8-K
false000182816100018281612022-11-092022-11-09

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 9, 2022

 

 

FTC Solar, Inc.

(Exact name of Registrant as Specified in Its Charter)

 

 

Delaware

001-40350

81-4816270

(State or Other Jurisdiction
of Incorporation)

(Commission File Number)

(IRS Employer
Identification No.)

 

 

 

 

 

9020 N Capital of Texas Hwy, Suite I-260

 

Austin, Texas

 

78759

(Address of Principal Executive Offices)

 

(Zip Code)

 

Registrant’s Telephone Number, Including Area Code: 737 787-7906

 

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:


Title of each class

 

Trading
Symbol(s)

 


Name of each exchange on which registered

Common Stock, $0.0001 par value

 

FTCI

 

The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

 


Item 2.02 Results of Operations and Financial Condition.

On November 9, 2022, FTC Solar, Inc. (the "Company") issued a press release regarding its financial results for the quarter ended September 30, 2022. A copy of the Company's press release is furnished herewith as Exhibit 99.1.

 

The information furnished in this Current Report under this Item 2.02 and the exhibit furnished herewith shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit No.

 

Description

99.1

 

Press release dated November 9, 2022

104

 

Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

 

FTC SOLAR, INC.

 

 

 

 

Date:

November 9, 2022

By:

/s/ Phelps Morris

 

 

 

Phelps Morris,
Chief Financial Officer

 


EX-99.1

 

Exhibit 99.1

https://cdn.kscope.io/93103cd0004e53a7cef452856c2300ad-img83930929_0.jpg 

FTC Solar Announces Third Quarter 2022 Financial Results

 

Third Quarter Highlights and Recent Developments

Total project pipeline1 reaches new record high of 90GW
Added $203 million to our backlog since August 9
Launched new solution for U.S. thin-film modules
Launched differentiated new 1P tracker solution, Pioneer, along with initial 500MW agreement
Awarded our largest project to date in Australia, 128MW hybrid solar project

 

AUSTIN, Texas — November 9, 2022– FTC Solar, Inc. (Nasdaq: FTCI), a leading provider of solar tracker systems, software and engineering services, today announced financial results for the third quarter ended September 30, 2022.

“Third quarter results were in-line with our guidance ranges, and we continue to expect that quarter to represent the low point from which we grow,” said Sean Hunkler, FTC Solar President and Chief Executive Officer. While the U.S. market recovery has been slower than expected, as customers continue to struggle to obtain imported solar modules amid UFLPA-related reviews, our international presence continues to grow, and our efforts to further strengthen our competitive position through this downturn have progressed quite well.

“Our goal through this downturn has simply been to best position the company for the coming recovery, and we continued to make good progress this quarter, including, launching a new 1P tracker to expand our served market, launching a new solution for U.S. sourced thin-film modules which fills a gap in our offering, entering several new international markets and growing our project pipeline to a new record high.

“There are a few key takeaways I would point investors to this quarter, including:

Our total backlog2 continues to grow nicely and is approaching the $1 billion mark at $961 million;
Of the $203 million of backlog we added in the last three months, $165 million is not expected to be impacted by UFLPA;
We continue to believe we're on track for double-digit gross margins as our revenue recovers; and
Our liquidity position is stable, ending the quarter with $50 million in cash on the balance sheet, a $100 million undrawn revolver and no debt.

“While we can’t control the pace of recovery from UFLPA-related module delays, we believe the actions we have taken through this downturn have made the company significantly stronger. In addition, we believe that many of our recent achievements should also help mitigate future impacts from UFLPA. Overall, we see significant long-term growth opportunities ahead for the market, and believe we are poised to once-again outpace the market when the module market normalizes.”

 

 


 

Summary Financial Performance: Q3 2022 compared to Q3 2021

 

 

GAAP

 

 

Non-GAAP

 

 

 

Three months ended September 30,

 

(in thousands, except per share data)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenue

 

$

16,572

 

 

$

52,989

 

 

$

16,572

 

 

$

52,989

 

Gross margin percentage

 

 

(57.4

%)

 

 

(15.2

%)

 

 

(49.8

%)

 

 

(14.5

%)

Total operating expenses

 

$

17,179

 

 

$

14,731

 

 

$

9,147

 

 

$

8,412

 

Loss from operations(a)

 

$

(26,694

)

 

$

(22,770

)

 

$

(17,734

)

 

$

(16,091

)

Net loss

 

$

(25,636

)

 

