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Boingo Wireless Reports Full Year 2020 Financial Results

·20-min read

Announced agreement to be acquired by Digital Colony for a total transaction value of approximately $854 million

A Tier 1 carrier to join the Long Island Rail Road Atlantic Branch portion of the MTA project

Signed Wi-Fi offload agreement with a Tier 1 carrier

Boingo Wireless (NASDAQ:WIFI), the leading distributed antenna system ("DAS") and Wi-Fi provider that serves carriers, consumers, property owners and advertisers worldwide, today announced the Company's financial results for the full year ended December 31, 2020. In order to better align reportable segments with the growth drivers and strategic direction of the Company, Boingo restructured its business into five reportable and operating segments – Carrier Services, Military, Private Networks and Emerging Technologies, Multifamily and Legacy. Segment operating results for the full year ended December 31, 2020 and the comparable 2019 period have been recast to reflect the new presentation as five reportable and operating segments.

Management Commentary

"We were extremely focused on managing our expenses and improving profitability in 2020 which led to adjusted EBITDA of $83.5 million increasing 1.0% compared to 2019 despite the 10.0% decline in revenue," commented Mike Finley, Chief Executive Officer, Boingo Wireless. "The headwinds resulting from COVID-19 accelerated the anticipated decline in our Legacy retail and advertising products as well as delayed progress on several projects into 2021. Despite these challenges, we did an incredible job maintaining velocity in the business in 2020. We signed a Tier 1 carrier to the Long Island Rail Road Atlantic Branch portion of the MTA project for DAS. In addition, we signed a Wi-Fi offloading contract with a Tier 1 carrier to begin to utilize Boingo’s Wi-Fi footprint."

Mr. Finley concluded, "As announced this morning, we have agreed to be acquired by Digital Colony in an all-cash transaction valued at approximately $854 million. Our team at Boingo will continue to execute our strategy with access to more capital and resources to expand our network and robust suite of products and services. Following a year-long formal strategic process through a once-in-a-century pandemic, we could not be more thrilled with the outcome which we believe maximizes value for our stockholders."

Full Year 2020 Consolidated Financial Highlights

  • Revenue of $237.4 million decreased 10.0% compared to $263.8 million in 2019.

  • Net loss attributable to common stockholders was $(17.1) million, or $(0.38) per diluted share, compared to $(10.3) million, or $(0.23) per diluted share, in 2019.

  • Adjusted EBITDA of $83.5 million increased 1.0% compared to $82.6 million in 2019. Adjusted EBITDA, which is a non-GAAP financial measure, is defined below and is reconciled to net loss attributable to common stockholders, the most comparable measure under GAAP, in the schedule entitled "Reconciliation of Net Loss Attributable to Common Stockholders to Adjusted EBITDA."

  • Net cash provided by operating activities of $72.5 million decreased 33.3% compared to $108.7 million in 2019.

  • Free cash flow was $(33.7) million compared to $(25.0) million in 2019. Free cash flow, which is a non-GAAP financial measure, is defined below and is reconciled to net cash provided by operating activities, the most comparable measure under GAAP, in the schedule entitled "Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flows."

  • Cash, cash equivalents and marketable securities were $40.7 million at December 31, 2020, down from $54.6 million at September 30, 2020. As of December 31, 2020, the Company had no amounts outstanding and $150.0 million of remaining borrowing capacity under its revolving credit facility.

Full Year 2020 Segment Results

Carrier Services
Revenue of $107.7 million decreased 7.0% compared to $115.8 million in 2019. Gross profit margin of 37.0% decreased 740 basis points compared to 44.4% in 2019. Income from operations of $19.7 million decreased 34.5% compared to $30.0 million in 2019.

Military
Revenue of $76.8 million increased 2.5% compared to $74.9 million in 2019. Gross profit margin of 76.2% increased 60 basis points compared to 75.6% in 2019. Income from operations of $24.0 million increased 15.9% compared to $20.7 million in 2019.

Private Networks and Emerging Technologies
Revenue of $2.2 million increased 10.4% compared to $2.0 million in 2019. Gross profit margin of 76.4% compared to a non-meaningful amount in 2019. Income from operations of $1.3 million decreased 35.5% compared to $2.0 million in 2019.

Multifamily
Revenue of $21.6 million decreased 13.8% compared to $25.0 million in 2019. Gross profit margin of 26.9% increased 520 basis points compared to 21.7% in 2019. Loss from operations of $(6.7) million decreased 7.4% compared to $(7.2) million in 2019.

