SOURCE: Cachet Financial Solutions

Cachet Financial Solutions

March 05, 2015 16:05 ET

Cachet Financial Solutions Reports Fourth Quarter and Full Year 2014 Results

MINNEAPOLIS, MN--(Marketwired - Mar 5, 2015) -  Cachet Financial Solutions, Inc. (OTCQB: CAFN), a leading provider of cloud-based SaaS mobile money management technology to banks, credit unions, and other financial services organizations, reported results for the fourth quarter and fiscal year ended December 31, 2014.

Q4 2014 Operational Highlights

  • Estimated cumulative contract value totaled a record $55.3 million, up 77% over the same year-ago quarter.
  • Bank and credit union customers totaled 317, up 38% from 230 at the end of 2013.
  • Select Mobile™ Money platform was chosen by League Service Corporation, a national credit union service organization, to power its prepaid mobile application.
  • Expanded partnership with Mitek (NASDAQ: MITK) to offer Mitek's Mobile Photo Account Opening™ SaaS Suite as part of Cachet's mobile prepaid platform.
  • Launched Enhanced Select Business, a cloud-based software solution that enables banks and credit unions to offer their business customers the convenience of remote deposit capture, regardless of platform.

Q4 2014 Performance Indicators for RDC Solutions

                         
    Q4 2014   vs. Q3 2014   Change     vs. Q4 2013   Change  
Transactions   1,335,851   1,193,326   12 %   654,000   104 %
Products Sold (through the end of each period)   348   318   9 %   230   51 %
Live Product Implementations (through the end of each period)   252   208   21 %   130   94 %
                         

Full Year 2014 Performance Indicators for RDC Solutions

                       
    FY 2014   vs. FY 2013   Change          
Transactions   4,294,022   1,604,073   168 %        
Products Sold (through the end of each period)   348   230   51 %        
Live Product Implementations (through the end of each period)   252   130   94 %        
                       

Q4 2014 Financial Results
Revenue in the fourth quarter of 2014 increased 74% to $707,000 from $405,000 in the same year-ago quarter. The increase was driven by growing adoption of the company's Select Mobile RDC solutions, along with new product offerings, CheckRisk Pro and Select Mobile Money.

The company's total cumulative contract value increased 77% to a record $55.3 million from $31.2 million in the same year-ago period. The company defines cumulative contract value as the estimated aggregate total revenue potential over the ensuing 36-month period of product and service contracts signed with bank and credit union customers over the trailing 24-month period. The number of these bank and credit union customers totaled 317 at the end of the fourth quarter of 2014, as compared to 230 at the end of same year-ago quarter.

At the end of the fourth quarter of 2014, the company's cumulative contract value totaled $55.3 million compared to $31.2 million at the end of the same year-ago period, with nearly the entire amount representing recurring revenue versus one-time setup or hosting fees.

Cost of revenues in the fourth quarter of 2014 totaled $582,000 (82% of revenue) compared to $554,000 (137% of revenue) in the same year-ago period. The increase was primarily due to higher amortization expense associated with the intangible assets acquired with the Select Mobile Money acquisition in March 2014.

Net loss attributable to common stockholders in the fourth quarter of 2014 totaled $3.5 million or $0.20 per basic and diluted share, compared to a net loss attributable to common stockholders of $2.7 million or $0.56 per basic and diluted share in the fourth quarter of 2013.

Adjusted EBITDA loss (a non-GAAP term defined as net loss before interest, taxes, depreciation, amortization, stock-based compensation, and non-recurring items) for the fourth quarter of 2014 totaled $2.3 million compared to an adjusted EBITDA loss of $1.5 million in the same year-ago period (see further discussion about the use of adjusted EBITDA, below). Non-GAAP loss for the fourth quarter of 2014 totaled $2.5 million or $.15 per share, compared to $1.8 million or $.38 per share in the same year-ago period.

Full Year 2014 Financial Results
Revenue in 2014 increased 125% to a record $2.6 million from $1.2 million in 2013. The increase was driven by growing adoption of the company's Select Mobile RDC solutions and new product offerings.

Cost of revenues in 2014 totaled $2.8 million (104% of revenue) compared to $2.5 million (209% of revenue) in 2013. The increase was primarily due to higher amortization expense associated with the intangible assets acquired with the Select Mobile Money acquisition.

