Top Image Systems, Ltd. (NASDAQ:TISA), a global
innovator of intelligent content processing solutions, announced
its financial results for the third quarter ended September 30,
2016.
Third Quarter 2016 Highlights
- Recruited U.S enterprise software industry veteran Brendan
Reidy to the position of CEO on August 23, 2016; Mr. Reidy was
given the mandate to increase stockholder value and accelerate
growth in revenues worldwide and in the U.S. in particular;
- Quarterly revenues were $7.7 million, compared to $8.5 million
in the second quarter of 2016 and $9.0 million in the third quarter
of 2015;
- Quarterly net loss was ($0.3 million), compared to ($0.2
million) in the second quarter of 2016, and compared to a loss of
($1.5 million) the third quarter of 2015;
- Adjusted EBITDA* was $234,000 compared to a loss of ($162,000)
in the third quarter of 2015;
- Quarterly recurring revenues were $4.9 million, representing
64% of total revenue in the current quarter, compared to 57% of
total revenue in Q2 2016 and 52% of revenue in the third quarter of
2015;
- Quarterly expenses were $8.2 million, a decrease of $1.7
million compared to expenses of $9.9 million in the third quarter
of 2015;
- Signed several key sales contracts, including
- an agreement worth over $525,000 for licenses and services for
a content process automation (CPA) forms processing project in the
government sector in Latin America that was deployed with a key
strategic partner;
- an agreement with a total contract value of over $450,000 for
licenses and professional services to deploy eFLOW® for a new
project in the U.S. public sector;
- a $420,000 financial process automation (FPA) contract with a
leading energy supplier that will extend the use of eFLOW® AP for
SAP globally, including to North, Central and South America;
- upsell of a FPA solution to an existing customer in the
European power sector; and
- a $350,000 CPA agreement for a government project in Asia
Pacific that was deployed with an affiliate of a key strategic
partner;
- Announced issue of a U.S. patent to TIS protecting advanced
data classification technologies;
- Named as a Vendor in Gartner’s IT Market Clock for Mobile
Imaging for Banks, 2016 and in Gartner’s Hype Cycle for Digital
Banking Transformation 2016.
Brendan Reidy, CEO, Top Image Systems, commented, “Since joining
TIS in late August, I have toured the Company’s offices worldwide
to evaluate the performance of our global operations. I have been
impressed by the Company’s R&D resources and product management
team, as well as by the high caliber of our professional services’
organization. I have participated in business reviews in each
region to evaluate our sales and marketing strategies and consider
how to improve our execution and accelerate achievement of our
goals. One high priority goal is our FPA cloud solution
development, which is making great progress. This cloud deployment
model will enable us to adapt our solution to address the specific
deployment demands of virtually any enterprise. Coupled with our
well-received on-premise FPA solution, our cloud offering widely
expands our addressable market opportunity in the Accounts Payable
space. In the recent quarter, 64% of our business was recurring; by
growing sales of our cloud-based FPA solution sold via a SaaS
business model, our revenue will be more predictable and, due to
their relatively short sales cycles, should also bring faster
revenue growth. These new solutions bolster our continued presence
in the profitable content and banking process automation markets
where we have reinforced our core capture technologies with
innovative and high-in-demand mobile and cloud capabilities and are
improving our go-to-market via powerful strategic
partnerships.”
“After two consecutive quarters of revenue in line with
expectations, in Q3 the Company experienced a delay in the
deployment of an important government project which caused a
revenue shortfall for the quarter,” added Mr. Reidy. “For this
reason we are working hard to modify our product strategy so that
an increasing percentage of revenues will be predictable and
reliable, reducing our dependency on the profitable yet volatile
capture market. Despite the temporary revenue shortfall, we
achieved a positive adjusted EBITDA of $234,000 this quarter and we
continued to make steady progress executing on our growth
initiatives, including receiving orders for half a million dollars
in sales from our on-premise FPA solution. Nevertheless,
going forward, I have now put in place a 90-day operational and
strategic priorities program. Our imperative is to return the
Company to profitable growth while we transform our business to
focus on the higher velocity cloud applications software market
opportunity.”
