Sonic Foundry, Inc. (NASDAQ: SOFO), the trusted leader for video
creation and management
solutions, today announced financial results for its fiscal 2016
first quarter ended December 31, 2015.
Fiscal 2016 First Quarter Highlights
-
Billings grew 12% to $8.6 million, compared to $7.7 million in the
first quarter of 2015, led by a 55% increase in billings from markets
outside of North America
-
Revenue of $9.1 million represented an increase of 4% over $8.7
million in the first quarter of 2015
-
Gross margin increased to $6.4 million, or 70% of sales compared to
$6.1 million, or 69% of sales for the first quarter of 2015
-
Net loss of $1.2 million or $(0.28) per basic share compared to a net
loss of $1.0 million or $(0.24) per basic share in the first quarter
of 2015
-
Adjusted EBITDA loss of $(182) thousand was in-line with adjusted
EBITDA loss of $(181) thousand in the first quarter of 2015
-
The company finished the quarter with cash of $2.7 million, compared
to $2.0 million as of September 30, 2015, and had an additional $1.4
million available on its line of credit at December 31, 2015
-
Unearned revenue from services and products increased $3.2 million, or
36% to $12.2 million as of the end of the first quarter of 2016,
compared to $9.0 million for the same period last year
Fiscal 2016 First Quarter Review
Fiscal first quarter billings outside North America were 55 percent
higher than the same period last year; and international products and
services billings accounted for 49 percent of Sonic Foundry’s
consolidated product and services billings, compared to 39 percent in
the first quarter 2015. The strength in international billings growth
was primarily a result of increased distribution activity in China, and
in strong demand in Japan driven in part by initiatives in the
pharmaceuticals industry. Billings were further impacted by growth in
licensing of software products, particularly in China.
The company had $12.2 million in unearned revenue, of which $3.8 million
is expected to be recorded as revenue in the second quarter of fiscal
2016. Additionally there was a single international transaction of $2.1
million which was billed in September 2015, but did not meet the
criteria for revenue recognition as of December 31, 2015. The company
expects to record this revenue in the second quarter or soon thereafter.
The remaining unearned revenue is a result of increased billings for
services, which are recognized as revenues over the life of the
respective contract terms. Consolidated gross margin of 70%, one
percentage point ahead of the same period last year, was led by greater
software sales and efficiencies in our events business. The company
reported a net loss of $1.2 million for the quarter and Adjusted EBITDA
loss of $182,000, essentially flat year over year.
“We are pleased with the company’s acceleration in billings during the
first quarter, which was driven by improved international execution and
our uncontested market leadership in higher education. We continue to
see a rising demand for enterprise video solutions, as customers around
the world invest in Mediasite to power their strategic video
communications initiatives, connect global workforces and drive
organizational efficiencies,” said Gary Weis, CEO of Sonic Foundry. “As
the year progresses we will continue pipeline-building activities and
making focused, strategic investments to address the unique video
challenges of the enterprise, including solutions like Mediasite Join to
maximize employee collaboration in the videoconferencing space; and
Mediasite Edge which will ensure seamless inside-the-firewall video
distribution. We believe these investments will yield an increase in
revenue, particularly in corporate, and ultimately increase shareholder
value.”
Outlook
The company is reiterating the fiscal 2016 guidance of billings of
between $42 and $45 million, adjusted EBITDA of between $3.5 and $4.5
million and bottom line results of between breakeven and $1.0 million.
Non-GAAP Financial Information:
To supplement and enhance the reader’s understanding of our operating
performance and our ability to satisfy lender requirements, we disclose
adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization
(adjusted EBITDA), a non-GAAP measure of operating performance. Our
adjusted EBITDA measure additionally includes stock compensation expense
from the SEC definition of EBITDA. As such, our adjusted EBITDA may not
be comparable to similarly titled measures reported by other companies,
and should not be viewed as an alternative to net income as a
measurement of our operating performance. Our credit agreement contains
a minimum EBITDA calculation based, in part, on adjusted EBITDA since
this measure is representative of adjusted income available for debt and
interest payments. A reconciliation of net loss to adjusted EBITDA for
the quarters ended December 31, 2015 and 2014 are included in the
release. The company is unable to provide a reconciliation of projected
EBITDA to projected net income due to the unknown effect, timing and
potential significance of certain income statement items.
Webcast:
Sonic Foundry will host a corporate webcast today, February 11th,
for analysts and investors to discuss its fiscal 2016 first quarter
results at 3:30 p.m. CT / 4:30 p.m. ET. It will use its patented rich
media communications system, Mediasite,
to webcast the presentation for both live and on-demand viewing. To
access the presentation, register at www.sonicfoundry.com/earnings.
