UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
May 15, 2017
Concurrent Computer Corporation
(Exact Name of Registrant as Specified in its Charter)
Delaware | 001-37706 | 04-2735766 |
(State or Other | (Commission | (IRS Employer |
Jurisdiction | File Number) | Identification Number) |
of Incorporation) |
4375 River Green Parkway, Suite 100, Duluth, Georgia | 30096 |
(Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including area code: (678) 258-4000
Not applicable
(Former Name or Former Address, if Changed Since Last Report)
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)) |
Indicate by check mark whether the registrant is an emerging growth company as defined Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
ITEM 2.02. Results of Operations and Financial Condition.
On May 15, 2017, Concurrent Computer Corporation (the “company”) issued a press release containing information about its financial condition and results of operations for its third quarter of its fiscal year ending June 30, 2017. Included in the press release are (1) the condensed consolidated balance sheets of the company as of March 31, 2017 (unaudited) and June 30, 2016, (2) the company’s unaudited condensed consolidated statements of operations for the three and nine months ended March 31, 2017 and 2016, and three months ended December 31, 2016, (3) the company’s unaudited condensed consolidated statements of comprehensive income (loss) for the three and nine months ended March 31, 2017 and 2016, and three months ended December 31, 2016 and (4) a reconciliation of net income (loss) to the non-GAAP financial measure of Adjusted EBITDA for the three and nine months ended March 31, 2017 and 2016, and three months ended December 31, 2016. A copy of this press release is being furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Additionally, a copy of the company’s Fiscal Year 2017 Third Quarter Earnings Call Presentation is being furnished as Exhibit 99.2 to this Current Report on Form 8-K and is also incorporated herein by reference.
ITEM 9.01. Financial Statements and Exhibits.
(c) Exhibits
The following exhibits are filed herewith:
Exhibit No. | Description |
99.1 | Press release of Concurrent Computer Corporation, issued on May 15, 2017. |
99.2 | Fiscal Year 2017 Third Quarter Earnings Call Presentation. |
-2-
SIGNATURES
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 hereunto duly authorized.
Dated: May 15, 2017
CONCURRENT COMPUTER CORPORATION
(Registrant)
By: | /s/ Derek Elder | ||
Derek Elder | |||
President and Chief Executive Officer |
-3-
EXHIBIT INDEX
Exhibit Number and Description
99.1 Press Release of Concurrent Computer Corporation, issued on May 15, 2017.
99.2 Fiscal Year 2017 Third Quarter Earnings Call Presentation.
-4-
Exhibit 99.1
Concurrent Reports Fiscal 2017 Third Quarter Financial Results
Conference Call Today at 5:00 P.M. ET
ATLANTA, May 15, 2017 – Concurrent (NASDAQ: CCUR), a global leader in storage, protection, transformation, and delivery of visual assets, today announced financial results for its fiscal third quarter of 2017 ended March 31, 2017.
Recent Business Highlights:
· | Introduced next-generation versions of its video streaming and Aquari™ software-defined storage solutions that add new capabilities and improved scalability and performance. |
· | Signed nine new or expanded video media delivery and storage customers in the calendar year to date, including Midco and Blue Ridge Communications. |
· | Sold Real-Time business segment for gross proceeds of $35 million to Battery Ventures. |
“We continued building momentum during the quarter as we expanded our Aquari customer base by four to a total of 17 active deployments,” said Derek Elder, President and CEO. “The business model of our Aquari product line provides a product and service revenue stream for the life of the installation, which makes new customer acquisition a key metric for future revenue growth. We also added three new CDN customers in the quarter, which is a testament to the competitive position of our portfolio.”
“We’ve also made great progress defining a more focused operating model, which culminated today with the sale of our Real-Time segment. We have a blue-chip list of cable, telco, and media companies that have a strong need for the solutions that Concurrent provides and our new focus will allow us to successfully address this opportunity.”
