Intermolecular Reports Second Quarter 2019 Financial Results
8 August 2019
SAN JOSE, Calif., Aug. 8, 2019 /PRNewswire/ -- Intermolecular, Inc. (Nasdaq: IMI), the trusted partner for advanced materials innovation, today reported results for its second quarter ended June 30, 2019.
Second Quarter of 2019 Financial Results
Revenue for the second quarter of 2019 was $4.6 million, a decrease of 31% from $6.7 million in the first quarter of 2019, and a decrease of 53% from $9.8 million in the same period a year ago. Program revenue was $4.5 million, a 30% decrease from $6.4 million in the first quarter of 2019, and a 52% decrease from $9.4 million in the same period a year ago.
Gross profit for the second quarter of 2019 was $3.2 million (69% of total revenue), a 34% decrease from $4.8 million (73% of total revenue) in the first quarter of 2019, and a 54% decrease from $6.9 million (71% of total revenue) in the same period a year ago.
Total operating expenses for the second quarter of 2019 were $8.7 million, an 18% increase from $7.4 million in the first quarter of 2019, and an increase of 30% compared to $6.7 million in the same period a year ago.
Net loss for the second quarter of 2019 totaled $(5.3) million, or $(0.11) per basic and diluted share, compared to net loss of $(2.3) million, or $(0.05) per basic and diluted share in the first quarter of 2019, and compared to net income of $0.5 million, or $0.01 per basic and diluted share in the same period a year ago.
Non-GAAP net loss, which excludes stock-based compensation expense, for the second quarter of 2019 totaled $(4.9) million, or $(0.10) per basic and diluted share, compared to non-GAAP net loss of $(1.8) million, or $(0.04) per basic and diluted share in the first quarter of 2019, and compared to non-GAAP net income of $0.7 million, or $0.01 per basic and diluted share in the same period a year ago.
Adjusted EBITDA for the second quarter of 2019 totaled $(4.6) million, compared to an adjusted EBITDA of $(1.3) million in the first quarter of 2019 and Adjusted EBITDA of $1.8 million in the same period a year ago.
Cash and investments totaled $23.9 million at the end of second quarter of 2019, a decrease of $3.5 million compared to $27.4 million at the end of first quarter of 2019. The company had no debt as of June 30, 2019.
Intermolecular reports revenue, cost of revenue, gross margin, operating income (loss), net income (loss) and earnings (loss) per share in accordance with U.S. generally accepted accounting principles (GAAP) and additionally on a non-GAAP basis. A reconciliation of the non-GAAP financial measures with the most directly comparable GAAP measures, as well as a description of the items excluded from the non-GAAP measures, is included in the financial statements portion of this press release. Please refer to "Reconciliation of GAAP to Non-GAAP Financial Measures" and "Reconciliation of GAAP Net Loss to Non-GAAP Net Loss" below.
Agreement and Plan of Merger
Intermolecular will not hold an earnings call, nor provide forward guidance for the third quarter of fiscal year 2019, due to the previously announced proposed acquisition of Intermolecular by Merck KGaA, Darmstadt, Germany.
About Intermolecular, Inc.
Intermolecular® is the trusted partner for advanced materials innovation. Advanced materials are at the core of innovation in the 21st century for a wide range of industries including semiconductors, consumer electronics, automotive and aerospace. With its substantial materials expertise, accelerated learning and experimentation platform, and information and analytics infrastructure, Intermolecular has a ten-year track record helping leading companies accelerate and de-risk materials innovation. Learn more at www.intermolecular.com.
"Intermolecular" and the Intermolecular logo are registered trademarks; all rights reserved.
Non-GAAP Financial Measures
To supplement the financial data presented on a GAAP basis, we also disclose certain non-GAAP financial measures, which exclude the effect of stock-based compensation expense. These non-GAAP financial measures are not prepared in accordance with GAAP, do not serve as an alternative to GAAP and may be calculated differently than non-GAAP financial information disclosed by other companies. These results should only be used to evaluate our results of operations in conjunction with the corresponding GAAP measures. We believe that our non-GAAP financial information provides useful information to management and investors regarding financial and business trends relating to our financial condition and results of operations because the non-GAAP measures exclude charges that management considers to be outside of Intermolecular's core operating results. We believe that the non-GAAP measures of revenue, cost of net revenue, gross profit, gross margin, operating (loss) income, net (loss) income, Adjusted EBITDA, earnings per share and net (loss) income per share, viewed in combination with our financial results calculated in accordance with GAAP, provide investors with additional perspective and a more meaningful understanding of our ongoing operating performance. In addition, management uses these non-GAAP measures to review and assess financial performance, to determine executive officer incentive compensation and to plan and forecast performance in future periods.
Investor Contact
Bill Roeschlein
Intermolecular, Inc.
