ATLANTA, Nov. 9, 2023
/PRNewswire/ -- KORE Group Holdings,
Inc. (NYSE: KORE, KORE.WS) ("KORE"
or the "Company"), the global pure-play Internet of Things ("IoT")
hyperscaler, and provider of IoT Connectivity, Solutions and
Analytics, today reported financial and operational results for the
quarter ended September 30, 2023.
KORE: Company Highlights
- KORE announced a definitive agreement to refinance its
approximately $300 million term loan,
resulting in substantially lower first lien leverage. The new
$185 million term loan from
Whitehorse Capital will carry an interest rate of SOFR plus 650
basis points and represents a reduction in first lien leverage to
3.2x trailing twelve-month (TTM) Adjusted EBITDA, a non-GAAP
metric1, down from 5.2x. The credit agreement
for the new term loan allows for an interest rate reduction of 25
basis points for each 0.5x improvement in the first lien leverage
ratio up to a maximum reduction of 50 basis points. Importantly,
after repaying our existing term loan, the Company will not have
any material debt maturities until 2028. Whitehorse Capital will
also make available to the Company a $25
million revolving credit facility, which will be undrawn at
closing.
- As part of the refinancing, the Company also signed a
definitive agreement for a $150
million strategic investment from an affiliate of
Searchlight Capital Partners, two designees of which will be
joining the Company's Board of Directors upon closing of the
investment, which is expected to occur on or before December 1, 2023, subject to the satisfaction of
closing conditions. This investment, in the form of a preferred
stock issuance having a ten-year maturity and a 13% per annum
dividend rate with a payment-in-kind (PIK) feature, will allow for
greater cash flow flexibility. When combined with proceeds from the
new term loan, this will add approximately $15 million of cash to the balance sheet, net of
transaction expenses. This strategic investment will reduce the
Company's total leverage from 7.3x TTM Adjusted EBITDA to 5.3x.
Upon the closing of these two transactions, the company's total
debt will be comprised of a $185
million term loan and $120
million in 5.5% fixed interest convertible notes. The
Company also issued ten-year penny warrants to purchase 11.8
million shares of common stock to an affiliate of Searchlight
Capital Partners as part of the transaction.
- KORE returned to year-over-year growth in the third quarter of
2023, with total revenue of $68.6
million versus $66.1 million
in the third quarter of 2022, driven by strong growth in our high
margin IoT Connectivity business, which increased 27%. On an
organic basis, IoT Connectivity revenue grew in the high single
digits, and excluding the 2G/3G sunset forced churn of non-core
customers at the end of 2022, grew in the mid-teens.
- Third quarter estimated Total Contract Value (TCV) in new
business bookings was $27 million.
KORE's sales funnel, which the Company defines as opportunities for
new business the KORE sales team is actively pursuing, now includes
almost 1,700 opportunities with an estimated potential TCV of over
$740 million, an approximately 12%
sequential increase from second quarter 2023's estimated potential
TCV of $660 million.
- KORE added over 300,000 connections in the third quarter,
bringing Total Connections to almost 18.9 million as of
September 30, 2023. This is a
significant step up in connections from approximately 15.3 million
connections on September 30,
2022.
"I am delighted to announce a successful refinancing of our
senior debt, which upon closing in the next couple of weeks, will
reduce our overall debt level by approximately $120 million. Our improved balance sheet results
in greater cash efficiency to service debt and extends our debt
maturity by five years, giving the Company plenty of time to
delever, especially in light of our Adjusted EBITDA growth
prospects. We are particularly pleased by a significant reduction
in required annual cash interest payments from approximately
$42 million in 2023 to approximately
$28 million in 2024. With this
important refinancing behind us, we are singularly refocused on the
tremendous opportunity ahead of us through the Decade of IoT. Our
best-in-class eSIM-powered IoT connectivity value proposition
represents an exciting opportunity for profitable growth," said
Romil Bahl, President and CEO of
KORE.