$

(22,915

)

 

$

(17,748

)

 

$

(16,313

)

Diluted loss per share

 

$

(0.25

)

 

$

(0.24

)

 

$

(0.17

)

 

$

(0.17

)

(a) Adjusted EBITDA for Non-GAAP

 

 

 

 

 

 

 

 

 

 

 

 

Total third quarter revenue was $16.6 million, in line with our prior guidance range. This revenue level reflects the lower demand environment in the U.S., as customers struggle to navigate the regulatory environment and get line of sight to solar modules. This revenue level represents a decrease of 46.1% compared to the prior quarter and a decrease of 69% year-over-year, driven by lower volume and partially offset by a higher ASP.

GAAP gross loss was $9.5 million, or 57.4% of revenue, compared to $6.5 million, or 21.2% of revenue in the prior quarter. Non-GAAP gross loss was $8.2 million or 49.8% of revenue. The result for this quarter compares to a non-GAAP gross loss of $7.7 million in the prior-year period, with the difference driven primarily by lower product revenue, partially offset by improved logistics margin.

GAAP operating expenses were $17.2 million. On a non-GAAP basis, excluding stock-based compensation and certain other expenses, operating expenses were $9.1 million, compared to $8.4 million in the year-ago quarter. The year-over-year increase was driven primarily by necessary growth in staffing, and other costs related to public company requirements.

GAAP net loss was $25.6 million or $0.25 per share, compared to a loss of $25.7 million or $0.26 per share in the prior quarter, and compared to a net loss of $22.9 million or $0.24 per share in the year-ago quarter. Adjusted EBITDA loss, which excludes approximately $7.9 million, including stock-based compensation expense, certain consulting and legal fees, severance and other non-cash items, was $17.7 million. This result compares to an Adjusted EBITDA loss of $17.7 million in the prior quarter and $16.1 million in the year-ago quarter.

Contracted and awarded orders2 as of November 9 were $961 million with expected delivery dates in 2022 and beyond. This includes the addition of $203 million since the company's last update as of August 9, 2022.

Outlook

Fourth Quarter

For the fourth quarter, while our U.S. customers are seeing some signs of improvement in the module market, the pace of recovery is slower than previously expected, and customers largely continue to hold orders pending module availability. As a result, while we continue to expect the third quarter to be the low-water mark in terms of revenue and margin, and expect strong sequential growth of 40-60%, our fourth quarter revenue target is lower than our previous target, with that change flowing down through adjusted EBITDA.

Beyond Q4

While we are still looking for incremental clarity on how much module supply will be available to customers, we expect to see continued sequential revenue improvement in the first quarter of 2023, along with continued margin improvement.

Overall, we continue to believe the ingredients are in place for a strong year for the industry in 2023.We believe FTC Solar is well-positioned to quickly respond to pent-up customer demand, benefit from continued cost reduction efforts and resume our strong growth trajectory – with our growth rate moderated only by our customers’ ability to obtain solar modules.

 


 

(in millions)

 

3Q '22 Guidance

 

3Q '22 Actual

 

 

4Q '22 Guidance

Revenue

 

$16.5 - $19.0

 

$

16.6

 

 

$23 - $27

Non-GAAP Gross Profit

 

$(8.3) - $(3.8)

 

$

(8.2

)

 

$(3.5) - $0.0

Non-GAAP Gross Margin

 

(50%) - (20%)

 

 

(49.8

%)

 

(15%) - 0%

Non-GAAP operating expenses

 

$10 - $11

 

$

9.1

 

 

$10 - $11

Non-GAAP adjusted EBITDA

 

$(19) - $(14)

 

$

(17.7

)

 

$(14.5) - $(10.0)

Third quarter 2022 Earnings Conference Call

FTC Solar’s senior management will host a conference call for members of the investment community at 8:30 a.m. E.T. today, during which the company will discuss its third quarter results, its outlook and other business items. This call will be webcast and can be accessed within the Investor Relations section of FTC Solar's website at investor.ftcsolar.com. A replay of the conference call will also be available on the website for 30 days following the webcast.

1. The term ‘pipeline’ refers to the total amount of uncontracted projects in the solar energy market to which the company has visibility as a potential sale opportunity for its trackers. The size of our pipeline does not guarantee future sales results or revenues, which will depend on our ability to convert pipeline opportunities to binding sales orders.

