UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

x~~QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

For the quarterly period ended ~~March 31,~~September 30, 2019

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

o~~TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

For the transition period from to

Commission file number: 001-35155

BOINGO WIRELESS, INC.

(Exact name of registrant as specified in its charter)

Delaware		95-4856877
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

10960 Wilshire Blvd., 23rd Floor
Los Angeles, California		90024
(Address of principal executive offices)		(Zip Code)

~~(310)~~ (310) 586-5180

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Common Stock, $0.0001 par value	WIFI	The NASDAQ Stock Market LLC		~~WIFI~~
(Title of each class)	(Trading symbol)	(Name of each exchange on which registered)		~~(Trading symbol)~~

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes x⌧ No o☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x⌧ No o☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer x☒		Accelerated filer o☐

Non-accelerated filer o☐		Smaller Reporting Company o☐

		Emerging Growth Company o☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o☐ No x⌧

As of ~~May 3,~~October 25, 2019, there were ~~43,985,167~~44,160,591 shares of the registrant’s common stock outstanding.

Table of Contents

TABLE OF CONTENTS


		Page
PART I — FINANCIAL INFORMATION

Item 1.	~~Item 1.~~	Financial Statements (unaudited)	3

		Condensed Consolidated Balance Sheets	3

		Condensed Consolidated Statements of Operations	4

		Condensed Consolidated Statements of Comprehensive Income (Loss)	5

		Condensed Consolidated Statement of Stockholders’ Equity	6

		Condensed Consolidated Statements of Cash Flows	7

		Notes to the Condensed Consolidated Financial Statements	8

Item 2.	~~Item 2.~~	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2730

Item 3.	~~Item 3.~~	Quantitative and Qualitative Disclosure about Market Risk	3744

Item 4.	~~Item 4.~~	Controls and Procedures	3745

PART II — OTHER INFORMATION

Item 1.	~~Item 1.~~Legal Proceedings	~~Legal Proceedings~~	3745

Item 1A.	~~Item 1A.~~Risk Factors	~~Risk Factors~~	3745

Item 2.	~~Item 6.~~Unregistered Sales of Equity Securities and Use of Proceeds	~~Exhibits~~	3846

~~SIGNATURES~~Item 6.	39Exhibits	47

SIGNATURES				48

Table of Contents

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

Boingo Wireless, Inc.

Condensed Consolidated Balance Sheets

~~(Unaudited)~~

(Unaudited)

(In thousands, except per share amounts)

March 31,
2019

December 31,
2018

Assets

Current assets:

Cash and cash equivalents

$
69,016

$
149,412

Marketable securities

36,888

—

Accounts receivable, net

38,434

42,766

Prepaid expenses and other current assets

8,823

7,815

Total current assets

153,161

199,993

Property and equipment, net

329,734

314,179

Operating lease right-of-use assets

16,478

—

Goodwill

58,890

59,640

Intangible assets, net

18,021

19,152

Other assets

10,784

9,936

Total assets

$
587,068

$
602,900

Liabilities and stockholders’ equity

Current liabilities:

Accounts payable

$
25,829

$
21,543

Accrued expenses and other liabilities

57,765

62,653

Deferred revenue

68,351

80,383

Current portion of operating leases

2,736

—

Current portion of long-term debt

778

—

Current portion of finance leases

3,843

4,201

Current portion of notes payable

2,204

2,411

Total current liabilities

161,506

171,191

Deferred revenue, net of current portion

149,675

137,205

Long-term portion of operating leases

18,915

—

Long-term debt

156,411

151,670

Long-term portion of finance leases

2,475

3,293

Long-term portion of notes payable

1,148

1,618

Deferred tax liabilities

1,132

1,073

Other liabilities

1,268

6,728

Total liabilities

492,530

472,778

Commitments and contingencies (Note 14)

Stockholders’ equity:

Preferred stock, $0.0001 par value; 5,000 shares authorized; no shares issued and outstanding

—

—

Common stock, $0.0001 par value; 100,000 shares authorized; 43,979 and 42,669 shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively

4

4

Additional paid-in capital

228,805

259,132

Accumulated deficit

(135,083
)
(129,930
)
Accumulated other comprehensive loss

(1,317
)
(1,295
)
Total common stockholders’ equity

92,409

127,911

Non-controlling interests

2,129

2,211

Total stockholders’ equity

94,538

130,122

Total liabilities and stockholders’ equity

$
587,068

$
602,900


	September 30,		December 31,
	2019		2018
Assets
Current assets:
Cash and cash equivalents	$	50,182	$	149,412
Marketable securities		36,594		—
Accounts receivable, net		49,446		42,766
Prepaid expenses and other current assets		8,965		7,815
Total current assets		145,187		199,993
Property and equipment, net		361,876		314,179
Operating lease right-of-use assets, net		15,647		—
Goodwill		58,579		59,640
Intangible assets, net		15,739		19,152
Other assets		9,406		9,936
Total assets	$	606,434	$	602,900

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	28,497	$	21,543
Accrued expenses and other liabilities		55,707		62,653
Deferred revenue		63,510		80,383
Current portion of operating leases		2,911		—
Current portion of long-term debt		778		—
Current portion of finance leases		3,057		4,201
Current portion of notes payable		1,937		2,411
Total current liabilities		156,397		171,191
Deferred revenue, net of current portion		172,601		137,205
Long-term portion of operating leases		17,879		—
Long-term debt		160,568		151,670
Long-term portion of finance leases		1,149		3,293
Long-term portion of notes payable		218		1,618
Deferred tax liabilities		1,129		1,073
Other liabilities		307		6,728
Total liabilities		510,248		472,778

Commitments and contingencies (Note 14)

Stockholders’ equity:
Preferred stock, $0.0001 par value; 5,000 shares authorized; 0 shares issued and outstanding		—		—
Common stock, $0.0001 par value; 100,000 shares authorized; 44,121 and 42,669 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively		4		4
Additional paid-in capital		232,286		259,132
Accumulated deficit		(135,801)		(129,930)
Accumulated other comprehensive loss		(1,543)		(1,295)
Total common stockholders’ equity		94,946		127,911
Non-controlling interests		1,240		2,211
Total stockholders’ equity		96,186		130,122
Total liabilities and stockholders’ equity	$	606,434	$	602,900

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

Boingo Wireless, Inc.

Condensed Consolidated Statements of Operations

~~(Unaudited)~~

(Unaudited)

(In thousands, except per share amounts)

Three Months Ended
March 31,

2019

2018

Revenue

$
66,473

$
58,159

Costs and operating expenses:

Network access

31,411

26,565

Network operations

14,142

12,846

Development and technology

8,999

7,425

Selling and marketing

5,867

5,463

General and administrative

8,294

7,699

Amortization of intangible assets

1,131

727

Total costs and operating expenses

69,844

60,725

Loss from operations

(3,371
)
(2,566
)
Interest and other expense, net

(1,676
)
(79
)
Loss before income taxes

(5,047
)
(2,645
)
Income tax expense

192

128

Net loss

(5,239
)
(2,773
)
Net (loss) income attributable to non-controlling interests

(86
)
456

Net loss attributable to common stockholders

$
(5,153
)
$
(3,229
)

Net loss per share attributable to common stockholders:

Basic

$
(0.12
)
$
(0.08
)
Diluted

$
(0.12
)
$
(0.08
)

Weighted average shares used in computing net loss per share attributable to common stockholders:

Basic

43,527

41,330

Diluted

43,527

41,330



	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2019		2018		2019		2018

Revenue	$	64,707	$	65,253	$	199,734	$	183,013
Costs and operating expenses:
Network access		29,155		29,273		90,368		79,926
Network operations		13,682		13,260		42,073		38,829
Development and technology		8,182		7,995		25,534		22,883
Selling and marketing		5,721		5,674		17,782		16,490
General and administrative		5,021		7,789		20,330		22,218
Amortization of intangible assets		1,103		1,112		3,365		2,507
Total costs and operating expenses		62,864		65,103		199,452		182,853
Income from operations		1,843		150		282		160
Interest expense and amortization of debt discount		(2,191)		(8)		(6,741)		(58)
Interest income and other expense, net		388		(14)		1,600		(93)
Income (loss) before income taxes		40		128		(4,859)		9
Income tax expense		(143)		(54)		(254)		(198)
Net (loss) income		(103)		74		(5,113)		(189)
Net income attributable to non-controlling interests		84		596		11		1,447
Net loss attributable to common stockholders	$	(187)	$	(522)	$	(5,124)	$	(1,636)

Net loss per share attributable to common stockholders:
Basic	$	0.00	$	(0.01)	$	(0.12)	$	(0.04)
Diluted	$	0.00	$	(0.01)	$	(0.12)	$	(0.04)

Weighted average shares used in computing net loss per share attributable to common stockholders:
Basic		44,136		42,377		43,904		41,890
Diluted		44,136		42,377		43,904		41,890

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

Boingo Wireless, Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss)

~~(Unaudited)~~

(Unaudited)

(In thousands)

Three Months Ended

March 31,

2019

2018

Net loss

$
(5,239
)
$
(2,773
)
Other comprehensive income (loss), net of tax

Foreign currency translation adjustments

(34
)
(4
)
Unrealized gain on marketable securities

16

—

Comprehensive loss

(5,257
)
(2,777
)
Comprehensive (loss) income attributable to non-controlling interest

(82
)
453

Comprehensive loss attributable to common stockholders

$
(5,175
)
$
(3,230
)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2019		2018		2019		2018

Net (loss) income	$	(103)	$	74	$	(5,113)	$	(189)
Other comprehensive loss, net of tax
Foreign currency translation adjustments		(304)		(219)		(268)		(490)
Unrealized (loss) gain on marketable securities		(4)		—		41		—
Comprehensive loss		(411)		(145)		(5,340)		(679)
Comprehensive income attributable to non-controlling interest		107		609		32		1,514
Comprehensive loss attributable to common stockholders	$	(518)	$	(754)	$	(5,372)	$	(2,193)

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

Boingo Wireless, Inc.

Condensed Consolidated Statement of Stockholders’ Equity

~~(Unaudited)~~

(Unaudited)

(In thousands)

Accumulated

Common

Common

Additional

Other

Non-

Total

Stock

Stock

Paid-in

Accumulated

Comprehensive

controlling

Stockholders’

Shares

Amount

Capital

Deficit

Loss

Interests

Equity

Balance at December 31, 2018

42,669

$
4

$
259,132

$
(129,930
)
$
(1,295
)
$
2,211

$
130,122

Issuance of common stock under stock incentive plans

1,310

—

6

—

—

—

6

Shares withheld for taxes

—

—

(32,907
)
—

—

—

(32,907
)
Stock-based compensation expense

—

—

2,574

—

—

—

2,574

Net loss

—

—

—

(5,153
)
—

(86
)
(5,239
)
Other comprehensive loss

—

—

—

—

(22
)
4

(18
)
Balance at March 31, 2019

43,979

$
4

$
228,805

$
(135,083
)
$
(1,317
)
$
2,129

$
94,538

Balance at December 31, 2017

40,995

$
4

$
230,679

$
(131,967
)
$
(898
)
$
1,212

$
99,030

Issuance of common stock under stock incentive plans

758

—

4,228

—

—

—

4,228

Shares withheld for taxes

—

—

(6,340
)
—

—

—

(6,340
)
Stock-based compensation expense

—

—

3,312

—

—

—

3,312

Cumulative effect of a change in accounting principle

—

—

—

3,257

—

69

3,326

Net loss

—

—

—

(3,229
)
—

456

(2,773
)
Other comprehensive loss

—

—

—

—

(1
)
(3
)
(4
)
Balance at March 31, 2018

41,753

$
4

$
231,879

$
(131,939
)
$
(899
)
$
1,734

$
100,779


								Accumulated
	Common	Common		Additional				Other		Non-		Total
	Stock	Stock		Paid-in		Accumulated		Comprehensive		controlling		Stockholders’
	Shares	Amount		Capital		Deficit		Loss		Interests		Equity

Balance at December 31, 2018	42,669	$	4	$	259,132	$	(129,930)	$	(1,295)	$	2,211	$	130,122
Issuance of common stock under stock incentive plans	1,310		—		6		—		—		—		6
Shares withheld for taxes	—		—		(32,907)		—		—		—		(32,907)
Stock-based compensation expense	—		—		2,574		—		—		—		2,574
Net loss	—		—		—		(5,153)		—		(86)		(5,239)
Other comprehensive (loss) income	—		—		—		—		(22)		4		(18)
Balance at March 31, 2019	43,979		4		228,805		(135,083)		(1,317)		2,129		94,538
Issuance of common stock under stock incentive plans	128		—		74		—		—		—		74
Shares withheld for taxes	—		—		(759)		—		��		—		(759)
Stock-based compensation expense	—		—		2,271		—		—		—		2,271
Non-controlling interest distributions	—		—		—		—		—		(1,003)		(1,003)
Net income	—		—		—		216		—		13		229
Other comprehensive income (loss)	—		—		—		—		105		(6)		99
Balance at June 30, 2019	44,107		4		230,391		(134,867)		(1,212)		1,133		95,449
Issuance of common stock under stock incentive plans	70		—		74		—		—		—		74
Repurchases of common stock	(56)		—		—		(747)		—		—		(747)
Shares withheld for taxes	—		—		(457)		—		—		—		(457)
Stock-based compensation expense	—		—		2,278		—		—		—		2,278
Net (loss) income	—		—		—		(187)		—		84		(103)
Other comprehensive (loss) income	—		—		—		—		(331)		23		(308)
Balance at September 30, 2019	44,121	$	4	$	232,286	$	(135,801)	$	(1,543)	$	1,240	$	96,186

Balance at December 31, 2017	40,995	$	4	$	230,679	$	(131,967)	$	(898)	$	1,212	$	99,030
Issuance of common stock under stock incentive plans	758		—		4,228		—		—		—		4,228
Shares withheld for taxes	—		—		(6,340)		—		—		—		(6,340)
Stock-based compensation expense	—		—		3,312		—		—		—		3,312
Cumulative effect of a change in accounting principle	—		—		—		3,257		—		69		3,326
Net (loss) income	—		—		—		(3,229)		—		456		(2,773)
Other comprehensive loss	—		—		—		—		(1)		(3)		(4)
Balance at March 31,2018	41,753		4		231,879		(131,939)		(899)		1,734		100,779
Issuance of common stock under stock incentive plans	500		—		4,227		—		—		—		4,227
Shares withheld for taxes	—		—		(1,246)		—		—		—		(1,246)
Stock-based compensation expense	—		—		3,152		—		—		—		3,152
Non-controlling interest distributions	—		—		—		—		—		(614)		(614)
Net income	—		—		—		2,115		—		395		2,510
Other comprehensive (loss) income	—		—		—		—		(324)		57		(267)
Balance at June 30, 2018	42,253		4		238,012		(129,824)		(1,223)		1,572		108,541
Issuance of common stock under stock incentive plans	225		—		1,309		—		—		—		1,309
Shares withheld for taxes	—		—		(1,315)		—		—		—		(1,315)
Stock-based compensation expense	—		—		3,363		—		—		—		3,363
Net (loss) income	—		—		—		(522)		—		596		74
Other comprehensive (loss) income	—		—		—		—		(232)		13		(219)
Balance at September 30,2018	42,478	$	4	$	241,369	$	(130,346)	$	(1,455)	$	2,181	$	111,753

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

Boingo Wireless, Inc.

Condensed Consolidated Statements of Cash Flows

~~(Unaudited)~~

(Unaudited)

(In thousands)

Three Months Ended
March 31,

2019

2018

Cash flows from operating activities

Net loss

$
(5,239
)
$
(2,773
)
Adjustments to reconcile net loss including non-controlling interests to net cash provided by operating activities:

Depreciation and amortization of property and equipment

19,009

20,606

Amortization of intangible assets

1,131

727

Impairment loss and loss on disposal of fixed assets and intangible assets held for sale, net

91

70

Stock-based compensation

2,344

3,126

Amortization of deferred financing costs and debt discount, net of amounts capitalized

2,256

—

Amortization of operating lease right-of-use assets

438

—

Unrealized gains and amortization of premiums/discounts for marketable securities

(207
)
—

Changes in operating assets and liabilities:

Accounts receivable

4,307

(3,799
)
Prepaid expenses and other assets

(13
)
551

Accounts payable

1,397

706

Accrued expenses and other liabilities

(1,481
)
1,014

Deferred revenue

439

(2,958
)
Operating lease liabilities

(729
)
—

Net cash provided by operating activities

23,743

17,270

Cash flows from investing activities

Purchases of marketable securities

(36,665
)
—

Purchases of property and equipment

(32,390
)
(21,117
)
Net cash used in investing activities

(69,055
)
(21,117
)
Cash flows from financing activities

Debt issuance costs

(1,687
)
—

Proceeds from credit facility

3,500

—

Principal payments on credit facility

(194
)
(219
)
Payments of acquisition related consideration

(1,952
)
—

Proceeds from exercise of stock options

6

4,228

Payments of finance leases and notes payable

(1,853
)
(1,450
)
Payments of withholding tax on net issuance of restricted stock units

(32,907
)
(6,340
)
Net cash used in financing activities

(35,087
)
(3,781
)
Effect of exchange rates on cash

3

7

Net decrease in cash, cash equivalents, and restricted cash

(80,396
)
(7,621
)
Cash and cash equivalents at beginning of period

149,412

26,685

Cash, cash equivalents, and restricted cash at end of period

$
69,016

$
19,064

Supplemental disclosure of non-cash investing and financing activities

Property and equipment costs included in accounts payable, accrued expenses and other liabilities

$
39,309

$
20,377

Purchase of equipment and prepaid maintenance services under capital financing arrangements

$
—

$
1,930

Capitalized stock-based compensation included in property and equipment costs

$
230

$
186

Purchase price for business acquisition included in accrued expenses and other liabilities

$
2,961

$
—

Debt issuance costs included in accrued expenses and other liabilities

$
125

$
—

Financed sale of intangible assets held for sale

$
311

$
—


	Nine Months Ended
	September 30,
	2019		2018
Cash flows from operating activities
Net loss	$	(5,113)	$	(189)
Adjustments to reconcile net loss including non-controlling interests to net cash provided by operating activities:
Depreciation and amortization of property and equipment		52,750		56,769
Amortization of intangible assets		3,365		2,507
Impairment loss and loss on disposal of fixed assets and intangible assets held for sale, net		277		198
Stock-based compensation		6,434		9,227
Amortization of deferred financing costs and debt discount, net of amounts capitalized		6,554		0
Non-cash operating lease cost		1,675		0
Gains and amortization of premiums/discounts for marketable securities		(522)		0
Change in fair value of contingent consideration		(961)		0
Bad debt expense		187		301
Changes in operating assets and liabilities:
Accounts receivable		(6,974)		(1,596)
Prepaid expenses and other assets		946		(209)
Accounts payable		532		2,041
Accrued expenses and other liabilities		5,394		3,557
Deferred revenue		18,523		(1,772)
Operating lease liabilities		(1,996)		0
Net cash provided by operating activities		81,071		70,834
Cash flows from investing activities
Purchases of marketable securities		(73,323)		0
Proceeds from maturities of marketable securities		37,293		0
Purchases of property and equipment		(101,455)		(72,531)
Payments for asset acquisitions		0		(22,052)
Net cash used in investing activities		(137,485)		(94,583)
Cash flows from financing activities
Debt issuance costs		(1,815)		0
Proceeds from credit facility		3,500		15,000
Principal payments on credit facility		(584)		(656)
Payments of acquisition related consideration		(3,027)		0
Proceeds from exercise of stock options		154		9,764
Repurchase of common stock for retirement		(747)		0
Payments of finance leases and notes payable		(5,162)		(4,362)
Payments of withholding tax on net issuance of restricted stock units		(34,123)		(8,901)
Payments to non-controlling interests		(1,003)		(614)
Net cash (used in) provided by financing activities		(42,807)		10,231
Effect of exchange rates on cash		(9)		9
Net decrease in cash, cash equivalents, and restricted cash		(99,230)		(13,509)
Cash and cash equivalents at beginning of period		149,412		26,685
Cash, cash equivalents, and restricted cash at end of period	$	50,182	$	13,176
Supplemental disclosure of non-cash investing and financing activities
Property and equipment costs in accounts payable, accrued expenses and other liabilities	$	35,515	$	35,458
Purchase of equipment and prepaid maintenance services under capital financing arrangements	$	0	$	5,068
Capitalized stock-based compensation included in property and equipment costs	$	689	$	600
Financed sale of intangible assets held for sale	$	300	$	0

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Boingo Wireless, Inc.

