klr-10q_20220630.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number: 001-38320

KALEYRA, INC.

(Exact name of registrant as specified in its charter)

Delaware		82-3027430
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

17 State Street, New York, NY		10004
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: +1 917 508 9185

(Former name or former address, if changed since last report): N/A

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbols	Name of each exchange on which registered
Common Stock, par value $0.0001 per share	KLR	New York Stock Exchange
Warrants, at an exercise price of $11.50 per share of Common Stock	KLR WS	NYSE American LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by checkmark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files) Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 5, 2022, there were 44,344,364 shares of the Company’s common stock issued and outstanding.

KALEYRA, INC.

Quarterly Report on Form 10-Q

Table of Contents

PART I – FINANCIAL INFORMATION		Page

Item 1.	Condensed Consolidated Financial Statements (unaudited):	1

	Condensed Consolidated Balance Sheets	1

	Condensed Consolidated Statements of Operations	2

	Condensed Consolidated Statements of Comprehensive Loss	3

	Condensed Consolidated Statements of Stockholders’ Equity (Deficit)	4

	Condensed Consolidated Statements of Cash Flows	6

	Notes to Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	43

Item 4.	Controls and Procedures	43

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	44

Item 1A.	Risk Factors	45

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	45

Item 3.	Defaults Upon Senior Securities	45

Item 4.	Mine Safety Disclosures	46

Item 5.	Other Information	46

Item 6.	Exhibits	47

Signatures		48

Item 1 – Financial Statements

KALEYRA, INC.

Condensed Consolidated Balance Sheets

(Unaudited, in thousands, except share and per share data)

	June 30, 2022			December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	73,622		$	90,001
Restricted cash		468			1,701
Short-term investments		680			6,236
Trade receivables, net		95,768			85,945
Deferred cost		329			341
Prepaid expenses		4,340			5,357
Other current assets		1,436			2,599
Total current assets		176,643			192,180
Property and equipment, net		20,384			18,811
Intangible assets, net		115,146			125,396
Goodwill		111,893			110,465
Deferred tax assets		376			1,230
Other long-term assets		1,525			399
Total Assets	$	425,967		$	448,481
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable	$	71,934		$	70,942
Lines of credit		3,182			5,256
Current portion of bank and other borrowings		10,581			10,508
Current portion of notes payable		405			—
Deferred revenue		6,934			9,553
Payroll and payroll related accrued liabilities		6,567			6,907
Other current liabilities		6,327			8,274
Total current liabilities		105,930			111,440
Long-term portion of bank and other borrowings		15,928			22,910
Long-term portion of notes payable		190,733			190,147
Long-term portion of employee benefit obligation		2,377			2,338
Deferred tax liabilities		5,205			2,384
Other long-term liabilities		892			1,840
Total Liabilities		321,065			331,059
Commitments and contingencies (Note 13)
Stockholders’ equity (deficit):
Preferred stock, par value of $0.0001 per share; 1,000,000 shares authorized; no shares issued or outstanding		—			—
Common stock, par value of $0.0001 per share; 100,000,000 shares authorized as of June 30, 2022 and December 31, 2021; 47,142,422 shares issued and 44,344,364 shares outstanding as of June 30, 2022 and 44,831,695 shares issued and 42,033,637 shares outstanding as of December 31, 2021		5			4
Additional paid-in capital		270,672			251,659
Treasury stock, at cost; 2,798,058 shares as of June 30, 2022 and December 31, 2021		(30,431	)		(30,431	)
Accumulated other comprehensive loss		(4,535	)		(2,010	)
Accumulated deficit		(130,809	)		(101,800	)
Total stockholders’ equity		104,902			117,422
Total liabilities and stockholders’ equity (deficit)	$	425,967		$	448,481

__________________

The accompanying notes are an integral part of these condensed consolidated financial statements.

KALEYRA, INC.

Condensed Consolidated Statements of Operations

(Unaudited, in thousands, except share and per share data)

	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Revenue	$	81,109		$	53,992		$	161,590		$	93,706
Cost of revenue		62,459			43,529			125,202			76,919
Gross profit		18,650			10,463			36,388			16,787
Operating expenses:
Research and development		6,265			4,282			11,155			7,150
Sales and marketing		7,226			4,660			14,326			7,519
General and administrative		16,594			12,364			31,974			22,966
Total operating expenses		30,085			21,306			57,455			37,635
Loss from operations		(11,435	)		(10,843	)		(21,067	)		(20,848	)
Other income, net		37			47			83			92
Financial expense, net		(3,417	)		(908	)		(6,569	)		(1,627	)
Foreign currency income (loss)		(1,117	)		(191	)		(860	)		164
Loss before income tax expense (benefit)		(15,932	)		(11,895	)		(28,413	)		(22,219	)
Income tax expense (benefit)		(95	)		(7,408	)		596			(7,374	)
Net loss	$	(15,837	)	$	(4,487	)	$	(29,009	)	$	(14,845	)
Net loss per common share, basic and diluted	$	(0.36	)	$	(0.13	)	$	(0.68	)	$	(0.46	)
Weighted-average shares used in computing net loss per common share, basic and diluted		43,410,858			34,292,874			42,829,188			32,328,909

The accompanying notes are an integral part of these condensed consolidated financial statements.

