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Press Release

Sonic Foundry Reports Third Quarter Fiscal 2013 Results

MADISON, Wis. – July 25, 2013 – Sonic Foundry, Inc. (NASDAQ: SOFO), the trusted market leader for video management and academic, enterprise and event webcasting, today announced financial results for its fiscal 2013 third quarter ended June 30, 2013.

GAAP results include:

  • Revenues of $8.0 million, up 3 percent from the fiscal third quarter of 2012
  • Product and other revenue of $4.2 million, up 1 percent from the fiscal third quarter of 2012
  • Services revenue of $3.8 million, up 6 percent from $3.6 million in the third quarter of fiscal 2012
    • Support and maintenance revenue of $2.0 million, an increase of 9 percent over the third quarter of fiscal 2012
    • Event services and hosting revenue of $1.8 million, an increase of 3 percent over the third quarter of fiscal 2012
  • Unearned revenue balance of $6.6 million, compared to $5.7 million at June 30, 2012
  • GAAP net  income of $40 thousand or $0.01 per basic share, compared to net income of $559 thousand or $0.14 per basic share in the fiscal third quarter of 2012
  • Gross margin of $5.6 million or 70 percent compared to $5.6 million or 72 percent for the fiscal third quarter of 2012
  • Cash balance of $3.1 million at June 30, 2013
  • Equity investment in earnings from Mediasite KK of $11 thousand related to our current 26% ownership interest in our Japanese partner

Non-GAAP results include:

  • Billings of $8.5 million, an increase of 2 percent over the third quarter of fiscal 2012
  • Product and other billings of $4.4 million, up 4 percent from the third quarter of fiscal 2012
  • Services billings of $4.1 million is consistent with the third quarter of fiscal 2012
    • Support and maintenance billings of $2.5 million, an increase of 3 percent over the third quarter of fiscal 2012
    • Event services and hosting billings of $1.6 million, a decrease of 6 percent over the third quarter of fiscal 2012
  • Non-GAAP net income of $1.0 million or $0.26 per basic share compared to non-GAAP net income of $1.6 million or $0.41 per basic share in the third quarter of fiscal 2012

Non-GAAP net income primarily excludes all non-cash related expenses of stock compensation, depreciation, amortization, provision for income taxes and includes the cash impact of billings not recognized as revenue. Reconciliation between GAAP and non-GAAP results is provided at the end of this press release.

At June 30, 2013, $6.6 million of revenue was deferred, of which the company expects to realize approximately $2.4 million in the quarter ending September 30, 2013. Revenue from service contracts is recognized over the life of the contract. Services revenue includes Mediasite customer support contracts as well as training, installation, rental, event and content hosting services.

Gross margin decreased from 72 percent in the third quarter of fiscal 2012 to 70 percent in the third quarter of fiscal 2013 due to a greater volume of discounted upgrade units for customers whose product had reached the end of hardware eligibility.

International product and service billings accounted for 27 percent of overall billings, compared to 24 percent in the third quarter of fiscal 2012. During the third quarter of this fiscal year, 80 percent of billings were to preexisting customers, compared to 85 percent in third quarter fiscal 2012, with 63 percent to education customers and 27 percent to corporate.

As previously reported in June 2013, the Company’s Board of Directors authorized a $1 million common stock repurchase program. No repurchases have been made pursuant to the program during the quarter.

“The ability to scale the creation, management and security of video assets is increasingly a requirement for higher education and corporations. In the third quarter we continued to build on our new product-line momentum by strategically expanding our sales team to pursue new markets, and add a concentrated focus to building our existing customer deployments. While still in the early stages, this emphasis on reaching a broader spectrum of organizations and deepening customer relationships has already created tremendous opportunity for Sonic Foundry in the corporate and higher education markets,” said Gary Weis, chief executive officer of Sonic Foundry. “Our large opportunities in the Middle East continue to develop as campuses under construction near completion.  While we were optimistic at the beginning of the year that we would begin shipping solutions for these opportunities in the third quarter of fiscal 2013, we now believe that the majority of shipments will occur in the first half of our fiscal year 2014.  We are confident that we will exceed the current year guidance of 13% growth in billings for our base business.”

Sonic Foundry will host a corporate webcast today for analysts and investors to discuss its fiscal 2013 third 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 An archive of the webcast will be available for 90 days.


