| iLearningEngines Reports Fourth Quarter and Full Year 2023 ResultsGlobeNewswireApril 22, 2024 Fourth quarter revenue grew 39% year-over-year to $116 million Posts record full year revenue of $421 million, up 36% year-over-year, and ARR growth accelerates to 43% year-over-year BETHESDA, Md., April 22, 2024 (GLOBE NEWSWIRE) -- iLearningEngines, Inc. (NASDAQ: AILE) ("iLearningEngines", "ILE", or "the Company"), a leader in AI-powered learning automation and information intelligence for corporate and educational use, today announced financial results for the fourth quarter and fiscal year ended December 31, 2023. "The fourth quarter capped off a strong 2023," said Harish Chidambaran, Chief Executive Officer of iLearningEngines. "During 2023, we expanded our core markets, grew end customers and licensed users, achieved 36% revenue growth year-over-year, and reached $447 million of annual recurring revenue . We are pleased to be carrying this business momentum into the first half of 2024." Key Fourth Quarter & Full Year 2023 Financial Highlights Revenue - fourth quarter 2023 revenue of $116 million increased 39% year-over-year. Full year 2023 revenue of $421 million increased 36% year-over-year.Annual Recurring Revenue ("ARR")1 - ARR of $447 million increased 43% year-over-year.Net Dollar Retention ("NDR")1 - NDR of 125% in 2023 increased compared to 117% in 2022.Net Loss - Fourth quarter GAAP net loss of $4 million. Full year 2023 GAAP net loss of $4 million.Adjusted EBITDA & Adjusted EBITDA Margin2 - Fourth quarter 2023 adjusted EBITDA of $10 million, and full year 2023 adjusted EBITDA of $23 million. Adjusted EBITDA margin expanded by 240 basis points in Q4 2023 compared to Q4 2022, and 85 basis points in full year 2023 compared to full year 2022._____________________________1 For additional information regarding ARR and NDR, please see the section titled "Certain Definitions" at the end of this press release.2 Adjusted EBITDA and Adjusted EBITDA margin are a non-GAAP financial measures. For descriptions and reconciliations of our non-GAAP financial measures to their most comparable GAAP financial measures, please see the section titled "Non-GAAP Financial Measures" and the tables at the end of this press release. Financial Summary & Operating Metrics (In millions) - Fourth Quarter 2023MetricQ4 2023Q4 2022D Y/YRevenue1168339%ARR44731443%Gross profit805838%Net (loss) income(4)8NMAdjusted EBITDA103NMAdjusted EBITDA Margin8.6%3.5%NMFinancial Summary & Operating Metrics (In millions) - Full Year 2023MetricFY 2023FY 2022D Y/YRevenue42130936%ARR44731443%Gross profit28821534%Net (loss) income(4)11NMAdjusted EBITDA2313NMAdjusted EBITDA Margin5.6%4.1%NMRecent Business Highlights Strong customer and partner growth includes adding three new value-added resellers ("VARs") in 2023, bringing total Contracted Customers to 29.Reached more than 4.4 million licensed users at the end of 2023.On April 16, 2024, successfully completed a business combination (the "Business Combination") transaction with Arrowroot Acquisition Corp. ("Arrowroot") and began trading as a public company under the ticker "AILE" on April 17, 2024.Appointed Matthew Barger, Ian Davis, Bruce Mehlman, Michael Moe, and Tom Olivier to its Board of Directors.Finished 2023 with 508 employees globally, including 98 full-time employees and 410 contractors."Our differentiated AI solutions enable customers to productize their institutional knowledge and drive mission-critical business outcomes," continued Chidambaran. "In 2024, we intend to continue to invest heavily in R&D, including our industry-specific datasets, while we also execute our sales strategy to drive value for new and existing customers." The Company intends to host a conference call in May 2024 to discuss first quarter 2024 financial results. About iLearningEngines iLearningEngines is a leading provider of cloud-based, AI driven, learning and workforce automation solutions mission-critical training for enterprises. iLearningEngines has consistently ranked as one of the fastest growing companies in North America on the Deloitte Technology Fast 500. iLearningEngines' AI and Learning Automation platform is used by enterprises to productize their enterprise knowledge for consumption throughout the enterprise. The intense demand for scalable outcome-based training has led to deployments in some of the most regulated and detail-oriented vertical markets, including Healthcare, Education, Insurance, Retail, Oil & Gas / Energy, Manufacturing and Government. iLearningEngines was founded by Harish Chidambaran in 2010, and is headquartered in Bethesda, MD with international offices in Dubai, UAE and Trivandrum, Pune and Kochi, India. For more information about iLearningEngines, please visit: www.ilearningengines.com. IR & Press ContactsInvestor Contact:Kevin Hunt, ICR Inc. iLearningEnginesIR@icrinc.com Press Contact:Dan Brennan, ICR Inc.iLearningPR@icrinc.com ILEARNINGENGINES, INC. AND SUBSIDIARIESCONSOLIDATED INCOME STATEMENT(In thousands, except share amounts)Year Ended December 31,Amount Change% Change2023202220212023 vs 20222022 vs 20212023 vs 20222022 vs 