Blueprint
Issuer Direct Reports First Quarter Financial Results
Total Revenue Increases 24% while Platform and Technology Revenue
Increases 25% Year Over Year to 58% of Total Revenue
MORRISVILLE, NC / ACCESSWIRE / May 3, 2018 / Issuer
Direct Corporation (NYSE American: ISDR) (the "Company"),
an industry-leading communications and compliance
company, today reported its operating results for the three months
ended March 31, 2018. The Company will host an investor conference
call today at 4:30 PM Eastern Time to discuss its operating
results.
First Quarter 2018 and Recent Highlights:
●
Total revenue
was $3,530,000, a 24% increase from $2,856,000 in Q1 2017 and a 4%
increase from $3,398,000 in Q4 2017.
●
Platform and
Technology revenue increased 25% from Q1 2017 and 13% from Q4
2017.
●
Overall gross
margin was 71%, compared to 74% in Q1 2017 and 73% in Q4
2017.
●
Platform and
Technology gross margin was 79%, down from 85% in Q1 2017 and 83%
in Q4 2017.
●
GAAP earnings
per diluted share was $0.10 compared to $0.11 in Q1 2017 and $0.24
in Q4 2017.
●
The Company
generated cash flows from operations of $537,000 compared to
$647,000 in Q1 2017 and $417,000 in Q4 2017.
●
On April 6,
2018, the Company's Board of Directors declared a quarterly cash
dividend of $0.05 per share, marking the eleventh straight quarter
of paying dividends.
Customer Count Metrics:
●
The Company had
1,845 Platform and Technology customers during Q1 2018, compared to
1,761 during Q1 2017 and 1,819 during Q4 2017.
●
The Company had
571 Services customers during Q1 2018, compared to 517 during Q1
2017 and 579 during Q4 2017.
Brian
Balbirnie, CEO of Issuer Direct, commented, “We had a very
good first quarter. Platform and Technology revenue grew 25% year
over year, to 58% of total revenue and EBITDA increased to
$655,000, which is a 24% increase compared to the first quarter of
2017. On the balance sheet, cash grew by 12% since year-end to $5.5
million, and deferred revenue grew 27% since year-end, highlighting
the success we had during the quarter of focusing on platform
sales. We continue to build our pipeline in our platform business
by not only generating new customers, but cross selling and
converting our current customers.”
Mr.
Balbirnie continued, “We are very pleased with the start to
2018. Looking ahead, we are focused on increasing our platform
business, expanding our newswire distribution and overall client
count, which we believe will accelerate earnings
growth.”
Financial Results for the First Quarter Ended March 31,
2018:
Total
revenue for the first quarter of 2018 was $3,530,000 compared to
$2,856,000 for the same period of 2017, an increase of $674,000, or
24%. Revenue from customers obtained from our recent acquisition of
Interwest Transfer Company, Inc. (“Interwest”) was
approximately $418,000 during the first quarter of
2018.
Platform
and Technology revenue increased $412,000 or 25%, during the first
quarter of 2018, as compared to the first quarter of 2017. The
increase is due to an increase in revenue from our ACCESSWIRE®
offering, as we continue to penetrate the newswire market. We also
achieved revenue growth due to the addition of Interwest customers
as well as from increased subscriptions of Platform id.. As a percentage of
overall revenue, Platform & Technology revenue increased to 58%
of total revenue for the three months ended March 31, 2018,
compared to 57% for the same period of 2017. It is important to
note, due to a newly adopted accounting principle, certain revenue
related to the electronic dissemination of a customer’s
annual report that was previously reported as Service revenue has
been reclassified as Platform and Technology revenue for the three
months ended March 31, 2017.