KALEYRA, INC.

Condensed Consolidated Statements of Comprehensive Loss

(Unaudited, in thousands)

	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Net loss	$	(15,837	)	$	(4,487	)	$	(29,009	)	$	(14,845	)
Other comprehensive income (loss):
Foreign currency translation adjustments		(1,900	)		(602	)		(2,534	)		503
Net change in unrealized gain on marketable securities, net of tax		4			23			9			19
Total other comprehensive income (loss)		(1,896	)		(579	)		(2,525	)		522
Total comprehensive loss	$	(17,733	)	$	(5,066	)	$	(31,534	)	$	(14,323	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

KALEYRA, INC.

Condensed Consolidated Statements of Stockholders’ Equity (Deficit)

(Unaudited, in thousands, except share data)

	Three Months Ended June 30, 2022
	Common Stock				Additional Paid-in		Treasury Stock					Accumulated Other Comprehensive			Accumulated			Total Stockholders' Equity
	Shares		Amount		Capital		Shares		Amount			Income (Loss)			Deficit			(Deficit)
Balance as of March 31, 2022		42,361,833	$	4	$	258,418		2,798,058	$	(30,431	)	$	(2,639	)	$	(114,972	)	$	110,380
Stock-based compensation (RSUs)		1,982,531		1		12,254		—		—			—			—			12,255
Net loss		—		—		—		—		—			—			(15,837	)		(15,837	)
Other comprehensive loss		—		—		—		—		—			(1,896	)		—			(1,896	)
Balance as of June 30, 2022		44,344,364	$	5	$	270,672		2,798,058	$	(30,431	)	$	(4,535	)	$	(130,809	)	$	104,902

	Three Months Ended June 30, 2021
	Common Stock				Additional Paid-in		Treasury Stock					Accumulated Other Comprehensive			Accumulated			Total Stockholders' Equity
	Shares		Amount		Capital		Shares		Amount			Income (Loss)			Deficit			(Deficit)
Balance as of March 31, 2021		30,930,617	$	3	$	122,252		2,798,058	$	(30,431	)	$	(1,725	)	$	(78,161	)	$	11,938
Stock-based compensation (RSUs)		376,719		—		5,318		—		—			—			—			5,318
Proceeds from issuance of common stock in Private Investment in Public Equity offering, net of issuance costs		8,400,000		1		99,050		—		—			—			—			99,051
Common stock issued to Vivial equity holders (mGage acquisition) (2)		1,600,000		—		18,832		—		—			—			—			18,832
Net loss		—		—		—		—		—			—			(4,487	)		(4,487	)
Other comprehensive income		—		—		—		—		—			(579	)		—			(579	)
Balance as of June 30, 2021		41,307,336	$	4	$	245,452		2,798,058	$	(30,431	)	$	(2,304	)	$	(82,648	)	$	130,073

	Six Months Ended June 30, 2022
	Common Stock				Additional Paid-in		Treasury Stock					Accumulated Other Comprehensive			Accumulated			Total Stockholders' Equity
	Shares		Amount		Capital		Shares		Amount			Income (Loss)			Deficit			(Deficit)
Balance as of December 31, 2021		42,033,637	$	4	$	251,659		2,798,058	$	(30,431	)	$	(2,010	)	$	(101,800	)	$	117,422
Stock-based compensation (RSUs)		2,310,727		1		19,013		—		—			—			—			19,014
Net loss		—		—		—		—		—			—			(29,009	)		(29,009	)
Other comprehensive income		—		—		—		—		—			(2,525	)		—			(2,525	)
Balance as of June 30, 2022		44,344,364	$	5	$	270,672		2,798,058	$	(30,431	)	$	(4,535	)	$	(130,809	)	$	104,902

	Six Months Ended June 30, 2021
	Common Stock				Additional Paid-in		Treasury Stock					Accumulated Other Comprehensive			Accumulated			Total Stockholders' Equity
	Shares		Amount		Capital		Shares		Amount			Income (Loss)			Deficit			(Deficit)
Balance as of December 31, 2020		30,288,687	$	3	$	93,628		2,798,058	$	(30,431	)	$	(2,826	)	$	(67,803	)	$	(7,429	)
Conversion of Cowen Note		303,171		—		2,295		—		—			—			—			2,295
Forfeiture of 2020 Sponsors' Earnout Shares (1)