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MicroStrategy Announces First Quarter 2019 Financial Results
Reading Time: 10 minutes
TYSONS CORNER, Va.–(BUSINESS WIRE)–lt;a href=”https://twitter.com/search?q=%24MSTR&src=ctag” target=”_blank”gt;$MSTRlt;/agt; lt;a href=”https://twitter.com/hashtag/MSTR?src=hash” target=”_blank”gt;#MSTRlt;/agt;–MicroStrategy®
Incorporated (Nasdaq: MSTR), a leading worldwide provider of enterprise
analytics and mobility software, today announced financial results for
the three-month period ended March 31, 2019 (the first quarter of its
2019 fiscal year).
MicroStrategy adopted Accounting Standards Update No. 2016-02, Leases
(Topic 842), and its subsequent amendments (“ASU 2016-02”),
effective January 1, 2019. Comparative prior period consolidated
financial statements have not been restated and are not directly
comparable to the current period consolidated financial statements.
First quarter 2019 revenues were $115.4 million versus $123.0 million
for the first quarter of 2018, a 6.2% decrease. Product licenses and
subscription services revenues for the first quarter of 2019 were $25.4
million versus $25.0 million for the first quarter of 2018, a 1.9%
increase. Product support revenues for the first quarter of 2019 were
$71.5 million versus $74.4 million for the first quarter of 2018, a 4.0%
decrease. Other services revenues for the first quarter of 2019 were
$18.5 million versus $23.6 million for the first quarter of 2018, a
21.7% decrease. Foreign currency effects had an unfavorable impact on
revenues for the first quarter of 2019.
Operating expenses for the first quarter of 2019 were $99.6 million
versus $97.1 million for the first quarter of 2018, a 2.6% increase.
Loss from operations for the first quarter of 2019 was $10.4 million
versus income from operations of $0.7 million for the first quarter of
2018. Net loss for the first quarter of 2019 was $7.9 million, or $0.77
per share on a diluted basis, as compared to net income of $1.7 million,
or $0.15 per share on a diluted basis, for the first quarter of 2018.
Non-GAAP loss from operations, which excludes share-based compensation
expense, was $7.4 million for the first quarter of 2019 versus non-GAAP
income from operations of $5.5 million for the first quarter of 2018.
The tables at the end of this press release include a reconciliation of
(loss) income from operations to non-GAAP (loss) income from operations
for the three months ended March 31, 2019 and 2018. An explanation of
this non-GAAP financial measure is also included under the heading
“Non-GAAP Financial Measure” below.
As of March 31, 2019, MicroStrategy had cash and cash equivalents and
short-term investments of $551.1 million, as compared to $576.1 million
as of December 31, 2018, a decrease of $25.1 million. During the first
quarter of 2019, MicroStrategy repurchased 362,148 shares of its class A
common stock for an aggregate purchase price of approximately $48.2
million. As of March 31, 2019, MicroStrategy had 8.2 million shares of
class A common stock and 2.0 million shares of class B common stock
outstanding.
MicroStrategy uses its Intelligent Enterprise
platform across the
enterprise and has created an interactive dossier with quarterly
financial performance data. Anyone can access the
MSTR Financials dossier via a web browser, or by downloading the
MicroStrategy Library app on an iOS or Android device. To download the
native apps, visit MicroStrategy
Library for iPad, MicroStrategy
Library for iPhone, or MicroStrategy
Library for Android tablet and smartphone.
Conference Call
MicroStrategy will be discussing its first quarter 2019 financial
results on a conference call today beginning at approximately 5:00 p.m.
EDT. To access the conference call, dial (844) 824-7425 (domestically)
or (716) 220-9429 (internationally) and use conference ID 7634017. A
live and archived webcast will be available under the “Events” section
on MicroStrategy’s investor relations website at http://ir.microstrategy.com/events.cfm.
A replay of the conference call will be available beginning
approximately two hours after the call concludes until May 7, 2019 at
(855) 859-2056 (domestically) or (404) 537-3406 (internationally) using
the passcode 7634017.
Recent Business Highlights
-
MicroStrategy announced the general availability
of MicroStrategy 2019
, the industry’s first and only enterprise
platform for Federated Analytics, Transformational Mobility, and
HyperIntelligence. MicroStrategy 2019 delivers modern analytics on an
enterprise platform that can be deployed on-premises or on multiple
private and public cloud platforms. MicroStrategy customers on
MicroStrategy 2019 platform can get started on HyperIntelligence by
downloading the MicroStrategy HyperIntelligence extension at the Chrome
Web Store. Customers can provision MicroStrategy 2019 in the cloud
with the MicroStrategy for AWS and MicroStrategy for Azure
provisioning consoles. A 30-day free trial is available for MicroStrategy
2019 on AWS and Microsoft Azure. -
MicroStrategy was recognized by industry analysts in the following
published research:-
Recognized by Gartner, Inc. as the sole Challenger in the “2019
Magic Quadrant for Analytics and Business Intelligence Platforms”
(1) -
Named a Technology Innovation Leader by Dresner Advisory Services
for the second consecutive year -
Ranked the #1 Overall Value Index Leader in Embedded Analytics and
Business Intelligence by Ventana Research -
Ranked the #1 Overall Value Index Leader in Mobile Analytics and
Business Intelligence by Ventana Research
-
Recognized by Gartner, Inc. as the sole Challenger in the “2019
-
MicroStrategy held its 22nd annual user conference,
MicroStrategy World 2019, which brought together thousands of product
experts, thought leaders and MicroStrategy users for three days of
inspirational keynotes, educational workshops, and customer
presentations on how analytics can transform the way people use
information to make each organization a more Intelligent Enterprise.