2021Revenue$420,582$309,170$217,867$111,412$91,30336.0%41.9%Cost of revenue132,15493,89064,83438,26429,05640.8%44.8%Gross profit288,428215,280153,03373,14862,24734.0%40.7%Operating expenses:Selling, general, and administrative expenses140,897105,96674,43434,93131,53233.0%42.4%Research and development expenses128,54497,43670,91331,10826,52331.9%37.4%Total operating expenses269,441203,402145,34766,03958,05532.5%39.9%Operating income18,98711,8787,6867,1094,19259.9%54.5%Other (expense) income:Interest expense(6,274)(6,614)(5,047)340(1,567)5.1%31.0%Change in fair value of warrant liability(771)248(83)(1,019)331NMNMChange in fair value of convertible notes(14,147)--(14,147)-NMNMOther expense(45)(21)(3)(24)(18)NMNMTotal other expense, net(21,237)(6,387)(5,133)(14,850)(1,254)NM24.4%Net income before income tax (expense) benefit(2,250)5,4912,553(7,741)2,938NMNMIncome tax (expense) benefit(2,157)5,975(32)(8,132)6,007NMNMNet (loss) income$(4,407)$11,466$2,521$(15,873)$8,945NMNMILEARNINGENGINES, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(In thousands, except share amounts)As of December 31,20232022AssetsCurrent assets:Cash$4,763$856Restricted cash2,000-Accounts receivable, net of provision for credit loss of $336 and $0, respectively73,49834,698Contract asset5099,408Prepaid expenses6288Total current assets80,83245,050Receivable from Technology Partner13,60210,217Receivable from related party465595Other assets729885Deferred tax assets, net5,7036,798Deferred transaction costs3,990-Total assets$105,321$63,545Liabilities and shareholders' deficitCurrent liabilities:Trade accounts payable$3,753$787Accrued expenses2,9821,284Current portion of long-term debt, net10,5178,138Contract liability2,7652,106Payroll taxes payable3,0372,789Other current liabilities116237Total current liabilities23,17015,341Convertible notes31,547-Warrant liability11,8707,645Long-term debt, net10,6799,713Subordinated payable to Technology Partner49,16347,495Other non-current liabilities74126Total liabilities126,50380,320Shareholders' deficit:Common Shares $0.0001 par value: 200,000,000 shares authorized: 95,782,605 shares issued and outstanding at December 31, 2023 and December 31, 20221010Additional paid-in capital36,38436,384Accumulated deficit(57,576)(53,169)Total shareholders' deficit(21,182)(16,775)Total liabilities and shareholders' deficit$105,321$63,545ILEARNINGENGINES, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands)Years ended December 31,202320222021Cash flows used in operating activities:Net (loss) income$(4,407)$11,466$2,521Adjustments to reconcile net income to net cash flows used in operating activities:Depreciation and amortization12877--Share based compensation expense----39Amortization of debt discount and debt issuance costs2,1033,2482,186Provision for deferred taxes1,095(6,798)--Accretion of interest on subordinated payable to Technology Partner1,6681,6671,668Change in fair value of warrant liability771(248)83Change in fair value of convertible debts14,147----Provision for credit losses336----Changes in operating assets and liabilities:Accounts receivable(39,136)(18,740)(5,395)Receivable from related party13020(350)Contract asset8,8997,6452,115Advance to customer--362(362)Prepaid expenses and other current assets26(31)(56)Receivable from Technology Partner(3,385)(9,490)(727)Trade accounts payable1,906163536Accrued expenses and other current liabilities(47)702(718)Contract liability659613613Subordinated payable to Technology Partner----(10,503)Payroll taxes payable248401116Deferred transaction costs(1,307)----Net cash flows used in operating activities(16,166)(8,943)(8,234)Cash flows (used in) provided by investing activities:Purchase of property and equipment(24)--(18)Cash acquired from business acquisition--161--Net cash flows (used in) provided by investing activities:(24)161(18)Cash flows provided by financing activities:Proceeds from term loans15,00010,0007,000Repayment of term loans(10,303)(4,766)(272)Proceeds from convertible notes17,400----Other financing activities--(3)1Net cash flows provided by financing activities:22,0975,2316,729Net change in cash5,907(3,551)(1,523)Cash and restricted cash, beginning of year8564,4075,930Cash and restricted cash, end of year$6,763$856$4,407Supplemental disclosure of cash flows information:Cash paid during the year for interest$2,510$3,557$922Supplemental disclosure of non-cash investing and financing information:Issuance of warrants to purchase common shares$3,455$1,027$3,193Issuance of equity for acquisition of In2vate, LLC$--$883$--Accrued transaction costs$2,683$--$--Capital contribution from cancellation of convertible notes$--$--$574Reconciliation of cash and restricted cashCash$4,763$856$4,407Restricted cash$2,000$--$--Total cash and restricted cash at end of year$6,763$856$4,407Certain Definitions(a) "ARR" or "Annual Recurring Revenue" means the annualized recurring value of all active maintenance and support contracts at the end of a reporting period. ARR is useful for assessing the performance of the Company's recurring maintenance and support revenue base and identifying trends affecting the Company's business. ARR mitigates fluctuations due to seasonality, contract term, sales mix, and revenue recognition timing resulting from revenue recognition methodologies under GAAP. ARR should be viewed independently of revenue as it is an operating measure and is not intended to be combined with or to replace GAAP revenue.