Airspan Networks Holdings Inc. Reports Second Quarter 2023 Results

BOCA RATON, Fla.--(BUSINESS WIRE)--Airspan Networks Holdings Inc. (NYSE American: MIMO), which provides ground-breaking, disruptive software and hardware for 5G networks, and a pioneer in end-to-end Open RAN solutions, today announced results for the second quarter ended June 30, 2023.

Second Quarter Financial Highlights

• Revenue of $32.1 million, compared to $24.8 million sequentially from first quarter 2023, and from $46.9 million year-over-year from second quarter 2022.
• Gross margin of 21.0% compared to 41.8% in the first quarter 2023 and 40.1% in second quarter 2022. In the second quarter 2023, the Company recorded an inventory impairment charge of $7.2 million related to product initiatives that were either reduced or eliminated as a result of a headcount reduction. Excluding this impairment, the adjusted gross margin was 43.4% (non-GAAP measure).
• Total operating expenses of $27.5 million compared to $28.0 million in first quarter 2023, and $37.1 million for second quarter 2022. Total operating expenses for the second quarter 2023, include a $3.0 million restructuring provision, primarily related to headcount reductions.
• Net loss of $33.6 million, compared to a net loss of $20.9 million in first quarter 2023, and a net loss of $21.0 million for second quarter 2022. For the second quarter 2023, excluding the inventory impairment charge of $7.2 million and the restructuring provision of $3.0 million, the adjusted net loss would have been $23.4 million (non-GAAP measure).
• Adjusted EBITDA (non-GAAP measure) was a loss of $15.2 million compared to a loss of $13.8 million in first quarter 2023 and a loss of $12.3 million in second quarter 2022. For the second quarter 2023, excluding the inventory impairment of $7.2 million, the adjusted EBITDA would have been a loss of $8.0 million.
• Loss per share was 45 cents, compared to loss per share of 28 cents in first quarter 2023 and a loss per share of 29 cents in second quarter 2022.

About Airspan

Airspan Networks Holdings Inc. (NYSE American: MIMO) is a U.S.-based provider of groundbreaking, disruptive software and hardware for 5G networks, and a pioneer in end-to-end Open RAN solutions that provide interoperability with other vendors. As a result of innovative technology and significant R&D investments to build and expand 5G solutions, Airspan believes it is well-positioned with 5G indoor and outdoor, Open RAN, private networks for enterprise customers and industrial use applications, Air To Ground, and CBRS solutions to help mobile network operators of all sizes deploy their networks of the future, today. With over one million cells shipped to 1,000 customers in more than 100 countries, Airspan has global scale. For more information, visit www.airspan.com.

Non-GAAP Measures

This news release references non-GAAP measures. Non-GAAP measures do not have a standardized meaning and are, therefore, unlikely to be comparable to similar measures presented by other companies. We reference these non-GAAP financial measures in our decision making because they provide supplemental information that facilitates consistent internal comparisons to the historical operating performance of prior periods and we believe they provide investors with greater transparency to evaluate operational activities and financial results. The presentation of this financial information, which is not prepared under any comprehensive set of accounting rules or principles, is not intended to be considered in isolation of, or as a substitute for, the financial information prepared and presented in accordance with US generally accepted accounting principles. Non-GAAP financial measures referred to in this report are labeled as “non-GAAP measure.”