Notes to the Condensed Consolidated Financial Statements

~~(Unaudited)~~

(Unaudited)

(In thousands, except shares and per share amounts)

1. The business

Boingo Wireless, Inc. and its subsidiaries (collectively “we, “us”, “our” or “the Company”) is a leading global provider of wireless connectivity solutions for smartphones, tablets, laptops, wearables and other wireless-enabled consumer devices. Boingo Wireless, Inc. was incorporated on April 16, 2001 in the State of Delaware. We have a diverse monetization model that enables us to generate revenues from wholesale partnerships, retail sales, and advertising across these wireless networks. Wholesale offerings include distributed antenna systems (“DAS”) or small cells, which are cellular extension networks, multifamily, carrier offload, Wi-Fi roaming, value-added services, private label Wi-Fi, and location-based services. Retail products include Wi-Fi services for military personnel living in the barracks of U.S. Army, Air Force and Marine bases around the world, and Wi-Fi subscriptions and day passes that provide access to over ~~1.2~~1.3 million commercial hotspots worldwide. Advertising revenue is driven by Wi-Fi sponsorships at airports, hotels, cafes and restaurants, and public spaces. Our customers include some of the world’s largest carriers, telecommunications service providers, global consumer brands, and property owners, as well as troops stationed at military bases and Internet savvy consumers on the go.

2. Summary of significant accounting policies

Basis of presentation

The accompanying interim condensed consolidated financial statements and related notes for the three and nine months ended ~~March 31,~~September 30, 2019 and 2018 are unaudited. The unaudited interim condensed consolidated financial information has been prepared in accordance with the rules and regulations of the SEC for interim financial information. Accordingly, they do not include all information and footnotes required by generally accepted accounting principles (“GAAP”) in the United States of America (“U.S.”) for complete financial statements. These financial statements should be read in conjunction with the audited consolidated financial statements and the accompanying notes for the year ended December 31, 2018 contained in our annual report on Form 10-K filed with the SEC on March 1, 2019. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and in the opinion of management, reflect all adjustments, consisting of normal recurring adjustments, necessary for a fair statement of our results of operations for the three and nine months ended September 30, 2019 and 2018, our cash flows for the ~~three~~nine months ended ~~March 31,~~September 30, 2019 and 2018, and our financial position as of ~~March 31,~~September 30, 2019. The year-end balance sheet data was derived from audited consolidated financial statements but does not include all disclosures required by GAAP. Interim results are not necessarily indicative of the results to be expected for an entire year or any other future year or interim period.

In June 2018, the ~~FASB~~Financial Accounting Standards Board (“FASB”) issued ~~ASU~~Accounting Standards Update (“ASU”) 2018-07, Improvements to Nonemployee Share-Based Payment Accounting, which eliminates the separate accounting model for nonemployee share-based payment awards and generally requires companies to account for share-based payment transactions with nonemployees in the same way as share-based payment transactions with employees. The accounting remains different for attribution, which represents how the equity-based payment cost is recognized over the vesting period, and a contractual term election for valuing nonemployee equity share options. The standard is effective for interim and annual periods beginning after December 15, 2018. We adopted ASU 2018-07 on January 1, 2019 and the adoption of this standard did not have a material impact on our condensed consolidated financial statements.

In February 2016, the ~~Financial Accounting Standards Board (“FASB”)~~FASB issued a new standard related to leases, which was codified into Accounting Standards Codification (“ASC”) 842, Leases. ASC 842 requires lessees to recognize assets and liabilities for all leases with lease terms of more than 12 months on the balance sheet. Under ASC 842, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee will depend on its classification as a finance or operating lease. On January 1, 2019, we adopted ASC 842 using the modified retrospective transition approach. ASC 842 permits two methods of adoption and we elected to apply the guidance to each lease that had commenced as of January 1, 2019 with a cumulative-effect adjustment to the opening balance of retained earnings as of that date. ASC 842 permits various optional transition practical expedients. The discount rate used to calculate the present value of the future payments was determined as of January 1, 2019 for existing lease contracts and was generally based on our incremental borrowing rate as of January 1, 2019 commensurate with the remaining lease term. We also elected the package of

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practical expedients which included the following: (i) an entity need not reassess whether any expired or existing contracts are or contain leases; (ii) an entity need not reassess the lease classification for any expired or existing leases; and (iii) an entity need not reassess initial direct costs for any existing leases. The standard had a material impact on our condensed consolidated balance sheet but did not have an impact on our condensed consolidated statement of operations and our condensed consolidated statement of cash flows. The most significant impact was the recognition of right-of-use (“ROU”) assets and liabilities related to our operating leases, while our accounting for finance leases remained substantially unchanged. Adoption of thenew standard resulted in the recording of $16,916 of operating lease ROU assets and $22,338 of operating lease ROU liabilities as of January 1, 2019.

Principles of consolidation

The unaudited condensed consolidated financial statements include our accounts and the accounts of our majority owned subsidiaries. We consolidate our 70% ownership of Chicago Concourse Development Group, LLC and our 75% ownership of Boingo Holding Participacoes Ltda. in accordance with ASC 810, Consolidation. Other parties’ interests in consolidated entities are reported as non-controlling interests. All intercompany balances and transactions have been eliminated in consolidation.

Marketable securities

Our marketable securities consist of available-for-sale securities with original maturities exceeding three months. According to ~~FASB~~ ASC 320, ~~Investments~~—Investments—Debt and Equity Securities, we have classified securities, which have readily determinable fair values and are highly liquid, as short-term because such securities are expected to be realized within a one-year period. At ~~March 31,~~September 30, 2019, we had ~~$36,888~~$36,594 in marketable securities. We had no0 marketable securities at December 31, 2018.

Marketable securities are reported at fair value with the related unrealized gains and losses reported as other comprehensive income (loss) until realized or until a determination is made that an other-than-temporary decline in market value has occurred. No significant unrealized gains and losses have been reported during the periods presented. Factors considered by us in assessing whether an other-than-temporary impairment has occurred include the nature of the investment, whether the decline in fair value is attributable to specific adverse conditions affecting the investment, the financial condition of the investee, the severity and the duration of the impairment and whether we have the ability to hold the investment to maturity. When it is determined that an other-than-temporary impairment has occurred, the investment is written down to its market value at the end of the period in which it is determined that an other-than-temporary decline has occurred. The cost of marketable securities sold is based upon the specific identification method. Any realized gains or losses on the sale of investments are reflected as a component of interest income and other expense, net.

For the three and nine months ended ~~March 31,~~September 30, 2019, ~~and 2018,~~ we had no significant realized or unrealized gains or losses from investments in marketable securities classified as available-for-sale. As of ~~March 31,~~September 30, 2019, we had ~~$16~~$41 of cumulative unrealized gains, net of tax, which was $0 as of ~~March 31,~~September 30, 2019 due to the full valuation allowance established against our deferred tax assets, in accumulated other comprehensive loss.

Segment and geographic information

We operate as ~~one~~1 reportable segment; a service provider of wireless connectivity solutions across our managed and operated network and aggregated network for mobile devices such as laptops, smartphones, tablets and other wireless-enabled consumer devices. This single segment is consistent with the internal organization structure and the manner in which operations are reviewed and managed by our Chief Executive Officer, the chief operating decision maker.

All significant long-lived tangible assets are held in the United States of America. We do not disclose sales by geographic area because to do so would be impracticable.

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The following is a summary of our revenue disaggregated by product offerings:

Three Months Ended
March 31,

2019

2018

Revenue:

Military/multifamily

$
25,897

$
15,854

DAS

24,095

23,645

Wholesale—Wi-Fi

11,020

11,149

Retail

3,926

5,310

Advertising and other

1,535

2,201

Total revenue

$
66,473

$
58,159


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2019		2018		2019		2018
Revenue:
DAS	$	23,714	$	24,410	$	75,431	$	69,940
Military/multifamily		23,641		21,745		73,934		54,334
Wholesale—Wi-Fi		11,200		11,749		32,938		36,428
Retail		3,646		4,088		11,419		13,964
Advertising and other		2,506		3,261		6,012		8,347
Total revenue	$	64,707	$	65,253	$	199,734	$	183,013

Revenue recognition

We generate revenue from several sources including: (i) DAS customers that are telecom operators under long-term contracts for access to our DAS at our managed and operated locations, (ii) military and retail customers under subscription plans for month-to-month network access that automatically renew, and military and retail single-use access from sales of hourly, daily or other ~~single-~~ ~~use~~single-use access plans, ~~(ii)~~(iii) arrangements with property owners for multifamily properties that provide for network installation and monthly Wi-Fi services and support for residents and employees, ~~(iii) DAS customers that are telecom operators under long-term contracts for access to our DAS at our managed and operated locations,~~ (iv) arrangements with wholesale Wi-Fi customers that provide software licensing, network access, and/or professional services fees, and (v) display advertisements and sponsorships on our walled garden sign-in pages. Software licensed by our wholesale platform services customers can only be used during the term of the service arrangements and has no utility to them upon termination of the service arrangement.

Revenues are recognized when a contract with a customer exists and control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services and the identified performance obligation has been satisfied. Contracts entered into at or near the same time with the same customer are combined and accounted for as a single contract if the contracts have a single commercial objective, the amount of consideration is dependent on the price or performance of the other contract, or the services promised in the contracts are a single performance obligation. Contract amendments are routine in the performance of our DAS, wholesale Wi-Fi, and advertising contracts. Contracts are often amended to account for changes in contract specifications or requirements or expand network access services. In most instances, our DAS and wholesale Wi-Fi contract amendments are for additional goods or services that are distinct, and the contract price increases by an amount that reflects the standalone selling price of the additional goods or services; therefore, such contract amendments are accounted for as separate contracts. Contract amendments for our advertising contracts are also generally for additional goods or services that are distinct; however, the contract price does not increase by an amount that reflects the standalone selling price of the additional goods or services. Advertising contract amendments are therefore generally accounted for as contract modifications under the prospective method. Contract amendments to transaction prices with no change in remaining services are accounted for as contract modifications under the cumulative catch-up method.

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in ASC ~~606.~~606, Revenue from Contracts with Customers. A contract’s transaction price is allocated to each distinct performance obligation and is recognized as revenue when, or as, the performance obligation is satisfied, which typically occurs when the services are rendered. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. Our contracts with customers may include multiple performance obligations. For such arrangements, we allocate revenue to each performance obligation based on its relative standalone selling price. We generally determine standalone selling prices based on the prices charged to customers. Judgment may be used to determine the standalone selling prices for items that are not sold separately, including services provided at no additional charge. Most of our performance obligations are satisfied over time as services are provided. We generally recognize revenue on a gross basis as we are primarily responsible for fulfilling the promises to provide the specified goods or services, we are responsible for paying all costs related to the goods or services before they have been transferred to the customer, and we have discretion in establishing prices for the specified goods or services. Revenue is presented net of any sales and value added taxes.

Payment terms vary on a contract-by-contract basis, although terms generally ~~include a requirement of~~require payment within 30 to 60 days for non-recurring payments, the first day of the monthly or quarterly billing cycle for recurring payments for DAS and wholesale Wi-Fi contracts, and the first day of the month prior to the month that services are provided for multifamily contracts. We apply a practical expedient for purposes of determining whether a significant financing component may exist for our contracts if, at contract inception,

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we expect that the period between when we transfer the promised good or service to the customer and when the customer pays for that good or service will be one year or less. In instances where the customer pays for a good or service one year or more in advance of the period when we transfer the promised good or service to the customer, we have determined our contracts generally do not include a significant financing component. The primary purpose of our invoicing terms is not to receive financing from our customers or to provide customers with financing but rather to maximize our profitability on the customer contract. Specifically, inclusion of non-refundable upfront fees in our long-term customer contracts increases the likelihood that the customer will be committed through the end of the contractual term and ensures recoverability of the capital outlay that we incur in expectation of the customer fulfilling its contractual obligations. We may also provide service credits to our customers if we fail to meet contractual monthly system uptime requirements and we account for the variable consideration related to these service credits using the most likely amount method.

For contracts that include variable consideration, we estimate the amount of consideration at contract inception under the expected value method or the most likely amount method and include the amount of variable consideration that is not considered to be constrained. Significant judgment is used in constraining estimates of variable consideration. We update our estimates at the end of each reporting period as additional information becomes available.

Timing of revenue recognition may differ from the timing of invoicing to customers. We record unbilled receivables (contract assets) when revenue is recognized prior to invoicing, deferred revenue (contract liabilities) when revenue is recognized after invoicing, and receivables when we have an unconditional right to consideration to invoice and receive payment in the future. We present our DAS, multifamily, and wholesale Wi-Fi contracts in our condensed consolidated balance sheet as either a contract asset or a contract liability with any unconditional rights to consideration presented separately as a receivable. Our other customer contracts generally do not have any significant contract asset or contract liability balances. Generally, a significant portion of the billing for our DAS contracts occurs prior to revenue recognition, resulting in our DAS contracts being presented as contract liabilities. In contrast, our wholesale Wi-Fi contracts that contain recurring fees with annual escalations are generally presented as contract assets as revenue is recognized prior to invoicing. Our multifamily contracts can be presented as either contract liabilities or contract assets primarily as a result of timing of invoicing for the network installations.

We recognize an asset for the incremental costs of obtaining a contract with a customer if we expect the benefit of those costs to be longer than one year. We have determined that certain sales incentive programs meet the requirements to be capitalized. Total capitalized costs to obtain a contract were immaterial during the three and nine months ended ~~March 31,~~September 30, 2019 and are included in prepaid expenses and other current assets and non-current other assets on our condensed consolidated balance sheets. We apply a practical expedient to expense costs as incurred for costs to obtain a contract with a customer when the amortization period would have been one year or less, the most significant of which relates to sales commissions related to obtaining our advertising customer contracts. Contract costs are evaluated for impairment in accordance with ASC 310, Receivables.

~~Military and retail~~DAS

Military and retail customers must review and agree to abide by our standard “Customer Agreement (With Acceptable Use Policy) and End User License Agreement” before they are able to sign up for our subscription or single-use Wi-Fi network access services. Our military and retail customer contracts generally contain a single performance obligation—provide non-exclusive access to Wi-Fi services, together with performance of standard maintenance, customer support, and the Wi-Finder app to facilitate seamless connection to the Company’s Wi-Fi network. The performance obligation is considered a series of distinct services as the performance obligation is satisfied over time and the same time-based input method would be used to measure our progress toward complete satisfaction of the performance obligation to transfer each distinct service in the series to the customer. Our contracts also provide our military and retail subscription customers with the option to renew the agreement when the subscription term is over. We do not consider this option to provide the customer with a material right that should be accounted for as a separate performance obligation because the customer would not receive a discount if it decided to renew and the option to renew is cancellable within 5 days’ notice prior to the end of the then current term by either party.

The contract transaction price is determined based on the subscription or single-use plan selected by the customer. Our military and retail service plans are for fixed price services as described on our website. From time to time, we offer promotional discounts that result in an immediate reduction in the price paid by the customer. Subscription fees from military and retail customers are paid monthly in advance. We provide refunds for our military and retail services on a case-by-case basis. Refunds and credit card chargeback amounts are not significant and are recorded as contra-revenue in the period the refunds are made, or chargebacks are received.

Subscription fee revenue is recognized ratably over the subscription period. Revenue generated from military and retail single-use access is recognized when access is provided, and the performance obligation is satisfied.

~~Multifamily~~

We enter into long-term contracts with property owners. The initial term of our contracts with property owners generally range from three to five years and the contracts may contain renewal options. Some of our contracts provide termination for convenience clauses that may or may not include substantive termination penalties. We apply judgment in determining the contract term, which is the period during which we have present and enforceable rights and obligations. Our customer contracts generally contain two performance obligations: (i) install the network required to provide Wi-Fi services; and (ii) provide Wi-Fi services and technical support to the residents and employees. Our contracts may also provide our property owners with the option to renew the agreement. We do not consider this option to provide the property owner with a material right that should be accounted for as a separate performance obligation because the property owner would not receive a discount if it decided to renew and the option to renew is generally cancellable by either party subject to the notice of non-renewal requirements specified in the contract. Our contracts may also provide our customers with the option to purchase additional future services. We do not consider this option to provide the customer with a material right that should be accounted for as a separate performance obligation since the cost of the additional future services are generally at market rates for such services and we are not automatically obligated to stand ready to deliver these additional goods or services because the customer may reject our proposal.

Our contract fee structure includes a network installation fee and recurring Wi-Fi service and support fees. The network installation fee is generally structured as a firm-fixed price arrangement and becomes payable as certain contract and/or installation milestones are achieved. We generally estimate variable consideration for unpriced change orders using the most likely amount method based on the expected price for those services. If network installations are not completed by specified dates, we may be subject to network installation penalties. We estimate the variable consideration for our network installation fees using the most likely amount method based on the amount of network installation penalties we expect to incur. Title to the network generally transfers to the property owner once installation is completed and the network has been accepted. We generally recognize revenue related to our network installation performance obligation using a cost-to-cost method over the network installation period. We may provide latent defect warranties for materials and installation labor services related to our network installation services. Our warranty obligations are generally not accounted for as separate performance obligations as warranties cannot be separately purchased and warranties do not provide a service in addition to the assurance that the network will function as expected.

The recurring fees commence once the network is launched with recurring fees generally based upon a fixed or variable occupancy rate. The recurring Wi-Fi service fees may be adjusted prospectively for changes in circuit and/or video content costs, and Wi-Fi support fees may escalate on an annual basis. We estimate the variable consideration for our recurring fees using the expected value method with the exception of the variable consideration related to actual occupancy rates, which we record when we have the contractual right to bill. We evaluate our estimates of variable consideration each period and record a cumulative catch-up adjustment in the period in which changes occur for the amount allocated to satisfied performance obligations. We recognize revenue related to the recurring fees on a monthly basis over the contract term as the Wi-Fi services and support is rendered, and the performance obligation is satisfied.

~~DAS~~

We enter into long-term contracts with telecom operators at our managed and operated locations. The initial term of our contracts with telecom operators generally range from five to twenty years and the agreements generally contain renewal options. Some of our contracts provide termination for convenience clauses that may or may not include substantive termination penalties. We apply judgment in determining the contract term, the period during which we have present and enforceable rights and obligations. Our DAS customer contracts generally contain a single performance obligation—provide non-exclusive access to our DAS or small cell networks to provide telecom operators’ customers with access to the licensed wireless spectrum, together with providing telecom operators with construction, installation, optimization/engineering, maintenance services and agreed-upon storage space for the telecom operators’ transmission equipment, each related to providing such licensed wireless spectrum to the telecom operators. The performance obligation is considered a series of distinct services as the performance obligation is satisfied over time and the same time-based input method would be used to measure our progress toward complete satisfaction of the performance obligation to transfer each distinct service in the series to the customer. Our contract fee structure generally includes a non-refundable upfront fee and we evaluated whether customer options to renew services give rise to a material right that should be accounted for as a separate performance obligation because of those non-refundable upfront fees. We believe that a material right generally does not exist for our DAS customer contracts that contain renewal options because the telecom operators’ decision to renew is highly dependent upon our ability to maintain our exclusivity as the DAS service provider at the venue location and our limited operating history with venue and customer renewals. The telecom operators will make the decision to incur the capital improvement costs at the venue location irrespective of our remaining exclusivity period with the venue as the telecom operators expect that the assets will continue to be serviced regardless of whether we will remain such exclusive DAS service provider. Our contracts also provide our DAS customers with the option to purchase additional future services such as upgrades or enhancements. This option is not considered to provide the

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customer with a material right that should be accounted for as a separate performance obligation since the cost of the additional future services depends entirely on the market rate of such services at the time such services are requested and we are not automatically obligated to stand ready to deliver these additional goods or services as the customer may reject our proposal. Periodically, we install and sell DAS networks to customers where we do not have service contracts or remaining obligations beyond the installation of those networks and we recognize build-out fees for such projects as revenue when the installation work is completed, and the network has been accepted by the customer.

