Blueprint
Issuer Direct Reports First Quarter Financial Results
Year over Year Platform and Technology Revenue Increases 50%,
Despite a Decrease in Overall Revenue
MORRISVILLE, NC / ACCESSWIRE / May 4, 2017 / Issuer
Direct Corporation (NYSE MKT: ISDR) (the "Company"), an
industry-leading communications and compliance company,
today reported its operating results for the three months ended
March 31, 2017. The Company will host an investor conference call
today at 4:30 PM Eastern Time to discuss its operating
results.
First Quarter 2017 Financial Highlights:
●
Revenue
was $2,856,000, up from $2,775,000 in Q4 2016, but down compared to
$3,277,000 in Q1 2016. Absent a one-time benefit of $316,000,
discussed below, revenue in Q1 2016 would have been
$2,961,000.
●
Platform
and Technology revenue increased 19% from Q4 2016 and 50% from Q1
2016.
●
Gross
margin was 74%, compared to 75% in Q4 2016 and 77% in Q1 2016.
Absent a one-time benefit of $316,000, Q1 2016 gross margin would
have been 74%.
●
GAAP
earnings per diluted share was $0.11 compared to $0.17 in Q4 2016
and Q1 2016.
●
The
Company generated cash flows from operations of $647,000 compared
to $741,000 in Q4 2016 and $501,000 in Q1 2016.
●
On
April 5, 2017, the Company’s Board of Directors declared a
quarterly cash dividend of $0.05 per share, marking the seventh
straight quarter of paying dividends.
Client Count Metrics:
●
The
Company had 1,761 Platform and Technology customers during the
first quarter of 2017 compared to 1,817 during Q4 2016 and 1,405
during Q1 2016.
●
The
Company had 517 Services customers during the first quarter of 2017
compared to 546 during Q4 2016 and 630 during Q1 2016.
Brian Balbirnie, CEO of Issuer Direct, commented, "Overall, we are
pleased with the continued strong performance of our high margin,
recurring, Platform and Technology revenue, up 50% year over year
and 19% sequentially. Our Platform and Technology products now
account for 49% of our overall revenue, an
increase compared to 43% of
total revenue in Q4 2016 and just 29% of total revenue in Q1 2016.
Our near-term target is to reach or exceed 50% revenue contribution
from Platform and Technology for 2017, and for that percentage to
be significantly greater in 2018.”
Mr. Balbirnie continued, “We expect the increasing percentage
of Platform and Technology revenue will allow us to increase profit
margin, earnings and EBITDA, due to the leverage in that revenue
stream. Our service revenue decreased 38%, which is a trend we
expect to continue as customers move from traditional print and
delivery of hardcopy company materials and regulatory disclosure
services. Looking ahead to the second quarter and the balance of
the year, we are highly focused on our sales and marketing,
partnership, and product development efforts, in support of the
continued growth of our Platform and Technology
solutions.”
Financial Results for the First Quarter Ended March 31,
2017:
Total revenue for the first quarter of 2017 was $2,856,000,
compared to $3,277,000 for the same period of 2016. It is important
to note that revenue and gross profit for the three months ended
March 31, 2016, included a one-time benefit of $316,000 due to the
reversal of an accrual related to unused postage credits for annual
report service (“ARS”) customers acquired as part of
the acquisition of PrecisionIR. Excluding the benefit of the unused
postage credit reversal, total revenue would have been $2,961,000
for the first quarter of 2016.
Platform and Technology revenue increased $468,000, or 50%, during
the first quarter of 2017 as compared to the first quarter of 2016.
The increase is primarily due to an increase in revenue from our
ACCESSWIRE platform, as we continue to penetrate the newswire
market. We also achieved increases in revenue from increased
licensing of most of our other platform idTM.
cloud-based products.
Services revenue decreased $890,000, or 38%, during the first
quarter of 2017, as compared to the same period of 2016. A majority
of the decrease is related to the one-time benefit of $316,000
noted above as well as the continued decline in our ARS business,
as issuers shift from hardcopy fulfillment to digital fulfillment
or elect not to continue with the service. Additionally, we saw
decreases in proxy and transfer agent services which are less
predictable as they typically occur on a project-by-project basis,
as well as in our Edgar and XBRL services, as the market continues
to become commoditized.
Gross margin for the first quarter of 2017 was $2,110,000, or 74%
of total revenue, compared to $2,507,000, or 77% gross margin in
the first quarter of 2016. Absent the benefit of the aforementioned
reversal of the accrual for unused postage credits, gross profit
margins for the first quarter of 2016 would have been 74%. It is
anticipated that we will be able to maintain gross margin
percentages above the historical 70%, as we continue our transition
to a platform first engagement.