(b) "NDR" or "Net Dollar Retention" means an operational performance measure that is used to assess client retention and its dollar impact on business. NDR is defined as the ARR in dollars generated in the current period by clients that existed in the prior comparable period divided by the ARR in dollars by those same clients in the prior period. NDR illustrates the impact of upgrades, downgrades, and cancellations in the current period on the existing client base. Since NDR does not factor in revenue from clients acquired in the current period and includes any churn from existing contracted customers, it is believed that it is an accurate measure of client retention. For the avoidance of doubt, NDR does not exclude prior year contracted customers that were not retained in the current year. NDR is calculated as the dollar value of recurring revenue from existing clients at the end of the prior period, plus the current period's dollar impact of upsells or cross-sells from the prior period's existing clients, minus the current period's dollar impact of churn or downgrades from the prior period's existing clients, divided by prior period recurring revenues from existing clients.The dollar impact of upsells or cross-sells is calculated as the sum of incremental recurring revenue between the end of the prior period and the end of the current period from the prior period's existing clients that expanded usage of our products resulting in incremental recurring revenues earned in the current period.The dollar impact of churn or downgrades is calculated as the difference in recurring revenue between the end of the prior period and the end of the current period from the prior period's existing clients that have decreased in usage or are no longer revenue contributing customers.(c) "NM" means not meaningful Forward-Looking Statements Certain statements included in this press release that are not historical facts are forward-looking statements for purposes of the safe harbor provisions under the United States Private Securities Litigation Reform Act of 1995 with respect to the Business Combination. 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," the negative forms of these words and similar expressions that predict or indicate future events or trends or that are not statements of historical matters. These forward-looking statements include, but are not limited to, statements regarding the potential benefits of the Business Combination, the Company's future growth prospects, the Company's plans to invest heavily in R&D, including industry-specific datasets, the Company's ability to drive value for new and existing customers and the Company's ability to address market opportunities across artificial intelligence. These statements are based on various assumptions, whether or not identified in this press release, and on the current expectations of the iLearningEngines' management and are not predictions of actual performance. These forward-looking statements are provided for illustrative purposes only and are not intended to serve as and must not be relied on by an investor as a guarantee, an assurance, a prediction, or a definitive statement of fact or probability. Actual events and circumstances are difficult or impossible to predict and will differ from assumptions this press release relies on. Many actual events and circumstances are beyond the control of iLearningEngines. These forward-looking statements are subject to a number of risks and uncertainties, including changes in domestic and foreign business, market, financial, political, and legal conditions; iLearningEngines' failure to realize the anticipated benefits of the Business Combination; risks related to the rollout of iLearningEngines' business and the timing of expected business milestones; iLearningEngines' dependence on a limited number of customers and partners; iLearningEngines' ability to obtain sufficient financing to pay its expenses incurred in connection with the closing of the business combination; the ability of iLearningEngines to issue equity or equity-linked securities or obtain debt financing in the future; risks related to iLearningEngines' need for substantial additional financing to implement its operating plans, which financing it may be unable to obtain, or unable to obtain on acceptable terms; iLearningEngines' ability to maintain the listing of its securities on Nasdaq or another national securities exchange; the risk that the Business Combination disrupts current plans and operations of iLearningEngines; the effects of competition on iLearningEngines future business and the ability of iLearningEngines to grow and manage growth profitably, maintain relationships with customers and suppliers and retain its management and key employees; risks related to political and macroeconomic uncertainty; the outcome of any legal