Sonic Foundry (MM) (NASDAQ:SOFOD)
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MADISON, Wis., Nov. 30 /PRNewswire-FirstCall/ -- Sonic Foundry, Inc. (NASDAQ:SOFOD), the recognized market leader for rich media webcasting and knowledge management, today announced financial results for the fiscal year and quarter ended September 30, 2009. Results include:
2009 Fiscal Year
-- Revenue totaled $18.6 million compared to $15.6 million in 2008
-- Billings totaled $19.2 million compared to $16.9 million in 2008
-- Gross margin was 77 percent, up from 73 percent in fiscal year 2008
-- Operating expenses were reduced 13 percent from $19.3 million to $16.7
million
-- Services revenue increased 25 percent
-- Cash used in operating activities decreased 62 percent from $3.9
million in fiscal year 2008 to $1.5 million in fiscal year 2009
-- GAAP net loss was $(2.6) million or $(0.74) per diluted share compared
to a revised loss of $(8.1) million or $(2.28) per diluted share in
2008
-- Non-GAAP net loss was $(693) thousand or $(0.19) per diluted share
compared to non-GAAP net loss of $(4.6) million or $(1.29) per diluted
share in fiscal year 2008
Fourth Quarter
-- Revenue was $4.1 million, up two percent from 2008 fiscal fourth
quarter
-- Billings totaled $4.7 million compared to $5.3 million in the fourth
quarter of 2008
-- GAAP net loss was $(1.1) million or $(0.30) per diluted share compared
to a revised loss of $(1.5) million or $(0.42) per diluted share in
the fourth quarter of 2008
-- Non-GAAP net loss was ($0.1) million or $(0.04) per diluted share
compared to non-GAAP net income of $0.3 million or $0.08 per diluted
share
-- Deferred revenue balance was $5.3 million compared to $4.7 million at
June 30, 2009, and $4.7 million at September 30, 2008, partly due to
increase in webcasting events and other services
-- Services revenue was $2.1 million, up 20 percent from fiscal fourth
quarter of 2008
Non-GAAP net income primarily excludes all non-cash related expenses of stock compensation, depreciation, amortization, provision for income taxes and the cash impact of personnel and program reductions and billings not recognized as revenue. Reconciliation between GAAP and non-GAAP results is provided at the end of this press release.
In fiscal 2009, the company recorded a non-cash deferred tax liability related to goodwill acquired in 2001 and made corresponding revisions to 2008 results. The net impact was to record a $142 thousand non-cash provision for taxes and an increase to a long-term deferred tax liability of $142 thousand in fiscal 2009 and to record a $256 thousand non-cash provision for taxes in fiscal 2008 as well as the accumulated impact of prior period amortization of goodwill. This liability had historically been presented net of deferred tax assets and associated valuation allowances. Management determined that due to the nature of the deferred tax liability and future growth of such non-cash liability it was more prudent to present separately. Fiscal 2008 numbers have been revised to match this presentation.
On November 16, 2009, the company completed a one-for-ten reverse stock split of its common stock. The net effect was to reduce the number of common shares outstanding from approximately 36,069,000 to 3,606,900. Fiscal 2009 and prior period share and per share amounts have been adjusted to reflect the split for comparative purposes.
The company increased the balance of unearned revenue by $611 thousand or 13 percent year over year to its current end of year level of $5.3 million. Of the unearned revenue balance, the company expects to realize $2.2 million in the quarter ending December 31, 2009.
Total services revenue was $8.8 million for fiscal 2009, an increase of 25 percent from fiscal 2008. Services revenue includes Mediasite customer support contracts, as well as training, installation, rental, event and content hosting services. The increase was primarily due to event and content hosting services plus support contracts on new Mediasite Recorders and recurring renewals of support contracts entered into previous years.
The expense reductions and cost control initiated in January 2008 and continued throughout fiscal 2009 resulted in quarter over quarter EPS improvement for the seventh consecutive reporting period.
U.S. higher education purchasing decreased year over year as both public and private institutions struggled with state budget deficits and mandates. Billings to higher education customers totaled 61 percent of total billings for fiscal 2009.
Corporate sector sales appear to be recovering from the recession with sales roughly flat compared to fiscal 2008. However, international sales remained strong with approximately 27 percent of the year's billings, compared to 14 percent in fiscal 2008.
"While the last year or two have been quite challenging, due primarily to extraordinary economic conditions, we managed to grow our business during a period when overall IT spending decreased," said Rimas Buinevicius, chairman and CEO of Sonic Foundry. "Furthermore, we are beginning to see signs of economic recovery, and specifically, certain signals for expanded growth in mid-2010 as they relate to the Mediasite product and service offering. Correspondingly, our recent prospecting has resulted in additions to our sales pipeline that, if consummated, would dwarf most of the previous sales made by the company to date. These opportunities have been harvested both domestically and internationally and in different vertical segments of our customer base, most of it occurring in the last few months. Based on the expected timing of these new opportunities, mid-2010 may mark a significant turning point for the company, which could substantially expand operating performance, especially given the cost reductions and operating leverage now in place."
