UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
April 26, 2012(April 26, 2012)
Date of Report (Date of earliest event reported)
Sonic Foundry, Inc.
(Exact name of registrant as specified in its chapter)
Maryland (State or other jurisdiction of incorporation) |
1-14007 (Commission File Number) |
39-1783372 (IRS Employer Identification No.) |
222 W. Washington Ave Madison, WI 53703 |
(608) 443-1600 (Registrant's telephone number) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions
£ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
£ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
£ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
£ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 Results of Operations and Financial Condition.
On April 26, 2012, Sonic Foundry, Inc. reported financial results for the fiscal quarter ended March 31, 2012. See attached press release at exhibit 99.1.
The information in this Report on Form 8-K (including the exhibit) is furnished and shall not be deemed to be "filed" for purposes of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), nor shall it be deemed incorporated by reference in any filing made by the Company under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.
Item 9.01 Financial Statements and Exhibits.
(d) | Exhibits |
99.1 | Press release concerning financial results for the fiscal quarter ended March 31, 2012. |
2 |
EXHIBIT LIST
NUMBER | DESCRIPTION |
99.1 | Press release concerning financial results for the fiscal quarter ended March 31, 2012. |
3 |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Sonic Foundry, Inc. | ||
(Registrant) | ||
April 26, 2012 | By: | /s/ Kenneth A. Minor |
Kenneth A. Minor | ||
Chief Financial Officer |
4 |
Sonic Foundry Reports Second Quarter Fiscal 2012 Results
MADISON, Wis., April 26, 2012 /PRNewswire/ -- Sonic Foundry, Inc. (NASDAQ: SOFO), the trusted market leader for lecture capture, enterprise and event webcasting, today announced financial results for its fiscal 2012 second quarter ended March 31, 2012.
GAAP results include:
Non-GAAP results include:
Non-GAAP net income primarily excludes all non-cash related expenses of stock compensation, 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 March 31, 2012, $5.1 million of revenue was deferred, of which the company expects to realize approximately $2.2 million in the quarter ending June 30, 2012. 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.
Gross margin improved from 70 percent in the second quarter of fiscal 2011 to 72 percent in the second quarter of fiscal 2012 due to operational efficiencies in recorder and services costs and a decrease in direct and outsourced event labor costs with lower markups for services which the Company does not provide, such as closed captioning. These improvements were partially offset by a greater volume of discounted upgrade units for customers whose product had reached end of hardware warranty eligibility and by an increase in high definition material cost.
International product and service billings accounted for 34 percent of overall billings, compared to 30 percent in the second quarter of fiscal 2011. During the second quarter of this fiscal year, 81 percent of billings were to preexisting customers, compared to 66 percent in second quarter fiscal 2011, with 54 percent to education customers and 33 percent to corporate.
"We're on track to improve year over year GAAP performance while at the same time developing new capabilities for Mediasite at an ever increasing pace. As a result of those focused resources in the first half of fiscal 2012, we have released new product enhancements including the Mediasite ML HD, advanced integration services and mobile playback to Android devices with much more to come in the second half of the year." said Gary Weis, chief executive officer of Sonic Foundry. "Our customers are already responding to these developments, with billings from existing customers at a much higher percentage for Q2 than in previous quarters. At the same time, our efforts at prospecting for bigger deals have been successful in growing pipeline to its highest level in company history, and we expect Q3 and Q4 to bring even greater purchasing interest among clients and prospects alike as we expand the value of Mediasite by future enhancements."
Sonic Foundry will host a corporate webcast today for analysts and investors to discuss its fiscal 2012 second quarter 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, register at www.sonicfoundry.com/earnings. 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. Condensed Consolidated Balance Sheets (in thousands, except for share data) (Unaudited) | |||
March 31, 2012 | September 30,
| ||
Assets | |||
Current assets: | |||
Cash and cash equivalents | $ 4,400 | $ 5,515 | |
Accounts receivable, net of allowances of $85 and $90 | 4,518 | 5,799 | |
Inventories | 1,166 | 536 | |
Prepaid expenses and other current assets | 921 | 740 | |
Total current assets | 11,005 | 12,590 | |