Fiscal Third Quarter Financial Results:
Total revenue was $15.0 million, compared to $15.5 million in both the second quarter of fiscal 2017 and the third quarter of fiscal 2016. Content delivery segment revenue (which includes Aquari storage revenue) was $7.5 million, compared to $7.2 million in the second quarter of fiscal 2017 and $8.2 million in the third quarter of fiscal 2016. Real-time segment revenue was $7.5 million, compared to $8.3 million in the second quarter of fiscal 2017 and $7.3 million in the third quarter of fiscal 2016.
Total gross margin as a percentage of revenue was 56.8%, compared to 60.8% in the second quarter of fiscal 2017 and 51.5% for the third quarter of fiscal 2016.
Net loss was $(1.7) million, or $(0.18) per share, compared to net loss of $(0.1) million, or $(0.01) per share, in the second quarter of fiscal 2017 and a net loss of $(1.2) million, or $(0.13) per share, in the third quarter of fiscal 2016. The company did generate cash from operations of $0.6 million during the third quarter.
Adjusted EBITDA loss was $(1.0) million, which included $1.1 million in transaction-related expenses in connection with the sale of the Real-Time segment that was announced today. The Adjusted EBITDA loss compares to $0.7 million in the second quarter of fiscal 2017 and an Adjusted EBITDA loss of $(1.3) million in the third quarter of fiscal 2016. See "Non-GAAP Financial Measurements" below for more information on the calculation of Adjusted EBITDA, including a reconciliation of Adjusted EBITDA to net income.
Cash and cash equivalents and short-term investments were $18.2 million as of March 31, 2017. Concurrent has no debt.
The company continued to pay a quarterly dividend of $0.12 per share in the third quarter of fiscal 2017.
Guidance
Due to the sale of the Real-Time business segment, the company has withdrawn its previously provided fiscal 2017 annual guidance and plans to provide fiscal 2018 full year guidance when it reports its fiscal fourth quarter and annual fiscal 2017 results in early September 2017.
Non-GAAP Financial Measurements
To supplement the company's condensed consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles ("GAAP"), this news release provides information concerning the company's Adjusted EBITDA, a non-GAAP financial measure. Reconciliations of Adjusted EBITDA to net income, the most comparable GAAP financial measure, can be found in tables immediately following the condensed consolidated balance sheets.
For purposes of this news release, Adjusted EBITDA is defined as GAAP net income, less interest income and other income (expense), net, provision for income taxes, depreciation and amortization expenses, share-based compensation expense and gain on the sale of assets. The company considers Adjusted EBITDA important to understanding its historical results and identifying current and future trends impacting its business. Management uses Adjusted EBITDA to compare the company's performance to that of prior periods and evaluate the company's financial and operating results on a consistent basis from period to period. The company also believes this measure, when viewed in combination with the company's financial results prepared in accordance with GAAP, provides useful information to investors to evaluate ongoing operating results and trends. The adjustments to the company's GAAP results are made with the intent of providing both management and investors a more complete understanding of the company's underlying operational results, trends and performance. Additionally, adjusted EBITDA is not intended to be a measure of cash flow for management's discretionary use. We believe that the inclusion of Adjusted EBITDA is appropriate to provide additional information to investors because securities analysts, noteholders and other investors use these non-GAAP financial measures to assess our operating performance across periods on a consistent basis and to evaluate the relative risk of an investment in our securities.
Adjusted EBITDA has limitations as an analytical tool, however, including the following:
· | Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future and adjusted EBITDA does not reflect any cash requirements for such replacements; |
· | Adjusted EBITDA does not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments; |
· | Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs; |
· | Adjusted EBITDA does not reflect our tax expense or any cash requirements to pay income taxes; and |
· | Adjusted EBITDA does not reflect the impact of earnings or charges resulting from matters we do not consider to be indicative of our ongoing operations, but may nonetheless have a material impact on our results of operations. |
The presentation of Adjusted EBITDA is not meant to be considered in isolation or as a substitute for or superior to the company's financial results determined in accordance with GAAP. In addition, the company's presentation of Adjusted EBITDA may not be computed in the same manner as similarly titled measures used by other companies, including other companies in our industry.