Our contract fee structure may include varying components of an upfront build-out fee and recurring access, maintenance, and other fees. The upfront build-out fee is generally structured as a firm-fixed price or cost-plus arrangement and becomes payable as certain contract and/or construction milestones are achieved. Our DAS and small cell networks are neutral-host networks that can accommodate multiple telecom operators. Some of our DAS customer contracts provide for credits that may be issued to existing telecom operators for additional telecom operators subsequently joining the DAS network. The credits are generally based upon a fixed dollar amount per additional telecom operator, a fixed percentage amount of the original build-out fee paid by the telecom operator per additional telecom operator, or a proportionate share based upon the split among the relevant number of telecom operators for the actual costs incurred by all telecom operators to construct the DAS network. In most cases, there is significant uncertainty on whether additional telecom operator contracts will be executed at inception of the contract with the existing telecom operator. We believe that the upfront build-out fee is fixed consideration once the build-out is complete and any subsequent credits that may be issued would be accounted for in a manner similar to a contract modification under the prospective method because (i) the execution of customer contracts with additional telecom carriers is at our sole election and (ii) we would not execute agreements with additional telecom carriers if it would not increase our revenues and gross profits at the venue level. Further, the credits issued to the existing telecom operator changes the transaction price on a go-forward basis, which corresponds with the decline in service levels for

the existing telecom operator once the neutral-host DAS network can be accessed by the additional telecom operator. The recurring access, maintenance, and other fees generally escalate on an annual basis. The recurring fees are variable consideration until the contract term and annual escalation dates are fixed. We estimate the variable consideration for our recurring fees using the most likely amount method based on the expected commencement date for the services. We evaluate our estimates of variable consideration each period and record a cumulative catch-up adjustment in the period in which changes occur for the amount allocated to satisfied performance obligations.

We generally recognize revenue related to our single performance obligation for our DAS customer contract monthly over the contract term once the customer ~~has the ability to~~may access the DAS network and we commence maintenance on the DAS network.

Military and retail

Military and retail customers must review and agree to abide by our standard “Customer Agreement (With Acceptable Use Policy) and End User License Agreement” before they are able to sign up for our subscription or single-use Wi-Fi network access services. Our military and retail customer contracts generally contain a single performance obligation—provide non-exclusive access to Wi-Fi services, together with performance of standard maintenance, customer support, and the Wi-Finder app to facilitate seamless connection to the Company’s Wi-Fi network. The performance obligation is considered a series of distinct services as the performance obligation is satisfied over time and the same time-based input method would be used to measure our progress toward complete satisfaction of the performance obligation to transfer each distinct service in the series to the customer. Our contracts also provide our military and retail subscription customers with the option to renew the agreement when the subscription term is over. We do not consider this option to provide the customer with a material right that should be accounted for as a separate performance obligation because the customer would not receive a discount if it decided to renew and the option to renew is cancellable with 5 days’ notice prior to the end of the then current term by either party.

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Multifamily

We enter into long-term contracts with property owners. The initial term of our contracts with property owners generally range from three to five years and the contracts may contain renewal options. Some of our contracts provide termination for convenience clauses that may or may not include substantive termination penalties. We apply judgment in determining the contract term, which is the period during which we have present and enforceable rights and obligations. Our customer contracts generally contain 2 performance obligations: (i) install the network required to provide Wi-Fi services; and (ii) provide Wi-Fi services and technical support to the residents and employees. Our contracts may also provide our property owners with the option to renew the agreement. We do not consider this option to provide the property owner with a material right that should be accounted for as a separate performance obligation because the property owner would not receive a discount if it decided to renew and the option to renew is generally cancellable by either party subject to the notice of non-renewal requirements specified in the contract. Our contracts may also provide our customers with the option to purchase additional future services. We do not consider this option to provide the customer with a material right that should be accounted for as a separate performance obligation since the cost of the additional future services are generally at market rates for such services and we are not automatically obligated to stand ready to deliver these additional goods or services because the customer may reject our proposal.

Wholesale Wi-Fi

We enter into long-term contracts with enterprise customers such as telecom operators, cable companies, technology companies, and enterprise software/services companies, that pay us usage-based Wi-Fi network access and software licensing fees to allow their ~~customers’~~customers' access to our footprint worldwide. We also enter into long-term contracts with financial institutions and other enterprise customers who provide access to our Wi-Fi footprint as a value-added service for their customers. The initial term of our contracts with wholesale Wi-Fi customers generally range from one to three years and the agreements generally contain renewal options. Some of our contracts provide termination for convenience clauses that may or may not include substantive termination penalties. We apply judgment in determining the contract term, the period during which we have present and enforceable rights and obligations. Our wholesale Wi-Fi customer contracts generally contain a single performance obligation—-provide non-exclusive rights to access our Wi-Fi networks to provide wholesale Wi-Fi ~~customers’~~customers' end customers with access to the high-speed broadband network that may be bundled together with integration services, support services, and/or performance of standard maintenance. The performance obligation is considered a series of distinct services as the performance obligation is satisfied over time and the same time-based input method or usage-based output method would be used to measure our progress toward complete satisfaction of the performance obligation to transfer each distinct service in the series to the customer. Our contracts may also provide our enterprise customers with the option to renew the agreement. This option is not considered to provide the customer with a material right that should be accounted for as a separate performance obligation because the customer would not receive a discount if it decided to renew and the option to renew is generally cancellable by either party subject to the notice of non-renewal requirements specified in the

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contract. Our contracts may also provide our wholesale Wi-Fi customers with the option to purchase additional future services. We do not consider this option to provide the customer with a material right that should be accounted for as a separate performance obligation since the cost of the additional future services are generally at market rates for such services and we are not automatically obligated to stand ready to deliver these additional goods or services because the customer may reject our proposal. Periodically, we install and sell Wi-Fi networks to customers where we do not have service contracts or remaining obligations beyond the installation of those networks and we recognize build-out fees for such projects as revenue when the installation work is completed, and the network has been accepted by the customer.

Our contract fee structure may include varying components of a minimum fee and usage-based fees. Minimum fees represent fixed price consideration while usage-based fees represent variable consideration. With respect to variable consideration, our commitment to our wholesale Wi-Fi customers consists of providing continuous access to the network. It is therefore a single performance obligation to stand ready to perform and we allocate the variable fees charged for usage when we have the contractual right to bill. The variable component of revenue is recognized based on the actual usage during the period.

Wholesale Wi-Fi revenue is recognized as it is earned over the relevant contract term with variable consideration recognized when we have the contractual right to bill.

Advertising

We generally enter into short-term cancellable insertion orders with our advertising customers for advertising campaigns that are served at our managed and operated locations and other locations where we solely provide authorized access to a partner’s Wi-Fi network through sponsored and promotional programs. Our sponsorship advertising arrangements are generally priced under a cost per engagement structure, which is a set price per click or engagement, or a cost per install structure for third party application downloads. Our display advertising arrangements are priced based on cost per thousand impressions. Insertion orders may also include bonus items. Our advertising customer contracts may contain multiple performance obligations with each distinct service. These distinct services may include an advertisement video or banner impressions in the contract bundled with the requirement to provide network, space on the website, and integration of customer advertisement onto the website, and each is generally considered to be its own performance obligation. The performance obligations are considered a series of distinct services as the performance obligations are satisfied over time and the same action-based output method would be used to measure our progress toward complete satisfaction of the performance obligation to transfer each distinct service in the series to the customer.

The contract transaction price is comprised of variable consideration based on the stated rates applied against the number of units delivered inclusive of the bonus units subject to the maximums provided for in the insertion order. It is customary for us to provide additional units over and above the amounts contractually required; however, there are a number of factors that can also negatively impact our ability to deliver the units required by the customer such as service outages at the venue resulting from power or circuit failures and customer cancellation of the remaining undelivered units under the insertion order due to campaign performance or budgetary constraints. Typically, the advertising campaign periods are short in duration. We therefore use the contractual rates per the insertion orders and actual units delivered to determine the transaction price each period end. The transaction price is allocated to each performance obligation based on the standalone selling price of each performance obligation.

Advertising revenue is recognized ratably over the service period based on actual units delivered subject to the maximums provided for in the insertion order.

Leases

We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use assets, current portion of operating and finance leases, and long-term portion of operating and finance leases in our condensed consolidated balance sheets. Finance leases are included in property and equipment, net, current portion of operating and finance leases, and long-term portion of operating and finance leases in our condensed consolidated balance sheets.

Operating and finance lease ROU assets and ROU liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments. The ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease

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expense for minimum lease payments is recognized on a straight-line basis over the lease term. We have lease agreements with lease and non-lease components, which are accounted for separately for the asset classes maintained. We exclude short-term leases with a lease term of 12 months or less at the commencement date from our condensed consolidated balance sheets.

Income taxes

We calculate our interim income tax provision in accordance with ASC 270,Interim Reporting, and ASC 740, Accounting for Income Taxes. At the end of each interim period, we estimate the annual effective tax rate and apply that rate to our ordinary quarterly earnings. The tax expense or benefit related to significant, unusual, or extraordinary items is recognized in the interim period in which those items occur. In addition, the effect of changes in enacted tax laws, rates, or tax status is recognized in the interim period in which the change occurs. Excess windfall tax benefits and tax deficiencies related to our stock option exercises and restricted stock unit (“RSU”) vesting are recognized as an income tax benefit or expense in our condensed consolidated statements of operations in the period they are deducted on the income tax return. Excess windfall tax benefits and tax deficiencies are therefore not anticipated when determining the annual effective tax rate and are instead recognized in the interim period in which those items occur.

The computation of the annual estimated effective tax rate at each interim period requires certain estimates and significant judgment, including the expected operating income (loss) for the year, projections of the proportion of income (loss) earned and taxed in various states, permanent and temporary differences as a result of differences between amounts measured and recognized in accordance with tax laws and financial accounting standards, and the likelihood of recovering deferred tax assets generated in the current year. The accounting estimates used to compute the provision for income taxes may change as new events occur, additional information is obtained, or as the tax environment changes.

As of ~~March 31,~~September 30, 2019, we had an immaterial amount of unremitted earnings in our subsidiaries located outside of the U.S. for which state taxes have not been paid. Our intention is to indefinitely reinvest these earnings outside the U.S. If we were to remit our foreign earnings, we would be subject to state income taxes or withholding taxes imposed on actual distributions, or currency transaction gains (losses) that would result in taxation upon remittance. However, the amounts of any such tax liabilities resulting from the repatriation of foreign earnings are not material.

Foreign currency translation

Our Brazilian subsidiary uses the Brazilian Real as its functional currency. Assets and liabilities of our Brazilian subsidiary are translated to U.S. dollars at period-end rates of exchange, and revenues and expenses are translated at average exchange rates prevailing for each month. The resulting translation adjustments are made directly to a separate component of other comprehensive loss, which is reflected in stockholders’ equity in our condensed consolidated balance sheets. As of ~~March 31,~~September 30, 2019 and December 31, 2018, the Company had ~~$(1,333~~)$(1,584) and $(1,295), respectively, of cumulative foreign currency translation adjustments, net of tax, which was $0 as of ~~March 31,~~September 30, 2019 and December 31, 2018 due to the full valuation allowance established against our deferred tax assets, in accumulated other comprehensive loss.

The functional currency for our other foreign subsidiaries is the U.S. dollar. Gains and losses from the revaluation of foreign currency transactions and monetary assets and liabilities are included in the condensed consolidated statements of operations.

Use of estimates

The preparation of accompanying condensed consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the accompanying condensed consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Assets and liabilities which are subject to significant judgment and the use of estimates include the allowance for doubtful accounts, recoverability of goodwill and long-lived assets, valuation allowances with respect to deferred tax assets, ~~uncertain tax positions,~~ useful lives associated with property and equipment, valuation of ROU assets and ROU liabilities, valuation and useful lives of intangible assets, valuation of contingent consideration, contract assets and contract liabilities including estimates of variable consideration, and the valuation and assumptions underlying stock-based compensation and other equity instruments. On an ongoing basis, we evaluate our estimates compared to historical experience and trends, which form the basis for making judgments about the carrying value of assets and liabilities.

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Fair value of financial instruments

Fair value is defined as the price that would be received from selling an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, we consider the principal or most advantageous market in which it would transact, and we consider assumptions that market participants would use when pricing the asset or liability.

The accounting guidance for fair value measurement also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is as follows:

●

Level 1—Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

· ~~Level 1—Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.~~

●

Level 2—Quoted prices for identical assets and liabilities in markets that are not active, quoted prices for similar assets and liabilities in active markets or financial instruments for which significant inputs are observable, either directly or indirectly.

●

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

· Level 2—Quoted prices for identical assets and liabilities in markets that are not active, quoted prices for similar assets and liabilities in active markets or financial instruments for which significant inputs are observable, either directly or indirectly.

· ~~Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.~~

The carrying amount reflected in the accompanying condensed consolidated balance sheets for cash and cash equivalents, accounts receivable, prepaid expenses and other current assets, other assets, accounts payable, accrued expenses and other liabilities, and deferred revenue approximates fair value due to the short duration and nature of these financial instruments.

Recent accounting pronouncements

In August 2018, the FASB issued ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which requires customers to apply the same criteria for capitalizing implementation costs incurred in a cloud computing arrangement that is hosted by the vendor as they would for an arrangement that has a software license. The standard is effective for interim and annual periods beginning after December 15, 2019 and early adoption is permitted. The standard can be adopted prospectively or retrospectively. We are completing the assessment stage of our evaluation of the impact of the new standard on our accounting policies, processes, and system requirements. We have assigned internal resources to assist in the evaluation and implementation. We are currently evaluating the expected impact of this new ~~standard.~~standard on our consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326), which replaces the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (“CECL”) methodology. The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loan receivables and held-to-maturity debt securities. It also applies to off-balance sheet credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar investments) and net investments in leases recognized by the lessor in accordance with ASC 842 on leases. In addition, the standard made changes to the accounting for available-for-sale debt securities. One such change is to require credit losses to be presented as an allowance rather than as a write-down on available-for-sale debt securities. Available-for-sale accounting recognizes that value may be realized either through collection of contractual cash flows or through sale of the security. Therefore, the amendments limit the amount of the allowance for credit losses to the amount by which fair value is below amortized cost because the classification as available-for-sale is premised on an investment strategy that recognizes that the investment could be sold at fair value, if cash collection would result in the realization of an amount less than fair value. The standard is effective for interim and annual periods beginning after December 15, 2019 and early adoption is permitted. The standard will be adopted under the modified-retrospective approach with the prospective transition approach required for debt securities for which an other-than-temporary impairment had been recognized before the effective date. We are currently evaluating the expected impact of this new standard on our consolidated financial statements.

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3. Acquisitions

~~3. Acquisitions~~

Elauwit Networks, LLC

On August 1, 2018, we acquired the assets of Elauwit Networks, LLC (“Elauwit”) for $28,000 plus other contingent consideration. Elauwit provides data and video services to multi-unit dwelling properties including student housing, condominiums, apartments, senior living, and hospitality industries throughout the U.S. In addition, Elauwit builds and maintains the network that supports these services for property owners and managers and provides support for residents and employees.

The acquisition has been accounted for under the acquisition method of accounting in accordance with ~~FASB~~ ASC 805, Business Combinations. As such, the assets acquired and liabilities assumed are recorded at their acquisition-date fair values. The total purchase price was ~~$29,537,~~$28,612, which includes contingent consideration fair valued at $961. At the closing date, we paid cash of $15,576. $13,000 of the purchase price was held back for the following: (i) $11,000 held back for third-party consents not obtained at closing for certain customer agreements, which ~~will be~~are released as Elauwit delivers third-party consents with respect to such customer agreements; and (ii) a $2,000 indemnification holdback that is being retained for a period of 12 months following the closing of the acquisition. In 2018, we paid $9,048 of the amounts held back for third-party consents. We paid the remaining $1,952 for amounts held back for third-party consents in January 2019. During the nine months ended September 30, 2019, we paid $1,075 of the indemnification holdback consideration with the remaining $925 retained by the Company for settlement of working capital deficit and other indemnification matters discussed further below. Of the $925 retained by the Company, $566 related to undisclosed liabilities associated with acquired contracts that were initially recorded as network costs in the condensed consolidated statement of operations in the period in which the costs were incurred instead of recognizing a reduction in the indemnification liability and establishing an unfavorable contract liability. Accordingly, during the three months ended September 30, 2019 an out-of-period adjustment was recognized that reduced cost of sales by $566 to correct for costs associated with these unfavorable contracts that were recorded in the prior periods.

The contingent consideration could require payments in the aggregate amount of up to $15,000 that would be due and payable subject to certain conditions and the successful achievement of annual revenue targets for the acquired business during the 2019 and 2020 fiscal years. Refer to Note 12 for further discussion. The contingent consideration is subject to acceleration under certain corporate events.

The fair value of the contingent consideration is based on Level 3 inputs. Further changes in the fair value of the contingent consideration will be recorded through operating income (loss). The contingent consideration was valued at the date of acquisition using the Monte Carlo method reflecting the average expected monthly revenue, an annual risk-free rate of 2.78%, and an annual revenue volatility rate of 40%.

The identifiable intangible assets were primarily valued using the excess earnings, relief from royalty, and loss-of-revenue methods using discount rates ranging from 8.0% to 21.0% and a 1.0% royalty rate, where applicable, except for certain backlog intangible assets held for sale that were valued at fair value less costs to sell using a discount rate of 8%. The amortizable intangible assets held for use are being amortized on a straight-line basis over their estimated useful lives. Intangible assets held for sale are not amortized. We allocated the excess of the purchase price over the fair value of assets acquired and liabilities assumed to goodwill, which is deductible for tax purposes. The goodwill arising from the Elauwit acquisition is attributable primarily to expected synergies and other benefits, including the acquired workforce, from combining Elauwit with us.

ASC 805 provides for a measurement period not to exceed one year from the acquisition date to adjust the provisional amounts recognized at the acquisition date to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date. During the ~~three~~nine months ended ~~March 31,~~September 30, 2019, we recorded a measurement period ~~adjustment to~~adjustments to: (i) increase the value of backlog intangible assets held for sale ~~and decrease goodwill~~ by $750 as a result of the identification of additional assets that were ~~acquired.~~acquired; (ii) decrease the value of backlog intangible assets by $48 as a result of an adjustment made to the fair value of an acquired customer contract; and (iii) increase the value of accrued expenses and other liabilities and reduce the indemnification liability by $566 as a result of the identification of previously undisclosed liabilities of the sellers. The measurement period adjustments resulted in a net decrease to goodwill of $1,061. Intangible assets held for sale are included within prepaid expenses and other current assets on the condensed consolidated balance sheets. ~~To date, we have not recorded any other material measurement period adjustments.~~ The following summarizes the ~~preliminary~~final purchase price allocation:

Estimated
Fair Value

Weighted Average
Estimated Useful
Life (years)

Consideration:

Cash paid

$
15,576

Holdback consideration

13,000

Contingent consideration

961

Total consideration

$
29,537

Recognized amounts of identifiable assets acquired and liabilities assumed:

Accounts receivable

$
4,494

Prepaid expenses and other current assets

1,687

Property and equipment

195

Other non-current assets

177

Accounts payable

(2,049
)

Accrued expenses and other liabilities

(683
)

Deferred revenue

(3,854
)

Other non-current liabilities

(307
)

Net tangible liabilities acquired

(340
)

Backlog

7,030

5.0

Backlog - held for sale

750

—

Customer relationships

2,490

10.0

Partner relationships

1,200

10.0

Transition services agreement

540

2.0

Non-compete agreement

1,380

3.0

Goodwill

16,487

Total purchase price

$
29,537

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			Weighted Average
			Estimated Useful
	Fair Value		Life (years)
Consideration:
Cash paid	$	15,576
Holdback consideration		12,075
Contingent consideration		961
Total consideration	$	28,612
Recognized amounts of identifiable assets acquired and liabilities assumed:
Accounts receivable	$	4,494
Prepaid expenses and other current assets		1,687
Property and equipment		195
Other non-current assets		177
Accounts payable		(2,049)
Accrued expenses and other liabilities		(1,249)
Deferred revenue		(3,854)
Other non-current liabilities		(307)
Net tangible liabilities acquired		(906)
Backlog		6,982	5.0
Backlog-held for sale		750	—
Customer relationships		2,490	10.0
Partner relationships		1,200	10.0
Transition services agreement		540	2.0
Non-compete agreement		1,380	3.0
Goodwill		16,176
Total purchase price	$	28,612

The following table presents the results of Elauwit included in the Company’s revenue and net loss:

	Three Months Ended March 31,
	2019			2018

						Three Months Ended				Nine Months Ended
						September 30,				September 30,
						2019		2018		2019		2018
						(Unaudited)
Revenue	$	7,420		$	—	$	5,745	$	5,082	$	19,049	$	5,082
Net loss	(2,357		)	—			(1,658)		(571)		(5,674)		(571)

Pro forma results (Unaudited)

The following table presents the unaudited pro forma results of the Company for the three and nine months ended ~~March 31,~~September 30, 2018 as if the acquisition of Elauwit had occurred on January 1, 2017 and therefore includes Elauwit’s revenue and net income (loss), as adjusted, for such period. These results are not intended to reflect the actual operations of the Company had the acquisition occurred on January 1, 2017. Income taxes were calculated based on the projected annual effective tax rate ~~for 2018,~~ excluding ~~the tax effects on the equity component~~discrete items as of ~~Convertible Notes recorded in~~September 30, 2018. Acquisition transaction costs have been excluded from the pro forma net ~~loss.~~income (loss).

