Glowpoint Reports Fourth Quarter and Full Year 2011 Results

MURRAY HILL, N.J., March 8, 2012 /PRNewswire/ -- Glowpoint, Inc. (NYSE Amex: GLOW), a leading global provider of cloud managed video services, today reported its financial results for the fourth quarter and fiscal year ended December 31, 2011.

Fourth quarter revenues for our cloud managed video services ("Managed Services Combined" as reported) were $3.5 million, an increase of 18% over the same period last year.  Managed Services Combined represents 49% of total revenue in the quarter, up from 42% in the prior year period.  Network services revenue for the quarter was $3.2 million, a decrease of 17% over the same period last year.  One-time and event-based revenues ("Professional and other services" as reported) were $345,000 for the quarter.

Adjusted EBITDA (as defined and reconciled to GAAP) for the fourth quarter was $825,000, an increase of $339,000 or 70% over the same period last year.  Adjusted EBITDA margin was 12% compared to 7% in the same period last year. Net income for the fourth quarter was $284,000, an increase of $731,000 over the same period last year.

For the full year ended December 31, 2011, cloud managed video service revenue was $12.8 million, an increase of 22% over the prior year. Network services revenue for the full year was $13.4 million, a decrease of 17% over the prior year. One-time and event-based revenue was $1.6 million.

"Our cloud managed video service business remains the focus of our growth and now represents the largest component of our revenues," said Joe Laezza, Glowpoint's president and CEO. "The network services component of our business has performed as anticipated given the technology trend towards converged networks, yet remains a component of our product offerings for customers that require connectivity to our OpenVideo cloud."

Adjusted EBITDA for the fiscal year ended December 31, 2011 was $2.5 million, an increase of $2.6 million over the prior year. Adjusted EBITDA margin was 9% compared to a negative 1% in the prior year. Net income for the fiscal year period was $369,000, an increase of $3.0 million over the prior year.

"The fourth quarter represents continued consistent improvement in our operating results, as evidenced by the consecutive quarters of positive adjusted EBITDA and EPS," commented John McGovern, Glowpoint's executive vice president and CFO. "With the revenue mix shift to cloud managed video services and strong operating leverage, we are in a good position to drive growth as we pursue our goal of becoming the leader in cloud managed video services."

Key business metrics

• Number of managed telepresence and video conferencing rooms increased 56% to 1,152 for 2011 as compared with 2010.
• Number of managed conferences increased 50% to 60,475 for 2011 as compared with 2010.
• Number of certified enterprise video systems on OpenVideo™ increased 21% to 43,752 for 2011 as compared with 2010.

"We are seeing strong pipeline growth with an increase in usage as we enter into the new year. We have made progress in our service offerings to attach to a greater set of enterprise grade video technologies beyond immersive telepresence rooms and our existing and new sales channels are expanding.  We are ramping up a number of initiatives and investing in growth to continue to deliver strong growth rates for our cloud managed video services in 2012," commented Laezza.

Highlights

• Higher-margin cloud managed video services have become a majority of our revenue mix.
• Sound operating liquidity resulting from a full year of positive earnings and cash from operations.
• Added key industry veterans to management team and organization.
• Key new strategic partnerships were added:  Avaya, SABRE Virtual Meetings and Stryker Communications.
• Reached new milestones with number of rooms relying on Glowpoint managed services, enterprises connected to OpenVideo™ for B2B exchange services, and growth in immersive telepresence usage across OpenVideo™ cloud.
• Continued investment in growth and operating efficiencies are anticipated to drive growth and improved operating leverage.  
• Launched the OpenVideo™ cloud strategy to expand services on a global basis, and announced several service rollouts as part of the evolution of unified communications technology, including enhanced self-use services delivered via cloud-based hosted infrastructure and applications.
• Up-listed our common stock to the NYSE Amex.

For the twelve months ended December 31, 2011, capital expenditures were $940,000 and as of March 5, 2012; there were 25,211,250 shares of common stock outstanding.

"I am very pleased with the progress we made in 2011," said Mr. Laezza. "Our goal is to secure a definitive leadership position in the rapidly developing industry of cloud managed video services.  Our focus on product initiatives, sales and marketing, strategic partnerships and operating efficiencies are paving the way towards achieving this goal."  

Guidance

The 2012 full year outlook and expectations that were recently announced are reaffirmed as follows.

