Sonic Foundry Announces Fiscal 2020 Fourth Quarter and Fiscal 2020 Financial Results - Third Consecutive Quarter of Net Income
MADISON, Wis., Dec. 22, 2020 (GLOBE NEWSWIRE) -- Sonic Foundry, Inc. (OTC Pink Sheets: SOFO), the trusted leader for video creation and management solutions, as well as virtual and hybrid events, today announced consolidated financial results for its fiscal 2020 fourth quarter and fiscal year ended September 30, 2020.
Fiscal 2020 Fourth Quarter Highlights
Billings of $11 million in the fourth quarter of 2020, a $1.2 million increase over the same quarter last year
Total revenues of $10.2 million compared to $9.2 million in the fourth quarter of 2019, a 10 percent increase
Gross margin was $7.3 million, or 72 percent in the fourth quarter of 2020 compared to $6.5 million, or 70 percent in the fourth quarter of 2019
Net income attributable to common stockholders of $439,000, or $0.06 per share, compared to a net loss of $(179,000), or $(0.03) per share, in the fourth quarter of 2019, an improvement of $618,000
Adjusted EBITDA of $1.6 million for the fourth quarter of 2020 compared to $744,000 in the same quarter last year, a 115% improvement
Unearned revenue was $12.1 million as of September 30, 2020 and $11.5 million as of September 30, 2019
Fiscal 2020 Year-End Highlights
Billings totaled $35.4 million in fiscal 2020 compared to $35.1 million in the prior year
Revenue remained flat year over year at $34.8 million despite impacts from COVID-19
Gross margin declined slightly from 73 percent in fiscal 2019 to 72 percent in fiscal 2020
Net loss attributable to common stockholders of $(179,000), or $(0.02) per share compared to a net loss of $(3.7) million, or $(0.64) per share in fiscal 2019
Adjusted EBITDA was $2.4 million for the year compared to $(450,000) in the prior year. The company adjusts EBITDA for non-cash stock compensation expense and severance expense
Fiscal 2020 Fourth Quarter Review
Product billings were $2.9 million during the fourth quarter of 2020 compared to $3.7 million in the same quarter last year. Service billings, including support, hosting, events and installs were $8 million, compared to $6.1 million in the prior year. Notably, billings related to hosting increased 86 percent in the fourth quarter of 2020 compared to the same quarter last year. These increases in services are indicative of the acceleration in video content creation across the globe. The company expects to recognize $4.1 million of the current unearned revenue in the first quarter of fiscal 2021. Recurring revenue of $6.8 million was 67 percent of total revenue in the fourth quarter of 2020, compared to $5.9 million, or 64 percent of total revenue, in the fourth quarter of 2019.
“It has been incredibly exciting for me to join Sonic Foundry at this pivotal point in its 30-year history,” said Joe Mozden Jr., CEO, Sonic Foundry. “Every organization across the world has been impacted by COVID-19 in a profound way. We have had the sincere privilege of being positioned to help our customers navigate unchartered waters – new users like Norland College in the United Kingdom and Hamid Bin Khalifa University, part of the Qatar Foundation, and longtime clients like Florida Atlantic University and Texas A&M University. Our solutions are helping them continue, if not grow their businesses, by keeping their classes, trainings, work and events going virtually, despite distance.”
Mozden continued: “Whether it’s migrating a health organization’s in-person conference to a virtual platform to ensure they continue to exchange vital information with thousands of users, or enabling teachers to connect with their students in more thoughtful and engaging ways, we’re proud to be a lifeline to our customers in this new video-centric world.”
“We are rapidly adapting our business to the trends that we are seeing, and are accelerating our investments and focus on high value-add markets which we believe will grow in a post COVID world. Increased demand for hosting, our virtual events platform and our video content management capabilities reflect significant opportunities for Sonic Foundry and are the basis for changes we are making in our business. I am extremely proud of our team for quickly pivoting to meet our customers’ needs during this difficult year. We are beginning a new journey with greater emphasis on product orientation coupled with our historical customer-centric focus. A great example of that is the innovations we are driving for in the new hybrid world for the classroom, the office, and the events industry,” he concluded.
