Luna(US:LUNA)2023-11-14 13:20Revenue Performance - Revenue for Q3 2023 increased by $1.6 million, or 5%, to $30.7 million compared to $29.2 million in Q3 2022, driven by strong growth in communications test products [82]. - Revenue for the nine months ended September 30, 2023, increased by $7.1 million, or 9%, to $84.9 million, largely due to contributions from the acquisition of Luna Innovations GmbH [89]. - Revenue for the three months ended September 30, 2023, increased by $1.6 million, or 5%, to $30.7 million compared to $29.2 million in the same period of 2022 [82]. - Revenue for the nine months ended September 30, 2023 increased by $7.1 million, or 9%, to $84.9 million compared to $77.8 million for the same period in 2022 [89]. Cost and Gross Margin - Cost of revenue for Q3 2023 increased by $0.8 million, or 7%, to $13.1 million, resulting in a gross margin of 57%, down from 58% in Q3 2022 due to an unfavorable product mix [83]. - Cost of revenue for the nine months ended September 30, 2023, increased by $4.8 million, or 16%, to $35.4 million, leading to a gross margin of 58%, down from 61% in the same period of 2022 [90]. - Cost of revenue for the three months ended September 30, 2023, increased by $0.8 million, or 7%, to $13.1 million, resulting in a gross margin of 57%, down from 58% in the prior year [83]. - Cost of revenue increased by $4.8 million, or 16%, to $35.4 million for the nine months ended September 30, 2023, resulting in a gross margin of 58%, down from 61% in the prior year [90]. Operating Expenses - Total operating expenses for Q3 2023 rose by $1.0 million, or 7%, to $16.5 million, with selling, general and administrative expenses increasing by 10% to $12.8 million [84][85]. - Total operating expense for the nine months ended September 30, 2023 was $50.7 million, a slight increase of $0.2 million compared to $50.5 million in 2022 [91]. - Selling, general and administrative expense decreased by $0.2 million to $39.6 million for the nine months ended September 30, 2023, primarily due to efforts to eliminate redundant expenses [91]. - Research, development, and engineering expenses for the nine months ended September 30, 2023, increased by $0.3 million, or 3%, to $8.3 million compared to $8.0 million in the same period of 2022 [92]. Financial Position - As of September 30, 2023, total cash and cash equivalents were $6.0 million, with outstanding borrowings of $17.2 million under the Term Loan and $14.7 million under the Revolving Line [96][97]. - Net cash used in operating activities for the nine months ended September 30, 2023, was $8.1 million, an increase from $3.3 million in the same period of 2022, driven by higher inventory levels [103]. - Cash provided by financing activities increased to $10.0 million in 2023 from $7.2 million in 2022, mainly from new borrowings of $8.7 million [105]. - Cash provided by financing activities was $10.0 million for the nine months ended September 30, 2023, compared to $7.2 million in the prior year [105]. Backlog and Future Plans - Backlog of purchase orders as of September 30, 2023, was $49.0 million, down from $52.9 million at December 31, 2022 [75]. - The company plans to continue expanding through acquisitions and investments in research and development, which may lead to increased expenses and potential net losses in future periods [74]. - The company aims to diversify its product offerings and strengthen its position in high-growth markets such as security and smart infrastructure monitoring [73]. Losses and Discontinued Operations - Loss from continuing operations before income taxes for the nine months ended September 30, 2023, was $2.7 million, an improvement from a loss of $3.6 million in the same period of 2022 [93]. - Income from continuing operations before income taxes for the three months ended September 30, 2023 was $0.7 million, down from $1.3 million in the same period of 2022 [86]. - The company recognized a loss from discontinued operations of $1.0 million for the nine months ended September 30, 2023, compared to income of $11.5 million in the same period of 2022 [95]. Debt and Amortization - The Term Loan matures on June 21, 2027, with an amortization schedule starting at 10% for the first year and increasing to 20% in year four [98].