Attached files
file | filename |
---|---|
8-K - CURRENT REPORT - Crexendo, Inc. | cxdo_8k.htm |
Exhibit 99.1
Crexendo
Reports Financial Results for the Fourth Quarter and Year Ended
December 31, 2016
PHOENIX,
AZ—(Marketwired – March 7, 2017)
Crexendo, Inc.
(OTCQX: CXDO), a CLEC cloud services company that provides award
winning cloud telecommunications services, broadband internet
services and other cloud business services, today reported
financial results for its fourth quarter and full year ended
December 31, 2016.
Financial
highlights for the fourth quarter of 2016
Consolidated
revenue for the fourth quarter of 2016 increased 11% to $2.3
million compared to $2.1 million for the fourth quarter of
2015.
Cloud
Telecommunications Services Segment revenue for the fourth quarter
of 2016 increased 20% to $2.0 million compared to $1.7 million for
the fourth quarter of 2015.
Web
Services Segment revenue for the fourth quarter of 2016 decreased
27% to $299,000, compared to $407,000 for the fourth quarter of
2015.
Consolidated
operating expenses for the fourth quarter of 2016 decreased 17% to
$2.9 million compared to $3.4 million for the fourth quarter of
2015.
On a
GAAP basis, the Company reported a $(525,000) net loss for the
fourth quarter of 2016, or $(0.04) loss per diluted common share,
compared to net loss of $(1.3) million or $(0.10) loss per diluted
common share for the fourth quarter of 2015.
Non-GAAP net loss
was $(256,000) for the fourth quarter of 2016, or $(0.02) loss per
diluted common share, compared to a non-GAAP net loss of $(645,000)
or $(0.05) loss per diluted common share for the fourth quarter of
2015.
EBITDA
loss for the fourth quarter of 2016 was $(473,000) compared to loss
of $(1.3) million for the fourth quarter of 2015. Adjusted EBITDA
loss for the fourth quarter of 2016 was $(266,000) compared to loss
of $(694,000) for the fourth quarter of 2015.
Financial
highlights for the year ended December, 2016
Consolidated
revenue for year ended December 31, 2016 increased 17% to $9.1
million compared to $7.8 million for the year ended December 31,
2015.
Cloud
Telecommunications Services Segment revenue for the year ended
December 31, 2016 increased 30% to $7.8 million compared to $6.0
million for the year ended December 31, 2015.
Web
Services Segment revenue for the year ended December 31, 2016
decreased 26% to $1.4 million compared to $1.8 million for the year
ended December 31, 2015.
Consolidated
operating expenses for the year ended December 31, 2016 decreased
6% to $11.9 million compared to $12.7 million for the year ended
December 31, 2015.
1
On a
GAAP basis, the Company reported a $(2.8) million net loss for the
year ended December 31, 2016, or $(0.21) loss per diluted common
share, compared to net loss of $(4.6) million or $(0.35) loss per
diluted common share for the year ended December 31,
2015.
Non-GAAP net loss
was $(1.7) million for the year ended December 31, 2016, or $(0.13)
loss per diluted common share, compared to a non-GAAP net loss of
$(2.8) million or $(0.22) loss per diluted common share for the
year ended December 31, 2015.
EBITDA
loss for the year ended December 31, 2016 was $(2.6) million
compared to loss of $(4.6) million for the year ended December 31,
2015. Adjusted EBITDA loss for the year ended December 31, 2016 was
$(1.7) million compared to loss of $(3.0) million for the year
ended December 31, 2015.
Total
cash and cash equivalents, excluding restricted cash, at December
31, 2016 was $619,000 compared to $1.5 million at December 31,
2015.
Cash
used for operating activities for the year ended December 31, 2016
was $(1.1) million compared to $(3.0) million for the year ended
December 31, 2015. Cash provided by investing activities for the
year ended December 31, 2016 was $11,000 compared to cash used for
investing activities of $(4,000) for the year ended December 31,
2015. Cash provided by financing activities for the year ended
December 31, 2016 was $237,000 compared to $1.6 million for the
year ended December 31, 2015.
Steven
G. Mihaylo, Chief Executive Officer commented, “We continue
to make substantial progress. We have reduced our loss on an
EBITDA basis in 2016, cutting the loss almost in half. Our yearly
results were much stronger in 2016 than previous years across all
reporting metrics. I am confident this trend will continue in 2017
and beyond. The results for Q4 were not as strong as I anticipated.
