Revenue of $2.3 Million Increased 104%
Year-over-Year and 95% Sequentially
Full Year Bookings and Revenue Guidance
Reiterated
Quanergy Systems, Inc. (OTC: QNGY) (“Quanergy” or the
“Company”), a leading provider of LiDAR sensors and smart 3D
solutions, today announced financial results for the three months
ended September 30, 2022.
Third Quarter 2022 Highlights
- Last 12 month bookings1 increased 154% year-over-year to $10.8
million
- Third quarter revenue of $2.3 million, near the top end of the
Company’s guidance range, and up 104% year-over-year
- Third quarter GAAP net loss of $17.7 million compared to $19.0
million in the third quarter of 2021
- Third quarter adjusted EBITDA loss of $12.3 million compared to
$6.1 million in the third quarter of 2021, an increase driven
primarily by investments to support growth and public company
costs
- Ended the third quarter with cash, cash equivalents and
restricted cash of $7.1 million, which does not include proceeds
from an underwritten public offering (the “Offering”) completed on
November 2, 2022 and a drawdown under the Global Emerging Markets
Group share subscription facility (the “GEM Facility”), each of
which was completed after the end of the quarter
Liquidity and Capital Markets
Activities
- On October 3, 2022, the Company settled a drawdown under the
GEM Facility which resulted in cash proceeds of $1.7 million.
- On November 2, 2022, the Company completed the Offering,
resulting in net proceeds of approximately $15.4 million after
deducting underwriting discounts and commissions and offering
expenses. The net proceeds of the offering will be used primarily
for general corporate purposes.
- On November 9, 2022, trading in the Company’s shares was
transferred to the over-the-counter (“OTC”) market after the
Company no longer met NYSE listing requirements. The Company
intends to apply to have the common stock quoted on the OTCQB, a
higher market tier operated by the OTC Markets Group, Inc.
1 Bookings are defined as non-cancellable orders expected to be
delivered within 12 months of purchase order receipt.
“The third quarter evidenced improving demand conditions and
reduced lead times which supported year-over-year growth in
bookings and revenue, driven by demand from the security, smart
spaces and industrial markets. We believe the demand environment
and improved supply chain dynamics will continue to support our
growth and scale moving forward,” said Kevin Kennedy, Chairman and
CEO of Quanergy.
Third Quarter 2022 Financial
Results
Revenue for the third quarter of 2022 totaled $2.3 million,
compared with $1.1 million in the same period of 2021, representing
year-over-year growth of 104%. The year-over-year increase was
driven by strength from the security, smart spaces and industrial
markets as well as improved conversion of bookings to revenue
resulting from improvements in supply chain conditions.
GAAP gross profit was negative $167 thousand for the quarter,
compared to positive $149 thousand in the third quarter of 2021.
Excluding stock-based compensation expense, non-GAAP adjusted gross
profit was $12 thousand for the quarter, compared to $165 thousand
in the third quarter of 2021. Non-GAAP adjusted gross profit in the
third quarter of 2022 was adversely impacted by $0.7 million of
expenses related to transient material purchasing surcharges.
GAAP net loss was $17.7 million for the quarter compared to
$19.0 million for the same period in 2021.
Adjusted EBITDA loss for the third quarter of 2022 was $12.3
million compared with $6.1 million for the same period in 2021, a
decrease primarily driven by increased headcount, investments to
support growth and public company costs.
As of September 30, 2022, the Company had $7.1 million in cash,
cash equivalents and restricted cash on its balance sheet. This
amount does not include $15.4 million of net proceeds from the
Offering and $1.7 million of proceeds from a drawdown under the GEM
Facility – both completed after the end of the third quarter.
Net cash from operating activities was negative $11.6 million in
the third quarter of 2022 compared to negative $7.6 million in the
third quarter of 2021. Free cash flow was negative $11.6 million in
the third quarter of 2022 compared to negative $7.6 million in the
prior year period.
On October 3, 2022, the Company implemented a restructuring
plan, including a reduction in staff, in order to reduce operating
expenses and extend the Company’s cash runway.
