Smart Buildings

Inpixon Indoor Intelligence Business & SPAC Examined

Inpixon, is a US Nasdaq listed analytics-focused smart building firm headquartered in Palo Alto California. The company’s indoor location data platform ingests a wide range of data from proprietary and third-party sensors that utilize the positions of active cellular, Wi-Fi, and Bluetooth devices in order to map spaces in real-time and provide actionable indoor intelligence. Recent headlines have been dominated by Inpixon’s decision to spin off its Enterprise Apps Business, a major segment of the corporation. The announcement last week, September 26th, detailed a definitive merger agreement between KINS Technology Group, a publicly traded special purpose acquisition company (SPAC), and CXApp Holding Corp., a newly formed subsidiary Inpixon created for the so-called “business combination”. Inpixon stockholders receiving shares in KINS valued at approximately $69 million. KINS will acquire Inpixon's enterprise apps business, including its workplace experience technologies, indoor mapping, events platform, augmented reality, and related business solutions. The transaction is expected to provide Inpixon's enterprise apps business with […]

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Inpixon, is a US Nasdaq listed analytics-focused smart building firm headquartered in Palo Alto California. The company’s indoor location data platform ingests a wide range of data from proprietary and third-party sensors that utilize the positions of active cellular, Wi-Fi, and Bluetooth devices in order to map spaces in real-time and provide actionable indoor intelligence.

Recent headlines have been dominated by Inpixon’s decision to spin off its Enterprise Apps Business, a major segment of the corporation. The announcement last week, September 26th, detailed a definitive merger agreement between KINS Technology Group, a publicly traded special purpose acquisition company (SPAC), and CXApp Holding Corp., a newly formed subsidiary Inpixon created for the so-called “business combination”. Inpixon stockholders receiving shares in KINS valued at approximately $69 million.

KINS will acquire Inpixon's enterprise apps business, including its workplace experience technologies, indoor mapping, events platform, augmented reality, and related business solutions. The transaction is expected to provide Inpixon's enterprise apps business with greater capital and operational resources, a new executive management team and board expertise to accelerate growth. It will make Inpixon’s Enterprise Apps Business a publicly listed company in its own right, through a SPAC, the increasingly infamous alternative IPO route.

“SPAC deals rocketed to popularity as an under-the-radar way to take companies public after high-profile flameouts of traditional IPOs, such as WeWork’s in 2019. Years of cheap borrowing followed by government responses to the pandemic had kept capital markets flowing,” writes Orion Jones for The Real Deal in New York. “But a murky track record for SPAC investors combined with rule changes and increased borrowing rates have complicated the picture. Among derailed SPAC dreams: Fifth Wall’s decision to not pursue a second such deal, and Goldman Sachs’ exit from the SPAC market all together.”

SPACs have been an emerging force in the wider smart buildings industry. Smart window company View, completed a SPAC merger with the support of Softbank and others in 2021, but is now under official notice by NASDAQ and could, reportedly, run out of money by November. Security firm Latch also went public in 2021 via SPAC and in 2022, they have already gone through two “workforce reductions” and parted ways with their CFO during an executive shake-up in April. The SPAC of another security firm, Brivo, missed the deadline to raise the necessary funds, while Gorilla Technology’s share price plunged 44% in the first few days after their SPAC IPO. Each story compounds the concern around the SPAC route to market.

Of course, not all SPAC mergers are failures, and despite the turbulent start to public life for the companies above, their decision to take the SPAC route may still prove wise in the long term. Stem is often touted as a SPAC success story, after an initial share price swing it has stabilized and is even attracting the attention of stock market advisors, albeit as a long-term opportunity. None of the companies mentioned above attempted to spin off a section of their company like Inpixon.

Inpixon’s revenues for the year ended December 31, 2021 were $16.0 million compared to $9.3 million for the comparable period in the prior year, an increase of approximately $6.7 million, or approximately 72%. Net income for the year ended December 31, 2021 was $69.16 million as compared to $29.23 million for the comparable period in the prior year. 

This increase in loss of is primarily attributable to increased operating expenses offset by the increased gross profit margin of approximately $4.9 million. While the increase in revenues is primarily attributable to an approximate $5.0 million increase in Indoor Intelligence sales, including their smart office app and real-time location-based technologies.

The increase in Indoor Intelligence sales of $5.0 million was driven by a $4.4 million increase in revenue due to the acquisitions of Game Your Game and IntraNav. Inpixon announced that its customer base for indoor intelligence solutions had grown approximately 55% during 2021. 

A significant portion of that indoor intelligence solutions segment will be part of the Enterprise Apps Business that is set to be spun off. Inpixon will retain the remainder of its portfolio, namely its Industrial Internet of Things (IIoT) business line, which they probably intend to expand. Smart building and IoT solution providers can cover the entire commercial building spectrum, maybe residential too, but the industrial buildings market has remained separate and Inpixon may see the spin-off as a way to focus on these separate markets simultaneously. 

Inpixon has been developing both its commercial and industrial offering through investment and strategic M&A, acquiring more than half a dozen companies in the last two years: 

  • In October 2020, Inpixon acquired all of the outstanding shares of Nanotron, to extend their asset tracking and real-time location system (RTLS) capabilities. 
  • In March 25, 2021, they entered into a Stock Purchase Agreement with sports data and analytics firm Game Your Game, acquiring an aggregate of 522,000 shares of common stock, representing 55.4% of the outstanding shares. 
  • In April 2021, the firm entered an asset purchase agreement with Visualix and Future Energy Ventures Management, gaining all Visualix assets including computer vision, robust localization, large-scale navigation, mapping, and 3D reconstruction technologies, as well as the intellectual property and patent applications underlying the AR technology.
  • On April 30, 2021, Inpixon acquired over 99.9% of the outstanding capital stock of Design Reactor, a provider of a SaaS app platform that enables corporate enterprise organizations to provide a custom-branded, location-aware employee app focused on enhancing the workplace experience and hosting virtual and hybrid events.
  • In May 2021, they acquired the remaining interest of The CXApp to own 100% of the outstanding capital stock of CXApp. They provide custom-branded, location-aware mobile apps that enable social distanced desk reservations, room booking, navigation, event hosting, occupancy metrics, and other features that promote safety, productivity and employee retention. The aggregate purchase price was $32.1 million.
  • On December 9, 2021, through the now wholly-owned subsidiary Nanotron, the firm entered into a Share Sale and Purchase Agreement with IntraNav, an industrial IoT , real-time location system (“RTLS”), and sensor data services provider.

“Inpixon has engaged in a series of acquisitions and investments over the last several years, executing on an aggressive growth strategy focused on building its comprehensive Indoor Intelligence platform. With a strong cash position and consecutive year-over-year, and quarter-over-quarter, revenue increases over the past two years, management believes it is in its best historical business and financial position, and, yet, our common stock continues to trade at well below the sum of our parts,” said Nadir Ali, CEO of Inpixon.

Limited comparisons can be made with the string of smart building startups that have struggled with the SPAC approach. The newly independent Enterprise Apps Business unit will hit the ground running with a high-profile and established customer base, but only time will tell how the stock market warms to the company in its post-SPAC, public life.

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