MADISON, Wis., Aug. 13, 2019 (GLOBE NEWSWIRE) — Sonic Foundry (OTC Pink Sheets: SOFO) today announced consolidated financial results for its fiscal 2019 third quarter ended June 30, 2019.
Fiscal 2019 Third Quarter Highlights
- Total revenues were $10.1 million ($10.2 million without distribution impact) compared to $8.7 million in the third quarter of 2018
- Gross margin was $7.4 million or 73 percent of sales compared to $6.4 million or 74 percent of sales in the third quarter of 2018
- Adjusted EBITDA of $740,000 compared to $(343,000) in the third quarter of 2018
- Net loss of $(159,000) ($(93,000) without distribution impact) or $(0.03) per share compared to net loss of $(1) million or $(0.23) per share in the third quarter of 2018
- Billings totaled $10.5 million in the third quarter of 2019, an increase of 16 percent compared to the same period last year
- Unearned revenue increased to $11 million as of June 30, 2019
Fiscal 2019 Third Quarter Review
Service billings, including support, hosting, events, and installs, saw an increase of 14 percent from the prior year for a total of $6.5 million. Product billings were up 20 percent to $4 million during the third quarter of fiscal year 2019 compared to the same period last year. Product billings and revenue were negatively impacted by a planned reduction of product inventory maintained by domestic distributors of $94,000 during the quarter and $1.3 million year to date. The company expects to recognize $3.4 million of the current unearned revenue in the fourth quarter of fiscal 2019.
Recurring revenue of $6.3 million was 63 percent of total revenue in the third quarter of 2019, compared to $5.9 million, or 68 percent of total revenue in the third quarter of 2018.
Operating expenses were $7.2 million, down $66,000 or 1 percent from the same period in 2018. The net loss of $(159,000) was an improvement compared to the same period in 2018.
“I am pleased to see us execute according to our plan for the quarter. As we proceed with our strategic and operational improvements, we are focused on living up to the expectations and goals we create,” said Michael Norregaard, CEO, Sonic Foundry. “We are confident we have the platform that best helps our customers scale deployments across campuses and enterprises. As we quickly approach the start of a new fiscal year, Mediasite Video Cloud and our unified communications solution Mediasite Join are two of our key priorities. We are zeroing in on our product innovation process and customer success, adding product functions and services to attract and expand more customers.”
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 and severance 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 income (loss) to adjusted EBITDA for the quarters ended June 30, 2019 and 2018 are included in the release.
About Sonic Foundry®, Inc.
Sonic Foundry (OTC Pink Sheets: SOFO) is the global leader for video capture, management and streaming solutions. Trusted by more than 4,900 educational institutions, corporations, health organizations and government entities in over 65 countries, its Mediasite Video Platform quickly and cost-effectively automates the capture, management, delivery and search of live and on-demand streaming videos. Learn more at www.sonicfoundry.com and @mediasite.
© 2019 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.
Media Relations:
Nicole Wise, Director of Communications
920.226.0269
[email protected]
| Sonic Foundry, Inc. Condensed Consolidated Balance Sheets (in thousands, except for share data) (Unaudited) |
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| June 30, 2019 |
September 30, 2018 |
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| Assets | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 3,387 | $ | 1,189 | |||
| Accounts receivable, net of allowances of $75 and $524 | 6,890 | 7,418 | |||||
| Financing receivables, current, net of allowances of $526, respectively | 109 | 100 | |||||
| Inventories | 955 | 1,027 | |||||
| Investment in sales-type lease, current | 163 | 150 | |||||
| Capitalized commissions, current | 435 | — | |||||
| Prepaid expenses and other current assets | 829 | 941 | |||||
| Total current assets | 12,768 | 10,825 | |||||
| Property and equipment: | |||||||
| Leasehold improvements | 1,122 | 1,105 | |||||
| Computer equipment | 6,015 | 5,718 | |||||
