MADISON, Wis. – February 10, 2022 – Sonic Foundry, Inc. (NASDAQ: SOFO), the trusted leader in video creation and management solutions, and virtual and hybrid events, today announced consolidated financial results for its first quarter 2022 ended December 31, 2021.
Highlights for the First Quarter Ended December 31, 2021:
- Total revenue was $7.3 million compared to $9.2 million in the prior year quarter primarily due to reduced event revenue associated with in-person events being cancelled or delayed as a result of COVID
- Gross margin was 71% of sales versus 74% of sales in the comparable quarter, reflecting hardware cost increases from global supply chain pressure
- Net loss attributable to common stockholders was $0.17 per share compared to net income of $0.08 per diluted share in the first fiscal quarter of 2021, reflecting new investments made in product development and marketing, to address new markets
- Adjusted EBITDA was a negative $1.1 million compared to $1.3 million in the first fiscal quarter of 2021
- On January 25, 2022, SOFO began trading on the Nasdaq Capital Market
“As I indicated last quarter, we expect that fiscal 2022 revenues will be relatively flat with momentum building throughout the year and beyond. While our first quarter performance was down year-over-year, it was in line with fluctuations in the events industry and the economic disruption caused by the lingering pandemic. It’s not surprising that the omicron variant caused renewed confusion and delays in the marketplace, just when event organizers began to schedule more in-person and hybrid gatherings. The same also applies to corporate workplaces where management teams are still working to determine whether and how to bring their employees back to the office safely and productively. While we can assume these situations will eventually be resolved, the current uncertainty leads to disruption in our base video business,” said Joe Mozden, Jr., Chief Executive Officer of Sonic Foundry.
“While we always aim at steadily improving results, we recognize growth constraints in our existing business and therefore are far more focused on building our runway for future growth. As I shared in my year-end commentary, we are very energized by our new initiatives that will address tomorrow’s needs and generate future growth. First, we are expanding our cloud capabilities to better support our customers’ video-first journey. This is an important step in moving Sonic Foundry from primarily a hardware provider to a SaaS service provider with recurring revenue streams. Second, next-gen Sonic Foundry is materializing before our eyes. We are building the world’s most complete library of AI -enabled video solutions that can deliver instant, comprehensive, and automated video enhancement at scale. We call this: better video every time, in no time, and we are confident the market for this technology provides our Company with an ability to generate impressive growth.
“The third key component of our growth strategy has the potential to democratize global higher education. U.S. and U.K. universities are being increasingly challenged with lower enrollment and are looking for ways to expand into new growth markets. In close collaboration with several university clients, we identified a global supply- demand imbalance. There are many students worldwide that can afford a higher education yet do not have access to it for a variety of reasons—geo/political instability; international travel restrictions; and inadequate infrastructure. Our innovative solution will allow students to have an in-person experience in locally supported, affordable, community-centric environments that offer aggregated educational content through our Mediasite platform. Think of it this way—master classes taught by top professors that encourage students to engage with one another in a collaborative and supported setting. Our team is thrilled to be part of a solution that bridges the educational gap and offers education opportunities in economically disadvantaged regions.”
“This quarter is the beginning of our transformation from focusing solely on our existing business to investing substantially, not only in our current space, but in adjacent markets where we have the right to win. I promised to keep you updated on our progress regarding these top-priority initiatives and am pleased to share that we have deals with key enterprise clients who are excited to bring these new ventures to market with us. The other piece of news is that we achieved our goal of uplisting to the Nasdaq Capital Market, which I believe will improve our visibility to new investors and our trading liquidity. Our team has accomplished a lot in a short period of time, yet we’re just getting started.”
Fiscal First Quarter 2022 Operating Results:
Service revenue, which included support, cloud services, events, and professional services was $5.2 million for fiscal quarter ended December 31, 2021, compared to prior year quarter service revenue of $7.0 million. Product revenue was $2.0 million compared to $2.2 million during the same period last year. Cloud services revenue, including event related cloud services, decreased 23% to $1.8 million in the first quarter of 2022 compared to $2.4 million in the same quarter last year. Event revenue in the first quarter of 2022 was $1.4 million, compared with $1.9 reported in the comparable year-ago quarter. Gross margin was $5.1 million for the first quarter of fiscal 2022, compared with $6.8 million in the same period of the prior fiscal year.
Non-GAAP Financial Information:
To supplement and enhance the reader’s understanding of our operating performance, we disclose adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (adjusted EBITDA), a non-GAAP measure of operating performance. Our adjusted EBITDA measure additionally adds back stock compensation expense, and severance 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. A reconciliation of net income to adjusted EBITDA for the first quarter ended December 31, 2022, and 2021 are included in the release.
About Sonic Foundry®, Inc.
Sonic Foundry (NASDAQ: SOFO) is the global leader for video capture, management and streaming solutions as well as virtual and hybrid events. Trusted by thousands of educational institutions, corporations, health organizations and government entities in over 65 countries, Sonic Foundry’s solutions include Mediasite®, Mediasite Connect, Vidable™ and Global Learning Exchange™.
© 2022 Sonic Foundry, Inc. Product and service names mentioned herein are the trademarks of Sonic Foundry, Inc. or their respective owners.