Significant Sales and
2022 Fourth Quarter Cost-Optimization Initiatives Provide Significant Adjusted EBITDA Benefit and Position Company Closer to Reaching Profitability
Management Commentary
“In a year largely defined by global market uncertainty, 2022 was a transformational year for our organization,” said
“In addition, optimizing our cost structure was a major initiative for our fourth quarter,” Huberman continued. “We limited our costs and improved efficiency throughout our organization, resulting in an improvement in adjusted EBITDA quarter-over-quarter. As we move deeper into 2023, we are focused on near-term profitability with continued key organic growth investments. While we are committed to managing our business towards adjusted EBITDA expansion in the short term, we are confident we have the team, technology, and exceptional service capabilities to drive our long-term growth strategy. We believe that
Fourth Quarter 2022 Financial Results
Results compare the three months ended
- Net revenue decreased 39% to
$27.9 million from$46.1 million in the fourth quarter of 2021. The decrease in net revenue was primarily due to a decrease in product revenue. - Non-GAAP revenue, a non-GAAP measurement of operating performance reconciled to net revenue below, decreased 16% to
$22.3 million from$26.5 million in the fourth quarter of 2021. The decrease in non-GAAP revenue was primarily due to a decrease in CaaS and marketing revenue. - Operating loss increased to
$12.6 million compared to an operating loss of$0.9 million in the comparable year-ago period. The increase in operating loss was materially driven by a one-time write down of bad debt and royalty expense.
Full Year 2022 Financial Results
Results compare the twelve months ended
- Net revenue decreased 7% to
$94.5 million from$101.3 million for the full year endedDecember 31, 2021 . The decrease in net revenue was primarily due to a decrease in net product revenue during the period, partially offset by an increase in net revenue from related parties. - Non-GAAP revenue, a non-GAAP measurement of operating performance reconciled to net revenue below, increased 3% to
$72.4 million from$70.0 million for the full year endedDecember 31, 2021 . The increase in non-GAAP revenue was primarily due to an increase in CaaS revenue. - Operating loss increased to
$40.3 million compared to an operating loss of$6.3 million in the comparable year-ago period. The increase in operating loss was primarily due to supply chain issues experienced at the end of 2021 which impacted our performance in the first half of 2022, along with a one-time write down of bad debt and royalty expense.
2023 Financial Outlook
Management expects the Company’s financial results in the 2023 first quarter and full year, including Adjusted EBITDA, to be positively impacted by sales to existing customers, new customer agreements, and the continued results of a comprehensive cost reduction and performance improvement program. The goal of the cost and performance improvement program is to drive efficiency throughout the business while simultaneously achieving or exceeding internal and customer KPIs (Key Performance Indicators).
The expected impact of the Company’s cost and performance improvement program for the full year 2023 is anticipated to be between
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About
Non-GAAP Financial Measures
We prepare and present our consolidated financial statements in accordance with
We calculate and define non-GAAP revenue as GAAP revenue less Product Revenue plus the Service Revenues associated with the Product Revenue.
We calculate and define Adjusted EBITDA as net loss, adjusted to exclude: (1) interest expense, (2) income tax expense and (3) depreciation and amortization.