proceedings that may be instituted against iLearningEngines or any of their respective directors or officers, including litigation related to the Business Combination; the impact of the global COVID-19 pandemic on any of the foregoing risks; and those factors discussed in the Company's registration statement on Form S-4, as amended or supplemented, under the heading "Risk Factors," and other documents the Company has filed, or will file, with the SEC. If any of these risks materialize or our assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. There may be additional risks that iLearningEngines does not presently know, or that iLearningEngines does not currently believe are immaterial, that could also cause actual results to differ from those contained in the forward-looking statements. In addition, forward-looking statements reflect iLearningEngines' expectations, plans, or forecasts of future events and views as of the date of this communication. iLearningEngines anticipate that subsequent events and developments will cause iLearningEngines' assessments to change. However, while iLearningEngines may elect to update these forward-looking statements at some point in the future, iLearningEngines specifically disclaim any obligation to do so. These forward-looking statements should not be relied upon as representing iLearningEngines' assessments as of any date subsequent to the date of this communication. Accordingly, undue reliance should not be placed upon the forward-looking statements. Non-GAAP Financial Measures In addition to financial information prepared in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"), this press release also contains adjusted EBITDA and adjusted EBITDA margin. The Company believes these measures provide investors and management with supplemental information relating to operating performance and trends that facilitate comparisons between periods. Adjusted EBITDA is calculated net (loss) income plus: (1) interest, (2) taxes, (3) depreciation and amortization, (4) stock-based compensation and other stock-settled obligations; (5) goodwill, long-lived assets and intangible asset impairments; (6) legal reserves and settlements; (7) restructuring and other related reorganization costs; and (8) non-recurring expenses and income. Adjusted EBITDA is a performance measure that the Company uses to assess its operating performance and the operating leverage within its business. The Company monitors Adjusted EBITDA as a non-GAAP financial measure to supplement the financial information it presents in accordance with GAAP to provide investors with additional information regarding its financial results. Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by revenue. The Company believes the use of non-GAAP financial measures helps indicate underlying trends in the Company's business and are important in comparing current results with prior period results and understanding projected operating performance. Non-GAAP financial measures provide the Company and its investors with an indication of the Company's baseline performance before items that are considered by the Company not to be reflective of the Company's ongoing results. See the attached reconciliation tables for details of the amounts excluded and included to arrive at certain of the non-GAAP financial measures. These non-GAAP financial measures should be considered in addition to, but not as a substitute for, the information prepared in accordance with GAAP. In addition, from time to time in the future there may be other items that the Company may exclude for purposes of its non-GAAP financial measures; and the Company may in the future cease to exclude items that it has historically excluded for purposes of its non-GAAP financial measures. Likewise, the Company may determine to modify the nature of its adjustments to arrive at its non-GAAP financial measures. The Company strongly encourages investors to review its consolidated financial statements and publicly filed reports in their entirety and cautions investors that the non-GAAP financial measures used by the Company may differ from similar measures used by other companies, even when similar terms are used to identify such measures. The following table presents a reconciliation of Adjusted EBITDA to net (loss) income, the most directly comparable financial measure stated in accordance with GAAP, for the periods presented: Year Ended December 31,202320222021(Dollars in thousands)Net (loss) income$(4,407)$11,466$2,521Interest expense6,2746,6145,047Income tax expense (benefit)2,157(5,975)32Depreciation and amortization12877-EBITDA4,15212,1827,600Other expense45213Share-based compensation expense--39Transaction costs34,280709159Change in fair value of warrant liability771(248)83Change in fair value of convertible notes14,147--Adjusted EBITDA$23,395$12,664$7,884Adjusted EBITDA Margin5.6%4.1%3.6%_____________________________3 Represents legal, tax, accounting, consulting, and other professional fees related to the merger with Arrowroot and previously explored strategic alternatives, all of which are non-recurring in nature. COMTEX_451242782/2010/2024-04-22T16:30:48 