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FOMO WORLDWIDE, INC. (FOMC)·Q2 2022 Earnings Summary

Executive Summary

  • Record Q2 2022 revenue of $2.646M, up 2,959% YoY on SST acquisition; gross margin was 8% vs 23% YoY as mix shifted to hardware installs .
  • Operating loss narrowed to $(0.253)M and net loss improved to $(1.085)M vs Q1’s $(1.718)M, reflecting scale and lower G&A, while derivative/marketable security marks weighed on other expense .
  • Guidance raised: FY22 pro forma revenue to $9–10M (mid $9.5M) from $8–10M (mid $9.0M); management cited sustained K‑12 demand and backlog extending installations into November .
  • Liquidity improved with cash $0.234M, AR $1.27M, AR facility $0.73M, deferred revenue $0.825M, and backlog ≈$4M; management targets positive EBITDA in Q3 2022 .
  • Potential stock catalysts: raised guidance, backlog visibility, and K‑12 ESSER tailwind vs counterpoints of covenant defaults, derivative liabilities, and going‑concern risk noted in filings .

What Went Well and What Went Wrong

What Went Well

  • “Record second quarter results” driven by SST; consolidated revenues hit $2.6M with SST at “record levels,” underpinned by ~$500B K‑12 ESSER stimulus .
  • Backlog stability and customer traction: ~95 districts booked covering ~190,000 students; backlog ≈$4M; suppliers provided “head of the line” access amid constraints .
  • Guidance raised with pro forma YTD revenue >$6M through August, tracking $9–10M FY22; CEO: “no reason why SST’s business cannot double or triple” as chip shortage normalizes and cross‑sell expands .

What Went Wrong

  • Gross margin compressed to 8% in Q2 (vs 13% in Q1 and 23% YoY) as hardware installation mix ramped and cost of sales rose faster than revenue .
  • Other expense elevated: interest expense, amortization of debt discount, derivative charges, and marketable security losses drove $(0.832)M other expense in Q2 .
  • Financial risk remains: covenant defaults on AR facility (not exercised), significant derivative liabilities ($0.958M), working capital deficit ($1.418M), and going‑concern disclosure .

Financial Results

MetricQ2 2021Q1 2022Q2 2022
Revenue ($USD)$84,661 $1,234,567 $2,646,008
Gross Profit ($USD)$19,375 $165,927 $205,488
Gross Margin (%)23% 13% 8%
Operating Income ($USD)$(340,478) $(1,040,164) $(252,863)
Net Income ($USD)$1,182,709 $(1,718,285) $(1,084,752)
Diluted EPS ($USD)$0.00 $(0.00) $(0.00)

Segment/Mix (disaggregation of revenue):

Revenue MixH1 2021H1 2022
Smart boards & installation ($ / %)$0 / 0% $3,570,212 / 92%
Installation & repair services ($ / %)$0 / 0% $286,185 / 7%
Clean air technology ($ / %)$256,863 / 100% $24,179 / 1%
Total Revenue ($)$256,863 $3,880,576

Key KPIs and Balance Items (Q2 2022):

KPIQ2 2022
Backlog (approx)≈$4,000,000
Deferred Revenue$825,340
Cash and Equivalents$233,688
Accounts Receivable (net)$1,270,215
Inventory (net)$725,265
AR Credit Facility Balance$732,432
School Districts Booked~95 districts / 190,000 students

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue (Pro Forma)FY 2022$8–10M (mid $9.0M) $9–10M (mid $9.5M) Raised
EBITDAQ3 2022Not providedProjected positive EBITDA Introduced (positive)

Notes: Guidance excludes potential M&A impacts under negotiation (no assurances) .

Earnings Call Themes & Trends

(No Q2 earnings call transcript found; themes based on Q1/Q2 10‑Q and Q2 press releases.)

TopicPrevious Mentions (Q1 2022)Current Period (Q2 2022)Trend
Supply chain / chipsSupplier dependency; chip shortages noted; AR facility adopted; covenant defaults but lender not enforcing “Head of the line” supply prioritization; manufacturers re‑deploy product around chip shortages Improving operationally, constraints persist
K‑12 ESSER funding demandESSER tailwind driving orders/backlog; expansion underway Sustained demand; backlog ≈$4M; 95 districts booked Strengthening
Guidance / revenue trajectoryOne month SST in Q1; no formal FY guide in Q1 filings FY22 pro forma raised to $9–10M; YTD >$6M through August Raised
Liquidity & financingAR facility in place; cash $64,849; covenant defaults disclosed Cash $233,688; AR $1.27M; total liquidity “over $2M”; vendor line reduced Improved but constrained
M&A / expansionActive pipeline; SST employees granted warrants; regional expansion planned Evaluating strategic M&A and new verticals; exploring access control, cleaning services Ongoing
Regional sales focusPA/OH/WV; exploring AL/MI Expand to eastern PA, western OH, MI, NJ; universities, enterprise Expanding footprint

Management Commentary

  • John Raymond (SST): “Q2 saw significant gains in booked sales... approximately 95 school districts... backlog continues to hold steady at approximately $4 million... manufacturers ability to rapidly re‑deploy product around... shortage of computer and video chips” .
  • Vik Grover (CEO): “The interactive whiteboard market is booming... we will aggressively target additional acquisitions to add to growth and scale. We will now go to the next level” .
  • Vik Grover (CEO, guidance PR): “The smart board business is booming in K‑12... cross‑selling new products... edging out into adjacent markets... executing M&A... time to move to the next level and go big.” .

