− Announced agreement to be acquired by Digital
Colony for a total transaction value of approximately $854
million
− A Tier 1 carrier to join the Long Island Rail
Road Atlantic Branch portion of the MTA project
− Signed Wi-Fi offload agreement with a Tier 1
carrier
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 full year ended December 31,
2020. In order to better align reportable segments with the growth
drivers and strategic direction of the Company, Boingo restructured
its business into five reportable and operating segments – Carrier
Services, Military, Private Networks and Emerging Technologies,
Multifamily and Legacy. Segment operating results for the full year
ended December 31, 2020 and the comparable 2019 period have been
recast to reflect the new presentation as five reportable and
operating segments.
Management Commentary
“We were extremely focused on managing our expenses and
improving profitability in 2020 which led to adjusted EBITDA of
$83.5 million increasing 1.0% compared to 2019 despite the 10.0%
decline in revenue,” commented Mike Finley, Chief Executive
Officer, Boingo Wireless. “The headwinds resulting from COVID-19
accelerated the anticipated decline in our Legacy retail and
advertising products as well as delayed progress on several
projects into 2021. Despite these challenges, we did an incredible
job maintaining velocity in the business in 2020. We signed a Tier
1 carrier to the Long Island Rail Road Atlantic Branch portion of
the MTA project for DAS. In addition, we signed a Wi-Fi offloading
contract with a Tier 1 carrier to begin to utilize Boingo’s Wi-Fi
footprint.”
Mr. Finley concluded, “As announced this morning, we have agreed
to be acquired by Digital Colony in an all-cash transaction valued
at approximately $854 million. Our team at Boingo will continue to
execute our strategy with access to more capital and resources to
expand our network and robust suite of products and services.
Following a year-long formal strategic process through a
once-in-a-century pandemic, we could not be more thrilled with the
outcome which we believe maximizes value for our stockholders.”
Full Year 2020 Consolidated Financial Highlights
- Revenue of $237.4 million decreased 10.0% compared to $263.8
million in 2019.
- Net loss attributable to common stockholders was $(17.1)
million, or $(0.38) per diluted share, compared to $(10.3) million,
or $(0.23) per diluted share, in 2019.
- Adjusted EBITDA of $83.5 million increased 1.0% compared to
$82.6 million in 2019. 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 of $72.5 million
decreased 33.3% compared to $108.7 million in 2019.
- Free cash flow was $(33.7) million compared to $(25.0) million
in 2019. 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."
- Cash, cash equivalents and marketable securities were $40.7
million at December 31, 2020, down from $54.6 million at September
30, 2020. As of December 31, 2020, the Company had no amounts
outstanding and $150.0 million of remaining borrowing capacity
under its revolving credit facility.
Full Year 2020 Segment Results
Carrier Services Revenue of $107.7 million decreased 7.0%
compared to $115.8 million in 2019. Gross profit margin of 37.0%
decreased 740 basis points compared to 44.4% in 2019. Income from
operations of $19.7 million decreased 34.5% compared to $30.0
million in 2019.
Military Revenue of $76.8 million increased 2.5% compared to
$74.9 million in 2019. Gross profit margin of 76.2% increased 60
basis points compared to 75.6% in 2019. Income from operations of
$24.0 million increased 15.9% compared to $20.7 million in
2019.
Private Networks and Emerging Technologies Revenue of $2.2
million increased 10.4% compared to $2.0 million in 2019. Gross
profit margin of 76.4% compared to a non-meaningful amount in 2019.
Income from operations of $1.3 million decreased 35.5% compared to
$2.0 million in 2019.
Multifamily Revenue of $21.6 million decreased 13.8% compared to
$25.0 million in 2019. Gross profit margin of 26.9% increased 520
basis points compared to 21.7% in 2019. Loss from operations of
$(6.7) million decreased 7.4% compared to $(7.2) million in
2019.
Legacy Revenue of $29.1 million decreased 36.7% compared to
$46.1 million in 2019. Gross profit margin of 57.5% decreased 480
basis points compared to 62.3% in 2019. Income from operations was
essentially breakeven compared to $5.6 million in 2019.
Business Highlights
- The Company announced it has signed an agreement with a Tier 1
carrier to join the Long Island Rail Road (“LIRR”) Atlantic Branch
portion of the MTA project in New York. The MTA agreements to
design, build, operate and maintain wireless services for the LIRR
Atlantic Branch and Grand Central Terminal East Side Access
facility represent the largest DAS deployments in the Company’s
history.
- The Company signed a Wi-Fi offloading agreement with a Tier 1
carrier. Beginning in November 2020, this carrier’s customers have
begun to utilize Boingo’s high-speed Wi-Fi networks via carrier
offloading at one airport with more airports expected to launch
during 2021.