Fourth quarter revenue grew 39% year-over-year to $116 million Posts record full year revenue of $421 million, up 36% year-over-year, and ARR growth accelerates to 43% year-over-year BETHESDA, Md., April 22, 2024 (GLOBE NEWSWIRE) -- iLearningEngines, Inc. (NASDAQ: AILE) ("iLearningEngines", "ILE", or "the Company"), a leader in AI-powered learning automation and information intelligence for corporate and educational use, today announced financial results for the fourth quarter and fiscal year ended December 31, 2023. "The fourth quarter capped off a strong 2023," said Harish Chidambaran, Chief Executive Officer of iLearningEngines. "During 2023, we expanded our core markets, grew end customers and licensed users, achieved 36% revenue growth year-over-year, and reached $447 million of annual recurring revenue . We are pleased to be carrying this business momentum into the first half of 2024." Key Fourth Quarter & Full Year 2023 Financial Highlights Revenue - fourth quarter 2023 revenue of $116 million increased 39% year-over-year. Full year 2023 revenue of $421 million increased 36% year-over-year.Annual Recurring Revenue ("ARR")1 - ARR of $447 million increased 43% year-over-year.Net Dollar Retention ("NDR")1 - NDR of 125% in 2023 increased compared to 117% in 2022.Net Loss - Fourth quarter GAAP net loss of $4 million. Full year 2023 GAAP net loss of $4 million.Adjusted EBITDA & Adjusted EBITDA Margin2 - Fourth quarter 2023 adjusted EBITDA of $10 million, and full year 2023 adjusted EBITDA of $23 million. Adjusted EBITDA margin expanded by 240 basis points in Q4 2023 compared to Q4 2022, and 85 basis points in full year 2023 compared to full year 2022._____________________________1 For additional information regarding ARR and NDR, please see the section titled "Certain Definitions" at the end of this press release.2 Adjusted EBITDA and Adjusted EBITDA margin are a non-GAAP financial measures. For descriptions and reconciliations of our non-GAAP financial measures to their most comparable GAAP financial measures, please see the section titled "Non-GAAP Financial Measures" and the tables at the end of this press release. Financial Summary & Operating Metrics (In millions) - Fourth Quarter 2023MetricQ4 2023Q4 2022D Y/YRevenue1168339%ARR44731443%Gross profit805838%Net (loss) income(4)8NMAdjusted EBITDA103NMAdjusted EBITDA Margin8.6%3.5%NMFinancial Summary & Operating Metrics (In millions) - Full Year 2023MetricFY 2023FY 2022D Y/YRevenue42130936%ARR44731443%Gross profit28821534%Net (loss) income(4)11NMAdjusted EBITDA2313NMAdjusted EBITDA Margin5.6%4.1%NMRecent Business Highlights Strong customer and partner growth includes adding three new value-added resellers ("VARs") in 2023, bringing total Contracted Customers to 29.Reached more than 4.4 million licensed users at the end of 2023.On April 16, 2024, successfully completed a business combination (the "Business Combination") transaction with Arrowroot Acquisition Corp. ("Arrowroot") and began trading as a public company under the ticker "AILE" on April 17, 2024.Appointed Matthew Barger, Ian Davis, Bruce Mehlman, Michael Moe, and Tom Olivier to its Board of Directors.Finished 2023 with 508 employees globally, including 98 full-time employees and 410 contractors."Our differentiated AI solutions enable customers to productize their institutional knowledge and drive mission-critical business outcomes," continued Chidambaran. "In 2024, we intend to continue to invest heavily in R&D, including our industry-specific datasets, while we also execute our sales strategy to drive value for new and existing customers." The Company intends to host a conference call in May 2024 to discuss first quarter 2024 financial results. About iLearningEngines iLearningEngines is a leading provider of cloud-based, AI driven, learning and workforce automation solutions mission-critical training for enterprises. iLearningEngines has consistently ranked as one of the fastest growing companies in North America on the Deloitte Technology Fast 500. iLearningEngines' AI and Learning Automation platform is used by enterprises to productize their enterprise knowledge for consumption throughout the enterprise. The intense demand for scalable outcome-based training has led to deployments in some of the most regulated and detail-oriented vertical markets, including Healthcare, Education, Insurance, Retail, Oil & Gas / Energy, Manufacturing and Government. iLearningEngines was founded by Harish Chidambaran in 2010, and is headquartered in Bethesda, MD with international offices in Dubai, UAE and Trivandrum, Pune and Kochi, India. For more information about iLearningEngines, please visit: www.ilearningengines.com. IR & Press ContactsInvestor Contact:Kevin Hunt, ICR Inc. iLearningEnginesIR@icrinc.com Press Contact:Dan Brennan, ICR Inc.iLearningPR@icrinc.com ILEARNINGENGINES, INC. AND SUBSIDIARIESCONSOLIDATED INCOME STATEMENT(In thousands, except share amounts)Year Ended December 31,Amount Change% Change2023202220212023 vs 20222022 vs 20212023 vs 20222022 vs 2021Revenue$420,582$309,170$217,867$111,412$91,30336.0%41.9%Cost of