Key Operational Highlights
- Expanded security customer base with key critical
infrastructure wins in data centers, power utilities, police
stations, transportation authorities and international
airports
- Demonstrated continued traction in the industrial automation
market with several large orders booked and new design wins
secured
- Announced QORTEX 2.3, which adds motion-based noise reduction,
occlusion filter and anti-masking capabilities to the Company’s
proprietary QORTEX platform
- Partnered with Fabrinet to expand Quanergy’s global
manufacturing production of LiDAR sensors
- Continued expansion of Quanergy’s broad technology partner
ecosystem including:
- Integration of Quanergy’s M-Series sensors and QORTEX DTC 3D
perception software with Hanwha’s Techwin’s video management
software, Wisenet WAVE VMS, which enables advanced sensing
capabilities to help reduce false alarm rates and operational costs
for security
- Advancis integration of Quanergy’s LiDAR-based solutions into
WinGuard PSIM Software to provide enhanced perimeter intrusion
detection and people-counting applications
- Nx Meta selection of Quanergy’s Security and Flow Management
solution to provide LiDAR integration with Network Optix
Outlook for 2022
- Quanergy reiterates 2022 bookings guidance of $14.0 - $18.0
million, representing 121% year-over-year growth at the midpoint.
The timing and number of large deals will be a key driver of the
2022 bookings results.
- The Company reiterates full year 2022 revenue guidance of $7.0
- $9.0 million, representing 104% year-over-year growth at the
midpoint.
- The Company plans to implement additional measures to reduce
its cash burn rate to be executed prior to year-end.
The Company’s expectations with respect to Q4 2022 and full year
2022 are estimated. Actual revenues for Q4 2022 and full year 2022
are subject to completion of the Company’s financial closing
procedures for the period, and the actual and reported financial
results for Q4 2022 and full year 2022 may materially differ. As
such, the Company’s expectations with respect to Q4 2022 and full
year 2022 are inherently unpredictable and actual results and
outcomes could differ materially for a variety of reasons,
including the factors discussed below under “Forward-Looking
Statements.”
2022 Third Quarter Conference Call and Webcast
Quanergy is hosting a conference call and webcast today,
November 14, 2022, beginning at 4:30 p.m. ET to discuss the
Company’s third quarter 2022 results and other matters. Both the
call and the webcast are open to the general public. The conference
call number is 412-317-6060 and the conference ID number is
10173300 (domestic or international). Please call five minutes
prior to the presentation to ensure that you are connected.
About Quanergy Systems, Inc.
Quanergy’s (OTC: QNGY) mission is to create powerful, affordable
smart LiDAR solutions for IoT and automotive applications to
enhance people’s experiences and safety. Through Quanergy’s smart
LiDAR solutions, businesses can now leverage real-time, advanced 3D
insights to transform their operations in a variety of industries
including industrial automation, physical security, smart cities,
smart spaces and much more. Quanergy solutions are deployed by
nearly 400 customers across the globe. For more information, please
visit us at www.quanergy.com.
Non-GAAP Financial Measures
In addition to its results determined in accordance with
generally accepted accounting principles in the United States
(“GAAP”), Quanergy believes the non-GAAP measures of non-GAAP
adjusted gross profit, adjusted EBITDA and free cash flow are
useful in evaluating its operating performance. Quanergy calculates
non-GAAP adjusted gross profit as gross profit adding back
stock-based compensation expense included in cost of goods sold.
Quanergy calculates non-GAAP adjusted EBITDA as net loss adding
back stock-based compensation expense, depreciation and
amortization, interest expense and income, change in fair value of
derivatives, gain on forgiveness of PPP loan and income tax
provision (benefit). Quanergy believes that non-GAAP adjusted gross
profit and non-GAAP adjusted EBITDA may be helpful to investors
because they provide consistency and comparability with past
financial performance and may be helpful in comparing with other
companies, some of which use similar non-GAAP information to
supplement their GAAP results. Free cash flow is a non-GAAP
financial measure. Management believes, however, that free cash
flow is an important financial measure for use in evaluating the
Company’s financial performance, as it measures the Company’s
ability to generate additional cash from its business operations.