2. The term ‘backlog’ refers to the combination of our executed contracts and awarded orders, which are orders that have been documented and signed through a contract, where we are in the process of documenting a contract but for which a contract has not yet been signed, or that have been awarded in writing or verbally with a mutual understanding that the order will be contracted in the future. In the case of certain projects, including those that are scheduled for delivery on later dates, we have not locked in binding pricing with customers and we instead use estimated average selling price to calculate the revenue included in our contracted and awarded orders for such projects. Actual revenue for these projects could differ once contracts with binding pricing are executed, and there is also a risk that a contract may never be executed for an awarded but uncontracted project, thus reducing anticipated revenues. Please refer to our SEC filings, including our Form 10-K, for more information on our contracted and awarded orders, including risk factors.

About FTC Solar Inc.

Founded in 2017 by a group of renewable energy industry veterans, FTC Solar is a leading provider of solar tracker systems, technology, software, and engineering services. Solar trackers significantly increase energy production at solar power installations by dynamically optimizing solar panel orientation to the sun. FTC Solar’s innovative tracker designs provide compelling performance and reliability, with an industry-leading installation cost-per-watt advantage.

Forward-Looking Statements

This press release contains forward looking statements. These statements are not historical facts but rather are based on our current expectations and projections regarding our business, operations and other factors relating thereto. Words such as “may,” “will,” “could,” “would,” “should,” “anticipate,” “predict,” “potential,” “continue,” “expects,” “intends,” “plans,” “projects,” “believes,” “estimates” and similar expressions are used to identify these forward-looking statements. These statements are only predictions and as such are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. You should not rely on our forward-looking statements as predictions of future events, as actual results may differ materially from those in the forward-looking statements because of several factors, including those described in more detail above and in our filings with the U.S. Securities and Exchange Commission, including the section entitled “Risk Factors” contained therein. FTC Solar undertakes no duty or obligation to update any forward-looking statements contained in this release as a result of new information, future events or changes in its expectations, except as required by law.

 

 


 

FTC Solar Investor Contact:

Bill Michalek
Vice President, Investor Relations
FTC Solar
T: (737) 241-8618
E: IR@FTCSolar.com

 

FTC Solar Media Contact:

Scott Deitz
On behalf of FTC Solar
T: (336) 908-7759

# # #

 

 

 

 


 

FTC Solar, Inc.

Condensed Consolidated Statements of Comprehensive Loss

(unaudited)

 

 

 

Three months ended September 30,

 

 

Nine months ended September 30,

 

(in thousands, except shares and per share data)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Product

 

$

3,543

 

 

$

45,582

 

 

$

43,677

 

 

$

137,799

 

Service

 

 

13,029

 

 

 

7,407

 

 

 

53,169

 

 

 

31,005

 

Total revenue

 

 

16,572

 

 

 

52,989

 

 

 

96,846

 

 

 

168,804

 

Cost of revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Product

 

 

11,411

 

 

 

48,090

 

 

 

62,800

 

 

 

146,964

 

Service

 

 

14,676

 

 

 

12,938

 

 

 

59,360

 

 

 

45,810

 

Total cost of revenue

 

 

26,087

 

 

 

61,028

 

 

 

122,160

 

 

 

192,774

 

Gross profit (loss)

 

 

(9,515

)

 

 

(8,039

)

 

 

(25,314

)

 

 

(23,970

)

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

2,126

 

 

 

2,116

 

 

 

7,538

 

 

 

9,653

 

Selling and marketing

 

 

1,994

 

 

 

2,224

 

 

 

6,893

 

 

 

6,421

 

General and administrative

 

 

13,059

 

 

 

10,391

 

 

 

39,966

 

 

 

63,217

 

Total operating expenses

 

 

17,179

 

 

 

14,731

 

 

 

54,397

 

 

 

79,291

 

Loss from operations

 

 

(26,694

)

 

 

(22,770

)

 

 

(79,711

)

 

 

(103,261

)

Interest expense, net

 

 

(160

)

 

 

(301

)

 

 

(882

)

 

 

(515

)

Gain from disposal of investment in unconsolidated subsidiary

 

 

1,408

 

 

 

210

 

 

 

1,745

 

 

 

20,829

 

Gain (loss) on extinguishment of debt

 

 

 

 

 

 

 

 

 

 

 

790

 

Other income (expense)

 

 

(341

)

 

 

(13

)

 

 

(249

)

 

 

(59

)

Income (loss) from unconsolidated subsidiary

 

 

 

 

 

 

 

 

 

 

 

(354

)

Loss before income taxes

 

 

(25,787

)

 

 