Conference Call Information
Concurrent will host a conference call today, Monday, May 15 at 5:00 p.m. ET to review its third quarter fiscal 2017 financial results and recent corporate developments. The call and presentation materials will be webcast at www.concurrent.com, on the "Investors" page, under the “Company” tab. The call can be also be accessed live by dialing 800-230-1085 (U.S.) or 612-288-0337 (International) and entering passcode 170515. A webcast replay will also be available at www.concurrent.com.
About Concurrent
Concurrent (NASDAQ: CCUR) is a global software and solutions company that develops advanced applications on a core foundation
of high-performance Linux and storage technologies. We serve industries and customers that demand uncompromising performance,
reliability and flexibility to gain a competitive edge, drive meaningful growth and confidently deliver best-in-class solutions
that enrich the lives of millions of people around the world every day. Offices are located in North America, Europe and Asia.
Visit www.concurrent.com for further information and follow us on Twitter:www.twitter.com/Concurrent_CCUR.
Safe Harbor
Certain statements made or incorporated by reference in this release may constitute "forward-looking statements" within the meaning of the federal securities laws. Statements regarding future events and developments and the company's future performance, including, but not limited to, management's expectations, beliefs, plans, estimates, or projections relating to the future, are forward-looking statements within the meaning of these laws. All forward-looking statements are subject to certain risks and uncertainties that could cause actual events to differ materially from those projected.
The risks and uncertainties which could affect our financial condition or results of operations include, without limitation: the potential consolidation of the markets that we serve; U.S. Government sequestration; European austerity measures; the impact of the U.K. exiting the European Union; delays or cancellations of customer orders; non-renewal of maintenance and support service agreements with customers; changes in product demand; economic conditions; various inventory risks due to changes in market conditions; margins of the content delivery business to capture new business; our ability to obtain regulatory approval for the sale of the European operations of our Real-Time business within the timeframe anticipated or at all; our ability to reinvest the net proceeds from the sale of our Real-Time segment in a manner that we believe will generate an adequate return to our remaining business; fluctuations and timing of large content delivery orders; risks associated with our operations in the People’s Republic of China; uncertainties relating to the development and ownership of intellectual property; uncertainties relating to our ability and the ability of other companies to enforce their intellectual property rights; the pricing and availability of equipment, materials and inventories; the concentration of our customers; failure to effectively manage change; delays in testing and introductions of new products; the impact of reductions in force on our operations; rapid technology changes; system errors or failures; reliance on a limited number of suppliers and failure of components provided by those suppliers; uncertainties associated with international business activities, including foreign regulations, trade controls, taxes, tariffs and currency fluctuations; the impact of competition on the pricing of content delivery products; failure to effectively service the installed base; the entry of new, well-capitalized competitors into our markets; the success of new content delivery products, including acceptance of our new storage solutions; the success of our relationships with technology and channel partners; capital spending patterns by a limited customer base; the current challenging macroeconomic environment; continuing unevenness of the global economic recovery; global terrorism; privacy concerns over data collection; our ability to utilize net operating losses to offset cash taxes in the event of an ownership change as defined by the Internal Revenue Service; earthquakes, tsunamis, floods and other natural disasters in areas in which our customers and suppliers operate; the process of evaluation of strategic alternatives; and the availability of debt or equity financing to support our liquidity needs.
Other important risk factors are discussed in Concurrent's Form 10-K filed August 30, 2016 with the Securities and Exchange Commission ("SEC"), and in subsequent filings of periodic reports with the SEC. The risk factors discussed in the Form 10-K and subsequently filed periodic reports under the heading "Risk Factors" are specifically incorporated by reference in this press release. Forward-looking statements are based on current expectations and speak only as of the date of such statements. Concurrent undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of future events, new information, or otherwise.
Concurrent Computer Corporation and its logo are registered trademarks of Concurrent. All Concurrent product names are trademarks or registered trademarks of Concurrent while all other product names are trademarks or registered trademarks of their respective owners.