| Furniture and fixtures | 1,242 | 1,099 | |||||
| Total property and equipment | 8,379 | 7,922 | |||||
| Less accumulated depreciation and amortization | 6,782 | 6,009 | |||||
| Property and equipment, net | 1,597 | 1,913 | |||||
| Other assets: | |||||||
| Financing receivables, long-term | 97 | 181 | |||||
| Investment in sales-type lease, long-term | 134 | 249 | |||||
| Capitalized commissions, long-term | 120 | — | |||||
| Other long-term assets | 400 | 415 | |||||
| Total assets | $ | 15,116 | $ | 13,583 | |||
| Liabilities and stockholders’ deficit | |||||||
| Current liabilities: | |||||||
| Revolving lines of credit | $ | 463 | $ | 885 | |||
| Accounts payable | 1,283 | 1,610 | |||||
| Accrued liabilities | 1,724 | 1,609 | |||||
| Unearned revenue | 8,887 | 11,645 | |||||
| Current portion of capital lease and financing arrangements | 169 | 248 | |||||
| Current portion of notes payable and warrant debt, net of discounts | 768 | 593 | |||||
| Total current liabilities | 13,294 | 16,590 | |||||
| Long-term portion of unearned revenue | 2,152 | 1,691 | |||||
| Long-term portion of capital lease and financing arrangements | 96 | 187 | |||||
| Long-term portion of notes payable and warrant debt, net of discounts | 5,483 | 1,357 | |||||
| Derivative liability, at fair value | 5 | 14 | |||||
| Other liabilities | 165 | 202 | |||||
| Total liabilities | 21,195 | 20,041 | |||||
| Commitments and contingencies | |||||||
| Stockholders’ deficit: | |||||||
| 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 4,500 shares; zero and 2,678 shares issued and outstanding, respectively, at amounts paid in | — | 1,651 | |||||
| 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; 6,735,512 and 5,113,400 shares issued and 6,722,796 and 5,100,684 shares outstanding | 67 | 51 | |||||
| Additional paid-in capital | 203,752 | 200,130 | |||||
| Accumulated deficit | (209,161 | ) | (207,419 | ) | |||
| Accumulated other comprehensive loss | (542 | ) | (676 | ) | |||
| Receivable for common stock issued | (26 | ) | (26 | ) | |||
| Treasury stock, at cost, 12,716 shares | (169 | ) | (169 | ) | |||
| Total stockholders’ deficit | (6,079 | ) | (6,458 | ) | |||
| Total liabilities and stockholders’ deficit | $ | 15,116 | $ | 13,583 | |||
| Sonic Foundry, Inc. Condensed Consolidated Statements of Operations (in thousands, except for share and per share data) (Unaudited) |
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| Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||
| Revenue: | |||||||||||||||
| Product and other | $ | 4,221 | $ | 3,214 | 7,768 | $ | 8,927 | ||||||||
| Services | 5,847 | 5,485 | 17,799 | 17,127 | |||||||||||
| Total revenue | 10,068 | 8,699 | 25,567 | 26,054 | |||||||||||
| Cost of revenue: | |||||||||||||||
| Product and other | 1,558 | 1,388 | 2,854 | 3,814 | |||||||||||
| Services | 1,123 | 916 | 3,673 | 3,446 | |||||||||||
| Total cost of revenue | 2,681 | 2,304 | 6,527 | 7,260 | |||||||||||
| Gross margin | 7,387 | 6,395 | 19,040 | 18,794 | |||||||||||
| Operating expenses: | |||||||||||||||
| Selling and marketing | 3,785 | 3,882 | 11,564 | 11,859 | |||||||||||
| General and administrative | 1,609 | 1,631 | 4,492 | 4,713 | |||||||||||
| Product development | 1,849 | 1,796 | 5,617 | 5,361 | |||||||||||
| Total operating expenses | 7,243 | 7,309 | 21,673 | 21,933 | |||||||||||
| Income (loss) from operations | 144 | (914 | ) | (2,633 | ) | (3,139 | ) | ||||||||
| Non-operating income (expenses): | |||||||||||||||
| Interest expense, net | (276 | ) | (266 | ) | (657 | ) | (461 | ) | |||||||
| Other income (expense), net | (63 | ) | 88 | (66 | ) | 98 | |||||||||
| Total non-operating expenses | (339 | ) | (178 | ) | (723 | ) | (363 | ) | |||||||
| Loss before income taxes | (195 | ) | (1,092 | ) | (3,356 | ) | (3,502 | ) | |||||||
| Benefit (provision) for income taxes | 36 | 72 | (77 | ) | 1,353 | ||||||||||
| Net loss | (159 | ) | (1,020 | ) | (3,433 | ) | (2,149 | ) | |||||||
| Dividends on preferred stock | (24 | ) | (67 | ) | (122 | ) | (189 | ) | |||||||
| Net loss attributable to common stockholders | $ | (183 | ) | $ | (1,087 | ) | $ | (3,555 | ) | $ | (2,338 | ) | |||
| Loss per common share | |||||||||||||||
| – basic | $ | (0.03 | ) | $ | (0.23 | ) | $ | (0.64 | ) | $ | (0.51 | ) | |||
| – diluted | $ | (0.03 | ) | $ | (0.23 | ) | $ | (0.64 | ) | $ | (0.51 | ) | |||
