Bad News for InterCloud Systems Inc(OTCMKTS:ICLD)?

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InterCloud Systems Inc (OTCMKTS:ICLD) shares were trading down significantly, after it announced its fourth quarter earnings results. ICLD stock has observed a 52-week range between a penny and 1.15, however, there may be some concerns with the company. Although InterCloud Systems showed signs of rebounding recently, its fourth quarter and full year 2016 results did not seem to impress investors.
The stock had some impressive gains recently, returning over 300% in a week. Setting off many traders’ scanners, ICLD recently saw extremely high dollar volume with shares gapping up in three consecutive sessions, including today. That said, ICLD was due for a consolidation and today’s pullback was inevitable after such a meteoric rise.

 

InterCloud Systems Inc (OTCMKTS:ICLD) is an information technology services company that is a global single-source provider of value-added services for service providers and corporate enterprises. The company’s offerings include cloud and managed services, data and optical solutions, and professional consulting services and voice. InterCloud Systems’ professional services groups offer an array of solutions, which includes app development teams, project management, program management, analytics, and other services.

That in mind, here’s a look into InterCloud Systems full year 2016 financial results. The company reduced its long-term debt by $27.4M since June 2016, while increasing 2016 revenue to $78M. Moreover, the company reduced its operating expenses by $7.8M.

According to InterCloud Systems Chairman and CEO Mark Munro, “In 2016, the Company began a systematic restructuring. The changes included the sale of certain assets to generate cash and reduce senior debt.  Our senior debt now totals only $5.7 Million; which is down from $25.7 Million in June of 2016. The senior debt reduction along with the subordinated debt reductions since June 2016 now total over $27.4 Million.  This is a significant and important reversal. Our team remains focused on eliminating or restructuring the remaining subordinated debt in order to reduce interest expense and increase the shareholder equity of the Company.”

Munro added, “InterCloud will continue to deleverage, sell assets that do not have significant upside for the long term and focus on deeper cost cutting measures to achieve positive cash flow.  Our focus is on driving our cost of goods sold down as well as reducing future operating expenses. Corporate costs are also being reduced as our employees are focused on achieving more with less overhead.”

 

With that in mind, the company was able to grow its revenue by 5% YoY. However, it was not able to turn a profit. InterCloud Systems had a net loss attributable to common shareholders of $(26.5M) for the period ended on Dec. 31, 2016, compared to a net loss of $(65.8M) for the 2015 fiscal year. Consequently, the company had a diluted net loss per share of 63 cents for the 2016 fiscal year, while it reported a net loss of $3.05 per share during the 2015 fiscal year. Now, the fall in net loss for the 2016 fiscal year was primarily due to the increase in the gains from the change in derivative securities of $26.9M.

 

InterCloud Systems CEO also stated, “”In 2016, InterCloud’s SDN and NFV related revenue increased from zero in 2015 to almost $5 million in 2016. This market has been slower to adopt than most experts predicted but clearly the virtualization of the network has begun and future opportunities remain robust and exciting for InterCloud…Recently, two companies with similar software platforms to InterCloud’s have sold for over $100 million each. These events give us even more confidence we are in the right space at the right time. We have streamlined costs but our platform remains robust and the team continues to develop use cases with near term revenue opportunities. We have focused on strategic partnerships to help lower our costs of sales and deliver our solutions into large enterprise customers that already have existing relationships with our brand name partners. I look forward to reporting news around this market during 2017.”

 

InterCloud Systems has been experiencing some crazy volatility recently. Its most recent drop could be attributed to its full year 2016 earnings results. The company reported a net loss per share of 63 cents per share, which may not have satisfied market participants. That being said, ICLD should still be kept under the radar since we’ve seen this stock have large swings, which could offer potential trading opportunities. To stay up to date on ICLD, sign up to our free newsletter by simply entering your email in the box below.

 

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