Press Releases

DataWind Reports Fiscal First Quarter 2017 Revenues up 70% to Record $21.1 Million

Gross Margin of 33.4% Drives Record Gross Profit of $7.0 Million

MISSISSAUGA, Ontario, Nov. 21, 2016 (GLOBE NEWSWIRE) -- DataWind Inc. (TSX:DW), a leader in the delivery of internet access in emerging markets, reported financial results for its fiscal first quarter 2017 ended June 30, 2016. All amounts are in Canadian dollars.

Fiscal Q1 2017 Financial and Operational Highlights

  • Revenues were a record for the eighth consecutive quarter, totaling $21.1 million, increasing 19% from the previous quarter and up 70% from the same year-ago quarter.
  • Revenue was driven by record unit sales of 380,000, up 12% from 340,000 in the previous quarter and up 74% from 218,000 in the same year-ago quarter.
  • Gross profit totaled a record $7.0 million, up 12% from the previous quarter and up 133% from the same year-ago quarter.
  • Adjusted EBITDA was positive for the fourth consecutive quarter, totaling $30,000 compared with an adjusted EBITDA loss of $623,000 during the year-ago quarter.
  • Cash and cash equivalents totaled $5.0 million at June 30, 2016 up from $0.2 million at March 31, 2016.

Management Commentary

“High demand for our low-cost Internet enabled devices drove our improved results during the first quarter of fiscal 2017," said Suneet Singh Tuli, president and CEO of DataWind. “We continue to position DataWind to meet the ever-increasing need for Internet access and to bring the next billion people online.”

Financial Summary

Revenue

Revenue for the first fiscal quarter of 2017 increased 70% to $21.1 million compared to $12.4 million in the same year-ago quarter. The increases were driven by the expansion of sales regions, carrier relationships and sales channels. Additionally, the company experienced an increase in sales from its TV home shopping partners.

Unit Sales

Unit sales totaled a record 380,000 for the first quarter of fiscal 2017, up 12% from 340,000 last quarter and up 74% from 218,000 in the same year-ago quarter.

Gross Profit

Gross profit was $7.0 million or 33.4% of sales in Q1 2017, compared with $3.0 million or 24.3% in the same year-ago period. Gross margins improved due to increased efficiency meeting channel requirements, improved cost controls and reduced import duties.

Research and Development (R&D)

R&D costs in the fiscal first quarter of 2017 were $391,000, an 15% increase from $340,000 during the comparable year-ago quarter.

General and Administrative (G&A)

G&A costs, which include sales and marketing expenses and salaries, were $6.6 million in the first quarter, as compared with $3.3 million in the same year-ago period. The increase was driven by increased selling and marketing expenses during the first quarter of 2017.

Net Loss

Net loss in Q1 2017 was $1.3 million or $(0.05) per common share, compared with $1.4 million or $(0.06) per common share in Q1 2016. The narrowing loss was due to increased sales and related improvement in gross margins offset by an increase in G&A costs.  

Adjusted EBITDA

Adjusted EBITDA for the quarter totaled $30,000 for Q2 2017, an improvement from an adjusted EBITDA loss of $623,000 in the year-ago quarter.

Balance Sheet

Working capital was $10.3 million at June 30, 2016 compared with $9.0 million at March 31, 2016.

Cash and cash equivalents totaled $5.0 million at June 30, 2016 up from $0.2 million at March 31, 2016. The increase was driven by a bought deal financing which netted $2.6 million after expenses coupled with further improvements in revenue and receivables collections during the quarter ended June 30, 2016

For more information, please refer to the company’s MD&A and full financial statements that have been filed with SEDAR.

Conference Call

DataWind management will hold a conference call followed by a question and answer period on Wednesday, November 23, 2016 at 4:15 p.m. Eastern time to discuss these results.

Interested parties can listen to the live presentation by dialing the toll-free number or by clicking the webcast link below.

Date: Wednesday, November 23, 2016
Time: 4:15 p.m. Eastern time
Toll-free number: +1(844) 647-5492
International number: +1(661) 378-9451
Conference ID: 24453312
Webcast: http://edge.media-server.com/m/p/6ajizroy

Please call the conference telephone number 10 minutes before the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Liolios at +1(949) 574-3860.