Non-GAAP Financial Information
To supplement and enhance the reader’s understanding of our operating performance, 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 as well as severance 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. A reconciliation of net loss to adjusted EBITDA for the fourth quarter ended September 30, 2020, and 2019 are included in the release.
About Sonic Foundry®, Inc.
Sonic Foundry (OTC Pink Sheets: SOFO) is the global leader for video capture, management and streaming solutions. Trusted by more than 5,200 educational institutions, corporations, health organizations and government entities in over 65 countries, its Mediasite Video Platform quickly and cost-effectively automates the capture, management, delivery and search of live and on-demand streaming videos. Learn more at www.sonicfoundry.com.
© 2020 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.
Contact:
Nicole Wise, Director of Communications
920.226.0269
nicolew@sonicfoundry.com
Sonic Foundry, Inc.
Consolidated Balance Sheets
(in thousands, except for share data)
(Unaudited)
September 30, | ||||||||
2020 | 2019 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 7,619 | $ | 4,295 | ||||
Accounts receivable, net of allowances of $236 and $135 | 6,250 | 6,532 | ||||||
Inventories | 1,167 | 558 | ||||||
Investment in sales-type lease, current | 275 | 163 | ||||||
Capitalized commissions, current | 440 | 464 | ||||||
Prepaid expenses and other current assets | 1,065 | 972 | ||||||
Total current assets | 16,816 | 12,984 | ||||||
Property and equipment: | ||||||||
Leasehold improvements | 1,128 | 1,121 | ||||||
Computer equipment | 7,960 | 5,610 | ||||||
Furniture and fixtures | 1,366 | 1,233 | ||||||
Total property and equipment | 10,454 | 7,964 | ||||||
Less accumulated depreciation and amortization | 7,295 | 6,396 | ||||||
Property and equipment, net | 3,159 | 1,568 | ||||||
Other assets: | ||||||||
Investment in sales-type lease, long-term | 76 | 134 | ||||||
Capitalized commissions, long-term | 100 | 106 | ||||||
Right-of-use assets under operating leases | 2,081 | — | ||||||
Other long-term assets | 397 | 388 | ||||||
Total assets | $ | 22,629 | $ | 15,180 | ||||
Liabilities and stockholders’ equity (deficit) | ||||||||
Current liabilities: | ||||||||
Accounts payable | 2,689 | 843 | ||||||
Accrued liabilities | 2,565 | 2,216 | ||||||
Unearned revenue | 10,402 | 9,610 | ||||||
Current portion of finance lease obligations | 119 | 194 | ||||||
Current portion of operating lease obligations | 1,425 | — | ||||||
Current portion of notes payable and warrant debt, net of discounts | 1,104 | 968 | ||||||
Total current liabilities | 18,304 | 13,831 | ||||||
Long-term portion of unearned revenue | 1,736 | 1,842 | ||||||
Long-term portion of finance lease obligations | 89 | 179 | ||||||
Long-term portion of operating lease obligations | 665 | — | ||||||
Long-term portion of notes payable and warrant debt, net of discounts | 2,673 | 5,429 | ||||||
Derivative liability, at fair value | 66 | 9 | ||||||
Other liabilities | 144 | 143 | ||||||
Total liabilities | 23,677 | 21,433 | ||||||
Commitments and contingencies | ||||||||
Stockholders’ equity (deficit): | ||||||||
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 4,500 shares; zero shares issued and outstanding, at amounts paid in | — | — | ||||||
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; 7,965,325 and 6,749,359 shares issued and 7,952,609 and 6,736,643 shares outstanding | 80 | 67 | ||||||
Additional paid-in capital | 209,022 | 203,735 | ||||||
Accumulated deficit | (209,519 | ) | (209,340 | ) | ||||
Accumulated other comprehensive loss | (462 | ) | (546 | ) | ||||
Treasury stock, at cost, 12,716 shares | (169 | ) | (169 | ) | ||||
Total stockholders’ equity (deficit) | (1,048 | ) | (6,253 | ) | ||||
Total liabilities and stockholders’ equity (deficit) | $ | 22,629 | $ | 15,180 | ||||
Sonic Foundry, Inc.
