providing early access through a special beta launch to the NAREB members, we’ve received overwhelming feedback on how easy the AI Virtual Business Assistant is to use, and how much time it saves them each day,” added LaPoint. About the National Association of Real Estate Brokers (NAREB) The National Association of Real Estate Brokers (NAREB) was established in 1947, when black real estate professionals weren’t allowed to join the National Association of Realtors. NAREB continues to thrive today, boasting over 100 Local Boards nation-wide, and continues to champion “Democracy In Housing”, black homeownership rights and education. LikeRE.com’s professional development and social network align well with NAREB’s aspirations, in that both seek to educate the real estate professional who is committed to helping the consumer. About LikeRE, Inc. More than 100 real estate professionals came together as co-founders and creators of the LikeRE real estate social network and professional development platform. LikeRE.com promotes greater industry education, increased marketing efficiency, and a decrease in transactional mistakes, and provides real estate professionals with the ability to save time and grow their expertise in the residential real estate sector. About Decentral Life: Decentral Life, Inc. (OTC: WDLF) is a SaaS company providing Blockchain and AI technology through license agreements with technology companies and operates a Technology Business Incubator (TBI) as a division of the company, which provides tech start-ups with executive leadership and consulting, making it easier for start-up founders to focus on growing their businesses. For more information, visit the website @ https://www.WDLF.ai/ Safe Harbor & Disclaimer This information also contains certain forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are identified using the words “could”, “believe”, “anticipate”, “intend”, “estimate”, “expect”, “may”, “continue”, “predict”, “potential”, “possible,” “project” and similar expressions that are intended to identify forward-looking statements. All forward-looking statements speak only as of the date of this presentation. You should not place undue reliance on these forward-looking statements. Although we believe that our plans, objectives, expectations, and intentions reflected in or suggested by the forward-looking statements are reasonable, we can give no assurance that these plans, objectives, expectations, or intentions will be achieved. Forward-looking statements involve significant risks and uncertainties (some of which are beyond our control) and assumptions that could cause actual results to differ materially from historical experience and present expectations or projections. Actual results may differ materially from those in the forward-looking statements and the trading price for our common stock may fluctuate significantly. Forward-looking statements also are affected by the risk factors described in the Company’s filings with the U.S. Securities and Exchange Commission. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. Risks include but are not limited to general risks associated with partnerships, joint ventures, and strategic alliances; lack of sufficient capital, changes in industry related laws; possible impairment of assets, COVID and more. No information in this press release should be construed as any indication whatsoever of our future financial results, revenues, or stock price. Todd Markey Investor Relations Decentral Life, Inc. ir@WDLF.ai 1-855-933-3277 |
0001437749-24-030748:ex_730179.htm | 0001437749-24-030748 | 1,120,970 | 1,120,970 | Comstock Inc. (LODE) (CIK 0001120970) | ['LODE'] | 8-K | 8-K | 2024-10-07 | 2024-10-01 | 001-35200 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-35200&action=getcompany | 241,356,082 | EX-99.1 | EXHIBIT 99.1 | 1.01,9.01 | https://www.sec.gov/Archives/edgar/data/1120970/000143774924030748 | https://www.sec.gov/Archives/edgar/data/1120970/000143774924030748/0001437749-24-030748-index.html | https://www.sec.gov/Archives/edgar/data/1120970/000143774924030748/ex_730179.htm | EX-99.1 3 ex_730179.htm EXHIBIT 99.1 ex_730179.htm Exhibit 99.1 COMSTOCK TO ACQUIRE QUANTUM GENERATIVE MATERIALS LLC Strategic Investment in Artificial Intelligence for Materials Discovery in Energy Applications VIRGINIA CITY, NEVADA, October 7, 2024 – Comstock Inc. (NYSE: LODE) (“Comstock” and the “Company”) today announced the execution of an agreement by Comstock, Deep Interstellar Research LLC (“DIR”), and Quantum Generative Materials LLC (“GenMat”) under which Comstock effectively acquired substantially all of the equity in GenMat, including GenMat’s artificial intelligence materials discovery platform, materials synthesis, and related assets, business, and most of the related technical team. Concurrently, as part of the acquisition of GenMat, Deep Prasad’s holding company will be receiving GenMat’s consolidated satellite, mission control software, other related low earth orbit assets, and space team. As a result of the transaction, Comstock will own substantially all of GenMat’s issued and outstanding equity and continue development and commercialization of its breakthrough physics-based artificial intelligence products and services to discover new materials and other technologies, primarily for decarbonizing energy. “Our interest in GenMat was and remains grounded in the critical need and use of artificial intelligence for materials science and mineral discovery, for breakthrough energy applications and other mature industries with large addressable markets,” said Corrado De Gasperis, Comstock’s executive chairman and chief executive officer. “Artificial intelligence is even more critical today, as rapidly evolving AI platforms have begun to accelerate the pace of global innovation and redefine industries and competitive requirements. Frankly, anyone that is not integrating AI into their core competencies and capacities will likely either be disrupted or completely replaced.” OpenAI’s ChatGPT employs a generative large language model to generate new, valuable information for a wide range of use cases at orders of magnitude faster than what was previously possible. GenMat’s AI operates similarly, but instead of generating words and language for a wide range of use cases, it generates new atoms, molecules, and physical systems for a wide range of materials applications, harnessing aspects of humanity’s collective knowledge of physics and chemistry combined with proprietary synthetic datasets to discover new materials in an exponentially shorter time than traditional methods have allowed. Kevin Kreisler, Comstock’s chief technology officer, added, “focusing and building on GenMat’s team and competencies in materials science, computational chemistry, and computational machine learning, while incorporating the bleeding edge of emerging artificial intelligence technologies will reinforce our competitive advantages in our metals, mining, and fuels businesses, while dramatically expanding our existing innovation capacity as we continue to develop more advanced solutions for enabling systemic decarbonization.” Since our initial investment in 2021, GenMat has built an exceptional team and achieved a series of critical milestones in materials simulation and synthesis, in addition to successfully launching its orbital imaging and remote sensing satellite, developing its proprietary mission control software, and commencing commercial sales in its space business. “Deep Prasad positioned GenMat for an extraordinary second opportunity commercializing satellite development, manufacturing and management that requires different skills and dedication,” continued De Gasperis. “Launching a new company that will leverage GenMat’s existing space-based assets evolved as the logical, win-win solution that allowed our respective companies to maximize the value of each enterprise, with Comstock fully owning and dedicating to GenMat, and Deep fully dedicated to, owning, and leading the new space-based enterprise.” “GenMat is one of the world’s first physics-based AI for materials science startup companies,” added Deep Prasad, GenMat’s founder and former chief executive officer. “We couldn’t be prouder of our accomplishments in materials simulation and synthesis, and the emerging opportunities with space-based systems and technologies. We are excited with Comstock’s plans to build on our work to date, and our ability to now fully dedicate and focus on building our space-based technologies, assets, and operations.” “The strategic value of leveraging physics-based AI cannot be overstated,” concluded Kreisler. “AI will allow us to build on our competitive advantages in this rapidly changing world, while positioning us to generate extraordinary shareholder value as we fulfill our mission to enable systemic decarbonization by innovating, developing, commercializing, and monetizing new technologies for producing, distributing, storing, and using energy more efficiently.” Mr. Kreisler will lead the management of GenMat’s ongoing technology development and commercialization efforts, including as part of Comstock’s growing innovation capabilities, projects, and partner networks. Technology Readiness Level Comstock uses the technology readiness scale to estimate the readiness of technology from conception to commercialization, iterating sequentially as follows: (i) TRL 1 (basic principles observed and reported); (ii) TRL 2 (technology concept and application formulated); (iii) TRL 3 (analytical and experimental proof of concept); (iv) TRL 4 (validation in laboratory environment); (v) TRL 5 (pre-pilot scale validation in relevant environment); (vi) TRL 6 (pilot prototype demonstration in relevant environment); (vii) TRL 7 (scaled-up commercial prototype in operational environment); (viii) TRL 8 (commercial system demonstration); (ix) TRL 9 (commercial maturity). GenMat’s materials discovery AI is at TRL 3 in some applications. GenMat is focused on the minimum sufficient requirements for simulating and synthesizing breakthrough new materials for use in energy applications at TRL 6, followed by both commercialization and integration into Comstock’s businesses. Comstock’s original 2021 investment agreement with GenMat called for a milestone-based investment of $50,000,000 for 50% of GenMat’s fully diluted equity, including about $15,000,000 previously paid by Comstock. Comstock and GenMat agreed to terminate each of their prior agreements as part of the new acquisition agreement. Comstock expects to efficiently operate, integrate, and commercialize GenMat. About Comstock Inc. Comstock Inc. (NYSE: LODE) commercializes innovative technologies that contribute to global decarbonization and the clean energy transition by efficiently converting under-utilized natural resources, primarily, woody biomass into low-carbon renewable fuels, end-of-life metal extraction and renewal, and generative AI-enabled advanced materials synthesis and mineral discovery for sustainable mining. To learn more, please visit www.comstock.inc. Comstock Social Media Policy Comstock Inc. has used, and intends to continue using, its investor relations link and main website at www.comstock.inc in addition to its Twitter, LinkedIn and YouTube accounts, as means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD. Contacts For investor inquiries: RB Milestone Group LLC Tel (203) 487-2759 ir@comstockinc.com For media inquiries or questions: Comstock Inc., Tracy Saville Tel (775) 847-7573 questions@comstockinc.com Forward-Looking Statements This press release and any related calls or discussions may include 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. All statements, other than statements of historical facts, are forward-looking statements. The words “believe,” “expect,” “anticipate,” “estimate,” “project,” “plan,” “should,” “intend,” “may,” “will,” “would,” “potential” and similar expressions identify forward-looking statements but are not the exclusive means of doing so. Forward-looking statements include statements about matters such as: future market conditions; future explorations or acquisitions; future changes in our research, development and exploration activities; future financial, natural, and social gains; future prices and sales of, and demand for, our products and services; land entitlements and uses; permits; production capacity and operations; operating and overhead costs; future capital expenditures and their impact on us; operational and management changes (including changes in the Board of Directors); changes in business strategies, planning and tactics; future employment and contributions of personnel, including consultants; future land and asset sales; investments, acquisitions, joint ventures, strategic alliances, business combinations, operational, tax, financial and restructuring initiatives, including the nature, timing and accounting for restructuring charges, derivative assets and liabilities and the impact thereof; contingencies; litigation, administrative or arbitration proceedings; environmental compliance and changes in the regulatory environment; offerings, limitations on sales or offering of equity or debt securities, including asset sales and associated costs; business opportunities, growth rates, future working capital, needs, revenues, variable costs, throughput rates, operating expenses, debt levels, cash flows, margins, taxes and earnings. These statements are based on assumptions and assessments made by our management in light of their experience and their perception of historical and current trends, current conditions, possible future developments and other factors they believe to be appropriate. Forward-looking statements are not guarantees, representations or warranties and are subject to risks and uncertainties, many of which are unforeseeable and beyond our control and could cause actual results, developments, and business decisions to differ materially from those contemplated by such forward-looking statements. Some of those risks and uncertainties include the risk factors set forth in our filings with the SEC and the following: adverse effects of climate changes or natural disasters; adverse effects of global or regional pandemic disease spread or other crises; global economic and capital market uncertainties; the speculative nature of gold or mineral exploration, and lithium, nickel and cobalt recycling, including risks of diminishing quantities or grades of qualified resources; operational or technical difficulties in connection with exploration, metal recycling, processing or mining activities; costs, hazards and uncertainties associated with precious and other metal based activities, including environmentally friendly and economically enhancing clean mining and processing technologies, precious metal exploration, resource development, economic feasibility assessment and cash generating mineral production; costs, hazards and uncertainties associated with metal recycling, processing or mining activities; contests over our title to properties; potential dilution to our stockholders from our stock issuances, recapitalization and balance sheet restructuring activities; potential inability to comply with applicable government regulations or law; adoption of or changes in legislation or regulations adversely affecting our businesses; permitting constraints or delays; challenges to, or potential inability to, achieve the benefits of business opportunities that may be presented to, or pursued by, us, including those involving battery technology and efficacy, quantum computing and generative artificial intelligence supported advanced materials development, development of cellulosic technology in bio-fuels and related material production; commercialization of cellulosic technology in bio-fuels and generative artificial intelligence development services; ability to successfully identify, finance, complete and integrate acquisitions, joint ventures, strategic alliances, business combinations, asset sales, and investments that we may be party to in the future; changes in the United States or other monetary or fiscal policies or regulations; interruptions in our production capabilities due to capital constraints; equipment failures; fluctuation of prices for gold or certain other commodities (such as silver, zinc, lithium, nickel, cobalt, cyanide, water, diesel, gasoline and alternative fuels and electricity); changes in generally accepted accounting principles; adverse effects of war, mass shooting, terrorism and geopolitical events; potential inability to implement our business strategies; potential inability to grow revenues; potential inability to attract and retain key personnel; interruptions in delivery of critical supplies, equipment and raw materials due to credit or other limitations imposed by vendors; assertion of claims, lawsuits and proceedings against us; potential inability to satisfy debt and lease obligations; potential inability to maintain an effective system of internal controls over financial reporting; potential inability or failure to timely file periodic reports with the Securities and Exchange Commission; potential inability to list our securities on any securities exchange or market or maintain the listing of our securities; and work stoppages or other labor difficulties. Occurrence of such events or circumstances could have a material adverse effect on our business, financial condition, results of operations or cash flows, or the market price of our securities. All subsequent written and oral forward-looking statements by or attributable to us or persons acting on our behalf are expressly qualified in their entirety by these factors. Except as may be required by securities or other law, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Neither this press release nor any related calls or discussions constitutes an offer to sell, the solicitation of an offer to buy or a recommendation with respect to any securities of the Company, the fund, or any other issuer. |
0001907982-25-000070:qbts-20250331.htm | 0001907982-25-000070 | 1,907,982 | 1,907,982 | D-Wave Quantum Inc. (QBTS, QBTS-WT) (CIK 0001907982) | ['QBTS', 'QBTS-WT'] | 8-K | 8-K | 2025-03-31 | 2025-03-31 | 001-41468 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-41468&action=getcompany | 25,788,813 | 8-K | 8-K | 7.01,9.01 | https://www.sec.gov/Archives/edgar/data/1907982/000190798225000070 | https://www.sec.gov/Archives/edgar/data/1907982/000190798225000070/0001907982-25-000070-index.html | https://www.sec.gov/Archives/edgar/data/1907982/000190798225000070/qbts-20250331.htm | qbts-202503310001907982FALSE00019079822025-03-312025-03-310001907982us-gaap:CommonStockMember2025-03-312025-03-310001907982us-gaap:WarrantMember2025-03-312025-03-31UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549_____________________________________________________________FORM 8-K_____________________________________________________________CURRENT REPORTPURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934Date of Report (Date of earliest event reported): March 31, 2025_____________________________________________________________D-Wave Quantum Inc.(Exact Name of Registrant as Specified in Its Charter)_____________________________________________________________Delaware001-4146888-1068854(State or other jurisdiction of incorporation or organization)(Commission File Number)(I.R.S. Employer Identification No.)2650 East Bayshore RoadPalo Alto, California94303(Address of principal executive offices)(604) 630-1428(Registrant’s telephone number, including area code)N/A(Former name or former address, if changed since last report)_____________________________________________________________Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))Securities registered pursuant to Section 12(b) of the Act:Title of each classTrading Symbol(s)Name of each exchange on which registeredCommon stock, par value $0.0001 per shareQBTSNew York Stock ExchangeWarrants, each whole warrant exercisable for 1.4541326 shares of common stock at an exercise price of $11.50QBTS.WTNew York Stock ExchangeIndicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).Emerging growth companyxIf an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.oItem 7.01 Regulation FD Disclosure. On March 31, 2025, D-Wave Quantum Inc. (“D-Wave”) and the pharmaceutical division of Japan Tobacco Inc. (“JT”) announced the completion of a joint proof-of-concept project that used quantum computing technology and artificial intelligence (“AI”) in the drug discovery process. JT and D-Wave enhanced large language models with a quantum-hybrid workflow to increase their generative capabilities and enable JT to produce novel, more ‘drug-like’ molecular structures beyond those found in the training datasets for the quantum-hybrid generative AI system. The project results indicate that D-Wave’s quantum processing unit provided the teams with higher quality, lower energy samples, highlighting the potential benefits of quantum computing in generative AI for drug discovery. A copy of this press release is attached as Exhibit 99.1.Also on March 31, 2025, D-Wave and Ford Otosan, a joint venture between Ford Motor Company and Koç Holding in Turkey, announced that the vehicle manufacturer has deployed a hybrid-quantum application in production, streamlining manufacturing processes for its Ford Transit line of vehicles. The application, which uses D-Wave’s annealing quantum computing technology, has improved vehicle production sequencing at Ford Otosan, a powerful demonstration of quantum computing’s real-world impact in automotive manufacturing. According to Ziya Dalkılıç, data scientist at Ford Otosan, Ford Otosan was able to build and deploy a quantum optimization application using D-Wave’s technology that goes beyond what they were able to achieve with a purely classical computing approach. A copy of this press release is attached as Exhibit 99.2.The information in this Item 7.01 to this Current Report on Form 8-K, including Exhibit 99.1 and Exhibit 99.2, is intended to be furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing. Forward-Looking StatementsCertain statements in this report are forward-looking, as defined in the Private Securities Litigation Reform Act of 1995. These statements involve risks, uncertainties, and other factors that may cause actual results to differ materially from the information expressed or implied by these forward-looking statements and may not be indicative of future results. These forward-looking statements are subject to a number of risks and uncertainties, including, among others, various factors beyond management’s control, including the risks set forth under the heading “Risk Factors” discussed under the caption “Item 1A. Risk Factors” in Part I of D-Wave’s most recent Annual Report on Form 10-K or any updates discussed under the caption “Item 1A. Risk Factors” in Part II of D-Wave’s Quarterly Reports on Form 10-Q and in D-Wave’s other filings with the SEC. Undue reliance should not be placed on the forward-looking statements in this report in making an investment decision, which are based on information available to D-Wave on the date hereof. D-Wave undertakes no duty to update this information unless required by law.Item 9.01 Financial Statements and Exhibits. (d) Exhibits Exhibit No. Description99.1 Press release, dated March 31, 2025.99.2 Press release, dated March 31, 2025.104Cover Page Interactive Data File (embedded within the Inline XBRL document).SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.Date: March 31, 2025D-Wave Quantum Inc.By:/s/ Alan Baratz Name:Alan BaratzTitle:President & Chief Executive Officer |
0001104659-24-115337:tm2426973d1_ex99-1.htm | 0001104659-24-115337 | 903,651 | 903,651 | INNODATA INC (INOD) (CIK 0000903651) | ['INOD'] | 8-K | 8-K | 2024-11-07 | 2024-11-07 | 001-35774 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-35774&action=getcompany | 241,436,234 | EX-99.1 | EXHIBIT 99.1 | 2.02,9.01 | https://www.sec.gov/Archives/edgar/data/903651/000110465924115337 | https://www.sec.gov/Archives/edgar/data/903651/000110465924115337/0001104659-24-115337-index.html | https://www.sec.gov/Archives/edgar/data/903651/000110465924115337/tm2426973d1_ex99-1.htm | EX-99.1 2 tm2426973d1_ex99-1.htm EXHIBIT 99.1 Exhibit 99.1 Innodata Reports Third Quarter 2024 Results; Record 136% Revenue Growth Year-Over-Year NEW YORK – November 7, 2024 – INNODATA INC. (Nasdaq: INOD) today reported results for the third quarter ended September 30, 2024. ·Revenue of $52.2 million, 136% revenue growth year-over-year. ·Net income of $17.4 million, or $0.60 per basic share and $0.51 per diluted share, compared to net income of $0.4 million, or $0.01 per basic and diluted share, in the same period last year. Third quarter net income included a $5.6 million benefit as a result of recognizing a deferred tax asset that related to our accumulated net operating losses and other deferred expenses from prior periods. ·Adjusted EBITDA of $13.9 million, an increase of 337% from $3.2 million in the same period last year.* ·Cash, cash equivalents and short-term investments of $26.4 million at September 30, 2024 and $13.8 million at December 31, 2023. ·Guidance raised to between 88% and 92% year-over-year revenue growth for full year 2024. *Adjusted EBITDA is defined below. Jack Abuhoff, CEO, said “Innodata continued to build on its recent progress, leading to record third quarter revenue of $52.2 million, an increase of 136% year-over-year. As a result of strong business momentum, Innodata is raising 2024 full-year revenue guidance to between 88% and 92% year-over-year revenue growth. “We are seeing strong business momentum reflected in revenue growth, margin expansion, broadening customer relationships, and continuing progress on our strategic roadmap. We believe increasing investments by the world’s largest tech companies in generative AI and large language models (LLMs) will continue to be a growth catalyst for Innodata. “The hard work and dedication of our talented team has enabled us to scale and to meet or exceed the expectations of some of the most demanding, fast-moving companies in the world. We believe Innodata is well positioned to capture the generative AI market opportunity and continue to drive value for shareholders.” Big Tech Customer Roster and New Win Beyond the Big Tech customer we ramped up considerably this quarter, we have seven other Big Tech customers that we believe will collectively become a significant part of our revenue makeup next year. Our confidence is bolstered by the progress we made this quarter in broadening these relationships, expanding our engagements and securing new wins. Our Big Tech customer roster now includes five of the Magnificent Seven, one of the most prominent AI research and development companies and a prominent social media company. We are proud to announce that we won this prominent social media company, our eighth Big Tech customer, in the third quarter. These companies are all investing significantly in generative AI development initiatives, for which Innodata is providing data engineering support. The Company also secured its second federal government agency win. The agency will be leveraging the new generative AI capabilities built into Innodata’s Agility platform. Record Revenue and Strong Balance Sheet Revenue for third quarter 2024 reached $52.2 million, reflecting a year-over-year increase of 136%. On a sequential basis, the Company observed a 60% increase of $19.7 million from its second quarter 2024 revenue of $32.6 million. Innodata continues to operate a strong balance sheet, which enables the Company to invest in growth. As of September 30, 2024, the Company’s cash balances were $26.4 million, up approximately $10 million from the second quarter 2024. Amounts in this press release have been rounded. All percentages have been calculated using unrounded amounts. Timing of Conference Call with Q&A Innodata will conduct an earnings conference call, including a question-and-answer period, at 5:00 PM eastern time today. You can participate in this call by dialing the following call-in numbers: The call-in numbers for the conference call are: 1-800-343-4136 (Domestic) +1 203-518-9848 (International) Participant Access Code INNODATA 888-562-2817 (Domestic Replay) 402-220-7354 (International Replay) It is recommended that participants dial in approximately 10 minutes prior to the start of the call. Investors are also invited to access a live Webcast of the conference call at the Investor Relations section of www.innodata.com. Please note that the Webcast feature will be in listen-only mode. Call-in replay will be available for 7 days following the conference call, and Webcast replay will be available for 30 days following the conference call. About Innodata Innodata (Nasdaq: INOD) is a global data engineering company. We believe that data and Artificial Intelligence (AI) are inextricably linked. That’s why we’re on a mission to help the world’s leading technology companies and enterprises drive Generative AI / AI innovation. We provide a range of transferable solutions, platforms, and services for Generative AI / AI builders and adopters. In every relationship, we honor our 35+ year legacy delivering the highest quality data and outstanding outcomes for our customers. Visit www.innodata.com to learn more. Forward-Looking Statements This press release may contain certain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. These forward-looking statements include, without limitation, statements concerning our operations, economic performance, financial condition, developmental program expansion and position in the generative AI services market. Words such as “project,” “believe,” “expect,” “can,” “continue,” “could,” “intend,” “may,” “should,” “will,” “anticipate,” “indicate,” “predict,” “likely,” “estimate,” “plan,” “potential,” “possible,” or the negatives thereof, and other similar expressions generally identify forward-looking statements. These forward-looking statements are based on management’s current expectations, assumptions and estimates and are subject to a number of risks and uncertainties, including, without limitation, impacts resulting from ongoing geopolitical conflicts, including between Russia and Ukraine, Hamas’ attack against Israel and the ensuing conflict and increased hostilities between Hezbollah and Israel and Iran and Israel; investments in large language models; that contracts may be terminated by customers; projected or committed volumes of work may not materialize; pipeline opportunities and customer discussions which may not materialize into work or expected volumes of work; the likelihood of continued development of the markets, particularly new and emerging markets, that our services support; the ability and willingness of our customers and prospective customers to execute business plans that give rise to requirements for our services; continuing reliance on project-based work in the Digital Data Solutions (DDS) segment and the primarily at-will nature of such contracts and the ability of these customers to reduce, delay or cancel projects; potential inability to replace projects that are completed, canceled or reduced; our DDS segment’s revenue concentration in a limited number of customers; our dependency on content providers in our Agility segment; the Company’s ability to achieve revenue and growth targets; difficulty in integrating and deriving synergies from acquisitions, joint ventures and strategic investments; potential undiscovered liabilities of companies and businesses that we may acquire; potential impairment of the carrying value of goodwill and other acquired intangible assets of companies and businesses that we acquire; a continued downturn in or depressed market conditions; changes in external market factors; the potential effects of U.S. monetary policy, including the interest rate policies of the Federal Reserve; changes in our business or growth strategy; the emergence of new, or growth in existing competitors; various other competitive and technological factors; our use of and reliance on information technology systems, including potential security breaches, cyber-attacks, privacy breaches or data breaches that result in the unauthorized disclosure of consumer, customer, employee or Company information, or service interruptions; and other risks and uncertainties indicated from time to time in our filings with the Securities and Exchange Commission. Our actual results could differ materially from the results referred to in any forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, the risks discussed in Part I, Item 1A. “Risk Factors,” Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and other parts of our Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 4, 2024, as updated or amended by our other filings that we may make with the Securities and Exchange Commission. In light of these risks and uncertainties, there can be no assurance that the results referred to in the forward-looking statements will occur, and you should not place undue reliance on these forward-looking statements. These forward-looking statements speak only as of the date hereof. We undertake no obligation to update or review any guidance or other forward-looking statements, whether as a result of new information, future developments or otherwise, except as may be required by the U.S. federal securities laws. Company Contact Jelena Sutovic Innodata Inc. Jsutovic@innodata.com (201) 371-8024 Non-GAAP Financial Measures In addition to the financial information prepared in conformity with U.S. GAAP (“GAAP”), we provide certain non-GAAP financial information. We believe that these non-GAAP financial measures assist investors in making comparisons of period-to-period operating results. In some respects, management believes non-GAAP financial measures are more indicative of our ongoing core operating performance than their GAAP equivalents by making adjustments that management believes are reflective of the ongoing performance of the business. We believe that the presentation of this non-GAAP financial information provides investors with greater transparency by providing investors a more complete understanding of our financial performance, competitive position, and prospects for the future, particularly by providing the same information that management and our Board of Directors use to evaluate our performance and manage the business. However, the non-GAAP financial measures presented in this press release have certain limitations in that they do not reflect all of the costs associated with the operations of our business as determined in accordance with GAAP. Therefore, investors should consider non-GAAP financial measures in addition to, and not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP. Further, the non-GAAP financial measures that we present may differ from similar non-GAAP financial measures used by other companies. Adjusted EBITDA We define Adjusted EBITDA as net income (loss) attributable to Innodata Inc. and its subsidiaries in accordance with U.S. GAAP before interest expense, income taxes, depreciation and amortization of intangible assets (which derives EBITDA), plus additional adjustments for loss on impairment of intangible assets and goodwill, stock-based compensation, income (loss) attributable to non-controlling interests, non-recurring severance, and other one-time costs. We use Adjusted EBITDA to evaluate core results of operations and trends between fiscal periods and believe that these measures are important components of our internal performance measurement process. A reconciliation of Adjusted EBITDA to the most directly comparable GAAP measure is included in the tables that accompany this release. INNODATA INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except per-share amounts) Three Months Ended Nine Months Ended September 30, September 30, 2024 2023 2024 2023 Revenues $52,224 $22,169 $111,281 $60,663 Direct operating costs 30,893 13,945 70,964 39,534 Selling and administrative expenses 9,910 7,401 27,235 22,772 Interest (income) expense, net (26) 66 (55) 122 40,777 21,412 98,144 62,428 Income (loss) before provision for income taxes 11,447 757 13,137 (1,765) Provision for (benefit from) income taxes (5,944) 374 (5,235) 780 Consolidated net income (loss) 17,391 383 18,372 (2,545) Income attributable to non-controlling interests 2 12 8 15 Net Income (loss) attributable to Innodata Inc. and Subsidiaries $17,389 $371 $18,364 $(2,560) Income (loss) per share attributable to Innodata Inc. and Subsidiaries: Basic $0.60 $0.01 $0.64 $(0.09) Diluted $0.51 $0.01 $0.55 $(0.09) Weighted average shares outstanding: Basic 28,994 28,459 28,873 27,930 Diluted 34,007 32,463 33,297 27,930 Tax provision for the three months and nine months ended September 30, 2024 includes a net tax benefit of $5.6 million resulting from the recognition of deferred tax asset of the company’s accumulated net loss carry forward (NOLCO) and other deferred expenses. INNODATA INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands) September 30, 2024 December 31, 2023 ASSETS Current assets: Cash and cash equivalents $26,364 $13,806 Short term investments – other 14 14 Accounts receivable, net 23,186 14,288 Prepaid expenses and other current assets 5,221 3,969 Total current assets 54,785 32,077 Property and equipment, net 3,325 2,281 Right-of-use-asset, net 4,435 5,054 Other assets 1,771 2,445 Deferred income taxes, net 7,890 1,741 Intangibles, net 13,880 13,758 Goodwill 2,084 2,075 Total assets $88,170 $59,431 LIABILITIES, NON-CONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable and accrued expenses $7,692 $5,722 Accrued salaries, wages and related benefits 9,619 7,799 Deferred revenues 6,500 3,523 Income and other taxes 3,961 3,848 Long-term obligations - current portion 1,166 1,261 Operating lease liability - current portion 855 782 Total current liabilities 29,793 22,935 Deferred income taxes, net 30 22 Long-term obligations, net of current portion 7,311 6,778 Operating lease liability, net of current portion 4,027 4,701 Total liabilities 41,161 34,436 Non-controlling interests (700) (708) STOCKHOLDERS’ EQUITY: 47,709 25,703 Total liabilities, non-controlling interests and stockholders’ equity $88,170 $59,431 The company’s Deferred Tax Assets as of September 30, 2024 includes deferred tax assets related to the company’s accumulated net loss carry forward (NOLCO) and other deferred expenses previously with a full valuation allowance. INNODATA INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands) Nine Months Ended September 30, 2024 2023 Cash flows from operating activities: Consolidated net income (loss) $18,372 $(2,545) Adjustments to reconcile consolidated net income (loss) to net cash provided by operating activities: Depreciation and amortization 4,219 3,479 Stock-based compensation 2,881 2,998 Deferred income taxes (6,153) (120) Pension cost 948 791 Changes in operating assets and liabilities: Accounts receivable (8,834) (1,198) Prepaid expenses and other current assets (1,222) 449 Other assets 673 (243) Accounts payable and accrued expenses 1,892 268 Deferred revenues 2,977 702 Accrued salaries, wages and related benefits 1,822 1,019 Income and other taxes 109 189 Net cash provided by operating activities 17,684 5,789 Cash flows from investing activities: Capital expenditures (5,522) (4,320) Proceeds from sale of short term investments - others - 494 Net cash used in investing activities (5,522) (3,826) Cash flows from financing activities: Proceeds from exercise of stock options 810 3,158 Withholding taxes on net settlement of restricted stock units (97) - Payment of long-term obligations (516) (329) Net cash provided by financing activities 197 2,829 Effect of exchange rate changes on cash and cash equivalents 199 228 Net increase in cash and cash equivalents 12,558 5,020 Cash and cash equivalents, beginning of period 13,806 9,792 Cash and cash equivalents, end of period $26,364 $14,812 INNODATA INC. AND SUBSIDIARIES RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (Unaudited) (In thousands) Three Months Ended September 30, Nine Months Ended September 30, Consolidated 2024 2023 2024 2023 Net income (loss) attributable to Innodata Inc. and Subsidiaries $17,389 $371 $18,364 $(2,560) Provision for (benefit from) income taxes (5,944) 374 (5,235) 780 Interest expense 21 163 190 295 Depreciation and amortization 1,535 1,237 4,219 3,479 Severance** - - - 580 Stock-based compensation 855 1,017 2,881 2,998 Non-controlling interests 2 12 8 15 Adjusted EBITDA - Consolidated $13,858 $3,174 $20,427 $5,587 Three Months Ended September 30, Nine Months Ended September 30, DDS Segment 2024 2023 2024 2023 Net income (loss) attributable to DDS Segment $16,526 $444 $16,492 $(751) Provision for (benefit from) income taxes (5,887) 371 (5,183) 772 Interest expense 20 162 187 291 Depreciation and amortization 670 328 1,513 811 Severance** - - - 33 Stock-based compensation 760 854 2,523 2,524 Non-controlling interests 2 12 8 15 Adjusted EBITDA - DDS Segment $12,091 $2,171 $15,540 $3,695 Three Months Ended September 30, Nine Months Ended September 30, Synodex Segment 2024 2023 2024 2023 Net income (loss) attributable to Synodex Segment $381 $(154) $973 $(19) Depreciation and amortization 112 155 406 479 Severance** - - - 6 Stock-based compensation 38 60 136 177 Adjusted EBITDA - Synodex Segment $531 $61 $1,515 $643 Three Months Ended September 30, Nine Months Ended September 30, Agility Segment 2024 2023 2024 2023 Net income (loss) attributable to Agility Segment $482 $81 $899 $(1,790) Provision for (benefit from) income taxes (57) 3 (52) 8 Interest expense 1 1 3 4 Depreciation and amortization 753 754 2,300 2,189 Severance** - - - 541 Stock-based compensation 57 103 222 297 Adjusted EBITDA - Agility Segment $1,236 $942 $3,372 $1,249 **Represents non-recurring severance incurred for a reduction in headcount in connection with the re-alignment of the Company’s cost structure. INNODATA INC. AND SUBSIDIARIES CONSOLIDATED REVENUE BY SEGMENT (Unaudited) (In thousands) For the Three Months Ended September 30, For the Nine Months Ended September 30, 2024 2023 2024 2023 Revenues: DDS $44,694 $16,003 $89,810 $41,929 Synodex 1,935 1,728 5,792 5,705 Agility 5,595 4,438 15,679 13,029 Total Consolidated $52,224 $22,169 $111,281 $60,663 |
0001628280-24-050446:ex991-fy25xq2earnings.htm | 0001628280-24-050446 | 1,577,526 | 1,577,526 | C3.ai, Inc. (AI) (CIK 0001577526) | ['AI'] | 8-K | 8-K | 2024-12-09 | 2024-12-09 | 001-39744 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-39744&action=getcompany | 241,535,212 | EX-99.1 | EX-99.1 | 2.02,9.01 | https://www.sec.gov/Archives/edgar/data/1577526/000162828024050446 | https://www.sec.gov/Archives/edgar/data/1577526/000162828024050446/0001628280-24-050446-index.html | https://www.sec.gov/Archives/edgar/data/1577526/000162828024050446/ex991-fy25xq2earnings.htm | EX-99.1 2 ex991-fy25xq2earnings.htm EX-99.1 DocumentC3 AI Announces Fiscal Second Quarter 2025 Financial ResultsRevenue Accelerated 29% Year-Over-Year and Guidance Raised for FY 2025C3 AI and Microsoft Strategic Alliance to Accelerate Enterprise AI AdoptionREDWOOD CITY, Calif. — December 9, 2024 — C3.ai, Inc. (“C3 AI,” “C3,” or the “Company”) (NYSE: AI), the Enterprise AI application software company, today announced financial results for its fiscal second quarter ended October 31, 2024.“We had an outstanding quarter with strong top- and bottom-line performance to mark our seventh consecutive quarter of accelerating revenue growth,” said Thomas M. Siebel, Chairman and CEO, C3 AI. “It is difficult to overstate the potential of the Microsoft–C3 AI strategic alliance,” said Siebel. “By establishing C3 AI as a preferred AI application provider on Azure and creating a Microsoft-scale go-to-market engine, we’re making it easy for businesses to adopt and deploy C3 AI applications. This is an inflection point for Enterprise AI, driving growth.”Fiscal Second Quarter 2025 Financial Highlights•Revenue: Total revenue for the quarter was $94.3 million, an increase of 29% compared to $73.2 million one year ago.•Subscription Revenue: Subscription revenue for the quarter was $81.2 million, constituting 86% of total revenue, an increase of 22% compared to $66.4 million one year ago.•Subscription and Prioritized Engineering Services Revenue Combined: Subscription and prioritized engineering services revenue combined was $90.8 million, constituting 96% of total revenue, an increase of 27% compared to $71.3 million one year ago.•Gross Profit: GAAP gross profit for the quarter was $57.8 million, representing a 61% gross margin. Non-GAAP gross profit for the quarter was $66.3 million, representing a 70% non-GAAP gross margin.•Net Loss per Share: GAAP net loss per share was $(0.52). Non-GAAP net loss per share was $(0.06).•Cash Balance: $730.4 million in cash, cash equivalents, and marketable securities.Microsoft Azure Strategic Alliance•The Company signed a new global alliance agreement with Microsoft on September 30 for an initial five-and-a-half-year term ending March 2030 to accelerate growth in Enterprise AI.Under the terms of the Microsoft–C3 AI strategic alliance agreement:◦All C3 AI Enterprise AI and C3 Generative AI solutions are now available on the Azure Price List.◦All C3 AI Enterprise AI and generative AI software solutions are now orderable on the Azure Marketplace.◦All C3 AI solutions are sellable by the entire Azure sales organization globally.◦Azure sales personnel will receive commissions, quota credit, and special bonuses on Azure–C3 AI sales.◦Azure sales personnel will receive design win credit for each Azure–C3 AI sale.◦All C3 AI products are orderable on Microsoft paper incorporating the Microsoft enterprise licensing agreement that Microsoft has in place with 95% of the Fortune 500, dramatically shortening C3 AI sales cycles.◦Microsoft will subsidize C3 AI pilots and C3 AI production deployments over the term of the agreement.Partner NetworkC3 AI reinforced its leadership in Enterprise AI, strengthened by a thriving partner ecosystem to accelerate Enterprise AI adoption.•In Q2, the Company closed 62% of total agreements with and through its partner network. •C3 AI and Capgemini extended their partnership to advance Enterprise AI for business transformation. Capgemini will establish a dedicated global C3 AI practice to deliver scalable, rapid Enterprise AI solutions for joint clients across industries.•Google Cloud and C3 AI jointly closed 20 agreements, an increase of more than 180% year-over-year. C3 AI was featured in Google’s Public Sector Summit held in Washington, DC. Both companies also co-hosted six executive roundtable discussions focused on various industries across North America and LATAM.Business HighlightsC3 AI had continuing momentum with significant Federal and commercial successes and strengthened strategic partnerships. •The Company closed 58 agreements including 36 pilots.•The Company entered into new and expanded agreements with ExxonMobil, Koch, Dow, Holcim, Shell, Duke Energy, Boston Scientific, Rolls-Royce, Cameco, Mars, ESAB, Flex, Worley, the Defense Logistics Agency, and the U.S. Department of Defense, among others. •The Company expanded its footprint across State and Local Governments, closing nine agreements across California, Texas, Michigan, Idaho, New Mexico, Washington, and Florida.Federal MomentumFederal business demonstrated strong execution, securing key wins and expansions across multiple agencies.•The Company entered into new and expansion agreements with the U.S. Department of Defense (DoD), the U.S. Air Force, the U.S. Navy, the U.S. Army, the U.S. Marine Corps, the Defense Logistics Agency, the Chief Digital Artificial Intelligence Office (CDAO), and the National Science Foundation.•The U.S. Army’s Program Manager for Intelligence Systems & Analytics has selected C3 AI and ECS to transform its intelligence collection management with C3 AI Decision Advantage, to be delivered under a $23 million award. This AI application unifies data from multiple systems to streamline tasking and collection, including digitizing scheduling workflows. These modernization efforts make it easier for the Army workforce to quickly provide real-time, predictive intelligence to leaders for enhanced, accelerated decision making.•The U.S. Air Force Rapid Sustainment Office (RSO) continued the expansion of sensor-based algorithms with C3 AI with a new contract. The PANDA application, which is the designated U.S. Air Force (USAF) System of Record for all CBM+ and Predictive Maintenance, will expand to include new systems on two monitored aircraft (KC-46 and KC-135).•The Defense Logistics Agency, a cornerstone of the U.S. Department of Defense’s supply chain, expanded its use of the C3 AI Contested Logistics application to drive efficiency and productivity across its workforce, ensuring supply network resilience and availability in contested environments. DLA uses C3 AI Contested Logistics to streamline workflows and decision making for risk management, sustainment, scenario-based planning, proactive readiness, and predictive maintenance across the DoD. Together, C3 AI continues to support DLA to enhance warfighter readiness, drive operational efficiency, and improve mission effectiveness across the globe.C3 Generative AIC3 AI further strengthens its competitive edge in generative AI, affirming its market leadership. •In Q2, the Company closed 15 C3 Generative AI pilots with Boston Scientific, Rolls-Royce, the U.S. Navy, the National Science Foundation, and others, including various government agencies in Texas, Washington, and New Mexico. •The Company converted multiple C3 Generative AI pilots to production, including Dow, Flint Hills Resources, Cargill, Norfolk Iron & Metal, and Florida Crystals, among others.•C3 AI launched the C3 Generative AI Accelerator Program, a three-day workshop designed to help organizations implement generative AI solutions quickly and effectively.“Our recent partnership with C3 AI has been a significant boost to our Data Analytics team. Throughout our engagement with C3 AI, our team members have been able to get hands-on experience through generative AI trainings provided by C3 AI,” said Ben Dubois, Director of Data Analytics, Norfolk Iron & Metal. “Additionally, we participated in their first C3 Generative AI Accelerator Program, where our team had the opportunity to develop a generative AI prototype application in just three days. We look forward to continuing to build on everything that was accomplished in our first pilot project.”•C3 AI was awarded a foundational U.S. patent (US 12,111,859) for generative AI agents. Key patented technologies include:◦AI Orchestrator: The C3 AI orchestrator coordinates multiple AI agents, invokes specialized machine-learning models or mathematical tools as necessary and handles all data types and tasks.◦Autonomy: Meaning the AI agents can operate independently to perform tasks across various business functions like sales, service, marketing, and commerce. AI agents can be fully customized to fit the specific needs of any industry or business process, using tools that are already familiar to programmers and data scientists.◦Multimodal Model Integration: The system integrates advanced multimodal models to break down inputs into a series of instructions for a multiplicity of AI agents.◦Natural Language Summarization: The technology generates comprehensive summaries from varied data sources, significantly improving decision making.◦Traceability and Security: C3 Generative AI agents provide full traceability to both structured and unstructured data sources, enforces comprehensive enterprise access controls, high data security, minimal hallucinations, and are LLM agnostic.Financial Outlook:The Company’s guidance includes GAAP and non-GAAP financial measures.The following table summarizes C3 AI’s guidance for the third quarter of fiscal 2025 and full-year fiscal 2025:(in millions)Third Quarter Fiscal 2025GuidanceFull Year Fiscal 2025 GuidanceTotal revenue$95.5 - $100.5$378.0 - $398.0Non-GAAP loss from operations$(38.6) - $(46.6)$(105.0) - $(135.0)A reconciliation of non-GAAP guidance measures to corresponding GAAP measures is not available on a forward-looking basis without unreasonable effort due to the uncertainty regarding, and the potential variability of, expenses that may be incurred in the future. Stock-based compensation expense-related charges, including employer payroll tax-related items on employee stock transactions, are impacted by the timing of employee stock transactions, the future fair market value of our common stock, and our future hiring and retention needs, all of which are difficult to predict and subject to constant change. We have provided a reconciliation of GAAP to non-GAAP financial measures in the financial statement tables for our historical non-GAAP results included in this press release. Our fiscal year ends April 30, and numbers are rounded for presentation purposes.Conference Call Details What:C3 AI Second Quarter Fiscal 2025 Financial Results Conference CallWhen:Monday, December 9, 2024Time:2:00 p.m. PT / 5:00 p.m. ETParticipant Registration:https://register.vevent.com/register/BI383ae1e1c80b4221a65de6c2c2baf582 (live)Webcast:https://edge.media-server.com/mmc/p/xf8dudjw (live and replay)Investor Presentation DetailsAn investor presentation providing additional information and analysis can be found at our investor relations page at ir.c3.ai.Statement Regarding Use of Non-GAAP Financial MeasuresThe Company reports the following non-GAAP financial measures, which have not been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”), in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.•Non-GAAP gross profit, non-GAAP gross margin, non-GAAP loss from operations, and non-GAAP net loss per share. Our non-GAAP gross profit, non-GAAP gross margin, non-GAAP loss from operations, and non-GAAP net loss per share exclude the effect of stock-based compensation expense-related charges and employer payroll tax expense related to employee stock-based compensation. We believe the presentation of operating results that exclude these non-cash items provides useful supplemental information to investors and facilitates the analysis of our operating results and comparison of operating results across reporting periods.•Free cash flow. We believe free cash flow, a non-GAAP financial measure, is useful in evaluating liquidity and provides information to management and investors about our ability to fund future operating needs and strategic initiatives. We calculate free cash flow as net cash used in operating activities less purchases of property and equipment and capitalized software development costs. This non-GAAP financial measure may be different than similarly titled measures used by other companies. Additionally, the utility of free cash flow is further limited as it does not represent the total increase or decrease in our cash balances for a given period.We use these non-GAAP financial measures internally for financial and operational decision-making purposes and as a means to evaluate period-to-period comparisons. Non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP financial measures and should be read only in conjunction with our condensed consolidated financial statements prepared in accordance with GAAP. Our presentation of non-GAAP financial measures may not be comparable to similar measures used by other companies. We encourage investors to carefully consider our results under GAAP, as well as our supplemental non-GAAP information and the reconciliation between these presentations, to more fully understand our business. Please see the tables included at the end of this release for the reconciliation of GAAP to non-GAAP financial measures.Other InformationProfessional Services RevenueOur professional services revenue includes service fees and prioritized engineering services. Service fees include revenue from services such as consulting, training, and paid implementation services. For service fees, revenue is typically recognized over time as the services are performed.Prioritized engineering services are undertaken when a customer requests that we accelerate the design, development, and delivery of software features and functions that are planned in our future product roadmap. When we agree to this, we negotiate an agreed upon fee to accelerate the development of the software. When the software feature is delivered, it becomes integrated to our core product offering, is available to all subscribers of the underlying software product, and enhances the operation of that product going forward. Such prioritized engineering services result in production-level computer software – compiled code that enhances the functionality of our production products – which is available for our customers to use over the life of their software licenses. Per Accounting Standards Codification (ASC) 606, Prioritized engineering services revenue is recognized as professional services over the period in which the software development is completed.Total professional services revenue consists of:Three Months Ended October 31,Six Months Ended October 31,2024202320242023(in thousands)(in thousands)Prioritized engineering services$9,661 $4,852 $20,310 $13,100 Service fees3,515 1,928 6,623 4,690 Total professional services revenue$13,176 $6,780 $26,933 $17,790 Use of Forward-Looking StatementsThis press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The words “anticipate,” “believe,” “continue,” “estimate,” “expect,” “intend,” “may,” “will” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these words. Forward-looking statements in this press release include, but are not limited to, statements regarding our market leadership position, anticipated benefits from our partnerships, financial outlook, our sales and customer opportunity pipeline including our industry diversification, the expected benefits of our offerings (including the potential benefits of our C3 Generative AI offerings), and our business strategies, plans, and objectives for future operations. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks and uncertainties, including our history of losses and ability to achieve and maintain profitability in the future, our historic dependence on a limited number of existing customers that account for a substantial portion of our revenue, our ability to attract new customers and retain existing customers, market awareness and acceptance of enterprise AI solutions in general and our products in particular, the length and unpredictability of our sales cycles and the time and expense required for our sales efforts. Some of these risks are described in greater detail in our filings with the Securities and Exchange Commission, including our Quarterly Reports on Form 10-Q for the fiscal quarters ended July 31, 2024 and, when available, October 31, 2024, although new and unanticipated risks may arise. The future events and trends discussed in this press release may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, achievements, or events and circumstances reflected in the forward-looking statements will occur. Except to the extent required by law, we do not undertake to update any of these forward-looking statements after the date of this press release to conform these statements to actual results or revised expectations.About C3.ai, Inc.C3.ai, Inc. (NYSE:AI) is the Enterprise AI application software company. C3 AI delivers a family of fully integrated products including the C3 AI Platform, an end-to-end platform for developing, deploying, and operating enterprise AI applications, C3 AI applications, a portfolio of industry-specific SaaS enterprise AI applications that enable the digital transformation of organizations globally, and C3 Generative AI, a suite of domain-specific generative AI offerings for the enterprise.Investor Contactir@c3.aiC3 AI Public RelationsEdelmanLisa Kennedy(415) 914-8336pr@c3.aiSource: C3.ai, Inc.C3.AI, INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except per share data)(Unaudited)Three Months Ended October 31,Six Months Ended October 31, 20242024202320242023RevenueSubscription(1)$81,162 $66,449 $154,618 $127,801 Professional services(2)13,176 6,780 26,933 17,790 Total revenue94,338 73,229 181,551 145,591 Cost of revenueSubscription35,038 30,937 68,330 61,371 Professional services1,460 1,179 3,215 2,558 Total cost of revenue36,498 32,116 71,545 63,929 Gross profit57,840 41,113 110,006 81,662 Operating expensesSales and marketing(3)55,643 49,895 107,768 93,780 Research and development55,715 50,399 108,642 101,267 General and administrative21,770 20,215 41,470 40,104 Total operating expenses133,128 120,509 257,880 235,151 Loss from operations(75,288)(79,396)(147,874)(153,489)Interest income9,560 10,480 19,563 20,602 Other income (expense), net13 (638)41 (877)Loss before provision for income taxes(65,715)(69,554)(128,270)(133,764)Provision for income taxes257 226 529 374 Net loss$(65,972)$(69,780)$(128,799)$(134,138)Net loss per share attributable to Class A and Class B common stockholders, basic and diluted$(0.52)$(0.59)$(1.02)$(1.15)Weighted-average shares used in computing net loss per share attributable to Class A and Class B common stockholders, basic and diluted127,870 118,656 126,434 117,125 (1) Including related party revenue of $10,581 for the six months ended October 31, 2023.(2) Including related party revenue of $5,804 for the six months ended October 31, 2023.(3) Including related party sales and marketing expense of $810 for the six months ended October 31, 2023.C3.AI, INC.CONDENSED CONSOLIDATED BALANCE SHEETS(In thousands, except for share and per share data)(Unaudited)October 31, 2024April 30, 2024AssetsCurrent assetsCash and cash equivalents$121,274 $167,146 Marketable securities609,100 583,221 Accounts receivable, net of allowance of $486 and $359 as of October 31, 2024 and April 30, 2024, respectively159,987 130,064 Prepaid expenses and other current assets27,458 23,963 Total current assets917,819 904,394 Property and equipment, net84,198 88,631 Goodwill625 625 Other assets, non-current43,647 44,575 Total assets$1,046,289 $1,038,225 Liabilities and stockholders’ equityCurrent liabilitiesAccounts payable$20,611 $11,316 Accrued compensation and employee benefits41,755 44,263 Deferred revenue, current35,663 37,230 Accrued and other current liabilities23,979 9,526 Total current liabilities122,008 102,335 Deferred revenue, non-current127 1,732 Other long-term liabilities65,193 60,805 Total liabilities187,328 164,872 Commitments and contingenciesStockholders’ equityClass A common stock125 120 Class B common stock3 3 Additional paid-in capital2,077,044 1,963,726 Accumulated other comprehensive income (loss)521 (563)Accumulated deficit(1,218,732)(1,089,933)Total stockholders’ equity858,961 873,353 Total liabilities and stockholders’ equity$1,046,289 $1,038,225 C3.AI, INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands)(Unaudited)Six Months Ended October 31,20242023Cash flows from operating activities:Net loss$(128,799)$(134,138)Adjustments to reconcile net loss to net cash used in operating activitiesDepreciation and amortization6,092 6,220 Non-cash operating lease cost203 454 Stock-based compensation expense111,721 104,049 Accretion of discounts on marketable securities(7,618)(8,755)Other418 — Changes in operating assets and liabilitiesAccounts receivable(1)(30,051)(8,567)Prepaid expenses, other current assets and other assets(2)(1,993)(665)Accounts payable(3)9,294 (2,918)Accrued compensation and employee benefits(4,815)(2,551)Operating lease liabilities(1,215)7,804 Other liabilities(4)19,284 1,709 Deferred revenue(5)(3,172)(7,296)Net cash used in operating activities(30,651)(44,654)Cash flows from investing activities:Purchases of property and equipment(1,739)(16,631)Capitalized software development costs— (2,750)Purchases of marketable securities(365,926)(489,871)Maturities and sales of marketable securities348,750 412,554 Net cash used in investing activities(18,915)(96,698)Cash flows from financing activities:Proceeds from issuance of Class A common stock under employee stock purchase plan5,009 5,055 Proceeds from exercise of Class A common stock options4,472 10,163 Taxes paid related to net share settlement of equity awards(5,787)(9,686)Net cash provided by financing activities3,694 5,532 Net decrease in cash, cash equivalents and restricted cash(45,872)(135,820)Cash, cash equivalents and restricted cash at beginning of period179,712 297,395 Cash, cash equivalents and restricted cash at end of period$133,840 $161,575 Cash and cash equivalents$121,274 $149,009 Restricted cash included in other assets12,566 12,566 Total cash, cash equivalents and restricted cash$133,840 $161,575 Supplemental disclosure of cash flow information—cash paid for income taxes$534 $281 Supplemental disclosures of non-cash investing and financing activities:Purchases of property and equipment included in accounts payable and accrued liabilities$117 $7,293 Right-of-use assets obtained in exchange for lease obligations (including remeasurement of right-of-use assets and lease liabilities due to changes in the timing of receipt of lease incentives)$1,345 $778 Vesting of early exercised stock options$216 $294 (1)Including changes in related party balances of $12,444 for the six months ended October 31, 2023.(2)Including changes in related party balances of $(810) for the six months ended October 31, 2023.(3)Including changes in related party balances of $248 for the six months ended October 31, 2023.(4)Including changes in related party balances of $(2,448) for the six months ended October 31, 2023.(5)Including changes in related party balances of $(46) for the six months ended October 31, 2023.C3.AI, INC.RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES(In thousands, except percentages)(Unaudited)Three Months Ended October 31,Six Months Ended October 31,2024202320242023Reconciliation of GAAP gross profit to non-GAAP gross profit:Gross profit on a GAAP basis$57,840$41,113$110,006$81,662Stock-based compensation expense (1)8,3118,99316,71917,509Employer payroll tax expense related to employee stock-based compensation (2)171297527838Gross profit on a non-GAAP basis$66,322$50,403$127,252$100,009Gross margin on a GAAP basis61%56%61%56%Gross margin on a non-GAAP basis70%69%70%69%Reconciliation of GAAP loss from operations to non-GAAP loss from operations:Loss from operations on a GAAP basis$(75,288)$(79,396)$(147,874)$(153,489)Stock-based compensation expense (1)57,03853,169111,721104,049Employer payroll tax expense related to employee stock-based compensation (2)1,0901,2742,3623,774Loss from operations on a non-GAAP basis$(17,160)$(24,953)$(33,791)$(45,666)Reconciliation of GAAP net loss per share to non-GAAP net loss per share:Net loss on a GAAP basis$(65,972)$(69,780)$(128,799)$(134,138)Stock-based compensation expense (1)57,03853,169111,721104,049Employer payroll tax expense related to employee stock-based compensation (2)1,0901,2742,3623,774Net loss on a non-GAAP basis$(7,844)$(15,337)$(14,716)$(26,315)GAAP net loss per share attributable to Class A and Class B common shareholders, basic and diluted$(0.52)$(0.59)$(1.02)$(1.15)Non-GAAP net loss per share attributable to Class A and Class B common shareholders, basic and diluted$(0.06)$(0.13)$(0.12)$(0.22)Weighted-average shares used in computing net loss per share attributable to Class A and Class B common stockholders, basic and diluted127,870 118,656 126,434 117,125 (1)Stock-based compensation expense for gross profits and gross margin includes costs of subscription and cost of professional services as follows. Stock-based compensation expense for loss from operations includes total stock-based compensation expense as follows:Three Months Ended October 31,Six Months Ended October 31,2024202320242023Cost of subscription$7,827 $8,514 $15,521 — $16,570 Cost of professional services484 479 1,198 — 939 Sales and marketing20,802 18,226 39,635 — 35,005 Research and development17,999 16,685 36,430 — 33,718 General and administrative9,926 9,265 18,937 — 17,817 Total stock-based compensation expense$57,038 $53,169 $111,721 $104,049 (2) Employer payroll tax expense related to employee stock-based compensation for gross profits and gross margin includes costs of subscription and cost of professional services as follows. Employer payroll tax expense related to employee stock-based compensation for loss from operations includes total employer payroll tax expense related to employee stock-based compensation as follows:Three Months Ended October 31,Six Months Ended October 31,2024202320242023Cost of subscription$163 $282 $489 $791 Cost of professional services8 15 38 47 Sales and marketing450 463 922 1,468 Research and development231 415 595 1,232 General and administrative238 99 318 236 Total employer payroll tax expense$1,090 $1,274 $2,362 $3,774 Reconciliation of free cash flow to the GAAP measure of net cash used in operating activities:The following table below provides a reconciliation of free cash flow to the GAAP measure of net cash used in operating activities for the periods presented:Three Months Ended October 31,Six Months Ended October 31,2024202320242023Net cash used in operating activities$(38,693)$(48,590)$(30,651)$(44,654)Less:Purchases of property and equipment(815)(5,293)(1,739)(16,631)Capitalized software development costs— (1,250)— (2,750)Free cash flow$(39,508)$(55,133)$(32,390)$(64,035)Net cash provided by (used in) investing activities$22,635 $(11,898)$(18,915)$(96,698)Net cash provided by financing activities$3,512 $3,055 $3,694 $5,532 |