Financial Performance for Third Quarter 2023, Compared to the
Same Period of 2022:
- Total revenue increased by 4% to $68.6
million, compared to $66.1
million in the third quarter of 2022.
- IoT Connectivity revenue of $55.2
million increased by 27%, compared to $43.4 million in the third quarter of 2022. On an
organic basis, revenue growth was in the high single-digits and in
the mid-teens, excluding the forced churn of non-core customers due
to the 2G/3G sunsets at the end of 2022.
- IoT Solutions revenue declined by 41% to $13.4 million, compared to $22.7 million one year ago, as this segment was
impacted by customer order deferrals, which does not reflect a
change in the long-term outlook of this segment.
- Net Loss increased to $95.4
million, or $1.10 per share,
compared to $14.3 million, or
$0.19 per share, one year ago.
Excluding the $78.3 million non-cash
goodwill impairment charge related to the decline in the Company's
share price, Net Loss in the third quarter of 2023 would have been
$17.1 million, or $0.20 per share. The year-over-year increase in
Net Loss was primarily due to increased interest expense owing to
the rise in interest rates.
- Adjusted EBITDA declined 6% year-over-year to $14.2 million from $15.1
million in the third quarter of 2022. The decline was mainly
due to increased operating expenses from the inclusion of the
acquired Twilio IoT business.
Financial Performance for Nine Months Ending September 30, 2023, Compared to the Same Period
of 2022:
- Total revenue decreased by 1% to $204.1
million, compared to $206.0
million.
- IoT Connectivity revenue increased 10% to $147.0 million, compared to $133.5 million.
- IoT Solutions revenue decreased by 21% to $57.1 million, compared to $72.5 million. The revenue decline in the
nine-month period was primarily due to the large LTE transition
project at our largest customer that was completed in the second
quarter of 2022.
- Net Loss increased to $133.4
million, or $1.65 per share,
compared to $36.6 million, or
$0.49 per share. Excluding the
$78.3 million non-cash goodwill
impairment charge related to the decline in the Company's share
price, Net Loss for the nine months would have been $55.1 million, or $0.68 per share. The increase in Net Loss was
primarily due to the increase in interest expense and increased
amortization.
- Adjusted EBITDA declined by 12% to $41.7
million, compared to $47.2
million. The decline was due to increases in headcount
related costs, including those from the acquired Twilio IoT
business.
The tables below summarize our revenue and specific key
metrics:
|
Three Months Ended
September 30,
|
($ in
thousands)
|
2023
|
|
2022
|
IoT
Connectivity
|
$
55,169
|
|
80 %
|
|
$
43,415
|
|
66 %
|
IoT
Solutions
|
13,464
|
|
20 %
|
|
22,722
|
|
34 %
|
Total
Revenue
|
$
68,633
|
|
100 %
|
|
$
66,137
|
|
100 %
|
Period End Total
Connections
|
18.9
million
|
|
15.3
million
|
Average Total
Connections for the Period
|
16.8
million
|
|
15.3
million
|
|
Nine Months Ended
September 30,
|
($ in
thousands)
|
2023
|
|
2022
|
IoT
Connectivity
|
$
147,042
|
|
72 %
|
|
$
133,504
|
|
65 %
|
IoT
Solutions
|
57,102
|
|
28 %
|
|
72,532
|
|
35 %
|
Total
Revenue
|
$
204,144
|
|
100 %
|
|
$
206,036
|
|
100 %
|
Period End Total
Connections
|
18.9
million
|
|
15.3
million
|
Average Total
Connections for the Period
|
16.8
million
|
|
15.2
million
|
Third Quarter 2023 Key Metrics and Business
Successes
- KORE's Total Connections were almost 18.9 million as of
September 30, 2023, an increase of
over 300,000 from the second quarter of 2023 and, notably, an
increase of 3.6 million from the same period in 2022. We have a
robust IoT Connectivity sales pipeline, including many customers
with whom we are positioned to consolidate wallet share with our
industry-leading multi–multi–multi value proposition and global
eSIM product.
