Boingo Wireless Reports First Quarter 2019 Financial Results

  • Revenue of $66.5 million increased 14.3% year-over-year
  • Awarded Wi-Fi contract at Heathrow Airport
  • Deployed Wi-Fi 6 commercial trial at John Wayne Airport

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 first quarter ended March 31, 2019.

First Quarter 2019 Financial Highlights

  • Revenue of $66.5 million increased 14.3% compared to $58.2 million in
    the first quarter of 2018. Growth was driven by strength in
    military/multifamily and DAS.

    • Military/multifamily revenue of $25.9 million increased 63.3%
      compared to $15.9 million in the first quarter of 2018.
    • DAS revenue of $24.1 million increased 1.9% compared to $23.6
      million in the first quarter of 2018. DAS revenue for the quarter
      was comprised of $17.7 million of build-out project revenue and
      $6.4 million of access fee revenue. Access fee revenue grew 28.0%
      year-over-year.
  • Net loss attributable to common stockholders was $(5.2) million, or
    $(0.12) per diluted share, compared to a net loss of $(3.2) million,
    or $(0.08) per diluted share, in the first quarter of 2018.
  • Adjusted EBITDA of $19.1 million decreased 12.7% compared to $21.9
    million in the first 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 $23.7 million compared
    to $17.3 million in the first quarter of 2018.
  • Free cash flow was $(8.6) million, compared to $(3.8) million in the
    first 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 announced it was selected to be the Wi-Fi service provider
    by London Heathrow airport, Europe’s largest airport. Passengers at
    all Heathrow terminals now have access to seamless and secure
    high-speed Wi-Fi via carrier offloading on Boingo’s
    Passpoint-certified networks.
  • The Company deployed a Wi-Fi 6 commercial trial at John Wayne Airport
    (SNA) to test next-generation Wi-Fi capabilities. Wi-Fi 6 is a new
    industry standard and meets 5G requirements to power a broad range of
    connected use cases in dense environments with greater capacity, speed
    and scalability. This is the first Wi-Fi 6 deployment in a major
    airport.
  • The Company launched one new DAS venue location during the quarter
    bringing the total to 59 DAS venues live comprised of 31,100 DAS
    nodes. The Company also added three new DAS venues to total 74 venues
    and 13,700 nodes in backlog as of March 31, 2019.
  • The Company implemented speed and price increases to its military
    broadband offering which led to 12% growth in ARPU compared to the
    first quarter of 2018.

Management Commentary

“I’m pleased to share that Boingo’s strong results and momentum
continued through the first quarter of 2019 with our top-line
performance fueled by growth in military/multifamily and DAS,” commented
Mike Finley, Chief Executive Officer of Boingo Wireless. “We are very
excited about the multifamily vertical and its growth potential. As of
March 31st, we had 228 multifamily properties live with our
Wi-Fi solution with another 15 under contract. Consistent with our 2019
focus for military, we grew ARPU by 12% year-over-year. Importantly, DAS
continued to be robust with 28% year-over-year growth in high-margin
access fee revenue.”

Mr. Finley continued, “I believe Boingo is at the forefront of a
transformative time in history with respect to 5G and that we are very
well-positioned to take advantage of the incredible changes it will
bring. Since Boingo has the wireless rights at the venues we have
deployed, carriers will work with us to deploy 5G networks at these
venues. We are a ready-made, neutral-host operator and can build 5G
networks just as fast as a carrier wants to deploy. The multifamily
product and 5G upgrades represent huge opportunities for Boingo and I am
very excited for the future.”

Business Outlook

Boingo Wireless is initiating guidance for the second quarter ending
June 30, 2019 and is reiterating guidance for the full year ending
December 31, 2019, as follows:

Second Quarter 2019

  • Revenue is expected to be in the range of $66.0 million to $71.0
    million.
  • Net loss attributable to common stockholders is expected to be in the
    range of $(4.0) million to $(1.0) million, or a net loss of $(0.09)
    to $(0.02) per diluted share.
  • Adjusted EBITDA is expected to be in the range of $20.0
    million to $24.0 million. 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 – Guidance.”

Full Year 2019

  • Revenue is expected to be in the range of $270.0 million to $280.0
    million.
  • Net loss attributable to common stockholders is expected to be in the
    range of $(20.0) million to $(15.0) million, or a net loss of $(0.45)
    to $(0.34) per diluted share.
  • Adjusted EBITDA is expected to be in the range of $80.0 million to
    $87.0 million.