Management will be taking questions live via the comment feature of the
Mediasite player. An archive of the webcast will be available for 90
days.
About Sonic Foundry®, Inc.
Sonic Foundry (NASDAQ: SOFO) is the trusted global leader for video
capture, management and webcasting solutions in education, business and
government. The patented Mediasite
Enterprise Video Platform transforms communications, training,
education and events for more than 3,800 customers in over 65 countries.
Sonic Foundry is a leader in Aragon Research’s Globe for Video Content
Management, Frost & Sullivan’s lecture capture leader for seven
consecutive years, a leader in Forrester’s Enterprise Video Platforms
and Webcasting Wave and a challenger in Gartner’s Magic Quadrant for
enterprise video content management.
© 2016 Sonic Foundry, Inc. Product and service names mentioned herein
are the trademarks of Sonic Foundry, Inc. or their respective owners.
This news release contains forward-looking statements about the
products and services of Sonic Foundry within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934. Forward looking statements include statements about
our products and services, our customer base, strategic investments, new
partnerships, our future operating results and any statements we make
about the company’s future. These types of statements address
matters that are subject to many risks and uncertainties. Actual results
could differ materially from the forward-looking guidance we provide.
Any forward-looking statements should be considered in context of the
risk factors disclosed in our periodic forms 10Q, 10K and other filings
with the SEC. These filings can be accessed on-line at www.sec.gov
and other websites or can be obtained from the company’s investor
relations department. All of the information and disclosures we
make in this news release regarding our business, including any forward
looking guidance, are as of the date given and we assume no obligation
to update or change this information, regardless of subsequent events.
|
|
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Sonic Foundry, Inc.
|
|
Condensed Consolidated Balance Sheets
|
|
(in thousands, except for share data)
|
|
(Unaudited)
|
|
|
|
|
|
|
December 31,
|
|
|
September 30,
|
|
|
|
|
2015
|
|
|
2015
|
|
Assets
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
2,666
|
|
|
|
$
|
1,976
|
|
|
Accounts receivable, net of allowances of $100 and $150
|
|
|
9,257
|
|
|
|
12,659
|
|
|
Inventories
|
|
|
2,535
|
|
|
|
2,385
|
|
|
Prepaid expenses and other current assets
|
|
|
833
|
|
|
|
927
|
|
|
Total current assets
|
|
|
15,291
|
|
|
|
17,947
|
|
|
Property and equipment:
|
|
|
|
|
|
|
|
Leasehold improvements
|
|
|
915
|
|
|
|
904
|
|
|
Computer equipment
|
|
|
6,098
|
|
|
|
5,852
|
|
|
Furniture and fixtures
|
|
|
950
|
|
|
|
837
|
|
|
Total property and equipment
|
|
|
7,963
|
|
|
|
7,593
|
|
|
Less accumulated depreciation and amortization
|
|
|
5,231
|
|
|
|
4,785
|
|
|
Property and equipment, net
|
|
|
2,732
|
|
|
|
2,808
|
|
|
Other assets:
|
|
|
|
|
|
|
|
Goodwill
|
|
|
10,817
|
|
|
|
10,853
|
|
|
Customer relationships, net of amortization of $524 and $457
|
|
|
1,796
|
|
|
|
1,872
|
|
|
Software development costs, net of amortization of $474 and $429
|
|
|
59
|
|
|
|
104
|
|
|
Product rights, net of amortization of $195 and $164
|
|
|
477
|
|
|
|
508
|
|
|
Other intangibles, net of amortization of $207 and $190
|
|
|
104
|
|
|
|
112
|
|
|
Other long-term assets
|
|
|
608
|
|
|
|
599
|
|
|
Total assets
|
|
|
$
|
31,884
|
|
|
|
$
|
34,803
|
|
|
Liabilities and stockholders’ equity
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
Revolving line of credit
|
|
|
$
|
1,716
|
|
|
|
$
|
1,818
|
|
|
Accounts payable
|
|
|
