November 17, 2011 (November 17, 2011)
Date of Report (Date of earliest event reported)
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Sonic Foundry, Inc.
(Exact name of registrant as specified in its chapter)
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Maryland
(State or other jurisdiction
of incorporation)
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1-14007
(Commission
File Number)
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39-1783372
(IRS Employer
Identification No.)
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222 W. Washington Ave
Madison, WI53703
(Address of principal executive offices)
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(608) 443-1600
(Registrant's telephone number)
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o
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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o
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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(d)
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Exhibits
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99.1
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Press release concerning financial results for the fiscal year ended September 30, 2011.
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99.1
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Press release concerning financial results for the fiscal year ended September 30, 2011.
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November 17, 2011
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By:
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/s/ Kenneth A. Minor | |
Kenneth A. Minor | |||
Chief Financial Officer
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Sonic Foundry Reports Fourth Quarter and Fiscal 2011 Results
Company posts record annual revenues and billings
MADISON, Wis., Nov. 17, 2011 /PRNewswire/ -- Sonic Foundry, Inc. (NASDAQ: SOFO), the trusted market leader for enterprise webcasting and lecture capture, today announced financial results for its fourth fiscal quarter and fiscal year ended September 30, 2011.
2011 Fiscal Fourth Quarter
2011 Fiscal Year
Non-GAAP net income primarily excludes all non-cash related expenses of stock compensation, accrued severance, depreciation, amortization, provision for income taxes and includes the cash impact of billings not recognized as revenue. Reconciliation between GAAP and non-GAAP results is provided at the end of this press release.
At September 30, 2011, $6.0 million of revenue was deferred, of which the company expects to realize approximately $2.4 million in the quarter ending December 31, 2011. Revenue from service contracts is recognized over the life of the contract. Services revenue includes Mediasite customer support contracts as well as training, installation, rental, event and content hosting services.
Services billings for fiscal 2011 were $12.1 million, an increase of 14 percent over fiscal 2010. Support and maintenance billings were $7.3 million, an increase of 10 percent over fiscal 2010, and event services and hosting billings totaled $4.8 million, up 20 percent from $4.0 million in fiscal 2010.
International product and service billings accounted for 25 percent of overall billings, compared to 19 percent in fiscal 2010. In fiscal 2011, 67 percent of billings were to preexisting customers, compared to 70 percent in fiscal 2010, with 59 percent to education customers and 31 percent to corporate.
During fiscal 2011, the company also recognized a one-time expense of $528 thousand due to executive severance compensation triggered by the resignations of Rimas Buinevicius, former Executive Chairman of the Board, and Monty Schmidt, former Chief Technology Officer.
Fiscal 2011 total gross margin was 71 percent, compared to 75 percent in FY10. Gross margin was affected by an increase in outsourced event labor costs with lower markups for services which the company does not provide, such as closed captioning. Gross margin was also impacted by a greater volume of discounted upgrade units for customers whose product had reached the end of hardware warranty eligibility, an increase in the rack to mobile recorder sales ratio and by an increase in high definition material cost. These effects were partially offset by a lesser number of higher quantity transactions with corresponding discount pricing in fiscal 2011 than in fiscal 2010.
"We end fiscal 2011 with another record-breaking year of double-digit growth for Sonic Foundry. While the global financial crisis has led to diminishing confidence for some companies in the educational and enterprise technology sectors, the adoption of Mediasite products and services is at an all-time high," said Gary Weis, chief executive officer of Sonic Foundry. "In the new fiscal year, we will continue to make focused, strategic investments in our road map and talent pool, initiatives which are already yielding measurable results in both product and services sales, as well as ramping up our research and development agenda to deliver new and lasting value for our customers."
Sonic Foundry will host a corporate webcast today for analysts and investors to discuss its fourth quarter and fiscal 2011 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 www.sonicfoundry.com/fy11. 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. Management also believes that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating our operating results and future prospects in the same manner as management and in comparing financial results across accounting periods and to those of peer companies. Our non-GAAP financial measures reflect adjustments based on the following items:
About Sonic Foundry®, Inc.
