Cachet Financial Solutions Reports Fourth Quarter and Full Year 2014 Results
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MINNEAPOLIS, MN -- (Marketwired) -- 03/05/15 -- Cachet Financial Solutions, Inc. (OTCQB: CAFN), a leading provider of cloud-based SaaS mobile money management technology to banks, credit unions, and other financial services organizations, reported results for the fourth quarter and fiscal year ended December 31, 2014.
Q4 2014 Operational Highlights
- Estimated cumulative contract value totaled a record $55.3 million, up 77% over the same year-ago quarter.
- Bank and credit union customers totaled 317, up 38% from 230 at the end of 2013.
- Select Mobile" Money platform was chosen by League Service Corporation, a national credit union service organization, to power its prepaid mobile application.
- Expanded partnership with Mitek (NASDAQ: MITK) to offer Mitek's Mobile Photo Account Opening" SaaS Suite as part of Cachet's mobile prepaid platform.
- Launched Enhanced Select Business, a cloud-based software solution that enables banks and credit unions to offer their business customers the convenience of remote deposit capture, regardless of platform.
Q4 2014 Performance Indicators for RDC Solutions
vs. Q3 vs. Q4
Q4 2014 2014 Change 2013 Change
--------- --------- ------ --------- ------
Transactions 1,335,851 1,193,326 12% 654,000 104%
Products Sold (through the end
of each period) 348 318 9% 230 51%
Live Product Implementations
(through the end of each
period) 252 208 21% 130 94%
Full Year 2014 Performance Indicators for RDC Solutions
vs. FY
FY 2014 2013 Change
--------- --------- ------
Transactions 4,294,022 1,604,073 168%
Products Sold (through the end
of each period) 348 230 51%
Live Product Implementations
(through the end of each
period) 252 130 94%
Q4 2014 Financial Results Revenue in the fourth quarter of 2014 increased 74% to $707,000 from $405,000 in the same year-ago quarter. The increase was driven by growing adoption of the company's Select Mobile RDC solutions, along with new product offerings, CheckRisk Pro and Select Mobile Money.
The company's total cumulative contract value increased 77% to a record $55.3 million from $31.2 million in the same year-ago period. The company defines cumulative contract value as the estimated aggregate total revenue potential over the ensuing 36-month period of product and service contracts signed with bank and credit union customers over the trailing 24-month period. The number of these bank and credit union customers totaled 317 at the end of the fourth quarter of 2014, as compared to 230 at the end of same year-ago quarter.
At the end of the fourth quarter of 2014, the company's cumulative contract value totaled $55.3 million compared to $31.2 million at the end of the same year-ago period, with nearly the entire amount representing recurring revenue versus one-time setup or hosting fees.
Cost of revenues in the fourth quarter of 2014 totaled $582,000 (82% of revenue) compared to $554,000 (137% of revenue) in the same year-ago period. The increase was primarily due to higher amortization expense associated with the intangible assets acquired with the Select Mobile Money acquisition in March 2014.
Net loss attributable to common stockholders in the fourth quarter of 2014 totaled $3.5 million or $0.20 per basic and diluted share, compared to a net loss attributable to common stockholders of $2.7 million or $0.56 per basic and diluted share in the fourth quarter of 2013.
Adjusted EBITDA loss (a non-GAAP term defined as net loss before interest, taxes, depreciation, amortization, stock-based compensation, and non-recurring items) for the fourth quarter of 2014 totaled $2.3 million compared to an adjusted EBITDA loss of $1.5 million in the same year-ago period (see further discussion about the use of adjusted EBITDA, below). Non-GAAP loss for the fourth quarter of 2014 totaled $2.5 million or $.15 per share, compared to $1.8 million or $.38 per share in the same year-ago period.
Full Year 2014 Financial Results Revenue in 2014 increased 125% to a record $2.6 million from $1.2 million in 2013. The increase was driven by growing adoption of the company's Select Mobile RDC solutions and new product offerings.