Operating income was $375,000 for the three months ended March 31,
2017, as compared to operating income of $690,000 during the same
period of the prior year. Again, the decrease is primarily related
to the one-time benefit of $316,000 recorded in the first quarter
of 2016 as lower gross margin was offset by lower operating
expenses due to a decrease in amortization expense of intangible
assets.
On a GAAP basis, we generated net income of $325,000, or $0.11 per
diluted share during the three months ended March 31, 2017,
compared to $493,000, or $0.17 per diluted share during the three
months ended March 31, 2016. The income tax provisions for the
quarters ended March 31, 2017 and 2016, included the benefit of
$77,000 and $41,000, respectively, for discrete period items that
lowered the effective tax rate.
First quarter EBITDA was $529,000 or 19% of revenue, compared to
$997,000, or 30%, during the first quarter of 2016. EBITDA for the
first quarter of 2016 includes the non-recurring benefit of the
postage accrual noted above. Non-GAAP net income was $406,000, or
$0.14 per diluted share, compared to $525,000, or $0.18 per diluted
share during the first quarter of 2016. The Non-GAAP results
exclude amortization of intangible assets, stock-based
compensation, unusual, non-recurring gains, impact of discrete
items impacting income tax expense and tax impact of adjustments.
Please refer to the tables below for the calculation of EBITDA and
the reconciliation of GAAP income and earnings per share to
Non-GAAP income and earnings per share.
Non-GAAP Information
Certain Non-GAAP financial measures are included in this press
release. In the calculation of these measures, the Company
generally excludes certain items, such as amortization and
impairment of acquired intangibles, non-cash stock-based
compensation charges and unusual, non-recurring gains and charges.
The Company believes that excluding such items provides investors
and management with a representation of the Company's core
operating performance and with information useful in assessing its
prospects for the future and underlying trends in the Company's
operating expenditures and continuing operations. Management uses
such Non-GAAP measures to evaluate financial results and manage
operations. The release and the attachments to this release provide
a reconciliation of each of the Non-GAAP measures referred to in
this release to the most directly comparable GAAP measure. The
Non-GAAP financial measures are not meant to be considered a
substitute for the corresponding GAAP financial statements and
investors should evaluate them carefully. These Non-GAAP financial
measures may differ materially from the Non-GAAP financial measures
used by other companies.
CALCULATION OF EBITDA
|
Three Months
ended March 31,
|
|
|
|
|
|
|
|
|
|
Net
income:
|
$324,942
|
$493,288
|
Adjustments:
|
|
|
Depreciation and
amortization
|
164,920
|
306,928
|
Interest
income
|
(1,087)
|
(992)
|
Income tax
expense
|
40,579
|
197,922
|
EBITDA:
|
$529,354
|
$997,146
|
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP
MEASURES
|
Three Months
ended March 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income:
|
$324,942
|
$0.11
|
$493,288
|
$0.17
|
Adjustments:
|
|
|
|
|
Amortization of
intangible assets (1)
|
83,408
|
0.03
|
258,926
|
0.09
|
Stock-based
compensation (2)
|
146,248
|
0.05
|
167,078
|
0.05
|
Unusual,
non-recurring gains (3)
|
10,385
|
0.00
|
(316,040)
|
(0.11)
|
Tax impact of
adjustments (4)
|
(81,614)
|
(0.03)
|
(37,387)
|
(0.01)
|
Impact of discrete
items impacting income tax expense (5)
|
(77,272)
|
(0.02)
|
(40,875)
|
(0.01)
|
Non-GAAP net
income:
|
$406,097
|
$0.14
|
$524,990
|
$0.18
|
(1)
The
adjustments represent the amortization of intangible assets related
to acquired assets and companies.
(2)
The
adjustments represent stock-based compensation expense recognized
related to awards of stock options, restricted stock or common
stock in exchange for services. Although the Company expects to
continue to award stock to employees or in exchange for services,
the amount of stock-based compensation is excluded, as it is
subject to change as a result of one-time or non-recurring
projects.
(3)
The
adjustment removes gains or losses during the period that are
unusual, non-recurring, or infrequent in nature and don't relate to
the core business of the Company. For the three months ended March
31, 2017, the loss includes the change in value of stock received,
in lieu of cash, related to the settlement of a receivable. For the
three months ended March 31, 2016, the gain includes the reversal
of an accrual related to unused postage credits related to ARS
clients acquired during the acquisition of
PrecisionIR.