0001829126-23-004673:cxappinc_ex99-1.htm | 0001829126-23-004673 | 1,820,875 | 1,820,875 | CXApp Inc. (CXAI, CXAIW) (CIK 0001820875) | ['CXAI', 'CXAIW'] | 8-K | 8-K | 2023-07-14 | 2023-07-14 | 001-39642 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-39642&action=getcompany | 231,088,113 | EX-99.1 | EXHIBIT 99.1 | 1.01,3.02,8.01,9.01 | https://www.sec.gov/Archives/edgar/data/1820875/000182912623004673 | https://www.sec.gov/Archives/edgar/data/1820875/000182912623004673/0001829126-23-004673-index.html | https://www.sec.gov/Archives/edgar/data/1820875/000182912623004673/cxappinc_ex99-1.htm | EX-99.1 3 cxappinc_ex99-1.htm EXHIBIT 99.1 Exhibit 99.1 CXApp Inc. (Nasdaq: CXAI) Business Update: Accelerating AI Platform Deployment for the Future of Work $5M Cash Added to Balance Sheet with Warrant Exercises Two Fortune 200 Financial Services Customers Added Last Month Palo Alto, Calif., July 14, 2023 / -- CXApp Inc (Nasdaq : CXAI), the global technology leader in employee workplace experiences provided a business update as it accelerates its Artificial Intelligence (AI) platform deployment and adoption.Detailed financial results will be provided with our second quarter 2023 10-Q filing and earnings report anticipated in the second week of August. Khurram Sheikh, Chairman and CEO of CXApp said, “The CXAI SaaS platform is anchored on the intersection of customer experience (CX) and artificial intelligence (AI) providing digital transformation for the physical workplace for enhanced experiences across people, places and things. We are pleased to announce the following business updates as we make progress on our journey to shape the future of work: 1.AI (Artificial Intelligence) and Augmented Reality (AR) Technology Development ●Our state-of-the-art technology platform is based on 37 filed patents, with 17 of them already granted. This substantial intellectual property not only establishes our company as a technological frontrunner but also secures our position as a pioneer in the industry. ●Our AI tools and models are being built on the strong foundation of our full stack software solution that provides contextual awareness using indoor mapping and on-device positioning technology as well as the data collection of millions of data points from our enterprise app. This new area of spatial intelligence creates the opportunity to personalize the workplace experience at the same time as redefine the workplace environment. ●Our AR application provides seamless integration of digital experiences with the real world and transforms the way users navigate and interact with their environment. This solution is currently in beta trials with existing customers for a projected launch in Q4 2023. ●Our AI applications include both Generative AI as well as Analytics based solutions that run the full myriad of use cases from search, wayfinding, discovery, recommendations and behavioral patterns. These solutions are being trialed with existing customers for deployment testing. 2.Customer Adoption ●Our existing customer base has expanded to more than 450+ campuses with 20 unique enterprise customers around the world in 59 countries. ●Our AI and AR platform extends our ”land and expand” strategy of scaling our campus deployments with value-based data rich applications ●We added two new Fortune 200 logos as recurring revenue customers in the Financial Sector in the last month. 3.Financial Structure ●We have optimized the operational cost structure with a net 50% operating expense reduction as compared to prior to the acquisition. ●To date, investors have redeemed approximately 435K warrants at $11.50 for a $5M in cash addition to the balance sheet. ●As disclosed in our Form 8-K, we have entered into a warrant exchange agreement that will reduce the outstanding public warrants by over 15%. Khurram Sheikh concluded “CXApp is a “category-maker” company that has developed the most engaging application for the hybrid workplace market – in reality, this is the Workplace SuperApp with over 150 native features and 100+ API integrations. We are excited to provide this update and look forward to sharing additional information in the coming month”. This press release is for informational purposes only and is neither an offer to purchase, nor a solicitation of an offer to sell, subscribe for or buy, any securities, nor shall there be any sale, issuance or transfer or securities in any jurisdiction in contravention of applicable law. About CXApp Inc CXApp Inc, The Workplace SuperApp, consolidates the services, features, and functions of your workplace tech stack into a single mobile app. The CXApp SaaS solution suite includes an enterprise employee application, indoor mapping, on-device positioning, augmented reality technologies and an AI-based analytics platform providing a full-stack software solution for enterprises. CXApp’s customers include major Fortune 500 Global Companies in the technology, financial, consumer, medical and media entertainment verticals. 2 www.cxapp.com CXApp Inc.: marketing@cxapp.com Forward-Looking Statements This press release includes “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. The expectations, estimates, and projections of the Company may differ from its actual results and consequently, you should not rely on these forward-looking statements as predictions of future events. Words such as “expect,” “estimate,” “project,” “budget,” “forecast,” “anticipate,” “intend,” “plan,” “may,” “will,” “could,” “should,” “believes,” “predicts,” “potential,” “continue,” or the negative or other variations thereof and similar expressions are intended to identify such forward looking statements. These forward-looking statements include, without limitation, expectations with respect to future performance of the Company, including projected financial information (which is not audited or reviewed by the Company’s auditors), and the future plans, operations and opportunities for the Company and other statements that are not historical facts. These statements are based on the current expectations of the Company’s management and are not predictions of actual performance. These forward-looking statements involve significant risks and uncertainties that could cause the actual results to differ materially from the expected results. Factors that may cause such differences include, but are not limited to: the impact of the COVID-19 pandemic on our business, operations, results of operations and financial condition, including liquidity for the foreseeable future; the demand for the Company’s services together with the possibility that the Company may be adversely affected by other economic, business, and/or competitive factors or changes in the business environment in which the Company operates; changes in consumer preferences or the market for the Company’s services; changes in applicable laws or regulations; the availability or competition for opportunities for expansion of the Company’s business; difficulties of managing growth profitably; the loss of one or more members of the Company’s management team; loss of a major customer and other risks and uncertainties included from time to time in the Company’s reports (including all amendments to those reports) filed with the SEC. The Company cautions that the foregoing list of factors is not exclusive. You should not place undue reliance upon any forward-looking statements, which speak only as of the date made. The Company does not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in its expectations or any change in events, conditions, or circumstances on which any such statement is based, except as required by law. These forward-looking statements should not be relied upon as representing the Company’s assessments as of any date subsequent to the date of this communication. 3 |
0000051143-23-000028:ibm-3q23xearningsxprepar.htm | 0000051143-23-000028 | 51,143 | 51,143 | INTERNATIONAL BUSINESS MACHINES CORP (IBM) (CIK 0000051143) | ['IBM'] | 8-K | 8-K | 2023-10-26 | 2023-10-25 | 001-02360 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-02360&action=getcompany | 231,350,273 | EX-99.1 | EX-99.1 | 7.01,9.01 | https://www.sec.gov/Archives/edgar/data/51143/000005114323000028 | https://www.sec.gov/Archives/edgar/data/51143/000005114323000028/0000051143-23-000028-index.html | https://www.sec.gov/Archives/edgar/data/51143/000005114323000028/ibm-3q23xearningsxprepar.htm | EX-99.1 2 ibm-3q23xearningsxprepar.htm EX-99.1 ibm-3q23xearningsxprepar IBM 3Q23 Earnings Prepared Remarks Introduction Thank you. I’d like to welcome you to IBM’s third quarter 2023 earnings presentation. As the operator just mentioned, I’m Patricia Murphy, and I’m here today with Arvind Krishna, IBM’s Chairman and Chief Executive Officer, and Jim Kavanaugh, IBM’s Senior Vice President and Chief Financial Officer. We’ll post today’s prepared remarks on the IBM investor website within a couple of hours, and a replay will be available by this time tomorrow. To provide additional information to our investors, our presentation includes certain non-GAAP measures. For example, all of our references to revenue and signings growth are at constant currency. We’ve provided reconciliation charts for these and other non-GAAP financial measures at the end of the presentation, which is posted to our investor website. Finally, some comments made in this presentation may be considered forward looking under the Private Securities Litigation Reform Act of 1995. These statements involve factors that could cause our actual results to differ materially. Additional information about these factors is included in the company’s SEC filings. So with that, I’ll turn the call over to Arvind. Exhibit 99.1 IBM 3Q23 Earnings Prepared Remarks CEO Perspective Thank you for joining us. Before we start, let me address the outbreak of war in Israel. We condemn all acts of terrorism. We are also saddened over the loss of innocent lives and join the global community in the hope that peace and safety can be restored. Let me now turn to our business performance. In the third quarter, we had solid growth across revenue, profit and free cash flow while delivering innovations and positioning our business to capture future opportunities. On the broader trends we are seeing in the market, technology continues to serve as a fundamental source of competitive advantage. Businesses and governments around the world are looking for opportunities to address demographic shifts, make their supply chains more resilient and improve sustainability. More recently, geopolitical events and the reality of “higher for longer,” add to the growing uncertainty. Technology helps organizations better deal with the many challenges they face. We see both tailwinds and headwinds to overall spending. Nearly every business we talk to wants to leverage technology to offer better services, scale more quickly, and fuel growth without increasing their footprint. This has been driving demand for technologies that boost productivity and competitiveness, like hybrid cloud and artificial intelligence. Overall, we believe the tailwinds outweigh the headwinds, and technology spend will continue to outpace GDP. In this past quarter, we saw good revenue growth in Software and Consulting. In Infrastructure, more than a year into the product cycle, we continue to see good adoption of z16. Our overall growth reflects our ability to help clients to leverage data and AI for competitive advantage, automate IT environments, and seamlessly integrate hybrid cloud IBM 3Q23 Earnings Prepared Remarks solutions. We also continued to position our business for the future: launching new products and offerings, forging and expanding key partnerships, investing in talent and skills, and focusing our portfolio. We have been taking concrete actions to deliver productivity in our own business. All of this results in an IBM that is aligned to our clients’ most pressing needs and has a stronger financial profile. Our third quarter results are another proof point. IBM 3Q23 Earnings Prepared Remarks IBM’s generative AI tech stack and expertise Typically at this point I’d talk about hybrid cloud and the progress we have made. Hybrid cloud remains vitally important to our clients and to our business. Given the inflection in AI and more specifically generative AI, I want to spend more time today on AI and how we’re approaching this opportunity. We believe that generative AI will be multi-model, with clients using a combination of IBM’s models, other company’s models, their own proprietary models and open-source models. This hybrid approach to AI is similar to the hybrid approach to cloud. Let me give you an overview of the capabilities we have been building. Our generative AI software stack starts with Red Hat OpenShift, which serves as the foundation that allows clients to operate in a hybrid environment. Data services help make their data ready for AI. watsonx is the core platform that enables clients to train, tune, validate and deploy AI models. We are providing models that address specific domains such as code, language, and cybersecurity, among others. Our AI assistants include the watsonx Code Assistant to augment developers, watsonx Assistant to augment customer service agents and watsonx Orchestrate to augment employees. This quarter, we introduced new AI capabilities for our clients and partners. We unveiled Granite, a multi-billion parameter foundation model on watsonx.ai, which excels in both language and code. We also introduced the watsonx Code Assistant. This includes the watsonx Code Assistant for Z, to help clients accelerate the modernization of mainframe code and apps. It's fueled by a 20-billion parameter model and can, as an example, swiftly translate COBOL to Java. There are hundreds of billions IBM 3Q23 Earnings Prepared Remarks of lines of code written in COBOL, so the opportunity is significant. Looking forward, we plan to launch watsonx.governance before the end of the year, that provides governance tools businesses need to mitigate risks and ensure compliance through the AI lifecycle. This is a key consideration for clients as they go beyond early proof of concepts into real deployments. To bring our AI capabilities to life, we have more than 20,000 data and AI consultants, including a center of excellence for generative AI. Our teams help clients navigate the AI landscape – from crafting a strategy, understanding how AI can be used and deploying AI responsibly. These consultants also provide valuable real-time feedback to our product teams. As in hybrid cloud, our ecosystem across GSIs, ISVs and hyperscalers plays a critical role in bringing generative AI to our clients. In the work we are doing, clear patterns are emerging in terms of the AI enterprise use cases. Based on extensive feedback and trials to date, three have risen to the top. Code modernization, customer service and digital labor all have broad relevance and deliver tangible business benefits. We have also seen this internally, as we apply our AI capabilities to areas such as client support, HR, IT optimization and source-to-pay, to automate a significant portion of tasks and improve the productivity of our people. Our book of business in the third quarter specifically related to generative AI was in the low hundreds of millions of dollars. The interest is larger, with thousands of hands-on interactions with our clients. These are across our largest clients and smaller clients, which lays the groundwork for future watsonx opportunities. Let me close the discussion on AI by talking about a couple of client examples. Dun & Bradstreet is leveraging our consulting and software IBM 3Q23 Earnings Prepared Remarks capabilities, fueled by watsonx, to help their clients create proprietary generative AI solutions. IBM and EY also just announced a new solution powered by watsonx Orchestrate, to enhance EY’s People Advisory services. We continue to bring innovations to the market in areas other than AI. This includes new innovations to our industry-leading hybrid cloud platform, Red Hat OpenShift, which was recognized recently by both Gartner and Forrester as a leader in container management. We completed the acquisition of Apptio which complements our IT automation capabilities. In quantum, we are making good progress in building practical quantum computers that can solve hard problems in areas such as risk, finance and materials. In closing, we accomplished a lot this quarter. We launched our generative AI platform and have good momentum in helping our clients use this important technology. We continue to take portfolio actions to increase our focus on hybrid cloud and AI. And we are applying AI within our own business, improving execution speed and unlocking real value. All of this reinforces my confidence in our future. We're executing a strategy that closely resonates with our clients' needs, and this is propelling our business forward. Three quarters into the year, we are well positioned to deliver on 2023 expectations for both revenue growth and free cash flow. Now, to offer you a more detailed view of our results and the rest of 2023, I'll hand it over to Jim. IBM 3Q23 Earnings Prepared Remarks Financial highlights Thanks Arvind. I’ll get right into the financial highlights of the quarter. We delivered $14.8 billion of revenue, $2.3 billion of operating pre-tax income and $2.20 of operating earnings per share. Through the first three quarters of the year, we generated $5.1 billion of free cash flow. Reported revenue growth was 4.6%. This includes just over a point of growth from currency translation, which is significantly less than the currency rates suggested in July. In fact, currency movements over the last 90 days impacted our third quarter revenue by about $250 million. At constant currency, our revenue was up three-and-a-half percent. As is typical, I’ll focus the discussion on constant currency. Arvind talked about clients’ priorities in today’s environment, which are driving solid growth in our Software and Consulting offerings. I’ll remind you, Software and Consulting are our two growth vectors, and together make up about three quarters of our revenue base. Software revenue was up 6%, as clients leverage their data for insights and automate their IT in a hybrid environment. We had good growth in both Hybrid Platform & Solutions and Transaction Processing revenue. Our Consulting business had another solid quarter with 5% revenue growth, strong signings performance, and a book-to-bill ratio greater than 1.15 over the last year. We are capitalizing on our continued momentum in the market, as we help clients get value from hybrid cloud and AI and leverage our strategic partnerships. Our Infrastructure revenue was down 3%, with growth in zSystems. More and more we are seeing clients embrace IBM Z in their hybrid cloud environments, especially in regulated industries. This growth was offset by declines in Distributed Infrastructure and Infrastructure Support. IBM 3Q23 Earnings Prepared Remarks IBM’s revenue growth, together with a good portfolio mix and yield from our productivity initiatives generated strong margin, profit and free cash flow performance. Operating gross margin expanded 160 basis points and operating pre-tax margin expanded 170 basis points. Within that PTI margin, we absorbed a year-to-year currency impact of over 150 basis points. Despite that headwind, our margin expansion was broad based, with improvements in every business segment. Driving efficiency and productivity has always been part of our operating and financial models. These ongoing productivity initiatives enable reinvestment in the business, increase financial flexibility and contribute to margin expansion. Our activities range from simplifying our application environment to digitally transforming our business processes by applying AI at scale. We are ahead of pace to achieve our target of $2 billion in annual run-rate savings by the end of 2024. While there is still more to do, I am pleased with our progress. The combination of our revenue and margin performance yielded strong profit growth. Operating pre-tax profit was up 17% to $2.3 billion. We generated $1.7 billion of free cash flow in the quarter, and over $5 billion year to date, which is up $1 billion versus last year. Free cash flow growth through the first three quarters was driven primarily by cash sourced from our operating profit performance. We also had working capital efficiencies driven by solid collections. These growth drivers were partially offset by higher performance-based compensation payments earlier in the year. In terms of cash uses, year to date we spent about $5 billion on acquisitions and returned four-and-a-half billion dollars to shareholders through dividends. IBM 3Q23 Earnings Prepared Remarks Our resulting cash balance at the end of September was $11 billion. That’s up over $2 billion from year end, but with the acquisition of Apptio in the third quarter, cash is down over $5 billion from June. Our debt balance is now $55 billion, also down from June. Putting this all together, our business fundamentals are solid, with sustainable revenue growth, margin expansion, solid cash generation and a strong balance sheet with financial flexibility to support our business into the future. IBM 3Q23 Earnings Prepared Remarks Software Turning to the segments, Software revenue grew 6%, with contribution from Hybrid Platform & Solutions and Transaction Processing. This performance reflects growth in both our transactional revenue and our recurring revenue base, which is about 80% of our annual software revenue. In Hybrid Platform & Solutions, revenue was up 7% with growth across Red Hat, Automation and Data & AI, as we execute our platform-based approach to hybrid cloud and AI. Red Hat revenue was up 8%. We continue to deliver good growth in OpenShift and Ansible, both gaining share again this quarter. Clients are committing to our hybrid cloud approach with annual bookings up 14% in the quarter. This includes double-digit growth across RHEL, OpenShift and Ansible, partially offset by headwinds in consumption-based services. IT and business automation are top client priorities, and we’ve been investing to capture the opportunity. This quarter, our Automation revenue grew 13%, with pervasive growth across all business areas. We had strength in AIOps and Management driven by good performance in Instana, Turbonomic and now Apptio as clients look to optimize business outcomes and boost productivity. Data & AI revenue was up 6%. Growth areas include Data Fabric and Customer Care as enterprise clients are both preparing for and adopting generative AI solutions, leveraging watsonx. We also grew in Asset & Supply Chain Management as we help enterprises run sustainable operations. Security revenue declined 3%. We delivered growth in security software driven by Data Security and Identity & Access Management. This was more than offset by declines in managed security services. Looking across these businesses, our Hybrid Platform & Solutions ARR has grown to $14 billion, up 7% since last year. IBM 3Q23 Earnings Prepared Remarks In Transaction Processing, revenue was up 5%. Throughout this year we’ve been talking about how the success of the last couple of zSystems cycles is driving demand for this mission-critical software. This, together with price increases, contributed to year-to-date growth in both recurring and transactional software revenue in Transaction Processing. Moving to profit for the Software segment, we expanded gross and pre-tax margins. Our pre-tax margin was up 120 basis points, even while absorbing over two points of impact from currency. We continued to deliver operating leverage driven by our revenue scale and mix this quarter. IBM 3Q23 Earnings Prepared Remarks Consulting Our Consulting revenue was up 5% with growth across all three lines of business and geographies. With another quarter of strong signings, as I said, our trailing twelve-month book-to-bill ratio is now over 1.15. Clients continue to prioritize transformation projects that enable cost savings and productivity. These results are a proof point that we are well positioned to meet these needs in today’s complex environment. IBM’s focused hybrid cloud and AI strategy has become even more of a differentiator as clients’ interest in generative AI continues to ramp. We are helping clients understand how AI can be used to automate tasks, make better decisions with speed and improve customer experiences. We’ve made a series of AI announcements over the last few months demonstrating continued advancement of our strategic partnerships. We are providing clients with the opportunity to accelerate their transformation and deploy generative AI responsibly, whether that be leveraging AI capabilities of IBM, our partners, or a combination. Today, our strategic partnerships account for about 40% of Consulting revenue and have continued to grow double digits across revenue and signings. In aggregate, our hyperscaler partnership revenue was up over 40% and signings essentially doubled year to year. Additionally, our Red Hat practice, which helps clients optimize how they build, deploy and manage applications for a hybrid cloud environment has continued to grow at a double-digit rate, with over $1 billion of signings in the quarter. All of what I’ve just mentioned – from market demand, to how we’re positioned and partnering, to our investments to drive growth – is reflected in our overall Consulting revenue performance. You can see that play out across our three lines of business. In Business Transformation, IBM 3Q23 Earnings Prepared Remarks revenue grew 5%, again led by data and technology transformations including AI and analytics-focused projects. Finance and supply chain transformations also contributed to the growth. In Technology Consulting, revenue was up 1%. Growth in cloud-based application development and modernization work was partially offset by declines in on-prem application-focused projects. In Application Operations, revenue grew 7%, driven by both cloud application management and platform engineering services. In platform engineering, we help clients design an application environment that runs securely and smoothly at scale. Moving to Consulting profit, we expanded gross margin 150 basis points. Pre-tax margin expanded 40 basis points to just over 10%. Our year-to- year margin performance reflects productivity actions we’ve taken, mitigated by increased labor costs and about a point of pre-tax margin impact from currency. IBM 3Q23 Earnings Prepared Remarks Infrastructure Moving to the Infrastructure segment, revenue was down 3%. Hybrid Infrastructure revenue was flat, while Infrastructure Support declined 7%. Within Hybrid Infrastructure, zSystems grew 9% in a seasonally smaller revenue quarter. Z16 revenue remains well ahead of prior cycles after six quarters of availability. The program strength reflects both growing enterprise workload requirements and the economic value at scale of the platform in traditional processing and Linux consolidation. In fact, installed MIPs capacity for Linux on Z has grown more than 4-fold over the last decade. Clients continue to value the security, resiliency and hybrid cloud capabilities of the zSystems platform. Distributed Infrastructure revenue was down 6% as compared to a strong growth in last year of 21% as we introduced innovation across Storage and Power10. This quarter, we had growth in Power offset by declines in Storage. In the Infrastructure segment we had strong gross and pre-tax margin performance. Pre-tax margin expanded 350 basis points, reflecting benefits from portfolio mix with our zSystems performance and productivity, while absorbing over a point of impact from currency. IBM 3Q23 Earnings Prepared Remarks Summary Now let me bring it back up to the IBM level to talk about our expectations before we go to Q&A. Just about two years ago, we introduced Today’s IBM, a more focused business with a platform-based approach to hybrid cloud and AI. Since then, we’ve continued to invest organically and inorganically, bring new products and innovation to market, expand our ecosystem and our talent base and drive productivity across our business. The result is a business that addresses today’s client needs, with a stronger financial profile. Our third quarter performance reinforces this progress with three-and-a-half percent revenue growth, gross and pre-tax margin expansion and strong free cash flow generation. Now, with three quarters of the year behind us, we are holding our full- year view of our two primary financial metrics, revenue growth and free cash flow. We continue to expect constant currency revenue growth of three to five percent, and free cash flow of about ten-and-a-half billion dollars – that’s up $1.2 billion over last year. We’ve had solid revenue performance all year in our growth vectors of Software and Consulting. We still expect Software revenue growth at the high end of its mid-single digit model, and Consulting revenue in the six to eight percent range. Infrastructure revenue of course, reflects product cycle dynamics. In total, with one quarter to go, it’s prudent to assume the low end of IBM’s three- to-five percent range. We are making great progress in our productivity initiatives. The work we are doing to digitally transform our business not only makes us more nimble by simplifying and streamlining our processes and operations, but it also frees up spend for reinvestment, provides financial flexibility and delivers operating leverage. This contributes to solid margin and free cash flow performance. We continue to expect about a half-a-point of operating IBM 3Q23 Earnings Prepared Remarks pre-tax margin improvement, and we see a mid-teens tax rate for the year. Our free cash flow performance has been driven primarily from our profit performance. Through the first three quarters, we’re up a billion dollars year to year, and we’ve delivered nearly 50% of our full-year expectation, which is ahead of our historical attainment. While, as always, we are reliant on a seasonally strong fourth quarter, we’re on track to achieve about ten-and-a-half billion dollars for the year. As I look specifically at the fourth quarter, with the recent currency movements, we now see currency to be neutral to a one-point headwind to revenue growth. That’s nearly $600 million worse than 90 days ago. I’d expect constant currency revenue growth in the fourth quarter to be similar to the third. That’s despite a tough compare from last year’s strong ELA contribution in Software and the large z16 transactional performance in Infrastructure. This demonstrates continued momentum in our underlying business. Bring it all together, we’ve clearly got a higher-growth, higher-value business with strong cash generation – a business well-positioned for the future. Arvind and I are now happy to take your questions. Patricia, let’s get started. IBM 3Q23 Earnings Prepared Remarks Closing Thank you, Jim. Before we begin the Q&A, I’d like to mention a couple of items. First, supplemental information is provided at the end of this presentation. And then second, I’ll try this one last time, but I’d ask you to refrain from multi-part questions to allow time for more people to participate. Operator, let’s please open it up for questions. |
0001213900-24-061152:ea020938801ex99-1_real.htm | 0001213900-24-061152 | 1,859,199 | 1,859,199 | reAlpha Tech Corp. (AIRE) (CIK 0001859199) | ['AIRE'] | 8-K | 8-K | 2024-07-15 | 2024-07-12 | 001-41839 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-41839&action=getcompany | 241,115,803 | EX-99.1 | PRESS RELEASE, DATED JULY 15, 2024 | 1.01,3.02,8.01,9.01 | https://www.sec.gov/Archives/edgar/data/1859199/000121390024061152 | https://www.sec.gov/Archives/edgar/data/1859199/000121390024061152/0001213900-24-061152-index.html | https://www.sec.gov/Archives/edgar/data/1859199/000121390024061152/ea020938801ex99-1_real.htm | EX-99.1 3 ea020938801ex99-1_real.htm PRESS RELEASE, DATED JULY 15, 2024 Exhibit 99.1 reAlpha Tech Corp. acquires AiChat Pte. Ltd. Dublin, OH, July 15, 2024 [BUSINESS WIRE] – reAlpha Tech Corp. (“reAlpha” or the “Company”) (Nasdaq: AIRE), a real estate technology company developing and commercializing artificial intelligence (“AI”) technologies, today announced that it has acquired 85% of the outstanding equity in AiChat Pte. Ltd. (“AiChat”). AiChat is an award winning Singapore-based company that develops AI-powered conversational customer experience solutions that provide enterprise customers with intelligent chatbots and automation tools that improve customer interactions and operational efficiency. The Company will acquire the remaining 15% on June 30, 2025. The total purchase price is $1.14 million, which is payable in shares of the Company’s common stock in three tranches beginning no later than January 1, 2025. The Company has also agreed to infuse $300,000 into AiChat at such time determined by the parties. This strategic acquisition marks a significant milestone in reAlpha’s growth trajectory and underscores its commitment to expanding its technological capabilities and market presence in the Asia-Pacific (APAC) region. reAlpha expects that integrating AiChat’s conversational AI and customer experience platform, which supports over 250 languages, into its business will enhance reAlpha’s technological capabilities by providing customers with more robust and intelligent customer interaction tools due to the sentiment analysis and machine learning capabilities from AiChat’s platform. Additionally, reAlpha believes that AiChat’s platform capabilities and already established sales channels will increase usage and visibility of its technologies and platforms, including Claire, reAlpha’s commission-free homebuying platform, which in turn is expected to lead to more customers using reAlpha’s platforms when seeking real estate solutions, including homebuyers purchasing a home via Claire. As a result of this acquisition, reAlpha believes its brand and market position in the AI industry will be further bolstered by leveraging AiChat’s brand and expertise in such industry. The global conversational AI market, the industry AiChat operates in, is projected to expand from $13.2 billion in 2024 to $49.9 billion by 2030, growing at a compound annual growth rate (CAGR) of 24.9% over the forecast period. Giri Devanur, CEO of reAlpha, commented, “We are thrilled to welcome AiChat to the reAlpha group. We believe this accretive acquisition is a large step in our journey to bring the global real estate industry into the digital era. AiChat’s innovative platform and talented team will accelerate our efforts to make Claire set the new standard for efficiency, accessibility and reliability when it comes to buying a new home.” Kester Poh, AiChat’s CEO and founder, along with the key management team, are expected to continue to lead AiChat as part of the reAlpha group. reAlpha believes that this will ensure continuity and leverage their domain expertise to drive forward the combined company’s vision. Mr. Poh added, “Joining forces with reAlpha opens up exciting new opportunities for AiChat. We look forward to integrating our technology with reAlpha’s resources and expertise, which will help us to enhance our product offerings and expand our market leadership.” For additional details concerning the terms of this acquisition, please reference the Company’s Current Report on Form 8-K which will be filed with the U.S. Securities and Exchange Commission (the “SEC”). About reAlpha Tech Corp. reAlpha is a real estate technology company with a mission to shape the property technology, or “proptech,” market landscape through the commercialization of artificial intelligence technologies and strategic synergistic acquisitions that complement our business model. For more information about reAlpha, visit www.realpha.com. About Claire Claire, announced on April 24, 2024, is reAlpha’s generative AI-powered, zero-commission homebuying platform. The tagline: No fees. Just keys.TM Claire’s introduction aligns with major shifts in the real estate sector after the National Association of Realtors (NAR) agreed to settle certain lawsuits after they were found to have violated antitrust laws, resulting in inflated fees paid to buy-side agents. This development is expected to result in the end of the standard 6 percent sales commission, which equates to approximately $100 billion in realtor fees paid annually. Claire offers a cost-free alternative for homebuyers by utilizing an AI-driven workflow that assists them through the home buying process. Homebuyers can use Claire’s conversational interface to guide them through every step of their journeys, from property search to closing the deal. By offering support 24/7, Claire is poised to make the homebuying process more efficient, enjoyable and cost-efficient. Claire matches buyers with their dream homes using over 400 data attributes and provides insights into market trends and property values. Additionally, Claire can assist with questions, booking property tours, submitting offers, and negotiations. Currently, Claire is under limited availability for homebuyers located in Palm Beach, Miami-Dade and Broward counties in South Florida, but we are actively seeking new MLS and brokerage licenses that will allow us to expand into a larger number of U.S. states. For more information on Claire, please visit www.reAlpha.com About AiChat Pte. Ltd. AiChat Pte. Ltd. is a Singapore-based company that develops AI-powered conversational customer experience solutions. Its platform leverages artificial intelligence to provide businesses with intelligent chatbots and automation tools that improve customer interactions and operational efficiency. For more information about AiChat, visit www.aichat.com. Forward-Looking Statements The information in this press release includes “forward-looking statements”. Forward-looking statements include, among other things, statements about the AiChat acquisition; the anticipated benefits of the AiChat acquisition, reAlpha’s ability to anticipate the future needs of the short-term rental market; future trends in the real estate, technology and artificial intelligence industries, generally; and reAlpha’s future growth strategy and growth rate. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “could”, “might”, “plan”, “possible”, “project”, “strive”, “budget”, “forecast”, “expect”, “intend”, “will”, “estimate”, “anticipate”, “believe”, “predict”, “potential” or “continue”, or the negatives of these terms or variations of them or similar terminology. Factors that may cause actual results to differ materially from current expectations include, but are not limited to: reAlpha’s limited operating history and that reAlpha has not yet fully developed its AI-based technologies; reAlpha’s ability to commercialize its developing AI-based technologies; whether reAlpha’s technology and products will be accepted and adopted by its customers and intended users; reAlpha’s ability to integrate the business of aAiChat into its existing business and the anticipated demand for AiChat’s services; the inability to maintain and strengthen reAlpha’s brand and reputation; the inability to accurately forecast demand for short-term rentals and AI-based real estate focused products; the inability to execute business objectives and growth strategies successfully or sustain reAlpha’s growth; the inability of reAlpha’s customers to pay for reAlpha’s services; changes in applicable laws or regulations, and the impact of the regulatory environment and complexities with compliance related to such environment; and other risks and uncertainties indicated in reAlpha’s SEC filings. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those anticipated in the forward-looking statements. Although reAlpha believes that the expectations reflected in the forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. reAlpha’s future results, level of activity, performance or achievements may differ materially from those contemplated, expressed or implied by the forward-looking statements, and there is no representation that the actual results achieved will be the same, in whole or in part, as those set out in the forward-looking statements. For more information about the factors that could cause such differences, please refer to reAlpha’s filings with the SEC. Readers are cautioned not to put undue reliance on forward-looking statements, and reAlpha does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. For media inquiries, please contact: ICR on behalf of reAlpha media@realpha.com |
0001185185-23-000913:ex_564354.htm | 0001185185-23-000913 | 1,530,766 | 1,530,766 | BioSig Technologies, Inc. (BSGM) (CIK 0001530766) | ['BSGM'] | 8-K | 8-K | 2023-08-24 | 2023-08-24 | 001-38659 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-38659&action=getcompany | 231,200,120 | EX-99.1 | EXHIBIT 99.1 | 7.01,9.01 | https://www.sec.gov/Archives/edgar/data/1530766/000118518523000913 | https://www.sec.gov/Archives/edgar/data/1530766/000118518523000913/0001185185-23-000913-index.html | https://www.sec.gov/Archives/edgar/data/1530766/000118518523000913/ex_564354.htm | EX-99.1 2 ex_564354.htm EXHIBIT 99.1 ex_564354.htm Exhibit 99.1 BioSig Technologies, Inc. www.biosig.com 1 (870) SIGNALS customerservice@biosigtech.com 55 Greens Farms Rd, FL 1 Westport, CT 06880 BioSig AI Sciences Achieves Infrastructure and Technology progress in Development of Generative AI Platform for Hospitals BioSig Technologies, Inc. (NASDAQ: BSGM) (“BioSig” or the “Company”), a medical technology company delivering unprecedented accuracy and precision to intracardiac signal visualization, today is providing an update since the launch of BioSig’s established technology team with external partners and collaborators to advance the research and development of an artificial intelligence (“AI”) medical device platform. On July 20, 2023, we announced the inclusion of BioSig AI Sciences, Inc., a majority owned subsidiary of the Company (“BAIS”), in Nvidia’s Inception partnership program, providing our team access to engineering and technology support. On July 23, 2023, BAIS completed its seed round of funding of $2.2 million. The funding valued the majority owned subsidiary at $15 million. In less than a month since closing BAIS’s initial funding, it has been meeting with numerous hospital customers at the highest levels of leadership. BAIS has identified numerous opportunities to bring our proprietary AI platform to market. In addition, BAIS has recently signed a collaboration agreement with a leading global technology organization who will be building important data infrastructure, enabling a scaling of the platform in high-volume, data intensive hospital centers. Kenneth Londoner, Chairman & CEO of BioSig, “In my 30+ year career in and around the technology marketplace, I have never seen more compelling growth opportunities than what I am seeing today. The leading hospitals are looking for entrepreneurial and agile emerging market participants to test and adopt AI based solutions. Given our relationships and ramp up of commercial placements of PURE EP ™ platform technology, combined with our external technology relationships and internal capabilities, we expect to demonstrate significant progress in 2023 and beyond”. According to Data Bridge Market Research, the market for AI in healthcare, estimated at $9.6 billion in 2022, is expected to reach $272.9 billion by 2030, at a CAGR of 51.9% during the forecast period.1 About BAIS BAIS, a majority-owned subsidiary of BioSig, is developing AI solutions for the hospital marketplace utilizing structured, semi-structured, and unstructured data. About BioSig Technologies BioSig Technologies is a medical technology company focused on deciphering the body’s electrical signals, starting with heart rhythms. By leveraging a first of its kind combination of hardware and software, we deliver unprecedented cardiac signal clarity, ending the reliance on ‘mixed signals’ and ‘reading between the lines.’ Our platform technology is addressing some of healthcare’s biggest challenges—saving time, saving costs, and saving lives. The Company’s product, the PURE EP™ Platform, an FDA 510(k) cleared non-invasive class II device, provides superior, real-time signal visualization allowing physicians to perform highly targeted cardiac ablation procedures with increased procedural efficiency and efficacy. An estimated, 14.4 million Americans suffer from cardiac arrhythmias, and the global EP market is projected to reach $16B in 2028 with an 11.2% growth rate.2 Forward-looking Statements This press release contains “forward-looking statements.” Such statements may be preceded by the words “intends,” “may,” “will,” “plans,” “expects,” “anticipates,” “projects,” “predicts,” “estimates,” “aims,” “believes,” “hopes,” “potential” or similar words. Forward-looking statements are not guarantees of future performance, are based on certain assumptions and are subject to various known and unknown risks and uncertainties, many of which are beyond the Company’s control, and cannot be predicted or quantified and consequently, actual results may differ materially from those expressed or implied by such forward-looking statements. Such risks and uncertainties include, without limitation, risks and uncertainties associated with (i) the geographic, social and economic impact of COVID-19 on our ability to conduct our business and raise capital in the future when needed, (ii) our inability to manufacture our products and product candidates on a commercial scale on our own, or in collaboration with third parties; (iii) difficulties in obtaining financing on commercially reasonable terms; (iv) changes in the size and nature of our competition; (v) loss of one or more key executives or scientists; and (vi) difficulties in securing regulatory approval to market our products and product candidates. More detailed information about the Company and the risk factors that may affect the realization of forward-looking statements is set forth in the Company’s filings with the Securities and Exchange Commission (SEC), including the Company’s Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q. Investors and security holders are urged to read these documents free of charge on the SEC’s website at http://www.sec.gov. The Company assumes no obligation to publicly update or revise its forward-looking statements as a result of new information, future events or otherwise. References References 1) Data Bridge Market Research. Global Artificial Intelligence in Healthcare Market – Industry Trends and Forecast to 2030. January 2023. 2) Global Market Insights, Inc. (2022, March). For investor relations: Andrew Ballou BioSig Technologies, Inc. Vice President, Investor Relations 55 Greens Farms Westport, CT 06880 aballou@biosigtech.com 203-409-5444, x133 |
0001213900-24-015576:ea0200384ex99-1_newbury.htm | 0001213900-24-015576 | 1,831,978 | 1,831,978 | Newbury Street Acquisition Corp (NBST, NBSTU, NBSTW) (CIK 0001831978) | ['NBST', 'NBSTU', 'NBSTW'] | 8-K | 8-K | 2024-02-21 | 2024-02-21 | 001-40251 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-40251&action=getcompany | 24,656,868 | EX-99.1 | PRESS RELEASE, DATED FEBRUARY 21, 2024 | 7.01,9.01 | https://www.sec.gov/Archives/edgar/data/1831978/000121390024015576 | https://www.sec.gov/Archives/edgar/data/1831978/000121390024015576/0001213900-24-015576-index.html | https://www.sec.gov/Archives/edgar/data/1831978/000121390024015576/ea0200384ex99-1_newbury.htm | EX-99.1 2 ea0200384ex99-1_newbury.htm PRESS RELEASE, DATED FEBRUARY 21, 2024 Exhibit 99.1 Infinite Reality and Vodafone to Unveil Revolutionary Automotive Onboarding Service Featuring Generative AI and VR at Mobile World Congress Barcelona 2024 A New Era in Automotive Retail: AI-Onboard is an AI-Driven Experience Powered with Pairpoint by Vodafone Technology BARCELONA, SPAIN and LOS ANGELES, February 21, 2024 – Infinite Reality (iR), a global leader in artificial intelligence innovations and immersive virtual experiences, together with telecommunication giant Vodafone, is thrilled to announce the unveiling of an innovative automotive original equipment manufacturer (OEM) onboarding service at Mobile World Congress 2024 in Barcelona. This pioneering product, set to redefine automotive retail and customer onboarding, will be showcased in a state-of-the-art mixed reality experience, demonstrating the advanced capabilities of Vodafone’s Pairpoint technology. AI-Onboard utilizes the latest in generative AI, coupled with augmented reality (AR) and virtual reality (VR), to offer an immersive and interactive experience that showcases the future of customer engagement and retail. This initiative serves as a powerful example of how Infinite Reality is reshaping customer engagement through cutting edge, immersive solutions. “We are thrilled to continue our partnership with Vodafone with the introduction of this next-generation service offering for the automotive industry at this year’s Mobile World Congress,” stated John Acunto, CEO of Infinite Reality. “This launch is not just about showcasing a new product but also demonstrating the immense impact of AI immersive experiences in transforming the buying and selling of products and services. Pairpoint Technology plays a crucial role in bringing this vision to life, offering a glimpse into the future of interactive and immersive retail. An additional and valuable benefit is the power of the data that Vodafone will now have ownership and access to. This will drive and inform future decisions and enhance user experiences for follow-on engagements.” “This is a tremendous opportunity to bring immersive consumer experiences to one of the largest markets in the world. It is a significant change in how consumers can make customized purchase decisions, with both brands and consumers benefitting,” remarked Tom Bushey, CEO of Newbury Street Acquisition Corp (Nasdaq: NBST), SPAC partner to Infinite Reality. “The in-car payment market is forecast to be a $580 billion opportunity by 2030 and the sales and onboarding touch points will be key for automotive manufacturers to build a relationship with the customer through the lifecycle of car ownership. AI promises to be a key factor in placing the car at the center of retail experiences, as well as powering retail engagement where the car pays on behalf of the customer. The VR and AI solutions create an environment where customers can experience the vehicle and optional extras, as well as select and pay for them before they physically collect the car from the showroom. The Pairpoint platform builds on Vodafone’s 40m SIM footprint in connected cars by providing a vehicle digital identity passport and wallet that is set up during car onboarding and can be used for retail pay by car services,” commented David Palmer, Chief Product Officer, Pairpoint by Vodafone. This extension of Infinite Reality and Vodafone’s partnership, highlights their collective commitment to innovation and bringing forward customer-centric solutions. Building from their collaborative success at the 2023 London Tech Week, the Mobile World Congress 2024 showcase promises to be a landmark event, illustrating the transformative impact of advanced AI-driven immersive experiences with Pairpoint Technology in the retail sector. For more information about AI-Onboard and future collaborations between Infinite Reality and Vodafone, visit the websites of Infinite Reality and Vodafone. About Infinite Reality, Inc. Infinite Reality (iR) helps clients with audiences develop immersive experiences that convert those audiences into users. An iR powered virtual experience enables brands and creators to fully control the ways in which they commercialize their creations, distribute content, and communicate with their communities. With deep expertise in Hollywood production, iR develops world-class products and experiences that upend traditional, passive one-way viewership of events and static online retail transactions while shaping the future of audience engagement, brand loyalty, and fan commitment. The Services and Advisory teams manage, design, and oversee custom builds, leveraging the Technology team’s platform development expertise. Infinite Reality’s products are hardware agnostic, do not require any special equipment, and can be viewed and experienced on laptop, desktop, mobile phone, tablet, and Smart TV. iR Studios, one of the largest independent production studios in the country, works collaboratively with iR’s expert Innovation team to develop proprietary technology for Metaverse creation and immersive experiences, including live event virtualization and remote collaboration tools, from their 150,000 sq. ft. state-of-the-art facility. Visit theinfinitereality.com. About Vodafone Vodafone is the largest pan-European and African telecoms company. Our purpose is to connect for a better future by using technology to improve lives, digitalise critical sectors and enable inclusive and sustainable digital societies. We provide mobile and fixed services to over 300 million customers in 17 countries, partner with mobile networks in 46 more and are also a world leader in the Internet of Things (IoT), connecting over 167 million devices and platforms. With Vodacom Financial Services and M-Pesa, we have the largest financial technology platform in Africa, serving more than 71 million people across seven countries. We are committed to reducing our environmental impact to reach net zero emissions by 2040, while helping our customers reduce their own carbon emissions by 350 million tonnes by 2030. We are driving action to reduce device waste and achieve our target to reuse, resell or recycle 100% of our network waste by 2025. For more information, please visit www.vodafone.com, follow us on Twitter at @VodafoneGroup or connect with us on LinkedIn at www.linkedin.com/company/vodafone. Investor & Media Contacts: Ashley DeSimone, ICR Ashley.DeSimone@icrinc.com Brett Milotte, ICR Brett.Milotte@icrinc.com Company press@theinfinitereality.com |
