Boingo Wireless Reports Third Quarter 2019 Financial Results

15-year contract extension with the Army and Air Force Exchange Service through 2038

DAS access fee revenue of $10.3 million increased 67.6% year-over-year

Positive free cash flow of $20.5 million

LOS ANGELES–(BUSINESS WIRE)–Boingo Wireless (NASDAQ: WIFI), the leading distributed antenna system (“DAS”) and Wi-Fi provider that serves carriers, consumers, property owners and advertisers worldwide, today announced the Company’s financial results for the third quarter ended September 30, 2019.

Third Quarter 2019 Financial Highlights

  • Revenue of $64.7 million decreased 0.8% compared to $65.3 million in the third quarter of 2018. Revenue reflected strong performance in military/multifamily.

    • Military/multifamily revenue of $23.6 million increased 8.7% compared to $21.7 million in the third quarter of 2018.
    • DAS revenue of $23.7 million decreased 2.9% compared to $24.4 million in the third quarter of 2018. DAS revenue for the quarter was comprised of $13.4 million of build-out project revenue and $10.3 million of access fee revenue. Access fee revenue grew 67.6% year-over-year. Access fee revenue for the third quarter of 2019 included $1.8 million of one-time access fees.
  • Net loss attributable to common stockholders was $(0.2) million, or break-even per diluted share, compared to net loss of $(0.5) million, or $(0.01) per diluted share, in the third quarter of 2018.
  • Adjusted EBITDA of $21.9 million decreased 6.2% compared to $23.3 million in the third quarter of 2018. 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 $48.1 million, an increase of 26.3% compared to $38.1 million in the third quarter of 2018.
  • Free cash flow was $20.5 million, compared to $8.5 million in the third quarter of 2018. 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 a 15-year contract extension with the Army and Air Force Exchange Service (“AAFES”) which covers Army and Air Force base network deployments through 2038. In the third quarter of 2019, the Company deployed wireless infrastructure to cover an additional 2,000 military beds, bringing the total footprint to 354,000 military beds on 64 military bases.
  • The Company launched two new DAS venue locations with Tier One carriers. As of September 30, 2019, the Company had 71 DAS venues live comprised of 37,200 DAS nodes and an additional 12,100 nodes in backlog.
  • The Company launched neutral-host, 5G-ready cellular DAS and carrier offload enabled Wi-Fi networks at the new Louis Armstrong New Orleans International Airport (MSY).
  • The Company is partnering with Verizon Communications to develop a hyper-dense 5G Ultra-Wideband network for indoor venues, including Soldier Field in Chicago, as part of Verizon’s ongoing 5G network expansions.
  • The Company debuted its Converged Virtualized Core at Mobile World Congress Los Angeles, replacing network hardware with software to efficiently power 5G use cases over unlicensed and Citizens Broadband Radio Service (“CBRS”) spectrum. The neutral host platform serves as a backbone for Boingo’s Wi-Fi 6, CBRS and 5G deployments at large venues and enables seamless, scalable roaming onto its networks.
  • Airports where Boingo manages and operates the Wi-Fi network comprised half of the top 40 U.S. airports with the fastest Wi-Fi in Ookla’s latest “Fastest Airport Wi-Fi” report with four ranking in the top five.

Corporate Development

  • The Company repurchased and retired 56,000 shares of common stock at an average price of $13.24 per share for $0.7 million during the third quarter of 2019. As of September 30, 2019, $19.3 million remained available for future share repurchases.

Management Commentary

“The third quarter was another great quarter for Boingo highlighted by the 15-year contract extension with AAFES for our Army and Air Force base deployments through 2038,” commented Mike Finley, Chief Executive Officer of Boingo Wireless. “We anticipate the revenue from the retail portion of this contract alone to be worth more than a billion dollars for the remainder of the term without including potential additional services such as carrier offload, macro cell towers and private services. As it relates to DAS, we had our fourth consecutive quarter of strong double-digit growth in DAS access fee revenue. We launched two new DAS venues in the quarter with another 62 venues in backlog, including substantial multiyear construction projects like the MTA Long Island Railroad and Grand Central Terminal Eastside Access in New York City. We are pleased that our core business drivers are performing well and continue to be excited about what new technologies will afford us.”

Business Outlook

Boingo Wireless is updating and narrowing its guidance for the full year ending December 31, 2019 as follows:

  • Revenue is expected to be in the range of $267.0 million to $273.0 million.
  • Net loss attributable to common stockholders is expected to be in the range of $(14.0) million to $(10.0) million, or a net loss of $(0.32) to $(0.23) per diluted share.
  • Adjusted EBITDA is expected to be in the range of $80.0 million to $85.0 million.