Net loss attributable to common stockholders in 2014 totaled $15.8 million or $1.39 per basic and diluted share, compared to a net loss attributable to common stockholders of $14.0 million or $3.58 per basic and diluted share in fiscal 2013.

Adjusted EBITDA loss for 2014 totaled $8.6 million compared to an adjusted EBITDA loss of $7.0 million a year-ago. Non-GAAP loss for the year-ended 2014, totaled $10.5 million or $.92 per share, compared to $8.2 million or $2.12 per share for the prior year.

Management Commentary
"2014 marked a transformational year in the operational and financial development of Cachet," said the company's president and CEO, Jeffrey Mack. "Our rapid development has been the result of our ability to successfully execute on our strategic plan and growth initiatives. This was evident during 2014 from the several milestones we achieved, including completing the acquisition of a mobile money management platform in March, followed by our IPO in July.

"These achievements allowed us to deepen our product offering, expand our sales resources, and secure major new customer wins. These efforts also led to a 125% increase in revenue in 2014, driven by a 168% increase in transactions on our platform, which together underscores our growing and highly-valuable recurring revenue stream.

"In addition to the improvement in our financial performance, one of the most encouraging achievements in 2014 was securing new contract wins with a number of industry-leading financial institutions, including Bancorp, Navy Federal Credit Union, and US Bank. In the first quarter of 2015, we built upon this momentum by signing a major follow-on order from Navy Federal to provide our Select Mobile Money app for Navy's new 'GO Prepaid Card.'

"We are continuing to broaden our access to the market by expanding our selling and marketing resources in order to better capitalize on the strong industry trends. These efforts include strengthening our relationships with key resellers as well as adding new resellers to our network. These relationships have become an integral part of our differentiated growth strategy to drive revenue growth and capture market share in the growing multi-billion dollar mobile banking and RDC markets.

"In 2015, we plan to leverage our recently expanded sales resources and product suite to dramatically increase the number of products we sell and our overall customer base. Our success operationally will help drive our financial goals, which we expect will include eclipsing the 70% recurring revenue mark, as well as achieving cash flow profitability. We believe our operational strength and the acceleration in the number of 'go-lives' we are able to complete each quarter will continue to expand our market share and drive strong revenue growth in the quarters ahead."

Conference Call
Cachet Financial Solutions will hold a conference call today (March 5, 2015) at 4:30 p.m. Eastern time (3:30 p.m. Central time) to discuss these results. Cachet's president and CEO, Jeffery Mack, and EVP and CFO, Darin McAreavey, will host the presentation, followed by a question and answer period.

Date: Thursday, March 5, 2015
Time: 4:30 p.m. Eastern time (3:30 p.m. Central time)
U.S. dial-in: 877-705-6003
International dial-in: 201-493-6725

The conference call will be broadcast simultaneously and available for replay via the investor section of the company's website. During the conference call, Cachet management will refer to a supplementary slide presentation, which is also available for download in the investor section of the company's website.

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

A replay of the call will be available after 7:30 p.m. Eastern time on the same day through April 5, 2015.

U.S. replay dial-in: 877-870-5176
International replay dial-in: 858-384-5517
Replay ID: 13601847

About Cachet Financial Solutions, Inc.
Cachet Financial Solutions is a leading cloud-based, SaaS technology provider serving the financial services industry with mobile money management and remote deposit capture solutions for PC, Mac and Mobile. Our industry-leading solutions help clients to increase customer/member engagement, grow revenues and gain competitive advantage. Cachet's cloud-based technology platform simplifies development, deployment and servicing of clients' consumer and commercial solutions -- minimizing cost and accelerating speed-to-market and ROI. With our complete suite of business and consumer solutions, financial institutions can better serve the needs of all their customers/members. For more information, visit www.cachetfinancial.com.

Use of Non-GAAP Information
In evaluating the Company's financial performance and operating trends, management considers information concerning the Company's net sales, adjusted gross margins, adjusted operating expenses, and adjusted EBITDA, among other items, which are not calculated in accordance with generally accepted accounting principles ("GAAP") in the United States of America. The Company's management believes these non-GAAP measures are useful to investors because they provide supplemental information that facilitates comparisons to prior periods and for the evaluation of financial results. Management uses these non-GAAP measures to evaluate its financial results, develop budgets and manage expenditures. The method the Company uses to produce non-GAAP results is not computed according to GAAP, is likely to differ from the methods used by other companies and should not be regarded as a replacement for corresponding GAAP measures. Investors are encouraged to review the reconciliation of these non-GAAP financial measures to the comparable GAAP results, which is attached to this release and can also be found on the Company's website at www.cachetfinancial.com.