	Three Months Ended March 31, 2018

				Three Months Ended		Nine Months Ended
				September 30, 2018		September 30, 2018
Revenue	$	64,546		$	67,917	$	200,885
Net loss	(3,399		)
Net income (loss)					104		(1,221)
Net loss attributable to common stockholders	(3,848		)		(492)		(2,668)
Net loss per share attributable to common stockholders
Basic	$	(0.09	)	$	(0.01)	$	(0.06)
Diluted	$	(0.09	)	$	(0.01)	$	(0.06)

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4. Cash and cash equivalents and marketable securities

Cash and cash equivalents and marketable securities consisted of the following:

March 31,
2019

December 31,
2018

Cash and cash equivalents:

Cash

$
4,611

$
11,689

Money market accounts

59,910

137,723

Marketable securities

4,495

—

Total cash and cash equivalents

$
69,016

$
149,412

Short-term marketable securities—available-for-sale:

Marketable securities

$
36,888

$
—

Total short-term marketable securities

$
36,888

$
—


	September 30,		December 31,
	2019		2018
Cash and cash equivalents:
Cash	$	4,391	$	11,689
Money market accounts		45,791		137,723
Total cash and cash equivalents	$	50,182	$	149,412
Short-term marketable securities-available-for-sale:
Marketable securities	$	36,594	$	—
Total short-term marketable securities	$	36,594	$	—

All contractual maturities of marketable securities were less than one year at ~~March 31,~~September 30, 2019. Marketable securities consist primarily of debt securities which include commercial paper and debt instruments including notes issued by foreign or domestic industrial and financial corporations and governments which pay in U.S. dollars and carry a rating of A or better. For the three and nine months ended ~~March 31,~~September 30, 2019, interest income was $431 and $1,685, respectively. For the three and nine months ended September 30, 2018, interest income was ~~$714~~$12 and ~~$8, respectively, which~~$31, respectively. Interest income is included in interest income and other expense, net in the accompanying condensed consolidated statements of operations.

5. Contract assets and contract liabilities

The opening and closing balances of our contract asset, net and contract liability, net balances from contracts with customers for the ~~three~~nine months ended ~~March 31,~~September 30, 2019 ~~are~~were as follows:

Contract
assets, net

Contract
liabilities, net

Balance at December 31, 2018

$
468

$
217,733

Balance at March 31, 2019

1,117

218,029

Change

$
649

$
296


	Contract		Contract
	Assets, Net		Liabilities, Net
Balance at December 31, 2018	$	468	$	217,733
Balance at September 30, 2019		784		236,111
Change	$	316	$	18,378

The current and non-current portions of our contract assets, net are included within prepaid expenses and other current assets and other assets, respectively, and current and non-current portions of our contract liabilities, net are included within deferred revenue and deferred revenue, net of current portion, respectively, in our condensed consolidated balance sheets. Contract assets, net is generated from our multifamily and wholesale Wi-Fi contracts and the change in the contract assets, net balance includes activity related to amounts invoiced offset by revenue recognized from performance obligations satisfied in the current reporting period.

Contract liabilities are recorded when fees are collected, or we have an unconditional right to consideration (a receivable) in advance of delivery of goods or services. The change in contract liabilities, net balance is related to customer activity associated with each of our product offerings including the receipt of cash payments and the satisfaction of our performance obligations. Revenues for the three and nine months ended ~~March 31,~~September 30, 2019 include the following:

	Three Months Ended March 31, 2019

			Three Months Ended		Nine Months Ended
			September 30, 2019		September 30, 2019
Amounts included in the beginning of period contract liability balance	$	28,871	$	21,801	$	73,301
Amounts associated with performance obligations satisfied in previous periods	294			40		341

As of ~~March 31,~~September 30, 2019, the aggregate amount of the transaction price allocated to remaining service performance obligations for our DAS contracts was ~~$202,993.~~$219,218. We expect to recognize this revenue as service is provided over the remaining contract term. As of ~~March 31,~~September 30, 2019, our DAS contracts have a remaining duration of less than one year to approximately fifteen years.

Certain of our wholesale Wi-Fi contracts include variable consideration based on usage. This variable consideration has been excluded from the disclosure of remaining performance obligations. As of ~~March 31,~~September 30, 2019, the aggregate amount of the transaction price allocated to remaining service performance obligations for certain of our wholesale Wi-Fi contracts with guaranteed

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minimum consideration was ~~$9,863.~~$11,379. We expect to recognize this revenue as service is provided over the remaining contract term. As of ~~March 31,~~September 30, 2019, our wholesale Wi-Fi contracts have a remaining duration of less than one year to approximately fifteen years.

Information about remaining performance obligations that are part of a contract that has an original expected duration of one year or less have been excluded from the above, which primarily consists of network installations for our multifamily customers and monthly service contracts.

6. Property and equipment

The following is a summary of property and equipment, at cost less accumulated depreciation and amortization:

	March 31, 2019			December 31, 2018

							September 30,		December 31,
							2019		2018
Leasehold improvements	$	485,162		$	474,808		$	534,794	$	474,808
Construction in progress	61,080			40,369				72,552		40,369
Software	53,971			51,534				57,912		51,534
Computer equipment	15,257			14,215				15,986		14,215
Furniture, fixtures and office equipment	2,144			2,141				2,142		2,141
Total property and equipment	617,614			583,067				683,386		583,067
Less: accumulated depreciation and amortization	(287,880		)	(268,888		)		(321,510)		(268,888)
Total property and equipment, net	$	329,734		$	314,179		$	361,876	$	314,179

Depreciation and amortization expense, which includes depreciation and amortization for property and equipment under finance leases, is allocated as follows in the accompanying condensed consolidated statements of operations:

	Three Months Ended March 31,
	2019		2018

					Three Months Ended				Nine Months Ended
					September 30,				September 30,
					2019		2018		2019		2018
Network access	$	11,582	$	13,587	$	9,463	$	11,531	$	30,527	$	35,252
Network operations	4,386		4,256			4,361		4,447		13,069		13,017
Development and technology	2,779		2,508			2,782		2,664		8,369		7,740
General and administrative	262		255			261		259		785		760
Total depreciation and amortization of property and equipment	$	19,009	$	20,606	$	16,867	$	18,901	$	52,750	$	56,769

7. Accrued expenses and other liabilities

Accrued expenses and other liabilities consisted of the following:

March 31,
2019

December 31,
2018

Accrued construction in progress

$
21,035

20,930

Accrued customer liabilities

14,445

$
15,219

Revenue share

5,251

5,514

Accrued taxes

3,397

2,745

Salaries and wages

2,802

4,425

Holdback consideration

2,000

2,000

Accrued partner network

1,331

1,228

Accrued professional fees

1,298

1,434

Acquisition purchase consideration

—

1,952

Other

6,206

7,206

Total accrued expenses and other liabilities

$
57,765

$
62,653


	September 30,		December 31,
	2019		2018
Accrued customer liabilities	$	18,135	$	15,219
Accrued construction in progress		12,246		20,930
Revenue share		8,972		5,514
Salaries and wages		3,504		4,425
Accrued taxes		3,421		2,745
Accrued professional fees		1,420		1,434
Accrued partner network		1,043		1,228
Holdback consideration		—		2,000
Acquisition purchase consideration		—		1,952
Other		6,966		7,206
Total accrued expenses and other liabilities	$	55,707	$	62,653

8. Convertible Notes

In October 2018, the Company sold, through the initial purchasers, convertible senior notes (“Convertible Notes”) to qualified institutional buyers pursuant to Rule 144A of the Securities Act of 1933, as amended, for gross proceeds of $201,250. The

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Convertible Notes are senior, unsecured obligations with interest payable semi-annually in cash at a rate of 1.00% per annum on April 1^st and October 1^st of each year, beginning on April 1, 2019. The Convertible Notes will mature on October 1, 2023 unless they are redeemed, repurchased or converted prior to such date. Prior to April 1, 2023, the Convertible Notes are convertible at the option of holders only during certain periods and upon satisfaction of certain conditions. Thereafter, the Convertible Notes will be convertible at any time until the close of business on the second scheduled trading day immediately preceding the maturity date. Upon conversion, the Convertible Notes may be settled in shares of the Company’s common stock, cash or a combination of cash and shares of the Company’s common stock, at the Company’s election.

The Convertible Notes have an initial conversion rate of 23.6323 shares of common stock per $1,000 principal amount of the Convertible Notes, which will be subject to customary anti-dilution adjustments in certain circumstances. This represents an initial effective conversion price of approximately $42.31 per share, which represents a premium of approximately 30% to the $32.55 per share closing price of the Company’s common stock on October 2, 2018, the date the Company priced the offering.

The Company may redeem all or any portion of the Convertible Notes, at its option, on or after October 5, 2021, at a redemption price equal to 100% of the principal amount of the Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date, if the last reported sale price of the Company’s stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides written notice of redemption.

Holders of Convertible Notes may require the Company to repurchase their Convertible Notes upon the occurrence of certain events that constitute a fundamental change under the indenture governing the Convertible Notes at a fundamental change repurchase price equal to 100% of the principal amount thereof, plus accrued and unpaid interest to, but excluding, the date of repurchase. In connection with certain corporate events or if the Company issues a notice of redemption prior to the maturity date, it will, under certain circumstances, increase the conversion rate for holders who elect to convert their Convertible Notes in connection with such corporate event or notice of redemption.

In connection with the pricing of the Convertible Notes, the Company entered into privately negotiated capped call transactions with a financial institution. The capped call transactions initially cover, subject to customary anti-dilution adjustments, the number of shares of the Company’s common stock that initially underlie the Convertible Notes. The cap price of the capped call transactions is initially $65.10 per share of the Company’s common stock, representing a premium of 100% above the closing price of $32.55 per share of the Company’s common stock on October 2, 2018, and is subject to certain adjustments under the terms of the capped call transactions. The capped call transactions are expected generally to reduce potential dilution to the Company’s common stock upon conversion of the Convertible Notes and/or offset the potential cash payments that the Company could be required to make in excess of the principal amount of any converted Convertible Notes upon conversion thereof, with such reduction and/or offset subject to a cap based on the cap price.

The following table summarizes the Convertible Notes as of ~~March 31,~~September 30, 2019:

March 31,
2019

Par value of the Convertible Notes

$
201,250

Unamortized debt discounts

(43,052
)
Unamortized debt issuance costs

(4,315
)
Net carrying value of Convertible Notes

$
153,883


	September 30,
	2019
Par value of the Convertible Notes	$	201,250
Unamortized debt discounts		(38,930)
Unamortized debt issuance costs		(3,890)
Net carrying value of Convertible Notes	$	158,430

The fair value of our Convertible Notes was ~~$181,552~~$167,541 as of ~~March 31,~~September 30, 2019. The estimated fair value of Convertible Notes is based on market rates and the closing trading price of the Convertible Notes as of ~~March 28,~~September 27, 2019 and is classified as Level 2 in the fair value hierarchy. As of ~~March 31,~~September 30, 2019, the if-converted value of the Convertible Notes did not exceed the principal amount.

Debt issuance costs are amortized on an effective interest basis over the term of the Convertible Notes. Debt issuance cost amortization expense, net of amounts capitalized, is included in interest expense and ~~other expense, net~~amortization of debt discount in the

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accompanying condensed consolidated statements of operations for the three and nine months ended ~~March 31,~~September 30, 2019. The following table sets forth interest expense related to the Convertible Notes for the three and nine months ended ~~March 31,~~September 30, 2019:

March 31,
2019

Contractual interest expense

$
503

Amortization of debt issuance costs

208

Amortization of debt discount

2,006

Total

$
2,717

Effective interest rate of the liability component

7.1
%


	Three Months			Nine Months
	Ended			Ended
	September 30, 2019			September 30, 2019
Contractual interest expense	$	503		$	1,509
Amortization of debt issuance costs		213			632
Amortization of debt discount		2,079			6,127
Total	$	2,795		$	8,268
Effective interest rate of the liability component		7.1	%		7.1	%

During the three and nine months ended ~~March 31,~~September 30, 2019, we capitalized ~~$465~~$740 and $1,948, respectively, of amortization and interest expense related to the Convertible Notes.

Amortization expense for our debt discount and debt issuance costs through 2023 are as follows:

Debt
Discounts

Debt Issuance
Costs

April 1, 2019—December 31, 2019

$
6,239

$
642

January 1, 2020—December 31, 2020

8,864

901

January 1, 2021—December 31, 2021

9,528

955

January 1, 2022—December 31, 2022

10,241

1,015

January 1, 2023—December 31, 2023

8,180

802

$
43,052

$
4,315


	Debt		Debt Issuance
	Discounts		Costs
October 1, 2019―December 31, 2019	$	2,117	$	217
January 1, 2020―December 31, 2020		8,864		901
January 1, 2021―December 31, 2021		9,528		955
January 1, 2022―December 31, 2022		10,241		1,015
January 1, 2023―December 31, 2023		8,180		802
	$	38,930	$	3,890

9. Credit Facility

In February 2019, we entered into a Credit Agreement (the “Credit Agreement”) and related agreements with Bank of America, N.A. acting as agent for lenders named therein, including Bank of America, N.A., Silicon Valley Bank, Bank of the West, Zions Bancorporation, N.A. dba California Bank & Trust, and Barclays Bank PLC (the “Lenders”), for a secured credit facility in the form of a revolving line of credit of up to $150,000 (the “Revolving Line of Credit”) and a term loan of $3,500 (the “Term Loan” and together with the Revolving Line of Credit, the “Credit Facility”). We may use borrowings under the Credit Facility for general working capital and corporate purposes. In general, amounts borrowed under the Credit Facility are secured by a lien against all assets, with certain exclusions.

As of ~~March 31,~~September 30, 2019, we had no0 amounts outstanding under the Revolving Line of Credit and ~~$3,306~~$2,916 outstanding under the Term Loan. Amounts borrowed under the Revolving Line of Credit and Term Loan will bear variable interest at the greater of LIBOR plus 1.75% - 2.75% or Lender’s Prime Rate plus 0.75% - 1.75% per year and we will pay a fee of 0.25% - 0.5% per year on any unused portion of the Revolving Line of Credit. The Term Loan requires quarterly payments of interest and principal until it is repaid in full on the maturity date but may be prepaid in whole or part at any time. Our Credit Facility will mature on April 3, 2023. Repayment of amounts borrowed under the Credit Facility may be accelerated in the event that we are in violation of the representations, warranties and covenants made in the Credit Agreement, including certain financial covenants set forth therein, and under other specified default events including, but not limited to, non-payment or inability to pay debt, breach of cross default provisions, insolvency provisions, and change of control.

The Company is subject to customary financial and non-financial covenants under the Credit Facility, including a minimum quarterly consolidated senior secured leverage ratio, a minimum quarterly consolidated total leverage ratio, a maximum quarterly consolidated fixed charge coverage ratio, and cash on hand minimums.

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Principal payments due under our Term Loan through 2023 are as follows:

Principal Payments

April 1, 2019—December 31, 2019

$
583

January 1, 2020—December 31, 2020

778

January 1, 2021—December 31, 2021

778

January 1, 2022—December 31, 2022

778

January 1, 2023—December 31, 2023

389

$
3,306


	Principal Payments
October 1, 2019―December 31, 2019	$	194
January 1, 2020―December 31, 2020		778
January 1, 2021―December 31, 2021		778
January 1, 2022―December 31, 2022		778
January 1, 2023―December 31, 2023		388
	$	2,916

Debt issuance costs are amortized on a straight-line basis over the term of the Credit Facility. Amortization expense related to debt issuance costs, net of amounts capitalized, are included in interest expense and ~~other expense~~amortization of debt discount in the accompanying condensed consolidated statements of operations for the three and nine months ended ~~March 31,~~September 30, 2019. Amortization and interest expense capitalized during the three and nine months ended September 30, 2019 amounted to $33 and $69, respectively. Amortization and interest expense expensed during the three and nine months ended ~~March 31,~~September 30, 2019 amounted to ~~$56.~~$114 and $284, respectively. The interest rate for the Credit Facility for the ~~three~~nine months ended ~~March 31,~~September 30, 2019 ~~was 4.2%~~ranged from 4.1% to 4.4%.

Amortization expense for our debt issuance costs through 2023 are as follows:

Amortization
Expense

April 1, 2019—December 31, 2019

$
343

January 1, 2020—December 31, 2020

457

January 1, 2021—December 31, 2021

457

January 1, 2022—December 31, 2022

457

January 1, 2023—December 31, 2023

120

$
1,834


	Amortization Expense
October 1, 2019―December 31, 2019	$	115
January 1, 2020―December 31, 2020		457
January 1, 2021―December 31, 2021		457
January 1, 2022―December 31, 2022		457
January 1, 2023―December 31, 2023		120
	$	1,606

10. Leases

We have operating and finance leases for corporate offices, datacenters, data communication equipment and database software. Our operating leases have remaining lease terms of less than one year to nine years and our finance leases have remaining lease terms of one month to two years. Some of our operating leases may include ~~one~~1 or more options to renew and can extend the lease term from 1one year to 10ten years. The exercise of operating lease renewal options is at our sole discretion. Certain leases also include options to purchase the leased property. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. Some of our operating lease agreements include options to terminate the leases upon written notice and may include early termination penalties. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. As of ~~March 31,~~September 30, 2019, assets recorded under finance leases were ~~$12,280~~$12,280 and accumulated depreciation and amortization associated with finance leases was ~~$3,809.~~$4,840.

The components of lease expense were as follows:

	Three Months Ended March 31, 2019

			Three Months		Nine Months
			Ended		Ended
			September 30, 2019		September 30, 2019
Operating lease expense	$	885	$	907	$	2,683
Finance lease expense:
Depreciation and amortization of assets included in property and equipment, net	524		$	514	$	1,555
Interest on lease liabilities	56			—		56
Total finance lease expense	$	580	$	514	$	1,611

Interest on lease liabilities capitalized during the three and nine months ended September 30, 2019 amounted to $38 and $85, respectively.

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Supplemental cash flow information related to leases was as follows:

Three Months
Ended March 31,
2019

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases

$
(977
)
Operating cash flows from finance leases

(56
)
Financing cash flows from finance leases

(1,176
)
Right-of-use assets obtained in exchange for lease obligations:

Operating leases

16,916


	Nine Months
	Ended September 30,
	2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	(2,723)
Operating cash flows from finance leases		(142)
Financing cash flows from finance leases		(3,288)
Right-of-use assets obtained in exchange for lease obligations:
Operating leases		17,321

Operating lease ROU assets obtained in exchange for lease obligations include the effects of the adoption of ASC 842 effective January 1, 2019.