revenue132,15493,89064,83438,26429,05640.8%44.8%Gross profit288,428215,280153,03373,14862,24734.0%40.7%Operating expenses:Selling, general, and administrative expenses140,897105,96674,43434,93131,53233.0%42.4%Research and development expenses128,54497,43670,91331,10826,52331.9%37.4%Total operating expenses269,441203,402145,34766,03958,05532.5%39.9%Operating income18,98711,8787,6867,1094,19259.9%54.5%Other (expense) income:Interest expense(6,274)(6,614)(5,047)340(1,567)5.1%31.0%Change in fair value of warrant liability(771)248(83)(1,019)331NMNMChange in fair value of convertible notes(14,147)--(14,147)-NMNMOther expense(45)(21)(3)(24)(18)NMNMTotal other expense, net(21,237)(6,387)(5,133)(14,850)(1,254)NM24.4%Net income before income tax (expense) benefit(2,250)5,4912,553(7,741)2,938NMNMIncome tax (expense) benefit(2,157)5,975(32)(8,132)6,007NMNMNet (loss) income$(4,407)$11,466$2,521$(15,873)$8,945NMNMILEARNINGENGINES, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(In thousands, except share amounts)As of December 31,20232022AssetsCurrent assets:Cash$4,763$856Restricted cash2,000-Accounts receivable, net of provision for credit loss of $336 and $0, respectively73,49834,698Contract asset5099,408Prepaid expenses6288Total current assets80,83245,050Receivable from Technology Partner13,60210,217Receivable from related party465595Other assets729885Deferred tax assets, net5,7036,798Deferred transaction costs3,990-Total assets$105,321$63,545Liabilities and shareholders' deficitCurrent liabilities:Trade accounts payable$3,753$787Accrued expenses2,9821,284Current portion of long-term debt, net10,5178,138Contract liability2,7652,106Payroll taxes payable3,0372,789Other current liabilities116237Total current liabilities23,17015,341Convertible notes31,547-Warrant liability11,8707,645Long-term debt, net10,6799,713Subordinated payable to Technology Partner49,16347,495Other non-current liabilities74126Total liabilities126,50380,320Shareholders' deficit:Common Shares $0.0001 par value: 200,000,000 shares authorized: 95,782,605 shares issued and outstanding at December 31, 2023 and December 31, 20221010Additional paid-in capital36,38436,384Accumulated deficit(57,576)(53,169)Total shareholders' deficit(21,182)(16,775)Total liabilities and shareholders' deficit$105,321$63,545ILEARNINGENGINES, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands)Years ended December 31,202320222021Cash flows used in operating activities:Net (loss) income$(4,407)$11,466$2,521Adjustments to reconcile net income to net cash flows used in operating activities:Depreciation and amortization12877--Share based compensation expense----39Amortization of debt discount and debt issuance costs2,1033,2482,186Provision for deferred taxes1,095(6,798)--Accretion of interest on subordinated payable to Technology Partner1,6681,6671,668Change in fair value of warrant liability771(248)83Change in fair value of convertible debts14,147----Provision for credit losses336----Changes in operating assets and liabilities:Accounts receivable(39,136)(18,740)(5,395)Receivable from related party13020(350)Contract asset8,8997,6452,115Advance to customer--362(362)Prepaid expenses and other current assets26(31)(56)Receivable from Technology Partner(3,385)(9,490)(727)Trade accounts payable1,906163536Accrued expenses and other current liabilities(47)702(718)Contract liability659613613Subordinated payable to Technology Partner----(10,503)Payroll taxes payable248401116Deferred transaction costs(1,307)----Net cash flows used in operating activities(16,166)(8,943)(8,234)Cash flows (used in) provided by investing activities:Purchase of property and equipment(24)--(18)Cash acquired from business acquisition--161--Net cash flows (used in) provided by investing activities:(24)161(18)Cash flows provided by financing activities:Proceeds from term loans15,00010,0007,000Repayment of term loans(10,303)(4,766)(272)Proceeds from convertible notes17,400----Other financing activities--(3)1Net cash flows provided by financing activities:22,0975,2316,729Net change in cash5,907(3,551)(1,523)Cash and restricted cash, beginning of year8564,4075,930Cash and restricted cash, end of year$6,763$856$4,407Supplemental disclosure of cash flows information:Cash paid during the year for interest$2,510$3,557$922Supplemental disclosure of non-cash investing and financing information:Issuance of warrants to purchase common shares$3,455$1,027$3,193Issuance of equity for acquisition of In2vate, LLC$--$883$--Accrued transaction costs$2,683$--$--Capital contribution from cancellation of convertible notes$--$--$574Reconciliation of cash and restricted cashCash$4,763$856$4,407Restricted cash$2,000$--$--Total cash and restricted cash at end of year$6,763$856$4,407Certain Definitions(a) "ARR" or "Annual Recurring Revenue" means the annualized recurring value of all active maintenance and support contracts at the end of a reporting period. ARR is useful for assessing the performance of the Company's recurring maintenance and support revenue base and identifying trends affecting the Company's business. ARR mitigates fluctuations due to seasonality, contract term, sales mix, and revenue recognition timing resulting from revenue recognition methodologies under GAAP. ARR should be viewed independently of revenue as it is an operating measure and is not intended to be combined with or to replace GAAP revenue.