0001691421-23-000051:lmndshareholderletterq12.htm | 0001691421-23-000051 | 1,691,421 | 1,691,421 | Lemonade, Inc. (LMND, LMND-WT) (CIK 0001691421) | ['LMND', 'LMND-WT'] | 8-K | 8-K | 2023-05-03 | 2023-05-03 | 001-39367 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-39367&action=getcompany | 23,885,032 | EX-99.1 | EX-99.1 | 2.02,9.01 | https://www.sec.gov/Archives/edgar/data/1691421/000169142123000051 | https://www.sec.gov/Archives/edgar/data/1691421/000169142123000051/0001691421-23-000051-index.html | https://www.sec.gov/Archives/edgar/data/1691421/000169142123000051/lmndshareholderletterq12.htm | EX-99.1 2 lmndshareholderletterq12.htm EX-99.1 lmndshareholderletterq12 Shareholder Letter Q1 2023 2 Dear Shareholders, The first quarter of 2023 was strong, clocking solid performance across our key metrics. Notwithstanding persistent inflation and heightened frequency of severe weather events, the primary dials with which we monitor our business all moved in the right direction: • Growing Top Line In Force Premium ("IFP") topped $653 million, a 56% - or $234 million - increase YoY. • Declining Loss Ratio Gross loss ratio was 87%, down from 89% in Q4 and 94% in Q3 22. • Strong unit economics Annual Dollar Retention ("ADR") hit a new all-time-high of 87%, up 5 percentage points YoY, while Premium Per Customer jumped 26%. • Improving Bottom Line At ($51) million, Adjusted EBITDA saw an 11% improvement YoY, while Net Loss, at ($66) million, registered a 12% improvement. Three bits of color commentary: 1. Our loss ratio continued its downward journey despite the unseasonably high number of catastrophic weather events ("CAT") in Q1. Indeed, an ex-CAT picture shows that our underlying loss ratio is improving faster than our headline loss ratio suggests. 3 While we have line of sight to our target loss ratios, we believe this destination is still several quarters away. As outlined previously, we will continue to constrain our growth until our loss ratio is within that range. 2. Despite our reiterated intention to proactively slow growth until more of our price changes are approved, as our Q1 results and Q2 guidance demonstrate, we haven’t mastered this maneuver quite yet. While we aim to slow down further as the year progresses, we are modestly raising our IFP guidance for the year, from $695m-$700m to $700m-$705m. 3. The quarter’s sizable and concurrent improvements in both top and bottom lines evidence considerable progress along our path to profitability. Accordingly, we are now projecting a significant improvement to Adjusted EBITDA, and are raising our annual guidance from ($245m-$240m) to ($205m-$200m). 4 Lemonade <3 AI It’s in vogue to talk-up AI in earnings calls, though for Lemonade the power of AI and chatbots isn’t a recent revelation - it’s the foundation upon which our company was founded. Lemonade launched in the fall of 2016, and three months later we claimed a new world record when ‘AI-Jim’ paid a theft claim in 3 seconds. At the time, we spotlighted how AI “works at the speed of light, 24/7, but costs only a few pennies in electricity bills” enabling both “the best service” and “the best price tag.” Today, close to half our claims are settled this way. In 2017 we wrote "The Rise Of The Autonomous Organization", outlining how organizations like ours will use AI to unchain revenue growth from headcount growth, with AI taking over ever more repetitive and time consuming tasks. At the same time we also published "AI Eats Insurance: Exactly why Artificial Intelligence will transform insurance, and exactly how," outlining our vision for how AI not only provides superior service at a lower cost, but how it will ultimately transform the core of insurance: quantifying and selecting risk. In the intervening years we’ve made huge strides in realizing this vision, and during our November 2022 Investor Day, we shared how our LTV6 model - approximately a million-parameter AI able to predict churn, claims and cross sells for every prospect - is already offering unprecedented levels of insight and precision. We’ve since upgraded LTV7, with LTV8 expected later this quarter. While insurance has a built in time-lag (AI’s findings are reconstituted as regulatory filings, which are then reviewed, approved, and begin to earn in) - the impact of these technologies is increasingly evident in our results. 5 The broad, recent excitement around AI is on point. Our competitors presumably share in this excitement, but unless they built their company for this moment, we expect its impact will be somewhat muted. Broker-based distribution, siloed systems, disparate databases, and a motley collection of off-the-shelf applications - all these are kryptonite for AI. In contrast, Lemonade was built for this moment. Eight years ago, at our founding, we made a bet on chat interfaces, AI and bots. We posited that if we built our company atop these technologies, as they advance, our structural advantage would grow in tandem. We architected our company accordingly: our pricing is the product of machine learning, our knowledge base is stored in vector databases, our tech stack is API based, ours is an engineering culture, and we sell almost all of our policies and assimilate almost all of our claims, using chat and AI. Generative AI, in short, is not a course change for us - it’s an accelerant along the very course we set at our inception. As to the impact of generative AI on our business, we will share specifics in time. For now, we want to highlight our assessment that in the coming 18 months we expect to see meaningful savings in our cost structure. We have identified over 100 business processes that generative AI can automate and improve, and prototyped dozens of them already. To be sure, generative AIs still have issues and so we will be thoughtful as to where and how we integrate them into our production environment. We will always prioritize ensuring our use of AI adheres to high compliance and fairness standards. Nevertheless, the first of our generative-AI-based automations will make their way into production within weeks, and we expect the benefits of these, as well as subsequent rollouts, to be somewhat impactful on our financials late this year (already reflected in our updated Adjusted EBITDA guidance), and more significantly impactful in 2024 and beyond. 6 Reinsurance Upgrade On June 30, 2023, our current quota share reinsurance agreement expires - though, as it is ‘risk attaching’, it will sunset gradually over the subsequent 12 months. Our reinsurance needs have evolved considerably since this agreement incepted 3 years ago: Lemonade is now severalfold larger and more diversified, and we believe we are far better equipped to predict the predictable, and absorb the unpredictable. In light of this, in our November Investor Day we shared the broad strokes outline of how we plan to evolve our reinsurance strategy, with a continued focus on capital efficiency. This view still encapsulates our thinking and expectations: Source: Slide from our Investor Day, November 2022 7 In the intervening months, discussions with regulators and reinsurers have validated our planned mix of risk retention, ceding to a captive, and commercial reinsurance. We now have a finely tuned construct, that we believe best balances capital efficiency with profit maximization. Once the accompanying deals are inked in the coming weeks, we will share all the specifics. 8 Q1 2023 Results, KPIs and Non-GAAP Financial Measures In Force Premium IFP, defined as the aggregate annualized premium for customers as of the period end date, increased by 56% to $653.3 million as compared to the first quarter of 2022, due to a 23% increase in the number of customers and a 26% increase in premium per customer. Customers Customer count increased by 23% to 1,856,012 as compared to the first quarter of 2022. Premium per Customer Premium per customer, defined as in force premium divided by customers, was $352 at the end of the first quarter, up 26% from the first quarter of 2022. Annual Dollar Retention ADR, defined as the percentage of IFP retained over a twelve month period, inclusive of changes in policy value, changes in number of policies, changes in policy type, and churn, was 87% at the end of the quarter, an increase of 5 percentage points from first quarter of 2022. Gross Earned Premium First quarter gross earned premium of $154.2 million increased by $58.2 million or 61% as compared to the first quarter of 2022, primarily due to the increase of in force premium earned during the quarter. 9 Revenue First quarter revenue of $95.2 million increased by $50.9 million or 115% as compared to the first quarter of 2022, primarily due to the increase of gross earned premium during the quarter, and to a lesser extent, a reduction in the proportion of earned premium ceded to reinsurers. Gross Profit First quarter gross profit of $16.5 million increased by $6.3 million or 62% as compared to the first quarter of 2022, primarily due to an overall increase in total revenue in the period. Adjusted Gross Profit First quarter adjusted gross profit of $20.6 million increased by $4.3 million or 26% as compared to the first quarter of 2022, primarily due to an overall increase in total revenue in the period. Adjusted gross profit is a non-GAAP metric. Reconciliations of GAAP to non- GAAP financial measures, as well as definitions for the non-GAAP financial measures included in this letter and the reasons for their use, are presented at the end of this letter. Operating Expense Total operating expense, excluding net loss and loss adjustment expense, in Q1 increased by $3.8 million to $96.3 million as compared to $92.5 million in the first quarter of 2022. Net Loss Net loss in Q1 was $65.8 million, or $(0.95) per share, as compared to $74.8 million, or $(1.21) per share, in the first quarter of 2022. 10 Adjusted EBITDA Adjusted EBITDA loss of $50.8 million improved by $6.6 million as compared to an EBITDA loss of $57.4 million in the first quarter of 2022, primarily due to an overall increase in total revenue in the period. Adjusted EBITDA is a non-GAAP metric. Reconciliations of GAAP to non- GAAP financial measures, as well as definitions for the non-GAAP financial measures included in this letter and the reasons for their use, are presented at the end of this letter. Cash & Investments The Company’s cash, cash equivalents, and investments totaled approximately $993 million at March 31, 2023, reflecting primarily the $46 million of net cash used in operations since December 31, 2022. As of March 31, 2023, approximately $358 million in cash, cash equivalents, and investments, was held in accounts owned by our US and Dutch insurance company subsidiaries. Most of this cash is available to our insurance companies to use in their ordinary course of business, for example to pay for claims, reinsurance and services from affiliated and unaffiliated companies. Approximately $148 million is held as regulatory surplus. 11 Key Operating and Financial Metrics Three Months Ended March 31, 2023 2022 ($ in millions, except Premium per customer) Customers (end of period) 1,856,012 1,504,197 In force premium (end of period) $ 653.3 $ 419.0 Premium per customer (end of period) $ 352 $ 279 Annual dollar retention (end of period) 87% 82% Total revenue $ 95.2 $ 44.3 Gross earned premium $ 154.2 $ 96.0 Gross profit $ 16.5 $ 10.2 Adjusted gross profit $ 20.6 $ 16.3 Net loss $ (65.8) $ (74.8) Adjusted EBITDA $ (50.8) $ (57.4) Gross profit margin 17% 23% Adjusted gross profit margin 22% 37% Ratio of Adjusted Gross Profit to Gross Earned Premium 13% 17% Gross loss ratio 87% 90% Net loss ratio 93% 89% 12 Guidance Second Quarter 2023 We expect: • In force premium at June 30, 2023 of $665 - $668 million • Gross earned premium of $156 - $158 million • Revenue of $96 - $98 million • Adjusted EBITDA loss of ($58) - ($55) million • Stock-based compensation expense of approximately $15 million • Capital expenditures of approximately $3 million • Weighted total common shares outstanding of approximately 70 million Full Year 2023 We expect: • In force premium at December 31 of $700 - $705 million • Gross earned premium of $645 - $650 million • Revenue of $392 - $396 million • Adjusted EBITDA loss of ($205) - ($200) million • Stock-based compensation expense of approximately $60 million • Capital expenditures of approximately $12 million • Weighted total common shares outstanding of approximately 70 million A full reconciliation of adjusted EBITDA guidance to net loss on a forward- looking basis cannot be provided without unreasonable efforts, as we are unable to provide reconciling information with respect to income tax expense, depreciation and amortization, interest income, net investment income, and other transactions that we consider to be unique in nature, all of which are adjustments to adjusted EBITDA. We have provided a reconciliation of GAAP to non-GAAP financial measures for the first quarter 2023 in the reconciliation tables at the end of this letter. 13 Non-GAAP financial measures and key operating metrics The non-GAAP financial measures used in this letter to shareholders are adjusted gross profit, Ratio of Adjusted Gross Profit to Gross Earned Premium, and adjusted EBITDA. We define adjusted EBITDA as net loss excluding interest income and expense, income tax expense, depreciation, amortization, stock-based compensation, net investment income, change in fair value of warrants liability, amortization of fair value adjustment on insurance contract intangible liability relating to the Metromile Acquisition, and other non-cash adjustments and other transactions that we consider to be unique in nature. We exclude these items from adjusted EBITDA because we do not consider them to be directly attributable to our underlying operating performance. We use adjusted EBITDA as an internal performance measure in the management of our operations because we believe it gives our management and other customers of our financial information useful insight into our results of operations and our underlying business performance. Adjusted EBITDA should not be viewed as a substitute for net loss calculated in accordance with GAAP, and other companies may define adjusted EBITDA differently. We define adjusted gross profit as gross profit excluding net investment income, interest income and expense plus fixed costs and overhead associated with our underwriting operations including employee-related costs and professional fees and other, and depreciation and amortization allocated to cost of revenue. After these adjustments, the resulting calculation is inclusive of only those variable costs of revenue incurred on the successful acquisition of business and without the volatility of investment income. We use adjusted gross profit as a key measure of our progress toward profitability and to consistently evaluate the variable contribution to our business from underwriting operations from period to period. 14 We define Ratio of Adjusted Gross Profit to Gross Earned Premium as the ratio of adjusted gross profit to gross earned premium. The Ratio of Adjusted Gross Profit to Gross Earned Premium measures the relationship between the underlying business volume and gross economic benefit generated by our underwriting operations, on the one hand, and our underlying profitability trends, on the other. We rely on this measure, which supplements our gross profit ratio as calculated in accordance with GAAP, because it provides management with insight into our underlying profitability trends over time. The non-GAAP financial measures used in this letter to shareholders have not been calculated in accordance with GAAP and should be considered in addition to results prepared in accordance with GAAP and should not be considered as a substitute for, or superior to, GAAP results. In addition, adjusted gross profit, and adjusted gross profit margin, ratio of adjusted gross profit to gross earned premium, and adjusted EBITDA should not be construed as indicators of our operating performance, liquidity or cash flows generated by operating, investing and financing activities, as there may be significant factors or trends that they fail to address. We caution investors that non-GAAP financial information, by its nature, departs from traditional accounting conventions. Therefore, its use can make it difficult to compare our current results with our results from other reporting periods and with the results of other companies. Our management uses these non-GAAP financial measures, in conjunction with GAAP financial measures, as an integral part of managing our business and to, among other things: (i) monitor and evaluate the performance of our business operations and financial performance; (ii) facilitate internal comparisons of the historical operating performance of our business operations; (iii) facilitate external comparisons of the results of our overall business to the historical operating performance of other companies that may have different capital structures and debt levels; (iv) review and assess the operating performance of our management team; (v) analyze and evaluate financial and strategic planning decisions regarding future 15 operating investments; and (vi) plan for and prepare future annual operating budgets and determine appropriate levels of operating investments. Investors are encouraged to review the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures as provided in the tables accompanying this letter to shareholders. This letter to shareholders also includes key performance indicators, including customers, in force premium, premium per customer, annual dollar retention, gross earned premium, gross loss ratio and net loss ratio. We define customers as the number of current policyholders underwritten by us or placed by us with third-party insurance partners (who pay us recurring commissions) as of the period end date. A customer that has more than one policy counts as a single customer for the purposes of this metric. We view customers as an important metric to assess our financial performance because customer growth drives our revenue, expands brand awareness, deepens our market penetration, creates additional upsell and cross-sell opportunities and generates additional data to continue to improve the functioning of our platform. We define in force premium ("IFP") as the aggregate annualized premium for customers as of the period end date. At each period end date, we calculate IFP as the sum of: (i) In force written premium — the annualized premium of in force policies underwritten by us; and (ii) In force placed premium — the annualized premium of in force policies placed with third party insurance companies for which we earn a recurring commission payment. In force placed premium currently reflects approximately 1% of IFP. The annualized value of premiums is a legal and contractual determination made by assessing the contractual terms with our customers. The annualized value of contracts is not determined by reference to historical revenues, deferred revenues or any other GAAP financial measure over any period. IFP is not a forecast of future revenues nor is it a reliable indicator of revenue expected 16 to be earned in any given period. We believe that our calculation of IFP is useful to analysts and investors because it captures the impact of growth in customers and premium per customer at the end of each reported period, without adjusting for known or projected policy updates, cancellations, rescissions and non-renewals. We use IFP because we believe it gives our management useful insight into the total reach of our platform by showing all in force policies underwritten and placed by us. Other companies, including companies in our industry, may calculate IFP differently or not at all, which reduces the usefulness of IFP as a tool for comparison. We define premium per customer as the average annualized premium customers pay for products underwritten by us or placed by us with third- party insurance partners. We calculate premium per customer by dividing IFP by customers. We view premium per customer as an important metric to assess our financial performance because premium per customer reflects the average amount of money our customers spend on our products, which helps drive strategic initiatives. We define annual dollar retention ("ADR"), as the percentage of IFP retained over a twelve month period, inclusive of changes in policy value, changes in number of policies, changes in policy type, and churn. To calculate ADR we first aggregate the IFP from all active customers at the beginning of the period and then aggregate the IFP from those same customers at the end of the period. ADR is then equal to the ratio of ending IFP to beginning IFP. We believe that our calculation of ADR is useful to analysts and investors because it captures our ability to retain customers and sell additional products and coverage to them over time. We view ADR as an important metric to measure our ability to provide a delightful end-to-end customer experience, satisfy our customers’ evolving insurance needs and maintain our customers’ trust in our products. Our customers become more valuable to us every year they continue to subscribe to our products. Other companies, including companies in our industry, may calculate ADR differently or not at all, which reduces the usefulness of ADR as a tool for comparison. 17 Gross earned premium is the earned portion of our gross written premium. Gross earned premium includes direct and assumed premium. In December 2022, we began assuming premium related to car insurance policies written in Texas, in connection with our fronting arrangement with a third party carrier in Texas, and this did not impact the key performance indicators prior to fourth quarter of 2022. We use this operating metric as we believe it gives our management and other users of our financial information useful insight into the gross economic benefit generated by our business operations and allows us to evaluate our underwriting performance without regard to changes in our underlying reinsurance structure. Unlike net earned premium, gross earned premium excludes the impact of premiums ceded to reinsurers, and therefore should not be used as a substitute for net earned premium, total revenue, or any other measure presented in accordance with GAAP. We define gross loss ratio, expressed as a percentage, as the ratio of losses and loss adjustment expense to gross earned premium. We define net loss ratio, expressed as a percentage, as the ratio of losses and loss adjustment expense, less amounts ceded to reinsurers, to net earned premium. 18 Links The information contained on, or that can be accessed through, hyperlinks included herein is deemed not to be incorporated in or part of this shareholder letter. Earnings teleconference information The Company will discuss its first quarter 2023 financial results and business outlook during a teleconference on May 4, 2023, at 8:00 AM ET. The conference call (access code 5819404) can be accessed toll-free at 1-888-210-4149, or at 1-646-960-0145. A live audio webcast of the call will also be available simultaneously at https://investor.lemonade.com Following completion of the call, a recorded replay of the webcast will be available on the investor relations section of Lemonade’s website. Additional investor information can be accessed at https://investor.lemonade.com About Lemonade Lemonade offers renters, homeowners, pet, car, and life insurance. Powered by artificial intelligence and behavioral economics, Lemonade’s full stack insurance carriers in the US, the UK and the EU replace brokers and bureaucracy with bots and machine learning, aiming for zero paperwork and instant everything. A Certified B-Corp, Lemonade gives unused premiums to nonprofits selected by its community, during its annual Giveback. Lemonade is currently available in the United States, the UK, Germany, the Netherlands, and France, and continues to expand globally. For more information, please visit www.lemonade.com, and follow Lemonade on Twitter or Instagram. 19 Media inquiries: press@lemonade.com Investor contact: ir@lemonade.com Forward-looking statement safe harbor This letter to shareholders contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this letter to shareholders that do not relate to matters of historical fact should be considered forward-looking statements, including statements regarding our anticipated financial performance and upgraded guidance, including our financial outlook for the second quarter of 2023 and full year 2023, our expectations related to the use of AI to provide cost savings and the impact we expect it to have on our financials, the expected updates, timing, and benefits of our contemplated reinsurance upgrades, our anticipated growth, our industry, our industry, business strategy, plans, goals and expectations concerning our market position, future operations and other financial and operating information. These statements are neither promises nor guarantees, but involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to, the following: our history of losses and the fact that we may not achieve or maintain profitability in the future; risks related to our ability to retain and expand our customer base; the risk that the “Lemonade” brand may not become as widely known as incumbents’ brands or the brand may become tarnished; the denial of claims or our failure to accurately and timely pay claims; our ability to attain greater value from each user; the novelty of our business model and its unpredictable efficacy and susceptibility to unintended consequences; risks related to the possibility that we could be forced to modify or eliminate our Giveback; our limited operating history; our ability to manage our growth effectively; risks related to the intense 20 competition in the segments of the insurance industry in which we operate; risks related to the availability of reinsurance at current levels and prices; our exposure to counterparty risks; our ability to maintain our risk-based capital at the required levels; risks related to our ability to expand our product offerings; risks, including regulatory risks, related to the operation, development, and implementation of our proprietary artificial intelligence algorithms and telematics based pricing model; risks related to legislation or legal requirements that may affect how we communicate with customers; risks related to our reliance on artificial intelligence, telematics, mobile technology, and our digital platforms to collect data that we utilize in our business; risks related to our dependence on search engines, social media platforms, digital app stores, content-based online advertising and other online sources to attract consumers to our website and our online app; risks related to our ability to obtain additional capital to the extent required to grow our business, which may not be available on terms acceptable to us or at all; risks related to the loss of personal customer information as a result of security incidents or real or perceived errors, failures or bugs in our systems, website or app; risks related to periodic examinations by our primary state insurance regulators or by insurance regulators in other states in which we are licensed; risks related to our actual or perceived failure to protect customer information and other data, respect customers’ privacy, or comply with data privacy and security laws and regulations; risks related to underwriting risks accurately and charging competitive yet profitable rates to customers; risks related to potentially significant expenses incurred in connection with any new products before generating revenue from such products; risks associated with any costs incurred and other risks as we expand our business in the U.S. and internationally; risks related to our ability to successfully complete the combination of the businesses of Lemonade and Metromile and realize the anticipated benefits of the merger within the anticipated timeframes or cost expectations or at all; risks related to the cyclical nature of the insurance industry; risks related to our ability to comply with extensive insurance industry regulations and additional regulatory requirements specific to other vertical markets that we enter or have entered; risks related to our ability to predict the impacts of severe weather 21 events and catastrophes, including the effects of climate change and global pandemics, on our business and the global economy generally; risks related to increasing scrutiny, actions, and changing expectations on environmental, social, and governance matters; risks related to fluctuations of our results of operations on a quarterly and annual basis; risks related to utilizing customer and third party data in underwriting our policies; risks related to limitations in the analytical models used to assess and predict our exposure to catastrophe losses; risks related to potential losses that could be greater than our loss and loss adjustment expense reserves; risks related to the minimum capital and surplus requirements our insurance subsidiaries are required to have; risks related to assessments and other surcharges from state guaranty funds; risks related to our status and obligations as a public benefit corporation; risks related to significant shareholders and their ability to influence the outcome of important transactions, including a change in control; and risks related to our operations in Israel and the current political, economic, and military environment. These and other important factors are discussed under the caption “Risk Factors” in our Form 10-K filed with the SEC on March 3, 2023 and in our other and subsequent filings with the SEC, which could cause actual results to differ materially from those indicated by the forward-looking statements made in this letter to shareholders. Any such forward-looking statements represent management’s beliefs as of the date of this letter to shareholders. While we may elect to update such forward-looking statements at some point in the future, we disclaim any obligation to do so, even if subsequent events cause our views to change. 22 Condensed Consolidated Statements of Operations and Comprehensive Loss $ in millions, except per share amounts, unaudited Three Months Ended March 31, 2023 2022 Revenue Net earned premium $ 68.2 $ 27.4 Ceding commission income 17.2 14.0 Net investment income 5.0 0.9 Commission and other income 4.8 2.0 Total revenue 95.2 44.3 Expense Loss and loss adjustment expense, net 63.6 24.4 Other insurance expense 13.6 9.1 Sales and marketing 28.2 38.3 Technology development 21.8 16.9 General and administrative 32.7 28.2 Total expense 159.9 116.9 Loss before income taxes (64.7) (72.6) Income tax expense 1.1 2.2 Net loss $ (65.8) $ (74.8) Other comprehensive loss, net of tax Unrealized gain (loss) on investments in fixed maturities 6.0 (14.3) Foreign currency translation adjustment (0.7) (1.1) Comprehensive loss $ (60.5) $ (90.2) Per share data: Net loss per share attributable to common stockholders—basic and diluted $ (0.95) $ (1.21) Weighted average common shares outstanding—basic and diluted 69,334,103 61,698,568 23 Condensed Consolidated Balance Sheets $ in millions, except per share amounts As of March 31, December 31, 2023 2022 (Unaudited) Assets Investments Fixed maturities available-for-sale, at fair value (amortized cost: $665.7 million and $673.5 million as of March 31, 2023 and December 31, 2022, respectively) $ 648.5 $ 650.3 Short-term investments (cost: $89.5 million and $99.9 million as of March 31, 2023 and December 31, 2022, respectively) 89.4 99.8 Total investments 737.9 750.1 Cash, cash equivalents and restricted cash 254.8 286.5 Premium receivable, net of allowance for credit losses of $2.7 million and $2.7 million as of March 31, 2023 and December 31, 2022, respectively 185.0 179.6 Reinsurance recoverable 153.7 156.8 Prepaid reinsurance premium 159.8 164.5 Deferred acquisition costs 6.9 6.9 Property and equipment, net 19.8 19.6 Intangible assets 29.8 32.5 Goodwill 19.0 19.0 Other assets 74.5 75.2 Total assets $ 1,641.2 $ 1,690.7 Liabilities and Stockholders' Equity Unpaid loss and loss adjustment expense $ 245.2 $ 256.2 Unearned premium 297.8 288.0 Trade payables 1.9 1.1 Funds held for reinsurance treaties 129.1 136.0 Deferred ceding commission 39.5 39.7 Ceded premium payable 20.9 18.4 Other liabilities and accrued expenses 85.0 84.5 Total liabilities 819.4 823.9 Contingencies Stockholders' equity Common stock, $0.00001 par value, 200,000,000 shares authorized; 69,449,348 and 69,275,030 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively — — Additional paid-in capital 1,769.6 1,754.1 Accumulated deficit (925.5) (859.7) Accumulated other comprehensive loss (22.3) (27.6) Total stockholders' equity 821.8 866.8 Total liabilities and stockholders' equity $ 1,641.2 $ 1,690.7 24 Condensed Consolidated Statements of Cash Flows $ in millions, unaudited Three Months Ended March 31, 2023 2022 Cash flows from operating activities: Net loss $ (65.8) $ (74.8) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 5.1 1.5 Stock-based compensation 15.4 14.1 Amortization of discount on bonds 0.2 2.5 Provision for bad debt 2.3 2.0 Changes in operating assets and liabilities: Premium receivable (7.7) (10.6) Reinsurance recoverable 3.1 (22.7) Prepaid reinsurance premium 4.7 (7.1) Deferred acquisition costs — (0.5) Other assets 0.7 (4.2) Unpaid loss and loss adjustment expense (11.0) 9.7 Unearned premium 9.8 14.7 Trade payables 0.8 1.6 Funds held for reinsurance treaties (6.9) 5.1 Deferred ceding commissions (0.2) 2.3 Ceded premium payable 2.5 16.1 Other liabilities and accrued expenses 0.6 10.8 Net cash used in operating activities (46.4) (39.5) Cash flows from investing activities: Proceeds from short-term investments sold or matured 36.6 44.7 Proceeds from bonds sold or matured 106.9 9.2 Cost of short-term investments acquired (23.2) (17.9) Cost of bonds acquired (102.3) (29.1) Purchases of property and equipment (2.7) (2.8) Net cash provided by investing activities 15.3 4.1 Cash flows from financing activities: Proceeds from stock exercises 0.1 0.6 Net cash provided by financing activities 0.1 0.6 Effect of exchange rate changes on cash, cash equivalents and restricted cash (0.7) (0.8) Net decrease in cash, cash equivalents and restricted cash (31.7) (35.6) Cash, cash equivalents and restricted cash at beginning of period 286.5 270.6 Cash, cash equivalents and restricted cash at end of period $ 254.8 $ 235.0 Supplemental disclosure of cash flow information: Cash paid for income taxes $ 0.2 $ 1.1 25 Reconciliation of Non-GAAP Financial Measures to their Most Directly Comparable GAAP Financial Measures Adjusted Gross Profit and Adjusted Gross Profit Margin The following table provides a reconciliation of total revenue to adjusted gross profit and the related adjusted gross profit margin for the periods presented: Three Months Ended March 31, 2023 2022 ($ in millions) Total revenue $ 95.2 $ 44.3 Adjustments: Loss and loss adjustment expense, net $ (63.6) $ (24.4) Other insurance expense (13.6) (9.1) Depreciation and amortization (1.5) (0.6) Gross profit $ 16.5 $ 10.2 Gross profit margin (% of total revenue) 17% 23% Adjustments: Net investment income $ (5.0) $ (0.9) Interest income (0.7) — Employee-related expense 3.8 3.9 Professional fees and other 4.5 2.5 Depreciation and amortization 1.5 0.6 Adjusted gross profit $ 20.6 $ 16.3 Adjusted gross profit margin (% of total revenue) 22% 37% 26 Ratio of Adjusted Gross Profit to Gross Earned Premium The following table sets forth our calculation of the Ratio of Adjusted Gross Profit to Gross Earned Premium for the periods presented: Three Months Ended March 31, 2023 2022 ($ in millions) Numerator: Adjusted gross profit $ 20.6 $ 16.3 Denominator: Gross earned premium $ 154.2 $ 96.0 Ratio of Adjusted Gross Profit to Gross Earned Premium 13% 17% Adjusted EBITDA The following table provides a reconciliation of adjusted EBITDA to net loss for the periods presented: Three Months Ended March 31, 2023 2022 ($ in millions) Net loss $ (65.8) $ (74.8) Adjustments: Income tax expense $ 1.1 $ 2.2 Depreciation and amortization 5.2 1.5 Stock-based compensation 15.4 14.1 Transaction and integration costs from Metromile acquisition — 0.5 Interest (income) expense, net (0.7) — Net investment income (5.0) (0.9) Change in fair value of warrants liability (0.3) — Amortization of fair value adjustment on insurance contract intangible liability relating to the Metromile acquisition (0.7) — Adjusted EBITDA $ (50.8) $ (57.4) 27 Supplemental Financial Information $ in millions, unaudited Stock-based compensation Three Months Ended March 31, 2023 2022 Loss and loss adjustment expense, net $ 0.7 $ 0.6 Other insurance expense 0.5 0.3 Sales and marketing 1.2 1.5 Technology development 6.7 5.4 General and administrative 6.3 6.3 Total stock-based compensation expense $ 15.4 $ 14.1 Written and Earned Premium Three Months Ended March 31, 2023 2022 Change % Change ($ in millions) Gross written premium $ 164.0 $ 110.6 $ 53.4 48% Ceded written premium (81.3) (75.6) (5.7) 8% Net written premium $ 82.7 $ 35.0 $ 47.7 136% Three Months Ended March 31, 2023 2022 Change % Change ($ in millions) Gross earned premium $ 154.2 $ 96.0 $ 58.2 61% Ceded earned premium (86.0) (68.6) (17.4) 25% Net earned premium $ 68.2 $ 27.4 $ 40.8 149% 28 Historical Operating Metrics $ in millions except Premium per customer Mar. 31, Jun. 30, Sept. 30, Dec. 31, Mar. 31, Jun. 30, Sept. 30, Dec. 31, Mar. 31 2021 2021 2021 2021 2022 2022 2022 2022 2023 Customers (end of period) 1,096,618 1,206,172 1,206,172 1,363,754 1,427,481 1,504,197 1,579,936 1,775,824 1,807,548 1,856,012 In force premium (end of period) $ 251.7 $ 296.8 $ 346.7 $ 380.1 $ 419.0 $ 457.6 $ 609.2 $ 625.1 $ 653.3 Premium per customer (end of period) $ 229 $ 246 $ 254 $ 266 $ 279 $ 290 $ 343 $ 346 $ 352 Annual dollar retention (end of period) 81% 82% 82% 82% 82% 83% 84% 86% 87% Total revenue $ 23.5 $ 28.2 $ 35.7 $ 41.0 $ 44.3 $ 50.0 $ 74.0 $ 88.4 $ 95.2 Gross earned premium $ 56.2 $ 66.9 $ 79.6 $ 89.3 $ 96.0 $ 106.8 $ 136.4 $ 151.3 $ 154.2 Gross profit $ 1.9 $ 9.8 $ 11.7 $ 7.8 $ 10.2 $ 11.3 $ 8.1 $ 12.7 $ 16.5 Adjusted gross profit $ 5.0 $ 12.8 $ 15.2 $ 12.6 $ 16.3 $ 17.5 $ 13.2 $ 17.9 $ 20.6 Net loss $ (49.0) $ (55.6) $ (66.4) $ (70.3) $ (74.8) $ (67.9) $ (91.4) $ (63.7) $ (65.8) Adjusted EBITDA $ (41.3) $ (40.4) $ (51.3) $ (51.2) $ (57.4) $ (50.3) $ (65.7) $ (51.7) $ (50.8) Gross profit margin 8% 35% 33% 19% 23% 23% 11% 14% 17% Adjusted gross profit margin 21% 45% 43% 31% 37% 35% 18% 20% 22% Ratio of Adjusted Gross Profit to Gross Earned Premium 9% 19% 19% 14% 17% 16% 10% 12% 13% Gross loss ratio 121% 74% 77% 96% 90% 86% 94% 89% 87% Net loss ratio 120% 80% 81% 98% 89% 90% 105% 97% 93% 29 Appendix to the Q1 2023 Shareholder Letter Customers (in ‘000s) In Force Premium ($s in m) 23% 37% YoY growth 56%66% 1,097 1,504 1,856 Q1 21 Q1 22 Q1 23 $251.7 $419.0 $653.3 Q1 21 Q1 22 Q1 23 $229 $279 $352 Q1 21 Q1 22 Q1 23 Premium Per Customer 26% 22% * = Appendix p.2 Gross Earned Premium (“GEP”) ($s in m) Revenue ($s in m) $23.5 $44.3 $95.2 Q1 21 Q1 22 Q1 23 115%89%YoY growth $56.2 $96.0 $154.2 Q1 21 Q1 22 Q1 23 61% 71% Appendix p.3 Loss Ratio Gross Loss Ratio (1) Net Loss Ratio (1) (1) We define gross loss ratio, expressed as a percentage, as the ratio of losses and loss adjustment expense to gross earned premium, and net loss ratio, expressed as a percentage, as the ratio of losses and loss adjustment expense, less amounts ceded to reinsurers, to net earned premium. Appendix p.4 72% 67% 72% 73% 121% 74% 77% 96% 90% 86% 94% 89% 87% 72% 70% 65% 76% 120% 80% 81% 98% 89% 90% 105% 97% 93% Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Gross Profit ($s in m) Gross Profit Margin 62%437% 8% 23% 17% Q1 21 Q1 22 Q1 23 YoY growth Appendix p.5 $1.9 $10.2 $16.5 Q1 21 Q1 22 Q1 23 Adj. Gross Profit (1) ($s in m) Ratio of Adj. Gross Profit to GEP $5.0 $16.3 $20.6 Q1 21 Q1 22 Q1 23 26%226% (1) This is a non-GAAP metric. For a description of these metrics and a reconciliation to the most directly comparable GAAP measure, please see "Reconciliation of Non-GAAP Financial Measures to GAAP" and "Non-GAAP financial measures and key operating metrics". 9% 17% 13% Q1 21 Q1 22 Q1 23 YoY growth Appendix p.6 (29.1) (38.3) (28.2) ($55.1) ($92.5) ($96.3) (110.0) (90.0) (70.0) (50.0) (30.0) (10.0) Q1 21 Q1 22 Q1 23 Other insurance expense Sales and marketing Technology development General and administrative Operating Expenses (1) ($s in m) (1) Represents total expense less loss and loss adjustment expense, net Appendix p.7 Net Loss ($s in m) Adj. EBITDA (1) ($s in m) 11%(39%) Better / (Worse) 12% (53%) (1) This is a non-GAAP metric. For a description of these metrics and a reconciliation to the most directly comparable GAAP measure, please see "Reconciliation of Non-GAAP Financial Measures to GAAP" and "Non-GAAP financial measures and key operating metrics". Appendix p.8 ($49.0) ($74.8) ($65.8) Q1 21 Q1 22 Q1 23 ($41.3) ($57.4) ($50.8) Q1 21 Q1 22 Q1 23 Guidance ($s in m)Q2 2023 Full Year 2023 $665 $668 $156 $158 $96 $98 ($58) ($55) ($205) ($200) $392 $396 $645 $650 $700 $705 Low High Low High In Force Premium (as of end of period) Gross Earned Premium Revenue Adj. EBITDA (1) (1) Adj. EBITDA is a non-GAAP metric. A full reconciliation of Adj. EBITDA guidance to net loss on a forward-looking basis cannot be provided without unreasonable efforts, as we are unable to provide reconciling information with respect to excluding interest income and expense, income tax expense, depreciation, amortization, stock-based compensation, net investment income, change in fair value of warrants liability, amortization of fair value adjustment on insurance contract intangible liability relating to the Metromile Acquisition, and other non-cash adjustments and other transactions that we consider to be unique in nature. We estimate that stock-based compensation for the second quarter and full year 2023 is approximately $15m and $60m, respectively. Appendix p.9 |
0001193125-23-206194:d502883dex991.htm | 0001193125-23-206194 | 1,819,404 | 1,819,404 | Nerdy Inc. (NRDY) (CIK 0001819404) | ['NRDY'] | 8-K | 8-K | 2023-08-08 | 2023-08-08 | 001-39595 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-39595&action=getcompany | 231,151,240 | EX-99.1 | EX-99.1 | 2.02,9.01 | https://www.sec.gov/Archives/edgar/data/1819404/000119312523206194 | https://www.sec.gov/Archives/edgar/data/1819404/000119312523206194/0001193125-23-206194-index.html | https://www.sec.gov/Archives/edgar/data/1819404/000119312523206194/d502883dex991.htm | EX-99.1 2 d502883dex991.htm EX-99.1 EX-99.1 Exhibit 99.1 Q2 | 2023 Earnings Release A Note to Our Shareholders In the second quarter, our strong start to the year continued and we delivered revenue and profitability ahead of our expectations. We also made substantial progress in advancing our ‘always on’ recurring revenue product offerings and the application of AI for HI®, or Artificial Intelligence for Human Interaction, to our business. As we head into the 2023-2024 school year, it is worth noting what has changed over the past year and how we believe those changes position us for growth in the periods ahead. One year ago, we were entering our first back to school with Learning Memberships, a new ‘all access’ subscription offering that aimed to support Learners across academic calendar years, subjects, and learning formats. We had just introduced the concept the quarter before and were just beginning to expand the product introduction to a higher percentage of new Consumer customers. Learning Memberships had driven just 2% of Consumer revenue in the second quarter of 2022. Fast forward to today and Learning Memberships accounted for 88% of recognized Consumer revenue in the second quarter of 2023. As of this June, 100% of new Consumer customers joining the platform are doing so through a Learning Membership subscription, marking the completion of our evolution to the new recurring revenue business model six months earlier than expected. We now expect that by the end of the year, nearly 100% of recognized Consumer revenue will be from Learning Membership subscriptions as revenue recognized from legacy packages trails off. We ended this most recent quarter with 31K Active Members paying approximately $350 per month on average, representing a $130 million annualized run-rate at quarter end. We underwent a similar evolution over the past year in our Institutional offering, Varsity Tutors for Schools. We shared one year ago that we were building new ‘always on’ products that were built for district-wide scale that would enable us to help more Learners than ever before. We also shared that we were seeking to bring together our different offerings to address a multitude of needs for school district partners and students. In addition to actually having to build these new products, we also needed to shift our Institutional go-to-market sales strategy to larger and more comprehensive relationships with school district partners. Fast forward to today, and we are pleased to share that our strategy continues to work and that the strong momentum from the first quarter continued into the second quarter. Our Institutional business delivered revenue of $8.4 million, an increase of 43% year-over-year, representing 17% of total revenue in the second quarter. Bookings in the quarter totaled $10.5 million, an increase of 175% year- over-year. We shared over the past year and at the start of this year that we expected our new ‘always on’ recurring revenue offerings to be far superior to our legacy package model. In addition to allowing us to provide a better and more personalized experience to Learners, our new operating model would be far more efficient, allowing us to drive operating leverage, simplify our sales model, and shift additional resources toward net new innovation, including the application of AI for HI®. We expected the benefits would become apparent in upcoming quarters with accelerating growth and profitability that stemmed from more attractive unit-level economics, longer duration and higher lifetime value customer relationships, higher gross margin, and a more scalable and efficient operating model. Those anticipated business model benefits are now being realized and driving substantial improvements in our operating results. In the second quarter, we recognized $48.8 million of revenue, an increase of 16% year-over-year, exceeding our guidance range of $45-47 million, and a 1,100 bps acceleration in growth over the previous quarter. The new and simpler operating model made possible by our ‘always on’ recurring revenue offerings, combined with the benefits we are realizing from our application of AI, has allowed for us to significantly reduce the labor needed to operate our platform. These changes have meaningfully enhanced our contribution margin profile and simultaneously allowed us to fund increased investments in product and engineering, including AI, to more aggressively pursue our product roadmap and drive both growth and profitability in future periods. Our GAAP net loss was $5.6 million in the second quarter, while we delivered adjusted EBITDA of positive $1.3 million, a $10.9 million and 2,555 bps improvement year-over-year, beating our guidance range of an adjusted EBITDA loss of $3.0 million to breakeven. Positive adjusted EBITDA was driven by improvements across every P&L line item on a year-over-year basis, including higher revenues, gross margin expansion, sales and marketing efficiency gains, and continued variable labor productivity improvements stemming from automation efforts and our business model changes that streamline operations. Q2 Earnings Release 2023 2 I am pleased to share that in the second quarter: ● We delivered $48.8 million of revenue, an increase of 16% year-over-year, above our guidance range of $45-47 million. ● We saw positive new customer addition and engagement trends in the second quarter. New Consumer Learning Membership or package customers acquired in the quarter grew 19% year-over-year, with growth increasing as we progressed farther into the summer, with June and July representing the highest levels of year-over-year growth rates in new Consumer customers this year. ● We completed our evolution to 100% Learning Memberships for new Consumer customers in June with the transition of the Professional audience six months earlier than originally targeted given the strong results in the other audiences and our desire to realize the full benefits of a more scalable and efficient operating model sooner. ● Our customer lifetime values continued to show significant improvements relative to our old package model (as visualized later in this letter), driven by our evolution to Learning Memberships and the application of AI for HI®. These drivers were key contributors to our strong operating results and improved profitability. ● Learning Membership subscriptions accounted for 73% of total Company recognized revenue and 88% of Consumer recognized revenue in the second quarter. By the end of 2023, we expect nearly 100% of Consumer recognized revenues will be from Learning Memberships. ● We delivered positive adjusted EBITDA of $1.3 million, a $10.9 million and 2,555 bps improvement year-over-year in the second quarter, beating our guidance range of an adjusted EBITDA loss of $3.0 million to breakeven. ● We continued to make substantial progress on accelerating the use of AI throughout our business, including launching Membership experience improvements that leverage generative AI, as well as accelerating the use of AI to drive substantial operating efficiencies and internal productivity improvements. Rapidly Shifting to ‘Always On’ Recurring Revenue Products Q1-2022 Q2-2022 Q3-2022 Q4-2022 Q1-2023 Q2-2023 Institutional Memberships Packages Q2 2023 Adjusted EBITDA Bridge Adj. EBITDA Q2 2022 Gross Profit S&M G&A Adj. EBITDA Q2 2023 Q2 Earnings Release 2023 3 Consumer Business Our Learning Membership model leads to more attractive unit-level economics, longer duration and higher lifetime value customer relationships, higher gross margin, and a more scalable and efficient operating model. It also serves as an easier platform from which to drive innovation and incremental growth, given our ability to add new product capabilities into the existing ‘all access’ subscription offering, thereby making the offering more appealing and engaging, driving conversion of new members and the retention of existing ones. ● Learning Membership revenue continued to grow at a rapid pace in the second quarter. Revenue during the second quarter from Learning Memberships grew to $35.6 million, a $5.9 million or 20% increase from the first quarter of 2023. ● Active Member count of 31K as of June 30, 2023 exceeded our expectation, driven by both higher than anticipated levels of new Learning Membership additions and stronger retention among existing Learning Membership customers. ● Average Revenue per Member per Month (ARPM) of approximately $350 at the end of the second quarter resulted in an annualized run-rate of approximately $130 million from Learning Memberships at quarter end. ● The continued Learning Membership lifetime value expansion combined with a decrease in customer acquisition costs (CAC) per customer drove a significantly improved sales and marketing payback period versus the same period one year ago. Sales and marketing as a percentage of revenue in the period decreased more than 1,100 bps year-over-year demonstrating the superior ratio of customer lifetime value relative to customer acquisition cost (LTV/CAC) of the new and more attractive product offering. As visualized in the chart below, recent cohorts’ cumulative Learning Membership average revenue per customer continues to expand and separate from the historical amount an average Consumer customer would spend over time under our legacy package model. We believe these results clearly demonstrate the superior lifetime value of our Learning Membership model across all cohorts that have matured for at least 90 days from the time of each Learning Members’ first purchase. Quarterly Membership Cohorts vs. 2021 Average Monthly Consumer Customer Cohort (by Cumulative Average Revenue per Customer) Consumer Customers Acquired in 2021 - Average Cumulative Revenue Q2-2022 Memberships Q3-2022 Memberships Q4-2022 Memberships Q1-2023 Memberships Month 0 Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Q2 Earnings Release 2023 4 Enhanced Learning Membership Experience We are introducing a significantly upgraded and enhanced Learning Membership digital experience this August in time for back-to-school. The updates are aimed at enriching the experience, encouraging achievement, reinforcing personal accountability to learning, and improving the discoverability of learning formats and subjects. From many years of experience, we know that when customers engage more deeply with our products, including across multiple learning formats, multiple subjects, or multiple students per household, it is highly predictive of stronger long-term retention and higher lifetime value of those customers. These upgrades of the digital experience for Learning Members are in service of that ultimate outcome and are aimed at increasing engagement across each of those vectors. During the second quarter, we launched an all new membership experience making it easier for Learners to more fully engage with their Learning Membership by improving product discovery and personalization. The new Learning Membership Experience includes several new features: My Learning Hub: The new My Learning Hub transforms the way members engage with our platform, making engaging and discovery with our platform more intuitive and user-friendly. The My Learning Hub serves as the new home page and central destination for Learning Members, allowing members to effortlessly access their upcoming live tutoring schedule, easily track their past learning interactions in a subject, and track progress and achievement toward learning goals. The My Learning Hub enables easier discovery of new subjects, and will encourage users to explore additional areas of interest through personalized AI-generated learning recommendations that predict and suggest the next product interaction across learning formats and subjects that are most likely to drive engagement and customer value. My Learning Hub also brings together all of the key account management information and resources into a simple user experience that provides easy self-service management tools to better meet the changing needs of Learning Members and, separately, drive operating efficiency. Subject Portals: Our new Subject Portals enable Learners to easily find all the different ways they can learn a given subject. We know our typical Learner prefers to learn a given subject in multiple different ways and this new experience honors that with improved discoverability. With the new Subject Portal experience updates, we aim to increase the number of learning formats Learners leverage on our platform in each subject, thereby driving increases in engagement and frequency of use and improving the value received by Learning Members. Q2 Earnings Release 2023 5 Varsity Tutors for Schools We launched Varsity Tutors for Schools two years ago to help students at a larger scale than ever before. Students needed significant intervention to remediate learning loss and help learn core foundational skills. Simultaneously, school districts were now open to leveraging third party online platforms to help solve problems they were experiencing. Given our Consumer experience, we believed we were uniquely qualified and positioned to help deliver live learning at district-wide scale in a way that hadn’t been done before. We continue to make progress building the foundation for a durable Institutional business capable of supporting millions of students. Consistent with our strategy heading into 2023, our focus on larger and more expansive partnerships with larger school districts, including the inclusion of our High-Dosage Tutoring, Teacher Assigned, and On-Demand products into a single district partnership, is yielding results: ● Institutional revenue of $8.4 million, an increase of 43% year-over-year, represented 17% of total revenue in the second quarter. ● We completed 48 contracts totaling $10.5 million of bookings during the second quarter, an increase of 175% year-over-year. ● Year-to-date, we have executed 15 contracts between $100K and $1 million, and 4 contracts that were greater than $1 million, yielding an average order value of more than $100K, a more than 2x increase versus the same period last year. Varsity Tutors for Schools is delivering results for our school district partners and our ability to showcase the impact we are able to have through third party data continues to grow. As one example, last year Varsity Tutors for Schools partnered with the University of California Irvine and a large and well-known school district in southern California to conduct a randomized- controlled trial (RCT) research study to evaluate students’ score point increases in 4th grade mathematics as a result of High Dosage Tutoring. The study found that students who received the High Dosage Tutoring product offering from Varsity Tutors for Schools showed 217% growth in math proficiency compared to students not in the program. Our sustained growth trajectory in the second quarter, an expanding portfolio of reference accounts, compelling efficacy data that demonstrates the effectiveness of our solutions, and enhancements to our unique product suite of High-Dosage Tutoring, Teacher Assigned, and On-Demand, provide us confidence that we are well positioned as we enter the key back-to-school selling season. Q2 Earnings Release 2023 6 AI for HI® Our Artificial Intelligence for Human Interaction strategy is driving customer and business value at a rapid pace. Over the last six years, AI has been foundational to our ability to improve quality, enhance personalization, and decrease the cost of our offerings. We’ve been using AI for years to power our ability to identify the highest quality Experts, assess Learners’ foundational knowledge, help ensure the right Expert-Learner match, and drive operational efficiency. Last quarter I shared that the speed of innovation occurring at Nerdy was both stunning and invigorating and that we were actively infusing generative AI into our products to supercharge human interaction, deliver on the promise of hyper-personalized online learning and instruction, drive operating efficiency, and generally enhance the effectiveness and efficiency of our platform. I also shared that as a result of the investments we had made in instrumentation and data capture over the past 10 million hours of live face-to-face tutoring, as well as our practical experience driving both enhanced personalized learning interactions and business outcomes like revenue growth and operating efficiency through the application of AI, we believed we stood to benefit tremendously from the latest advancements in generative AI and were positioned to move quickly. Ninety days later, that speed of innovation that was initially ‘stunning’ is now quickly becoming just ‘how we work’. Our teams are both encouraged and pushed to leverage AI in their daily work and all employees have access to in-line generative AI tools, in addition to system and workflow-driven approaches to support high volume activities at scale, allowing our teams to focus their time and energy on new innovation and growth opportunities. Our dedicated generative AI infrastructure team, Nerd AI, has built out and deployed shared capabilities and APIs that enable multiple different engineering teams to leverage common generative AI capabilities via APIs with established best practices, which in turn allows teams working on a given initiative or product to leverage that capability faster to accomplish their objective and enhance their initiative or product. To illustrate the speed and significance of innovation occurring, along with where AI-related investments are being made beyond some of the more visible consumer- facing applications, I’ll share with you a few examples: Q2 Earnings Release 2023 7 Customer Facing AI Enabled Innovation: AI Content Generation: By employing the latest AI cloud frameworks, we’ve designed a robust system that generates practice content across a broad spectrum of subjects and skills. This system is unique as it integrates a human-in-the- loop feedback process, ensuring both accuracy and difficulty are aligned with educational standards while curating datasets we can use for improving our AI models. In order to scale learning content to the 3,000+ subjects we currently support, and the corresponding tens of thousands of skills, we needed to construct an AI-based approach for evaluating learning content. Every subject is different and needs a unique dataset in order to tune and optimize our AI models for both accuracy, difficulty and academic learning standards alignment. We are rapidly deploying learning content across approximately 200 of our most in-demand subjects with more than 66,000 AI-generated practice problems, answers, and explanations having been created and vetted to date, available for Learning Membership customers to use this back-to-school season in learning formats involving quizzes, computer adaptive diagnostics, and more. By year end, we expect to be able to 10X the quantity of learning content generated by the new AI system. AI Tutor Chat Improvements: We made enhancements to our AI Tutor chat system, focusing on both user experience and educational effectiveness. By employing an upgraded AI model and refining metrics to evaluate each conversation, we’ve sharpened our understanding of the AI Tutor’s strengths and areas for improvement. These updates reflect our commitment to pedagogical adherence and the individualized needs of each Learner. Moderation and Redaction Services: Leveraging state of the art AI, we implemented monitoring and safeguarding of customer information and harmful content through the use of PII identification, redaction, and AI classification techniques for moderation in order to have complete auditability and control over conversations with our AI products and services. Speech Transcription Service: Utilizing state of the art speech recognition AI, we built this service to automate the speech-to-text transcription of Nerdy’s rich audio data between customers, sales, support, and Experts. This enables us to more comprehensively predict insights, understand customer satisfaction and engagement, as well as tap into our rich Expert-Learner data to improve our AI- enabled products and solutions. Summarization Service: We implemented an AI-based summarization system capable of distilling precise and accurate summaries from diverse interactions across all organizational levels. From Expert-Learner engagements to customer service interactions and internal communications, this tool is boosting efficiency, enhancing accuracy, and fostering insight-driven decisions. AI Enabled Efficiency Improvements: Nerdy Navigator Chatbot Creation: In order to meet the demand of internal teams requesting AI-powered chatbots to solve problems specific to users in their functional area, we created a templated approach for developing, training and deploying chatbots to support customers and internal teams. Nerdy Navigator allows our employees to access Company specific information backed by the power of AI. With remote and distributed teams, growing volumes of information, and an ever-evolving landscape, the need for an efficient and accessible question-and-answer communication tool for our employees is essential. The Nerdy Navigator serves as a versatile solution that not only streamlines internal processes, it also empowers employees to be more productive, informed, and engaged. We’ve also supercharged our tech support chatbot using Nerdy’s AI embedded framework. Now integrated into our platform for Learners, the chatbot proficiently handles general account inquiries and technical support questions such as A/V camera issues and scheduling. These innovations are dramatically streamlining employee and customer support by reducing the number of interactions that require human based customer support. Nerdy AI Playground: An exploratory environment that embodies our innovative spirit, the “AI Playground” serves as an internal platform enabling our teams to experiment, learn, and prototype AI applications. By offering capabilities like rapid A/B testing and seamless integration of generative AI, this playground fast-tracks the development and adoption of AI within Nerdy, fostering a culture of continuous innovation. Increased Productivity and Operating Efficiency As noted at the beginning of this letter, our simplified operating model, coupled with recent AI-driven automation and operational improvements enabling more efficient and responsive customer support interactions, have allowed for us to increase the productivity of our existing teams and reduce the variable labor needed to operate our platform. Whether it is the mass production of hyper-personalized learning content, or the use of AI-powered chatbots for customer service interactions, the application of AI throughout our business is yielding a better experience for Learners and driving significant operating leverage. These improvements support our ambitious goal to improve adjusted EBITDA margins by more than 2,000 bps in 2023 and become adjusted EBITDA profitable on a permanent basis. Looking ahead, we expect to see further wins on driving both conversion and retention, as well as improvements in operational efficiency as a result of continued investments in AI. Q2 Earnings Release 2023 8 In Closing In closing, I want to extend my thanks to our team at Nerdy for their high quality work and focus on driving strong execution in service of our Learners, Experts, Institutional Partners, and Shareholders. We have an opportunity to redefine how people learn and build a business of significant value and impact in the years to come. Our strategic evolution towards ‘always on’ recurring revenue products and the continued implementation of AI for HI® have helped put us in a strong position entering the 2023-2024 school year. We appreciate your continued interest in our Company. CHUCK COHN Founder, Chairman & CEO Q2 Earnings Release 2023 9 Financial Highlights • Learning Memberships Deliver Strong Results – In the second quarter, Nerdy delivered revenue of $48.8 million, above the top end of our guidance range of $45-47 million, and represented an increase of 16% from $42.2 million during the same period in 2022. Revenue growth was driven by the completion of our evolution towards ‘always on’ recurring revenue products, strong adoption of Learning Memberships, and lifetime value expansion in our Consumer business coupled with the continued scaling of our Institutional business. • Membership Evolution Complete – We transitioned the Professional audience to Learning Memberships, completing the evolution to Learning Memberships for 100% of new Consumer customers. Revenue recognized in the second quarter from Learning Memberships grew to $35.6 million or 73% of total revenue, up from 60% of total Company revenue recognized in the first quarter of 2023. Active Member count of 31.0K as of June 30, 2023 was driven by higher than anticipated levels of new customer additions and retention among Learning Membership customers. • Institutional Business Continues to Scale – In the second quarter, Varsity Tutors for Schools executed 48 contracts, reflecting our strategy to focus on larger school district contracts, yielding $10.5 million of bookings an increase of 175% year-over-year. Institutional revenue of $8.4 million increased 43% year-over-year and represented 17% of total revenue in the second quarter. • Gross Profit Expansion – Gross profit of $34.1 million in the second quarter increased 19% year-over-year. Gross margin of 69.8% for the three months ended June 30, 2023, was approximately 166 bps higher than gross margin of 68.2% during the comparable period in 2022. Gross profit and gross margin increases were driven by growth in our Consumer business as a result of the strong adoption of Learning Memberships, which has led to lifetime value expansion and higher gross margin. • Positive Non-GAAP Adjusted Net Earnings and Adjusted EBITDA – Net loss was $5.6 