Altigen Communications, Inc. Reports Second Quarter Results for Fiscal Year 2023

Revenue increased 31.9%; GAAP Loss Per Share of ($0.01); Non-GAAP diluted EPS of $0.00

MILPITAS, CA / ACCESSWIRE / May 17, 2023 / Altigen Communications, Inc. (OTCQB:ATGN), a Silicon Valley-based cloud solutions provider for the Unified Communications as a Service (UCaaS), Contact Center as a Service (CCaaS) and our Customer Engagement as a Service (CEaaS) markets, announced today its financial results for the second quarter ended March 31, 2023.

Second Quarter Highlights (Fiscal 2023 versus Fiscal 2022)

• Net Revenue increased 32% to $3.4 million;
• Gross margin decreased to 63.4%, compared with 70.2%;
• GAAP net loss and loss per share of ($0.1) million and ($0.01), respectively, compared to GAAP net income and diluted EPS of $0.07 million and $0.00, respectively;
• Non-GAAP net income and non-GAAP diluted EPS of $0.1 million and $0.00, respectively, compared to $0.3 million and $0.01, respectively.

"We're pleased to report that our cloud services revenues increased quarter over quarter", said Jeremiah Fleming, Altigen President & CEO. "While our gross margins were down a bit due to the higher concentration of professional services revenue in the quarter, we do expect a return to normal levels as our cloud services revenues increase as a percentage of overall revenues. We also continued to remain cash flow positive even though we have been heavily investing in our new solutions. As we get closer to exiting this investment phase and start moving into our planned growth phase, we expect to see continued growth in our cloud services business."

Select Financial Metrics: Fiscal 2023 versus Fiscal 2022

(in thousands, except for EPS and percentages)		Fiscal 2Q23				Fiscal 2Q22				Change
Total Revenue		$	3,373			$	2,558				31.9	%
Cloud Services			1,894				1,880				0.7	%
Professional and Other Services			1,028				124				729.0	%
Legacy Products			451				554				-18.6	%
Software Assurance			390				471				-17.2	%
Perpetual Software License			61				83				-26.5	%
GAAP Operating (Loss)/Income		$	(131	)		$	78				nm
Operating Margin			-3.9	%			3.0	%
Non-GAAP Operating (Loss)/Income		$	(101	)		$	92				nm
Non-GAAP Operating Margin			-3.0	%			3.6	%
GAAP Net (Loss)/Income		$	(140	)		$	65				nm
GAAP (Loss)/Earnings Per Share		$	(0.01	)		$	0.00				nm
Non-GAAP Net Income		$	95			$	342				-72.2	%
Non-GAAP Diluted Earnings Per Share		$	0.00			$	0.01				-74.7	%
Adjusted EBITDA (1)		$	95			$	342				-72.2	%
Cash Flow from Operations		$	560			$	557				nm

nm = not measurable/meaningful; *may not add up due to rounding

1.Throughout this release, the use of non-GAAP financial measures is intended to provide useful information that supplements Altigen's results in accordance with GAAP. Please refer to the Reconciliation of Non-GAAP Financial Measure at the end of this release.

Trended Financial Information

(in thousands, except for EPS and percentages)		Fiscal 1Q22			Fiscal 2Q22			Fiscal 3Q22			Fiscal 4Q22			Fiscal 1Q23			Fiscal 2Q23			FY2022			FY2023
Total Revenue		$	2,733		$	2,558		$	3,029		$	3,571		$	3,460		$	3,373		$	11,891		$	6,833
Cloud Services			1,910			1,880			1,906			1,943			1,822			1,894			7,639			3,716
Professional and Other Services			139			124			555			1,161			1,174			1,028			1,979			2,202
Legacy Products			684			554			568			467			464			451			2,273			915
Software Assurance			506			471			473			417			424			390			1,867			814
Perpetual Software License			178			83			95			50			40			61			406			101
GAAP Operating (Loss)/Income		$	10		$	78		$	(9	)	$	(659	)	$	(188	)	$	(131	)	$	(580	)	$	(319	)
Operating Margin			0.4	%		3.0	%		-0.3	%		-18.5	%		-5.4	%		-3.9	%		-4.9	%		-4.7	%
Non-GAAP Operating (Loss)/Income		$	66		$	92		$	3		$	(62	)	$	(156	)	$	(101	)	$	99		$	(257	)
Non-GAAP Operating Margin			2.4	%		3.6	%		0.1	%		-1.7	%		-4.5	%		-3.0	%		0.8	%		-3.8	%
GAAP Net (Loss)/Income		$	11		$	65		$	(9	)	$	(764	)	$	(187	)	$	(140	)	$	(697	)	$	(327	)
Non-GAAP Net Income		$	313		$	342		$	224		$	205		$	44		$	95		$	1,084		$	139
Non-GAAP Diluted Earnings Per Share		$	0.01		$	0.01		$	0.01		$	0.01		$	0.00		$	0.00		$	0.04		$	0.01
Adjusted EBITDA(1)		$	312		$	342		$	224		$	204		$	44		$	95		$	1,082		$	139