(b) "NDR" or "Net Dollar Retention" means an operational performance measure that is used to assess client retention and its dollar impact on business. NDR is defined as the ARR in dollars generated in the current period by clients that existed in the prior comparable period divided by the ARR in dollars by those same clients in the prior period. NDR illustrates the impact of upgrades, downgrades, and cancellations in the current period on the existing client base. Since NDR does not factor in revenue from clients acquired in the current period and includes any churn from existing contracted customers, it is believed that it is an accurate measure of client retention. For the avoidance of doubt, NDR does not exclude prior year contracted customers that were not retained in the current year. NDR is calculated as the dollar value of recurring revenue from existing clients at the end of the prior period, plus the current period's dollar impact of upsells or cross-sells from the prior period's existing clients, minus the current period's dollar impact of churn or downgrades from the prior period's existing clients, divided by prior period recurring revenues from existing clients.The dollar impact of upsells or cross-sells is calculated as the sum of incremental recurring revenue between the end of the prior period and the end of the current period from the prior period's existing clients that expanded usage of our products resulting in incremental recurring revenues earned in the current period.The dollar impact of churn or downgrades is calculated as the difference in recurring revenue between the end of the prior period and the end of the current period from the prior period's existing clients that have decreased in usage or are no longer revenue contributing customers.(c) "NM" means not meaningful Forward-Looking Statements Certain statements included in this press release that are not historical facts are forward-looking statements for purposes of the safe harbor provisions under the United States Private Securities Litigation Reform Act of 1995 with respect to the Business Combination. 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," the negative forms of these words and similar expressions that predict or indicate future events or trends or that are not statements of historical matters. These forward-looking statements include, but are not limited to, statements regarding the potential benefits of the Business Combination, the Company's future growth prospects, the Company's plans to invest heavily in R&D, including industry-specific datasets, the Company's ability to drive value for new and existing customers and the Company's ability to address market opportunities across artificial intelligence. These statements are based on various assumptions, whether or not identified in this press release, and on the current expectations of the iLearningEngines' management and are not predictions of actual performance. These forward-looking statements are provided for illustrative purposes only and are not intended to serve as and must not be relied on by an investor as a guarantee, an assurance, a prediction, or a definitive statement of fact or probability. Actual events and circumstances are difficult or impossible to predict and will differ from assumptions this press release relies on. Many actual events and circumstances are beyond the control of iLearningEngines. These forward-looking statements are subject to a number of risks and uncertainties, including changes in domestic and foreign business, market, financial, political, and legal conditions; iLearningEngines' failure to realize the anticipated benefits of the Business Combination; risks related to the rollout of iLearningEngines' business and the timing of expected business milestones; iLearningEngines' dependence on a limited number of customers and partners; iLearningEngines' ability to obtain sufficient financing to pay its expenses incurred in connection with the closing of the business combination; the ability of iLearningEngines to issue equity or equity-linked securities or obtain debt financing in the future; risks related to iLearningEngines' need for substantial additional financing to implement its operating plans, which financing it may be unable to obtain, or unable to obtain on acceptable terms; iLearningEngines' ability to maintain the listing of its securities on Nasdaq or another national securities exchange; the risk that the Business Combination disrupts current plans and operations of iLearningEngines; the effects of competition on iLearningEngines future business and the ability of iLearningEngines to grow and manage growth profitably, maintain relationships with customers and suppliers and retain its management and key employees; risks related to political and macroeconomic uncertainty; the outcome of any legal proceedings that may be instituted against iLearningEngines or any of their