Services
revenue increased $262,000 or 21%, during the first quarter of
2018, as compared to the same period of 2017. Revenue from our
transfer agent services increased, not only as a result of the
acquisition of Interwest, but also due to an increase in corporate
directives and actions of our customers. We also generated
increased revenue from our print and proxy distribution services
due to one-time projects. These increases were partially offset by
the continued customer attrition we experienced in our legacy ARS
business as companies elect to leave the service or transition to
our electronic delivery alternative (reflected as Platform and
Technology revenue). Additionally, we experienced continued decline
in our XBRL services business as the market for these services
commoditizes and we continue to experience pricing pressure and or
customers elect to utilize our cloud-based platform.
Gross
margin for the first quarter of 2018 was $2,509,000, or 71% of
total revenue, compared to $2,110,000, or 74% of revenue in the
first quarter of 2017. The decrease in gross margin percentage is
primarily due to an increase in amortization of capitalized
software associated with Platform id. of $140,000. Absent the
increase in amortization, gross margin percentage would have been
75% for the quarter.
Operating
income was $315,000 for the three months ended March 31, 2018, as
compared to operating income of $375,000 during the same period of
the prior year. Despite the increase in gross margin dollars noted
above, the decrease in operating income is primarily attributable
to increases in general and administrative expenses, sales and
marketing expenses and product development expenses. Both general
and administrative expenses and sales and marketing expenses
increased due to new hires joining the Company in either the latter
part of 2017 or early 2018. In an effort to increase revenue growth
in 2018 and beyond, the Company increased its sales and marketing
headcount by 25% over the same quarter of the prior year. Product
development expenses increased as a result of less capitalization
of costs and increased maintenance costs required to support
Platform id. During the
three months ended March 31, 2018, the Company recorded an income
tax benefit of $10,000 compared to income tax expense of $41,000
during the same period of the prior year. The Company’s low
effective tax rate for the periods, as compared to the applicable
statutory rates, is due to benefits of $73,000 and $77,000,
respectively, related to equity based
compensation.
On a
GAAP basis, we generated net income of $320,000 or $0.10 per
diluted share, during the three months ended March 31, 2018,
compared to $325,000, or $0.11 per diluted share during the same
period of 2017.
First
quarter EBITDA was $655,000, or 19% of revenue, compared to
$529,000, or 19% of revenue during the first quarter of 2017.
Non-GAAP net income was $458,000 or $0.15 per diluted share,
compared to $437,000 or $0.15 per diluted share during the first
quarter of 2017. The Non-GAAP results exclude amortization of
intangible assets, stock-based compensation, unusual, non-recurring
gains and losses, the impact of discrete items impacting income tax
expense and tax impact of adjustments. Please refer to the tables
below for the calculation of EBITDA and the reconciliation of GAAP
income and earnings per share to Non-GAAP income and earnings per
share.
Non-GAAP Information
Certain
Non-GAAP financial measures are included in this press release. In
the calculation of these measures, the Company generally excludes
certain items, such as amortization and impairment of acquired
intangibles, non-cash stock-based compensation charges and unusual,
non-recurring gains and losses. The Company believes that excluding
such items provides investors and management with a representation
of the Company's core operating performance and with information
useful in assessing its prospects for the future and underlying
trends in the Company's operating expenditures and continuing
operations. Management uses such Non-GAAP measures to evaluate
financial results and manage operations. The release and the
attachments to this release provide a reconciliation of each of the
Non-GAAP measures referred to in this release to the most directly
comparable GAAP measure. The Non-GAAP financial measures are not
meant to be considered a substitute for the corresponding GAAP
financial statements and investors should evaluate them carefully.
These Non-GAAP financial measures may differ materially from the
Non-GAAP financial measures used by other companies.