Chief Financial Officer
bill.roeschlein@intermolecular.com
(408) 582-5415
Intermolecular, Inc. | |||||||||||||||
Condensed Consolidated Statements of Operations | |||||||||||||||
(In thousands, except share and per share amounts, Unaudited) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Revenue: | |||||||||||||||
Program revenue | $ | 4,485 | $ | 9,365 | $ | 10,870 | $ | 18,621 | |||||||
Licensing and royalty revenue | 133 | 437 | 399 | 856 | |||||||||||
Total revenue | 4,618 | 9,802 | 11,269 | 19,477 | |||||||||||
Cost of revenue: | |||||||||||||||
Cost of program revenue | 1,437 | 2,856 | 3,255 | 6,231 | |||||||||||
Cost of licensing and royalty revenue | — | 3 | — | 4 | |||||||||||
Total cost of revenue | 1,437 | 2,859 | 3,255 | 6,235 | |||||||||||
Gross profit | 3,181 | 6,943 | 8,014 | 13,242 | |||||||||||
Operating expenses: | |||||||||||||||
Research and development | 4,216 | 4,056 | 8,362 | 8,087 | |||||||||||
Sales and marketing | 974 | 858 | 1,864 | 1,654 | |||||||||||
General and administrative | 3,494 | 1,748 | 5,832 | 4,034 | |||||||||||
Total operating expenses | 8,684 | 6,662 | 16,058 | 13,775 | |||||||||||
Income (loss) from operations | (5,503) | 281 | (8,044) | (533) | |||||||||||
Other income (expenses), net | |||||||||||||||
Interest income (expense), net | 172 | 140 | 355 | 245 | |||||||||||
Other income (expense), net | (3) | 75 | 93 | 162 | |||||||||||
Total other income (expense), net | 169 | 215 | 448 | 407 | |||||||||||
Income (loss) before provision for income taxes | (5,334) | 496 | (7,596) | (126) | |||||||||||
Provision for income taxes | - | - | - | 1 | |||||||||||
Net income (loss) | $ | (5,334) | $ | 496 | $ | (7,596) | $ | (127) | |||||||
Earnings (loss) per share: | |||||||||||||||
Basic | $ | (0.11) | $ | 0.01 | $ | (0.15) | $ | (0.00) | |||||||
Diluted | $ | (0.11) | $ | 0.01 | $ | (0.15) | $ | (0.00) | |||||||
Weighted-average number of shares used in computing earnings (loss) per share: | |||||||||||||||
Basic | 49,758,224 | 49,672,739 | 49,757,917 | 49,627,584 | |||||||||||
Diluted | 49,758,224 | 50,059,639 | 49,757,917 | 49,627,584 | |||||||||||
Intermolecular, Inc. | |||||||
Condensed Consolidated Balance Sheets | |||||||
(In thousands, Unaudited) | |||||||
As of June 30, 2019 | As of December 31, 2018 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 2,160 | $ | 8,351 | |||
Short-term investments | 21,753 | 22,098 | |||||
Total cash, cash equivalents and short-term investments | 23,913 | 30,449 | |||||
Accounts receivable | 1,941 | 3,349 | |||||
Prepaid expenses and other current assets | 1,004 | 936 | |||||
Total current assets | 26,858 | 34,734 | |||||
Materials inventory | 2,375 | 2,638 | |||||
Property and equipment, net | 2,809 | 3,432 | |||||
Intangible assets, net | 1,892 | 2,075 | |||||
Right-of-use lease assets - operating | 10,841 | — | |||||
Other assets | 503 | 514 | |||||
Total assets | $ | 45,278 | $ | 43,393 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 112 | $ | 760 | |||
Accrued liabilities | 1,592 | 1,234 | |||||
Accrued compensation and employee benefits | 1,984 | 3,431 | |||||
Current portion of lease obligation - operating | 1,816 | — | |||||
Deferred revenue | 159 | 917 | |||||
Total current liabilities | 5,663 | 6,342 | |||||
Deferred rent | — | 2,667 | |||||
Long term lease obligation - operating | 11,832 | — | |||||
Total liabilities | 17,495 | 9,009 | |||||
Stockholders' equity: | |||||||
Common stock | 50 | 50 | |||||
Additional paid-in capital | 216,974 | 216,034 | |||||
Accumulated other comprehensive income (loss) | 28 | (27) | |||||
Accumulated deficit | (189,269) | (181,673) | |||||
Total stockholders' equity | 27,783 | 34,384 | |||||
Total liabilities and stockholders' equity | $ | 45,278 | $ | 43,393 | |||
Intermolecular, Inc. | |||||||
Condensed Consolidated Statements of Cash Flows | |||||||
(In thousands, Unaudited) | |||||||
Six Months Ended June 30, | |||||||
2019 | 2018 | ||||||
Cash flows from operating activities: | |||||||
Net loss | $ | (7,596) | $ | (127) | |||
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||
Depreciation, amortization and accretion | 1,123 | 2,693 | |||||
Amortization expense - Right of use lease assets operating | 787 | — | |||||
