IPass CEO Discusses Q1 2012 Results - Earnings Call Transcript

iPass Inc. (IPAS)

Q1 2012 Earnings Call

May 7, 2012; 05:00 pm ET

Executives

Evan Kaplan - President & Chief Executive Officer

Steven Gatoff - Chief Financial Officer

Anitha Gopalan - Director of Finance & Investor Relations

Analysts

Frederick Ziegel - Topeka Capital Markets

Kevin Hanrahan - KMH Capital Advisors

James Stein Hibler (ph) - Morgan Stanley Smith Barney

Scott Searle - Unterberg Capital

Presentation

Operator

Good day everyone and welcome to the iPass, first quarter 2012 financial results conference call. Today’s conference is being recorded.

At this time I would like to turn the conference over to the company for opening remarks. Please go ahead.

Anitha Gopalan

Thanks operator. Good afternoon and thank you for joining us today. This is Anitha Gopalan, Director of Finance and Investor Relations. I’m here today with Evan Kaplan, President and CEO of iPass and Steven Gatoff, our Chief Financial Officer.

We have distributed our Q1 earnings release over the wire services and have posted it on our website at investor.ipass.com. Please also refer to our website for upcoming presentations updated for the first quarter financial results. This call is also being webcast at investor.ipass.com. A replay of this call will be available on our website for one quarter until the next earnings call. Please note that this webcast is the property of iPass and any copying or rebroadcast without the expressed prior written consent of iPass is prohibited.

Before we get started, we want to emphasize that some of the information and statements you will hear during our discussions today will consist of forward-looking statements, including without limitations, those regarding our expected performance of the business, revenue and operating model targets. These statements involve risk and uncertainty that could cause actual results to differ materially.

These forward-looking statements reflect our opinion only as of the day of this presentation and we undertake no obligation to revise or publicly release the results or make any revisions to these forward-looking statements in light of new information or future events. Please refer to our SEC filings for a more detailed description of the risk factors that may affect our results.

On this call we will also provide and talk about our results using non-GAAP financial measures. Our GAAP results and reconciliation of non-GAAP to GAAP measures can be found in our earnings press release.

Before I turn over the call to Evan, we’d like to note for you that management will be meeting with investors and analysts in Boston, Philadelphia and New York later this week and in St. Louis and Minneapolis the week of May 14. Also we will be presenting at the B. Riley Annual Investor conference in L.A. on May 22. If you’re interested in connecting with us, please feel free to send us an email at ir@ipass.com.

With that, I’d like to turn the call over to Evan.

Evan Kaplan

Thanks Anitha. Good afternoon everyone. It’s great to talk to you today and thanks for joining us. Before I jump into our Q1 results, I’d like to first start by recapping the core messages that we laid out for you in our February call. First, we said we continue to perform well, we like our results and we like our growth profile in our core business and second, we said that we’d view 2012 as a year for growth in the metrics that we are most focused on, specifically driving scale with users, revenue in our core offerings, profitability and cash flow.

As we now go through our Q1 2012 results, let me start by telling you that we reiterate those same beliefs, specifically strong execution and growth in our core Open Mobile business. On that high level note, let me jump into the highlights of the quarter.

Starting with our Open Mobile Enterprise business, we produced some wheel traction and user scale, both in aggregate platform users a good things and with Open Mobile specifically, a far more important thing. That first point is an important one though.

Last quarter we highlighted for you that perhaps the most critical indicator of a return to growth was turn in total platform monetized users. We guided that after four plus years of steady decline, we’ll be growing our total platform monentized user base again and that we anticipate steady adds going forward.

We delivered on that in Q1 with another quarter of sequential growth, with a net addition of more than 16,000 average monthly monetized users, which include an increase of approximately 50,000 average monthly monetized open mobile users, offset by decline in legacy platform IPC users.

And with Open Mobile specifically we have continued to demonstrate the value proposition resonating with large enterprises globally, as we signed new Open Mobile agreements with numerous Fortune 1000 companies, including Intel, John Deer, Emerson Electric, Rockwell Collins, Schwab, ABN Amro and Ernst & Young among others. All in, we currently have over more than 460 enterprise customers signed on to Open Mobile.

Arguably more important than customer accounts at this point is the actual deployments. In the quarter new Open Mobile deployments drove significant growth in Open Mobile user accounts. Q4 was a solid quarter, in which we ended with more than 50,000 active users and 230,000 gross monetizers on the Open Mobile Platform.

As you likely saw in our results today though, we performed even better this quarter, as we grew our active user account by 150% sequentially over December to the end of Q1, with more than 135,000 active OM users and more than 320,000 gross monetized paying OM users. We are pleased with our execution on this platform, growth is good and growth with these large numbers is even better.

Read the rest of this transcript for free on seekingalpha.com