MADISON, Wis. – August 10, 2017 – Sonic Foundry, Inc. (NASDAQ: SOFO), the trusted leader for video creation and management solutions, today announced consolidated financial results for its fiscal 2017 third quarter ended June 30, 2017.
Fiscal 2017 Third Quarter Highlights
- Total Revenues of $9.8 million, flat with $9.8 million in the third quarter of 2016
- Gross margin remained at $7.2 million, or 74% of sales, the same as the third quarter of 2016
- Adjusted EBITDA of $246 thousand compared to $240 thousand in the third quarter of 2016
- Net loss of $(489) thousand, or $(0.13) per share compared to a net loss of $(552) thousand, or $(0.13) per share in the third quarter of 2016
- Billings totaled $10.3 million in the third quarter of 2017, a decline of 7% compared to same period last year
- Unearned revenue from services and products decreased $876 thousand during the first three quarters of 2017 due to realization of deferred amounts for events and an international customer. The balance was $13.2 million as of June 30, 2017, compared to $14.1 million at the beginning of the year
Fiscal 2017 Third Quarter Review
Domestic higher education and events accounts experienced reduced activity during the quarter compared to last year while results in Japan were significantly better. International product and service billings accounted for 42% percent of Sonic Foundry’s consolidated billings in the third quarter of fiscal 2017, compared to 34% percent in the third quarter of fiscal 2016. Our Japanese subsidiary recognized the remaining billing from the five-year contract it initiated during the second quarter of fiscal 2017, which generated total billings of over $800 thousand during the third quarter of fiscal 2017. Approximately $600 thousand of product revenue was recognized during the third quarter of fiscal 2017 from this contract and the remaining deferred support amount will be recognized over the life of the contract.
“The third fiscal quarter demonstrated significant improvements over the previous quarter. Strong cash collections and acceleration of inventory sell-through resulted in over $2 million in operating cash flow for the quarter which has funded all of the company’s operating cash year to date. We made significant improvement in net income, reducing our loss in the second quarter by nearly $1 million,” said Gary Weis, CEO of Sonic Foundry.
“While revenue was flat when compared to the third quarter of the prior year, our strategic customer base of large universities and corporate customers continues to remain loyal and grow. We have plans in place to accelerate growth in the middle market of higher education. We are launching new and exciting products this month, with the objective of providing more right-sized lecture capture solutions to these new market segments. These dynamics have us positioned for long-term financial performance improvements, and should result in positive contributions to our results in the fourth fiscal quarter, and enable us to build on this quarter’s progress as we close out the year and beyond.”
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 adds back 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 and nine months ended June 30, 2017 and 2016 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.
The company will hold its corporate webcast for analysts and investors at 4:30 p.m. ET today, August 10. Sonic Foundry will use its webcasting technology, Mediasite, to stream the presentation for live and on-demand viewing. To access the webcast register at www.sonicfoundry.com/earnings on or before August 10, 2017. A video archive of the full earnings call, including Q&A, will be available for 90 days.
About Sonic Foundry®, Inc.
Sonic Foundry, Inc. (NASDAQ: SOFO) (the “Company”) is the trusted global leader for video capture, management and streaming solutions. Trusted by educational institutions, corporations and government entities, Mediasite Video Platform quickly and cost-effectively automates the capture, management, delivery and search of live and on-demand streaming videos and rich media. Mediasite transforms communications, training, education and events for more than 4,300 customers in over 65 countries. Leading analyst research firms Aragon, Forrester, Wainhouse and Frost & Sullivan recognize Sonic Foundry as a leader in enterprise video, webcasting and lecture capture.
© 2017 Sonic Foundry, Inc. Product and service names mentioned herein are the trademarks of Sonic Foundry, Inc. or their respective owners.
Forward Looking Statements
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.
Director of Communications
Peter Seltzberg, Managing Director
Darrow Associates, Inc.
