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Boingo Wireless, Inc.$23.37$.281.21%

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 Boingo Wireless Reports Record Third Quarter 2017 Financial Results
   Thursday, November 02, 2017 4:03:15 PM ET

-- Record quarterly revenue of $53.7 million exceeded guidance and increased 31.5% year-over-year

-- Signed 34 DAS carrier contracts through the first nine months of 2017

-- Raising full year 2017 guidance

Boingo Wireless (WIFI ), the leading distributed antenna system (DAS) and Wi-Fi provider that serves carriers, consumers and advertisers worldwide, today announced the Company’s financial results for the third quarter ended September 30, 2017.

Third Quarter 2017 Financial Highlights

-- Revenue of $53.7 million increased 31.5% compared to $40.8 million in the third quarter of 2016. Growth was driven by strength in wholesale Wi-Fi, military and DAS.

<ul type="circle"><p>-- Wholesale Wi-Fi revenue of $8.3 million increased 41.1% compared to $5.9 million in the third quarter of 2016.

-- Wholesale Wi-Fi revenue of $8.3 million increased 41.1% compared to $5.9 million in the third quarter of 2016.

-- Military revenue of $13.9 million increased 37.6% compared to $10.1 million in the third quarter of 2016.

-- DAS revenue of $21.8 million increased 36.3% compared to $16.0 million in the third quarter of 2016. DAS revenue for the quarter was comprised of $16.1 million of build-out project revenue and $5.7 million of access fee revenue.

-- Net loss attributable to common stockholders was $(3.5) million, or $(0.09) per diluted share, compared to a net loss of $(5.7) million, or $(0.15) per diluted share, in the third quarter of 2016.

-- Adjusted EBITDA of $19.8 million increased 71.1% compared to $11.6 million in the third quarter of 2016. Adjusted EBITDA, which is a non-GAAP financial measure, is defined below and is reconciled to net loss attributable to common stockholders, the most comparable measure under GAAP, in the schedule entitled "Reconciliation of Net Loss Attributable to Common Stockholders to Adjusted EBITDA."

-- Net cash provided by operating activities was $20.1 million compared to $37.9 million in the third quarter of 2016.

-- Free cash flow was a negative $2.7 million compared to $10.1 million in the third quarter of 2016. Free cash flow, which is a non-GAAP financial measure, is defined below and is reconciled to net cash provided by operating activities, the most comparable measure under GAAP, in the schedule entitled "Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flows."

Business Highlights

-- The Company signed 12 long-term carrier leasing agreements in the quarter, bringing the total to 34 carrier leasing contracts for the first nine months of 2017. As of September 30, 2017, there were 22,200 DAS nodes live with another 11,000 nodes in backlog.

-- The Company launched carrier offload services on 13 military bases with plans to deploy the majority of its 58 domestic bases live with the Boingo Broadband service by year end.

-- The Company announced it is in active discussions with multiple carriers to deploy small cell networks on military bases.

Management Commentary

"After a strong first half of the year, we reported another record quarter, and as a result, we are updating and raising our full year guidance," commented David Hagan, Chief Executive Officer of Boingo Wireless. "We extended our streak of double-digit revenue growth to 12 consecutive quarters and year-over-year adjusted EBITDA margin expansion to nine consecutive quarters. This growth is the result of consistent execution against our strategic plan to leverage explosive mobile data growth by obtaining long-term wireless rights at large venues, deploying DAS, Wi-Fi and small cell networks at those venues and monetizing the networks with Boingo’s unique mix of products and services."

Mr. Hagan continued, "We are extremely pleased with our third quarter financial results which point to the strength of our overall business and the products and services driving the results. We believe Boingo is the largest provider of indoor DAS networks in the world and that both carrier offload and small cells will play an important role in boosting carrier coverage on military bases. It is exciting to see this become a reality."

Business Outlook

Boingo Wireless is raising its guidance for the full year ending December 31, 2017 as follows:

-- Revenue is expected to be in the range of $199.0 million to $203.0 million.