Conference Call Information

Members of Boingo Wireless’ management will host a conference call to
discuss its first quarter 2019 financial results beginning at 4:30 p.m.
ET (1:30 p.m. PT), today, May 8, 2019. To participate in the conference
call, investors from the U.S. and Canada should dial (877) 407-9716 and
enter the passcode: 13689494 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.

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 and the ability of Boingo to achieve financial,
operational and strategic benefits from the acquisition of Elauwit
Networks. 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, the application of new accounting standards, 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 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
March 31,
2019     2018
 
Revenue $ 66,473 $ 58,159
Costs and operating expenses:
Network access 31,411 26,565
Network operations 14,142 12,846
Development and technology 8,999 7,425
Selling and marketing 5,867 5,463
General and administrative 8,294 7,699
Amortization of intangible assets 1,131 727
Total costs and operating expenses 69,844 60,725
Loss from operations (3,371 ) (2,566 )
Interest and other expense, net (1,676 ) (79 )
Loss before income taxes (5,047 ) (2,645 )
Income tax expense 192 128
Net loss (5,239 ) (2,773 )
Net (loss) income attributable to non-controlling interests (86 ) 456
Net loss attributable to common stockholders $ (5,153 ) $ (3,229 )
 
Net loss per share attributable to common stockholders:
Basic $ (0.12 ) $ (0.08 )
Diluted $ (0.12 ) $ (0.08 )
 
Weighted average shares used in computing net loss per share
attributable to common stockholders:
Basic 43,527 41,330
Diluted 43,527 41,330
 
Boingo Wireless, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands, except per share amounts)
       
March 31,
2019
December 31,
2018
 
Assets
Current assets:
Cash and cash equivalents $ 69,016 $ 149,412
Marketable securities 36,888
Accounts receivable, net 38,434 42,766
Prepaid expenses and other current assets 8,823 7,815
Total current assets 153,161 199,993
Property and equipment, net 329,734 314,179
Operating lease right-of-use assets(1) 16,478
Goodwill 58,890 59,640
Intangible assets, net 18,021 19,152
Other assets 10,784 9,936
Total assets $ 587,068 $ 602,900
 
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable $ 25,829 $ 21,543
Accrued expenses and other liabilities 57,765 62,653
Deferred revenue 68,351 80,383
Current portion of operating leases(1) 2,736
Current portion of long-term debt 778
Current portion of finance leases 3,843 4,201
Current portion of notes payable 2,204 2,411
Total current liabilities 161,506 171,191
Deferred revenue, net of current portion 149,675 137,205
Long-term portion of operating leases(1) 18,915
Long-term debt 156,411 151,670
Long-term portion of finance leases 2,475 3,293
Long-term portion of notes payable 1,148 1,618
Deferred tax liabilities 1,132 1,073
Other liabilities 1,268 6,728
Total liabilities 492,530 472,778
 
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; 43,979
and 42,669 shares issued and outstanding at March 31, 2019 and
December 31, 2018, respectively
4 4
Additional paid-in capital 228,805 259,132
Accumulated deficit (135,083 ) (129,930 )
Accumulated other comprehensive loss (1,317 ) (1,295 )
Total common stockholders’ equity 92,409 127,911
Non-controlling interests 2,129 2,211
Total stockholders’ equity 94,538 130,122
Total liabilities and stockholders’ equity $ 587,068 $ 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)
   
