SAN JOSE, Calif.--(BUSINESS WIRE)--Intermolecular, Inc. (NASDAQ:IMI) - a leader in engineered materials solutions - today announced results for its third quarter ended September 30, 2015
Third Quarter Fiscal 2015 Results
Revenue for the third quarter of 2015 was $11.5 million, compared to $10.9 million in the same period a year ago. Program revenue was $8.7 million for the quarter, compared to $7.7 million in the prior year. Licensing and royalty revenue was $2.8 million, compared to $3.2 million in the prior year.
As reported under GAAP, the Company reported a net loss of $(5.8) million, or $(0.12) per share, for the third quarter of 2015, compared to net loss of $(5.0) million, or $(0.11) per share, for the third quarter of 2014.
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.
Non-GAAP net loss for the quarter ended September 30, 2015 was $(4.7) million, or $(0.10) per share. This compared with non-GAAP net loss of $(3.2) million, or $(0.07) per share, for the third quarter of 2014.
“I am happy with the results of our third quarter, as we continue to move forward with new customers in the major areas that we believe are key to Intermolecular’s future growth and profitability,” stated Bruce McWilliams, President and CEO of Intermolecular. “Our new business model is resonating with customers, and the tangible results of this approach are reflected in the strong 21% quarter over quarter program revenue growth we had in the third quarter. Our growing confidence in our new product offerings is reflected in our outlook for the fourth quarter of this year.”
Outlook for Fourth Quarter 2015
The following statements are based on current expectations for the fourth quarter of 2015. The Company does not plan to update, nor does it undertake any obligation to update, this outlook in the future.
- Intermolecular projects revenue in the range of $12.0 million to $13.0 million.
- Non-GAAP net loss, which excludes stock-based compensation expense, is projected between $(3.0) million and $(4.0) million, or between $(0.06) to $(0.08) per share, on approximately 49 million shares outstanding.
Conference Call Today
Intermolecular will host a conference call and simultaneous audio-only webcast at 5:00 p.m. Eastern Time/2:00 p.m. Pacific Time with Bruce McWilliams, president and chief executive officer, and Rick Neely, senior vice president and chief financial officer, for Intermolecular.
The call can be accessed by dialing (877) 251-1860; international callers should dial (224) 357-2386. Please dial-in ten minutes prior to the scheduled conference call time. A live and archived webcast (audio only) of the call will be available on Intermolecular’s Website at http://ir.intermolecular.com for up to 30 days after the call.
About Intermolecular, Inc.
Intermolecular® is the world’s leading pure play supplier of products and services for the evaluation of high technology engineered thin-film materials. Intermolecular provides solutions to advanced technical problems in thin-film materials development for next generation technology products. Intermolecular utilizes proprietary methods to accelerate deep and rapid understanding of the characteristics of thin-film engineered materials. The company’s products and services consist of information products, tools, and materials formulations that enable its customers’ R&D departments to efficiently evaluate, select and integrate materials that are critical to their next generation products. Intermolecular’s product solutions create significant economic value for its customers by enabling them to rapidly discover and create new options for mission-critical materials decisions. Founded in 2004, Intermolecular is based in San Jose, California. “Intermolecular” and the Intermolecular logo are registered trademarks; and “HPC” is a trademark of Intermolecular, Inc.; all rights reserved. Learn more at www.intermolecular.com.