Sonic Foundry (NASDAQ: SOFO, www.sonicfoundry.com) is the trusted market leader for enterprise webcasting and lecture capture, providing video communication solutions for education, business and government. Powered by the patented Mediasite webcasting platform and Mediasite Events group, the company empowers people to transform the way they communicate online, using video webcasts to bridge time and distance, accelerate research and improve performance. Product and service names mentioned herein are the trademarks of Sonic Foundry, Inc. or their respective owners.
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 and per share data) | ||||
September 30, | ||||
2011 | 2010 | |||
Assets | ||||
Current assets: | ||||
Cash and cash equivalents | $ 5,515 | $ 3,358 | ||
Accounts receivable, net of allowances of $90 and $105 | 5,799 | 5,038 | ||
Inventories | 536 | 541 | ||
Prepaid expenses and other current assets | 740 | 433 | ||
Total current assets | 12,590 | 9,370 | ||
Property and equipment: | ||||
Leasehold improvements | 980 | 980 | ||
Computer equipment | 3,586 | 2,597 | ||
Furniture and fixtures | 461 | 461 | ||
Total property and equipment | 5,027 | 4,038 | ||
Less accumulated depreciation and amortization | 3,391 | 2,801 | ||
Net property and equipment | 1,636 | 1,237 | ||
Other assets: | ||||
Goodwill | 7,576 | 7,576 | ||
Other intangibles, net of amortization of $137 and $71 | 38 | 84 | ||
Total assets | $ 21,840 | $ 18,267 | ||
Liabilities and stockholders' equity | ||||
Current liabilities: | ||||
Revolving line of credit | $ - | $ - | ||
Accounts payable | 1,373 | 1,138 | ||
Accrued liabilities | 1,073 | 752 | ||
Accrued severance | 528 | - | ||
Unearned revenue | 5,547 | 5,486 | ||
Current portion of capital lease obligations | 89 | - | ||
Current portion of notes payable | 897 | 552 | ||
Total current liabilities | 9,507 | 7,928 | ||
Long-term portion of unearned revenue | 471 | 587 | ||
Long-term portion of capital lease obligation | 177 | - | ||
Long-term portion of notes payable | 694 | 1,040 | ||
Other liabilities | - | 85 | ||
Deferred tax liability | 1,730 | 1,490 | ||
Total liabilities | 12,579 | 11,130 | ||
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; 3,845,531 and 3,650,823 shares issued and 3,832,815 and 3,638,107 shares outstanding | 38 | 37 | ||
Additional paid-in capital | 188,339 | 185,973 | ||
Accumulated deficit | (178,921) | (178,678) | ||
Receivable for common stock issued | (26) | (26) | ||
Treasury stock, at cost, 12,716 shares | (169) | (169) | ||
Total stockholders' equity | 9,261 | 7,137 | ||
Total liabilities and stockholders' equity | $ 21,840 | $ 18,267 | ||
Sonic Foundry, Inc. Consolidated Statements of Operations (in thousands except for share and per share data) | ||||
Years Ended September 30, | ||||
2011 | 2010 | |||
Revenue: | ||||
Product | $ 12,784 | $ 10,477 | ||
Services | 12,187 | 9,849 | ||
Other | 251 | 150 | ||
Total revenue | 25,222 | 20,476 | ||
Cost of revenue: | ||||
Product | 5,957 | 4,345 | ||
Services | 1,354 | 720 | ||
Total cost of revenue | 7,311 | 5,065 | ||
Gross margin | 17,911 | 15,411 | ||
Operating expenses: | ||||
Selling and marketing | 10,755 | 9,506 | ||
General and administrative | 2,811 | 2,542 | ||
Severance costs | 528 | - | ||
Product development | 3,539 | 3,090 | ||
Total operating expenses | 17,633 | 15,138 | ||
Income from operations | 278 | 273 | ||
Interest expense | (316) | (190) | ||
Other income, net | 6 | 20 | ||
Total other expense, net | (310) | (170) | ||
Income (loss) before income taxes | (32) | 103 | ||