million in the second quarter versus net earnings of $15.3 million during the same period in 2022. Excluding non-cash stock compensation expenses and mark-to-market derivative adjustments, adjusted net earnings was $0.4 million for the second quarter of 2023 compared to an adjusted net loss of $11.2 million in the second quarter of 2022. We achieved positive adjusted EBITDA of $1.3 million, a $10.9 million and 2,555 bps improvement year-over-year in the second quarter, beating our guidance range of an adjusted EBITDA loss of $3.0 million to breakeven. This compares to an adjusted EBITDA loss of $9.6 million in the same period one year ago. Adjusted EBITDA outperformance was driven by higher revenues, gross margin expansion, sales and marketing efficiency gains, and continued variable labor productivity improvements stemming from automation efforts and our business model changes that streamline operations. • Operating Cash Flow and Liquidity – Negative operating cash flow of $4.5 million in the second quarter of 2023 primarily reflects the continued burn down of legacy package deferred revenue, and compared to negative operating cash flow of $19.3 million last year, an improvement of $14.8 million that reflects the substantial improvements from our evolution to Learning Memberships. With no debt and $90.9 million of cash on our balance sheet, we believe we have ample liquidity to fund the business and pursue growth initiatives. See page 17 for reconciliations of non-GAAP measures to the most directly comparable GAAP financial measure. Q2 Earnings Release 2023 10 2023 Outlook For the third quarter and full year, we expect year-over-year revenue growth will be driven by the completion of our evolution towards recurring revenue streams in our Consumer business, the corresponding increase in the number of Learning Membership subscribers, and higher Institutional revenues. Third quarter revenue guidance reflects the quarterly low point in revenue during the year, which is due to normal seasonality and the resulting lower revenues from Learning Membership, legacy package customers and Varsity Tutors for Schools when K12 schools and universities are on summer break. Full year revenue guidance reflects normal back-to-school seasonality (with the majority of schools in session starting in September) including anticipated higher levels of new customer acquisition and retention coupled with higher Institutional revenues during the academic calendar when K12 schools and universities are in session. Our positive momentum provides us with increased visibility into and confidence in our expectation that we will deliver accelerating sequential year-over-year revenue growth each quarter as we move throughout 2023. Our adjusted EBITDA guidance for both the third quarter and full year reflects the continuing benefits from our recurring revenue products which focus on long-term relationships with higher value customers, an improving gross margin profile, and further operating efficiencies stemming from the completion of our evolution to recurring revenue business models. Third quarter adjusted EBITDA guidance reflects the impact of lower revenue due to normal summer seasonality and higher variable costs in the third quarter as we ramp into the back-to-school selling season. Consistent with prior guidance we expect a return to positive adjusted EBITDA in the fourth quarter. Revenue Guidance • For the third quarter of 2023, we expect revenue in a range of $38-40 million, representing 23% growth at the midpoint vs. our Q3 2022 revenue of $31.8 million. • For the full year, we are raising our revenue targets from $193-$200 million to $196-200 million; representing 22% growth at the midpoint vs. our 2022 revenue of $162.7 million. Adjusted EBITDA Guidance • For the third quarter of 2023, we expect an adjusted EBITDA loss in a range of $8-10 million. • For the full year, we are raising our adjusted EBITDA targets from a loss of $7 million to breakeven, to an adjusted EBITDA loss of $4 million to breakeven. Q2 Earnings Release 2023 11 Financial Discussion Revenue Revenue for the three months ended June 30, 2023 was $48.8 million, an increase of 16% from $42.2 million during the same period in 2022. Revenue for the six months ended June 30, 2023 was $98.0 million, an increase of 10% from $89.1 million during the same period in 2022. Revenue growth for both periods was driven by the completion of our evolution towards ‘always on’ recurring revenue products, strong adoption of Learning Memberships, and lifetime value expansion in our Consumer business coupled with the continued scaling of our Institutional business. Gross Profit and Gross Margin Gross profit of $34.1 million for the three months ended June 30, 2023 increased by $5.4 million or 19% compared to the same period in 2022. Gross profit of $68.0 million for the six months ended June 30, 2023 increased by $6.5 million or 11% compared to the same period in 2022. Gross margin of 69.8% and 69.4% for the three and six months ended June 30, 2023, respectively, was 166 and 31 bps higher than gross margin of 68.2% and 69.0% during the comparable periods in 2022. Gross profit and gross margin increases were driven by growth in our Consumer business as a result of the strong adoption of Learning Memberships, which has led to lifetime value expansion and higher gross margin. As we evolve towards a greater mix of Learning Memberships revenue, we expect Consumer gross margin to expand as we move throughout 2023. Sales and Marketing Sales and marketing expenses for the three months ended June 30, 2023 on a GAAP basis were $14.9 million, a decrease of $3.1 million from $18.0 million in the same period in 2022. Excluding non-cash stock compensation, sales and marketing expenses for the three months ended June 30, 2023 were $14.2 million, or 29% of revenue, compared to $17.0 million, or 40% of revenue in the same period in 2022, an improvement of 1,139 bps year-over-year. Sales and marketing expenses for the six months ended June 30, 2023 on a GAAP basis were $30.4 million, a decrease of $10.6 million from $41.0 million in the same period in 2022. Excluding non-cash stock compensation, sales and marketing expenses for the six months ended June 30, 2023 were $28.9 million, or 29% of revenue, compared to $38.9 million, or 44% of revenue in the same period in 2022, an improvement of 1,420 bps year-over-year. Sales and marketing spend and efficiency improvements were driven by the completion of our evolution to Learning Memberships, including the continued expansion of lifetime value, our focus on optimizing the level of marketing spend, and a more efficient operating model in our Consumer business. We also delivered substantial Varsity Tutors for School revenue growth, yielding efficiencies from prior investments in the Institutional sales and go-to-market organization. Consistent with our prior guidance, as Learning Memberships become a greater percentage of total revenue and the Institutional business continues to scale, we expect to yield durable sales and marketing improvements as the business delivers sequential year-over-year revenue growth each quarter as we move throughout 2023. Sales and marketing expenses as a percentage of revenue may fluctuate from quarter to quarter based on Learning Membership sales, the size and volume of Institutional contracts, bookings, seasonality, and the timing of our investments in marketing activities. Q2 Earnings Release 2023 12 General and Administrative General and administrative expenses for the three months ended June 30, 2023 on a GAAP basis were $29.7 million, a decrease of $3.0 million from $32.7 million in the same period in 2022. Excluding non-cash stock compensation expenses, general and administrative expenses for the three months ended June 30, 2023 were $20.3 million, or 42% of revenue, compared to $22.9 million, or 54% of revenue in the same period in 2022, an improvement of 1,270 bps year-over-year. General and administrative expenses for the six months ended June 30, 2023 on a GAAP basis were $59.4 million, a decrease of $3.9 million from $63.3 million in the same period in 2022. Excluding non-cash stock compensation expenses, general and administrative expenses for the six months ended June 30, 2023 were $39.8 million, or 41% of revenue, compared to $42.0 million, or 47% of revenue in the same period in 2022, an improvement of 652 bps year-over-year. Our investments in product development and our platform-oriented approach to growth have allowed us to launch a suite of ‘always on’ subscription products including Learning Memberships for consumers, and our Teacher Assigned and On Demand offerings for Institutional customers. Subscription offerings simplify the operating model needed to support customers and grow the business. Combined with our ongoing automation efforts involving self-service capabilities, the application of artificial intelligence, and other efficiency efforts, we have been able to generate operating efficiencies and remove significant costs from the business. We believe we will be able to further simplify our operating model and remove additional costs from the business while growing revenue and Active Members. Net (Loss) Earnings, Non-GAAP Adjusted Net Earnings (Loss), and Non-GAAP Adjusted EBITDA Net loss on a GAAP basis was $5.6 million for the three months ended June 30, 2023, compared to net earnings of $15.3 million in the same period in 2022. Excluding non-cash stock compensation expenses and mark-to-market derivative adjustments, non-GAAP adjusted net earnings was $0.4 million for the three months ended June 30, 2023 compared to a non-GAAP adjusted net loss of $11.2 million in the same period in 2022, an improvement of $11.6 million year-over-year. Net loss on a GAAP basis was $37.8 million for the six months ended June 30, 2023, compared to a net loss of $16.5 million in the same period in 2022. Excluding non-cash stock compensation expenses and mark-to-market derivative adjustments, adjusted non-GAAP net earnings for the six months ended June 30, 2023 was $0.9 million versus a non-GAAP adjusted net loss of $19.4 million in the same period in 2022, an improvement of $20.3 million year-over-year. Non-GAAP adjusted EBITDA was $1.3 million for the three months ended June 30, 2023, beating our guidance range of an adjusted EBITDA loss of $3.0 million to breakeven, and compared to a non-GAAP adjusted EBITDA loss of $9.6 million in the same period in 2022, an improvement of $10.9 million and 2,555 bps year-over-year. Non-GAAP adjusted EBITDA was $2.7 million for the six months ended June 30, 2023, compared to a non-GAAP adjusted EBITDA loss of $16.3 million in the same period in 2022, an improvement of $19.0 million and 1,826 bps year-over-year. Adjusted EBITDA outperformance was driven by higher revenues, gross margin expansion, sales and marketing efficiency gains, and continued variable labor productivity improvements stemming from automation efforts and our business model changes that streamline operations. See page 17 for reconciliations of non-GAAP measures to the most directly comparable GAAP financial measure. Liquidity and Capital Resources As of June 30, 2023, the Company’s principal sources of liquidity were cash and cash equivalents of $90.9 million. Our strong balance sheet provides us with ample liquidity to operate against our plan and pursue growth initiatives. Conference Call Details Nerdy’s management will host a conference call to discuss its financial results on Tuesday, August 8, 2023 at 5:00 p.m. Eastern Time. Interested parties in the U.S. may listen to the call by dialing 1-833-470-1428. International callers can dial 1-404-975-4839. The Access Code is 943957. A live webcast of the call will also be available on Nerdy’s investor relations website at https://www.nerdy.com/investors. A replay of the webcast will be available on Nerdy’s website for one year following the event and a telephonic replay of the call will be available until August 15, 2023 by dialing 1-866-813-9403 from the U.S. or 44-204-525-0658 from all other locations, and entering the Access Code: 491834. Contact press@nerdy.com investors@nerdy.com Q2 Earnings Release 2023 13 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except per share data) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Revenue $ 48,839 $ 42,186 $ 98,019 $ 89,111 Cost of revenue 14,740 13,431 30,030 27,583 Gross Profit 34,099 28,755 67,989 61,528 Sales and marketing expenses 14,859 18,011 30,419 40,957 General and administrative expenses 29,713 32,751 59,413 63,260 Operating Loss (10,473 ) (22,007 ) (21,843 ) (42,689 ) Unrealized (gain) loss on derivatives, net (4,198 ) (37,336 ) 17,484 (26,294 ) Interest income (783 ) (5 ) (1,616 ) (12 ) Other expense, net 5 57 16 74 (Loss) Earnings before Income Taxes (5,497 ) 15,277 (37,727 ) (16,457 ) Income tax expense 53 — 76 13 Net (Loss) Earnings (5,550 ) 15,277 (37,803 ) (16,470 ) Net (loss) earnings attributable to noncontrolling interests (2,252 ) 6,582 (15,574 ) (8,320 ) Net (Loss) Earnings Attributable to Class A Common Stockholders $ (3,298 ) $ 8,695 $ (22,229 ) $ (8,150 ) (Loss) Earnings per share of Class A Common Stock: Basic $ (0.03 ) $ 0.10 $ (0.24 ) $ (0.10 ) Diluted $ (0.03 ) $ 0.09 $ (0.24 ) $ (0.10 ) Weighted-Average Shares of Class A Common Stock Outstanding: Basic 94,448 86,373 93,119 83,018 Diluted 94,448 88,600 93,119 83,018 REVENUE (Unaudited) (in thousands) Three Months EndedJune 30, Six Months EndedJune 30, 2023 % 2022 % 2023 % 2022 % Consumer $ 40,296 82 % $ 35,635 84 % $ 80,631 82 % $ 74,553 84 % Institutional 8,354 17 % 5,825 14 % 16,894 17 % 12,300 14 % Other (a) 189 1 % 726 2 % 494 1 % 2,258 2 % Revenue $ 48,839 100 % $ 42,186 100 % $ 98,019 100 % $ 89,111 100 % (a) Other consists of EduNation Limited, a company incorporated in England and Wales (“First Tutors UK”) and other services. Q2 Earnings Release 2023 14 CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (in thousands) June 30,2023 December 31,2022 ASSETS Current Assets Cash and cash equivalents $ 90,929 $ 90,715 Accounts receivable, net 5,173 11,596 Other current assets 4,039 5,345 Total Current Assets 100,141 107,656 Fixed assets, net 12,476 12,504 Goodwill 5,717 5,717 Intangible assets, net 3,353 3,574 Other assets 2,524 3,241 Total Assets $ 124,211 $ 132,692 LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities Accounts payable $ 2,939 $ 3,199 Deferred revenue 15,698 25,539 Other current liabilities 9,109 8,593 Total Current Liabilities 27,746 37,331 Other liabilities 30,958 14,311 Total Liabilities 58,704 51,642 Stockholders’ Equity Class A common stock 10 9 Class B common stock 7 7 Additional paid-in capital 536,073 522,031 Accumulated deficit (497,336 ) (475,107 ) Accumulated other comprehensive income (loss) 26 (12 ) Total Stockholders’ Equity Excluding Noncontrolling Interests 38,780 46,928 Noncontrolling interests 26,727 34,122 Total Stockholders’ Equity 65,507 81,050 Total Liabilities and Stockholders’ Equity $ 124,211 $ 132,692 Q2 Earnings Release 2023 15 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands) Six Months EndedJune 30, 2023 2022 Cash Flows From Operating Activities Net Loss $ (37,803 ) $ (16,470 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation & amortization 3,091 2,861 Amortization of intangibles 302 308 Unrealized loss (gain) on derivatives, net 17,484 (26,294 ) Non-cash stock-based compensation expense 21,180 23,344 Other changes in operating assets and liabilities: Decrease in accounts receivable, net 6,423 2,484 Decrease in other current assets 1,306 1,119 Decrease in other assets 717 580 Decrease in accounts payable (260 ) (270 ) Decrease in deferred revenue (9,841 ) (7,448 ) Increase in other current liabilities 719 248 Decrease in other liabilities (1,039 ) (653 ) Net Cash Provided by (Used In) Operating Activities 2,279 (20,191 ) Cash Flows From Investing Activities Capital expenditures (2,049 ) (2,714 ) Net Cash Used In Investing Activities (2,049 ) (2,714 ) Cash Flows From Financing Activities Payments to legacy Nerdy holders — (767 ) Other — (70 ) Net Cash Used In Financing Activities — (837 ) Effect of Exchange Rate Change on Cash, Cash Equivalents, and Restricted Cash (16 ) (13 ) Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash 214 (23,755 ) Cash, Cash equivalents, and Restricted Cash, Beginning of Year 91,547 145,879 Cash, Cash Equivalents, and Restricted Cash, End of Period $ 91,761 $ 122,124 Supplemental Cash Flow Information Non-cash stock-based compensation included in capitalized internal use software $ 1,015 $ 1,168 Q2 Earnings Release 2023 16 RECONCILIATION OF GAAP TO NON-GAAP SALES AND MARKETING EXPENSE (Unaudited) (in thousands) Three Months EndedJune 30, Six Months EndedJune 30, 2023 2022 2023 2022 Sales and marketing expenses $ 14,859 $ 18,011 $ 30,419 $ 40,957 Less: Non-cash stock-based compensation expense 691 970 1,529 2,045 Non-GAAP sales and marketing expenses $ 14,168 $ 17,041 $ 28,890 $ 38,912 RECONCILIATION OF GAAP TO NON-GAAP GENERAL AND ADMINISTRATIVE EXPENSE (Unaudited) (in thousands) Three Months EndedJune 30, Six Months EndedJune 30, 2023 2022 2023 2022 General and administrative expenses $ 29,713 $ 32,751 $ 59,413 $ 63,260 Less: Non-cash stock-based compensation expense 9,440 9,884 19,651 21,299 Non-GAAP general and administrative expenses $ 20,273 $ 22,867 $ 39,762 $ 41,961 RECONCILIATION OF GAAP NET (LOSS) EARNINGS TO NON-GAAP ADJUSTED EBITDA (LOSS) (Unaudited) (in thousands) Three Months EndedJune 30, Six Months EndedJune 30, 2023 2022 2023 2022 Net (Loss) Earnings $ (5,550 ) $ 15,277 $ (37,803) $ (16,470 ) Add: Interest income (783 ) (5 ) (1,616 ) (12 ) Income taxes 53 — 76 13 Depreciation and amortization 1,690 1,590 3,393 3,169 Non-cash stock-based compensation expense 10,131 10,854 21,180 23,344 Unrealized loss (gain) on derivatives, net (4,198 ) (37,336 ) 17,484 (26,294 ) Adjusted EBITDA (Loss) $ 1,343 $ (9,620 ) $ 2,714 $ (16,250 ) RECONCILIATION OF GAAP NET (LOSS) EARNINGS TO NON-GAAP ADJUSTED NET EARNINGS (LOSS) (Unaudited) (in thousands) Three Months EndedJune 30, Six Months EndedJune 30, 2023 2022 2023 2022 Net (Loss) Earnings $ (5,550 ) $ 15,277 $ (37,803 ) $ (16,470 ) Add: Stock-based compensation 10,131 10,854 21,180 23,344 Unrealized loss (gain) on derivatives, net (4,198 ) (37,336 ) 17,484 (26,294 ) Adjusted Net Earnings (Loss) $ 383 $ (11,205 ) $ 861 $ (19,420 ) Q2 Earnings Release 2023 17 CAPITALIZATION RECONCILIATION (Unaudited) (in thousands) June 30, 2023 Class A Common Shares 95,516 Combined Interests that can be converted into shares of Class A Common Stock 65,803 Total outstanding share count, excluding earnouts 161,319 Earnouts 7,964 Total outstanding share count, end of period 169,283 Q2 Earnings Release 2023 18 We monitor the following key operating metrics to evaluate the growth of our business, measure our performance, identify trends affecting our business, formulate business plans, and make strategic decisions. During the second quarter, we completed our evolution to Learning Memberships within our Consumer business. As a result of this transition, we are presenting Active Members as a key operating metric. Active Members exclude EduNation Limited, a company incorporated in England and Wales (“First Tutors UK”) and our Institutional business. Active Experts include our Institutional business, but excludes First Tutors UK. KEY OPERATING METRICS Active Members in thousands June 30, 2023 March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2022 Active Members 31.0 32.9 20.2 11.3 2.0 Three Months EndedJune 30, Change Six Months EndedJune 30, Change Active Experts in thousands: favorable/(unfavorable) 2023 2022 % 2023 2022 % Active Experts 10.0 12.1 (17 ) % 12.0 14.5 (17 ) % Q2 Earnings Release 2023 19 Key Performance Metrics and Non-GAAP Financial Measures This earnings release includes non-GAAP financial measures for non-GAAP sales and marketing expenses, non-GAAP general and administrative expenses, non-GAAP adjusted EBITDA (loss), and non-GAAP adjusted net earnings (loss). Non-GAAP sales and marketing expenses exclude non-cash stock compensation expenses and restructuring costs. Non-GAAP general and administrative expenses exclude non-cash stock compensation expenses, restructuring costs, and transaction related costs. Non-GAAP adjusted EBITDA (loss) is defined as net income or net loss, as applicable, before net interest income (expense), taxes, depreciation and amortization expense, non-cash stock-based compensation expenses, gain or loss on mark-to-market derivative financial instruments, and other non-recurring one-time items. Non-GAAP adjusted net earnings or loss is defined as net income or net loss, as applicable, excluding non-cash stock-based compensation expenses, gain or loss on mark-to-market derivative financial instruments, and other non-recurring one-time items. Sales and marketing expenses consist of salaries and benefits for our employees engaged in our consultative sales process. General and administrative expenses are recorded in the period in which they are incurred and include salaries, benefits, and non-cash stock-based compensation expense for certain employees as well as support services, finance, legal, human resources, other administrative employees, information technology expenses, outside services, legal and accounting services, depreciation expense, and other costs required to support our operations. Net loss per share is computed by dividing net loss by the weighted average number of ordinary shares outstanding during the period as calculated using the treasury stock method. Non-GAAP measures are in addition, and not a substitute for or superior to measures of financial performance prepared in accordance with GAAP and should not be considered as an alternative to sales, net income, operating income, cash flows from operations, or any other performance measures derived in accordance with GAAP. Other companies may calculate these non-GAAP financial measures differently, and therefore such financial measures may not be directly comparable to similarly titled measures of other companies. The Company believes that these non- GAAP measures of financial results provide useful supplemental information. The Company’s management uses these non-GAAP measures to evaluate the Company’s operating performance, trends, and to compare it against the performance of other companies. There are, however, a number of limitations related to the use of these non-GAAP measures and their nearest GAAP equivalents. See the table above regarding reconciliation of non-GAAP measures to the most directly comparable GAAP measures. Active Members is defined as the number of Learners with an active Learning Membership as of the date presented. Variations in the number of Active Members are due to changes in demand for our solutions, seasonality, testing schedules, the extension of Learning Memberships to additional Consumer audiences, and the launch of new Learning Membership options. As a result, Active Members is a key indicator of our ability to attract, engage and retain Learners. ARPM is defined as average revenue per Learning Membership per month in a given period. Annualized run-rate is defined as the number of Learning Members at the end of the period multiplied by average revenue per Learning Membership per month multiplied by twelve months. This recurring revenue customer base provides us with increased forecasting visibility into future periods. Active Experts is defined as the number of Experts who have instructed one or more sessions in a given period. Bookings represent contracted amounts in the next 12 months for Varsity Tutors for Schools. Q2 Earnings Release 2023 20 Management and our board of directors use these metrics as supplemental measures of our performance that are not required by or presented in accordance with GAAP because they assist us in comparing our operating performance on a consistent basis, as they remove the impact of items not directly resulting from our core operations. We also use these metrics for planning purposes, including the preparation of our internal annual operating budget and financial projections, to evaluate the performance and effectiveness of our strategic initiatives and to evaluate our capacity to expand our business and the capital expenditures required for that expansion. Non-GAAP sales and marketing expenses, non-GAAP general and administrative expenses, non-GAAP adjusted EBITDA (loss), and non-GAAP adjusted net income or loss should not be considered in isolation, as an alternative to, or superior to net loss, revenue, cash flows or other performance measure derived in accordance with GAAP. We believe these metrics are frequently used by analysts, investors, and other interested parties to evaluate companies in our industry. Management believes that the presentation of non-GAAP metrics is an appropriate measure of operating performance because they eliminate the impact of expenses that do not relate directly to the performance of our underlying business. These non-GAAP metrics should not be construed as an implication that our future results will be unaffected by unusual or other items. We are not able to provide a reconciliation of non-GAAP adjusted EBITDA (loss) guidance for future periods to net loss, the comparable GAAP measure, because certain items that are excluded from non-GAAP adjusted EBITDA (loss) cannot be reasonably predicted or are not in our control. In particular, we are unable to forecast the timing or magnitude for gains or losses on mark-to-market derivative financial instruments, or share based compensation without unreasonable efforts, and these items could significantly impact, either individually or in the aggregate, net income or loss in the future. See the tables above regarding reconciliations of these non- GAAP measures to the most directly comparable GAAP measures for historical periods. Forward-Looking Statements The information included herein and in any oral statements made in connection herewith may include “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. Forward-looking statements include, but are not limited to, statements regarding our or our management team’s expectations, hopes, beliefs, intentions, or strategies regarding the future, including our expectations with respect to: the guidance with respect to our future financial performance; continued improvements in sales and marketing leverage; the growth of our Institutional business; simplifying our operations model while growing our business; and the sufficiency of our cash to fund future operations. Additionally, any statements that refer to projections, forecasts, or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipates,” “approximately,” “believes,” “contemplates,” “continues,” “could,” “estimates,” “expects,” “intends,” “may,” “might,” “outlook,” “plans,” “possible,” “potential,” “predicts,” “projects,” “should,” “seeks,” “will,” “would,” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. The forward-looking statements made herein relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of this press release or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. There are a significant number of factors that could cause actual results to differ materially from statements made herein or in connection herewith, including but not limited to, our limited operating history, which makes it difficult to predict our future financial and operating results; our history of net losses; risks associated with our shift to the Learning Membership model; risks associated with scaling up our Institutional business, risks associated with our intellectual property, including claims that we infringe on a third party’s intellectual property rights; risks associated with our classification of some individuals and entities we contract with as independent contractors; risks associated with the liquidity and trading of our securities; risks associated with payments that we may be required to make under the tax receivable agreement; risks associated with the terms of our warrants; litigation, regulatory and reputational risks arising from the fact that many of our Learners are minors; changes in applicable law or regulation; the possibility of cyber-related incidents and their related impacts on our business and results of operations; the possibility that we may be adversely affected by other economic, business, and/or competitive factors; and risks associated with Q2 Earnings Release 2023 21 managing our rapid growth. Our actual results could differ materially from those stated or implied in forward-looking statements due to a number of factors, including but not limited to, risks detailed in our filings with the SEC, including our Annual Report on Form 10-K filed on February 28, 2023, as well as other filings that we may make from time to time with the SEC. Q2 Earnings Release 2023 22 |
0001601830-23-000022:exhibit991-q0123.htm | 0001601830-23-000022 | 1,601,830 | 1,601,830 | RECURSION PHARMACEUTICALS, INC. (RXRX) (CIK 0001601830) | ['RXRX'] | 8-K | 8-K | 2023-05-08 | 2023-05-08 | 001-40323 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-40323&action=getcompany | 23,895,945 | EX-99.1 | EX-99.1 | 2.02,7.01,9.01 | https://www.sec.gov/Archives/edgar/data/1601830/000160183023000022 | https://www.sec.gov/Archives/edgar/data/1601830/000160183023000022/0001601830-23-000022-index.html | https://www.sec.gov/Archives/edgar/data/1601830/000160183023000022/exhibit991-q0123.htm | EX-99.1 2 exhibit991-q0123.htm EX-99.1 DocumentExhibit 99.1Recursion Provides Business Updates and Reports First Quarter 2023 Financial Results•Entered into agreements to acquire Cyclica and Valence to bolster digital chemistry and generative AI capabilities in order to further create new chemical composition of matter for novel biological targets•Advanced 4 active clinical trials, including an exploratory Phase 2 study of REC-994 in Cerebral Cavernous Malformation where more than 80% of planned participants have enrolled•Phase 2 trial in AXIN1 or APC mutant solid tumors remains on track to initiate in early 2024•Advanced our RBM39 HR-proficient ovarian cancer program (previously identified as Target Gamma) to the preclinical stage and have initiated IND-enabling studiesSALT LAKE CITY, May 8, 2023 — Recursion (Nasdaq: RXRX), a clinical stage TechBio company leading the space by decoding biology to industrialize drug discovery, today reported business updates and financial results for its first quarter ending March 31, 2023. “Recursion has pioneered the massive, parallel generation of -omics data with machine learning in order to map and navigate biology to discover new medicines faster. The strategic acquisitions of Cyclica and Valence add industry-leading capabilities in digital chemistry, as well as machine-learning and artificial intelligence, which combined with our large-scale automated wet-laboratories and supercomputing capabilities, enables us to deploy what I believe is the most complete, technology-enabled drug discovery solution in the biopharma industry. We look forward to showing the world proof of the compounding benefit of this full-stack approach through the rapid acceleration of our pipeline and partnerships. Amidst a rapidly accelerating global race for technology talent, these acquisitions cement Recursion as the center of gravity for the best and brightest in ML and AI who want to reimagine how drugs are discovered,” said Chris Gibson, Ph.D., Co-Founder and CEO of Recursion. “I am so excited to welcome the Cyclica and Valence teams to Recursion, especially at such a dynamic moment in history when machine learning and artificial intelligence are creating so much rapid change across every industry.”Summary of Business Highlights•Digital Chemistry and Generative AI Acquisitions◦Cyclica: Cyclica has built an industry-leading digital chemistry software suite which enables mechanism of action deconvolution, generative chemistry and molecular optimization tools. Recursion completed a prospective, blinded evaluation of their software against challenging internal programs, where we gained deep confidence in the power of their tools and reinforced our belief that this team could accelerate Recursion’s work across its pipeline and partnerships by rapidly advancing the discovery of new chemical entities. We believe that Cyclica’s tools will enhance the optimization of our compounds for efficacy while minimizing liabilities through generative machine learning approaches. The company is located in Toronto, where Recursion maintains its biggest hub outside of its headquarters, and the teams at Cyclica will be fully integrated into Recursion. ◦Valence: Valence is a ML/AI-native digital chemistry company which has pioneered the development of novel hybrid graph neural networks and transformers for state-of-the-art chemical property prediction. The small team at Valence has led a massive open-science movement with a network of academic collaborators at the pinnacle of machine learning, chemistry and other fields. Based in Montréal, where Recursion also maintains a ML research team, Valence will work on cutting-edge applied ML research across chemistry and biology. We believe that the technology they have built and will build will enable acceleration of our work at Recursion across many fields, beginning with generative design of new molecules, DMPK predictions and more. Combined with Recursion’s wet-lab data generation capabilities and one of the largest relatable datasets in the industry, the team will also accelerate ongoing internal work to build foundation models, large-language models and other approaches leveraging active learning. ◦Financial Impact of Acquisitions: Recursion has entered into agreements to acquire Cyclica for a purchase price of $40 million and Valence for a purchase price of $47.5 million, in each case subject to customary closing and post-closing purchase price adjustments. The purchase price in the acquisitions will be payable in the form of shares of Recursion Class A common stock, shares of a subsidiary of Recursion exchangeable for shares of Recursion’s Class A common stock and the assumption of certain outstanding Valence and Cyclica options. In certain circumstances, Recursion may pay cash consideration to Valence and Cyclica shareholders in lieu of such exchangeable shares or Recursion Class A common stock. Recursion expects no material change to its cash runway as a result of these acquisitions. Recursion expects both acquisitions to be completed in the second quarter of 2023, subject to applicable closing conditions.•Internal Pipeline◦Cerebral Cavernous Malformation (CCM) (REC-994): Our Phase 2 SYCAMORE clinical trial is a double-blind, placebo-controlled safety, tolerability and exploratory efficacy study of this drug candidate in 60 participants with CCM. We have enrolled the majority of participants associated with this study, and most participants who have finished their first year of treatment have now enrolled in the long-term extension study. We expect to share top-line data in H2 2024.◦Neurofibromatosis Type 2 (NF2) (REC-2282): Our Phase 2/3 POPLAR clinical trial is a parallel group, two stage, randomized, multicenter study of this drug candidate in approximately 90 participants with progressive NF2-mutated meningiomas. Enrollment is ongoing and we expect to share a Phase 2 interim safety analysis in 2024.◦Familial Adenomatous Polyposis (FAP) (REC-4881): Our Phase 2 TUPELO clinical trial is a multicenter, randomized, double-blind, placebo-controlled two-part clinical trial to evaluate efficacy, safety, and pharmacokinetics of this drug candidate in patients with FAP. We continue to advance this study. ◦AXIN1 or APC Mutant Cancers (REC-4881): REC-4881 is being studied for the potential treatment of AXIN1 or APC mutant cancers with an initial focus on solid tumors harboring these mutations. We are developing a Phase 2 open-label study for REC-4881 in participants with unresectable, locally advanced or metastatic cancer with AXIN1 or APC mutations. We expect to initiate a Phase 2 biomarker enriched study across select AXIN1 or APC mutant solid tumors in early 2024.◦Clostridioides difficile Colitis (REC-3964): Our Phase 1 clinical trial is a first-in-human protocol evaluating single and multiple doses of REC-3964 in healthy volunteers and will assess the safety, tolerability and pharmacokinetic profile of REC-3964. We have enrolled the majority of participants associated with this study, and REC-3964 has been well tolerated to date. We expect to share safety and PK data in H2 2023.◦RBM39 HR-Proficient Ovarian Cancer: In January 2023, we disclosed that RBM39 (previously identified as Target Gamma) is the novel CDK12-adjacent target identified by the Recursion OS. We believe that we can modulate this target to produce a potentially therapeutic effect in HR-proficient ovarian cancer. We have advanced this program to the preclinical stage and have initiated IND-enabling studies.•Transformational CollaborationsWe continue to advance efforts to discover potential new therapeutics with our strategic partners in the areas of neuroscience and a single indication in gastrointestinal oncology (Roche-Genentech) as well as fibrotic disease (Bayer). In the near-term, there is the potential for option exercises associated with partnership programs, option exercises associated with map building initiatives or data sharing and additional partnerships in large, intractable areas of biology or technological innovation. •Recursion OS ◦Industrialized Program Generation: This end-to-end process validates map-based insights without human intervention. Following the proposal of disease model starting points, Industrialized Program Generation carries out the programmatic selection of compound hits, compound ordering coordination, and validation through phenomic and transcriptomic profiling. Given the large number of proto-programs that are expected from this process, we look forward to leveraging the digital chemistry technology and expertise of the Cyclica and Valence teams to design and optimize chemical structures for novel biological targets. Additional Corporate Updates•ESG Reporting: In March 2023, Recursion released its second annual ESG report. Materials from this report can be found at www.Recursion.com/esg.•Annual Shareholder Meeting: The Recursion Annual Shareholder Meeting will be held on June 16, 2023 at 12:00 pm Mountain Time. In preparation for this meeting, Recursion released its annual Proxy Statement in April 2023. First Quarter 2023 Financial Results•Cash Position: Cash and cash equivalents were $473.1 million as of March 31, 2023.•Revenue: Total revenue was $12.1 million for the first quarter of 2023, compared to $5.3 million for the first quarter of 2022. The increase was due to progress made in our Roche-Genentech collaboration.•Research and Development Expenses: Research and development expenses were $46.7 million for the first quarter of 2023, compared to $32.4 million for the first quarter of 2022. The increase in research and development expenses was due to increased platform costs as we have expanded and upgraded our capabilities.•General and Administrative Expenses: General and administrative expenses were $22.9 million for the first quarter of 2023, compared to $21.1 million for the first quarter of 2022. The increase in general and administrative expenses was due to an increase in salaries and wages of $1.2 million and increases in other administrative costs associated with growth in the size of the Company's operations. •Net Loss: Net loss was $65.3 million for the first quarter of 2023, compared to a net loss of $56.0 million for the first quarter of 2022. About RecursionRecursion is a clinical stage TechBio company leading the space by decoding biology to industrialize drug discovery. Enabling its mission is the Recursion OS, a platform built across diverse technologies that continuously expands one of the world’s largest proprietary biological and chemical datasets. Recursion leverages sophisticated machine-learning algorithms to distill from its dataset a collection of trillions of searchable relationships across biology and chemistry unconstrained by human bias. By commanding massive experimental scale — up to millions of wet lab experiments weekly — and massive computational scale — owning and operating one of the most powerful supercomputers in the world, Recursion is uniting technology, biology and chemistry to advance the future of medicine. Recursion is headquartered in Salt Lake City, where it is a founding member of BioHive, the Utah life sciences industry collective. Recursion also has offices in Toronto, Montréal and the San Francisco Bay Area. Learn more at www.Recursion.com, or connect on Twitter and LinkedIn. Media ContactMedia@Recursion.comInvestor ContactInvestor@Recursion.comRecursion Pharmaceuticals, Inc. Condensed Consolidated Statements of Operations (unaudited)(in thousands, except share and per share amounts) Three months ended March 31,20232022RevenueOperating revenue$12,134 $5,299 Grant revenue— 34 Total revenue12,134 5,333 Operating costs and expensesCost of revenue12,448 7,799 Research and development46,677 32,441 General and administrative22,874 21,074 Total operating costs and expenses81,999 61,314 Loss from operations(69,865)(55,981)Other income, net4,538 2 Net loss$(65,327)$(55,979)Per share dataNet loss per share of Class A and B common stock, basic and diluted$(0.34)$(0.33)Weighted-average shares (Class A and B) outstanding, basic and diluted191,618,238 170,690,392 Recursion Pharmaceuticals, Inc. Condensed Consolidated Balance Sheets (unaudited)(in thousands) March 31,December 31, 20232022Assets Current assets Cash and cash equivalents$473,145 $549,912 Restricted cash1,311 1,280 Other receivables2,057 2,753 Other current assets15,612 15,869 Total current assets492,125 569,814 Restricted cash, non-current7,920 7,920 Property and equipment, net90,004 88,192 Operating lease right-of-use assets35,116 33,255 Intangible assets, net1,318 1,306 Goodwill801 801 Other assets, non-current82 — Total assets$627,366 $701,288 Liabilities and stockholders’ equityCurrent liabilitiesAccounts payable$4,247 $4,586 Accrued expenses and other liabilities25,041 32,904 Unearned revenue57,761 56,726 Notes payable661 97 Operating lease liabilities4,440 5,952 Total current liabilities92,150 100,265 Unearned revenue, non-current57,091 70,261 Notes payable, non-current1,179 536 Operating lease liabilities, non-current46,771 44,420 Total liabilities197,191 215,482 Commitments and contingenciesStockholders’ equityCommon stock (Class A and B) 2 2 Additional paid-in capital1,135,056 1,125,360 Accumulated deficit(704,883)(639,556)Total stockholders’ equity430,175 485,806 Total liabilities and stockholders’ equity $627,366 $701,288 Forward-Looking StatementsThis document contains information that includes or is based upon "forward-looking statements" within the meaning of the Securities Litigation Reform Act of 1995, including, without limitation, those regarding the timing and completion of the Cyclica and Valence acquisitions and the outcomes and benefits expected from such acquisitions; early and late stage discovery, preclinical, and clinical programs; licenses and collaborations, including option exercises by partners and additional partnerships; prospective products and their potential future indications and market opportunities; Recursion OS and other technologies; business and financial plans and performance, including cash runway; and all other statements that are not historical facts. Forward-looking statements may or may not include identifying words such as “plan,” “will,” “expect,” “anticipate,” “intend,” “believe,” “potential,” “could,” “continue,” and similar terms. These statements are subject to known or unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied in such statements, including but not limited to: challenges inherent in pharmaceutical research and development, including the timing and results of preclinical and clinical programs, where the risk of failure is high and failure can occur at any stage prior to or after regulatory approval due to lack of sufficient efficacy, safety considerations, or other factors; our ability to leverage and enhance our drug discovery platform; our ability to obtain financing for development activities and other corporate purposes; the success of our collaboration activities; our ability to obtain regulatory approval of, and ultimately commercialize, drug candidates; our ability to obtain, maintain, and enforce intellectual property protections; cyberattacks or other disruptions to our technology systems; our ability to attract, motivate, and retain key employees and manage our growth; inflation and other macroeconomic issues; and other risks and uncertainties such as those described under the heading “Risk Factors” in our filings with the U.S. Securities and Exchange Commission, including our most recent Quarterly Report on Form 10-Q and our Annual Report on Form 10-K. All forward-looking statements are based on management’s current estimates, projections, and assumptions, and Recursion undertakes no obligation to correct or update any such statements, whether as a result of new information, future developments, or otherwise, except to the extent required by applicable law. |
0001679688-23-000084:digitalbridge2q2023earni.htm | 0001679688-23-000084 | 1,679,688 | 1,679,688 | DigitalBridge Group, Inc. (DBRG, DBRG-PH, DBRG-PI, DBRG-PJ) (CIK 0001679688) | ['DBRG', 'DBRG-PH', 'DBRG-PI', 'DBRG-PJ'] | 8-K | 8-K | 2023-08-04 | 2023-08-04 | 001-37980 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-37980&action=getcompany | 231,142,297 | EX-99.1 | EX-99.1 | 2.02,9.01 | https://www.sec.gov/Archives/edgar/data/1679688/000167968823000084 | https://www.sec.gov/Archives/edgar/data/1679688/000167968823000084/0001679688-23-000084-index.html | https://www.sec.gov/Archives/edgar/data/1679688/000167968823000084/digitalbridge2q2023earni.htm | EX-99.1 2 digitalbridge2q2023earni.htm EX-99.1 digitalbridge2q2023earni 1 EARNINGS PRESENTATION 2Q 2023 August 4, 2023 2 CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS This presentation may contain forward-looking statements within the meaning of the federal securities laws, including statements relating to (i) our strategy, outlook and growth prospects, (ii) our operational and financial targets and (iii) general economic trends and trends in our industry and markets. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In some cases, you can identify forward-looking statements by the use of forward-looking terminology such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” or “potential” or the negative of these words and phrases or similar words or phrases which are predictions of or indicate future events or trends and which do not relate solely to historical matters. You can also identify forward-looking statements by discussions of strategy, plans or intentions. Forward-looking statements involve known and unknown risks, uncertainties, assumptions and contingencies, many of which are beyond the Company’s control, and may cause the Company’s actual results to differ significantly from those expressed in any forward-looking statement. Factors that might cause such a difference include, without limitation, our ability to grow our business by raising capital for our funds and the companies that we manage; whether run rate metrics presented herein are reflective of actual annual data; our position as an owner and investment manager of digital infrastructure and our ability to manage any related conflicts of interest; adverse changes in general economic and political conditions, including those resulting from supply chain difficulties, inflation, interest rate increases, a potential economic slowdown or a recession; our ability to deconsolidate our Operating segment; the anticipated impact of artificial intelligence developments on our business; our exposure to business risks in Europe, Asia and other foreign markets; our ability to obtain and maintain financing arrangements, including securitizations, on favorable or comparable terms or at all; the ability of our managed companies to attract and retain key customers and to provide reliable services without disruption; the reliance of our managed companies on third-party suppliers for power, network connectivity and certain other services; our ability to increase assets under management ("AUM") and expand our existing and new investment strategies; our ability to integrate and maintain consistent standards and controls, including our ability to manage our acquisitions in the digital infrastructure and investment management industries effectively; our business and investment strategy, including the ability of the businesses in which we have significant investments to execute their business strategies; performance of our investments relative to our expectations and the impact on our actual return on invested equity, as well as the cash provided by these investments and available for distribution; our ability to deploy capital into new investments consistent with our investment management strategies; the availability of, and competition for, attractive investment opportunities and the earnings profile of such new investments; our ability to achieve any of the anticipated benefits of certain joint ventures, including any ability for such ventures to create and/or distribute new investment products; our expected hold period for our assets and the impact of any changes in our expectations on the carrying value of such assets; the general volatility of the securities markets in which we participate; the market value of our assets; interest rate mismatches between our assets and any borrowings used to fund such assets; effects of hedging instruments on our assets; the impact of economic conditions on third parties on which we rely; the impact of any security incident or deficiency affecting our systems or network or the system and network of any of our managed companies or service providers; any litigation and contractual claims against us and our affiliates, including potential settlement and litigation of such claims; our leverage and our ability to reach our targeted level of leverage by year-end; the impact of legislative, regulatory and competitive changes, including those related to privacy and data protection; the impact of our transition from a real estate investment trust ("REIT") to a taxable C corporation for tax purposes, and the related liability for corporate and other taxes; whether we will be able to utilize existing tax attributes to offset taxable income to the extent contemplated; our ability to maintain our exemption from registration as an investment company under the Investment Company Act of 1940, as amended (the “1940 Act”); changes in our board of directors or management team, and availability of qualified personnel; our ability to make or maintain distributions to our stockholders; fluctuations in foreign currency and exchange rates and our understanding of and ability to successfully navigate the competitive landscape in which we and our managed companies operate and other risks and uncertainties, including those detailed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 and Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2023, each under the heading “Risk Factors,” as such factors may be updated from time to time in the Company’s subsequent periodic filings with the U.S. Securities and Exchange Commission (“SEC”). All forward-looking statements reflect the Company’s good faith beliefs, assumptions and expectations, but they are not guarantees of future performance. Additional information about these and other factors can be found in the Company’s reports filed from time to time with the SEC. The Company cautions investors not to unduly rely on any forward-looking statements. The forward-looking statements speak only as of the date of this presentation. The Company is under no duty to update any of these forward-looking statements after the date of this presentation, nor to conform prior statements to actual results or revised expectations, and the Company does not intend to do so. This presentation is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any securities of the Company or any investment vehicle managed or advised thereby. This information is not intended to be indicative of future results. Actual performance of the Company may vary materially. The appendices herein contain important information that is material to an understanding of this presentation and you should read this presentation only with and in context of the appendices. 3 IMPORTANT NOTE REGARDING NON-GAAP FINANCIAL MEASURES This presentation includes certain “non-GAAP” supplemental measures that are not defined by generally accepted accounting principles, or GAAP, including certain of the financial metrics defined below, of which the calculations may differ from methodologies utilized by other companies for similar performance measurements, and accordingly, may not be comparable to those of other companies. This presentation includes forward-looking guidance for certain non-GAAP financial measures, including Adjusted EBITDA, FRE, and Run-Rate Fee Revenue. These measures will differ from net income, determined in accordance with GAAP, in ways similar to those described in the reconciliations of historical Adjusted EBITDA and FRE to net income. We do not provide guidance for net income, determined in accordance with GAAP, or a reconciliation of guidance for these measures to the most directly comparable GAAP measure because the Company is not able to predict with reasonable certainty the amount or nature of all items that will be included in net income. Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA): Adjusted EBITDA represents DE adjusted to exclude the following items attributable to the operating company: interest expense as included in DE, income tax expense or benefit as included in DE, preferred stock dividends, equity method earnings, placement fee expense, principal investment income or loss as included in DE, placement fee expense, our share of incentive fees and realized carried interest allocation or reversal net of associated compensation expense or reversal, certain investment costs for capital raising that are not reimbursable by our sponsored funds, and capital expenditures as deducted in DE. Adjusted EBITDA is presented on a reportable segment basis and for the Company in total. We believe that Adjusted EBITDA is a meaningful supplemental measure of performance because it presents the Company’s operating performance independent of its capital structure, leverage and non-cash items, which allows for better comparability against entities with different capital structures and income tax rates. However, because Adjusted EBITDA is calculated before recurring cash charges including interest expense and taxes and does not deduct capital expenditures or other recurring cash requirements, its usefulness as a performance measure may be limited. Assets Under Management (“AUM”): Assets owned by the Company’s balance sheet and assets for which the Company and its affiliates provide investment management services, including assets for which the Company may or may not charge management fees and/or performance allocations. Balance sheet AUM is based on the undepreciated carrying value of digital investments and the impaired carrying value of non digital investments as of the report date. Investment management AUM is based on the cost basis of managed investments as reported by each underlying vehicle as of the report date. AUM further includes uncalled capital commitments, but excludes DBRG OP’s share of non wholly-owned real estate investment management platform’s AUM. The Company's calculations of AUM may differ from the calculations of other asset managers, and as a result, this measure may not be comparable to similar measures presented by other asset managers. DigitalBridge Operating Company, LLC (“DBRG OP”): The operating partnership through which the Company conducts all of its activities and holds substantially all of its assets and liabilities. DBRG OP share excludes noncontrolling interests in investment entities. Fee Related Earnings (“FRE”): FRE is calculated as recurring fee income and other income inclusive of cost reimbursements (related to administrative expenses), and net of compensation expense (excluding equity-based compensation, carried interest and incentive compensation) and administrative expense (excluding placement fees and straight-line rent). FRE is used to assess the extent to which direct base compensation and operating expenses are covered by recurring fee revenues in the digital investment management business. We believe that FRE is a useful supplemental performance measure because it may provide additional insight into the profitability of the overall digital investment management business. FRE is measured as Adjusted EBITDA for the IM segment, adjusted to reflect the Company’s IM segment as a stabilized business by excluding FRE associated with new investment strategies that have 1) not yet held a first close raising FEEUM; or 2) not yet achieved break-even Adjusted EBITDA only for investment products that may be terminated solely at the Company’s discretion, collectively referred to as “Start-up FRE.” The Company evaluates new investment strategies on a regular basis and excludes Start-Up FRE from FRE until such time a new strategy is determined to form part of the Company’s core investment management business. Distributable Earnings (“DE”): DE is an after-tax measure that differs from GAAP net income or loss from continuing operations as a result of the following adjustments, including adjustment for our share of similar items recognized by our equity method investments: transaction-related costs; restructuring charges (primarily severance and retention costs); realized and unrealized gains and losses, except realized gains and losses from digital assets in Corporate and Other; depreciation, amortization and impairment charges; debt prepayment penalties, and amortization of deferred financing costs, debt premiums and debt discounts; our share of unrealized carried interest, net of associated compensation expense; equity-based compensation expense; equity method earnings from BRSP which is replaced with dividends declared by BRSP; effect of straight-line lease income and expense; impairment of equity investments directly attributable to decrease in value of depreciable real estate held by the investee; non-revenue enhancing capital expenditures; income tax effect on certain of the foregoing adjustments. Income taxes included in DE reflect the benefit of deductions arising from certain expenses that are excluded from the calculation of DE, such as equity-based compensation, as these deductions do decrease actual income tax paid or payable by the Company in any one period. There are no differences in the Company’s measurement of DE and AFFO. Therefore, previously reported AFFO is the equivalent to DE and prior period information has not been recast. DE is presented on a reportable segment basis and for the Company in total. We believe that DE is a meaningful supplemental measure as it reflects the ongoing operating performance of our core business by generally excluding items that are non-core operational in nature and allows for better comparability of operating results period-over- period and to other companies in similar lines of business. Fee Related Earnings Margin (“FRE Margin”): FRE Margin is calculated by dividing FRE by management fee revenues, excluding one-time catch-up fees and/or incentives fees. Fee-Earning Equity Under Management (“FEEUM”): Equity for which the Company and its affiliates provides investment management services and derives management fees and/or performance allocations. FEEUM generally represents the basis used to derive fees, which may be based on invested equity, stockholders’ equity, or fair value pursuant to the terms of each underlying investment management agreement. The Company's calculations of FEEUM may differ materially from the calculations of other asset managers, and as a result, this measure may not be comparable to similar measures presented by other asset managers. Monthly Recurring Revenue (“MRR”): The Company defines MRR as revenue from ongoing services that is generally fixed in price and contracted for longer than 30 days. Run-Rate Fee Revenue: Calculated as FEEUM , inclusive of uncalled contractual commitments expected to be called within their commitment periods by investment vehicles that charge fees on invested capital once called, multiplied by the blended average fee rate as of the most recent reporting period. The Company’s calculations of Run-rate Investment Management Fee Revenues may not be achieved if all uncalled commitments are not called In evaluating the information presented throughout this presentation see definitions and reconciliations of non-GAAP financial measures to GAAP measures. For purposes of comparability, historical data in this presentation may include certain adjustments from prior reported data at the historical period. 