- Boingo has been selected to build and operate a carrier grade
Wi-Fi 6 network at Rockefeller Center, New York City’s landmark
property spanning 22 acres in Midtown Manhattan.
- As of December 31, 2020, the Company had a total of 74 DAS
venues live comprised of 41,200 DAS nodes and an additional 11,500
nodes in backlog. This compares to 73 venues live comprised of
38,100 nodes as of December 31, 2019.
Acquisition by Digital Colony
On March 1, 2021, the Company announced that it has signed a
definitive merger agreement to be acquired by an affiliate of
Digital Colony Management, LLC. Under the terms of the agreement,
which was unanimously approved by Boingo’s Board of Directors,
Digital Colony will acquire all of the outstanding shares of Boingo
common stock for $14.00 per share in cash, in a transaction valued
at approximately $854 million, including the assumption of
approximately $199 million of Boingo’s net debt obligations. The
offer price represents a 23% premium to Boingo’s closing price of
$11.40 on February 26, 2021.
In connection with the proposed transaction, Boingo has canceled
its conference call to discuss the Company’s full year 2020
results, previously scheduled for March 1, 2021 at 4:30 PM Eastern
Time. The Company expects to file its Annual Report on Form 10-K
for year ended December 31, 2020 on March 1, 2021.
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 (benefit), interest expense
and amortization of debt discount, interest income 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. Adjusted EBITDA for
2020 excludes transaction costs and litigation loss contingencies
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 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.
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 and things at airports, stadiums, military bases,
convention centers, multifamily communities and commercial
properties. To learn more about the Boingo story, visit
www.boingo.com.
Additional Information and Where to Find It
In connection with the transaction with Digital Colony, the
Company intends to file relevant materials with the SEC, including
a preliminary proxy statement on Schedule 14A. Promptly after
filing its definitive proxy statement with the SEC, the Company
will mail the proxy materials to each stockholder entitled to vote
at the special meeting relating to the transaction. This
communication is not a substitute for the proxy statement or any
other document that the Company may file with the SEC or send to
its stockholders in connection with the proposed transaction.
BEFORE MAKING ANY VOTING DECISION, INVESTORS AND SECURITY HOLDERS
OF THE COMPANY ARE URGED TO READ THESE MATERIALS (INCLUDING ANY
AMENDMENTS OR SUPPLEMENTS THERETO) AND ANY OTHER RELEVANT DOCUMENTS
IN CONNECTION WITH THE TRANSACTION THAT THE COMPANY WILL FILE WITH
THE SEC WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION ABOUT THE COMPANY AND THE TRANSACTION. The
definitive proxy statement, the preliminary proxy statement and
other relevant materials in connection with the transaction (when
they become available), and any other documents filed by the
Company with the SEC, may be obtained free of charge at the SEC’s
website (http://www.sec.gov) or at the Company’s website
(https://investors.boingo.com) or by writing to the Company’s
Secretary at 10960 Wilshire Blvd., 23rd Floor, Los Angeles,
California 90024.
Participants in the Solicitation
The Company and its directors and executive officers may be
deemed to be participants in the solicitation of proxies from the
Company’s stockholders with respect to the transaction. Information
about the Company’s directors and executive officers and their
ownership of the Company’s common stock is set forth in the proxy
statement on Schedule 14A filed with the SEC on April 21, 2020.
Information regarding the identity of the potential participants,
and their direct or indirect interests in the transaction, by
security holdings or otherwise, will be set forth in the proxy
statement and other materials to be filed with SEC in connection
with the transaction.
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 regarding Boingo’s intent to complete the
transaction with Digital Colony, statements regarding Boingo's
future growth opportunities, operations and financial performance,
including due to COVID-19, strategic plans and transactions and any
future guidance. Forward-looking statements are based on Boingo'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. Boingo'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
impact of health epidemics, including the recent COVID-19 pandemic,
on Boingo’s business, Boingo'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 achieve and maintain revenue growth and achieve
profitability, its ability to execute on its strategic and business
plans, as well as its ability to successfully compete with new
technologies and adapt to changes in the wireless industry.
