Sonic Foundry Announces Fourth Quarter and Fiscal Year 2022 Results
Sonic Foundry, Inc. (NASDAQ: SOFO) reported Q4 and fiscal year results for 2022. Total revenue for Q4 was $6.5 million, down from $8.6 million a year earlier, attributed to lower hardware sales and industry challenges. The net loss per share rose to $0.25, against a profit of $0.06 in Q4 2021. Annual revenues decreased by 22% to $27.5 million, with a net loss of $7.1 million versus a profit of $3.1 million in 2021. Despite setbacks, management remains optimistic about new growth initiatives and strategic investments for future profitability.
- The launch of three new business lines (Vidable, Video Solutions, Global Learning Exchange) with customer adoption and strategic partnerships.
- Improvements anticipated in the Mediasite business due to emerging trends in video technology.
- Recent fundraising efforts include $4.3 million from a public offering and $9.7 million from debt and equity agreements to support growth initiatives.
- Significant revenue decline of 22% year-over-year, resulting in a total fiscal year revenue of $27.5 million.
- Increased net loss of $7.1 million for the fiscal year, compared to a profit of $3.1 million in 2021.
- Gross margin decreased to 68% from 71% in the prior fiscal year, primarily due to decreased service revenue.
Highlights for the Fourth Quarter Ended
-
Total revenue was
compared to$6.5 million in the prior-year quarter primarily due to lower hardware sales, softness in the virtual and hybrid events industry, delays in renewals of support contracts due to macro concerns, global foreign currency impact and new pandemic related restrictions in$8.6 million Japan . -
Gross margin was
61% of sales versus69% of sales in the comparable quarter primarily due to increased depreciation costs on cloud service assets. The depreciation increase is a result of one-time adjustment associated with the AWS transition to improve the hosting environment, limit long-term capital investment, and better position the company for growth. -
Net loss attributable to common stockholders was
per share compared to net loss of$0.25 per diluted share in the fourth fiscal quarter of 2021, reflecting investments made to enter new markets per previously disclosed strategy.$0.06 -
Adjusted EBITDA was a negative
compared to a negative$2.1 million in the fourth fiscal quarter of 2021, mostly attributable to investments in our new growth areas.$270 thousand
Fiscal Year 2022 Financial Highlights
-
Total fiscal year revenues of
compared to$27.5 million in fiscal year 2021, a$35.2 million or$7.7 million 22% decrease. -
Full fiscal year 2022 gross margin was
, or$18.8 million 68% of sales, compared to , or$24.9 million 71% of sales, in fiscal year 2021. -
Full fiscal year net loss attributable to common stockholders of
, or$7.1 million per diluted share, compared to net income of$0.72 , or$3.1 million per diluted share, in fiscal year 2021.$0.36 -
Full fiscal year 2022 Adjusted EBITDA was a loss of
compared to$5.2 million gain reported in fiscal year 2021.$2.7 million
Management Commentary
“2022 was both challenging and exhilarating. Regarding our current financial results, our core Mediasite business continued to face headwinds throughout the fiscal year. While we were seeing a gradual improvement in our in-person Events business, it remained off pace from pre-pandemic levels. The widespread conversion to hybrid and virtual meeting formats, which filled the gap during the height of COVID, declined in 2022. Overall, there is uncertainty in the events market as organizations try to strike the right balance with their target audiences. In
“Our team recognized two years ago that the video market segment that Mediasite traditionally served has growth limitations. While we could confidently grow the Mediasite business inside a limited market, it did not have the dynamic growth opportunity we wanted. After carefully studying the video landscape, we developed a strategic plan that would leverage our video expertise, data analytics, customer base and reputation to launch new initiatives with tremendous and relevant market opportunity. I’m thrilled to report that in the timeframe of just one year, we added three business lines to our family of brands—Vidable™, Video Solutions, and Global Learning Exchange™ (GLX). Each one of these businesses achieved significant proof points in recent months including customer adoption, new strategic partnerships and, in the case of GLX, student enrollments. We are moving quickly for a rapid scaleup phase of all three brands, and our goal is to make these new business units profitable before we exit 2024. We now have the management, infrastructure, and most important the capital to continue transforming
“As reported earlier, in April, we raised
Mozden continued, “Now I’ll recap the significant progress we made this year in transforming
“For me personally, the high point of 2022 was seeing our innovative concept Global Learning Exchange become a reality. In July, we celebrated the opening of our first GLX Hub in the
“And finally, we transformed our Mediasite Events offering into Video Solutions that launched in November. Video Solutions incorporates many of the services previously offered under the umbrella of our Mediasite Events business, but it is targeted at the much broader enterprise market. Video Solutions addresses the challenges that organizations are facing when it comes to their video strategy and infrastructure. Our technical capabilities and knowledgeable project managers can design a customized distribution and engagement strategy that helps customers derive maximum value from the content they produce.”
“I am proud of what our team has accomplished this year, and highly optimistic about the road ahead. Given the strengths of our current team and the rich landscape of opportunities for our new ventures, I am confident that
Fiscal Fourth Quarter 2022 Operating Results:
Service revenue, which included support, cloud services, events, and professional services, was
Selling, General and Administrative Expenses (SG&A) were
Net loss attributable to common stockholders was
Fiscal Year 2022 Operating Results
Service revenue, which included support, cloud services, events, and professional services, was
Gross margin was
Selling, general, administrative, and other expenses (SG&A) was
Net loss attributable to common stockholders was
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, and severance and subtracts gain from debt forgiveness from the
About
Founded in 1991 and headquartered in
Forward Looking Statements
This news release contains forward-looking statements about the products and services of
Condensed Consolidated Balance Sheets (in thousands, except for share data) (Unaudited) |
||||||||
|
|
|
||||||
|
|
2022 |
|
2021 |
||||
Assets |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
3,299 |
|
$ |
9,989 |
||
Accounts receivable, net of allowances of |
|
4,923 |
|
5,167 |
||||
Inventories, net |
|
1,462 |
|
442 |
||||
Investment in sales-type lease, current |
|
281 |
|
294 |
||||
Capitalized commissions, current |
|
224 |
|
360 |
||||
Prepaid expenses and other current assets |
|
945 |
|
1,153 |
||||
Total current assets |
|
11,134 |
|
17,405 |
||||
Property and equipment: |
|
|
|
|
|
|
|
|
Leasehold improvements |
|
1,460 |
|
1,111 |
||||
Computer equipment |
|
9,274 |
|
8,527 |
||||
Furniture and fixtures |
|
1,405 |
|
1,528 |
||||
Total property and equipment |
|
12,139 |
|
11,166 |
||||
Less accumulated depreciation and amortization |
|
8,705 |
|
8,368 |
||||
Property and equipment, net |
|
3,434 |
|
2,798 |
||||
Other assets: |
|
|
|
|
|
|
|
|
Investment in sales-type lease, long-term |
|
221 |
|
490 |
||||
Capitalized commissions, long-term |
|
42 |
|
76 |
||||
Right-of-use assets under operating leases |
|
2,053 |
|
2,441 |
||||
Deferred tax asset |
|
275 |
|
48 |
||||
Software development |
|
2,445 |
|
— |
||||
Other long-term assets |
|
296 |
|
757 |
||||
Total assets |
|
$ |
19,900 |
|
$ |
24,015 |
||
Liabilities and stockholders’ equity |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
1,904 |
|
1,072 |
||||
Accrued liabilities |
|
1,521 |
|
2,522 |
||||
Current portion of unearned revenue |
|
8,599 |
|
9,413 |
||||
Current portion of finance lease obligations |
|
10 |
|
79 |
||||
Current portion of operating lease obligations |
|
1,147 |
|
930 |
||||
Current portion of warrant debt |
|
565 |
|
— |
||||
Total current liabilities |
|
13,746 |
|
14,016 |
||||
Long-term portion of unearned revenue |
|
1,140 |
|
1,614 |
||||
Long-term portion of finance lease obligations |
|
15 |
|
26 |
||||
Long-term portion of operating lease obligations |
|
975 |
|
1,583 |
||||
Long-term portion of notes payable and warrant debt |
|
356 |
|
556 |
||||
Derivative liability, at fair value |
|
— |
|
53 |
||||
Other liabilities |
|
90 |
|
27 |
||||
Total liabilities |
|
16,322 |
|
17,875 |
||||
Commitments and contingencies |
|
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
|
|
|
|
Preferred stock, |
|
— |
|
— |
||||
|
|
— |
|
— |
||||
|
|
— |
|
— |
||||
Common stock, |
|
109 |
|
91 |
||||
Additional paid-in capital |
|
218,145 |
|
213,278 |
||||
Accumulated deficit |
|