Conference Call Information

Members of Boingo Wireless’ management will host a conference call to discuss their third quarter 2019 financial results beginning at 4:30 p.m. ET (1:30 p.m. PT), today, November 5, 2019. To participate in the conference call, investors from the U.S. and Canada should dial (877) 407-9716 and enter the passcode: 13695065 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 expense and amortization of debt discount, interest income 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.

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.

Lease Changes

On January 1, 2019, the Company adopted ASC 842, Leases, using the modified retrospective transition method. Results for reporting periods beginning on January 1, 2019 are presented under ASC 842, while prior period amounts are not adjusted and continue to be reported in accordance with ASC 840, Leases. Adoption of the new standard resulted in the recording of $16.9 million of operating lease right-of-use assets and $22.3 million of operating lease liabilities as of January 1, 2019.

About Boingo Wireless

Boingo Wireless, Inc. (NASDAQ: 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, multifamily communities 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, 2018 filed with the SEC on March 1, 2019, Form 10-Q for the quarter ended March 31, 2019 filed with the SEC on May 10, 2019, and Form 10-Q for the quarter ended June 30, 2019 filed with the SEC on August 5, 2019, 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 Wi-Finder, Boingo Broadband, and the Boingo Wireless Logo 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

September 30,

Nine Months Ended

September 30,

 

 

2019

2018

2019

2018

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

64,707

 

$

65,253

 

$

199,734

 

$

183,013

 

Costs and operating expenses:

 

 

 

 

 

 

 

 

 

Network access

 

29,155

 

29,273

 

90,368

 

79,926

 

Network operations

 

13,682

 

13,260

 

42,073

 

38,829

 

Development and technology

 

8,182

 

7,995

 

25,534

 

22,883

 

Selling and marketing

 

5,721

 

5,674

 

17,782

 

16,490

 

General and administrative

 

5,021

 

7,789

 

20,330

 

22,218

 

Amortization of intangible assets

 

1,103

 

1,112

 

3,365

 

2,507

 

Total costs and operating expenses

 

62,864

 

65,103

 

199,452

 

182,853

 

Income from operations

 

1,843

 

150

 

282

 

160

 

Interest expense and amortization of debt discount

 

(2,191

)

(8

)

(6,741

)

(58

)

Interest income and other expense, net

 

388

 

(14

)

1,600

 

(93

)

Income (loss) before income taxes

 

40

 

128

 

(4,859

)

9

 

Income tax expense

 

(143

)

(54

)

(254

)

(198

)

Net (loss) income

 

(103

)

74

 

(5,113

)

(189

)

Net income attributable to non-controlling interests

 

84

 

596

 

11

 

1,447

 

Net loss attributable to common stockholders

 

$

(187

)

$

(522

)

$

(5,124

)

$

(1,636

)

 

 

 

 

 

 

 

 

 

 

Net loss per share attributable to common stockholders:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.00

 

$

(0.01

)

$

(0.12

)

$

(0.04

)

Diluted

 

$

0.00

 

$

(0.01

)

$

(0.12

)

$

(0.04

)

 

 

 

 

 

 

 

 

 

 

Weighted average shares used in computing net loss per share attributable to common stockholders:

 

 

 

 

 

 

 

 

 

Basic

 

44,136

 

42,377

 

43,904

 

41,890

 

Diluted

 

44,136

 

42,377

 

43,904

 

41,890

 

Boingo Wireless, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except per share amounts)

 

 

 

 

 

 

 

 

September 30,

2019

December 31,

2018

 

 

 

 

 

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

50,182

 

$

149,412

 

Marketable securities

 

36,594

 

 

Accounts receivable, net

 

49,446

 

42,766

 

Prepaid expenses and other current assets

 

8,965

 

7,815

 

Total current assets

 

145,187

 

199,993

 

Property and equipment, net

 

361,876

 

314,179

 

Operating lease right-of-use assets, net(1)

 

15,647

 

 

Goodwill

 

58,579

 

59,640

 

Intangible assets, net

 

15,739

 

19,152

 

Other assets

 

9,406

 

9,936

 

Total assets

 

$

606,434

 

$

602,900

 

 

 

 

 

 

 

Liabilities and stockholders’ equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

28,497

 

$

21,543

 

Accrued expenses and other liabilities

 

55,707

 

62,653

 

Deferred revenue

 

63,510

 

80,383

 

Current portion of operating leases(1)

 

2,911

 

 

Current portion of long-term debt

 