(4)
This
adjustment gives effect to the tax impact of all non-GAAP
adjustments at the Federal rate of 34%
(5)
The
adjustment eliminates the income tax benefit of discrete items
impacting income tax expense. During the first quarter of 2017,
this related to the excess stock-based compensation tax benefit
recognized in income tax expense during the period, in connection
with the Company’s adoption of ASU 2016-09. During the first
quarter of 2016, this related to the reversal of a valuation
allowance established for net operating losses for PrecisionIR
Group, Inc. at the date of acquisition.
Conference Call Information
To
participate in this event, dial approximately 5 to 10 minutes
before the beginning of the call.
●
Date, Time: May 4,
2017, 4:30PM ET
●
Toll free:
866.682.6100
●
International:
862.255.5401
●
Live
Webcast: https://www.investornetwork.com/company/816
Conference Call Replay Information
The
replay will be available beginning approximately 1 hour after the
completion of the live event, ending at midnight eastern on May 18,
2017.
●
Toll free:
877.481.4010
●
International:
919.882.2331
●
Web
replay: http://www.issuerdirect.com/earnings-calls-and-scripts/
About Issuer Direct Corporation
Issuer
Direct® is an industry-leading communications and compliance
company focusing on the needs of corporate issuers. Issuer Direct's
principal platform, Platform id., empowers users by
thoughtfully integrating the most relevant tools, technologies, and
services, thus eliminating the complexity associated with producing
and distributing financial and business communications.
Headquartered in RTP, NC, Issuer Direct serves more than 2,000
public and private companies in more than 18 countries. For more
information, please visit www.issuerdirect.com.
Learn
more about Issuer Direct today: Investor Tear
Sheet.
Forward-Looking Statements
This
press release contains "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") (which Sections were adopted as part of the
Private Securities Litigation Reform Act of 1995). Statements
preceded by, followed by or that otherwise include the words
"believe," "anticipate," "estimate," "expect," "intend," "plan,"
"project," "prospects," "outlook," and similar words or
expressions, or future or conditional verbs, such as "will,"
"should," "would," "may," and "could," are generally
forward-looking in nature and not historical facts. These
forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the Company's
actual results, performance, or achievements to be materially
different from any anticipated results, performance, or
achievements. The Company disclaims any intention to, and
undertakes no obligation to, revise any forward-looking statements,
whether as a result of new information, a future event, or
otherwise. For additional risks and uncertainties that could impact
the Company's forward-looking statements, please see the Company's
Annual Report on Form 10-K for the year ended December 31, 2016 and
Quarterly Report on Form 10-Q for the quarter ended March 31, 2017,
including but not limited to the discussion under "Risk Factors"
therein, which the Company has filed with the SEC and which may be
viewed at http://www.sec.gov/.
ISSUER DIRECT CORPORATION
CONSOLIDATED BALANCE
SHEETS
|
|
|
|
|
|
ASSETS
|
|
|
Current
assets:
|
|
|
Cash
and cash equivalents
|
$5,589,295
|
$5,338,978
|
Accounts
receivable (net of allowance for doubtful accounts of $451,625 and
$429,192, respectively)
|
1,315,499
|
1,299,698
|
Other
current assets
|
259,083
|
188,584
|
Total
current assets
|
7,163,877
|
6,827,260
|
Capitalized
software (net of accumulated amortization of $268,901 and $207,438,
respectively)
|
2,352,783
|
2,048,273
|
Fixed
assets (net of accumulated amortization of $338,126 and $318,077,
respectively)
|
186,734
|
204,316
|
Deferred
income tax asset - noncurrent
|
137,235
|
140,974
|
Other
long-term assets
|
19,215
|
17,891
|
Goodwill
|
2,241,872
|
2,241,872
|
Intangible
assets (net of accumulated amortization of $3,407,190 and
$3,323,782, respectively)
|
1,296,810
|
1,380,218
|
Total assets
|
$13,398,526
|
$12,860,804
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
Current
liabilities:
|
|
|
Accounts
payable
|
$311,881
|
$343,418
|
Accrued
expenses
|
932,304
|
806,399
|
Income
taxes payable
|
117,520
|
111,961
|
Deferred
revenue
|
859,337
|
842,642
|
Total
current liabilities
|
2,221,042
|
2,104,420
|
Deferred
income tax liability
|
61,148
|
66,332
|
Other
long-term liabilities
|
103,491
|
112,154
|
Total liabilities
|
2,385,681
|
2,282,906
|
Commitments
and contingencies
|
|
|
Stockholders'
equity:
|
|
|
Preferred
stock, $0.001 par value, 1,000,000 and 30,000,000 shares
authorized, no shares issued and outstanding as of March 31, 2017
and December 31, 2016, respectively.