(22,874

)

 

 

(79,097

)

 

 

(82,570

)

(Provision) benefit for income taxes

 

 

151

 

 

 

(41

)

 

 

(15

)

 

 

(137

)

Net loss

 

 

(25,636

)

 

 

(22,915

)

 

 

(79,112

)

 

 

(82,707

)

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

(474

)

 

 

3

 

 

 

(357

)

 

 

9

 

Comprehensive loss

 

$

(26,110

)

 

$

(22,912

)

 

$

(79,469

)

 

$

(82,698

)

Net loss per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.25

)

 

$

(0.24

)

 

$

(0.79

)

 

$

(1.00

)

Diluted

 

$

(0.25

)

 

$

(0.24

)

 

$

(0.79

)

 

$

(1.00

)

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

102,164,455

 

 

 

94,596,519

 

 

 

100,642,126

 

 

 

82,677,824

 

Diluted

 

 

102,164,455

 

 

 

94,596,519

 

 

 

100,642,126

 

 

 

82,677,824

 

 

 


 

FTC Solar, Inc.

Condensed Consolidated Balance Sheets

(unaudited)

 

(in thousands, except shares and per share data)

 

September 30, 2022

 

 

December 31, 2021

 

ASSETS

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

49,820

 

 

$

102,185

 

Accounts receivable, net

 

 

52,929

 

 

 

107,548

 

Inventories

 

 

17,305

 

 

 

8,860

 

Prepaid and other current assets

 

 

12,458

 

 

 

17,186

 

Total current assets

 

 

132,512

 

 

 

235,779

 

Operating lease right-of-use assets

 

 

1,397

 

 

 

1,733

 

Property and equipment, net

 

 

1,731

 

 

 

1,582

 

Intangible assets, net

 

 

1,215

 

 

 

 

Goodwill

 

 

7,327

 

 

 

 

Other assets

 

 

4,300

 

 

 

3,926

 

Total assets

 

$

148,482

 

 

$

243,020

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts payable

 

$

26,946

 

 

$

39,264

 

Accrued expenses

 

 

19,617

 

 

 

47,860

 

Income taxes payable

 

 

430

 

 

 

47

 

Deferred revenue

 

 

4,910

 

 

 

1,421

 

Other current liabilities

 

 

9,576

 

 

 

4,656

 

Total current liabilities

 

 

61,479

 

 

 

93,248

 

Operating lease liability, net of current portion

 

 

996

 

 

 

1,340

 

Deferred income taxes

 

 

 

 

 

 

Other non-current liabilities

 

 

4,479

 

 

 

5,566

 

Total liabilities

 

 

66,954

 

 

 

100,154

 

Commitments and contingencies

 

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

 

Preferred stock par value of $0.0001 per share, 10,000,000 shares authorized; none issued as of September 30, 2022 and December 31, 2021

 

 

 

 

 

 

Common stock par value of $0.0001 per share, 850,000,000 shares authorized; 103,044,324 and 92,619,641 shares issued and outstanding as of September 30, 2022 and December 31, 2021

 

 

10

 

 

 

9

 

Treasury stock, at cost; 10,762,566 shares as of September 30, 2022 and December 31, 2021

 

 

 

 

 

 

Additional paid-in capital

 

 

310,212

 

 

 

292,082

 

Accumulated other comprehensive income (loss)

 

 

(350

)

 

 

7

 

Accumulated deficit

 

 

(228,344

)

 

 

(149,232

)

Total stockholders’ equity

 

 

81,528

 

 

 

142,866

 

Total liabilities and stockholders’ equity

 

$

148,482

 

 

$

243,020

 

 

 


 

FTC Solar, Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited)

 

 

 

Nine months ended September 30,

 

(in thousands)

 

2022

 

 

2021

 

Cash flows from operating activities

 

 

 

 

 

 

Net loss

 

$

(79,112

)

 

$

(82,707

)

Adjustments to reconcile net loss to cash used in operating activities:

 

 

 

 

 

 

Stock-based compensation

 

 

11,147

 

 

 

58,531

 

Depreciation and amortization

 

 

582

 

 

 

95

 

Loss from sale of property and equipment

 

 

183

 

 

 

 

Amortization of debt issue costs

 

 

526

 

 

 

288

 

Provision for obsolete and slow-moving inventory

 

 

129

 

 

 

 

Loss from unconsolidated subsidiary

 

 

 

 

 

354

 

Gain from disposal of investment in unconsolidated subsidiary

 