To supplement our financial results presented on a GAAP basis, we use a measure of non-GAAP net income or loss in our financial presentation, which excludes certain non-cash costs and includes certain cash billings not recognized as revenue for GAAP purposes. Our non-GAAP financial measure is not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. Our management regularly uses our supplemental non-GAAP financial measures internally to understand, manage and evaluate our business and make operating decisions. These non-GAAP measures are among the factors management uses in planning for and forecasting future periods. Management also believes that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating our operating results and future prospects in the same manner as management and in comparing financial results across accounting periods and to those of peer companies. Our non-GAAP financial measures reflect adjustments based on the following items:

  • Billings not recorded as revenue: We have included the cash effect of billings not recorded as revenue, which are deferred for GAAP purposes, in arriving at non-GAAP net income or loss. Our services are typically billed and collected in advance of providing the service which requires minimal cost to perform in the future. Billings are a better indicator of customer activity and cash flow than revenue is, in management’s opinion, and is therefore used by management as a key operational indicator.
  • Depreciation and amortization of intangible and other assets expenses: We have excluded the effect of depreciation and amortization of assets from our non-GAAP net income or loss. Depreciation and amortization of asset costs is a non-cash expense that includes the periodic write-off of tooling, product design and other assets that contributed to revenues earned during the periods presented and will contribute to future period revenues as well.
  • Non-cash provision for income taxes: We have excluded the impact of the provision for income taxes from our non-GAAP net income or loss. The provision for income taxes is associated with the difference in treatment of goodwill which is not expensed for GAAP purposes but is amortized over a fifteen year life for Federal income tax purposes. The result is a non-cash expense and liability that will never be paid.
  • Stock-based compensation expenses: We maintain an employee qualified stock option plan under which we grant options to acquire common stock to eligible employees. We also maintain an employee stock purchase plan under which common stock may be issued to eligible employees at a reduced price. Stock-based compensation expenses are recorded for these plans in accordance with FASB Accounting Standards Codification subtopic 718, Compensation-Stock Compensation. Stock-based compensation expense is a non-cash expense. As a result, we have excluded the effect of stock-based compensation expenses from our non-GAAP net income or loss.


About Sonic Foundry®, Inc.

Sonic Foundry (NASDAQ: SOFO) is the trusted market leader for enterprise webcasting solutions, providing video content management and distribution for education, business and government. Powered by the patented Mediasite webcasting platform and webcast services of Mediasite Events, the company empowers people to advance how they share knowledge online, using video webcasts to bridge time and distance, enhance learning outcomes and improve performance.

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:

For media relations:



Sonic Foundry, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except for share data)

  June 30, 2013   Sept. 30, 2012
Current assets:
     Cash and cash equivalents $        3,078 $        4,478
     Accounts receivable, net of allowances of $70 and $85 7,688 5,578
     Inventories 1,142 1,053
     Prepaid expenses and other current assets 775 757
          Total current assets 12,683 11,866
Property and equipment:
     Leasehold improvements 852 852
     Computer equipment 4,830 3,851
     Furniture and fixtures 865 865
          Total property and equipment 6,547 5,568
          Less accumulated depreciation and amortization 3,450 2,624
               Net property and equipment 3,097 2,944
Other assets:
     Goodwill 7,576 7,576
     Investment in Mediasite KK 577   420
     Software development costs, net of amortization of $30 503  
     Other intangibles, net of amortization of $195 and $180 20 15
Total assets $      24,456 $      22,821
Liabilities and stockholders’ equity
Current liabilities:
     Revolving line of credit $               – $              – 
     Accounts payable 1,529        1,604
     Accrued liabilities 1,222 850
     Unearned revenue 6,081 5,284
     Current portion of capital lease obligation 183 129
     Current portion of notes payable 667 667
          Total current liabilities 9,682 8,534
     Long-term portion of unearned revenue 490 349
     Long-term portion of capital lease obligation 129   131
     Long-term portion of notes payable 266 766
     Leasehold improvement liability 466 532
     Deferred tax liability 2,150 1,970
          Total liabilities 13,183 12,282
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; 3,978,502 and 3,909,040 shares issued and 3,965,786 and 3,896,324 shares outstanding 40   39
     Additional paid-in capital 190,318   189,459
     Accumulated deficit (178,890)   (178,764)
     Receivable for common stock issued (26) (26)
     Treasury stock, at cost, 12,716 shares (169) (169)
     Total stockholders’ equity 11,273 10,539
          Total liabilities and stockholders’ equity $      24,456 $      22,821



