MADISON, Wis. — February 5, 2015 — Sonic Foundry, Inc. (NASDAQ: SOFO), the trusted leader for video creation and management solutions, today announced consolidated financial results for its fiscal 2015 first quarter ended December 31, 2014.
Select financial highlights:
- Billings of $7.7 million, an increase of 11% over $6.9 million over the first quarter of fiscal 2014
- Revenues of $8.7 million, an increase of 21% over the first quarter of fiscal 2014. Revenue was positively impacted by two transactions totaling approximately $620 thousand that were billed in the previous quarter, but didn’t meet the criteria for revenue recognition until the current quarter.
- Product and other revenue of $3.5 million, an increase of 21% over the first quarter of fiscal 2014
- Service revenue of $5.2 million, an increase of 22% over the first quarter of fiscal 2014
- Gross margin of $6.1 million or 69% compared to $5.4 million or 75% for the first fiscal quarter of fiscal 2014 as a result of a lower gross margin international transaction and the higher cost of outsourced union labor in our events business. Outsourced event-labor costs vary based on the timing and location of events and is expected to trend significantly lower during the remainder of the fiscal year.
- Net loss of $1.0 million or $(0.24) per basic share compared to a net loss of $690 thousand or $(0.17) per basic share last year
- Adjusted EBITDA loss of $181 thousand compared to positive Adjusted EBITDA of $24 thousand last year.
- Cash of $2.8 million compared to $4.3 million at September 30, 2014
- Unearned revenue of $9.0 million, a decrease of $1.0 million during the quarter, compared to $7.0 million at December 31, 2013, an increase of $133 thousand during the comparable quarter last year. The decrease in unearned revenue during the quarter occurred as a result of the two transactions referred to above which were recognized as revenue in the current period.
Since our acquisitions of MediaMission and Mediasite KK both occurred in the prior fiscal year, we will no longer be providing detailed comparisons of results for both with and without acquisitions. As of December 31, 2014, $9 million of revenue from services was unearned (an increase from $7.0 million as of December 31, 2013), of which the company expects to realize $3.2 million in the quarter ending March 31, 2015. Services revenue, which includes Mediasite customer support contracts, training, installation, rental, event and content hosting services, is recognized over the life of the contract.
International product and service billings accounted for 39 percent of Sonic Foundry’s consolidated billings in the first quarter of fiscal 2015, compared to 28 percent in the first quarter of fiscal 2014. International billings have increased over prior periods primarily as a result of the acquisitions of Mediasite KK and MediaMission.
For our pre-acquisition business in the first quarter of fiscal 2015, 85 percent of billings were to existing customers, compared to 81 percent during the same period last year, with 53 percent to education customers and 37 percent to corporate customers.
“We continued to make strides this quarter with the most streamlined and scalable solution Sonic Foundry has ever offered. We have earned validation from every analyst firm that covers the enterprise video industry, and have fostered strong customer relationships on which we continue to build our business,” said Gary Weis, chief executive officer of Sonic Foundry.
“Despite the fact that this is historically our softest quarter, we expected to complete a significant project in the Middle East which we now expect to close in February. Our expectations for the remainder of 2015 are high as we see further momentum towards the largest, most strategic sales in our company’s history. We believe we have the right balance of product, operations and prospects that will help us drive meaningful growth in our business.”
The Company is reiterating the fiscal 2015 guidance provided previously for billings of $45 million, adjusted EBITDA of between $4.5 and $5.5 million and net income of between $1 and $2 million.
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. As a result, we will no longer disclose the non-GAAP measure we provided prior to Fiscal 2015. Our adjusted EBITDA measure excludes 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 debt service coverage ratio 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, 2014 and 2013 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.
Sonic Foundry will host a corporate webcast today for analysts and investors to discuss its fiscal 2015 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 atwww.sonicfoundry.com/earnings. An archive of the webcast will be available for 90 days.
About Sonic Foundry®, Inc.
Sonic Foundry (NASDAQ: SOFO) is the trusted 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 over 3,000 customers in over 60 countries. The company empowers organizations to reach everyone through the power of video; accelerating knowledge-sharing, preserving valuable content, building stronger teams and getting results.
