Kaleyra Inc. (KLR) Reports Q2 Loss of $0.39 on Revenues of $31.2M

Kaleyra Inc. (NYSE: KLR) reported Q2 EPS of ($0.39), versus ($0.12) reported last year. Revenue for the quarter came in at $31.2 million, versus $30.87 million reported last year.

Second Quarter 2020 Financial Highlights

• Total revenue of $31.2 million for the second quarter of 2020 was up 1.1% from $30.9 million in the second quarter of 2019. A positive change in geographical revenue mix helped offset lower transaction activity, including premium services and voice, during the lockdown related to the COVID-19 pandemic.
• Cost of revenue increased by 8% to $26.8 million, compared with the second quarter of 2019 and thus gross profit decreased by 28% to $4.4 million. This was mainly as a result of the effects of higher connectivity costs related to the initial delivery phase of new customer accounts and a decrease of high margin services such as voice (related to taxi services in India) and premium services (related to the usage of credit cards) during the lockdown related to the COVID-19 pandemic.
• Gross margin was 14.0% in the second quarter of 2020, compared with gross margin of 19.5% in the second quarter of 2019, mainly due to the effects noted above.
• Operating expenses were $11.9 million in the second quarter of 2020. This included adding nearly 30 employees from the beginning of the fiscal year, the majority of which support enhanced engineering development and global sales activities, $4.8 million in stock-based compensation, $1.8 million of transaction and one-off costs, and $1.1 million of costs pertaining to public company compliance. Excluding these costs, operating expenses would have decreased by $0.8 million compared with adjusted operating expenses of $5.0 million in the second quarter of 2019.
• Loss from operations was $7.5 million for the second quarter of 2020 and includes the $4.8 million of stock-based compensation and $1.8 million of transaction and one-off costs mentioned above as well as $1.1 million of costs pertaining to initial public company compliance. This compares with a loss from operations of $0.8 million in the second quarter of fiscal 2019.
• Net loss was $8.1 million, or a loss of $0.39 per share, for the second quarter of 2020, compared with a net loss of $1.3 million, or a net loss of $0.12 per share, for the second quarter of 2019.
• Adjusted EBITDA comparable with the previous year was $0.8 million in the second quarter of 2020 and includes approximately $1.1 million of costs incurred as a public company that were not recognized in the second quarter of 2019. Without adjusting those costs, but including the engineering and sales headcount increase, Adjusted EBITDA would have been $(0.3) million and compares to $1.7 million on the second quarter of 2019.
• Cash used in operating activities was $1.6 million in the second quarter of 2020, compared with cash provided in operating activities of $2.2 million in the second quarter last year.
• Cash and cash equivalents were $37.2 million as of June 30, 2020. The cash position is after the payment of substantially all the obligations under the forward share purchase agreements mentioned above and a large portion of promissory notes, and compares with $37.0 million in cash, cash equivalents and restricted cash as of December 31, 2019.

“During the quarter, Kaleyra benefitted from the flexibility and functionality of our platform, the strength of our customer relationships and the adaptability of our employees around the world who executed flawlessly during one of the most challenging periods in our history,” commented Dario Calogero, Kaleyra’s Founder and Chief Executive Officer. “Despite two of our largest markets, Italy and India, in lockdown for much of the second quarter, and with their economies essentially frozen, revenue not only was above our second quarter guidance range but was also up year over year. The pandemic is driving increased usage and the reach of our platform, while simultaneously unlocking new segments, including government and non-government customers in the Unites States, Europe, and APAC. Beginning in June, and continuing into July, as economies around the world reopen for business, we have seen volumes recover driven by the increasing penetration rate of digital payments and an increased number of digital transactions.

“We have also seen enterprise customers increasingly looking for new ways to engage with their customers, expanding into new channels like live chat, chatbots and IVR, accelerating their digital transformations by multiple years in many cases. We also expect to announce additional agreements over the second half of 2020 with some of the world’s largest OTT (Over-the-Top) Internet media and App services companies, further supporting our annual revenue outlook,” said Mr. Calogero.

GUIDANCE:

Kaleyra Inc. sees Q3 2020 revenue of $36 million.

Looking out to the third quarter and second half of the year, we believe we are uniquely positioned to help enterprise customers communicate with their customers in expanded ways and take advantage of the growing opportunities the pandemic has created in the already fast growing CPaaS market.

• For the third quarter, we anticipate reporting revenue of at least $36 million, which would represent a sequential improvement of at least 15%. This would be a record revenue quarter for Kaleyra. This guidance assumes that the Company’s largest markets, Italy and India, will continue to see improvements in their economies coming out of the COVID-19 pandemic. It also takes into consideration that there could still be continued pressure on transaction levels in certain regions and on certain business lines.
• For fiscal year 2020, the Company expects revenue in excess of $142 million, which anticipates a double-digit sequential increase in fourth quarter revenue from the third quarter, to establish yet another record revenue quarter for the company.
• Adjusted EBITDA in the second half of 2020 is expected to see a significant increase from first half levels. As a point of reference, in fiscal 2019, the vast majority, or approximately 80%, of adjusted EBITDA was generated in the third and fourth quarters. This seasonality is expected to benefit 2020 as well.

“The pandemic has been a catalyst to accelerate the digital transformation of several industries. Mobile technology is bridging the distance between the organizations and their audiences, and Kaleyra is designed to help the enterprises to seamlessly communicate with their customers through mobile services,” added Mr. Calogero. “The CPaaS marketplace continues to offer tremendous potential for growth and we are confident that in the longer term, as the world economies recover from the pandemic, we will see an acceleration of the digital transformation of many industries. With our reputation as the trusted CPaaS provider, our expanding blue-chip customer base, new product initiatives, recent strengthening of our balance sheet and growing footprint in the United States we look forward to a strong trajectory of growth ahead."

For earnings history and earnings-related data on Kaleyra Inc. (KLR) click here.

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