CALCULATION OF EBITDA
($ in ‘000’s)
|
Three Months
ended March 31,
|
|
|
|
|
|
|
Net
income:
|
$320
|
$325
|
Adjustments:
|
|
|
Depreciation and
amortization
|
340
|
165
|
Interest expense
(income)
|
5
|
(1)
|
Income tax expense
(benefit)
|
(10)
|
40
|
EBITDA:
|
$655
|
$529
|
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP
MEASURES
($ in ‘000’s, except per share amounts)
|
Three Months
ended March 31,
|
|
|
|
|
|
|
|
|
Net
income:
|
$320
|
$0.10
|
$325
|
$0.11
|
Adjustments:
|
|
|
|
|
Amortization of
intangible assets (1)
|
125
|
0.04
|
83
|
0.03
|
Stock-based
compensation (2)
|
142
|
0.05
|
146
|
0.05
|
Unusual,
non-recurring loss (3)
|
-
|
-
|
10
|
0.01
|
Tax impact of
adjustments (4)
|
(56)
|
(0.02)
|
(50)
|
(0.02)
|
Impact of discrete
items impacting income tax expense (5)
|
(73)
|
(0.02)
|
(77)
|
(0.03)
|
Non-GAAP net
income:
|
$458
|
$0.15
|
$437
|
$0.15
|
1)
The adjustments
represent the amortization of intangible assets related to acquired
assets and companies.
2)
The adjustments
represent stock-based compensation expense related to awards of
stock options, restricted stock units 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, these losses include a loss on the change in fair value of
stock received, in lieu of cash, related to the settlement of a
receivable.
4)
This adjustment
gives effect to the tax impact of all non-GAAP adjustments at the
current Federal rate of 21%.
5)
The adjustment
eliminates the income tax benefit of discrete items impacting
income tax expense. For the three months ended March 31, 2018 and
2017, this relates to the excess stock-based compensation tax
benefit recognized in income tax expense during the
period.
Conference Call Information
To
participate in this event, dial approximately 5 to 10 minutes
before the beginning of the call.
●
Date, Time:
Thursday May 3, 2018, 4:30 PM ET
●
Toll-free:
877.407.8133
●
International:
201.689.8040
●
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 31,
2018.
●
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/A for the year ended December 31, 2017,
including but not limited to the discussion under "Risk Factors"
therein, which the Company will file with the SEC and which may be
viewed at http://www.sec.gov/.
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
SOURCE: Issuer Direct Corporation
ISSUER DIRECT CORPORATION
CONSOLIDATED BALANCE SHEETS
(in
thousands, except share and per share amounts)
|
|
|
|
|
|
ASSETS
|
|
|
Current
assets:
|
|
|
Cash and cash
equivalents
|
$5,483
|
$4,917
|
Accounts
receivable (net of allowance for doubtful accounts of $444 and
$425, respectively)
|
1,486
|
1,275
|
Income tax
receivable
|
744
|
725
|
Other current
assets
|
244
|
193
|
Total current
assets
|
7,957
|
7,110
|
Capitalized
software (net of accumulated amortization of $698 and $497,
respectively)
|
2,548
|
2,749
|
Fixed assets (net
of accumulated amortization of $402 and $388,
respectively)
|
156
|
145
|
Other long-term
assets
|
19
|
18
|
Goodwill
|
4,070
|
4,070
|
Intangible assets
(net of accumulated amortization of $3,824 and $3,699,
respectively)
|
2,733
|
2,858
|
Total assets
|
$17,483
|
$16,950
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
Current
liabilities:
|
|
|
Accounts
payable
|
$513
|
$666
|
Accrued
expenses
|
558
|
613
|
Current portion
of note payable (See Note 3)
|
288
|
288
|
Income taxes
payable
|
66
|
65
|
Deferred
revenue
|
1,125
|
887
|
Total current
liabilities
|
2,550
|
2,519
|
Note payable
– long-term (net of discount of $64 and $70, respectively)
(See Note 3)
|
576
|
570
|
Deferred income
tax liability
|
565
|
573
|
Other long-term
liabilities
|
67
|
77
|
Total liabilities
|
3,758
|
3,739
|
Commitments and
contingencies
|
|
|
Stockholders'
equity:
|
|
|
Preferred stock,
$0.001 par value, 1,000,000 shares authorized, no shares issued and
outstanding as of March 31, 2018 and December 31, 2017,
respectively.
|
—
|
—
|
Common stock
$0.001 par value, 20,000,000 shares authorized, 3,062,120 and
3,014,494 shares issued and outstanding as of March 31, 2018 and
December 31, 2017, respectively.