Mr. Reidy concluded, “The institution of these measures will
include rigorous opportunity pipeline review, additional capacity
in leads qualifications, targeted campaigns to upsell new solutions
to our installed base, continued focus on services delivery, steps
to better leverage our remittance business in the U.S. and
investments in strategic partnerships. In short, we must improve
our top line revenue through better execution. I will
be relentlessly focused on addressing this challenge to ensure that
our revenue performance is more consistent. With my personal
commitment to the execution of these measures, in parallel with our
ongoing mission to transform our company into a cloud applications
software company, I am confident that we can realize our growth
potential.”
Izhak Nakar, Chairman of Top Image Systems, remarked, “Our Board
of Directors is confident that recruiting the well-respected,
enterprise software industry veteran Brendan Reidy will lead to
accelerated revenue growth. Brendan’s experience in bringing
cloud-based solutions to market and defining successful business
models will prove extremely valuable at this critical inflection
point for our company.”
Third Quarter Financial Results
Total revenues for the third quarter of 2016 were $7.7 million
compared to $8.5 million in the second quarter of 2016 and $9.0
million in the third quarter of 2015. Recurring (SaaS and
maintenance) revenues for the third quarter of 2016 were $4.9
million, unchanged from the second quarter of 2016 and compared to
$4.7 million in the same period of last year.
Gross profit for the third quarter of 2016 was $3.6 million
compared to $4.3 million in the second quarter of 2016 and to $4.7
million in the third quarter of last year. Gross margin for the
third quarter of 2016 was 47%, compared to 50% in the prior quarter
and 52% in the third quarter of last year.
In March 2016, the Company announced a restructuring initiative
to reduce costs and return the Company to sustainable
profitability; in 2016 accumulated non-GAAP costs were reduced by
$3.7 million.
GAAP net loss for the third quarter of 2016 was ($0.3 million)
compared to ($0.2 million) in the second quarter of 2016 and
compared to ($1.5 million) in the third quarter of last year.
Third quarter 2016 GAAP loss per share was ($0.02), compared
to ($0.01) in the second quarter of 2016 and compared to ($0.09)
for the third quarter of 2015.
Third quarter 2016 Non-GAAP* income per share was $0.02,
compared to non-GAAP net income per share of $0.02 for the second
quarter of 2016 and non-GAAP loss per share of ($0.06) for the
third quarter of 2015.
Adjusted EBITDA* was $234,000, compared to $667,000 in the
second quarter of 2016 and ($162,000) for the third quarter of
2015.
Conference Call
The Company will host a conference call and webcast today,
Tuesday, November 15th, 2016, at 10:00 am ET, during which the
Company’s management will present and discuss the financial results
and be available to answer questions from investors.
To join the conference call, please dial in to one of the
following teleconference phone lines using the numbers listed
below. Please begin placing your call at least 5 minutes
before the conference call commences. If you are unable to
connect using the toll-free number, please try the U.S.
Toll/International dial-in number.
US Toll-Free Dial-in
Number: |
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1-877-407-0784 |
US Toll/INTERNATIONAL Dial-in
Number: |
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1-201-689-8560 |
Israel Toll-Free Dial-in
Number: |
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1-809-406-247 |
The conference call is scheduled to begin at:
10:00 am Eastern Time 7:00 am Pacific Time
5:00 pm Israel Time
To join the live webcast, please click on the following link:
http://public.viavid.com/index.php?id=121864. For
those unable to attend the live call or webcast, from the following
day an audio recording of the call will be made available for
download from the Investors section of the Top Image Systems’
website www.topimagesystems.com; during the next three months the
recorded webcast can be viewed by clicking on the same link as for
the live webcast: http://public.viavid.com/index.php?id=121864
* GAAP and Non-GAAP Financial Measures This
release includes GAAP and non-GAAP financial measures, including,
without limitation, adjusted EBITDA (which eliminates the impact of
interest, taxes, amortization and depreciation expenses, as well as
non-cash stock-based compensation expenses and other non-recurring
items not part of regular business), Non-GAAP Net Income (Loss)
(which eliminates the impact of amortization expenses as well as
non-cash stock-based compensation expenses and other non-recurring
items not part of TIS’ ongoing business operations) and Non-GAAP
Income (Loss) per share. Non-GAAP measures are reconciled to
comparable GAAP measures in the tables below.