© 2015 Sonic Foundry, Inc. Product and service names mentioned herein are the trademarks of Sonic Foundry, Inc. or their respective owners.
Certain statements contained in this news release regarding matters that are not historical facts may be forward-looking statements. Because such forward-looking statements include risks and uncertainties, actual results may differ materially from those expressed in or implied by such forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, uncertainties pertaining to continued market acceptance for Sonic Foundry’s products, its ability to succeed in capturing significant revenues from media services and/or systems, the effect of new competitors in its market, integration of acquired business and other risk factors identified from time to time in its filings with the Securities and Exchange Commission.
For investor inquiries: investor@sonicfoundry.com
For media relations: mailto:tammy@sonicfoundry.com
| Sonic Foundry, Inc. Condensed Consolidated Balance Sheets (in thousands, except for share data) (Unaudited) |
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| December 31, 2014 | September 30, 2014 | ||
| Assets |
|||
| Current assets: | |||
| Cash and cash equivalents | $ 2,811 | $ 4,344 | |
| Accounts receivable, net of allowances of $150 | 7,310 | 8,449 | |
| Inventories | 1,921 | 1,721 | |
| Prepaid expenses and other current assets | 1,329 | 1,544 | |
| Total current assets | 13,371 | 16,058 | |
| Property and equipment: | |||
| Leasehold improvements | 946 | 911 | |
| Computer equipment | 6,028 | 5,440 | |
| Furniture and fixtures | 649 | 720 | |
| Total property and equipment | 7,623 | 7,071 | |
| Less accumulated depreciation | 4,051 | 3,675 | |
| Net property and equipment | 3,572 | 3,396 | |
| Other assets: | |||
| Goodwill | 10,911 | 11,185 | |
| Customer relationships, net of amortization of $258 and $191 | 2,076 | 2,471 | |
| Software development costs, net of amortization of $296 and $252 | 237 | 281 | |
| Product rights, net of amortization of $72 and $41 | 600 | 631 | |
| Other intangibles, net of amortization of $169 and $162 | 30 | 37 | |
| Other long-term assets | 512 | 564 | |
| Total assets | $31,309 | $34,623 | |
| Liabilities and stockholders’ equity | |||
| Current liabilities: | |||
| Revolving line of credit | $ – | $ – | |
| Accounts payable | 1,350 | 1,183 | |
| Accrued liabilities | 1,787 | 2,512 | |
| Unearned revenue | 7,726 | 9,079 | |
| Current portion of capital lease obligation | 180 | 196 | |
| Current portion of notes payable | 934 | 974 | |
| Current portion of subordinated notes payable | 1,777 | 2,096 | |
| Total current liabilities | 13,754 | 16,040 | |
| Long-term portion of unearned revenue | 1,238 | 929 | |
| Long-term portion of capital lease obligations | 134 | 173 | |
| Long-term portion of notes payable | 921 | 1,139 | |
| Long-term portion of subordinated notes payable | 150 | 314 | |
| Other liabilities | 376 | 401 | |
| Deferred tax liability | 4,283 | 4,312 | |
| Total liabilities | 20,856 | 23,308 | |
| 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; 4,351,272 and 4,276,470 shares issued and 4,338,556 and 4,263,754 shares outstanding | 44 | 43 | |
| Additional paid-in capital | 195,201 | 194,260 | |
| Accumulated deficit | (183,404) | (182,372) | |
| Accumulated other comprehensive loss | (1,193) | (421) | |
| Receivable for common stock issued | (26) | (26) | |
| Treasury stock, at cost, 12,716 shares | (169) | (169) | |
| Total stockholders’ equity | 10,453 | 11,315 | |
| Total liabilities and stockholders’ equity | $31,309 | $34,623 | |
| Sonic Foundry, Inc. Condensed Consolidated Statements of Operations (in thousands, except for per share data) (Unaudited) |
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| Three Months Ended December 31, | ||
| 2014 | 2013 | |
| Revenue: | ||
| Product | $ 3,374 | $ 2,812 |
| Services | 5,244 | 4,316 |