- DBNER2 was 96% for the twelve-month period ending
September 30, 2023, compared to 100%
for the twelve months ending September 30,
2022. Excluding our largest customer, DBNER was 104% vs.
106%.
- KORE added $27 million of new
business TCV in the third quarter, bringing the year-to-date TCV to
$87 million. The Company's new
business sales funnel now includes almost 1,700 opportunities with
an estimated potential TCV of approximately $740 million as of September 30, 2023, compared to $660 million and $407
million as of June 30, 2023,
and September 30, 2022, respectively.
The sales funnel includes almost 100 opportunities with estimated
potential TCVs ranging from $1
million to nearly $5 million,
16 opportunities in the $5 million to
$9.9 million range, and an additional
16 opportunities with estimated potential TCVs greater than
$10 million each.
- KORE continued to increase its presence in its target
distributed enterprises market segment with the announcement of
KORE's enabling a national retailer's digital transformation with
5G connectivity. This collaboration signals a turning point for
retail as 5G connectivity is driving a nationwide shift towards
digital-first retail, from security systems to customer
experiences. KORE's 5G solutions and services, including failover
options, provide the link for these retailers to reimagine
inventory management, business operations, and customer
service.
- KORE's innovative LoRaWAN solution, KORE LPHub™, received a
2023 IoT Evolution LPWAN Excellence Award from IoT Evolution World.
KORE LPHub is a SaaS-based Service Delivery Platform (SDP) that
seamlessly deploys, manages, and connects LoRaWAN devices over a
cost-effective, low-power, wide-area (LPWA) network, ensuring
device longevity and supporting Massive IoT expansion.
- Building on its "IoT for Good" initiative, KORE announced an
alliance with GrandPad to support their mission to help seniors age
in place with IoT. Powered by KORE's robust IoT Connectivity
solutions, GrandPad provides an easy-to-use communication device
that allows seniors to connect to vital caregivers and family
members by making video calls, sending voice messages, and viewing
media.
- KORE had several notable new business wins in the third
quarter, including:
- Increasing Share of Wallet: A Remote Patient Monitoring
(RPM) customer selected KORE as the sole provider of eSIM
connectivity across the US, UK, and Europe. The customer will be transferring
lines from a competitor. This engagement has a TCV of $4.4 million, and we see potential additional
opportunities with this customer.
- Cross-Selling IoT Solutions with the KORE One-Stop-Shop:
KORE won a $6.2 million TCV contract
with a national retail chain to migrate from LTE to 5G. KORE is
providing Full Lifecycle Managed Services, including connectivity,
installation services, and ongoing management of the customer's
devices.
- Upsell / Land-and-Expand: An existing rent-to-own store
franchiser customer awarded KORE a $2.5
million TCV contract to provide connectivity across multiple
carriers based on the quality of service they received on their
initial engagement with KORE. KORE is also working on upgrading
lines from LTE to 5G.
- International Opportunities / Global Deployments: An
Australia-based GPS tracking and
fleet management software provider selected KORE as its
connectivity provider utilizing KORE OmniSIM™. The initial contract
has a TCV of $435,000.
Revising 2023 Financial Outlook
For the twelve months ending December 31,
2023, the Company now expects the following:
- Revenue in the range of $280
million to $290 million;
and
- Adjusted EBITDA in the range of $60
million to $62 million, and an
Adjusted EBITDA margin of approximately 21.4% at the midpoint of
revenue and Adjusted EBITDA guidance.
This compares to prior guidance of revenue in the range of
$300 million to $310 million and Adjusted EBITDA in the range of
$60 million to $62 million.
Bahl concluded, "We have reduced revenue guidance to reflect
several customers' order deferrals in IoT Solutions. Despite the
macroeconomic environment causing this pushout of IoT Solutions
revenue, we are pleased with how the year has progressed,
especially in our core IoT Connectivity business, which experienced
strong organic growth in the third quarter and throughout the year.
