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Digiliti Money Reports First Quarter 2017 Results

MINNEAPOLIS, May 11, 2017 (GLOBE NEWSWIRE) -- Digiliti Money (NASDAQ:DGLT), a leading mobile FinTech provider of cloud-based remote deposit capture (RDC) and mobile prepaid card solutions, reported results for the first quarter ended March 31, 2017.

Q1 2017 Financial and Operational Highlights

  • Revenue increased 73% year-over-year to a record $2.5 million
  • Recurring revenue increased 35% year-over-year to $1.4 million
  • Rebranded the company from Cachet Financial Solutions to Digiliti Money to better reflect the company’s evolution as a mobile money technology leader capitalizing on multi-billion-dollar end markets
  • Successfully raised approximately $8.8 million through a public equity offering and uplisted onto the NASDAQ Capital Market
  • Partnered with ICBA Bancard to offer Select Mobile Money Express (SMM-X) to ICBA’s community bank members
  • Appointed Kevin Hollahan as Senior Vice President of Sales
  • Selected by Fidelity Express to integrate Select Mobile Bill Pay platform image recognition technology into client’s existing bill pay system
  • Received additional orders from U.S. Bank and Kroger, as part of their continuing enhancements for their Select Mobile Money white-label (SMM-W) programs

Q1 2017 Performance Indicators
RDC SolutionsQ1 2017 vs. Q4 2016 Change vs. Q1 2016 Change
Total Transactions 2,703,122 2,675,2991% 1,888,53643%
Cumulative Products Sold (at Quarter End)9328825%61452%
Cumulative Live Product Implementations (at Quarter End) 6406006%43547%
Mobile Money SolutionsQ1 2017vs. Q4 2016Changevs. Q1 2016Change
Quarterly Active Users 233,167 214,7648% 131,08878%

Q1 2017 Financial Results
Revenue in the first quarter of 2017 increased 73% to a record $2.5 million from $1.5 million in the first quarter of 2016. The improvement was driven primarily by an increase in professional services, and to a lesser extent, by an increase in recurring revenue from the company’s RDC and Select Mobile Money solutions as a result of increased deployments, product enhancements, and transactions.

Recurring revenue from the company’s RDC and Select Mobile Money products increased 35% to $1.4 million (56.2% of revenue) in the first quarter of 2017 from $1.1 million (71.9% of revenue) in the first quarter of 2016.

Gross profit increased 171% to $837,000 (33.2% of revenue) in the first quarter of 2017 from $309,000 (21.2% of revenue) in the first quarter of 2016.

Cost of revenue in the first quarter of 2017 totaled $1.7 million (66.8% of revenue), compared to $1.2 million (78.8% of revenue) in the first quarter of 2016.

Total operating expenses for the first quarter of 2017 increased 24% to $3.0 million from $2.4 million in the first quarter of 2016, driven primarily by additional hires to increase the sales efforts of the company’s solutions and services, as well as certain one-time expenses associated with the company’s public equity offering in March and uplisting onto the NASDAQ Capital Market.

Net loss attributable to common shareholders in the first quarter of 2017 totaled $2.8 million or $(0.83) per basic and fully diluted share, compared to a net loss attributable to common shareholders of $4.9 million or $(3.01) per basic and fully diluted share in the first quarter of 2016. The improvement in net loss attributable to common shareholders was primarily due to improved operational performance and a decrease in certain non-cash charges.

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 first quarter of 2017 totaled $1.8 million, compared to an adjusted EBITDA loss of $1.6 million in the same year-ago period (see further discussion about the use of adjusted EBITDA, below). Removing one-time expenses, adjusted EBITDA would have improved year-over-year.

Management Commentary
“Perhaps no other quarter in our history has been more pivotal and instrumental to our long-term success than Q1 2017,” said Digiliti Money’s CEO Jeffrey Mack. “To start with, we rebranded the company to better reflect our evolution as a mobile money technology leader capitalizing on multi-billion-dollar end markets. In addition, we successfully raised $9.3 million and uplisted to the NASDAQ Capital Market. All three actions have strengthened our business substantially and have given us the resources to pursue larger and more meaningful opportunities, particularly in the massive and rapidly expanding prepaid market.

“While the headline for the quarter is arguably the achievement of these three important milestones, Q1 also represented a period of both strong financial results and operational progress. Our revenue increased 73% for the quarter to a record $2.5 million, driven by record transactions and robust professional services revenue. What’s perhaps most noteworthy about our financial results is that we once again grew our topline faster than we did our expenses, which not only improved our margins, but reiterates the scalability of our business model.

“From an operational standpoint, we secured nearly 50 new wins in the RDC space, and were approved by the Canadian banks to process Canadian checks. This ability to now generate transactional revenue from Canadian checks significantly expands our market opportunity and will be central to our overall expansion strategy, not just in Canada but globally. On the Select Mobile Money side, we signed a new SMM-X customer and brought another one live in Rebar. Finally, our newer solutions, like Select Mobile Account Opening and Bill Pay, are gaining incremental traction, as our sales pipeline and customer interest continue to increase.

While our focus remains on driving organic growth, we will also look at potential strategic tuck-in acquisitions that can supplement this growth, which we can now better pursue because of our recently enhanced balance sheet. Overall, our sources of growth, whether organic or inorganic, remain as strong as ever, positioning us for another great year and future ahead.”