Attendees also learned about MicroStrategy’s new platform, robust
partner network, and services offerings as well as how they can employ
new digital strategies to increase the adoption of analytics across
the enterprise.-
MicroStrategy announced the ability of customers to leverage
MicroStrategy 2019 on Microsoft Azure and Amazon Web Services,
which allows customers to launch fully-configured analytics,
mobility, and HyperIntelligence projects on Azure and AWS. -
MicroStrategy presented Customer Awards to American Express Global
Business Travel, The Coca-Cola Company, Hilton, Ola, and TAP Air
Portugal for their outstanding enterprise analytics and mobility
applications. -
MicroStrategy hosted its second annual Datathon at MicroStrategy
World 2019, challenging participants to create innovative
analytics, AI, big data, or mobile applications using
MicroStrategy 2019 with aggregated data from CharityBase, a free,
open source charity data portal with public information on the
activities, locations, and finances of thousands of charities
registered in England and Wales.
-
MicroStrategy announced the ability of customers to leverage
Non-GAAP Financial Measure
MicroStrategy is providing a supplemental financial measure for (loss)
income from operations that excludes the impact of share-based
compensation arrangements. This supplemental financial measure is not a
measurement of financial performance under generally accepted accounting
principles in the United States (“GAAP”) and, as a result, this
supplemental financial measure may not be comparable to similarly titled
measures of other companies. Management uses this non-GAAP financial
measure internally to help understand, manage, and evaluate business
performance and to help make operating decisions. MicroStrategy believes
that this non-GAAP financial measure is also useful to investors and
analysts in comparing its performance across reporting periods on a
consistent basis because it excludes a significant non-cash expense that
MicroStrategy believes is not reflective of its general business
performance. In addition, accounting for share-based compensation
arrangements requires significant management judgment and the resulting
expense could vary significantly in comparison to other companies.
Therefore, MicroStrategy believes the use of this non-GAAP financial
measure can also facilitate comparison of MicroStrategy’s operating
results to those of its competitors.
About MicroStrategy Incorporated
MicroStrategy (Nasdaq: MSTR) is a leading worldwide provider of
enterprise analytics and mobility software and services. Our mission is
to make every enterprise a more Intelligent Enterprise. MicroStrategy
2019 delivers modern analytics on an open, comprehensive enterprise
platform designed to drive business results with Federated Analytics,
Transformational Mobility, and HyperIntelligence. To learn more, visit MicroStrategy
online, and follow us on LinkedIn,
Twitter
and Facebook.
MicroStrategy, Intelligent Enterprise, MicroStrategy Library,
MicroStrategy 2019, HyperIntelligence, and MicroStrategy World are
either trademarks or registered trademarks of MicroStrategy Incorporated
in the United States and certain other countries. Other product and
company names mentioned herein may be the trademarks of their respective
owners.
This press release may include statements that may constitute
“forward-looking statements,” including estimates of future business
prospects or financial results and statements containing the words
“believe,” “estimate,” “project,” “expect” or similar expressions.
Forward-looking statements inherently involve risks and uncertainties
that could cause actual results of MicroStrategy Incorporated and its
subsidiaries (collectively, the “Company”) to differ materially from the
forward-looking statements. Factors that could contribute to such
differences include: the extent and timing of market acceptance of
MicroStrategy’s new offerings, including MicroStrategy 2019; the
Company’s ability to recognize revenue or deferred revenue through
delivery of products or satisfactory performance of services; continued
acceptance of the Company’s other products in the marketplace;
fluctuations in tax benefits or provisions, including as a result of
changes to U.S. federal tax laws; the timing of significant orders;
delays in or the inability of the Company to develop or ship new
products; competitive factors; general economic conditions; currency
fluctuations; and other risks detailed in the Company’s registration
statements and periodic reports filed with the Securities and Exchange
Commission. The Company undertakes no obligation to update these
forward-looking statements for revisions or changes after the date of
this release.
MSTR-F
(1) Gartner, Magic Quadrant for Analytics and Business
Intelligence Platforms, Cindi Howson, James Richardson, Rita Sallam,
Austin Kronz, 11 February 2019. Gartner does not endorse any vendor,
product or service depicted in its research publications, and does not
advise technology users to select only those vendors with the highest
ratings or other designation. Gartner research publications consist of
the opinions of Gartner’s research organization and should not be
construed as statements of fact. Gartner disclaims all warranties,
express or implied, with respect to this research, including any
warranties of merchantability or fitness for a particular purpose.