We have successfully integrated the Twilio IoT team and plan to
launch our new combined next-generation eSIM product in 2024. We
have streamlined operating costs to align with revenue shifts and
have increased gross margins of the acquired Twilio IoT
connections. Despite reduced revenue expectations due to delayed
ordering primarily from IoT Solutions customers, the actions we
have taken enable us to maintain our 2023 Adjusted EBITDA guidance
and put us in a strong position entering 2024. As we look forward,
we are bullish about the Company's ability to grow revenues while
also optimizing operating expenses to add approximately
$10 million of savings in 2024."
Conference Call Details
KORE management will hold a conference call today (November 9, 2023) at 5:00
p.m. Eastern time (2:00 p.m. Pacific
time) to discuss its financial results, business highlights,
and outlook. President and CEO Romil
Bahl and CFO Paul Holtz will
host the call, followed by a question-and-answer session.
Webcast: Link
U.S. dial-in: (877) 407-3039
International dial-in: (215) 268-9922
Conference ID: 13742022
The conference call and a supplemental slide presentation to
accompany management's prepared remarks will be available via the
webcast link and for download via the investor relations section of
the Company's website, ir.korewireless.com.
For the conference call, please dial in 5-10 minutes prior to
the start time, and an operator will register your name and
organization, or you may register here. If you
have difficulty with the conference call, please contact KORE
investor relations at (678) 392-2386. A replay of the conference
call will be available approximately three hours after the
conference call ends and will remain on the investor relations
section of the Company's website for 90 days. An audio replay of
the conference call may be accessed by calling (877) 660-6853 or
(201) 612-7415 using access code 13742022.
About KORE
KORE is a pioneer, leader, and trusted advisor delivering
mission critical IoT solutions and services. We empower
organizations of all sizes to improve operational and business
results by simplifying the complexity of IoT. Our deep IoT
knowledge and experience, global reach, purpose-built solutions,
and deployment agility accelerate and materially impact our
customers' business outcomes. For more information, visit
www.korewireless.com.
Non-GAAP Financial Measures
In addition to our results determined in accordance with GAAP,
we believe the following non-GAAP measures are useful in evaluating
our operational performance. We use the following non-GAAP
financial information to evaluate our ongoing operations and for
internal planning and forecasting purposes. We believe that
non-GAAP financial information, when taken collectively, may be
helpful to investors in assessing our operating performance.
EBITDA and Adjusted EBITDA
"EBITDA" is defined as net income (loss) before other
non-operating expense or income, income tax expense or benefit, and
depreciation and amortization. "Adjusted EBITDA" is defined as
EBITDA adjusted for unusual and other significant items that
management views as distorting the operating results from period to
period. Such adjustments may include stock-based compensation,
integration and acquisition-related charges, tangible and
intangible asset impairment charges, certain contingent liability
reversals, transformation, and foreign currency transaction gains
and losses. EBITDA and Adjusted EBITDA are intended as supplemental
measures of our performance that are neither required by, nor
presented in accordance with, GAAP. We believe that the use of
EBITDA and Adjusted EBITDA provides an additional tool for
investors to use in evaluating ongoing operating results and trends
and in comparing the Company's financial measures with those of
comparable companies, which may present similar non-GAAP financial
measures to investors. However, you should be aware that when
evaluating EBITDA and Adjusted EBITDA we may incur future expenses
similar to those excluded when calculating these measures. In
addition, our presentation of these measures should not be
construed as an inference that our future results will be
unaffected by unusual or non-recurring items. Our computation of
Adjusted EBITDA may not be comparable to other similarly titled
measures computed by other companies, because all companies may not
calculate Adjusted EBITDA in the same fashion.
Because of these limitations, EBITDA and Adjusted EBITDA should
not be considered in isolation or as a substitute for performance
measures calculated in accordance with GAAP. We compensate for
these limitations by relying primarily on our GAAP results and
using EBITDA and Adjusted EBITDA on a supplemental basis. You
should review the reconciliation of net loss to EBITDA and Adjusted
EBITDA below and not rely on any single financial measure to
evaluate our business.