Legacy
Revenue of $29.1 million decreased 36.7% compared to $46.1 million in 2019. Gross profit margin of 57.5% decreased 480 basis points compared to 62.3% in 2019. Income from operations was essentially breakeven compared to $5.6 million in 2019.

Business Highlights

  • The Company announced it has signed an agreement with a Tier 1 carrier to join the Long Island Rail Road ("LIRR") Atlantic Branch portion of the MTA project in New York. The MTA agreements to design, build, operate and maintain wireless services for the LIRR Atlantic Branch and Grand Central Terminal East Side Access facility represent the largest DAS deployments in the Company’s history.

  • The Company signed a Wi-Fi offloading agreement with a Tier 1 carrier. Beginning in November 2020, this carrier’s customers have begun to utilize Boingo’s high-speed Wi-Fi networks via carrier offloading at one airport with more airports expected to launch during 2021.

  • Boingo has been selected to build and operate a carrier grade Wi-Fi 6 network at Rockefeller Center, New York City’s landmark property spanning 22 acres in Midtown Manhattan.

  • As of December 31, 2020, the Company had a total of 74 DAS venues live comprised of 41,200 DAS nodes and an additional 11,500 nodes in backlog. This compares to 73 venues live comprised of 38,100 nodes as of December 31, 2019.

Acquisition by Digital Colony

On March 1, 2021, the Company announced that it has signed a definitive merger agreement to be acquired by an affiliate of Digital Colony Management, LLC. Under the terms of the agreement, which was unanimously approved by Boingo’s Board of Directors, Digital Colony will acquire all of the outstanding shares of Boingo common stock for $14.00 per share in cash, in a transaction valued at approximately $854 million, including the assumption of approximately $199 million of Boingo’s net debt obligations. The offer price represents a 23% premium to Boingo’s closing price of $11.40 on February 26, 2021.

In connection with the proposed transaction, Boingo has canceled its conference call to discuss the Company’s full year 2020 results, previously scheduled for March 1, 2021 at 4:30 PM Eastern Time. The Company expects to file its Annual Report on Form 10-K for year ended December 31, 2020 on March 1, 2021.

Use of Non-GAAP Financial Measures

To supplement Boingo Wireless’ financial statements presented on a GAAP basis, Boingo Wireless provides Adjusted EBITDA and free cash flow as supplemental measures of its performance.

The Company defines Adjusted EBITDA as net loss attributable to common stockholders plus depreciation and amortization of property and equipment, stock-based compensation expense, amortization of intangible assets, income tax expense (benefit), interest expense and amortization of debt discount, interest income and other expense, net, non-controlling interests, and excludes charges or gains that are nonrecurring, infrequent, or unusual. Boingo Wireless believes Adjusted EBITDA is useful to investors in evaluating its operating performance. Boingo's management uses Adjusted EBITDA in conjunction with accounting principles generally accepted in the United States, or GAAP, and other operating performance measures as part of its overall assessment of the Company's performance for planning purposes, including the preparation of its annual operating budget, to evaluate the effectiveness of its business strategies and to communicate with its board of directors concerning its financial performance. Adjusted EBITDA should not be considered as an alternative financial measure to net loss attributable to common stockholders, which is the most directly comparable financial measure calculated in accordance with GAAP, or any other measure of financial performance calculated in accordance with GAAP. Adjusted EBITDA for 2020 excludes transaction costs and litigation loss contingencies because they represent non-recurring charges and are not indicative of the underlying performance of the Company’s business operations.

The Company defines free cash flow as net cash provided by operating activities, less purchases of property and equipment. Boingo Wireless believes that free cash flow provides investors with additional useful information to measure operating liquidity because it reflects the amount of cash generated by the Company's operations after the purchases of property and equipment that can be used for strategic opportunities. Free cash flow should not be considered as an alternative financial measure to net cash provided by operating activities, which is the most directly comparable financial measure calculated in accordance with GAAP, or any other measure of financial performance calculated in accordance with GAAP.

About Boingo Wireless

Boingo Wireless, Inc. (NASDAQ: WIFI) helps the world stay connected. Our vast footprint of DAS, Wi-Fi and small cells reaches more than a billion people annually, making Boingo one of the largest providers of indoor wireless networks. You’ll find Boingo connecting people and things at airports, stadiums, military bases, convention centers, multifamily communities and commercial properties. To learn more about the Boingo story, visit www.boingo.com.