-- Net loss attributable to common stockholders is expected to be in the range of $(26.0) million to $(23.0) million, or a net loss of $(0.66) to $(0.58) per diluted share.

-- Adjusted EBITDA is expected to be in the range of $65.0 million to $68.0 million.

Conference Call Information

Members of Boingo Wireless’ management will host a conference call to discuss its third quarter 2017 financial results beginning at 4:30 p.m. ET (1:30 p.m. PT), today, November 2, 2017. To participate in the conference call, investors from the U.S. and Canada should dial (877) 407-9716 and enter the passcode: 13671090 ten minutes prior to the scheduled start time. International callers should dial +1 (201) 493-6779 and enter the same passcode. The conference call will be broadcast live over the Internet in the Investor Relations section of the Company’s website at http://investors.boingo.com . In addition, a supplement reflecting the Company’s key business metrics will be made available in the Investor Relations section of the Company’s website. The supplement and webcast will be archived online upon completion of the conference call.

Use of Non-GAAP Financial Measures

To supplement Boingo Wireless’ financial statements presented on a GAAP basis, Boingo Wireless provides Adjusted EBITDA and free cash flow as supplemental measures of its performance.

The Company defines Adjusted EBITDA as net loss attributable to common stockholders plus depreciation and amortization of property and equipment, stock??’based compensation expense, amortization of intangible assets, income tax expense, interest and other expense, net, non-controlling interests, and excludes charges or gains that are nonrecurring, infrequent, or unusual. Boingo Wireless believes Adjusted EBITDA is useful to investors in evaluating its operating performance. Boingo’s management uses Adjusted EBITDA in conjunction with accounting principles generally accepted in the United States, or GAAP, and other operating performance measures as part of its overall assessment of the Company’s performance for planning purposes, including the preparation of its annual operating budget, to evaluate the effectiveness of its business strategies and to communicate with its board of directors concerning its financial performance. Adjusted EBITDA should not be considered as an alternative financial measure to net loss attributable to common stockholders, which is the most directly comparable financial measure calculated in accordance with GAAP, or any other measure of financial performance calculated in accordance with GAAP. Adjusted EBITDA for 2017 excludes settlement expense related to a claim from one of the Company’s venue partners and Adjusted EBITDA for 2016 excludes charges related to the Company’s contested proxy election for the 2016 annual meeting of stockholders because they represent non-recurring charges and are not indicative of the underlying performance of the Company’s business operations.

The Company defines free cash flow as net cash provided by operating activities, less purchases of property and equipment. Boingo Wireless believes that free cash flow provides investors with additional useful information to measure operating liquidity because it reflects the amount of cash generated by the Company’s operations after the purchases of property and equipment that can be used for strategic opportunities. Free cash flow should not be considered as an alternative financial measure to net cash provided by operating activities, which is the most directly comparable financial measure calculated in accordance with GAAP, or any other measure of financial performance calculated in accordance with GAAP.

About Boingo Wireless

Boingo Wireless, Inc. (WIFI ) helps the world stay connected. Our vast footprint of DAS, Wi-Fi and small cells reaches more than a billion people annually, making Boingo one of the largest providers of indoor wireless networks. You’ll find Boingo connecting people at airports, stadiums, military bases, convention centers, and commercial properties. To learn more about the Boingo story, visit www.boingo.com.