Provision for income taxes | (211) | (225) | ||
Net loss | $ (243) | $ (122) | ||
Loss per common share: | ||||
Basic net loss per common share | $ (0.06) | $ (0.03) | ||
Diluted net loss per common share | $ (0.06) | $ (0.03) | ||
Weighted average common shares – Basic | 3,748,840 | 3,617,423 | ||
– Diluted | 3,748,840 | 3,617,423 | ||
Non-GAAP Consolidated Statements of Operations (in thousands, except for per share data) | |||||||||||||
Fiscal Quarter Ended September 30, 2011 | Fiscal Quarter Ended September 30, 2010 | ||||||||||||
GAAP | Adj(1) | Non-GAAP | GAAP | Adj(1) | Non-GAAP | ||||||||
Revenues | $ 6,677 | $ 276 | $ 6,953 | $ 5,439 | $ 854 | $ 6,293 | |||||||
Cost of revenue | 1,825 | — | 1,825 | 1,369 | — | 1,369 | |||||||
Total operating expenses | 5,129 | (919) | 4,210 | 3,834 | (259) | 3,575 | |||||||
Income (loss) from operations | (277) | 1,195 | 918 | 236 | 1,113 | 1,349 | |||||||
Other expense | (98) | — | (98) | (65) | — | (65) | |||||||
Provision for income taxes | (31) | 31 | — | (45) | 45 | — | |||||||
Net income (loss) | $ (406) | $ 1,226 | $ 820 | $ 126 | $ 1,158 | $ 1,284 | |||||||
Basic net income per common share | $ (0.11) | $ 0.32 | $ 0.21 | $ 0.03 | $ 0.32 | $ 0.35 | |||||||
(1)Adjustments consist of the following: | |||||||||||||
Billings | $ 276 | $ 854 | |||||||||||
Depreciation and amortization | 211 | 144 | |||||||||||
Non-cash tax provision | 31 | 45 | |||||||||||
Severance costs | 528 | - | |||||||||||
Stock-based compensation(2) | 180 | 115 | |||||||||||
Total non-GAAP adjustments | $ 1,226 | $ 1,158 | |||||||||||
(2) Stock-based compensation is included in the following GAAP operating expenses: | |||||||||||||
Selling and marketing | $ 121 | $ 78 | |||||||||||
General and administrative | 13 | 8 | |||||||||||
Product development | 46 | 29 | |||||||||||
Total stock-based compensation | $ 180 | $ 115 | |||||||||||
Non-GAAP Consolidated Statements of Operations (in thousands, except for per share data) | |||||||||||||
Fiscal Year Ended September 30, 2011 | Fiscal Year Ended September 30, 2010 | ||||||||||||
GAAP | Adj(1) | Non-GAAP | GAAP | Adj(1) | Non-GAAP | ||||||||
Revenues | $ 25,222 | $ (55) | $25,167 | $ 20,476 | $ 801 | $ 21,277 | |||||||
Cost of revenue | 7,311 | — | 7,311 | 5,065 | — | 5,065 | |||||||
Total operating expenses | 17,633 | (2,005) | 15,628 | 15,138 | (837) | 14,301 | |||||||
Income from operations | 278 | 1,950 | 2,228 | 273 | 1,638 | 1,911 | |||||||
Other expense | (310) | — | (310) | (170) | — | (170) | |||||||
Provision for income taxes | (211) | 211 | — | (225) | 225 | — | |||||||
Net income (loss) | $ (243) | $ 2,161 | $ 1,918 | $ (122) | $ 1,863 | $ 1,741 | |||||||
Basic net income (loss) per common share | $ (0.06) | $ 0.57 | $ 0.51 | $ (0.03) | $ 0.51 | $ 0.48 | |||||||
(1)Adjustments consist of the following: | |||||||||||||
Billings | $ (55) | $ 801 | |||||||||||
Depreciation and amortization | 770 | 542 | |||||||||||
Non-cash tax provision | 211 | 225 | |||||||||||
Severance costs | 528 | - | |||||||||||
Stock-based compensation(2) | 707 | 295 | |||||||||||
Total non-GAAP adjustments | $ 2,161 | $ 1,863 | |||||||||||
(2) Stock-based compensation is included in the following GAAP operating expenses: | |||||||||||||
Selling and marketing | $ 482 | $ 199 | |||||||||||
General and administrative | 49 | 21 | |||||||||||
Product development | 176 | 75 | |||||||||||
Total stock-based compensation | $ 707 | $ 295 | |||||||||||
CONTACT: For investor inquiries, investor@sonicfoundry.com, or For media relations, tammy@sonicfoundry.com