AIRSPAN NETWORKS HOLDINGS INC. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except for share data)
	June 30, 2023			December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	10,102		$	7,253
Restricted cash		35			34
Accounts receivable, net of allowance of $478 and $647 at June 30, 2023 and December 31, 2022, respectively		22,790			46,565
Inventory		10,592			18,556
Prepaid expenses and other current assets		16,159			17,289
Assets held for sale -- current		15,352			-
Total current assets		75,030			89,697
Property, plant and equipment, net		5,686			7,351
Goodwill		-			13,641
Intangible assets, net		-			5,302
Right-of-use assets, net		3,711			5,697
Other non-current assets		3,059			3,407
Assets held for sale – non-current		20,913			-
Total assets	$	108,399		$	125,095
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	17,393		$	26,173
Accrued expenses and other current liabilities		31,247			32,243
Deferred revenue		1,547			2,892
Senior term loan, current portion		4,179			40,529
Subordinated debt		11,396			11,119
Subordinated term loan – related party		-			41,528
Convertible debt		-			43,928
Current portion of long-term debt		265			259
Liabilities held for sale -- current		12,015			-
Total current liabilities		78,042			198,671
Subordinated term loan - related party		43,402			-
Senior term loan		59,045			-
Convertible debt		47,749			-
Other long-term liabilities		9,561			7,223
Liabilities held for sale – non-current		375			-
Total liabilities		238,174			205,894
Commitments and contingencies (Note 13)
Stockholders’ deficit:
Common stock, $0.0001 par value; 250,000,000 shares authorized; 74,582,992 and 74,283,026 shares issued and outstanding at both June 30, 2023 and December 31, 2022		7			7
Additional paid-in capital		775,947			770,427
Accumulated deficit		(905,729	)		(851,233	)
Total stockholders’ deficit		(129,775	)		(80,799	)
Total liabilities and stockholders’ deficit	$	108,399		$	125,095
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

AIRSPAN NETWORKS HOLDINGS INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
Revenues:
Products and software licenses	$	28,855		$	44,028		$	49,788		$	77,604
Maintenance, warranty and services		3,268			2,917			7,108			6,905
Total revenues		32,123			46,945			56,896			84,509
Cost of revenues:
Products and software licenses		23,998			26,864			37,292			51,337
Maintenance, warranty and services		1,392			1,253			2,524			2,275
Total cost of revenues		25,390			28,117			39,816			53,612
Gross profit		6,733			18,828			17,080			30,897
Operating expenses:
Research and development		13,416			16,720			27,607			33,241
Sales and marketing		5,310			9,010			10,992			18,340
General and administrative		5,746			11,089			13,411			22,247
Amortization of intangibles		-			284			189			568
Restructuring costs		3,023			-			3,283			-
Total operating expenses		27,495			37,103			55,482			74,396
Loss from operations		(20,762	)		(18,275	)		(38,402	)		(43,499	)
Interest expense, net		(5,153	)		(4,207	)		(9,687	)		(8,775	)
Loss on extinguishment of debt		(8,281	)		-			(8,281	)		-
Change in fair value of warrant liability and derivatives, net		588			3,479			1,230			3,936
Other income (expense), net		(153	)		(2,126	)		408			(2,632	)
Loss before income taxes		(33,761	)		(21,129	)		(54,732	)		(50,970	)
Income tax benefit (expense), net		154			112			236			215
Net loss	$	(33,607	)	$	(21,017	)	$	(54,496	)	$	(50,755	)
Loss per share - basic and diluted	$	(0.45	)	$	(0.29	)	$	(0.73	)	$	(0.70	)
Weighted average shares outstanding - basic and diluted		74,582,992			72,335,952			74,528,668			72,335,952
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

AIRSPAN NETWORKS HOLDINGS INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
	Six Months Ended June 30,
	2023			2022
Cash flows from operating activities:
Net loss	$	(54,496	)	$	(50,755	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		1,772			2,275
Foreign exchange loss (gain) on long-term debt		6			(16	)
Bad debt expense		172			7
Change in fair value of warrants and derivatives, net		(1,230	)		(3,936	)
Loss on extinguishment of debt		8,281			-
Non-cash debt amendment fee		-			463
Inventory impairment charge		7,215			-
Share-based compensation		3,937			13,536
Total adjustments		20,153			12,329
Changes in operating assets and liabilities:
Decrease in accounts receivable		12,539			9,706
Increase in inventory		(1,496	)		(302	)
Decrease in prepaid expenses and other current assets		975			2,221
Decrease in other non-current assets		238			181
Increase (decrease) in accounts payable		1,611			(3,040	)
(Decrease) increase in deferred revenue		(1,118	)		1,686
Decrease in accrued expenses and other current liabilities		(623	)		(65	)
Increase in other long-term liabilities		4,220			151
Increase in accrued interest on long-term debt		5,825			5,394
Net cash used in operating activities		(12,172	)		(22,494	)
Cash flows from investing activities:
Purchase of property, plant and equipment		(1,122	)		(1,632	)
Net cash used in investing activities		(1,122	)		(1,632	)
Cash flows from financing activities:
Borrowings from senior term loan		19,981			-
Repayment of senior term loan		(1,760	)		(2,640	)
Payment of debt issuance costs		(1,916	)		-
Payment of taxes withheld on stock awards		(161	)		-
Net cash provided by (used in) financing activities		16,144			(2,640	)
Net increase (decrease) in cash, cash equivalents and restricted cash		2,850			(26,766	)
Cash, cash equivalents and restricted cash, beginning of year		7,287			63,122
Cash, cash equivalents and restricted cash, end of period	$	10,137		$	36,356
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