Quanergy defines free cash flow as cash flow from operations less
capital expenditures. Free cash flow should be considered in
addition to, rather than as a substitute for, net loss as a measure
of Quanergy’s performance or net cash provided by operating
activities as a measure of liquidity. Therefore, Quanergy believes
it is important to view free cash flow as supplemental to the
entire statement of cash flows. The non-GAAP financial information
is presented for supplemental informational purposes only and
should not be considered a substitute for financial information
presented in accordance with GAAP and may be different from
similarly titled non-GAAP measures used by other companies.
Reconciliation tables of the most comparable GAAP financial
measures to the non-GAAP financial measures are included at the end
of this press release.
Forward-Looking Statements
This press release includes certain statements that are not
historical facts but are forward-looking statements for purposes of
the safe harbor provisions under the United States Private
Securities Litigation Reform Act of 1995. Forward-looking
statements generally are accompanied by words such as “believe,”
“may,” “will,” “estimate,” “continue,” “anticipate,” “intend,”
“expect,” “should,” “would,” “plan,” “predict,” “potential,”
“seem,” “seek,” “future,” “outlook,” “project,” “will likely
result” and similar expressions that predict or indicate future
events or trends or that are not statements of historical matters.
All statements, other than statements of present or historical fact
included in this press release, are forward-looking statements,
including statements regarding: the demand environment and supply
chain dynamics and their impact on the growth and scale of
Quanergy’s business, extension of Quanergy’s cash runway,
Quanergy’s continued traction in the industrial automation market,
Quanergy’s relationship with Fabrinet, the expansion of Quanergy’s
technology partner ecosystem, and all information included in the
section titled “Outlook for 2022”. These forward-looking statements
involve significant risks and uncertainties that could cause actual
results to differ materially from expected results. Most of these
factors are outside Quanergy’s control and are difficult to
predict. Factors that may cause such differences include, but are
not limited to: changes in domestic and foreign business, market,
financial, political and legal conditions; the overall level of
consumer demand for Quanergy’s products; general economic
conditions and other factors affecting consumer confidence,
preferences, and behavior; disruption and volatility in the global
currency, capital, and credit markets; the financial strength of
Quanergy’s customers; Quanergy’s ability to implement its business
strategy; changes in governmental regulation, Quanergy’s exposure
to litigation claims and other loss contingencies; disruptions and
other impacts to Quanergy’s business, as a result of the COVID-19
global pandemic and government actions and restrictive measures
implemented in response; stability of Quanergy’s suppliers and the
impact of supply chain constraints, as well as consumer demand for
its products, in light of disease epidemics and health-related
concerns such as the COVID-19 global pandemic; the impact that
global climate change trends may have on Quanergy and its suppliers
and customers; Quanergy’s ability to protect patents, trademarks
and other intellectual property rights; any breaches of, or
interruptions in, Quanergy’s information systems; fluctuations in
the price, availability and quality of electricity and other raw
materials and contracted products as well as foreign currency
fluctuations; Quanergy’s ability to utilize potential net operating
loss carryforwards; changes in tax laws and liabilities, tariffs,
legal, regulatory, political and economic risks; and other risks
and uncertainties indicated in Quanergy’s filings with the U.S.
Securities and Exchange Commission (“SEC”), including under the
“Risk Factors” heading of Quanergy’s quarterly report on Form 10-Q
for the quarter ended June 30, 2022 and in Quanergy’s quarterly
report on Form 10-Q for the quarter ended September 30, 2022, being
filed with the SEC later today. In addition, forward-looking
statements reflect Quanergy’s expectations, plans or forecasts of
future events and views only as of the date of this press release.
Quanergy anticipates that subsequent events and developments will
cause its assessments to change. However, while Quanergy may elect
to update these forward-looking statements at some point in the
future, Quanergy specifically disclaims any obligation to do so,
except as required by law.
Quanergy is a registered trademark of Quanergy Systems. All
other trademarks and trade names contained herein may be those of
their respective owners.
© 2022, Quanergy Systems, Inc. All rights reserved.
