MADISON, Wis., Nov. 14 /PRNewswire-FirstCall/ — Sonic Foundry(R) Inc. (NASDAQ:SOFO) , a leader in automated rich media communications technology, today announced results for its 2006 fiscal year. Sonic Foundry reported GAAP revenues of $12.6 million, compared to $8.3 million reported for fiscal 2005, representing organic growth of 52 percent. GAAP net loss for the year improved to 11 cents per share, from 14 cents per share for fiscal 2005. Fiscal fourth quarter revenues were $4.1 million with a GAAP net loss of one cent per share. The quarterly loss consisted entirely of non-cash related items of depreciation and amortization along with compensation for stock options required by new accounting regulations adopted in 2006. Coupled with improved collections, the positive operating results generated an increase in cash for the quarter of $436,000.
Highlights for fiscal 2006 include:* Product licenses and service billings increase year over year; unearned
revenue grows 110 percent annually. The continued increase in annual
revenues for 2006 was led by increased sales and marketing efforts,
increased multiple unit sales, repeat purchases from existing customers
and the fiscal 2006 release of the Mediasite enterprise class server
software and other product enhancements. Product licenses increased
43 percent, from $6.9 million in fiscal 2005 to $9.9 million in fiscal
2006. The company continues to see marked growth in billings related
to customer support and technical services provided for both the
product line and online hosting. GAAP accounting rules require certain
portions of revenue to be recognized over a future time period. This
future revenue is reflected as unearned revenue recorded on the balance
sheet of just over $2 million, more than doubling from the $957,000
recorded in fiscal 2005.* Annual gross margins continue to improve. Gross margins for fiscal
2006 rose to 74 percent compared to 67 percent for fiscal 2005. As
expected, high margin customer support revenue and licensing of server
software applications accounted for the majority of the increase in
gross margin percentage over 2005 levels. The company anticipates
margin increases to continue in the near term as total revenues
increase, non-cash amortization of purchased technology is fully
amortized after the first quarter of fiscal 2007 and the mix of
revenues reflects a greater percentage of higher margin post contract
support, server software licensing fees, hosting, consulting and
professional services revenues.* Operating expenses increase moderately compared to revenues. Total
fiscal 2006 operating expenses increased just over 30 percent to
$12.9 million over $9.9 million from the previous year due to planned
growth in sales staff. The company believes it is now gaining leverage
through the controlled growth in operating costs as compared to the
higher growth of top line revenue. Continued expansion in sales and
marketing, professional services and engineering personnel is
anticipated in fiscal 2007 to maintain current momentum, but is
expected to continue to grow below the rate projected for top line
growth.* Services offerings more than double. Revenue from technical services,
online services as well as service contracts increased from $975,000 in
2005 to $2.5 million in 2006, representing a 156 percent annual growth.
This business segment has been a strategic focus for the company as it
responds to market demand for greater breadth of services and expertise
in rich media deployment. The company expects to continue significant
investments in this area through an expansion of offerings and
additional personnel.* Professional services division launch. The company responded to growth
in enterprise-wide deployments and increased demand for pre-sales
consulting, hosting and event services with the creation of the
professional services division. With the announcement, Darrin Coulson
is promoted to Chief Operating Officer, maintaining oversight of global
sales, and Justin Jaeck will serve as Vice President of Services and
Operations, responsible for tailoring Mediasite installation, training,
hosting and deployment to large customer institutions. The new
division also formalizes the company’s custom development services,
providing customers with Mediasite integration into other enterprise
applications, custom viewers, hosted search portal offerings and other
services.* Introduction of Mediasite 4.0. As previously announced, the company
introduced its latest enhancements to Mediasite EX Server for the
Enterprise and Mediasite Recorder software in the fourth quarter of
fiscal 2006, further differentiating Mediasite as the leading
enterprise platform for managing multimedia communications. Mediasite
4.0 introduces the new Mediasite Management Portal, end-to-end
security, expanded reporting, remote Recorder control and improvements
to the Mediasite viewer interface for watching recorded presentations.
In addition, EX Server now provides an integration-ready solution for
customers to incorporate Mediasite content into other applications
within their organization.* Advanced search technology. The company recently made significant
advances in its development and deployment of multi-modal search
technology for searching large media content libraries and
automatically finding segmented information for playback. The
uniqueness of the offering relates to combining advanced research and
development in the areas of speech recognition, phonetic search,
optical character recognition, language processing and contextual
analysis into one all-encompassing search solution. The company has
also built a data processing capability that automatically extracts and
creates contextually relevant metadata, eliminating the time and waste
associated with manual metadata entry. The result is an unprecedented
method for automating the search of Mediasite content that provides
tremendous additional benefits to Mediasite users. These advances will
be demonstrated in the company’s earnings webcast at 11 a.m. ET today.* Patent grant. The company was just notified that the U.S. Patent and
Trademark Office (PTO) has granted Sonic Foundry a patent related to
its rich media communications system, Mediasite(TM). The Mediasite
patent covers a production method and system involving the capture,
indexing and synchronization of RGB-based content that is then sent
over a network, such as the Internet. Further details of the patent
grant are provided in an additional press release issued today.* New customer acquisitions underscore enterprise deployment and repeat
sales. Leading organizations in all markets are increasingly selecting
Mediasite as their enterprise system for one-to-many communications.
