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
December
11, 2014
(December
11, 2014)
Date
of Report (Date of earliest event reported)
Sonic
Foundry, Inc.
(Exact
name of registrant as specified in its charter)
Maryland |
000-30407 |
39-1783372 |
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
222 W. Washington Ave Madison, WI 53703 |
(608) 443-1600 |
(Address of principal executive offices) |
(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 December 11, 2014, Sonic Foundry, Inc. reported financial results for the fiscal quarter and year ended September 30, 2014. 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 and year ended September 30, 2014. |
EXHIBIT LIST
NUMBER |
DESCRIPTION |
99.1 |
Press release concerning financial results for the fiscal quarter and year ended September 30, 2014. |
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) |
|||
|
December 11, 2014 | By: |
/s/ Kenneth A. Minor |
Kenneth A. Minor |
|||
Chief Financial Officer |
Exhibit 99.1
Sonic Foundry Announces Fourth Quarter and Fiscal 2014 Financial Results
MADISON, Wis.--(BUSINESS WIRE)--December 11, 2014--Sonic Foundry, Inc. (NASDAQ: SOFO), the trusted leader for video creation and management solutions, today announced financial results for its fiscal 2014 fourth quarter ended September 30, 2014, including results for the recently-acquired Mediasite KK and MediaMission BV.
Revenues showed improvement over fourth quarter 2013, increasing 25 percent to $8.5 million in 2014, up from $6.8 million recorded last year, driven by the impact of the acquisitions. The company billed two transactions totaling approximately $620 thousand that were not included in revenue for the quarter, resulting in a delay in the recording of revenue and earnings until fiscal 2015. Gross margin rates were slightly lower due to a higher number of discounted refresh recorders sold during the quarter.
Select financial highlights:
Consolidated | Sonic Foundry Only | |||||||||||||||||
Quarter Ended September 30, | Quarter Ended September 30, | |||||||||||||||||
Percent | Percent | |||||||||||||||||
2014 |
2013 |
Change |
2014 |
2013 |
Change |
|||||||||||||
Billings | $9.2M | $7.3M | 26% | $7.7M | $7.3M | 6% | ||||||||||||
Revenue: | ||||||||||||||||||
Total | 8.5M | 6.8M | 25 | 6.8M | 6.8M | 0 | ||||||||||||
Product and other | 4.0M | 3.7M | 9 | 3.4M | 3.6M | (9) | ||||||||||||
Service | 4.5M | 3.1M | 45 | 3.4M | 3.1M | 10 | ||||||||||||
Support and maintenance | 2.3M | 2.1M | 14 | 2.2M | 2.1M | 10 | ||||||||||||
Event services | 2.2M | 1.0M | 105 | 1.2M | 1.0M | 21 | ||||||||||||
Gross margin | 5.9M or 69% | 4.9M or 72% | 4.7M or 70% | 4.9M or 72% | ||||||||||||||
Net loss | (1.3M) | (666K) | (1.3M) | (666K) | ||||||||||||||
Net loss / share | (.30) | (.17) | (.31) | (.17) | ||||||||||||||
Cash | 4.3M | 1.4M | ||||||||||||||||
Unearned revenue | 10.0M | 7.1M | 9.3M | 7.1M | ||||||||||||||
Increase in Unearned revenue | 731K | 547K | 973K | 547K | ||||||||||||||
Adjusted EBITDA | (435K) | (80K) | (507K) | (80K) | ||||||||||||||
Adjusted EBITDA / share | (0.10) | (0.02) | (0.12) | (0.02) | ||||||||||||||
Consolidated | Sonic Foundry Only | |||||||||||||||||
Year Ended September 30, | Year Ended September 30, | |||||||||||||||||
Percent | Percent | |||||||||||||||||
2014 |
2013 |
Change |
2014 |
2013 |
Change |
|||||||||||||
Billings | $38.2M | $29.2M | 30% | $32.6M | $29.2M | 12% | ||||||||||||
Revenue: | ||||||||||||||||||
Total | 35.8M | 27.8M | 29 | 30.5M | 27.8M | 10 | ||||||||||||
Product and other | 17.1M | 13.9M | 24 | 15.2M | 13.9M | 10 | ||||||||||||
Service | 18.7M | 13.9M | 34 | 15.3M | 13.9M | 10 | ||||||||||||
Support and maintenance |
9.2M |
7.9M |
15 |
8.4M |
7.9M |
5 |
||||||||||||
Event services | 9.5M | 6.0M | 59 | 6.9M | 6.0M | 15 | ||||||||||||
Gross margin | 25.6M or 71% | 20.1M or 72% | 21.9M or 72% | 20.1M or 72% | ||||||||||||||
Net loss | (2.8M) | (792K) | (2.7M) | (792K) | ||||||||||||||
Net loss / share | (.67) | (.20) | (.68) | (.20) | ||||||||||||||