1,072
|
|
|
|
2,026
|
|
|
Accrued liabilities
|
|
|
1,105
|
|
|
|
1,666
|
|
|
Unearned revenue
|
|
|
10,964
|
|
|
|
11,359
|
|
|
Current portion of capital lease and financing arrangements
|
|
|
272
|
|
|
|
211
|
|
|
Current portion of notes payable, net of discounts
|
|
|
1,583
|
|
|
|
1,299
|
|
|
Current portion of subordinated note payable
|
|
|
90
|
|
|
|
186
|
|
|
Total current liabilities
|
|
|
16,802
|
|
|
|
18,565
|
|
|
Long-term portion of unearned revenue
|
|
|
1,191
|
|
|
|
1,325
|
|
|
Long-term portion of capital lease and financing arrangements
|
|
|
277
|
|
|
|
196
|
|
|
Long-term portion of notes payable and warrant debt, net of discounts
|
|
|
2,033
|
|
|
|
2,080
|
|
|
Long-term portion of subordinated note payable
|
|
|
—
|
|
|
|
92
|
|
|
Derivative liability, at fair value
|
|
|
63
|
|
|
|
109
|
|
|
Other liabilities
|
|
|
289
|
|
|
|
311
|
|
|
Deferred tax liability
|
|
|
4,353
|
|
|
|
4,322
|
|
|
Total liabilities
|
|
|
25,008
|
|
|
|
27,000
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
Stockholders’ equity:
|
|
|
|
|
|
|
|
Preferred stock, $.01 par value, authorized 500,000 shares; none
issued
|
|
|
—
|
|
|
|
—
|
|
|
5% preferred stock, Series B, voting, cumulative, convertible, $.01
par value (liquidation preference at par), authorized 1,000,000
shares, none issued
|
|
|
—
|
|
|
|
—
|
|
|
Common stock, $.01 par value, authorized 10,000,000 shares;
4,376,456 shares issued and 4,363,740 shares outstanding,
respectively
|
|
|
44
|
|
|
|
44
|
|
|
Additional paid-in capital
|
|
|
196,307
|
|
|
|
195,973
|
|
|
Accumulated deficit
|
|
|
(188,104
|
)
|
|
|
(186,897
|
)
|
|
Accumulated other comprehensive loss
|
|
|
(1,176
|
)
|
|
|
(1,122
|
)
|
|
Receivable for common stock issued
|
|
|
(26
|
)
|
|
|
(26
|
)
|
|
Treasury stock, at cost, 12,716 shares
|
|
|
(169
|
)
|
|
|
(169
|
)
|
|
Total stockholders’ equity
|
|
|
6,876
|
|
|
|
7,803
|
|
|
Total liabilities and stockholders’ equity
|
|
|
$
|
31,884
|
|
|
|
$
|
34,803
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sonic Foundry, Inc.
|
|
Condensed Consolidated Statements of Operations
|
|
(in thousands, except for share and per share data)
|
|
(Unaudited)
|
|
|
|
|
|
|
Three Months Ended December 31,
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|
|
|
|
2015
|
|
|
2014
|
|
Revenue:
|
|
|
|
|
|
|
|
Product
|
|
|
$
|
3,791
|
|
|
|
$
|
3,374
|
|
|
Services
|
|
|
5,199
|
|
|
|
5,244
|
|
|
Other
|
|
|
101
|
|
|
|
123
|
|
|
Total revenue
|
|
|
9,091
|
|
|
|
8,741
|
|
|
Cost of revenue:
|
|
|
|
|
|
|
|
Product
|
|
|
1,865
|
|
|
|
1,536
|
|
|
Services
|
|
|
846
|
|
|
|
1,135
|
|
|
Total cost of revenue
|
|
|
2,711
|
|
|
|
2,671
|
|
|
Gross margin
|
|
|
6,380
|
|
|
|
6,070
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
Selling and marketing
|
|
|
4,412
|
|
|
|
4,394
|
|
|
General and administrative
|
|
|
1,471
|
|
|
|
1,370
|
|
|
Product development
|
|
|
1,614
|
|
|
|
1,533
|
|
|
Total operating expenses
|
|
|
7,497
|
|
|
|
7,297
|
|
|
Loss from operations
|
|
|
(1,117
|
)
|
|
|
(1,227
|
)
|
|
Non-operating income (expenses):
|
|
|
|
|
|
|
|
Interest expense, net
|
|
|
(149
|
)
|
|
|
(63
|
)
|
|
Other income, net
|
|
|
65
|
|
|
|
168
|
|
|
Total non-operating income (expenses)
|
|
|
(84
|
)
|
|
|
105
|
|
|
Loss before income taxes
|
|
|
(1,201
|
)
|
|
|
(1,122
|
)
|
|
Benefit (provision) for income taxes
|
|
|
(6
|
)
|
|
|
90
|
|
|
Net loss
|
|
|
$
|
(1,207
|
)
|
|
|
$
|
(1,032
|
)
|
|
Loss per common share:
|
|
|
|
|
|
|
|
– basic
|
|
|
$
|
(0.28
|
)
|
|
|
$
|
(0.24
|
)
|
|
– diluted
|
|
|
$
|
(0.28
|
)
|
|
|
$
|
(0.24
|
)
|
|
Weighted average common shares
|
|
|
|
|
|
|
|
– basic
|
|
|
4,363,740
|
|
|
|
4,271,885
|
|
|
– diluted
|
|
|
4,363,740
|
|
|
|
4,271,885
|
|
|
|
|
|
|
|
|
|
|
|
|
Sonic Foundry, Inc.