Additional Information and Where to Find It

In connection with the transaction with Digital Colony, the Company intends to file relevant materials with the SEC, including a preliminary proxy statement on Schedule 14A. Promptly after filing its definitive proxy statement with the SEC, the Company will mail the proxy materials to each stockholder entitled to vote at the special meeting relating to the transaction. This communication is not a substitute for the proxy statement or any other document that the Company may file with the SEC or send to its stockholders in connection with the proposed transaction. BEFORE MAKING ANY VOTING DECISION, INVESTORS AND SECURITY HOLDERS OF THE COMPANY ARE URGED TO READ THESE MATERIALS (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) AND ANY OTHER RELEVANT DOCUMENTS IN CONNECTION WITH THE TRANSACTION THAT THE COMPANY WILL FILE WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE COMPANY AND THE TRANSACTION. The definitive proxy statement, the preliminary proxy statement and other relevant materials in connection with the transaction (when they become available), and any other documents filed by the Company with the SEC, may be obtained free of charge at the SEC’s website (http://www.sec.gov) or at the Company’s website (https://investors.boingo.com) or by writing to the Company’s Secretary at 10960 Wilshire Blvd., 23rd Floor, Los Angeles, California 90024.

Participants in the Solicitation

The Company and its directors and executive officers may be deemed to be participants in the solicitation of proxies from the Company’s stockholders with respect to the transaction. Information about the Company’s directors and executive officers and their ownership of the Company’s common stock is set forth in the proxy statement on Schedule 14A filed with the SEC on April 21, 2020. Information regarding the identity of the potential participants, and their direct or indirect interests in the transaction, by security holdings or otherwise, will be set forth in the proxy statement and other materials to be filed with SEC in connection with the transaction.

Cautionary Statement Regarding Forward-Looking Statements

This press release contains "forward-looking statements" that involves risks, uncertainties and assumptions. Forward-looking statements can be identified by words such as "anticipates," "intends," "plans," "seeks," "believes," "estimates," "expects" and similar references to future periods. These forward-looking statements include the quotations from management in this press release, as well as any regarding Boingo’s intent to complete the transaction with Digital Colony, statements regarding Boingo's future growth opportunities, operations and financial performance, including due to COVID-19, strategic plans and transactions and any future guidance. Forward-looking statements are based on Boingo's current expectations and assumptions regarding its business, the economy and other future conditions. Since forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Boingo's actual results may differ materially from those contemplated by the forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include the impact of health epidemics, including the recent COVID-19 pandemic, on Boingo’s business, Boingo's ability to maintain its existing relationships and establish new relationships with venue partners, its ability to complete build-outs and sign venue contracts, its ability to achieve and maintain revenue growth and achieve profitability, its ability to execute on its strategic and business plans, as well as its ability to successfully compete with new technologies and adapt to changes in the wireless industry. Additionally, the following uncertainties and other factors could cause actual results to differ from those set forth in the forward-looking statements: the risk that the transaction may not be consummated in a timely manner, if at all; the risk that the transaction may not be consummated as a result of buyer’s failure to comply with its covenants and that, in certain circumstances, Boingo may not be entitled to a termination fee; the risk that the definitive merger agreement may be terminated in circumstances that require Boingo to pay a termination fee; risks related to the diversion of management’s attention from Boingo’s ongoing business operations; risks regarding the failure of the buyer to obtain the necessary financing to complete the transaction; the effect of the announcement of the transaction on Boingo’s business relationships (including, without limitation, customers and venues), operating results and business generally; and risks related to obtaining the requisite consents to the transaction, including, without limitation, the timing (including possible delays) and receipt of regulatory approvals from governmental entities (including any conditions, limitations or restrictions placed on these approvals) and the risk that one or more governmental entities may deny approval. Further, there are other risks and uncertainties that could cause actual results to differ from those set forth in the forward-looking statements, which are described more fully in documents filed with or furnished to the Securities and Exchange Commission (SEC), including Boingo's Form 10-K for the year ended December 31, 2020 to be filed with the SEC on March 1, 2021, which Boingo incorporates by reference into this press release. Any forward-looking statement made by Boingo in this press release speaks only as of the date on which it is made. Factors or events that could cause Boingo's actual results to differ may emerge from time to time, and it is not possible for Boingo to predict all of them. Boingo undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

Boingo, Boingo Wi-Finder, Boingo Broadband, and the Boingo Wireless Logo are registered trademarks of Boingo Wireless, Inc. All other trademarks are the properties of their respective owners.

