KonaTel Reports Fiscal Year 2024 Results

Rhea-AI Summary

KonaTel (OTCQB:KTEL) reported its fiscal year 2024 results, showing mixed performance. Revenue decreased to $15.5 million from $18.2 million in 2023, primarily due to reduced government subsidized revenues following the Affordable Connectivity Program (ACP) cancellation. However, gross profit slightly increased to $3.41 million from $3.37 million.

The company reported GAAP net income of $4.5 million ($0.10 per share) compared to a loss of $3.9 million in 2023, including IM Telecom 49% ownership sale. Cash position strengthened to $1.7 million from $777,000. Q4 2024 showed revenue decline but improved gross profit margins at 28.5% vs 6.8% year-over-year.

Looking ahead, KonaTel has expanded its national Lifeline license to 40 states and is growing its hosted cloud service platform. Monthly SMS service revenue increased from $20,000 to $110,000 over 12 months, and the company has launched new wholesale POTS services with agreements covering 35,000 existing lines for migration.

Positive

• Gross profit increased to $3.41M from $3.37M in 2023
• Q4 gross profit margin improved significantly to 28.5% from 6.8%
• Cash position strengthened to $1.7M from $777,000
• SMS service revenue grew from $20K to $110K monthly
• Expanded Lifeline license coverage from 11 to 40 states
• Secured wholesale agreements for 35,000 POTS lines migration
• Eliminated all long-term debt

Negative

• Revenue declined 14.8% to $15.5M from $18.2M in 2023
• Q4 revenue dropped 51.5% to $2.4M from $4.9M
• Non-GAAP net loss increased to $3.3M from $2.9M in 2023
• Q4 GAAP net loss of $1.1M

Positioned for Growth in 2025; Focused on Higher Margin Product Mix

DALLAS, TX / ACCESS Newswire / April 15, 2025 / KonaTel, Inc. (OTCQB:KTEL) (www.konatel.com), a voice/data communications holding company, today announced financial results for the year ended December 31, 2024.

Full Fiscal Year 2024 Financial Highlights (2024 vs. 2023)

• Revenues of $15.5 million compared to $18.2 million for the year ended December 31, 2023. The decrease in revenue was due to fewer activations within the Company's Mobile Services segment as a result of reduced government subsidized revenues due to the cancellation of the Affordable Connectivity Program (the "ACP").

• Gross profit of $3.41 million compared to $3.37 million for the year ended December 31, 2023.

• GAAP net income (loss) $4.5 million, or $0.10 per diluted share, compared to $(3.9) million, or $(0.09) per diluted share, in the year ended December 31, 2023, which includes IM Telecom 49% ownership sale.

• Non-GAAP net income (loss) of $(3.3) million, or $(0.08) per diluted share, compared to non-GAAP net loss of $(2.9) million, or $(0.07) per diluted share, in the year ended December 31, 2023, which excludes IM Telecom 49% ownership sale.

• Cash and cash equivalents of $1.7 million compared to $777,000 as of December 31, 2023.

Quarterly Financial Highlights (Q4 2024 vs. Q4 2023)

• Revenue of $2.4 million, a decrease of 51.5% compared to $4.9 million. This decrease was directly related to the decline in government subsidized revenues within the Mobile Services segment.

• Gross profit was $677,723 or 28.5% gross profit margin, compared to $333,540, or 6.8% gross profit margin. The increase in gross profit was directly related to a decrease in customer acquisition costs.

• Total operating expenses were flat at $1.8 million, compared to $1.8 million.

• GAAP net loss was $(1.1) million, or $(0.02) per diluted share compared to $(1.7) million, or $(0.04) per diluted share. The loss for the three months ended December 31, 2024, was impacted by reduced subsidized mobile activations in Q4-2024 triggering substantially lower customer acquisition costs (booked at time of sale) compared to increased activations in Q4-2023 triggering higher customer acquisition costs (booked at time of sale).

• Non-GAAP net loss was $(620,728), or $(0.01) per diluted share, compared to Non-GAAP net loss of $(1.2) million, or $(0.03) per diluted share.