Forward-Looking Statements
This press release contains certain statements that would be deemed "forward-looking statements" under Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1933 and includes, among other things, discussions of our business strategies, future operations and capital resources. Words such as "may," "likely," "anticipate," "expect", "plan" and "believes" indicate forward-looking statements.

These statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. Forward-looking statements include statements about the anticipated closing of our initial public offering and the number of shares to be sold in the offering.

Forward-looking statements reflect our current views with respect to future events, are based on assumptions and are subject to risks and uncertainties. We discuss many of these risks in greater detail in our Current Report on Form 8K filed with the Securities and Exchange Commission on March 31, 2014 under the heading "Risk Factors" and in the other reports we file with the Commission. Given these uncertainties, you should not attribute undue certainty to these forward-looking statements. Also, forward-looking statements represent our estimates and assumptions only as of the date of this press release. Except as required by law, we assume no obligation to update any forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, even if new information becomes available in the future.

             
             
CACHET FINANCIAL SOLUTIONS, INC.  
CONSOLIDATED BALANCE SHEETS  
             
    As of  
    December 31, 2014     December 31, 2013  
ASSETS   (unaudited)     (audited)  
CURRENT ASSETS                
  Cash and cash equivalents   $ 112,221     $ 150,555  
  Accounts receivable, net     314,743       329,557  
  Deferred commissions     80,348       62,732  
  Prepaid expenses     402,040       487,659  
  TOTAL CURRENT ASSETS     909,352       1,030,503  
                 
PROPERTY AND EQUIPMENT, net     295,925       353,420  
GOODWILL     204,000       -  
INTANGIBLE ASSETS, NET     1,437,001       -  
DEFERRED COMMISSIONS     103,312       101,468  
DEFERRED FINANCING COSTS     61,153       107,936  
  TOTAL ASSETS   $ 3,010,743     $ 1,593,327  
                 
LIABILITIES AND SHAREHOLDERS' DEFICIT                
CURRENT LIABILITIES                
  Accounts payable   $ 746,554     $ 937,200  
  Accrued expenses     201,768       153,113  
  Accrued interest     182,184       1,953,502  
  Deferred revenue     747,113       510,319  
  Warrant liability     163,570       -  
  Current portion of long-term debt     2,070,217       3,170,672  
  TOTAL CURRENT LIABILITIES     4,111,406       6,724,806  
                 
LONG TERM DEBT, net of current portion     2,566,486       3,933,253  
WARRANT LIABILITY     146,000       309,000  
DEFERRED REVENUE     412,219       401,758  
ACCRUED INTEREST     160,593       95,270  
ACCRUED RENT     25,333       61,482  
  TOTAL LIABILITIES     7,422,037       11,525,569  
                 
COMMITMENTS AND CONTINGENCIES                
                 
                 
SHAREHOLDERS' DEFICIT                
  Convertible preferred stock, $.0001 Par Value, 20,000,000 shares authorized, 2,229,702 and 0 issued and outstanding     223       -  
  Common shares, $.0001 Par Value, 500,000,000 shares authorized, 16,934,497 and 5,625,957 issued and outstanding     1,694       563  
ADDITIONAL PAID-IN-CAPITAL     47,307,314       26,668,258  
ACCUMULATED DEFICIT     (51,720,525 )     (36,601,063 )
  TOTAL SHAREHOLDERS' DEFICIT     (4,411,294 )     (9,932,242 )
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT   $ 3,010,743     $ 1,593,327  
                 
                 
                 
CACHET FINANCIAL SOLUTIONS, INC.  
CONSOLIDATED STATEMENT OF OPERATIONS  
(unaudited)  
                       
  Three Months Ended     Twelve Months Ended  
  December 31, 2014     December 31, 2013     December 31, 2014     December 31, 2013  
REVENUE $ 707,078     $ 405,336     $ 2,648,108     $ 1,179,603  
                               
COST OF REVENUE   582,171       554,060       2,747,343       2,462,087  
                               
GROSS PROFIT (LOSS)   124,907       (148,724 )     (99,235 )     (1,282,484 )
                               