Statements made in this press release and the earnings call referencing the press release that are not statements of historical fact are forward-looking statements. Forward-looking statements are subject to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements relate to, but are not limited to, recent efforts to expand our product offerings to a broader customer base, including our ability to realize cost savings as well as make the necessary investments in new technology and product capabilities; the effects of our engagement with our key markets and customers and our focus on customers that are semiconductor companies; our ability to productize our workflows with existing and future customers; expectations regarding our future revenue, cash flow and GAAP and non-GAAP net income or loss; our backlog and our expectations that it will convert to revenue; the ability of our new business model to generate long-term shareholder returns; the extent to which the IP we have generated will generate revenue in the future, whether through royalties or sale of such assets; the extent to which technology developed in collaboration with our customers will continue to remain on the critical path and have significant value for such customers and us as well as the industry as a whole; the strength of our intellectual property and patent portfolio; expectations of customers with respect to their business and technology in the fourth quarter of 2015 and beyond, including but not limited to implementation of their technology roadmaps (including timing), performance relative to the competitors in their respective fields, and successful volume manufacturing and commercialization of products that incorporate our technology; the scalability of our financial model and future earnings leverage; and anticipated growth in our current markets through expansion of existing customer programs and the entry into other engagements with new customers and sale of our assets. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from expectations, including but not limited to: our ability to execute on our strategy, prove our business model and remain technologically competitive in rapidly evolving industry conditions; commercial acceptance of our HPC platform and methodology as effective R&D tools; our ability to achieve and sustain profitability; the ability of our customers to achieve their announced product roadmaps in a timely manner; the extent to which we are able to successfully extend and expand relationships with existing customers; our ability to manage the growth of our business; the rapid technology changes and volatility of the customers and industries we serve; our potential need for future capital to finance our operations; and other risks described in our 2014 Form 10-K and our quarterly reports on Form 10-Q, each as filed with the SEC and available at www.sec.gov, particularly in the sections titled "Risk Factors." Forward-looking statements speak only as of the date the statements are made and are based on information available to us at the time those statements are made and/or management's good faith belief as of that time with respect to future events. We assume no obligation to update forward-looking statements to reflect actual performance or results, changes in assumptions or changes in other factors affecting forward-looking information, except to the extent required by applicable securities laws. Accordingly, investors should not place undue reliance on any forward-looking statements.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts, Unaudited)
|Three Months Ended September 30,||Nine Months Ended September 30,|
|Licensing and royalty revenue||2,844||3,156||9,334||13,244|
|Cost of revenue||5,048||6,167||15,155||18,371|
|Research and development||7,422||5,023||21,082||18,191|
|Sales and marketing||1,639||1,321||4,535||4,348|
|General and administrative||3,171||3,134||9,767||9,544|
|Total operating expenses||12,232||9,478||35,384||33,444|
|Interest expense, net||(52||)||(159||)||(307||)||(532||)|
|Other income (expense), net||(18||)||(13||)||(11||)||(13||)|
|Loss before provision for income taxes||(5,822||)||(4,962||)||(18,490||)||(15,666||)|
|Income tax provision||2||1||7||7|
|Basic and diluted net loss per common share||$||(0.12||)||$||(0.11||)||$||(0.38||)||$||(0.34||)|
|Shares used in basic and diluted net loss per common share||48,621||46,842||48,055||46,655|
Condensed Consolidated Balance Sheets
(In thousands, Unaudited)
|As of September 30,||As of December 31,|
|Cash and cash equivalents||$||3,301||$||21,765|
|Total cash, cash equivalents and marketable securities||34,494||65,069|
|Accounts receivable, net||7,864||5,321|
|Inventory, current portion||-||34|
|Prepaid expenses and other current assets||1,177||1,784|
|Total current assets||43,535||72,208|
|Inventory, net of current portion||4,180||5,894|
|Property and equipment, net||16,088||19,106|
|Intangible assets, net||7,316||7,941|
|LIABILITIES AND STOCKHOLDERS’ EQUITY|
|Accrued compensation and employee benefits||4,342||1,628|