Additionally, the following uncertainties and other factors could
cause actual results to differ from those set forth in the
forward-looking statements: the risk that the transaction may not
be consummated in a timely manner, if at all; the risk that the
transaction may not be consummated as a result of buyer’s failure
to comply with its covenants and that, in certain circumstances,
Boingo may not be entitled to a termination fee; the risk that the
definitive merger agreement may be terminated in circumstances that
require Boingo to pay a termination fee; risks related to the
diversion of management’s attention from Boingo’s ongoing business
operations; risks regarding the failure of the buyer to obtain the
necessary financing to complete the transaction; the effect of the
announcement of the transaction on Boingo’s business relationships
(including, without limitation, customers and venues), operating
results and business generally; and risks related to obtaining the
requisite consents to the transaction, including, without
limitation, the timing (including possible delays) and receipt of
regulatory approvals from governmental entities (including any
conditions, limitations or restrictions placed on these approvals)
and the risk that one or more governmental entities may deny
approval. Further, there are other risks and uncertainties that
could cause actual results to differ from those set forth in the
forward-looking statements, which are 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, 2020 to be filed with the SEC on March 1, 2021, which
Boingo 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 Boingo'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)
Year Ended
December 31,
2020
2019
Revenue
$
237,416
$
263,790
Cost of sales
114,784
119,613
Gross profit
122,632
144,177
Selling, general and administrative
expenses
127,461
143,310
Amortization of intangible assets
4,288
4,571
Loss from operations
(9,117
)
(3,704
)
Interest expense and amortization of debt
discount
(9,004
)
(8,618
)
Interest income and other expense, net
538
2,017
Loss before income taxes
(17,583
)
(10,305
)
Income tax (expense) benefit
(157
)
28
Net loss
(17,740
)
(10,277
)
Net (loss) income attributable to
non-controlling interests
(647
)
19
Net loss attributable to common
stockholders
$
(17,093
)
$
(10,296
)
Net loss per share attributable to common
stockholders:
Basic
$
(0.38
)
$
(0.23
)
Diluted
$
(0.38
)
$
(0.23
)
Weighted average shares used in computing
net loss per share attributable to common stockholders:
Basic
44,440
43,977
Diluted
44,440
43,977
Boingo Wireless, Inc.
Condensed Consolidated Balance
Sheets
(Unaudited)
(In thousands, except per
share amounts)
December 31,
2020
2019
Assets
Current assets:
Cash and cash equivalents
$
36,111
$
40,401
Marketable securities
4,565
40,214
Accounts receivable, net
27,716
33,350
Prepaid expenses and other current
assets
8,388
8,235
Total current assets
76,780
122,200
Property and equipment, net
406,328
380,243
Operating lease right-of-use assets,
net
12,876
15,196
Goodwill
58,579
58,579
Intangible assets, net
10,652
14,940
Other assets
11,264
9,309
Total assets
$
576,479
$
600,467
Liabilities and stockholders’
equity
Current liabilities:
Accounts payable
$
22,489
$
24,298
Accrued expenses and other liabilities
55,984
65,152
Deferred revenue
65,292
61,229
Current portion of operating leases
2,632
2,695
Current portion of long-term debt
778
778
Current portion of finance leases
573
2,721
Current portion of notes payable
95
1,527
Total current liabilities
147,843
158,400
Deferred revenue, net of current
portion
159,462
166,660
Long-term portion of operating leases
14,487
17,357
Long-term debt
171,695
162,708
Long-term portion of finance leases
—
572
Long-term portion of notes payable
—
95
Deferred tax liabilities
984
993
Other liabilities
87
201
Total liabilities
494,558
506,986
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; 44,631 and 44,224 shares issued and outstanding
for 2020 and 2019, respectively
4
4
Additional paid-in capital
241,868
234,638
Accumulated deficit
(158,066
)
(140,973
)
Accumulated other comprehensive loss
(2,279
)
(1,426
)
Total common stockholders’ equity
81,527
92,243
Non-controlling interests
394
1,238
Total stockholders’ equity
81,921
93,481
Total liabilities and stockholders’
equity
$
576,479
$
600,467
Boingo Wireless, Inc.
