Press Release

Boingo Wireless Reports Strong Second Quarter 2016 Financial Results

Company Release - 8/4/2016 4:00 PM ET

LOS ANGELES, CA -- (Marketwired) -- 08/04/16 --

  • Record quarterly revenue of $39.1 million increased 14.0% year-over-year
  • Adjusted EBITDA of $9.3 million increased 32.1% year-over-year
  • Wi-Fi offload with second Tier 1 carrier has commenced
  • Boingo Broadband covered 274,000 beds on 54 military bases with 28.8% subscriber penetration

Boingo Wireless(NASDAQ: WIFI), the leading distributed antenna system (DAS) and Wi-Fi provider that serves consumers, carriers and advertisers worldwide, today announced the Company's financial results for the second quarter ended June 30, 2016.

Second Quarter 2016 Financial Highlights

  • Revenue of $39.1 million increased 14.0% compared to $34.3 million in the second quarter of 2015. Growth was led by strength in both DAS and military.
    • DAS revenue of $13.9 million increased 14.6% compared to $12.1 million in the second quarter of 2015. DAS revenue for the quarter was comprised of $9.0 million of build-out project revenue and $4.9 million of access fee revenue.
    • Military revenue of $9.7 million increased 130.0% compared to $4.2 million in the second quarter of 2015.
  • Net loss attributable to common stockholders was $(7.3) million, or $(0.19) per diluted share, compared to a net loss of $(5.9) million, or $(0.16) per diluted share, in the second quarter of 2015.
  • Adjusted EBITDA of $9.3 million increased 32.1% compared to $7.0 million in the second quarter of 2015. 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."
  • Free cash flow was a negative $(4.1) million compared to a positive $5.7 million in the second quarter of 2015. 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 is now offloading traffic with a second Tier 1 carrier at a major U.S. airport, and expects to roll out additional locations in the coming months.
  • Boingo Broadband high-speed Wi-Fi and IPTV covered 274,000 beds on 54 military bases as of June 30, 2016 compared to 250,000 beds on 51 U.S. military bases as of March 31, 2016. Subscriber penetration improved to 28.8% from 27.6% in the first quarter of 2016.
  • The Company signed eight DAS carrier contracts during the second quarter of 2016 and had 31 DAS venues deployed as of June 30, 2016.

Management Commentary

"We delivered a strong second quarter characterized by excellent operating performance as well as seven consecutive quarters of double-digit year-over-year revenue growth and four consecutive quarters of year-over-year EBITDA margin expansion," commented David Hagan, Chief Executive Officer of Boingo Wireless. "Both revenue and adjusted EBITDA exceeded the mid-point of our guidance range. The investments we have made in building out high-density wireless networks over the past few years, particularly for our military service offering, have been instrumental in fueling this momentum. We expect to begin generating positive free cash flow as the business scales and these capital deployments near completion in the second half of the year."

Mr. Hagan continued, "I am thrilled to announce that we have launched Wi-Fi Offload with a second Tier 1 carrier. Similar to our first carrier deployment, we expect it will take months to complete a full roll out. In regards to military, we are now live on 54 bases covering more than 274,000 beds. We added 10,000 new subscribers during the quarter and improved our overall subscriber penetration rate to 28.8% across live bases. We also introduced our first international military deployment in Okinawa, Japan. In addition, strength in DAS continued as we secured the wireless rights to seven new venues during the quarter. We believe Boingo is the largest operator of indoor DAS networks in the U.S. and we are proud to be the market leader."

Business Outlook

Boingo Wireless is initiating guidance for the third quarter ending September 30, 2016 and reiterating guidance for the full year ending December 31, 2016 as follows:

Third Quarter 2016

  • Revenue is expected to be in the range of $39.5 million to $42.5 million.
  • Net loss attributable to common stockholders is expected to be in the range of $(7.0) million to $(5.0) million, or a net loss of $(0.19) to $(0.13) per diluted share.
  • Adjusted EBITDA is expected to be in the range of $10.0 million to $12.0 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 2016

  • Revenue is expected to be in the range of $158.0 million to $164.0 million.
  • Net loss attributable to common stockholders is expected to be in the range of $(30.0) million to $(26.0) million, or a net loss of $(0.79) to $(0.68) per diluted share.
  • Adjusted EBITDA is expected to be in the range of $38.5 million to $42.5 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."