We have not provided the forward-looking GAAP equivalents for
the forward-looking non-GAAP financial measures Adjusted EBITDA and
Adjusted EBITDA margin or a GAAP reconciliation as a result of the
uncertainty regarding, and the potential variability of,
reconciling items including but not limited to stock-based
compensation expense, foreign currency loss or gain and acquisition
and integration-related expenses. Accordingly, a reconciliation of
these non-GAAP guidance metrics to their corresponding GAAP
equivalents is not available without unreasonable effort. However,
it is important to note that material changes to reconciling items
could have a significant effect on future GAAP results and, as
such, we also believe that any reconciliations provided would imply
a degree of precision that could be confusing or misleading to
investors.
Key Metrics
KORE reviews a number of metrics to measure our performance,
identify trends affecting our business, prepare financial
projections, and make strategic decisions. The calculation of the
key metrics and other measures discussed below may differ from
other similarly titled metrics used by other companies, securities
analysts, or investors.
Number of Customer Connections
Total Customer Connections or "Total Connections" constitutes
the total of all KORE Connectivity services connections, including
both CaaS and CEaaS connections, but excluding certain connections
where mobile carriers license KORE's subscription management
platform from KORE. Total Connections include the contribution of
eSIMs and is the principal measure used by management to assess the
performance of the business on a periodic basis.
DBNER
DBNER (Dollar Based Net Expansion Rate) tracks the combined
effect of cross-sales of IoT Solutions to KORE's existing
customers, its customer retention and the growth of its existing
business. KORE calculates DBNER by dividing the revenue for a given
period ("given period") from existing go-forward customers by the
revenue from the same customers for the same period measured one
year prior ("base period"). The revenue included in the current
period excludes revenue from (i) customers that are non go-forward
customers, meaning customers that have either communicated to KORE
before the last day of the current period their intention not to
provide future business to KORE or customers that KORE has
determined are transitioning away from KORE based on a sustained
multi-year time period of declines in revenue and (ii) new
customers that started generating revenue after the end of the base
period. For example, to calculate our DBNER for the trailing 12
months ended September 30, 2023, we
divide (i) revenue, for the trailing 12 months ended September 30, 2023, from go-forward customers
that started generating revenue on or before September 30, 2022, by (ii) revenue, for the
trailing 12 months ended September 30,
2022, from the same cohort of customers. For the purposes of
calculating DBNER, if KORE acquires a company during the given
period or the base period, then the revenue of a customer before
the acquisition but during either the given period or the base
period is included in the calculation. Further, it is often
difficult to ascertain which customers should be deemed not to be
go-forward customers for purposes of calculating DBNER. Customers
are not required to give notice of their intention to transition
off of the KORE platform, and a customer's exit from the KORE
platform can take months or longer, and total connections of any
particular customer can at any time increase or decrease for any
number of reasons, including pricing, customer satisfaction or
product fit – accordingly, a decrease in total connections may not
indicate that a customer is intending to exit the KORE platform,
particularly if that decrease is not sustained over a period of
several quarters. DBNER would be lower if it were calculated using
revenue from non go-forward customers.
DBNER for the twelve-month periods ending September 30, 2023, and September 30, 2022, excludes connections from
non-go-forward customers, the vast majority of which are
connections from Non-Core Customers. KORE defines "Non-Core
Customers" to be customers that management has judged to be lost as
a result of the integration of Raco Wireless, Wyless, and other
acquisitions completed in the 2014-2017 period, but which continue
to have some connections (and account for some revenue) each year
with KORE. Non-Core Customers are a subset of non-go-forward
customers. As of January 1, 2024,
these Non-Core Customers will neither have connections with nor
generate revenue for KORE.
DBNER is used by management as a measure of growth at KORE's
existing customers (i.e., "same store" growth). It is not intended
to capture the effect of either new customer wins or the declines
from non go-forward customers on KORE's total revenue growth. This
is because DBNER excludes new customers which started generating
revenue after the base period, and also excludes any customers
which are non go-forward customers on the last day of the current
period. Revenue increases from new customer wins, and a decline in
revenue from non go-forward customers are also important factors in
assessing KORE's revenue growth, but these factors are independent
of DBNER.