Highlights of fiscal year 2009 include:
-- Further product development and enhancements including integration
with Moodle and the introduction of Mediasite 5.1 and 5.2, which
introduced new Mediasite Players, embeddable Mediasite content and the
Mediasite Recorder Control Center
-- Webcasting high-profile conferences, events and product launches for
Fortune 1000 companies and major brands including Autodesk, Fiserv,
OfficeMax, Research In Motion (RIM) and T-Mobile.
-- New higher education customer acquisitions including Duke University
Pratt School of Engineering, Johns Hopkins University Schools of
Nursing and Biotechnology, King Abdullah University of Science and
Technology, Tecnologico de Monterrey - School of Medicine, Temple
University Fox School of Business, University of Denver - Sturm
College of Law, University of Florida Radiology, University of Iowa
College of Business Administration, University of Michigan School of
Social Work, University of New Mexico Health Science Center and Center
for Long Term Ecological Research, University of Washington School of
Medicine, UCLA School of Public Health, Vanderbilt University,
Villanova University School of Business and Virtual University of
Tunis
-- Numerous awards and analyst recognition including Frost & Sullivan's
World Market Leadership Award, positioned as Market Leader for
Distance Education and e-Learning by Wainhouse Research, plus Best
Presentation Tool by Best of Elearning!, Best Webcasting Platform in
the Streaming Media Magazine Readers' Choice for the third consecutive
year as well as in the inaugural Streaming Media European Readers'
Choice, the only United States based company to receive an award
Sonic Foundry will host a corporate webcast today for analysts and investors to discuss its fiscal 2009 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 http://www.sonicfoundry.com/fy09. 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. 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-tax 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.
-- Personnel and program reduction costs: We have excluded the additional
costs incurred as a result of our cost reduction plan which was
communicated in January 2008. These costs include severance costs
associated with employee reductions as we better aligned ourselves
with key vertical markets. Also excluded is a one time charge
associated with an early extinguishment of a lease.
-- 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 Statement of Financial Accounting
Standard No. 123R, Share-Based Payment - an Amendment of FASB
Statement Nos. 123 and 95. 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:SOFODNASDAQ:www.sonicfoundry.com) is the global leader for rich media webcasting and knowledge management, providing enterprise communication solutions for more than 1,600 customers in education, business and government. Powered by Mediasite, the patented webcasting platform which automates the capture, management, delivery and search of lectures, online training and briefings, Sonic Foundry empowers people to transform the way they communicate. Through the Mediasite platform and its Events Services group, the company helps customers connect a dynamic, evolving world of shared knowledge and envisions a future where learners and workers around the globe use webcasting to bridge time and distance, accelerate research and improve performance.
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.
Consolidated Balance Sheets
(in thousands, except for share data)
September 30,
-------------
Revised
2009 2008
---- ---- Assets Current assets: Cash and cash equivalents $2,598 $3,560
Accounts receivable, net of allowances
of $105 and $150 3,741 3,864
Inventories 440 330 Prepaid expenses and other current assets 472 429
--- ---
Total current assets 7,251 8,183
Property and equipment: Leasehold improvements 980 980 Computer equipment 2,545 2,476 Furniture and fixtures 461 461
--- --- Total property and equipment 3,986 3,917 Less accumulated depreciation and
amortization 2,670 2,223
----- ----- Net property and equipment 1,316 1,694
Other assets:
Goodwill 7,576 7,576 Other intangibles, net of amortization
of $35 and $19 30 21
--- ---
Total assets $16,173 $17,474
======= =======
Liabilities and stockholders' equity Current liabilities: Revolving line of credit $300 $- Accounts payable 636 1,256 Accrued liabilities 1,047 1,113 Unearned revenue 5,272 4,661 Current portion of capital lease
obligations 24 46 Current portion of notes payable 316 333
--- ---
Total current liabilities 7,595 7,409
Long-term portion of capital lease
obligations - 24 Long-term portion of notes payable 557 223 Other liabilities 170 255 Deferred tax liability 1,250 1,108
----- -----
Total liabilities 9,572 9,019
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;
3,619,639 and 3,572,883 shares issued
and 3,606,922 and 3,560,167 shares
outstanding 362 357 Additional paid-in capital 184,990 184,204 Accumulated deficit (178,556) (175,911) Receivable for common stock issued (26) (26) Treasury stock, at cost, 12,716 shares (169) (169)
---- ---- Total stockholders' equity 6,601 8,455
----- ----- Total liabilities and stockholders'
equity $16,173 $17,474
======= =======
See accompanying notes
Sonic Foundry, Inc.