Increase in Unearned revenue | 2.9M | 1.5M | 2.2M | 1.5M | ||||||||||||||
Adjusted EBITDA | 1.2M | 1.4M | 1.1M | 1.4M | ||||||||||||||
Adjusted EBITDA / share | 0.28 | 0.36 | 0.27 | 0.36 | ||||||||||||||
To supplement and enhance the reader’s understanding of our operating performance and our ability to satisfy lender requirements, we disclose Earnings before Interest, Taxes, Depreciation, and Amortization (EBITDA), a non-GAAP measure of operating performance that is defined by the SEC. Due to the exclusion of non-cash stock-based compensation expense we refer to this measure as Adjusted 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. Our credit agreement contains a minimum debt service coverage ratio based, in part, on Adjusted EBITDA since this measure is representative of adjusted income available for debt and interest payments. A reconciliation of net loss to adjusted EBITDA for the quarters ended and years ended September 30, 2014 and 2013 are included in the release. The company is unable to provide a reconciliation of projected EBITDA to projected net income due to the unknown effect, timing and potential significance of certain income statement items.
As of September 30, 2014, $10 million of revenue from services was deferred (an increase from $7.1 million as of September 30, 2013), of which the company expects to realize $3.8 million in the quarter ending December 31, 2014. Services revenue, which includes Mediasite customer support contracts, training, installation, rental, event and content hosting services, is recognized over the life of the contract.
International product and service billings accounted for 39 percent of Sonic Foundry’s consolidated billings in the fourth quarter of fiscal 2014, compared to 26 percent in the fourth quarter of fiscal 2013. Total international product and service billings accounted for 37 percent of Sonic Foundry’s consolidated billings for fiscal 2014, compared to 29 percent for fiscal 2013. International billings have increased over prior periods primarily as a result of the acquisition of Mediasite KK and MediaMission.
Sonic Foundry-Only Highlights:
Recurring My Mediasite billings exceeded $1.3 million during fiscal 2014, an increase of over $600 thousand, or 85 percent, year over year. Revenue will be recorded over the period covered by the license and therefore had a smaller impact on revenue during the current year.
For the fourth quarter of fiscal 2014, 79 percent of billings were to existing customers, compared to 78 percent during the same period last year, with 69 percent to education customers and 19 percent to corporate customers.
Mediasite KK:
Mediasite KK experienced a delay in expected system deployments and event-capture services primarily as a result of a shortage of construction labor required to complete university expansions. The delay changed Mediasite KK’s expected fourth quarter income from $100 thousand to a net loss of approximately $100 thousand in the fourth quarter 2014. Mediasite KK expects to recoup the shortfall in revenue and income during fiscal 2015.
“Despite the complexities we experienced this year, including two planned international acquisitions, an unforeseen legal settlement, a shortfall of construction labor delaying forecasted projects in Japan and a significant change in the currency conversion rate, we’re confident we’ve taken the right steps to position the company for improved operational, sales and financial performance over time. Interest in our products and services has intensified in higher education as schools such as University of Leeds, New York University and Teikyo University in Japan strategically scale their installations of Mediasite to become the largest fully-automated lecture capture deployments in the world today. We also continue to see a surge in the events industry, as increasingly large and complex conferences place a premium on our turnkey webcasting solution,” said Gary Weis, chief executive officer of Sonic Foundry.