Cost of revenues in 2014 totaled $2.8 million (104% of revenue) compared to $2.5 million (209% of revenue) in 2013. The increase was primarily due to higher amortization expense associated with the intangible assets acquired with the Select Mobile Money acquisition.
Net loss attributable to common stockholders in 2014 totaled $15.8 million or $1.39 per basic and diluted share, compared to a net loss attributable to common stockholders of $14.0 million or $3.58 per basic and diluted share in fiscal 2013.
Adjusted EBITDA loss for 2014 totaled $8.6 million compared to an adjusted EBITDA loss of $7.0 million a year-ago. Non-GAAP loss for the year-ended 2014, totaled $10.5 million or $.92 per share, compared to $8.2 million or $2.12 per share for the prior year.
Management Commentary "2014 marked a transformational year in the operational and financial development of Cachet," said the company's president and CEO, Jeffrey Mack. "Our rapid development has been the result of our ability to successfully execute on our strategic plan and growth initiatives. This was evident during 2014 from the several milestones we achieved, including completing the acquisition of a mobile money management platform in March, followed by our IPO in July.
"These achievements allowed us to deepen our product offering, expand our sales resources, and secure major new customer wins. These efforts also led to a 125% increase in revenue in 2014, driven by a 168% increase in transactions on our platform, which together underscores our growing and highly-valuable recurring revenue stream.
"In addition to the improvement in our financial performance, one of the most encouraging achievements in 2014 was securing new contract wins with a number of industry-leading financial institutions, including Bancorp, Navy Federal Credit Union, and US Bank. In the first quarter of 2015, we built upon this momentum by signing a major follow-on order from Navy Federal to provide our Select Mobile Money app for Navy's new 'GO Prepaid Card.'
"We are continuing to broaden our access to the market by expanding our selling and marketing resources in order to better capitalize on the strong industry trends. These efforts include strengthening our relationships with key resellers as well as adding new resellers to our network. These relationships have become an integral part of our differentiated growth strategy to drive revenue growth and capture market share in the growing multi-billion dollar mobile banking and RDC markets.
"In 2015, we plan to leverage our recently expanded sales resources and product suite to dramatically increase the number of products we sell and our overall customer base. Our success operationally will help drive our financial goals, which we expect will include eclipsing the 70% recurring revenue mark, as well as achieving cash flow profitability. We believe our operational strength and the acceleration in the number of 'go-lives' we are able to complete each quarter will continue to expand our market share and drive strong revenue growth in the quarters ahead."
Conference Call Cachet Financial Solutions will hold a conference call today (March 5, 2015) at 4:30 p.m. Eastern time (3:30 p.m. Central time) to discuss these results. Cachet's president and CEO, Jeffery Mack, and EVP and CFO, Darin McAreavey, will host the presentation, followed by a question and answer period.
Date: Thursday, March 5, 2015 Time: 4:30 p.m. Eastern time (3:30 p.m. Central time) U.S. dial-in: 877-705-6003 International dial-in: 201-493-6725
The conference call will be broadcast simultaneously and available for replay via the investor section of the company's website. During the conference call, Cachet management will refer to a supplementary slide presentation, which is also available for download in the investor section of the company's website.
Please call the conference telephone number 10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Liolios Group at 949-574-3860.
A replay of the call will be available after 7:30 p.m. Eastern time on the same day through April 5, 2015.
U.S. replay dial-in: 877-870-5176 International replay dial-in: 858-384-5517 Replay ID: 13601847
About Cachet Financial Solutions, Inc. Cachet Financial Solutions is a leading cloud-based, SaaS technology provider serving the financial services industry with mobile money management and remote deposit capture solutions for PC, Mac and Mobile. Our industry-leading solutions help clients to increase customer/member engagement, grow revenues and gain competitive advantage. Cachet's cloud-based technology platform simplifies development, deployment and servicing of clients' consumer and commercial solutions -- minimizing cost and accelerating speed-to-market and ROI. With our complete suite of business and consumer solutions, financial institutions can better serve the needs of all their customers/members. For more information, visit www.cachetfinancial.com.