 

(1,745

)

 

 

(20,829

)

Gain on extinguishment of debt

 

 

 

 

 

(790

)

Warranty provision

 

 

7,374

 

 

 

2,118

 

Warranty recoverable from manufacturer

 

 

(299

)

 

 

(484

)

Bad debt expense

 

 

1,138

 

 

 

83

 

Deferred income taxes

 

 

(331

)

 

 

 

Lease expense and other

 

 

550

 

 

 

 

Impact on cash from changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable, net

 

 

53,481

 

 

 

(30,017

)

Inventories

 

 

(8,574

)

 

 

(9,590

)

Prepaid and other current assets

 

 

4,948

 

 

 

(16,609

)

Other assets

 

 

(661

)

 

 

180

 

Accounts payable

 

 

(11,867

)

 

 

(535

)

Accruals and other current liabilities

 

 

(25,507

)

 

 

21,243

 

Accrued interest – related party debt

 

 

 

 

 

(207

)

Deferred revenue

 

 

3,489

 

 

 

(13,374

)

Other non-current liabilities

 

 

(4,188

)

 

 

904

 

Lease payments and other, net

 

 

(348

)

 

 

(1,068

)

Net cash used in operating activities

 

 

(49,085

)

 

 

(92,414

)

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of property and equipment

 

 

(814

)

 

 

(778

)

Proceeds from sale of property and equipment

 

 

86

 

 

 

 

Acquisitions, net of cash acquired

 

 

(5,093

)

 

 

 

Proceeds from disposal of investment in unconsolidated subsidiary

 

 

1,745

 

 

 

22,332

 

Net cash provided by (used in) investing activities

 

 

(4,076

)

 

 

21,554

 

Cash flows from financing activities:

 

 

 

 

 

 

Repayments of borrowings

 

 

 

 

 

(1,000

)

Repurchase and retirement of common stock held by related parties

 

 

 

 

 

(54,155

)

Offering costs paid

 

 

 

 

 

(5,942

)

Deferred financing costs for revolving credit facility

 

 

 

 

 

(2,077

)

Proceeds from stock issuance

 

 

 

 

 

241,314

 

Proceeds from stock option exercises

 

 

788

 

 

 

 

Net cash provided by financing activities

 

 

788

 

 

 

178,140

 

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

 

8

 

 

 

9

 

Net increase (decrease) in cash, cash equivalents and restricted cash

 

 

(52,365

)

 

 

107,289

 

Cash, cash equivalents and restricted cash at beginning of period

 

 

102,185

 

 

 

33,373

 

Cash, cash equivalents and restricted cash at end of period

 

$

49,820

 

 

$

140,662

 

 

 

 

 

 

 

 

Supplemental disclosures of cash flow information:

 

 

 

 

 

 

Purchases of property and equipment included in ending accounts payable and accruals

 

$

27

 

 

$

40

 

Commencement of new operating leases

 

$

 

 

$

1,513

 

Cash paid during the period for third party interest

 

$

657

 

 

$

332

 

Cash paid during the period for taxes, net of refunds

 

$

119

 

 

$

 

 

 

 


 

Notes to Reconciliations of Non-GAAP Financial Measures to Nearest Comparable GAAP Measures

We present Non-GAAP gross profit (loss), Non-GAAP operating expense, Adjusted EBITDA, Adjusted net loss and Adjusted EPS as supplemental measures of our performance. We define Adjusted EBITDA as net loss plus (i) income tax (benefit) or expense, (ii) interest expense, (iii) depreciation expense, (iv) amortization of intangibles, (v) amortization of debt issuance costs, (vi) stock-based compensation (vii) gain on extinguishment of debt, (viii) gain from disposal of our investment in an unconsolidated subsidiary, (ix) non-routine legal fees, (x) severance, (xi) other costs and (xii) loss from unconsolidated subsidiary. We define Adjusted net loss as net loss plus (i) amortization of intangibles, (ii) amortization of debt issuance costs (iii) stock-based compensation, (iv) gain on extinguishment of debt, (v) gain from disposal of our investment in an unconsolidated subsidiary, (vi) non-routine legal fees, (vii) severance, (viii) other costs, (ix) loss from unconsolidated subsidiary and (x) income tax expense of adjustments. Adjusted EPS is defined as Adjusted Non-GAAP net loss per share using our weighted average basic and diluted shares outstanding.