A replay of the call will be available after the call ends through December 23, 2016 via webcast link on the Investor Information section of the DataWind website at www.datawind.com.

About DataWind

DataWind, Inc. is a leader in providing affordable mobile Internet connectivity in emerging markets. The company's patented, cloud-based technology reduces up to 97% the amount of data needed for web browsing, providing a broadband experience on any network -- even on legacy 2G networks that are still prevalent in developing countries. DataWind also provides economical smartphones and tablets that come bundled with one year of unlimited Internet access, making it the largest tablet provider in India. DataWind's unique solution offers broad social and economic benefits for the billions of people around the world for whom an Internet connection was previously out of reach. DataWind is traded on the Toronto Stock Exchange (TSX:DW). For more information, visit www.datawind.com.

Adjusted EBITDA

Adjusted net loss before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) is a non-IFRS measure and excludes finance costs, interest income, income tax expense or recovery, depreciation and amortization and income and expenses of a non-recurring, unusual or one-time nature. Adjusted EBITDA is a measure used by management, the retail industry and investors as an indicator of the Company’s operating performance, ability to incur and service debt, and as a valuation metric. While Adjusted EBITDA is a non-IFRS measure, management believes that it is an important indicator of operating performance because it excludes the effect of financing and investing activities by eliminating the effects of interest and depreciation and removes the impact of certain non-recurring items that are not indicative of our ongoing operating performance. Therefore, management believes Adjusted EBITDA gives investors greater transparency in assessing the Company’s result of operations

These measures do not have any standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other reporting issuers. Adjusted EBITDA should not be considered in isolation or as an alternative to measures prepared in accordance with IFRS.

Forward-Looking Information

This press release includes certain forward-looking statements that are based upon current expectations, which involve risks and uncertainties associated with our business and the environment in which the business operates. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements, including those identified by the expressions “anticipate”, “believe”, “plan”, “estimate”, “expect”, “intend” and similar expressions to the extent they relate to the Company or its management. The forward- looking statements are not historical facts, but reflect management’s current expectations regarding future results or events. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations. The Company does not undertake or accept any obligation to release publicly any updates or revisions to any forward-looking statements to reflect any change in the Company’s expectations, except as prescribed by applicable securities laws.

Key assumptions made in preparing the forward-looking statements contained in this MD&A include, but are not limited to, the following: the Company will continue to successfully increase its sales volumes, the Company will be able to maintain its gross margin, and the Company will continue to effectively manage the transition from private to public entity by hiring key senior and middle management and effectively rolling out and adopting appropriate policy changes.

No securities regulatory authority has either approved or disapproved the contents of this press release/media advisory.


-Tables to Follow-

DataWind Inc.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION
As at Jun 30, 2016 and March 31, 2016
(in thousands of Canadian dollars except per share data and except where indicated) (Unaudited)
       
 ASSETS June
2016
  March
2016
 Current assets      
 Cash and cash equivalents $   5,035     $   230  
 Trade and other receivables     31,634         29,467  
 Inventories     12,077         10,036  
      48,746         39,733  
 Non-current assets      
 Property, plant and equipment     212         218  
  Total Assets $   48,958     $   39,951  
       
 LIABILITIES      
 Current liabilities      
 Accounts payable and accrued liabilities $   26,650     $   18,607  
 Loans and borrowings     11,846         12,291  
 Total Liabilities     38,496         30,898  
 SHAREHOLDERS’ EQUITY        
 Share capital     54,760         52,276  
 Contributed surplus     3,563          3,521  
 Accumulated other comprehensive loss     (47 )       (223 )
 Deficit     (47,814 )       (46,521 )
 Total Shareholders' Equity      10,462         9,053  
 Total Liabilities and Shareholders' Equity $   48,958     $   39,951  
       
 



DataWind Inc.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS AND
COMPREHENSIVE LOSS
Three month periods ended June 30, 2016 and June 30, 2015
(in thousands of Canadian dollars except per share data and except where indicated) (Unaudited)
 