Use of Non-GAAP Information In evaluating the Company's financial performance and operating trends, management considers information concerning the Company's net sales, adjusted gross margins, adjusted operating expenses, and adjusted EBITDA, among other items, which are not calculated in accordance with generally accepted accounting principles ("GAAP") in the United States of America. The Company's management believes these non-GAAP measures are useful to investors because they provide supplemental information that facilitates comparisons to prior periods and for the evaluation of financial results. Management uses these non-GAAP measures to evaluate its financial results, develop budgets and manage expenditures. The method the Company uses to produce non-GAAP results is not computed according to GAAP, is likely to differ from the methods used by other companies and should not be regarded as a replacement for corresponding GAAP measures. Investors are encouraged to review the reconciliation of these non-GAAP financial measures to the comparable GAAP results, which is attached to this release and can also be found on the Company's website at www.cachetfinancial.com.
Forward-Looking Statements This press release contains certain statements that would be deemed "forward-looking statements" under Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1933 and includes, among other things, discussions of our business strategies, future operations and capital resources. Words such as "may," "likely," "anticipate," "expect", "plan" and "believes" indicate forward-looking statements.
These statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. Forward-looking statements include statements about the anticipated closing of our initial public offering and the number of shares to be sold in the offering.
Forward-looking statements reflect our current views with respect to future events, are based on assumptions and are subject to risks and uncertainties. We discuss many of these risks in greater detail in our Current Report on Form 8K filed with the Securities and Exchange Commission on March 31, 2014 under the heading "Risk Factors" and in the other reports we file with the Commission. Given these uncertainties, you should not attribute undue certainty to these forward-looking statements. Also, forward-looking statements represent our estimates and assumptions only as of the date of this press release. Except as required by law, we assume no obligation to update any forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, even if new information becomes available in the future.
CACHET FINANCIAL SOLUTIONS, INC.
CONSOLIDATED BALANCE SHEETS
As of
----------------------------
December 31, December 31,
2014 2013
------------- -------------
ASSETS (unaudited) (audited)
CURRENT ASSETS
Cash and cash equivalents $ 112,221 $ 150,555
Accounts receivable, net 314,743 329,557
Deferred commissions 80,348 62,732
Prepaid expenses 402,040 487,659
------------- -------------
TOTAL CURRENT ASSETS 909,352 1,030,503
PROPERTY AND EQUIPMENT, net 295,925 353,420
GOODWILL 204,000 -
INTANGIBLE ASSETS, NET 1,437,001 -
DEFERRED COMMISSIONS 103,312 101,468
DEFERRED FINANCING COSTS 61,153 107,936
------------- -------------
TOTAL ASSETS $ 3,010,743 $ 1,593,327
============= =============
LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable $ 746,554 $ 937,200
Accrued expenses 201,768 153,113
Accrued interest 182,184 1,953,502
Deferred revenue 747,113 510,319
Warrant liability 163,570 -
Current portion of long-term debt 2,070,217 3,170,672
------------- -------------
TOTAL CURRENT LIABILITIES 4,111,406 6,724,806