4 DBRG REPORTS SECOND QUARTER 2023 RESULTS Boca Raton, August 4th, 2023 - DigitalBridge Group, Inc. (NYSE: DBRG) and subsidiaries (collectively, “DigitalBridge,” or the “Company”) today announced financial results for the second quarter ended June 30, 2023. The Company reported second quarter 2023 total revenues of $425 million, GAAP net loss attributable to common stockholders of $(22) million, or $(0.14) per share, and Distributable Earnings of $10 million, or $0.06 per share. Common and Preferred Dividends On August 1, 2023, the Company’s Board of Directors declared a cash dividend of $0.01 per common share to be paid on October 16, 2023 to shareholders of record at the close of business on September 30, 2023; and declared cash dividends with respect to each series of the Company’s cumulative redeemable perpetual preferred stock in accordance with the terms of such series, as follows: Series H preferred stock: $0.4453125 per share; Series I preferred stock: $0.446875 per share; and Series J preferred stock: $0.4453125 per share, which will be paid on October 16, 2023 to the respective stockholders of record on October 10, 2023. Second Quarter 2023 Conference Call The Company will conduct an earnings conference call and presentation to discuss the Second Quarter 2023 financial results on Friday, August 4, 2023, at 10:00 a.m. Eastern Time (ET). The earnings presentation will be broadcast live over the Internet and a webcast link can be accessed on the Shareholders section of the Company’s website at ir.digitalbridge.com/events. To participate in the event by telephone, please dial (877) 407-4018 ten minutes prior to the start time (to allow time for registration). International callers should dial (201) 689-8471. For those unable to participate during the live call, a replay will be available starting August 4, 2023, at 3:00 p.m. ET. To access the replay, dial (844) 512-2921 (U.S.), and use passcode 13739028. International callers should dial (412) 317-6671 and enter the same conference ID number. We continued to advance our strategic position as a leading global digital infrastructure asset manager during the second quarter with strong capital formation and progress on the deconsolidation of our operating segment. That progress keeps us on track to achieve our key strategic priorities for 2023. At the portfolio level, we continued to invest and support the growing demand for compute and connectivity driven by increasingly powerful AI and cloud thematics. Marc Ganzi Chief Executive Officer “ ” 5 DIGITALBRIDGE SECOND QUARTER 2023 GAAP RESULTS Three Months Ended June 30, 2023 2022 Revenues Fee income $ 65,742 $ 44,318 Carried interest allocation (reversal) 79,254 110,779 Principal investment income (loss) 30,409 16,444 Property operating income 234,753 234,251 Other income 14,775 10,840 Total revenues 424,933 416,632 Expenses Property operating expense 98,231 97,290 Interest expense 56,022 46,388 Investment expense 5,253 7,187 Transaction-related costs 1,113 2,756 Placement fees 3,653 — Depreciation and amortization 149,562 155,352 Compensation expense Compensation expense - cash and equity-based 82,992 52,792 Compensation expense (reversal) - carried interest and incentive fee 36,076 49,069 Administrative expenses 25,763 26,353 Total expenses 458,665 437,187 Other income (loss) Other gain (loss), net (11,537) (46,256) Income (loss) before income taxes (45,269) (66,811) Income tax benefit (expense) (3,269) 2,518 Income (loss) from continuing operations (48,538) (64,293) Income (loss) from discontinued operations (3,978) (3,788) Net income (loss) (52,516) (68,081) Net income (loss) attributable to noncontrolling interests: Redeemable noncontrolling interests (2,441) (14,327) Investment entities (39,667) (29,102) Operating Company (1,745) (3,090) Net income (loss) attributable to DigitalBridge Group, Inc. (8,663) (21,562) Preferred stock redemption (927) — Preferred stock dividends 14,675 15,759 Net income (loss) attributable to common stockholders $ (22,411) $ (37,321) Income (loss) per share—basic Income (loss) from continuing operations per share—basic $ (0.12) $ (0.22) Net income (loss) attributable to common stockholders per share—basic $ (0.14) $ (0.24) Income (loss) per share—diluted Income (loss) from continuing operations per share—diluted $ (0.12) $ (0.22) Net income (loss) attributable to common stockholders per share—diluted $ (0.14) $ (0.24) Weighted average number of shares Basic 158,089 153,983 Diluted 158,089 153,983 CONSOLIDATED STATEMENT OF OPERATIONS (In thousands, except per share data, unaudited) 6 AGENDA BUSINESS UPDATES E C T IO N 1 FINANCIAL RESULTSS E C T IO N 2 S E C T IO N 3 EXECUTING THE DIGITAL PLAYBOOK 7 1 BUSINESS UPDATE 8 PROGRESS ON OUR 2023 PRIORITIES: THE 3 THINGS THAT MATTER In 2Q23, DigitalBridge made significant progress towards achieving its key 2023 priorities, including strong capital formation, operating segment deconsolidation, and support for the continued growth of its portfolio companies. ▪ Strong Growth: 2Q23 IM Fee Revenue increased 47% YoY and FRE increased 35%, driven by higher FEEUM from credit, core, and co-invest strategies and a full quarter contribution from the InfraBridge acquisition. ▪ New Capital Formation: DigitalBridge raised $2.7B(1) since last quarter, driven by initial commitments to the latest DBP Series and successful co-invest syndications. LP interest in digital infrastructure remains robust. ▪ Guidance On Track: DBRG remains on track to meet its fundraising targets for the year. FUNDRAISE ▪ Deconsolidation: DBRG expects to receive commitments sufficient to deconsolidate DataBank by the end of August 2023 which will generate at least $45M(2) of incremental proceeds to balance sheet. Vantage SDC remains on track for successful deconsolidation during 2023. ▪ Additional Alt Manager Reporting – additional disclosures and reporting framework consistent with Alt Manager peers (investment management segment detail) SIMPLIFY ▪ Portfolio Wide Growth: Portfolio company MRR continued to grow across all verticals in the DBRG ecosystem ▪ Capex Deployment: Over $4B deployed YTD at attractive development yields across our PortCos ▪ Data Centers: Early innings in Generative AI demand, with initial uplift seen in strong YoY pipeline growth DRIVE PORTCO PERFORMANCE Note: There can be no assurance that actual amounts will not be materially higher or lower than these expectations. Readers should refer to the discussion in the Cautionary Statement Regarding Forward-Looking Statements section at the beginning of this presentation. (1) Inclusive of all capital committed to DigitalBridge managed investment vehicles as of July 31, 2023 (2) Assumes DBRG pro-rata participation. 9 $1.2 $0.9 $0.6 NEW CAPITAL FORMATION DigitalBridge has raised $3.4B in new fee-earning equity YTD(1), up $2.7B since last quarter, driven principally by initial commitments to the latest DBP Series (which will begin generating fees following an initial close later in 2023) and new co-invest capital. DBRG remains on track to meet its FY 2023 fundraising targets. (1) Inclusive of all capital committed to DigitalBridge managed investment vehicles YTD, measured as of July 31, 2023. Note: There can be no assurance that actual amounts will not be materially higher or lower than these expectations. Readers should refer to the discussion in the Cautionary Statement Regarding Forward- Looking Statements section at the beginning of this presentation. YTD 2023(1) 2023 FY Target 1Q23 $2.9 2H23 $0.7 R A N G E$8.0 midpoint $0.7 $3.4 $9.5 $6.5 ($ in Billions) DBP Series Co-Invest Core, Credit, Liquid $2.7 10 $11.0 $11.2 $11.3 $4.7 $7.0 $8.0 $5.1 $5.1 $2.4 $2.2 $2.3 $0.9 $2.2 $2.4 $19.0 $27.7 $29.1 2Q22 1Q23 2Q23 ASSETS & FEE EARNING EQUITY UNDER MANAGEMENT Fee-Earning Equity Under Management (FEEUM) increased $10.1B, or 53% YoY, to $29.1B powered by organic capital formation and contribution from the InfraBridge acquisition. DBP Series Co-Invest Permanent Capital Vehicles Core, Liquid, Credit Note: Past performance is not indicative of future results or indicative of how other DigitalBridge investments will perform. Please see slide 2 for additional information. AUM(1)FEEUM InfraBridge +53% YoY Growth +51% YoY GrowthFEEUM growth is Key Revenue and Earnings Driver (1) See definition of AUM on page 3 of this presentation. DBRG Balance Sheet ($ in Billions) ($ in Billions) $16.7 $19.4 $20.0 $20.2 $29.1 $30.2 $7.4 $7.7 $8.0 $8.4 $8.9 $1.0 $3.0 $3.3 $2.6 $1.7 $1.8 $47.9 $69.3 $72.2 2Q22 1Q23 2Q23 11 DECONSOLIDATION UPDATE – DATABANK RECAP DBRG expects to finalize commitments to the DataBank recapitalization sufficient to deconsolidate DataBank from DBRG’s financial statements by the end of August 2023, and complete a final close on the recap by the end of 3Q23. VANTAGE SDC DECONSOLIDATIONDATABANK DECONSOLIDATION 10% Threshold Total Implied Value Proceeds To Date From Recap Expected Incremental Q3 Proceeds Remaining Implied Value <10% Ownership (expected) • Upon the closing of at least $208 million of recap commitments that are expected by the end of August 2023, DBRG ownership will decrease to less than 10% and DBRG will receive pro rata proceeds of approximately $45 million.(1) • Recapitalization expected to close during 3Q23; following such close, DBRG financial statements will not consolidate DataBank financials beginning in 4Q23. • DBRG’s remaining ownership stake will be held under Investments on the balance sheet; future adjustments to the asset’s fair market value will flow through Principal Investment Income.(2) DigitalBridge remains committed to successfully deconsolidating Vantage SDC by the end of 2023. Stay tuned… $905M <$435M (1) Assumes DBRG pro-rata participation. (2) Following deconsolidation, DBRG’s equity stake in DataBank will be held under Investments on the balance sheet and for accounting purposes be treated similarly to other GP stakes DBRG holds in its commingled funds. Note: There can be no assurance that actual amounts will not be materially higher or lower than these expectations. Readers should refer to the discussion in the Cautionary Statement Regarding Forward-Looking Statements section at the beginning of this presentation. ($425M) (~$45M) 12 PORTFOLIO PERFORMANCE Powerful secular tailwinds, driving demand for compute and connectivity, continue to underpin positive performance across our diversified global portfolio. Ultimately portfolio performance drives returns. (1) The Company defines Monthly Recurring Revenue “MRR”, as revenue from ongoing services that is generally fixed in price and contracted for longer than 30 days. (2) Excludes companies acquired during or after 2Q23 or for which comparable data was not yet available. 2Q232Q22 TOWER PORTFOLIO SMALL CELLS/EDGE FIBER PORTFOLIO DATA CENTER PORTFOLIO 21.8% 15.4%21.4% Monthly Recurring Revenue ($)(1)(2) Note: Past performance is not indicative of future results or indicative of how other DigitalBridge investments will perform. Please see slide 2 for additional information. 0.6% DigitalBridge has continued to support the growing demand for compute and connectivity, with over $4B in PortCo Capex funded so far in 2023. >$4B YTD Supporting Portfolio Growth 13 2 FINANCIAL RESULTS 14 $47.9B $72.2B 2Q22 2Q23 $180.9M $275.3M 2Q22 2Q23 $19.0B $29.1B 2Q22 2Q23 $0.6M $10.0M 2Q22 2Q23 $25.5M $34.4M 2Q22 2Q23 $45.1M $66.5M 2Q22 2Q23 DIGITALBRIDGE’S SECOND QUARTER 2023 HIGHLIGHTS – KEY METRICS Fee Income – IM Segment Fee Related Earnings – IM Segment Distributable Earnings - Corporate FEEUM AUM Run Rate Fee Revenue(1) 47% 35% 15.6x 53% 51% 52% (1) Based on 6/30/22 and 6/30/23 FEEUM respectively, multiplied by the weighted average annual fee rate % and inclusive of capital raised for new products that have yet to begin charging fees and recurring business service fees. 15 SECOND QUARTER 2023 HIGHLIGHTS & KPIs Financial Highlights At share, DBRG shareholder metrics for the quarter ended June 30, 2023; ▪ Fee Income in the investment management segment was $66.5 million, up 47% year-over-year. ▪ Fee Related Earnings in the investment management segment (“IM FRE”) was $34.4 million, up 35% year-over-year. ▪ Distributable Earnings (“DE”) attributable to DBRG shareholders was $10.0 million, benefitting from growth in the investment management platform which has continued its positive trend. Capital Metrics ▪ Assets Under Management (“AUM”) of $72.2 billion, up 51% year-over-year. ▪ Fee Earning Equity Under Management (“FEEUM”) of $29.1 billion, up 53% year-over-year. ▪ New Capital Raised YTD(1) of $3.4 billion, driven principally by initial commitments to the latest DBP Series. ▪ Run-Rate Fee Revenue representing committed FEEUM at quarter end, multiplied by weighted average fee rate is $275 million(2). Corporate ▪ Liquidity as of June 30, 2023 is $505 million, including full availability on the Company’s $300 million VFN. ▪ Debt Reduction $200 million payoff of 2023 convertible notes, resulting in a 14% reduction in at-share debt. ▪ Capital Allocation during the quarter was approximately $223 million, including the payoff of the Company’s $200 million 2023 convertible notes and GP commitments alongside existing investment funds. ▪ Regular Dividend of $0.01 per share of common stock was declared for the quarter. (1) The reported Capital Raised YTD, is inclusive of all capital committed to DigitalBridge managed investment vehicles YTD, measured as of August 3, 2022 and July 31, 2023, respectively. (2) Based on 6/30/23 FEEUM respectively, multiplied by the weighted average annual fee rate % and inclusive of capital raised for new products that have yet to begin charging fees and recurring business service fees. 16 TOTAL COMPANY 2Q22 2Q23 % Change YOY 2Q22 LTM 2Q23 LTM % Change YOY Fee Income $44.3 $65.7 +48% $193.4 $210.4 +9% Carried Interest (realized and unrealized) 110.8 79.3 (28%) 168.0 323.1 +92% Principal Investment Income 16.4 30.4 +85% 88.6 7.4 (92%) Property Operating Income 234.3 234.8 +0% 821.5 956.4 +16% Interest & Other Income 10.8 14.8 +36% 40.0 47.5 +19% Consolidated Revenues $416.6 $424.9 +2% $1,311.5 $1,544.9 +18% DBRG Pro Rata Share of Revenues $133.4 $176.8 +32% $426.1 $581.2 +36% Adjusted EBITDA $30.9 $42.9 +39% $90.0 $125.4 +39% Distributable Earnings ("DE") $0.6 $10.0 +1561% ($21.0) $20.6 N/M Distributable Earnings / Share $0.00 $0.06 ($0.14) $0.11 N/M Fee Income was up significantly, 48%, YoY. At-share total revenue and Adjusted EBITDA were both up >30% over the prior year and DigitalBridge generated $10 million in Distributable Earnings during the quarter. CONSOLIDATED RESULTS (NON-GAAP) Note: All $ in millions 17 INVESTMENT MANAGEMENT ("IM") 2Q22 2Q23 % Change YOY 2Q22 LTM 2Q23 LTM % Change YOY Fee Income, excluding incentive fees $45.1 $66.5 +47% $191.3 $213.0 +11% Other Income 0.5 1.1 1.5 2.5 G&A (20.2) (33.1) (74.3) (100.8) Fee Related Earnings ("FRE") $25.5 $34.4 +35% $118.5 $114.6 (3%) Minority Holder Allocation of Adjusted EBITDA (4.7) – (34.1) – Fee Related Earnings ("FRE") at share $20.8 $34.4 +66% $84.4 $114.6 +36% FRE Margin (consolidated) 56.4% 51.8% (4.7%) 61.5% 53.2% (8.3%) Distributable Earnings Adjustments Realized Net Carried Interest (Loss) – (0.9) (0.0) 32.0 Realized Net Investment Income (Loss) – – – – Other IM Expenses & Taxes (6.5) (9.1) (30.9) (25.6) IM Segment Distributable Earnings ("DE") $14.3 $24.4 +71% $53.5 $121.1 +126% (1) During 2Q23, Fee Income increased 47% with additional FEEUM from new strategies and InfraBridge contributing to revenue growth. FRE at-share and segment-level distributable earnings were both up substantially YoY. FRE Margin was impacted by lower contribution margins at InfraBridge and expenses re-allocated from Start-Up G&A. INVESTMENT MANAGEMENT RESULTS (NON-GAAP) Note: All $ in millions (1) G&A excludes start-up FRE associated with new strategies, which is captured in Other IM Expenses & Taxes. (1) 18 Carried Interest Detail 2Q22 2Q23 % Change YoY Unrealized Carried Interest – Income $110.8 $79.3 Realized Carried Interest – Income – – Carried Interest – Income (as reported on GAAP Income Statement) $110.8 $79.3 (28%) Unrealized Carried Interest – Compensation Expense ($49.1) ($36.1) Realized Carried Interest – Compensation Expense – – Carried Interest – Compensation Expense ($49.1) ($36.1) (26%) Net Carried Interest (Unrealized and Realized)(1) $61.7 $43.2 (30%) INVESTMENT MANAGEMENT SEGMENT DETAIL (NON-GAAP) Other IM Expenses Detail 2Q22 2Q23 % Change YoY Startup Costs / New Product G&A ($2.3) ($1.2) Placement Fees $0.0 ($3.6) Other, at-share $0.2 $0.4 Allocated Securitization Interest ($2.4) ($2.3) Income Tax Benefit (expense) ($2.0) ($2.4) Total Other IM Expenses, net ($6.5) ($9.1) +40% New additional disclosure designed to simplify analysis of realized vs. unrealized carried interest allocations and associated expenses. Other IM Expense Detail captures expenses which impact segment-level DE. (1) Net Carried Interest includes investment team compensation expense but excludes non-controlling interest share of carried interest attributable to pre-acquisition legacy ownership and Wafra. 19 OPERATING 2Q22 2Q23 % Change YOY 2Q22 LTM 2Q23 LTM % Change YOY Revenues $40.3 $27.6 (32%) $141.7 $118.0 (17%) Expenses (22.6) (15.3) (80.7) (66.4) Adjusted EBITDA $17.7 $12.3 (30%) $61.0 $51.5 (16%) Interest & Other Expenses (7.1) (6.2) (25.9) (25.4) Maintenance Capex (2.6) (0.9) (6.4) (5.7) AFFO / Distributable Earnings "DE" $8.0 $5.2 (36%) $28.7 $20.5 (29%) EBITDA Margin 43.8% 44.6% +0.8% 43.1% 43.7% +0.6% Ownership 17% 12% OPERATING SEGMENT RESULTS (NON-GAAP) Note: All $ in millions Operating Segment revenues and earnings declined YoY due to lower DBRG ownership of businesses in this segment. Notably, since 2Q22, progress on the DataBank recap lowered DBRG ownership from 22% to 11%. Excluding the impact of the ownership reduction and certain 1x items, consolidated revenue was up 6.0% and Adj. EBITDA was 7.2%. YoY reduction due to sale of ownership interests in DataBank; excluding sale EBITDA was up 7.2%. 20 $275M Run Rate Fee Revenue CONSISTENT INVESTMENT MANAGEMENT GROWTH Note: There can be no assurance that actual amounts will not be materially higher or lower than these expectations. Readers should refer to the discussion in the Cautionary Statement Regarding Forward-Looking Statements section at the beginning of this presentation. (1) Based on 6/30/23 FEEUM multiplied by the weighted average annual fee rate % and inclusive of capital raised for new products that have yet to begin charging fees and recurring business service fees. Run-Rate Fee Revenue is calculated by multiplying committed FEEUM as of the referenced date by the average annual fee rate % to provide an indication of future expected revenue DBRG SHARE EXCLUDES 31.5% MINORITY INTEREST FOR PERIODS PRIOR TO MAY 2022 CONVERSION EXCLUDES 1X ITEMS Investment management segment has continued to grow consistently with ‘lower left to upper right trajectory’. Run-Rate Fee Revenue, which assumes full deployment of committed capital, continued to increase with contributions from new capital formed during the quarter. Annualized Fee Revenue Annualized IM Segment FRE (1) $85M $94M $106M $120M $148M $182M $181M $237M $266M $48M $53M $60M $73M $83M $100M $97M $138M $138M 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 21 BALANCE SHEET PROFILE Assets GP Investment in DBP Series $294 GP Investments in Other DBRG Offerings (Credit, Core, Infrabridge, Liquid, Ventures) 324 GP Investment Total $618 Operating Net Carrying Value(1) 490 Corporate Cash 205 Key Corporate Assets $1,313 Current Liquidity (Corporate Cash + VFN Availability) $505 Capitalization Primary assets are GP stakes, Operating Segment Net Equity Value and Corporate Cash. DigitalBridge continues to maintain strong liquidity levels. All figures as of 6/30/23, unless otherwise noted, $ in millions (1) Represents DBRG Share of investment cost basis & additional capital expenditures, less unpaid principal balance; does not reflect current market value of investments Investment Level Debt $630 $5,149 3.7% Corporate Debt Exchangeable Notes ($78M ‘25) $78 $78 5.8% Securitized Notes $300 $300 3.9% Revolver (VFN; $300M Available) - - n/a Total Corporate Debt $378 $378 4.3% Preferred Stock $822 7.1% Blended Avg. CostConsolidated DBRG Pro Rata DigitalBridge consolidates financial statements of Operating Segment portfolio companies’ ’Investment Level Debt’ despite minority ownership position; Pro Rata column details DBRG-relevant share of debt, consolidated figures provided for ease of comparison to financial statements To Be Deconsolidated w/Operating Segment 22 3 EXECUTING THE DIGITAL PLAYBOOK EARLY IMPACTS OF GENERATIVE AI 23 GENERATIVE AI: ITS FUNDAMENTALLY DIFFERENT Generative AI infuses new layers of creativity into Traditional ‘analysis-centric’ AI, unlocking new capabilities Why it matters to DBRG?…Enterprise Software Platforms are being Rearchitected to Incorporate Generative AI Creativity Enhancements = More Compute CREATION Scan large datasets to identify potential drug candidates TRADITIONAL AI GENERATIVE AI Design entirely new molecules to treat diseases AI Generated Short Film Domain-specific LLMs for intuitive Q&A/Search Netflix Recommendation Engine Enhance Credit Risk Evaluation The Frost Pharma Media Financial Services 24 “ DigitalBridge Data Center Portfolio CEO This could be as big or bigger than the cloud “ GENERATIVE AI ADOPTION IS THE FASTEST ON RECORD ChatGPT represented ‘iPhone Moment’ for generative AI Sources: IBM Global AI Adoption Index 2022, IDC Worldwide Artificial Intelligence Spending Guide ~$300B(1) Cloud Services Market ~$300B+ We are in the early innnings AICLOUD AI IS A CLOUD-SCALE OPPORTUNITY Uber Telegram Spotify Pinterest Instagram Tiktok ChatGPT 2 months TIME IT TOOK TO REACH 100 MILLION MONTHLY USERS WORLD WIDE 25 1,250 1,000 750 500 250 0 2016 2018 2020 2022 2024 TOASTER NVDA P100 NVDA V100 NVDA A100 NVDA H100 INTC PONTE VECCHIO C H IP P O W E R [ W ] 1000B 100B 10B 1B 0.1B 0.01B 2018 2019 2020 2021 2022 2023 ELMo (94M) BERT-Large (340M) GPT-2 (1.5B) T5 (11B) Megatron-LM (8.3B) Turing-NLG (17.2B) GPT-3 (175B) Jurassicc-1 (178B) Megatron-Turing (530B) PaLM (540B) 20402038203620342032203020282026 0 500 1,000 1,500 8% CAGR1 25% CAGR2 T E R A W H A T T - H O U R S Power consumption (W) per chip(1) Model Size, in Billions of Parameters(2) Data Center Power Consumption (TWh) DATA CENTERS WILL NEED FAR MORE POWER CHIP POWER IS EXPLODING, … LARGE MODELS ARE GROWING EXPONENTIALLY,… By 2040, ~80% of all data center power is expected to be consumed by AI(2) GENERATIVE AI WORKLOADS ARE POWER HUNGRY Sources: (1) INTC, NVIDA, (2) AvidThink 26 CLOUD-TRAINED: GEN AI IS POWER HUNGRY Gen AI model training is compute-bound…more compute resources are tied to a better product. Access to digital infra in size, at the lowest total cost, is a key success factor. LOWER PRICE PER KW Access to Low-Cost Power is Priority LOWER COST HIGHER COST HIGHER LATENCY LOWER LATENCY ~50MW per facility ~200MW per facility HIGHER MW per facility(1) The Ability to Access and Invest in Significant MW Capacity Becomes Increasingly Relevant CLOUD - TRAINED AI models HIGHER POWER DENSITY per rack 10KW per rack 40.8 kW per rack2 10KW per rack 10KW per rack 10KW per rack 10KW per rack Power Density and Efficiency Become Increasingly Relevant Sources: (1) DigitalBridge estimates, (2) NVIDA, 27 EDGE DELIVERED: INTELLIGENCE LIVES ACROSS THE NETWORK AI Inference, the process of actually using a cloud-trained AI model, happens at the edge. Here, trained AI models and the data to support the AI inference process must be deployed close to enterprises and consumers in a cost-efficient, latency - sensitive manner. Expect this to be more relevant in the next 2-3 years as applications leveraging GenAI proliferate. HYPERSCALE Data Centers EDGE DATA CENTERS MOBILE TOWERS SMALL CELLS FIBER Ecosystem 28 CLOUD TRAINED/EDGE DELIVERED: DBRG PORTFOLIO IS WELL POSITIONED TO MEET GROWING DEMAND FOR AI WORKLOADS With one of the ‘newest fleets’ in the business, DigitalBridge’s global data center portfolio operates from the core to the edge of the network, serving well-defined workload profiles across an increasingly hybrid compute landscape. Public CLOUD Hyperscale Private CLOUD Enterprise Interconnection Edge H yb ri d C o m p u te Global Hyperscale Enterprise Applications Content Distribution Data Center CLOUD - TRAINED Data Center EDGE - DELIVERED 29 DIGITALBRIDGE IS AT THE INTERSECTION OF AI SUPPLY AND DEMAND We are in the very early innings of the Generative AI-driven demand cycle, but already see tangible evidence manifesting in our data center pipelines and in conversations with our largest institutional investors. REPORTS FROM THE FIELD “ “ DigitalBridge Portfolio, CEO • Global LPs just getting up to speed on implications of GenAI for digital infra • DBRG thought leadership in sector driving engagement Investor Allocations to Digital Infra • DBRG data center pipelines up 84% over prior year • Industry-wide leasing of >2GW over the last 90 days in the US (10GW market)(1) Data Center Lease-Up Image generated by AI SUPPLY DEMAND We see an emerging class of new ‘model-as-a-service’ and HPC hosting providers driving demand for data center space with high density requirements similar to hyperscale cloud. . Q: Who is the easiest to work with on leasing new capacity? A: The DigitalBridge companies…Vantage, DataBank, Switch. “ “ ““ We are seeing unprecedented demand for data center capacity from technology companies looking to deploy LLMs. “ “ DigitalBridge Portfolio, CEO DigitalBridge Portfolio, CEO DBRG investor diligence call with Specialty AI Cloud Provider (GPUaaS) We believe we are at an inflection point for data center capacity requirements, as years of planning with our customers on their AI needs are becoming a reality. Those needs could be significant; just a few years ago, a 24MW requirement from a customer for capacity was considered a large opportunity; with AI, we are seeing requirements for 10x that capacity. (1) TD Cowen Report: A Tsunami Of AI Demand Hits The Data Center Market; Expect 2023 To Set Record For Leasing 30 2023 CEO PRIORITIES: 3 THINGS THAT MATTER CEO 2023 Checklist Secular Tailwinds Around Connectivity – Big Growing TAM The Leading Management Team 25+ years Investing and Operating Digital Assets Converged Vision with Exposure to Entire Digital Ecosystem Focus on realization of high-growth digital infrastructure platform FUNDRAISE • $8B IN NEW CAPITAL • STRONG MOMENTUM AT DBP SERIES SIMPLIFY • DECONSOLIDATE DATABANK • VANTAGE SDC IS ‘UP NEXT’ PORTCO PERFORMANCE • CONTINUING TO DELIVER SOLID GROWTH ACROSS THE PORTFOLIO • EARLY STAGES OF AI-LED DEMAND WILL REQUIRE MORE BUILDING AND CAPITAL Note: There can be no assurance that actual amounts will not be materially higher or lower than these expectations. Readers should refer to the discussion in the Cautionary Statement Regarding Forward-Looking Statements section at the beginning of this presentation. ON TRACK 31 4 Q&A SESSION 32 5 APPENDIX 33 NON-GAAP RECONCILIATIONS ($ in thousands) 2Q23 1Q23 4Q22 3Q22 2Q22 1Q22 4Q21 3Q21 Net income (loss) attributable to common stockholders $ (22,411) $ (212,473) $ (19,356) $ (63,273) $ (37,321) $ (262,316) $ (20,686) $ 41,036 Net income (loss) attributable to noncontrolling common interests in Operating Company (1,745) (16,662) (1,583) (4,834) (3,090) (22,862) (1,946) 4,311 Net income ( loss ) at t r ibu table to common in teres ts in Operat ing Company and common s tockholders (24,156) (229,135) (20,939) (68,107) (40,411) (285,178) (22,632) 45,347 Adjus tments for Dis t ribu table Earn ings (DE) : Transaction-related and restructuring charges 7,823 18,391 23,772 23,249 29,300 24,668 29,977 19,501 Other (gain) loss, net (excluding realized gain or loss related to digital assets and fund investments in Corporate and Other) (15,990) 141,229 (16,050) (7,211) 15,134 130,224 (52,611) 11,319 Unrealized carried interest allocation, net of associated compensation expense (43,791) 18,240 (70,541) (1,228) (58,775) 13,078 (7,375) (27,953) Compensation expense - equity-based 25,937 16,339 7,549 18,619 9,344 18,720 19,416 9,038 Depreciation and amortization 149,263 141,220 148,508 146,810 153,548 130,597 145,031 137,602 Straight-line rent revenue and expense (1,860) (1,727) (7,063) (8,895) (2,956) (2,548) (1,986) (1,925) Amortization of acquired above- and below-market lease values, net 370 26 100 80 (10) (248) (333) (172) Impairment loss — — — — 12,184 23,802 (40,732) (8,210) Gain from sales of real estate — — — — — — (197) (514) Non-revenue enhancing capital expenditures (8,284) (8,564) (14,774) (10,992) (13,377) (1,372) (1,097) (1,349) Finance lease interest expense, debt prepayment penalties and amortization of deferred financing costs, debt premiums and discounts 7,578 15,523 5,572 5,627 5,238 98,465 36,685 7,651 Preferred share redemption (gain) loss (927) — — — — — 2,127 2,865 Income tax effect on certain of the foregoing adjustments — — 55 — — (589) 8,195 1,663 Adjustments attributable to noncontrolling interests in investment entities (88,604) (118,563) (69,810) (136,338) (91,676) (132,237) (105,150) (83,074) DE from discontinued operations 2,653 3,656 (4,772) 70,721 (16,940) (22,446) (20,954) (116,675) Af ter-tax DE $ 10,012 $ (3,365) $ (18,393) $ 32,335 $ 603 $ (5,064) $ (11,636) $ (4,886) W.A. Common Shares and OP Units 173,678 173,127 173,182 176,827 168,643 157,248 146,276 136,669 DE per bas ic share $ 0.06 $ (0.02) $ (0.11) $ 0.18 $ — $ (0.03) $ (0.08) $ (0.04) ($ in thousands) 2Q23 1Q23 4Q22 3Q22 2Q22 1Q22 4Q21 3Q21 Af ter-tax DE $ 10,012 $ (3,365) $ (18,393) $ 32,335 $ 603 $ (5,064) $ (11,636) $ (4,886) Interest expense included in DE 10,130 12,549 13,756 16,348 14,142 13,280 13,775 14,160 Income tax expense (benefit) included in DE 2,825 1,092 30,616 (7,839) (2,662) (6,849) 631 (12,638) Preferred dividends 14,675 14,676 14,765 15,283 15,759 15,759 16,139 17,456 Principal Investment Income (Loss) — (277) (1,860) (9,303) — (58) (157) (198) Placement fee expense 3,653 — — — — — 603 2,102 Realized carried interest allocation, net of associated compensation expense 883 (243) (12,377) (20,258) — 1,172 (1,092) (7) Investment costs and non-revenue enhancing capital expenditures in DE 706 1,194 1,252 2,531 3,086 2,023 2,463 1,402 Non pro-rata allocation of income (loss) to noncontrolling interests — — — — — 231 231 231 Adjus ted EBITDA $ 42,884 $ 25,626 $ 27,759 $ 29,097 $ 30,928 $ 20,494 $ 20,957 $ 17,622 34 NON-GAAP RECONCILIATIONS ($ in thousands) 2Q23 1Q23 4Q22 3Q22 2Q22 1Q22 4Q21 3Q21 IM net income ( loss ) $ 35,177 $ (2,804) $ 81,167 $ 46,065 $ 67,995 $ (9,143) $ 28,194 $ 39,272 Adjustments: Interest expense (income) 2,268 2,411 2,200 2,906 2,771 2,500 2,499 2,250 Investment expense, net of reimbursement — 51 156 230 (200) 138 (12) — Depreciation and amortization 11,039 6,409 6,135 5,369 5,375 5,276 5,928 8,242 Compensation expense—equity-based 17,099 3,898 6,639 2,654 3,361 3,191 2,011 2,046 Compensation expense—carried interest and incentive 36,076 (36,831) 92,738 80,831 49,069 (20,352) 25,921 31,736 Administrative expenses—straight-line rent (39) 77 1,541 68 76 159 75 74 Administrative expenses—placement agent fee 3,653 — — — — — 880 3,069 Transaction-related and restructuring charges 3,025 9,682 8,101 2,317 4,042 3,942 2,516 2,627 Incentive/performance fee income (79,425) 53,887 (176,944) (121,698) (110,779) 31,119 (5,720) (1,313) Principal investment income (loss) (1,604) (318) (2,072) (1,016) (1,016) (17) (31,608) (59,196) Other (gain) loss, net 3,608 (3,082) (248) 110 424 3,055 (52) (461) Income tax (benefit) expense 2,356 217 2,172 1,263 2,006 2,374 1,852 3,089 IM Adjus ted EBITDA $ 33,233 $ 33,597 $ 21,585 $ 19,099 $ 23,124 $ 22,242 $ 32,484 $ 31,435 Exclude: Start-up FRE of certain new strategies 1,165 915 2,643 2,399 2,335 2,362 2,306 2,224 IM FRE $ 34,398 $ 34,512 $ 24,228 $ 21,498 $ 25,459 $ 24,604 $ 34,790 $ 33,659 Wafra’s 31.5% ownership — — — — (4,700) (7,615) (11,033) (10,737) DBRG OP share of IM FRE $ 34,398 $ 34,512 $ 24,228 $ 21,498 $ 20,759 $ 16,989 $ 23,757 $ 22,922 2Q23 1Q23 4Q22 3Q22 2Q22 1Q22 4Q21 3Q21 Operat ing net income ( loss ) f rom cont inu ing operat ions (93,055) (97,942) (76,990) (93,772) (85,428) (74,141) (83,909) (71,822) Adjustments: Interest expense 51,285 59,984 45,222 40,770 37,233 36,184 35,144 29,839 Income tax (benefit) expense 499 (56) 509 (5) 161 (330) (1,941) 1,922 Depreciation and amortization 138,209 134,699 133,269 130,663 145,817 122,891 126,436 120,458 Straight-line rent expenses and amortization of above- and below-market lease intangibles (678) (1,221) (1,749) (2,827) (236) (377) 370 482 Compensation expense—equity-based 4,926 5,275 (95) 10,852 752 752 1,918 308 Installation services — — — — — — 2,097 (4,058) Transaction-related and restructuring charges 1,328 184 1,574 1,105 2,400 4,636 3,188 4,042 Other gain/loss, net (344) (1,769) (3,188) 4,418 534 (956) 1,226 (285) Operat ing Adjus ted EBITDA $ 102,170 $ 99,154 $ 98,552 $ 91,204 $ 101,233 $ 88,659 $ 84,529 $ 80,886 35 BALANCE SHEET ($ in thousands, except per share data) (unaudited) As of June 30, 2023 Consol idated Assets Cash and cash equivalents $ 426,883 Restricted cash 154,687 Investments 1,288,877 Real estate 6,178,467 Goodwill 923,112 Deferred leasing costs and intangible assets 1,052,822 Other assets 607,554 Due from affiliates 71,149 Assets held for disposition 53,514 Total assets $ 10,757,065 Liabi l i t ies Corporate debt $ 370,461 Non-recourse investment-level debt 5,025,845 Intangible liabilities 28,447 Other liabilities 1,158,427 Liabilities related to assets held for disposition 12,954 Total l iabi l i t ies 6,596,134 Commitments and contingencies Redeemable noncontrol l ing in teres ts 31,920 Equ ity Stockholders’ equity: Preferred stock, $0.01 par value per share; $827,711 liquidation preference; 250,000 shares authorized; 32,876 shares issued and outstanding 794,670 Common stock, $0.01 par value per share Class A, 237,250 shares authorized; 162,475 shares issued and outstanding 1,624 Class B, 250 shares authorized; 166 shares issued and outstanding 2 Additional paid-in capital 7,846,440 Accumulated deficit (7,201,651) Accumulated other comprehensive income (loss) 1,122 Total stockholders’ equity 1,442,207 Noncontrolling interests in investment entities 2,639,606 Noncontrolling interests in Operating Company 47,198 Total equity 4,129,011 Total l iabi l i t ies , redeemable noncontrol l ing in teres ts and equ ity $ 10,757,065 36 |
0001477932-24-002229:bglc_ex991.htm | 0001477932-24-002229 | 1,737,523 | 1,737,523 | BioNexus Gene Lab Corp (BGLC) (CIK 0001737523) | ['BGLC'] | 8-K | 8-K | 2024-04-18 | 2024-04-18 | 001-41750 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-41750&action=getcompany | 24,853,798 | EX-99.1 | PRESS RELEASE | 7.01,8.01,9.01 | https://www.sec.gov/Archives/edgar/data/1737523/000147793224002229 | https://www.sec.gov/Archives/edgar/data/1737523/000147793224002229/0001477932-24-002229-index.html | https://www.sec.gov/Archives/edgar/data/1737523/000147793224002229/bglc_ex991.htm | EX-99.1 2 bglc_ex991.htm PRESS RELEASE bglc_ex991.htmEXHIBIT 99.1 BioNexus Gene Lab Corp. Agrees to Invest RM 1.2 million in Ascension Innovation (AISB) to Advance Digital Health Innovation through AI adoption in Healthcare FOR IMMEDIATE RELEASE Kuala Lumpur, Malaysia - April 18, 2024 — BioNexus Gene Lab Corporation (NASDAQ: BGLC), a global leader in genomic diagnostics and healthcare technology, announces a strategic investment by its wholly owned subsidiary, MRNA Scientific Sdn Bhd, in Ascension Innovation Sdn Bhd (AISB), a privately held Malaysian company. This investment underscores BGLC’s commitment to advancing healthcare solutions through cutting-edge AI and predictive analytics. Background: ● MRNA Scientific Sdn Bhd: ○ A wholly-owned subsidiary of BGLC, MRNA Scientific specializes in blood-based genomic screening and dynamic genome profiling. MRNA’s innovative techniques enable early disease detection, personalized health management, and AI-driven insights. ● Ascension Innovation Sdn Bhd (AISB): ○ AISB is a trailblazer in healthcare technology, committed to enhancing patient experiences and outcomes. ○ Their flagship platform, aiCMS, empowers clinics, physicians, and patients to have better control over healthcare delivery through personalized patient health management. Strategic Investment and Handover Ceremony: · MRNA Scientific’s investment of RM 1.2 million (approx. USD $250k) will occur in two tranches. The Company has made an initial payment of approx. RM 100k, to be followed by a final payment of RM 1.1million, subject to a formal agreement. Our investment in AISB signifies a strategic move to accelerate healthcare innovation. The investment, funded internally, is expected to constitute an indicative equity of approximately 10% of the ordinary shares in AISB upon completion. · The infusion of capital will further AISB’s development and accelerate its AI rollout, including: o AI Assistance in the Clinic and on-App: The AI features include the integration of predictive and generative AI note taking/analysis and diagnosis aids via Large Language Model (LLM), voice transcription, and natural language assistance for service selection and bookings. o Predictive Analytics and Personalized Solutions: aiCMS will enhance early disease detection and personalized health recommendations in clinic and on-app, with the integration of in-app predictive health and wellness recommendations, medical translation services, and AI medical image analysis. 1 Ceremony Participants: · MRNA Scientific Directors: o Mr. Kenny Lai o Mr. CC Wong · AISB Directors: o Mr. Andrew Teng (Chief Executive Officer, CEO) o Mrs. Penny Attenbrough (Chief Strategy Officer, CSO) Expanding Market Reach: · MRNA Scientific and BGLC believe that this strategic investment will allow BGLC’s Blood-based Genomic Screening (BGS) liquid biopsies and other diagnostic services to be better marketed and accessible to a wider range of customers and healthcare providers, through integration into AISB’s aiCMS and the aiCARE app, enabling direct booking via healthcare providers and patients. · By combining MRNA’s expertise in genomics and AISB’s innovative platform, patients and healthcare professionals will benefit from advanced diagnostics and personalized care. Digital Health & AI Market: · The global digital health market size was estimated at USD 240.9 billion in 2023 and is projected to grow at a compound annual growth rate (CAGR) of 21.9% from 2024 to 20301. · The global market size for AI in Healthcare is expected to reach USD 187.7 billion by 2030 with a compound annual growth rate (CAGR) of 38.5% from 2024 to 20302. · Given the market size and opportunities in Digital Health and AI in Healthcare, MRNA and BGLC will closely consider opportunities to increase our participation in this market, including the potential to increase our investment in AISB and other technology platforms. AISB’s Projections: · Projected Revenue in Malaysia: o As stated in its investment documents, AISB anticipates substantial revenue growth driven by increased adoption of aiCMS, with projections reaching RM 75million collectively for 2024-2028. o The platform’s comprehensive suite of services positions it as a game-changer in the Malaysian healthcare landscape. o These revenue projections were part of the approved prospectus on the Securities Commission of Malaysia approved pitchIN Funding platform. 2 · Clinics and Service Providers: o AISB aims to onboard a significant number of healthcare and wellness providers, and corporations. o Since its recent launch, aiCMS has already proven market traction with over 30 healthcare providers and corporations in its initial segue into this broad market. · User Base and Health Records: o With 145,000+ registered users and 340,000+ individual health records in its database, the aiCMS platform is already making an impact in the market. o The platform’s scalability has the potential for exponential growth. Quotes: · Mr. Sam Tan, CEO, BioNexus Gene Lab Corporation: “Our investment in AISB reflects our belief in their transformative healthcare solutions. Together, we aim to revolutionize patient care through predictive and generative AI.” · Mr. Andrew Teng, CEO, Ascension Innovation Sdn Bhd: “We welcome MRNA Scientific’s support and look forward to leveraging their expertise. The future of healthcare lies in predictive analytics and personalized solutions.” The handover ceremony took place at the Apollo Men’s Wellness Centre in Starhill, Kuala Lumpur on April 18th, 2024, witnessed by Mr. Sam Tan, Chief Executive Officer of BioNexus Gene Lab Corp (BGLC). Photo: Mr. Kenny Lai and Mr. CC Wong handing over the Letter of Offer to Mr. Andrew Teng and Mrs. Penny Attenbrough at Apollo Men’s Wellness Centre, witnessed by the CEO of BioNexus Gene Lab Corp., Mr. Sam Tan (centre) 3 About BioNexus Gene Lab Corporation: BioNexus Gene Lab Corporation (NASDAQ: BGLC) is a global leader in RNA-based genomic diagnostics, committed to advancing personalized medicine and improving global health outcomes. For more information, visit BioNexus Gene Lab Corp.’s website: www.bionexusgenelab.com About Ascension Innovation Sdn Bhd: Ascension Innovation Sdn Bhd (AISB) is at the forefront of healthcare technology, driving innovation through its flagship platform, aiCMS. For more information, visit Ascension Innovation Sdn Bhd’s website: www.aisb.io 1 https://www.grandviewresearch.com/industry-analysis/digital-health-market 2 https://www.grandviewresearch.com/industry-analysis/artificial-intelligence-ai-healthcare-market 4 For media inquiries, please contact: Investor Relations BioNexus Gene Lab Corporation Email: ir@bionexusgenelab.com Disclaimer: This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations, forecasts, and assumptions involving risks and uncertainties that could cause actual outcomes and results to differ materially from those anticipated or projected. Forward-looking statements include, but are not limited to, statements regarding: · Projected revenue growth · Market trends and adoption rates · The potential impact of aiCMS on patient care These forward-looking statements are subject to risks, uncertainties, and other factors that may cause actual results to differ materially from the statements made. Such risks and uncertainties include, but are not limited to: 1. Market and Industry Risks: - Rapidly evolving healthcare technology landscape - Regulatory changes and compliance challenges - Competitive pressures and market dynamics 2. Operational and Financial Risks: - Execution of strategic initiatives - Financial performance and liquidity - Intellectual property protection 3. External Factors: - Global economic conditions - Public health crises (e.g., pandemics) - Political and geopolitical uncertainties 5 Investors are cautioned not to place undue reliance on these forward-looking statements. BGLC undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. The safe harbor provisions of the Private Securities Litigation Reform Act of 1995 protect forward-looking statements from litigation risks. Investors are encouraged to review BGLC's filings with the Securities and Exchange Commission (SEC) for a comprehensive understanding of the company's business, financial performance, and risk factors. BioNexus Gene Lab Corporation Tower B, Vertical Business Suite 10-2 No. 8, Jalan Kerinchi, Bangsar South, 59200, Kuala Lumpur Note to Editors: High-resolution images and additional information are available upon request. 6 |
0001628280-25-008139:ex991-fy25xq3earnings.htm | 0001628280-25-008139 | 1,577,526 | 1,577,526 | C3.ai, Inc. (AI) (CIK 0001577526) | ['AI'] | 8-K | 8-K | 2025-02-26 | 2025-02-26 | 001-39744 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-39744&action=getcompany | 25,670,065 | EX-99.1 | EX-99.1 | 2.02,9.01 | https://www.sec.gov/Archives/edgar/data/1577526/000162828025008139 | https://www.sec.gov/Archives/edgar/data/1577526/000162828025008139/0001628280-25-008139-index.html | https://www.sec.gov/Archives/edgar/data/1577526/000162828025008139/ex991-fy25xq3earnings.htm | EX-99.1 2 ex991-fy25xq3earnings.htm EX-99.1 DocumentC3 AI Announces Fiscal Third Quarter 2025 Financial Results26% Year-Over-Year Revenue GrowthDramatically Expanded Strategic Partnerships with Microsoft, AWS, and McKinsey QuantumBlackC3 Generative AI Makes History with First Ever Agentic AI Earnings CallREDWOOD CITY, Calif. — February 26, 2025 — C3.ai, Inc. (“C3 AI,” “C3,” or the “Company”) (NYSE: AI), the Enterprise AI application software company, today announced financial results for its fiscal third quarter ended January 31, 2025.“In the third quarter, C3 AI achieved significant milestones — expanding our global distribution network, advancing our leadership in agentic and generative AI, and delivering total revenue reaching $98.8 million, up 26% year-over-year,” said Thomas M. Siebel, Chairman and CEO, C3 AI. “We believe C3 AI is broadly credited with inventing Enterprise AI. We invented the model-driven agentic Enterprise AI platform. The operative law as it relates to patent law is first to file, and we filed our initial patent on December 16, 2022, and yes, the U.S. Patent for agentic generative AI was awarded to C3 AI. We have the technology, the management team, and the global partner ecosystem — through our dramatically expanded strategic partnerships with Microsoft, AWS, and McKinsey QuantumBlack — we believe we have all the elements in place to indelibly change the face of Enterprise AI.”Fiscal Third Quarter 2025 Financial Highlights•Revenue: Total revenue for the quarter was $98.8 million, an increase of 26% compared to $78.4 million one year ago.•Subscription Revenue: Subscription revenue for the quarter was $85.7 million, constituting 87% of total revenue, an increase of 22% compared to $70.4 million one year ago.•Subscription and Prioritized Engineering Services Revenue Combined: Subscription and prioritized engineering services revenue combined was $91.4 million, constituting 93% of total revenue, an increase of 18% compared to $77.5 million one year ago.•Gross Profit: GAAP gross profit for the quarter was $58.3 million, representing a 59% gross margin. Non-GAAP gross profit for the quarter was $68.2 million, representing a 69% non-GAAP gross margin.•Net Loss per Share: GAAP net loss per share was $(0.62). Non-GAAP net loss per share was $(0.12).•Cash Balance: $724.3 million in cash, cash equivalents, and marketable securities.Business HighlightsC3 AI gained momentum with Microsoft to drive increased pilot activity and broadened its global distribution network through a new strategic partnership with McKinsey & Company QuantumBlack.•The Company closed 66 agreements including 50 pilots, an increase of 72% year-over-year.•The Company entered into new and expanded agreements with the New York Power Authority, Worley, Flex, Sanofi, Nucor Corporation, Holcim, Shell, ExxonMobil, Liberty Coca-Cola Beverages, GSK, Quest Diagnostics, SmithRx, and Swift, among others.•The Company significantly expanded its footprint across State and Local Government, closing 21 agreements across Texas, California, Florida, New Jersey, Indiana, Colorado, Montana, Oregon, Georgia, New Mexico, and Arizona.•C3 AI’s Federal business had strong execution across the board. The Company entered into new and expanded agreements with the U.S. Department of Defense, the U.S. Air Force, the U.S. Navy, CAE USA, and the Missile Defense Agency.•C3 AI achieved “Awardable” status on the U.S. Department of Defense’s Chief Digital and Artificial Intelligence Office’s Tradewinds Solutions Marketplace, with the addition of C3 AI Decision Advantage and C3 AI Contested Logistics to Marketplace. The Tradewinds Solutions Marketplace accelerates the technology acquisition process for government agencies, showcasing the best-fit solutions and accelerating procurement.Partner NetworkC3 AI dramatically expanded its strategic partnerships, substantially strengthening its strategic partnership with Microsoft, expanding its relationship with AWS, and establishing a new important alliance with McKinsey & Company QuantumBlack.•In Q3, the Company closed 47 agreements through its partner network, an increase of 74% year-over-year.•Microsoft Azure Strategic Alliance◦C3 AI and Microsoft have, in short order, closed 28 agreements across 9 different industries, a 460% increase quarter-over-quarter. In addition, as of today, the companies are engaged in joint sales campaigns to 621 accounts in Europe, Asia, and North and South America.◦The joint qualified opportunity pipeline with Microsoft has increased by over 244% year-over-year.◦Sales cycles with Microsoft have shortened by nearly 20% quarter-over-quarter.◦In the current quarter, C3 AI and Microsoft are refining a highly tuned closely coordinated joint market sales and service motion. This includes alignment of strategic objectives and target accounts, a regular executive meeting cadence, and expansion of event and enablement activities including jointly hosting executive roundtables, virtual fireside chats, and three-day workshops, where we jointly engage hands-on with customers to bring working enterprise AI applications live in three days.•C3 AI and AWS dramatically expanded their strategic alliance. Under the expanded agreement, C3 AI and AWS will continue to jointly offer advanced Enterprise AI solutions, focusing on executing a robust go-to-market strategy.•C3 AI and McKinsey & Company announced a major new strategic alliance, initially showcased at World Economic Forum in Davos. This collaboration combines McKinsey QuantumBlack’s expertise in AI business transformation with C3 AI’s Enterprise AI application leadership to deliver high assurance AI-powered digital transformation at global scale. Customer SuccessWith C3 AI, customers across sectors continued to realize significant operational improvements and cost efficiencies — achieving increased reliability, optimized production schedules, optimized supply chain management and enhanced forecasting.•GSK, a leading global biopharma company, is significantly scaling out the C3 AI Demand Forecasting application across regions and products to enhance its supply chain, ensuring more accurate and efficient delivery of critical medicines and vaccines to patients worldwide. With this AI application, GSK can better predict and respond to market fluctuations, optimize its manufacturing operations, and improve its supply chain visibility to deliver significant cost savings.•Worley, an engineering and professional services company, has partnered with C3 AI and Microsoft to accelerate supply chain and value chain solutions for the technology solutions business. The initial scale solution focuses on small modular reactors (SMRs), which can be applied to the broader, complex nuclear industry. Worley is using the C3 AI Supply Chain Suite and C3 AI Asset Performance Suite to deliver increased efficiency and refined predictive capabilities for streamlined business practices for itself and to scale up across its lighthouse customers.C3 Generative AIC3 AI’s continuous innovation in generative AI to build its growing suite of secure, enterprise-grade solutions drives adoption across industries.•In Q3, the Company closed 20 C3 Generative AI pilots with Mars, Liberty Coca-Cola Beverages, the U.S. Department of Defense, and others, including various government agencies in New Jersey, Montana, and California.•C3 AI advances its technology stack with a breakthrough foundation time series embedding model. This innovation enables direct retrieval and reasoning on time series, streamlining the configuration of applications that require sensor data. Key benefits include the automatic identification of anomalies, and the cataloging and retrieval of relevant actions (e.g., relevant past work orders) or expert recommendations.•SmithRx, a next-generation pharmacy benefits manager, is using C3 Generative AI to streamline member support and enhance customer service. Using C3 Generative AI, call center operators are able to get access to key information, such as member history, drug eligibility, and lower-cost alternatives for customers from across multiple systems. The AI application has significantly reduced call handle times. This efficiency allows SmithRx focus to improve member outcomes, increase member satisfaction, and reduce costs.C3 Transform 2025C3 AI will be holding its sixth annual international user’s group conference, C3 Transform, in Boca Raton from March 18–20, 2025. The entire C3 AI board of directors will be actively participating, as will the entire executive team. Customers, partners, and prospects from multiple geographies and a multiplicity of industries will be actively engaged, including leaders across almost every sector. By bringing together C3 AI experts and early adopters who can speak to the value of Enterprise AI, C3 Transform gives customers, partners and prospects the chance to discover exactly how they can use Enterprise AI and generative AI securely and effectively. The C3 Transform agenda is available as part of our FY25-Q3 Investor Supplemental.Financial Outlook:The Company’s guidance includes GAAP and non-GAAP financial measures.The following table summarizes C3 AI’s guidance for the fourth quarter of fiscal 2025 and full-year fiscal 2025:(in millions)Fourth Quarter Fiscal 2025GuidanceFull Year Fiscal 2025 GuidanceTotal revenue$103.6 - $113.6$383.9 - $393.9Non-GAAP loss from operations$(30.0) - $(40.0)$(87.0) - $(97.0)A reconciliation of non-GAAP guidance measures to corresponding GAAP measures is not available on a forward-looking basis without unreasonable effort due to the uncertainty regarding, and the potential variability of, expenses that may be incurred in the future. Stock-based compensation expense-related charges, including employer payroll tax-related items on employee stock transactions, are impacted by the timing of employee stock transactions, the future fair market value of our common stock, and our future hiring and retention needs, all of which are difficult to predict and subject to constant change. We have provided a reconciliation of GAAP to non-GAAP financial measures in the financial statement tables for our historical non-GAAP results included in this press release. Our fiscal year ends April 30, and numbers are rounded for presentation purposes.Conference Call Details What:C3 AI Third Quarter Fiscal 2025 Financial Results Conference CallWhen:Wednesday, February 26, 2025Time:2:00 p.m. PT / 5:00 p.m. ETParticipant Registration:https://register.vevent.com/register/BId3a29d38315445ceac8b1dc16f2068e9 (live)Webcast:https://edge.media-server.com/mmc/p/h8imsh6j (live and replay)Investor Presentation DetailsAn investor presentation providing additional information and analysis can be found at our investor relations page at ir.c3.ai.Statement Regarding Use of Non-GAAP Financial MeasuresThe Company reports the following non-GAAP financial measures, which have not been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”), in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.•Non-GAAP gross profit, non-GAAP gross margin, non-GAAP loss from operations, and non-GAAP net loss per share. Our non-GAAP gross profit, non-GAAP gross margin, non-GAAP loss from operations, and non-GAAP net loss per share exclude the effect of stock-based compensation expense-related charges and employer payroll tax expense related to employee stock-based compensation. We believe the presentation of operating results that exclude these non-cash items provides useful supplemental information to investors and facilitates the analysis of our operating results and comparison of operating results across reporting periods.•Free cash flow. We believe free cash flow, a non-GAAP financial measure, is useful in evaluating liquidity and provides information to management and investors about our ability to fund future operating needs and strategic initiatives. We calculate free cash flow as net cash used in operating activities less purchases of property and equipment and capitalized software development costs. This non-GAAP financial measure may be different than similarly titled measures used by other companies. Additionally, the utility of free cash flow is further limited as it does not represent the total increase or decrease in our cash balances for a given period.We use these non-GAAP financial measures internally for financial and operational decision-making purposes and as a means to evaluate period-to-period comparisons. Non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP financial measures and should be read only in conjunction with our condensed consolidated financial statements prepared in accordance with GAAP. Our presentation of non-GAAP financial measures may not be comparable to similar measures used by other companies. We encourage investors to carefully consider our results under GAAP, as well as our supplemental non-GAAP information and the reconciliation between these presentations, to more fully understand our business. Please see the tables included at the end of this release for the reconciliation of GAAP to non-GAAP financial measures.Other InformationProfessional Services RevenueOur professional services revenue includes service fees and prioritized engineering services. Service fees include revenue from services such as consulting, training, and paid implementation services.Prioritized engineering services are undertaken when a customer requests that we accelerate the design, development, and delivery of software features and functions that are planned in our future product roadmap. When we agree to this, we negotiate an agreed upon fee to accelerate the development of the software. When the software feature is delivered, it becomes integrated to our core product offering, is available to all subscribers of the underlying software product, and enhances the operation of that product going forward. Such prioritized engineering services result in production-level computer software – compiled code that enhances the functionality of our production products – which is available for our customers to use over the life of their software licenses. Per Accounting Standards Codification (ASC) 606, Prioritized engineering services revenue is recognized as professional services over the period in which the software development is completed.Total professional services revenue consists of:Three Months Ended January 31,Nine Months Ended January 31,2025202420252024(in thousands)(in thousands)Prioritized engineering services$5,698 $7,125 $26,008 $20,225 Service fees7,405 876 14,028 5,566 Total professional services revenue$13,103 $8,001 $40,036 $25,791 Use of Forward-Looking StatementsThis press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The words “anticipate,” “believe,” “continue,” “estimate,” “expect,” “intend,” “may,” “will” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these words. Forward-looking statements in this press release include, but are not limited to, statements regarding our market leadership position, anticipated benefits from our partnerships, financial outlook, our sales and customer opportunity pipeline including our industry diversification, the expected benefits of our offerings (including the potential benefits of our C3 Generative AI offerings), and our business strategies, plans, and objectives for future operations. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks and uncertainties, including our history of losses and ability to achieve and maintain profitability in the future, our historic dependence on a limited number of existing customers that account for a substantial portion of our revenue, our ability to attract new customers and retain existing customers, market awareness and acceptance of enterprise AI solutions in general and our products in particular, the length and unpredictability of our sales cycles and the time and expense required for our sales efforts. Some of these risks are described in greater detail in our filings with the Securities and Exchange Commission, including our Quarterly Reports on Form 10-Q for the fiscal quarters ended July 31, 2024, October 31, 2024, and, when available, January 31, 2025, although new and unanticipated risks may arise. The future events and trends discussed in this press release may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, achievements, or events and circumstances reflected in the forward-looking statements will occur. Except to the extent required by law, we do not undertake to update any of these forward-looking statements after the date of this press release to conform these statements to actual results or revised expectations.About C3.ai, Inc.C3.ai, Inc. (NYSE:AI) is the Enterprise AI application software company. C3 AI delivers a family of fully integrated products including the C3 AI Platform, an end-to-end platform for developing, deploying, and operating enterprise AI applications, C3 AI applications, a portfolio of industry-specific SaaS enterprise AI applications that enable the digital transformation of organizations globally, and C3 Generative AI, a suite of domain-specific generative AI offerings for the enterprise.Investor Contactir@c3.aiC3 AI Public RelationsEdelmanLisa Kennedy(415) 914-8336pr@c3.aiSource: C3.ai, Inc.C3.AI, INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except per share data)(Unaudited)Three Months Ended January 31,Nine Months Ended January 31,2025202420252024RevenueSubscription(1)$85,679 $70,400 $240,297 $198,201 Professional services(2)13,103 8,001 40,036 25,791 Total revenue98,782 78,401 280,333 223,992 Cost of revenueSubscription37,799 32,273 106,129 93,644 Professional services2,636 841 5,851 3,399 Total cost of revenue40,435 33,114 111,980 97,043 Gross profit58,347 45,287 168,353 126,949 Operating expensesSales and marketing(3)61,201 57,140 168,969 150,920 Research and development59,356 49,480 167,998 150,747 General and administrative25,375 21,213 66,845 61,317 Total operating expenses145,932 127,833 403,812 362,984 Loss from operations(87,585)(82,546)(235,459)(236,035)Interest income8,677 9,995 28,240 30,597 Other (expense) income, net(957)409 (916)(468)Loss before provision for income taxes(79,865)(72,142)(208,135)(205,906)Provision for income taxes336 489 865 863 Net loss$(80,201)$(72,631)$(209,000)$(206,769)Net loss per share attributable to Class A and Class B common stockholders, basic and diluted$(0.62)$(0.60)$(1.64)$(1.75)Weighted-average shares used in computing net loss per share attributable to Class A and Class B common stockholders, basic and diluted130,382 120,486 127,752 118,259 (1) Including related party revenue of $10,581 for the nine months ended January 31, 2024.(2) Including related party revenue of $5,804 for the nine months ended January 31, 2024.(3) Including related party sales and marketing expense of $810 for the nine months ended January 31, 2024.C3.AI, INC.CONDENSED CONSOLIDATED BALANCE SHEETS(In thousands, except for share and per share data)(Unaudited)January 31, 2025April 30, 2024AssetsCurrent assetsCash and cash equivalents$125,094 $167,146 Marketable securities599,233 583,221 Accounts receivable, net of allowance of $642 and $359 as of January 31, 2025 and April 30, 2024, respectively180,357 130,064 Prepaid expenses and other current assets26,219 23,963 Total current assets930,903 904,394 Property and equipment, net81,910 88,631 Goodwill625 625 Other assets, non-current41,703 44,575 Total assets$1,055,141 $1,038,225 Liabilities and stockholders’ equityCurrent liabilitiesAccounts payable$28,737 $11,316 Accrued compensation and employee benefits48,727 44,263 Deferred revenue, current32,955 37,230 Accrued and other current liabilities27,628 9,526 Total current liabilities138,047 102,335 Deferred revenue, non-current— 1,732 Other long-term liabilities56,917 60,805 Total liabilities194,964 164,872 Commitments and contingenciesStockholders’ equityClass A common stock129 120 Class B common stock3 3 Additional paid-in capital2,158,686 1,963,726 Accumulated other comprehensive income (loss)292 (563)Accumulated deficit(1,298,933)(1,089,933)Total stockholders’ equity860,177 873,353 Total liabilities and stockholders’ equity$1,055,141 $1,038,225 C3.AI, INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands)(Unaudited)Nine Months Ended January 31,20252024Cash flows from operating activities:Net loss$(209,000)$(206,769)Adjustments to reconcile net loss to net cash used in operating activitiesDepreciation and amortization9,215 9,469 Non-cash operating lease cost270 656 Stock-based compensation expense174,373 159,032 Accretion of discounts on marketable securities(10,715)(13,238)Other2,158 110 Changes in operating assets and liabilitiesAccounts receivable(1)(52,017)(38,892)Prepaid expenses, other current assets and other assets(2)587 (3,379)Accounts payable(3)16,916 (4,945)Accrued compensation and employee benefits7,648 171 Operating lease liabilities1,439 14,330 Other liabilities(4)12,462 6,296 Deferred revenue(5)(6,007)(6,546)Net cash used in operating activities(52,671)(83,705)Cash flows from investing activities:Purchases of property and equipment(2,101)(22,718)Capitalized software development costs— (2,750)Purchases of marketable securities(518,806)(657,431)Maturities and sales of marketable securities514,365 590,299 Net cash used in investing activities(6,542)(92,600)Cash flows from financing activities:Proceeds from issuance of Class A common stock under employee stock purchase plan5,009 5,055 Proceeds from exercise of Class A common stock options19,648 11,379 Taxes paid related to net share settlement of equity awards(7,496)(10,397)Net cash provided by financing activities17,161 6,037 Net decrease in cash, cash equivalents and restricted cash(42,052)(170,268)Cash, cash equivalents and restricted cash at beginning of period179,712 297,395 Cash, cash equivalents and restricted cash at end of period$137,660 $127,127 Cash and cash equivalents$125,094 $114,561 Restricted cash included in other assets, non-current12,566 12,566 Total cash, cash equivalents and restricted cash$137,660 $127,127 Supplemental disclosure of cash flow information—cash paid for income taxes$743 $760 Supplemental disclosures of non-cash investing and financing activities:Purchases of property and equipment included in accounts payable and accrued liabilities$527 $2,475 Right-of-use assets obtained in exchange for lease obligations (including remeasurement of right-of-use assets and lease liabilities due to changes in the timing of receipt of lease incentives)$1,016 $1,858 Vesting of early exercised stock options$251 $406 (1)Including changes in related party balances of $12,444 for the nine months ended January 31, 2024.(2)Including changes in related party balances of $(810) for the nine months ended January 31, 2024.(3)Including changes in related party balances of $248 for the nine months ended January 31, 2024.(4)Including changes in related party balances of $(2,448) for the nine months ended January 31, 2024.(5)Including changes in related party balances of $(46) for the nine months ended January 31, 2024.C3.AI, INC.RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES(In thousands, except percentages)(Unaudited)Three Months Ended January 31,Nine Months Ended January 31,2025202420252024Reconciliation of GAAP gross profit to non-GAAP gross profit:Gross profit on a GAAP basis$58,347$45,287$168,353$126,949Stock-based compensation expense (1)9,5048,98326,22326,492Employer payroll tax expense related to employee stock-based compensation (2)3564058831,243Gross profit on a non-GAAP basis$68,207$54,675$195,459$154,684Gross margin on a GAAP basis59%58%60%57%Gross margin on a non-GAAP basis69%70%70%69%Reconciliation of GAAP loss from operations to non-GAAP loss from operations:Loss from operations on a GAAP basis$(87,585)$(82,546)$(235,459)$(236,035)Stock-based compensation expense (1)62,65254,983174,373159,032Employer payroll tax expense related to employee stock-based compensation (2)1,7891,7734,1515,547Loss from operations on a non-GAAP basis$(23,144)$(25,790)$(56,935)$(71,456)Reconciliation of GAAP net loss per share to non-GAAP net loss per share:Net loss on a GAAP basis$(80,201)$(72,631)$(209,000)$(206,769)Stock-based compensation expense (1)62,65254,983174,373159,032Employer payroll tax expense related to employee stock-based compensation (2)1,7891,7734,1515,547Net loss on a non-GAAP basis$(15,760)$(15,875)$(30,476)$(42,190)GAAP net loss per share attributable to Class A and Class B common shareholders, basic and diluted$(0.62)$(0.60)$(1.64)$(1.75)Non-GAAP net loss per share attributable to Class A and Class B common shareholders, basic and diluted$(0.12)$(0.13)$(0.24)$(0.36)Weighted-average shares used in computing net loss per share attributable to Class A and Class B common stockholders, basic and diluted130,382 120,486 127,752 118,259 (1)Stock-based compensation expense for gross profits and gross margin includes costs of subscription and cost of professional services as follows. Stock-based compensation expense for loss from operations includes total stock-based compensation expense as follows:Three Months Ended January 31,Nine Months Ended January 31,2025202420252024Cost of subscription$8,563 $8,674 $24,084 $25,244 Cost of professional services941 309 2,139 1,248 Sales and marketing21,860 17,528 61,495 52,533 Research and development19,896 18,757 56,326 52,475 General and administrative11,392 9,715 30,329 27,532 Total stock-based compensation expense$62,652 $54,983 $174,373 $159,032 (2) Employer payroll tax expense related to employee stock-based compensation for gross profits and gross margin includes costs of subscription and cost of professional services as follows. Employer payroll tax expense related to employee stock-based compensation for loss from operations includes total employer payroll tax expense related to employee stock-based compensation as follows:Three Months Ended January 31,Nine Months Ended January 31,2025202420252024Cost of subscription$329 $392 $818 $1,183 Cost of professional services27 13 65 60 Sales and marketing614 496 1,536 1,964 Research and development578 738 1,173 1,970 General and administrative241 134 559 370 Total employer payroll tax expense$1,789 $1,773 $4,151 $5,547 Reconciliation of free cash flow to the GAAP measure of net cash used in operating activities:The following table below provides a reconciliation of free cash flow to the GAAP measure of net cash used in operating activities for the periods presented:Three Months Ended January 31,Nine Months Ended January 31,2025202420252024Net cash used in operating activities$(22,020)$(39,051)$(52,671)$(83,705)Less:Purchases of property and equipment(362)(6,087)(2,101)(22,718)Capitalized software development costs— — — (2,750)Free cash flow$(22,382)$(45,138)$(54,772)$(109,173)Net cash provided by (used in) investing activities$12,373 $4,098 $(6,542)$(92,600)Net cash provided by financing activities$13,467 $505 $17,161 $6,037 |