Concurrent Computer Corporation
Condensed Consolidated Statements of Operations (Unaudited)
(In Thousands Except Share and Per Share Data)
Three Months Ended March 31, | Nine Months Ended March 31, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Revenues: | ||||||||||||||||
Product | $ | 9,430 | $ | 10,772 | $ | 27,535 | $ | 29,240 | ||||||||
Service | 5,551 | 4,684 | 16,109 | 14,466 | ||||||||||||
Total revenues | 14,981 | 15,456 | 43,644 | 43,706 | ||||||||||||
Cost of sales: | ||||||||||||||||
Product | 4,405 | 5,676 | 12,274 | 12,670 | ||||||||||||
Service | 2,072 | 1,821 | 6,234 | 5,844 | ||||||||||||
Total cost of sales | 6,477 | 7,497 | 18,508 | 18,514 | ||||||||||||
Gross margin | 8,504 | 7,959 | 25,136 | 25,192 | ||||||||||||
Operating expenses: | ||||||||||||||||
Sales and marketing | 4,024 | 4,252 | 12,867 | 11,443 | ||||||||||||
Research and development | 3,057 | 3,467 | 9,180 | 11,066 | ||||||||||||
General and administrative | 2,996 | 2,150 | 7,653 | 6,103 | ||||||||||||
(Gain) loss on sale of product line, net | - | - | - | (4,116 | ) | |||||||||||
Total operating expenses | 10,077 | 9,869 | 29,700 | 24,496 | ||||||||||||
Operating income (loss) | (1,573 | ) | (1,910 | ) | (4,564 | ) | 696 | |||||||||
Other income (expense), net | 57 | 292 | 263 | 448 | ||||||||||||
Income (loss) before income taxes | (1,516 | ) | (1,618 | ) | (4,301 | ) | 1,144 | |||||||||
Income tax provision (benefit) | 142 | (442 | ) | 373 | (604 | ) | ||||||||||
Net income (loss) | $ | (1,658 | ) | $ | (1,176 | ) | $ | (4,674 | ) | $ | 1,748 | |||||
Basic net income (loss) per share | $ | (0.18 | ) | $ | (0.13 | ) | $ | (0.51 | ) | $ | 0.19 | |||||
Diluted net income (loss) per share | $ | (0.18 | ) | $ | (0.13 | ) | $ | (0.51 | ) | $ | 0.19 | |||||
Basic weighted average shares outstanding | 9,261,862 | 9,168,978 | 9,231,932 | 9,147,681 | ||||||||||||
Diluted weighted average shares outstanding | 9,261,862 | 9,168,978 | 9,231,932 | 9,227,966 | ||||||||||||
Cash dividends declared per common share | $ | 0.12 | $ | 0.12 | $ | 0.36 | $ | 0.36 |
Concurrent Computer Corporation
Condensed Consolidated Statements of Operations (Unaudited)
(In Thousands Except Share and Per Share Data)
Three Months Ended | ||||||||
March 31, | December 31, | |||||||
2017 | 2016 | |||||||
Revenues: | ||||||||
Product | $ | 9,430 | $ | 10,246 | ||||
Service | 5,551 | 5,301 | ||||||
Total revenues | 14,981 | 15,547 | ||||||
Cost of sales: | ||||||||
Product | 4,405 | 4,079 | ||||||
Service | 2,072 | 2,019 | ||||||
Total cost of sales | 6,477 | 6,098 | ||||||
Gross margin | 8,504 | 9,449 | ||||||
Operating expenses: | ||||||||
Sales and marketing | 4,024 | 4,368 | ||||||
Research and development | 3,057 | 2,816 | ||||||
General and administrative | 2,996 | 2,313 | ||||||
Total operating expenses | 10,077 | 9,497 | ||||||
Operating income (loss) | (1,573 | ) | (48 | ) | ||||
Other income (expense), net | 57 | 63 | ||||||
Income (loss) before income taxes | (1,516 | ) | 15 | |||||
Income tax provision | 142 | 103 | ||||||
Net income (loss) | $ | (1,658 | ) | $ | (88 | ) | ||
Basic net income (loss) per share | $ | (0.18 | ) | $ | (0.01 | ) | ||
Diluted net income (loss) per share | $ | (0.18 | ) | $ | (0.01 | ) | ||
Basic weighted average shares outstanding | 9,261,862 | 9,244,590 | ||||||
Diluted weighted average shares outstanding | 9,261,862 | 9,244,590 | ||||||
Cash dividends declared per common share | $ | 0.12 | $ | 0.12 |
Concurrent Computer Corporation
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)
(In Thousands)
Three Months Ended | Nine Months Ended | |||||||||||||||||||
March 31, | December 31, | March 31, | March 31, | |||||||||||||||||
2017 | 2016 | 2016 | 2017 | 2016 | ||||||||||||||||