OPERATING EXPENSES                              
  Sales and Marketing   885,247       552,561       2,854,959       2,208,689  
  Research and Development   921,394       249,412       2,663,633       982,917  
  General and Administrative   998,539       662,322       3,998,086       3,566,044  
                               
    TOTAL OPERATING EXPENSES   2,805,180       1,464,295       9,516,678       6,757,650  
                               
OPERATING LOSS   (2,680,273 )     (1,613,019 )     (9,615,913 )     (8,040,134 )
                               
INTEREST EXPENSE   707,154       424,087       5,704,533       2,804,594  
                               
INDUCEMENT TO CONVERT DEBT AND WARRANTS   46,121       681,189       424,335       1,355,603  
                               
SHARE PRICE / CONVERSION ADJUSTMENT   -       -       -       1,710,475  
                               
OTHER (INCOME) EXPENSE   -       21,500       (34,999 )     54,213  
                               
NET LOSS   (3,433,548 )     (2,739,795 )     (15,709,782 )     (13,965,019 )
                               
LESS: CUMMULATIVE UNPAID PREFERRED DIVIDENDS   (47,206 )     -       (48,409 )     -  
                               
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS $ (3,480,754 )   $ (2,739,795 )   $ (15,758,191 )   $ (13,965,019 )
                               
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING                              
Basic and fully diluted   17,026,296       4,869,178       11,337,482       3,897,081  
                               
Net loss per common share - basic and fully diluted $ (0.20 )   $ (0.56 )   $ (1.39 )   $ (3.58 )
                               
                               
                               
CACHET FINANCIAL SOLUTIONS, INC.
SUPPLEMENTAL INFORMATION
(Unaudited)
                         
Reconciliation of Net Loss to Adjusted EBITDA  
                         
    Three Months Ended     Twelve Months Ended  
    December 31, 2014     December 31, 2013     December 31, 2014     December 31, 2013  
Net loss, as reported   $ (3,433,548 )   $ (2,739,795 )   $ (15,709,782 )   $ (13,965,019 )
                                 
  Interest expense     707,154       424,087       5,704,533       2,804,594  
  Inducement of convert debt and warrants     46,121       681,189       424,335       1,355,603  
  Share Price / Conversion Adjustment     -       -       -       1,710,475  
  Depreciation and Amortization     193,676       76,356       694,494       366,718  
  Share-based compensation     164,602       78,314       316,176       700,715  
  Warrants issued for professional services     3,124       -       23,735       -  
                                 
Adjusted EBITDA   $ (2,318,871 )   $ (1,479,849 )   $ (8,546,509 )   $ (7,026,914 )
                                 
                                 
                                 
CACHET FINANCIAL SOLUTIONS, INC.
GAAP TO NON-GAAP RECONCILIATION CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited)
                                 
    Three Months Ended   Twelve Months Ended
    GAAP           Non-GAAP   GAAP           Non-GAAP
    December 31, 2014       Adjustments   December 31, 2014   December 31, 2014       Adjustments   December 31, 2014
REVENUE   $ 707,078       $ -   $ 707,078   $ 2,648,108       $ -   $ 2,648,108
                                             
COST OF REVENUE     582,171   (1)     (147,249)     422,425     2,747,343   (1)     (479,999)     2,245,591
          (2)     (12,497)               (2)     (21,753)      
                                             
GROSS PROFIT (LOSS)     124,907         159,746     284,653     (99,235)         501,752     402,517
                                             
OPERATING EXPENSES                                            
  Sales and Marketing     885,247   (2)     (29,842)     855,405     2,854,959   (2)     (51,803)     2,803,156
  Research and Development     921,394   (2)     (28,358)     893,036     2,663,633   (2)     (41,365)     2,622,268
  General and Administrative     998,539   (2)     (93,905)     904,634     3,998,086   (2)     (201,255)     3,796,831
                                               
    TOTAL OPERATING EXPENSES     2,805,180         (152,105)     2,653,075     9,516,678         (294,423)     9,222,255
                                             
OPERATING LOSS     (2,680,273)         311,851     (2,368,422)     (9,615,913)         796,175     (8,819,738)
                                             