| MICROSTRATEGY INCORPORATED | ||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||
| (in thousands, except per share data) | ||||||||||
| Three Months Ended | ||||||||||
| March 31, | ||||||||||
| 2019 | 2018 | |||||||||
| (unaudited) | (unaudited) | |||||||||
| Revenues | ||||||||||
| Product licenses | $ | 18,291 | $ | 17,301 | ||||||
| Subscription services | 7,144 | 7,662 | ||||||||
| Total product licenses and subscription services | 25,435 | 24,963 | ||||||||
| Product support | 71,450 | 74,415 | ||||||||
| Other services | 18,481 | 23,589 | ||||||||
| Total revenues | 115,366 | 122,967 | ||||||||
| Cost of revenues | ||||||||||
| Product licenses | 519 | 2,211 | ||||||||
| Subscription services | 3,598 | 3,249 | ||||||||
| Total product licenses and subscription services | 4,117 | 5,460 | ||||||||
| Product support | 7,067 | 4,796 | ||||||||
| Other services | 14,989 | 14,929 | ||||||||
| Total cost of revenues | 26,173 | 25,185 | ||||||||
| Gross profit | 89,193 | 97,782 | ||||||||
| Operating expenses | ||||||||||
| Sales and marketing | 48,760 | 51,335 | ||||||||
| Research and development | 28,215 | 23,560 | ||||||||
| General and administrative | 22,604 | 22,172 | ||||||||
| Total operating expenses | 99,579 | 97,067 | ||||||||
| (Loss) income from operations | (10,386 | ) | 715 | |||||||
| Interest income, net | 2,566 | 2,034 | ||||||||
| Other expense, net | (596 | ) | (1,594 | ) | ||||||
| (Loss) income before income taxes | (8,416 | ) | 1,155 | |||||||
| Benefit from income taxes | (510 | ) | (518 | ) | ||||||
| Net (loss) income | $ | (7,906 | ) | $ | 1,673 | |||||
| Basic (loss) earnings per share (1): | $ | (0.77 | ) | $ | 0.15 | |||||
|
Weighted average shares outstanding used in computing basic (loss) earnings per share |
10,328 | 11,447 | ||||||||
| Diluted (loss) earnings per share (1): | $ | (0.77 | ) | $ | 0.15 | |||||
|
Weighted average shares outstanding used in computing diluted (loss) earnings per share |
10,328 | 11,488 | ||||||||
| (1) |
Basic and fully diluted (loss) earnings per share for class A and class B common stock are the same. |
|
| MICROSTRATEGY INCORPORATED | ||||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||||
| (in thousands, except per share data) | ||||||||||
| March 31, | December 31, | |||||||||
| 2019 | 2018* | |||||||||
| (unaudited) | ||||||||||
| Assets | ||||||||||
| Current assets | ||||||||||
| Cash and cash equivalents | $ | 258,743 | $ | 109,924 | ||||||
| Restricted cash | 922 | 862 | ||||||||
| Short-term investments | 292,314 | 466,186 | ||||||||
| Accounts receivable, net | 133,922 | 171,359 | ||||||||
| Prepaid expenses and other current assets | 32,511 | 30,068 | ||||||||
| Total current assets | 718,412 | 778,399 | ||||||||
| Property and equipment, net | 54,832 | 51,919 | ||||||||
| Right-of-use assets | 87,743 |
0 |
||||||||
| Deposits and other assets | 8,374 | 8,134 | ||||||||
| Deferred tax assets, net | 18,983 | 17,316 | ||||||||
| Total Assets | $ | 888,344 | $ | 855,768 | ||||||
| Liabilities and Stockholders’ Equity | ||||||||||
| Current liabilities | ||||||||||
| Accounts payable, accrued expenses, and operating lease liabilities | $ | 37,227 | $ | 33,684 | ||||||
| Accrued compensation and employee benefits | 36,713 | 48,045 | ||||||||
| Deferred revenue and advance payments | 190,070 | 176,540 | ||||||||
| Total current liabilities | 264,010 | 258,269 | ||||||||
| Deferred revenue and advance payments | 4,539 | 6,469 | ||||||||
| Operating lease liabilities | 106,661 | 0 | ||||||||
| Other long-term liabilities | 34,793 | 61,262 | ||||||||
| Deferred tax liabilities | 35 | 37 | ||||||||
| Total Liabilities | 410,038 | 326,037 | ||||||||
| Stockholders’ Equity | ||||||||||
|
Preferred stock undesignated, $0.001 par value; 5,000 shares authorized; no shares issued or outstanding |
0 | 0 | ||||||||
|
Class A common stock, $0.001 par value; 330,000 shares authorized; 15,850 shares issued and 8,202 shares outstanding, and 15,837 shares issued and 8,552 shares outstanding, respectively |
16 | 16 | ||||||||
|
Class B convertible common stock, $0.001 par value; 165,000 shares authorized; 2,035 shares issued and outstanding, and 2,035 shares issued and outstanding, respectively |
2 | 2 | ||||||||
| Additional paid-in capital | 581,429 | 576,957 | ||||||||
| Treasury stock, at cost; 7,648 shares and 7,285 shares, respectively | (634,405 | ) | (586,161 | ) | ||||||
| Accumulated other comprehensive loss | (9,964 | ) | (10,217 | ) | ||||||
| Retained earnings | 541,228 | 549,134 | ||||||||
| Total Stockholders’ Equity | 478,306 | 529,731 | ||||||||
| Total Liabilities and Stockholders’ Equity | $ | 888,344 | $ | 855,768 | ||||||
| * | Derived from audited financial statements. | |
| MICROSTRATEGY INCORPORATED | ||||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||
| (in thousands) | ||||||||||
| Three Months Ended | ||||||||||
| March 31, | ||||||||||
| 2019 | 2018 | |||||||||
| (unaudited) | (unaudited) | |||||||||
| Operating activities: | ||||||||||
| Net (loss) income | $ | (7,906 | ) | $ | 1,673 | |||||
|
Adjustments to reconcile net (loss) income to net cash provided by operating activities: |
||||||||||
| Depreciation and amortization | 3,664 | 3,298 | ||||||||
| Bad debt expense | 827 | 165 | ||||||||
| Net realized loss on short-term investments | 41 |
0 |
||||||||
| Deferred taxes | (1,694 | ) | (2,662 | ) | ||||||
| Share-based compensation expense | 3,017 | 4,743 | ||||||||
| Changes in operating assets and liabilities: | ||||||||||
| Accounts receivable | 10,266 | 422 | ||||||||
| Prepaid expenses and other current assets | (3,070 | ) | (3,783 | ) | ||||||
| Deposits and other assets | (134 | ) | 228 | |||||||
| Accounts payable and accrued expenses | (3,108 | ) | (6,016 | ) | ||||||
| Accrued compensation and employee benefits | (12,195 | ) | (8,085 | ) | ||||||
| Deferred revenue and advance payments | 38,502 | 19,570 | ||||||||
| Operating lease liabilities | (2,074 | ) |
0 |
|||||||
| Other long-term liabilities | 320 | 9,164 | ||||||||