The following tables present the reconciliation of net loss, the most directly comparable GAAP measure, to Adjusted EBITDA:
	Three Months Ended
($ in thousands)	June 30, 2023			March 31, 2023
Net loss	$	(33,607	)	$	(20,889	)
Adjusted for:
Interest expense, net		5,153			4,534
Income tax benefit, net		(154	)		(82	)
Depreciation and amortization		720			1,052
EBITDA		(27,888	)		(15,385	)
Share-based compensation expense		1,998			1,939
Change in fair value of warrant liability and derivatives		(588	)		(642	)
Loss on extinguishment of debt		8,281			-
Restructuring costs		3,023			260
Adjusted EBITDA	$	(15,174	)	$	(13,828	)
Inventory impairment charge		7,215			-
Adjusted EBITDA excluding inventory impairment charge	$	(7,959	)	$	(13,828	)

	Three Months Ended June 30,
($ in thousands)	2023			2022
Net loss	$	(33,607	)	$	(21,017	)
Adjusted for:
Interest expense, net		5,153			4,207
Income tax (benefit) expense, net		(154	)		(112
Depreciation and amortization		720			1,154
EBITDA		(27,888	)		(15,768	)
Share-based compensation expense		1,998			6,972
Change in fair value of warrant liability and derivatives		(588			(3,479	)
Loss on extinguishment of debt		8,281			-
Restructuring costs		3,023			-
Adjusted EBITDA	$	(15,174	)	$	(12,275	)
Inventory impairment charge		7,215			-
Adjusted EBITDA excluding inventory impairment charge	$	(7,959	)	$	(12,275	)

The following tables present the reconciliation of gross profit to Adjusted gross profit:
($ in thousands)	Three Months Ended June 30,			Three Months Ended March 31,
	2023		%	2023		%
Revenue	$	32,123	100.0	$	24,773		100.0
Cost of revenue		25,390	79.0		14,426		58.2
Gross profit		6,733	21.0		10,347		41.8
Inventory provision		7,215	22.4		-		-
Adjusted gross profit	$	13,948	43.4	$	10,347		41.8

($ in thousands)	Three Months Ended June 30,			Three Months Ended June 30,
	2023		%	2022		%
Revenue	$	32,123	100.0	$	46,945	100.0
Cost of revenue		25,390	79.0		28,117	59.9
Gross profit		6,733	21.0		18,828	40.1
Inventory provision		7,215	22.4		274	0.6
Adjusted gross profit	$	13,948	43.4	$	19,102	40.7

The following tables present the reconciliation of net loss, the most directly comparable GAAP measure, to Adjusted net loss:
	Three Months Ended
($ in thousands)	June 30, 2023			March 31, 2023
Net loss	$	(33,607	)	$	(20,889	)
Adjusted for:
Restructuring costs		3,023			260
Inventory impairment charge		7,215			-
Adjusted net loss	$	(23,369	)	$	(20,629	)

	Three Months Ended June 30,
($ in thousands)	2023			2022
Net loss	$	(33,607	)	$	(21,017	)
Adjusted for:
Restructuring costs		3,023			-
Inventory impairment charge		7,215			-
Adjusted net loss	$	(23,369	)	$	(21,017	)