Sphere 3D: Fiscal 4Q18 Financial Results

Sphere 3D Corp. reported financial results for the year ended December 31, 2018.

“2018 was a year of transition with a number of challenges that needed to be overcome in order to complete the divestiture of Overland-Tandberg and restructuring of our credit facilities,” said Peter Tassiopoulos, CEO. “The impact of our focusing on the restructuring, coupled with our limited financial resources, negatively impacted the company’s performance. With that behind us, we can now focus on seeking to create shareholder value.”

Fiscal Year Financial Results:
On November 13, 2018, the company closed the divestiture of its Overland subsidiary and related business. Beginning in 4FQ18, the financial results of Overland for fiscal years 2018 and 2017 have been reflected in the company’s consolidated statements of operations as discontinued operations. All results below exclude discontinued operations.

Results for FY18:
• Net revenue for 2018 was $9.0 million, compared to $12.6 million for 2017.
• Product revenue for 2018 was $6.1 million, compared to $9.7 million for 2017. The overall decrease in revenue was partially due to the divestiture of Overland and our limited liquidity which delayed shipments. In addition, in 2017 there was a significant product transaction related to a one-time opportunity resulting in $2.2 million of product revenue that did not reoccur in 2018.
• Service revenue was $2.9 million in each of the years 2018 and 2017.
• Gross margin for 2018 was 18.6%, compared to 25.0% for 2017.
• Operating expenses for 2018 were $14.3 million, compared to $21.2 million for 2017. In 2017 the company recorded an impairment charge of $2.3 million.
• Share-based compensation expense for 2018 was $1.6 million, compared to $7.8 million for 2017. Depreciation and amortization was $1.7 million for 2018, compared to $3.4 million for 2017.
• Net loss from continuing operations for 2018 was $12.7 million, or a net loss of $7.65 per share, compared to a net loss from continuing operations of $15.4 million, or a net loss of $24.78 per share, for 2017.
• Net loss from discontinued operations for 2018 was $13.5 million, or a net loss of $8.15 per share, compared to a net loss from discontinued operations of $10.8 million, or a net loss of $17.30 per share, for 2017.

In March 2019, the company’s board of directors granted 100,000 inducement restricted stock units to Stoney Hall, who has joined the sales and marketing team of the company. This grant vests over an 18-month vesting period.