The presentation of these non-GAAP financial measures should be
considered in addition to TIS’ GAAP results provided in the
attached financial statements for the third quarter ended September
30, 2016 and the other periods presented, and is not intended to be
considered in isolation or as a substitute for the financial
information prepared and presented in accordance with GAAP. The
tables below reconcile each non-GAAP financial measure to its most
directly comparable GAAP financial measure. TIS’ management
believes that these non-GAAP financial measures provide meaningful
supplemental information regarding TIS’ performance by excluding
the impact of certain items that may not be indicative of TIS’ core
business operating results. TIS’ management believes that both
management and investors benefit from referring to these non-GAAP
financial measures in assessing TIS’ performance in addition to the
GAAP results. These non-GAAP financial measures also facilitate
comparisons to TIS’ historical performance and its competitors’
operating results. TIS includes these non-GAAP financial measures
because management believes they are useful to investors in
allowing for greater transparency with respect to supplemental
information used by management in its financial and operational
decision-making.
About Top Image Systems Top Image Systems™
(TIS™) Ltd. is a global innovator of on-premise and cloud-based
applications that optimize content-driven business processes such
as procure to pay operations, remittance processing, integrated
receivables, customer response management and more. Whether
originating from mobile, electronic, paper or other sources, TIS
solutions automatically capture, process and deliver content across
enterprise applications, transforming information entering an
organization into useful and accessible electronic data, delivering
it directly and efficiently to the relevant business system or
person for action with as little manual handling as possible.
TIS’ solutions are marketed in more than 40 countries through a
multi-tier network of distributors, system integrators, value-added
resellers and strategic partners. Visit the company's website at
http://www.TopImageSystems.com for more information.
Caution Concerning Forward-Looking
Statements
Certain matters discussed in this news release are
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Forward-looking
statements involve known and unknown risks, uncertainties and other
factors that may cause our actual results to be materially
different from any future results expressed or implied in those
forward-looking statements. Words such as "will," "expects,"
"anticipates," "estimates," and words and terms of similar
substance in connection with any discussion of future operating or
financial performance identify forward-looking statements. These
statements are based on management's current expectations or
beliefs and are subject to a number of risks and uncertainties that
could cause actual results to differ materially including, but not
limited to, risks in product development, approval
and introduction plans and schedules, rapid technological
change, customer acceptance of new products, the impact of
competitive products and pricing, the lengthy sales cycle,
proprietary rights of TIS and its competitors, risk of operations
in Israel, government regulation, litigation, general economic
conditions and other risk factors detailed in the Company's most
recent annual report on Form 20-F and other subsequent filings with
the United States Securities and Exchange Commission. We are under
no obligation to, and expressly disclaim any obligation to, update
or alter our forward-looking statements, whether as a result of new
information, future events or otherwise.
Top Image Systems Ltd. |
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Consolidated Balance Sheet as of |
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September 30, |
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December 31, |
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2016 |
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2015 |
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In thousands |
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Unaudited |
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Audited |
Assets |
|
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|
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Current Assets: |
|
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Cash and
Cash Equivalents |
|
$ |
3,565 |
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$ |
2,404 |
Restricted Cash |
|
|
176 |
|
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262 |
Trade
Receivables, net |
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8,971 |
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9,348 |
Other
Accounts Receivable and Prepaid Expenses |
|
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1,270 |
|
|
932 |
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Total
Current Assets |
|
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13,982 |
|
|
12,946 |
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Long-Term Assets: |
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Severance Pay Funds |
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1,286 |
|
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1,327 |
Restricted Cash |
|
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152 |
|
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147 |
Long-term Deposits and Long-term Assets |
|
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155 |
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204 |
Property
and Equipment, net |
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1,153 |
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1,444 |
Intangible Assets, net |
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3,982 |
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5,058 |
Goodwill |
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18,659 |
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19,091 |
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Total
Long-term Assets |
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25,387 |
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27,271 |
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Total Assets |
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$ |
39,369 |
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$ |
40,217 |
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Liabilities and Shareholders' Equity |