|Total current liabilities||10,498||10,131|
|Note payable, net of current portion||-||21,000|
|Deferred revenue, net of current portion||130||1,103|
|Other long-term liabilities||3,558||2,938|
|Additional paid-in capital||207,788||202,139|
|Accumulated other comprehensive loss||(9||)||(37||)|
|Total stockholders’ equity||57,446||70,265|
|Total liabilities and stockholders’ equity||$||71,632||$||105,437|
Condensed Consolidated Statements of Cash Flows
(In thousands, Unaudited)
|Nine Months Ended September 30,|
|Cash flows from operating activities:|
|Adjustments to reconcile net loss to net cash (used in) provided by operating activities:|
|Depreciation and amortization||7,468||8,149|
|Changes in operating assets and liabilities:|
|Prepaid expenses and other assets||(136||)||656|
|Accrued and other liabilities||3,542||(440||)|
|Net cash (used in) provided by operating activities||(6,811||)||(1,594||)|
|Cash flows from investing activities:|
|Purchase of short-term investments||(32,118||)||(45,171||)|
|Redemption of short-term investments||44,114||785|
|Purchase of property and equipment||(933||)||(2,568||)|
|Capitalized intangible assets||(577||)||(1,160||)|
|Net cash provided by (used in) investing activities||10,486||(48,114||)|
|Cash flows from financing activities:|
|Payment of debt||(23,000||)||(1,500||)|
|Proceeds from exercise of common stock options||861||1,175|
|Net cash (used in) provided by financing activities||(22,139||)||(325||)|
|Net (decrease) increase in cash and cash equivalents||(18,464||)||(50,033||)|
|Cash and cash equivalents at beginning of period||21,765||72,083|
|Cash and cash equivalents at end of period||$||3,301||$||22,050|
Non-GAAP Financial Measures
To supplement the financial data presented on a GAAP basis, we also disclose certain non-GAAP financial measures, which exclude the effect of stock-based compensation and restructuring related charges. These non-GAAP financial measures are not prepared in accordance with GAAP, do not serve as an alternative to GAAP and may be calculated differently than non-GAAP financial information disclosed by other companies. These results should only be used to evaluate our results of operations in conjunction with the corresponding GAAP measures. We believe that our non-GAAP financial information provides useful information to management and investors regarding financial and business trends relating to our financial condition and results of operations because the non-GAAP measures exclude charges that management considers to be outside of Intermolecular's core operating results. We believe that the non-GAAP measures of revenue, cost of net revenue, gross profit, gross margin, operating (loss) income, net (loss) income, earnings per share and net (loss) income per share, viewed in combination with our financial results calculated in accordance with GAAP, provide investors with additional perspective and a more meaningful understanding of our ongoing operating performance. In addition, management uses these non-GAAP measures to review and assess financial performance, to determine executive officer incentive compensation and to plan and forecast performance in future periods.
Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, except per share amounts and percentages, Unaudited)
|Three Months Ended September 30,||Nine Months Ended September 30,|
|GAAP cost of net revenue||$||5,048||$||6,167||$||15,155||$||18,371|
|Stock-based compensation expense (a)||(172||)||(407||)||(956||)||(955||)|
|Non-GAAP cost of net revenue||$||4,876||$||5,760||$||14,199||$||17,416|
|GAAP gross profit||$||6,480||$||4,688||$||17,212||$||18,323|
|Stock-based compensation expense (a)||172||407||956||955|
|Non-GAAP gross profit||$||6,652||$||5,095||$||18,168||$||19,278|
|As a percentage of net revenue:|
|GAAP gross margin||56.2||%||43.2||%||53.2||%||49.9|
|Non-GAAP gross margin||57.7||%||46.9||%||56.1||%||52.5|
|GAAP operating loss||$||(5,752||)||$||(4,790||)||$||(18,172||)||$||(15,121||)|
|Stock-based compensation expense (a):|
|- Cost of net revenue||172||407||956||955|
|- Research and development||320||296||1,338||876|
|- Sales and marketing||157||412||680||1,072|
|- General and administrative||496||621||1,814||1,626|
|Restructuring charges (b)||-||-||-||1,361|
|Non-GAAP operating loss||$||(4,607||)||$||(3,054||)||$||(13,384||)||$||(9,231||)|
|GAAP net loss||$||(5,824||)||$||(4,963||)||$||(18,497||)||$||(15,673||)|
|Stock-based compensation expense (a)||1,145||1,736||4,788||4,529|
|Restructuring charges (b)||-||-||-||1,361|
|Non-GAAP net loss||$||(4,679||)||$||(3,227||)||$||(13,709||)||$||(9,783||)|
|Shares used in computing Non-GAAP basic and diluted earnings per share||48,621||46,842||48,055||46,655|
|Non-GAAP earnings per share:|
|Basic and diluted net loss per common share||$||(0.10||)||$||(0.07||)||$||(0.29||)||$||(0.21||)|
(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 GAAP measure is not indicative of its core operating performance.
(b) Restructuring charges incurred in connection with a reduction in headcount primarily comprised of employee severance and benefit costs.