LONG TERM DEBT, net of current portion 2,566,486 3,933,253
WARRANT LIABILITY 146,000 309,000
DEFERRED REVENUE 412,219 401,758
ACCRUED INTEREST 160,593 95,270
ACCRUED RENT 25,333 61,482
------------- -------------
TOTAL LIABILITIES 7,422,037 11,525,569
------------- -------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' DEFICIT
Convertible preferred stock, $.0001 Par
Value, 20,000,000 shares authorized,
2,229,702 and 0 issued and outstanding 223 -
Common shares, $.0001 Par Value, 500,000,000
shares authorized, 16,934,497 and 5,625,957
issued and outstanding 1,694 563
ADDITIONAL PAID-IN-CAPITAL 47,307,314 26,668,258
ACCUMULATED DEFICIT (51,720,525) (36,601,063)
------------- -------------
TOTAL SHAREHOLDERS' DEFICIT (4,411,294) (9,932,242)
------------- -------------
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT $ 3,010,743 $ 1,593,327
============= =============
CACHET FINANCIAL SOLUTIONS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited)
Three Months Ended Twelve Months Ended
-------------------------- --------------------------
December 31, December 31, December 31, December 31,
2014 2013 2014 2013
------------ ------------ ------------ ------------
REVENUE $ 707,078 $ 405,336 $ 2,648,108 $ 1,179,603
COST OF REVENUE 582,171 554,060 2,747,343 2,462,087
------------ ------------ ------------ ------------
GROSS PROFIT (LOSS) 124,907 (148,724) (99,235) (1,282,484)
------------ ------------ ------------ ------------
OPERATING EXPENSES
Sales and Marketing 885,247 552,561 2,854,959 2,208,689
Research and
Development 921,394 249,412 2,663,633 982,917
General and
Administrative 998,539 662,322 3,998,086 3,566,044
------------ ------------ ------------ ------------
TOTAL OPERATING
EXPENSES 2,805,180 1,464,295 9,516,678 6,757,650
------------ ------------ ------------ ------------
OPERATING LOSS (2,680,273) (1,613,019) (9,615,913) (8,040,134)
INTEREST EXPENSE 707,154 424,087 5,704,533 2,804,594
INDUCEMENT TO CONVERT
DEBT AND WARRANTS 46,121 681,189 424,335 1,355,603
SHARE PRICE /
CONVERSION
ADJUSTMENT - - - 1,710,475
OTHER (INCOME)
EXPENSE - 21,500 (34,999) 54,213
------------ ------------ ------------ ------------
NET LOSS (3,433,548) (2,739,795) (15,709,782) (13,965,019)
LESS: CUMMULATIVE
UNPAID PREFERRED
DIVIDENDS (47,206) - (48,409) -
------------ ------------ ------------ ------------
NET LOSS ATTRIBUTABLE
TO COMMON
STOCKHOLDERS $ (3,480,754) $ (2,739,795) $(15,758,191) $(13,965,019)
============ ============ ============ ============
WEIGHTED AVERAGE
COMMON SHARES
OUTSTANDING
Basic and fully
diluted 17,026,296 4,869,178 11,337,482 3,897,081
Net loss per common
share - basic and
fully diluted $ (0.20) $ (0.56) $ (1.39) $ (3.58)
CACHET FINANCIAL SOLUTIONS, INC.
SUPPLEMENTAL INFORMATION
(Unaudited)
Reconciliation of Net Loss to Adjusted EBITDA
Three Months Ended Twelve Months Ended
-------------------------- --------------------------
December 31, December 31, December 31, December 31,
2014 2013 2014 2013
------------ ------------ ------------ ------------
Net loss, as
reported $ (3,433,548) $ (2,739,795) $(15,709,782) $(13,965,019)
Interest expense 707,154 424,087 5,704,533 2,804,594
Inducement of
convert debt and
warrants 46,121 681,189 424,335 1,355,603
Share Price /
Conversion
Adjustment - - - 1,710,475
Depreciation and
Amortization 193,676 76,356 694,494 366,718
Share-based
compensation 164,602 78,314 316,176 700,715
Warrants issued
for professional
services 3,124 - 23,735 -
------------ ------------ ------------ ------------
Adjusted EBITDA $ (2,318,871) $ (1,479,849) $ (8,546,509) $ (7,026,914)
============ ============ ============ ============
CACHET FINANCIAL SOLUTIONS, INC.