Conference Call
Digiliti Money will hold a conference call today (May 11, 2017) at 4:30 p.m. Eastern time (3:30 p.m. Central time) to discuss these results. Digiliti Money’s president and CEO, Jeffrey Mack, and EVP and CFO, Bryan Meier, will host the presentation, followed by a question and answer period.

Date: Thursday, May 11, 2017
Time: 4:30 p.m. Eastern time (3:30 p.m. Central time)
U.S. dial-in: 1-877-705-6003
International dial-in: 1-201-493-6725

The conference call will be broadcast simultaneously and available for replay via the investor section of the company's website. During the conference call, Digiliti 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 June 11, 2017.

U.S. replay dial-in: 1-844-512-2921
International replay dial-in: 1-412-317-6671
Replay ID: 13660951

About Digiliti Money, Inc.
Digiliti Money is a leading cloud-based, SaaS technology provider serving the financial services industry with mobile money and remote deposit capture solutions for PC, Mac and mobile. Founded in early 2010 as Cachet Financial Solutions, Digiliti Money has quickly grown into a technology leader and trusted partner of some of the world’s largest and most respected financial organizations. With remarkable growth, an impressive client base and award-winning technologies, Digiliti Money continues to drive innovation and deliver world-class solutions to financial institutions of all sizes.

The company's industry-leading solutions help clients to increase customer engagement, grow revenues and gain competitive advantage. Digiliti Money’s cloud-based technology platform simplifies development, deployment and servicing of consumer and commercial solutions—minimizing cost and accelerating speed-to-market and ROI. Enabled by Digiliti Money’s complete suite of business and consumer solutions, financial institutions can better serve the needs of all their customers. For more information, visit www.digilitimoney.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.digilitimoney.com.

DIGILITI MONEY GROUP, INC
Supplemental Information
(In thousands)
(Unaudited)
Reconciliation of Net Loss to Adjusted EBITDA
Three Months Ended
March 31, 2017 March 31, 2016
Net loss, as reported$ (2,734) $ (4,557)
Interest expense and non-cash financing charges 1,483 1,051
Mark-to-market warrant and debt (income) expense (904) 1,396
Depreciation and amortization 179 196
Share-based compensation 109 129
Warrants and common stock issued for professional services 107 172
Adjusted EBITDA$ (1,760) $ (1,613)

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 Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 24, 2017 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.

DIGILITI MONEY GROUP, INC
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
As of
March 31, 2017 December 31, 2016
ASSETS (Unaudited) (Audited)
CURRENT ASSETS
Cash and cash equivalents$ 5,731 $ 7
Restricted cash 725
Accounts receivable, net 4,030 2,885
Deferred commissions 29 36
Prepaid expenses and deferred costs 1,306 313
TOTAL CURRENT ASSETS 11,821 3,241
PROPERTY AND EQUIPMENT, net 646 696
GOODWILL 204 204
INTANGIBLE ASSETS, net 76
DEFERRED COMMISSIONS 11 13
OTHER NON-CURRENT ASSETS 308 266
TOTAL ASSETS $ 12,990 $ 4,496
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 2,314 $ 2,205
Checks issued in excess of deposits 199
Accrued expenses 332 241
Accrued interest 262 675
Deferred revenue 823 697
Warrant and conversion feature liability, current 2,870
Current maturities of capital lease obligations 311 379
Short-term debt and current portion of long-term debt 1,463 4,229
TOTAL CURRENT LIABILITIES 5,505 11,495
CAPITAL LEASE OBLIGATIONS, net of current maturities 195 238
LONG TERM DEBT, net of current portion 288 316
WARRANT LIABILITY, net of current portion 1,206 7,352
DEFERRED REVENUE 241 306
ACCRUED RENT 118 121
TOTAL LIABILITIES 7,553 19,828
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY (DEFICIT)
Convertible preferred stock, $.0001 Par Value, 20,000,000 shares authorized,
0 and 43,530 issued and outstanding
Common shares, $.0001 Par Value, 500,000,000 shares authorized,
9,757,448 and 2,103,392 issued and outstanding 1
Additional paid-in-capital 93,453 69,119
Accumulated deficit (88,017) (84,451)
TOTAL SHAREHOLDERS' EQUITY (DEFICIT) 5,437 (15,332)
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)$ 12,990 $ 4,496


DIGILITI MONEY GROUP, INC
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
(Unaudited)
Three Months Ended
March 31, 2017 March 31, 2016
REVENUE $ 2,518 $ 1,460
COST OF REVENUE 1,681 1,151
GROSS PROFIT 837 309
OPERATING EXPENSES
Sales and Marketing 1,096 938
Research and Development 552 445
General and Administrative 1,344 1,036
TOTAL OPERATING EXPENSES 2,992 2,419
OPERATING LOSS (2,155) (2,110)
INTEREST EXPENSE AND NON-CASH FINANCING CHARGES 1,483 1,051
MARK-TO-MARKET WARRANT AND DEBT (INCOME) EXPENSE (904) 1,396
NET LOSS (2,734) (4,557)
LESS: CUMULATIVE UNPAID PREFERRED DIVIDENDS (95) (372)
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS $ (2,829) $ (4,929)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic and fully diluted 3,397,782 1,637,099
Net loss per common share - basic and fully diluted $ (0.83) $ (3.01)

Contact Information: Bryan Meier EVP & CFO Digiliti Money 952-698-5214 bmeier@digilitimoney.com Investor Relations Contact: Matt Glover or Najim Mostamand Liolios Group, Inc. 949-574-3860 DGLT@liolios.com

Source:Digiliti Money, Inc.