December 3, 2019

Global CPaaS Provider, Kaleyra, Inc., Reports Results for the Third Quarter of Fiscal 2019

Third Quarter US-GAAP Financial Highlights

• Total revenue of $35.3 million, up nearly 50% year-over-year
• Operating income of $1.4 million
• Net income of $0.8 million

PALO ALTO, Calif. & MILAN–(BUSINESS WIRE)–Kaleyra, Inc. (NYSE American: KLR, KLR WS), a rapidly growing cloud communications software provider delivering secure application programming interfaces (APIs) and connectivity solutions in the API/Communications Platform as a Service (CPaaS) market, reported its US-GAAP financial results for the period ending September 30, 2019 as a Current Report Form 8-K filed with the Securities and Exchange Commission on December 2, 2019.

“While we continue to introduce our “trusted cloud communications”

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“Our first quarterly report as a publicly traded company highlights the significant financial progress we have made during the year as we continue to integrate our recent acquisitions into a One Kaleyra,” commented Dario Calogero, Kaleyra’s Founder and Chief Executive Officer. “Revenue growth benefitted from solid double digit gains in our mobile secure notification for enterprise businesses, as well as from this year’s strategic focus on leveraging the communication platforms we have acquired with the last couple of years acquisitions of Solutions Infini and Buc Mobile across all our subsidiaries as we are positioning to become the global industry leading API/Communications platform. This improved topline performance coupled with a continuous steady improvement in our gross margin, led to the profitable quarter, despite significant one-time expenses incurred in the execution of the public offering of the company through the November 25^th combination with GigCapital, Inc. With a strengthened capital structure as a result of the transaction, we will continue to invest in our multi-national engineering and new product development teams while enhancing the global growth and efficiencies through synergies across our sales organizations and communication platforms to strengthen our position as a preferred partner in the CPaaS segment across the globe.”

Third Quarter 2019 US-GAAP Financial Highlights

• Total revenue of $35.3 million for the third quarter of 2019 was up 49.5% from the third quarter of 2018 and up 14.4% sequentially from the second quarter of 2019:

– The total revenue combined for Buc Mobile and Solutions Infini increased 94% over the third quarter of 2018 driven by an increase in the volume of our delivered messages and the product mix.

– The legacy Italian banking revenue increased 18.5% over the third quarter of 2018, driven predominantly by the increase in the number of digital payments transactions made by the end-user’s customers (such as credit card transactions and other digital payments) and by the increasing penetration rate of digital payments in the underlying payments markets in Kaleyra’s operations in Italy.

• Gross margin was 19.8% in the third quarter of 2019. This compares with gross margin of 19.5% in the second quarter of 2019, and 21.0% in the third quarter of 2018.

• General and administrative expenses in the three months ended September 30, 2019 included $1.1 million in non-recurring consulting fees primarily incurred in connection with the prospective business combination with GigCapital, Inc. and the related SEC filing, as well as about $0.8 million for consulting services specifically related to the Solutions Infini and Buc Mobile business acquisitions. Excluding the above mentioned costs, the general and administrative expenses would have decreased in this quarter by about $0.2 million compared to the same period last year, mainly as a result of a decrease in payroll expenses.

• Income from operations was $1.4 million for the third quarter of 2019, compared with a loss from operations of about $0.8 million in the second quarter of fiscal 2019, and income from operations of $0.05 million for the third quarter of 2018.

• Net income for the third quarter of 2019 was about $0.8 million, compared with a net loss of $1.3 million in the second quarter of fiscal 2019, and a net loss of about $0.6 million for the third quarter of 2018.

• Cash, cash equivalents, and short-term investments were $15.6 million at September 30, 2019. Kaleyra has certain long-term bank and other borrowings totaling approximately $16.1 million as of September 30, 2019.

Key Metrics and Recent Business Highlights

• Kaleyra has more than 3,000 customers and business partners worldwide across industry verticals such as financial services, ecommerce and transportation, with no single customer representing more than 15% of revenues. Kaleyra’s customers are located in regions throughout the world including in Europe, Asia Pacific and North America. Kaleyra’s top volume by country includes the following countries in order of volume: Italy, India, United Kingdom, United States, Netherlands, South Africa and China.
• As of September 30, 2019, Kaleyra employed 258 employees in its principal locations.

