The Company has been focused on a number of initiatives to drive growth, streamline operations and improve operational efficiencies over the last 24 months with significant progress having been made. Some preliminary financial metrics to support the Company’s commitment to operational efficiency include the following:
- Net revenue for the fourth quarter of 2016 is anticipated to be approximately
$18.7 million, which is slightly higher than net revenue for the third quarter of 2016.
- Operating expenses have decreased significantly since the first quarter of 2015, which was the first full quarter after the merger of Overland and Sphere 3D. These operating expenses decreased from
$13.6 millionin the first quarter of 2015 to an estimated $10.8 millionin the fourth quarter of 2016. Operating expenses include non-cash share-based compensation of $0.7 millionin the first quarter of 2015 and $1.6 millionin the fourth quarter of 2016. This reflects a reduction of more than 28% when excluding the share based compensation. Operating expenses were also down when compared to the third quarter of 2016, which were $47.8 millionincluding non-cash share-based compensation of $2.6 millionand $34.4 millionof goodwill and acquired intangible asset impairment.
- Cash used in operations in the second half of 2016 was below
$4 million, and is expected to be less than $2 millionin Q4 2016, compared to $13.8 millionin the first half of 2016.
- There has been a global headcount reduction of approximately 120 people from
December 2014through December 2016. This represents a 26% reduction of non-factory headcount since the merger with Overland in December 2014and a 23% reduction in factory headcount in that same period.
- Additional reductions took place in
February 2017to eliminate redundancies from the acquisition of HVE ConneXions (HVE) and Unified ConneXions (UCX).
Final detailed financial results for the fiscal year ended 2016 will be contained in the Company’s Annual Report on Form 20-F, which will be filed with the
To achieve the Company’s goals of driving revenue growth and profitability, a number of operational changes, as well as product rationalization decisions, have been made. To assist in this transformation, the Company entered into strategic acquisitions and partnerships to unlock some of the potential within its virtualization product portfolio. The Company’s recent acquisition of HVE and UCX was completed in January 2017. Prior to this acquisition, in the calendar year of 2016, HVE and UCX had combined revenue of over
Since the HVE / UCX acquisition, the Company has divided itself into two business groups: One focused on its foundational storage business and the second focused on its virtualization product portfolio. The Company believes this organizational change facilitates added focus on each product portfolio and its respective unique go-to-market approach, while maintaining the benefit of the Company’s significant reseller and distributor base across all product lines.
As previously announced, Mr.
With respect to the Virtualization group, Joseph L. O’Daniel, previously president and CEO of UCX, has taken on the role of President of Virtualization and Professional Services for
Going forward the Company intends to provide converged and hyperconverged infrastructure to the marketplace under the HVE brand. The Company will be incorporating certain V3 technologies, including Desktop Cloud Orchestrator™ (DCO), Optimized Desktop Allocation (ODA) and Autonomous Resource Scheduling (ARS), within the HVE offering. Whereas the V3 product line was optimized and focused strictly on Virtual Desktop Infrastructure (VDI), through HVE, the Company has expanded its offering to include optimized and customer proven technologies for server and network virtualization as well as all flash storage appliances. Combining these technologies will allow
In addition to the product synergies of HVE and V3, the Company intends to streamline the go-to-market approach of its proprietary container technology for delivering
The Company is working with existing partners including
The Company is assessing all opportunities and strategic alternatives that could help increase shareholder value. As such, the Company is in discussions with financial advisors to assist in this process. In addition, given the significant changes at
Safe Harbor Statement
This press release contains forward-looking statements that involve risks, uncertainties, and assumptions that are difficult to predict. Actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of risks and uncertainties including our inability to obtain additional debt or equity financing; our inability to comply with the covenants in our credit facilities; any increase in our future cash needs; our ability to successfully integrate the UCX and HVE business with
The Blueshirt Group Mike BishopTel: +1 415-217-4968 email@example.com Lauren SloaneTel: +415-217-2632 Lauren@blueshirtgroup.com