GAAP TO NON-GAAP RECONCILIATION CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited)
Three Months Ended
-------------------------------------------
GAAP Non-GAAP
------------ ------------
December 31, December 31,
2014 Adjustments 2014
------------ ------------ ------------
REVENUE $ 707,078 $ - $ 707,078
COST OF REVENUE 582,171 (1) (147,249) 422,425
(2) (12,497)
------------ ------------ ------------
GROSS PROFIT (LOSS) 124,907 159,746 284,653
------------ ------------ ------------
OPERATING EXPENSES
Sales and Marketing 885,247 (2) (29,842) 855,405
Research and Development 921,394 (2) (28,358) 893,036
General and Administrative 998,539 (2) (93,905) 904,634
------------ ------------ ------------
TOTAL OPERATING EXPENSES 2,805,180 (152,105) 2,653,075
------------ ------------ ------------
OPERATING LOSS (2,680,273) 311,851 (2,368,422)
INTEREST EXPENSE 707,154 (3) (598,207) 108,947
INDUCEMENT TO CONVERT DEBT AND
WARRANTS 46,121 (3) (46,121) -
SHARE PRICE / CONVERSION
ADJUSTMENT - - -
OTHER (INCOME) EXPENSE - - -
------------ ------------ ------------
NET LOSS (3,433,548) 956,179 (2,477,369)
LESS: CUMMULATIVE UNPAID
PREFERRED DIVIDENDS (47,206) - (47,206)
------------ ------------ ------------
NET LOSS ATTRIBUTABLE TO COMMON
STOCKHOLDERS $(3,480,754) $ 956,179 $(2,524,575)
============ ============ ============
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING
Basic and fully diluted 17,026,296 17,026,296 17,026,296
Net loss per common share -
basic and fully diluted $ (0.20) $ 0.06 $ (0.15)
Twelve Months Ended
---------------------------------------------
GAAP Non-GAAP
------------- -------------
December 31, December 31,
2014 Adjustments 2014
------------- ------------ -------------
REVENUE $ 2,648,108 $ - $ 2,648,108
COST OF REVENUE 2,747,343 (1) (479,999) 2,245,591
(2) (21,753)
------------- ------------ -------------
GROSS PROFIT (LOSS) (99,235) 501,752 402,517
------------- ------------ -------------
OPERATING EXPENSES
Sales and Marketing 2,854,959 (2) (51,803) 2,803,156
Research and Development 2,663,633 (2) (41,365) 2,622,268
General and Administrative 3,998,086 (2) (201,255) 3,796,831
------------- ------------ -------------
TOTAL OPERATING EXPENSES 9,516,678 (294,423) 9,222,255
------------- ------------ -------------
OPERATING LOSS (9,615,913) 796,175 (8,819,738)
INTEREST EXPENSE 5,704,533 (3) (4,023,733) 1,680,800
INDUCEMENT TO CONVERT DEBT AND
WARRANTS 424,335 (3) (424,335) -
SHARE PRICE / CONVERSION
ADJUSTMENT - - -
OTHER (INCOME) EXPENSE (34,999) - (34,999)
------------- ------------ -------------
NET LOSS (15,709,782) 5,244,243 (10,465,539)
LESS: CUMMULATIVE UNPAID
PREFERRED DIVIDENDS (48,409) - (48,409)
------------- ------------ -------------
NET LOSS ATTRIBUTABLE TO COMMON
STOCKHOLDERS $(15,758,191) $ 5,244,243 $(10,513,948)
============= ============ =============
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING
Basic and fully diluted 11,337,482 11,337,482 11,337,482
Net loss per common share -
basic and fully diluted $ (1.39) $ 0.46 $ (0.92)
(1) - Non-cash amortization expense related to identified intangible assets
(2) - Non-cash stock based compensation expense
(3) - Non-cash interest expense and other non-cash one-time charges
CACHET FINANCIAL SOLUTIONS, INC.