Other information related to leases was as follows:


	~~March 31,~~September 30, 2019
Weighted average remaining lease term:
Operating leases	~~6.8 years~~6.4	years
Financing leases	~~1.7 years~~1.4	years
Weighted average discount rate:
Operating leases	~~5.3%~~5.3	%
Finance leases	~~3.2%~~3.2	%

Future minimum lease payments under non-cancellable leases as of ~~March 31,~~September 30, 2019 as presented in accordance with ASC 842 were as follows:


							Operating		Finance
	Operating Leases			Finance Leases			Leases		Leases
April 1, 2019 – December 31, 2019	$	2,739		$	3,142
January 1, 2020—December 31, 2020	3,609			2,784
January 1, 2021—December 31, 2021	3,508			574
January 1, 2022—December 31, 2022	3,541			—
January 1, 2023—December 31, 2023	3,626			—
January 1, 2024—December 31, 2024	3,639			—
October 1, 2019 – December 31, 2019							$	1,033	$	943
January 1, 2020―December 31, 2020								3,821		2,784
January 1, 2021―December 31, 2021								3,640		574
January 1, 2022―December 31, 2022								3,597		—
January 1, 2023―December 31, 2023								3,626		—
January 1, 2024―December 31, 2024								3,639		—
Thereafter	5,235			—				5,235		—
Total future minimum lease payments	25,897			6,500				24,591		4,301
Less: Imputed interest	(4,246		)	(182		)		(3,801)		(95)
Total	21,651			6,318				20,790		4,206
Current portion of operating and finance leases	2,736			3,843				2,911		3,057
Long-term portion of operating and finance leases	$	18,915		$	2,475		$	17,879	$	1,149

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Future minimum lease payments under non-cancellable leases as of December 31, 2018 as presented in accordance with ASC 840, Leases, were as follows:

	Operating Leases		Capital Leases

						Operating		Capital
						Leases		Leases
January 1, 2019 – December 31, 2019	$	3,573	$	4,373		$	3,573	$	4,373
January 1, 2020—December 31, 2020	3,456		2,783
January 1, 2021—December 31, 2021	3,385		574
January 1, 2022—December 31, 2022	3,414		—
January 1, 2023—December 31, 2023	3,495		—
January 1, 2020―December 31, 2020							3,456		2,783
January 1, 2021―December 31, 2021							3,385		574
January 1, 2022―December 31, 2022							3,414		—
January 1, 2023―December 31, 2023							3,495		—
Thereafter	8,835		—				8,835		—
Minimum lease payments	$	26,158	7,730			$	26,158		7,730
Less: Amounts representing interest ranging from 1.3% to 7.7%			(236		)				(236)
Minimum lease payments			7,494						7,494
Current portion of capital leases			4,201						4,201
Long-term portion of capital leases			$	3,293				$	3,293

11. Notes payable

We enter into financed maintenance arrangements for some of our leased data communication equipment. Future minimum lease payments under notes payable as of ~~March 31,~~September 30, 2019 were as follows:

Notes Payable

April 1, 2019 – December 31, 2019

$
1,775

January 1, 2020—December 31, 2020

1,541

January 1, 2021—December 31, 2021

95

Total future minimum payments

3,411

Less: Imputed interest

(59
)
Total

3,352

Current portion of note payable

2,204

Long-term portion of notes payable

$
1,148


	Notes Payable
October 1, 2019 – December 31, 2019	$	547
January 1, 2020―December 31, 2020		1,541
January 1, 2021―December 31, 2021		95
Total future minimum payments		2,183
Less: Imputed interest		(28)
Total		2,155
Current portion of note payable		1,937
Long-term portion of notes payable	$	218

12. Fair value measurement

The following table sets forth our financial assets and liabilities that are measured at fair value on a recurring basis:

At March 31, 2019

Level 1

Level 2

Level 3

Total

Assets:

Money market accounts

$
59,910

$
—

$
—

$
59,910

Marketable securities

4,463

36,920

—

41,383

Total assets

$
64,373

$
36,920

$
—

$
101,293

Liabilities:

Contingent consideration

$
—

$
—

$
961

$
961

Total liabilities

$
—

$
—

$
961

$
961

At December 31, 2018

Level 1

Level 2

Level 3

Total

Assets:

Money market accounts

$
137,723

$
—

$
—

$
137,723

Total assets

$
137,723

$
—

$
—

$
137,723

Liabilities:

Contingent consideration

$
—

$
—

$
961

$
961

Total liabilities

$
—

$
—

$
961

$
961


At September 30, 2019	Level 1		Level 2		Level 3		Total
Assets:
Money market accounts	$	45,791	$	—	$	—	$	45,791
Marketable securities		4,250		32,344		—		36,594
Total assets	$	50,041	$	32,344	$	—	$	82,385


At December 31, 2018	Level 1		Level 2		Level 3		Total
Assets:
Money market accounts	$	137,723	$	—	$	—	$	137,723
Total assets	$	137,723	$	—	$	—	$	137,723
Liabilities:
Contingent consideration	$	—	$	—	$	961	$	961
Total liabilities	$	—	$	—	$	961	$	961

Our marketable securities utilize Level 1 and Level 2 inputs and consist primarily of corporate debt securities, which primarily include commercial paper and debt instruments including notes issued by foreign or domestic industrial and financial corporations and governments which pay in U.S. dollars and carry a rating of A or better. We have evaluated the various types of securities in our investment portfolio to determine an appropriate fair value hierarchy level based upon trading activity and the

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observability of market inputs. Due to variations in trading volumes and the lack of quoted market prices in active markets, our fixed ~~maturities~~maturity securities are classified as Level 2 securities. Our marketable securities are valued at amortized cost, which approximates fair value. The fair value of our fixed maturity marketable securities is derived through the use of a third-party pricing source using recent reported trades for identical or similar securities, making adjustments through the reporting date based upon available market observable data.

The Company’s contingent consideration obligation was initially recorded at fair value ~~and the Company will revalue this obligation each reporting period until the related contingencies are resolved. The fair value measurement is estimated~~ using probability-weighted discounted cash flow approaches that are based on significant unobservable inputs related to achievement of estimated annual sales and are reviewed quarterly. Significant changes to estimated annual sales and discount rates would result in corresponding changes in the fair value of this obligation. ~~There were no significant changes to the fair value of our contingent~~ ~~consideration liabilities during the three months ended March 31, 2019.~~ The following table presents a reconciliation of the beginning and ending amounts related to the fair value of contingent consideration categorized as Level 3:

Balance, December 31, 2018

$
961

Payment of contingent consideration

—

Change in fair value

—

Balance, March 31, 2019

$
961


Balance , December 31, 2018	$	961
Payment of contingent consideration		—
Change in fair value		—
Balance, June 30, 2019		961
Payment of contingent consideration		—
Change in fair value		(961)
Balance , September 30, 2019	$	—

We do not expect to make any payments for the contingent consideration related to the Elauwit acquisition. The change in fair value of contingent consideration was recorded in general and administrative expenses in the condensed consolidated statements of operations.

13. Income taxes

Income tax expense of ~~$192~~$143 and ~~$128 reflects an~~$54 reflect effective tax ~~rate~~rates of ~~3.8%~~357.5% and ~~4.8%~~42.2% for the three months ended ~~March 31,~~September 30, 2019 and 2018, respectively. Income tax expense of $254 and $198 reflect effective tax rates of 5.2% and 2,200.0% for the nine months ended September 30, 2019 and 2018, respectively. Our effective tax rate differs from the statutory rate primarily due to our valuation allowance and minimum state taxes for the three and nine months ended ~~March 31,~~September 30, 2019 and 2018 as well as foreign tax expense for the three and nine months ended September 30, 2018.

We operate within federal, state and international taxing jurisdictions and are subject to audit in these jurisdictions. These audits can involve complex issues which may require an extended period to resolve. We are subject to taxation in the United States and in various states. Our tax years ~~2015~~2016 and forward are subject to examination by the IRS and our tax years 2014 and forward are subject to examination by material state jurisdictions. However, due to prior year loss carryovers, the IRS and state tax authorities may examine any tax years for which the carryovers are used to offset future taxable ~~income~~. We are currently subject to examination by the IRS for our 2015 tax year. Although the ultimate outcome is unknown, we believe that any adjustments that may result from examination is not likely to have a material adverse effect on our condensed consolidated results of operations, financial position or cash flows.income.

14. Commitments and contingencies

Letters of credit

We have entered into Letter of Credit Authorization agreements (collectively, “Letters of Credit”), which are issued under our Credit Agreement. The Letters of Credit are irrevocable and serve as performance guarantees that will allow our customers to draw upon the available funds if we are in default. As of ~~March 31,~~September 30, 2019, we have Letters of Credit totaling ~~$12,498~~$12,976 that are scheduled to expire or renew over the next ~~two years.~~fourteen months. There have been no0 drafts drawn under these Letters of Credit as of ~~March 31,~~September 30, 2019.

Legal proceedings

From time to time, we may be subject to claims, suits, investigations and proceedings arising out of the normal course of business. We are not currently a party to any litigation that we believe could have a material adverse effect on our business, financial position, results of operations or cash flows. Legal costs are expensed as incurred.

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Other matters

We have received a claim from one of our venue partners with respect to contractual terms on our revenue share payments. The claim asserts that we have underpaid revenue share payments and related interest by approximately $4,600. We are currently in settlement discussions with our venue partner. As of ~~March 31,~~September 30, 2019, we have accrued for the probable and estimable losses that have been incurred, which have been recorded as general and administrative expenses in the condensed consolidated statements of operations. We are not currently a party to any other claims that we believe could have a material adverse effect on our business, financial position, results of operations or cash flows.

15. Stock repurchases

On April 1, 2013, the Company approved a stock repurchase program to repurchase up to $10,000 of the Company’s common stock in the open market, exclusive of any commissions, markups or expenses. In July 2019, the stock repurchase plan was terminated and was replaced with a new stock repurchase program to repurchase up to $20,000 of the Company’s common stock in the open market. The stock repurchased will be retired and will resume the status of authorized but unissued shares of common stock. During the three months ended September 30, 2019, we repurchased approximately 56,000 shares under the new stock repurchase program for $745, excluding commissions paid, at a weighted average price per share of $13.24, which was not in excess of current market values at the time of repurchase. As of September 30, 2019, the remaining approved amount for repurchase was approximately $19,255.

16. Stock incentive plans

In March 2011, our board of directors approved the 2011 Equity Incentive Plan (“2011 Plan”). The 2011 Plan provides for the grant of incentive and non-statutory stock options, stock appreciation rights, restricted shares of our common stock, stock units, and performance cash awards. As of ~~March 31,~~September 30, 2019, options to purchase approximately ~~290,000~~269,000 shares of common stock and RSUs covering approximately ~~970,000~~800,000 shares of common stock were outstanding under the 2011 ~~Plan~~.Plan.

No further awards will be made under our Amended and Restated 2001 Stock Incentive Plan (“2001 Plan”), and it will be terminated. Options outstanding under the 2001 Plan will continue to be governed by their existing terms.

Stock-based compensation expense is allocated as follows on the accompanying condensed consolidated statements of operations:

	Three Months Ended March 31,
	2019		2018

					Three Months Ended				Nine Months Ended
					September 30,				September 30,
					2019		2018		2019		2018
Network operations	$	506	$	537	$	387	$	549	$	1,241	$	1,602
Development and technology	303		278			325		323		962		915
Selling and marketing	529		473			578		511		1,655		1,377
General and administrative	1,006		1,838			764		1,772		2,576		5,333
Total stock-based compensation expense	$	2,344	$	3,126
Total stock-based compensation					$	2,054	$	3,155	$	6,434	$	9,227

During the three and nine months ended ~~March 31,~~September 30, 2019, we capitalized $224 and $689, respectively, of stock-based compensation expense. During the three and nine months ended September 30, 2018, we capitalized ~~$230~~$208 and ~~$186,~~$600, respectively, of stock-based compensation expense.

Stock option awards

We grant stock option awards to both employees and non-employee directors. The grant date for these awards is the same as the measurement date. The stock option awards generally vest over a four-year service period with 25% vesting when the individual completes 12 months of continuous service and the remaining 75% vesting monthly thereafter. These awards are valued as of the measurement date and the stock-based compensation expense, net of forfeitures, is recognized on a straight-line basis over the requisite service period.

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A summary of the stock option activity is as follows:

	Number of Options (000’s)		Weighted Average Exercise Price		Weighted- Average Remaining Contract Life (years)	Aggregate Intrinsic Value

											Weighted-
											Average
									Weighted		Remaining
								Number of	Average		Contract	Aggregate
								Options	Exercise		Life	Intrinsic
								(000’s)	Price		(years)	Value
Outstanding at December 31, 2018	304		$	7.49	3.8	$	3,970	304	$	7.49	3.8	$	3,970
Exercised	(4	)	$	2.01				(27)	$	5.72
Canceled/forfeited	—		$	—				—	$	—
Outstanding and exercisable at March 31, 2019	300		$	7.55	3.6	$	4,766
Outstanding and exercisable at September 30, 2019								277	$	7.66	3.1	$	1,044

Restricted stock unit awards

We grant service-based RSUs to executive and non-executive personnel and non-employee directors. The service-based RSUs granted to executive and non-executive personnel generally vest over a three-year period subject to continuous service on each vesting date. The service-based RSUs for our non-employee directors generally vest over a one-year period for existing members and 33.3% per year over a three-year period for new members subject to continuous service on each vesting date.

We grant performance-based RSUs to executive personnel. These awards vest subject to certain performance objectives based on the Company’s revenue growth, Adjusted EBITDA growth, and/or relative total stockholder return achieved during the specified performance period and certain long-term service conditions. The maximum number of RSUs that may vest is determined based on actual Company achievement and performance-based RSUs generally vest over a three-year period subject to continuous service on each vesting ~~date.~~date and achievement of the performance conditions. We recognize stock-based compensation expense for performance-based RSUs when we believe that it is probable that the performance objectives will be met.

A summary of the RSU activity is as follows:

Number of Shares
(000’s)

Weighted Average
Grant-Date Fair
Value

Non-vested at December 31, 2018

3,119

$
8.60

Granted(1)

517

$
23.36

Vested

(2,656
)
$
6.58

Canceled/forfeited

(10
)
$
25.51

Non-vested at March 31, 2019

970

$
21.80


		Weighted Average
	Number of Shares	Grant-Date Fair
	(000’s)	Value
Non-vested at December 31, 2018	3,119	$	8.60
Granted(1)	637	$	22.15
Vested	(2,896)	$	7.56
Canceled/forfeited	(60)	$	23.71
Non-vested at September 30, 2019	800	$	21.97

~~(1)~~

(1)

The RSUs granted to all of our named executive officers in 2017 were subject to satisfaction of specified service-based and performance-based conditions. The performance objectives were subject to under- or over- achievement on a sliding scale, with a threshold of 50% of the target number of RSUs and a maximum of 150% of the target RSUs. In February 2019, our Compensation Committee determined actual achievement of the 2017 performance-based RSUs resulting in additional RSUs granted of approximately 29,000 at a grant-date fair value of $11.94 per share during the nine months ended September 30, 2019.

During the target number of RSUs and a maximum of 150% of the target RSUs. In February 2019, our Compensation Committee determined actual achievement of the 2017 performance-based RSUs resulting in additional RSUs granted of approximately 29,000 at a grant-date fair value of $11.94 per share during the threenine months ended ~~March 31, 2019.~~

~~During the three months ended March 31,~~September 30, 2019, approximately ~~2,656,000~~2,896,000 shares of RSUs vested. The Company issued approximately ~~1,306,000~~1,481,000 shares and the remaining shares were withheld to pay minimum statutory federal, state, and local employment payroll taxes on those vested awards.

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~~16.~~17. Net loss per share attributable to common stockholders

The following table sets forth the computation of basic and diluted net loss per share attributable to common stockholders:

Three Months Ended
March 31,

2019

2018

(in thousands)

Numerator:

Net loss attributable to common stockholders, basic and diluted

$
(5,153
)
$
(3,229
)
Denominator:

Weighted average common stock, basic and diluted

43,527

41,330

Net loss per share attributable to common stockholders:

Basic and diluted

$
(0.12
)
$
(0.08
)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2019		2018		2019		2018
	(in thousands)
Numerator:
Net loss attributable to common stockholders, basic and diluted	$	(187)	$	(522)	$	(5,124)	$	(1,636)
Denominator:
Weighted average common stock, basic and diluted		44,136		42,377		43,904		41,890
Net loss per share attributable to common stockholders:
Basic	$	0.00	$	(0.01)	$	(0.12)	$	(0.04)
Diluted	$	0.00	$	(0.01)	$	(0.12)	$	(0.04)

For the three and nine months ended ~~March 31,~~September 30, 2019 and September 30, 2018, we excluded all assumed exercises of stock options and the assumed issuance of common stock under RSUs from the computation of diluted net loss per share as the effect would be anti-dilutive due to the net loss for the period. For the three and nine months ended ~~March 31,~~September 30, 2019, we also excluded the shares that would be issuable assuming conversion of the Convertible Notes and the shares for the capped call as their effect would be anti-dilutive. Diluted EPS for our Convertible Notes is calculated under the treasury method in accordance with ASC 260, Earnings Per Share.

On April 1, 2013, the Company approved a stock repurchase program to repurchase up to $10,000 of the Company’s common stock in the open market, exclusive of any commissions, markups or expenses. The stock repurchased will be retired and will resume the status of authorized but unissued shares of common stock. The Company did not repurchase any of our common stock during the three months ended March 31, 2019. As of March 31, 2019, the remaining approved amount for repurchases was approximately $5,180.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and notes thereto included in “Item 1. Financial Statements” of this Quarterly Report on Form 10-Q and the audited consolidated financial statements and notes thereto and the section titled “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2018, filed with the Securities Exchange Commission on March 1, 2019.

Forward-Looking Statements

This Quarterly Report on Form 10-Q and the documents incorporated herein by reference contain forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, as amended, based on our current expectations, estimates and projections about our operations, industry, financial condition, performance, results of operations, and liquidity. Statements containing words such as “may,” “believe,” “anticipate,” “expect,” “intend,” “plan,” “project,” “projections,” “business outlook,” “estimate,” or similar expressions constitute forward-looking statements. These forward-looking statements include, but are not limited to, statements about future financial performance; revenues; metrics; operating expenses; market trends, including those in the markets in which we compete; operating and marketing efficiencies; liquidity; cash flows and uses of cash; dividends; capital expenditures; depreciation and amortization; tax payments; foreign currency exchange rates; hedging arrangements; our ability to repay indebtedness, pay dividends and invest in initiatives; our products and services; pricing; competition; strategies; and new business initiatives, products, services, and features. Potential factors that could affect the matters about which the forward-looking statements are made include, among others, the factors disclosed in the section entitled “Risk Factors” in this Quarterly Report on Form 10-Q and additional factors that accompany the related forward-looking statements in this Quarterly Report on Form 10-Q and our other filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2018. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s analysis only as the date hereof. Any such forward-looking statements are not guarantees of future performance or results and involve risks and uncertainties that may cause actual performance and results to differ materially from those predicted. Reported results should not be considered an indication of future performance. Except as required by law, we undertake no obligation to publicly release the results of any revision to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Overview

Boingo helps the world stay connected to the people and things they love.

We acquire long-term wireless rights at large venues like airports, transportation hubs, stadiums/arenas, military bases, multifamily properties, universities, convention centers, and office campuses; we build high-quality wireless networks such as distributed antenna systems (“DAS”), Wi-Fi, and small cells at those venues; and we monetize the wireless networks through a number of products and services.

Over the past 17 years, we’ve built a global footprint of wireless networks that we estimate reaches more than a billion consumers annually. We operate 5971 DAS networks containing approximately ~~31,100~~37,200 DAS nodes, and believe we are the largest operator of indoor DAS networks in the world. Our Wi-Fi network, which includes locations we manage and operate ourselves (our “managed and operated locations”) as well as networks managed and operated by third-parties with whom we contract for access (our “roaming” networks), includes over ~~1.2~~1.3 million commercial Wi-Fi hotspots in more than 100 countries around the world.

We generate revenue from our wireless networks in a number of ways, including our ~~multifamily,~~ DAS, small cells, multifamily and wholesale Wi-Fi offerings, which are targeted towards businesses, and our military, retail, and advertising offerings, which are targeted towards consumers.

Military/multifamily revenue, which is driven by military personnel who purchase Wi-Fi services on military bases, and multifamily revenue, which is driven by property owners who purchase network installation services and recurring monthly Wi-Fi services and support, accounted for approximately 39% of our total revenue for the three months ended March 31, 2019. As of March 31, 2019, we have grown our military subscriber base to approximately 147,000, an increase of approximately 3.5% over the prior year comparative period. Retail revenue, which is driven by consumers who purchase a recurring monthly subscription plan or one-time Wi-Fi access, accounted for approximately 6% of our total revenue for the three months ended March 31, 2019. As of March 31, 2019, our retail subscriber base was approximately 113,000, a decrease of approximately 32.7% over the prior year comparative period.

We generate wholesale revenue from telecom operators that pay us build-out fees and recurring access fees so that their cellular customers may use our DAS or small cell networks at locations where we manage and operate the wireless network. For the three months ended ~~March 31,~~September 30, 2019, DAS revenue accounted for approximately ~~36%~~37% of our revenue.

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Military revenue, which is driven by military personnel who purchase Wi-Fi services on military bases, and multifamily revenue, which is driven by property owners who purchase network installation services and recurring monthly Wi-Fi services and support, accounted for approximately 37% of our total revenue for the three months ended September 30, 2019. As of September 30, 2019, our military subscriber base was approximately 137,000, a 3.5% decrease over the prior year comparative period. Retail revenue, which is driven by consumers who purchase a recurring monthly subscription plan or one-time Wi-Fi access, accounted for approximately 6% of our total revenue for the three months ended September 30, 2019. As of September 30, 2019, our retail subscriber base was approximately 85,000, a 39.7% decrease over the prior year comparative period.

Our wholesale customers such as telecom operators, cable companies, technology companies, and enterprise software/services companies, pay us usage-based Wi-Fi network access and software licensing fees to allow their customers’ access to our footprint worldwide. Wholesale Wi-Fi revenue also includes financial institutions and other enterprise customers who provide Boingo as a value-added service for their customers. For the three months ended ~~March 31,~~September 30, 2019, wholesale Wi-Fi revenue accounted for approximately 17% of our revenue.