 

 
 Three Months Ended
June 30,
    2016     2015  
Revenue $   21,060   $   12,397  
Cost of goods sold     14,035       9,387  
Gross profit     7,025       3,010  
     
Operating expenses:    
Research and development     391       340  
Administration cost     6,618       3,309  
IPO transaction costs   -     -  
Foreign exchange loss/(gain)   42       (198 )
Total operating expenses     7,051       3,451  
Operating profit/ (loss)     (26 )     (441 )
Finance and other income     -       20  
Finance expense     (1,267 )     (965 )
Loss before income taxes     (1,293 )     (1,386 )
Tax expense     -       -  
Net loss     (1,293 )     (1,386 )
Other comprehensive income:    
Unrealized foreign exchange translation gain /(loss)   176     (680 )
Net comprehensive loss for the period $   (1,281 ) $   (2,066 )
     
Net loss per share    
Basic $ (0.05 ) $ (0.06 )
               
Weighted Average number of shares outstanding   23,560,232     22,057,623  



DataWind Inc.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
Three month periods ended June 30, 2016 and June 30, 2015
(in thousands of Canadian dollars except per share data and except where indicated) (Unaudited)
 
   Three-month period ended 
  June 30,
    2016     2015  
Cash flows from operating activities    
Net loss for the period $   (1,293 ) $ (1,386 )
Non-cash items:    
Foreign exchange translation loss/(gain)   42     (880 )
Depreciation of property and equipment     14     16  
Finance expenses   1,267     418  
Provision for bad debt and slow moving inventory   100     -  
Stock based compensation     42     32  
Changes in non-cash working capital items   172     (1,800 )
     
Trade and other receivables   (2,167 )   (2,558 )
Inventories   (2,041 )   (2,801 )
Accounts payable and accrued liabilities   8,043     2,845  
Net cash used in operating activities   4,007     (4,314 )
Cash flows from investing activities    
Addition of property and equipment during the period   (12 )   (14 )
Net cash used in investing activities   (12 )   (14 )
Cash flows from financing activities    
Issuance of common shares   2,484     -  
Loan received during the period   -     4,179  
Interest paid during the period   (666 )   -  
Net cash (used in)/provided by financing activities   1,818     4,179  
Net change in cash and cash equivalents   5,813     (149 )
Cash and cash equivalents – beginning of period   230     10,698  
Exchange gains/(losses)   (1,008 )   (234 )
Cash and cash equivalents – end of period  $  5,035   $ 10,315  



DataWind Inc.
RECONCILIATION OF QUARTERLY NET LOSS TO ADJUSTED EBITDA
(in thousands of Canadian dollars except per share data and except where indicated) (Unaudited)
 
    Three-month periods ended
(in CAD "000" except per share amounts)   Jun. 30,
2016
  Mar. 31,
2016
  Jun. 30,
2015
Net loss   $   (1,293 )   $    (1,640 )   $   (1,386 )
  Depreciation/amortization expenses       14          265         16  
  Extended payment finance (i)        719          564          547  
  Finance costs        548         623          418  
  Finance and other income       -         27          (20 )
  Foreign exchange translation (gain)/loss       42         279         (198 )
Adjusted EBITDA (ii)   $     30     $     118     $     (623 )
Adjusted EBITDA loss per share   $     0.00     $   0.01     $     (0.03 )
 
(i) Extended Payment Finance represents finance cost paid to third parties for
financing of Chinese manufacturers for the extended payment terms for material.
 
(ii) Adjusted EBITDA is a measure used by management, the retail industry and
investors as an indicator of the Company’s performance, ability to incur and service
debt and as a valuation metric. Adjusted EBITDA is a non-IFRS measure.

Please see the SEDAR filings for the complete consolidated financial statements which include footnotes that are an integral part of these statements.

Contact:
Dan Hilton
Chief Financial Officer
DataWind Inc.
+1(613) 277-3266

Investor Relations:
Michael Koehler
Liolios Group, Inc.
+1(949) 574-3860

Source: DataWind, Inc.