|
|
Consolidated Adjusted EBITDA Reconciliation
|
|
(in thousands)
|
|
(Unaudited)
|
|
|
|
|
|
|
Three Months Ended December 31,
|
|
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
$
|
(1,207
|
)
|
|
|
$
|
(1,032
|
)
|
|
Add:
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
536
|
|
|
|
561
|
|
|
Income tax expense
|
|
|
6
|
|
|
|
(90
|
)
|
|
Interest expense
|
|
|
149
|
|
|
|
63
|
|
|
Stock-based compensation expense
|
|
|
334
|
|
|
|
317
|
|
|
Adjusted EBITDA
|
|
|
$
|
(182
|
)
|
|
|
$
|
(181
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sonic Foundry, Inc.
|
|
Condensed Consolidated Statements of Cash Flows
|
|
(in thousands)
|
|
(Unaudited)
|
|
|
|
|
|
|
Three months ended
|
|
|
|
|
December 31,
|
|
|
|
|
2015
|
|
|
2014
|
|
Operating activities
|
|
|
|
|
|
|
|
Net loss
|
|
|
$
|
(1,207
|
)
|
|
|
$
|
(1,032
|
)
|
|
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities:
|
|
|
|
|
|
|
|
Amortization of other intangibles
|
|
|
85
|
|
|
|
104
|
|
|
Amortization of software development costs
|
|
|
45
|
|
|
|
44
|
|
|
Amortization of product rights
|
|
|
31
|
|
|
|
31
|
|
|
Amortization of debt discount
|
|
|
18
|
|
|
|
—
|
|
|
Depreciation and amortization of property and equipment
|
|
|
394
|
|
|
|
382
|
|
|
Provision for doubtful accounts
|
|
|
(50
|
)
|
|
|
—
|
|
|
Deferred taxes
|
|
|
6
|
|
|
|
15
|
|
|
Stock-based compensation expense related to stock options
|
|
|
334
|
|
|
|
317
|
|
|
Remeasurement gain on subordinated debt
|
|
|
(6
|
)
|
|
|
(179
|
)
|
|
Remeasurement gain on derivative liability
|
|
|
(62
|
)
|
|
|
—
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
3,426
|
|
|
|
1,044
|
|
|
Inventories
|
|
|
(152
|
)
|
|
|
(223
|
)
|
|
Prepaid expenses and other current assets
|
|
|
61
|
|
|
|
233
|
|
|
Accounts payable and accrued liabilities
|
|
|
(1,492
|
)
|
|
|
(967
|
)
|
|
Other long-term liabilities
|
|
|
(22
|
)
|
|
|
(21
|
)
|
|
Unearned revenue
|
|
|
(510
|
)
|
|
|
(979
|
)
|
|
Net cash provided by (used in) operating activities
|
|
|
899
|
|
|
|
(1,231
|
)
|
|
Investing activities
|
|
|
|
|
|
|
|
Purchases of property and equipment
|
|
|
(77
|
)
|
|
|
(109
|
)
|
|
Net cash used in investing activities
|
|
|
(77
|
)
|
|
|
(109
|
)
|
|
Financing activities
|
|
|
|
|
|
|
|
Proceeds from notes payable
|
|
|
500
|
|
|
|
—
|
|
|
Proceeds from line of credit
|
|
|
2,300
|
|
|
|
—
|
|
|
Payments on notes payable
|
|
|
(447
|
)
|
|
|
(550
|
)
|
|
Payments on line of credit
|
|
|
(2,400
|
)
|
|
|
—
|
|
|
Payment of debt issuance costs
|
|
|
(10
|
)
|
|
|
—
|
|
|
Proceeds from issuance of common stock and warrants
|
|
|
—
|
|
|
|
625
|
|
|
Payments on capital lease and financing arrangements
|
|
|
(65
|
)
|
|
|
(53
|
)
|
|
Net cash provided by (used in) financing activities
|
|
|
(122
|
)
|
|
|
22
|
|
|
Changes in cash and cash equivalents due to changes in foreign
currency
|
|
|
(10
|
)
|
|
|
(215
|
)
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
690
|
|
|
|
(1,533
|
)
|
|
Cash and cash equivalents at beginning of period
|
|
|
1,976
|
|
|
|
4,344
|
|
|
Cash and cash equivalents at end of period
|
|
|
$
|
2,666
|
|
|
|
$
|
2,811
|
|
|
|
|
|
|
|
|
|
|
|
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20160211006291/en/
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