778

 

 

Current portion of finance leases

 

3,057

 

4,201

 

Current portion of notes payable

 

1,937

 

2,411

 

Total current liabilities

 

156,397

 

171,191

 

Deferred revenue, net of current portion

 

172,601

 

137,205

 

Long-term portion of operating leases(1)

 

17,879

 

 

Long-term debt

 

160,568

 

151,670

 

Long-term portion of finance leases

 

1,149

 

3,293

 

Long-term portion of notes payable

 

218

 

1,618

 

Deferred tax liabilities

 

1,129

 

1,073

 

Other liabilities

 

307

 

6,728

 

Total liabilities

 

510,248

 

472,778

 

 

 

 

 

 

 

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; 44,121 and 42,669 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively

 

4

 

4

 

Additional paid-in capital

 

232,286

 

259,132

 

Accumulated deficit

 

(135,801

)

(129,930

)

Accumulated other comprehensive loss

 

(1,543

)

(1,295

)

Total common stockholders’ equity

 

94,946

 

127,911

 

Non-controlling interests

 

1,240

 

2,211

 

Total stockholders’ equity

 

96,186

 

130,122

 

Total liabilities and stockholders’ equity

 

$

606,434

 

$

602,900

 

_________________________________

(1)

We adopted ASC 842 on January 1, 2019 using the modified retrospective transition method. Adoption of ASC 842 using the modified retrospective method required us to record operating lease right-of-use assets of $16,916 and operating lease liabilities of $22,338 on January 1, 2019.

Boingo Wireless, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

 

 

 

 

 

 

Nine Months Ended

September 30,

 

 

2019

2018

Cash flows from operating activities

 

 

 

 

 

Net loss

 

$

(5,113

)

$

(189

)

Adjustments to reconcile net loss including non-controlling interests to net cash provided by operating activities:

 

 

 

 

 

Depreciation and amortization of property and equipment

 

52,750

 

56,769

 

Amortization of intangible assets

 

3,365

 

2,507

 

Impairment loss and loss on disposal of fixed assets and intangible assets held for sale, net

 

277

 

198

 

Stock-based compensation

 

6,434

 

9,227

 

Amortization of deferred financing costs and debt discount, net of amounts capitalized

 

6,554

 

 

Non-cash operating lease cost

 

1,675

 

 

Gains and amortization of premiums/discounts for marketable securities

 

(522

)

 

Change in fair value of contingent consideration

 

(961

)

 

Bad debt expense

 

187

 

301

 

Changes in operating assets and liabilities:

 

 

 

 

 

Accounts receivable

 

(6,974

)

(1,596

)

Prepaid expenses and other assets

 

946

 

(209

)

Accounts payable

 

532

 

2,041

 

Accrued expenses and other liabilities

 

5,394

 

3,557

 

Deferred revenue

 

18,523

 

(1,772

)

Operating lease liabilities

 

(1,996

)

 

Net cash provided by operating activities

 

81,071

 

70,834

 

Cash flows from investing activities

 

 

 

 

 

Purchases of marketable securities

 

(73,323

)

 

Proceeds from maturities of marketable securities

 

37,293

 

 

Purchases of property and equipment

 

(101,455

)

(72,531

)

Payments for asset acquisitions

 

 

(22,052

)

Net cash used in investing activities

 

(137,485

)

(94,583

)

Cash flows from financing activities

 

 

 

 

 

Debt issuance costs

 

(1,815

)

 

Proceeds from credit facility

 

3,500

 

15,000

 

Principal payments on credit facility

 

(584

)

(656

)

Payments of acquisition related consideration

 

(3,027

)

 

Proceeds from exercise of stock options

 

154

 

9,764

 

Repurchase of common stock for retirement

 

(747

)

 

Payments of finance leases and notes payable

 

(5,162

)

(4,362

)

Payments of withholding tax on net issuance of restricted stock units

 

(34,123

)

(8,901

)

Payments to non-controlling interests

 

(1,003

)

(614

)

Net cash (used in) provided by financing activities

 

(42,807

)

10,231

 

Effect of exchange rates on cash

 

(9

)

9

 

Net decrease in cash, cash equivalents, and restricted cash

 

(99,230

)

(13,509

)

Cash and cash equivalents at beginning of period

 

149,412

 

26,685

 

Cash, cash equivalents, and restricted cash at end of period

 

$

50,182

 

$

13,176

 

Supplemental disclosure of non-cash investing and financing activities

 

 

 

 

 

Property and equipment costs in accounts payable, accrued expenses and other liabilities

 

$

35,515

 

$

35,458

 

Purchase of equipment and prepaid maintenance services under capital financing arrangements

 

$

 

$

5,068

 

Capitalized stock-based compensation included in property and equipment costs

 

$

689

 

$

600

 

Financed sale of intangible assets held for sale

 

$

300

 

$

 

Boingo Wireless, Inc.