Q&A Highlights

  • No earnings call transcript was available; management delivered details via Q2 10‑Q and press releases. Key clarifications include: covenant defaults on AR facility (lender not enforcing) , derivative liabilities/warrants mark‑to‑market , and going‑concern risk with plans to raise capital .
  • Liquidity actions: reduction of vendor line, use of AR facility, and improved cash/AR balances to fund operations .

Estimates Context

  • Wall Street consensus estimates from S&P Global were unavailable for FOMC due to missing CIQ mapping; therefore, no quantitative comparison to analyst revenue/EPS/EBITDA estimates can be provided at this time.

Key Takeaways for Investors

  • Demand/visibility: Raised FY22 revenue guide to $9–10M with YTD pro forma >$6M through August; backlog ≈$4M and installations scheduled through November underpin near‑term revenue recognition .
  • Margin trajectory: Gross margin compressed (8% in Q2) as installation-heavy mix scaled; watch mix shift, pricing, and supply chain normalization for margin recovery .
  • Operating leverage: Q2 operating loss narrowed materially vs Q1; lower G&A and scale suggest potential leverage if margin improves and derivative/interest burdens moderate .
  • Liquidity and risk: Improved cash/AR and funding lines support operations, but covenant defaults, derivative liabilities, working capital deficit, and going‑concern disclosure remain critical risks; financing/dilution likely .
  • Execution vector: Cross‑sell (cleantech/IAQ), regional expansion (eastern PA/western OH/MI/NJ), and potential M&A could add scale; monitor deal terms and integration .
  • Near‑term trading setup: Guidance raise plus backlog visibility are positive catalysts; offset by margin compression and capital structure complexity—expect volatile microcap trading until financing clarity improves .
  • Medium‑term thesis: If K‑12 refresh cycle persists and supply constraints ease, revenue scale with normalized margins and reduced derivative exposure could transition to cash‑flow positivity (management targets Q3 positive EBITDA) .
Citations:
**[867028_0001493152-22-024360_ex99-1.htm:1]** FOMO Corp. 8‑K Exhibit 99.1 (Aug 30, 2022) – Investor meeting, raised guidance
**[867028_0001493152-22-023122_ex99-1.htm:0]** FOMO Corp. 8‑K Exhibit 99.1 (Aug 16, 2022) – Record Q2 results, liquidity, EBITDA outlook
**[867028_0001493152-22-023122_ex99-1.htm:1]** FOMO Corp. 8‑K Exhibit 99.1 (Aug 16, 2022) – John Raymond and CEO quotes, backlog
**[867028_0001493152-22-022732_form10-q.htm:3]** Q2 2022 10‑Q – Balance sheet cash/AR/inventory/deferred revenue
**[867028_0001493152-22-022732_form10-q.htm:4]** Q2 2022 10‑Q – Income statement (sales, GP, Op loss, net loss, EPS)
**[867028_0001493152-22-022732_form10-q.htm:21]** Q2 2022 10‑Q – Revenue disaggregation H1 2022 vs H1 2021
**[867028_0001493152-22-022732_form10-q.htm:31]** Q2 2022 10‑Q – AR credit facility terms and covenant default
**[867028_0001493152-22-022732_form10-q.htm:50]** Q2 2022 10‑Q – MD&A margins and drivers (gross margin %)
**[867028_0001493152-22-022732_form10-q.htm:25]** Q2 2022 10‑Q – Going‑concern discussion and plans
**[867028_0001493152-22-018972_form10-q.htm:3]** Q1 2022 10‑Q – Balance sheet and liquidity baseline
**[867028_0001493152-22-018972_form10-q.htm:4]** Q1 2022 10‑Q – Income statement (sales, GP, losses)
**[867028_0001493152-22-018972_form10-q.htm:10]** Q1 2022 10‑Q – SST business description/ESSER demand
**[867028_0001493152-22-018972_form10-q.htm:20]** Q1 2022 10‑Q – Q1 revenue disaggregation (mix)
**[867028_0001493152-22-018972_form10-q.htm:29]** Q1 2022 10‑Q – AR facility terms
**[867028_0001493152-22-018972_form10-q.htm:39]** Q1 2022 10‑Q – SPA and SST employment/warrants