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| 8-K - SONIC FOUNDRY, INC. 8-K - SONIC FOUNDRY INC | a51241516.htm |
Exhibit 99.1
Sonic Foundry Announces Fourth Quarter and Fiscal 2015 Financial Results
MADISON, Wis.--(BUSINESS WIRE)--December 10, 2015--Sonic Foundry, Inc. (NASDAQ: SOFO), the trusted leader for video creation and management solutions, today announced consolidated financial results for its fiscal 2015 fourth quarter and fiscal year ended September 30, 2015.
Fourth Quarter Highlights
- Billings of $11.5 million, an increase of 25%, compared to $9.2 million in the fourth quarter of fiscal 2014. The company billed a $2.1 million international transaction that did not meet the criteria for revenue recognition at September 30, 2015. Recording of revenue and earnings for this transaction is delayed until fiscal 2016.
- Revenue of $9.1 million, an increase of 7%, compared to $8.5 million in the fourth quarter of fiscal 2014. Service revenue, including increased hosting and support, was the primary driver for this increase.
- Gross margin of $6.5 million or 71% compared to $5.9 million or 69% for the fourth quarter of fiscal 2014.
- Net loss of $1.2 million or $(0.28) per basic share compared to a net loss of $1.3 million or $(0.30) per basic share in the fourth quarter of fiscal 2014.
- Adjusted EBITDA loss of $(212) thousand compared to adjusted EBITDA loss of $(435) thousand in the fourth quarter of fiscal 2014.
- Cash of $2 million at September 30, 2015 compared to $4.3 million at September 30, 2014.
- Unearned revenue from services and products of $12.7 million as of the end of the fourth quarter 2015, compared to $10 million as of the end of the fourth quarter 2014. The company expects to realize $3.6 million of this unearned revenue at September 30, 2015 in the first quarter of fiscal 2016. The deferred international transaction referenced above resulted in an increase of $2.1 million to unearned revenue. The remaining increase in unearned revenue is a result of increased billings for services. Services revenue, which includes Mediasite customer support contracts, training, installation, rental, event and content hosting services, is recognized over the life of the contract.
The gross margin increase in the fourth quarter of 2015 compared to the fourth quarter of 2014 was due to fewer higher-volume, lower-margin transactions, and to improvements to product margins as a result of sourcing lower cost components. The full-year gross margins were 71% in fiscal 2015 and fiscal 2014.
International product and service billings accounted for 53 percent of Sonic Foundry’s consolidated billings in the fourth quarter 2015, compared to 39 percent in the fourth quarter 2014. International billings have remained high primarily as a result of demand generation and new customers in the Middle East, and of focused sales efforts in our locations in Europe and Japan.
In the fourth quarter of fiscal 2015, 69 percent of billings were to existing customers, compared to 79 percent during the fourth quarter of fiscal 2014, with 69 percent to education customers and 24 percent to corporate customers.
“Despite the challenges of the past year, our core business in education has strengthened across the globe. Strategic wins and increasingly larger deployments of our technology underscore the fact that when customers decide to invest in a video strategy our solution is the most trusted, automated, scalable and efficient on the market,” said Gary Weis, CEO of Sonic Foundry.
Weis continued, “Looking ahead we are focused on ensuring that our offerings target the more complex and highly valued needs of customers as they expand their enterprise video deployments. We’ll continue to penetrate new geographies to transform education, accelerate training and personalize communication, all with the aim of growing the market for enterprise video and creating long-term shareholder value.”
The company is providing fiscal 2016 guidance of billings of between $42 and $45 million, adjusted EBITDA of between $3.5 and $4.5 million and bottom line results of between breakeven and $1.0 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. Our adjusted EBITDA measure additionally includes 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 ended and years ended September 30, 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, December 10th, for analysts and investors to discuss its fiscal 2015 fourth quarter and fiscal 2015 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 3,800 customers in over 65 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. | ||||||||