Sonic Foundry is setting fiscal 2015 guidance for billings at $45 million. With this growth, along with plans to manage expenses, the company expects to show significant improvement in earnings. The company also expects to improve upon fiscal 2014 adjusted EBITDA of $1.2 million to between $4.5 and $5.5 million and projecting net income between $1 million and $2 million in fiscal 2015.
Sonic Foundry will host a corporate webcast today for analysts and investors to discuss its fiscal 2014 fourth 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 90 days.
About Sonic Foundry®, Inc.
Sonic Foundry (NASDAQ: SOFO) is the trusted leader for video capture, management and webcasting solutions in education, business and government. The patented Mediasite Enterprise Video Platform transforms communications, training, education and events for over 3,000 customers in over 60 countries. The company empowers organizations to reach everyone through the power of video; accelerating knowledge-sharing, preserving valuable content, building stronger teams and getting results.
© 2014 Sonic Foundry, Inc. 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) | ||||||||||
September 30, | September 30, | |||||||||
2014 | 2013 | |||||||||
Assets | ||||||||||
Current assets: | ||||||||||
Cash and cash equivalents | $ | 4,344 | $ | 3,482 | ||||||
Accounts receivable, net of allowances of $150 and $90 | 8,449 | 6,885 | ||||||||
Inventories | 1,721 | 1,447 | ||||||||
Prepaid expenses and other current assets | 1,544 | 805 | ||||||||
Total current assets | 16,058 | 12,619 | ||||||||
Property and equipment: | ||||||||||
Leasehold improvements | 911 | 852 | ||||||||
Computer equipment | 5,440 | 5,296 | ||||||||
Furniture and fixtures | 720 | 581 | ||||||||
Total property and equipment | 7,071 | 6,729 | ||||||||
Less accumulated depreciation and amortization | 3,675 | 3,449 | ||||||||
Net property and equipment | 3,396 | 3,280 | ||||||||
Other assets: | ||||||||||
Goodwill | 11,185 | 7,576 | ||||||||
Minority interest in Mediasite KK | - | 385 | ||||||||
Customer relationships, net of amortization of $191 and $0 | 2,471 | - | ||||||||
Software development costs, net of amortization of $252 and $75 | 281 | 458 | ||||||||
Product rights, net of amortization of $41 and $0 | 631 | - | ||||||||
Other intangibles, net of amortization of $162 and $135 | 37 | 15 | ||||||||
Other long-term assets | 564 | - | ||||||||
Total assets | $ | 34,623 | $ | 24,333 | ||||||
Liabilities and stockholders' equity | ||||||||||
Current liabilities: | ||||||||||
Revolving line of credit | $ |
- |
$ | - | ||||||
Accounts payable | 1,183 | 1,513 | ||||||||
Accrued liabilities | 2,512 | 1,204 | ||||||||
Unearned revenue | 9,079 | 6,470 | ||||||||
Current portion of capital lease obligation | 196 | 223 | ||||||||
Current portion of notes payable to bank | 974 | 634 | ||||||||
Current portion of subordinated notes payable | 2,096 | - | ||||||||
Total current liabilities | 16,040 | 10,044 | ||||||||
Long-term portion of unearned revenue | 929 | 648 | ||||||||
Long-term portion of subordinated note payable | 314 | - | ||||||||
Long-term portion of capital lease obligation | 173 | 149 | ||||||||
Long-term portion of notes payable to bank | 1,139 | 133 | ||||||||
Leasehold improvement liability | 401 | 445 | ||||||||