INTEREST EXPENSE     707,154   (3)     (598,207)     108,947     5,704,533   (3)     (4,023,733)     1,680,800
                                             
INDUCEMENT TO CONVERT DEBT AND WARRANTS     46,121   (3)     (46,121)     -     424,335   (3)     (424,335)     -
                                             
SHARE PRICE / CONVERSION ADJUSTMENT     -         -     -     -         -     -
                                             
OTHER (INCOME) EXPENSE     -         -     -     (34,999)         -     (34,999)
                                             
NET LOSS     (3,433,548)         956,179     (2,477,369)     (15,709,782)         5,244,243     (10,465,539)
                                             
LESS: CUMMULATIVE UNPAID PREFERRED DIVIDENDS     (47,206)         -     (47,206)     (48,409)         -     (48,409)
                                             
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS   $ (3,480,754)       $ 956,179   $ (2,524,575)   $ (15,758,191)       $ 5,244,243   $ (10,513,948)
                                             
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING                                            
Basic and fully diluted     17,026,296         17,026,296     17,026,296     11,337,482         11,337,482     11,337,482
                                             
Net loss per common share - basic and fully diluted   $ (0.20)       $ 0.06   $ (0.15)   $ (1.39)       $ 0.46   $ (0.92)
                                             
(1) - Non-cash amortization expense related to identified intangible assets
(2) - Non-cash stock based compensation expense
(3) - Non-cash interest expense and other non-cash one-time charges
 
 
 
 
CACHET FINANCIAL SOLUTIONS, INC.
GAAP TO NON-GAAP RECONCILIATION CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited)
                                 
    Three Months Ended   Twelve Months Ended
    GAAP           Non-GAAP   GAAP           Non-GAAP
    December 31, 2013       Adjustments   December 31, 2013   December 31, 2013       Adjustments   December 31, 2013
REVENUE   $ 405,336       $ -   $ 405,336   $ 1,179,603       $ -   $ 1,179,603
                                             
COST OF REVENUE     554,060   (1)     (2,085)     551,975     2,462,087   (1)     (1,815)     2,460,272
                                             
                                             
GROSS PROFIT (LOSS)     (148,724)         2,085     (146,639)     (1,282,484)         1,815     (1,280,669)
                                             
OPERATING EXPENSES                                            
  Sales and Marketing     552,561   (1)     (3,621)     548,940     2,208,689   (1)     (67,697)     2,140,992
  Research and Development     249,412   (1)     (6,308)     243,104     982,917   (1)     (48,609)     934,308
  General and Administrative     662,322   (1)     (66,300)     596,022     3,566,044   (1)     (582,594)     2,983,450
                                               
    TOTAL OPERATING EXPENSES     1,464,295         (76,229)     1,388,066     6,757,650         (698,900)     6,058,750
                                             
OPERATING LOSS     (1,613,019)         78,314     (1,534,705)     (8,040,134)         700,715     (7,339,419)
                                             
INTEREST EXPENSE     424,087   (2)     (132,730)     291,357     2,804,594   (2)     (1,955,201)     849,393
                                             
INDUCEMENT TO CONVERT DEBT AND WARRANTS     681,189   (2)     (681,189)     -     1,355,603   (2)     (1,355,603)     -
                                             
SHARE PRICE / CONVERSION ADJUSTMENT     -         -     -     1,710,475   (2)     (1,710,475)     -
                                             
OTHER (INCOME) EXPENSE     21,500         -     21,500     54,213         -     54,213
                                             
NET LOSS     (2,739,795)         892,233     (1,847,562)     (13,965,019)         5,721,994     (8,243,025)
                                             
LESS: CUMMULATIVE UNPAID PREFERRED DIVIDENDS     -         -     -     -         -     -
                                             
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS   $ (2,739,795)       $ 892,233   $ (1,847,562)   $ (13,965,019)       $ 5,721,994   $ (8,243,025)
                                             
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING                                            
Basic and fully diluted     4,869,178         4,869,178     4,869,178     3,897,081         3,897,081     3,897,081
                                             
Net loss per common share - basic and fully diluted   $ (0.56)       $ 0.18   $ (0.38)   $ (3.58)       $ 1.47   $ (2.12)
                                             
(1) - Non-cash stock based compensation expense
(2) - Non-cash interest expense and other non-cash one-time charges

Contact Information

  • Contact Information:

    Darin McAreavey
    EVP & CFO
    Cachet Financial Solutions
    952-698-5214
    Email Contact

    Investor Relations:
    Matt Glover or Michael Koehler
    Liolios Group, Inc.
    949-574-3860
    Email Contact