GAAP TO NON-GAAP RECONCILIATION CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited)
Three Months Ended
----------------------------------------------
GAAP Non-GAAP
------------- -------------
December 31, December 31,
2013 Adjustments 2013
------------- ------------- -------------
REVENUE $ 405,336 $ - $ 405,336
COST OF REVENUE 554,060 (1) (2,085) 551,975
------------- ------------- -------------
GROSS PROFIT (LOSS) (148,724) 2,085 (146,639)
------------- ------------- -------------
OPERATING EXPENSES
Sales and Marketing 552,561 (1) (3,621) 548,940
Research and Development 249,412 (1) (6,308) 243,104
General and Administrative 662,322 (1) (66,300) 596,022
------------- ------------- -------------
TOTAL OPERATING EXPENSES 1,464,295 (76,229) 1,388,066
------------- ------------- -------------
OPERATING LOSS (1,613,019) 78,314 (1,534,705)
INTEREST EXPENSE 424,087 (2) (132,730) 291,357
INDUCEMENT TO CONVERT DEBT
AND WARRANTS 681,189 (2) (681,189) -
SHARE PRICE / CONVERSION
ADJUSTMENT - - -
OTHER (INCOME) EXPENSE 21,500 - 21,500
------------- ------------- -------------
NET LOSS (2,739,795) 892,233 (1,847,562)
LESS: CUMMULATIVE UNPAID
PREFERRED DIVIDENDS - - -
------------- ------------- -------------
NET LOSS ATTRIBUTABLE TO
COMMON STOCKHOLDERS $ (2,739,795) $ 892,233 $ (1,847,562)
============= ============= =============
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING
Basic and fully diluted 4,869,178 4,869,178 4,869,178
Net loss per common share -
basic and fully diluted $ (0.56) $ 0.18 $ (0.38)
Twelve Months Ended
-----------------------------------------------
GAAP Non-GAAP
------------- -------------
December 31, December 31,
2013 Adjustments 2013
------------- ------------ -------------
REVENUE $ 1,179,603 $ - $ 1,179,603
COST OF REVENUE 2,462,087 (1) (1,815) 2,460,272
------------- ------------ -------------
GROSS PROFIT (LOSS) (1,282,484) 1,815 (1,280,669)
------------- ------------ -------------
OPERATING EXPENSES
Sales and Marketing 2,208,689 (1) (67,697) 2,140,992
Research and Development 982,917 (1) (48,609) 934,308
General and Administrative 3,566,044 (1) (582,594) 2,983,450
------------- ------------ -------------
TOTAL OPERATING EXPENSES 6,757,650 (698,900) 6,058,750
------------- ------------ -------------
OPERATING LOSS (8,040,134) 700,715 (7,339,419)
INTEREST EXPENSE 2,804,594 (2) (1,955,201) 849,393
INDUCEMENT TO CONVERT DEBT
AND WARRANTS 1,355,603 (2) (1,355,603) -
SHARE PRICE / CONVERSION
ADJUSTMENT 1,710,475 (2) (1,710,475) -
OTHER (INCOME) EXPENSE 54,213 - 54,213
------------- ------------ -------------
NET LOSS (13,965,019) 5,721,994 (8,243,025)
LESS: CUMMULATIVE UNPAID
PREFERRED DIVIDENDS - - -
------------- ------------ -------------
NET LOSS ATTRIBUTABLE TO
COMMON STOCKHOLDERS $(13,965,019) $ 5,721,994 $ (8,243,025)
============= ============ =============
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING
Basic and fully diluted 3,897,081 3,897,081 3,897,081
Net loss per common share -
basic and fully diluted $ (3.58) $ 1.47 $ (2.12)
(1) - Non-cash stock based compensation expense
(2) - Non-cash interest expense and other non-cash one-time charges
Contact Information: Darin McAreavey EVP & CFO Cachet Financial Solutions 952-698-5214 Email Contact Investor Relations: Matt Glover or Michael Koehler Liolios Group, Inc. 949-574-3860 Email Contact
Source: Cachet Financial Solutions
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