Sean McEwen, Chairman and CEO of KonaTel stated, "There is no doubt 2024 was a challenging year for our Company, our employees and our shareholders; however, we feel the worst is behind us as we stabilized the impact from the government's unwillingness to re-fund the ACP in 2024. That being said, we are prepared to take advantage of the ACP, if it returns, or an enhanced (more profitable) Lifeline program. In some ways, we are better positioned to expand our government subsidy business as we have grown our national Lifeline license from our original eleven (11) states to forty (40) states over the past twelve (12) months.

"It's also encouraging that in January, 2025, President Elect Trump, in a post on Truth Social announcing his nomination of FCC commissioner Olivia Trusty and reemphasizing his support for affordable Internet access, which was the foundation of the ACP created by President Trump in his first term, "[She] will work with our incredible new Chairman of the FCC, Brendan Carr, to cut regulations at a record pace, protect Free Speech, and ensure every American has access to affordable and fast Internet."

McEwen added, "Additionally, we have paid down all our long-term debt accumulated during our ACP/Lifeline growth period. With a cash balance of 1,679,345 and net working capital of $2,006,701, we have been growing our hosted cloud service platform focusing on enhanced and new product offerings."

Hosted Cloud Service Platform Expansion

McEwen continued, "Throughout 2024, we dedicated additional resources to expand our SaaS ("Software as a Service") cloud platform to include a variety of enhanced and new wholesale services, ready for deployment in 2025. Our expansion efforts have already resulted in an increase in our monthly SMS service revenue from $20,000 to $110,000 over the last twelve (12) months. Customers are selecting our wholesale SMS service because of our robust API interface, flexibility within our cloud platform, and a streamlined process for enabling SMS short codes, critical for wholesale SMS distribution."

"In addition to our SMS expansion, we have added a new wholesale POTS ("plain old telephone service") service to our suite of cloud products. Our POTS service utilizes our wireless cellular infrastructure and offers unique features specifically designed to support the wholesale market, which includes telecommunications companies and national resellers with an existing POTS customer base. This allows us to grow at scale versus selling to individual retail customers."

"There are approximately 40 million traditional (i.e., "copper wire") POTS lines in the USA. Many lines are used for elevator phones, monitoring systems, fire alarms, and other equipment that require access to the national telephone network. After the FCC deregulated mandatory POTS support in 2019, carriers started to move their POTS customers to less expensive internet and wireless (cellular) data solutions. With the advent of more cost-effective POTS replacement services, like ours, carriers are getting more aggressive in moving their customers to a new internet/wireless based POTS solution."

McEwen concluded, "As of Q1-2025, we have already entered into wholesale agreements with a group of resellers who have over 35,000 existing POTS lines, which they plan to migrate. Our new wholesale POTS service provides a stable, sticky ("very low churn"), predictable recurring revenue line of business."

About KonaTel

KonaTel provides a variety of retail and wholesale telecommunications services including mobile voice/text/data service supported by national U.S. mobile networks, mobile numbers, SMS/MMS services, IoT mobile data service, and a range of hosted cloud services. KonaTel's subsidiary, Apeiron Systems (www.apeiron.io), is a global cloud communications service provider employing a dynamic "as a service" ("CPaaS/UCaaS/CCaaS/PaaS") platform. Apeiron provides voice, messaging, SD-WAN, and platform services using its national cloud network. All Apeiron's services can be accessed through legacy interfaces and rich communications APIs. KonaTel's other subsidiary, IM Telecom, dba "Infiniti Mobile" (www.infinitimobile.com), is an FCC authorized wireless Lifeline carrier with an FCC approved wireless Lifeline Compliance Plan, authorized to provide government subsidized cellular service to low-income American families. KonaTel is headquartered in Plano, Texas.

Safe Harbor Statement

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are not a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on information available at the time the statements are made and involve known and unknown risks, uncertainties and other factors that may cause our results, levels of activity, performance or achievements to be materially different from the information expressed or implied by the forward-looking statements in this press release. This press release should be considered in light of the disclosures contained in the filings of KonaTel and its "forward-looking statements" in such filings that are contained in the EDGAR Archives of the SEC at www.sec.gov.

Contacts

D. Sean McEwen
inquiries@konatel.com

-- Tables Follow -

KonaTel, Inc.