Deferred tax liability | 4,312 | 2,210 | ||||||||
Total liabilities | 23,308 | 13,629 | ||||||||
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; 4,276,470 and 3,999,634 shares issued and 4,263,754 and 3,986,918 shares outstanding |
43 |
40 |
||||||||
Additional paid-in capital | 194,260 | 190,653 | ||||||||
Accumulated deficit | (182,372 | ) | (179,556 | ) | ||||||
Accumulated other comprehensive loss | (421 | ) | (238 | ) | ||||||
Receivable for common stock issued | (26 | ) | (26 | ) | ||||||
Treasury stock, at cost, 12,716 shares | (169 | ) | (169 | ) | ||||||
Total stockholders' equity | 11,315 | 10,704 | ||||||||
Total liabilities and stockholders' equity | $ | 34,623 | $ | 24,333 | ||||||
Sonic Foundry, Inc. | ||||||||||
Condensed Consolidated Statements of Operations | ||||||||||
(in thousands, except for share and per share data) | ||||||||||
Years Ended September 30, | ||||||||||
2014 | 2013 | |||||||||
Revenue: | ||||||||||
Product | $ | 16,773 | $ | 13,588 | ||||||
Services | 18,649 | 13,933 | ||||||||
Other | 408 | 235 | ||||||||
Total revenue | 35,830 | 27,756 | ||||||||
Cost of revenue: | ||||||||||
Product | 7,350 | 6,215 | ||||||||
Services | 2,925 | 1,481 | ||||||||
Total cost of revenue | 10,275 | 7,696 | ||||||||
Gross margin | 25,555 | 20,060 | ||||||||
Operating expenses: | ||||||||||
Selling and marketing | 16,551 | 13,079 | ||||||||
General and administrative | 5,623 | 3,343 | ||||||||
Product development | 5,545 | 4,276 | ||||||||
Patent charge | 428 | - | ||||||||
Acquisition costs | 490 | - | ||||||||
Total operating expenses | 28,637 | 20,698 | ||||||||
Loss from operations | (3,082 | ) | (638 | ) | ||||||
Gain on investment in MSKK | 1,390 | - | ||||||||
Equity in earnings of investment in MSKK | 38 | 209 | ||||||||
Other expense, net | (58 | ) | (123 | ) | ||||||
Income (loss) before income taxes | (1,712 | ) | (552 | ) | ||||||
Provision for income taxes | (1,104 | ) | (240 | ) | ||||||
Net loss | $ | (2,816 | ) | $ | (792 | ) | ||||
Loss per common share: | ||||||||||
Basic net loss per common share | $ | (0.67 | ) | $ | (0.20 | ) | ||||
Diluted net loss per common share | $ | (0.67 | ) | $ | (0.20 | ) | ||||
Weighted average common shares | ||||||||||
– Basic | 4,174,191 | 3,932,692 | ||||||||
– Diluted | 4,174,191 | 3,932,692 | ||||||||
Sonic Foundry, Inc. | ||||||||||||||||||
Adjusted EBITDA Reconciliation | ||||||||||||||||||
(in thousands) | ||||||||||||||||||
Consolidated | Consolidated | |||||||||||||||||
Fiscal Quarter Ended | Fiscal Year Ended | |||||||||||||||||
September 30, | September 30, | |||||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||||
Net Loss | $ | (1,288 | ) | $ | (666 | ) | $ | (2,816 | ) | $ | (792 | ) | ||||||
Add: | ||||||||||||||||||
Depreciation and amortization | 518 | 335 | 1,730 | 1,206 | ||||||||||||||
Income tax expense | 32 | 60 | 1,104 | 240 | ||||||||||||||
Interest expense | 61 | 20 | 231 | 92 | ||||||||||||||
Stock-based compensation expense | 242 | 171 | 921 | 656 | ||||||||||||||
Adjusted EBITDA | $ | (435 | ) | $ | (80 | ) | $ | 1,170 | $ | 1,402 | ||||||||
Sonic Only | Sonic Only | |||||||||||||||||
Fiscal Quarter Ended | Fiscal Year Ended | |||||||||||||||||
September 30, | September 30, | |||||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||||