Consolidated Statements of Operations
(in thousands, except for share and per share data)
(Unaudited)
Quarters Ended September 30, | Years Ended September 30, | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Revenue: | ||||||||||||||||
Product and other | $ | 2,727 | $ | 3,863 | $ | 10,339 | $ | 11,631 | ||||||||
Services | 7,427 | 5,351 | 24,414 | 23,150 | ||||||||||||
Total revenue | 10,154 | 9,214 | 34,753 | 34,781 | ||||||||||||
Cost of revenue: | ||||||||||||||||
Product and other | 1,243 | 1,534 | 4,430 | 4,387 | ||||||||||||
Services | 1,638 | 1,219 | 5,204 | 4,893 | ||||||||||||
Total cost of revenue | 2,881 | 2,753 | 9,634 | 9,280 | ||||||||||||
Gross margin | 7,273 | 6,461 | 25,119 | 25,501 | ||||||||||||
Operating expenses: | ||||||||||||||||
Selling and marketing | 3,591 | 3,163 | 13,025 | 14,727 | ||||||||||||
General and administrative | 1,408 | 1,437 | 5,055 | 5,929 | ||||||||||||
Product development | 1,703 | 1,736 | 6,303 | 7,353 | ||||||||||||
Total operating expenses | 6,702 | 6,336 | 24,383 | 28,009 | ||||||||||||
Income/(loss) from operations | 571 | 125 | 736 | (2,508 | ) | |||||||||||
Non-operating income (expenses): | ||||||||||||||||
Interest expense, net | (37 | ) | (240 | ) | (658 | ) | (897 | ) | ||||||||
Other expense, net | 41 | (51 | ) | (109 | ) | (117 | ) | |||||||||
Total non-operating expenses | 4 | (291 | ) | (767 | ) | (1,014 | ) | |||||||||
Loss before income taxes | 575 | (166 | ) | (31 | ) | (3,522 | ) | |||||||||
Income tax provision | (136 | ) | (13 | ) | (148 | ) | (90 | ) | ||||||||
Net loss | $ | 439 | $ | (179 | ) | $ | (179 | ) | $ | (3,612 | ) | |||||
Dividends on preferred stock | — | — | — | (122 | ) | |||||||||||
Net loss attributable to common stockholders | $ | 439 | $ | (179 | ) | $ | (179 | ) | $ | (3,734 | ) | |||||
Loss per common share: | ||||||||||||||||
Basic net loss per common share | $ | 0.06 | $ | (0.03 | ) | $ | (0.02 | ) | $ | (0.64 | ) | |||||
Diluted net loss per common share | $ | 0.05 | $ | (0.03 | ) | $ | (0.02 | ) | $ | (0.64 | ) | |||||
Weighted average common shares – Basic | 7,940,480 | 6,736,285 | 7,216,135 | 5,833,301 | ||||||||||||
– Diluted | 8,346,877 | 6,736,285 | 7,216,135 | 5,833,301 | ||||||||||||
Sonic Foundry, Inc.
Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
Years Ended | ||||||||
September 30, | ||||||||
2020 | 2019 | |||||||
Operating activities | ||||||||
Net loss | $ | (179 | ) | $ | (3,612 | ) | ||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||
Amortization of other intangibles | 231 | 307 | ||||||
Depreciation and amortization of property and equipment | 889 | 970 | ||||||
Loss on sale of fixed assets | — | 8 | ||||||
Provision for doubtful accounts - including financing receivables | 111 | 116 | ||||||
Provision for inventory reserve | 122 | — | ||||||
Loss on conversion of related party debt to equity | 26 | — | ||||||
Stock-based compensation expense related to stock options and warrants | 158 | 177 | ||||||
Stock issued for board of director’s fees | 63 | 246 | ||||||
Deferred loan interest to related party | 317 | 259 | ||||||
Remeasurement gain on derivative liability | 57 | (8 | ) | |||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | 268 | 950 | ||||||
Financing receivables | — | 293 | ||||||
Inventories | (729 | ) | 472 | |||||
Investment in sales-type lease | (48 | ) | 120 | |||||
Capitalized commissions | 30 | 123 | ||||||
Prepaid expenses and other current assets | (57 | ) | 15 | |||||
Right-of-use assets under operating leases | 492 | — | ||||||
Operating lease obligations | (528 | ) | — | |||||
Other long-term assets | — | — | ||||||
Accounts payable and accrued liabilities | 1,503 | (204 | ) | |||||
Other long-term liabilities | (2 | ) | (68 | ) | ||||
Unearned revenue | 617 | (900 | ) | |||||
Net cash used in operating activities | 3,341 | (736 | ) | |||||
Investing activities | ||||||||
Purchases of property and equipment | (1,736 | ) | (433 | ) | ||||
Net cash used in investing activities | (1,736 | ) | (433 | ) | ||||
Financing activities | ||||||||
Proceeds from notes payable | 3,157 | 5,500 | ||||||
Proceeds from lines of credit | — | 9,199 | ||||||
Payments on notes payable | (1,358 | ) | (833 | ) | ||||
Payments on lines of credit | — | (10,098 | ) | |||||
Payments of debt issuance costs | — | (110 | ) | |||||
Payments to settle put on term debt | — | — | ||||||
Proceeds from issuance of preferred stock and common stock | 73 | 873 | ||||||
Payments on capital lease and financing arrangements | (202 | ) | (250 | ) | ||||
Net cash provided by financing activities | 1,670 | 4,281 | ||||||
Changes in cash and cash equivalents due to changes in foreign currency | 49 | (6 | ) | |||||
Net increase (decrease) in cash and cash equivalents | 3,324 | 3,106 | ||||||
Cash and cash equivalents at beginning of year | 4,295 | 1,189 | ||||||
Cash and cash equivalents at end of year | $ | 7,619 | $ | 4,295 | ||||
Supplemental cash flow information: | ||||||||
Interest paid | $ | 148 | $ | 618 | ||||
Income taxes paid, foreign | 154 | 99 | ||||||
Non-cash financing and investing activities: | ||||||||
Property and equipment financed by finance lease or accounts payable | 724 | 186 | ||||||
Debt discount and warrant | — | 679 | ||||||
Preferred stock dividend paid in additional shares | — | 122 | ||||||
Conversion of preferred shares to common shares | — | 1,773 | ||||||
Conversion of related party debt to common shares | 5,005 | — | ||||||
Sonic Foundry, Inc.
Consolidated Non-GAAP Adjusted EBITDA Reconciliation
(in thousands)
Quarters Ended September 30, | Years Ended September 30, | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Net income (loss) | $ | 439 | $ | (179 | ) | $ | (179 | ) | $ | (3,612 | ) | |||||
Add: | ||||||||||||||||
Depreciation and amortization | 235 | 228 | 883 | 977 | ||||||||||||
Income tax expense | 136 | 13 | 148 | 90 | ||||||||||||
Interest expense | 37 | 240 | 658 | 897 | ||||||||||||
Stock-based compensation expense | 55 | (25 | ) | 158 | 175 | |||||||||||
Severance | 705 | 467 | 705 | 1,023 | ||||||||||||
Adjusted EBITDA | $ | 1,607 | $ | 744 | $ | 2,373 | $ | (450 | ) | |||||||
