Sonic Foundry Announces Fiscal 2020 Third Quarter Financial Results

  • Billings of $7.7 million in the third quarter of 2020, bringing total billings for the year to $24.3 million which is $300,000 ahead of last year
  • Total revenues of $7.9 million compared to $10.1 million in the third quarter of 2019, and $24.6 million total revenue year-to-date compared to $25.6 million last year
  • Gross margin remained consistent at 73 percent for the third quarter in both 2020 and 2019
  • Net income attributable to common stockholders of $107,000, or $.01 per share, compared to a net loss of $(159,000), or $(0.03) per share, in the third quarter of 2019, an improvement of $266,000
  • Adjusted EBITDA of $353,000 for the third quarter of 2020, bringing year-to-date adjusted EBITDA to $767,000, which is $2 million ahead of last year 
  • Unearned revenue was $11.3 million as of June 30, 2020 and $11.5 million as of September 30, 2019 
  • Due to supply chain interruptions caused by COVID-19, product billings were $2.5 million during the third quarter of 2020 compared to $4 million in the same quarter last year. Service billings, including support, hosting, events and installs were $5.2 million, compared to $6.5 million in the prior year. Events billings, particularly with MSKK, our Japanese subsidiary, were negatively impacted by cancellations due to COVID-19. The company expects to recognize $4.6 million of the current unearned revenue in the fourth quarter of fiscal 2020. Recurring revenue of $5.6 million was 70 percent of total revenue in the third quarter of 2020, compared to $6.3 million, or 63 percent of total revenue, in the third quarter of 2019.

    “In this new video-centric world, Sonic Foundry is well positioned to help schools and organizations react quickly to meet their expanding communication needs with Mediasite. I am proud of how the team has innovated to launch additional products and services that are in high demand. We expect that Mediasite Mosaic, our new personal capture app, and our expanded Zoom integration will be integral to hybrid back-to-school plans around the world. Our Mediasite Events team pivoted almost overnight to a complete virtual event offering that grew out of our 15-year history of creating dynamic online experiences – a business segment we expect to grow as the long-reaching effects of the pandemic on in-person conferences continues into next year,” said Michael Norregaard, CEO, Sonic Foundry.

    Norregaard continued: “We are reminded daily that our customers continue to navigate uncertain budgets and back-to-school plans during these unprecedented times. As we welcome new customers, such as Edgecombe Community College and Kansas State Lottery into the Mediasite fold, and help our current customers expand their existing footprint, we are honored to be their trusted solution to help them recover faster and emerge stronger than ever.”

    “We appreciate Michael Norregaard’s contributions to the company in terms of efficiencies he implemented that led us to improved profitability,” said Mark Burish, chairman, Sonic Foundry. “Now as we face new demands for virtual learning and enterprise communication brought on by the pandemic, we believe a focus on sales growth is critical to maximizing shareholder value. We believe that Joe Mozden, with his proven experience in building sustainable growth, is the right person to lead this initiative when he takes the reins next month.”

    www.sonicfoundry.com and @mediasite.” data-reactid=”31″>About Sonic Foundry®, Inc.
    Sonic Foundry (OTC: 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 and @mediasite.

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    nicolew@sonicfoundry.com
    ” data-reactid=”38″>Contacts:
    Nicole Wise, Director of Communications
    920.226.0269
    nicolew@sonicfoundry.com

      June 30,
     2020
      September 30,
     2019
    Assets      
    Current assets:      
    Cash and cash equivalents $ 6,442     $ 4,295  
    Accounts receivable, net of allowances of $159 & $135 5,438     6,532  
    Inventories 544     558  
    Investment in sales-type lease, current 147     163  
    Capitalized commissions, current 354     464  
    Prepaid expenses and other current assets 1,111     972  
    Total current assets 14,036     12,984  
    Property and equipment:      
    Leasehold improvements 1,122     1,121  
    Computer equipment 6,644     5,610  
    Furniture and fixtures 1,326     1,233  
    Total property and equipment 9,092     7,964  
    Less accumulated depreciation and amortization 7,056     6,396  
    Property and equipment, net 2,036     1,568  
    Other assets:      
    Investment in sales-type lease, long-term 13     134  
    Capitalized commissions, long-term 89     106  
    Right-of-use assets under operating leases 2,335      
    Other long-term assets 413     388  
    Total assets $ 18,922     $ 15,180  
    Liabilities and stockholders’ deficit      
    Current liabilities:      
    Accounts payable $ 1,544     $ 843  
    Accrued liabilities 1,122     2,216  
    Unearned revenue 9,558     9,610  
    Current portion of finance lease obligations 137     194  
    Current portion of operating lease obligations 1,364      
    Current portion of notes payable and warrant debt, net of discounts 1,255     968  
    Total current liabilities 14,980     13,831  
    Long-term portion of unearned revenue 1,760     1,842  
    Long-term portion of finance lease obligations 110     179  
    Long-term portion of operating lease obligations 989      
    Long-term portion of notes payable and warrant debt, net of discounts 2,485     5,429  
    Derivative liability, at fair value 125     9  
    Other liabilities 141     143  
    Total liabilities 20,590     21,433  
    Commitments and contingencies      
    Stockholders’ 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; 7,934,760 and 6,749,359 shares issued, respectively and 7,922,044 and 6,736,643 shares outstanding, respectively 79     67  
    Additional paid-in capital 208,914     203,735  
    Accumulated deficit (209,958 )   (209,340 )
    Accumulated other comprehensive loss (534 )   (546 )
    Treasury stock, at cost, 12,716 shares (169 )   (169 )
    Total stockholders’ deficit (1,668 )   (6,253 )
    Total liabilities and stockholders’ deficit $ 18,922     $ 15,180  

    See accompanying notes to the condensed consolidated financial statements.