Non-GAAP revenue and Adjusted EBITDA are financial measures that are not required by or presented in accordance with
Non-GAAP revenue and Adjusted EBITDA are presented for supplemental informational purposes only, have limitations as analytical tools and should not be considered in isolation or as a substitute for financial information presented in accordance with
Cautionary Statements Concerning Forward-Looking Statements
This release contains certain forward-looking statements within the meaning of the federal securities laws, including statements regarding the development and adoption of the Company’s platform, new customer agreements and cost-reduction and performance improvement measures. These forward-looking statements generally are identified by the words "believe," "project," "expect," "anticipate," "estimate," "intend," "strategy," "future," "opportunity," "plan," "may," "should," "would," "will continue," "will likely result," and similar expressions. Forward-looking statements are predictions, projections, and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. Forward-looking information includes, but is not limited to, statements regarding: the Company’s platforms and offerings on such platforms, performance, and operations, and the related benefits to stockholders, and the Company’s strategy. Many factors could cause actual future events to differ materially from the forward-looking statements in this document, including the Company’s ability to implement business plans and cost reduction measures and changes and developments in the industry in which the Company competes. 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 our Annual Report on Form 10-K filed with the
Contacts:
Nogin Media Relations Contact:
nogin@bocacommunications.com
Nogin Investor Relations Contact:
Gateway Investor Relations
949-574-3860
nogin@gatewayir.com
-Financial Tables to Follow-
Consolidated Balance Sheets
(In thousands, except share and per share data)
2022 | 2021 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash | $ | 15,385 | $ | 1,071 | ||||
Accounts receivable, net | 1,578 | 1,977 | ||||||
Related party receivables | — | 5,356 | ||||||
Inventory | 15,726 | 22,777 | ||||||
Prepaid expenses and other current assets | 2,539 | 2,915 | ||||||
Total current assets | 35,228 | 34,096 | ||||||
Restricted cash | — | 3,500 | ||||||
Property and equipment, net | 1,595 | 1,789 | ||||||
Right-of-use asset, net (Note 21) | 17,391 | — | ||||||
Intangible assets, net | 5,493 | 1,112 | ||||||
6,748 | — | |||||||
Investment in unconsolidated affiliates | 7,404 | 13,570 | ||||||
Other non-current asset | 1,074 | 664 | ||||||
Total assets | $ | 74,933 | $ | 54,731 | ||||
LIABILITIES, CONVERTIBLE REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 19,605 | $ | 16,098 | ||||
Due to clients | 10,891 | 5,151 | ||||||
Related party payables | 1,033 | — | ||||||
Accrued expenses and other liabilities (Note 6) | 17,826 | 14,018 | ||||||
Lease liabilities, current portion (Note 21) | 4,367 | — | ||||||
Total current liabilities | 53,722 | 35,267 | ||||||
Line of credit | — | 348 | ||||||
Long-term note payable, net | — | 19,249 | ||||||
Convertible notes | 60,852 | — | ||||||
Deferred tax liabilities | 394 | 1,174 | ||||||
Lease liabilities, net of current portion (Note 21) | 15,223 | — | ||||||
Other long-term liabilities (Note 6) | 17,766 | 734 | ||||||
Total liabilities | 147,957 | 56,772 | ||||||
Commitments and contingencies (Note 22) | ||||||||
CONVERTIBLE REDEEMABLE PREFERRED STOCK | ||||||||
Series A convertible, redeemable preferred stock, authorized, issued and outstanding, as of | — | 4,687 | ||||||
Series B convertible, redeemable preferred stock, authorized, 6,334,150 shares issued and outstanding, as of | — | 6,502 | ||||||
