Expects Return to Profitability in Q4 based on Q4 Revenues of $10.5 - $11.5M and Operating Expenses of $9.3 - $9.7M; Q3 Recurring Revenues Reach 45% of Total Revenues
TEL AVIV, Israel and PLANO, Texas, Nov. 10, 2014 (GLOBE NEWSWIRE) -- Top Image Systems, Ltd. (Nasdaq:TISA), a leading cloud and on premise ECM (Enterprise Content Management) and BPM (Business Process Management) solution and MIP (Mobile Imaging Platform) provider today announced its financial results for the third quarter ended September 30, 2014. The quarter's results include the impact of TIS' July acquisition of eGistics, a leading U.S. provider of cloud-based payment and remittance record management solutions.
Third Quarter 2014 Highlights include:
- Record revenues of $10.7 million, an increase of 35% year over year;
- Adjusted EBITDA* loss of $1.5 million was impacted by one-time increase in costs related to changes made to the company's accrual policy;
- GAAP operating loss was $4.7 million and included non-recurring expenses related to the acquisition of eGistics, PMI costs, debt reserve adjustment as well as to the legal fees related to the settlement of litigation with Mitek as well as to the impact of changes made to the company's accrual policies;
- Management anticipates return to profitability in Q4 with operating expenses ranging between $9.3 million to $9.7 million and expected Q4 revenues of between $10.5 million and $11.5 million;
- Recognized SaaS (Software as a Service) revenues of $2 million; total recurring revenues were $4.8 million;
- Mobile pipeline in the U.S. and worldwide more than doubled since the beginning of the year, driven by new sales opportunities;
- Development of a go-to-market strategy for innovative joint solutions based on the synergies and combined roadmap derived from the rapid, smooth consolidation of TIS and eGistics product development teams;
- Reinforced TIS presence in the U.S. financial mobile image processing market, marked by development of additional partnerships and participation in key industry events such as AFP, Money20/20 and FinovateFall;
- Received positive media coverage and industry analyst attention, including a write-up in American Banker's Bank Technology News and mention in research published by IDC following TIS' presentation of GlassCapture at FinovateFall;
- Obtained approval by the U.S. Patent and Trademark Office for TIS' patent for technology for high-quality processing of documents of A4 or virtually any size and format.
Michael Schrader, CEO, Top Image Systems, commented, "Following the successful acquisition of eGistics early in Q3, TIS management led by our newly appointed COO and CFO Lyron Bentovim has focused on consolidation of the two companies, not only by initiating integration of products and solutions and by developing a joint long-term strategy and product roadmap, but also by combining operational teams, office sites and procedures to maximize efficiency and reach economies of scale. The closer we have examined the business of eGistics, the more confident we are that the acquisition will prove to be synergistic and highly accretive and further expand TIS' business and value."
Mr. Schrader added, "As we discussed on last quarter's conference call, in Q3, TIS incurred significant one-time expenses related mostly to transaction expenses, PMI costs, and accrual policy changes as well as to the legal fees related to the settlement of litigation with Mitek. The company expects to return to a more normalized expense level and profitability in the fourth quarter and projects that revenues will range between $10.5 million and $11.5 million and expenses will range between $9.3 million to $9.7 million."
Third Quarter 2014 Year over Year Results
Revenues: Total record revenues for the third quarter were $10.7 million, 35% growth over the $7.9 million achieved in the third quarter of 2013. License revenues for the third quarter were $5.8 million, compared to $4.2 million for the third quarter last year. Professional Services revenues for the third quarter were $4.9 million, compared to $1.7 million for the third quarter last year. Recurring revenues for the third quarter were $4.8 million, an increase of 140% on a year-over-year basis.
Gross Profit: Gross profit for the third quarter was $5.9 million, compared to $4.9 million for the third quarter of 2013, an increase of 20%. As a result of the one-time costs and adjustments, gross margin for the third quarter was 55%, compared to 62% in the third quarter last year.
Earnings: Adjusted EBITDA was a loss of $1.5 million compared to positive adjusted EBITDA of $1.2 million for the third quarter of 2013. Non-GAAP diluted loss per share was $0.10 compared to a gain of $ 0.08 for the third quarter of 2013. GAAP net loss was $4.8 million compared to GAAP net income of $1 million for the third quarter of 2013. GAAP diluted loss per share was $0.28 compared a $0.08 gain per share for the third quarter of 2013. 2014 results include the contributions from eGistics, but 2013 results do not include any eGistics results. We closed on the acquisition of eGistics in July 2014.
Conference Call
The Company will host a conference call and webcast at 10 a.m. EST on Monday, November 10, 2014, during which TIS management will present and discuss the financial results and be available to answer any 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 calls 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: | 1-877-407-0784 |
| US Toll/INTERNATIONAL Dial-in Number: | 1-201-689-8560 |
| Israel Toll-Free Dial-in Number: | 1-809-406-247 |
The conference call is scheduled to begin at:
10 a.m. Eastern Time
7 a.m. Pacific Time
5 p.m. Israel Time
To join the live webcast, please click on the following link: http://public.viavid.com/index.php?id=111274. For those unable to attend the live call or webcast, from the following day a 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=111274.
*Non-GAAP Financial Measures
This release includes 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 regular business) and Non-GAAP Income (Loss) per share. Non-GAAP measures are reconciled to comparable GAAP measures in the tables entitled "GAAP and Non-GAAP Statements of Operations".
The presentation of these non-GAAP financial measures should be considered as an addition to TIS' GAAP results provided in the attached financial statements for the third quarter ended September 30, 2014, 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 attached tables 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 charges and gains 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. 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) is a leading innovator of enterprise solutions for managing and validating content entering organizations from various sources. Whether originating from mobile, electronic, paper or other sources, TIS solutions deliver the content to applications that drive the organization. TIS' eFLOW® Platform is a common platform for the company's solutions. TIS markets its platform in more than 40 countries through a multi-tier network of distributors, system integrators, value-added resellers as well as strategic partners. Visit the company's website 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 Europe and 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. | ||
| Consolidated Balance Sheet as of | ||
|
September 30, 2014 |
December 31, 2013 |
|
| In thousands | ||
| Unaudited | Audited | |
| Assets | ||
| Current Assets: | ||
| Cash and cash equivalents | $ 4,379 | $ 3,203 |
| Restricted cash | 153 | 347 |
| Trade receivables, net | 11,706 | 7,111 |
| Other accounts receivable and prepaid expenses | 1,424 | 901 |
| Deferred tax asset | 732 | 913 |
| Total current assets | 18,394 | 12,475 |
| Long-Term Assets: | ||
| Severance pay funds | 1,340 | 1,775 |
| Restricted cash | 248 | 374 |
| Long-term deposits and long-term assets | 261 | 80 |
| Deferred tax asset | 453 | 515 |
| Property and equipment, net | 1,266 | 260 |
| Intangibles assets | 6,647 | -- |
| Goodwill | 19,535 | 6,168 |
| Total long-term assets | 29,750 | 9,172 |
| Total Assets | $ 48,144 | $ 21,647 |
| Liabilities and Shareholders' Equity | ||
| Current Liabilities: | ||
| Trade payables | $ 2,665 | $ 359 |
| Deferred revenues | 2,731 | 2,284 |
| Accrued expenses and other accounts payable | 3,306 | 1,334 |
| Total current liabilities | 8,702 | 3,977 |
| Long-Term Liabilities: | ||
| Accrued severance pay | $ 1,486 | $ 1,956 |
| Non-current deferred revenues | 2,127 | -- |
| Other long-term liabilities | 979 | -- |
| Total long-term liabilities | 4,592 | 1,956 |
| Total Liabilities | $ 13,294 | $ 5,933 |
| Total parent shareholders' equity | $ 34,845 | $ 15,714 |
| Noncontrolling interest | 5 | -- |
| Shareholders' Equity | 34,850 | 15,714 |
| Total Liabilities and Shareholders' Equity | $ 48,144 | $ 21,647 |
| Top Image Systems Ltd. | ||||
| Statements of Operations for the | ||||
| Three months ended | Three months ended | Nine months ended | Nine months ended | |
| September 30, | September 30, | September 30, | September 30, | |
| 2014 | 2013 | 2014 | 2013 | |
| In thousands, except per share data | ||||
| Unaudited | ||||
| Revenues | $10,701 | $7,906 | $26,948 | $21,027 |
| Cost of revenues | 4,835 | 3,016 | 10,426 | 8,648 |
| Gross profit | 5,866 | 4,890 | 16,522 | 12,379 |
| Expenses | ||||
| Research and development | 1,473 | 673 | 3,508 | 2,133 |
| Selling and marketing | 4,583 | 2,264 | 10,254 | 6,990 |
| General and administrative | 3,192 | 1,181 | 5,464 | 3,308 |
| Acquisition related costs | 1,170 | -- | 1,170 | -- |
| Amortization costs | 120 | -- | 120 | -- |
| 10,538 | 4,118 | 20,516 | 12,431 | |
| Operating income (loss) | (4,672) | 772 | (3,994) | (52) |
| Financing expenses, net | (218) | (75) | (188) | (231) |
| Other income (loss), net | (17) | 377 | (8) | 377 |
| Income (loss) before taxes on income | (4,907) | 1,074 | (4,190) | 94 |
| Tax on income | 131 | 101 | 348 | 205 |
| Net income (loss) | (5,038) | 973 | (4,538) | (111) |
| Net loss (income) attributable to noncontrolling interest | 269 | -- | (5) | -- |
| Net income (loss) | ($4,769) | $973 | ($4,543) | ($111) |
| Earnings per Share | ||||
| Basic earning (loss) per share | ($0.28) | $0.08 | ($0.29) | ($0.01) |
| Weighted average number of shares used in computation of basic net income (loss) per share | 16,901 | 11,681 | 15,483 | 11,664 |
| Diluted earning (loss) per share | ($0.28) | $0.08 | ($0.29) | ($0.01) |
| Weighted average number of shares used in computation of diluted net (loss) earnings per share | 16,901 | 12,119 | 15,483 | 11,664 |
| Adjusted EBITDA results: | ||||
| Three months ended | Three months ended | Nine months ended | Nine months ended | |
| September 30, | September 30, | September 30, | September 30, | |
| 2014 | 2013 | 2014 | 2013 | |
| In thousands, except per share data | ||||
| Adjusted EBITDA: | ||||
| Net income (loss) | ($4,769) | $973 | ($4,543) | ($111) |
| Interest | 19 | 13 | 19 | 25 |
| Taxes | 131 | 101 | 348 | 205 |
| Depreciation | 81 | 49 | 170 | 152 |
| Amortization | 354 | -- | 354 | -- |
| Stock-based compensation expenses | 171 | 43 | 470 | 129 |
| Acquisition related costs | 1,170 | -- | 1,170 | -- |
| Post merger integration costs | 303 | -- | 303 | -- |
| Legal costs related to law suit settlement | 444 | -- | 444 | -- |
| Debt reserve adjustment | 601 | -- | 601 | -- |
| Total Adjusted EBITDA | ($1,495) | $1,179 | ($664) | $400 |
| Reconciliation of GAAP to Non-GAAP results: | ||||
| Net income (loss) | ($4,769) | $973 | ($4,543) | ($111) |
| Amortization | 354 | -- | 354 | -- |
| Stock-based compensation expenses | 171 | 43 | 470 | 129 |
| Acquisition related costs | 1,170 | -- | 1,170 | -- |
| Post merger integration costs | 303 | -- | 303 | -- |
| Legal costs related to law suit settlement | 444 | -- | 444 | -- |
| Debt reserve adjustment | 601 | -- | 601 | -- |
| Non-GAAP Net income (loss) | ($1,726) | $1,016 | ($1,201) | $18 |
| Non-GAAP Net income (loss) used for basic earnings per share | ($1,726) | $1,016 | ($1,201) | $18 |
| Shares used in basic earnings per share calculation | 16,901 | 11,681 | 15,483 | 11,664 |
| Non-GAAP basic earnings (loss) per share | ($0.10) | $0.09 | ($0.08) | $0.00 |
| Non-GAAP Net income (loss) used for diluted earnings per share | ($1,726) | $1,016 | ($1,201) | $18 |
| Shares used in diluted earnings per share calculation | 16,901 | 12,119 | 15,483 | 12,120 |
| Non-GAAP diluted earnings (loss) per share | ($0.10) | $0.08 | ($0.08) | $0.00 |