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Sonic Foundry Reports First Quarter Results for Fiscal 20065 February 2006
Sonic Foundry(R) Inc. (Nasdaq: SOFO), a leader in automated rich media communications technology, announced results for its first quarter of fiscal 2006. Financial and company highlights for the first quarter include:
* Revenues increase 18 percent year-to-year. For the first quarter of
fiscal 2006, Sonic Foundry reported revenues of $1.9 million, an
increase of 18 percent from $1.6 million reported for the first quarter
of fiscal 2005. During this seasonally slow period, the company
reported a net loss of $1.6 million or five cents per share for the
first quarter of fiscal 2006 compared to $1.4 million or five cents per
share in Q1-2005. Current period results include non-cash expense of
$182 thousand related to a new accounting rule change requiring
companies to record the cost of issuing stock options.
* Multi-unit sales grow as customer base rapidly expands. The customer
base at the end of the first quarter of 2006 was 491, a 79 percent
increase over the first quarter last fiscal year. The company reported
multi-unit sales in key verticals including education (University of
Cincinnati and Victoria University), government (Maryland House of
Delegates) and corporate (Raytheon). Other new customers include Mutual
of Omaha, Merck, Carnegie Mellon and the Tiger Woods Learning Center.
* Sonic Foundry featured in Dell Intelligent Classroom. As previously
announced, Sonic Foundry recently became a supplier to the Dell
education channel with a significant role in Dell's Intelligent
Classroom marketing and sales initiative. In anticipation of this new
initiative, first quarter sales and marketing efforts were focused on
creating and planning new marketing programs as well as conducting
initial sales training and customer visits with Dell personnel. This
new distribution channel is expected to diversify Sonic Foundry's reach,
especially in education sales, both to the higher education and K-12
markets.
* EX Server ships late in Quarter. Shipment of EX server software
occurred later than anticipated in the quarter and therefore provided no
significant contribution to revenues. However, the new offering has
attracted large enterprise customers who are interested in deploying the
highly scalable, secure rich media software platform. As such, the
company expects larger contributions from server software license sales
in the future and may potentially see dramatic swings in future
sequential quarter results due to full scale enterprise deployments
based on EX.
* Cash flow breakeven expected during fiscal 2006. As reported at fiscal
2005 year end, the company projected a seasonally slow quarter for the
fiscal 2006 first quarter, with a significant pick up in business
expected for the balance of fiscal 2006. The company believes it
remains on pace to achieve breakeven operations some time in fiscal 2006
and has sufficient working capital to reach breakeven operations.
* Customer support revenues more than double. Customer support revenue
represents the portion of fees charged for Mediasite SmartServe service
contracts as well as training and installation services. In the first
quarter of fiscal 2006, customer support revenue was $415,000, up from
$189,000 in the first quarter of fiscal 2005. The increase was due
primarily to support contracts on new Mediasite sales and renewals. At
December 31, 2005, $1.1 million of unearned revenue was recorded for
service and support contracts to be recognized in upcoming quarters.
* Gross margins improve from the same period one year earlier. For the
first fiscal quarter of 2006, gross margins increased to 70 percent, up
from 66 percent in the first quarter of 2005. Mediasite customer
support revenues and server license fees contributed to the increase.
The company expects margins for fiscal 2006 to be in the low 70's
percent range.
* Improved search capabilities. Sonic Foundry introduced Mediasite.com, a
website that aggregates public presentations created with Mediasite
systems. Users can search for specific content in one location with a
simple search phrase. Throughout the first quarter of fiscal 2006, the
company's advanced R&D group incorporated unique ways in which data can
be indexed. Users are now employing these advanced search capabilities
to drill further down into rich media communications that have been
difficult to find, even through the use of traditional search engines
like Google, Yahoo or MSN. Based on the initial positive reaction of
customers, the company expects this initiative will lead to new products
and services that further advantage the customer base with the Mediasite
platform. Development efforts are now under way that provide for new
automated metadata extraction and archiving technology, specific
customizations and new hosting services.
"Over the last three years, we have evangelized our Mediasite product line as a new form of communication technology geared specifically to information providers," said Rimas Buinevicius, chairman and CEO of Sonic Foundry. "We've found that whether it's the professor, CEO, reporter, health care provider, product manager, lawyer or engineer, they all have one thing in common: a fundamental need to share knowledge and information quickly, and above all easily, with those that seek it. What makes Sonic Foundry unique is our ability to adapt the early ideas of television, telephony and audio/video production and meld them into an entirely new form of communication that is changing the way people deliver their message. This is still just the beginning of what we expect will turn into thousands of devices capturing and transmitting information for millions of hours of content, all accessible on a distributed network basis."