| Weighted average common shares | |||||||||||||||
| – basic | 6,122,098 | 4,709,516 | 5,528,999 | 4,542,955 | |||||||||||
| – diluted | 6,122,098 | 4,709,516 | 5,528,999 | 4,542,955 | |||||||||||
| Sonic Foundry, Inc. Condensed Consolidated Statements of Cash Flows (in thousands) (Unaudited) |
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| Nine Months Ended June 30, | |||||||
| 2019 | 2018 | ||||||
| Operating activities | |||||||
| Net loss | $ | (3,433 | ) | $ | (2,149 | ) | |
| Adjustments to reconcile net loss to net cash used in operating activities: | |||||||
| Amortization | 170 | 482 | |||||
| Depreciation and amortization of property and equipment | 748 | 822 | |||||
| Loss on sale of fixed assets | 8 | — | |||||
| Provision for doubtful accounts – including financing receivables | 31 | 300 | |||||
| Deferred taxes | — | (1,387 | ) | ||||
| Stock-based compensation expense related to stock options and warrants | 203 | 392 | |||||
| Stock issued for board of director’s fees | 246 | — | |||||
| Conversion of accrued interest to preferred stock | — | 31 | |||||
| Beneficial conversion feature recognized on debt converted to preferred stock | — | 71 | |||||
| Remeasurement gain on derivative liability | (12 | ) | (16 | ) | |||
| Changes in operating assets and liabilities: | |||||||
| Accounts receivable | 660 | 834 | |||||
| Financing receivables | 87 | 1,614 | |||||
| Inventories | 75 | 70 | |||||
| Capitalized commissions | 138 | — | |||||
| Prepaid expenses and other current assets | 280 | 356 | |||||
| Accounts payable and accrued liabilities | (294 | ) | (126 | ) | |||
| Other long-term liabilities | (46 | ) | (136 | ) | |||
| Unearned revenue | (1,339 | ) | (2,347 | ) | |||
| Net cash used in operating activities | (2,478 | ) | (1,189 | ) | |||
| Investing activities | |||||||
| Purchases of property and equipment | (373 | ) | (657 | ) | |||
| Net cash used in investing activities | (373 | ) | (657 | ) | |||
| Financing activities | |||||||
| Proceeds from notes payable | 5,500 | 3,000 | |||||
| Proceeds from revolving lines of credit | 9,199 | 16,706 | |||||
| Payments on notes payable | (583 | ) | (815 | ) | |||
| Payments to settle warrant debt | — | (200 | ) | ||||
| Payments on revolving lines of credit | (9,636 | ) | (16,546 | ) | |||
| Payment of debt issuance costs | (110 | ) | (97 | ) | |||
| Proceeds from issuance of preferred stock, common stock and warrants | 864 | 1,008 | |||||
| Payments on capital lease and financing arrangements | (193 | ) | (228 | ) | |||
| Net cash provided by financing activities | 5,041 | 2,828 | |||||
| Changes in cash and cash equivalents due to changes in foreign currency | 8 | (64 | ) | ||||
| Net increase in cash and cash equivalents | 2,198 | 918 | |||||
| Cash and cash equivalents at beginning of year | 1,189 | 1,211 | |||||
| Cash and cash equivalents at end of year | $ | 3,387 | $ | 2,129 | |||
| Supplemental cash flow information: | |||||||
| Interest paid | $ | 425 | $ | 290 | |||
| Income taxes paid, foreign | 237 | 48 | |||||
| Non-cash financing and investing activities: | |||||||
| Property and equipment financed by capital lease or accounts payable | 45 | 414 | |||||
| Debt discount and warrant | 679 | 127 | |||||
| Deemed dividend for beneficial conversion feature of preferred stock | — | 28 | |||||
| Preferred stock dividends paid in additional shares | 122 | 161 | |||||
| Subordinated note payable converted to preferred stock | — | 1,000 | |||||
| Conversion of preferred shares to common shares | 1,772 | — | |||||
| Sonic Foundry, Inc. Condensed Consolidated Non-GAAP Adjusted EBITDA Reconciliation (in thousands) (Unaudited) |
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| Three Months Ended June 30, |
Nine Months Ended June 30, |
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| 2019 | 2018 | 2019 | 2018 | ||||||||||||
| Net loss | $ | (159 | ) | $ | (1,020 | ) | $ | (3,433 | ) | $ | (2,149 | ) | |||
| Add: | |||||||||||||||
| Depreciation and amortization | 240 | 411 | 748 | 1,161 | |||||||||||
| Income tax benefit (provision) | (36 | ) | (72 | ) | 77 | (1,353 | ) | ||||||||
| Interest expense | 276 | 266 | 657 | 462 | |||||||||||
| Stock-based compensation expense | (17 | ) | 72 | 203 | 392 | ||||||||||
| Severance expense | 436 | — | 562 | — | |||||||||||
| Adjusted EBITDA | $ | 740 | $ | (343 | ) | $ | (1,186 | ) | $ | (1,487 | ) | ||||