|
-
|
-
|
Common
stock $0.001 par value, 20,000,000 and 100,000,000 shares
authorized, 2,912,114 and 2,860,944 shares issued and outstanding
as of March 31, 2017 and December 31, 2016,
respectively.
|
2,912
|
2,861
|
Additional
paid-in capital
|
9,368,433
|
9,119,610
|
Other
accumulated comprehensive loss
|
(29,461)
|
(35,798)
|
Retained
earnings
|
1,670,961
|
1,491,225
|
Total stockholders' equity
|
11,012,845
|
10,577,898
|
Total liabilities and stockholders’ equity
|
$13,398,526
|
$12,860,804
|
ISSUER DIRECT CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
|
For the Three
Months Ended
|
|
|
|
|
|
|
|
|
|
Revenues
|
$2,856,131
|
$3,277,339
|
Cost of
revenues
|
746,097
|
770,082
|
Gross
profit
|
2,110,034
|
2,507,257
|
Operating costs and
expenses:
|
|
|
General and
administrative
|
911,018
|
842,161
|
Sales and marketing
expenses
|
593,668
|
623,960
|
Product
development
|
124,853
|
69,160
|
Depreciation and
amortization
|
105,675
|
281,758
|
Total operating
costs and expenses
|
1,735,214
|
1,817,039
|
Operating
income
|
374,820
|
690,218
|
Other income
(expense)
|
(9,299)
|
992
|
Net income before
income taxes
|
365,521
|
691,210
|
Income tax
expense
|
40,579
|
197,922
|
Net
income
|
$324,942
|
$493,288
|
Income per share
– basic
|
$0.11
|
$0.18
|
Income per share
– fully diluted
|
$0.11
|
$0.17
|
Weighted average
number of common shares outstanding – basic
|
2,898,418
|
2,788,308
|
Weighted average
number of common shares outstanding – fully
diluted
|
2,980,480
|
2,887,753
|
ISSUER DIRECT CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
|
For the Three
Months Ended
|
|
|
|
|
|
|
Net
income
|
$324,942
|
$493,288
|
Foreign
currency translation adjustment
|
6,337
|
10,015
|
Comprehensive
income
|
$331,279
|
$503,303
|
ISSUER DIRECT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
|
For the Three Months Ended
|
|
|
|
|
|
|
Cash flows from operating activities:
|
|
|
Net
income
|
$324,942
|
$493,288
|
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
|
|
Depreciation
and amortization
|
164,920
|
306,928
|
Bad
debt expense
|
32,015
|
35,228
|
Deferred
income taxes
|
(656)
|
56,015
|
Stock-based
compensation expense
|
146,248
|
167,078
|
Changes
in operating assets and liabilities:
|
|
|
Decrease
(increase) in accounts receivable
|
(47,159)
|
(257,614)
|
Decrease
(increase) in deposits and prepaid assets
|
(71,734)
|
(32,324)
|
Increase
(decrease) in accounts payable
|
(31,737)
|
167,617
|
Increase
(decrease) in accrued expenses
|
114,242
|
(484,962)
|
Increase
(decrease) in deferred revenue
|
15,691
|
50,063
|
Net
cash provided by operating activities
|
646,772
|
501,317
|
|
|
|
Cash flows from investing activities:
|
|
|
Capitalized
software
|
(290,037)
|
(347,364)
|
Purchase
of fixed assets
|
(2,467)
|
(30,628)
|
Net
cash used in investing activities
|
(292,504)
|
(377,992)
|
|
|
|
Cash flows from financing activities:
|
|
|
Proceeds
from exercise of stock options, net of income taxes
|
26,690
|
7,094
|
Payment
of dividend
|
(145,206)
|
(83,551)
|
Net
cash used in financing activities
|
(118,516)
|
(76,457)
|
|
|
|
Net
change in cash
|
235,752
|
46,868
|
Cash
– beginning
|
5,338,978
|
4,215,145
|
Currency
translation adjustment
|
14,565
|
14,713
|
Cash
– ending
|
$5,589,295
|
$4,276,726
|
|
|
|
Supplemental disclosures:
|
|
|
Cash
paid for income taxes
|
$37,325
|
$120,250
|
Non-cash
activities:
|
|
|
Stock-based
compensation - capitalized software
|
$75,936
|
$179,200
|
For Further Information:
Issuer Direct Corporation
Brian R. Balbirnie
(919)-481-4000
brian.balbirnie@issuerdirect.com
Hayden IR
Brett Maas
(646)-536-7331
brett@haydenir.com
Hayden IR
James Carbonara
(646)-755-7412
james@haydenir.com