0000051143-24-000045:ex-991.htm | 0000051143-24-000045 | 51,143 | 51,143 | INTERNATIONAL BUSINESS MACHINES CORP (IBM) (CIK 0000051143) | ['IBM'] | 8-K | 8-K | 2024-10-24 | 2024-10-23 | 001-02360 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-02360&action=getcompany | 241,392,763 | EX-99.1 | EX-99.1 | 7.01,9.01 | https://www.sec.gov/Archives/edgar/data/51143/000005114324000045 | https://www.sec.gov/Archives/edgar/data/51143/000005114324000045/0000051143-24-000045-index.html | https://www.sec.gov/Archives/edgar/data/51143/000005114324000045/ex-991.htm | EX-99.1 2 ex-991.htm EX-99.1 ex-991 IBM 3Q24 Earnings Prepared Remarks 1 Introduction Thank you. I’d like to welcome you to IBM’s third quarter 2024 earnings presentation. I’m Olympia McNerney, and I’m here today with Arvind Krishna, IBM’s Chairman, President and Chief Executive Officer, and Jim Kavanaugh, IBM’s Senior Vice President and Chief Financial Officer. We’ll post today’s prepared remarks on the IBM investor website within a couple of hours, and a replay will be available by this time tomorrow. To provide additional information to our investors, our presentation includes certain non-GAAP measures. For example, all of our references to revenue and signings growth are at constant currency. We’ve provided reconciliation charts for these and other non-GAAP financial measures at the end of the presentation, which is posted to our investor website. Finally, some comments made in this presentation may be considered forward looking under the Private Securities Litigation Reform Act of 1995. These statements involve factors that could cause our actual results to differ materially. Additional information about these factors is included in the company’s SEC filings. So with that, I’ll turn the call over to Arvind. Exhibit 99.1 IBM 3Q24 Earnings Prepared Remarks 2 CEO Perspective Thank you for joining us today. Let me start by discussing the quarter before I get into more detail on the execution of our strategy. We delivered double-digit revenue growth in Software, with a re-acceleration in Red Hat and continued strength in Transaction Processing. Infrastructure reflects product cycle dynamics, with z16 well ahead of prior cycles highlighting customer adoption and continued reliance on the mainframe. In Consulting, we continue to navigate an uncertain macro environment, with results at the lower end of our expectations. We generated strong operating profitability and the highest level of first nine months cash generation in many years, while overall revenue performance was mixed. We continue to reposition our portfolio towards a higher growth, higher margin business that is well-positioned to address client needs around hybrid cloud and Artificial Intelligence. I'll start with a few thoughts on the macroeconomic environment. Technology spending remains strong. Businesses view technology as a source of competitive advantage, allowing them to scale operations, improve productivity, and drive growth. However, a pause in discretionary spending is impacting our Consulting business. This is due to economic uncertainty, which stems from several temporary factors including geopolitical issues, upcoming elections, and the changing landscape of interest rates and inflation levels. The consulting market remains dynamic, with significant opportunity as clients prepare for AI. Overall, we're confident in our business and our ability to capture these opportunities. Now turning to our performance. Software is nearly 45% of our total revenue, up from the high twenties in 2018, a testament to our focus on organic innovation and repositioning our portfolio. You can see this in our IBM 3Q24 Earnings Prepared Remarks 3 quarterly results as we delivered strong and accelerating Software revenue growth of 10%, including Red Hat at 14%, seven points of organic growth and strength across all our key platforms. Software segment profit margin was about 30%. Our recurring revenue base, which is about 80% of annual software revenue, continues to deliver strong growth. ARR for Hybrid Platform & Solutions now stands at $14.9 billion, up 11% year over year. This quarter marks the five-year anniversary of our acquisition of Red Hat, and I am proud of our accomplishments together. Since IBM announced the acquisition, Red Hat revenue has grown to approximately $6.5 billion, doubling in size and delivering a mid-teens CAGR. OpenShift scaled from about $100 million in ARR to $1.3 billion, expanding more than 10x. Red Hat has also continued to diversify its global footprint, expanding into many new countries since acquisition. We continue to drive innovation, announcing new capabilities including Ansible 2.5, RHEL AI and OpenShift AI. Red Hat was also named a Leader for the second consecutive year in the 2024 Gartner® Magic Quadrant™ for Container Management. 1 We continue to gain traction in enterprise AI. Our book of business related to generative AI is now over $3 billion inception to date, up more than $1 billion quarter over quarter. The mix is roughly one-fifth software and four- fifths consulting signings. This performance has placed us in an early leadership position, which is crucial at the onset of any technology shift. The AI portfolio we have built is designed to give clients a comprehensive 1 Gartner, Magic Quadrant for Container Management, September 2024. Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner’s research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose. GARTNER is a registered trademark and service mark of Gartner, Inc. and/or its affiliates in the U.S. and internationally, and MAGIC QUADRANT is a registered trademark of Gartner, Inc. and/or its affiliates and are used herein with permission. All rights reserved. The Gartner content described herein, (the "Gartner Content") represent(s) research opinion or viewpoints published, as part of a syndicated subscription service, by Gartner, Inc. ("Gartner"), and are not representations of fact. Gartner Content speaks as of its original publication date (and not as of the date of this exhibit) and the opinions expressed in the Gartner Content are subject to change without notice. IBM 3Q24 Earnings Prepared Remarks 4 set of tools to deploy AI within their enterprise. RHEL AI and OpenShift AI allow clients to build a consistent AI foundation based on open-source technology while watsonx provides an AI middleware platform. Our assistants are designed to help clients become more productive using AI across a variety of business processes – from code, to HR, customer service and more. Consulting is helping clients design and execute AI strategies. We also continue to see our Infrastructure segment play a larger role as clients bring AI to their data. Choosing the right AI model is top of mind for our clients. IBM’s Granite family of AI models are fit-for-purpose. Earlier this year, we released code models with 8 to 34 billion parameters. This month, we updated Granite models making them approximately 90% more cost-efficient than larger models. These models can be trained in weeks instead of months and are easier to fine tune for specific tasks. Granite models are available on watsonx and Red Hat and are also integrated into offerings from partners like AWS, Salesforce, Qualcomm and SAP. Globally, clients are turning to IBM to transform their operations with technology. This quarter, we announced new collaborations with NatWest, Telefonica, Samsung SDS, Toyota Systems and many others. At the US Open, IBM delivered AI-generated Match Report summaries, and we are collaborating with ESPN to enhance their sports coverage through advanced AI insights. We also continue to deepen our relationships with key technology partners, including Dell, Intel, Microsoft, Oracle, Salesforce, SAP and ServiceNow. We remain focused on delivering innovations to the market. For example, this quarter we announced Telum II, IBM's next-generation processor for Z, and the Spyre Accelerator, which will significantly enhance IBM Z’s AI capabilities and processing power for enterprise-scale applications. IBM 3Q24 Earnings Prepared Remarks 5 Investment in emerging technologies also remains a focus for IBM. Earlier this month, we opened Europe's first IBM Quantum Data Center. This is the second IBM quantum data center deployed globally which will greatly advance our goal of expanding access to the world’s most performant quantum computers. Before I conclude, let me touch on our outlook. The momentum in our Software strategy can be seen in our year-to-date results. Our revenue guidance for the fourth quarter reflects this progress, balanced by macro dynamics in Consulting and Infrastructure product cycle dynamics. We remain confident in our free cash flow guidance, which we raised in July, driven by continued strength in our operating margin performance. Overall, our portfolio is well positioned to deliver an upward inflection in growth in 2025. I am excited about the opportunities ahead of us and will share more details with you in January. I will now hand over to Jim to walk you through the details of the quarter. Jim, over to you. IBM 3Q24 Earnings Prepared Remarks 6 Financial Highlights Thanks Arvind. In the third quarter, we delivered $15.0 billion in revenue, $3.8 billion of Adjusted EBITDA, $2.5 billion of operating pre-tax income and $2.30 operating diluted earnings per share. And through the first nine months, we generated $6.6 billion of free cash flow. We are pleased with the solid operating profitability and free cash flow generation of the business. Revenue growth, combined with 100 basis points of operating pre-tax margin expansion drove 8% operating pre-tax profit growth and 5% operating diluted earnings per share growth. Our revenue growth for the quarter was up 2% at constant currency. Software growth accelerated to 10%, with strength across our key platforms of Red Hat, Automation, Data & AI and Transaction Processing. Consulting was flat and continued to be impacted by a dynamic market environment as clients reprioritize spending. And Infrastructure was down 7%, reflecting product cycle dynamics. Our portfolio mix, operating leverage and yield from productivity initiatives generated strong gross margin, operating profit and free cash flow performance. These results represent our highest third quarter levels of gross margin and free cash flow in many years. We expanded operating gross margin by 210 basis points and operating pre-tax margin by 100 basis points over last year. Year to date, operating pre-tax margin is up 150 basis points, well ahead of our guidance provided in July of over 50 basis points of improvement in 2024. In September, we closed on the Palo Alto QRadar transaction, generating a pre-tax gain of about $350 million in the quarter. As we previously discussed, this was substantially offset by charges we took to address stranded costs and accelerate our productivity initiatives. IBM 3Q24 Earnings Prepared Remarks 7 These productivity initiatives allowed for continued investments to drive innovation which you can see in our higher R&D expense, up 10% year to date. Year to date, we generated $6.6 billion of free cash flow, up $1.5 billion year over year. The largest driver of this year-to-date growth comes from Adjusted EBITDA, up about $800 million year-over-year. This quarter we realized $500 million in proceeds from the Palo Alto QRadar transaction. As I mentioned last quarter, for the full year, we expect only a modest contribution to free cash flow given payouts from structural actions we have taken and forgone profit from the QRadar business. Through the first nine months of the year, excluding the impact of the QRadar transaction, we are several points ahead of our two-year average attainment levels. In terms of cash uses, year to date, we returned $4.6 billion to shareholders in the form of dividends. From a balance sheet perspective, we have a strong liquidity position with cash of about $14 billion. Our debt balance at the end of the third quarter was flat with year-end 2023 at $56.6 billion, including $10.4 billion from our financing business. IBM 3Q24 Earnings Prepared Remarks 8 Software Turning to the segments, Software revenue growth accelerated to 10% with broad based growth across the portfolio. This reflects the repositioning of Software around key growth platforms - Hybrid Cloud, Automation, Data and Transaction Processing – where we deliver a differentiated value proposition to address clients’ most pressing needs. Growth this quarter was fueled by the same performance drivers we've highlighted throughout the year. Red Hat accelerated, contributing about 3.5 points of growth to Software. The combination of innovation and recurring revenue contributed about 3.5 points to growth. And our focused M&A strategy contributed about 3 points of growth. Let me take you through some more details on each of these. Red Hat revenue growth accelerated to 14%, up six points sequentially. We gained market share across each of our key solutions, with OpenShift and Ansible growing more than 20% and RHEL growing in the double digits. This strength reflects the demand for our hybrid cloud solutions as clients continue to prioritize application modernization on OpenShift containers and Ansible automation to optimize their IT spend and reduce operational complexity. We saw strong acceleration in Red Hat's subscription business while the consumption-based services business stabilized, as we expected. Looking at our revenue under contract over the next six months, this metric continues to grow in the mid-teens as our annual bookings grew double digits in the third quarter. We are excited about the opportunities ahead of us, including generative AI, early client interest in our virtualization solution and, after the deal completion, potential synergies with HashiCorp. IBM 3Q24 Earnings Prepared Remarks 9 We delivered strong growth in our recurring revenue base and are seeing momentum from innovation across our Software portfolio. Hybrid Platform & Solutions ARR was $14.9 billion, up 11% year over year driven by strength across Automation, Data & AI and Red Hat. Transaction Processing grew 9% in the quarter. Growing capacity, solid renewal rates, and continued customer interest in our new generative AI product, watsonx Code Assistant for Z, contributed to this growth. We continue to invest in bringing innovation to market launching new offerings like RHEL AI, Ansible 2.5, and updated capabilities to our family of assistants including the recently announced watsonx Code Assistant with advanced features for enterprise java applications. Red Hat also announced a partnership with Dell that makes RHEL AI the preferred platform for AI deployments on Dell PowerEdge servers. This innovation is driving organic growth acceleration with increasing contribution from our core watsonx middleware in Data & AI, watsonx Orchestrate and IBM Concert in Automation, and our AI embed strategy across our Software portfolio. Revenue performance this quarter also benefited from recent software acquisitions. August marked the one-year anniversary of the Apptio acquisition, and we are seeing strong synergies with our automation capabilities and broader software portfolio, driving continued acceleration in bookings and ARR growth since close. Additionally, the StreamSets and webMethods assets are now part of the Software business, and we continue to expect the HashiCorp acquisition to close by the end of this year. Moving to Software profit, we expanded gross margin, and segment profit was up over 120 basis points from last year as we continue to deliver operating leverage driven by our revenue performance. IBM 3Q24 Earnings Prepared Remarks 10 Consulting Consulting revenue was flat, which was at the lower end of our expectations. As we discussed throughout this year, we are operating in a challenging macroeconomic environment and see no change in client buying behavior. At the same time, clients are reprioritizing their IT budgets to prepare for generative AI. While demand for large digital transformations remained solid, our overall signings declined for the second consecutive quarter as we wrapped on record third quarter signings from last year. Despite the weak current demand environment, we are well positioned to capture growth from generative AI. We continue to build a solid generative AI book of business with about $1 billion of new bookings in the quarter as we partner with our clients to design and scale AI solutions and develop new ways of working. This early momentum is important – engaging with clients as they architect their AI strategies is establishing IBM Consulting as a strategic partner of choice. In the third quarter, our Red Hat practice, which helps clients optimize how they build, deploy, and manage applications for a hybrid cloud environment continued to grow at a double-digit rate, with this quarter being the largest single quarter of signings since the acquisition of Red Hat. Additionally, within our strategic partnerships both our AWS and Azure practices continue to contribute robust revenue growth. Turning to our lines of business, Business Transformation revenue grew 2% driven by strength in transformation projects for data, finance and supply chain. Both Technology Consulting and Application Operations declined in the quarter. While there was strength in cloud-based application services, across modernization, development, and IBM 3Q24 Earnings Prepared Remarks 11 management we continued to see clients reprioritizing spending away from on-prem customized services. Looking at Consulting profit, we expanded gross profit margin almost one point and delivered segment profit margin of 11%, a sequential improvement of two points, reflecting yield from our productivity actions. IBM 3Q24 Earnings Prepared Remarks 12 Infrastructure Moving to the Infrastructure segment, revenue was down 7%, reflecting product cycle dynamics. Hybrid Infrastructure was down 9% and Infrastructure Support declined 3%. Within Hybrid Infrastructure, IBM Z revenue declined 19% in what is now the tenth quarter of z16 availability. The z16 program continues to exceed prior cycles delivering revenue growth in eight of the last ten quarters and program to date installed MIPs are up over 30%. Our clients continue to face increasing demands for workloads given rapid business expansion, complex regulatory environments, and increasing cybersecurity threats and attacks. IBM Z remains uniquely positioned to address these demands with the technologies that our latest program offers - embedded AI at scale, quantum-safe security, and cloud-native development for hybrid cloud. Distributed Infrastructure revenue was down 3% with product cycle dynamics impacting our Power business while we saw solid growth in Storage which continues to take share. For Infrastructure profit, we expanded gross profit margin 120 basis points across the portfolio this quarter. At the same time, segment profit margin was down 110 basis points, driven by continued investments in innovation for our next generation of products. IBM 3Q24 Earnings Prepared Remarks 13 Summary Now, let me bring it back to the IBM level to wrap up. Through the first nine months of the year, we have grown revenue by 3%, expanded our operating pre-tax margin by 150 basis points, and grown free cash flow by $1.5 billion. We have made solid progress in transitioning our portfolio to a higher growth, higher margin business that is well positioned as we head into next year. With nine months of the year behind us, let me now focus on the fourth quarter. We expect revenue growth in the fourth quarter to be consistent with the third quarter levels. Software revenue growth has accelerated throughout the year, and this should continue. We expect low double-digit fourth quarter revenue growth for Software, led by Red Hat growth in the mid-teens, and continued strength in Transaction Processing. This now represents strong high-single digit growth for the year. Consulting revenue is up 1% year to date, impacted by the challenging macroeconomic environment. We expect fourth quarter revenue performance to be similar to the third quarter. This represents the weaker end of our prior expectations of low single digit revenue growth for the year. And given we are at the end of a multi-year product cycle, we now expect Infrastructure to be about a one point impact to IBM for the full year. On currency, given the strengthening of the dollar, we now expect currency to be about a half- a-point headwind to revenue growth in the quarter and about a point impact to revenue growth for the year. Now turning to profitability. For the full year we are raising our expectation for operating pre-tax margin expansion to about a point year to year, well above our model. The strength of this performance is driven by our revenue scale, portfolio mix, and productivity initiatives, enabling IBM 3Q24 Earnings Prepared Remarks 14 operating leverage while providing investment flexibility. Actions taken in the third quarter help accelerate our productivity initiatives and we now believe we can achieve approximately $3.5 billion in annual run rate savings by the end of 2024, up from $3 billion. Drilling down on segment margins, we expect Software segment profit margin to expand by well over a point for the year. Consulting segment profit margin is now expected to be flat and we continue to see Infrastructure segment profit margin in the mid to high teens. Consistent with last year, we are maintaining our full year view of operating tax rate in the mid-teens range. For free cash flow, given the strength of our performance year to date, we remain confident in delivering greater than $12 billion of free cash flow for the year, driven primarily by growth in adjusted EBITDA. We are on track to grow revenue, expand operating profit and grow free cash flow as we close out 2024. This positions us well as we look forward to 2025. We are confident in our portfolio and growth trajectory as we head into 2025 given the acceleration in Software, the opportunities ahead of us in Red Hat, our new mainframe cycle and associated hardware and software stack, our generative AI positioning and contribution from acquisitions. Arvind and I are now happy to take your questions. Olympia, let’s get started. IBM 3Q24 Earnings Prepared Remarks 15 Closing Thank you, Jim. Before we begin the Q&A, I’d like to mention a couple of items. First, supplemental information is provided at the end of the presentation. And then second, as always, I’d ask you to refrain from multi-part questions. Operator, let’s please open it up for questions. |
0001840856-23-000014:soun-20230307ex9911.htm | 0001840856-23-000014 | 1,840,856 | 1,840,856 | SOUNDHOUND AI, INC. (SOUN, SOUNW) (CIK 0001840856) | ['SOUN', 'SOUNW'] | 8-K | 8-K | 2023-03-07 | 2023-03-07 | 001-40193 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-40193&action=getcompany | 23,713,110 | EX-99.1 | EX-99.1 | 2.02,9.01 | https://www.sec.gov/Archives/edgar/data/1840856/000184085623000014 | https://www.sec.gov/Archives/edgar/data/1840856/000184085623000014/0001840856-23-000014-index.html | https://www.sec.gov/Archives/edgar/data/1840856/000184085623000014/soun-20230307ex9911.htm | EX-99.1 2 soun-20230307ex9911.htm EX-99.1 DocumentExhibit 99.1SoundHound AI Reports Strong Q4 Revenue, Up 84% Year-Over-YearFull Year 2022 Revenue of $31.1 Million at High End of Guidance; Company Expects to Grow Revenue by Approximately 50% in 2023SANTA CLARA, Calif.--(BUSINESS WIRE)--SoundHound AI, Inc. (Nasdaq: SOUN), a global leader in voice artificial intelligence, today reported its financial results for the fourth quarter and full year 2022.Conversational AI is at a watershed moment and our proprietary Dynamic Interaction and Generative AI solutions are perfectly positioned. From electricity to telecommunications to internet search, each generation has established a new foundational capability to better serve society, and AI will catalyze this next horizon” said Keyvan Mohajer, Co-Founder and CEO of SoundHound. “Such a convergence of technological maturity and market demand is rare, and SoundHound, as a leading innovator of voice and conversational AI, is in a unique position to create tremendous value.”Fourth Quarter and Full Year Financial Highlights•Fourth quarter revenue was $9.5 million, an increase of 84% year-over-year •Fourth quarter gross margin was 71%, an increase of 4 percentage points year-over-year•Fourth quarter earnings per share was a net loss of ($0.15), compared to ($0.32) in the prior year. Net loss was ($30.7) million, compared to ($21.8) million in the prior year•At the end of 2022, cumulative bookings backlog was $332 million, an increase of 59% year-over-year •In 2022, queries grew 85% year-over-year leading to an annual run rate of approximately 2.2 billion queries•Full year revenue was $31.1 million, an increase of 47% year-over-year•Full year earnings per share was a net loss of ($0.73), compared to ($1.18) in the prior year. Net loss was ($115.3) million, compared to ($79.5) million in the prior year"We closed 2022 on a strong note, and we are entering 2023 in a position of strength. Customer engagement is robust, we are rolling out waves of industry-defining innovations, and the market demand for our solutions is high," said Nitesh Sharan, CFO of SoundHound. "We have taken the necessary steps to significantly improve our operating efficiency, strengthen our financial foundation, and we have a clear line of sight to near-term profitability and sustained long-term growth."Business HighlightsProduct launchesSoundHound launched a broad range of category-leading products:•SoundHound’s next generation, multimodal voice interface Dynamic Interaction for restaurants and customer service. •Dynamic Interaction with Generative AI for devices and automotive.•Intelligent Transcription, which captures, identifies, and attributes meaning to live conversations. •Edge and Cloud connectivity options to open up voice AI to even more smart device, IoT, and vehicle manufacturers.Upcoming Launch•The Company is announcing the upcoming launch of its chat AI service for end users and businesses, which combines the power of software engineering and machine learning with Generative AI to deliver the digital assistant experience that users have been desiring for decades.Partner announcementsSoundHound forged a number of key partnerships with world class brands:•In automotive, SoundHound now provides voice AI solutions for 20 global brands.•Expanded its existing relationship with Hyundai, which includes a multi-year arrangement.•Expanded its relationship with Stellantis in Europe, adding multiple brands. •Announced collaborations in the automotive space with LG and HARMAN International, a Samsung Company, as well as DPCA and DMI.•Agreement with Qualcomm to bring SoundHound voice AI to Snapdragon platforms. •Signed a new deal expanding its long standing relationship with VIZIO. •Extended its partnership with Snap.•PoS agreements with Square, Toast and Oracle. •Airmeez chose SoundHound to deliver its intelligent virtual assistant and notification services with natural language interactions across multiple channels.Industry recognitionSoundHound’s voice AI has received broad praise and recognition:•Qualcomm, Yobe, and LG showcasing its voice technology at CES. •AI Magazine named SoundHound among ten other disruptive global AI companies.•SoundHound was also named as a 2022 Speech Industry Award Winner.•SoundHound for Restaurants was named among the winners of the National Restaurant Association’s Smartbrief Innovation Awards for Foodservice 2022. Financial Results in DetailFourth Quarter 2022 Financial MeasuresThree Months Ended(thousands, except per share data)December 31, 2022December 31, 2021Change in %Cumulative bookings backlog1$331,515 $207,927 59 %Revenues$9,501 $5,151 84 %Operating expenses:Cost of revenues$2,755 $1,707 61 %Sales and marketing6,744 981 587 %Research and development21,528 16,368 32 %General and administrative7,226 5,134 41 %Total operating expenses$38,253 $24,190 58 %Operating loss$(28,752)$(19,039)51 %Net loss$(30,680)$(21,847)40 %Net loss per share$(0.15)$(0.32)$0.17 Adjusted EBITDA2$(18,620)$(15,433)21 %Full Year 2022 Financial MeasuresTwelve Months Ended(thousands, except per share data)December 31, 2022December 31, 2021Change in %Revenues$31,129 $21,197 47 %Operating expenses:Cost of revenues$9,599 $6,585 46 %Sales and marketing20,367 4,240 380 %Research and development76,392 59,178 29 %General and administrative30,178 16,521 83 %Total operating expenses$136,536 $86,524 58 %Operating loss$(105,407)$(65,327)61 %Net loss$(115,373)$(79,540)45 %Net loss per share$(0.73)$(1.18)$0.45 Adjusted EBITDA2$(72,578)$(53,503)36 %21)Cumulative bookings backlog is prior quarter end balance plus new bookings in the current quarter minus associated revenue recognized. Balance is as of December 31, 2022.2)Please see table below for a reconciliation from GAAP to non-GAAP.Summary of Liquidity and Cash FlowsThe Company’s cash and cash equivalents was $9.2 million at December 31, 2022. In January 2023, the Company successfully raised $25 million in net proceeds of equity financing from both current shareholders and new capital providers.Year Ended(thousands)December 31,2022December 31,2021Cash flows:Net cash used in operating activities$(94,019)$(66,177)Net cash used in investing activities(1,329)(636)Net cash provided by financing activities82,001 44,653 Net change in cash and cash equivalents$(13,347)$(22,160)Business OutlookBased on the Company's strong business momentum and customer demand for its voice AI products and services, the Company expects to grow its revenue by approximately 50% in 2023. SoundHound’s guidance for revenue in 2023 is expected to be in a range of $43 to $50 million. With this growth, and previously announced restructuring, which we expect will result in approximately $60 million of operating cost savings, the Company expects to become adjusted EBITDA positive in the fourth quarter of 2023.Additional InformationSoundHound expects to file its Form 10-K for 2022, by March 31, 2023. For more information please see the company’s SEC filings which can be obtained on our website at investors.soundhound.com.Conference Call and WebcastKeyvan Mohajer, Co-Founder and CEO and Nitesh Sharan, CFO will host a live audio conference call and webcast today at 2:30 p.m. Pacific Time/5:30 p.m. Eastern Time. Please click here to pre-register for the conference call and obtain your dial in number and passcode. A live webcast will also be accessible at investors.soundhound.com and a replay of the webcast will be available following the session. About SoundHoundSoundHound AI (Nasdaq: SOUN), a leading innovator of conversational intelligence, offers an independent voice AI platform that enables businesses across industries to deliver best-in-class conversational experiences to their customers. Built on proprietary Speech-to-Meaning® and Deep Meaning Understanding® technologies, SoundHound’s advanced voice AI platform provides exceptional speed and accuracy and enables humans to interact with products and services like they interact with each other—by speaking naturally. SoundHound is trusted by companies around the globe, including Hyundai, Mercedes-Benz, Pandora, Qualcomm, Netflix, Snap, Square, Toast, LG, VIZIO, KIA, and Stellantis. www.soundhound.comForward Looking StatementsThis press release forward-looking statements, which are not historical facts, 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. In some cases, you can identify forward-looking statements by the use of words such as “may,” “could,” “expect,” “intend,” “plan,” “seek,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue,” “likely,” “will,” “would” and variations of these terms and similar expressions, or the negative of these terms or similar expressions. These forward-looking statements include, but are not limited to, statements concerning the expected financial performance of the company, the company's ability to implement its business strategy and anticipated business and operations, including the anticipated launch of its chat AI service, the potential utility of and market for the company's products and services, guidance for 3financial results for 2023 and our ability to timely file our annual report on Form 10-K. Such forward-looking statements are necessarily based upon estimates and assumptions that, while considered reasonable by us and our management, are inherently uncertain. As a result, readers are cautioned not to place undue reliance on these forward-looking statements. Our actual results, performance or achievements may differ materially from those expressed or implied by these forward-looking statements. Actual results may differ materially from those indicated by these forward-looking statements as a result of risks and uncertainties impacting SoundHound’s business including, current uncertainties associated with the COVID-19 pandemic, our inability to predict or measure supply chain disruptions at our customers resulting from the COVID-19 pandemic and other causes, the potential future revenue associated with our AI platform products and services; our projected rate of revenue growth; the impact of our announced restructuring; our ability to predict direct and indirect customer demand for our existing and future products and to secure adequate manufacturing capacity; our ability to hire, retain and motivate employees; the effects of competition, including price competition within our industry segment; technological, regulatory and legal developments that uniquely or disproportionately impact our industry segment; developments in the economy and financial markets and those other factors described in our risk factors set forth in our filings with the Securities and Exchange Commission from time to time, including our Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. We do not intend to update or alter our forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.Non-GAAP Measures of Financial PerformanceTo supplement our financial statements, which are presented on the basis of U.S. generally accepted accounting principles (GAAP), the following non-GAAP measure of financial performance is included in this release: adjusted EBITDA. We define Adjusted EBITDA as our GAAP net loss excluding (i) interest and other expense, net, (ii) depreciation and amortization expense, (iii) income taxes, and (iv) stock-based compensation. A reconciliation of GAAP to this adjusted non-GAAP financial measure is included below. When analyzing the Company's operating results, investors should not consider non-GAAP measures as substitutes for the comparable financial measures prepared in accordance with GAAP.Reconciliation of GAAP Net Profit (Loss) to Non-GAAP Adjusted EBITDAThree Months Ended(thousands)December 31,2022December 31,2021GAAP net profit (loss)$(30,680)$(21,847)Adjustments:Interest and other expense, net1$644 $3,752 Income taxes1,284 (944)Depreciation and amortization840 1,333 Stock-based compensation9,292 2,273 Adjusted EBITDA$(18,620)$(15,433)1)Includes other (income)/expense of ($0.5) and $1.1 million, respectivelyReconciliation of GAAP Net Profit (Loss) to Non-GAAP Adjusted EBITDATwelve Months Ended(thousands)December 31,2022December 31,2021GAAP net profit (loss)$(115,373)$(79,540)Adjustments:Interest and other expense, net1$7,077 $13,757 Income taxes2,889 456 Depreciation and amortization4,037 5,502 Stock-based compensation28,792 6,322 Adjusted EBITDA$(72,578)$(53,503)1)Includes other expense of $0.2 and $5.4 million, respectively4 |
0001907982-24-000159:d-waveq32024investorpres.htm | 0001907982-24-000159 | 1,907,982 | 1,907,982 | D-Wave Quantum Inc. (QBTS, QBTS-WT) (CIK 0001907982) | ['QBTS', 'QBTS-WT'] | 8-K | 8-K | 2024-11-14 | 2024-11-14 | 001-41468 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-41468&action=getcompany | 241,457,144 | EX-99.2 | EX-99.2 | 2.02,9.01 | https://www.sec.gov/Archives/edgar/data/1907982/000190798224000159 | https://www.sec.gov/Archives/edgar/data/1907982/000190798224000159/0001907982-24-000159-index.html | https://www.sec.gov/Archives/edgar/data/1907982/000190798224000159/d-waveq32024investorpres.htm | EX-99.2 3 d-waveq32024investorpres.htm EX-99.2 d-waveq32024investorpres 1 COPYRIGHT © D-WAVE QUANTUM Q3 2024 Investor Presentation 2 COPYRIGHT © D-WAVE FORWARD-LOOKING STATEMENTS Certain statements in this presentation are forward-looking, as defined in the Private Securities Litigation Reform Act of 1995. These statements involve risks, uncertainties, and other factors that may cause actual results to differ materially from the information expressed or implied by these forward-looking statements and may not be indicative of future results. These forward-looking statements are subject to a number of risks and uncertainties, including, among others, various factors beyond management’s control, including the risks set forth under the heading “Risk Factors” discussed under the caption “Item 1A. Risk Factors” in Part I of our most recent Annual Report on Form 10-K or any updates discussed under the caption “Item 1A. Risk Factors” in Part II of our Quarterly Reports on Form 10-Q and in our other filings with the SEC. Undue reliance should not be placed on the forward-looking statements in this presentation in making an investment decision, which are based on information available to us on the date hereof. We undertake no duty to update this information unless required by law. 3 COPYRIGHT © D-WAVE D-WAVE AT A GLANCE STRONG CUSTOMER BASE MARKET LEADER THOUGHT & TECHNICAL LEADERSHIP 43 PhDs 240+ U.S. granted patents 100+ Pending worldwide 60+% Annealing AND Gate Over 240 scientific papers published Quantum Annealing Fifth generation system 5000+ qubits Real-Time Quantum Cloud Quantum hybrid solvers 99% up-time Open-Source Python Tools Easily configurable Simplifies use of QC & HSS Customer PS On-Ramp From application eval to production deployment ESTABLISHED PRODUCT PORTFOLIO: • World’s largest Quantum Computer • Accessible through production-grade cloud service • Quantum supremacy paper under peer review GROWING COMMERCIAL ADOPTION: • 1st commercial Quantum Computing company • 30+ proven business use cases • Initial applications moving into production HIGH-VALUE CONSULTATIVE SERVICES: • 20+ successful POC engagements in 18 months • Advisory services to aid in production deployment INDUSTRY PERSPECTIVE: “We believe that today’s quantum technology can play a key role in ensuring optimal and efficient construction and operation of buildings and are eager to use D-Wave’s quantum solutions in support of that effort.” —Dr. Reinhard Schlemmer, Member of the Board of VINCI Energies 3rd largest quantum patent portfolio globally (Source: GlobalData) 4 COPYRIGHT © D-WAVE COMPLETED CALIBRATION OF 4400+ QUBIT ADVANTAGE2 PROTOTYPE Completion of calibrating a 4400+ qubit Advantage2 processor as a key part of ongoing development of sixth-generation annealing quantum computer This comes on the heels of launching the 1,200+ qubit Advantage2 prototype and making it accessible in D-Wave’s Leap quantum cloud service earlier this year GREATER COHERENCE Doubled to drive faster time-to-solution GREATER CONNECTIVITY 20-way connectivity to enable solutions to larger problems INCREASED ENERGY SCALE Increased by 40% to deliver higher-quality solutions Advantage2 is expected to fuel customer success with: 5 COPYRIGHT © D-WAVE FURTHER PROGRESS ON QUANTUM AI SOLUTIONS D-Wave continued to make rapid progress on exploring generative AI architectures that directly use quantum processing unit (QPU) samples from quantum distributions to facilitate faster and more energy-efficient model training and inference Completed initial designs of transformer and diffusion architectures – moving toward benchmarking the role of the QPU Supporting several customers that are investigating restricted Boltzmann machine architectures, a canonical machine learning approach for generative AI, that use samples from the QPU 6 COPYRIGHT © D-WAVE INTRODUCTION OF SERVICE-LEVEL AGREEMENTS (SLAS) FOR LEAP CLOUD SERVICE CUSTOMERS New SLAs for Leap quantum cloud service customers who are transitioning applications into production We believe D-Wave is the only quantum computing company providing formal SLAs Offering SLAs reflects the high levels of availability, reliability and performance of Leap quantum cloud service and its ability to support requirements for commercial-grade applications as customers move into production deployments Our monitoring data shows that the Leap service has consistently exceeded 99.9% availability over the past two years, meaning that the service is highly reliable even during periods of high demand 7 COPYRIGHT © D-WAVE JAPAN’S LARGEST MOBILE PHONE OPERATOR PLANS TO MOVE QUANTUM APPLICATION INTO PRODUCTION NTT DOCOMO, Japan’s largest wireless carrier with more than 87 million subscribers, is planning production deployment of a hybrid-quantum application, built with D-Wave technology, for optimizing mobile network performance Using D-Wave’s annealing quantum computing solutions, NTT DOCOMO found that it can reduce network signal congestion across base stations, potentially leading to more efficient signal transmission and equipment cost savings 8 COPYRIGHT © D-WAVE D-WAVE DEEMED “AWARDABLE” ON US DEPT. OF DEFENSE “TRADEWINDS MARKETPLACE” D-Wave has been deemed “awardable” on the US Department of Defense’s Tradewinds buying platform, which is designed to accelerate the procurement and adoption of emerging technologies Marketplace includes D-Wave’s annealing quantum computing products and services alongside other offerings like Artificial Intelligence (AI)/Machine Learning (ML), data, and analytics capabilities 9 COPYRIGHT © D-WAVE GO-TO-MARKET EFFORTS INCLUDE LAUNCH OF QUANTUM OPTIMIZATION MARKET CATEGORY Continued progress executing the company’s aggressive go-to-market (GTM) growth strategy, most notably launching the quantum optimization market category with a robust collection of website content and assets that showcase key use cases including workforce scheduling, vehicle routing, production scheduling, resource optimization, and cargo loading In addition, recent work on our systems in the area of materials simulation has opened up new GTM efforts with research and government customers 10 COPYRIGHT © D-WAVE BROADENED REACH WITH NEW PARTNERSHIPS Partnership designed to accelerate commercial adoption of annealing quantum computing across Middle East D-Wave has joined the Chicago Quantum Exchange (CQE) as a corporate partner, aiming to engage with the CQE community on materials science research, quantum education, and the development of practical optimization use cases, including for the manufacturing and logistics industries Partnership revealed at first-ever Qubits UAE event in Dubai, a half-day version of D-Wave’s annual Qubits user conference, which showcased “success powered by quantum” through business optimization use cases, progress in quantum- fueled AI technology, and demonstrations of annealing quantum computing performance over classical computing 11 COPYRIGHT © D-WAVE NEW LEADERS BRING GROWTH MINDSET & COMMERCIAL TECH EXPERTISE Announced the expansion of the D-Wave executive leadership bench with the addition of Sophie Ames as chief human resources officer as well as the addition of two new board members John DiLullo and Rohit Ghai The moves are designed to help facilitate D-Wave’s next phase of growth as it continues to usher in the era of commercial quantum computing 12 COPYRIGHT © D-WAVE 2024 Q3 FINANCIAL UPDATE 0 50 100 150 Prior LTM Most recent LTM 125 Total # of Customers 132 75 Commercial Customers including 26 Forbes Global 2000 76 Commercial Customers including 27 Forbes Global 2000 $- $2 $4 $6 $8 Q3 2023 Q3 2024 M IL LI O N S $5.8M First 9 Months Revenue $6.5M $- $10 $20 $30 $40 Q3-23 Q3-24 11-13-24 M IL LI O N S PAID IN FULL $31.1M $- $20 $40 $60 $80 $100 Q3-24 Q3-24 Q3-24 M IL LI O N S $49.9M $79.1M $75.0M $- $2 $4 Prior LTM Most recent LTM M IL LI O N S - $1.2M Research & Gov’t Revenue $2.0M * Capital raising capacity under the ELOC is subject to a $1.00 minimum stock price PSP Term Loan Balance Capital Raising Capacity Government $1.8M$1.3M Government Research Research $13.6M ELOC* ATM S-3 Shelf 13 COPYRIGHT © D-WAVE QUANTUM |
0001477932-25-000639:nexscient_ex991.htm | 0001477932-25-000639 | 1,976,663 | 1,976,663 | Nexscient, Inc. (NXNT) (CIK 0001976663) | ['NXNT'] | 8-K | 8-K | 2025-02-03 | 2025-02-03 | 333-274532 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=333-274532&action=getcompany | 25,581,687 | EX-99.1 | PRESS RELEASE | 7.01,9.01 | https://www.sec.gov/Archives/edgar/data/1976663/000147793225000639 | https://www.sec.gov/Archives/edgar/data/1976663/000147793225000639/0001477932-25-000639-index.html | https://www.sec.gov/Archives/edgar/data/1976663/000147793225000639/nexscient_ex991.htm | EX-99.1 2 nexscient_ex991.htm PRESS RELEASE nexscient_ex991.htm EXHIBIT 99.1 PRESS RELEASE NEXSCIENT® LAUNCHES NXNT LABS Accelerating Commercialization of AI-Driven Enterprise Applications LOS ANGELES, CA / ACCESSWIRE / FEBRUARY 3, 2025 / -- Nexscient, Inc. (OTCQB: NXNT), a leading innovator in artificial intelligence (AI) applications and intelligent enterprise solutions, is proud to announce the launch of its new business unit, NXNT Labs (“Labs”). This groundbreaking initiative is dedicated to fostering collaboration with corporate partners, academic institutions, and research organizations to drive innovation and accelerate the adoption of cutting-edge technologies, including AI, quantum computing, and blockchain, across diverse industries. “With NXNT Labs, we are creating a focused platform to fast-track the commercialization and deployment of AI-driven products and services,” said Fred E. Tannous, President & CEO of Nexscient. “This initiative positions Nexscient as a key player in turning emerging technologies into real-world solutions. It also establishes a collaborative ecosystem that unites entrepreneurs, corporate partners, and academic leaders to unlock transformative innovations,” he added. Consistent with Nexscient’s mission, NXNT Labs aims to deliver strategic guidance, financial resources, and access to key industry stakeholders to catalyze the adoption of emerging technologies. The unit will also advocate for the shared benefits of these technologies, ensuring a positive impact on industries and communities alike. “The establishment of NXNT Labs is a pivotal step in refining our approach to partnerships and research collaborations,” Tannous continued. “Our goal is to advance AI and other transformative technologies by creating an environment where innovation thrives, resulting in new opportunities and groundbreaking solutions for global challenges.” This launch marks a critical milestone in Nexscient’s growth strategy. While the company continues to enhance its flagship AegisOne intelligent enterprise application, NXNT Labs will unlock additional value by empowering external partners to integrate AI into solutions for industries such as manufacturing, cybersecurity, and financial technology. Moreover, the division will spearhead advancements in Generative AI, redefining creative possibilities and expanding the boundaries of content creation. About NXNT Labs NXNT Labs, a division of Nexscient, Inc., is at the forefront of shaping an intelligent and interconnected world through its unique collaborative commercialization model. The Labs division offers a comprehensive suite of resources, including funding, strategic guidance, and technical expertise, empowering developers and businesses to create, deploy, and monetize next-generation enterprise applications powered by cutting-edge AI technologies. With a mission to drive the evolution of AI and make these advancements accessible to all, NXNT Labs is committed to supporting and scaling innovative solutions that deliver real-world impact. By prioritizing practical and scalable applications, NXNT Labs not only fosters AI-driven innovation but ensures that these technologies are democratized and readily adoptable by businesses and consumers alike. For more information, please visit https://nxntlabs.ai/ About Nexscient, Inc. Nexscient® is an emerging-growth company that’s building a collaborative network of intelligent enterprise applications and technologies through internal development, synergistic acquisitions, and capital investments in companies involved in machine learning, artificial intelligence, and the Industrial Internet of Things technologies. Our flagship product, AegisOne, introduces a subscription-based, Software-as-a-Service platform that incorporates innovative technologies to offer intelligent enterprise solutions for businesses across several industries. As part of our growth strategy, we also seek to acquire and integrate synergistic companies and technologies into our collaborative network, further expanding our service offerings while enhancing shareholder value. For more information, please visit https://nexscient.ai. Forward-Looking Statements This release contains statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements appear in a number of places in this release and include all statements that are not statements of historical fact regarding the intent, belief or current expectations of Nexscient, Inc., its directors or its officers with respect to, among other things: (i) financing plans; (ii) trends affecting its financial condition or results of operations; (iii) growth strategy and operating strategy; and (iv) performance of our products and services. You can identify these statements by the use of the words “may,” “will,” “could,” “should,” “would,” “plans,” “expects,” “anticipates,” “continue,” “estimate,” “project,” “intend,” “likely,” “forecast,” “probable,” “potential,” and similar expressions and variations thereof are intended to identify forward-looking statements. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, many of which are beyond Nexscient, Inc.’s ability to control, and actual results may differ materially from those projected in the forward-looking statements as a result of various factors. These risks and uncertainties also include such additional risk factors as are discussed in the Company’s filings with the U.S. Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended June 30, 2024, Forms 10-Q and 8-K, and in other filings we make with the Securities and Exchange Commission from time to time. These documents are available on the SEC Filings section of the Investor Relations section of our website at https://nexscient.ai. The Company cautions readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made. ####### COMPANY CONTACT: Investor Relations ir@nexscient.com (800) 785-6070 2 |
0001654954-25-000568:inuvo_ex991.htm | 0001654954-25-000568 | 829,323 | 829,323 | Inuvo, Inc. (INUV) (CIK 0000829323) | ['INUV'] | 8-K | 8-K | 2025-01-21 | 2025-01-21 | 001-32442 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-32442&action=getcompany | 25,540,405 | EX-99.1 | PRESS RELEASE | 2.02,9.01 | https://www.sec.gov/Archives/edgar/data/829323/000165495425000568 | https://www.sec.gov/Archives/edgar/data/829323/000165495425000568/0001654954-25-000568-index.html | https://www.sec.gov/Archives/edgar/data/829323/000165495425000568/inuvo_ex991.htm | EX-99.1 2 inuvo_ex991.htm PRESS RELEASE inuvo_ex991.htm EXHIBIT 99.1 Inuvo Reports Unaudited Preliminary Fourth Quarter 2024 Record Revenue of $26 Million, Achieving 26% Year-Over-Year Growth LITTLE ROCK, AR, January 21, 2025 -- Inuvo, Inc. (NYSE American: INUV), provider of the first generative artificial intelligence (AI) advertiser solution made specifically for brands and agencies, today reported preliminary unaudited revenue results for the fourth quarter of 2024. Inuvo is projecting revenue of approximately $26 million for Q4 2024, a 26% year-over-year increase from the $20.8 million reported in Q4 2023. This growth would set a new record as the highest quarterly revenue in the Company's history. Richard Howe, CEO of Inuvo, stated, “As discussed during our third quarter conference call, we anticipated a double digit increase in fourth quarter revenue as well as a near breakeven adjusted EBITDA for the quarter. While the audit of our results has not yet been completed, we believe the optimism we expressed in November was well-founded.” Mr. Howe continued, “We look forward to sharing more details about our strong fourth quarter, as well as our plans for 2025, during our upcoming earnings conference call, which is expected to take place on February 27th, 2025.” IntentKey® is the first large-language generative AI that can identify and target audiences without consumer data, tracking, or cookies while outperforming competitors. This advanced AI empowers marketers with Inuvo's audience discovery and targeting technology implemented both as a managed service and/or self-service. The financial information and results in this press release are preliminary and have been prepared internally by management based on the best information currently available to the Company and are subject to completion of the fourth quarter and full year financial statements and audit by our independent registered public accounting firm. There can be no assurance that actual results will not differ from the preliminary financial information presented herein and such changes could be material. This preliminary financial data should not be viewed as a substitute for full financial statements prepared in accordance with Generally Accepted Accounting Principles. Page 1 of 2 About Inuvo Inuvo®, Inc. (NYSE American: INUV) is a market leader in Artificial Intelligence built for advertising. Its IntentKey AI solution is a first-of-its-kind proprietary and patented technology capable of identifying and actioning to the reasons why consumers are interested in products, services, or brands, not who those consumers are. To learn more, visitwww.inuvo.com. Safe Harbor / Forward-Looking Statements This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding Inuvo’s quarter-end financial close process and preparation of financial statements for the quarter that are subject to risks and uncertainties that could cause results to be materially different than expectations. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including, without limitation risks detailed from time to time in our filings with the Securities and Exchange Commission (the “SEC”), and represent our views only as of the date they are made and should not be relied upon as representing our views as of any subsequent date. You are urged to carefully review and consider any cautionary statements and other disclosures, including the statements made under the heading "Risk Factors" in Inuvo, Inc.'s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 as filed on February 29, 2024, and our other filings with the SEC. In addition, our expectations about the fourth quarter and full year 2024 results are based on preliminary information about the fourth quarter and full year and are subject to revision or adjustment based on our quarter and year-end review procedures. Although the fourth quarter and full year are now completed, we are still in the process of our standard financial reporting closing procedures. Accordingly, following completion of our normal closing and audit processes, it may turn out that actual results differ materially from these preliminary results. Factors that could cause our actual results for the fourth quarter and full year to differ materially from our preliminary results include, but are not limited to, inaccurate assumptions, unrecorded expenses, changes in estimates or judgments, and facts or circumstances affecting the application of our critical accounting policies. All forward-looking statements involve significant risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements, many of which are generally outside the control of Inuvo, Inc. and are difficult to predict. Inuvo does not intend to update or revise any forward-looking statements made herein or any other forward-looking statements as a result of new information, future events, or otherwise. Inuvo further expressly disclaims any written or oral statements made by a third party regarding the subject matter of this press release. The information which appears on our websites and our social media platforms is not part of this press release. Inuvo Company Contact: Wally Ruiz Chief Financial Officer Tel (501) 205-8397 wallace.ruiz@inuvo.com Investor Relations: David Waldman / Natalya Rudman Crescendo Communications, LLC Tel: (212) 671-1020 inuv@crescendo-ir.com Page 2 of 2 |
