Sonic Foundry Announces Fiscal 2021 First Quarter Results - Fourth Consecutive Quarter of Net Income


MADISON, Wis., Feb. 11, 2021 (GLOBE NEWSWIRE) -- Sonic Foundry, Inc. (OTC Pink Sheets: SOFO), the trusted leader for video creation and management solutions as well as virtual and hybrid events, today announced consolidated financial results for its fiscal 2021 first quarter ended December 31, 2020.

Fiscal 2021 First Quarter Highlights

  • Total revenues of $9.2 million compared to $8 million in the first quarter of 2020, a 14 percent increase
  • Gross margin was $6.8 million, or 74 percent in the first quarter of 2021 compared to $5.8 million, or 73 percent in the first quarter of 2020
  • Net income attributable to common stockholders of $632,000, or $0.08 per share, compared to a net loss of $(820,000), or $(0.12) per share, in the first quarter of 2020, an improvement of $1.5 million
  • Adjusted EBITDA of $1.3 million for the first quarter of 2021 compared to $(297,000) in the same quarter last year, a 539% improvement
  • Unearned revenue was $10.8 million as of December 31, 2020 and $10.8 million as of December 31, 2019

Fiscal 2021 First Quarter Review

Product revenue was $2.2 million during the first quarter of 2021 compared to $2.1 million in the same quarter last year. Service billings, including support, hosting, events and professional services were $7 million, compared to $6 million in the prior year. Notably, revenue related to hosting increased 58 percent in the first quarter of 2021 compared to the same quarter last year. These increases in services are indicative of the acceleration in video content creation across the globe. The company expects to recognize $4.4 million of the current unearned revenue in the second quarter of fiscal 2021. Recurring revenue of $6.9 million was 76 percent of total revenue in the first quarter of 2021, compared to $6.3 million, or 78 percent of total revenue, in the first quarter of 2020. 

“I’m pleased that our first quarter delivered solid results across several key financial metrics. These results were driven by the informed bold decisions we’ve made to pursue high-demand, high-growth markets and anticipating our client needs in a video-centric world. We continue to maintain positive momentum across several important business segments, including our virtual events platform and Mediasite Video Cloud, two key areas we continue to invest in as we adjust our model to focus on solving new client business issues,” said Joe Mozden Jr., CEO, Sonic Foundry.

“We have seen the use of video for communications and e-learning accelerate exponentially over the past year. As an example, we have clients now viewing Mediasite content one million times per month compared to one million times per year. From just March to September 2020 alone, we saw over 1.4 billion video views. With this prolific amount of video creation and usage comes the need to organize, enhance and secure this ever-growing content, regardless of the source, and ensure users can access it from any location around the world,” Mozden continued. “We are leveraging our worldwide data center architecture to help our clients like University of Bristol deliver their videos anytime where they want it – the board room, a learning management system, anywhere their users are. We are also continuing to see increased demand for our Mediasite Events virtual platform, and our team of experts is creating highly engaging online experiences allowing organizations to continue delivering critical information to their users worldwide. As we plan for the post-COVID environment, our team, with 15 years of experience, is poised to lead our clients into a hybrid event world which we believe will be the future of the meetings and conferences industry.” 

“I am even more enthusiastic and confident today than when I joined the team last fall. While we have some challenges ahead, we have a vision and mentality for growth and have the right team in place to drive that growth. We are thinking about our business differently, aligning to our clients’ needs and proudly serving as their trusted partner to help them grow and lead them through the uncertainty,” Mozden concluded.

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 as well as severance expense 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 loss to adjusted EBITDA for the first quarter ended December 31, 2021, and 2020 are included in the release.

About Sonic Foundry®, Inc.
Sonic Foundry (OTC Pink Sheets: SOFO) is the global leader for video capture, management and streaming solutions as well as virtual and hybrid events. Trusted by more than 5,200 educational institutions, corporations, health organizations and government entities in over 65 countries, its Mediasite Video Platform quickly and cost-effectively automates the capture, management, delivery and search of live and on-demand streaming videos. Learn more at www.sonicfoundry.com.

© 2021 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.

Contact:
Nicole Wise, Director of Communications
920.226.0269
nicolew@sonicfoundry.com

Sonic Foundry, Inc.
Consolidated Balance Sheets
(in thousands, except for share data)
(Unaudited)