However, we have already seen good progress in the first two months
of Q1 2017. I do believe we have turned the corner and our results
will be stronger going forward. I am very pleased with our
continual cost cutting. We are running the business very
effectively. We continue to provide award winning industry best
products and services. I have every confidence we will reach GAAP
cash flow breakeven by Q3 2017 and GAAP income in Q4
2017.”
Conference
Call
The
Company is hosting a conference call today, March 7, 2017 at 5:30
PM EST. The telephone dial-in number is 888-297-0353 for domestic
participants and 719-457-2600 for international participants. The
conference ID to join the call is 1256203. Please dial in five to
ten minutes prior to the beginning of the call at 5:30 PM
EST.
About
Crexendo
Crexendo, Inc.
(CXDO) is a CLEC cloud services company that provides award winning
cloud telecommunications services, broadband internet services and
other cloud business services. Our solutions are designed to
provide enterprise-class cloud services available to any size
businesses at affordable monthly rates.
Safe
Harbor Statement
This
press release contains forward-looking statements. The Private
Securities Litigation Reform Act of 1995 provides a "safe harbor"
for such forward-looking statements. The words "believe," "expect,"
"anticipate," "estimate," "will" and other similar statements of
expectation identify forward-looking statements. Specific
forward-looking statements in this press release include
information about Crexendo (i)
continuing to make substantial progress; (ii) cutting its EBITDA
loss almost in half in 2016; (iii) yearly results being much
stronger in 2016 than previous years across all reporting metrics;
(iv) being confident that trend will continue in 2017 and beyond;
(v)results for Q4 not being as strong as anticipated; (vi) having
seen good progress in the first two months of Q1 2017; (vii) having
turned the corner and results will be stronger going forward;
(viii) being very pleased with our continual cost cutting and
running the business very effectively; (ix) providing award winning
industry best products and services; and (x) reaching GAAP cash
flow breakeven by Q3 2017 and GAAP income in Q4 2017.
For a
more detailed discussion of risk factors that may affect
Crexendo’s operations and results, please refer to the
company's Form 10-K for the year ended December 31, 2016 when filed
subsequent to this press release; and Form 10-K for the year ended
December 31, 2015, as well as Form 10-Qs filed with the SEC during
2016. These forward-looking statements speak only as of the date on
which such statements are made and the company undertakes no
obligation to update such forward-looking statements, except as
required by law.
Contact
Info:
Crexendo, Inc.
Steven G. Mihaylo
CEO
602-345-7777
Smihaylo@crexendo.com
2
CREXENDO, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except par value and share data)
|
2016
|
2015
|
Assets
|
|
|
Current
assets:
|
|
|
Cash
and cash equivalents
|
$619
|
$1,497
|
Restricted
cash
|
100
|
112
|
Trade
receivables, net of allowance for doubtful accounts of
$34
|
|
|
as
of December 31, 2016 and $35 as of December 31, 2015
|
346
|
364
|
Inventories
|
170
|
134
|
Equipment
financing receivables
|
121
|
131
|
Prepaid
expenses
|
686
|
1,046
|
Other
current assets
|
8
|
15
|
Total
current assets
|
2,050
|
3,299
|
|
|
|
Certificate
of deposit
|
252
|
251
|
Long-term
trade receivables, net of allowance for doubtful
accounts
|
|
|
of
$13 as December 31, 2016 and $24 as of December 31,
2015
|
43
|
81
|
Long-term
equipment financing receivables
|
176
|
319
|
Property
and equipment, net
|
18
|
33
|
Deferred
income tax assets, net
|
-
|
482
|
Intangible
