MADISON, Wis., May 1 /PRNewswire-FirstCall/ — Sonic Foundry(R) Inc. (NASDAQ:SOFO) , a leader in automated rich media communications technology, announced results for its second quarter of fiscal 2007. Financial and company highlights for the second quarter include:
* Second quarter results. Revenues for the second quarter of fiscal 2007
were $3.82 million, an increase of 29 percent from the $2.95 million
reported for the second quarter of fiscal 2006. Total quarterly
billings, which include deferred revenues related primarily to
professional services fees were $4.29 million. Revenues for the first
six months of fiscal 2007 totaled $7.29 million compared to $4.83
million for the same period in fiscal 2006, an increase of 51 percent.
The company reported a GAAP net loss of $1.91 million or 5 cents per
share for the second quarter of fiscal 2007 compared to $947,000 or 3
cents per share in Q2-2006. GAAP net loss includes $395,000 of
non-cash related expenses of stock compensation, depreciation and
amortization. Total gross margins for Q2-2007 were 77 percent compared
to 71 percent in Q2-2006.* Customer purchasing trends. Second quarter customer sales to
corporations were 44 percent, education 39 percent, healthcare 13
percent and government 3 percent. Recent company selling efforts have
been concentrated on account building and enterprise deployments of
Mediasite technology within the higher education sector. Sales to
higher education customers are expected to contribute strongly to the
company’s third and fourth fiscal quarters, traditionally the strongest
for that sector. The company’s sales pipeline to higher education
customers has recently expanded beyond the 50 percent revenue
contribution seen in the past due to intra-account growth from existing
customers and the introduction of master purchase agreements. Second
quarter revenues were also impacted by earlier stage corporate
customers demonstrating initial demand for outsourced hosting and event
offerings, which typically act as a precursor to enterprise adoption.* Professional services growth. Professional services billings,
comprised of support contracts, installation, training, rental, event
and content hosting services, accounted for approximately 34 percent of
total billings for the quarter, or $1.47 million. Hosting and event
revenues increased significantly to $480,000 from $57,000 in the second
quarter of fiscal 2006. At March 31, 2007, an accumulated $2.24
million of unearned revenue was billed and deferred for services to be
recognized in upcoming quarters. Sonic Foundry expects continued
expansion in services revenue with the developing professional services
division and continued emphasis on enterprise sales.* Personnel expansion and capital investment. Enterprise sales
opportunities and high market growth expectations prompted the company
to expand the staff and resources required to support those activities
ahead of expected revenues. The increase in operating expenses was
primarily due to planned growth in the sales and marketing organization
coupled with investment in resources required for the company’s
professional services group, hosted service offerings and product
development efforts to advance its multi-modal search technologies. In
addition, the company made various capital investments in its network
infrastructure, facilities and certain product development and concept
design work.* Search offerings advance. Sonic Foundry continued to advance and
market its multi-modal search capabilities for online video and web
presentations. The advanced technology performs an analysis and search
of online audio, video, text and graphical information by combining
phonetic search, optical character recognition, language processing and
contextual analysis into a proprietary algorithm. As a result, this
process yields more contextually relevant search results for rich media
content, thereby allowing information and knowledge to be found more
rapidly. The company is providing contract price quotes to the first
series of customers interested in enhancing their content libraries
with multi-modal search functionality.* Introduction of Mediasite 4.1. The company introduced Mediasite 4.1
with Mediasite Podcast which automatically transforms any Mediasite
presentation into portable audio content for on-the-go playback with
Apple(R) iPods(R), iTunes(R) or any other MP3 player. The release also
provides for automated scheduling of presentation recordings by the
growing number of customers who create large libraries of recurring
presentations, featuring the industry’s first flexible start-stop
functionality. Together, the new Mediasite capabilities streamline
recording while distributing the content in multiple formats for
today’s media-savvy students and mobile workforce.* Key customer wins. In the second quarter of fiscal 2007, strategic
customer acquisitions included Anadarko Petroleum, Beckman Coulter, CDC
Office of Career and Workforce Development, Colorado State University,
Connecticut Department of Public Health, Fort Gordon, New York State
Controller’s Office, Oregon Institute of Technology, Unison Health
Plan, University of Arizona, University of Auckland, University of
Westminster and Wake Forest University.