nm = not measurable/meaningful; *may not add up due to rounding

1.Throughout this release, the use of non-GAAP financial measures is intended to provide useful information that supplements Altigen's results in accordance with GAAP. Please refer to the Reconciliation of Non-GAAP Financial Measure at the end of this release.

Conference Call

Altigen will be discussing its financial results and outlook on a conference call today at 2:00 p.m. Pacific Time (5:00 p.m. ET). The conference call can be accessed by dialing [phone] (domestic) or [phone] (international), conference ID #418212. A live webcast will also be made available at www.altigen.com . To access the replay, dial [phone] (domestic) or [phone] (international), conference ID #48343. A web archive will be made available at www.altigen.com for 90 days following the call's conclusion.

About Altigen Communications

Altigen Communications Inc. (OTCQB:ATGN), based in Silicon Valley, is a leading Microsoft Cloud Solutions provider, delivering fully managed Cloud-based Unified Communications services based on the Microsoft platform. Our SIP trunk services, enterprise customer engagement and innovative cloud contact center solutions seamlessly integrate with Microsoft Teams to enhance and extend the business communications capabilities for our customers. Altigen's solutions are designed for high reliability, ease of use, seamless integration into Microsoft technologies, all delivered as fully managed cloud services. Our solutions are available through our global network of certified resellers. For more information, call 1-888-ALTIGEN or visit our website at www.altigen.com.

Safe Harbor Statement

This press release contains forward‐looking information. The statements are based on reasonable assumptions, beliefs and expectations of management and the Company provides no assurance that actual events will meet management's expectations. Furthermore, the forward-looking statements contained in this press release are based on the Company's views of future events and financial performances which are subject to known and unknown risks and uncertainties including, many of which are outside the Company's control. There can be no assurances that the Company will achieve expected results, and actual results may be materially different than expectations and from those stated or implied in forward-looking statements.

Please refer to the Company's most recent Annual Report filed with the OTCQB over-the-counter market for a further discussion of risks and uncertainties. Any forward-looking statement made by us in this press release is based only on information currently available to us and speaks only as of the date on which it is made. The Company does not undertake any obligation to update any forward-looking statements.

Contact:
Carolyn David
Vice President of Finance
Altigen Communications, Inc.
[phone]
www.altigen.com

ALTIGEN COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, amounts in thousands)

		March 31, 2023				September 30, 2022
ASSETS
Current assets:
Cash and cash equivalents		$	3,376			$	3,232
Accounts receivable, net			945				1,220
Other current assets			300				206
Total current assets			4,621				4,658
Property and equipment, net			5				7
Operating lease right-of-use assets			393				572
Goodwill			2,725				2,725
Intangible assets, net			1,790				1,882
Capitalized software development cost, net			1,313				1,331
Deferred tax asset			6,493				6,493
Other long-term assets			25				37
Total assets		$	17,365			$	17,705
LIABILITIES AND STOCKHOLDERS EQUITY
Current liabilities:
Accounts payable		$	48			$	53
Accrued compensation and benefits			544				364
Accrued expenses			547				530
Acquisition-related contingent consideration - current			500				500
Operating lease liabilities, current			338				383
Deferred revenue - current			511				566
Total current liabilities			2,488				2,396
Contingent consideration on acquired business - long-term			670				670
Operating lease liabilities - long-term			90				233
Deferred revenue - long-term			147				206
Total liabilities			3,395				3,505
Stockholders' equity:
Common stock			24				24
Treasury stock			(1,565	)			(1,565	)
Additional paid-in capital			72,768				72,671
Accumulated deficit			(57,257	)			(56,930	)
Total stockholders' equity			13,970				14,200
Total liabilities and stockholders' equity		$	17,365			$	17,705

ALTIGEN COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(amounts in thousands, except per share data)