| Other | 123 | 78 |
| Total revenue | 8,741 | 7,206 |
| Cost of revenue: | ||
| Product | 1,536 | 1,353 |
| Services | 1,135 | 457 |
| Total cost of revenue | 2,671 | 1,810 |
| Gross margin | 6,070 | 5,396 |
| Operating expenses: | ||
| Selling and marketing | 4,394 | 3,376 |
| General and administrative | 1,370 | 960 |
| Product development | 1,533 | 1,236 |
| Acquisition costs | – | 450 |
| Total non-operating income | 7,297 | 6,022 |
| Loss from operations |
(1,227) | (626) |
| Non-operating income: | ||
| Equity in earnings from investment in Mediasite KK | – | 23 |
| Interest expense, net | (63) | (17) |
| Other income, net | 168 | – |
| Total operating expenses | 105 | 6 |
| Loss before income taxes | (1,122) | (620) |
| Provision for income taxes | 90 | (70) |
| Net loss | $ (1,032) | $ (690) |
| Loss per common share: | ||
| -basic | $ (0.24) | $ (0.17) |
| -diluted | $ (0.24) | $ (0.17) |
| Sonic Foundry, Inc. Consolidated Adjusted EBITDA Reconciliation (in thousands) (Unaudited) |
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| Three Months Ended December 31, | ||
| 2014 | 2013 | |
| Net Loss | $ (1,032) | $ (690) |
| Add: | ||
| Depreciation and amortization | 561 | 345 |
| Income tax expense (benefit) | (90) | 70 |
| Interest expense | 63 | 17 |
| Stock-based compensation expense | 317 | 282 |
| Adjusted EBITDA | $ (181) | $ 24 |
| Sonic Foundry, Inc. Condensed Consolidated Statements of Cash Flows (in thousands) (Unaudited) |
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| Three Months Ended December 31, | ||
| 2014 | 2013 | |
| Operating activities | ||
| Net loss | $(1,032) | $(690) |
| Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ||
| Equity in earnings on investment in Mediasite KK | – | (23) |
| Amortization of other intangibles | 104 | 5 |
| Amortization of software development costs | 44 | 44 |
| Amortization of product rights | 31 | – |
| Depreciation of property and equipment | 382 | 296 |
| Deferred taxes | 15 | 70 |
| Stock-based compensation expense related to stock options | 317 | 282 |
| Remeasurement gain on subordinated debt | (179) | – |
| Changes in operating assets and liabilities: | ||
| Accounts receivable | 1,044 | 266 |
| Inventories | (223) | (79) |
| Prepaid expenses and other current assets | 233 | (86) |
| Accounts payable and accrued liabilities | (967) | 174 |
| Other long-term liabilities | (21) | (22) |
| Unearned revenue | (979) | (199) |
| Net cash (used in) provided by operating activities | (1,231) | 38 |
| Investing activities | ||
| Purchases of property and equipment | (109) | (117) |
| Cash paid for MediaMission acquisitions, net of cash acquired | – | (119) |
| Net cash used in investing activities | (109) | (236) |
| Financing activities | ||
| Payments on notes payable | (550) | (167) |
| Proceeds from exercise of common stock and warrants | 625 | – |
| Proceeds from issuance of common stock options | – | 35 |
| Payments on capital lease obligations | (53) | (55) |
| Net cash provided by (used in) financing activities | 22 | (187) |
| Changes in cash and cash equivalents due to changes in foreign currency | (215) | – |
| Net decrease in cash and cash equivalents | (1,533) | (385) |
| Cash and cash equivalents at beginning of period | 4,344 | 3,482 |
| Cash and cash equivalents at end of period | $ 2,811 | $ 3,097 |
About Sonic Foundry®, Inc.
Founded in 1991 and headquartered in Madison, Wis., Sonic Foundry (OTC: SOFO) is dedicated to transforming how the world works and learns through innovative and scalable technology solutions. Sonic Foundry’s brands include Vidable® and Global Learning Exchange® which help unlock a smarter, more connected world for learners, workers, and entrepreneurs everywhere. For more information visit www.sonicfoundry.com.
© 2024 Sonic Foundry, Inc. Product and service names mentioned herein are the trademarks of Sonic Foundry, Inc. or their respective owners.