Property and equipment: | |||
Leasehold improvements | 1,728 | 980 | |
Computer equipment | 3,971 | 3,586 | |
Furniture and fixtures | 766 | 461 | |
Total property and equipment | 6,465 | 5,027 | |
Less accumulated depreciation and amortization | 3,777 | 3,391 | |
Net property and equipment | 2,688 | 1,636 | |
Other assets: | |||
Goodwill | 7,576 | 7,576 | |
Other intangibles, net of amortization of $170 and $137 | 5 | 38 | |
Total assets | $ 21,274 | $ 21,840 | |
Liabilities and stockholders' equity | |||
Current liabilities: | |||
Revolving line of credit | $ - | $ - | |
Accounts payable | 1,136 | 1,373 | |
Accrued liabilities | 861 | 1,073 | |
Accrued severance | 199 | 528 | |
Unearned revenue | 4,779 | 5,547 | |
Current portion of capital lease obligation | 92 | 89 | |
Current portion of notes payable | 699 | 897 | |
Total current liabilities | 7,766 | 9,507 | |
Long-term portion of unearned revenue | 359 | 471 | |
Long-term portion of capital lease obligation | 130 | 177 | |
Long-term portion of notes payable | 1,099 | 694 | |
Leasehold improvement liability | 576 | - | |
Deferred tax liability | 1,850 | 1,730 | |
Total liabilities | 11,780 | 12,579 | |
Stockholders' equity: | |||
Preferred stock, $.01 par value, authorized 500,000 shares; none issued and outstanding | - | - | |
5% preferred stock, Series B, voting, cumulative, convertible, $.01 par
|
- |
- | |
Common stock, $.01 par value, authorized 10,000,000 shares; 3,865,896 and 3,845,531
|
39 |
38 | |
Additional paid-in capital | 188,871 | 188,339 | |
Accumulated deficit | (179,221) | (178,921) | |
Receivable for common stock issued | (26) | (26) | |
Treasury stock, at cost, 12,716 shares | (169) | (169) | |
Total stockholders' equity | 9,494 | 9,261 | |
Total liabilities and stockholders' equity | $ 21,274 | $ 21,840 |
Sonic Foundry, Inc. Condensed Consolidated Statements of Operations (in thousands, except for share and per share data) (Unaudited)
| ||||||||||
Three Months Ended March 31, | Six Months Ended March 31, | |||||||||
2012 |
2011 |
2012 |
2011 | |||||||
Revenue: | ||||||||||
Product | $ 2,617 | $ 2,631 | $ 5,216 | $ 5,475 | ||||||
Services | 3,250 | 2,839 | 6,750 | 5,864 | ||||||
Other | 61 | 55 | 147 | 116 | ||||||
Total revenue | 5,928 | 5,525 | 12,113 | 11,455 | ||||||
Cost of revenue: | ||||||||||
Product | 1,354 | 1,291 | 2,616 | 2,641 | ||||||
Services | 290 | 364 | 706 | 683 | ||||||
Total cost of revenue | 1,644 | 1,655 | 3,322 | 3,324 | ||||||
Gross margin | 4,284 | 3,870 | 8,791 | 8,131 | ||||||
Operating expenses: | ||||||||||
Selling and marketing | 2,704 | 2,443 | 5,477 | 4,905 | ||||||
General and administrative | 650 | 717 | 1,475 | 1,336 | ||||||
Product development | 962 | 862 | 1,944 | 1,696 | ||||||
Total operating expenses | 4,316 | 4,022 | 8,896 | 7,937 | ||||||
Income (loss) from operations | (32) | (152) | (105) | 194 | ||||||
Other expense, net | (23) | (60) | (75) | (123) | ||||||
Income (loss) before income taxes | (55) | (212) | (180) | 71 | ||||||
Provision for income taxes | (60) | (60) | (120) | (120) | ||||||
Net loss | $ (115) | $ (272) | $ (300) | $ (49) | ||||||
Net loss per common share: | ||||||||||
– basic | $ (0.03) | $ (0.07) | $ (0.08) | $ (0.01) | ||||||
– diluted | $ (0.03) | $ (0.07) | $ (0.08) | $ (0.01) | ||||||
Weighted average common shares – basic |
3,852,664 |
3,732,996 |
3,846,251 |
3,693,444 | ||||||
– diluted | 3,852,664 | 3,732,996 | 3,846,251 | 3,693,444 | ||||||
Non-GAAP Consolidated Statements of Operations (in thousands, except for per share data)
| |||||||||||||
Fiscal Quarter Ended March 31, 2012 | Fiscal Quarter Ended March 31, 2011 | ||||||||||||
GAAP |
Adj(1) | Non-GAAP |
GAAP |
Adj(1) |
Non-GAAP | ||||||||
Revenues | $ 5,928 | $ (407) | $ 5,521 | $ 5,525 | $ (402) | $ 5,123 | |||||||
Cost of revenue |
1,644 |
- |
1,644 |
1,655 |
- |
1,655 | |||||||
Total operating expenses |
4,316 |
(402) |
3,914 |
4,022 |
(377) |
3,658 | |||||||
Income (loss) from operations |
(32) |
(5) |
(37) |
(152) |
(25) |
(177) | |||||||
Other expense |
(23) |
- |
(23) |
(60) |
- |
(60) | |||||||
Provision for income taxes | (60) | 60 | - | (60) | 60 | - | |||||||
Net income (loss) |
$ (115) |
$ 55 |
$ (60) |
$ (272) |
$ 35 |
$ (237) | |||||||
Basic net income (loss) per common share |
$ (0.03) |
$ 0.01 |
$ (0.02) |
$ (0.07) |
$ 0.01 |
$ (0.06) | |||||||
(1)Adjustments consist of the following: | |||||||||||||
Billings | $ (407) | $ (402) | |||||||||||
Depreciation and amortization | 219 | 185 | |||||||||||
Non-cash tax provision | 60 | 60 | |||||||||||
Stock-based compensation(2) |
183 |
192 | |||||||||||
Total non-GAAP adjustments |
$ 55 |
$ 35 | |||||||||||
(2) Stock-based compensation is included in the following GAAP operating expenses: | |||||||||||||
Selling and marketing | $ 119 | $ 131 | |||||||||||
General and administrative | 11 | 13 | |||||||||||
Product development | 53 | 48 | |||||||||||
Total stock-based compensation |
$ 183 |
$ 192 | |||||||||||
CONTACT: Investors, investor@sonicfoundry.com, or Media, tammy@sonicfoundry.com