We also generate revenue from advertisers that seek to reach consumers via sponsored Wi-Fi access. For the three months ended ~~March 31,~~September 30, 2019, advertising and other revenue accounted for approximately 2%3% of our revenue.

Our customer agreements for certain DAS networks include both a fixed and variable fee structure with the highest percentage of sales typically occurring in the fourth quarter of each year and the lowest percentage of sales occurring in the first quarter of each year. Our multifamily network installation services have historically been performed for the student housing market with the highest percentage of revenues typically occurring in the third quarter of each year. We expect these trends to continue. We do not expect significant seasonal impact for any of our other products.

In support of our overall business strategy, we are focused on the following objectives:

●expand our footprint of managed and operated and aggregated networks;

●leverage our neutral-host business model to grow DAS, small cell, and wholesale roaming partnerships;

●expand our carrier offload relationships; and

●increase our brand awareness.

Key Business Metrics

In addition to monitoring traditional financial measures, we also monitor our operating performance using key performance indicators. Our key performance indicators follow:

DAS nodes. This metric represents the number of active DAS nodes as of the end of the period. A DAS node is a single communications endpoint, typically an antenna, which transmits or receives radio frequency signals wirelessly. This measure is an indicator of the reach of our DAS network.

Subscribers—military and Subscribers—retail. These metrics represent the number of paying customers who are on a month-to-month subscription plan at a given period end.

Connects. This metric shows how often individuals connect to our global Wi-Fi network in a given period. The connects include wholesale and retail customers in both customer pay locations and customer free locations where we are a paid service provider or receive sponsorship or promotion fees. We count each connect as a single connect regardless of how many times that individual accesses the network at a given venue during their 24-hour period. This measure is an indicator of paid activity throughout our network.

Revenue

Our revenue consists of DAS revenue, military/multifamily revenue and retail ~~revenue, DAS~~ revenue, wholesale Wi-Fi revenue, and advertising and other revenue.

DAS. We generate revenue from telecom operator partners that pay us network build-out fees, inclusive of network upgrades, and access fees for our DAS and small cell networks.

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Military/multifamily and retail. We generate revenue from sales to military and retail individuals of month-to-month network access subscriptions that automatically renew and hourly, daily or other single-use access, primarily through charge card transactions. We ~~also~~ generate multifamily revenue from property owners who pay us a recurring monthly fee for Wi-Fi services including building and maintaining the network that supports these services and providing support for residents and employees of the properties.

~~DAS.~~ ~~We generate revenue from telecom operator partners that pay us network build-out fees, inclusive of network upgrades, and access fees for our DAS and small cell networks.~~

Wholesale—Wi-Fi. We generate revenue from wholesale Wi-Fi partners that license our software and pay usage-based monthly network access fees to allow their customers to access our global Wi-Fi network. Usage-based network access fees may be measured in minutes, connects, megabytes or gigabytes, and in most cases are subject to minimum volume commitments. Other wholesale Wi-Fi partners pay us monthly fees to provide a Wi-Fi infrastructure that we install, manage and operate at their venues for their customers under a service provider arrangement.

Advertising and other. We generate revenue from advertisers that seek to reach visitors to our landing pages at our managed and operated network locations with online advertising, promotional and sponsored programs and at locations where we solely provide authorized access to a partner’s Wi-Fi network through sponsored access and promotional programs. In addition, we receive revenue from partners in certain venues where we manage and operate the Wi-Fi network.

Results of Operations

The following tables set forth our results of operations for the specified periods:

	Three Months Ended March 31,
	2019			2018
	(unaudited) (in thousands)
Consolidated Statement of Operations Data:

							Three Months Ended				Nine Months Ended
							September 30,				September 30,
							2019		2018		2019		2018
							(unaudited)
							(in thousands)
Consolidated Statements of Operations Data:
Revenue	$	66,473		$	58,159		$	64,707	$	65,253	$	199,734	$	183,013
Costs and operating expenses:
Network access	31,411			26,565				29,155		29,273		90,368		79,926
Network operations	14,142			12,846				13,682		13,260		42,073		38,829
Development and technology	8,999			7,425				8,182		7,995		25,534		22,883
Selling and marketing	5,867			5,463				5,721		5,674		17,782		16,490
General and administrative	8,294			7,699				5,021		7,789		20,330		22,218
Amortization of intangible assets	1,131			727				1,103		1,112		3,365		2,507
Total costs and operating expenses	69,844			60,725				62,864		65,103		199,452		182,853
Loss from operations	(3,371		)	(2,566		)
Interest and other expense, net	(1,676		)	(79		)
Loss before income taxes	(5,047		)	(2,645		)
Income from operations								1,843		150		282		160
Interest expense and amortization of debt discount								(2,191)		(8)		(6,741)		(58)
Interest income and other expense, net								388		(14)		1,600		(93)
Income (loss) before income taxes								40		128		(4,859)		9
Income tax expense	192			128				(143)		(54)		(254)		(198)
Net loss	(5,239		)	(2,773		)
Net (loss) income attributable to non-controlling interests	(86		)	456
Net (loss) income								(103)		74		(5,113)		(189)
Net income attributable to non-controlling interests								84		596		11		1,447
Net loss attributable to common stockholders	$	(5,153	)	$	(3,229	)	$	(187)	$	(522)	$	(5,124)	$	(1,636)

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Depreciation and amortization expense included in costs and operating expenses:

	Three Months Ended March 31,
	2019		2018
	(unaudited) (in thousands)

					Three Months Ended				Nine Months Ended
					September 30,				September 30,
					2019		2018		2019		2018
					(unaudited)
					(in thousands)
Network access	$	11,582	$	13,587	$	9,463	$	11,531	$	30,527	$	35,252
Network operations	4,386		4,256			4,361		4,447		13,069		13,017
Development and technology	2,779		2,508			2,782		2,664		8,369		7,740
General and administrative	262		255			261		259		785		760
Total(1)	$	19,009	$	20,606	$	16,867	$	18,901	$	52,750	$	56,769

(1)

The $2.0 million and $4.0 million decrease in depreciation and amortization of property and equipment for the three and nine months ended September 30, 2019, as compared to the three and nine months ended September 30, 2018, respectively, is primarily due to a decrease in depreciation expense related to certain DAS build-out projects that were depreciated over a longer estimated useful life resulting from the successful extension of certain venue agreements, which was partially offset by depreciation expense for new DAS build-out projects that were completed and launched in 2018 and 2019.

~~(1)~~ The $1.6 million decrease in depreciation and amortization of property and equipment for the three months ended March 31, 2019, as compared to the three months ended March 31, 2018, is primarily due to the $2.0 million decrease in depreciation expense related to certain DAS build-out projects that were depreciated over a longer estimated useful life resulting from the successful extension of certain venue agreements, which was partially offset by depreciation expense for new DAS build-out projects that were completed and launched in 2018 and 2019.

Stock-based compensation expense included in costs and operating expenses:

Three Months Ended
March 31,

2019

2018

(unaudited)
(in thousands)

Network operations

$
506

$
537

Development and technology

303

278

Selling and marketing

529

473

General and administrative

1,006

1,838

Total(2)

$
2,344

$
3,126


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2019		2018		2019		2018
	(unaudited)
	(in thousands)
Network operations	$	387	$	549	$	1,241	$	1,602
Development and technology		325		323		962		915
Selling and marketing		578		511		1,655		1,377
General and administrative		764		1,772		2,576		5,333
Total(2)	$	2,054	$	3,155	$	6,434	$	9,227

~~(2)~~ The $0.8 million decrease in stock compensation expense for the three months ended March 31, 2019, as compared to the three months ended March 31, 2018, is primarily due to the decrease in stock-based compensation expense related to the multi-year 2016 RSUs for our previous Chief Executive Officer and Chief Financial Officer, which became fully vested in February 2019. No similar multi-year RSUs were

(2)

Stock-based compensation expense decreased by $1.1 million and $2.8 million for the three and nine months ended September 30, 2019, as compared to the three and nine months ended September 30, 2018, respectively. The decreases are primarily due to the decrease in stock-based compensation expense related to the multi-year 2016 RSUs granted to our previous Chief Executive Officer and our Chief Financial Officer, which became fully vested in February 2019. No similar multi-year RSUs have been granted to any of our executives after 2016. We capitalized $0.2 million and $0.7 million of stock-based compensation expense for each of the three and nine months ended September 30, 2019, respectively. We capitalized $0.2 million and $0.6 million of stock-based compensation expense for each of the three and nine months ended September 30, 2018, respectively.

Table of ~~our executives after 2016. During each of the three months ended March 31, 2019 and 2018, we capitalized $0.2 million of stock-based compensation expense.~~Contents

The following table sets forth our results of operations for the specified periods as a percentage of our revenue for those periods:

	Three Months Ended March 31,
	2019		2018
	(unaudited) (as a percentage of revenue)
Consolidated Statement of Operations Data:

					Three Months Ended				Nine Months Ended
					September 30,				September 30,
					2019		2018		2019		2018
					(unaudited)
					(as a percentage of revenue)
Consolidated Statements of Operations Data:
Revenue	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%
Costs and operating expenses:
Network access	47.3		45.7		45.1		44.9		45.2		43.7
Network operations	21.3		22.1		21.1		20.3		21.1		21.2
Development and technology	13.5		12.8		12.6		12.3		12.8		12.5
Selling and marketing	8.8		9.4		8.8		8.7		8.9		9.0
General and administrative	12.5		13.2		7.8		11.9		10.2		12.1
Amortization of intangible assets	1.7		1.3		1.7		1.7		1.7		1.4
Total costs and operating expenses	105.1		104.4		97.2		99.8		99.9		99.9
Loss from operations	(5.1	)	(4.4	)
Interest and other expense, net	(2.5	)	(0.1	)
Loss before income taxes	(7.6	)	(4.5	)
Income from operations					2.8		0.2		0.1		0.1
Interest expense and amortization of debt discount					(3.4)		0.0		(3.4)		0.0
Interest income and other expense, net					0.6		0.0		0.8		(0.1)
Income (loss) before income taxes					0.1		0.2		(2.4)		0.0
Income tax expense	0.3		0.2		(0.2)		(0.1)		(0.1)		(0.1)
Net loss	(7.9	)	(4.8	)
Net (loss) income attributable to non-controlling interests	(0.1	)	0.8
Net (loss) income					(0.2)		0.1		(2.6)		(0.1)
Net income attributable to non-controlling interests					0.1		0.9		0.0		0.8
Net loss attributable to common stockholders	(7.8	)%	(5.6	)%	(0.3)	%	(0.8)	%	(2.6)	%	(0.9)	%

Three Months ended ~~March 31,~~September 30, 2019 and 2018

Revenue

Three Months Ended March 31,

2019

2018

Change

% Change

(unaudited)

(in thousands, except percentages)

Revenue:

Military/multifamily

$
25,897

$
15,854

$
10,043

63.3

DAS

24,095

23,645

450

1.9

Wholesale—Wi-Fi

11,020

11,149

(129
)
(1.2
)
Retail

3,926

5,310

(1,384
)
(26.1
)
Advertising and other

1,535

2,201

(666
)
(30.3
)
Total revenue

$
66,473

$
58,159

$
8,314

14.3

Key business metrics:

DAS nodes

31.1

24.2

6.9

28.5

Subscribers—military

147

142

5

3.5

Subscribers—retail

113

168

(55
)
(32.7
)
Connects

78,625

65,901

12,724

19.3


	Three Months Ended September 30,
	2019		2018		Change		% Change
	(unaudited)
	(in thousands, except percentages)
Revenue:
DAS	$	23,714	$	24,410	$	(696)	(2.9)
Military/multifamily		23,641		21,745		1,896	8.7
Wholesale—Wi-Fi		11,200		11,749		(549)	(4.7)
Retail		3,646		4,088		(442)	(10.8)
Advertising and other		2,506		3,261		(755)	(23.2)
Total revenue	$	64,707	$	65,253	$	(546)	(0.8)

Key business metrics:
DAS nodes		37.2		27.4		9.8	35.8
Subscribers—military		137		142		(5)	(3.5)
Subscribers—retail		85		141		(56)	(39.7)
Connects		89,291		75,424		13,867	18.4

~~Military/multifamily.~~DAS. ~~Military/multifamily~~ DAS revenue ~~increased $10.0~~decreased $0.7 million, or ~~63.3%~~2.9%, for the three months ended ~~March 31,~~September 30, 2019, as compared to the three months ended ~~March 31,~~September 30, 2018, due to a ~~$7.4~~$4.9 million decrease from build-out projects in our managed and operated locations, which was partially offset by $4.2 million increase in access fees from our telecom operators. DAS access fees for the three months ended September 30, 2019 include $1.8 million of one-time access fees.

Military/multifamily. Military/multifamily revenue increased $1.9 million, or 8.7%, for the three months ended September 30, 2019, as compared to the three months ended September 30, 2018, primarily due to a $1.3 million increase in military subscriber

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revenue, which was driven primarily by an 10.9% increase in the average monthly revenue per military subscriber in 2019 compared to 2018, and a $0.7 million increase in multifamily revenues resulting from our Elauwit Networks, LLC acquisition in August ~~2018, and a $2.6 million increase in military subscriber~~2018.

Wholesale—Wi-Fi. Wholesale Wi-Fi revenue ~~which was driven primarily by the increase in military subscribers and a 11.9% increase in the average monthly revenue per military subscriber in 2019 compared to 2018.~~

~~DAS.~~ ~~DAS revenue increased~~decreased $0.5 million, or ~~1.9%,~~4.7% for the three months ended ~~March 31,~~September 30, 2019, as compared to the three months ended ~~March 31,~~September 30, 2018, due to a $1.4 million increase in access fees from our telecom operators. The increase was partially offset by a $0.9 million decrease from build-out projects in our managed and operated locations, which was primarily due to the successful renewal of certain of our customer contracts resulting in the reamortization of the remaining deferred build revenues over a longer contract term.

~~Wholesale~~—~~Wi-Fi.~~ ~~Wholesale Wi-Fi revenue decreased $0.1 million, or 1.2% for the three months ended March 31, 2019, as compared to the three months ended March 31, 2018, due to a $0.5~~$1.6 million decrease in partner usage based fees, which was partially offset by a ~~$0.4~~$1.1 million increase in fees primarily earned from our venue partners who pay us to provide a Wi-Fi infrastructure that we install, manage and operate at their venues.

Retail. Retail revenue decreased ~~$1.4~~$0.4 million, or ~~26.1%~~10.8%, for the three months ended ~~March 31,~~September 30, 2019, as compared to the three months ended ~~March 31,~~September 30, 2018, primarily due to a $0.5 million decrease in retail subscriber revenue, which was driven primarily by the decrease in retail subscribers.

Advertising and other. Advertising and other revenue decreased $0.8 million, or 23.2% for the three months ended September 30, 2019, as compared to the three months ended September 30, 2018, primarily due to a decrease in advertising sales at our managed and operated locations resulting from a decline in the number of premium ad units sold.

Costs and Operating Expenses


	Three Months Ended September 30,
	2019		2018		Change		% Change
	(unaudited)
	(in thousands, except percentages)
Costs and operating expenses:
Network access	$	29,155	$	29,273	$	(118)	(0.4)
Network operations		13,682		13,260		422	3.2
Development and technology		8,182		7,995		187	2.3
Selling and marketing		5,721		5,674		47	0.8
General and administrative		5,021		7,789		(2,768)	(35.5)
Amortization of intangible assets		1,103		1,112		(9)	(0.8)
Total costs and operating expenses	$	62,864	$	65,103	$	(2,239)	(3.4)

Network access. Network access costs remained relatively consistent for the three months ended September 30, 2019, as compared to the three months ended September 30, 2018. We experienced a $2.1 million decrease in depreciation expense, a $1.4 million increase in revenue share paid to venues in our managed and operated locations, a $0.4 million increase in direct cost of sales, and a $0.3 million increase in expenses related to our multifamily operations, which we acquired in August 2018 in the Elauwit acquisition.

Network operations. Network operations expenses increased $0.4 million, or 3.2%, for the three months ended September 30, 2019, as compared to the three months ended September 30, 2018, due to a ~~$1.1~~$0.2 million increase in personnel related expenses and a $0.2 million increase in other expenses. Network operations expenses related to our multifamily operations, which we acquired in August 2018, increased by $0.5 million.

Development and technology. Development and technology expenses increased $0.2 million, or 2.3%, for the three months ended September 30, 2019, as compared to the three months ended September 30, 2018, primarily due to a $0.3 million increase in hardware and software maintenance expenses, which was partially offset by a $0.2 million decrease in consulting expenses.

Selling and marketing. Selling and marketing expenses remained relatively consistent for the three months ended September 30, 2019, as compared to the three months ended September 30, 2018. Selling and marketing expenses related to our multifamily operations, which we acquired in August 2018, increased by $0.3 million.

General and administrative. General and administrative expenses decreased $2.8 million, or 35.5%, for the three months ended September 30, 2019, as compared to the three months ended September 30, 2018, primarily due to a $1.0 million decrease in the fair value of contingent consideration, a $1.0 million decrease in personnel related expenses, a $0.3 million decrease in professional fees, and a $0.2 million decrease in bad debt expenses. General and administrative expenses related to our multifamily operations, which we acquired in August 2018, increased by $0.4 million.

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Amortization of intangible assets. Amortization of intangible assets expense remained relatively consistent for the three months ended September 30, 2019, as compared to the three months ended September 30, 2018.

Interest Expense and Amortization of Debt Discount

Interest expense and amortization of debt discount increased $2.2 million for the three months ended September 30, 2019, as compared to the three months ended September 30, 2018, primarily due to interest expense incurred in connection with the Convertible Notes we issued in October 2018. During the three months ended September 30, 2019 and 2018, we capitalized $0.8 million and $0.3 million, respectively, of interest expense.

Interest Income and Other Expense, Net

Interest income and other expense, net increased $0.4 million for the three months ended September 30, 2019, as compared to the three months ended September 30, 2018, primarily due to increased interest income related to our cash equivalents and marketable securities balances in 2019.

Income Tax Expense

There were no significant changes in income tax expense for the three months ended September 30, 2019, as compared to the three months ended September 30, 2018. Our effective tax rate was 357.5% and 42.2% for the three months ended September 30, 2019 and 2018, respectively. Our effective tax rate differs from the statutory rate primarily due to our valuation allowance and minimum state taxes for the three months ended September 30, 2019 and 2018 as well as foreign tax expense for the three months ended September 30, 2018.

Non-controlling Interests

Non-controlling interests decreased $0.5 million, or 85.9% for the three months ended September 30, 2019, as compared to the three months ended September 30, 2018 resulting from decreased net income for a subsidiary from DAS build-out projects that were completed in 2018.

Net Loss Attributable to Common Stockholders

Our net loss attributable to common stockholders for the three months ended September 30, 2019 decreased $0.3 million as compared to the three months ended September 30, 2018 primarily due to the $2.2 million decrease in costs and operating expenses, the $0.5 million decrease in non-controlling interests, and the $0.4 million increase in interest income and other expense, net, which were partially offset by the $2.2 million increase in interest expense and amortization of debt discount, and the $0.5 million decrease in revenues. Our diluted net loss per share remained consistent.

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Nine Months ended September 30, 2019 and 2018

Revenue


	Nine Months Ended September 30,
	2019		2018		Change		% Change
	(unaudited)
	(in thousands, except percentages)
Revenue:
DAS	$	75,431	$	69,940	$	5,491	7.9
Military/multifamily		73,934		54,334		19,600	36.1
Wholesale—Wi-Fi		32,938		36,428		(3,490)	(9.6)
Retail		11,419		13,964		(2,545)	(18.2)
Advertising and other		6,012		8,347		(2,335)	(28.0)
Total revenue	$	199,734	$	183,013	$	16,721	9.1

Key business metrics:
DAS nodes		37.2		27.4		9.8	35.8
Subscribers—military		137		142		(5)	(3.5)
Subscribers—retail		85		141		(56)	(39.7)
Connects		253,757		210,626		43,131	20.5

DAS. DAS revenue increased $5.5 million, or 7.9%, for the nine months ended September 30, 2019, as compared to the nine months ended September 30, 2018, due to a $10.3 million increase in access fees from our telecom operators, which was partially offset by a $4.8 million decrease from build-out projects in our managed and operated locations. DAS access fees for the nine months ended September 30, 2019 include $4.8 million of one-time access fees.

Military/multifamily. Military/multifamily revenue increased $19.6 million, or 36.1%, for the nine months ended September 30, 2019, as compared to the nine months ended September 30, 2018, primarily due to a $14.0 million increase in multifamily revenues resulting from our multifamily operations, which we acquired in August 2018, and a $5.8 million increase in military subscriber revenue, which was driven primarily by an 11.5% increase in the average monthly revenue per military subscriber in 2019 compared to 2018.