Boingo Wireless, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands, except per share amounts)

Year Ended

December 31,

2020

2019

Revenue

$

237,416

$

263,790

Cost of sales

114,784

119,613

Gross profit

122,632

144,177

Selling, general and administrative expenses

127,461

143,310

Amortization of intangible assets

4,288

4,571

Loss from operations

(9,117

)

(3,704

)

Interest expense and amortization of debt discount

(9,004

)

(8,618

)

Interest income and other expense, net

538

2,017

Loss before income taxes

(17,583

)

(10,305

)

Income tax (expense) benefit

(157

)

28

Net loss

(17,740

)

(10,277

)

Net (loss) income attributable to non-controlling interests

(647

)

19

Net loss attributable to common stockholders

$

(17,093

)

$

(10,296

)

Net loss per share attributable to common stockholders:

Basic

$

(0.38

)

$

(0.23

)

Diluted

$

(0.38

)

$

(0.23

)

Weighted average shares used in computing net loss per share attributable to common stockholders:

Basic

44,440

43,977

Diluted

44,440

43,977

Boingo Wireless, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except per share amounts)

December 31,

2020

2019

Assets

Current assets:

Cash and cash equivalents

$

36,111

$

40,401

Marketable securities

4,565

40,214

Accounts receivable, net

27,716

33,350

Prepaid expenses and other current assets

8,388

8,235

Total current assets

76,780

122,200

Property and equipment, net

406,328

380,243

Operating lease right-of-use assets, net

12,876

15,196

Goodwill

58,579

58,579

Intangible assets, net

10,652

14,940

Other assets

11,264

9,309

Total assets

$

576,479

$

600,467

Liabilities and stockholders’ equity

Current liabilities:

Accounts payable

$

22,489

$

24,298

Accrued expenses and other liabilities

55,984

65,152

Deferred revenue

65,292

61,229

Current portion of operating leases

2,632

2,695

Current portion of long-term debt

778

778

Current portion of finance leases

573

2,721

Current portion of notes payable

95

1,527

Total current liabilities

147,843

158,400

Deferred revenue, net of current portion

159,462

166,660

Long-term portion of operating leases

14,487

17,357

Long-term debt

171,695

162,708

Long-term portion of finance leases

572

Long-term portion of notes payable

95

Deferred tax liabilities

984

993

Other liabilities

87

201

Total liabilities

494,558

506,986

Commitments and contingencies

Stockholders’ equity:

Preferred stock, $0.0001 par value; 5,000 shares authorized; no shares issued and outstanding

Common stock, $0.0001 par value; 100,000 shares authorized; 44,631 and 44,224 shares issued and outstanding for 2020 and 2019, respectively

4

4

Additional paid-in capital

241,868

234,638

Accumulated deficit

(158,066

)

(140,973

)

Accumulated other comprehensive loss

(2,279

)

(1,426

)

Total common stockholders’ equity

81,527

92,243

Non-controlling interests

394

1,238

Total stockholders’ equity

81,921

93,481

Total liabilities and stockholders’ equity

$

576,479

$

600,467

Boingo Wireless, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

Year Ended December 31,

2020

2019

Cash flows from operating activities

Net loss

$

(17,740

)

$

(10,277

)

Adjustments to reconcile net loss including non-controlling interests to net cash provided by operating activities:

Depreciation and amortization of property and equipment

78,313

70,862

Amortization of intangible assets

4,288

4,571

Impairment loss, loss on disposal of fixed assets and intangible assets held for sale, net, and other

77

440

Stock-based compensation

7,606

8,596

Amortization of deferred financing costs and debt discount, net of amounts capitalized

8,173

8,412

Non-cash operating lease cost

2,320

2,350

Gains and amortization of premiums/discounts for marketable securities

(4

)

(609

)

Change in fair value of contingent consideration

(961

)

Bad debt expense

28

181

Change in deferred income taxes

(9

)

(80

)

Changes in operating assets and liabilities:

Accounts receivable

5,289

9,184

Prepaid expenses and other assets

(2,744

)

1,233

Accounts payable

(1,693

)

426

Accrued expenses and other liabilities

(5,290

)

7,054

Deferred revenue

(3,134

)

10,301

Operating lease liabilities

(2,932

)

(2,973

)

Net cash provided by operating activities

72,548

108,710

Cash flows from investing activities

Purchases of marketable securities

(15,032

)

(81,177

)

Proceeds from maturities of marketable securities

50,665

41,593

Purchases of property and equipment

(106,262

)

(133,696

)

Net cash used in investing activities

(70,629

)

(173,280

)

Cash flows from financing activities

Debt issuance costs

(1,815

)

Proceeds from credit facility

100,000

3,500

Principal payments on credit facility

(100,778

)

