MADISON, Wis.--(BUSINESS WIRE)--Sonic Foundry, Inc. (NASDAQ: SOFO), the trusted leader for video creation and management solutions, today announced consolidated financial results for its fiscal 2015 second quarter ended March 31, 2015.
Select quarterly financial highlights:
- Billings of $9.1 million, a decrease of 12% from $10.3 million compared to the same period last year. Billings in Japan were less than the prior year by approximately $700 thousand due to both significant currency rate changes compared to last year as well as continued construction delays. We also made the decision to route fewer transactions to our key distribution partners in an effort to reduce associated carrying and transaction costs that had a $350 thousand impact.
Revenues of $8.1 million, a decrease of 9% compared to the second
quarter of fiscal 2014. No revenue was recorded on a $900 thousand
international transaction shipped in the quarter, the majority of
which will be recognized as revenue in the third fiscal quarter.
- Product and other revenue of $3.3 million, a decrease of 20% compared to the second quarter of fiscal 2014
- Service revenue of $4.8 million, an increase of 1% over the second quarter of fiscal 2014
- Gross margin of $6.2 million or 77% compared to $6.5 million or 73% for the second quarter of fiscal 2014. The increase in gross margin percentage was driven by operational improvements in Europe as well as improved margins in Japan.
- Net loss of $1.4 million or $(0.31) per basic share compared to a net loss of $871 thousand or $(0.21) per basic share in the second quarter of fiscal 2014.
- Adjusted EBITDA loss of $(301) thousand compared to Adjusted EBITDA income of $984 thousand in the second quarter of fiscal 2014.
- Cash of $2.6 million compared to $4.3 million at September 30, 2014.
As of March 31, 2015, $9.9 million of revenue from services and products were unearned (an increase from $8.8 million as of March 31, 2014). The company expects to realize $3.7 million of that in the quarter ending June 30, 2015. Unearned revenue increased $1.0 million during the quarter as a result of the large international transaction referred to above which was fully deferred in the current period. 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 55 percent of Sonic Foundry’s consolidated billings in the second quarter of fiscal 2015, compared to 57 percent in the second quarter of fiscal 2014. International billings have remained high primarily as a result of customer wins in the Middle East and sales efforts of our locations in Europe and Japan.
In the second quarter of fiscal 2015, 75 percent of billings were to existing customers, compared to 66 percent during the same period last year, with 31 percent to corporate customers and 61 percent to education customers.
“We’re pleased to be progressing with large deals like the one in the Middle East, and expect to see more of them closing this fiscal year. As a company we are well positioned to take advantage of the largest, most strategic investments in video as campuses realize the value of building it into their very infrastructure. While the enterprise video market is still early stage, it’s growing, and we are committed to innovating the best, most holistic solutions that drive growth and lead customers to build stronger organizations,” said Gary Weis, chief executive officer of Sonic Foundry.
As a result of the impact of currency rate changes in Japan and Europe, continued construction delays in Japan as well as timing of domestic opportunities compared to last year, the company is revising the fiscal 2015 guidance provided previously for billings to between $41 and $42 million, adjusted EBITDA of between $1.5 and $2.5 million and a net loss 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 March 31, 2015 and 2014 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 second 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 www.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.
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.