| Net cash provided by operating activities | 26,456 | 18,717 | ||||||||
| Investing activities: | ||||||||||
| Proceeds from redemption of short-term investments | 314,403 | 195,820 | ||||||||
| Purchases of property and equipment | (6,011 | ) | (1,294 | ) | ||||||
| Purchases of short-term investments | (138,099 | ) | (483,440 | ) | ||||||
| Net cash provided by (used in) investing activities | 170,293 | (288,914 | ) | |||||||
| Financing activities: | ||||||||||
|
Proceeds from sale of class A common stock under exercise of employee stock options |
1,507 |
0 |
||||||||
| Purchases of treasury stock | (48,244 | ) |
0 |
|||||||
|
Payments on capital lease obligations and other financing arrangements prior to the adoption of ASU 2016-02 |
0 |
(7 | ) | |||||||
| Net cash used in financing activities | (46,737 | ) | (7 | ) | ||||||
|
Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash |
(1,133 | ) | 2,202 | |||||||
|
Net increase (decrease) in cash, cash equivalents, and restricted cash |
148,879 | (268,002 | ) | |||||||
| Cash, cash equivalents, and restricted cash, beginning of period | 110,786 | 421,182 | ||||||||
| Cash, cash equivalents, and restricted cash, end of period | $ | 259,665 | $ | 153,180 | ||||||
| MICROSTRATEGY INCORPORATED | |||||||||
| REVENUE AND COST OF REVENUE DETAIL | |||||||||
| (in thousands) | |||||||||
| Three Months Ended | |||||||||
| March 31, | |||||||||
| 2019 | 2018 | ||||||||
| (unaudited) | (unaudited) | ||||||||
| Revenues | |||||||||
| Product licenses and subscription services: | |||||||||
| Product licenses | $ | 18,291 | $ | 17,301 | |||||
| Subscription services | 7,144 | 7,662 | |||||||
| Total product licenses and subscription services | 25,435 | 24,963 | |||||||
| Product support | 71,450 | 74,415 | |||||||
| Other services: | |||||||||
| Consulting | 16,603 | 21,287 | |||||||
| Education | 1,878 | 2,302 | |||||||
| Total other services | 18,481 | 23,589 | |||||||
| Total revenues | 115,366 | 122,967 | |||||||
| Cost of revenues | |||||||||
| Product licenses and subscription services: | |||||||||
| Product licenses | 519 | 2,211 | |||||||
| Subscription services | 3,598 | 3,249 | |||||||
| Total product licenses and subscription services | 4,117 | 5,460 | |||||||
| Product support | 7,067 | 4,796 | |||||||
| Other services: | |||||||||
| Consulting | 12,985 | 13,321 | |||||||
| Education | 2,004 | 1,608 | |||||||
| Total other services | 14,989 | 14,929 | |||||||
| Total cost of revenues | 26,173 | 25,185 | |||||||
| Gross profit | $ | 89,193 | $ | 97,782 | |||||
| MICROSTRATEGY INCORPORATED | ||||||||||||
| DEFERRED REVENUE DETAIL | ||||||||||||
| (in thousands) | ||||||||||||
| March 31, | December 31, | March 31, | ||||||||||
| 2019 | 2018* | 2018 | ||||||||||
| (unaudited) | (unaudited) | |||||||||||
| Current: | ||||||||||||
| Deferred product licenses revenue | $ | 555 | $ | 1,768 | $ | 3,064 | ||||||
| Deferred subscription services revenue | 15,641 | 13,508 | 16,742 | |||||||||
| Deferred product support revenue | 166,306 | 152,501 | 173,156 | |||||||||
| Deferred other services revenue | 7,568 | 8,763 | 8,756 | |||||||||
| Total current deferred revenue and advance payments | $ | 190,070 | $ | 176,540 | $ | 201,718 | ||||||
| Non-current: | ||||||||||||
| Deferred product licenses revenue | $ | 479 | $ | 542 | $ | 843 | ||||||
| Deferred subscription services revenue | 247 | 2,384 | 385 | |||||||||
| Deferred product support revenue | 3,231 | 3,091 | 3,854 | |||||||||
| Deferred other services revenue | 582 | 452 | 586 | |||||||||
| Total non-current deferred revenue and advance payments | $ | 4,539 | $ | 6,469 | $ | 5,668 | ||||||
| Total current and non-current: | ||||||||||||
| Deferred product licenses revenue | $ | 1,034 | $ | 2,310 | $ | 3,907 | ||||||
| Deferred subscription services revenue | 15,888 | 15,892 | 17,127 | |||||||||
| Deferred product support revenue | 169,537 | 155,592 | 177,010 | |||||||||
| Deferred other services revenue | 8,150 | 9,215 | 9,342 | |||||||||
| Total current and non-current deferred revenue and advance payments | $ | 194,609 | $ | 183,009 | $ | 207,386 | ||||||
| * | Derived from audited financial statements. | |
| MICROSTRATEGY INCORPORATED | |||||||||
| RECONCILIATION OF GAAP TO NON-GAAP MEASURE | |||||||||
| (in thousands) | |||||||||
| Three Months Ended | |||||||||
| March 31, | |||||||||
| 2019 | 2018 | ||||||||
| (unaudited) | (unaudited) | ||||||||
| Reconciliation of non-GAAP (loss) income from operations: | |||||||||
| (Loss) income from operations | $ | (10,386 | ) | $ | 715 | ||||
| Share-based compensation expense | 3,017 | 4,743 | |||||||
| Non-GAAP (loss) income from operations | $ | (7,369 | ) | $ | 5,458 | ||||
| MICROSTRATEGY INCORPORATED | |||||||||||||||
| WORLDWIDE EMPLOYEE HEADCOUNT | |||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||
| 2019 | 2018 | 2018 | 2018 | 2018 | |||||||||||
| Subscription services | 54 | 56 | 55 | 54 | 57 | ||||||||||
| Product support | 224 | 202 | 194 | 184 | 182 | ||||||||||
| Consulting | 429 | 452 | 458 | 443 | 441 | ||||||||||
| Education | 50 | 47 | 44 | 39 | 42 | ||||||||||
| Sales and marketing | 675 | 707 | 699 | 687 | 667 | ||||||||||
| Research and development | 733 | 716 | 688 | 651 | 604 | ||||||||||
| General and administrative | 329 | 348 | 326 | 322 | 313 | ||||||||||
| Total headcount | 2,494 | 2,528 | 2,464 | 2,380 | 2,306 | ||||||||||
Contacts
MicroStrategy Incorporated
Investor Relations
Claudia Cahill
[email protected]
(703)
848-8600
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Cannabis
Medical Cannabis Market Report 2024-2030: Asia-Pacific Set to Witness Robust Growth, Driven by R&D Discovery Initiatives
Schwazze Management to Host Conference Call Today at 5:00 p.m. Eastern Time
DENVER, May 15, 2024 /PRNewswire/ — Medicine Man Technologies, Inc., operating as Schwazze, (OTCQX: SHWZ) (Cboe CA: SHWZ) (“Schwazze” or the “Company”), today announced financial and operational results for the first quarter ended March 31, 2024.
