Intermolecular, Inc.
Aug 8, 2017

Intermolecular Announces Second Quarter 2017 Financial Results

SAN JOSE, Calif., Aug. 8, 2017 /PRNewswire/ -- Intermolecular, Inc. (NASDAQ: IMI) today reported results for its Second Quarter ended June 30, 2017.

Results Highlights:

  • Second quarter total revenue of $8.1 million
  • Three new customer contracts signed during the quarter
  • Net cash position remains strong at $27.0 million

"Intermolecular's new customer engagement activity is succeeding in growing our customer base.  We signed three new customer contracts this quarter and we expect to continue to bring in additional customers over the coming quarters," said Chris Kramer, president and CEO of Intermolecular.  "With a growing customer base and a streamlined cost structure, we are increasingly confident that we are positioned for profitable growth going forward."

Second Quarter Fiscal 2017 Results

Revenue for the second quarter of 2017 was $8.1 million, down 18% compared to first quarter 2017 revenue of $9.9 million and down 31% compared to $11.7 million in the same period a year ago. GAAP net loss for the second quarter was $(2.9) million, or $(0.06) per share, compared to a net loss of $(5.8) million in the first quarter of 2017, or $(0.12) per share and a net loss of $(4.0) million, or $(0.08) per share, in the same period a year ago. Cash and investments were $27.0 million at the second quarter of 2017, a decrease of $1.0 million compared with the first quarter of 2017.

Non-GAAP net loss for the second quarter was $(2.5) million, or $(0.05) per share compared to a non-GAAP net loss of $(5.2) million, or $(0.10) per share, in the prior quarter and $(3.1) million, or $(0.06) per share in the same period a year ago. 

Adjusted EBITDA loss for the second quarter was $(1.0) million, compared to an adjusted EBITDA loss of $(1.9) million in the first quarter of 2017 and an adjusted EBITDA loss of $(1.2) million in the same period a year ago. 

Outlook for Second Half of 2017

The following statements are based on Intermolecular's current expectations for the second half of the fiscal year ended December 31, 2017. The following statements are forward-looking, and actual results could differ materially depending on market conditions and the factors set forth under "Forward-Looking Statements" below. Intermolecular does not plan to update, nor does it undertake any obligation to update, this outlook in the future.

  • Intermolecular projects revenue in the range of $18.0 million to $18.5 million.
  • GAAP net loss is projected between $(4.1) million and $(4.8) million, or between $(0.08) to $(0.10) per share, on approximately 49.6 million shares outstanding
  • Non-GAAP net loss, which excludes stock-based compensation expense, is projected between $(3.5) million and $(4.2) million, or between $(0.07) to $(0.08) per share
  • Adjusted EBITDA is projected to be between $(0.5) million and $(1.2) million.

Intermolecular reports revenue, cost of revenue, gross margin, operating income (loss), net income (loss) and earnings (loss) per share in accordance with U.S. generally accepted accounting principles (GAAP) and additionally on a non-GAAP basis. A reconciliation of the non-GAAP financial measures with the most directly comparable GAAP measures, as well as a description of the items excluded from the non-GAAP measures, is included in the financial statements portion of this press release. Please refer to "Reconciliation of GAAP to Non-GAAP Financial Measures" and "Reconciliation of GAAP Net Loss to Non-GAAP Net Loss" below.

Conference Call Today

Intermolecular will host a conference call and simultaneous audio-only webcast at 5:00 p.m. Eastern Time/2:00 p.m. Pacific Time today with Chris Kramer, CEO and president, and Bill Roeschlein, chief financial officer, for Intermolecular.

The call can be accessed by dialing (877) 251-1860; international callers should dial (224) 357-2386. Please dial-in ten minutes prior to the scheduled conference call time. The conference ID is 52401943. A live and archived webcast (audio only) of the call will be available on Intermolecular's Website at http://ir.intermolecular.com for up to 30 days after the call.

About Intermolecular, Inc.

