pdvWireless Reports Financials, O’Brien Dismisses 900 MHz Critics
Thursday, November 08, 2018 | Comments

pdvWireless reported its second-quarter results for the three and six-month periods ended Sept. 30.

During a call with investors, pdvWireless CEO Morgan O’Brien said he is pleased with the FCC’s September freeze of the 900 MHz band. O’Brien also said the FCC’s recently announced Facilitate America's Superiority in 5G Technology (FAST) plan bodes well for pdvWireless because it mentions changes to the 900 MHz spectrum.

O’Brien dismissed concerns from the Critical Infrastructure Coalition, saying the groups are “repackaging the same arguments, which the FCC has been considering” since pdvWireless’ initial 2014 filing. “… The passage of time has only made our position stronger,” he said.

He said three different utilities have expressed strong interest in pdvWireless’ offering for Long Term Evolution (LTE) at 900 MHz and are planning pilot projects that will demonstrate the technology and be a catalyst for the offering. “pdvWireless will be a trusted partner,” O’Brien said.

Revenue for the company's second fiscal quarter ended Sept. 30 was $1.8 million compared with $1.5 million in the same period of the prior year. Revenue for the six months ended Sept. 30 was $3.7 million compared with $3 million for the same period of the prior year. The increases in both the three- and six-month periods resulted from growth in the company's TeamConnect and Diga-Talk product offerings.

Net loss for the second fiscal quarter was $11.8 million, versus a net loss of $8.2 million for the similar period of the prior year. The net loss for the six months was $24.1 million versus a net loss of $16.1 million for the similar period of the prior year. The additional losses in both the three- and six-month periods were primarily attributable to restructuring charges taken related to the company's June announcements of a restructuring plan to shift the focus and resources for the future deployment of broadband and other advanced technologies and services.

Cost of revenue for the three months ended Sept. 30 was $1.8 million, a decrease of 6 percent over the prior fiscal year’s comparable period. The improvement resulted from lower headcount costs because of employees reassigned to other areas of the business to support strategic initiatives as well as lower costs to maintain the firm’s 900 MHz network. For the six months, cost of revenue was $3.9 million, an increase of 9.3 percent. The increased cost of revenue for the six-month period in the current fiscal year resulted from higher equipment sales for the TeamConnect business.

Total operating expenses of $12.2 million for the three months was $4.8 million or 66.2 percent higher than the three months ended Sept. 30, 2017. The increase was primarily attributable to a $4.1 million increase in restructuring charges and $1.6 million increase in general and administrative expenses, which includes increased costs for existing headcount as well as costs associated with the company's strategic initiatives. These increases were partially offset by $800,000 for lower sales and support costs primarily resulting from the June reduction in workforce.

Total operating expenses for the six months were $24.5 million and were $10.1 million, or 69.7 percent, higher than the six months ended Sept. 30, 2017. The primary drivers of the increase resulted from $8.1 million in restructuring charges and $500,000 for the impairment charge taken to reduce the carrying value of the company's radios for the TeamConnect business, as well as $1.5 million for increased costs related to existing headcount in general and administrative and higher consulting expenses related to the company's strategic initiatives.

"We are seeing an increased demand from enterprises, and especially utilities, for private broadband networks to solve critical needs," said Rob Schwartz, president and chief operating officer (COO) of pdvWireless. "The initial pilots and deployments we are supporting will help us demonstrate to the industry the substantial capabilities of leveraging cost effective foundational 900 MHz broadband spectrum combined with standardized LTE technology to increase the reliability, resilience and security of these mission-critical networks," he added.

The company remains debt free and has $85.6 million in available cash as of Sept. 30, a decrease of $5.3 million from June 30. The decrease primarily resulted from payroll costs and investments in the pursuit of business and spectrum initiatives.

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