“We delivered another period of revenue growth in Q1 as we further refined our retail strategy while contending with the prolonged competitive challenges in Colorado and New Mexico,” said Forrest Hoffmaster, Interim CEO of Schwazze. “Throughout the quarter, we continued to sharpen our pricing and promotional efforts while enhancing the in-store experience, widening assortment, improving in-stock position, and advancing our loyalty program to attract and retain new customers. We also strengthened our wholesale business with quarter-over-quarter growth, while surpassing 30% total door penetration across both states.”
“The Colorado market remains highly competitive with more than 680 active recreational licenses, underscoring the importance of delivering an exceptional customer experience and fully integrated retail support program. Although retail pricing has recently stabilized, Colorado sales in Q1 were down 10% year-over-year due to lower volumes. Nonetheless, we significantly outpaced the market as our sales were up 9%, demonstrating the effectiveness of our operating playbook to compete in challenging environments. We expect to continue driving improvements in customer acquisition, retention, and loyalty as we further increase market share in the state.”
“In New Mexico, the proliferation of new licenses continued to outpace state cannabis sales as store count in Q1 increased 31% year-over-year while the market grew only 13%. In addition to pricing and promotional efforts, we’ve focused on driving traffic into our stores by expanding assortment with high quality flower and delivering an elevated customer experience. The New Mexico regulatory body has also increased its license enforcement efforts in recent months, contributing to more than 70 store closures and a 33% sequential decrease in net new store openings in the first quarter. We will continue to support the New Mexico Cannabis Control Division as it develops its regulatory framework.”
“Over the past four years we have rapidly scaled our footprint through 13 acquisitions, building a leading retail presence in both Colorado and New Mexico. We are beginning to see positive momentum from our pricing and promotional strategy and will remain focused on driving operating efficiencies while further optimizing our assets as we consolidate cultivation facilities and eliminate underperforming stores that do not meet our high-margin thresholds. We believe these initiatives, coupled with our operating playbook and strict cost controls, will enable us to return to stronger levels of profitability moving forward.”
First Quarter 2024 Financial Summary
|
$ in Thousands USD |
Q1 2024 |
Q4 2023 |
Q1 2023 |
|
Total Revenue |
$41,601 |
$43,325 |
$40,001 |
|
Gross Profit |
$17,934 |
$7,034[1] |
$21,849 |
|
Operating Expenses |
$20,643 |
$23,276 |
$16,199 |
|
Income (Loss) from Operations |
$(2,709) |
$(16,242) |
$5,650 |
|
Adjusted EBITDA[2] |
$7,341 |
$10,953 |
$14,525 |
|
Operating Cash Flow |
$(3,700) |
$3,452 |
$(880) |
Recent Highlights
- Announced the grand opening of a medical and recreational dispensary in March under the Everest Apothecary banner in Las Cruces, New Mexico, increasing the Company’s retail footprint to 34 stores across the state.
- Increased wholesale penetration in the first quarter to more than 30% of total doors in Colorado and New Mexico.
- Lowell Herb Co. pre-roll sales increased more than 3x quarter-over-quarter in Colorado, where it continues to be the #1 pre-roll in the state.
- Wana gummy sales up more than 2x quarter-over-quarter in New Mexico.
First Quarter 2024 Financial Results
Total revenue in the first quarter of 2024 increased 4% to $41.6 million compared to $40.0 million for the same quarter last year. The increase was primarily due to growth from new stores compared to the prior year period, partially offset by continued pricing pressure and the proliferation of new licenses in New Mexico.
Gross profit for the first quarter of 2024 was $17.9 million or 43.1% of total revenue, compared to $21.8 million or 54.6% of total revenue for the same quarter last year. The decrease in gross margin was primarily driven by the aforementioned pricing pressure in New Mexico, as well as higher medical sales mix in Colorado.
|
____________________________ |
|
1 Q4 2023 Gross Profit includes one-time, non-cash inventory adjustments of approximately $13.1 million comprised of $3.1 million of product consolidation, obsolescence, and shrinkage expenses, $4.3 million of net realizable value adjustments, and $5.8 million of fair value adjustments on acquired inventory in New Mexico in 2023. |
Operating expenses for the first quarter of 2024 were $20.6 million compared to $16.2 million for the same quarter last year. The year-ago period benefitted from a payroll tax credit of $3.9M. The remaining increase was primarily driven by personnel expenses and four-wall SG&A costs associated with 21 additional stores in Colorado and New Mexico that are still ramping.