|
3
|
3
|
Additional
paid-in capital
|
10,703
|
10,400
|
Other accumulated
comprehensive income
|
77
|
34
|
Retained
earnings
|
2,942
|
2,774
|
Total stockholders' equity
|
13,725
|
13,211
|
Total liabilities and stockholders’ equity
|
17,483
|
$16,950
|
ISSUER DIRECT CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in
thousands, except share and per share amounts)
|
For the Three
Months Ended
|
|
|
|
|
|
|
|
|
|
Revenues
|
$3,530
|
$2,856
|
Cost of
revenues
|
1,021
|
746
|
Gross
profit
|
2,509
|
2,110
|
Operating costs and
expenses:
|
|
|
General and
administrative
|
1,004
|
911
|
Sales and marketing
expenses
|
750
|
593
|
Product
development
|
298
|
125
|
Depreciation and
amortization
|
142
|
106
|
Total operating
costs and expenses
|
2,194
|
1,735
|
Operating
income
|
315
|
375
|
Other income
(expense):
|
|
|
Other
expense
|
—
|
(10)
|
Interest
income (expense), net
|
(5)
|
1
|
Total other income
(expense)
|
(5)
|
(9)
|
Net income before
income taxes
|
310
|
366
|
Income tax
(benefit) expense
|
(10)
|
41
|
Net
income
|
$320
|
$325
|
Income per share
– basic
|
$0.11
|
$0.11
|
Income per share
– fully diluted
|
$0.10
|
$0.11
|
Weighted average
number of common shares outstanding – basic
|
3,036
|
2,898
|
Weighted average
number of common shares outstanding – fully
diluted
|
3,111
|
2,980
|
ISSUER DIRECT CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
(in
thousands)
|
For the Three
Months Ended
|
|
|
|
|
|
|
Net
income
|
$320
|
$325
|
Foreign currency
translation adjustment
|
43
|
6
|
Comprehensive
income
|
$363
|
$331
|
ISSUER DIRECT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in
thousands)
|
For the Three
Months Ended
|
|
|
|
|
|
|
Cash flows from operating activities:
|
|
|
Net
income
|
$320
|
$325
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
Depreciation and
amortization
|
340
|
165
|
Bad debt
expense
|
43
|
32
|
Deferred income
taxes
|
(8)
|
(1)
|
Non-cash interest
expense (See Note 3)
|
6
|
—
|
Stock-based
compensation expense
|
142
|
146
|
Changes in
operating assets and liabilities:
|
|
|
Decrease
(increase) in accounts receivable
|
(253)
|
(47)
|
Decrease
(increase) in deposits and prepaid assets
|
(70)
|
(71)
|
Increase
(decrease) in accounts payable
|
(154)
|
(32)
|
Increase
(decrease) in accrued expenses
|
(66)
|
114
|
Increase
(decrease) in deferred revenue
|
237
|
16
|
Net cash provided
by operating activities
|
537
|
647
|
|
|
|
Cash flows from investing activities:
|
|
|
Capitalized
software
|
—
|
(290)
|
Purchase of fixed
assets
|
(25)
|
(2)
|
Net cash used in
investing activities
|
(25)
|
(292)
|
|
|
|
Cash flows from financing activities:
|
|
|
Proceeds from
exercise of stock options, net of income taxes
|
160
|
26
|
Payment of
dividends
|
(152)
|
(145)
|
Net cash provided
by (used in) financing activities
|
8
|
(119)
|
|
|
|
Net change in
cash
|
520
|
236
|
Cash –
beginning
|
4,917
|
5,339
|
Currency
translation adjustment
|
46
|
14
|
Cash –
ending
|
$5,483
|
$5,589
|
|
|
|
Supplemental disclosures:
|
|
|
Cash paid for
income taxes
|
$12
|
$37
|
Non-cash
activities:
|
|
|
Stock-based
compensation - capitalized software
|
$—
|
$76
|