• Partnership signed with Epiphany, a digital banking solutions start-up founded in Italy and operating globally, in July has resulted in Italy’s first Open Banking Hub which allows banks to quickly innovate and deploy open banking compliant apps such as InstaPay, Account Aggregation, and InstaCredit.
• Leveraged our strong base of bank customers in Europe and added new bank customer in India.
• Continued to enhance the suite of omni channel by adding WhatsApp for Business and RCS.
• Closed on the previously announced combination with GigCapital which began trading on the NYSE American stock exchange under the ticker symbol KLR on November 26, 2019.

Nine Month 2019 US-GAAP Financial Highlights

• Total revenue of $93.9 million for the first nine months of 2019 was up 87.7% from the first nine months of 2018. Total revenue benefitted from the consolidation of Solutions Infini and Buc Mobile as well as strong growth experienced in both subsidiaries, and a 27% increase in message activity volume in the Italian banking business alone. This significant increase was partially offset by unfavorable foreign exchange rates, and a less favorable business mix in this period.
• Gross margin for the first nine months of 2019 was 19.5%, up from 18.7% for the first nine months of fiscal 2018.
• Operating loss was $648,000 for the first nine months of 2019 almost flat with the operating loss of $609,000 for the year ago period, and in spite of the intensive activities pertaining to completion of the public offering.
• Net loss for the first nine months of 2019 was $1.9 million compared with a net loss of $1.4 million for the first nine months of 2018.

“While we continue to introduce our “trusted cloud communications” platform to new customers, the breadth and stability of our existing customers continues to drive our growth,” added Mr. Calogero. “Year to date, 80% of revenues came from customers which have been on our Platform for at least two years. This provides a solid base of revenue upon which we can continue to innovate and make investments to expand and strengthen our global footprint, in particular gaining market share in the North America and Asia-Pacific markets with the recently acquired Solutions Infini and Buc Mobile businesses. With our innovative technology, product leadership, global revenue growth and profitability over the last several years, as well as a strengthened capital structure as a public company, Kaleyra is poised for significant global growth and shareholder value creation within the consolidating Cloud Communications for Enterprises market by both organic and strategic means.”

Outlook

The Company has provided select guidance with respect to the fourth quarter and full year ending December 31, 2019:

• Fourth quarter 2019 revenue is anticipated to exceed $37 million with full year 2019 revenues anticipated to exceed $130 million.
• Immediately after giving effect to the Business Combination there were 19,977,101 shares of Kaleyra’s issued and outstanding common stock. In addition, there are 4,015,059 shares of common stock reserved for the Kaleyra, Inc. 2019 Equity Incentive Plan and an aggregate of 11,154,942 shares of common stock related to the outstanding warrants.

The foregoing guidance is based on current expectations. These statements are forward looking, and actual results may differ materially. Please see the Safe Harbor Statement in this earnings release for a description of certain important risk factors that could cause actual results to differ, and refer to Kaleyra’s most recent annual and quarterly reports on file with the Securities and Exchange Commission (SEC) for a more complete description of these risks. Furthermore, our outlook excludes items that may be required by GAAP, including, but not limited to, restructuring and related costs, acquisition or disposal related costs, expenses or income from certain legal actions, settlements and related costs outside our normal course of business, impairments of other long-lived assets, depreciation and amortization, extraordinary items, as well as the expensing of stock options and restricted stock grants. We do not intend to update this guidance as a result of developments occurring after the date of this release.

 

 

1. Includes $50 thousand and $136 thousand of stock-based compensation expense in the three months and the nine months ended September 30, 2018, respectively. No stock-based compensation expense was recorded in 2019.
2. Includes $19 thousand and $163 thousand of costs for related party transactions in the three months and in the nine months ended September 30, 2019, respectively and (ii) $100 thousand of costs for related party transactions both in the three months and in the nine months ended September 30, 2018.
3. Includes $177 thousand and $448 thousand of stock-based compensation expense in the three months and the nine months ended September 30, 2018, respectively. No stock-based compensation expense was recorded in 2019.
4. Includes $273 thousand and $755 thousand of stock-based compensation expense in the three months and the nine months ended September 30, 2018, respectively. No stock-based compensation expense was recorded in 2019.
5. Includes (i) $19 thousand and $163 thousand of costs for related party transactions in the three months and in the nine months ended September 30, 2019, respectively; and (ii) $167 thousand and $292 thousand of costs for related party transactions in the three months and in the nine months ended September 30, 2018, respectively.