Loss from operations for the first quarter of 2024 was $2.7 million compared to income from operations of $5.6 million in the same quarter last year. Net loss was $16.1 million for the first quarter of 2024 compared to net income of $1.7 million for the same quarter last year.
Adjusted EBITDA for the first quarter of 2024 was $7.3 million compared to $14.5 million for the same quarter last year. The decrease in Adjusted EBITDA was primarily driven by lower gross margin and higher operating expenses associated with the 21 additional stores that are still ramping.
As of March 31, 2024, cash and cash equivalents were $13.2 million compared to $19.2 million on December 31, 2023. Total debt as of March 31, 2024, was $159.7 million compared to $156.8 million on December 31, 2023.
Conference Call
The Company will conduct a conference call today, May 15, 2024, at 5:00 p.m. Eastern time to discuss its results for the first quarter ended March 31, 2024.
Schwazze management will host the conference call, followed by a question-and-answer period. Interested parties may submit questions to the Company prior to the call by emailing [email protected].
Date: Wednesday, May 15, 2024
Time: 5:00 p.m. Eastern time
Toll-free dial-in: (888) 664-6383
International dial-in: (416) 764-8650
Conference ID: 84167910
Webcast: SHWZ Q1 2024 Earnings Call
The conference call will also be broadcast live and available for replay on the investor relations section of the Company’s website at https://ir.schwazze.com.
Toll-free replay number: (888) 390-0541
International replay number: (416) 764-8677
Replay ID: 167910
If you have any difficulty registering or connecting with the conference call, please contact Elevate IR at (720) 330-2829.
About Schwazze
Schwazze (OTCQX: SHWZ) (Cboe CA: SHWZ) is building a premier vertically integrated regional cannabis company with assets in Colorado and New Mexico and will continue to explore taking its operating system to other states where it can develop a differentiated regional leadership position. Schwazze is the parent company of a portfolio of leading cannabis businesses and brands spanning seed to sale.
Schwazze is anchored by a high-performance culture that combines customer-centric thinking and data science to test, measure, and drive decisions and outcomes. The Company’s leadership team has deep expertise in retailing, wholesaling, and building consumer brands at Fortune 500 companies as well as in the cannabis sector.
Medicine Man Technologies, Inc. was Schwazze’s former operating trade name. The corporate entity continues to be named Medicine Man Technologies, Inc. Schwazze derives its name from the pruning technique of a cannabis plant to enhance plant structure and promote healthy growth. To learn more about Schwazze, visit https://schwazze.com/.
Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements include financial outlooks; any projections of net sales, earnings, or other financial items; any statements of the strategies, plans and objectives of our management team for future operations; expectations in connection with the Company’s previously announced business plans; any statements regarding future economic conditions or performance; and statements regarding the intent, belief or current expectations of our management team. Such statements may be preceded by the words “may,” “will,” “could,” “would,” “should,” “expect,” “intends,” “plans,” “strategy,” “prospects,” “anticipate,” “believe,” “approximately,” “estimate,” “predict,” “project,” “potential,” “continue,” “ongoing,” or the negative of these terms or other words of similar meaning in connection with a discussion of future events or future operating or financial performance, although the absence of these words does not necessarily mean that a statement is not forward-looking. We have based our forward-looking statements on management’s current expectations and assumptions about future events and trends affecting our business and industry. Although we do not make forward-looking statements unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy. Therefore, forward-looking statements are not guarantees of future events or performance, are based on certain assumptions, and are subject to various known and unknown risks and uncertainties, many of which are beyond the Company’s control and cannot be predicted or quantified. Consequently, actual events and results may differ materially from those expressed or implied by such forward-looking statements. Such risks and uncertainties include, without limitation, risks and uncertainties associated with (i) regulatory limitations on our products and services and the uncertainty in the application of federal, state, and local laws to our business, and any changes in such laws; (ii) our ability to manufacture our products and product candidates on a commercial scale on our own or in collaboration with third parties; (iii) our ability to identify, consummate, and integrate anticipated acquisitions; (iv) general industry and economic conditions; (v) our ability to access adequate capital upon terms and conditions that are acceptable to us; (vi) our ability to pay interest and principal on outstanding debt when due; (vii) volatility in credit and market conditions; (viii) the loss of one or more key executives or other key employees; and (ix) other risks and uncertainties related to the cannabis market and our business strategy. More detailed information about the Company and the risk factors that may affect the realization of forward-looking statements is set forth in the Company’s filings with the Securities and Exchange Commission (SEC), including the Company’s Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q. Investors and security holders are urged to read these documents free of charge on the SEC’s website at http://www.sec.gov. The Company assumes no obligation to publicly update or revise its forward-looking statements as a result of new information, future events or otherwise except as required by law.