Intermolecular® is the trusted partner for advanced materials innovation. Advanced materials are at the core of innovation in the 21st century for a wide range of industries including semiconductors, consumer electronics, automotive and aerospace. With its substantial materials expertise; accelerated learning and experimentation platform; and information and analytics infrastructure, Intermolecular has a ten-year track record helping leading companies accelerate and de-risk materials innovation.

"Intermolecular" and the Intermolecular logo are registered trademarks; all rights reserved. Learn more at www.intermolecular.com

Forward-Looking Statements

Statements made in this press release and the earnings call referencing the press release that are not statements of historical fact are forward-looking statements. Forward-looking statements are subject to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are commonly identified by words such as "would," "may," "expects," "believes," "plans," "intends," "projects" and other terms with similar meaning. Investors are cautioned that the forward-looking statements in this document are based on current beliefs, assumptions and expectations, speak only as of the date of this document and involve risks and uncertainties that could cause actual results to differ materially from current expectations. Such statements are subject to certain known and unknown risks and uncertainties, many of which are difficult to predict and generally beyond Intermolecular's control, that could cause actual results and other future events to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. Material factors that could cause actual results to differ materially from current expectations include, without limitation, the following, : our ability to productize our workflows with existing and future customers; expectations regarding our future revenue, cash flow and GAAP and non-GAAP net income or loss; financial condition; the ability of our new business model to generate profits and long-term shareholder returns; the extent to which technology developed in collaboration with our customers will continue to remain on the critical path and have significant value for such customers and us as well as the industry as a whole;  and anticipated growth in our current markets through expansion of existing customer programs and the entry into other engagements with new customers. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from expectations, including but not limited to: our ability to execute on our strategy, prove our business model and remain technologically competitive in rapidly evolving industry conditions; commercial acceptance of our HPC platform and methodology as effective R&D tools; our ability to achieve and sustain profitability; the ability of our customers to achieve their announced product roadmaps in a timely manner; the extent to which we are able to successfully extend and expand relationships with existing customers; our ability to manage the growth of our business; the rapid technology changes and volatility of the customers and industries we serve; our potential need for future capital to finance our operations; and other risks described in our most recent annual report on Form 10-K as updated by our quarterly reports on Form 10-Q and other filings with the Securities and Exchange Commission available at www.sec.gov, particularly in the sections titled "Risk Factors." All forward-looking statements are based on management's current estimates, projections and assumptions, and we assume no obligation to update them.

Non-GAAP Financial Measures

To supplement the financial data presented on a GAAP basis, we also disclose certain non-GAAP financial measures, which exclude the effect of stock-based compensation expense. These non-GAAP financial measures are not prepared in accordance with GAAP, do not serve as an alternative to GAAP and may be calculated differently than non-GAAP financial information disclosed by other companies. These results should only be used to evaluate our results of operations in conjunction with the corresponding GAAP measures. We believe that our non-GAAP financial information provides useful information to management and investors regarding financial and business trends relating to our financial condition and results of operations because the non-GAAP measures exclude charges that management considers to be outside of Intermolecular's core operating results. We believe that the non-GAAP measures of revenue, cost of net revenue, gross profit, gross margin, operating (loss) income, net (loss) income, earnings per share and net (loss) income per share, viewed in combination with our financial results calculated in accordance with GAAP, provide investors with additional perspective and a more meaningful understanding of our ongoing operating performance. In addition, management uses these non-GAAP measures to review and assess financial performance, to determine executive officer incentive compensation and to plan and forecast performance in future periods.

 

Intermolecular, Inc.