Total Contract Value (TCV)
Total Contract Value (TCV) represents KORE's estimated value of
a revenue opportunity. TCV for an IoT Connectivity opportunity is
calculated by multiplying by forty the estimated revenue expected
to be generated during the twelfth month of production. TCV for an
IoT Solutions opportunity is either the actual total expected
revenue opportunity, or if it is a longer-term "programmatically
recurring revenue" program, calculated for the first 36 months of
the delivery period.
Cautionary Note on Forward-Looking Statements
This press release includes certain statements that are not
historical facts but are forward-looking statements for purposes of
the safe harbor provisions under the United States Private
Securities Litigation Reform Act of 1995. 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," "target" 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 the closing and funding of the new term loan
and revolving credit facility with Whitehorse Capital, the closing
of the preferred stock investment with Searchlight Capital and the
benefits and use of proceeds of these refinancing transactions,
statements regarding the benefits of the acquisition of Twilio's
IoT business, estimates and forecasts of revenue, cash position,
interest expense, Adjusted EBITDA and other financial and
performance metrics, future capital availability, debt maturity,
projections regarding recent customer engagements, projections of
market opportunity and conditions, the total contract value (TCV)
of signed contracts and potential revenue opportunities in KORE's
sales funnel, and related expectations. These statements are based
on various assumptions and on the current expectations of KORE's
management. 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 or other person 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 KORE.
These forward-looking statements are subject to a number of risks
and uncertainties, including general economic, financial, legal,
political and business conditions and changes in domestic and
foreign markets; the potential effects of COVID-19; risks related
to the rollout of KORE's business and the timing of expected
business milestones; risks relating to the integration of KORE's
acquired companies, including the acquisition of Twilio's IoT
business, changes in the assumptions underlying KORE's expectations
regarding its future business; our ability to negotiate and sign a
definitive contract with a customer in our sales funnel; our
ability to realize some or all of the TCV of customer contracts as
revenue, including any contractual options available to customers
or contractual periods that are subject to termination for
convenience provisions; the effects of competition on KORE's future
business; and the outcome of judicial proceedings to which KORE is,
or may become a party. 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 KORE presently does not know or that KORE
currently believes are immaterial that could also cause actual
results to differ materially from those contained in the
forward-looking statements. In addition, forward-looking statements
reflect KORE's expectations, plans or forecasts of future events
and views as of the date of this press release. KORE anticipates
that subsequent events and developments will cause these
assessments to change. However, while KORE may elect to update
these forward-looking statements at some point in the future, KORE
specifically disclaims any obligation to do so. These
forward-looking statements should not be relied upon as
representing KORE'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.
|
|
|
|
|
1 See
"Non-GAAP Financial Measures" and "Reconciliation of Net Loss to
EBITDA to Adjusted EBITDA" below for more
information
|
2 See
"Key Metrics" below for definitions
|
KORE Investor
Contact:
|
KORE Media
Contact:
|
Charley
Brady
|
Carla Deisenroth
|
Vice President,
Investor Relations
|
Vice President,
Strategy & Marketing
|
