MISSISSAUGA, Ontario, Nov. 21, 2016 (GLOBE NEWSWIRE) -- DataWind Inc. (TSX:DW), a leader in the delivery of internet access in emerging markets, reported financial results for its fiscal second quarter 2017 ended September 30, 2016. All amounts are in Canadian dollars.
Fiscal Q2 2017 Financial and Operational Highlights
- Revenues were a record for the ninth consecutive quarter, totaling $21.5 million, increasing 54% from the same year-ago quarter.
- Revenue was driven by unit sales of 404,000, up 6% from 380,000 in the previous quarter and up 72% from 235,000 in the same year-ago quarter.
- Gross profit totaled $6.6 million, up 68% from the same year-ago quarter.
- Adjusted EBITDA loss was $1.3 million compared with an adjusted EBITDA gain of $5,000 during the year-ago quarter.
Management Commentary
“The shift in consumer demand from our relatively higher-cost tablets to our lower-cost devices drove our results for the second quarter of fiscal 2017," said Suneet Singh Tuli, president and CEO of DataWind. “As such, we saw a slight slowdown in the growth of the top line coupled with slightly lower margins when compared to last quarter.”
“We continue to take steps to better position our company, as demonstrated by the recent shift to our TV home shopping distribution channels which have lower credit risk and is expected to improve our future collections.
“Looking forward, the Indian government’s recent change in its physical currency, where its Rs.500 and Rs.1000 bills (approximately $7 and $14 USD) are being pulled from circulation, is expected to impact our results for the coming quarter. However, we expect this matter to be resolved and our sales to return to normal in the near future.
“We have made significant progress toward our long-term goal of bridging the digital divide and bringing low-cost Internet access to people around the world.”
Financial Summary
Revenue
Revenue for the second fiscal quarter of 2017 increased 54% to $21.5 million compared to $14.0 million in the same year-ago quarter. The improvement was driven by an increase in sales from its TV home shopping partners versus the year-ago quarter.
Unit Sales
Unit sales totaled a record 404,000 for the second quarter of fiscal 2017, up 6% from 380,000 last quarter and up 72% from 235,000 in the same year-ago quarter.
Gross Profit
Gross profit increased 68% to $6.6 million or 30.7% of sales in Q2 2017, compared with $3.9 million or 28.2% in the same year-ago period. Gross profits improved due to increased revenues coupled with improved efficiency meeting channel requirements, improved cost controls and reduced import duties. Looking forward, hardware margins are expected to stabilize below 30% while increased Internet service sales should allow the overall margin to continue to rise.
Research and Development (R&D)
R&D costs in the fiscal second quarter of 2017 were $402,000, a 3% decrease from $413,000 during the comparable year-ago quarter.
General and Administrative (G&A)
G&A costs, which include sales and marketing expenses and salaries, were $7.5 million in the second quarter, as compared with $3.6 million in the same year-ago period. The increase was driven by increased selling and marketing expenses during the second quarter of 2017.
Net Loss
Net loss in Q2 2017 was $1.7 million or $(0.07) per common share, compared with $2.0 million or $(0.09) per common share in Q2 2016. The narrowing loss was due to increased sales and related improvement in gross profits offset by an increase in G&A costs.
Adjusted EBITDA
Adjusted EBITDA loss totaled $1.3 million for Q2 2017, down from an adjusted EBITDA of $5,000 in the year-ago quarter.
Balance Sheet
Working capital was $8.6 million at September 30, 2016 compared with $10.3 million at June 30, 2016.
Cash and cash equivalents totaled $0.8 million at September 30, 2016 down from $5.0 million at June 30, 2016.
For more information, please refer to the company’s MD&A and full financial statements that have been filed with SEDAR.
Conference Call
DataWind management will hold a conference call followed by a question and answer period on Wednesday, November 23, 2016 at 4:15 p.m. Eastern time to discuss these results.
Interested parties can listen to the live presentation by dialing the toll-free number or by clicking the webcast link below.
Date: Wednesday, November 23, 2016
Time: 4:15 p.m. Eastern time
Toll-free number: +1(844) 647-5492
International number: +1(661) 378-9451
Conference ID: 24453312
Webcast: http://edge.media-server.com/m/p/6ajizroy
Please call the conference telephone number 10 minutes before the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Liolios at +1(949) 574-3860.
A replay of the call will be available after the call ends through December 23, 2016 via webcast link on the Investor Information section of the DataWind website at www.datawind.com.
About DataWind
DataWind, Inc. is a leader in providing affordable mobile Internet connectivity in emerging markets. The company's patented, cloud-based technology reduces up to 97% the amount of data needed for web browsing, providing a broadband experience on any network -- even on legacy 2G networks that are still prevalent in developing countries. DataWind also provides economical smartphones and tablets that come bundled with one year of unlimited Internet access, making it the largest tablet provider in India. DataWind's unique solution offers broad social and economic benefits for the billions of people around the world for whom an Internet connection was previously out of reach. DataWind is traded on the Toronto Stock Exchange (TSX:DW). For more information, visit www.datawind.com.