Condensed Consolidated Statements of Operations

(In thousands, except share and per share amounts, Unaudited)




Three Months Ended June 30,



Six Months Ended June 30,



2017



2016



2017



2016



Revenue:


















Program revenue


$

6,480



$

10,052



$

13,291



$

22,013



Licensing and royalty revenue



1,609




1,677




4,742




4,234



Total revenue



8,089




11,729




18,033




26,247



Cost of revenue:


















Cost of program revenue



2,545




4,117




5,242




8,853



Cost of licensing and royalty revenue



2




15




292




75



Total cost of revenue



2,547




4,132




5,534




8,928



Gross profit



5,542




7,597




12,499




17,319



Operating expenses:


















Research and development



5,385




6,924




12,494




13,828



Sales and marketing



931




2,130




2,412




4,074



General and administrative



2,217




2,669




5,225




5,269



Restructuring charges



3







1,350






Total operating expenses



8,536




11,723




21,481




23,171



Loss from operations



(2,994)




(4,126)




(8,982)




(5,852)



Other income (expense):


















Interest income (expense), net



58




40




113




72



Other income (expense), net



82




99




179




115



Total other income (expense), net



140




139




292




187



Loss before provision for income taxes



(2,854)




(3,987)




(8,690)




(5,665)



Provision for income taxes






1




1




4



Net loss


$

(2,854)



$

(3,988)



$

(8,691)



$

(5,669)



Net loss per share, basic and diluted


$

(0.06)



$

(0.08)



$

(0.18)



$

(0.11)



Weighted-average number of shares used in computing net loss per share, basic and diluted



49,554,701




49,448,325




49,537,074




49,316,859



 

Intermolecular, Inc.

Condensed Consolidated Balance Sheets

(In thousands, Unaudited)




As of June 30, 2017



As of December 31, 2016


ASSETS









Current assets:









Cash and cash equivalents


$

6,499



$

5,759


Short-term investments



14,962




20,035


Total cash, cash equivalents and short-term investments



21,461




25,794


Accounts receivable



2,842




5,063


Prepaid expenses and other current assets



1,219




1,397


Total current assets



25,522




32,254


Long-term investments



5,561




1,995


Materials inventory



2,970




3,357


Property and equipment, net



8,629




10,964


Intangible assets, net



3,209




4,001


Other assets



587




597


Total assets


$

46,478



$

53,168











LIABILITIES AND STOCKHOLDERS' EQUITY









Current liabilities:









Accounts payable


$

1,024



$

309


Accrued liabilities



1,138




1,451


Accrued compensation and employee benefits



2,167




1,663


Deferred revenue



1,745




1,533


Total current liabilities



6,074




4,956


Other long-term liabilities



3,104




3,216


Total liabilities



9,178




8,172


Stockholders' equity:









Common stock



50




50


Additional paid-in capital



214,295




213,313


Accumulated other comprehensive loss



(21)




(32)


Accumulated deficit



(177,024)




(168,335)


Total stockholders' equity



37,300




44,996


Total liabilities and stockholders' equity


$

46,478



$

53,168


 

Intermolecular, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands, Unaudited)




Six Months Ended June 30,




2017



2016


Cash flows from operating activities:









Net loss


$

(8,691)



$

(5,669)


Adjustments to reconcile net loss to net cash used in operating activities:









Depreciation, amortization and accretion



3,597




3,823


Stock-based compensation



978




2,049


Gain on disposal of property and equipment



(7)




(19)


Gain on disposal of intangible assets



(1,239)





Changes in operating assets and liabilities:









Prepaid expenses and other assets



254




404


Materials inventory



373




426


Accounts receivable



2,221




1,343


Accounts payable



743




(211)


Accrued and other liabilities



4




(1,888)


Deferred revenue



211




(137)


Net cash (used in) provided by operating activities



(1,556)




121


Cash flows from investing activities:









Purchase of investments



(11,897)




(13,262)


Redemption of investments



13,215




18,916


Purchase of property and equipment



(521)




(1,786)


Proceeds from sale of equipment



10




22


Proceeds from sale of intangible assets



1,500





Purchased and capitalized intangible assets






(45)


Net cash provided by investing activities



2,307




3,845


Cash flows from financing activities:









Payment of capital leases



(11)





Proceeds from exercise of common stock options






714


Net cash (used in) provided by financing activities



(11)




714


Net increase in cash and cash equivalents



740




4,680


Cash and cash equivalents at beginning of period



5,759




11,676


Cash and cash equivalents at end of period


$

6,499



$

16,356


 

Intermolecular, Inc.