Sonic Foundry will host a Webcast today to discuss its first quarter 2006 results at 10:00 a.m. CT/11 a.m. ET. It will use Mediasite to Webcast the presentation for both live and on-demand viewing. To access the presentation, go to http://www.sonicfoundry.com. An archive of the Webcast will be available for 30 days.
About Sonic Foundry(R), Inc.
Founded in 1991, Sonic Foundry (Nasdaq: SOFO) is a technology leader in the emerging rich media communications marketplace, providing enterprise solutions and services that link an information driven world. Sonic Foundry is changing the way organizations communicate via the Web and how people around the globe receive vital information needed for work, professional advancement, safety and education. The company's integrated Webcasting and Web presentation solutions are trusted by Fortune 500 companies, education institutions and government agencies for a variety of critical communication needs. Sonic Foundry is based in Madison, Wis. For more information about Sonic Foundry, visit the company's Website at http://www.sonicfoundry.com.
Certain statements contained in this news release regarding matters that are not historical facts may be forward-looking statements. Because such forward-looking statements include risks and uncertainties, actual results may differ materially from those expressed in or implied by such forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, uncertainties pertaining to continued market acceptance for Sonic Foundry's products, its ability to succeed in capturing significant revenues from media services and/or systems, the effect of new competitors in its market, integration of acquired business and other risk factors identified from time to time in its filings with the Securities and Exchange Commission.
Sonic Foundry, Inc.
Consolidated Balance Sheets
(in thousands except for share data)
December 31, September 30,
2005 2005
Assets (unaudited)
Current assets:
Cash and cash equivalents $3,417 $4,271
Accounts receivable, net of allowances
of $115 each period 1,656 2,232
Inventories 598 414
Prepaid expenses and other current assets 231 363
Total current assets 5,902 7,280
Property and equipment:
Leasehold improvements 185 185
Computer equipment 1,734 1,570
Furniture and fixtures 185 185
Total property and equipment 2,104 1,940
Less accumulated depreciation 1,017 933
Net property and equipment 1,087 1,007
Other assets:
Goodwill and other intangibles, net 7,613 7,626
Capitalized software development costs,
net of amortization of $1,136 and $1,067 263 332
Total other assets 7,876 7,958
Total assets $14,865 $16,245
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $882 $1,323
Accrued liabilities 441 780
Unearned revenue 1,100 957
Current portion of capital
lease obligation 14 15
Total current liabilities 2,437 3,075
Long-term portion of capital lease 26 28
Other liabilities 19 21
Total liabilities 2,482 3,124
Stockholders' equity:
Preferred stock, $.01 par value,
authorized 5,000,000 shares; none
issued and outstanding -- --
5% preferred stock, Series B, voting,
cumulative, convertible, $.01 par value
(liquidation preference at par),
authorized 10,000,000 shares, none
issued and outstanding -- --
Common stock, $.01 par value, authorized
100,000,000 shares; 31,666,827 and
31,596,577 issued and 30,910,409 and
29,782,269 outstanding at December 31,
2005 and September 30, 2005, respectively 316 309
Additional paid-in capital 170,950 170,083
Accumulated deficit (158,689) (157,077)
Receivable for common stock issued (26) (26)
Treasury stock, at cost, 70,250 shares (168) (168)
Total stockholders' equity 12,383 13,121
Total liabilities and stockholders' equity $14,865 $16,245
Sonic Foundry, Inc.
Statements of Operations
(in thousands except for per share data)
(Unaudited)
Three Months Ended
December 31,
2005 2004
Continuing Operations
Revenue:
Product sales $1,346 $1,339
Customer support fees 415 189
Other 111 63
Total revenue 1,872 1,591
Cost of revenue 560 536
Gross margin 1,312 1,055
Operating expenses:
Selling and marketing expenses 1,718 1,231
General and administrative expenses 696 815
Product development expenses 534 455
Total operating expenses 2,948 2,501
Loss from operations (1,636) (1,446)
Other income, net 24 46
Net loss $(1,612) $(1,400)
Net loss per common share:
- basic and diluted $(0.05) $(0.05)
Source: prnewswire
All trademarks and copyrighted information contained herein are the property of their respective owners.
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