Adjusted EBITDA
Adjusted net loss before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) is a non-IFRS measure and excludes finance costs, interest income, income tax expense or recovery, depreciation and amortization and income and expenses of a non-recurring, unusual or one-time nature. Adjusted EBITDA is a measure used by management, the retail industry and investors as an indicator of the Company’s operating performance, ability to incur and service debt, and as a valuation metric. While Adjusted EBITDA is a non-IFRS measure, management believes that it is an important indicator of operating performance because it excludes the effect of financing and investing activities by eliminating the effects of interest and depreciation and removes the impact of certain non-recurring items that are not indicative of our ongoing operating performance. Therefore, management believes Adjusted EBITDA gives investors greater transparency in assessing the Company’s result of operations
These measures do not have any standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other reporting issuers. Adjusted EBITDA should not be considered in isolation or as an alternative to measures prepared in accordance with IFRS.
Forward-Looking Information
This press release includes certain forward-looking statements that are based upon current expectations, which involve risks and uncertainties associated with our business and the environment in which the business operates. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements, including those identified by the expressions “anticipate”, “believe”, “plan”, “estimate”, “expect”, “intend” and similar expressions to the extent they relate to the Company or its management. The forward- looking statements are not historical facts, but reflect management’s current expectations regarding future results or events. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations. The Company does not undertake or accept any obligation to release publicly any updates or revisions to any forward-looking statements to reflect any change in the Company’s expectations, except as prescribed by applicable securities laws.
Key assumptions made in preparing the forward-looking statements contained in this MD&A include, but are not limited to, the following: the Company will continue to successfully increase its sales volumes, the Company will be able to maintain its gross margin, and the Company will continue to effectively manage the transition from private to public entity by hiring key senior and middle management and effectively rolling out and adopting appropriate policy changes.
No securities regulatory authority has either approved or disapproved the contents of this press release/media advisory.
-Tables to Follow-
DataWind Inc.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION
As at September 30, 2016 and March 31, 2016
(in thousands of Canadian dollars except per share data and except where indicated) (Unaudited)
| ASSETS | September 2016 | March 2016 | |||||
| Current assets | |||||||
| Cash and cash equivalents | $ | 807 | $ | 230 | |||
| Trade and other receivables | 35,291 | 29,467 | |||||
| Inventories | 11,047 | 10,036 | |||||
| 47,145 | 39,733 | ||||||
| Non-current assets | |||||||
| Property, plant and equipment | 250 | 218 | |||||
| Total Assets | $ | 47,395 | $ | 39,951 | |||
| LIABILITIES | |||||||
| Current liabilities | |||||||
| Accounts payable and accrued liabilities | $ | 26,637 | $ | 18,607 | |||
| Loans and borrowings | 11,885 | 12,291 | |||||
| Total Liabilities | 38,522 | 30,898 | |||||
| SHAREHOLDERS’ EQUITY | |||||||
| Share capital | 54,760 | 52,276 | |||||
| Contributed surplus | 3,605 | 3,521 | |||||
| Accumulated other comprehensive loss | 1 | (223 | ) | ||||
| Deficit | (49,493 | ) | (46,521 | ) | |||
| Total Shareholders' Equity | 8,873 | 9,053 | |||||
| Total Liabilities and Shareholders' Equity | $ | 47,395 | $ | 39,951 | |||
DataWind Inc.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
Three month period ended September 30, 2016 and September 30, 2015
(in thousands of Canadian dollars except per share data and except where indicated) (Unaudited)
| Three Months Ended September 30, | Six Months Ended September 30, | |||||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||||
| Revenue | $ | 21,544 | $ | 14,015 | $ | 42,604 | $ | 26,412 | ||||||||||
| Cost of goods sold | 14,923 | 10,066 | 28,958 | 19,453 | ||||||||||||||
| Gross profit | 6,621 | 3,949 | 13,646 | 6,959 | ||||||||||||||