- Financial tables follow –
Quanergy Systems, Inc.
Condensed Consolidated Balance
Sheets
(in thousands, except share and
per share data)
(unaudited)
September 30,
2022
December 31,
2021
Assets
Current assets:
Cash and cash equivalents
$
7,064
$
26,106
Restricted cash
70
70
Accounts receivable, net of allowance for
doubtful accounts of $224 at September 30, 2022 and December 31,
2021
2,700
645
Inventory
5,593
3,242
Prepaid expenses and other current assets
(includes related party assets of $8,801 at September 30, 2022)
10,709
1,138
Total current assets
26,136
31,201
Property and equipment, net
1,664
1,908
Other long-term assets (includes related
party assets of $8,557 at September 30, 2022)
12,575
3,539
Total assets
$
40,375
$
36,648
Liabilities and stockholders’ equity /
(deficit)
Current liabilities
Accounts payable
$
5,556
$
2,375
Accrued expenses
4,153
2,435
Accrued settlement liability
2,750
2,500
Other current liabilities
5,793
737
Short-term debt
—
34,311
Related party payable
1,070
—
Total current liabilities
19,322
42,358
Long-term debt
—
16,153
Long-term debt - related party
—
16,670
Derivative liability
241
26,017
Other long-term liabilities
9,335
803
Total liabilities
28,898
102,001
Commitments and contingencies
Stockholders’ equity / (deficit):
Common stock, $0.0001 par value.
300,000,000 and 4,003,595 shares authorized as of September 30,
2022 and December 31, 2021, respectively; 7,077,402 and 2,850,876
shares issued and outstanding as of September 30, 2022 and December
31, 2021, respectively.
1
—
Additional paid-in capital
467,185
242,305
Accumulated other comprehensive loss
(104
)
(61
)
Accumulated deficit
(455,605
)
(307,597
)
Total stockholders’ equity / (deficit)
11,477
(65,353
)
Total liabilities and stockholders’ equity
/ (deficit)
$
40,375
$
36,648
Quanergy Systems, Inc.
Condensed Consolidated
Statements of Operations
(in thousands, except share and
per share data)
(unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2022
2021
2022
2021
Net sales
$
2,324
$
1,137
$
4,880
$
2,425
Cost of goods sold
2,491
988
6,797
2,245
Gross profit (loss)
(167
)
149
(1,917
)
180
Operating expenses:
Research and development
6,504
3,953
25,769
12,050
Sales and marketing
3,738
1,913
15,026
5,881
General and administrative
6,839
3,950
54,850
13,142
Operating expenses
17,081
9,816
95,645
31,073
Loss from operations
(17,248
)
(9,667
)
(97,562
)
(30,893
)
Other income (expense):
Interest income (expense), net
34
(5,911
)
(40,020
)
(14,872
)
Other expense, net
(438
)
(3,416
)
(10,420
)
(8,400
)
Loss before income taxes
(17,652
)
(18,994
)
(148,002
)
(54,165
)
Income tax provision
—
(5
)
(6
)
(15
)
Net loss
$
(17,652
)
$
(18,999
)
$
(148,008
)
$
(54,180
)
Net loss attributable per share to common
stockholders, basic and diluted
$
(2.59
)
$
(5.49
)
$
(25.55
)
$
(16.32
)
Weighted-average shares used to compute
net loss attributable per share to common stockholders, basic and
diluted
6,824,212
3,463,403
5,793,554
3,320,498
Quanergy Systems, Inc.