Net Loss | $ | (1,313 | ) | $ | (666 | ) | $ | (2,718 | ) | $ | (792 | ) | ||||||
Add: | ||||||||||||||||||
Depreciation and amortization | 469 | 335 | 1,629 | 1,206 | ||||||||||||||
Income tax expense | 34 | 60 | 1,064 | 240 | ||||||||||||||
Interest expense | 61 | 20 | 231 | 92 | ||||||||||||||
Stock-based compensation expense | 242 | 171 | 921 | 656 | ||||||||||||||
Adjusted EBITDA | $ | (507 | ) | $ | (80 | ) | $ | 1,127 | $ | 1,402 | ||||||||
Sonic Foundry, Inc. | ||||||||||
Condensed Consolidated Statements of Cash Flows | ||||||||||
(in thousands) | ||||||||||
Twelve Months Ended September 30, | ||||||||||
2014 | 2013 | |||||||||
Operating activities | ||||||||||
Net loss | $ | (2,816 | ) | $ | (792 | ) | ||||
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ||||||||||
Gain or equity in earnings on investment in Mediasite KK | (1,429 | ) | (209 | ) | ||||||
Amortization of other intangibles | 244 | 20 | ||||||||
Amortization of software development costs | 177 | 75 | ||||||||
Amortization of product rights | 41 | - | ||||||||
Depreciation and amortization of property and equipment | 1,268 | 1,111 | ||||||||
Deferred taxes | 1,064 | 5 | ||||||||
Stock-based compensation expense related to stock options | 921 | 240 | ||||||||
Provision for doubtful accounts | 60 | - | ||||||||
Remeasurement gain on subordinated debt | (157 | ) | - | |||||||
Changes in operating assets and liabilities, net of acquisition: | ||||||||||
Accounts receivable | (597 | ) | (1,312 | ) | ||||||
Inventories | 259 | (394 | ) | |||||||
Prepaid expenses and other current assets | (547 | ) | (48 | ) | ||||||
Accounts payable and accrued liabilities | (810 | ) | 263 | |||||||
Other long-term liabilities | (94 | ) | (87 | ) | ||||||
Unearned revenue | 2,329 | 1,485 | ||||||||
Net cash (used in) provided by operating activities | (87 | ) | 1,013 | |||||||
Investing activities |
||||||||||
Software development costs | - | (533 | ) | |||||||
Purchases of property and equipment | (862 | ) | (1,162 | ) | ||||||
Cash received in Mediasite KK acquisition, net of cash paid | 1,281 | - | ||||||||
Cash paid for MediaMission acquisition, net of cash acquired | (119 | ) | - | |||||||
Net cash provided by (used in) investing activities | 300 | (1,695 | ) | |||||||
Financing activities | ||||||||||
Proceeds from notes payable | 1,954 | - | ||||||||
Payments on notes payable | (1,199 | ) | (666 | ) | ||||||
Payment on debt issuance costs | (49 | ) | (20 | ) | ||||||
Proceeds from exercise of common stock options | 286 | 448 | ||||||||
Proceeds from issuance of common stock | 98 | 75 | ||||||||
Dividends from investment in Mediasite KK | - | 22 | ||||||||
Payments on capital lease obligations | (229 | ) | (173 | ) | ||||||
Net cash provided by (used in) financing activities | 861 | (314 | ) | |||||||
Changes in cash and cash equivalents due to changes in | ||||||||||
foreign currency exchange rates | (212 | ) | - | |||||||
Net increase (decrease) in cash and cash equivalents | 862 | (996 | ) | |||||||
Cash and cash equivalents at beginning of period | 3,482 | 4,478 | ||||||||
Cash and cash equivalents at end of period | $ | 4,344 | $ | 3,482 |
CONTACT:
Sonic Foundry, Inc.
Tammy Jackson, 608.770.9052
For
investor inquiries: investor@sonicfoundry.com
or
For media
relations: tammy@sonicfoundry.com