| Operating expenses: | ||||||||||||||||||
| Research and development | 402 | 413 | 793 | 753 | ||||||||||||||
| Administration cost | 7,525 | 3,552 | 14,143 | 6,663 | ||||||||||||||
| IPO transaction costs | - | - | - | - | ||||||||||||||
| Foreign exchange loss/(gain) | (547 | ) | 1,176 | (505 | ) | 978 | ||||||||||||
| Total operating expenses | 7,380 | 5,141 | 14,431 | 8,394 | ||||||||||||||
| Operating loss | (759 | ) | (1,192 | ) | (785 | ) | (1,435 | ) | ||||||||||
| Finance and other income | - | 1 | - | 21 | ||||||||||||||
| Finance expense | (920 | ) | (814 | ) | (2,187 | ) | (1,779 | ) | ||||||||||
| Loss before income taxes | (1,679 | ) | (2,005 | ) | (2,972 | ) | (3,193 | ) | ||||||||||
| Tax expense | - | - | - | - | ||||||||||||||
| Net loss | (1,679 | ) | (2,005 | ) | (2,972 | ) | (3,193 | ) | ||||||||||
| Other comprehensive income: | ||||||||||||||||||
| Unrealized foreign exchange translation gain | 48 | 1,290 | 224 | 412 | ||||||||||||||
| Net comprehensive loss for the period | $ | (1,631 | ) | $ | (715 | ) | $ | (2,748 | ) | $ | (2,781 | ) | ||||||
| Net loss per share | ||||||||||||||||||
| Basic | $ | (0.07 | ) | $ | (0.09 | ) | $ | (0.13 | ) | $ | (0.14 | ) | ||||||
| Weighted Average number of shares outstanding | 23,623,748 | 22,057,623 | 23,623,748 | 22,057,623 | ||||||||||||||
DataWind Inc.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
Three month periods ended September 30, 2016 and September 30, 2015
(in thousands of Canadian dollars except per share data and except where indicated) (Unaudited)
| Six-month period ended | ||||||
| Sep 30, | ||||||
| 2016 | 2015 | |||||
| Cash flows from operating activities | ||||||
| Net loss for the period | $ | (2,972 | ) | $ | (3,193 | ) |
| Non-cash items: | ||||||
| Foreign exchange translation loss/(gain) | (505 | ) | - | |||
| Depreciation of property and equipment | 32 | 37 | ||||
| Finance expenses | 2,187 | 1,779 | ||||
| Provision for bad debt and slow moving inventory | 100 | - | ||||
| Stock based compensation | 84 | 65 | ||||
| Changes in non-cash working capital items | (1,074 | ) | (1,312 | ) | ||
| Trade and other receivables | (5,824 | ) | (7,451 | ) | ||
| Inventories | (1,011 | ) | (404 | ) | ||
| Accounts payable and accrued liabilities | 8,030 | 2,022 | ||||
| Net cash used in operating activities | 121 | (7,145 | ) | |||
| Cash flows from investing activities | ||||||
| Addition of property and equipment during the period | (63 | ) | (122 | ) | ||
| Net cash used in investing activities | (63 | ) | (122 | ) | ||
| Cash flows from financing activities | ||||||
| Issuance of common shares | 2,484 | - | ||||
| Loan received during the period | - | 6,323 | ||||
Loan re paid during the period Interest paid during the period | - (1,411) | (1,031) (241) | ||||
| Net cash (used in)/provided by financing activities | 1,073 | 5,051 | ||||
| Net change in cash and cash equivalents | 1,131 | (2,216 | ) | |||
| Cash and cash equivalents – beginning of period | 230 | 10,698 | ||||
| Exchange gains/(losses) | (554 | ) | (1,145 | ) | ||
| Cash and cash equivalents – end of period | $ | 807 | $ | 7,337 | ||
DataWind Inc.
RECONCILIATION OF QUARTERLY NET LOSS TO ADJUSTED EBITDA
(in thousands of Canadian dollars except per share data and except where indicated) (Unaudited)
| Three-month periods ended | ||||||||||||
| (in CAD "000" except per share amounts) | Sep. 30, 2016 | Jun. 30, 2016 | Sep. 30, 2015 | |||||||||
| Net loss | $ | (1,679 | ) | $ | (1,293 | ) | $ | (2,005 | ) | |||
| Depreciation/amortization expenses | 18 | 14 | 21 | |||||||||
| Extended payment finance (i) | 376 | 719 | 370 | |||||||||
| Finance costs | 544 | 548 | 444 | |||||||||
| Finance and other income | - | - | 1 | |||||||||
| Foreign exchange translation (gain)/loss | (547 | ) | 42 | 1,176 | ||||||||
| Adjusted EBITDA (ii) | $ | (1,288 | ) | $ | 30 | $ | 7 | |||||
| Adjusted EBITDA loss per share | $ | (0.05 | ) | $ | 0.00 | $ | (0.01 | ) | ||||
| (i) | Extended Payment Finance represents finance cost paid to third parties for financing of Chinese manufacturers for the extended payment terms for material. |
| (ii) | Adjusted EBITDA is a measure used by management, the retail industry and investors as an indicator of the Company’s performance, ability to incur and service debt and as a valuation metric. Adjusted EBITDA is a non-IFRS measure. |
Please see the SEDAR filings for the complete consolidated financial statements which include footnotes that are an integral part of these statements.