Net income (loss) | $ | (1,658 | ) | $ | (88 | ) | $ | (1,176 | ) | $ | (4,674 | ) | $ | 1,748 | ||||||
Other comprehensive income (loss): | ||||||||||||||||||||
Foreign currency translation adjustment | 38 | (216 | ) | (79 | ) | (253 | ) | (202 | ) | |||||||||||
Pension and post-retirement benefits, net of tax | (19 | ) | 110 | (35 | ) | 88 | 10 | |||||||||||||
Other comprehensive income (loss) | 19 | (106 | ) | (114 | ) | (165 | ) | (192 | ) | |||||||||||
Comprehensive income (loss) | $ | (1,639 | ) | $ | (194 | ) | $ | (1,290 | ) | $ | (4,839 | ) | $ | 1,556 |
Concurrent Computer Corporation
Condensed Consolidated Balance Sheets
(In Thousands)
March 31, | December 31, | June 30, | |||||||||||
2017 | 2016 | 2016 | |||||||||||
(Unaudited) | (Unaudited) | ||||||||||||
ASSETS | |||||||||||||
Cash and cash equivalents | $ | 15,750 | $ | 18,804 | $ | 20,268 | |||||||
Short-term investments | 2,423 | - | - | ||||||||||
Trade accounts receivable, net | 8,944 | 7,896 | 15,104 | ||||||||||
Inventories | 2,939 | 2,001 | 3,495 | ||||||||||
Prepaid expenses and other current assets | 1,855 | 1,220 | 1,061 | ||||||||||
Total current assets | 31,911 | 29,921 | 39,928 | ||||||||||
Property, plant and equipment, net | 2,319 | 2,763 | 3,061 | ||||||||||
Deferred income taxes, net | 761 | 820 | 924 | ||||||||||
Other long-term assets, net | 1,356 | 1,281 | 1,323 | ||||||||||
Total assets | $ | 36,347 | $ | 34,785 | $ | 45,236 | |||||||
LIABILITIES | |||||||||||||
Accounts payable and accrued expenses | $ | 9,925 | $ | 5,908 | $ | 9,191 | |||||||
Deferred revenue | 6,694 | 6,605 | 8,126 | ||||||||||
Total current liabilities | 16,619 | 12,513 | 17,317 | ||||||||||
Long-term deferred revenue | 643 | 708 | 1,168 | ||||||||||
Pension liability | 3,624 | 3,558 | 3,720 | ||||||||||
Other long-term liabilities | 2,092 | 2,001 | 2,033 | ||||||||||
Total liabilities | 22,978 | 18,780 | 24,238 | ||||||||||
STOCKHOLDERS' EQUITY | |||||||||||||
Common stock | 93 | 93 | 92 | ||||||||||
Additional paid-in capital | 211,666 | 211,521 | 210,971 | ||||||||||
Accumulated deficit | (197,425 | ) | (194,625 | ) | (189,265 | ) | |||||||
Treasury stock, at cost | (255 | ) | (255 | ) | (255 | ) | |||||||
Accumulated other comprehensive income (loss) | (710 | ) | (729 | ) | (545 | ) | |||||||
Total stockholders' equity | 13,369 | 16,005 | 20,998 | ||||||||||
Total liabilities and stockholders' equity | $ | 36,347 | $ | 34,785 | $ | 45,236 |
Concurrent Computer Corporation
Reconciliation of GAAP to Non-GAAP Financial Measures (Unaudited)
(In Thousands)
Three Months Ended | Nine Months Ended | |||||||||||||||||||
March 31, | December 31, | March 31, | March 31, | |||||||||||||||||
2017 | 2016 | 2016 | 2017 | 2016 | ||||||||||||||||
GAAP Net income (loss) | $ | (1,658 | ) | $ | (88 | ) | $ | (1,176 | ) | $ | (4,674 | ) | $ | 1,748 | ||||||
Addback (deduct): | ||||||||||||||||||||
Other (income) expense, net | (57 | ) | (63 | ) | (292 | ) | (263 | ) | (448 | ) | ||||||||||
Income tax provision (benefit) | 142 | 103 | (442 | ) | 373 | (604 | ) | |||||||||||||
Depreciation | 418 | 459 | 406 | 1,332 | 1,228 | |||||||||||||||
Amortization | 3 | 3 | 3 | 9 | 42 | |||||||||||||||
Share-based compensation | 145 | 309 | 179 | 696 | 561 | |||||||||||||||
(Gain) loss on sale of assets, net | - | - | - | - | (4,116 | ) | ||||||||||||||
Non-GAAP Adjusted EBITDA | $ | (1,007 | ) | $ | 723 | $ | (1,322 | ) | $ | (2,527 | ) | $ | (1,589 | ) |
# # #
For more information, contact:
Media Relations:
Sandra Dover
Phone: (678) 258-4112
Email: sandra.dover@ccur.com
Investor Relations:
EVC Group
Doug Sherk
Phone: (415) 652-9100
Email: dsherk@evcgroup.com
Todd Kehrli
Phone: (310) 625-4462
Email: tkehrli@evcgroup.com
Exhibit 99.2