|Sonic Foundry, Inc.|
|Condensed Consolidated Balance Sheets|
|(in thousands, except for share data)|
|March 31,||September 30,|
|Cash and cash equivalents||$||2,610||$||4,344|
|Accounts receivable, net of allowances of $180 and $150||8,141||8,449|
|Prepaid expenses and other current assets||1,721||1,544|
|Total current assets||14,688||16,058|
|Property and equipment:|
|Furniture and fixtures||745||720|
|Total property and equipment||7,703||7,071|
|Less accumulated depreciation||4,456||3,675|
|Property and equipment, net||3,247||3,396|
|Customer relationships, net of amortization of $324 and $191||1,973||2,471|
|Software development costs, net of amortization of $341 and $252||192||281|
|Product rights, net of amortization of $103 and $41||569||631|
|Other intangibles, net of amortization of $180 and $162||50||37|
|Other long-term assets||512||564|
|Liabilities and stockholders' equity|
|Revolving line of credit||$||2,227||
|Current portion of capital lease obligation||224||196|
|Current portion of notes payable||907||974|
|Current portion of subordinated notes payable||134||2,096|
|Total current liabilities||14,752||16,040|
|Long-term portion of unearned revenue||1,385||929|
|Long-term portion of capital lease obligations||233||173|
|Long-term portion of notes payable||1,540||1,139|
|Long-term portion of subordinated note payable||134||314|
|Deferred tax liability||4,256||4,312|
|Commitments and contingencies|
|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, $.01 par value, authorized 10,000,000 shares; 4,363,919 and|
|4,276,470 shares issued and 4,351,203 and 4,263,754 shares outstanding||44||43|
|Additional paid-in capital||195,468||194,260|
|Accumulated other comprehensive loss||(1,158||)||(421||)|
|Receivable for common stock issued||(26||)||(26||)|
|Treasury stock, at cost, 12,716 shares||(169||)||(169||)|
|Total stockholders' equity||9,405||11,315|
|Total liabilities and stockholders' equity||$||32,059||$||34,623|
|Sonic Foundry, Inc.|
|Condensed Consolidated Statements of Operations|
|(in thousands, except for per share data)|
Three Months Ended March 31,
Six Months Ended March 31,
Cost of revenue:
|Total cost of revenue||1,890||2,379||4,561||4,189|
|Selling and marketing||4,311||4,058||8,705||7,446|
|General and administrative||1,433||1,641||2,803||2,578|
|Total operating expenses||7,288||7,521||14,585||13,543|
|Loss from operations||(1,072||)||(1,022||)||(2,299||)||(1,648||)|
|Non-operating income (expenses):|
|Gain on investment in Mediasite KK||-||1,391||-||1,391|
|Equity in earnings of investment in Mediasite KK||
|Interest expense, net||(66||)||(74||)||(129||)||(91||)|
|Other income (expense), net||(4||)||(10||)||164||(10||)|
|Income (loss) before income taxes||(1,142||)||300||(2,264||)||(320||)|
|Provision for income taxes||(208||)||(1,171||)||(118||)||(1,241||)|
|Net loss per common share:|
|Sonic Foundry, Inc.|
|Consolidated Adjusted EBITDA Reconciliation|
|Three Months Ended|
|Depreciation and amortization||553||417|
|Income tax expense||208||1,171|
|Stock-based compensation expense||222||193|
|Sonic Foundry, Inc.|
|Condensed Consolidated Statements of Cash Flows|
|Six months ended|
|Adjustments to reconcile net loss to net cash used in operating activities:|
|Gain or equity in earnings on investment in Mediasite KK||-||(1,429||)|
|Amortization of other intangibles||180||71|
|Amortization of software development costs||89||88|
|Amortization of product rights||62||-|
|Depreciation of property and equipment||783||603|
|Provision for doubtful accounts||30||133|
|Stock-based compensation expense related to stock options||538||475|
|Remeasurement gain on subordinated debt||(212||)||-|
|Changes in operating assets and liabilities:|
|Prepaid expenses and other current assets||(191||)||(916||)|
|Accounts payable and accrued liabilities||(868||)||1,352|
|Other long-term liabilities||(43||)||(44||)|
|Net cash used in operating activities||(2,302||)||(1,249||)|
|Purchases of property and equipment||(465||)||(366||)|
|Cash received in Mediasite KK acquisition, net of cash paid||-||1,281|
|Cash paid for MediaMission acquisition, net of cash acquired||-||(119||)|
|Net cash (used in) provided by investing activities||(465||)||796|
|Proceeds from notes payable||833||1,954|
|Proceeds from line of credit||5,027||-|
|Payments on notes payable||(2,417||)||(677||)|
|Payments on line of credit||(2,800||)||-|
|Payment of debt issuance costs||(30||)||(28||)|
|Proceed from issuance of common stock and warrants||663||182|
|Proceeds from exercise of common stock options||8||32|
|Payments on capital lease obligations||(120||)||(118||)|
|Net cash provided by financing activities||1,164||1,345|
|Changes in cash and cash equivalents due to changes in foreign currency||(131||)||(9||)|
|Net increase (decrease) in cash and cash equivalents||(1,734||)||883|
|Cash and cash equivalents at beginning of period||4,344||3,482|
|Cash and cash equivalents at end of period||$||2,610||$||4,365|