Consolidated Statements of Operations
(in thousands, except for share and per share data)
Years Ended September 30,
-------------------------
Revised
2009 2008
---- ------- Revenue: Product $9,644 $8,439 Services 8,813 7,037 Other 120 125
--- --- Total revenue 18,577 15,601
Cost of revenue: Product 3,794 3,886 Services 537 319
--- --- Total cost of revenue 4,331 4,205
----- ----- Gross margin 14,246 11,396
Operating expenses: Selling and marketing 10,350 12,905 General and administrative 2,910 2,843 Product development 3,464 3,531
----- ----- Total operating expenses 16,724 19,279
------ ------ Loss from operations (2,478) (7,883)
Interest expense (72) (89) Other income, net 47 99
--- --- Total other income (expense) (25) 10
--- --- Loss before income taxes (2,503) (7,873) Provision for income taxes (142) (256)
---- ----
Net loss $(2,645) $(8,129)
======= =======
Loss per common share:
Basic net loss per common share $(0.74) $(2.28)
====== ====== Diluted net loss per common share $(0.74) $(2.28)
====== ======
Weighted average common shares - Basic 3,598,040 3,557,966
========= =========
- Diluted 3,598,040 3,557,966
========= ========= See accompanying notes
Non-GAAP Consolidated Statements of Operations (in thousands)
Fiscal Quarter Ended Revised Fiscal Quarter Ended
September 30, 2009 September 30, 2008
-------------------- ----------------------------
Non- Non-
GAAP Adj(1) GAAP GAAP Adj(1) GAAP
---- ----- ---- ---- ----- ---- Revenues $4,128 $575 $4,703 $4,065 $1,220 $5,285
Cost of revenue 1,015 - 1,015 1,125 - 1,125
Total Operating
expenses 4,065 (237) 3,828 4,158 (304) 3,854
----- ---- ----- ----- ---- -----
Loss from
operations (952) 812 (140) (1,218) 1,524 306
Other income
(expense) 4 - 4 (8) - (8) Provision for
income taxes (142) 142 - (256) 256 -
---- --- --- ---- --- ---
Net income (loss) $(1,090) $954 $(136) $(1,482) $1,780 $298
======= ==== ===== ======= ====== ====
Diluted net
income (loss)
per common
share $(0.30) $0.26 $(0.04) $(0.42) $0.50 $0.08
====== ===== ====== ====== ===== =====
(1) Adjustments
consist of
the following:
Billings $575 $1,220 Depreciation
(in G&A) 145 195 Personnel and
program reductions Non-cash tax
provision 142 256 Stock-based
compensation(2) 92 109
--- ---
Total non-GAAP
adjustments $954 $1,780
==== ======
(2) Stock-based
compensation
is included
in the
following
GAAP
operating
expenses:
Selling and
marketing $59 $71 General and
administrative 8 30 Research and
development 25 8
--- ---
Total stock-based
compensation $92 $109
=== ====
Fiscal Year Ended Revised Fiscal Year Ended
September 30, 2009 September 30, 2008
-------------------- ----------------------------
Non- Non-
GAAP Adj(1) GAAP GAAP Adj(1) GAAP
---- ----- ---- ---- ----- ---- Revenues $18,577 $611 $19,188 $15,601 $1,347 $16,948
Cost of revenue 4,331 - 4,331 4,205 - 4,205
Total Operating
expenses 16,724 (1,199) 15,525 19,279 (1,953) 17,326
------ ------ ------ ------ ----- ------
Loss from
operations (2,478) 1,810 (668) (7,883) 3,300 (4,583)
Other income (25) - (25) 10 - 10 Provision for
income taxes (142) 142 - (256) 256 -
---- --- --- ---- --- ---
Net income
(loss) $(2,645) 1,952 $(693) $(8,129) $3,556 $4,573
======= ===== ===== ======= ====== ======
Diluted net
income (loss)
per common
share $(0.74) $0.55 $(0.19) $(2.28) $0.99 $(1.29)
====== ===== ====== ====== ===== ======
(1) Adjustments
consist of
the following:
Billings $611 $1,347 Depreciation
(in G&A) 615 702 Personnel and
program reductions - 612 Non-cash tax
provision 142 256 Stock-based
compensation(2) 584 639
--- ---
Total non-GAAP
adjustments $1,952 $3,556
====== ======
(2) Stock-based
compensation
is included
in the following
GAAP operating
expenses:
Selling and
marketing $375 $352 General and
administrative 52 90 Research and
development 157 197
--- ---
Total stock-based
compensation $584 $639
==== ====
DATASOURCE: Sonic Foundry, Inc.
CONTACT: investor inquiries, , or media
relations, , both of Sonic Foundry, Inc.
Web Site: http://www.sonicfoundry.com/