Conference Call Information

Members of Boingo Wireless' management will host a conference call to discuss its second quarter 2016 financial results beginning at 4:30 p.m. ET (1:30 p.m. PT), today, August 4, 2016. To participate in the conference call, investors from the U.S. and Canada should dial (877) 407-0789 and enter the passcode: 13641193 ten minutes prior to the scheduled start time. International callers should dial +1 (201) 689-8562 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 flows 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 (income), net, non-controlling interests, and excludes charges or gains that are nonrecurring, infrequent, or unusual. Boingo Wireless believes Adjusted EBITDA is useful to investors in evaluating its operating performance. Boingo's management uses Adjusted EBITDA in conjunction with accounting principles generally accepted in the United States, or GAAP, and other operating performance measures as part of its overall assessment of the Company's performance for planning purposes, including the preparation of its annual operating budget, to evaluate the effectiveness of its business strategies and to communicate with its board of directors concerning its financial performance. Adjusted EBITDA should not be considered as an alternative financial measure to net loss attributable to common stockholders, which is the most directly comparable financial measure calculated in accordance with GAAP, or any other measure of financial performance calculated in accordance with GAAP. Adjusted EBITDA excludes charges related to the Company's contested proxy election for the 2016 annual meeting of stockholders because they represent non-recurring charges and are not indicative of the underlying performance of the Company's business operations.

The Company defines free cash flows as cash flows provided by operating activities, less purchases of property and equipment, net. Boingo Wireless believes that free cash flows 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 flows should not be considered as an alternative financial measure to net cash provided by operating activities, which is the most directly comparable financial measure calculated in accordance with GAAP, or any other measure of financial performance calculated in accordance with GAAP.

About Boingo Wireless

Boingo Wireless, Inc.(NASDAQ: WIFI) helps the world stay connected. Boingo's vast footprint of small cell networks covers more than a million and a half DAS and Wi-Fi locations and reaches more than 1 billion consumers annually -- in places as varied as airports, stadiums, arenas, universities, and military bases. For more information 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 and future guidance. 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, particularly key airport venue partners and military bases, 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, 2015 filed with the SEC on March 11, 2016 and Form 10-Q for the quarter ended March 31, 2016 filed with the SEC on May 9, 2016, which the Company incorporates by reference into this press release. Any forward-looking statement made by Boingo in this press release speaks only as of the date on which it is made. Factors or events that could cause the Company's actual results to differ may emerge from time to time, and it is not possible for Boingo to predict all of them. Boingo undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

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

 
 
Boingo Wireless, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share amounts)
 
 Three Months Ended
June 30,
  Six Months Ended
June 30,
 
 2016  2015  2016  2015 
            
Revenue$39,075  $34,277  $73,574  $63,669 
Costs and operating expenses:               
 Network access 16,915   16,011   31,593   29,634 
 Network operations 10,418   7,902   20,868   15,941 
 Development and technology 5,267   4,786   10,620   8,977 
 Selling and marketing 4,882   4,781   9,550   9,197 
 General and administrative 7,700   5,689   15,852   11,522 
 Amortization of intangible assets 862   873   1,727   1,766 
  Total costs and operating expenses 46,044   40,042   90,210   77,037 
Loss from operations (6,969)  (5,765)  (16,636)  (13,368)
Interest and other (expense) income, net (152)  19   (182)  (1)
Loss before income taxes (7,121)  (5,746)  (16,818)  (13,369)
Income tax expense 124   82   362   286 
Net loss (7,245)  (5,828)  (17,180)  (13,655)
Net income attributable to non-controlling interests 21   109   70   164 
Net loss attributable to common stockholders$(7,266) $(5,937) $(17,250) $(13,819)
                
Net loss per share attributable to common stockholders:               
 Basic$(0.19) $(0.16) $(0.46) $(0.38)
 Diluted$(0.19) $(0.16) $(0.46) $(0.38)
                
Weighted average shares used in computing net loss per share attributable to common stockholders:               
 Basic 37,944   36,724   37,749   36,558 
 Diluted 37,944   36,724   37,749   36,558 
                
                
 
Boingo Wireless, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands, except per share amounts)
 
 June 30,
2016
  December 31,
2015
 
Assets       
Current assets:       
 Cash and cash equivalents$9,291  $14,718 
 Accounts receivable, net 48,301   43,552 
 Prepaid expenses and other current assets 4,605   3,876 
  Total current assets 62,197   62,146 
Property and equipment, net 236,680   214,500 
Goodwill 42,403   42,403 
Intangible assets, net 14,305   16,055 
Other assets 5,577   5,908 
  Total assets$361,162  $341,012 
        