Reconciliation of Net Loss Attributable to Common Stockholders to Adjusted EBITDA

(Unaudited)

(In thousands)

 

 

 

 

 

 

 

 

Three Months Ended

September 30,

Nine Months Ended

September 30,

 

 

2019

2018

2019

2018

Net loss attributable to common stockholders

 

$

(187

)

$

(522

)

$

(5,124

)

$

(1,636

)

Depreciation and amortization of property and equipment

 

16,867

 

18,901

 

52,750

 

56,769

 

Stock-based compensation expense

 

2,054

 

3,155

 

6,434

 

9,227

 

Amortization of intangible assets

 

1,103

 

1,112

 

3,365

 

2,507

 

Income tax expense

 

143

 

54

 

254

 

198

 

Interest expense and amortization of debt discount

2,191

8

6,741

58

Interest income and other expense, net

(388)

14

(1,600)

93

Non-controlling interests

 

84

 

596

 

11

 

1,447

 

Adjusted EBITDA

 

$

21,867

 

$

23,318

 

$

62,831

 

$

68,663

 

Boingo Wireless, Inc.

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

(Unaudited)

(In thousands)

 

 

 

 

 

 

 

 

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

 

2019

 

2018

 

2019

 

2018

 

 

 

 

 

 

 

 

 

 

Net cash provided by operating activities

 

$

48,099

 

$

38,070

$

81,071

$

70,834

Purchases of property and equipment

 

(27,603

)

(29,613

)

(101,455

)

(72,531

)

Free cash flows

 

$

20,496

 

$

8,457

 

$

(20,384

)

$

(1,697

)

Boingo Wireless, Inc.

Revenue Summary

(Unaudited)

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30,

 

September 30,

 

 

2019

 

2018

 

2019

 

2018

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

DAS

 

$

23,714

 

$

24,410

 

$

75,431

 

$

69,940

Military/multifamily

 

 

23,641

 

 

21,745

 

 

73,934

 

 

54,334

Wholesale—Wi-Fi

 

 

11,200

 

 

11,749

 

 

32,938

 

 

36,428

Retail

 

 

3,646

 

 

4,088

 

 

11,419

 

 

13,964

Advertising and other

 

 

2,506

 

 

3,261

 

 

6,012

 

 

8,347

Total revenue

 

$

64,707

 

$

65,253

 

$

199,734

 

$

183,013

Boingo Wireless, Inc.

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

(Unaudited)

(In millions)

 

 

 

Year Ended

December 31, 2019

 

 

Low

 

High

 

 

 

 

 

 

Net loss attributable to common stockholders

 

$

(14.0

)

$

(10.0

)

Depreciation and amortization of property and equipment

 

72.1

 

73.1

 

Stock-based compensation expense

 

 

8.6

 

 

 

Amortization of intangible assets

 

 

4.5

 

 

Income tax expense, interest expense and amortization of debt discount, and interest income and other expense, net

7.6

Non-controlling interests

 

 

1.2

 

 

 

Adjusted EBITDA

 

$

80.0

 

$

85.0

 

Boingo Wireless, Inc.

Key Business Metrics

(Unaudited)

(In thousands)

 

 

Three Months Ended

 

Nine Months Ended

September 30,

September 30,

 

2019

 

2018

 

2019

 

2018

Key business metrics:

 

 

 

 

 

 

 

DAS nodes (1)

37.2

 

27.4

 

37.2

 

27.4

DAS nodes in backlog (2)

12.1

 

11.2

 

12.1

 

11.2

Subscribers—military (3)

137

 

142

 

137

 

142

Subscribers—retail (3)

85

 

141

 

85

 

141

Connects (4)

89,291

 

75,424

 

253,757

 

210,626

_________________________________

(1)

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.

(2)

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

(3)

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

(4)

This metric shows how often individuals connect to the Company’s global Wi-Fi network in a given period. The connects include wholesale and retail customers in both customer pay locations and customer free locations where Boingo is a paid service provider or receives 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:
Melody Walker

Director, Marketing Communications

mwalker@boingo.com
(424) 256-7036

INVESTORS:
Kimberly Orlando and Ariel Papermaster

ADDO Investor Relations

investors@boingo.com
(310) 829-5400

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