Reconciliation of GAAP to Non-GAAP Financial Measures

(In thousands, except per share amounts and percentages, Unaudited)




Three Months Ended
June 30,



Six Months Ended
June 30,




2017



2016



2017



2016


GAAP cost of net revenue


$

2,547



$

4,132



$

5,534



$

8,928


Stock-based compensation expense (a)



(41)




(101)




(106)




(306)


Non-GAAP cost of net revenue


$

2,506



$

4,031



$

5,428



$

8,622


GAAP gross profit


$

5,542



$

7,597



$

12,499



$

17,319


Stock-based compensation expense (a)



41




101




106




306


Non-GAAP gross profit


$

5,583



$

7,698



$

12,605



$

17,625


As a percentage of net revenue:

















GAAP gross margin



68.5

%



64.8

%



69.3

%



66.0

%

Non-GAAP gross margin



69.0

%



65.6

%



69.9

%



67.2

%

GAAP operating loss


$

(2,994)



$

(4,126)



$

(8,982)



$

(5,852)


Stock-based compensation expense (a):

















- Cost of net revenue



41




101




106




306


- Research and development



63




207




245




536


- Sales and marketing



10




247




69




390


- General and administrative



208




373




558




817


Non-GAAP operating loss


$

(2,672)



$

(3,198)



$

(8,004)



$

(3,803)



















GAAP net loss


$

(2,854)



$

(3,988)



$

(8,691)



$

(5,669)


Stock-based compensation expense (a)



322




928




978




2,049


Non-GAAP net loss


$

(2,532)



$

(3,060)



$

(7,713)



$

(3,620)



















GAAP net loss


$

(2,854)



$

(3,988)



$

(8,691)



$

(5,669)


Interest income/ (expense), net



58




40




113




72


Provision for taxes






1




1




4


Depreciation, amortization, impairments and accretion



1,619




1,852




3,597




3,823


Restructuring charges (b)



3







1,350





Stock-based compensation expense (a)



322




928




978




2,049


Adjusted EBITDA


$

(968)



$

(1,247)



$

(2,878)



$

135



















Shares used in computing GAAP basic and diluted earnings per share



49,555




49,448




49,537




49,317


GAAP earnings per share:

















Basic and diluted net loss per share


$

(0.06)



$

(0.08)



$

(0.18)



$

(0.11)


Shares used in computing Non-GAAP basic and diluted earnings per share



49,555




49,448




49,537




49,317


Non-GAAP earnings per share:

















Basic and diluted net loss per share


$

(0.05)



$

(0.06)



$

(0.16)



$

(0.07)




(a)

Stock-based compensation reflects expense recorded relating to stock-based awards. The Company excludes this item when it evaluates the continuing operational performance of the Company, as management believes this provides it a meaningful understanding of its core operating performance.



(b)

Restructuring charges incurred in connection with a reduction in headcount primarily comprised of employee severance and benefit costs.


 

Intermolecular, Inc.

Second Half 2017 Outlook

Reconciliation of GAAP Net Loss to Non-GAAP Net Loss

(In thousands, except per share amounts, Unaudited)


GAAP net loss range


$(4,100) -   $(4,800)

Stock-based compensation


$600 -   $600

Non-GAAP net loss range


$(3,500) -   $(4,200)




GAAP and Non-GAAP diluted shares


49,600

GAAP net loss per share range


$(0.08) -   $(0.10)

Non-GAAP net loss per share range


$(0.07) -   $(0.08)

 

CONTACT:

Bill Roeschlein
Intermolecular, Inc.
Chief Financial Officer
bill.roeschlein@intermolecular.com
+1.408.582.5415

Intermolecular Logo (PRNewsFoto/Intermolecular)

 

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