assets, net
|
335
|
466
|
Goodwill
|
272
|
272
|
Long-term
prepaid expenses
|
251
|
288
|
Other
long-term assets
|
136
|
169
|
Total
Assets
|
$3,533
|
$5,660
|
|
|
|
Liabilities and Stockholders' Equity
|
|
|
Current
liabilities:
|
|
|
Accounts
payable
|
$116
|
$76
|
Accrued
expenses
|
997
|
812
|
Notes
payable, current portion
|
66
|
57
|
Income
taxes payable
|
5
|
-
|
Contingent
consideration
|
-
|
99
|
Deferred
income tax liability
|
-
|
482
|
Deferred
revenue, current portion
|
809
|
775
|
Total
current liabilities
|
1,993
|
2,301
|
Deferred
revenue, net of current portion
|
43
|
81
|
Notes
payable, net of current portion
|
966
|
965
|
Other
long-term liabilities
|
16
|
109
|
Total
liabilities
|
3,018
|
3,456
|
|
|
|
Commitments
and contingencies
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
Preferred
stock, par value $0.001 per share - authorized 5,000,000 shares;
none issued
|
—
|
—
|
Common
stock, par value $0.001 per share - authorized 25,000,000 shares,
13,578,556
|
|
|
shares
issued and outstanding as of December 31, 2016 and 13,227,489
shares issued
|
|
|
and
outstanding as of December 31, 2015
|
14
|
13
|
Additional
paid-in capital
|
58,716
|
57,614
|
Accumulated
deficit
|
( 58,215)
|
( 55,423)
|
Total
stockholders' equity
|
515
|
2,204
|
|
|
|
Total
Liabilities and Stockholders' Equity
|
$3,533
|
$5,660
|
3
CREXENDO, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(In thousands, except per share and share data)
|
Three Months Ended December 31,
|
Year Ended December 31,
|
||
|
2016
|
2015
|
2016
|
2015
|
Revenue
|
$2,345
|
$2,109
|
$9,119
|
$7,823
|
Operating
expenses:
|
|
|
|
|
Cost
of revenue
|
863
|
979
|
3,625
|
3,577
|
Selling
and marketing
|
604
|
638
|
2,531
|
2,445
|
General
and administrative
|
1,195
|
1,617
|
4,900
|
5,861
|
Research
and development
|
192
|
202
|
826
|
779
|
Total
operating expenses
|
2,854
|
3,436
|
11,882
|
12,662
|
|
|
|
|
|
Loss
from operations
|
( 509)
|
( 1,327)
|
( 2,763)
|
( 4,839)
|
|
|
|
|
|
Other
income/(expense):
|
|
|
|
|
Interest
income
|
3
|
5
|
15
|
24
|
Interest
expense
|
( 33)
|
(12)
|
( 138)
|
(28)
|
Other
income, net
|
15
|
26
|
106
|
290
|
Total
other income/(expense), net
|
( 15)
|
19
|
( 17)
|
286
|
|
|
|
|
|
Loss
before income tax
|
( 524)
|
( 1,308)
|
( 2,780)
|
( 4,553)
|
|
|
|
|
|
Income
tax benefit/(provision)
|
( 1)
|
40
|
( 12)
|
12
|
|
|
|
|
|
Net
loss
|
$(525)
|
$(1,268)
|
$(2,792)
|
$(4,541)
|
|
|
|
|
|
Net
loss per common share:
|
|
|
|
|
Basic
|
$(0.04)
|
$(0.10)
|
$(0.21)
|
$(0.35)
|
Diluted
|
$(0.04)
|
$(0.10)
|
$(0.21)
|
$(0.35)
|
|
|
|
|
|
Weighted-average
common shares outstanding:
|
|
|
|
|
Basic
|
13,483,502
|
13,227,385
|
13,358,311
|
12,960,625
|
Diluted
|
13,483,502
|
13,227,385
|
13,358,311
|
12,960,625
|
4
CREXENDO, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In thousands)
|
Year Ended December 31,
|
|
|
2016
|
2015
|
CASH
FLOWS FROM OPERATING ACTIVITIES
|
|
|
Net
loss
|
$(2,792)
|
$(4,541)
|
Adjustments
to reconcile net loss to net cash used for operating
activities:
|
|
|
Amortization
of prepaid rent
|
322
|
322
|
Depreciation
and amortization
|
146
|
270
|
Expense
for stock options issued to employees
|
653
|
1,306
|
Non-cash
interest expense
|
124
|
-
|
Amortization
of deferred gain
|
(93)
|
(94)
|
Change
in fair value of contingent consideration
|
-
|
(11)
|
Changes
in assets and liabilities, net of effects of
acquisitions:
|
|
|
Trade
receivables
|
56
|
162
|
Equipment
financing receivables
|
153
|
176
|
Inventories
|
(36)
|
(62)
|
Prepaid
expenses
|
75
|
(112)
|
Other
assets
|
40
|
(69)
|
Accounts
payable and accrued expenses
|
225
|
(380)
|
Income
tax payable
|
5
|
(7)
|
Deferred
revenue
|
(4)
|
66
|
Net
cash used for operating activities
|
(1,126)
|
(2,974)