0001045810-24-000028:q4fy24pr.htm | 0001045810-24-000028 | 1,045,810 | 1,045,810 | NVIDIA CORP (NVDA) (CIK 0001045810) | ['NVDA'] | 8-K | 8-K | 2024-02-21 | 2024-02-21 | 000-23985 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=000-23985&action=getcompany | 24,659,885 | EX-99.1 | Q4FY24 PRESS RELEASE | 2.02,9.01 | https://www.sec.gov/Archives/edgar/data/1045810/000104581024000028 | https://www.sec.gov/Archives/edgar/data/1045810/000104581024000028/0001045810-24-000028-index.html | https://www.sec.gov/Archives/edgar/data/1045810/000104581024000028/q4fy24pr.htm | EX-99.1 2 q4fy24pr.htm Q4FY24 PRESS RELEASE DocumentFOR IMMEDIATE RELEASE:NVIDIA Announces Financial Results for Fourth Quarter and Fiscal 2024•Record quarterly revenue of $22.1 billion, up 22% from Q3, up 265% from year ago•Record quarterly Data Center revenue of $18.4 billion, up 27% from Q3, up 409% from year ago•Record full-year revenue of $60.9 billion, up 126%SANTA CLARA, Calif.—Feb. 21, 2024―NVIDIA (NASDAQ: NVDA) today reported revenue for the fourth quarter ended January 28, 2024, of $22.1 billion, up 22% from the previous quarter and up 265% from a year ago.For the quarter, GAAP earnings per diluted share was $4.93, up 33% from the previous quarter and up 765% from a year ago. Non-GAAP earnings per diluted share was $5.16, up 28% from the previous quarter and up 486% from a year ago.For fiscal 2024, revenue was up 126% to $60.9 billion. GAAP earnings per diluted share was $11.93, up 586% from a year ago. Non-GAAP earnings per diluted share was $12.96, up 288% from a year ago.“Accelerated computing and generative AI have hit the tipping point. Demand is surging worldwide across companies, industries and nations,” said Jensen Huang, founder and CEO of NVIDIA.“Our Data Center platform is powered by increasingly diverse drivers — demand for data processing, training and inference from large cloud-service providers and GPU-specialized ones, as well as from enterprise software and consumer internet companies. Vertical industries — led by auto, financial services and healthcare — are now at a multibillion-dollar level.“NVIDIA RTX, introduced less than six years ago, is now a massive PC platform for generative AI, enjoyed by 100 million gamers and creators. The year ahead will bring major new product cycles with exceptional innovations to help propel our industry forward. Come join us at next month’s GTC, where we and our rich ecosystem will reveal the exciting future ahead,” he said.NVIDIA will pay its next quarterly cash dividend of $0.04 per share on March 27, 2024, to all shareholders of record on March 6, 2024.Q4 Fiscal 2024 SummaryGAAP($ in millions, except earnings per share)Q4 FY24Q3 FY24Q4 FY23Q/QY/YRevenue$22,103$18,120$6,051Up 22%Up 265%Gross margin76.0 %74.0 %63.3 %Up 2.0 ptsUp 12.7 ptsOperating expenses$3,176$2,983$2,576Up 6%Up 23%Operating income$13,615$10,417$1,257Up 31%Up 983%Net income$12,285$9,243$1,414Up 33%Up 769%Diluted earnings per share$4.93$3.71$0.57Up 33%Up 765%Non-GAAP($ in millions, except earnings per share)Q4 FY24Q3 FY24Q4 FY23Q/QY/YRevenue$22,103$18,120$6,051Up 22%Up 265%Gross margin76.7 %75.0 %66.1 %Up 1.7 ptsUp 10.6 ptsOperating expenses$2,210$2,026$1,775Up 9%Up 25%Operating income$14,749$11,557$2,224Up 28%Up 563%Net income$12,839$10,020$2,174Up 28%Up 491%Diluted earnings per share$5.16$4.02$0.88Up 28%Up 486%Fiscal 2024 SummaryGAAP($ in millions, except earnings per share)FY24FY23Y/YRevenue$60,922$26,974Up 126%Gross margin72.7 %56.9 %Up 15.8 ptsOperating expenses$11,329$11,132Up 2%Operating income$32,972$4,224Up 681%Net income$29,760$4,368Up 581%Diluted earnings per share$11.93$1.74Up 586%Non-GAAP($ in millions, except earnings per share)FY24FY23Y/YRevenue$60,922$26,974Up 126%Gross margin73.8 %59.2 %Up 14.6 ptsOperating expenses$7,825$6,925Up 13%Operating income$37,134$9,040Up 311%Net income$32,312$8,366Up 286%Diluted earnings per share$12.96$3.34Up 288%OutlookNVIDIA’s outlook for the first quarter of fiscal 2025 is as follows:•Revenue is expected to be $24.0 billion, plus or minus 2%.•GAAP and non-GAAP gross margins are expected to be 76.3% and 77.0%, respectively, plus or minus 50 basis points.•GAAP and non-GAAP operating expenses are expected to be approximately $3.5 billion and $2.5 billion, respectively.•GAAP and non-GAAP other income and expense are expected to be an income of approximately $250 million, excluding gains and losses from non-affiliated investments.•GAAP and non-GAAP tax rates are expected to be 17.0%, plus or minus 1%, excluding any discrete items.Highlights NVIDIA achieved progress since its previous earnings announcement in these areas:Data Center •Fourth-quarter revenue was a record $18.4 billion, up 27% from the previous quarter and up 409% from a year ago. Full-year revenue rose 217% to a record $47.5 billion.•Launched, in collaboration with Google, optimizations across NVIDIA’s data center and PC AI platforms for Gemma, Google’s groundbreaking open language models.•Expanded its strategic collaboration with Amazon Web Services to host NVIDIA® DGX™ Cloud on AWS.•Announced that Amgen will use the NVIDIA DGX SuperPOD™ to power insights into drug discovery, diagnostics and precision medicine.•Announced NVIDIA NeMo™ Retriever, a generative AI microservice that lets enterprises connect custom large language models with enterprise data to deliver highly accurate responses for AI applications.•Introduced NVIDIA MONAI™ cloud APIs to help developers and platform providers integrate AI into their medical-imaging offerings.•Announced that Singtel will bring generative AI services to Singapore through energy-efficient data centers that the telco is building with NVIDIA Hopper™ architecture GPUs.•Introduced plans with Cisco to help enterprises quickly and easily deploy and manage secure AI infrastructure.•Supported the National Artificial Intelligence Research Resource pilot program, a major step by the U.S. government toward a shared national research infrastructure.Gaming •Fourth-quarter revenue was $2.9 billion, flat from the previous quarter and up 56% from a year ago. Full-year revenue rose 15% to $10.4 billion.•Launched GeForce RTX™ 40 SUPER Series GPUs, starting at $599, which support the latest NVIDIA RTX™ technologies, including DLSS 3.5 Ray Reconstruction and NVIDIA Reflex.•Announced generative AI capabilities for its installed base of over 100 million RTX AI PCs, including Tensor-RT™ LLM to accelerate inference on large language models, and Chat with RTX, a tech demo that lets users personalize a chatbot with their own content.•Introduced microservices for the NVIDIA Avatar Cloud Engine, allowing game and application developers to integrate state-of-the-art generative AI models into non-playable characters.•Reached the milestone of 500 AI-powered RTX games and applications utilizing NVIDIA DLSS, ray tracing and other NVIDIA RTX technologies.Professional Visualization•Fourth-quarter revenue was $463 million, up 11% from the previous quarter and up 105% from a year ago. Full-year revenue rose 1% to $1.6 billion.•Announced adoption of NVIDIA Omniverse™ by the global automotive-configurator ecosystem.•Announced the NVIDIA RTX 2000 Ada Generation GPU, bringing the latest AI, graphics and compute technology to compact workstations.Automotive•Fourth-quarter revenue was $281 million, up 8% from the previous quarter and down 4% from a year ago. Full-year revenue rose 21% to $1.1 billion.•Announced further adoption of its NVIDIA DRIVE® platform, with Great Wall Motors, ZEEKR and Xiaomi using DRIVE Orin™ to power intelligent automated-driving systems and Li Auto selecting DRIVE Thor™ as its centralized car computer.CFO CommentaryCommentary on the quarter by Colette Kress, NVIDIA’s executive vice president and chief financial officer, is available at https://investor.nvidia.com.Conference Call and Webcast InformationNVIDIA will conduct a conference call with analysts and investors to discuss its fourth quarter and fiscal 2024 financial results and current financial prospects today at 2 p.m. Pacific time (5 p.m. Eastern time). A live webcast (listen-only mode) of the conference call will be accessible at NVIDIA’s investor relations website, https://investor.nvidia.com. The webcast will be recorded and available for replay until NVIDIA’s conference call to discuss its financial results for its first quarter of fiscal 2025.Non-GAAP MeasuresTo supplement NVIDIA’s condensed consolidated financial statements presented in accordance with GAAP, the company uses non-GAAP measures of certain components of financial performance. These non-GAAP measures include non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP income from operations, non-GAAP other income (expense), net, non-GAAP net income, non-GAAP net income, or earnings, per diluted share, and free cash flow. For NVIDIA’s investors to be better able to compare its current results with those of previous periods, the company has shown a reconciliation of GAAP to non-GAAP financial measures. These reconciliations adjust the related GAAP financial measures to exclude acquisition termination costs, stock-based compensation expense, acquisition-related and other costs, IP-related costs, other, gains and losses from non-affiliated investments, interest expense related to amortization of debt discount, and the associated tax impact of these items where applicable. Free cash flow is calculated as GAAP net cash provided by operating activities less both purchases related to property and equipment and intangible assets and principal payments on property and equipment and intangible assets. NVIDIA believes the presentation of its non-GAAP financial measures enhances the user’s overall understanding of the company’s historical financial performance. The presentation of the company’s non-GAAP financial measures is not meant to be considered in isolation or as a substitute for the company’s financial results prepared in accordance with GAAP, and the company’s non-GAAP measures may be different from non-GAAP measures used by other companies.About NVIDIASince its founding in 1993, NVIDIA (NASDAQ: NVDA) has been a pioneer in accelerated computing. The company’s invention of the GPU in 1999 sparked the growth of the PC gaming market, redefined computer graphics, ignited the era of modern AI and is fueling industrial digitalization across markets. NVIDIA is now a full-stack computing infrastructure company with data-center-scale offerings that are reshaping industry. More information at https://nvidianews.nvidia.com/.###For further information, contact:Simona JankowskiMylene MangalindanInvestor RelationsCorporate CommunicationsNVIDIA CorporationNVIDIA Corporationsjankowski@nvidia.commmangalindan@nvidia.comCertain statements in this press release including, but not limited to, statements as to: demand for accelerated computing and generative AI surging worldwide across companies, industries and nations; our Data Center platform being powered by increasingly diverse drivers, including demand for data processing, training and inference from large cloud-service providers and GPU-specialized ones, as well as from enterprise software and consumer internet companies; vertical industries led by auto, financial, services and healthcare now at a multibillion-dollar level; NVIDIA RTX becoming a massive PC platform for generative AI enjoyed by 100 million gamers and creators; the year ahead bringing major new product cycles with exceptional innovations to help propel our industry forward; our upcoming conference at GTC, where we and our rich ecosystem will reveal the exciting future ahead; NVIDIA’s next quarterly cash dividend; NVIDIA’s financial outlook and expected tax rates for the first quarter of fiscal 2025; the benefits, impact, performance, features and availability of NVIDIA’s products and technologies, including NVIDIA AI platforms, NVIDIA DGX Cloud, NVIDIA DGX SuperPOD, NVIDIA NeMo Retriever, NVIDIA MONAI cloud APIs, NVIDIA Hopper architecture GPUs, NVIDIA GeForce RTX 40 SUPER Series GPUs, NVIDIA DLSS 3.5 Ray Reconstruction, NVIDIA Reflex, NVIDIA TensorRT-LLM, Chat with RTX, microservices for the NVIDIA Avatar Cloud Engine, NVIDIA DLSS, ray tracing and other NVIDIA RTX technologies, NVIDIA Omniverse, NVIDIA RTX 2000 Ada Generation GPU, NVIDIA DRIVE platform, NVIDIA DRIVE Orin and NVIDIA DRIVE Thor; and our collaborations with third parties are forward-looking statements that are subject to risks and uncertainties that could cause results to be materially different than expectations. Important factors that could cause actual results to differ materially include: global economic conditions; our reliance on third parties to manufacture, assemble, package and test our products; the impact of technological development and competition; development of new products and technologies or enhancements to our existing product and technologies; market acceptance of our products or our partners’ products; design, manufacturing or software defects; changes in consumer preferences or demands; changes in industry standards and interfaces; and unexpected loss of performance of our products or technologies when integrated into systems, as well as other factors detailed from time to time in the most recent reports NVIDIA files with the Securities and Exchange Commission, or SEC, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q. Copies of reports filed with the SEC are posted on the company’s website and are available from NVIDIA without charge. These forward-looking statements are not guarantees of future performance and speak only as of the date hereof, and, except as required by law, NVIDIA disclaims any obligation to update these forward-looking statements to reflect future events or circumstances.© 2024 NVIDIA Corporation. All rights reserved. NVIDIA, the NVIDIA logo, GeForce, GeForce RTX, NVIDIA DGX, NVIDIA DGX SuperPOD, NVIDIA DRIVE, NVIDIA DRIVE Orin, NVIDIA DRIVE Thor, NVIDIA Hopper, NVIDIA MONAI, NVIDIA NeMo, NVIDIA Omniverse, NVIDIA RTX and TensorRT are trademarks and/or registered trademarks of NVIDIA Corporation in the U.S. and/or other countries. Other company and product names may be trademarks of the respective companies with which they are associated. Features, pricing, availability and specifications are subject to change without notice.NVIDIA CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME(In millions, except per share data)(Unaudited) Three Months EndedTwelve Months Ended January 28,January 29,January 28,January 29,2024202320242023Revenue$22,103 $6,051 $60,922 $26,974 Cost of revenue 5,312 2,218 16,621 11,618 Gross profit16,791 3,833 44,301 15,356 Operating expensesResearch and development 2,465 1,951 8,675 7,339 Sales, general and administrative711 625 2,654 2,440 Acquisition termination cost— — — 1,353 Total operating expenses3,176 2,576 11,329 11,132 Operating income13,615 1,257 32,972 4,224 Interest income294 115 866 267 Interest expense(63)(65)(257)(262)Other, net260 (18)237 (48)Other income (expense), net491 32 846 (43)Income before income tax14,106 1,289 33,818 4,181 Income tax expense (benefit)1,821 (125)4,058 (187)Net income$12,285 $1,414 $29,760 $4,368 Net income per share:Basic$4.98 $0.57 $12.05 $1.76 Diluted$4.93 $0.57 $11.93 $1.74 Weighted average shares used in per share computation:Basic2,466 2,464 2,469 2,487 Diluted2,490 2,477 2,494 2,507 NVIDIA CORPORATIONCONDENSED CONSOLIDATED BALANCE SHEETS(In millions)(Unaudited)January 28,January 29,20242023ASSETSCurrent assets:Cash, cash equivalents and marketable securities$25,984 $13,296 Accounts receivable, net9,999 3,827 Inventories5,282 5,159 Prepaid expenses and other current assets3,080 791 Total current assets44,345 23,073 Property and equipment, net3,914 3,807 Operating lease assets1,346 1,038 Goodwill4,430 4,372 Intangible assets, net1,112 1,676 Deferred income tax assets6,081 3,396 Other assets 4,500 3,820 Total assets$65,728 $41,182 LIABILITIES AND SHAREHOLDERS' EQUITYCurrent liabilities:Accounts payable$2,699 $1,193 Accrued and other current liabilities6,682 4,120 Short-term debt1,250 1,250 Total current liabilities10,631 6,563 Long-term debt8,459 9,703 Long-term operating lease liabilities1,119 902 Other long-term liabilities2,541 1,913 Total liabilities22,750 19,081 Shareholders' equity42,978 22,101 Total liabilities and shareholders' equity$65,728 $41,182 NVIDIA CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(In millions)(Unaudited)Three Months EndedTwelve Months EndedJanuary 28,January 29,January 28,January 29, 2024202320242023Cash flows from operating activities: Net income$12,285 $1,414 $29,760 $4,368 Adjustments to reconcile net income to net cashprovided by operating activities:Stock-based compensation expense993 738 3,549 2,709 Depreciation and amortization387 426 1,508 1,544 Deferred income taxes(78)(647)(2,489)(2,164)(Gains) losses on investments in non-affiliated entities, net(260)10 (238)45 Acquisition termination cost— — — 1,353 Other(109)20 (278)(7)Changes in operating assets and liabilities, net of acquisitions:Accounts receivable(1,690)1,081 (6,172)822 Inventories(503)(706)(98)(2,554)Prepaid expenses and other assets(1,184)(210)(1,522)(1,517)Accounts payable281 (193)1,531 (551)Accrued and other current liabilities1,072 166 2,025 1,341 Other long-term liabilities305 150 514 252 Net cash provided by operating activities11,499 2,249 28,090 5,641 Cash flows from investing activities:Proceeds from maturities of marketable securities1,731 2,633 9,732 19,425 Proceeds from sales of marketable securities50 — 50 1,806 Purchases of marketable securities(7,524)(2,133)(18,211)(11,897)Purchase related to property and equipment and intangible assets(253)(509)(1,069)(1,833)Acquisitions, net of cash acquired— — (83)(49)Investments in non-affiliated entities and other, net(113)5 (985)(77)Net cash provided by (used in) investing activities(6,109)(4)(10,566)7,375 Cash flows from financing activities:Proceeds related to employee stock plans— 5 403 355 Payments related to repurchases of common stock(2,660)(1,212)(9,533)(10,039)Payments related to tax on restricted stock units(841)(344)(2,783)(1,475)Repayment of debt— — (1,250)— Dividends paid(99)(98)(395)(398)Principal payments on property and equipment and intangible assets(29)(4)(74)(58)Other— (3)(1)(2)Net cash used in financing activities(3,629)(1,656)(13,633)(11,617)Change in cash and cash equivalents1,761 589 3,891 1,399 Cash and cash equivalents at beginning of period5,519 2,800 3,389 1,990 Cash and cash equivalents at end of period$7,280 $3,389 $7,280 $3,389 Supplemental disclosure of cash flow information:Cash paid for income taxes, net$1,874 $32 $6,549 $1,404 Cash paid for interest$26 $28 $252 $254 NVIDIA CORPORATION RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (In millions, except per share data) (Unaudited) Three Months EndedTwelve Months Ended January 28,October 29January 29,January 28,January 29, 20242023202320242023GAAP gross profit$16,791 $13,400 $3,833 $44,301 $15,356 GAAP gross margin76.0 %74.0 %63.3 %72.7 %56.9 %Acquisition-related and other costs (A)119 119 120 477 455 Stock-based compensation expense (B)45 38 30 141 138 IP-related costs4 26 16 40 16 Non-GAAP gross profit$16,959 $13,583 $3,999 $44,959 $15,965 Non-GAAP gross margin76.7 %75.0 %66.1 %73.8 %59.2 %GAAP operating expenses$3,176 $2,983 $2,576 $11,329 $11,132 Stock-based compensation expense (B)(948)(941)(709)(3,408)(2,572)Acquisition-related and other costs (A)(18)(16)(54)(106)(219)Acquisition termination cost— — — — (1,353)Other (C)— — (38)10 (63)Non-GAAP operating expenses$2,210 $2,026 $1,775 $7,825 $6,925 GAAP operating income$13,615 $10,417 $1,257 $32,972 $4,224 Total impact of non-GAAP adjustments to operating income1,134 1,140 967 4,162 4,816 Non-GAAP operating income$14,749 $11,557 $2,224 $37,134 $9,040 GAAP other income (expense), net$491 $105 $32 $846 $(43)(Gains) losses from non-affiliated investments(260)69 10 (238)45 Interest expense related to amortization of debt discount1 1 1 4 5 Non-GAAP other income (expense), net$232 $175 $43 $612 $7 GAAP net income$12,285 $9,243 $1,414 $29,760 $4,368 Total pre-tax impact of non-GAAP adjustments875 1,210 978 3,928 4,865 Income tax impact of non-GAAP adjustments (D)(321)(433)(218)(1,376)(867)Non-GAAP net income $12,839 $10,020 $2,174 $32,312 $8,366 Three Months EndedTwelve Months EndedJanuary 28,October 29January 29,January 28,January 29,20242023202320242023Diluted net income per shareGAAP$4.93 $3.71 $0.57 $11.93 $1.74 Non-GAAP $5.16 $4.02 $0.88 $12.96 $3.34 Weighted average shares used in diluted net income per share computation2,490 2,494 2,477 2,494 2,507 GAAP net cash provided by operating activities$11,499 $7,333 $2,249 $28,090 $5,641 Purchases related to property and equipment and intangible assets(253)(278)(509)(1,069)(1,833)Principal payments on property and equipment and intangible assets(29)(13)(4)(74)(58)Free cash flow$11,217 $7,042 $1,736 $26,947 $3,750 (A) Acquisition-related and other costs are comprised of amortization of intangible assets and transaction costs, and are included in the following line items:Three Months EndedTwelve Months Ended January 28,October 29January 29,January 28,January 29, 20242023202320242023Cost of revenue$119 $119 $120 $477 $455 Research and development$12 $12 $10 $49 $39 Sales, general and administrative$6 $4 $44 $57 $180 (B) Stock-based compensation consists of the following:Three Months EndedTwelve Months EndedJanuary 28,October 29January 29,January 28,January 29,20242023202320242023Cost of revenue$45 $38 $30 $141 $138 Research and development$706 $701 $527 $2,532 $1,892 Sales, general and administrative$242 $240 $182 $876 $680 (C) Other consists of costs related to Russia branch office closure, assets held for sale related adjustments, legal settlement costs, and contributions.(D) Income tax impact of non-GAAP adjustments, including the recognition of excess tax benefits or deficiencies related to stock-based compensation under GAAP accounting standard (ASU 2016-09). NVIDIA CORPORATION RECONCILIATION OF GAAP TO NON-GAAP OUTLOOK Q1 FY2025 Outlook($ in millions)GAAP gross margin76.3 %Impact of stock-based compensation expense, acquisition-related costs, and other costs0.7 %Non-GAAP gross margin77.0 %GAAP operating expenses$3,480 Stock-based compensation expense, acquisition-related costs, and other costs(980)Non-GAAP operating expenses$2,500 |
0001193125-24-201374:d856033dex991.htm | 0001193125-24-201374 | 1,844,817 | 1,844,817 | Armada Acquisition Corp. I (CIK 0001844817) | null | 8-K | 8-K | 2024-08-15 | 2024-08-15 | 001-40742 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-40742&action=getcompany | 241,213,164 | EX-99.1 | EX-99.1 | 7.01,9.01 | https://www.sec.gov/Archives/edgar/data/1844817/000119312524201374 | https://www.sec.gov/Archives/edgar/data/1844817/000119312524201374/0001193125-24-201374-index.html | https://www.sec.gov/Archives/edgar/data/1844817/000119312524201374/d856033dex991.htm | EX-99.1 2 d856033dex991.htm EX-99.1 EX-99.1 Exhibit 99.1 Armada Acquisition Corp. I Closes Business Combination with Rezolve AI Limited Rezolve AI common shares and warrants to begin trading on the Nasdaq on Aug. 16, 2024 under the ticker symbols “RZLV” and “RZLVW”, respectively Philadelphia — Aug. 15, 2024 — Armada Acquisition Corp. I, (Nasdaq: AACI) a publicly traded special purpose acquisition company (“Armada”), announced today the closing of its previously announced business combination with Rezolve AI Limited, a leading provider of AI-driven engagement platforms for retail and commerce. Armada stockholders approved the transaction at Armada’s special meeting held on August 1, 2024. Rezolve plans to grow a strategic market base and expand its position as a global provider of a SAAS based, generative AI powered sales engine that is designed to help retailers improve search, advice and revenue generation. The combined company will operate as “Rezolve AI Limited”, and its common shares and warrants are expected to begin trading on the Nasdaq Stock Market (“Nasdaq”) under the ticker symbols “RZLV” and “RZLVW”, respectively, on August 16, 2024. Rezolve’s management team, led by Chairman and CEO Daniel Wagner, CEO, Technology and Product Sauvik Banerjjee, CTO Dr Salman Ahmed and CFO Richard Burchill, will continue to lead the public company following the Business Combination. “Armada identified what we believe to be a company capable of transforming digital retail engagement using its proprietary generative AI powered sales engine, and we’re committed to helping Rezolve grow to deliver next level performance for customers and value to shareholders,” said Stephen Herbert, chairman and CEO of Armada Acquisition Corp. I. “The Rezolve team, Armada, and Armada’s advisors and professionals worked tirelessly to close this important transaction which represents a significant milestone for Armada,” said Douglas M. Lurio, President and Director of Armada. Additional information about the completed Business Combination will be provided in a Current Report on Form 8-K to be filed by Armada and a Form 6-K to be filed by Rezolve with the Securities and Exchange Commission and available at www.sec.gov. Advisors Cohen & Company Capital Markets, a division of J.V.B. Financial Group, LLC, and Northland Capital Markets are serving as financial advisors and lead capital markets advisors to Armada Acquisition Corp. I. DLA Piper LLP (US) is serving as legal counsel for Armada Acquisition Corp. I. Marcum LLP is serving as auditor for Armada Acquisition Corp. I. Bishop IR is serving as investor relations advisor on the transaction. About Armada Acquisition Corp. I Armada is a special purpose acquisition company whose business purpose is to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or similar business combination with one or more businesses. Armada was founded on November 5, 2020 and is headquartered in Philadelphia, PA. About Rezolve AI Limited Rezolve AI is a leader in the mobile commerce industry with our cutting-edge engagement platform powered by artificial intelligence and machine learning. By enabling retailers, brands, and manufacturers to create dynamic connections with consumers across mobile and desktop devices, we redefine mobile engagement. Rezolve AI’s AI-driven platform simplifies the purchasing process, providing relevant information and facilitating seamless transactions with a single tap. With a commitment to innovation, we shape the future of digital commerce where technology seamlessly intersects with commerce for the benefit of businesses and consumers. Rezolve AI’s scalable platform offers merchants actionable solutions to engage consumers effectively, managing high traffic volumes and gathering valuable engagement data in real-time. The company was founded in 2016, is headquartered in London, UK and has offices in: New Delhi, Taipei, Frankfurt, Madrid, Mexico City and Providence, RI. For more information, please visit www.rezolve.com. Forward-Looking Statements This press release includes “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995 and within the meaning of Section 27a of the Securities Act and Section 21E of the Exchange Act. Any actual results may differ from expectations, estimates and projections presented or implied and, consequently, you should not rely on these forward-looking statements as predictions of future events. Words such as “expect,” “estimate,” “project,” “budget,” “forecast,” “anticipate,” “intend,” “plan,” “may,” “will,” “could,” “should,” “believes,” “predicts,” “potential,” “continue,” and similar expressions are intended to identify such forward-looking statements. These forward-looking statements include, without limitation, statements regarding Rezolve’s plans for its business and platform and plans to operate following the closing of the business combination. These forward-looking statements are subject to a number of risks and uncertainties, including, among others, (1) the outcome of any legal proceedings that may be instituted against Armada, Rezolve Limited, Rezolve or others following in connection with the proposed business combination and any definitive agreements with respect thereto; (3) the ability to meet stock exchange listing standards following the consummation of proposed business combination; (4) the risk that the proposed business combination disrupts current plans and operations of Rezolve as a result of the announcement and consummation of the proposed business combination; (5) the ability to recognize the anticipated benefits of the proposed business combination, which may be affected by, among other things, competition, the ability of the combined company to grow and manage growth profitably, and retain its management and key employees; (6) costs related to the proposed business combination; (7) changes in applicable laws or regulations; (8) weakness in the economy, market trends, uncertainty and other conditions in the markets in which Rezolve Limited or Rezolve operate, and other factors beyond their control, such as inflation or rising interest rates; (9) the possibility that Rezolve Limited, Rezolve or the combined company may be adversely affected by other economic, business, and/or competitive factors; and (10) additional risks, including those to be included under the header “Risk Factors” in the Registration Statement and those included under the header “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” in Armada’s Annual Report on Form 10-K for the year ended September 30, 2022 and the Quarterly Reports on Form 10-Q filed by Armada for the quarterly periods ended December 31, 2022 and March 31, 2023. If any of these risks materialize or Armada’s, Rezolve Limited’s or Rezolve’s assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. There may be additional risks that none of Armada, Rezolve Limited or Rezolve presently know or that Armada, Rezolve Limited and Rezolve currently believe are immaterial that could also cause actual results to differ from those contained in the forward-looking statements. In addition, forward-looking statements reflect Armada’s, Rezolve Limited’s and/or Rezolve’s expectations, plans or forecasts of future events and views as of the date of this press release. Armada, Rezolve Limited and Rezolve anticipate that subsequent events and developments will cause Armada, Rezolve Limited’s and Rezolve’s assessments to change. However, while Armada, Rezolve Limited and Rezolve may elect to update these forward-looking statements at some point in the future, each of Armada, Rezolve Limited, Rezolve and Rezolve Merger Sub specifically disclaim any obligation to do so, unless required by applicable law. These forward-looking statements should not be relied upon as representing Armada’s, Rezolve Limited’s and Rezolve’s assessments as of any date subsequent to the date of this press release. Accordingly, undue reliance should not be placed upon the forward-looking statements. Contacts Investor Contact: Mike Bishop Bishop IR, LLC mike@bishopir.com Media Contact: Urmee Khan urmeekhan@rezolve.com +44-7576-094-040 |
0001213900-24-086424:ea021714201ex99-1_ondas.htm | 0001213900-24-086424 | 1,646,188 | 1,646,188 | Ondas Holdings Inc. (ONDS) (CIK 0001646188) | ['ONDS'] | 8-K | 8-K | 2024-10-09 | 2024-10-09 | 001-39761 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-39761&action=getcompany | 241,361,671 | EX-99.1 | PRESS RELEASE, DATED OCTOBER 9, 2024 | 7.01,9.01 | https://www.sec.gov/Archives/edgar/data/1646188/000121390024086424 | https://www.sec.gov/Archives/edgar/data/1646188/000121390024086424/0001213900-24-086424-index.html | https://www.sec.gov/Archives/edgar/data/1646188/000121390024086424/ea021714201ex99-1_ondas.htm | EX-99.1 2 ea021714201ex99-1_ondas.htm PRESS RELEASE, DATED OCTOBER 9, 2024 Exhibit 99.1 GenLab Venture Studio and Ondas Autonomous Systems Launch AI & Autonomous Systems Strategic Alliance for Data Center, Semiconductor & AI-Foundry Critical Infrastructure Protection Alliance aims to leverage GenLab’s AI and business development expertise and Ondas Autonomous Systems (OAS) autonomous drone platforms to drive scalable go to market solutions Partners will initially focus on advancing comprehensive AI-driven aerial security and inspection solutions to protect critical infrastructure and technology assets October 9, 2024 11:53 AM Eastern Daylight Time SAN FRANCISCO--(BUSINESS WIRE)--GenLab Venture Studio (GenLab) announces the creation of a strategic alliance with Ondas Autonomous Systems Inc. (OAS) to drive the future of public safety, first responder, and emergency response through the selection and integration of trusted autonomous systems for critical infrastructure protection, homeland security, and national security service providers. “The future of public safety and security of Autonomy & Mobility is being redefined with extraordinary breakthroughs in artificial intelligence, autonomy, and navigation,” said Daniel Riedel, founder of GenLab Venture Studio. “We are not only privileged to partner with the leader in trusted autonomous systems, Ondas Autonomous Systems, but we are also actively investing in their breakthroughs for scaling critical infrastructure protection.” OAS’ advancements in autonomy and the proven system reliability of their Optimus System to collect and provide essential intelligence in the scaled deployment of automated drone fleets are reshaping what’s possible for drones as first responder (DFR) and autonomous fleet management operations to defend the Cloud Service Provider, Data Center, AI Semiconductor and Foundry Industry’s most valuable critical infrastructure. GenLab’s Studio’s VC model is a venture studio equity class designed to build sustainable, trusted deep tech and artificial intelligence business models. By partnering with best-in-class technology providers such as OAS, GenLab creates unique, resilient, and highly scalable platforms and business models to become a leader in value creation for global infrastructure. Sarah Novotny, GenLab partner and CTO: ” AI data platforms, autonomous distributed systems like Optimus from OAS, and 5G combined with velocity and navigation telemetry generated by state-of-the-art guidance sensor suites will redefine transportation and autonomy. Telemetry and observability data are critical as we work to trust artificial intelligence platforms as they integrate into our data in our daily lives and physical systems.” GenLab’s investments in firms like OAS and its backing for their Optimus and Iron Drone portfolio for critical infrastructure are informed by decades of data security and infrastructure experience, underscoring the importance of building safe, robust data governance and deploying secure, scalable systems. Too many services we rely on daily are built on complex, fragile systems reliant on transmitting crucial telemetry data moved through potentially insecure systems. Our national organizations, such as DHS, Mitre, NIST, and other FRRDCs, including our national labs, constantly encourage “Secure by Design” approaches to building better, scaling better, and delivering systems that society can trust, our venture community must help drive that methodology to ensure we build trusted infrastructure for our families and our future. OAS proven autonomous drone systems provide GenLab’s partners in Corporate Venture Capital and the Defense Industrial Base with a highly reliable aerial data platform that ensures system integrity and operational continuity. The Optimus System delivers the necessary drone infrastructure and command-and-control (C2) and data automation software systems combined with integrated airspace safety infrastructure and regulatory solutions for truly autonomous operations and intelligence gathering. Already operational in the UAE and Israel, the Optimus System employs scalable automated drone fleets that function without on-the-ground human intervention, forming a task force that gathers and delivers crucial information for a variety of customer needs. Those needs include ISR requirements to secure critical military assets and DFR capabilities for public safety and security organizations protecting the world’s most critical industrial and technology infrastructure. Protecting that infrastructure, ranging from cloud hyperscale, data centers and semiconductor manufacturing facilities to maritime ports and airports, is an imperative given how strategic these assets are in supporting the defense and economic security of the United States “Recent increases in supply chain integrity breaches have raised the bar again for companies that must apply zero-trust principles to manufacturing. Implementing these principles while driving widespread adoption and commercialization of valuable AI-enabled systems is, in essence, the purpose of GenLab, ” says Bob Gourley, Advisor to GenLab Venture Studio. “Given the global need to protect the integrity of the supply chain at every step from transportation, delivery, building, and deploying, we will have to rely on autonomous systems to give humans the ability to have full visibility and transparency.” Gourley continued, “For decades, hundreds of companies have been working to improve drone automation and fleet autonomy, but few have been able to demonstrate the reliable automation capabilities that OAS possesses and that are required to realize the benefits of truly scalable aerial operations. Each Optimus System operates as a networked fleet, featuring a smart docking station for automated battery changes, ensuring 24/7 continuous operation. These stations enable automated sensor loading and installation tailored to mission-specific requirements. Optimus drones provide aerial coverage of up to 30 square miles per docking station. Tasked with various sensors, the drones facilitate diverse operations, with complex missions overseen remotely from a command-and-control center. Built to endure harsh environments, it operates effectively in both extreme heat and cold weather conditions. The Optimus System is designed to operate in complex aerial environments including those where GPS and communication links are compromised or unavailable. 2 The autonomous capabilities of the Optimus System are powered by the Primus and Insightful mission-critical software platforms, offering robust support for navigation, data processing, and analysis. The Primus platform serves as a C2 system for remote BVLOS operations, managed from an Integrated Control Center, and supports fleet operations, while providing real time payload control during flight. Primus also commands the automated functionality of the docking station. The Insightful platform is a comprehensive geo-visual data solution designed to enhance the capabilities of Airobotics’ Optimus drones. It excels in real-time data processing, transforming data captured by the drones into actionable insights without requiring human intervention ensuring timely and accurate intelligence delivery. Additionally, Insightful serves as a unified data platform, providing a secure, centralized web-based portal for visualizing, understanding, and sharing of data and intelligence. Modular and adaptable, the Optimus System allows for interchangeable and upgradeable components, including payload sensors and data analytics, to meet specific customer needs. Similarly, both Primus and Insightful software platforms provide comprehensive suites of APIs to ensure integration with related aerial infrastructure, customer operating systems and for third party data processing and analytics capabilities. “We are excited to partner with GenLab to help expand the market for our Optimus System,” said Eric Brock OAS Chairman & CEO. “GenLab brings extreme expertise in AI/ML technologies and their application to support high performing business models valued by customers. Our partnership will help OAS advance and deliver new AI-driven capabilities allowing for faster and deeper penetration in our targeted end markets. Demand is surging for reliable, persistent DFR-type solutions that are truly autonomous across public safety and critical infrastructure and industrial security markets, including for the protection of our nation’s most strategic and valuable technology assets. Utilizing the combined strengths of OAS and GenLab, we will together meet the highest autonomy requirements for aerial security and intelligence that OAS can uniquely deliver with Optimus.” The unique capabilities of OAS’ Optimus System allow GenLab to leverage its deep knowledge in building secure data platforms and deliver advanced integration into a variety of business models that can help drive global infrastructure from observability to autonomy. Optimus can persistently collect high valued data which has been historically difficult to capture and harness and turned into actionable intelligence. Collecting that data at scale is fundamental to highly precise and trusted artificial intelligence systems. About GenLab Studio GenLab Studio is a venture studio building startups that leverage the impact and application of generative AI. By focusing on solid design principles and engaging a diverse community, GenLab Studio aims to create groundbreaking products that help build a stronger ecosystem for AI and humanity. About Ondas Autonomous Systems Inc: Ondas Autonomous Systems Inc. (OAS) specializes in the design, development, and marketing of autonomous drone solutions through its wholly owned subsidiaries, American Robotics, Inc. (“American Robotics”) and Airobotics LTD (“Airobotics”). OAS is deploying two advanced autonomous drone platforms: the Optimus System and the Iron Drone Raider system, aimed at providing aerial security and intelligence for military, critical infrastructure, and industrial markets. 3 The Optimus System is the world’s first FAA-certified small UAS (sUAS) designed for aerial security and data capture, while the Iron Drone Raider is a counter-drone system developed to combat the increasing threat of hostile drones. Both platforms are highly automated, AI-powered, and capable of continuous, remote operation required by critical defense, infrastructure, industrial, and government applications where enhanced security, data collection, and information processing are essential. American Robotics and Airobotics boast industry-leading regulatory achievements, including the first-ever FAA Type Certification for the Optimus System and the first drone system approved by the FAA for automated beyond-visual-line-of-sight (BVLOS) operations without an on-site human operator. Together, OAS, American Robotics, and Airobotics deliver improved situational awareness and advanced data collection and processing capabilities to customers in defense, homeland security, public safety, and other critical industrial and government sectors. OAS and its subsidiaries have headquarters in Baltimore County, Maryland and Peta Tikvah, Israel Contacts GenLab Studio Daniel Riedel Founder/Partner press@genlab.studio 717 Market St Suite 100 San Francisco, CA 94103 Ondas Autonomous Systems Inc. Eric Brock Chairman & CEO ir@ondas.com 936 Ridgebrook Road Sparks, MD 21152 4 |
0001907982-25-000101:a991d-waveannouncesgeneral.htm | 0001907982-25-000101 | 1,907,982 | 1,907,982 | D-Wave Quantum Inc. (QBTS, QBTS-WT) (CIK 0001907982) | ['QBTS', 'QBTS-WT'] | 8-K | 8-K | 2025-05-20 | 2025-05-20 | 001-41468 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-41468&action=getcompany | 25,966,319 | EX-99.1 | EX-99.1 | 8.01,9.01 | https://www.sec.gov/Archives/edgar/data/1907982/000190798225000101 | https://www.sec.gov/Archives/edgar/data/1907982/000190798225000101/0001907982-25-000101-index.html | https://www.sec.gov/Archives/edgar/data/1907982/000190798225000101/a991d-waveannouncesgeneral.htm | EX-99.1 2 a991d-waveannouncesgeneral.htm EX-99.1 DocumentD-Wave Announces General Availability of Advantage2 Quantum Computer, Its Most Advanced and Performant System Sixth-Generation Quantum Computer Shown to Solve Hard Problems Beyond the Reach of Classical ComputersNew System Delivers Significant Performance Gains with Greater Coherence and Increased Qubit Connectivity to Better Tackle More Complex Problems at ScaleProduction-Ready 4,400+ Qubit Annealing Quantum Computer Available Now for Customers’ Real-World Use CasesPALO ALTO, Calif. – May 20, 2025 – D-Wave Quantum Inc. (NYSE: QBTS) (“D-Wave” or the “Company”), a leader in quantum computing systems, software, and services, today announced the general availability of its Advantage2TM quantum computing system, a powerful and energy-efficient annealing quantum computer capable of solving computationally complex problems beyond the reach of classical computers. Featuring D-Wave’s most advanced quantum processor to date, the Advantage2 system is commercial-grade, and built to address real-world use cases in areas such as optimization, materials simulation and artificial intelligence (AI). “Today marks a significant milestone not just for D-Wave, but for the quantum computing industry as a whole, as we bring to market our sixth-generation quantum computer, a system so powerful that it can solve hard problems outside the reach of one of the world’s largest exascale GPU-based classical supercomputers,” said Dr. Alan Baratz, CEO of D-Wave. “It’s an engineering marvel, with substantial technical advancements that highlight D-Wave’s progress in scaling quantum technology to meet industry demands for growing computational processing power while maintaining energy efficiency. We’re helping customers realize value from quantum computing right now, and the Advantage2 system represents a remarkable achievement in delivering on that mission.”Customers can now access the Advantage2 system via D-Wave’s LeapTM real-time quantum cloud service, which is available in more than 40 countries and offers 99.9% availability and uptime, sub-second response times and SOC 2 Type 2 compliance to meet enterprise needs and security requirements. For hyperscalers and supercomputing centers that want to integrate quantum computing into their infrastructure, the Advantage2 system is also available to purchase for on-premises ownership.Advantage2 Quantum Processor Shows Significant Performance Gains over Previous GenerationDesigned to tackle highly complex computational problems and facilitate quantum and hybrid-quantum applications for production deployment, the Advantage2 system’s key benefits include: •Increased qubit connectivity: The Advantage2 processor features the Zephyr™ topology with 20-way connectivity, which enables embedding of more complex problems.•Higher energy scale and lower noise: The Advantage2 system offers a 40% increase in energy scale and a 75% reduction in noise, which contributes to higher-quality solutions for complex calculations.•Greater coherence: A twofold increase in coherence allows the Advantage2 quantum processor to achieve faster time-to-solution.•Energy-efficient processing power: D-Wave’s quantum computers, including the Advantage2 system, have required the same amount of electricity over six generations—a mere 12.5 kilowatts. •Fast anneal: This feature enables coherent quantum annealing at scale, greatly reducing the impact of external disturbances such as thermal fluctuations that can hinder quantum calculations.•Hybrid solver integration: Now integrated with the full Advantage2 system, the hybrid solvers in the Leap quantum cloud service—including the powerful nonlinear hybrid solver—support up to two million variables and constraints, allowing businesses to run large-scale, business-critical applications in production.To check out the impressive Advantage2 system benchmarking results, read the whitepaper here: https://d-wave-systems-inc-website.euwest01.umbraco.io/media/wakjcpsf/adv2_4400q_whitepaper-1.pdf. Customer Use Cases Reflect a Diverse Set of Quantum Optimization, Quantum Research and Quantum AI Applications Organizations regularly face the limitations of legacy computing solutions, leading to a growing demand for D-Wave's annealing quantum computing technology to tackle hard problems such as optimizing mobile networks, creating more efficient workforce scheduling, and streamlining automotive manufacturing processes. More than 20.6 million customer problems have been run on the Advantage2 prototypes available in the Leap cloud service since June 2022, with customer use up 134% in the last six months. An Advantage2 prototype was used by Japan Tobacco in a proof-of-concept project that utilized quantum computing and AI in the drug discovery process, and the Jülich Supercomputing Center and Los Alamos National Laboratory have used the prototypes to advance their research. Beginning today, a full-scale generally available Advantage2 system is accessible in the Leap quantum cloud service for all D-Wave customers. In addition, D-Wave continues to expand its fleet of annealing quantum computers hosted around the world. The forthcoming Advantage2 system hosted on-premises at Davidson Technologies is intended to serve as a focal point for national security-focused quantum research. Also, the system currently located at the Jülich Supercomputing Centre (JSC) at Forschungszentrum Jülich (FZJ) will be upgraded to an Advantage2 system and is expected to connect with the JUPITER supercomputer, Europe’s first and only exascale HPC, to facilitate breakthroughs in artificial intelligence and quantum optimization applications.Learn more and begin using the D-Wave Advantage2 quantum computer today here: https://www.dwavequantum.com/solutions-and-products/systems/. Register to attend a D-Wave webinar on the Advantage2 system on June 10 at 11 a.m. ET here: https://dwavesys.zoom.us/webinar/register/2517467129419/WN_PavIfr-gQJ-NJWPq7NhnQQ. Support from Leading Industry Voices and Advantage2 Prototype UsersCarleton Coffrin, Senior Scientist, Los Alamos National Laboratory (LANL)“I lead a significant R&D effort at LANL to explore the use of analog quantum computers for scientific discovery in condensed matter theory and magnetic materials. We currently use the Advantage2 prototype system, which has yielded a variety of interesting technical results that are currently being prepared for peer review. The team is eager to work on the full-scale Advantage2 system to further this research.”Dale Moore, President and CEO, Davidson Technologies“We are thrilled to host an Advantage2 annealing quantum computer on-premises at Davidson headquarters in Huntsville, Alabama. We believe this system offers an important new pathway for the development of quantum optimization applications designed to support mission-critical challenges and national security-focused quantum research.” Dr. Masaru Tateno, Chief Scientific Officer of Central Pharma Research Institute at Japan Tobacco“The impact of bringing quantum together with AI could drive new breakthroughs in life sciences, as demonstrated in our recent proof of concept. The project revealed that D-Wave’s Advantage2 quantum systems can deliver high quality, low energy samples that could drive enhanced performance in generative AI architectures. We look forward to using the full Advantage2 system to accelerate our efforts in achieving Quantum AI-driven drug discovery.”About D-Wave Quantum Inc.D-Wave is a leader in the development and delivery of quantum computing systems, software, and services. We are the world’s first commercial supplier of quantum computers, and the only company building both annealing and gate-model quantum computers. Our mission is to help customers realize the value of quantum, today. Our quantum computers, the world’s largest, are available on-premises or via the cloud, supported by 99.9% availability and uptime. More than 100 organizations trust D-Wave with their toughest computational challenges. With over 200 million problems submitted to our quantum systems to date, our customers apply our technology to address use cases spanning optimization, artificial intelligence, research and more. Learn more about realizing the value of quantum computing today and how we’re shaping the quantum-driven industrial and societal advancements of tomorrow: www.dwavequantum.com.Forward-Looking StatementsCertain statements in this press release are forward-looking, as defined in the Private Securities Litigation Reform Act of 1995. These statements involve risks, uncertainties, and other factors that may cause actual results to differ materially from the information expressed or implied by these forward-looking statements and may not be indicative of future results. These forward-looking statements are subject to a number of risks and uncertainties, including, among others, various factors beyond management’s control, including the risks set forth under the heading “Risk Factors” discussed under the caption “Item 1A. Risk Factors” in Part I of our most recent Annual Report on Form 10-K or any updates discussed under the caption “Item 1A. Risk Factors” in Part II of our Quarterly Reports on Form 10-Q and in our other filings with the SEC. Undue reliance should not be placed on the forward-looking statements in this press release in making an investment decision, which are based on information available to us on the date hereof. We undertake no duty to update this information unless required by law.Media Contacts:D-WaveAlex Daiglemedia@dwavesys.com |
0001104659-25-046237:tm2513400d1_ex99-1.htm | 0001104659-25-046237 | 903,651 | 903,651 | INNODATA INC (INOD) (CIK 0000903651) | ['INOD'] | 8-K | 8-K | 2025-05-08 | 2025-05-08 | 001-35774 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-35774&action=getcompany | 25,927,385 | EX-99.1 | EXHIBIT 99.1 | 2.02,9.01 | https://www.sec.gov/Archives/edgar/data/903651/000110465925046237 | https://www.sec.gov/Archives/edgar/data/903651/000110465925046237/0001104659-25-046237-index.html | https://www.sec.gov/Archives/edgar/data/903651/000110465925046237/tm2513400d1_ex99-1.htm | EX-99.1 2 tm2513400d1_ex99-1.htm EXHIBIT 99.1 Exhibit 99.1 Innodata Reports First Quarter 2025 Results with Revenue up 120% Year-Over-Year and Reaffirms Growth Guidance of 40% or more for 2025 NEW YORK – May 8, 2025 – INNODATA INC. (Nasdaq: INOD) today reported results for the first quarter ended March 31, 2025. ·Revenue of $58.3 million, representing 120% revenue growth year-over-year. ·Adjusted EBITDA of $12.7 million, an increase of $8.9 million from $3.8 million in the same period last year.* ·Net income of $7.8 million, or $0.25 per basic share and $0.22 per diluted share, compared to a net income of $1.0 million, or $0.03 per basic and diluted share, in the same period last year. ·Cash, cash equivalents and short-term investments were $56.6 million as of March 31, 2025 and $46.9 million as of December 31, 2024. * Adjusted EBITDA is defined below. Jack Abuhoff, CEO, said, "We had a strong start to the year. We’re being onboarded by potential major new customers, expanding existing relationships, and building a pipeline that’s deeper and more advanced than at any point in our history. We are bringing ideas and innovation to our customers that are being well received. We believe the breadth of activity across our business illustrates strong momentum that positions us for continued strong performance. Specifically, we draw investors' attention to several important factors that we believe demonstrate the accelerating growth in our business: ·Expanding Relationships with Existing Customers. Today we signed a second master statement of work with our largest customer enabling them to utilize our capabilities in a distinct budget category within their organization – separate from the budget that supports our existing engagements. We believe this new budget is materially larger. In addition, four of our other Big Tech customers have awarded us engagements that we value at approximately $8 million, and we are in discussions with five of our other Big Tech customers that we believe are likely to result in more than $30 million of awards in the near term. ·New Customer Acquisition. We are in the process of being onboarded by a number of potentially significant customers. This includes one of the world’s largest and most respected enterprise technology providers; one of the world’s leading cloud software companies; a technology conglomerate that operates one of the world’s largest digital commerce ecosystems; and a global healthcare technology company. ·Strategic Alignment. We believe we are aligned strategically to support our customers on their generative AI journeys. We continue to innovate and expand our capabilities around collecting and creating generative AI training data; agentic AI; enterprise AI; and large language model trust & safety. ·Investment. In 2025, we plan to re-invest a portion of our cash from operations back into the business. We are planning targeted investments in technology to support both current and prospective customers in their AI journeys, as well as increased strategic hiring in sales and solutioning to drive long-term growth. We believe we can make these investments and still guide to growing our Adjusted EBITDA in 2025 over 2024. ·Strong Balance Sheet. We strengthened our balance sheet, finishing the quarter with $56.6 million in cash, up from with $46.9 million in cash at year end. Our $30 million credit facility remains undrawn. ·2025 Guidance. We reiterate our guidance of 40% or more revenue growth in 2025. ·Macro Environment. We do not believe that short term business cycles or trade policies have much of an impact on our business prospects. We believe we are positioned to benefit from strong AI-driven capex spending among the Magnificent Seven companies, for whom AI advancements are considered high priorities. Abuhoff concluded, “The momentum in our business has never been stronger. My executive team and I are enthusiastic about our opportunity to harness the moment to build Innodata into one of the leading AI solutions companies of our era.” Amounts in this press release have been rounded. All percentages have been calculated using unrounded amounts. Timing of Conference Call with Q&A Innodata will conduct an earnings conference call, including a question-and-answer period, at 5:00 PM eastern time today. You can participate in this call by dialing the following call-in numbers: The call-in numbers for the conference call are: (+1) 800 549 8228 North America (+1) 289 819 1520 International Participant Access Code 75884 (+1) 888 660 6264 (Domestic replay) (+1) 289 819 1325 (International replay) Replay passcode 75884# It is recommended that participants dial in approximately 10 minutes prior to the start of the call. Investors are also invited to access a live Webcast of the conference call at the Investor Relations section of Innodata’s website at https://investor.innodata.com/events-and-presentations/. Please note that the Webcast feature will be in listen-only mode. Call-in replay will be available for seven days following the conference call, and Webcast replay will be available for 30 days following the conference call, at the Investor Relations section of Innodata’s website at https://investor.innodata.com/events-and-presentations/. About Innodata Innodata (Nasdaq: INOD) is a global data engineering company. We believe that data and Artificial Intelligence (AI) are inextricably linked. That’s why we’re on a mission to help the world’s leading technology companies and enterprises drive Generative AI / AI innovation. We provide a range of transferable solutions, platforms, and services for Generative AI / AI builders and adopters. In every relationship, we honor our 35+ year legacy delivering the highest quality data and outstanding outcomes for our customers. Visit www.innodata.com to learn more. Forward-Looking Statements This press release may contain certain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. These forward-looking statements include, without limitation, statements concerning our operations, economic performance, financial condition, developmental program expansion and position in the generative AI services market. Words such as “project,” “forecast,” “believe,” “expect,” “can,” “continue,” “could,” “intend,” “may,” “should,” “will,” “anticipate,” “indicate,” “guide,” “predict,” “likely,” “estimate,” “plan,” “potential,” “possible,” “promises,” or the negatives thereof, and other similar expressions generally identify forward-looking statements. These forward-looking statements are based on management’s current expectations, assumptions and estimates and are subject to a number of risks and uncertainties, including, without limitation, impacts resulting from ongoing geopolitical conflicts, including between India and Pakistan, Russia and Ukraine, Hamas’ attack against Israel and the ensuing conflict and increased hostilities between Hezbollah and Israel and Iran and Israel; investments in large language models; that contracts may be terminated by customers; projected or committed volumes of work may not materialize; pipeline opportunities and customer discussions which may not materialize into work or expected volumes of work; the likelihood of continued development of the markets, particularly new and emerging markets, that our services support; the ability and willingness of our customers and prospective customers to execute business plans that give rise to requirements for our services; continuing reliance on project-based work in the Digital Data Solutions (“DDS”) segment and the primarily at-will nature of such contracts and the ability of these customers to reduce, delay or cancel projects; potential inability to replace projects that are completed, canceled or reduced; our DDS segment’s revenue concentration in a limited number of customers; our dependency on content providers in our Agility segment; our ability to achieve revenue and growth targets; difficulty in integrating and deriving synergies from acquisitions, joint ventures and strategic investments; potential undiscovered liabilities of companies and businesses that we may acquire; potential impairment of the carrying value of goodwill and other acquired intangible assets of companies and businesses that we acquire; a continued downturn in or depressed market conditions; changes in external market factors; the potential effects of U.S. global trading and monetary policy, including the interest rate policies of the Federal Reserve; changes in our business or growth strategy; the emergence of new, or growth in existing competitors; various other competitive and technological factors; our use of and reliance on information technology systems, including potential security breaches, cyber-attacks, privacy breaches or data breaches that result in the unauthorized disclosure of consumer, customer, employee or Company information, or service interruptions; and other risks and uncertainties indicated from time to time in our filings with the Securities and Exchange Commission. Our actual results could differ materially from the results referred to in any forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, the risks discussed in Part I, Item 1A. “Risk Factors,” Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and other parts of our Annual Report on Form 10-K, filed with the Securities and Exchange Commission on February 24, 2025, as updated or amended by our other filings that we may make with the Securities and Exchange Commission. In light of these risks and uncertainties, there can be no assurance that the results referred to in the forward-looking statements will occur, and you should not place undue reliance on these forward-looking statements. These forward-looking statements speak only as of the date hereof. We undertake no obligation to update or review any guidance or other forward-looking statements, whether as a result of new information, future developments or otherwise, except as may be required by the U.S. federal securities laws. Company Contact Jelena Sutovic Innodata Inc. investor@innodata.com (201) 371-8024 Non-GAAP Financial Measures In addition to the financial information prepared in conformity with U.S. GAAP (“GAAP”), we provide certain non-GAAP financial information. We believe that these non-GAAP financial measures assist investors in making comparisons of period-to-period operating results. In some respects, management believes non-GAAP financial measures are more indicative of our ongoing core operating performance than their GAAP equivalents by making adjustments that management believes are reflective of the ongoing performance of the business. We believe that the presentation of this non-GAAP financial information provides investors with greater transparency by providing investors a more complete understanding of our financial performance, competitive position, and prospects for the future, particularly by providing the same information that management and our Board of Directors use to evaluate our performance and manage the business. However, the non-GAAP financial measures presented in this press release have certain limitations in that they do not reflect all of the costs associated with the operations of our business as determined in accordance with GAAP. Therefore, investors should consider non-GAAP financial measures in addition to, and not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP. Further, the non-GAAP financial measures that we present may differ from similar non-GAAP financial measures used by other companies. Adjusted Gross Profit and Adjusted Gross Margin We define Adjusted Gross Profit as revenues less direct operating costs attributable to Innodata Inc. and its subsidiaries in accordance with U.S. GAAP, plus depreciation and amortization of intangible assets, stock-based compensation, non-recurring severance and other one-time costs included within direct operating cost. We define Adjusted Gross Margin by dividing Adjusted Gross Profit over total U.S. GAAP revenues. We use Adjusted Gross Profit and Adjusted Gross Margin to evaluate results of operations and trends between fiscal periods and believe that these measures are important components of our internal performance measurement process. A reconciliation of Adjusted Gross Profit and Adjusted Gross Margin to the most directly comparable GAAP measure is included in the tables that accompany this release. Adjusted EBITDA We define Adjusted EBITDA as net income (loss) attributable to Innodata Inc. and its subsidiaries in accordance with U.S. GAAP before interest expense, income taxes, depreciation and amortization of intangible assets (which derives EBITDA), plus additional adjustments for loss on impairment of intangible assets and goodwill, stock-based compensation, income (loss) attributable to non-controlling interests, non-recurring severance, and other one-time costs. We use Adjusted EBITDA to evaluate core results of operations and trends between fiscal periods and believe that these measures are important components of our internal performance measurement process. A reconciliation of Adjusted EBITDA to the most directly comparable GAAP measure is included in the tables that accompany this release. INNODATA INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except per-share amounts) Three Months Ended March 31 2025 2024 Revenues $58,344 $26,504 Operating costs and expenses: Direct operating costs 35,092 16,869 Selling and administrative expenses 14,980 8,305 Interest income, net (127) (84) 49,945 25,090 Income before provision for income taxes 8,399 1,414 Provision for income taxes 612 424 Consolidated net income 7,787 990 Income attributable to non-controlling interests - 1 Net income attributable to Innodata Inc. and Subsidiaries $7,787 $989 Income per share attributable to Innodata Inc. and Subsidiaries: Basic $0.25 $0.03 Diluted $0.22 $0.03 Weighted average shares outstanding: Basic 31,434 28,753 Diluted 34,951 32,239 INNODATA INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands) March 31, 2025 December 31, 2024 ASSETS Current assets: Cash and cash equivalents $56,556 $46,897 Accounts receivable, net 29,577 28,013 Prepaid expenses and other current assets 6,216 6,090 Total current assets 92,349 81,000 Property and equipment, net 4,679 4,101 Right-of-use asset, net 4,036 4,238 Other assets 1,276 1,267 Deferred income taxes, net 7,282 7,492 Intangibles, net 13,570 13,353 Goodwill 2,018 1,998 Total assets $125,210 $113,449 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable, accrued expenses and other $18,257 $17,455 Accrued salaries, wages and related benefits 13,608 13,836 Income and other taxes 4,861 5,695 Long-term obligations - current portion 1,505 1,643 Operating lease liability - current portion 904 877 Total current liabilities 39,135 39,506 Deferred income taxes, net 35 32 Long-term obligations, net of current portion 7,096 6,744 Operating lease liability, net of current portion 3,542 3,778 Total liabilities 49,808 50,060 STOCKHOLDERS' EQUITY 75,402 63,389 Total liabilities and stockholders’ equity $125,210 $113,449 INNODATA INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands) Three Months Ended March 31, 2025 2024 Cash flows from operating activities: Consolidated net income $7,787 $990 Adjustments to reconcile consolidated net income to net cash provided by operating activities: Depreciation and amortization 1,563 1,266 Stock-based compensation 2,881 1,034 Deferred income taxes 149 (54) Pension cost 342 309 Loss on lease termination Changes in operating assets and liabilities: Accounts receivable (1,353) 137 Prepaid expenses and other current assets (47) 86 Other assets (16) 426 Accounts payable, accrued expenses and other 679 2,838 Accrued salaries, wages and related benefits (249) (490) Income and other taxes (869) 225 Net cash provided by operating activities 10,867 6,767 Cash flows from investing activities: Capital expenditures (2,350) (1,339) Net cash used in investing activities (2,350) (1,339) Cash flows from financing activities: Proceeds from exercise of stock options 963 - Payment of long-term obligations (103) (291) Net cash provided by (used in) financing activities 860 (291) Effect of exchange rate changes on cash and cash equivalents 282 32 Net increase in cash and cash equivalents 9,659 5,169 Cash and cash equivalents, beginning of period 46,897 13,806 Cash and cash equivalents, end of period $56,556 $18,975 INNODATA INC. AND SUBSIDIARIES RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (Unaudited) (In thousands) Adjusted Gross Profit and Adjusted Gross Margin Three Months Ended March 31, Consolidated 2025 2024 Gross Profit attributable to Innodata Inc. and Subsidiaries $23,252 $9,635 Depreciation and amortization 1,544 1,240 Stock-based compensation 427 84 Adjusted Gross Profit $25,223 $10,959 Gross Margin 40% 36% Adjusted Gross Margin 43% 41% Three Months Ended March 31, DDS Segment 2025 2024 Gross Profit attributable to DDS Segment $19,729 $6,558 Depreciation and amortization 714 338 Stock-based compensation 416 74 Adjusted Gross Profit $20,859 $6,970 Gross Margin 39% 33% Adjusted Gross Margin 41% 35% Three Months Ended March 31, Synodex Segment 2025 2024 Gross Profit attributable to Synodex Segment $552 $399 Depreciation and amortization 87 137 Stock-based compensation - - Adjusted Gross Profit $639 $536 Gross Margin 27% 21% Adjusted Gross Margin 32% 29% Three Months Ended March 31, Agility Segment 2025 2024 Gross Profit attributable to Agility Segment $2,971 $2,678 Depreciation and amortization 743 765 Stock-based compensation 11 10 Adjusted Gross Profit $3,725 $3,453 Gross Margin 55% 54% Adjusted Gross Margin 68% 70% INNODATA INC. AND SUBSIDIARIES RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (Unaudited) (In thousands) Adjusted EBITDA Three Months Ended March 31, Consolidated 2025 2024 Net income attributable to Innodata Inc. and Subsidiaries $7,787 $989 Provision for income taxes 612 424 Interest (income) expense, net (127) 68 Depreciation and amortization 1,563 1,266 Stock-based compensation 2,881 1,034 Non-controlling interests - 1 Adjusted EBITDA - Consolidated $12,716 $3,782 Three Months Ended March 31, DDS Segment 2025 2024 Net income attributable to DDS Segment $7,675 $426 Provision for income taxes 587 421 Interest (income) expense, net (127) 67 Depreciation and amortization 733 364 Stock-based compensation 2,676 895 Non-controlling interests - 1 Adjusted EBITDA - DDS Segment $11,544 $2,174 Three Months Ended March 31, Synodex Segment 2025 2024 Net income attributable to Synodex Segment $266 $276 Depreciation and amortization 87 137 Stock-based compensation 65 49 Adjusted EBITDA - Synodex Segment $418 $462 Three Months Ended March 31, Agility Segment 2025 2024 Net income (loss) attributable to Agility Segment $(154) $287 Provision for income taxes 25 3 Interest expense - 1 Depreciation and amortization 743 765 Stock-based compensation 140 90 Adjusted EBITDA - Agility Segment $754 $1,146 INNODATA INC. AND SUBSIDIARIES CONSOLIDATED REVENUE BY SEGMENT (Unaudited) (In thousands) Three Months Ended March 31, 2025 2024 Revenues: DDS $50,831 $19,705 Synodex 2,013 1,871 Agility 5,500 4,928 Total Consolidated $58,344 $26,504 |