Investor Relations Contact
Sean Mansouri, CFA or Aaron D’Souza
Elevate IR
(720) 330-2829
[email protected]
MEDICINE MAN TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
For the Periods Ended March 31, 2024 and December 31, 2023
Expressed in U.S. Dollars
|
March 31, |
December 31, |
||||
|
2024 |
2023 |
||||
|
ASSETS
|
|||||
|
Current Assets |
|||||
|
Cash & Cash Equivalents |
$ |
13,151,317 |
$ |
19,248,932 |
|
|
Accounts Receivable, net of Allowance for Doubtful Accounts |
3,356,032 |
4,261,159 |
|||
|
Inventory |
26,382,184 |
25,787,793 |
|||
|
Marketable Securities, net of Unrealized Loss of $347,516 and Loss of $1,816, respectively |
108,583 |
456,099 |
|||
|
Prepaid Expenses & Other Current Assets |
3,502,310 |
3,914,064 |
|||
|
Total Current Assets |
46,500,426 |
53,668,047 |
|||
|
Non-Current Assets |
|||||
|
Fixed Assets, net Accumulated Depreciation of $10,061,700 and $8,741,782, respectively |
31,326,000 |
31,113,630 |
|||
|
Investments |
2,000,000 |
2,000,000 |
|||
|
Investments Held for Sale |
– |
202,111 |
|||
|
Goodwill |
67,492,705 |
67,499,199 |
|||
|
Intangible Assets, net Accumulated Amortization of $36,483,160 and $32,706,765, respectively |
162,391,482 |
166,167,877 |
|||
|
Other Non-Current Assets |
1,328,187 |
1,263,837 |
|||
|
Operating Lease Right of Use Assets |
34,575,832 |
34,233,142 |
|||
|
Deferred Tax Assets, net |
992,144 |
1,996,489 |
|||
|
Total Non-Current Assets |
300,106,350 |
304,476,285 |
|||
|
Total Assets |
$ |
346,606,776 |
$ |
358,144,332 |
|
|
LIABILITIES & STOCKHOLDERS’ EQUITY
|
|||||
|
Current Liabilities |
|||||
|
Accounts Payable |
$ |
9,443,233 |
$ |
13,341,561 |
|
|
Accrued Expenses |
8,106,618 |
7,774,691 |
|||
|
Derivative Liabilities |
1,319,845 |
638,020 |
|||
|
Lease Liabilities – Current |
5,186,316 |
4,922,724 |
|||
|
Current Portion of Long Term Debt |
29,579,713 |
3,547,011 |
|||
|
Income Taxes Payable |
28,235,039 |
25,232,782 |
|||
|
Total Current Liabilities |
81,870,764 |
55,456,789 |
|||
|
Non-Current Liabilities |
|||||
|
Long Term Debt, net of Debt Discount & Issuance Costs |
130,120,753 |
153,262,203 |
|||
|
Lease Liabilities – Non-Current |
30,735,072 |
30,133,452 |
|||
|
Total Non-Current Liabilities |
160,855,825 |
183,395,655 |
|||
|
Total Liabilities |
$ |
242,726,589 |
$ |
238,852,444 |
|
|
Stockholders’ Equity |
|||||
|
Preferred Stock, $0.001 Par Value. 10,000,000 Shares Authorized; 82,185 Shares Issued and |
|||||
|
82,185 Outstanding as of March 31, 2024 and 85,534 Shares Issued and 85,534 Outstanding as of |
|||||
|
December 31, 2023. |
82 |
86 |
|||
|
Common Stock, $0.001 Par Value. 250,000,000 Shares Authorized; 79,168,539 Shares Issued |
|||||
|
and 78,248,389 Shares Outstanding as of March 31, 2024 and 74,888,392 Shares Issued |
|||||
|
and 73,968,242 Shares Outstanding as of December 31, 2023. |
79,169 |
74,888 |
|||
|
Additional Paid-In Capital |
202,677,665 |
202,040,968 |
|||
|
Accumulated Deficit |
(96,843,602) |
(80,790,927) |
|||
|
Common Stock Held in Treasury, at Cost, 920,150 Shares Held as of March 31, 2024 and |
|||||
|
920,150 Shares Held as of December 31, 2023. |
(2,033,127) |
(2,033,127) |
|||
|
Total Stockholders’ Equity |
103,880,187 |
119,291,888 |
|||
|
Total Liabilities & Stockholders’ Equity |
$ |
346,606,776 |
$ |
358,144,332 |
|
MEDICINE MAN TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME AND (LOSS)
For the Periods Ended March 31, 2024 and 2023
Expressed in U.S. Dollars
|
For the Three Months Ended |
|||||
|
March 31, |
|||||
|
2024 |
2023 |
||||
|
(Unaudited) |
(Unaudited) |
||||
|
Operating Revenues |
|||||
|
Retail |
$ |
37,633,252 |
$ |
35,820,111 |
|
|
Wholesale |
3,898,320 |
4,058,925 |
|||
|
Other |
69,421 |
121,900 |
|||
|
Total Revenue |
41,600,993 |
40,000,936 |
|||
|
Total Cost of Goods & Services |
23,667,319 |
18,152,163 |
|||
|
Gross Profit |
17,933,674 |
21,848,773 |
|||
|
Operating Expenses |
|||||
|
Selling, General and Administrative Expenses |
11,835,818 |
10,100,934 |
|||
|
Professional Services |
1,671,881 |
1,187,364 |
|||
|
Salaries |
6,880,988 |
4,695,971 |
|||
|
Stock Based Compensation |
253,916 |
214,544 |
|||
|
Total Operating Expenses |
20,642,603 |
16,198,813 |
|||
|
Income from Operations |
(2,708,929) |
5,649,960 |
|||
|
Other Income (Expense) |
|||||
|
Interest Expense, net |
(8,307,369) |
(7,745,854) |
|||
|
Unrealized Gain (Loss) on Derivative Liabilities |
(681,825) |
8,501,685 |
|||
|
Other Loss |
10,500 |
– |
|||
|
Loss on Investment |
(33,382) |
– |
|||
|
Unrealized Gain on Investment |
(347,516) |
1,816 |
|||
|
Total Other Income (Expense) |
(9,359,592) |
757,647 |
|||
|