Condensed Consolidated
Statements of Cash Flows
(Unaudited)
(In thousands)
Year Ended December
31,
2020
2019
Cash flows from operating
activities
Net loss
$
(17,740
)
$
(10,277
)
Adjustments to reconcile net loss
including non-controlling interests to net cash provided by
operating activities:
Depreciation and amortization of property
and equipment
78,313
70,862
Amortization of intangible assets
4,288
4,571
Impairment loss, loss on disposal of fixed
assets and intangible assets held for sale, net, and other
77
440
Stock-based compensation
7,606
8,596
Amortization of deferred financing costs
and debt discount, net of amounts capitalized
8,173
8,412
Non-cash operating lease cost
2,320
2,350
Gains and amortization of
premiums/discounts for marketable securities
(4
)
(609
)
Change in fair value of contingent
consideration
—
(961
)
Bad debt expense
28
181
Change in deferred income taxes
(9
)
(80
)
Changes in operating assets and
liabilities:
Accounts receivable
5,289
9,184
Prepaid expenses and other assets
(2,744
)
1,233
Accounts payable
(1,693
)
426
Accrued expenses and other liabilities
(5,290
)
7,054
Deferred revenue
(3,134
)
10,301
Operating lease liabilities
(2,932
)
(2,973
)
Net cash provided by operating
activities
72,548
108,710
Cash flows from investing
activities
Purchases of marketable securities
(15,032
)
(81,177
)
Proceeds from maturities of marketable
securities
50,665
41,593
Purchases of property and equipment
(106,262
)
(133,696
)
Net cash used in investing activities
(70,629
)
(173,280
)
Cash flows from financing
activities
Debt issuance costs
—
(1,815
)
Proceeds from credit facility
100,000
3,500
Principal payments on credit facility
(100,778
)
(778
)
Payments of acquisition related
consideration
—
(3,027
)
Proceeds from exercise of stock
options
708
470
Repurchase of common stock for
retirement
—
(747
)
Payments of finance leases and notes
payable
(4,247
)
(6,608
)
Payments of withholding tax on net
issuance of restricted stock units
(1,730
)
(34,420
)
Payments to non-controlling interest
(262
)
(1,003
)
Net cash used in financing activities
(6,309
)
(44,428
)
Effect of exchange rates on cash
100
(13
)
Net decrease in cash and cash
equivalents
(4,290
)
(109,011
)
Cash and cash equivalents at beginning of
year
40,401
149,412
Cash and cash equivalents at end of
year
$
36,111
$
40,401
Supplemental disclosure of cash flow
information
Cash paid for interest, net of amounts
capitalized
$
853
$
154
Cash paid for taxes, net of refunds
$
287
$
(20
)
Supplemental disclosure of non-cash
investing and financing activities
Property and equipment costs included in
accounts payable, accrued expenses and other liabilities
$
35,125
$
39,037
Capitalized stock-based compensation
included in property and equipment costs
$
645
$
860
Financed sale of intangible assets held
for sale
$
217
$
290
Boingo Wireless, Inc.
Reconciliation of Net Loss
Attributable to Common Stockholders to Adjusted EBITDA
(Unaudited)
(In thousands)
Year Ended
December 31,
2020
2019
Net loss attributable to common
stockholders
$
(17,093
)
$
(10,296
)
Depreciation and amortization of property
and equipment
78,313
70,862
Stock-based compensation expense
7,606
8,596
Amortization of intangible assets
4,288
4,571
Income tax expense (benefit)
157
(28
)
Interest expense and amortization of debt
discount
9,004
8,618
Interest income and other expense, net
(538
)
(2,017
)
Non-controlling interests
(647
)
19
Restructuring charges
—
2,298
Transaction costs
1,270
—
Litigation loss contingencies
1,100
—
Adjusted EBITDA
$
83,460
$
82,623
Boingo Wireless, Inc.
Reconciliation of Net Cash
Provided by Operating Activities to Free Cash Flows
(Unaudited)
(In thousands)
Year Ended
December 31,
2020
2019
Net cash provided by operating
activities
$
72,548
$
108,710
Purchases of property and equipment
(106,262
)
(133,696
)
Free cash flows
$
(33,714
)
$
(24,986
)
Boingo Wireless, Inc.
Segment Results of
Operations
(Unaudited)
(In thousands)
Year Ended
December 31,
2020
2019
Revenue:
Carrier services
$
107,746
$
115,806
Military
76,753
74,911
Multifamily
21,567
25,008
Legacy
29,134
46,058
Private networks and emerging
technologies
2,216
2,007
Total revenue
$
237,416
$
263,790
Cost of sales:
Carrier services
$
67,867
$
64,340
Military
18,252
18,299
Multifamily
15,756
19,569
Legacy
12,385
17,361
Private networks and emerging
technologies
524
44
Total cost of sales
$
114,784
$
119,613
Gross profit:
Carrier services
37.0
%
44.4
%
Military
76.2
75.6
Multifamily
26.9
21.7
Legacy
57.5
62.3
Private networks and emerging
technologies
76.4
97.8
Total gross profit
51.7
%
54.7
%
Income (loss) from operations:
Carrier services
$
19,671
$
30,043
Military
24,027
20,736
Multifamily
(6,690
)
(7,225
)
Legacy
42
5,616
Private networks and emerging
technologies
1,266
1,963
Unallocated overhead costs
(47,433
)
(54,837
)
Total loss from operations
$
(9,117
)
$
(3,704
)
Boingo Wireless, Inc.
Key Business Metrics
(Unaudited)
(In thousands)
December 31,
2020
2019
Key business metrics:
DAS nodes(1)
41.2
38.1
DAS nodes in backlog(2)
11.5
11.7
Subscribers—military(3)
128
133
(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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210301005318/en/
PRESS: Melissa Robinson Vice
President, 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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