Second quarter revenue grew 33.9% year-over-year to $135.5 million Net loss driven entirely by one-time items; Adjusted EBITDA1 of $4 million BETHESDA, Md., Aug. 13, 2024 (GLOBE NEWSWIRE) -- iLearningEngines, Inc. (NASDAQ:AILE) ("iLearningEngines", "ILE", or "the Company"), a leader in AI-powered learning and work automation for enterprises, today announced financial results for the second quarter ended June 30, 2024. "We are pleased to report financial results for our first quarter as a publicly traded company," said Harish Chidambaran, Chief Executive Officer of iLearningEngines. "We delivered 33.9% year-over-year top line revenue growth, including $521 million of annual recurring revenue, up 33% year-over-year. It was an exciting and monumental quarter for the Company as we completed our business combination with Arrowroot Acquisition Corp.; we were added to the Russell 3000 and its related indexes; and we raised an additional $20 million in debt financing allowing us to further grow our business. We continue to see strong demand for the ILE AI platform as we added over a hundred end customers this quarter." Second Quarter 2024 Financial Highlights –Three Months Ended June 30, 2024 Revenue – Revenue increased 33.9% year-over-year to $135.5 million. Annual Recurring Revenue ("ARR")2 – ARR increased 33.2% year-over-year to $520.8 million. Net Dollar Retention ("NDR")2 – Trailing 12-month NDR continues around 130%. GAAP Net Loss – Net loss was $314.0 million, which included an $82.3 million one-time catch-up share-based compensation expense related to the previously announced business combination (the "Business Combination") transaction with Arrowroot Acquisition Corp. ("Arrowroot") and $5.7 million of share-based compensation expense for the quarter, and other one-time expenses of $37.4 million change in fair value of warrant liability, $169.9 million change in fair value of convertible notes, and an $8.2 million gain on debt extinguishment. Adjusted EBITDA & Adjusted EBITDA Margin1 – Adjusted EBITDA was $4.0 million. Cost of Revenue: Cost of Revenue increased marginally from 29.7% of revenue ($30.1 million) in the three months ended June 30, 2023 to 30.9% of revenue ($41.8 million) in the three months ended June 30, 2024. This slight increase is linked to the implementation revenue from the new contracts that started in the three months ended June 30, 2024. Research and Development ("R&D"): R&D slightly increased from 30.1% of revenue ($30.4 million) in the three months ended June 30, 2023 to 30.4% of revenue ($41.2 million) in the three months ended June 30, 2024. The spend in research and development is linked to the product roadmap of Hyper Automation apps. Selling General and Administration ("SG&A"): SG&A increased from 36.4% of revenue ($36.9 million) in the three months ended June 30, 2023 to 101.6% of revenue ($137.7 million) in the three months ended June 30, 2024. Selling and Marketing ("S&M") expenses improved marginally from 31.2% of revenue ($31.6 million) in the three months ended June 30, 2023 to 30.9% of revenue ($41.9 million) in the three months ended June 30, 2024. General and Administrative ("G&A") expenses marginally increased from 5.2% of revenue ($5.3 million) in the three months ended June 30, 2023 to 70.7% of revenue ($95.8 million) in the three months ended June 30, 2024. Shares outstanding – As of June 30, 2024 the Company had: (i) approximately 141.2 million shares of common stock outstanding, (ii) warrants to purchase 22.6 million shares of common stock, consisting of 14.4 million public warrants, each exercisable for one share of common stock at a price of $11.50 per share, and 8.3 million private warrants, each exercisable for one share of common stock at a price of $11.50 per share, outstanding, and (iii) approximately 1.3 million restricted stock units, each convertible into one share of common stock, subject to vesting conditions, outstanding. Second Quarter 2024 Unaudited Financial Summary & Operating Metrics (In millions, except percentages)   Three Months EndedJune 30,   Metric 2024 2023 % Change Revenue 135.5 101.2 33.9% Gross profit 93.7 71.2 31.7% Net loss (314.0) (1.9) NM Adjusted EBITDA 4.0 1.3 197.5% Adjusted EBITDA Margin 2.9% 1.3% 122.2%   Six