Pre-Tax Net Income (Loss) |
(12,068,521) |
6,407,607 |
|||
|
Provision for Income Taxes |
3,984,154 |
4,662,178 |
|||
|
Net Income (Loss) |
$ |
(16,052,675) |
$ |
1,745,429 |
|
|
Less: Accumulated Preferred Stock Dividends for the Period |
(2,155,259) |
(2,029,394) |
|||
|
Net Income (Loss) Attributable to Common Stockholders |
$ |
(18,207,934) |
$ |
(283,965) |
|
|
Earnings (Loss) per Share Attributable to Common Stockholders |
|||||
|
Basic Earnings (Loss) per Share |
$ |
(0.24) |
$ |
(0.01) |
|
|
Diluted Earnings (Loss) per Share |
$ |
(0.24) |
$ |
(0.06) |
|
|
Weighted Average Number of Shares Outstanding – Basic |
76,006,932 |
55,835,501 |
|||
|
Weighted Average Number of Shares Outstanding – Diluted |
76,006,932 |
101,608,278 |
|||
|
Comprehensive Income (Loss) |
$ |
(16,052,675) |
$ |
1,745,429 |
|
MEDICINE MAN TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Periods Ended March 31, 2024 and 2023
Expressed in U.S. Dollars
|
For the Three Months Ended |
|||||
|
March 31, |
|||||
|
2024 |
2023 |
||||
|
(Unaudited) |
(Unaudited) |
||||
|
Cash Flows from Operating Activities: |
|||||
|
Net Income (Loss) for the Period |
$ |
(16,052,675) |
$ |
1,745,429 |
|
|
Adjustments to Reconcile Net Income (Loss) to Cash for Operating Activities |
|||||
|
Depreciation & Amortization |
5,096,314 |
6,151,395 |
|||
|
Non-Cash Interest Expense |
1,031,431 |
991,184 |
|||
|
Non-Cash Lease Expense |
2,871,226 |
2,251,459 |
|||
|
Deferred Taxes |
1,004,345 |
(637,225) |
|||
|
Loss on Investment |
202,111 |
– |
|||
|
Change in Derivative Liabilities |
681,825 |
(8,501,685) |
|||
|
Amortization of Debt Issuance Costs |
421,512 |
421,513 |
|||
|
Amortization of Debt Discount |
2,303,246 |
1,999,933 |
|||
|
(Gain) Loss on Investments, net |
347,516 |
(1,816) |
|||
|
Stock Based Compensation |
640,974 |
214,544 |
|||
|
Changes in Operating Assets & Liabilities (net of Acquired Amounts): |
|||||
|
Accounts Receivable |
905,127 |
(118,181) |
|||
|
Inventory |
(587,900) |
(3,023,251) |
|||
|
Prepaid Expenses & Other Current Assets |
411,754 |
(3,036,801) |
|||
|
Other Assets |
(64,350) |
360,674 |
|||
|
Change in Operating Lease Liabilities |
(2,348,703) |
(1,531,765) |
|||
|
Accounts Payable & Other Liabilities |
(3,566,401) |
(3,464,671) |
|||
|
Income Taxes Payable |
3,002,257 |
5,299,403 |
|||
|
Net Cash Provided by (Used in) Operating Activities |
(3,700,390) |
(879,861) |
|||
|
Cash Flows from Investing Activities: |
|||||
|
Collection of Notes Receivable |
– |
10,631 |
|||
|
Purchase of Fixed Assets |
(1,532,287) |
(2,913,394) |
|||
|
Net Cash Provided by (Used in) Investing Activities |
(1,532,287) |
(2,902,763) |
|||
|
Cash Flows from Financing Activities: |
|||||
|
Payment on Notes Payable |
(864,938) |
– |
|||
|
Net Cash Provided by (Used in) Financing Activities |
(864,938) |
– |
|||
|
Net (Decrease) in Cash & Cash Equivalents |
(6,097,615) |
(3,782,624) |
|||
|
Cash & Cash Equivalents at Beginning of Period |
19,248,932 |
38,949,253 |
|||
|
Cash & Cash Equivalents at End of Period |
$ |
13,151,317 |
$ |
35,166,628 |
|
|
Supplemental Disclosure of Cash Flow Information: |
|||||
|
Cash Paid for Interest |
$ |
4,515,205 |
$ |
6,540,748 |
|
MEDICINE MAN TECHNOLOGIES, INC.
ADJUSTED EBITDA RECONCILIATION (NON-GAAP)
For the Periods Ended March 31, 2024 and 2023
Expressed in U.S. Dollars
|
For the Three Months Ended |
|||||
|
March 31, |
|||||
|
2024 |
2023 |
||||
|
Net Income (Loss) |
$ |
(16,052,675) |
$ |
1,745,429 |
|
|
Interest Expense, net |
8,307,369 |
7,745,854 |
|||
|
Provision for Income Taxes |
3,984,154 |
4,662,178 |
|||
|
Other (Income) Expense, net of Interest Expense |
1,052,223 |
(8,503,501) |
|||
|
Depreciation & Amortization |
5,618,834 |
6,612,814 |
|||
|
Earnings Before Interest, Taxes, Depreciation and |
|||||
|
Amortization (EBITDA) (non-GAAP) |
$ |
2,909,905 |
$ |
12,262,774 |
|
|
Non-Cash Stock Compensation |
253,916 |
214,544 |
|||
|
Deal Related Expenses |
637,761 |
1,195,802 |
|||
|
Capital Raise Related Expenses |
20,760 |
35,068 |
|||
|
Severance |
484,561 |
118,436 |
|||
|
Retention Program Expenses |
807,500 |
280,632 |
|||
|
Pre-Operating & Dark Carry Expenses |
1,053,837 |
391,917 |
|||
|
One-Time Legal Settlements |
417,653 |
– |
|||
|
Other Non-Recurring Items |
754,751 |
25,707 |
|||
|
Adjusted EBITDA (non-GAAP) |
$ |
7,340,644 |
$ |
14,524,880 |
|
|
Revenue |
41,600,993 |
40,000,936 |
|||
|
Adjusted EBITDA Percent |
17.6 % |
36.3 % |
|||
View original content:https://www.prnewswire.co.uk/news-releases/schwazze-announces-first-quarter-2024-financial-results-302146858.html
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