Liabilities and stockholders' equity       
Current liabilities:       
 Accounts payable$14,262  $29,376 
 Accrued expenses and other liabilities 30,045   36,328 
 Deferred revenue 40,165   25,759 
 Current portion of long-term debt 875   875 
 Current portion of capital leases 1,751   1,610 
  Total current liabilities 87,098   93,948 
Deferred revenue, net of current portion 136,972   106,825 
Long-term debt 21,313   16,750 
Long-term portion of capital leases 2,181   2,217 
Deferred tax liabilities 3,221   2,965 
Other liabilities 8,265   6,272 
  Total liabilities 259,050   228,977 
        
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; 38,104 and 37,325 shares issued and outstanding at June 30, 2016 and December 31, 2015, respectively 4   4 
 Additional paid-in capital 205,025   197,612 
 Accumulated deficit (102,520)  (85,176)
 Accumulated other comprehensive loss (854)  (1,160)
  Total common stockholders' equity 101,655   111,280 
  Non-controlling interests 457   755 
  Total stockholders' equity 102,112   112,035 
  Total liabilities and stockholders' equity$361,162  $341,012 
        
        
  
Boingo Wireless, Inc. 
Reconciliation of Net Loss Attributable to Common Stockholders to Adjusted EBITDA 
(Unaudited) 
(In thousands) 
  
 Three Months Ended
June 30,
  Six Months Ended
June 30,
 
 2016  2015  2016  2015 
            
Net loss attributable to common stockholders$(7,266) $(5,937) $(17,250) $(13,819)
Depreciation and amortization of property and equipment 11,400   9,812   21,708   17,866 
Stock-based compensation expense 3,079   2,099   6,684   3,934 
Amortization of intangible assets 862   873   1,727   1,766 
Income tax expense 124   82   362   286 
Interest and other expense (income), net 152   (19)  182   1 
Non-controlling interests 21   109   70   164 
Contested proxy election expense 902   -   1,440   - 
Adjusted EBITDA$9,274  $7,019  $14,923  $10,198 
                
                
 
Boingo Wireless, Inc.
Reconciliation of Net Loss Attributable to Common Stockholders to Adjusted EBITDA - Guidance
(Unaudited)
(In millions)
 
 Three Months Ended
September 30, 2016
  Year Ended
December 31, 2016
 
 Low  High  Low  High 
            
Net loss attributable to common stockholders$(7.0) $(5.0) $(30.0) $(26.0)
Depreciation and amortization of property and equipment 13.0   50.0 
Stock-based compensation expense 3.0   12.3 
Amortization of intangible assets 0.9   3.5 
Income tax expense and interest and other expense (income) net 0.1   1.1 
Non-controlling interests -   0.2 
Contested proxy election expense -   1.4 
Adjusted EBITDA$10.0  $12.0  $38.5  $42.5 
                
                
 
Boingo Wireless, Inc.
Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flows
(Unaudited)
(In thousands)
 
 Three Months Ended June 30, Six Months Ended June 30,
 2016 2015 2016 2015
Net cash provided by operating activities$14,630 $22,362 $55,667 $34,837
Purchases of property and equipment, net(18,735) (16,706) (64,257) (33,306)
Free cash flows$(4,105) $5,656 $(8,590) $1,531
        
        
 
Boingo Wireless, Inc.
Revenue Summary
(Unaudited)
(In thousands)
 
 Three Months Ended
June 30,
 Six Months Ended
June 30,
 2016 2015 2016 2015
Revenue:           
 DAS$13,892 $12,125 $24,998 $21,721
 Military 9,734  4,232  18,832  7,746
 Retail 6,567  8,145  13,481  16,854
 Wholesale-Wi-Fi 5,206  5,472  10,143  9,642
 Advertising and other 3,676  4,303  6,120  7,706
  Total revenue$39,075 $34,277 $73,574 $63,669
            
            
 
Boingo Wireless, Inc.
Key Business Metrics
(In thousands)
 
 Three Months Ended June 30, Six Months Ended June 30,
 2016 2015 2016 2015
Key business metrics:       
 DAS nodes(1)13.5 9.5 13.5 9.5
 DAS nodes in backlog(2)5.0 4.6 5.0 4.6
 Subscribers-military(3)79 40 79 40
 Subscribers-retail(3)184 225 184 225
 Connects(4)31,899 25,806 62,252 48,624
  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 retail and wholesale customers in both customer pay locations and customer free locations where Boingo is a paid service provider or receives revenue sponsorship or promotion fees. The Company counts each connect as a single connect regardless of how many times that individual accesses the network at a given venue during their 24 hour period. This measure is an indicator of paid activity throughout Boingo's network.

CONTACTS:
PRESS:
Lauren de la Fuente
Vice President, Marketing and Communications
[email protected]
(310) 405-8517

INVESTORS:

Kimberly Orlando
ADDO Investor Relations
[email protected]
(310) 829-5400

Source: Boingo Wireless, Inc.