cbrady@korewireless.com
|
cdeisenroth@korewireless.com
|
+1-678-392-2386
|
+1-248-982-2759
|
KORE Group
Holdings, Inc
Condensed
Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)
(In thousands,
except share and per share data)
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Revenue
|
|
|
|
|
|
|
|
Services
|
$
57,046
|
|
$
46,448
|
|
$
155,619
|
|
$
141,796
|
Products
|
11,587
|
|
19,689
|
|
48,525
|
|
64,240
|
Total
revenue
|
68,633
|
|
66,137
|
|
204,144
|
|
206,036
|
Cost of
revenue
|
|
|
|
|
|
|
|
Cost of
services
|
22,794
|
|
16,581
|
|
57,405
|
|
50,740
|
Cost of
products
|
8,202
|
|
14,960
|
|
35,624
|
|
49,701
|
Total cost of
revenue (exclusive of depreciation
and amortization shown separately below)
|
30,996
|
|
31,541
|
|
93,029
|
|
100,441
|
Operating
expenses
|
|
|
|
|
|
|
|
Selling, general and
administrative
|
32,778
|
|
28,904
|
|
95,870
|
|
86,029
|
Depreciation and
amortization
|
14,457
|
|
13,688
|
|
43,094
|
|
40,616
|
Goodwill
impairment
|
78,255
|
|
—
|
|
78,255
|
|
—
|
Total operating
expenses
|
125,490
|
|
42,592
|
|
217,219
|
|
126,645
|
Operating
loss
|
(87,853)
|
|
(7,996)
|
|
(106,104)
|
|
(21,050)
|
Interest expense,
including amortization of deferred
financing costs, net
|
10,615
|
|
8,206
|
|
31,217
|
|
22,127
|
Change in fair value of
warrant liability
|
(14)
|
|
(120)
|
|
(14)
|
|
(253)
|
Loss before income
taxes
|
(98,454)
|
|
(16,082)
|
|
(137,307)
|
|
(42,924)
|
Income tax
benefit
|
(3,093)
|
|
(1,805)
|
|
(3,957)
|
|
(6,285)
|
Net
loss
|
$
(95,361)
|
|
$
(14,277)
|
|
$
(133,350)
|
|
$
(36,639)
|
Loss per
share:
|
|
|
|
|
|
|
|
Basic and
diluted
|
$
(1.10)
|
|
$
(0.19)
|
|
$
(1.65)
|
|
$
(0.48)
|
Weighted average
number of shares outstanding:
|
|
|
|
|
|
|
|
Basic and
diluted
|
86,655,279
|
|
76,240,530
|
|
81,046,880
|
|
75,514,986
|
KORE Group
Holdings, Inc.
Condensed
Consolidated Balance Sheets (Unaudited)
(In thousands,
except share data)
|
|
|
September 30,
2023
|
|
December 31,
2022
|
ASSETS
|
Current
assets
|
|
|
|
Cash
|
$
19,767
|
|
$
34,645
|
Accounts receivable,
net
|
48,220
|
|
44,538
|
Inventories,
net
|
9,925
|
|
10,051
|
Income taxes
receivable
|
379
|
|
502
|
Prepaid expenses and
other current assets
|
13,935
|
|
13,484
|
Total current
assets
|
92,226
|
|
103,220
|
Non-current
assets
|
|
|
|
Restricted
cash
|
296
|
|
362
|
Property and equipment,
net
|
12,122
|
|
11,899
|
Intangible assets,
net
|
176,028
|
|
192,504
|
Goodwill
|
294,600
|
|
369,706
|
Operating lease
right-of-use assets
|
9,905
|
|
10,019
|
Deferred tax
assets
|
52
|
|
55
|
Other long-term
assets
|
947
|
|
971
|
Total
assets
|
$
586,176
|
|
$
688,736
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
Current
liabilities
|
|
|
|
Accounts
payable
|
$
22,455
|
|
$
17,835
|
Accrued
liabilities
|
24,539
|
|
15,793
|
Current portion of
operating lease liabilities
|
1,433
|
|
1,811
|
Income taxes
payable
|
2,212
|
|
207
|
Deferred
revenue
|
7,931
|
|
7,817
|
Current portion of
long-term debt and other borrowings, net
|
4,268
|
|
5,345
|
Total current
liabilities
|
62,838
|
|
48,808
|
Non-current
liabilities
|
|
|
|
Deferred tax
liabilities
|
14,168
|
|
25,248
|
Warrant
liability
|
19
|
|
33
|
Non-current portion of
operating lease liabilities
|
9,741
|
|
9,275
|
Long-term debt and
other borrowings, net
|
412,633
|
|
413,910
|
Other long-term
liabilities
|
15,671
|
|
10,790
|
Total
liabilities
|
$
515,070
|
|
$
508,064
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
Stockholders'
equity
|
|
|
|
Common stock, voting;
par value $0.0001 per share; 315,000,000 shares authorized,
86,724,356 and 76,292,241 shares issued and outstanding as of
September 30,
2023, and December 31, 2022, respectively
|
$
9
|
|
$
8
|
Additional paid-in
capital
|
459,047
|
|
435,292
|
Accumulated other
comprehensive loss
|
(6,362)
|
|
(6,390)
|
Accumulated
deficit
|
(381,588)
|
|
(248,238)
|
Total stockholders'
equity
|
71,106
|
|
180,672
|
Total liabilities
and stockholders' equity
|
$
586,176
|
|
$
688,736
|
KORE Group
Holdings, Inc.