  December 31,  September 30, 
  2020  2020 
Assets        
Current assets:        
Cash and cash equivalents $5,845  $7,619 
Accounts receivable, net of allowances of $258 & $236  5,260   6,250 
Inventories  1,214   1,167 
Investment in sales-type lease, current  217   275 
Capitalized commissions, current  373   440 
Prepaid expenses and other current assets  1,048   1,065 
Total current assets  13,957   16,816 
Property and equipment:        
Leasehold improvements  1,136   1,128 
Computer equipment  8,213   7,960 
Furniture and fixtures  1,444   1,366 
Total property and equipment  10,793   10,454 
Less accumulated depreciation and amortization  7,596   7,295 
Property and equipment, net  3,197   3,159 
Other assets:        
Investment in sales-type lease, long-term  78   76 
Capitalized commissions, long-term  72   100 
Right-of-use assets under operating leases  1,827   2,081 
Other long-term assets  499   397 
Total assets $19,630  $22,629 
Liabilities and stockholders’ deficit        
Current liabilities:        
Accounts payable $891  $2,689 
Accrued liabilities  2,374   2,565 
Unearned revenue  9,053   10,402 
Current portion of finance lease obligations  100   119 
Current portion of operating lease obligations  1,482   1,425 
Current portion of notes payable and warrant debt, net of discounts  1,038   1,104 
Total current liabilities  14,938   18,304 
Long-term portion of unearned revenue  1,717   1,736 
Long-term portion of finance lease obligations  68   89 
Long-term portion of operating lease obligations  344   665 
Long-term portion of notes payable and warrant debt, net of discounts  2,399   2,673 
Derivative liability, at fair value  71   66 
Other liabilities  160   144 
Total liabilities  19,697   23,677 
Commitments and contingencies        
Stockholders’ deficit:        
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 10,000,000 shares; 8,012,279 and 7,965,325 shares issued, respectively and 7,999,563 and 7,952,609 shares outstanding, respectively  80   80 
Additional paid-in capital  209,283   209,022 
Accumulated deficit  (208,887)  (209,519)
Accumulated other comprehensive loss  (374)  (462)
Treasury stock, at cost, 12,716 shares  (169)  (169)
Total stockholders’ deficit  (67)  (1,048)
Total liabilities and stockholders’ deficit $19,630  $22,629 


Sonic Foundry, Inc.
Consolidated Statements of Operations
(in thousands, except for share and per share data)
(Unaudited)

  Three Months Ended December
31,
 
  2020  2019 
Revenue:        
Product and other $2,161  $2,055 
Services  7,004   5,960 
Total revenue  9,165   8,015 
Cost of revenue:        
Product and other  813   831 
Services  1,598   1,348 
Total cost of revenue  2,411   2,179 
Gross margin  6,754   5,836 
Operating expenses:        
Selling and marketing  3,010   3,396 
General and administrative  1,198   1,441 
Product development  1,741   1,590 
Total operating expenses  5,949   6,427 
Income (loss) from operations  805   (591)
Non-operating expenses:        
Interest expense, net  (29)  (263)
Other expense, net  11   15 
Total non-operating expenses  (18)  (248)
Income (loss) before income taxes  787   (839)
Income tax (expense) benefit  (155)  19 
Net income (loss) $632  $(820)
Dividends on preferred stock      
Net income (loss) attributable to common stockholders $632  $(820)
Income (loss) per common share        
– basic $0.08  $(0.12)
– diluted $0.08  $(0.12)
Weighted average common shares        
– basic  7,963,775   6,736,643 
– diluted  8,336,028   6,736,643 


Sonic Foundry, Inc.
Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)

  Three Months Ended 
  December 31, 
  2020  2019 
Operating activities        
Net income (loss) $632  $(820)
Adjustments to reconcile net income (loss) to net cash used in operating activities:        
Amortization of other intangibles  19   94 
Depreciation and amortization of property and equipment  268   227 
Provision for doubtful accounts - including financing receivables  22   9 
Stock-based compensation expense related to stock options and warrants  119   52 
Deferred loan interest to related party     123 
Remeasurement loss on derivative liability  5   2 
Changes in operating assets and liabilities:        
Accounts receivable  1,079   1,137 
Inventories  (42)  (351)
Investment in sales-type lease  63   33 
Capitalized commissions  95   87 
Prepaid expenses and other current assets  45   216 
Right-of-use assets under operating leases  285   289 
Operating lease obligations  (295)  (289)
Other long-term assets  (91)  5 
Accounts payable and accrued liabilities  (2,053)  (136)
Other long-term liabilities  12   (6)
Unearned revenue  (1,431)  (1,090)
Net cash used in operating activities  (1,268)  (418)
Investing activities        
Purchases of property and equipment  (287)  (59)
Net cash used in investing activities  (287)  (59)
Financing activities        
Payments on notes payable  (368)  (250)
Proceeds from exercise of common stock options  142    
Payments on finance lease obligations  (41)  (70)
Net cash used in financing activities  (267)  (320)
Changes in cash and cash equivalents due to changes in foreign currency  48   13 
Net decrease in cash and cash equivalents  (1,774)  (784)
Cash and cash equivalents at beginning of year  7,619   4,295 
Cash and cash equivalents at end of period $5,845  $3,511 
Supplemental cash flow information:        
Interest paid $20  $253 
Income taxes paid, foreign  44   81 
Non-cash financing and investing activities:        
Property and equipment financed by finance lease or accounts payable     36 


Sonic Foundry, Inc.
Consolidated Non-GAAP Adjusted EBITDA Reconciliation
(in thousands)

  Three Months Ended December
31,
 
  2020  2019 
Net income (loss) $632  $(820)
Add:        
Depreciation and amortization  268   227 
Income tax expense (benefit)  155   (19)
Interest expense  29   263 
Stock-based compensation expense  119   52 
Severance  101   - 
Adjusted EBITDA $1,304  $(297)