Wholesale— Wi-Fi. Wholesale Wi-Fi revenue decreased $3.5 million, or 9.6% for the nine months ended September 30, 2019, as compared to the nine months ended September 30, 2018, due to a $5.7 million decrease in partner usage based fees, which was partially offset by a $2.2 million increase in fees primarily earned from our venue partners who pay us to provide a Wi-Fi infrastructure that we install, manage and operate at their venues.

Retail. Retail revenue decreased $2.5 million, or 18.2%, for the nine months ended September 30, 2019, as compared to the nine months ended September 30, 2018, due to a $2.2 million decrease in retail subscriber revenue, which was driven primarily by the decrease in retail subscribers, and a $0.3 million decrease in retail single-use revenue.

Advertising and other.Advertising and other revenue decreased ~~$0.7~~$2.3 million, , or ~~30.3%~~28.0% for the ~~three~~nine months ended ~~March 31,~~September 30, 2019, as compared to the ~~three~~nine months ended ~~March 31,~~September 30, 2018, primarily due to a ~~$0.7~~$2.6 million decrease in advertising sales at our managed and operated locations resulting from ~~an decrease~~a decline in the number of premium ad units sold.

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Costs and Operating Expenses

	Three Months Ended March 31,
	2019		2018		Change		% Change
	(unaudited)
	(in thousands, except percentages)

								Nine Months Ended September 30,
								2019		2018		Change		% Change
								(unaudited)
								(in thousands, except percentages)
Costs and operating expenses:
Network access	$	31,411	$	26,565	$	4,846	18.2	$	90,368	$	79,926	$	10,442	13.1
Network operations	14,142		12,846		1,296		10.1		42,073		38,829		3,244	8.4
Development and technology	8,999		7,425		1,574		21.2		25,534		22,883		2,651	11.6
Selling and marketing	5,867		5,463		404		7.4		17,782		16,490		1,292	7.8
General and administrative	8,294		7,699		595		7.7		20,330		22,218		(1,888)	(8.5)
Amortization of intangible assets	1,131		727		404		55.6		3,365		2,507		858	34.2
Total costs and operating expenses	$	69,844	$	60,725	$	9,119	15.0	$	199,452	$	182,853	$	16,599	9.1

Network access. Network access costs increased ~~$4.8~~$10.4 million, or ~~18.2%~~13.1%, for the ~~three~~nine months ended ~~March 31,~~September 30, 2019, as compared to the ~~three~~nine months ended ~~March 31,~~September 30, 2018. The increase is primarily due to an $11.0 million increase in expenses related to our multifamily operations, which we acquired in August 2018, a ~~$6.1~~$3.3 million increase in revenue share paid to venues in our managed and operated locations, and a $1.0 million increase in direct cost of sales, and a $0.7 million increase in other ~~costs~~cost of ~~revenue. The increases~~revenue, which were partially offset by ~~a $2.0~~$4.7 million decrease in depreciation ~~expense.~~ expense related to our decreased fixed assets from our DAS build-out projects and a $0.9 million decrease from customer usage at partner venues.

Network ~~access costs include $6.2~~operations. Network operations expenses increased $3.2 million, ofor 8.4%, for the nine months ended September 30, 2019, as compared to the nine months ended September 30, 2018, primarily due to a $1.9 million increase in personnel related expenses, a $0.5 million increase in network maintenance expenses, a $0.5 million increase in other expenses, and a $0.3 million increase in travel and entertainment expenses. Network operations expenses related to our multifamily operations, which we acquired in August 2018, ~~in the Elauwit acquisition.~~increased by $2.6 million.

~~Network operations.~~Development and technology. ~~Network operations~~Development and technology expenses increased ~~$1.3~~$2.7 million, or ~~10.1%~~11.6%, for the ~~three~~nine months ended ~~March 31,~~September 30, 2019, as compared to the ~~three~~nine months ended ~~March 31,~~September 30, 2018, primarily due to a ~~$1.1~~$0.8 million increase in hardware and software maintenance expenses, a $0.7 million increase in personnel related expenses, ~~and~~ a ~~$0.3~~$0.6 million increase in ~~network maintenance~~depreciation expense related to our increased software assets, and a $0.2 million increase in cloud computing expenses. ~~Network operations include $1.0 million of~~Development and technology expenses related to our multifamily operations, which we acquired in August ~~2018.~~2018, increased by $0.4 million.

~~Development~~Selling and ~~technology.~~marketing. ~~Development~~Selling and ~~technology~~marketing expenses increased ~~$1.6~~$1.3 million, or ~~21.2%~~7.8%, for the ~~three~~nine months ended ~~March 31,~~September 30, 2019, as compared to the ~~three~~nine months ended ~~March 31,~~September 30, 2018, primarily due to a ~~$0.4~~$1.0 million increase in personnel related expenses ~~a $0.3 million in hardware and software maintenance expenses, a $0.3 million increase in depreciation expense related to our increased fixed assets,~~ and a $0.2 million increase in ~~consulting~~travel and entertainment expenses. ~~Development~~Selling and ~~technology expenses include $0.4 million of~~marketing expenses related to our multifamily operations, which we acquired in August ~~2018.~~2018, increased by $1.6 million.

~~Selling~~General and ~~marketing.~~administrative. ~~Selling~~General and ~~marketing~~administrative expenses ~~increased $0.4~~decreased $1.9 million, or ~~7.4%~~8.5%, for the ~~three~~nine months ended ~~March 31,~~September 30, 2019, as compared to the ~~three~~nine months ended ~~March 31,~~September 30, 2018, primarily due to a ~~$0.5~~$1.2 million decrease in personnel related expenses and a $1.0 million decrease in the fair value of contingent consideration, which were partially offset by a $0.3 million increase in ~~personnel related expenses. Selling~~licenses and ~~marketing expenses include $0.5 million of~~taxes. General and administrative expenses related to our multifamily operations, which we acquired in August ~~2018.~~2018, increased by $1.9 million.

~~General and administrative.~~ General and administrative expenses increased $0.6 million, or 7.7%, for the three months ended March 31, 2019, as compared to the three months ended March 31, 2018, primarily due to a $0.3 million increase in personnel related expenses, which is inclusive of the $0.8 million decrease in stock-based compensation expense and the federal, state, and local employment payroll taxes related to our RSUs that vested during the period. General and administrative expenses include $0.8 million of expenses related to our multifamily operations, which we acquired in August 2018.

Amortization of intangible assets.Amortization of intangible assets expense increased ~~$0.4~~$0.9 million, or ~~55.6%~~34.2% for the ~~three~~nine months ended ~~March 31,~~September 30, 2019, as compared to the ~~three~~nine months ended ~~March 31,~~September 30, 2018, primarily due to the ~~$0.6~~$1.5 million increase resulting from our Elauwit acquisition in August 2018.

Interest Expense and Amortization of Debt Discount

~~Interest and Other Expense, Net~~

Interest expense and ~~other expense~~amortization of debt discount increased ~~$1.6~~$6.7 million ~~or 2,021.5%,~~ for the ~~three~~nine months ended ~~March 31,~~September 30, 2019, as compared to the ~~three~~nine months ended ~~March 31,~~September 30, 2018, primarily due to interest expense incurred ~~related to~~in connection with the Convertible Notes we issued in October 2018. During the nine months ended September 30, 2019 and 2018, ~~which was partially offset by~~we capitalized $2.1 million and $0.6 million, respectively, of interest expense.

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Interest Income and Other Expense, Net

Interest income and other expense, net increased $1.7 million for the nine months ended September 30, 2019, as compared to the nine months ended September 30, 2018, primarily due to increased interest income related to our ~~higher cash and~~ cash equivalents and marketable securities balances in ~~2019 compared to 2018. During the three months ended March 31, 2019 and 2018, we capitalized $0.5 million and $0.1 million, respectively, of interest expense.~~2019.

Income Tax Expense

There were no significant changes in income tax expense ~~and our effective tax rate~~ for the ~~three~~nine months ended ~~March 31,~~September 30, 2019, as compared to the ~~three~~nine months ended September 30, 2018. Our effective tax rate decreased from 2,200.0% for the nine months ended September 30, 2018 to 5.2% for the nine months ended September 30, 2019. Or effective tax rate differs from the statutory rate primarily due to our valuation allowance and ~~March 31,~~minimum state taxes for the nine months ended September 30, 2019 and 2018 as well as foreign tax expense for the nine months ended September 30, 2018.

Non-controlling Interests

Non-controlling interests decreased ~~$0.5~~$1.4 million,, or ~~118.9%~~99.2% for the ~~three~~nine months ended ~~March 31,~~September 30, 2019, as compared to the ~~three~~nine months ended ~~March 31,~~September 30, 2018 resulting from decreased net income for a subsidiary from DAS build-out projects that were completed in 2018.

Net Loss Attributable to Common Stockholders

Our net loss attributable to common stockholders for the ~~three~~nine months ended ~~March 31,~~September 30, 2019 increased $3.5 million as compared to the ~~three~~nine months ended ~~March 31,~~September 30, 2018, primarily due to the ~~$9.1 million increase in costs and operating expenses and the $1.6~~$6.7 million increase in interest expense and ~~other expense, net. The increases were~~amortization of debt discount, which was partially offset by the ~~$8.3~~$1.7 million increase in ~~revenues~~interest income and other expense, net, and the ~~$0.5~~$1.4 million decrease in non-controlling interests. Our diluted net loss per share increased primarily as a result of the increase in our net loss.

Reconciliation of Non-GAAP Financial Measures

We define Adjusted EBITDA as net loss attributable to common stockholders plus depreciation and amortization of property and equipment, stock-based compensation expense, amortization of intangible assets, income tax expense, interest expense and amortization of debt discount, interest income and other expense, net, non-controlling interests, and excludes charges or gains that are non-recurring, infrequent, or unusual.

We believe that Adjusted EBITDA is useful to investors and other users of our financial statements in evaluating our operating performance because it provides them with an additional tool to compare business performance across companies and across periods. We believe that:

●

Adjusted EBITDA provides investors and other users of our financial information consistency and comparability with our past financial performance, facilitates period-to-period comparisons of operations and facilitates comparisons with other companies, many of which use similar non-generally accepted accounting principles in the United States (“GAAP”) financial measures to supplement their GAAP results; and

●

it is useful to exclude non-cash charges, such as depreciation and amortization of property and equipment, amortization of intangible assets and stock-based compensation, from Adjusted EBITDA because the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations, and these expenses can vary significantly between periods as a result of full amortization of previously acquired tangible and intangible assets or the timing of new stock-based awards.

· Adjusted EBITDA provides investors and other users of our financial information consistency and comparability with our past financial performance, facilitates period-to-period comparisons of operations and facilitates comparisons with other companies, many of which use similar non-generally accepted accounting principles in the United States (“GAAP”) financial measures to supplement their GAAP results; and

· it is useful to exclude non-cash charges, such as depreciation and amortization of property and equipment, amortization of intangible assets and stock-based compensation, from Adjusted EBITDA because the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations, and these expenses can vary significantly between periods as a result of full amortization of previously acquired tangible and intangible assets or the timing of new stock-based awards.

We use Adjusted EBITDA in conjunction with traditional GAAP measures as part of our overall assessment of our performance, for planning purposes, including the preparation of our annual operating budget and quarterly forecasts, to evaluate the effectiveness of our business strategies and to communicate with our board of directors concerning our financial performance.

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We do not place undue reliance on Adjusted EBITDA as our only measure of operating performance. Adjusted EBITDA should not be considered as a substitute for other measures of financial performance reported in accordance with GAAP. There are limitations to using non-GAAP financial measures, including that other companies may calculate these measures differently than we do.

We compensate for the inherent limitations associated with using Adjusted EBITDA through disclosure of these limitations, presentation of our financial statements in accordance with GAAP and reconciliation of Adjusted EBITDA to the most directly comparable GAAP measure, net loss attributable to common stockholders.

The following provides a reconciliation of net loss attributable to common stockholders to Adjusted EBITDA:

	Three Months Ended March 31,
	2019			2018
	(unaudited) (in thousands)

							Three Months Ended				Nine Months Ended
							September 30,				September 30,
							2019		2018		2019		2018
							(unaudited)
							(in thousands)
Net loss attributable to common stockholders	$	(5,153	)	$	(3,229	)	$	(187)	$	(522)	$	(5,124)	$	(1,636)
Depreciation and amortization of property and equipment	19,009			20,606				16,867		18,901		52,750		56,769
Stock-based compensation expense	2,344			3,126				2,054		3,155		6,434		9,227
Amortization of intangible assets	1,131			727				1,103		1,112		3,365		2,507
Income tax expense	192			128				143		54		254		198
Interest and other expense, net	1,676			79
Interest expense and amortization of debt discount								2,191		8		6,741		58
Interest income and other expense, net								(388)		14		(1,600)		93
Non-controlling interests	(86		)	456				84		596		11		1,447
Adjusted EBITDA	$	19,113		$	21,893		$	21,867	$	23,318	$	62,831	$	68,663

Adjusted EBITDA was ~~$19.1~~$21.9 million for the three months ended ~~March 31,~~September 30, 2019, a decrease of ~~12.7%~~ 6.2% from ~~$21.9~~$23.3 million recorded in the three months ended ~~March 31,~~September 30, 2018. As a percent of revenue, Adjusted EBITDA was ~~28.8%~~33.8% for the three months ended ~~March 31,~~September 30, 2019, down from ~~37.6%~~35.7% of revenue for the three months ended ~~March 31,~~September 30, 2018. The Adjusted EBITDA decrease was primarily due to the $2.0 million decrease in depreciation and amortization expense, the $1.1 million decrease in stock-based compensation expense, the $0.5 million decrease in non-controlling interests, and the $0.4 million increase in interest income and other expense, net, for the three months ended September 30, 2019 compared to the three months ended September 30, 2018. The changes were partially offset by $2.2 million increase in interest expense and amortization of debt discount and the $0.3 million decrease in net loss attributable to common stockholders, for the three months ended September 30, 2019 compared to three nine months ended September 30, 2018.

Adjusted EBITDA was $62.8 million for the nine months ended September 30, 2019, a decrease of 8.5% from $68.7 million recorded in the nine months ended September 30, 2018. As a percent of revenue, Adjusted EBITDA was 31.5% for the nine months ended September 30, 2019, down from 37.5% of revenue for the nine months ended September 30, 2018. The Adjusted EBITDA decrease was due primarily to the ~~$1.9~~$3.5 million increase in our net loss attributable to common stockholders, the ~~$1.2~~$3.2 million decrease in depreciation and amortization expense, the ~~$0.8~~$2.8 million decrease in stock based compensation expense, the $1.7 million increase in interest income and other expense, net, and the ~~$0.5~~$1.4 million decrease in non-controlling interests, which were partially offset by the ~~$1.6~~$6.7 million increase in interest expense and ~~other expense~~amortization of debt discount, for the ~~three~~nine months ended ~~March 31,~~September 30, 2019 compared to the ~~three~~nine months ended ~~March 31,~~September 30, 2018.

Liquidity and Capital Resources

We have financed our operations primarily through cash provided by operating activities and borrowings under our Convertible Notes (defined below) and credit facilities. Our primary sources of liquidity as of ~~March 31,~~September 30, 2019 consisted of ~~$69.0~~$50.2 million of cash and cash equivalents, ~~$36.9~~$36.6 million of marketable securities, $150.0 million available for borrowing under our Credit Facility, ~~$12.5~~$13.0 million of which is reserved for our outstanding Letter of Credit Authorization agreements. As of ~~March 31,~~September 30, 2019, we had ~~$3.3~~$2.9 million outstanding under the Term Loan, and we had no amounts outstanding under the Revolving Line of Credit.

Our principal uses of liquidity have been to fund our operations, working capital requirements, capital expenditures and acquisitions. We expect that these requirements will be our principal needs for liquidity over the near term. Our capital expenditures in

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the ~~three~~nine months ended ~~March 31,~~September 30, 2019 were ~~$32.4~~$101.5 million, of which ~~$24.6~~$79.9 million ~~was~~will be reimbursed through revenue for DAS build-out projects from our telecom operators.

In February 2019, we entered into a Credit Agreement (the “Credit Agreement”) and related agreements with Bank of America, N.A. acting as agent for lenders named therein, including Bank of America, N.A., Silicon Valley Bank, Bank of the West, Zions Bancorporation, N.A. dba California Bank & Trust, and Barclays Bank PLC (the “Lenders”), for a secured credit facility in the form of a revolving line of credit up to $150.0 million (the “Revolving Line of Credit”) and a term loan of $3.5 million (the “Term Loan” and together with the Revolving Line of Credit, the “Credit Facility”). Our Credit Facility will mature on April 3, 2023. Amounts borrowed under the Revolving Line of Credit and Term Loan will bear variable interest at the greater of LIBOR plus 1.75% - 2.75% or Lender’s Prime Rate plus 0.75% - 1.75% per year and we will pay a fee of 0.25% - 0.5% per year on any unused portion of the Revolving Line of Credit.

Repayment of amounts borrowed under the Credit Facility may be accelerated in the event that we are in violation of the representation, warranties and covenants made in the Credit Agreement, including certain financial covenants set forth therein, and under other specific default events including, but not limited to, non-payment or inability to pay debt, breach of cross default provisions, insolvency provisions, and change in control. We are subject to customary covenants, including a minimum quarterly consolidated senior secured leverage ratio, a minimum quarterly consolidated total leverage ratio, a maximum quarterly consolidated fixed charge coverage ratio, and cash on hand minimums. The Credit Facility provides us with significant additional flexibility and liquidity to pursue our strategic objectives for capital expenditures and acquisitions that we may pursue from time to time.

In October 2018, we sold, through the initial purchasers, convertible senior notes (“Convertible Notes”) to qualified institutional buyers pursuant to Rule 144A of the Securities Act of 1933, as amended, for gross proceeds of $201.25 million. The Convertible Notes are senior, unsecured obligations with interest payable semi-annually in cash at a rate of 1.00% per annum on April 1st and October 1st of each year, beginning on April 1, 2019. The Convertible Notes will mature on October 1, 2023 unless they are redeemed, repurchased or converted prior to such date. Prior to April 1, 2023, the Convertible Notes are convertible at the option of holders only during certain periods and upon satisfaction of certain conditions. Thereafter, the Convertible Notes will be convertible at any time until the close of business on the second scheduled trading day immediately preceding the maturity date. Upon conversion, the Convertible Notes may be settled in shares of our common stock, cash or a combination of cash and shares of our common stock, at our election.

The Convertible Notes have an initial conversion rate of 23.6323 shares of common stock per $1,000 principal amount of the Convertible Notes, which will be subject to customary anti-dilution adjustments in certain circumstances. This represents an initial effective conversion price of approximately $42.31 per share, which represents a premium of approximately 30% to the $32.55 per share closing price of our common stock on October 2, 2018, the day we priced the offering.

We may redeem all or any portion of the Convertible Notes, at our option, on or after October 5, 2021, at a redemption price equal to 100% of the principal amount of the Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date, if the last reported sale price of our stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which we provide written notice of redemption.

Holders of Convertible Notes may require us to repurchase their Convertible Notes upon the occurrence of certain events that constitute a fundamental change under the indenture governing the Convertible Notes at a fundamental change repurchase price equal to 100% of the principal amount thereof, plus accrued and unpaid interest to, but excluding, the date of repurchase. In connection with certain corporate events or if we issue a notice of redemption prior to the maturity date, it will, under certain circumstances, increase the conversion rate for holders who elect to convert their Convertible Notes in connection with such corporate event or notice of redemption.

In connection with the pricing of the Convertible Notes, we entered into privately negotiated capped call transactions with a financial institution. The capped call transactions initially cover, subject to customary anti-dilution adjustments, the number of shares of our common stock that initially underlie the Convertible Notes. The cap price of the capped call transactions is initially $65.10 per share of our common stock, representing a premium of 100% above the closing price of $32.55 per share of our common stock on October 2, 2018, and is subject to certain adjustments under the terms of the capped call transactions. The capped call transactions are expected generally to reduce potential dilution to our common stock upon conversion of the Convertible Notes and/or offset the

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potential cash payments that we could be required to make in excess of the principal amount of any converted Convertible Notes upon conversion thereof, with such reduction and/or offset subject to a cap based on the cap price.