Cautionary Statement Regarding Forward-Looking Statements

This press release contains "forward-looking statements" that involves risks, uncertainties and assumptions. Forward-looking statements can be identified by words such as "anticipates," "intends," "plans," "seeks," "believes," "estimates," "expects" and similar references to future periods. These forward-looking statements include the quotations from management in this press release, as well as any statements regarding Boingo’s strategic plans, future guidance and future growth opportunities. Forward-looking statements are based on the Company’s current expectations and assumptions regarding its business, the economy and other future conditions. Since forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. The Company’s actual results may differ materially from those contemplated by the forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include the Company’s ability to maintain its existing relationships and establish new relationships with venue partners, its ability to complete build-outs and sign venue contracts, its ability to maintain revenue growth and achieve profitability, its ability to execute on its strategic and business plans, its ability to successfully compete with new technologies and adapt to changes in the wireless industry, as well as other risks and uncertainties described more fully in documents filed with or furnished to the Securities and Exchange Commission (SEC), including Boingo’s Form 10-K for the year ended December 31, 2016 filed with the SEC on March 13, 2017, Form 10-Q for the quarter ended March 31, 2017 filed with the SEC on May 8, 2017 and Form 10-Q for the quarter ended June 30, 2017 filed with the SEC on August 4, 2017, which the Company incorporates by reference into this press release. Any forward-looking statement made by Boingo in this press release speaks only as of the date on which it is made. Factors or events that could cause the Company’s actual results to differ may emerge from time to time, and it is not possible for Boingo to predict all of them. Boingo undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

Boingo, Boingo Wireless, the Boingo Wireless Logo and Don’t Just Go. Boingo. are registered trademarks of Boingo Wireless, Inc. All other trademarks are the properties of their respective owners.

Boingo Wireless, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands, except per share amounts)

                                                                                                   Three Months Ended            Nine Months Ended
                                                                                                   September 30,                 September 30,
                                                                                                   2017            2016          2017            2016
Revenue                                                                                            $   53,655      $   40,796    $   147,021     $   114,370
Costs and operating expenses:
Network access                                                                                     24,143          17,982        64,655          49,575
Network operations                                                                                 11,625          10,698        34,556          31,566
Development and technology                                                                         6,817           5,394         19,814          16,014
Selling and marketing                                                                              5,201           4,553         15,188          14,103
General and administrative                                                                         8,006           6,701         27,372          22,553
Amortization of intangible assets                                                                  852             855           2,673           2,582
Total costs and operating expenses                                                                 56,644          46,183        164,258         136,393
Loss from operations                                                                               (2,989     )    (5,387     )  (17,237     )   (22,023     )
Interest and other expense, net                                                                    (84        )    (117       )  (126        )   (299        )
Loss before income taxes                                                                           (3,073     )    (5,504     )  (17,363     )   (22,322     )
Income tax expense                                                                                 167             95            507             457
Net loss                                                                                           (3,240     )    (5,599     )  (17,870     )   (22,779     )
Net income attributable to non-controlling interests                                               210             110           477             180
Net loss attributable to common stockholders                                                       $   (3,450 )    $   (5,709 )  $   (18,347 )   $   (22,959 )
Net loss per share attributable to common stockholders:
Basic                                                                                              $   (0.09  )    $   (0.15  )  $   (0.46   )   $   (0.61   )
Diluted                                                                                            $   (0.09  )    $   (0.15  )  $   (0.46   )   $   (0.61   )
Weighted average shares used in computing net loss per share attributable to common stockholders:
Basic                                                                                              40,336          38,189        39,468          37,897
Diluted                                                                                            40,336          38,189        39,468          37,897

Boingo Wireless, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except per share amounts)