(778

)

Payments of acquisition related consideration

(3,027

)

Proceeds from exercise of stock options

708

470

Repurchase of common stock for retirement

(747

)

Payments of finance leases and notes payable

(4,247

)

(6,608

)

Payments of withholding tax on net issuance of restricted stock units

(1,730

)

(34,420

)

Payments to non-controlling interest

(262

)

(1,003

)

Net cash used in financing activities

(6,309

)

(44,428

)

Effect of exchange rates on cash

100

(13

)

Net decrease in cash and cash equivalents

(4,290

)

(109,011

)

Cash and cash equivalents at beginning of year

40,401

149,412

Cash and cash equivalents at end of year

$

36,111

$

40,401

Supplemental disclosure of cash flow information

Cash paid for interest, net of amounts capitalized

$

853

$

154

Cash paid for taxes, net of refunds

$

287

$

(20

)

Supplemental disclosure of non-cash investing and financing activities

Property and equipment costs included in accounts payable, accrued expenses and other liabilities

$

35,125

$

39,037

Capitalized stock-based compensation included in property and equipment costs

$

645

$

860

Financed sale of intangible assets held for sale

$

217

$

290

Boingo Wireless, Inc.

Reconciliation of Net Loss Attributable to Common Stockholders to Adjusted EBITDA

(Unaudited)

(In thousands)

Year Ended

December 31,

2020

2019

Net loss attributable to common stockholders

$

(17,093

)

$

(10,296

)

Depreciation and amortization of property and equipment

78,313

70,862

Stock-based compensation expense

7,606

8,596

Amortization of intangible assets

4,288

4,571

Income tax expense (benefit)

157

(28

)

Interest expense and amortization of debt discount

9,004

8,618

Interest income and other expense, net

(538

)

(2,017

)

Non-controlling interests

(647

)

19

Restructuring charges

2,298

Transaction costs

1,270

Litigation loss contingencies

1,100

Adjusted EBITDA

$

83,460

$

82,623

Boingo Wireless, Inc.

Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flows

(Unaudited)

(In thousands)

Year Ended

December 31,

2020

2019

Net cash provided by operating activities

$

72,548

$

108,710

Purchases of property and equipment

(106,262

)

(133,696

)

Free cash flows

$

(33,714

)

$

(24,986

)

Boingo Wireless, Inc.

Segment Results of Operations

(Unaudited)

(In thousands)

Year Ended

December 31,

2020

2019

Revenue:

Carrier services

$

107,746

$

115,806

Military

76,753

74,911

Multifamily

21,567

25,008

Legacy

29,134

46,058

Private networks and emerging technologies

2,216

2,007

Total revenue

$

237,416

$

263,790

Cost of sales:

Carrier services

$

67,867

$

64,340

Military

18,252

18,299

Multifamily

15,756

19,569

Legacy

12,385

17,361

Private networks and emerging technologies

524

44

Total cost of sales

$

114,784

$

119,613

Gross profit:

Carrier services

37.0

%

44.4

%

Military

76.2

75.6

Multifamily

26.9

21.7

Legacy

57.5

62.3

Private networks and emerging technologies

76.4

97.8

Total gross profit

51.7

%

54.7

%

Income (loss) from operations:

Carrier services

$

19,671

$

30,043

Military

24,027

20,736

Multifamily

(6,690

)

(7,225

)

Legacy

42

5,616

Private networks and emerging technologies

1,266

1,963

Unallocated overhead costs

(47,433

)

(54,837

)

Total loss from operations

$

(9,117

)

$

(3,704

)

Boingo Wireless, Inc.

Key Business Metrics

(Unaudited)

(In thousands)

December 31,

2020

2019

Key business metrics:

DAS nodes(1)

41.2

38.1

DAS nodes in backlog(2)

11.5

11.7

Subscribers—military(3)

128

133

(1)

This metric represents the number of active DAS nodes as of the end of the period. A DAS node is a single communications endpoint, typically an antenna, which transmits or receives radio frequency signals wirelessly. This measure is an indicator of the reach of the Company’s DAS network.

(2)

This metric represents the number of DAS nodes under contract but not yet active as of the end of the period.

(3)

This metric represents the number of paying customers who are on a month-to-month subscription plan at a given period end.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210301005318/en/

Contacts

PRESS:
Melissa Robinson
Vice President, Marketing & Communications
mrobinson@boingo.com
(818) 321-7234

INVESTORS:
Kimberly Orlando and Ariel Papermaster
ADDO Investor Relations
investors@boingo.com
(310) 829-5400