We believe that our existing cash and cash equivalents, marketable securities, cash flow from operations and availability under the Credit Facility will be sufficient to fund our operations and planned capital expenditures for at least the next 12 months from the date of issuance of our financial statements. There can be no assurance, however, that future industry-specific or other developments, general economic trends, or other matters will not adversely affect our operations or our ability to meet our future cash requirements. Our future capital requirements will depend on many factors, including our rate of revenue growth and corresponding timing of cash collections, the timing and size of our managed and operated location expansion efforts, the timing and extent of spending to support product development efforts, the timing of introductions of new solutions and enhancements to existing solutions and the continuing market acceptance of our solutions. We expect our capital expenditures for 2019 will range from ~~$100.0~~$120.0 million to ~~$120.0~~$135.0 million, including ~~$75.0~~$95.0 million to ~~$90.0~~$105.0 million of capital expenditures for DAS build-out projects, which are reimbursed through revenue from our telecom operator customers. We anticipate the majority of our 2019 capital expenditures will be used to build out and upgrade Wi-Fi and DAS networks at our managed and operated venues.

We have contracts with the U.S. government. The U.S. government may modify, curtail or terminate its contracts with us, either at its convenience or for default based on performance. Any such modification, curtailment, or termination of one or more of our government contracts could have a material adverse effect on our earnings, cash flow and/or financial position. We may also enter into other acquisitions of complementary businesses, applications or technologies, which could require us to seek additional equity or debt financing. Additional funds may not be available on terms favorable to us, or at all.

We are subject to customary covenants, including a minimum quarterly consolidated leverage ratio, a maximum quarterly consolidated fixed charge coverage ratio, and monthly liquidity minimums. We were in compliance with all such financial covenants as of ~~March 31,~~September 30, 2019 and through the date of this report. We are subject to certain non-financial covenants, and we were also in compliance with all such non-financial covenants as of ~~March 31,~~September 30, 2019 and through the date of this report. The Credit Facility provides us with significant additional flexibility and liquidity for our strategic objectives involving capital expenditures and acquisitions that we may pursue from time to time.

The following table sets forth cash flow data for the ~~three~~nine months ended ~~March 31:~~September 30:

	2019			2018
	(unaudited)
	(in thousands)


							2019		2018
							(unaudited)
							(in thousands)

Net cash provided by operating activities	$	23,743		$	17,270		$	81,071	$	70,834
Net cash used in investing activities	(69,055		)	(21,117		)		(137,485)		(94,583)
Net cash used in financing activities	(35,087		)	(3,781		)

Net cash (used in) provided by financing activities								(42,807)		10,231

Net Cash Provided by Operating Activities

For the ~~three~~nine months ended ~~March 31,~~September 30, 2019,, we generated ~~$23.7~~$81.1 million of net cash from operating activities, an increase of ~~$6.5~~$10.2 million from 2018. The increase is primarily due to ~~an $8.4~~a $14.4 million change in our operating assets and liabilities, which is primarily driven by a higher rate of ~~cash collections and~~ invoicing for our DAS build-out projects, ~~and~~ a ~~$2.3~~$6.6 million increase in the addback for amortization of deferred financing costs and debt ~~discounts.~~discounts, and a $1.7 million increase in the addback for the non-cash operating lease costs. The changes were partially offset by a ~~$2.5~~$4.9 million increase in our net loss, a ~~$1.2~~$3.2 million decrease in depreciation and amortization expenses, ~~and~~ a ~~$0.8~~$2.8 million decrease in stock-based compensation expenses, a $1.0 million change in fair value of contingent consideration, and a $0.5 million increase in gains and amortization of premiums/discounts on marketable securities in 2019.

Net Cash Used in Investing Activities

For the ~~three~~nine months ended ~~March 31,~~September 30, 2019,, we used ~~$69.1~~$137.5 million in investing activities, an increase of ~~$47.9~~$42.9 million from 2018. The increase is due to a ~~$36.7~~$36.0 million increase in net purchases of marketable securities resulting from our investment of some of the cash proceeds received from our issuance of the Convertible Notes, and ~~an $11.3~~a $28.9 million increase in purchases of property and ~~equipment.~~equipment resulting from our continued build out and upgrade of Wi-Fi and DAS networks at our managed and operated venues. The increases were partially offset by a $22.1 million decrease in cash paid for asset acquisitions.

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Net Cash ~~Used in~~(Used in) Provided by Financing Activities

For the ~~three~~nine months ended ~~March 31,~~September 30, 2019,, we used ~~$35.1~~$42.8 million of cash in financing activities ~~an increase~~compared to $10.2 million of ~~$31.3 million from~~cash provided by financing activities in 2018. This ~~increase~~change is primarily due to a ~~$26.6~~$25.2 million increase in payments for federal, state, and local employment payroll taxes related to our RSUs that vested during the period, an $11.5 million decrease in proceeds from our Credit Facility, a ~~$4.2~~$9.6 million decrease in proceeds from exercise of stock options, a ~~$2.0~~$3.0 million increase in cash paid for business acquisitions, a ~~$1.7~~$1.8 million increase in cash paid for debt issuance costs, ~~and~~ a ~~$0.4~~$0.8 million increase in principal payments for our finance leases and notes ~~payable. The changes were partially offset by~~payable, a ~~$3.5~~$0.7 million increase in ~~proceeds from our Credit Facility.~~cash paid for stock repurchases, and a $0.4 million increase in cash paid to non-controlling interests.

Contractual Obligations and Commitments

The following table sets forth our contractual obligations and commitments as of ~~March 31,~~September 30, 2019:

	Payments Due by Period
			Less than						More than
	Total		1 Year		2 - 3 Years		4 - 5 Years		5 Years
	(in thousands)

											Payments Due by Period
													Less than						More than
											Total		1 Year		2 - 3 Years		4 - 5 Years		5 Years
											(in thousands)
Venue revenue share minimums(1)	$	48,043	$	12,951	$	16,178	$	10,754	$	8,160	$	41,857	$	9,484	$	14,840	$	11,300	$	6,233
Operating and finance leases(2)	27,969		6,579		7,788		6,076		7,526			24,996		5,968		6,847		6,296		5,885
Open purchase commitments(3)	34,936		34,710		226		—		—			18,036		17,651		385		—		—
Convertible Notes(4)	201,250		—		—		201,250		—			201,250		—		—		201,250		—
Credit Facility(5)	3,306		778		1,556		972		—			2,916		778		1,556		582		—
Notes payable(6)	3,352		2,204		1,148		—		—			2,155		1,937		218		—		—
Total	$	318,856	$	57,222	$	26,896	$	219,052	$	15,686	$	291,210	$	35,818	$	23,846	$	219,428	$	12,118

(1)	Payments under exclusive long-term, non-cancellable contracts to provide wireless communications network access to venues such as airports.

(2)	Non-cancellable operating leases for office and other spaces and finance leases for equipment, primarily for data communication equipment and database software.

~~(1)~~ ~~Payments under exclusive long-term, non-cancellable contracts to provide wireless communications network access to venues such as airports.~~

(3)	Open purchase commitments for the purchase of property and equipment, supplies and services. They are not recorded as liabilities on our condensed consolidated balance sheet as of September 30, 2019 as we have not received the related goods or services.

(4)	Long-term debt associated with our Convertible Notes are based on contractual terms and intended timing of repayments of long-term debt.

~~(2)~~ ~~Non-cancellable operating leases for office and other spaces and finance leases for equipment, primarily for data communication equipment and database software.~~

(5)	Debt associated with our Credit Agreement with Bank of America N.A. Payments are based on contractual terms and intended timing of repayments.

(6)	Payments under notes payable related to purchases of prepaid maintenance service.

~~(3)~~ Open purchase commitments for the purchase of property and equipment, supplies and services. They are not recorded as liabilities on our condensed consolidated balance sheet as of March 31, 2019 as we have not received the related goods or services.

~~(4)~~ ~~Long-term debt associated with our Convertible Notes are based on contractual terms and intended timing of repayments of long-term debt.~~

~~(5)~~ ~~Debt associated with our Credit Agreement with Bank of America N.A. Payments are based on contractual terms and intended timing of repayments.~~

~~(6)~~ ~~Payments under notes payable related to purchases of prepaid maintenance service.~~

Off-Balance Sheet Arrangements

We do not have any off-balance sheet financing arrangements and we do not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

Critical Accounting Policies and Estimates

Leases

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balance sheets. Finance leases are included in property and equipment, net, current portion of operating and finance leases, and long-term portion of operating and finance leases in our condensed consolidated balance sheets.

Operating and finance lease ROU assets and ROU liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments. The ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. We have lease agreements with lease and non-lease components, which are generally accounted for separately. We exclude short-term leases with a lease term of 12 months or less at commencement date from our condensed consolidated balance sheets.

There have been no other material changes to our critical accounting policies and estimates from the information provided for the year ended December 31, 2018 in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in our annual report on Form 10-K filed by us with the SEC on March 1, 2019.

Recently Issued Accounting Standards

Information regarding recent accounting pronouncements is contained in Note 2 “Summary of Significant Accounting Policies” to the accompanying condensed consolidated financial statements included in Part I, Item 1, of this Quarterly Report on Form 10-Q and under “Critical Accounting Policies and Estimates” in Part I, Item II, of this Quarterly Report on Form 10-Q, the information of which is incorporated herein by this reference.

Item 3. Quantitative and Qualitative Disclosure about Market Risk

Market risk represents the potential loss arising from adverse changes in the value of financial instruments. The risk of loss is assessed based on the likelihood of adverse changes in fair values, cash flows or future earnings. We are exposed to various market risks including: (i) investment portfolio risk, (ii) interest rate risk, and (iii) foreign currency exchange rate risk.

Investment portfolio risk. We have established guidelines relative to the diversification and maturities of investments to maintain safety and liquidity. These guidelines are reviewed periodically and may be modified depending on market conditions. Although investments may be subject to credit risk, our investment policy specifies credit quality standards for our investments and limits the amount of credit exposure from any single issue, issuer, or type of investment. At ~~March 31,~~September 30, 2019, our market risk sensitive instruments consisted of marketable securities available-for-sale, which are comprised of highly rated short-term commercial paper, corporate debt instruments and US treasury and agencies obligations.

Our marketable available-for-sale securities are carried at fair value and are intended for use in meeting our ongoing liquidity needs. Unrealized gains and losses on available-for-sale securities, which are deemed temporary, are reported as a separate component of stockholders’ equity, net of tax. The cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity. The amortization, along with realized gains and losses, would be included in interest income and other expense, net.

Interest rate risk. Our Convertible Notes bear a coupon rate of 1.00% per annum. We do not have economic interest rate exposure on our Convertible Notes due to the fixed rate nature. However, the values of the Convertible Notes are exposed to interest rate risk. Generally, the fair value of our fixed interest rate Convertible Notes will increase as interest rates fall and decrease as interest rates rise. In addition, the fair values of the Convertible Notes are affected by our stock price. The fair value of the Convertible Notes will generally increase as our common stock price increases and will generally decrease as our common stock price declines in value. Additionally, we carry the Convertible Notes at face value less unamortized discount and issuance costs on our consolidated balance sheet, and we present the fair value for required disclosure purposes only.

Our Credit Facility bears interest at a variable rate equal to the greater of LIBOR plus 1.75% - 2.75% or the Lender’s Prime Rate plus 0.75% - 1.75% per year. Our use of variable rate debt exposes us to interest rate risk. A 100-basis point increase in the LIBOR or Lender’s Prime Rate as of ~~March 31,~~September 30, 2019 would not have a material impact on net ~~loss~~income (loss) and cash flow.

Foreign currency exchange rate risk. We are exposed to foreign currency exchange rate risk inherent in conducting business globally in numerous currencies, of which the most significant to our operations for the ~~three~~nine months ended ~~March 31,~~September 30, 2019 was

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the Brazilian Real. We are primarily exposed to foreign currency fluctuations related to the operations of our subsidiary in Brazil whose financial statements are not denominated in the U.S. dollar. Our foreign operations are not material to our operations as a whole. As such, we currently do not enter into currency forward exchange or option contracts to hedge foreign currency exposures.

Item 4. Controls and Procedures

Disclosure Controls and Procedures. We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness, as of ~~March 31,~~September 30, 2019, of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934). Based upon that evaluation, ~~the~~our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective.

Changes in Internal Control over Financial Reporting. During the three months ended ~~March 31,~~September 30, 2019, in order to facilitate the adoption of the new lease accounting standard on January 1, 2019, we implemented internal controls to help ensure we properly evaluate our lease contracts and assess the impact to our consolidated financial statements. There have beenthere were no ~~other~~ changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial ~~reporting during the quarter ended March 31, 2019.~~reporting.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The information set forth in Note 14 “Commitments and Contingencies,” to the unaudited condensed consolidated financial statements included in Part I, Item 1, of this Quarterly Report on Form 10-Q, is incorporated herein by this reference.

Item 1A. Risk Factors

Certain Factors Affecting Boingo Wireless, Inc.

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2018 filed with the SEC on March 1, 2019,

which we incorporate by reference into this Quarterly Report on Form 10-Q, which could materially affect our business, results of operations, cash flows, or financial condition. The risks described in our Annual Report on Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, or future results. There have been no material changes in the risk factors contained in our Annual Report on Form 10-K.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Information Regarding Stock Repurchases

On April 1, 2013, our Board of Directors approved a stock repurchase program to repurchase up to $10.0 million of the Company’s common stock in the open market, exclusive of any commissions, markups or expenses. On July 30, 2019, our Board of Directors authorized a new stock repurchase program under which we may repurchase up to $20.0 million of our outstanding shares of common stock through July 31, 2020. The program replaced and superseded our existing stock repurchase program. Under the program, we may repurchase shares in accordance with all applicable securities laws and regulations, including Rule 10b-18 of the Securities Exchange Act of 1934. The extent to which we may repurchase our shares, and the timing of such repurchases, will depend upon a variety of factors, including market conditions, regulatory requirements and other corporate considerations, as determined by our management. The repurchase program may be extended, suspended or discontinued at any time.

During the nine months ended September 30, 2019, we repurchased and retired approximately 56,000 shares under this program for approximately $745,000, excluding commissions paid, at a weighted average price per share of $13.24. As of September 30, 2019, the remaining approved amount for repurchases was approximately $19,255,000. Activity under the program for the nine months ended September 30, 2019 was as follows:


				Approximate Dollar
				Value of Shares that
				May Yet Be
	Total Number of	Weighted		Purchased Under
	Shares Purchased (1)	Average Price Paid		the Plans or
	(000’s)	Per Share		Programs (000’s)

As of December 31, 2018	—	$	—	—
September 1 – September 30	56	$	13.24	19,255
Total	56

(1)	All shares purchased were purchased as part of a publicly announced program discussed above, in open-market transactions.

Items 2, 3, 4 and 45 are not applicable and have been omitted.

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Item 6. Exhibits

The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q:

Exhibit		Incorporated by Reference			Filed		Incorporated by Reference			Filed
No.	Description	Form	Date	Number	Herewith	Description	Form	Date	Number	Herewith
3.1	Amended and Restated Certificate of Incorporation.	S-1	03/21/2011	3.2		Amended and Restated Certificate of Incorporation.	S-1	03/21/2011	3.2


3.2	Certificate of Amendment to the Certificate of Incorporation.	8-K	06/09/2017	3.1		Certificate of Amendment to the Certificate of Incorporation.	8-K	06/09/2017	3.1


3.3	Amended and Restated Bylaws.	8-K	06/09/2017	3.2		Amended and Restated Bylaws.	8-K	06/09/2017	3.2


31.1	Certification of Michael Finley, Chief Executive Officer, pursuant to Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.				X	Certification of Michael Finley, Chief Executive Officer, pursuant to Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.				X


31.2	Certification of Peter Hovenier, Chief Financial Officer, pursuant to Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.				X	Certification of Peter Hovenier, Chief Financial Officer, pursuant to Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.				X


32.1	Certifications of Michael Finley, Chief Executive Officer, and Peter Hovenier, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.				X	Certifications of Michael Finley, Chief Executive Officer, and Peter Hovenier, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.				X


101	The following financial information from the Quarterly Report on Form 10-Q of Boingo Wireless, Inc. for the quarter ended March 31, 2019, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets at March 31, 2019 and December 31, 2018 for Boingo Wireless, Inc.; (ii) Condensed Consolidated Statements of Operations for the three months ended March 31, 2019 and 2018 for Boingo Wireless, Inc.; (iii) Condensed Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2019 and 2018 for Boingo Wireless, Inc.; (iv) Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2019 and 2018 for Boingo Wireless, Inc.; (v) Condensed Consolidated Statement of Stockholders’ Equity for Boingo Wireless, Inc.; and (vi) the Notes to Condensed Consolidated Financial Statements, tagged as blocks of text.					The following financial information from the Quarterly Report on Form 10-Q of Boingo Wireless, Inc. for the quarter ended September 30, 2019, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets at September 30, 2019 and December 31, 2018 for Boingo Wireless, Inc.; (ii) Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2019 and 2018 for Boingo Wireless, Inc.; (iii) Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2019 and 2018 for Boingo Wireless, Inc.; (iv) Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2019 and 2018 for Boingo Wireless, Inc.; (v) Condensed Consolidated Statement of Stockholders’ Equity for Boingo Wireless, Inc.; and (vi) the Notes to Condensed Consolidated Financial Statements, tagged as blocks of text.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	BOINGO WIRELESS, INC.

Date: ~~May 10,~~November 8, 2019	By:	/s/ MICHAEL FINLEY
		Michael Finley
		Chief Executive Officer and Member of the Board
		(Principal Executive Officer)

	BOINGO WIRELESS, INC.

Date: ~~May 10,~~November 8, 2019	By:	/s/ PETER HOVENIER
		Peter Hovenier
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

	Three Months Ended
	March 31,
	2019			2018

Net loss	$	(5,239	)	$	(2,773	)
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments	(34		)	(4		)
Unrealized gain on marketable securities	16			—
Comprehensive loss	(5,257		)	(2,777		)
Comprehensive (loss) income attributable to non-controlling interest	(82		)	453
Comprehensive loss attributable to common stockholders	$	(5,175	)	$	(3,230	)

	Estimated Fair Value			Weighted Average Estimated Useful Life (years)
Consideration:
Cash paid	$	15,576
Holdback consideration	13,000
Contingent consideration	961
Total consideration	$	29,537
Recognized amounts of identifiable assets acquired and liabilities assumed:
Accounts receivable	$	4,494
Prepaid expenses and other current assets	1,687
Property and equipment	195
Other non-current assets	177
Accounts payable	(2,049		)
Accrued expenses and other liabilities	(683		)
Deferred revenue	(3,854		)
Other non-current liabilities	(307		)
Net tangible liabilities acquired	(340		)
Backlog	7,030			5.0
Backlog - held for sale	750			—
Customer relationships	2,490			10.0
Partner relationships	1,200			10.0
Transition services agreement	540			2.0
Non-compete agreement	1,380			3.0
Goodwill	16,487
Total purchase price	$	29,537

	Contract assets, net		Contract liabilities, net
Balance at December 31, 2018	$	468	$	217,733
Balance at March 31, 2019	1,117		218,029
Change	$	649	$	296

	Debt Discounts		Debt Issuance Costs
April 1, 2019—December 31, 2019	$	6,239	$	642
January 1, 2020—December 31, 2020	8,864		901
January 1, 2021—December 31, 2021	9,528		955
January 1, 2022—December 31, 2022	10,241		1,015
January 1, 2023—December 31, 2023	8,180		802
	$	43,052	$	4,315

	Amortization Expense
April 1, 2019—December 31, 2019	$	343
January 1, 2020—December 31, 2020	457
January 1, 2021—December 31, 2021	457
January 1, 2022—December 31, 2022	457
January 1, 2023—December 31, 2023	120
	$	1,834

	Notes Payable
April 1, 2019 – December 31, 2019	$	1,775
January 1, 2020—December 31, 2020	1,541
January 1, 2021—December 31, 2021	95
Total future minimum payments	3,411
Less: Imputed interest	(59		)
Total	3,352
Current portion of note payable	2,204
Long-term portion of notes payable	$	1,148

At March 31, 2019	Level 1		Level 2		Level 3		Total
Assets:
Money market accounts	$	59,910	$	—	$	—	$	59,910
Marketable securities	4,463		36,920		—		41,383
Total assets	$	64,373	$	36,920	$	—	$	101,293
Liabilities:
Contingent consideration	$	—	$	—	$	961	$	961
Total liabilities	$	—	$	—	$	961	$	961

Balance, December 31, 2018	$	961
Payment of contingent consideration	—
Change in fair value	—
Balance, March 31, 2019	$	961

	Number of Shares (000’s)		Weighted Average Grant-Date Fair Value
Non-vested at December 31, 2018	3,119		$	8.60
Granted(1)	517		$	23.36
Vested	(2,656	)	$	6.58
Canceled/forfeited	(10	)	$	25.51
Non-vested at March 31, 2019	970		$	21.80