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Current Liabilities: |
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Short-term Bank Loans |
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$ |
3,000 |
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$ |
77 |
Trade
Payables |
|
|
1,564 |
|
|
1,541 |
Deferred
Revenues |
|
|
2,417 |
|
|
2,966 |
Accrued
Expenses and Other Accounts Payable |
|
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4,166 |
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|
4,421 |
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Total
Current Liabilities |
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11,147 |
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9,005 |
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Long-Term Liabilities: |
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Accrued
Severance Pay |
|
$ |
1,462 |
|
$ |
1,533 |
Non-current Deferred Revenues |
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|
2,834 |
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|
3,280 |
Other
Long-term Liabilities |
|
|
196 |
|
|
407 |
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Total
Long-term Liabilities |
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4,492 |
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|
5,220 |
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Total Liabilities |
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$ |
15,639 |
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$ |
14,225 |
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Total
Parent Shareholders' Equity |
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$ |
23,693 |
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$ |
25,967 |
Non-controlling Interest |
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37 |
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25 |
Shareholders' Equity |
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23,730 |
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|
25,992 |
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Total Liabilities and Shareholders' Equity |
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$ |
39,369 |
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$ |
40,217 |
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Top Image Systems Ltd. |
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Statement of Operations for the |
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Three months ended |
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Three months ended |
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Nine months ended |
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Nine months ended |
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September 30, |
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September 30, |
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September 30, |
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September 30, |
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2016 |
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2015 |
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2016 |
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2015 |
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In thousands, except per share
data |
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Audited |
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License
Revenues |
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1,266 |
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2,177 |
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4,741 |
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|
7,532 |
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Services
Revenues |
|
|
6,415 |
|
|
|
6,806 |
|
|
|
19,883 |
|
|
|
19,626 |
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Revenues |
|
$ |
7,681 |
|
|
$ |
8,983 |
|
|
$ |
24,624 |
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|
$ |
27,158 |
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Cost of
License Revenues |
|
|
383 |
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|
352 |
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|
1,276 |
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|
|
1,027 |
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Cost of
Services Revenues |
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|
3,676 |
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|
|
3,965 |
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|
|
11,245 |
|
|
|
10,854 |
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Cost of Revenues |
|
|
4,059 |
|
|
|
4,317 |
|
|
|
12,521 |
|
|
|
11,881 |
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Gross
Profit |
|
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3,622 |
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|
|
4,666 |
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|
12,103 |
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|
15,277 |
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Expenses |
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|
|
|
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Research
& Development |
|
|
1,241 |
|
|
|
1,170 |
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|
|
3,556 |
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|
|
3,427 |
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Sales
& Marketing |
|
|
1,650 |
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|
|
2,802 |
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|
5,746 |
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|
8,344 |
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General
& Administrative |
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|
1,161 |
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|
|
1,611 |
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|
3,806 |
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|
4,209 |
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Amortization Costs |
|
|
124 |
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|
74 |
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|
|
378 |
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|
222 |
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Restructuring Charge |
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- |
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- |
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1,186 |
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- |
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|
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|
|
|
|
|
|
4,176 |