respective directors or officers, including litigation related to the Business Combination; the impact of the global COVID-19 pandemic on any of the foregoing risks; and those factors discussed in the Company's registration statement on Form S-4, as amended or supplemented, under the heading "Risk Factors," and other documents the Company has filed, or will file, with the SEC. If any of these risks materialize or our assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. There may be additional risks that iLearningEngines does not presently know, or that iLearningEngines does not currently believe are immaterial, that could also cause actual results to differ from those contained in the forward-looking statements. In addition, forward-looking statements reflect iLearningEngines' expectations, plans, or forecasts of future events and views as of the date of this communication. iLearningEngines anticipate that subsequent events and developments will cause iLearningEngines' assessments to change. However, while iLearningEngines may elect to update these forward-looking statements at some point in the future, iLearningEngines specifically disclaim any obligation to do so. These forward-looking statements should not be relied upon as representing iLearningEngines' assessments as of any date subsequent to the date of this communication. Accordingly, undue reliance should not be placed upon the forward-looking statements. Non-GAAP Financial Measures In addition to financial information prepared in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"), this press release also contains adjusted EBITDA and adjusted EBITDA margin. The Company believes these measures provide investors and management with supplemental information relating to operating performance and trends that facilitate comparisons between periods. Adjusted EBITDA is calculated net (loss) income plus: (1) interest, (2) taxes, (3) depreciation and amortization, (4) stock-based compensation and other stock-settled obligations; (5) goodwill, long-lived assets and intangible asset impairments; (6) legal reserves and settlements; (7) restructuring and other related reorganization costs; and (8) non-recurring expenses and income. Adjusted EBITDA is a performance measure that the Company uses to assess its operating performance and the operating leverage within its business. The Company monitors Adjusted EBITDA as a non-GAAP financial measure to supplement the financial information it presents in accordance with GAAP to provide investors with additional information regarding its financial results. Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by revenue. The Company believes the use of non-GAAP financial measures helps indicate underlying trends in the Company's business and are important in comparing current results with prior period results and understanding projected operating performance. Non-GAAP financial measures provide the Company and its investors with an indication of the Company's baseline performance before items that are considered by the Company not to be reflective of the Company's ongoing results. See the attached reconciliation tables for details of the amounts excluded and included to arrive at certain of the non-GAAP financial measures. These non-GAAP financial measures should be considered in addition to, but not as a substitute for, the information prepared in accordance with GAAP. In addition, from time to time in the future there may be other items that the Company may exclude for purposes of its non-GAAP financial measures; and the Company may in the future cease to exclude items that it has historically excluded for purposes of its non-GAAP financial measures. Likewise, the Company may determine to modify the nature of its adjustments to arrive at its non-GAAP financial measures. The Company strongly encourages investors to review its consolidated financial statements and publicly filed reports in their entirety and cautions investors that the non-GAAP financial measures used by the Company may differ from similar measures used by other companies, even when similar terms are used to identify such measures. The following table presents a reconciliation of Adjusted EBITDA to net (loss) income, the most directly comparable financial measure stated in accordance with GAAP, for the periods presented: Year Ended December 31,202320222021(Dollars in thousands)Net (loss) income$(4,407)$11,466$2,521Interest expense6,2746,6145,047Income tax expense (benefit)2,157(5,975)32Depreciation and amortization12877-EBITDA4,15212,1827,600Other expense45213Share-based compensation expense--39Transaction costs34,280709159Change in fair value of warrant liability771(248)83Change in fair value of convertible notes14,147--Adjusted EBITDA$23,395$12,664$7,884Adjusted EBITDA Margin5.6%4.1%3.6%_____________________________3 Represents legal, tax, accounting, consulting, and other professional fees related to the merger with Arrowroot and previously explored strategic alternatives, all of which are non-recurring in nature. COMTEX_451242782/2010/2024-04-22T16:30:48 |
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