Non-GAAP gross profit (loss), Non-GAAP operating expense, Adjusted EBITDA, Adjusted net loss and Adjusted EPS are intended as supplemental measures of performance that are neither required by, nor presented in accordance with U.S. generally accepted accounting principles (“GAAP”). We present these non-GAAP measures, many of which are commonly used by investors and analysts, because we believe they assist those investors and analysts in comparing our performance across reporting periods and on an ongoing basis, as well as against other entities, by excluding items that we do not believe are indicative of our core operating performance. In addition, we use Adjusted EBITDA, Adjusted Non-GAAP net loss and Adjusted EPS to evaluate the effectiveness of our business strategies.

Non-GAAP gross profit (loss), Non-GAAP operating expense, Adjusted EBITDA, Adjusted net loss and Adjusted EPS should not be considered in isolation or as substitutes for performance measures calculated in accordance with GAAP and you should not rely on any single financial measure to evaluate our business. These Non-GAAP financial measures, when presented, are reconciled to the most closely applicable GAAP measure as disclosed below.

The following table reconciles Non-GAAP gross profit (loss) to the most closely related GAAP measure for the three and nine months ended September 30, 2022 and 2021, respectively:

 

 

Three months ended September 30,

 

 

Nine months ended September 30,

 

(in thousands, except percentages)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

GAAP revenue

 

$

16,572

 

 

$

52,989

 

 

$

96,846

 

 

$

168,804

 

GAAP gross profit (loss)

 

$

(9,515

)

 

$

(8,039

)

 

$

(25,314

)

 

$

(23,970

)

Depreciation expense

 

 

116

 

 

 

31

 

 

 

272

 

 

 

47

 

Stock-based compensation

 

 

1,153

 

 

 

342

 

 

 

2,521

 

 

 

7,571

 

Severance

 

 

 

 

 

 

 

 

 

 

 

295

 

Other costs

 

 

 

 

 

 

 

 

102

 

 

 

165

 

Non-GAAP gross profit (loss)

 

$

(8,246

)

 

$

(7,666

)

 

$

(22,419

)

 

$

(15,892

)

Non-GAAP gross margin percentage

 

 

(49.8

%)

 

 

(14.5

%)

 

 

(23.1

%)

 

 

(9.4

%)

The following table reconciles Non-GAAP operating expenses to the most closely related GAAP measure for the three and nine months ended September 30, 2022 and 2021, respectively:

 

 

Three months ended September 30,

 

 

Nine months ended September 30,

 

(in thousands)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

GAAP operating expenses

 

$

17,179

 

 

$

14,731

 

 

$

54,397

 

 

$

79,291

 

Depreciation expense

 

 

(66

)

 

 

(22

)

 

 

(175

)

 

 

(48

)

Amortization expense

 

 

(135

)

 

 

 

 

 

(135

)

 

 

 

Stock-based compensation

 

 

(6,354

)

 

 

(5,039

)

 

 

(12,734

)

 

 

(50,960

)

Non-routine legal fees

 

 

(842

)

 

 

(988

)

 

 

(5,742

)

 

 

(1,778

)

Severance

 

 

(311

)

 

 

 

 

 

(1,037

)

 

 

 

Other (costs) credits

 

 

(324

)

 

 

(270

)

 

 

(1,802

)

 

 

(2,956

)

Non-GAAP operating expenses

 

$

9,147

 

 

$

8,412

 

 

$

32,772

 

 

$

23,549

 

 

 


 

The following table reconciles Non-GAAP Adjusted EBITDA to the related GAAP measure of loss from operations for the three and nine months ended September 30, 2022 and 2021, respectively:

 

 

Three months ended September 30,

 

 

Nine months ended September 30,

 

(in thousands)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

GAAP loss from operations

 

$

(26,694

)

 

$

(22,770

)

 

$

(79,711

)

 

$

(103,261

)

Depreciation expense

 

 

182

 

 

 

53

 

 

 

447

 

 

 

95

 

Amortization expense

 

 

135

 

 

 

 

 

 

135

 

 

 

 

Stock-based compensation

 

 

7,507

 

 

 

5,381

 

 

 

15,255

 

 

 

58,531

 

Non-routine legal fees

 

 

842

 

 

 

988

 

 

 

5,742

 

 

 

1,778

 

Severance

 

 

311

 

 

 

 

 

 

1,037

 

 

 

295

 

Other costs

 

 

324

 

 

 

270

 

 

 

1,904

 

 

 

3,121

 

Other income (expense)

 

 

(341

)

 

 

(13

)

 

 

(249

)