© 2017 Concurrent Q3 Fiscal 2017 Investor Conference Call Derek Elder, President & CEO Emory Berry, Chief Financial Officer May 15, 2017 Confidential & Proprietary Information
© 2017 Concurrent Safe Harbor Certain statements made or incorporated by reference in this release may constitute "forward - looking statements" within the meaning of the federal securities laws . Statements regarding future events and developments and the company's future performance, including, but not limited to, management's expectations, beliefs, plans, estimates, or projections relating to the future, are forward - looking statements within the meaning of these laws . All forward - looking statements are subject to certain risks and uncertainties that could cause actual events to differ materially from those projected . The risks and uncertainties which could affect our financial condition or results of operations include, without limitation : the potential consolidation of the markets that we serve ; U . S . Government sequestration ; European austerity measures ; the impact of the U . K . exiting the European Union ; delays or cancellations of customer orders ; non - renewal of maintenance and support service agreements with customers ; changes in product demand ; economic conditions ; various inventory risks due to changes in market conditions ; margins of the content delivery business to capture new business ; our ability to obtain regulatory approval for the sale of the European operations of our Real - Time business within the timeframe anticipated or at all ; our ability to reinvest the net proceeds from the sale of our Real - Time segment in a manner that we believe will generate an adequate return to our remaining business ; fluctuations and timing of large content delivery orders ; risks associated with our operations in the People’s Republic of China ; uncertainties relating to the development and ownership of intellectual property ; uncertainties relating to our ability and the ability of other companies to enforce their intellectual property rights ; the pricing and availability of equipment, materials and inventories ; the concentration of our customers ; failure to effectively manage change ; delays in testing and introductions of new products ; the impact of reductions in force on our operations ; rapid technology changes ; system errors or failures ; reliance on a limited number of suppliers and failure of components provided by those suppliers ; uncertainties associated with international business activities, including foreign regulations, trade controls, taxes, tariffs and currency fluctuations ; the impact of competition on the pricing of content delivery products ; failure to effectively service the installed base ; the entry of new, well - capitalized competitors into our markets ; the success of new content delivery products, including acceptance of our new storage solutions ; the success of our relationships with technology and channel partners ; capital spending patterns by a limited customer base ; the current challenging macroeconomic environment ; continuing unevenness of the global economic recovery ; global terrorism ; privacy concerns over data collection ; our ability to utilize net operating losses to offset cash taxes in the event of an ownership change as defined by the Internal Revenue Service ; earthquakes, tsunamis, floods and other natural disasters in areas in which our customers and suppliers operate ; the process of evaluation of strategic alternatives ; and the availability of debt or equity financing to support our liquidity needs . Other important risk factors are discussed in Concurrent's Form 10 - K filed August 30 , 2016 with the Securities and Exchange Commission ("SEC"), and in subsequent filings of periodic reports with the SEC . The risk factors discussed in the Form 10 - K and subsequently filed periodic reports under the heading "Risk Factors" are specifically incorporated by reference in this press release . Forward - looking statements are based on current expectations and speak only as of the date of such statements . Concurrent undertakes no obligation to publicly update or revise any forward - looking statement, whether as a result of future events, new information, or otherwise . 2