Sonic Foundry, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except for share and per share data)
  Three Months Ended June 30,   Nine Months Ended June 30,
  2013 2012 2013 2012
Product $     4,170 $      4,099 $         9,969 $       9,315
Services 3,782 3,567 10,837 10,317
Other 61   91   189   238
Total revenue 8,013 7,757 20,995 19,870
Cost of revenue:      
Product 1,955   1,850   4,629 4,466
Services 447 352 1,198 1,058
Total cost of revenue 2,402   2,202   5,827 5,524
Gross margin 5,611 5,555 15,168 14,346
Operating expenses:
Selling and marketing 3,652 3,399 9,681 8,875
General and administrative 779 668 2,428 2,143
Product development 1,071   1,089   3,115 3,033
Total operating expenses 5,502   5,156   15,224 14,051

Income (loss) from operations

109 399 (56) 295
Equity in earnings from investment in Mediasite KK 11   250   179   250
Other expense, net (20)   (30)   (69) (106)
Income before income taxes 100   619   54 439
Provision for income taxes (60)   (60)   (180) (180)
Net income (loss) $          40   $         559   $         (126)   $          259
Net income (loss) per common share:
    – basic $       0.01   $        0.14   $        (0.03)   $         0.07
    – diluted $       0.01   $        0.14   $        (0.03)   $         0.07
Weighted average common shares
     – basic 3,938,038 3,856,536 3,915,339 3,849,667
    – diluted 3,984,437 3,900,435 3,915,339   3,904,281



Non-GAAP Consolidated Statements of Operations
(in thousands, except for per share data)



Fiscal Quarter Ended
June 30, 2013


Fiscal Quarter Ended
June 30, 2012














Revenues $  8,013 $      483 $  8,496 $   7,757 $      568 $    8,325
Cost of revenue   2,402     2,402   2,202     2,202
Total operating expenses   5,502   (439)   5,063   5,156   (409)   4,747
Income from operations   109   922   1,031   399   977   1,376
Equity investment in earnings from Mediasite KK   11     11   250     250
Other expense, net   (20)   (20)   (30)     (30)
Provision for income taxes   (60)   60 (60) 60
Net income   $       40   $      982   $  1,022   $      559    $   1,037   $    1,596
Basic and diluted net income per common share $    0.01 $     0.25 $    0.26 $     0.14 $     0.27 $      0.41

(1)Adjustments consist of the following:
Billings $     483 $     568
Depreciation and amortization 301 233
Non-cash tax provision 60 60
Stock-based compensation(2) 138 176
Total non-GAAP adjustments $     982 $  1,037
(2) Stock-based compensation is included in the following GAAP operating expenses:
Selling and marketing $       91 $     112
General and administrative 9 10
Product development 38 54
Total stock-based compensation $     138 $     176




Sonic Foundry, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)

  Nine months endedJune 30, 
  2013   2012
Operating activities
Net income (loss) $        (126) $           259
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
     Equity in earnings from investment in Mediasite KK (179) (250)
     Amortization of other intangibles 15 38
     Amortization of software development costs 30
     Amortization of debt discount 32
     Depreciation and amortization of property and equipment 826 614
     Deferred taxes 180 180
     Stock-based compensation expense related to stock options 485 591
     Provision for doubtful accounts (5)
     Changes in operating assets and liabilities:  
          Accounts receivable (2,110) (805)
          Inventories (89) (213)
          Prepaid expenses and other current assets (18) (182)
          Accounts payable and accrued liabilities 297 (81)
          Other long-term liabilities (66)   (59)
          Unearned revenue 938   (312)
Net cash provided by (used in) operating activities 183 (193)
Investing activities      
Capitalized software development costs (533)  
Purchases of property and equipment  (804)    (1,119)
Net cash used in investing activities (1,337)    (1,119)
Financing activities      
Proceeds from notes payable   1,200
Payments on notes payable  (500)    (1,223)
Payment on debt issuance costs  (20)    (20)
Proceeds from exercise of common stock options and warrants  352    104
Dividends from investment in Mediasite KK  22    –
Proceeds from issuance of common stock  23    63
Payments on capital lease obligations  (123)    (74)
Net cash (used in) provided by financing activities  (246)    50
Net decrease in cash and cash equivalents  (1,400)    (1,262)
Cash and cash equivalents at beginning of period  4,478    5,515
Cash and cash equivalents at end of period  $        3,078    $        4,253
Non-cash transactions:      
Property and equipment financed by accrued liabilities, capital lease obligation and other long-term liabilities $           175   $           707

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


© 2024 Sonic Foundry, Inc. Product and service names mentioned herein are the trademarks of Sonic Foundry, Inc. or their respective owners.

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