                                                                                               September 30,     December 31,
                                                                                               2017              2016
Assets
Current assets:
Cash and cash equivalents                                                                      $      21,634     $      19,485
Accounts receivable, net                                                                       39,102            42,978
Prepaid expenses and other current assets                                                      6,722             5,344
Total current assets                                                                           67,458            67,807
Property and equipment, net                                                                    261,010           250,765
Goodwill                                                                                       42,403            42,403
Intangible assets, net                                                                         11,094            13,783
Other assets                                                                                   6,580             6,223
Total assets                                                                                   $      388,545    $      380,981
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable                                                                               $      14,614     $      15,516
Accrued expenses and other liabilities                                                         35,660            27,723
Deferred revenue                                                                               78,575            50,869
Current portion of long-term debt                                                              875               1,094
Current portion of capital leases and notes payable                                            4,349             3,993
Total current liabilities                                                                      134,073           99,195
Deferred revenue, net of current portion                                                       138,910           152,719
Long-term debt                                                                                 5,219             15,875
Long-term portion of capital leases and notes payable                                          3,560             4,612
Deferred tax liabilities                                                                       3,513             3,208
Other liabilities                                                                              6,500             6,826
Total liabilities                                                                              291,775           282,435
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.0001 par value; 5,000 shares authorized; no shares issued and outstanding  --                --
Common stock, $0.0001 par value; 100,000 shares authorized; 40,788 and 38,562                  4                 4
shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively
Additional paid-in capital                                                                     227,454           211,275
Accumulated deficit                                                                            (130,948       )  (112,601       )
Accumulated other comprehensive loss                                                           (812           )  (870           )
Total common stockholders’ equity                                                              95,698            97,808
Non-controlling interests                                                                      1,072             738
Total stockholders’ equity                                                                     96,770            98,546
Total liabilities and stockholders’ equity                                                     $      388,545    $      380,981

Boingo Wireless, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

                                                                                                                     Nine Months Ended
                                                                                                                     September 30,
                                                                                                                     2017            2016
Cash flows from operating activities
Net loss                                                                                                             $   (17,870 )   $   (22,779 )
Adjustments to reconcile net loss including non-controlling interests to net cash provided by operating activities:
Depreciation and amortization of property and equipment                                                              49,244          34,801
Amortization of intangible assets                                                                                    2,673           2,582
Bad debt expense (recovery)                                                                                          88              (47         )
Other                                                                                                                51              --
Impairment loss and loss on disposal of fixed assets, net                                                            442             49
Stock-based compensation                                                                                             11,016          9,690
Change in deferred income taxes                                                                                      305             324
Changes in operating assets and liabilities:
Accounts receivable                                                                                                  3,804           (462        )
Prepaid expenses and other assets                                                                                    (1,816      )   (2,182      )
Accounts payable                                                                                                     (1,330      )   3,464
Accrued expenses and other liabilities                                                                               6,920           4,018
Deferred revenue                                                                                                     13,897          64,140
Net cash provided by operating activities                                                                            67,424          93,598
Cash flows from investing activities
Purchases of property and equipment                                                                                  (54,691     )   (92,045     )
Payments for asset acquisition                                                                                       (1,150      )   --
Net cash used in investing activities                                                                                (55,841     )   (92,045     )
Cash flows from financing activities
Proceeds from credit facility                                                                                        --              5,000
Principal payments on credit facility                                                                                (10,875     )   (5,656      )
Proceeds from exercise of stock options                                                                              7,993           1,981
Debt issuance costs                                                                                                  --              (124        )
Payments of capital leases and notes payable                                                                         (2,952      )   (1,889      )
Payments of withholding tax on net issuance of restricted stock units                                                (3,480      )   (2,112      )
Payments to non-controlling interests                                                                                (125        )   (286        )
Net cash used in financing activities                                                                                (9,439      )   (3,086      )
Effect of exchange rates on cash                                                                                     5               15
Net increase (decrease) in cash and cash equivalents                                                                 2,149           (1,518      )
Cash and cash equivalents at beginning of period                                                                     19,485          14,718
Cash and cash equivalents at end of period                                                                           $   21,634      $   13,200
Supplemental disclosure of non-cash investing and financing activities
Property and equipment costs in accounts payable, accrued expenses and other liabilities                             $   19,438      $   19,367
Purchase of equipment and prepaid maintenance services under capital financing arrangements                          $   2,141       $   4,560

Boingo Wireless, Inc.