Months EndedJune 30,   Metric 2024 2023 % Change Revenue 260.5 195.2 33.4% Gross profit 179.9 133.6 34.7% Net loss (340.0) (1.5) NM Adjusted EBITDA 13.0 3.6 259.1% Adjusted EBITDA Margin 5.0% 1.8% 169.1%   As of June 30,   Metric 2024 2023 % Change ARR2 520.8 391.0 33.2% 1 Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial measures. For descriptions and reconciliations of our non-GAAP financial measures to their most comparable GAAP financial measures, please see the section titled "Non-GAAP Financial Measures" and the tables at the end of this press release.2 For additional information regarding ARR and NDR, please see the section titled "Certain Definitions" at the end of this press release. Second Quarter 2024 Business Highlights VARs and customers – The Company now has over 30 VARs signed. These VARs represent over 1,000 end customers with over 4.7 million end users. In the quarter ended June 30, 2024 the Company added over 108 end customers and 176,000 licensed users. Licensed Users – As of June 30, 2024, the Company had more than 4.9 million licensed users, up from 4.4 million at the end of 2023. Business Combination – As previously announced, on April 16, 2024, the Company successfully completed the Business Combination and began trading as a public company under the ticker "AILE" on April 17, 2024. The Company subsequently appointed Matthew Barger, Ian Davis, Bruce Mehlman, Michael Moe and Tom Olivier to its Board of Directors. Non- recurring items incurred because of the Business Combination are listed below: $82.3 million one-time catch-up share-based compensation expense. Other one-time expenses of: $37.4 million change in fair value of warrant liability; $169.9 million change in fair value of convertible notes; and $8.2 million gain on debt extinguishment. Accordion Loan –   On June 28, 2024, the Company secured an additional $20.0 million in financing from the accordion feature of Loan and Security Agreement with East West Bank, with Valley Bank joining the syndicate to increase our total debt balance to $60.0 million. Liquidity situation – As of June 30, 2024 our Cash and accounts receivable balance was $130.4 million. Accrued liabilities stood at $9.1 million. About iLearningEngines iLearningEngines (NASDAQ:AILE) is a leading Applied AI platform for learning and work automation. iLearningEngines enables Enterprises to rapidly productize and deploy a wide range of AI applications and use cases (AI Engines) at scale. iLearningEngines is powered by proprietary vertical specific AI models and data with a flexible No Code AI canvas to drive rapid out-of-the-box deployment while offering low latency and high levels of data security and compliance. Serving over 1,000 enterprise end customers, iLearningEngines is deployed globally into some of the most demanding vertical markets including Healthcare, Education, Insurance, Retail, Energy, Manufacturing and Public Sector to achieve mission critical outcomes. For more information about iLearningEngines, please visit: www.ilearningengines.com & https://investors.ilearningengines.com/ or contact   ILEARNINGENGINES, INC. AND SUBSIDIARIESUNAUDITED CONSOLIDATED INCOME STATEMENT(In thousands)       Six months Ended June 30,   Amount Change   % Change   Three months Ended June 30,   Amount Change   % Change (Dollars in thousands)   2024   2023   2024 vs 2023   2024 vs 2023   2024   2023   2024 vs 2023   2024 vs 2023 Revenue $ 260,473   $ 195,225   $ 65,248     33.4 % $ 135,538   $ 101,245   $ 34,293     33.9 % Cost of revenue   80,559     61,645     18,914     30.7 %   41,845     30,094     11,751     39.0 % Gross profit   179,914     133,580     46,334     34.7 %   93,693     71,151     22,542     31.7 % Operating expenses:                                 Selling, general, and administrative expenses   178,885     68,466     110,419     161.3 %   137,662     36,854     100,808     273.5 % Research and development expenses   78,344     59,015     19,329     32.8 %   41,245     30,433     10,812     35.5 % Total operating expenses   257,229     127,481     129,748     101.8 %   178,907     67,287     111,620     165.9 % Operating (loss) income   (77,315 )   6,099     (83,414 )   NM   (85,214 )   3,864     (89,078 )   NM Other (expense) income: