Sonic Foundry, Inc. (NASDAQ: SOFO), the trusted leader in video
creation and management solutions, and virtual and hybrid events,
today announced consolidated financial results for its fiscal 2022
second quarter ended March 31, 2022.
Highlights for the Second Quarter Ended March 31,
2022:
- Total revenue was $7.2 million compared to $8.7 million in the
prior year quarter primarily due to deferred customer support
revenue related to COVID and economic weakness in Japan.
- Gross margin was 71% of sales versus 70% of sales in the
comparable quarter, the slight change being due primarily to a
shift in revenue mix during the quarter.
- Net loss attributable to common stockholders was $0.15 per
share compared to net income of $0.03 per diluted share in the
second fiscal quarter of 2021, reflecting investments made to enter
new markets per previously disclosed strategy.
- Adjusted EBITDA was a negative $787 thousand compared to
positive $852 thousand in the second fiscal quarter of 2021.
Year-to-date Financial Highlights
- Total year-to-date revenues of $14.5 million compared to $17.9
million in the same period of 2021, a $3.4 million or 19 percent
decrease.
- Year-to-date gross margin was $10.3 million, or 71 percent of
sales, compared to $12.9 million, or 72 percent of sales, in the
same period of 2021.
- Year-to-date net loss attributable to common stockholders of
$2.9 million, or $0.35 per share, compared to net income of $889
thousand or $0.11 per share, in the same period of 2021.
- Year-to-date adjusted EBITDA was a loss of $1.8 million
compared to $2.2 million, in the same year-to-date period of
2021.
Management Commentary:
“While our second quarter financial results were sub-optimal,
they were in line with our expectations for multiple reasons.
First, even with the world gradually returning to in-person
meetings and conferences, our events business continued to reflect
slower demand than we experienced pre-pandemic. Second, sales for
Mediasite enterprise systems declined as increased economic
uncertainty began motivating organizations to closely evaluate
variable expenses. As I said in my first quarter commentary, we can
assume these disruptions to our base video business will eventually
be resolved, and when they are, we’ll see a lift in its revenues
and profitability,” said Joe Mozden, Jr., CEO of Sonic Foundry.
“Regardless of factors currently dampening our core business, we
recognized two years ago that Mediasite products and services had
growth and scale limitations even in the best of times. It was at
that point that I joined Sonic Foundry and built a new leadership
team to disrupt our own company. Through the test-and-learn process
of design theory, we are charting a new course that will lead us to
substantial and untapped market opportunities. It is important to
understand that Mediasite provides the foundation of our
transformation, and we are now unlocking its embedded value as a
recognized leader in video creation and management solutions.”
“To give you context on how our legacy business is the
springboard for our new ventures, I’ll start with Vidable™, which
is a next-gen software solution for video, beyond Mediasite’s
hardware capabilities. Vidable™ sits at the intersection of video
editing, enterprise video, and AI and addresses a $15 billion
target market. With Vidable™, we have the world’s most complete
collection of AI for video that can deliver instant, comprehensive,
and automated video transformation at scale. Our Mediasite Cloud
delivers a tremendous data advantage in Vidable’s creation—over 2
petabytes (2,000 terabytes…very big) of video that resides in our
cloud. We plan to scale it across our 1,600+ existing customers and
attract new customers with its strong value
proposition—ease-of-use, providing significant reduction in human
labor and agnostic to all enterprise video platforms. Vidable™ is
real and we are already using its technology to enhance customer’s
video content. Today we live in a world of video creation and
consumption, and this is the future of video.”
“Our second major initiative is Global Learning Exchange™, which
will enable students in emerging countries to attain first-class
higher education in a flexible, cost-effective, locally supported
environment. This is a groundbreaking solution that creates access
to educational opportunity, which is a known driver of social
mobility. Higher education has always been a strong vertical for
Sonic Foundry, and we are leveraging our long-term relationships
with universities to launch Global Learning Exchange™. As
previously announced, we have begun construction on our first GLX
hub in the Bahamas in partnership with the Bahamas Institute of
Business and Technology. We have numerous memos of understanding
with other institutions who are searching for solutions to address
declining enrollment while at the same time advancing their mission
to educate and prepare tomorrow’s leaders.”
“Transformation is never easy but it’s absolutely necessary in
order to create sustainable value for all our stakeholders. To fund
our new businesses, we successfully raised $4.3 million in gross
proceeds through a public offering in April. I am very pleased with
the progress our team is making and we are completely aligned in
our mission to transform a 30-year-old company with a modest growth
profile into a modern, high-growth enterprise. I’m confident that
we are bringing passion, purpose, and strengths to the table,”
concluded Mozden.
Fiscal Second Quarter 2022 Operating Results:
Service revenue, which included support, cloud services, events,
and professional services was $5.1 million for fiscal quarter ended
March 31, 2022, compared to prior year quarter service revenue of
$6.1 million. Product revenue was $2.2 million compared to $2.6
million during the same period last year. Event revenue in the
second quarter of 2022 was $1 million, compared with $1.3 million
reported in the comparable year-ago quarter. Gross margin was $5.2
million for the second quarter of fiscal 2022, compared with $6.1
million in the same period of the prior fiscal year.
Non-GAAP Financial Information:
To supplement and enhance the reader’s understanding of our
operating performance, we disclose adjusted Earnings Before
Interest, Taxes, Depreciation, and Amortization (adjusted EBITDA),
a non-GAAP measure of operating performance. Our adjusted EBITDA
measure additionally adds back stock compensation expense, and
severance from the SEC definition of EBITDA. As such, our adjusted
EBITDA may not be comparable to similarly titled measures reported
by other companies and should not be viewed as an alternative to
net income as a measurement of our operating performance. A
reconciliation of net income to adjusted EBITDA for the year to
date and second quarter ended March 31, 2022, and 2021 are included
in the release.
About Sonic Foundry®, Inc.
Sonic Foundry (NASDAQ: SOFO) is the global leader for video
capture, management and streaming solutions as well as virtual and
hybrid events. Trusted by thousands of educational institutions,
corporations, health organizations and government entities in over
65 countries, Sonic Foundry’s solutions include Mediasite®,
Vidable™ and Global Learning Exchange™. Learn more at
www.sonicfoundry.com.
© 2022 Sonic Foundry, Inc. Product and service names mentioned
herein are the trademarks of Sonic Foundry, Inc., or their
respective owners.
Forward Looking Statements
This news release contains forward-looking statements about the
products and services of Sonic Foundry within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Forward looking statements include
statements about our products and services, our customer base,
strategic investments, new partnerships, our future operating
results, and any statements we make about the company’s future.
These types of statements address matters that are subject to many
risks and uncertainties. Actual results could differ materially
from the forward-looking guidance we provide. Any forward-looking
statements should be considered in context of the risk factors
disclosed in our periodic forms 10Q, 10K and other filings with the
SEC. These filings can be accessed on-line at www.sec.gov and other
websites or can be obtained from the company’s investor relations
department. All of the information and disclosures we make in this
news release regarding our business, including any forward-looking
guidance, are as of the date given and we assume no obligation to
update or change this information, regardless of subsequent
events.
Sonic Foundry, Inc.
Consolidated Balance
Sheets
(in thousands, except for
share data)
(Unaudited)
March 31,
September 30,
2022
2021
Assets
Current assets:
Cash and cash equivalents
$
4,411
$
9,989
Accounts receivable, net of allowances of
$20 and $236
4,434
5,167
Inventories, net
1,125
442
Investment in sales-type lease,
current
278
294
Capitalized commissions, current
287
360
Prepaid expenses and other current
assets
1,160
1,153
Total current assets
11,695
17,405
Property and equipment:
Leasehold improvements
1,100
1,111
Computer equipment
9,177
8,527
Furniture and fixtures
1,620
1,528
Total property and equipment
11,897
11,166
Less accumulated depreciation and
amortization
8,597
8,368
Property and equipment, net
3,300
2,798
Other assets:
Investment in sales-type lease,
long-term
376
490
Capitalized commissions, long-term
69
76
Right-of-use assets under operating
leases
2,390
2,441
Other long-term assets
1,354
805
Total assets
$
19,184
$
24,015
Liabilities and stockholders’
equity
Current liabilities:
Accounts payable
2,043
1,072
Accrued liabilities
1,756
2,522
Current portion of unearned revenue
6,973
9,413
Current portion of finance lease
obligations
41
79
Current portion of operating lease
obligations
1,128
930
Total current liabilities
11,941
14,016
Long-term portion of unearned revenue
1,577
1,614
Long-term portion of finance lease
obligations
20
26
Long-term portion of operating lease
obligations
1,338
1,583
Long-term portion of notes payable and
warrant debt
541
556
Derivative liability, at fair value
23
53
Other liabilities
111
27
Total liabilities
15,551
17,875
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $.01 par value,
authorized 500,000 shares; none issued
—
—
9% Preferred stock, Series A, voting,
cumulative, convertible, $.01 par value (liquidation preference of
$1,000 per share), authorized 4,500 shares; zero shares issued and
outstanding, at amounts paid in
—
—
5% Preferred stock, Series B, voting,
cumulative, convertible, $.01 par value (liquidation preference at
par), authorized 1,000,000 shares, none issued
—
—
Common stock, $.01 par value, authorized
25,000,000 shares; 9,139,282 and 9,064,821 shares issued,
respectively and 9,126,566 and 9,052,105 shares outstanding,
respectively
91
91
Additional paid-in capital
213,812
213,278
Accumulated deficit
(209,306
)
(206,442
)
Accumulated other comprehensive loss
(795
)
(618
)
Treasury stock, at cost, 12,716 shares
(169
)
(169
)
Total stockholders’ equity
3,633
6,140
Total liabilities and stockholders’
equity
$
19,184
$
24,015
Sonic Foundry, Inc.
Consolidated Statements of
Operations
(in thousands, except for
share and per share data)
(Unaudited)
Three Months Ended March
31,
Six Months Ended March
31,
2022
2021
2022
2021
Revenue:
Product and other
$
2,162
$
2,586
$
4,171
$
4,747
Services
5,081
6,125
10,325
13,129
Total revenue
7,243
8,711
14,496
17,876
Cost of revenue:
Product and other
748
951
1,609
1,764
Services
1,331
1,624
2,575
3,222
Total cost of revenue
2,079
2,575
4,184
4,986
Gross margin
5,164
6,136
10,312
12,890
Operating expenses:
Selling and marketing
3,233
2,895
6,324
5,905
General and administrative
1,268
1,055
3,066
2,253
Product development
1,918
1,731
3,692
3,472
Total operating expenses
6,419
5,681
13,082
11,630
Income (Loss) from operations
(1,255
)
455
(2,770
)
1,260
Non-operating expenses:
Interest expense, net
(10
)
(23
)
(5
)
(52
)
Other expense, net
(17
)
(38
)
(36
)
(27
)
Total non-operating expense
(27
)
(61
)
(41
)
(79
)
Income (Loss) before income taxes
(1,282
)
394
(2,811
)
1,181
Income tax expense
(54
)
(137
)
(53
)
(292
)
Net income (loss)
$
(1,336
)
$
257
$
(2,864
)
$
889
Dividends on preferred stock
—
—
—
—
Net income (loss) attributable to
common stockholders
$
(1,336
)
$
257
$
(2,864
)
$
889
Income (Loss) per common share:
Basic net income (loss) per common
share
$
(0.15
)
$
0.03
$
(0.35
)
$
0.11
Diluted net income (loss) per common
share
$
(0.15
)
$
0.03
$
(0.35
)
$
0.11
Weighted average common shares – Basic
9,114,451
8,040,513
9,095,810
8,001,723
– Diluted
9,114,451
8,557,788
9,095,810
8,451,913
Sonic Foundry, Inc.
Consolidated Statements of
Cash Flows
(in thousands)
(Unaudited)
Six Months Ended
March 31
2022
2021
Operating activities
Net Income (Loss)
$
(2,864
)
$
889
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Amortization of warrant debt, debt
discount and debt issuance costs
15
33
Depreciation and amortization of property
and equipment
534
539
Loss on sale of fixed assets
167
5
Provision for doubtful accounts
(83
)
3
Stock-based compensation expense related
to stock options
409
283
Remeasurement (gain) loss on derivative
liability
(30
)
19
Changes in operating assets and
liabilities:
Accounts receivable
654
925
Inventories
(689
)
71
Investment in sales-type lease
87
63
Capitalized commissions
80
154
Prepaid expenses and other current
assets
(63
)
(45
)
Right-of-use assets under operating
leases
(16
)
655
Operating lease obligations
27
(665
)
Other long-term assets
358
(93
)
Accounts payable and accrued
liabilities
176
(1,628
)
Other long-term liabilities
94
17
Unearned revenue
(2,349
)
(2,495
)
Net cash used in operating activities
(3,493
)
(1,270
)
Investing activities
Purchases of property and equipment
(1,017
)
(448
)
Capitalization of software development
costs
(954
)
—
Net cash used in investing activities
(1,971
)
(448
)
Financing activities
Payments on notes payable
—
(618
)
Proceeds from exercise of common stock
20
10
Proceeds from exercise of common stock
options
105
209
Payments on capital lease and financing
arrangements
(43
)
(76
)
Net cash provided by (used in) financing
activities
82
(475
)
Changes in cash and cash equivalents due
to changes in foreign currency
(196
)
(1
)
Net decrease in cash and cash
equivalents
(5,578
)
(2,194
)
Cash and cash equivalents at beginning of
year
9,989
7,619
Cash and cash equivalents at end of
year
$
4,411
$
5,425
Supplemental cash flow information:
Interest paid
$
2
$
31
Income taxes paid, foreign
41
44
Non-cash financing and investing
activities:
Property and equipment financed by finance
lease or accounts payable
234
—
Sonic Foundry, Inc.
Consolidated Non-GAAP Adjusted
EBITDA Reconciliation
(in thousands)
Three Months Ended March
31,
Six Months Ended March
31,
2022
2021
2022
2021
Net income (loss)
$
(1,336
)
$
257
$
(2,864
)
$
889
Add:
Depreciation and amortization
281
270
534
539
Income tax expense
54
137
53
292
Interest expense
10
23
5
52
Stock-based compensation expense
188
165
409
283
Severance
16
-
16
101
Adjusted EBITDA
$
(787
)
$
852
$
(1,847
)
$
2,156
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220511005338/en/
Media: Maggie Habib, mPR, Inc.
maggie@mpublicrelations.com 310-916-6934
Investors: Margaret Boyce, Financial Profiles
mboyce@finprofiles.com 310-622-8247
Sonic Foundry (NASDAQ:SOFO)
Historical Stock Chart
From Aug 2024 to Sep 2024
Sonic Foundry (NASDAQ:SOFO)
Historical Stock Chart
From Sep 2023 to Sep 2024