| Consolidated Balance Sheets | ||||||||
| (in thousands, except for share and per share data) | ||||||||
| September 30, | ||||||||
| 2015 | 2014 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 1,976 | $ | 4,344 | ||||
| Accounts receivable, net of allowances of $150 | 12,659 | 8,449 | ||||||
| Inventories | 2,385 | 1,960 | ||||||
| Prepaid expenses and other current assets | 927 | 1,305 | ||||||
| Total current assets | 17,947 | 16,058 | ||||||
| Property and equipment: | ||||||||
| Leasehold improvements | 904 | 911 | ||||||
| Computer equipment | 5,852 | 5,440 | ||||||
| Furniture and fixtures | 837 | 720 | ||||||
| Total property and equipment | 7,593 | 7,071 | ||||||
| Less accumulated depreciation and amortization | 4,785 | 3,675 | ||||||
| Property and equipment, net | 2,808 | 3,396 | ||||||
| Other assets: | ||||||||
| Goodwill | 10,853 | 11,185 | ||||||
| Customer relationships, net of amortization of $457 and $191 | 1,872 | 2,471 | ||||||
| Software development costs, net of amortization of $429 and $252 | 104 | 281 | ||||||
| Product rights, net of amortization of $164 and $41 | 508 | 631 | ||||||
| Other intangibles, net of amortization of $190 and $162 | 112 | 37 | ||||||
| Other long-term assets | 599 | 564 | ||||||
| Total assets | $ | 34,803 | $ | 34,623 | ||||
| Liabilities and stockholders' equity | ||||||||
| Current liabilities: | ||||||||
| Revolving line of credit | $ | 1,818 | $ | - | ||||
| Accounts payable | 2,026 | 1,183 | ||||||
| Accrued liabilities | 1,666 | 2,512 | ||||||
| Unearned revenue | 11,359 | 9,079 | ||||||
| Current portion of capital lease and financing arrangements | 211 | 196 | ||||||
| Current portion of notes payable and warrant debt, net of discounts | 1,299 | 974 | ||||||
| Current portion of subordinated note payable | 186 | 2,096 | ||||||
| Total current liabilities | 18,565 | 16,040 | ||||||
| Long-term portion of unearned revenue | 1,325 | 929 | ||||||
| Long-term portion of capital lease and financing arrangements | 196 | 173 | ||||||
| Long-term portion of notes payable and warrant debt, net of discounts | 2,080 | 1,139 | ||||||
| Long-term portion of subordinated note payable | 92 | 314 | ||||||
| Derivative liability, at fair value | 109 | - | ||||||
| Other liabilities | 311 | 401 | ||||||
| Deferred tax liability | 4,322 | 4,312 | ||||||
| Total liabilities | 27,000 | 23,308 | ||||||
| Commitments and contingencies | ||||||||
| 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; 4,376,456 and | ||||||||
| 4,276,470 shares issued and 4,363,740 and 4,263,754 shares outstanding | 44 | 43 | ||||||
| Additional paid-in capital | 195,973 | 194,260 | ||||||
| Accumulated deficit | (186,897 | ) | (182,372 | ) | ||||
| Accumulated other comprehensive loss | (1,122 | ) | (421 | ) | ||||
| Receivable for common stock issued | (26 | ) | (26 | ) | ||||
| Treasury stock, at cost, 12,716 shares | (169 | ) | (169 | ) | ||||
| Total stockholders' equity | 7,803 | 11,315 | ||||||
| Total liabilities and stockholders' equity | $ | 34,803 | $ | 34,623 | ||||
| Sonic Foundry, Inc. | ||||||||||||||||
| Consolidated Statements of Operations | ||||||||||||||||
| (in thousands, except for share and per share data) | ||||||||||||||||
|
Quarters Ended September 30, |
Years Ended September 30, |
|||||||||||||||
|
2015 |
2014 |
2015 |
2014 |
|||||||||||||
| Revenue: | ||||||||||||||||
| Product | $ | 3,854 | $ | 3,890 | $ | 15,884 | $ | 16,773 | ||||||||
| Services | 5,154 | 4,490 | 20,160 | 18,649 | ||||||||||||
| Other | 48 | 100 | 415 | 408 | ||||||||||||
| Total revenue | 9,056 | 8,480 | 36,459 | 35,830 | ||||||||||||
|
Cost of revenue: |
||||||||||||||||
| Product | 2,110 | 1,862 | 7,406 | 7,350 | ||||||||||||
| Services | 496 | 747 | 3,229 | 2,925 | ||||||||||||
| Total cost of revenue | 2,606 | 2,609 | 10,635 | 10,275 | ||||||||||||
| Gross margin | 6,450 | 5,871 | 25,824 | 25,555 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling and marketing | 4,513 | 4,386 | 18,016 | 16,551 | ||||||||||||
| General and administrative | 1,302 | 1,375 | 5,635 | 5,623 | ||||||||||||
| Product development | 1,543 | 1,468 | 6,265 | 5,545 | ||||||||||||
| Patent settlement | - | - | - | 428 | ||||||||||||
| Acquisition costs | - | - | - | 490 | ||||||||||||
| Total operating expenses | 7,358 | 7,229 | 29,916 | 28,637 | ||||||||||||
| Loss from operations | (908 | ) | (1,358 | ) | (4,092 | ) | (3,082 | ) | ||||||||
| Non-operating income (expenses): | ||||||||||||||||
| Gain on investment in Mediasite KK | - | - | - | 1,390 | ||||||||||||