• Growth in revenues of cloud managed video services in the range of 21% - 23% year-over-year to approximately $15 - $16 million.
• Network service revenue to decline in the range of 4% - 6% to approximately $12 - $13 million.
• Professional services and event revenue to grow in the range of 26% - 28% to approximately $2.0 million.
• Non-GAAP Adjusted EBITDA margin to increase to 14% - 16% of total revenues.

Teleconference

Glowpoint will host a conference call at 4:30 p.m. EST today to discuss the financial results for Q4 and Full Year 2011, along with updates on the business into 2012. To view the webcast, please visit: http://video.webcasts.com/events/glow001/41553/. To participate in the teleconference, callers may dial the toll free number [phone] (U.S. callers only) or [phone] (from outside the U.S.). For those unable to view or participate in the live call, a recording of the call will be archived for viewing two hours following the call at www.glowpoint.com/investor-relations.

Supporting Link:

• Glowpoint Investor Information

About Glowpoint

Glowpoint, Inc. (NYSE Amex: GLOW) provides cloud managed video services that make the delivery of consistently high-quality video conferencing and telepresence service as simple as using the internet, between any technology, network and business.  Using our OpenVideo™ cloud architecture, Glowpoint enables organizations of all sizes to adopt business-class video easily, scale instantly and collaborate openly, yet securely across technology boundaries – to realize the full value of visual communications.  To learn more please visit www.glowpoint.com.

Non-GAAP Financial Information

Adjusted EBITDA is defined as income or loss from continuing operations before depreciation, amortization, interest expense, interest income, sales taxes and regulatory fee expense or benefit, loss on extinguishment of debt, changes in fair value of derivative financial instruments and stock-based compensation, and severance.  Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by total revenues.  Adjusted EBITDA is not intended to replace operating income (loss), net income (loss), cash flow or other measures of financial performance reported in accordance with generally accepted accounting principles.  Rather, Adjusted EBITDA is an important measure used by management to assess the operating performance of the company.  Adjusted EBITDA as defined here may not be comparable to similarly titled measures reported by other companies due to differences in accounting policies.  Additionally, Adjusted EBITDA as defined here does not have the same meaning as EBITDA as defined in our Securities and Exchange Commission filings prior to this date.  A reconciliation of Adjusted EBITDA to net loss is shown below.

Forward looking and cautionary statements

The information in this release may contain statements that are or may be deemed to be forward-looking statements and involve factors, risks, and uncertainties that may cause actual results in future periods to differ materially from such statements.  These factors, risks, and uncertainties include market acceptance and availability of new video communications services; the non-exclusive and terminable-at-will nature of sales agreements; rapid technological change affecting demand for our services; competition from other video communication service providers; and the availability of sufficient financial resources to enable us to expand our operations, as well as other risks detailed from time to time in our filings with the Securities and Exchange Commission.  We make no representation or warranty that the information contained herein is complete and accurate; we have no duty to correct or update any information.

INVESTOR CONTACT:

Investor Relations

Glowpoint, Inc.

[phone]

[e-mail]

www.glowpoint.com

GLOWPOINT, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except par value) (Unaudited)
	December 31,
	2011		2010
ASSETS
Current assets:
Cash	$    1,818		$    2,035
Accounts receivable, net of allowance for doubtful accounts of
$147 and $250, respectively	2,520		2,706
Net current assets of discontinued operations	-		15
Prepaid expenses and other current assets	330		377
Total current assets	4,668		5,133
Property and equipment, net	4,738		3,148
Other assets	59		83
Total assets	$    9,465		$    8,364
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Revolving loan facility	750		750
Current portion of capital lease	177		-
Accounts payable	$    1,382		$    2,333
Accrued expenses	1,024		1,352
Accrued sales taxes and regulatory fees	434		739
Customer deposits	139		243
Net current liabilities of discontinued operations	50		-
Deferred revenue	235		242
Total current liabilities	4,191		5,659
Noncurrent liabilities:
Capital lease, less current portion	334		-
Total liabilities	4,525		5,659
Commitments and contingencies	-		-
Stockholders' equity:
Preferred stock Series B-1, non-convertible; $.0001 par value	10,000		10,000
Preferred stock Series A-2, convertible; $.0001 par value	297		3,354
Common stock, $.0001 par value	3		9
Additional paid-in capital	159,339		154,410
Accumulated deficit	(164,699)		(165,068)
Total stockholders' equity	4,940		2,705
Total liabilities and stockholders' equity	$    9,465		$    8,364