|
|
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES
|
|
|
Purchase
of property and equipment
|
-
|
( 25)
|
Release
of restricted cash
|
12
|
21
|
Purchase
of long-term investment
|
(1)
|
-
|
Net
cash provided by/(used for) investing activities
|
11
|
( 4)
|
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES
|
|
|
Proceeds
from notes payable
|
150
|
1,000
|
Repayments
made on notes payable
|
(163)
|
(110)
|
Proceeds
from exercise of options
|
9
|
50
|
Payment
of contingent consideration
|
(59)
|
(61)
|
Proceeds
from exercise of warrants
|
300
|
690
|
Net
cash provided by financing activities
|
237
|
1,569
|
|
|
|
NET
DECREASE IN CASH AND CASH EQUIVALENTS
|
( 878)
|
( 1,409)
|
|
|
|
CASH
AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR
|
1,497
|
2,906
|
|
|
|
CASH
AND CASH EQUIVALENTS AT THE END OF THE YEAR
|
$619
|
$1,497
|
|
|
|
Supplemental
disclosure of cash flow information:
|
|
|
Cash
used during the year for:
|
|
|
Income
taxes, net
|
$(2)
|
$(1)
|
Supplemental
disclosure of non-cash investing and financing
information:
|
|
|
Issuance
of common stock for payment of interest on related-party note
payable
|
$101
|
$-
|
Issuance
of common stock for contingent consideration related to business
acquisition
|
$40
|
$40
|
Prepaid
assets financed through notes payable
|
$-
|
$137
|
Note
payable discount
|
$-
|
$115
|
5
CREXENDO, INC. AND SUBSIDIARIES
Supplemental Segment Financial Data
(In thousands)
|
Three Months Ended December 31,
|
Year Ended December 31,
|
||
|
2016
|
2015
|
2016
|
2015
|
Revenue:
|
|
|
|
|
Cloud
telecommunications services
|
$2,046
|
$1,702
|
$7,757
|
$5,989
|
Web
services
|
299
|
407
|
1,362
|
1,834
|
Consolidated
revenue
|
2,345
|
2,109
|
9,119
|
7,823
|
|
|
|
|
|
Income/(loss)
from operations:
|
|
|
|
|
Cloud
telecommunications services
|
(623)
|
(1,344)
|
(3,174)
|
(4,904)
|
Web
services
|
114
|
17
|
411
|
65
|
Total
operating loss
|
(509)
|
(1,327)
|
(2,763)
|
(4,839)
|
Other
income/(expense), net:
|
|
|
|
|
Cloud
telecommunications services
|
(15)
|
13
|
(36)
|
71
|
Web
services
|
-
|
6
|
19
|
215
|
Total
other income/(expense), net
|
(15)
|
19
|
(17)
|
286
|
Income/(loss)
before income tax provision
|
|
|
|
|
Cloud
telecommunications services
|
(638)
|
(1,331)
|
(3,210)
|
(4,833)
|
Web
services
|
114
|
23
|
430
|
280
|
Loss
before income tax provision
|
$(524)
|
$(1,308)
|
$(2,780)
|
$(4,553)
|
6
Use of Non-GAAP Financial Measures
To
evaluate our business, we consider and use non-generally accepted
accounting principles (Non-GAAP) net income (loss) and Adjusted
EBITDA as a supplemental measure of operating performance. These
measures include the same adjustments that management takes into
account when it reviews and assesses operating performance on a
period-to-period basis. We consider Non-GAAP net income (loss) to
be an important indicator of overall business performance because
it allows us to evaluate results without the effects of share-based
compensation, rent expense paid with common stock, interest expense
paid with common stock, and amortization of intangibles. We define
EBITDA as U.S. GAAP net income (loss) before interest income,
interest expense, other income and expense, provision for income
taxes, and depreciation and amortization. We believe EBITDA
provides a useful metric to investors to compare us with other
companies within our industry and across industries. We define
Adjusted EBITDA as EBITDA adjusted for share-based compensation,
and rent expense paid with stock. We use Adjusted EBITDA as a
supplemental measure to review and assess operating performance. We
also believe use of Adjusted EBITDA facilitates investors’
use of operating performance comparisons from period to period, as
well as across companies.