| Equity in earnings of investment in Mediasite KK |
- |
- |
- |
38 |
||||||||||||
| Interest expense, net | (143 | ) | (61 | ) | (372 | ) | (231 | ) | ||||||||
| Other income (expense), net | (97 | ) | 163 | 46 | 173 | |||||||||||
| Total non-operating income (expenses) | (240 | ) | 102 | (326 | ) | 1,370 | ||||||||||
| Loss before income taxes | (1,148 | ) | (1,256 | ) | (4,418 | ) | (1,712 | ) | ||||||||
| Provision for income taxes | (74 | ) | (32 | ) | (107 | ) | (1,104 | ) | ||||||||
| Net loss | $ | (1,222 | ) | $ | (1,288 | ) | $ | (4,525 | ) | $ | (2,816 | ) | ||||
| Loss per common share: | ||||||||||||||||
|
– Basic |
$ | (0.28 | ) | $ | (0.30 | ) | $ | (1.04 | ) | $ | (0.67 | ) | ||||
| – Diluted | $ | (0.28 | ) | $ | (0.30 | ) | $ | (1.04 | ) | $ | (0.67 | ) | ||||
| Weighted average common shares | ||||||||||||||||
|
– Basic |
4,335,453 | 4,252,094 | 4,332,576 | 4,174,191 | ||||||||||||
|
– Diluted |
4,335,453 | 4,252,094 | 4,332,576 | 4,174,191 | ||||||||||||
| Sonic Foundry, Inc. | ||||||||||||||||
| Consolidated Adjusted EBITDA Reconciliation | ||||||||||||||||
| (in thousands) | ||||||||||||||||
| Quarters Ended | Years Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Net loss | $ | (1,222 | ) | $ | (1,288 | ) | $ | (4,525 | ) | $ | (2,816 | ) | ||||
| Add: | ||||||||||||||||
| Depreciation and amortization | 576 | 518 | 2,260 | 1,730 | ||||||||||||
| Income tax expense | 74 | 32 | 107 | 1,104 | ||||||||||||
| Interest expense | 143 | 61 | 372 | 231 | ||||||||||||
| Stock-based compensation expense | 217 | 242 | 963 | 921 | ||||||||||||
| Adjusted EBITDA | $ | (212 | ) | $ | (435 | ) | $ | (823 | ) | $ | 1,170 | |||||
| Sonic Foundry, Inc. | ||||||||
| Consolidated Statements of Cash Flows | ||||||||
| (in thousands) | ||||||||
| Years Ended September 30, | ||||||||
|
2015 |
2014 |
|||||||
| Operating activities | ||||||||
| Net loss | $ | (4,525 | ) | $ | (2,816 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Gain and equity in earnings on investment in Mediasite KK | - | (1,429 | ) | |||||
| Amortization of other intangibles | 343 | 244 | ||||||
| Amortization of software development costs | 177 | 177 | ||||||
| Amortization of product rights | 123 | 41 | ||||||
| Amortization of debt discount | 26 | - | ||||||
| Depreciation of property and equipment | 1,599 | 1,268 | ||||||
| Provision for doubtful accounts | 57 | 60 | ||||||
| Deferred taxes | 53 | 1,064 | ||||||
| Stock-based compensation expense related to stock options | 963 | 921 | ||||||
| Remeasurement gain on subordinated debt | (202 | ) | (157 | ) | ||||
| Remeasurement gain on derivative liability | (11 | ) | - | |||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (4,379 | ) | (597 | ) | ||||
| Inventories | (344 | ) | 20 | |||||
| Prepaid expenses and other current assets | 169 | (308 | ) | |||||
| Accounts payable and accrued liabilities | 111 | (810 | ) | |||||
| Other long-term liabilities | (86 | ) | (94 | ) | ||||
| Unearned revenue | 2,800 | 2,329 | ||||||
| Net cash used in operating activities | (3,126 | ) | (87 | ) | ||||
| Investing activities | ||||||||
| Purchases of property and equipment | (722 | ) | (862 | ) | ||||
| Cash received in Mediasite KK acquisition, net of cash paid | - | 1,281 | ||||||
| Cash paid for MediaMission acquisition, net of cash acquired | - | (119 | ) | |||||
| Net cash provided by (used in) investing activities | (722 | ) | 300 | |||||
| Financing activities | ||||||||
| Proceeds from notes payable | 2,336 | 1,954 | ||||||
| Proceeds from line of credit | 8,535 | - | ||||||
| Payments on notes payable | (2,894 | ) | (1,199 | ) | ||||
| Payments on line of credit | (6,727 | ) | - | |||||
| Payment of debt issuance costs | (122 | ) | (49 | ) | ||||
| Proceeds from issuance of common stock and warrants | 710 | 98 | ||||||
| Proceeds from exercise of common stock options | 41 | 286 | ||||||
| Payments on capital lease and financing arrangements | (252 | ) | (229 | ) | ||||
| Net cash provided by provided by financing activities | 1,627 | 861 | ||||||
| Changes in cash and cash equivalents due to changes in foreign currency | (147 | ) | (212 | ) | ||||
| Net increase (decrease) in cash and cash equivalents | (2,368 | ) | 862 | |||||
| Cash and cash equivalents at beginning of period | 4,344 | 3,482 | ||||||
| Cash and cash equivalents at end of period | $ | 1,976 | $ | 4,344 | ||||
CONTACT:
Sonic Foundry, Inc.
For investor inquiries:
investor@sonicfoundry.com
or
For
media relations:
Tammy Jackson, 608.770.9052
tammy@sonicfoundry.com