GLOWPOINT, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS and GAAP to Non-GAAP Reconciliation (In thousands, except per share data) (Unaudited)
		Year Ended				Three Months Ended
		December 31,				December 31,
		2011		2010		2011		2010
Managed Services Combined		$ 12,816		$ 10,480		$ 3,472		$ 2,933
Network services		13,387		16,042		3,225		3,877
Professional and other services		1,603		1,028		345		199
Total revenue		27,806		27,550		7,042		7,009
Network and infrastructure		9,388		11,389		2,232		2,621
Global managed services		7,350		8,226		1,679		2,023
Sales and marketing		3,506		4,142		879		955
General and administrative		5,656		5,330		1,476		1,470
Depreciation and amortization		1,436		1,078		455		266
Total operating expenses		27,336		30,165		6,721		7,335
Income (loss) from operations		470		(2,615)		321		(326)
Interest/Financing		129		160		36		53
Income (loss) from continuing operations		341		(2,775)		285		(379)
Income (loss) from discontinued operations		28		112		(1)		(68)
Net income (loss)		369		(2,663)		284		(447)
Loss on redemption of preferred stock		-		(934)		-		-
Net income (loss) attributable to common stockholders		$      369		$ (3,597)		$    284		$  (447)
Net income (loss) attributable to common  stockholders per share:
Continuing operations		$     0.02		$   (0.20)		$   0.01		$ (0.02)
Discontinued operations		$         -		$     0.01		$       -		$       -
Basic net income (loss) per share		$     0.02		$   (0.19)		$   0.01		$ (0.02)
Continuing operations		$     0.02		$   (0.20)		$   0.01		$ (0.02)
Discontinued operations		$         -		$     0.01		$       -		$       -
Diluted net income (loss) per share		$     0.02		$   (0.19)		$   0.01		$ (0.02)
Weighted average number of common shares:
Basic		22,286		19,127		24,343		20,590
Diluted		23,363		19,127		25,492		20,590
ADJUSTED EBITDA - GAAP to Non GAAP Reconciliation
Income (loss) from continuing operations		$      341		$ (2,775)		$    285		$  (379)
Interest/Financing		129		160		36		53
Depreciation		1,436		1,078		455		266
Stock-based compensation		234		514		53		69
Stock-based comp Related to Severance		(2)		(96)		(2)		18
Severance		349		982		(2)		459
Adjusted EBITDA		$   2,487		$    (137)		$    825		$    486

GLOWPOINT, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)
								Year Ended				Three Months Ended
								December 31,				December 31,
								2011		2010		2011		2010
Cash flows from Operating Activities:
	Net income (loss)							$    369		$ (2,663)		$    284		$  (447)
	Adjustments to reconcile net income (loss) to net cash provided by (used in)
		operating activities:
			Depreciation and amortization					1,436		1,078		455		266
			Amortization of deferred financing costs					62		34		16		16
			Loss on disposal of equipment					35		15		34		26
			Bad debt expense					102		290		58		(55)
			Stock-based compensation					234		514		53		69
			Increase (decrease) attributable to changes in assets									-
				and liabilities:								-
					Accounts receivable			84		67		77		773
					Prepaids and other current assets			47		(86)		67		111
					Other assets			(38)		(86)		-		-
					Accounts payable			(951)		(874)		(207)		(681)
					Customer deposits			(103)		(65)		(11)		(13)
					Accrued expenses, sales taxes and regulatory fees			(584)		107		(161)		(118)
					Deferred revenue			(6)		(17)		(30)		18
						Net cash provided by (used in) continuing operating activities		687		(1,686)		635		(35)
						Net cash provided by discontinuing operating activities		65		242		-		154
						Net cash provided by (used in) operating activities		752		(1,444)		635		119
Cash flows from Investing Activities:
	Proceeds from sale of equipment							12		61		12		61
	Purchases of property and equipment							(940)		(1,620)		(147)		(661)
						Net cash used in investing activities		(928)		(1,559)		(135)		(600)
Cash flows from Financing Activities:
	Proceeds from preferred stock offering							-		4,000		-		-
	Proceeds from exercise of stock options							-		8		-		-
	Capital Lease							(41)		-		(41)		-
	Proceeds from revolving loan, net							-		750		-		-
	Receivable from sale of Series A Preferred Stock							-		-		-		1,000
	Costs related to private placement							-		(307)		-		-
						Net cash provided by financing activities		(41)		4,451		(41)		1,000
Increase (decrease) in cash								(217)		1,448		459		519
Cash at beginning of period								2,035		587		1,359		1,516
Cash at end of period								$ 1,818		$  2,035		$ 1,818		$ 2,035

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SOURCE Glowpoint, Inc.

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