|
|
|
5,657 |
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|
|
14,672 |
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16,202 |
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Operating (Loss)
Profit |
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(554 |
) |
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(991 |
) |
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(2,569 |
) |
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(925 |
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Financial Expenses, net |
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(169 |
) |
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(510 |
) |
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(443 |
) |
|
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(1,030 |
) |
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Other
Income (loss), net |
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- |
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9 |
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6 |
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4 |
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(Loss) profit
Before Taxes on Income |
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(723 |
) |
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(1,492 |
) |
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(3,006 |
) |
|
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(1,951 |
) |
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Tax
Expenses (income) |
|
|
(427 |
) |
|
|
74 |
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|
|
(421 |
) |
|
|
231 |
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|
|
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|
|
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Net (Loss) Profit |
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|
(296 |
) |
|
|
(1,566 |
) |
|
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(2,585 |
) |
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(2,182 |
) |
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Net
Income Attributable to Noncontrolling Interest |
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|
(3 |
) |
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(3 |
) |
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|
(11 |
) |
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(14 |
) |
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Net (Loss) Profit |
|
($ |
299 |
) |
|
($ |
1,569 |
) |
|
($ |
2,596 |
) |
|
($ |
2,196 |
) |
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Earnings
per Share |
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Basic (Loss) Earnings per
Share |
|
($ |
0.02 |
) |
|
($ |
0.09 |
) |
|
($ |
0.14 |
) |
|
($ |
0.12 |
) |
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|
|
|
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Weighted
Average Number of Shares Used in Computation of Basic Net (Loss)
Income per Share |
|
|
17,932 |
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|
|
17,902 |
|
|
|
17,923 |
|
|
|
17,856 |
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Diluted (Loss) Earnings
per Share |
|
($ |
0.02 |
) |
|
($ |
0.09 |
) |
|
($ |
0.14 |
) |
|
($ |
0.12 |
) |
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Weighted
Average Number of Shares Used in Calculation of Diluted Net (Loss)
Earnings per Share |
|
|
17,955 |
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|
|
17,902 |
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|
17,949 |
|
|
|
17,856 |
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Three months ended |
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Three months ended |
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Nine months ended |
|
Nine months ended |
|
|
September 30, |
|
September 30, |
|
September 30, |
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September 30, |
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|
|
2016 |
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|
2015 |
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2016 |
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|
2015 |
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In thousands, except per share
data |
Adjusted EBITDA: |
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Net (Loss) Profit |
|
($ |
299 |
) |
|
($ |
1,569 |
) |
|
($ |
2,596 |
) |
|
($ |
2,196 |
) |
Interest |
|
|
38 |
|
|
|
19 |
|
|
|
74 |
|
|
|
70 |
|
Other Financial
Expenses |
|
|
131 |
|
|
|
531 |
|
|
|
369 |
|
|
|
999 |
|
Taxes |
|
|
(427 |
) |
|
|
74 |
|
|
|
(421 |
) |
|
|
231 |
|
Depreciation |
|
|
167 |
|
|
|
179 |
|
|
|
510 |
|
|
|
485 |
|
Amortization |
|
|
359 |
|
|
|
336 |
|
|
|
1,082 |
|
|
|
1,008 |
|
Stock-based
Compensation Expenses |
|
|
265 |
|
|
|
141 |
|
|
|
719 |
|
|
|
398 |
|
Restructuring
Charge |
|
|
- |
|
|
|
- |
|
|
|
1,186 |
|
|
|
- |
|
One-time payment |
|
|
- |
|
|
|
127 |
|
|
|
- |
|
|
|
127 |
|
Total Adjusted
EBITDA |
|
$ |
234 |
|
|
($ |
162 |
) |
|
$ |
923 |
|
|
$ |
1,122 |
|
|
Reconciliation
of GAAP to Non-GAAP Results: |
|
|
|
Net (Loss)
Profit |
|
($ |
299 |
) |
|
($ |
1,569 |
) |
|
($ |
2,596 |
) |
|
($ |
2,196 |
) |
Amortization |
|
|
359 |
|
|
|
336 |
|
|
|
1,082 |
|
|
|
1,008 |
|
Stock-based
Compensation Expenses |
|
|
265 |
|
|
|
141 |
|
|
|
719 |
|
|
|
398 |
|
Restructuring
Charge |
|
|
- |
|
|
|
- |
|
|
|
1,186 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Non-GAAP Net
Profit |
|
$ |
325 |
|
|
($ |
1,092 |
) |
|
$ |
391 |
|
|
($ |
790 |
) |
|
Non-GAAP Net income
used for basic earnings per share |
|
$ |
325 |
|
|
($ |
1,092 |
) |
|
$ |
391 |
|
|
($ |
790 |
) |
Shares Used in Basic
Earnings per Share Calculation |
|
|
17,932 |
|
|
|
17,902 |
|
|
|
17,923 |
|
|
|
17,856 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Basic
Earnings per Share |
|
$ |
0.02 |
|
|
($ |
0.06 |
) |
|
$ |
0.02 |
|
|
($ |
0.04 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Net Income
Used for Diluted Earnings per Share |
|
$ |
325 |
|
|
($ |
1,092 |
) |
|
$ |
391 |
|
|
($ |
790 |
) |
Shares Used in Diluted
Earnings per Share Calculation |
|
|
17,955 |
|
|
|
17,902 |
|
|
|
17,949 |
|
|
|
17,856 |
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Diluted Earnings per Share |
|
$ |
0.02 |
|
|
($ |
0.06 |
) |
|
$ |
0.02 |
|
|
($ |
0.04 |
) |
Company Contact:
Shelli Zargary
Director of Corporate Marketing
shelli.zargary@topimagesystems.com
+972 3 767 9114
Investors:
James Carbonara
Regional Vice President, Hayden IR
james@haydenir.com
+ 1 646 755 7412
Top Image Systems, Ltd. - Ordinary Shares (NASDAQ:TISA)
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