Sonic Foundry Reports First Quarter Fiscal 2012 Results
MADISON, Wis., Jan. 26, 2012 /PRNewswire/ -- Sonic Foundry, Inc. (NASDAQ: SOFO), the trusted market leader for enterprise webcasting and lecture capture, today announced financial results for its fiscal 2012 first quarter ended December 31, 2011.
GAAP results include:
-- Revenues of $6.2 million, up 4 percent from the fiscal first quarter of
2011
-- Product and other revenue of $2.7 million, down 8 percent over the first
quarter of fiscal 2011
-- Services revenue of $3.5 million, up 16 percent from $3.0 million in the
first quarter of fiscal 2011
-- Support and maintenance revenue of $1.8 million, an increase of 10
percent over the first quarter of fiscal 2011
-- Event services and hosting revenue of $1.7 million, an increase of
22 percent over the first quarter of fiscal 2011
-- Unearned revenue balance of $5.5 million compared to $5.7 million at
December 31, 2010
-- GAAP net loss of $(184) thousand or $(0.05) per basic and diluted share,
compared to net income of $223 thousand or $0.06 per basic and diluted
share in the fiscal first quarter of 2011
-- Gross margin of $4.5 million or 73 percent compared to $4.3 million or
72 percent for the fiscal first quarter of 2011
-- Cash decrease of $1.4 million from September 30, 2011, primarily due to
a delayed payment from a distributor received after December 31, 2011.
Non-GAAP results include:
-- Billings of $5.7 million, an increase of 2 percent over the first
quarter of fiscal 2011
-- Product and other billings of $2.7 million, a decrease of 8 percent over
the first quarter of fiscal 2011
-- Services billings of $3.0 million, an increase of 13 percent over the
first quarter of fiscal 2011
-- Support and maintenance billings of $1.5 million, a decrease of 6
percent over the first quarter of fiscal 2011
-- Event services and hosting billings of $1.6 million, an increase of
39 percent over the first quarter of fiscal 2011
-- Non-GAAP net loss of $(164) thousand or $(0.04) per basic share compared
to non-GAAP net income of $287 thousand or $0.08 per basic share in the
first quarter of fiscal 2011
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 December 31, 2011, $5.5 million of revenue was deferred, of which the company expects to realize approximately $2.2 million in the quarter ending March 31, 2012. 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 improved from 72 percent in the first quarter of fiscal 2011 to 73 percent in the first quarter of fiscal 2012 due to operational efficiencies in recorder and services costs.
International product and service billings accounted for 29 percent of overall billings, compared to 31 percent in the first quarter of fiscal 2011. During the first quarter of this fiscal year, 73 percent of billings were to preexisting customers, compared to 65 percent in first quarter fiscal 2011, with 53 percent to education customers and 39 percent to corporate.
"We are optimistic about our performance in 2012 and reaffirm our guidance of seventeen percent billings growth. Our growth of four percent in revenue over the first quarter of fiscal 2011, which contained one very significant sale to a single international education customer, is modest but nevertheless represents a strong showing in what is historically our slowest seasonal period, particularly when measured amidst lingering economic uncertainty," said Gary Weis, chief executive officer of Sonic Foundry. "We remain focused on improving the fundamentals of the company, building a solid pipeline and investing in new technology enhancements to reach our goals for both financial performance and customer value."
Sonic Foundry will host a corporate webcast today for analysts and investors to discuss its fiscal 2012 first 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, go to www.sonicfoundry.com/q1. An archive of the webcast will be available for 30 days.
EXPLANATION OF NON-GAAP MEASURES
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. Amortization of intangible assets
expense varies in amount and frequency and it is significantly affected
by the timing and size of our acquisitions. 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, www.sonicfoundry.com) is the trusted market leader for enterprise webcasting and lecture capture, providing video communication solutions for education, business and government. Powered by the patented Mediasite webcasting platform and Mediasite Events group, the company empowers people to transform the way they communicate online, using video webcasts to bridge time and distance, accelerate research and improve performance. Product and service names mentioned herein are the trademarks of Sonic Foundry, Inc. or their respective owners.
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.