1951 Lowell Lane
Merrick, NY 11566
|Sonic Foundry, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except for share data)
|June 30,||September 30,|
|Cash and cash equivalents||$ 1,605||$ 1,794|
|Accounts receivable, net of allowances of $375 and $225||9,191||11,646|
|Investment in sales-type lease, current||118||─|
|Prepaid expenses and other current assets||1,144||1,404|
|Total current assets||13,177||16,748|
|Property and equipment:|
|Furniture and fixtures||911||825|
|Total property and equipment||8,452||7,541|
|Less accumulated depreciation and amortization||6,583||5,510|
|Property and equipment, net||1,869||2,031|
|Customer relationships, net of amortization of $923 and $723||1,558||1,882|
|Product rights, net of amortization of $380 and $287||292||385|
|Investment in sales-type lease, long-term||377||─|
|Other long-term assets||647||726|
|Total assets||$ 28,956||$ 33,082|
|Liabilities and stockholders’ equity|
|Revolving line of credit||$ 2,270||$ 1,772|
|Current portion of capital lease and financing arrangements||298||283|
|Current portion of notes payable, net of discounts||1,116||1,491|
|Current portion of subordinated note payable||─||93|
|Total current liabilities||17,805||19,317|
|Long-term portion of unearned revenue||1,845||1,257|
|Long-term portion of capital lease and financing arrangements||295||231|
|Long-term portion of notes payable and warrant debt, net of discounts||117||871|
|Derivative liability, at fair value||25||67|
|Deferred tax liability||4,444||4,564|
|Commitments and contingencies|
|Preferred stock, $.01 par value, authorized 500,000 shares; none issued||
|9% Preferred stock, Series A, voting, cumulative, convertible, $.01 par value (liquidation preference of $1,000 per share), authorized 1,000 shares, 830 shares issued and outstanding, at amounts paid in||
|5% Preferred stock, Series B, voting, cumulative, convertible, $.01 par value (liquidation preference at par), authorized 1,000,000 shares, none issued||
|Common stock, $.01 par value, authorized 10,000,000 shares; 4,462,609 and 4,424,275 shares issued and 4,449,893 and 4,411,559 shares outstanding, respectively||
|Additional paid-in capital||197,698||197,064|
|Accumulated other comprehensive loss||(613)||(183)|
|Receivable for common stock issued||(26)||(26)|
|Treasury stock, at cost, 12,716 shares||(169)||(169)|
|Total stockholders’ equity||4,023||6,516|
|Total liabilities and stockholders’ equity||$ 28,956||$ 33,082|
| Sonic Foundry, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except for share and per share data)
|Three Months Ended
|Nine Months Ended
|Product and other||$ 4,420||$ 4,062||$ 11,543||$ 12,162|
|Cost of revenue:|
|Product and other||1,560||1,547||4,728||4,823|
|Total cost of revenue||2,586||2,582||7,680||7,634|
|Selling and marketing||4,368||4,575||13,186||13,449|
|General and administrative||1,482||1,371||4,400||4,218|
|Total operating expenses||7,618||7,687||23,167||22,666|
|Loss from operations||(371)||(452)||(3,147)||(1,782)|
|Non-operating income (expenses):|
|Interest expense, net||(130)||(149)||(396)||(452)|
|Other income (expense), net||34||31||(43)||34|
|Total non-operating expenses||(96)||(118)||(439)||(418)|
|Loss before incomes taxes||(467)||(570)||(3,586)||(2,200)|
|Benefit (provision) for income taxes||(22)||18||132||(270)|
|Dividends on preferred stock||(75)||─||(75)||─|
|Net loss attributable to common stockholders||(564)||(552)||(3,529)||(2,470)|
|Loss per common share:|
|-Basic||$ (0.13)||$ (0.13)||$ (0.80)||$ (0.56)|
|-Diluted||$ (0.13)||$ (0.13)||$ (0.80)||$ (0.56)|
|Weighted average common shares|
Sonic Foundry, Inc.
|Three Months Ended
|Nine Months Ended
|Net loss||$ (489)||$ (552)||$ (3,454)||$ (2,470)|
|Depreciation and amortization||505||533||1,516||1,619|
|Income tax expense||22||(18)||(132)||270|
|Stock-based compensation expense||101||150||487||671|
|Adjusted EBITDA||$ 246||$ 240||$ (1,256)||$ 520|
|Sonic Foundry, Inc.
Condensed Consolidated Statements of Cash Flows
|Nine Months Ended June 30,|
|Net loss||$ (3,454)||$ (2,470)|
|Adjustments to reconcile net loss to net cash provided by (used in) operating activities:|
|Amortization of other intangibles||420||515|
|Depreciation and amortization of property and equipment||1,096||1,181|
|Gain on sale of fixed assets||8||─|
|Provision for doubtful accounts||150||(50)|
|Stock-based compensation expense related to stock options||487||671|
|Remeasurement gain on subordinated debt||(6)||(4)|
|Remeasurement gain on derivative liability||(42)||(53)|
|Changes in operating assets and liabilities:|
|Prepaid expenses and other current assets||(190)||43|
|Accounts payable and accrued liabilities||(8)||(717)|
|Other long-term liabilities||158||(66)|
|Net cash provided by operating activities||716||1,808|
|Purchases of property and equipment||(676)||(208)|
|Net cash used in investing activities||(676)||(208)|
|Proceeds from notes payable||─||500|
|Proceeds from line of credit||17,531||11,845|
|Payments on notes payable||(1,317)||(1,279)|
|Payments on line of credit||(16,999)||(12,076)|
|Payment of debt issuance costs||(26)||(36)|
|Proceeds from issuance of preferred stock, common stock and warrants||771||31|
|Payments on capital lease and financing arrangements||(255)||(202)|
|Net cash used in financing activities||(295)||(1,217)|
|Changes in cash and cash equivalents due to changes in foreign currency||66||(30)|
|Net increase (decrease) in cash and cash equivalents||(189)||353|
|Cash and cash equivalents at beginning of period||1,794||1,976|
|Cash and cash equivalents at end of period||$ 1,605||$ 2,329|
|Supplemental cash flow information:|
|Income taxes paid, foreign||27||10|
|Non-cash financing and investing activities:|
|Property and equipment financed by capital lease or accounts payable||358||355|
|Stock issued for board of director’s fees||133||164|
|Deemed dividend for beneficial conversion feature of preferred stock||69||─|
|Preferred stock dividends paid in additional shares||6||─|
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™.
© 2023 Sonic Foundry, Inc. Product and service names mentioned herein are the trademarks of Sonic Foundry, Inc. or their respective owners.