Stock-based compensation | 935 | 482 | |||||
Loss on disposal of property and equipment | 2 | — | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | 1,408 | 4,074 | |||||
Prepaid expenses and other assets | (57) | 393 | |||||
Materials inventory | 291 | (134) | |||||
Accounts payable | (520) | (750) | |||||
Accrued and other liabilities | (1,634) | (67) | |||||
Deferred revenue | (759) | (633) | |||||
Net cash (used in) provided by operating activities | (6,020) | 5,931 | |||||
Cash flows from investing activities: | |||||||
Purchase of investments | (13,804) | (19,367) | |||||
Redemption of investments | 14,202 | 12,010 | |||||
Purchase of property and equipment | (574) | (489) | |||||
Net cash used in investing activities | (176) | (7,846) | |||||
Cash flows from financing activities: | |||||||
Proceeds from exercise of common stock options | 5 | 172 | |||||
Net cash provided by financing activities | 5 | 172 | |||||
Net decrease in cash and cash equivalents | (6,191) | (1,743) | |||||
Cash and cash equivalents at beginning of period | 8,351 | 6,090 | |||||
Cash and cash equivalents at end of period | $ | 2,160 | $ | 4,347 | |||
Intermolecular, Inc. | ||||||||||||||||
Reconciliation of GAAP to Non-GAAP Financial Measures | ||||||||||||||||
(In thousands, except per share amounts and percentages, Unaudited) | ||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
GAAP cost of net revenue | $ | 1,437 | $ | 2,859 | $ | 3,255 | $ | 6,235 | ||||||||
Stock-based compensation expense (a) | (36) | (39) | (81) | (92) | ||||||||||||
Non-GAAP cost of net revenue | $ | 1,401 | $ | 2,820 | $ | 3,174 | $ | 6,143 | ||||||||
GAAP gross profit | $ | 3,181 | $ | 6,943 | $ | 8,014 | $ | 13,242 | ||||||||
Stock-based compensation expense (a) | 36 | 39 | 81 | 92 | ||||||||||||
Non-GAAP gross profit | $ | 3,217 | $ | 6,982 | $ | 8,095 | $ | 13,334 | ||||||||
As a percentage of net revenue: | ||||||||||||||||
GAAP gross margin | 68.9 | % | 70.8 | % | 71.1 | % | 68.0 | % | ||||||||
Non-GAAP gross margin | 69.7 | % | 71.2 | % | 71.8 | % | 68.5 | % | ||||||||
GAAP operating income (loss) | $ | (5,503) | $ | 281 | $ | (8,044) | $ | (533) | ||||||||
Stock-based compensation expense (a): | ||||||||||||||||
- Cost of net revenue | 36 | 39 | 81 | 92 | ||||||||||||
- Research and development | 120 | 59 | 233 | 114 | ||||||||||||
- Sales and marketing | 57 | 21 | 110 | 51 | ||||||||||||
- General and administrative | 259 | 93 | 511 | 225 | ||||||||||||
Non-GAAP operating income (loss) | $ | (5,031) | $ | 493 | $ | (7,109) | $ | (51) | ||||||||
GAAP net income (loss) | $ | (5,334) | $ | 496 | $ | (7,596) | $ | (127) | ||||||||
Stock-based compensation expense (a) | 472 | 212 | 935 | 482 | ||||||||||||
Non-GAAP net income (loss) | $ | (4,862) | $ | 708 | $ | (6,661) | $ | 355 | ||||||||
GAAP net income (loss) | $ | (5,334) | $ | 496 | $ | (7,596) | $ | (127) | ||||||||
Interest (income) expense, net | (172) | (140) | (355) | (245) | ||||||||||||
Provision for taxes | — | — | — | 1 | ||||||||||||
Depreciation, amortization, impairments and accretion | 458 | 1,270 | 1,123 | 2,693 | ||||||||||||
Stock-based compensation expense (a) | 472 | 212 | 935 | 482 | ||||||||||||
Adjusted EBITDA | $ | (4,576) | $ | 1,838 | $ | (5,893) | $ | 2,804 | ||||||||
Shares used in computing basic and diluted earnings per share: | ||||||||||||||||
Basic | 49,758,224 | 49,672,739 | 49,757,917 | 49,627,584 | ||||||||||||
Diluted | 49,758,224 | 50,059,639 | 49,757,917 | 49,627,584 | ||||||||||||
GAAP earnings (loss) per share: | ||||||||||||||||
Basic | $ | (0.11) | $ | 0.01 | $ | (0.15) | $ | (0.00) | ||||||||
Diluted | $ | (0.11) | $ | 0.01 | $ | (0.15) | $ | (0.00) | ||||||||
Non-GAAP earnings (loss) per share: | ||||||||||||||||
Basic | $ | (0.10) | $ | 0.01 | $ | (0.13) | $ | 0.01 | ||||||||
Diluted | $ | (0.10) | $ | 0.01 | $ | (0.13) | $ | 0.01 | ||||||||
(a) | Stock-based compensation reflects expense recorded relating to stock-based awards. The Company excludes this item when it evaluates the continuing operational performance of the Company, as management believes this provides it a meaningful understanding of its core operating performance. |
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SOURCE Intermolecular, Inc.