“The rich media market continues to advance through its early adopter stage, with signs pointing to scale happening most quickly in education. As a result, we continue to focus our direct sales efforts on these opportunities in anticipation of a strong summer selling season,” said Rimas Buinevicius, chairman and CEO of Sonic Foundry. “Accordingly, we are adapting our product and service mix to meet the diverse needs of our corporate and government customers. That work is culminating in a powerful and unique combination of product and service offerings that continue to lead the market in breadth, sophistication and ease of use.”
Sonic Foundry will host a webcast today to discuss its second quarter 2007 results at 3:30 p.m. CT/4:30 p.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/q207. 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.
Investor Contact:
Rob Schatz
Wolfe, Axelrod, Weinberger & Assoc., LLC
212-370-4500
rob@wolfeaxelrod.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)
(Unaudited)March 31, September 30,
2007 2006
Assets
Current assets:
Cash and cash equivalents $8,841 $2,751
Accounts receivable, net of
allowances of $210 and $160 4,570 3,442
Inventories 308 398
Prepaid expenses and other current assets 731 399
Total current assets 14,450 6,990
Property and equipment:
Leasehold improvements 975 893
Computer equipment 2,349 2,275
Furniture and fixtures 461 422
Total property and equipment 3,785 3,590
Less accumulated depreciation 1,531 1296
Net property and equipment 2,254 2,294
Other assets:
Goodwill and other intangibles, net of
amortization of $1,400 and $1,346 7,575 7,628
Total assets $24,279 $16,912Liabilities and stockholders’ equity
Current liabilities:
Accounts payable $1,434 $1,521
Accrued liabilities 819 1,225
Unearned revenue 2,244 2,005
Current portion of capital lease
obligation 43 41
Total current liabilities 4,540 4,792Long-term portion of capital lease
obligation 57 78
Other liabilities 394 441
Total liabilities 4,991 5,311Stockholders’ 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; 35,596,337 and
32,266,217 issued and 35,469,170 and
32,195,967 outstanding at March 31, 2007
and September 30, 2006, respectively 356 322
Additional paid-in capital 183,034 172,033
Accumulated deficit (163,902) (160,560)
Receivable for common stock issued (31) (26)
Treasury stock, at cost, 127,167 shares at
March 31, 2007 and 70,250 at
September 30, 2006 (169) (168)
Total stockholders’ equity 19,288 11,601
Total liabilities and stockholders’ equity $24,279 $16,912Sonic Foundry, Inc.
Statements of Operations
(in thousands, except for share data)
(Unaudited)Three Months Ended March 31, Six Months Ended March 31,
2007 2006 2007 2006
Revenue:
Product sales $2,898 $2,288 $5,484 $3,634
Professional services 913 652 1,791 1,067
Other 10 13 19 124
Total revenue 3,821 2,953 7,294 4,825
Cost of revenue:
Product costs 790 861 1,533 1,421
Professional services
costs 101 — 131 —Total cost of revenue 891 861 1,664 1,421
Gross margin 2,930 2,092 5,630 3,404Operating expenses:
Selling and marketing
expenses 3,043 1,750 5,547 3,468
General and
administrative
expenses 1,104 766 2,074 1,462
Product development
expenses 806 544 1,481 1,078
Total operating
expenses 4,953 3,060 9,102 6,008
Loss from operations (2,023) (968) (3,472) (2,604)Other income, net 111 21 131 45
Net loss $(1,912) $(947) $(3,341) $(2,559)Net loss per common
share:
– basic and diluted $(0.05) $(0.03) $(0.10) $(0.08)Weighted average common
shares
– basic and
diluted 35,368,667 31,733,659 33,881,848 31,500,438
Source: Sonic Foundry, Inc.