Consolidated Balance Sheets

		December 31, 2024				December 31, 2023
Assets
Current Assets
Cash and Cash Equivalents		$	1,679,345			$	777,103
Accounts Receivable, Net			1,533,015				1,496,799
Notes Receivable			1,000,000				-
Inventory, Net			163,063				1,229,770
Prepaid Expenses			94,496				129,706
Other Current Assets			112,170				-
Total Current Assets			4,582,089				3,633,378
Property and Equipment, Net			15,128				24,184
Other Assets
Intangible Assets, Net			323,468				634,251
Right of Use Asset			319,549				443,328
Other Assets			74,328				74,543
Total Other Assets			717,345				1,152,122
Total Assets		$	5,314,562			$	4,809,684
Liabilities and Stockholders' Equity
Current Liabilities
Accounts Payable and Accrued Expenses		$	2,277,597			$	3,709,691
Loans Payable, Net of Loan Fees			-				3,655,171
Right of Use Operating Lease Obligation - Current			113,740				127,716
Income Tax Payable			184,051				-
Total Current Liabilities			2,575,388				7,492,578
Long Term Liabilities
Right of Use Operating Lease Obligation - Long Term			227,776				330,511
Total Long Term Liabilities			227,776				330,511
Total Liabilities			2,803,164				7,823,089
Commitments and Contingencies
Stockholders' Equity
Common stock, $.001 par value, 50,000,000 shares authorized, 43,503,658 outstanding and issued at December 31, 2024 and 43,145,720 outstanding and issued at December 31, 2023			43,504				43,146
Additional Paid In Capital			10,215,767				9,182,140
Accumulated Deficit			(7,747,873	)			(12,238,691	)
Total Stockholders' Equity			2,511,398				(3,013,405	)
Total Liabilities and Stockholders' Equity		$	5,314,562			$	4,809,684

KonaTel, Inc.

Consolidated Statements of Operations

		Years Ended December 31,
		2024				2023
Revenue		$	15,503,251			$	18,223,745
Cost of Revenue			12,088,944				14,850,105
Gross Profit			3,414,307				3,373,640
Operating Expenses
Payroll and Related Expenses			5,310,549				3,995,698
Operating and Maintenance			6,086				5,804
Credit Loss			1,448				215
Professional and Other Expenses			1,646,755				1,526,947
Utilities and Facilities			210,438				191,556
Depreciation and Amortization			9,056				12,352
General and Administrative			213,149				155,734
Marketing and Advertising			99,759				154,533
Application Development Costs			140,880				138,600
Taxes and Insurance			315,258				312,804
Total Operating Expenses			7,953,378				6,494,243
Operating Loss			(4,539,071	)			(3,120,603	)
Other Income and Expense
Gain on Sale			9,247,726				-
Interest Expense			(104,737	)			(820,254	)
Other Income/(Expense), net			70,951				30
Total Other Income and Expenses			9,213,940				(820,224	)
Income Before Income Taxes			4,674,869				(3,940,827	)
Income Tax Expense			184,051				-
Net Income (Loss)		$	4,490,818			$	(3,940,827	)
Loss per Share
Basic		$	0.10			$	(0.09	)
Diluted		$	0.10			$	(0.09	)
Weighted Average Outstanding Shares
Basic			43,402,219				42,773,269
Diluted			43,526,417				42,773,269

SOURCE: KonaTel

View the original press release on ACCESS Newswire

FAQ

What caused KTEL's revenue decline in 2024?

Revenue declined due to fewer activations in Mobile Services segment following the cancellation of the Affordable Connectivity Program (ACP).

How much did KTEL's SMS service revenue grow in 2024?

Monthly SMS service revenue increased from $20,000 to $110,000 over the last 12 months.

What is KTEL's new wholesale POTS service potential?

KTEL has agreements with resellers controlling 35,000 POTS lines for potential migration to their new wireless-based solution.

How did KTEL's gross profit margin change in Q4 2024?

Gross profit margin improved to 28.5% from 6.8% year-over-year due to decreased customer acquisition costs.

What is KTEL's current cash position as of end-2024?

Cash and cash equivalents stood at $1.7 million, up from $777,000 at the end of 2023.