0001213900-23-093913:ea189490ex99-1_soundhoun.htm | 0001213900-23-093913 | 1,840,856 | 1,840,856 | SOUNDHOUND AI, INC. (SOUN, SOUNW) (CIK 0001840856) | ['SOUN', 'SOUNW'] | 8-K | 8-K | 2023-12-07 | 2023-12-06 | 001-40193 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-40193&action=getcompany | 231,471,200 | EX-99.1 | PRESS RELEASE ISSUED BY SOUNDHOUND AI, INC. DATED DECEMBER 7, 2023 | 1.01,3.02,7.01,9.01 | https://www.sec.gov/Archives/edgar/data/1840856/000121390023093913 | https://www.sec.gov/Archives/edgar/data/1840856/000121390023093913/0001213900-23-093913-index.html | https://www.sec.gov/Archives/edgar/data/1840856/000121390023093913/ea189490ex99-1_soundhoun.htm | EX-99.1 3 ea189490ex99-1_soundhoun.htm PRESS RELEASE ISSUED BY SOUNDHOUND AI, INC. DATED DECEMBER 7, 2023 Exhibit 99.1 SoundHound AI to Acquire SYNQ3 to Expand Its AI Customer Service Solutions and Create the Largest Voice AI Provider for Restaurants Merger will create a new AI market leader with over 10,000 restaurant locations and best-in-class voice AI solutions SANTA CLARA, Calif., December 07, 2023 – SoundHound AI, Inc. (Nasdaq: SOUN), a global leader in voice artificial intelligence, today announced a definitive merger agreement to acquire SYNQ3 Restaurant Solutions, a leading provider of voice AI and other technology solutions to the restaurant industry. The deal will make SoundHound the preeminent U.S. provider of voice AI for restaurants, significantly extending its market reach by an order of magnitude to over 10,000 signed locations and accelerating the deployment of leading-edge generative AI capabilities to the industry. SYNQ3 will also add large national brands spanning drive thru, fast casual, casual segments, and convenience stores to SoundHound’s fast growing customer base – bringing the total to more than 25 national and multinational chains. The highly complementary businesses will match nearly two decades of SoundHound AI innovation with decades of SYNQ3 industry expertise and established relationships. The SYNQ3 team brings deep restaurant sales, product, and customer service experience with an increasing focus on AI. Seasoned executive talent like Co-Founder and CEO Steve Bigari, a former McDonald’s operator, will strengthen SoundHound AI’s leadership as the company moves to rapidly roll out its best-in-class proprietary AI solutions to restaurants across the U.S. and beyond. Other immediate business benefits include: ●Over 100,000 restaurant locations in the combined pipeline, and over 10,000 signed ●A broad suite of AI products to offer SYNQ3’s established customer base more value added services, including Dynamic Interaction, Smart Answering, and Employee Assist ●Revenue synergies with SoundHound’s existing restaurant business ●Enhanced AI models using data from over 50 million interactions to strengthen product performance ●Omnichannel voice and conversational AI offerings that allow restaurants to engage across multiple touchpoints ●An acceleration of SoundHound’s monetization strategy via voice-enabled food and drink ordering in millions of cars, TVs, and IoT devices. “In joining forces, SoundHound AI and SYNQ3 will be the go-to standard for cutting-edge voice and conversational AI solutions for the restaurant industry,” said Keyvan Mohajer, CEO and Co-Founder of SoundHound AI. “Restaurant operators are turning to technology en masse, and voice AI is now playing a key role in helping them drive sales, reduce costs, and alleviate the burden of increasing demand on their employees.” “SoundHound AI and SYNQ3 will provide our restaurant partners with a formidable voice solution that we believe significantly surpasses the competition,” said Steve Bigari, CEO and Co-Founder of SYNQ3. “Our businesses are highly complementary, with both AI and industry expertise at the core of who we are. Together, we plan to capitalize on those synergies to provide best-in-class AI ordering methodologies backed by the largest library of restaurant AI orders in the world. This will power a rapid acceleration of our growth!” SoundHound is expected to pay a total consideration of $25 million. Over the next three years, based on certain revenue targets being achieved, up to $4 million of additional consideration could be realized. The aggregate consideration payable to stockholders of SYNQ3 consists of approximately 20% in cash and approximately 80% in shares of SoundHound’s Class A common stock. The transaction is expected to close in Q1 next year. Additional details will be provided on SoundHound’s Q4 2023 earnings conference call. About SoundHound AI SoundHound (Nasdaq: SOUN), a global leader in conversational intelligence, offers voice AI solutions that let businesses offer incredible conversational experiences to their customers. Built on proprietary technology, SoundHound’s voice AI delivers best-in-class speed and accuracy in numerous languages to product creators across automotive, TV, and IoT, and to customer service industries via groundbreaking AI-driven products like Smart Answering, Smart Ordering, and Dynamic Interaction™, a real-time, multimodal customer service interface. Along with SoundHound Chat AI, a powerful voice assistant with integrated Generative AI, SoundHound powers millions of products and services, and processes billions of interactions each year for world class businesses. Forward Looking Statements This communication contains forward-looking statements, which are not historical facts, within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. These forward-looking statements include, but are not limited to, statements concerning the closing of the merger, the expected operational and financial performance of the Company upon closing of the merger, the Company's ability to retain customers of SYNQ3 following the merger, and such other statements that may be identified by the use of words such as “may,” “could,” “expect,” “intend,” “plan,” “seek,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue,” “likely,” “will,” “would” and variations of these terms and similar expressions, or the negative of these terms or similar expressions. These statements are based on management’s current expectations, assumptions, estimates and beliefs. While the Company believes these expectations, assumptions, estimates and beliefs are reasonable, such forward-looking statements are only predictions, and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. The following factors, among others, could cause actual results to differ materially from those described in the forward-looking statements: (i) failure of SYNQ3 to obtain stockholder approval as required for the proposed transaction; (ii) failure to satisfy the conditions to the closing of the proposed transaction; (iii) unexpected costs, liabilities or delays in connection with or with respect to the proposed transaction; (iv) the effect of the announcement of the proposed transaction on the ability of the Company or SYNQ3 to retain and hire key personnel and maintain relationships with customers, suppliers and others with whom the Company or SYNQ3 do business, or on the Company or SYNQ3’s operating results and business generally; (v) the outcome of any legal proceeding related to the proposed transaction; (vi) the challenges and costs of integrating, restructuring and achieving anticipated synergies and benefits of the proposed transaction and the risk that the anticipated benefits of the proposed transaction may not be fully realized or take longer to realize than expected; (vii) competitive pressures in the markets in which the Company and SYNQ3 operate; (viii) the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement; and (ix) other risks to the consummation of the proposed transaction, including the risk that the proposed transaction will not be consummated within the expected time period or at all. Additional factors that may affect the future results of the Company are set forth in its filings with the SEC, including each of the Company’s most recently filed Annual Report on Form 10-K, subsequent Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other filings with the SEC, which are available on the SEC’s website at www.sec.gov. Readers are urged to consider these factors carefully in evaluating these forward-looking statements, and not to place undue reliance on any forward-looking statements. Readers should also carefully review the risk factors described in other documents that the Company files from time to time with the SEC. The forward-looking statements in these materials speak only as of the date of these materials. Except as required by law, the Company assumes no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future. Media Contact: Fiona McEvoy 415 610-6590 PR@SoundHound.com Investor Contact: Scott Smith 408-724-1498 IR@SoundHound.com |
0001628280-23-020351:ex991-fy23xq4earnings.htm | 0001628280-23-020351 | 1,577,526 | 1,577,526 | C3.ai, Inc. (AI) (CIK 0001577526) | ['AI'] | 8-K | 8-K | 2023-05-31 | 2023-05-31 | 001-39744 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-39744&action=getcompany | 23,981,776 | EX-99.1 | EX-99.1 | 2.02,9.01 | https://www.sec.gov/Archives/edgar/data/1577526/000162828023020351 | https://www.sec.gov/Archives/edgar/data/1577526/000162828023020351/0001628280-23-020351-index.html | https://www.sec.gov/Archives/edgar/data/1577526/000162828023020351/ex991-fy23xq4earnings.htm | EX-99.1 2 ex991-fy23xq4earnings.htm EX-99.1 DocumentC3 AI Announces Fiscal Fourth Quarter and Full Year Fiscal 2023 Financial ResultsGenerative AI Changes EverythingREDWOOD CITY, Calif. - May 31, 2023 - C3.ai, Inc. (NYSE: AI), the Enterprise AI application software company, today announced financial results for its fiscal fourth quarter and full fiscal year ended April 30, 2023.Fiscal Fourth Quarter 2023 Financial Highlights•Revenue: Total revenue for the quarter was $72.4 million.•Subscription Revenue: Subscription revenue for the quarter was $56.9 million, constituting 79% of revenue.•Gross Profit: GAAP gross profit for the quarter was $47.5 million, representing a 66% gross margin. Non-GAAP gross profit for the quarter was $53.9 million, representing a 74% non-GAAP gross margin.•Remaining Performance Obligations (“RPO”): GAAP RPO was $381.4 million.•Current RPO: Current RPO of $186.3 million.•Net Loss per Share: GAAP net loss per share was $(0.58). Non-GAAP net loss per share was $(0.13).•Cash Balance: $812.4 million in cash, cash equivalents, and investments.•Free Cash Flow: Positive free cash flow $16.3 million.Full Year Fiscal 2023 Financial Highlights•Revenue: Total revenue for the fiscal year was $266.8 million, an increase of 5.6% compared to FY 22.•Subscription Revenue: Subscription revenue for the fiscal year was $230.4 million, constituting 86% of revenue, representing 11.4% growth over FY 22.•Gross Profit: GAAP gross profit for the fiscal year was $180.5 million, representing 68% gross margin. Non-GAAP gross profit was $205.2 million, representing 77% non-GAAP gross margin.•Net Loss per Share: GAAP net loss per share was $(2.45). Non-GAAP net loss per share was $(0.42).Overall Business Results:We believe it is generally agreed today that the market for enterprise AI applications is substantially larger and growing at a much greater growth rate than experts predicted. C3 AI has been at the vanguard of the enterprise AI market for over a decade as that market has developed from its roots in IoT, to unsupervised learning, supervised learning, NLP, deep learning, reinforcement learning, and now generative AI. The interest in applying AI to business processes is more active than we've ever seen.C3 AI Applications:As the enterprise AI market develops, it appears that the bulk of the demand is increasingly for turnkey enterprise AI applications, rather than development tools. An evaluation of our bookings for the past fiscal year indicates that 83% of our bookings were driven by application sales. 17% of our bookings were driven by sales of the C3 AI Platform.C3 AI delivers over 40 enterprise AI applications today.We are seeing increasing diversity in the industries we serve. For FY 23, an analysis of our bookings includes:Oil & Gas33.8 %Federal, Defense & Aerospace28.9 %High Tech13.2 %Energy & utilities11.4 %Manufacturing4.2 %Food Processing2.0 %Chemicals1.8 %Life sciences1.5 %Other3.2 %An important leading indicator of our increasing industry diversity is evidenced by the trial and pilot agreements closed in Q4 FY 23:Federal, Defense & Aerospace36.8 %Manufacturing15.8 %High Tech10.5 %Oil & Gas10.5 %Agriculture5.3 %State and Local5.3 %Chemicals5.3 %Energy & utilities5.3 %Financial Services5.3 %As a result of increasing market demand for enterprise AI -- and from our adoption of consumption-based pricing -- we are seeing a substantial increase in opportunities and shorter sales cycles.In the fourth quarter of FY 23, the company closed 43 agreements, including 19 pilots. The number of qualified enterprise opportunities targeted for closure within 12 months in our sales pipeline has increased by more than 100% in the past year. During FY 23, we closed 126 agreements, up from 83 the prior year. The average sales cycle for agreements in Q4 FY 23 was 3.7 months, down from 5 months in Q4 FY 22.An examination of the composition of our pilot account profile suggests there is significant opportunity for growth as these accounts convert to consumption pricing. Of the 19 pilot accounts signed in Q4 FY 23:PilotsAccount size in revenue7> $100 billion7$10 - $100 billion4$1 - $10 billion0$100 million - $1 billion1< $100 millionIn FY 23, C3 AI expanded its application footprint at Shell, Koch Industries, U.S. Air Force Rapid Sustainment Office (“RSO”), PwC, Ball, ExxonMobil, Con Edison, Defense Counterintelligence and Security Agency (“DCSA”), Baker Hughes, New York Power Authority, Duke Energy, ATB, Defense Innovation Unit, Roche, Cargill, and Engie, among others. In FY 23, we established new customer relationships with Department of Defense – Common DoD Artificial Intelligence Office; Daly City, CA; DOW; ExxonMobil; Flex; General Mills; Hexagon; Nucor; O-I; Pantaleon; Riverside County, CA; Stark County, Ohio; Telus; DoD-SOCOM; DoD-TRANSCOM; ESAB, and others. Many of these also expanded their C3 AI engagements during the year.C3 AI Partner NetworkC3 AI's partner ecosystem is increasingly effective at opening new doors, providing prospects the assurance of success, and providing customers with the highest quality service. In FY 23, we closed 71 agreements with and through our partner network including Google Cloud, AWS, Microsoft, Baker Hughes, Booz Allen, and others. C3 AI has grown its qualified 12-month opportunity pipeline with AWS by over 24% in the last quarter, with particular focus on state and local government. With Google Cloud, our joint qualified 12-month opportunity pipeline grew from 25 opportunities at the end of FY 22 to 140 opportunities at the end of FY 23, a 460% increase. We closed 10 new oil & gas accounts in the year with Baker Hughes including ExxonMobil, ADNOC, ENI, and others.C3 Generative AI:In Q4 we released the C3 Generative AI solution to the market. It is distinguished from other GPT/LLM solutions in the market in that – leveraging the capabilities of the C3 AI Platform -- it 1) allows enterprises access to all their enterprise data and open source data – ERP, CRM, SCADA, text, PDFs, Excel, PowerPoint, sensor data, open source, etc.; 2) provides traceable, deterministic, consistent answers; 3) enforces corporate information access controls and security protocols, 4) has no risk of LLM-caused data or IP exfiltration; and 5) is hallucination-free.We rapidly closed three C3 Generative AI application agreements in the quarter with large enterprises, including Georgia Pacific, Flint Hills Resources, and the U.S. Department of Defense Missile Defense Agency (MDA). These applications are expected to be live in Q1 FY 24. We are currently working a substantial pipeline of additional C3 Generative AI opportunities with large corporations. The C3 Generative AI application is now available on both the AWS and Google Cloud marketplaces. It is difficult to estimate the size of the addressable market for these solutions, but it appears extraordinarily large.C3 AI Federal Momentum:The U.S. Federal Sector represented 29% of our bookings in FY 23.The U.S. Air Force selected C3 AI as the System of Record for AI-enabled predictive maintenance. C3 AI’s predictive maintenance solution, Predictive Analytics & Decision Assistant (“PANDA”), has been in production use for several years at the USAF Rapid Sustainment Office (“RSO”). This designation expands C3 AI’s opportunity to all predictive maintenance applications in the U.S. Air Force. Plan for ProfitabilityThe company continues on-track with its plan for profitability, with the goal of achieving a sustainably non-GAAP profitable business by the end of fiscal year 2024, ending April 30, 2024. Positive results to date, including $16.3 million positive free cash flow from business operations in Q4 FY 23.CEO Comments:“As we began the fiscal year on May 1, the company has never been better positioned,” said Thomas M. Siebel, C3 AI CEO. “I believe we now have broad consensus that the addressable market for Enterprise AI is extraordinarily large and rapidly growing; we have nearly 1,000 talented, dedicated employees; the C3 AI Platform is increasingly recognized as the gold-standard in enterprise AI; we have over 40 production enterprise AI applications that offer the market rapid time to value; our C3 Generative AI offerings are being enthusiastically received; our growing market-partner ecosystem provides us extraordinary reach; with our tried, tested, and proven management team, our strong work ethic, and armed with $812 million in cash – we are well positioned to accelerate growth, gain market share, attain sustainable non-GAAP profitability, and establish a market-leading position globally in enterprise AI. FY 2024 will be exciting.”Financial Outlook:The Company’s guidance includes GAAP and non-GAAP financial measures.The following table summarizes C3 AI’s guidance for the first quarter of fiscal 2024 and full-year fiscal 2024:(in millions)First Quarter Fiscal 2024GuidanceFull Year Fiscal 2024 GuidanceTotal revenue$70.0 - $72.5$295.0 - $320.0Non-GAAP loss from operations($25.0) - ($30.0)($50.0) - ($75.0)A reconciliation of non-GAAP guidance measures to corresponding GAAP measures is not available on a forward-looking basis without unreasonable effort due to the uncertainty regarding, and the potential variability of, expenses that may be incurred in the future. Stock-based compensation expense-related charges, including employer payroll tax-related items on employee stock transactions, are impacted by the timing of employee stock transactions, the future fair market value of our common stock, and our future hiring and retention needs, all of which are difficult to predict and subject to constant change. We have provided a reconciliation of GAAP to non-GAAP financial measures in the financial statement tables for our historical non-GAAP results included in this press release. Our fiscal year ends April 30, and numbers are rounded for presentation purposes.C3 AI Investor Day – June 22, 2023C3 AI will be hosting an Investor Day in New York City to provide C3 AI investors a company update, additional information about our product roadmap; product demonstrations; direct access to the C3 AI Executive team; updates on the partner eco-system; C3 Generative AI demonstrations; and additional company developing news. The event will be broadcast to the investor community at large via live webcast. Conference Call Details What:C3 AI Fourth Quarter Fiscal 2023 Financial Results Conference CallWhen:Wednesday, May 31, 2023Time:2:00 p.m. PT / 5:00 p.m. ETParticipant Registration:https://register.vevent.com/register/BI82803676bd9a45f486a3df9d2260d9a6 (live call)Webcast:https://edge.media-server.com/mmc/p/4mip8zax (live and replay)Investor Presentation DetailsAn investor presentation providing additional information and analysis can be found at our investor relations page at ir.c3.ai.Statement Regarding Use of Non-GAAP Financial MeasuresThe Company reports the following non-GAAP financial measures, which have not been prepared in accordance with generally accepted accounting principles in the United States (GAAP), in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.•Non-GAAP gross profit, non-GAAP gross margin, non-GAAP loss from operations, and non-GAAP net loss per share. Our non-GAAP gross profit, non-GAAP gross margin, non-GAAP loss from operations, and non-GAAP net loss per share exclude the effect of stock-based compensation expense-related charges and employer payroll tax expense related to employee stock-based compensation. We believe the presentation of operating results that exclude these non-cash items provides useful supplemental information to investors and facilitates the analysis of our operating results and comparison of operating results across reporting periods.•Free cash flow. We believe free cash flow, a non-GAAP financial measure, is useful in evaluating liquidity and provides information to management and investors about our ability to fund future operating needs and strategic initiatives. We calculate free cash flow as net cash provided by (used in) operating activities less purchases of property and equipment and capitalized software development costs. This non-GAAP financial measure may be different than similarly titled measures used by other companies. Additionally, the utility of free cash flow is further limited as it does not represent the total increase or decrease in our cash balances for a given period.We use these non-GAAP financial measures internally for financial and operational decision-making purposes and as a means to evaluate period-to-period comparisons. Non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP financial measures and should be read only in conjunction with our condensed consolidated financial statements prepared in accordance with GAAP. Our presentation of non-GAAP financial measures may not be comparable to similar measures used by other companies. We encourage investors to carefully consider our results under GAAP, as well as our supplemental non-GAAP information and the reconciliation between these presentations, to more fully understand our business. Please see the tables included at the end of this release for the reconciliation of GAAP to non-GAAP financial measures.Use of Forward-Looking StatementsThis press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this press release other than statements of historical facts, including our market leadership position, anticipated benefits from our partnerships and investments, financial outlook, our expectations relating to our new consumption-pricing model and the impact to our results of operations, our expectation to be operating profitably on a non-GAAP basis by the end of fiscal 2024, the expected benefits of our offerings, our business strategies, plans, and objectives for future operations, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “estimate,” “expect,” “intend,” “may,” “will” and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks and uncertainties, including difficulties in evaluating our prospects and future results of operations given our limited operating history, our dependence on a limited number of existing customers that account for a substantial portion of our revenue, our ability to attract new customers and retain existing customers, market awareness and acceptance of enterprise AI solutions in general and our products in particular, and our history of operating losses. Some of these risks are described in greater detail in our filings with the Securities and Exchange Commission, including our Quarterly Reports on Form 10-Q for the fiscal quarters ended July 31, 2022, October 31, 2022 and January 31, 2022, and other filings and reports we make with the Securities and Exchange Commission from time to time, including our Form 10-K that will be filed for the fiscal year ended April 30, 2023, although new and unanticipated risks may arise. The future events and trends discussed in this press release may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, achievements, or events and circumstances reflected in the forward-looking statements will occur. Except to the extent required by law, we do not undertake to update any of these forward-looking statements after the date of this press release to conform these statements to actual results or revised expectations.About C3.ai, Inc.C3.ai, Inc. (NYSE:AI) is the Enterprise AI application software company. C3 AI delivers a family of fully integrated products including the C3 AI Application Platform, an end-to-end platform for developing, deploying, and operating enterprise AI applications and C3 AI Applications, a portfolio of industry-specific SaaS enterprise AI applications that enable the digital transformation of organizations globally, and C3 Generative AI, a suite of large AI transformer models for the enterprise.Investor Contactir@c3.aiPress ContactLisa Kennedy (415) 914-8336pr@c3.aiSource: C3.ai, Inc.C3.AI, INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except per share data)(Unaudited)Three Months Ended April 30,Fiscal Year Ended April 30,2023202220232022RevenueSubscription(1)$56,866 $56,302 $230,443 $206,916 Professional services(2)15,544 16,015 36,352 45,843 Total revenue72,410 72,317 266,795 252,759 Cost of revenueSubscription(3)23,872 12,958 78,423 45,838 Professional services1,036 4,405 7,914 17,875 Total cost of revenue24,908 17,363 86,337 63,713 Gross profit47,502 54,954 180,458 189,046 Operating expensesSales and marketing(4)51,701 47,450 183,121 173,584 Research and development49,681 46,378 210,660 150,544 General and administrative19,400 17,649 77,170 61,040 Total operating expenses120,782 111,477 470,951 385,168 Loss from operations(73,280)(56,523)(290,493)(196,122)Interest income8,230 750 21,979 1,827 Other income (expense), net284 (2,452)350 3,019 Loss before provision for income taxes(64,766)(58,225)(268,164)(191,276)Provision for income taxes190 195 675 789 Net loss$(64,956)$(58,420)$(268,839)$(192,065)Net loss per share attributable to Class A and Class B common stockholders, basic and diluted$(0.58)$(0.55)$(2.45)$(1.84)Weighted-average shares used in computing net loss per share attributable to Class A and Class B common stockholders, basic and diluted112,746 105,824 109,851 104,404 (1) Including related party revenue of $19,568 and $20,465 for the three months ended April 30, 2023 and 2022, respectively, and $75,452 and $60,425 for the fiscal years ended April 30, 2023 and 2022, respectively.(2) Including related party revenue of $8,025 and $3,982 for the three months ended April 30, 2023 and 2022, respectively, and $16,774 and $16,872 for the fiscal years ended April 30, 2023 and 2022, respectively.(3) Including purchases from related party included in cost of revenue of nil and $190 for the three months ended April 30, 2023 and 2022, respectively, and nil and $578 for the fiscal years ended April 30, 2023 and 2022, respectively.(4) Including related party sales and marketing expense of $3,416 and $5,639 for the three months ended April 30, 2023 and 2022, respectively, and $13,962 and $8,229 for the fiscal years ended April 30, 2023 and 2022, respectively.C3.AI, INC.CONDENSED CONSOLIDATED BALANCE SHEETS(In thousands, except for share and per share data)(Unaudited)April 30, 2023April 30, 2022AssetsCurrent assetsCash and cash equivalents$284,829 $339,528 Short-term investments446,155 620,633 Accounts receivable, net of allowance of $359 and $157 as of April 30, 2023 and 2022, respectively(1)134,586 80,271 Prepaid expenses and other current assets(2)23,309 20,004 Total current assets888,879 1,060,436 Property and equipment, net84,578 14,517 Goodwill625 625 Long-term investments81,418 32,086 Other assets, non-current(3)47,528 63,218 Total assets$1,103,028 $1,170,882 Liabilities and stockholders’ equityCurrent liabilitiesAccounts payable(4)$24,610 $54,218 Accrued compensation and employee benefits46,513 32,223 Deferred revenue, current(5)47,846 48,854 Accrued and other current liabilities(6)17,070 14,874 Total current liabilities136,039 150,169 Deferred revenue, non-current4 288 Other long-term liabilities(7)37,320 30,948 Total liabilities173,363 181,405 Commitments and contingenciesStockholders’ equityClass A common stock, $0.001 par value. 1,000,000,000 shares authorized as of April 30, 2023 and 2022, respectively; 110,442,569 and 102,725,041 shares issued and outstanding as of April 30, 2023 and 2022 respectively110 103 Class B common stock, $0.001 par value; 3,500,000 shares authorized as of April 30, 2023 and 2022, respectively; 3,499,992 and 3,499,992 shares issued and outstanding as of April 30, 2023 and 2022, respectively3 3 Additional paid-in capital1,740,174 1,532,917 Accumulated other comprehensive loss(385)(2,148)Accumulated deficit(810,237)(541,398)Total stockholders’ equity929,665 989,477 Total liabilities and stockholders’ equity$1,103,028 $1,170,882 (1) Including amounts from a related party of $74,620 and $35,848 as of April 30, 2023 and 2022, respectively.(2) Including amounts from a related party of $4,983 and $4,862 as of April 30, 2023 and 2022, respectively.(3) Including amounts from a related party of $11,279 and $16,141 as of April 30, 2023 and 2022, respectively.(4) Including amounts from a related party of $2,200 and $18,549 as of April 30, 2023 and 2022, respectively.(5) Including amounts from a related party of $249 and $132 as of April 30, 2023 and 2022, respectively.(6) Including amounts from a related party of $2,448 and $2,510 as of April 30, 2023 and 2022, respectively.(7) Including amounts from a related party of nil and $2,448 as of April 30, 2023 and 2022, respectively.C3.AI, INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands)(Unaudited)Fiscal Year Ended April 30,20232022Cash flows from operating activities:Net loss$(268,839)$(192,065)Adjustments to reconcile net loss to net cash used in operating activitiesDepreciation and amortization6,088 5,190 Non-cash operating lease cost6,992 4,185 Stock-based compensation expense216,542 113,441 Other(4,309)1,601 Changes in operating assets and liabilitiesAccounts receivable(1)(54,517)(14,156)Prepaid expenses, other current assets and other assets(2)(576)(14,578)Accounts payable(3)(22,041)34,481 Accrued compensation and employee benefits3,193 10,394 Operating lease liabilities13,641 (3,266)Other liabilities(4)(10,573)(5,604)Deferred revenue(5)(1,292)(26,085)Net cash used in operating activities(115,691)(86,462)Cash flows from investing activities:Purchases of property and equipment(70,518)(3,791)Capitalized software development costs(1,000)(500)Purchases of investments(745,249)(796,487)Maturities and sales of investments876,713 1,117,793 Net cash provided by investing activities59,946 317,015 Cash flows from financing activities:Repurchase and retirement of Class A Common stock— (15,000)Payment of deferred offering costs— (105)Proceeds from exercise of Class A common stock options4,468 20,816 Proceeds from issuance of Class A common stock under employee stock purchase plan3,093 — Taxes paid related to net share settlement of equity awards(6,940)— Net cash provided by financing activities621 5,711 Net (decrease) increase in cash, cash equivalents and restricted cash(55,124)236,264 Cash, cash equivalents and restricted cash at beginning of period352,519 116,255 Cash, cash equivalents and restricted cash at end of period$297,395 $352,519 Cash and cash equivalents$284,829 $339,528 Restricted cash included in prepaid expenses and other current assets— 425 Restricted cash included in other assets, non-current12,566 12,566 Total cash, cash equivalents and restricted cash$297,395 $352,519 Supplemental disclosure of cash flow information—cash paid for income taxes$578 $939 Supplemental disclosures of non-cash investing and financing activities:Purchases of property and equipment included in accounts payable and accrued liabilities$13,814 $9,261 Right-of-use assets obtained in exchange for lease obligations (including remeasurement of right-of-use assets and lease liabilities due to changes in the timing of receipt of lease incentives)$(5,589)$26,529 Right-of-use assets obtained in exchange for lease obligations arising from lease modifications$3,093 $1,572 Receivable from exercise of stock options included in prepaid expenses, other current assets and other assets$61 $29 Unpaid liabilities related to intangible purchases$1,500 $2,500 Vesting of early exercised stock options$1,006 $2,746 (1)Including changes in related party balances of $38,772 and $20,668 for the fiscal years ended April 30, 2023 and 2022, respectively.(2)Including changes in related party balances of $(4,741) and $12,739 for the fiscal years ended April 30, 2023 and 2022, respectively.(3)Including changes in related party balances of $(16,349) and $18,493 for the fiscal years ended April 30, 2023 and 2022, respectively.(4)Including changes in related party balances of $(2,510) and $(3,350) for the fiscal years ended April 30, 2023 and 2022, respectively.(5)Including changes in related party balances of $117 and $(7,565) for the fiscal years ended April 30, 2023 and 2022, respectively.C3.AI, INC.RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES(In thousands, except percentages)(Unaudited)Three Months Ended April 30,Fiscal Year Ended April 30,2023202220232022Reconciliation of GAAP gross profit to non-GAAP gross profit:Gross profit on a GAAP basis$47,502$54,954$180,458$189,046Stock-based compensation expense (1)5,9723,53323,63711,348Employer payroll tax expense related to employee stock-based compensation (2)377411,150114Gross profit on a non-GAAP basis$53,851$58,528$205,245$200,508Gross margin on a GAAP basis66%76%68%75%Gross margin on a non-GAAP basis74%81%77%79%Reconciliation of GAAP loss from operations to non-GAAP loss from operations:Loss from operations on a GAAP basis$(73,280)$(56,523)$(290,493)—$(196,122)Stock-based compensation expense (1)48,06835,628216,542113,441Employer payroll tax expense related to employee stock-based compensation (2)1,6691785,8771,972Loss from operations on a non-GAAP basis$(23,543)$(20,717)$(68,074)$(80,709)Reconciliation of GAAP net loss per share to non-GAAP net loss per share:Net loss on a GAAP basis$(64,956)$(58,420)$(268,839)$(192,065)Stock-based compensation expense (1)48,06835,628216,542113,441Employer payroll tax expense related to employee stock-based compensation (2)1,6691785,8771,972Net loss on a non-GAAP basis$(15,219)$(22,614)$(46,420)$(76,652)GAAP net loss per share attributable to common stockholders, basic and diluted$(0.58)$(0.55)$(2.45)$(1.84)Non-GAAP net loss per share attributable to common stockholders, basic and diluted$(0.13)$(0.21)$(0.42)$(0.73)Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted112,746 105,824 109,851 104,404 (1)Starting fiscal year 2023, the Company records stock-based compensation associated with the Company’s annual bonus program that will be settled by shares of restricted common stock. Stock-based compensation expense for gross profits and gross margin includes costs of subscription and cost of professional services as follows. Stock-based compensation expense for loss from operations includes total stock-based compensation expense as follows:Three Months Ended April 30,Fiscal Year Ended April 30,2023202220232022Cost of subscription$5,663 $2,814 $21,417 $8,638 Cost of professional services309 719 2,220 — 2,710 Sales and marketing17,214 11,804 71,389 — 40,344 Research and development17,449 13,340 90,217 — 39,200 General and administrative7,433 6,951 31,299 — 22,549 Total stock-based compensation expense$48,068 $35,628 $216,542 $113,441 (2) Employer payroll tax expense related to employee stock-based compensation for gross profits and gross margin includes costs of subscription and cost of professional services as follows. Employer payroll tax expense related to employee stock-based compensation for loss from operations includes total employer payroll tax expense related to employee stock-based compensation as follows:Three Months Ended April 30,Fiscal Year Ended April 30,2023202220232022Cost of subscription$357 $35 $1,003 $42 Cost of professional services20 6 147 72 Sales and marketing604 42 1,767 760 Research and development576 72 2,523 509 General and administrative112 23 437 589 Total employer payroll tax expense$1,669 $178 $5,877 $1,972 Reconciliation of free cash flow to the GAAP measure of net cash provided by (used in) operating activities:The following table below provides a reconciliation of free cash flow to the GAAP measure of net cash provided by (used in) operating activities for the periods presented:Three Months Ended April 30,Fiscal Year Ended April 30,2023202220232022Net cash provided by (used in) operating activities$27,054 $(13,162)$(115,691)$(86,462)Less:Purchases of property and equipment(10,751)(1,608)(70,518)(3,791)Capitalized software development costs— — (1,000)(500)Free cash flow$16,303 $(14,770)$(187,209)$(90,753) |
0001493152-25-002460:ex99-1.htm | 0001493152-25-002460 | 1,498,148 | 1,498,148 | Artificial Intelligence Technology Solutions Inc. (AITX) (CIK 0001498148) | ['AITX'] | 8-K | 8-K | 2025-01-16 | 2025-01-16 | 000-55079 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=000-55079&action=getcompany | 25,534,237 | EX-99.1 | null | 8.01,9.01 | https://www.sec.gov/Archives/edgar/data/1498148/000149315225002460 | https://www.sec.gov/Archives/edgar/data/1498148/000149315225002460/0001493152-25-002460-index.html | https://www.sec.gov/Archives/edgar/data/1498148/000149315225002460/ex99-1.htm | EX-99.1 2 ex99-1.htm Exhibit 99.1 AITX Highlights Key Insights from 2025 Investor Presentation Detroit, Michigan, January 16, 2025 — Artificial Intelligence Technology Solutions, Inc., (the “Company”) (OTCPK:AITX), a global leader in AI-driven security and productivity solutions, shared significant updates during its annual investor presentation held on January 15, 2025. The event showcased the Company’s progress, innovations, and strategic roadmap, emphasizing its theme for 2025, “Security of Everything.” The 70-minute, comprehensive presentation not only delivered a deep dive into AITX’s impressive financial growth and ambitious revenue goals but also unveiled key strategies poised to disrupt the security landscape in 2025. With exclusive insights from CEO/CTO Steve Reinharz and other top executives, viewers are provided a clear vision of how AITX plans to capture new markets, enhance operational efficiencies, and strengthen its recurring revenue streams. This must-watch session offers a front-row seat to the Company’s roadmap for long-term success, making it an invaluable resource for investors looking to align with AITX’s upward momentum. To gain a complete understanding of AITX’s strategic direction and growth potential, watch the full 2025 Investor Presentation here. Below are key highlights from the presentation, categorized by each presenter: Steve Reinharz, Founder, CEO and CTO ●Current Financial Growth: AITX achieved exponential growth in fiscal Q3 with approximately 3x bigger year-over-year revenue and a 30% quarter-over-quarter growth rate. The Company expects to come in on the higher side of its full year forecasts and finish the fiscal year (ending February 28, 2025) at over $6 million in revenue which represents growth of over 250% over the prior year. ●Next Fiscal Year: Fiscal year 2026 (March 1, 2025 – February 28, 2026) revenue is projected between $12 million and $18 million. The Company will be expanding its sales force in order to work to achieve, as rapidly as possible, the major milestone of $1 million in recurring monthly revenue (RMR). ●Generative AI Leadership: The Company’s Gen 4 platform transition, moving from a platform of Microsoft/Intel to NVIDIA/Ubuntu within RADPack™ Millie Gen 4, has reduced device build times significantly freeing up production time, decreased weight by 33%, and improved audio intelligibility, paving the way for advanced Natural Language Processing (NLP) capabilities in security and safety solutions. ●Innovation and Vision: With vertically integrated operations, AITX is leading the “Security of Everything” revolution by introducing products like RADCam™ and the forthcoming RADCam Doorbell, expanding into residential security. Mark Folmer, CPP, PSP, FSyI, President of Subsidiary Robotic Assistance Devices, Inc. (RAD-I) ●Operational Excellence: RAD-I’s Detroit factory is operating efficiently with current excess capacity to support deployment growth without increased headcount, ensuring consistent and scalable solutions. This is due to our incredible team, and benefits from the Gen 4 solutions such as fewer components and decreased build times. ●Client Wins and Retention: RAD-I achieved nearly 6 million hours of autonomous device operation in 2024, equivalent to 3,400 full-time employees, demonstrating RAD-I’s impact on client operations, cost reductions, and enhancements to security. ●Product Milestones: The upcoming rollout of ROAMEO™ Generation 4 and RADDOG™ LE2 underscores RAD-I’s focus on rugged, high-performance, autonomous solutions for diverse environments. ●Security of Everything: SARA™ and other planned software is expected to contribute to strong growth and client satisfaction. Troy McCanna, Senior VP of Revenue Operations at RAD-I ●Sales Expansion: RAD-I expanded its dealer network to over 70 partners, driving momentum in key vertical markets including construction, healthcare, and logistics. Notable growth includes new contracts with a top 30 healthcare provider and partnerships with metropolitan revitalization initiatives. ●Sales Team Growth: The sales team will be the fastest growing team within RAD-I. The urgency to build and grow is the top of the Company’s priorities now that its technology is mature, the client base is more vocal and demanding than ever, and RAD-I has demonstrated its capabilities regarding broad, large-scale deployments. Sheldon Reinhart, AITX Chief Financial Strategy Officer ●Strategic Financial Goals: Plans for FY 2026 include achieving full operational profitability, reducing debt, and preparing for an eventual uplisting application to NASDAQ. ●Scalable Revenue Model: The Company’s SaaS-centric approach ensures recurring revenue through long-term customer relationships, bolstered by improved sales processes and team expansion. ●Three Financial Models: Sheldon highlighted the foundation of AITX’s financial strategy and shared three forecasting models of which the conservative version (continuation of current sales rate) yields impressive growth. ●Debt Management and Uplisting Preparation: Strategic debt reduction efforts, coupled with achieving operational cash flow positivity, position the Company to meet the rigorous requirements for a future uplisting to NASDAQ. Looking Ahead Steve Reinharz concluded the presentation by reaffirming AITX’s commitment to winning as much of this emerging security/safety market as possible and achievement of AITX positive operational cash flow. The Company’s groundbreaking advancements and strategic direction position it as a transformative force in AI-driven security and facility management. RMR is money earned from customers who pay for a subscription to a service or product. RAD’s solutions are generally offered as a recurring monthly subscription, typically with a minimum 12-month subscription contract. AITX, through its primary subsidiary, Robotic Assistance Devices, Inc. (RAD-I), is redefining the nearly $50 billion (US) security and guarding services industry 1 through its broad lineup of innovative, AI-driven Solutions-as-a-Service business model. RAD-I solutions are specifically designed to provide cost savings to businesses of between 35%-80% when compared to the industry’s existing and costly manned security guarding and monitoring model. RAD-I delivers these tremendous cost savings via a suite of stationary and mobile robotic solutions that complement, and at times, directly replace the need for human personnel in environments better suited for machines. All RAD-I technologies, AI-based analytics and software platforms are developed in-house. RAD-I has a prospective sales pipeline of over 35 Fortune 500 companies and numerous other client opportunities. RAD-I expects to continue to attract new business as it converts its existing sales opportunities into deployed clients generating a recurring revenue stream. Each Fortune 500 client has the potential of making numerous reorders over time. AITX is an innovator in the delivery of artificial intelligence-based solutions that empower organizations to gain new insight, solve complex challenges and fuel new business ideas. Through its next-generation robotic product offerings, AITX’s RAD-I, RAD-R, RAD-M and RAD-G companies help organizations streamline operations, increase ROI, and strengthen business. AITX technology improves the simplicity and economics of patrolling and guard services and allows experienced personnel to focus on more strategic tasks. Customers augment the capabilities of existing staff and gain higher levels of situational awareness, all at drastically reduced cost. AITX solutions are well suited for use in multiple industries such as enterprises, government, transportation, critical infrastructure, education, and healthcare. To learn more, visit www.aitx.ai, www.radsecurity.com, www.radcam.ai, www.stevereinharz.com, www.radgroup.ai, www.raddog.ai, and www.radlightmyway.com, or follow Steve Reinharz on Twitter @SteveReinharz. 1 https://www.ibisworld.com/united-states/market-research-reports/security-services-industry/ CAUTIONARY DISCLOSURE ABOUT FORWARD-LOOKING STATEMENTS The information contained in this publication does not constitute an offer to sell or solicit an offer to buy securities of Artificial Intelligence Technology Solutions, Inc. (the “Company”). This publication contains forward-looking statements, which are not guarantees of future performance and may involve subjective judgment and analysis. The information provided herein is believed to be accurate and reliable, however the Company makes no representations or warranties, expressed or implied, as to its accuracy or completeness. The Company strongly recommends that readers of this publication fully review the Company’s Form 10-Q for the quarterly period ending November 30, 2024, including its financial statements and footnotes, for a complete understanding of the Company’s financial position, results of operations, and associated risks. which is available at: https://www.sec.gov/Archives/edgar/data/1498148/000149315225002128/form10-q.htm The Company has no obligation to provide the recipient with additional updated information. No information in this publication should be interpreted as any indication whatsoever of the Company’s future revenues, results of operations, or stock price. CERTAIN ILLUSTRATIVE FINANCIAL PROJECTIONS Forward-Looking Statements The financial projections of Artificial Intelligence Technology Solutions, Inc. (the “Company”) (the “Projections”) set forth below constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Our actual results, performance or achievements or industry standards may differ materially from those expressed or implied in such forward-looking statements. The forward-looking statements contained in the Projections are subject to trends and uncertainties. The forward-looking statements in the Projections are not guarantees of future results and are subject to risks that could cause actual results to differ materially and adversely from those expressed in any forward-looking statements. As such, you are cautioned not to place undue reliance on such forward-looking statements. All forward-looking included below are qualified in their entirety by this cautionary statement and the statements under “Important Information” below. Important Information Regarding Financial Projections The Projections and the underlying assumptions were prepared internally by the Company’s management and were not prepared with a view towards compliance with published SEC or the American Institute of Certified Public Accountants for preparation and presentation of financial forecasts or generally accepted accounting principles. Neither the Company’s independent auditors, nor any other independent accountants, have compiled, examined or performed any procedures or review with respect to the Projections, nor have they expressed any opinion or given any form of assurance with respect to such information or its achievability. Furthermore, the Projections are necessarily based on numerous variables, assumptions and estimates that are inherently uncertain, many of which are beyond the Company’s control, including a wide variety of industry performance, general business, economic, regulatory, competitive, market and financial conditions, as well as matters specific to the Company’s business. The Projections should not be regarded as an indication that any of the Company or its affiliates or management considered to be predictive of actual future events. Actual results will likely vary from the Projections, and such variations may be material. Neither the Company nor its affiliates or management can give you any assurance that actual results will not differ materially from the Projections. The Projections should be read together with the Company’s historical financial statements, which may be accessed at www.sec.gov. ### Steve Reinharz 949-636-7060 @SteveReinharz |
0001443646-23-000220:investorpresentationocto.htm | 0001443646-23-000220 | 1,443,646 | 1,443,646 | Booz Allen Hamilton Holding Corp (BAH) (CIK 0001443646) | ['BAH'] | 8-K | 8-K | 2023-10-10 | 2023-10-10 | 001-34972 | https://www.sec.gov/cgi-bin/browse-edgar/?filenum=001-34972&action=getcompany | 231,318,014 | EX-99.1 | EX-99.1 | 7.01,9.01 | https://www.sec.gov/Archives/edgar/data/1443646/000144364623000220 | https://www.sec.gov/Archives/edgar/data/1443646/000144364623000220/0001443646-23-000220-index.html | https://www.sec.gov/Archives/edgar/data/1443646/000144364623000220/investorpresentationocto.htm | EX-99.1 2 investorpresentationocto.htm EX-99.1 investorpresentationocto 0Copyright © 2023 Booz Allen Hamilton Inc.Copyright © 2023 Booz Allen Hamilton Inc. AI& October 11, 2023 The Helix, Booz Allen's Center for Innovation 1Copyright © 2023 Booz Allen Hamilton Inc. FORWARD LOOKING SAFE HARBOR STATEMENT • Certain statements contained in this presentation and in related comments by our management include “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Examples of forward-looking statements include statements that do not directly relate to any historical or current fact. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “could,” “should,” “forecasts,” “expects,” “intends,” “plans,” “anticipates,” “projects,” “outlook,” “believes,” “estimates,” “predicts,” “potential,” “continue,” “preliminary,” or the negative of these terms or other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we can give you no assurance these expectations will prove to have been correct. • These forward-looking statements relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. A number of important factors could cause actual results to differ materially from those contained in or implied by these forward-looking statements, including those factors discussed in our filings with the Securities and Exchange Commission (SEC), including our Annual Report on Form 10-K for the fiscal year ended March 31, 2023, which can be found at the SEC’s website at www.sec.gov. All forward- looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing cautionary statements. All such statements speak only as of the date made and, except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. / 1COPYRIGHT © 023 BOOZ ALLEN HAMILTON INC. DISCLAIMER 2Copyright © 2023 Booz Allen Hamilton Inc. MEET OUR AI EXPERTS. 2,200 EMPLOYEES STRONG. ONE COLLECTIVE VISION: IGNITING TECHNICAL INNOVATION THROUGH AI EXPERTISE. Austin, TX Fayetteville, NC Tampa, FL San Diego, CA Top Geographies Atlanta, GA San Antonio, TX El Segundo, CA Norfolk, VA 42 STATES (NOT INCLUDING D.C.) 6 COUNTRIES Certifications 50% Total Certified Average Certs 2.3 Per Employee Clearance Secret TS/SCI Top Secret Public Trust* * Those that only have a Public Trust are counted 80% of AI Talent / 2COPYRIGHT © 023 BOOZ ALLEN HAMILTON INC. Data Scientist Data Engineer Adv Data Scientist/Researcher ML Engineer AI Solution Architect 2,200 Employees Top Job Classifications Sector AlignmentAI + Enterprise, Corporate 40% 28% 14% 19% GDS CTO NSS Civil Are members of a Technical Experience Group (TXG) 4-6 years Booz Allen Tenure 44% 1-3 years <1 year 28% 17% 7-9 years 5% 10+ years 6% 79% Highest Education Top Majors Bachelor’s Master’s Doctoral Other 42% 44% 9% 5% Engineering Computer Science Data Science Business Mathematics 22% 18% 14% 13% 13% Bethesda, MD Annapolis Junction, MD 1 1 Slide data as of September 2023. Booz Allen defines AI Tech Talent as one of the following job classifications: Advanced Data Scientist / Researcher, Artificial Intelligence Solution Architect, Data Engineer - Big Data, Data Scientist, or Machine Learning Engineer. Excludes approximately 1,700 Software Engineers who often provide critical support for software components for AI projects and who are well positioned to be upskilled into AI job classification through our Booz Allen training offerings. Education levels, majors, and certifications are as self-reported by employees. 3Copyright © 2023 Booz Allen Hamilton Inc. / 3COPYRIGHT © 023 BOOZ ALLEN HAMILTON INC. AI TECHNICAL TALENT AI PORTFOLIO 2,200 AI professionals firmwide Annualized growth since FY23~25% 200 ACTIVE AI PROJECTS Across Defense, Intelligence, and Civil Agencies Of the Largest AI contracts in DoD3 AI BOOK OF BUSINESS 3 AI REVENUE 1 36% Of our contracts greater than $100M include AI Higher win rate for contracts over $100M when AI is included 50% FY24 : $500M - $700M More than our nearest competitor in AI-related FY22 prime contract obligations 3X 2 1 AI Revenue is Booz Allen’s estimate of revenue accrued, or expected to be accrued, in FY24 as a result of work attributable to AI. This calculation estimates the portion of work of individual contracts that are attributable to AI and takes into account current contracts as well contracts in the pipeline (weighted for Booz Allen’s expected likelihood of winning the work) and the estimated number of AI-qualified staff available to deliver this work.4 As of September 2023. 2 Deltek GovWin IQ databases, Federal Procurement Data System data, and Deltek’s GovWin Federal AI Landscape Report of 2024. 3 As of September 2023. 4Copyright © 2023 Booz Allen Hamilton Inc. / 4COPYRIGHT © 023 BOOZ ALLEN HAMILTON INC. PRODUCTION READINESS 20 Proprietary AI software factory, aiSSEMBLE, offers reusable solutions that can be quickly tailored for the mission aiSSEMBLE Opportunities Won Our investments have been selected to offer strategic value to national missions and strategic access to COTs technology with a favorable financial return 10 Tech Partnerships LatentAI, Synthetaic, CredoAI, Hidden Layer, & more NVIDIA Partner of the Year 4 --2017-2019 Our AI team reduces risk, accelerates delivery and increases quality by scaling our specialized AI skillsets Our tech investments provide customers with rapid access to production grade AI at lower cost of ownership BOOZ ALLEN ADVANTAGE INNOVATION Creating AI differentiation, IP engineering efficiencies, risk reduction and ROI through Research and Development Best Workplace for Innovators Fast Company, 2021 2 Growth & Innovation Leader Frost & Sullivan, 2023 3 We pioneer AI Innovation through R&D, partnerships, and emerging tech investments– propelling government missions today with the AI solutions of tomorrow. BOOZ ALLEN ADVANTAGE • AI Edge Performance Lab • Quantum Crypto Lab • AI Adoption Studio We deeply understand the federal government’s most pressing challenges which create insight advantages that rapidly accelerate pathways to AI mission impact. MISSION KNOWLEDGE BOOZ ALLEN ADVANTAGE 160+ Federal Clients Defense, Intel, Civil 1 Single largest provider of AI services to the Federal Government - Deltek's GovWin Federal AI Landscape Report 2024 1 Deltek GovWin IQ databases, Federal Procurement Data System data, and Deltek’s GovWin Federal AI Landscape Report of 2024. 2 Fast Company, “Best Workplaces for Innovators” in 2021, https://www.boozallen.com/menu/media-center/q2- 2022/booz-allen-recognized-as-a-best-workplace-for-innovators-.html. 3 Frost & Sullivan, “Growth and Innovation Leader” in 2023 in the Frost Radar™: Military Intelligence Analytics report, https://www.boozallen.com/insights/ai/the-new-world-of-military-intelligence-analytics.html. 4 NVIDIA NPN Partner of the Year Award Winner in 2019, https://blogs.nvidia.com/blog/2020/07/17/npn-partner-awards/. 5Copyright © 2023 Booz Allen Hamilton Inc. 5 Industry leading and third-party recognized as the largest single provider of AI Services to the Federal Government TODAY’S BUSINESS MATURING SERVICES Accelerate client missions with reusable AI code and inform solutions and managed services TOMORROW’S BUSINESS EMERGING 3 REUSABLE CONTENT Create technical differentiation and competitive advantage through high quality, low risk reuse, Booz Allen IP, and commercial technical solutions FUTURE BUSINESS IN DEVELOPMENT SOLUTIONS & MANAGED SERVICES / 5COPYRIGHT © 023 BOOZ ALLEN HAMILTON INC. 6Copyright © 2023 Booz Allen Hamilton Inc. / 6COPYRIGHT © 023 BOOZ ALLEN HAMILTON INC. BOOZ ALLEN ADVANTAGE AI Stack Components AI PLATFORMS INFRASTRUCTURE MODELS PIPELINE(S) COMMERCIAL & VENTURE TECH PARTNERS IP PIPELINE & MODELS AI SERVICES Our stacks are our clients’ launch pad. Designed for federal missions and integrate seamlessly with our clients’ systems 7Copyright © 2023 Booz Allen Hamilton Inc. / 7COPYRIGHT © 023 BOOZ ALLEN HAMILTON INC. EMPOWERING CLIENT MISSION WITH TECHICAL EDGE MEET OUR STACKS CYBER AI STACK Enables standardized and reusable deployment of Cyber AI/ML focused on defensive cyber operations VISION AI STACK A set of integrated software services to build, deliver, run, and sustain computer vision models in the cloud or at the edge RESPONSIBLE AI STACK Integrated software and AI solution for managing risk across the entire ML and generative AI lifecycle ADVERSARIAL AI STACK Addresses risk across the AI lifecycle to offer clients a variety of options to study, assess, engineer, monitor and improve model robustness GENERATIVE AI STACK Standard deployment frameworks and pipelines that power rapid and safe adaptation of foundational models to fit unique mission requirements Pre-packaged solutions that combine Booz Allen IP and commercial technologies, known as our AI Stacks, enhance our service delivery and evolve our delivery model |
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