		Three Months Ended								Six Months Ended
		March 31,								March 31,
		2023				2022				2023				2022
Net revenue		$	3,373			$	2,558			$	6,833			$	5,290
Gross profit			2,140				1,796				4,348				3,763
Operating expenses:
Research and development			1,299				880				2,549				1,902
Selling, general & administrative			972				838				2,117				1,772
Operating (loss) income			(131	)			78				(318	)			89
Other income			-				1				-				1
Net (loss) income before provision for income taxes			(131	)			79				(318	)			90
Income tax benefit (expense)			(9	)			(14	)			(9	)			(14	)
Net (loss) income		$	(140	)		$	65			$	(327	)		$	76
Per share data:
Basic		$	(0.01	)		$	0.00			$	(0.01	)		$	0.00
Diluted		$	(0.01	)		$	0.00			$	(0.01	)		$	0.00
Weighted average shares outstanding:
Basic			24,367				23,957				24,294				23,857
Diluted			24,367				25,474				24,294				25,453

ALTIGEN COMMUNICATIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, amounts in thousands)

		Six Months Ended March 31,
		2023				2022
Cash flows from operating activities:
Net (loss) income		$	(327	)		$	76
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization			2				9
Amortization of intangible assets			92				88
Amortization of capitalized software			303				399
Stock-based compensation			61				69
Changes in operating assets and liabilities:
Accounts receivable and unbilled accounts receivable			275				107
Prepaid expenses and other current assets			(94	)			(115	)
Other long-term assets			12				8
Accounts payable			(5	)			71
Accrued expenses			188				(88	)
Deferred revenue			(114	)			45
Net cash provided by operating activities			393				669
Cash flows from investing activities:
Acquisitions			-				(73	)
Capitalized software development costs			(285	)			(203	)
Net cash used in investing activities			(285	)			(276	)
Cash flows from financing activities:
Proceeds from issuances of common stock			36				35
Net cash provided by financing activities			36				35
Net increase in cash and cash equivalents			144				428
Cash and cash equivalents, beginning of period			3,232				6,799
Cash and cash equivalents, end of period		$	3,376			$	7,227

ALTIGEN COMMUNICATIONS, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
(amounts in thousands, except per share data)

		Three Months Ended						Six Months Ended
		March 31,						March 31,
		2023			2022			2023			2022
Reconciliation of GAAP to Non-GAAP Gross Profit:
GAAP gross profit		$	2,140		$	1,796		$	4,348		$	3,763
Amortization of capitalized software			136			166			273			328
Acquisition related expenses			40			44			80			88
Non-GAAP gross profit		$	2,316		$	2,006		$	4,701		$	4,179
Reconciliation of GAAP to Non-GAAP Expenses:
GAAP operating expenses		$	2,271		$	1,718		$	4,666		$	3,674
Depreciation and amortization			1			5			2			9
Amortization of capitalized software			14			35			30			70
Amortization of intangible assets			6			-			12			-
Stock-based compensation			30			13			61			69
Non-GAAP operating expenses		$	2,220		$	1,665		$	4,561		$	3,526
Reconciliation of GAAP to Non-GAAP Net Income:
GAAP net (loss) income		$	(140	)	$	65		$	(327	)	$	76
Depreciation and amortization			1			5			2			9
Amortization of capitalized software			150			201			303			399
Amortization of intangible assets			46			44			92			88
Stock-based compensation			30			13			61			69
Deferred tax asset valuation allowance			9			14			9			14
Non-GAAP net income		$	96		$	342		$	140		$	655
Per share data:
Basic		$	0.00		$	0.01		$	0.01		$	0.03
Diluted		$	0.00		$	0.01		$	0.01		$	0.03
Weighted average shares outstanding:
Basic			24,367			23,957			24,294			23,857
Diluted			25,497			25,474			25,574			25,453

Non-GAAP Financial Measures

In calculating non-GAAP financial measures, we exclude certain items to facilitate a review of the comparability of our core operating performance on a period-to-period basis. These non-GAAP financial measures exclude stock-based compensation expense, amortization of acquired intangible assets, depreciation and amortization expenses, acquisition-related costs, change in deferred tax asset valuation allowance, litigation costs and other non-recurring or unusual charges or benefits that may arise from time to time that we do not consider to be directly related to core operating performance. We use non-GAAP measures to evaluate the core operating performance of our business and to perform financial planning. Since we find these measures to be useful, we believe that investors benefit from seeing results reviewed by management in addition to seeing GAAP results. We believe that these non-GAAP measures, when read in conjunction with our GAAP financials, provide useful information to investors by facilitating: (i) the comparability of our on-going operating results over the periods presented and (ii) the ability to identify trends in our underlying business.

SOURCE: Altigen Communications, Inc.

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The Altigen Communications Stock at the time of publication of the news with a fall of -1,31 % to 0,592USD on Nasdaq OTC stock exchange (17. Mai 2023, 21:45 Uhr).