Sonic Foundry, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except for share data)
(Unaudited)
December 31, September
2011 30, 2011
------------- ----------
Assets
Current assets:
Cash and cash equivalents $4,110 $5,515
Accounts receivable, net of
allowances of $150 and $90 5,373 5,799
Inventories 1,048 536
Prepaid expenses and other current
assets 716 740
Total current assets 11,247 12,590
Property and equipment:
Leasehold improvements 1,728 980
Computer equipment 3,737 3,586
Furniture and fixtures 703 461
--- ---
Total property and equipment 6,168 5,027
Less accumulated depreciation and
amortization 3,575 3,391
----- -----
Net property and equipment 2,593 1,636
Other assets:
Goodwill 7,576 7,576
Other intangibles, net of
amortization of $154 and $137 21 38
--- ---
Total assets $21,437 $21,840
======= =======
Liabilities and stockholders' equity
Current liabilities:
Revolving line of credit $- $-
Accounts payable 992 1,373
Accrued liabilities 1,017 1,073
Accrued severance 354 528
Unearned revenue 5,133 5,547
Current portion of capital lease
obligation 91 89
Current portion of notes payable 657 897
Total current liabilities 8,244 9,507
Long-term portion of unearned
revenue 412 471
Long-term portion of capital lease
obligation 153 177
Long-term portion of notes payable 967 694
Other liabilities 510 -
Deferred tax liability 1,790 1,730
----- -----
Total liabilities 11,988 12,579
Stockholders' equity:
Preferred stock, $.01 par value,
authorized 500,000 shares; none
issued and outstanding - -
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;
3,855,364 and 3,845,531 shares
issued and 3,842,648 and 3,832,815
shares outstanding 39 38
Additional paid-in capital 188,622 188,339
Accumulated deficit (179,105) (178,921)
Receivable for common stock issued (26) (26)
Treasury stock, at cost, 12,716
shares (169) (169)
---- ----
Total stockholders' equity 9,361 9,261
----- -----
Total liabilities and stockholders'
equity $21,437 $21,840
======= =======
Sonic Foundry, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except for share and per share data)
(Unaudited)
Three Months Ended
December 31,
-------------------
2011 2010
---- ----
Revenue:
Product $2,599 $2,844
Services 3,500 3,025
Other 86 61
--- ---
Total revenue 6,185 5,930
Cost of revenue:
Product 1,261 1,350
Services 417 319
--- ---
Total cost of revenue 1,678 1,669
----- -----
Gross margin 4,507 4,261
Operating expenses:
Selling and marketing 2,772 2,462
General and administrative 825 619
Product development 982 834
--- ---
Total operating expenses 4,579 3,915
----- -----
Income (loss) from operations (72) 346
Other expense, net (52) (63)
--- ---
Income (loss) before income
taxes (124) 283
Provision for income taxes (60) (60)
--- ---
Net income (loss) $(184) $223
===== ====
Net income (loss) per common
share:
- basic $(0.05) $0.06
====== =====
- diluted $(0.05) $0.06
====== =====
Weighted average common
shares 3,839,907 3,654,751
- basic ========= =========
- diluted 3,839,907 3,875,483
========= =========
Non-GAAP Consolidated Statements of Operations
(in thousands, except for per share data)
Fiscal Quarter Ended Fiscal Quarter Ended
-------------------- --------------------
December 31, 2011 December 31, 2010
----------------- -----------------
GAAP Adj(1) Non-GAAP GAAP Adj(1) Non-GAAP
---- ------ -------- ---- ------ --------
Revenues $6,185 $(473) $5,712 $5,930 $(347) $5,583
Cost of revenue 1,678 - 1,678 1,669 - 1,669
Total operating
expenses 4,579 (433) 4,146 3,915 (351) 3,564
----- ---- ----- ----- ---- -----
Income (loss) from
operations (72) (40) (112) 346 4 350
(52) - (52) (63) - (63)
Other expense
Provision for
income taxes (60) 60 - (60) 60 -
--- --- --- --- --- ---
Net income (loss) $(184) $20 $(164) $223 $64 $287
===== === ===== ==== === ====
Basic net income
(loss) per common
share $(0.05) $0.01 $(0.04) $0.06 $0.02 $0.08
====== ===== ====== ===== ===== =====
(1)Adjustments consist of the following:
Billings $(473) $(347)
Depreciation and
amortization 201 172
Non-cash tax
provision 60 60
Stock-based
compensation(2) 232 179
--- ---
Total non-GAAP
adjustments $20 $64
(2) Stock-based compensation is included in the
following GAAP operating expenses:
Selling and
marketing $157 $122
General and
administrative 14 12
Product development 61 45
--- ---
Total stock-based
compensation $232 $179
SOURCE Sonic Foundry, Inc.