STOCKHOLDERS' DEFICIT | ||||||||
Common stock, 39,621,946 shares issued and outstanding as of | 7 | 4 | ||||||
Additional paid-in capital | 9,263 | 4,358 | ||||||
— | (1,330 | ) | ||||||
Accumulated deficit | (82,294 | ) | (16,262 | ) | ||||
Total stockholders’ deficit | (73,024 | ) | (13,230 | ) | ||||
Total liabilities, convertible redeemable preferred stock and stockholders’ deficit | $ | 74,933 | $ | 54,731 |
Consolidated Statements of Operations
(In thousands, except share and per share data)
Twelve Months Ended | ||||||||
2022 | 2021 | |||||||
Net service revenue | $ | 40,855 | $ | 41,866 | ||||
Net product revenue | 41,540 | 51,346 | ||||||
Net revenue from related parties | 12,076 | 8,136 | ||||||
Total net revenue | 94,471 | 101,348 | ||||||
Operating costs and expenses: | ||||||||
Cost of services (1) | 26,706 | 24,174 | ||||||
Cost of product revenue (1) | 28,754 | 20,431 | ||||||
Sales and marketing | 2,672 | 1,772 | ||||||
Research and development | 5,330 | 5,361 | ||||||
General and administrative | 70,289 | 55,369 | ||||||
Depreciation and amortization | 808 | 520 | ||||||
Total operating costs and expenses | 134,559 | 107,627 | ||||||
Operating loss | (40,088 | ) | (6,279 | ) | ||||
Interest expense | (6,328 | ) | (926 | ) | ||||
Change in fair value of promissory notes | (4,561 | ) | — | |||||
Change in fair value of derivative instruments | 1,117 | — | ||||||
Change in fair value of unconsolidated affiliates | (4,245 | ) | 4,937 | |||||
Change in fair value of convertible notes | 4,271 | — | ||||||
Debt extinguishment loss | (1,885 | ) | — | |||||
Other (loss) income, net | (1,787 | ) | 3,378 | |||||
(Loss) Income before income taxes | (53,506 | ) | 1,110 | |||||
(Benefit) Provision for income taxes | (780 | ) | 1,175 | |||||
Net loss | $ | (52,726 | ) | $ | (65 | ) | ||
Net loss per common share – basic | $ | (1.08 | ) | $ | (0.00 | ) | ||
Net loss per common share – diluted | $ | (1.08 | ) | $ | (0.00 | ) | ||
Weighted average shares outstanding – basic | 49,041,640 | 39,621,946 | ||||||
Weighted average shares outstanding – diluted | 49,041,640 | 40,896,279 |
(1) Exclusive of depreciation and amortization shown separately.
Consolidated Statements of Cash Flows
(In thousands)
Twelve Months Ended | ||||||||
2022 | 2021 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net loss | $ | (52,726 | ) | $ | (65 | ) | ||
Adjustments to reconcile net loss to net cash used by operating activities: | ||||||||
Depreciation and amortization | 808 | 520 | ||||||
Amortization of debt issuance costs and discounts | 2,617 | 137 | ||||||
Debt issuance costs expensed under fair value option | 2,034 | — | ||||||
Amortization of contract acquisition costs | — | 361 | ||||||
Stock-based compensation | 130 | 53 | ||||||
Deferred income taxes | (780 | ) | 1,174 | |||||
Change in fair value of unconsolidated affiliates | 4,245 | (4,937 | ) | |||||
Change in fair value of warrant liability | 717 | (177 | ) | |||||
Change in fair value of promissory notes | 4,561 | — | ||||||
Change in fair value of convertible notes | (4,271 | ) | — | |||||
Change in fair value of derivatives | (1,117 | ) | — | |||||
Loss on extinguishment of debt | 1,885 | — | ||||||
Settlement of deferred revenue | (1,611 | ) | — | |||||
Gain on extinguishment of PPP loan | — | (2,266 | ) | |||||
Loss on disposal of asset | 641 | 74 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | 504 | 2,050 | ||||||
Related party receivables | (58 | ) | (5,356 | ) | ||||
Inventory | 11,838 | (22,641 | ) | |||||
Prepaid expenses and other current assets | (2,329 | ) | (2,138 | ) | ||||
Accounts payable | (255 | ) | 9,780 | |||||
Due to clients | 5,740 | (8,197 | ) | |||||
Related party payables | 1,140 | — | ||||||