© 2017 Concurrent Total revenue of $15 million Content Delivery segment revenue of $7.5 million Gross margins improve 530 basis points to 56.8% $1.7 million GAAP net loss Adjusted EBITDA loss of $1 million, including $1.1 million in Real - Time sale transaction costs Q3 Fiscal 2017 Financial Highlights 3 Cash flow from operations of $0.6 million; Cash and ST Investments of $18.2 million; no debt
© 2017 Concurrent Transformation of Concurrent: Creating A Focused Leader in Video Media Storage & Delivery Confidential & Proprietary Information
© 2017 Concurrent Acquired by Battery Ventures Asset Purchase Price: $35 Million Trailing 12 Month Revenue of $32.5 Million Maximized Valuation of Our Real - Time Business Segment Transformation of Concurrent * Sources: Frost & Sullivan, Coughlin Associates $3.7 Billion Market Growing at 10%/Year* Concurrent is an Early Established Leader Strong Progress in FY 2017 Transition of CFO to Warren Sutherland Focused on Maximizing Video Media Delivery & Storage Opportunity 5
© 2017 Concurrent Terms of Transaction 6 Gross proceeds of $35 million, subject to working capital adjustment • Sale closed today, except for European ops • $2 million escrow available May 15, 2018 European ops to close upon pending French government approval • $2.8 million of gross proceeds held until European ops close Board Evaluating Strategies to Maximize Shareholder Return Increases Proforma Working Capital Position by ~ $30 Million
© 2017 Concurrent Addressing rapidly growing $3.7 billion market* Unique, valued added media storage solutions Proven go - to - market model; blue - chip customer base Proven leadership team in place executing growth strategy Exceptional balance sheet favored by target market, dividend policy Compelling Investment Opportunity * Sources: Frost & Sullivan, Coughlin Associates 7
© 2017 Concurrent Large & Growing Market Opportunity By 2020, video will account for 79% of all global Internet traffic* Over 290 exabytes (290,000,000,000 gigabytes) of new video storage will be used for digital archiving and transcoding by 2021** Video file types will continue to change and grow – Standard Definition(SD) to High Definition(HD) to 4K and 8K, and virtual reality 8 *Source: Cisco Visual Networking Index (VNI) Complete Forecast for 2015 to 2020 **Source: Frost & Sullivan, Coughlin Associates
© 2017 Concurrent Large & Growing Market Opportunity Video content storage and delivery systems today use inflexible, closed architectures . Delivery systems today are unable to scale to growing demand for media storage nor flexible enough for rapidly changing media business models. Modern and open, agile, video storage and delivery architectures are needed to handle these changes Concurrent is uniquely positioned to capitalize on this $3.7 billion market opportunity** 9 *Source: Cisco Visual Networking Index (VNI) Complete Forecast for 2015 to 2020 **Source: Frost & Sullivan, Coughlin Associates