Condensed
Consolidated Statements of Cash Flows (Unaudited)
(In
thousands)
|
|
|
Nine Months
Ended
|
|
September
30,
|
|
2023
|
|
2022
|
Net cash provided by
operating activities
|
$
4,493
|
|
$
20,527
|
Cash flows from
investing activities
|
|
|
|
Additions to
intangible assets
|
(12,186)
|
|
(9,027)
|
Additions to property
and equipment
|
(3,410)
|
|
(2,945)
|
Payments for
acquisitions, net of cash acquired
|
—
|
|
(46,002)
|
Net cash used in
investing activities
|
$
(15,596)
|
|
$
(57,974)
|
Cash flows from
financing activities
|
|
|
|
Repayment of term
loan
|
(2,364)
|
|
(2,364)
|
Repayment of other
borrowings—notes payable
|
(1,626)
|
|
(507)
|
Equity financing
fees
|
—
|
|
(126)
|
Payment of deferred
financing costs
|
—
|
|
(452)
|
Payment of financing
lease obligations
|
—
|
|
(150)
|
Net cash used in
financing activities
|
$
(3,759)
|
|
$
(3,599)
|
Effect of exchange
rate changes on cash
|
(82)
|
|
(2,014)
|
Change in cash and
restricted cash
|
(14,944)
|
|
(43,060)
|
Cash and restricted
cash, beginning of period
|
35,007
|
|
86,343
|
Cash and restricted
cash, end of period
|
$
20,063
|
|
$
43,283
|
KORE Group
Holdings, Inc.
RECONCILIATION OF
NET LOSS TO EBITDA TO ADJUSTED EBITDA (Unaudited)
(In
thousands)
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net
loss
|
$
(95,361)
|
|
$
(14,277)
|
|
$
(133,350)
|
|
$
(36,639)
|
Income tax
benefit
|
(3,093)
|
|
(1,805)
|
|
(3,957)
|
|
(6,285)
|
Interest
expense
|
10,615
|
|
8,206
|
|
31,217
|
|
22,127
|
Depreciation and
amortization
|
14,457
|
|
13,688
|
|
43,094
|
|
40,616
|
EBITDA
|
$
(73,382)
|
|
$
5,812
|
|
$
(62,996)
|
|
$
19,819
|
Goodwill
impairment
|
78,255
|
|
—
|
|
78,255
|
|
—
|
Change in fair value
of warrant liability (non-cash)
|
(14)
|
|
(120)
|
|
(14)
|
|
(253)
|
Transformation
expenses
|
1,876
|
|
2,461
|
|
5,434
|
|
5,927
|
Acquisition
costs
|
—
|
|
—
|
|
1,776
|
|
1,400
|
Integration-related
restructuring costs
|
3,011
|
|
2,604
|
|
8,333
|
|
10,288
|
Stock-based
compensation (non-cash)
|
3,435
|
|
3,019
|
|
9,010
|
|
7,570
|
Foreign currency loss
(non-cash)
|
781
|
|
1,077
|
|
1,018
|
|
1,554
|
Other
|
197
|
|
259
|
|
910
|
|
873
|
Adjusted
EBITDA
|
$
14,159
|
|
$
15,112
|
|
$
41,726
|
|
$
47,178
|
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SOURCE KORE Wireless