Three Months Ended
March 31,
2019     2018
Cash flows from operating activities
Net loss $ (5,239 ) $ (2,773 )
Adjustments to reconcile net loss including non-controlling
interests to net cash provided by operating activities:
Depreciation and amortization of property and equipment 19,009 20,606
Amortization of intangible assets 1,131 727
Impairment loss and loss on disposal of fixed assets and intangible
assets held for sale, net
91 70
Stock-based compensation 2,344 3,126
Amortization of deferred financing costs and debt discount, net of
amounts capitalized
2,256
Amortization of operating lease right-of-use assets 438
Unrealized gains and amortization of premiums/discounts for
marketable securities
(207 )
Changes in operating assets and liabilities:
Accounts receivable 4,307 (3,799 )
Prepaid expenses and other assets (13 ) 551
Accounts payable 1,397 706
Accrued expenses and other liabilities (1,481 ) 1,014
Deferred revenue 439 (2,958 )
Operating lease liabilities (729 )
Net cash provided by operating activities 23,743 17,270
Cash flows from investing activities
Purchases of marketable securities (36,665 )
Purchases of property and equipment (32,390 ) (21,117 )
Net cash used in investing activities (69,055 ) (21,117 )
Cash flows from financing activities
Debt issuance costs (1,687 )
Proceeds from credit facility 3,500
Principal payments on credit facility (194 ) (219 )
Payments of acquisition related consideration (1,952 )
Proceeds from exercise of stock options 6 4,228
Payments of finance leases and notes payable (1,853 ) (1,450 )
Payments of withholding tax on net issuance of restricted stock units (32,907 ) (6,340 )
Net cash used in financing activities (35,087 ) (3,781 )
Effect of exchange rates on cash 3 7
Net decrease in cash, cash equivalents, and restricted cash (80,396 ) (7,621 )
Cash and cash equivalents at beginning of period 149,412 26,685
Cash, cash equivalents, and restricted cash at end of period $ 69,016 $ 19,064
Supplemental disclosure of non-cash investing and financing
activities
Property and equipment costs included in accounts payable, accrued
expenses and other
liabilities
$ 39,309 $ 20,377
Purchase of equipment and prepaid maintenance services under capital
financing arrangements
$ $ 1,930
Capitalized stock-based compensation included in property and
equipment costs
$ 230 $ 186
Purchase price for business acquisition included in accrued expenses
and other liabilities
$ 2,961 $
Debt issuance costs included in accrued expenses and other
liabilities
$ 125 $
Financed sale of intangible assets held for sale $ 311 $
 
Boingo Wireless, Inc.
Reconciliation of Net Loss Attributable to Common Stockholders to
Adjusted EBITDA
(Unaudited)
(In thousands)
   
Three Months Ended
March 31,
2019     2018
Net loss attributable to common stockholders $ (5,153 ) $ (3,229 )
Depreciation and amortization of property and equipment 19,009 20,606
Stock-based compensation expense 2,344 3,126
Amortization of intangible assets 1,131 727
Income tax expense 192 128
Interest and other expense, net 1,676 79
Non-controlling interests (86 ) 456
Adjusted EBITDA $ 19,113 $ 21,893
 
Boingo Wireless, Inc.
Reconciliation of Net Cash Provided by Operating Activities to
Free Cash Flows
(Unaudited)
(In thousands)
   
Three Months Ended
March 31,
2019     2018
 
Net cash provided by operating activities $ 23,743 $ 17,270
Purchases of property and equipment (32,390 ) (21,117 )
Free cash flows $ (8,647 ) $ (3,847 )
 
Boingo Wireless, Inc.
Revenue Summary
(Unaudited)
(In thousands)
   
Three Months Ended
March 31,
2019       2018
Revenue:
Military/multifamily $ 25,897 $ 15,854
DAS 24,095 23,645
Wholesale—Wi-Fi 11,020 11,149
Retail 3,926 5,310
Advertising and other 1,535 2,201
Total revenue $ 66,473 $ 58,159
 
Boingo Wireless, Inc.
Reconciliation of Net Loss Attributable to Common Stockholders to
Adjusted EBITDA – Guidance
(Unaudited)
(In millions)
           
Three Months Ended
June 30, 2019
Year Ended
December 31, 2019
Low High Low High
 
Net loss attributable to common stockholders $ (4.0 ) $ (1.0 ) $ (20.0 ) $ (15.0 )
Depreciation and amortization of property and equipment 17.8 18.8 75.2 77.2
Stock-based compensation expense

 

2.5

 

11.3

Amortization of intangible assets

 

1.1

 

4.6

Income tax expense and interest and other expense, net

 

2.2

 

7.3

Non-controlling interests

 

 

0.4

         

 

 

1.6

   
Adjusted EBITDA $ 20.0 $ 24.0 $ 80.0 $ 87.0
 
Boingo Wireless, Inc.
Key Business Metrics
(Unaudited)
(In thousands)
   
Three Months Ended
March 31,
2019       2018
Key business metrics:
DAS nodes(1) 31.1 24.2
DAS nodes in backlog(2) 13.7 11.4
Subscribers—military(3) 147 142
Subscribers—retail(3) 113 168
Connects(4) 78,625 65,901

______________________________

(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:
Melissa Robinson
VP,
Marketing + Communications
mrobinson@boingo.com
(818)
321-7234

INVESTORS:
Kimberly Orlando and
Ariel Papermaster
ADDO Investor Relations
investors@boingo.com
(310)
829-5400

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