© 2017 Concurrent Mukul Krishna Frost & Sullivan December 2016 “There is a lack of dedicated Media & Entertainment storage providers – from shooting to post - production, to management, and publishing. A 4K movie requires a couple, if not many, petabytes of storage capacity for production. Post - production requires a couple more petabytes, while management and distribution require additional storage sources.” There is an increased demand for intelligent storage solutions. More clients are demanding reliable storage solutions that manage data with policy - based provisions, without compromising the software logic necessary to administrate video content. An aspect that can limit the growth rate in the near future is the lack of intelligent storage. Intelligent storage must be able to allow different workflows facilitating the movement and storage of higher video and photography resolutions without slowing down business processes.” What the Experts Say 10
© 2017 Concurrent AQUARI Solution for the Media and Entertainment Market Invaluable content captured on tapes not available online Average 10 - 20 petabyte each – equates to 1 - 2 million hours of high definition video storage *Estimate of major broadcasters & content owners (not including any Pay - TV Operators). Photo provided curtesy of FERMILAB ALWAYS INTEGRATED ALWAYS AVAILABLE ALWAYS ACCESSIBLE ALWAYS GROWING 11
© 2017 Concurrent Concurrent is a Well - Recognized Brand in the Media & Entertainment Segment PBs OF VIDEO STORAGE Large 50 - 100 PB Medium 20 - 40 PB Small 2 - 10 PB Average 10 - 20 PB Mostly archive storage * Estimate of major broadcasters & content owners (not including any Pay - TV Operators) NUMBER OF BROADCASTERS* USA 175 Europe 100 APAC 100 South America 50 Middle East 20 Africa 20 12
© 2017 Concurrent Hybrid Direct + Channel Sales Model BlueChip Customer Base 13 Growth Fueled Through Channel Acceleration Signed 9 new or expanded video media delivery and storage customers since January 1 including Midco and Blue Ridge Communications
© 2017 Concurrent Milestones to Judge Our Progress 14 New Partnerships • Technology • Channels New Account & Design Wins Expanded Customer Relationships
© 2017 Concurrent New Storage Customer Acquisitions Creates Long - term Revenue Potential 15 $0.0 $0.5 $1.0 $1.5 $2.0 $2.5 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Total Annual Rev. Cumulative Rev. New Customer Win Total Lifetime of Customer in USD Millions
© 2017 Concurrent Leadership with Proven Track Record 16 DEREK ELDER Chief Executive Officer • 25 - year career in technology leadership roles with ARRIS Group, Cisco, Tropic Networks • Lead ARRIS DOCSIS BU to >50% mkt share, $1.2B revenue, in highly competitive environment • Emma Bowen Foundation Celeno , Zenverge Boards; Patent holder. NACD Board Governance Fellow. MBA Penn State SCOTT RYAN Senior Vice President, Products • 25 - year career in technology leadership roles with EMC, Nortel • Two - time venture capital backed CEO; sold last company to EMC • MBA Vanderbilt CLAY McCREERY Senior Vice President, Worldwide Sales & Service • 20 - year career in media technology sales leadership with ARRIS Group, C - COR • Senior Vice President at ARRIS; Led Team Responsible for > $1B Annual Revenue WARREN SUTHERLAND Chief Financial Officer • 16 - year career in high - tech and fin - tech finance and operations with private and public companies • CPA • Auditor with Arthur Anderson • Masters in Accountancy, University of Georgia
© 2017 Concurrent Addressing rapidly growing $3.7 billion market* Unique, valued added media storage solutions Proven go - to - market model; blue - chip customer base Proven leadership team in place executing growth strategy Exceptional balance sheet favored by target market, dividend policy Compelling Investment Opportunity * Sources: Frost & Sullivan, Coughlin Associates 17
© 2017 Concurrent Q&A
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