Condensed Consolidated
Statements of Cash Flows
(in thousands) (unaudited)
Nine Months Ended September
30,
2022
2021
Cash flows from operating
activities
Net loss
$
(148,008
)
$
(54,180
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Stock-based compensation
61,520
10,654
Non-cash interest expense
40,071
14,641
Change in fair value of derivative
liabilities
771
10,916
Change in fair value of share-settled
forward asset
9,649
—
Non-cash bonus expense
2,310
—
Depreciation and amortization
697
720
Non-cash lease expense
446
—
Paid-in-kind interest and accrued interest
on repayment of 2022 Notes
(9,341
)
—
Gain on extinguishment of debt
—
(2,515
)
Other
—
(69
)
Changes in operating assets and
liabilities:
Accounts receivable
(2,055
)
(80
)
Inventory
(2,351
)
958
Prepaid expenses and other current
assets
(769
)
123
Other long-term assets
(461
)
(2,717
)
Accounts payable
2,916
192
Accrued expenses
(22
)
(290
)
Accrued settlement liability
250
—
Other current liabilities
(661
)
(41
)
Other long-term liabilities
87
(360
)
Net cash used in operating activities
(44,951
)
(22,048
)
Cash flows from investing
activities
Purchases of property and equipment
(454
)
(18
)
Net cash used in investing activities
(454
)
(18
)
Cash flows from financing
activities
Related party proceeds from PIPE
financing
36,950
—
Proceeds from Business Combination and
PIPE financing
13,414
—
Proceeds from draw down on GEM
Agreement
9,900
—
Payments of offering costs
(8,188
)
—
Repayment of 2022 Notes
(25,813
)
—
Proceeds from exercise of stock
options
73
74
Proceeds from exercise of common stock
warrants
70
—
Proceeds from issuance of convertible
notes
—
37,130
Proceeds from issuance of convertible
notes to related parties
—
11,475
Net cash provided by financing
activities
26,406
48,679
Effect of exchange rate changes on cash,
cash equivalents and restricted cash
(43
)
(12
)
Net increase (decrease) in cash, cash
equivalents and restricted cash
(19,042
)
26,601
Cash, cash equivalents and restricted cash
at beginning of period
26,176
7,668
Cash, cash equivalents and restricted cash
at end of period
$
7,134
$
34,269
Supplemental disclosures of cash flow
information:
Cash paid during the period for
interest
$
9,326
$
289
Supplemental schedule of noncash
investing and financing activities:
Conversion of redeemable convertible
preferred stock to common stock
$
152,978
$
—
Conversion of 2023 Notes into equity
$
101,978
$
—
Issuance of common stock warrants
$
17,602
$
21,970
Assumption of net liabilities from
Business Combination
$
15,956
$
—
Issuance of share-settled forward
asset
10,027
-
Offering costs paid in common stock
$
9,531
$
—
GEM commitment fee
$
2,500
$
—
$
$
—
Fair value of debt derivative liabilities
related to issuance of convertible notes
$
—
$
17,540
Quanergy Systems, Inc.
Reconciliation of GAAP to
Non-GAAP Financial Measures
(in thousands)
(unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2022
2021
2022
2021
Non-GAAP Adjusted Gross Profit
Gross profit (loss)
$
(167
)
$
149
$
(1,917
)
$
180
Stock-based compensation expense
179
16
1,016
57
Non-GAAP adjusted gross profit
$
12
$
165
$
(901
)
$
237
Adjusted EBITDA
Net loss
(17,652
)
(18,999
)
(148,008
)
(54,180
)
Stock-based compensation expense
4,708
3,348
61,520
10,654
Depreciation and amortization
225
230
697
720
Interest expense
25
5,912
40,096
14,876
Interest income
(59
)
(1
)
(76
)
(4
)
Change in fair value of derivatives
438
3,417
10,420
10,916
Gain on forgiveness of PPP loan
—
—
—
(2,515
)
Income tax provision (benefit)
—
5
6
15
Adjusted EBITDA
(12,315
)
(6,088
)
(35,345
)
(19,518
)
Free Cash Flow
Net cash used in operating activities
(11,622
)
(7,582
)
(44,951
)
(22,048
)
Less: Purchase of property and
equipment
(23
)
(13
)
(454
)
(18
)
Free Cash Flow
(11,645
)
(7,595
)
(45,405
)
(22,066
)
[1] Bookings defined as non-cancellable orders expected to be
delivered in the 12 months of PO receipt
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221114005366/en/
Quanergy Systems Investor Contact:
quanergyIR@icrinc.com
Media Contact: Shannon Van Every media@quanergy.com
Quanergy Systems (NYSE:QNGY)
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