Sonic Foundry Announces Fiscal 2017 Third Quarter Financial Results
Sonic Foundry Announces Fiscal 2017 Third Quarter Financial Results
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  • 승인 2017.08.11 05:05
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MADISON, Wis., Aug. 10, 2017 (GLOBE NEWSWIRE) -- 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 the 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.

Webcast
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 (NASDAQ:SOFO) is the global leader for video capture, management and streaming solutions. Trusted by more than 4,300 educational institutions, corporations, health organizations and government entities in 65 countries, its Mediasite Video Platform quickly and cost-effectively automates the capture, management, delivery and search of live and on-demand streaming videos. Leading research firms Aragon, Forrester, Wainhouse and Frost & Sullivan recognize Sonic Foundry as a leader in enterprise video, webcasting and lecture capture. Learn more at www.sonicfoundry.com and @mediasite.

© 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.

 
Sonic Foundry, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except for share data)
(Unaudited)
 
 June 30,
 2017
 September 30,
 2016
Assets   
Current assets:   
Cash and cash equivalents$1,605  $1,794 
Accounts receivable, net of allowances of $375 and $2259,191  11,646 
Inventories1,119  1,904 
Investment in sales-type lease, current118   
Prepaid expenses and other current assets1,144  1,404 
Total current assets13,177  16,748 
Property and equipment:   
Leasehold improvements1,042  879 
Computer equipment6,499  5,837 
Furniture and fixtures911  825 
   Total property and equipment8,452  7,541 
   Less accumulated depreciation and amortization6,583  5,510 
      Property and equipment, net1,869  2,031 
Other assets:   
Goodwill11,036  11,310 
Customer relationships, net of amortization of $923 and $7231,558  1,882 
Product rights, net of amortization of $380 and $287292  385 
Investment in sales-type lease, long-term377   
Other long-term assets647  726 
Total assets$28,956  $33,082 
Liabilities and stockholders’ equity   
Current liabilities:   
Revolving lines of credit$2,270  $1,772 
Accounts payable1,252  961 
Accrued liabilities1,499  1,883 
Unearned revenue11,370  12,834 
Current portion of capital lease and financing arrangements298  283 
Current portion of notes payable, net of discounts1,116  1,491 
Current portion of subordinated note payable  93 
   Total current liabilities17,805  19,317 
Long-term portion of unearned revenue1,845  1,257 
Long-term portion of capital lease and financing arrangements295  231 
Long-term portion of notes payable and warrant debt, net of discounts117  871 
Derivative liability, at fair value25  67 
Other liabilities402  259 
Deferred tax liability4,444  4,564 
   Total liabilities24,933  26,566 
Commitments and contingencies   
Stockholders’ equity:   
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 in756   
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, respectively45  44 
Additional paid-in capital197,698  197,064 
Accumulated deficit(193,668) (190,214)
Accumulated other comprehensive loss(613) (183)
Receivable for common stock issued(26) (26)
Treasury stock, at cost, 12,716 shares(169) (169)
   Total stockholders’ equity4,023  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)
(Unaudited)
 
 Three Months Ended June 30, Nine Months Ended June 30,
 2017 2016 20172016
Revenue:      
Product and other$4,420  $4,062  11,543 $12,162 
Services5,413  5,755  16,157 16,356 
Total revenue9,833  9,817  27,700 28,518 
Cost of revenue:      
Product and other1,560  1,547  4,728 4,823 
Services1,026  1,035  2,952 2,811 
Total cost of revenue2,586  2,582  7,680 7,634 
Gross margin7,247  7,235  20,020 20,884 
Operating expenses:      
Selling and marketing4,368  4,575  13,186 13,449 
General and administrative1,482  1,371  4,400 4,218 
Product development1,768  1,741  5,581 4,999 
Total operating expenses7,618  7,687  23,167 22,666 
Loss from operations(371) (452) (3,147)(1,782)
Non-operating income (expenses):      
Interest expense, net(130) (149) (396)(452)
Other income (expense), net34  31  (43)34 
Total non-operating expenses(96) (118) (439)(418)
Loss before income taxes(467) (570) (3,586)(2,200)
Benefit (provision) for income taxes(22) 18  132 (270)
Net loss(489) (552) (3,454)(2,470)
Dividends on preferred stock(75)   (75) 
Net loss attributable to common stockholders$(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      
– basic4,449,893  4,402,479  4,429,006 4,381,987 
– diluted4,449,893  4,402,479  4,429,006 4,381,987 


 
Sonic Foundry, Inc.
Condensed Consolidated Adjusted EBITDA Reconciliation
(in thousands)
(Unaudited)
 
 Three Months Ended
June 30,
 Nine Months Ended
June 30,
 2017 2016 2017 2016
        
Net loss$(489) $(552) $(3,454) $(2,470)
Add:       
  Depreciation and amortization505  533  1,516  1,619 
  Income tax expense22  (18) (132) 270 
  Interest expense107  127  327  430 
  Stock-based compensation expense101  150  487  671 
Adjusted EBITDA$246  $240  $(1,256) $520 
        


 
Sonic Foundry, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
 
 Nine Months Ended June 30,
 2017 2016
Operating activities   
Net loss$(3,454) $(2,470)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:   
Amortization of other intangibles420  515 
Depreciation and amortization of property and equipment1,096  1,181 
Gain on sale of fixed assets8   
Provision for doubtful accounts150  (50)
Deferred taxes(42) 253 
Stock-based compensation expense related to stock options487  671 
Remeasurement gain on subordinated debt(6) (4)
Remeasurement gain on derivative liability(42) (53)
Changes in operating assets and liabilities:   
   Accounts receivable2,191  1,165 
   Inventories771  239 
   Prepaid expenses and other current assets(190) 43 
   Accounts payable and accrued liabilities(8) (717)
   Other long-term liabilities158  (66)
   Unearned revenue(823) 1,101 
Net cash provided by operating activities716  1,808 
Investing activities   
Purchases of property and equipment(676) (208)
Net cash used in investing activities(676) (208)
Financing activities   
Proceeds from notes payable  500 
Proceeds from line of credit17,531  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 warrants771  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 currency66  (30)
Net increase (decrease) in cash and cash equivalents(189) 353 
Cash and cash equivalents at beginning of period1,794  1,976 
Cash and cash equivalents at end of period$1,605  $2,329 
Supplemental cash flow information:   
Interest paid$403  $459 
Income taxes paid, foreign27  10 
Non-cash financing and investing activities:   
Property and equipment financed by capital lease or accounts payable358  355 
Debt discount  16 
Stock issued for board of director's fees133  164 
Deemed dividend for beneficial conversion feature of preferred stock69   
Preferred stock dividends paid in additional shares6   
      
CONTACT: Contacts:

Media:
Tammy Jackson
Director of Communications
Sonic Foundry
608.770.9052
tammy@sonicfoundry.com

Investor:
Peter Seltzberg, Managing Director
Darrow Associates, Inc.
1951 Lowell Lane
Merrick, NY 11566
516-419-9915
pseltzberg@darrowir.com
www.darrowir.com

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