In our
March 7, 2017 earnings press release, as furnished on Form 8-K, we
included Non-GAAP net loss, EBITDA and Adjusted EBITDA. The terms
Non-GAAP net loss, EBITDA, and Adjusted EBITDA are not defined
under U.S. GAAP, and are not measures of operating income,
operating performance or liquidity presented in analytical tools,
and when assessing our operating performance, Non-GAAP net loss,
EBITDA, and Adjusted EBITDA should not be considered in isolation,
or as a substitute for net loss or other consolidated income
statement data prepared in accordance with U.S. GAAP. Some of these
limitations include, but are not limited to:
●
EBITDA and Adjusted
EBITDA do not reflect our cash expenditures or future requirements
for capital expenditures or contractual commitments;
●
they do not reflect
changes in, or cash requirements for, our working capital
needs;
●
they do not reflect
the interest expense, or the cash requirements necessary to service
interest or principal payments, on our debt that we may
incur;
●
they do not reflect
income taxes or the cash requirements for any tax
payments;
●
although
depreciation and amortization are non-cash charges, the assets
being depreciated and amortized will be replaced sometime in the
future, and EBITDA and Adjusted EBITDA do not reflect any cash
requirements for such replacements;
●
while share-based
compensation is a component of operating expense, the impact on our
financial statements compared to other companies can vary
significantly due to such factors as the assumed life of the
options and the assumed volatility of our common stock;
and
●
other companies may
calculate EBITDA and Adjusted EBITDA differently than we do,
limiting their usefulness as comparative measures.
We
compensate for these limitations by relying primarily on our U.S.
GAAP results and using Non-GAAP net income (loss), EBITDA, and
Adjusted EBITDA only as supplemental support for management’s
analysis of business performance. Non-GAAP net income (loss),
EBITDA and Adjusted EBITDA are calculated as follows for the
periods presented.
Reconciliation of Non-GAAP Financial Measures
In
accordance with the requirements of Regulation G issued by the SEC,
we are presenting the most directly comparable U.S. GAAP financial
measures and reconciling the unaudited Non-GAAP financial metrics
to the comparable U.S. GAAP measures.
7
Reconciliation of U.S. GAAP Net Loss to Non-GAAP Net
Loss
(Unaudited)
|
Three Months Ended December 31,
|
Year Ended December 31,
|
||
|
2016
|
2015
|
2016
|
2015
|
|
(In
thousands)
|
(In
thousands)
|
||
U.S.
GAAP net loss
|
$(525)
|
$(1,268)
|
$(2,792)
|
$(4,541)
|
Share-based
compensation
|
149
|
522
|
653
|
1,306
|
Amortization
of rent expense paid in stock, net of deferred gain
|
58
|
57
|
229
|
228
|
Amortization
of intangible assets
|
32
|
44
|
131
|
210
|
Amortization
of interest expense paid in stock
|
30
|
-
|
101
|
-
|
Non-GAAP
net loss
|
$(256)
|
$(645)
|
$(1,678)
|
$(2,797)
|
Reconciliation of U.S. GAAP Net Loss to EBITDA to Adjusted
EBITDA
(Unaudited)
|
Three Months Ended December 31,
|
Year Ended December 31,
|
||
|
2016
|
2015
|
2016
|
2015
|
|
(In
thousands)
|
(In
thousands)
|
||
U.S.
GAAP net loss
|
$(525)
|
$(1,268)
|
$(2,792)
|
$(4,541)
|
Depreciation
and amortization
|
36
|
54
|
146
|
270
|
Interest
expense
|
33
|
12
|
138
|
28
|
Interest
and other income
|
(18)
|
(31)
|
(121)
|
(314)
|
Income
tax provision/(benefit)
|
1
|
(40)
|
12
|
(12)
|
EBITDA
|
(473)
|
(1,273)
|
(2,617)
|
(4,569)
|
Share-based
compensation
|
149
|
522
|
653
|
1,306
|
Amortization
of rent expense paid in stock, net of deferred gain
|
58
|
57
|
229
|
228
|
Adjusted
EBITDA
|
$(266)
|
$(694)
|
$(1,735)
|
$(3,035)
|
8