Reconciliation of Net Loss Attributable to Common Stockholders to Adjusted EBITDA

(Unaudited)

(In thousands)

                                                         Three Months Ended            Nine Months Ended
                                                         September 30,                 September 30,
                                                         2017            2016          2017            2016
Net loss attributable to common stockholders             $   (3,450 )    $   (5,709 )  $   (18,347 )   $   (22,959 )
Depreciation and amortization of property and equipment  18,245          13,093        49,244          34,801
Stock-based compensation expense                         3,684           3,006         11,016          9,690
Amortization of intangible assets                        852             855           2,673           2,582
Income tax expense                                       167             95            507             457
Interest and other expense, net                          84              117           126             299
Non-controlling interests                                210             110           477             180
Contested proxy election expense                         --              --            --              1,440
Settlement expense                                       --              --            2,807           --
Adjusted EBITDA                                          $   19,792      $   11,567    $   48,503      $   26,490

Boingo Wireless, Inc.

Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flows

(Unaudited)

(In thousands)

                                          Three Months Ended            Nine Months Ended
                                          September 30,                 September 30,
                                             2017           2016           2017           2016
Net cash provided by operating activities $  20,071      $  37,931      $  67,424      $  93,598
Purchases of property and equipment, net     (22,774 )      (27,788 )      (54,691 )      (92,045 )
Free cash flows                           $  (2,703  )   $  10,143      $  12,733      $  1,553

Boingo Wireless, Inc.

Revenue Summary

(Unaudited)

(In thousands)

                       Three Months Ended      Nine Months Ended
                       September 30,           September 30,
                       2017        2016        2017         2016
Revenue:
DAS                    $   21,755  $   15,959  $   56,563   $   40,957
Military               13,946      10,137      40,029       28,969
Wholesale--Wi-Fi       8,307       5,888       22,438       16,031
Retail                 6,234       6,619       19,007       20,100
Advertising and other  3,413       2,193       8,984        8,313
Total revenue          $   53,655  $   40,796  $   147,021  $   114,370

Boingo Wireless, Inc.

Reconciliation of Net Loss Attributable to Common Stockholders to Adjusted EBITDA - Guidance

(Unaudited)

(In millions)

                                                           Year Ended
                                                           December 31, 2017
                                                           Low           High
Net loss attributable to common stockholders               $   (26.0 )   $   (23.0 )
Depreciation and amortization of property and equipment..  68.9
Stock-based compensation expense                           14.2
Amortization of intangible assets                          3.6
Income tax expense and interest and other expense, net     0.8
Non-controlling interests                                  0.7
Settlement expense                                         2.8
Adjusted EBITDA                                            $   65.0      $   68.0

Boingo Wireless, Inc.

Key Business Metrics

(Unaudited)

(In thousands)

                          Three Months Ended Nine Months Ended
                          September 30,      September 30,
                          2017    2016       2017     2016
Key business metrics:
DAS nodes(1)              22.2    17.7       22.2     17.7
DAS nodes in backlog(2)   11.0    5.2        11.0     5.2
Subscribers--military(3)  133     86         133      86
Subscribers--retail(3)    194     185        194      185
Connects(4)               64,875  40,263     160,082  102,515

-- This metric represents the number of active DAS nodes as of the end of the period. A DAS node is a single communications endpoint, typically an antenna, which transmits or receives radio frequency signals wirelessly. This measure is an indicator of the reach of the Company’s DAS network.

-- This metric represents the number of DAS nodes under contract but not yet active as of the end of the period.

-- This metric represents the number of paying customers who are on a month-to-month subscription plan at a given period end.

-- This metric shows how often individuals connect to the Company’s global Wi-Fi network in a given period. The connects include retail and wholesale customers in both customer pay locations and customer free locations where Boingo is a paid service provider or receives revenue sponsorship or promotion fees. The Company counts each connect as a single connect regardless of how many times that individual accesses the network at a given venue during their 24 hour period. This measure is an indicator of paid activity throughout Boingo’s network.

CONTACTS:

PRESS:

Lauren de la Fuente

Vice President, Marketing and Communications

ldelafuente@boingo.com

(310) 405-8517

INVESTORS:

Kimberly Orlando and Ariel Papermaster

ADDO Investor Relations

investors@boingo.com

(310) 829-5400

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