Lease assets and liabilities | 2,200 | — | ||||||
Accrued expenses and other liabilities | (2,501 | ) | 10,255 | |||||
Net cash used in operating activities | (26,588 | ) | (21,373 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Purchases of property and equipment | (1,589 | ) | (1,789 | ) | ||||
Proceeds from sale of property and equipment | 700 | — | ||||||
Acquisition of an affiliate, net of cash acquired | (1,496 | ) | — | |||||
Investment in unconsolidated affiliates | — | (8,633 | ) | |||||
Net cash used in investing activities | (2,385 | ) | (10,422 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Exercise of stock options | 84 | — | ||||||
Proceeds from business combination, net of issuance costs | 1,375 | — | ||||||
Proceeds from long-term notes payable | — | 20,000 | ||||||
Payment of long-term notes payable | (20,950 | ) | — | |||||
Proceeds from promissory notes | 8,000 | — | ||||||
Proceeds from promissory notes – related parties | 2,175 | — | ||||||
Payment of promissory notes | (12,033 | ) | — | |||||
Payment of promissory notes – related parties | (3,130 | ) | — | |||||
Payment of debt issuance costs | (397 | ) | (150 | ) | ||||
Proceeds from PIPE convertible note issuance | 65,500 | — | ||||||
Prepayment and other fees paid upon early settlement of debt | (489 | ) | — | |||||
Proceeds from line of credit | 114,981 | 173,896 | ||||||
Repayments of line of credit | (115,329 | ) | (173,548 | ) | ||||
Net cash provided by financing activities | 39,787 | 20,198 | ||||||
NET INCREASE (DECREASE) IN CASH AND RESTRICTED CASH | 10,814 | (11,597 | ) | |||||
Beginning of period | 4,571 | 16,168 | ||||||
End of period | $ | 15,385 | $ | 4,571 |
Twelve Months Ended | ||||||||
2022 | 2021 | |||||||
SUPPLEMENTAL CASH FLOW INFORMATION | ||||||||
Cash paid for interest | $ | 2,231 | $ | 444 | ||||
Cash paid for taxes | 210 | 195 | ||||||
Issuance of warrants with debt | — | 738 | ||||||
Settlement of preexisting receivable in step-acquisition | 5,415 | — | ||||||
Derecognition of investment in unconsolidated entity-step acquisition | 1,921 | — | ||||||
Right-of-use assets exchanged for lease liabilities | 7,311 | — | ||||||
Non Cash Investing and Financing Activities | ||||||||
Issuance of common stock to settle transaction and advisory costs | 3,588 | — | ||||||
Deferred transaction and advisory fees | 10,979 | — | ||||||
Cash election consideration payable at closing of Business Combination | 9,198 | — | ||||||
Conversion of redeemable convertible preferred stock into common stock | 11,189 | — | ||||||
Net settlement of liability classified warrants | 1,706 | — | ||||||
SCHEDULE OF CASH AND RESTRICTED CASH | ||||||||
Cash | $ | 15,385 | $ | 1,071 | ||||
Restricted cash | — | 3,500 | ||||||
Total cash and restricted cash | $ | 15,385 | $ | 4,571 |
Reconciliation of Net Revenue to Non-GAAP Revenue
(in thousands)
(Unaudited)
Revenue - GAAP to Non-GAAP Reconciliation | Twelve Months Ending | |||||||
(in 000's) | GAAP | Less Product Revenue | Add Service Revenue Associated w/ Product Revenue | Non-GAAP | ||||
Net service revenue | $ | 40,855 | $ | 19,437 | $ | 60,292 | ||
Net product revenue | 41,540 | (41,540 | ) | — | ||||
Net revenue from related parties | 12,076 | 12,076 | ||||||
Total net revenue | 94,471 | (41,540 | ) | 19,437 | 72,368 |
Revenue - GAAP to Non-GAAP Reconciliation | Twelve Months Ending | |||||||
(in 000's) | GAAP | Less Product Revenue | Add Service Revenue Associated w/ Product Revenue | Non-GAAP | ||||
Net service revenue | $ | 41,866 | $ | 19,985 | $ | 61,851 | ||
Net product revenue | 51,346 | (51,346 | ) | — | ||||
Net revenue from related parties | 8,136 | 8,136 | ||||||
Total net revenue | 101,348 | (51,346 | ) | 19,985 | 69,987 |
Source:
2023 GlobeNewswire, Inc., source