      Three Months Ended June 30,   Nine Months Ended June 30,
      2020   2019   2020   2019
    Revenue:              
    Product and other   $ 2,744       $ 4,221       $ 7,612       $ 7,768  
    Services 5,173     5,847     16,987     17,799  
    Total revenue 7,917     10,068     24,599     25,567  
    Cost of revenue:              
    Product and other 1,199     1,558     3,188     2,854  
    Services 971     1,123     3,566     3,673  
    Total cost of revenue 2,170     2,681     6,754     6,527  
    Gross margin 5,747     7,387     17,845     19,040  
    Operating expenses:              
    Selling and marketing 2,980     3,785     9,433     11,564  
    General and administrative 1,030     1,609     3,647     4,492  
    Product development 1,511     1,849     4,600     5,617  
    Total operating expenses 5,521     7,243     17,680     21,673  
    Income (loss) from operations 226     144     165     (2,633 )
    Non-operating expenses:              
    Interest expense, net (140 )   (276 )   (621 )   (657 )
    Other expense, net (106 )   (63 )   (150 )   (66 )
    Total non-operating expenses (246 )   (339 )   (771 )   (723 )
    Income (loss) before income taxes (20 )   (195 )   (606     (3,356 )
    Income tax benefit (expense) 127     36     (12 )   (77 )
    Net income (loss)   $ 107       $ (159 )     $ (618 )     $ (3,433 )
    Dividends on preferred stock       (24 )       (122 )
    Net income (loss) attributable to common stockholders   $ 107       $ (183 )     $ (618 )     $ (3,555 )
    Income (loss) per common share              
    – basic   $ 0.01       $ (0.03 )     $ (0.09 )     $ (0.64 )
    – diluted   $ 0.01       $ (0.03 )     $ (0.09 )     $ (0.64 )
    Weighted average common shares              
    – basic 7,399,545     6,122,098     6,972,924     5,528,999  
    – diluted 7,830,293     6,122,098     6,972,924     5,528,999  

    See accompanying notes to the condensed consolidated financial statements

      Nine Months Ended
    June 30,
      2020   2019
    Operating activities      
    Net loss $ (618 )   $ (3,433 )
    Adjustments to reconcile net loss to net cash provided by (used in) operating activities:      
    Amortization of other intangibles 204     170  
    Depreciation and amortization of property and equipment 644     748  
    Loss on sale of fixed assets     8  
    Provision for doubtful accounts – including financing receivables 31     31  
    Provision for inventory reserve 90      
    Loss on conversion of related party debt to equity 26      
    Stock-based compensation expense related to stock options and warrants 104     203  
    Stock issued for board of director fees 61     246  
    Deferred loan interest to related party 322      
    Remeasurement loss (gain) on derivative liability 116     (12 )
    Changes in operating assets and liabilities:      
    Accounts receivable 1,077     660  
    Financing receivables     87  
    Inventories (76 )   75  
    Investment in sales-type lease 136      
    Capitalized commissions 127     138  
    Prepaid expenses and other current assets (128 )   280  
    Right-of-use assets under operating leases 208      
    Operating lease obligations (234 )    
    Other long-term assets (24 )    
    Accounts payable and accrued liabilities (749 )   (294 )
    Other long-term liabilities (2 )   (46 )
    Unearned revenue (153 )   (1,339 )
    Net cash provided by (used in) operating activities 1,162     (2,478 )
    Investing activities      
    Purchases of property and equipment (683 )   (373 )
    Net cash used in investing activities (683 )   (373 )
    Financing activities      
    Proceeds from notes payable 2,778     5,500  
    Proceeds from lines of credit     9,199  
    Payments on notes payable (984 )   (583 )
    Payments on lines of credit     (9,636 )
    Payment of debt issuance costs     (110 )
    Proceeds from issuance of preferred stock and common stock 2     864  
    Proceeds from exercise of common stock options 18      
    Payments on finance lease obligations (162 )   (193 )
    Net cash provided by (used in) financing activities 1,652     5,041  
    Changes in cash and cash equivalents due to changes in foreign currency 16     8  
    Net increase (decrease) in cash and cash equivalents 2,147     2,198  
    Cash and cash equivalents at beginning of year 4,295     1,189  
    Cash and cash equivalents at end of period $ 6,442     $ 3,387  
    Supplemental cash flow information:      
    Interest paid $ 114     $ 425  
    Income taxes paid, foreign 141     237  
    Non-cash financing and investing activities:      
    Property and equipment financed by finance lease or accounts payable 478     45  
    Debt discount and warrant     679  
    Preferred stock dividends paid in additional shares     122  
    Conversion of preferred shares to common shares     1,772  
    Conversion of related party debt to common shares 5,005      
               

    See accompanying notes to the condensed consolidated financial statements.

      Three Months Ended
    June 30,
      Nine Months Ended
    June 30,
      2020   2019   2020   2019
                   
    Net income (loss) $ 107     $ (159 )   $ (618 )   $ (3,433 )
    Add:              
    Depreciation and amortization   215       240       648       748  
    Income tax (benefit) expense (127 )   (36 )     12       77  
    Interest expense   140       276       621       657  
    Stock-based compensation expense   18     (17 )     104       203  
    Severance       436           562  
    Adjusted EBITDA $ 353     $ 740     $ 767     $ (1,186 )

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    Author: hafiz 2012