Customer acquisitions for fiscal 2006 include Astrazeneca, Corning,
GE Energy, H&R Block, Merck, Mutual of Omaha, Naval War College,
Nestle, Northwestern University, Philip Morris, Stanford Graduate
School of Business, Symantec, Time, Inc., Toyota, Transportation
Security Administration, Verisign and Walt Disney. Forty-two percent
of 2006 billings were from existing customers.
“Five years ago after acquiring Mediasite, we envisioned a day when the world would be communicating with rich media for student learning, business and government communications,” said Rimas Buinevicius, chairman and CEO of Sonic Foundry. “In 2006, that moment has arrived. Every day our customers experience the impact of rich media communications, not only the power and versatility of the medium, but also the cost savings and clarity it brings to their day to day communications.”
Buinevicius continued, “We have built a solid, high growth business that is specifically oriented toward the leading edge of advanced rich media technology and communications. Today, we are showcasing yet another significant advance, being able to automatically create searchable rich media databases for the purpose of finding knowledge instantly. Through our continued technology innovations, growing customer base and further market expansion, Sonic Foundry is demonstrating its strengthening position in a very important market segment.”
Sonic Foundry will host a webcast today to discuss its fiscal 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 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 www.sonicfoundry.com.
Press Contact: Investor Contact:
Terri Douglas Rob Schatz
Catapult PR-IR Wolfe, Axelrod, Weinberger & Assoc., LLC
303-581-7760, ext. 18 212-370-4500
Cell: 303-808-6820 rob@wolfeaxelrod.com
tdouglas@catapultpr-ir.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)September 30,
2006 2005
Assets
Current assets:
Cash and cash equivalents $2,751 $4,271
Accounts receivable, net of allowances
of $160 and $115 3,442 2,232
Inventories 398 414
Prepaid expenses and other current assets 399 363
Total current assets
6,990 7,280
Property and equipment:
Leasehold improvements 893 185
Computer equipment 2,275 1,570
Furniture and fixtures 422 185
Total property and equipment 3,590 1,940
Less accumulated depreciation 1,296 933
Net property and equipment 2,294 1,007
Other assets:
Goodwill and other intangible assets, net 7,575 7,626
Capitalized software development costs,
net of amortization of $1,346 and $1,067 53 332
Total other assets 7,628 7,958
Total assets $16,912 $16,245Liabilities and stockholders’ equity
Current liabilities:
Accounts payable $1,521 $1,323
Accrued liabilities 1,225 780
Unearned revenue 2,005 957
Current portion of capital lease obligation 41 15
Total current liabilities 4,792 3,075Long-term portion of capital lease 78 28
Other liabilities 441 21
Total liabilities 5,311 3,124Stockholders’ equity:
Preferred stock, $.01 par value,
authorized 5,000,000 shares; none issued — —
5% preferred stock, Series B, voting,
cumulative, convertible, $.01 par value
(liquidation preference at par),
authorized 10,000,000 shares, none issued — —
Common stock, $0.01 par value, authorized
100,000,000 shares; 32,266,217 and
30,910,409 shares issued and 32,195,967
and 30,840,159 shares outstanding 322 309
Additional paid-in capital 172,033 170,083
Accumulated deficit (160,560) (157,077)
Receivable for common stock issued (26) (26)
Treasury stock, at cost, 70,250 shares (168) (168)
Total stockholders’ equity 11,601 13,121
Total liabilities and stockholders’ equity $16,912 $16,245Sonic Foundry, Inc.
Consolidated Balance Sheets
(in thousands, except for share data)Years Ended September 30,
Continuing Operations 2006 2005 2004
Revenue:
Product sales $9,902 $6,928 $3,443
Services 2,506 975 425
Other 156 439 545
Total revenue 12,564 8,342 4,413
Cost of revenue 3,215 2,754 1,759
Gross margin 9,349 5,588 2,654Operating expenses:
Selling and marketing expenses 7,630 5,277 3,826
General and administrative expenses 3,041 2,864 2,826
Product development expenses 2,238 1,803 1,609
Total operating expenses 12,909 9,944 8,261
Loss from operations (3,560) (4,356) (5,607)Other income (expense), net 77 187 99
Loss from continuing operations (3,483) (4,169) (5,508)Gain on disposal of discontinued
operations — — 132
Net loss $(3,483) $(4,169) $(5,376)Loss per common share:
Continuing operations $(0.11) $(0.14) $(0.18)
Discontinued operations — — —
Basic net loss per common share $(0.11) $(0.14) $(0.18)
Diluted net loss per common share $(0.11) $(0.14) $(0.18)Weighted average common shares
– Basic 32,015,310 30,363,000 29,457,000
– Diluted 32,015,310 30,363,000 29,457,000