(213,525 |
) |
|
(206,442 |
) |
||
Accumulated other comprehensive loss |
|
(982 |
) |
|
(618 |
) |
||
|
|
(169 |
) |
|
(169 |
) |
||
Total stockholders’ equity |
|
3,578 |
|
6,140 |
||||
Total liabilities and stockholders’ equity |
|
$ |
19,900 |
|
$ |
24,015 |
Condensed Consolidated Statements of Operations (in thousands, except for share and per share data) (Unaudited) |
||||||||||||||||
|
|
Years Ended |
|
Quarters Ended |
||||||||||||
|
|
2022 |
|
2021 |
|
2022 |
|
2021 |
||||||||
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product and other |
|
$ |
8,135 |
|
$ |
10,473 |
|
$ |
1,728 |
|
$ |
3,067 |
||||
Services |
|
19,331 |
|
24,694 |
|
4,777 |
|
5,563 |
||||||||
Total revenue |
|
27,466 |
|
35,167 |
|
6,505 |
|
8,630 |
||||||||
Cost of revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product and other |
|
3,054 |
|
4,042 |
|
878 |
|
1,204 |
||||||||
Services |
|
5,599 |
|
6,252 |
|
1,682 |
|
1,482 |
||||||||
Total cost of revenue |
|
8,653 |
|
10,294 |
|
2,560 |
|
2,686 |
||||||||
Gross margin |
|
18,813 |
|
24,873 |
|
3,945 |
|
5,944 |
||||||||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and marketing |
|
12,264 |
|
11,970 |
|
3,076 |
|
3,205 |
||||||||
General and administrative |
|
5,933 |
|
4,870 |
|
1,428 |
|
1,514 |
||||||||
Product development |
|
7,539 |
|
7,226 |
|
1,922 |
|
1,871 |
||||||||
Total operating expenses |
|
25,736 |
|
24,066 |
|
6,426 |
|
6,590 |
||||||||
Income (Loss) from operations |
|
(6,923 |
) |
|
807 |
|
(2,481 |
) |
|
(646 |
) |
|||||
Non-operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
(31 |
) |
|
(44 |
) |
|
(9 |
) |
|
(2 |
) |
||||
Gain on debt forgiveness |
|
— |
|
2,325 |
|
— |
|
— |
||||||||
Other income (expense), net |
|
(364 |
) |
|
4 |
|
(174 |
) |
|
12 |
||||||
Total non-operating income (expense) |
|
(395 |
) |
|
2,285 |
|
(183 |
) |
|
10 |
||||||
Income (loss) before income taxes |
|
(7,318 |
) |
|
3,092 |
|
(2,664 |
) |
|
(636 |
) |
|||||
Income tax benefit (expense) |
|
235 |
|
(15 |
) |
|
(48 |
) |
|
178 |
||||||
Net income (loss) |
|
$ |
(7,083 |
) |
|
$ |
3,077 |
|
$ |
(2,712 |
) |
|
$ |
(458 |
) |
|
Dividends on preferred stock |
|
— |
|
— |
|
— |
|
— |
||||||||
Net income (loss) attributable to common stockholders |
|
$ |
(7,083 |
) |
|
$ |
3,077 |
|
$ |
(2,712 |
) |
|
$ |
(458 |
) |
|
Income (loss) per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income (loss) per common share |
|
$ |
(0.72 |
) |
|
$ |
0.37 |
|
$ |
(0.25 |
) |
|
$ |
(0.06 |
) |
|
Diluted net income (loss) per common share |
|
$ |
(0.72 |
) |
|
$ |
0.36 |
|
$ |
(0.25 |
) |
|
$ |
(0.06 |
) |
|
Weighted average common shares – Basic |
|
9,899,724 |
|
8,230,100 |
|
10,868,723 |
|
8,086,331 |
||||||||
– Diluted |
|
9,899,724 |
|
8,650,384 |
|
10,868,723 |
|
8,086,331 |
Condensed Consolidated Statements of Cash Flows (in thousands) (Unaudited) |
||||||||
|
|
Years Ended |
||||||
|
|
|
||||||
|
|
2022 |
|
2021 |
||||
Operating activities |
|
|
|
|
|
|
|
|
Net Income (Loss) |
|
$ |
(7,083 |
) |
|
$ |
3,077 |
|
Adjustments to reconcile net income (loss) to net cash used in operating activities: |
|
|
|
|
|
|
|
|
Amortization of other intangibles |
|
31 |
|
49 |
||||
Depreciation and amortization of property and equipment |
|
1,305 |
|
1,263 |
||||
Deferred income taxes |
|
(235 |
) |
|
— |
|||
Loss on sale of fixed assets |
|
36 |
|
37 |
||||
Loss on impairment of fixed assets |
|
328 |
|
— |
||||
Provision for doubtful accounts |
|
(50 |
) |
|
25 |
|||
(Recovery of ) Provision for inventory reserve |
|
— |
|
(16 |
) |
|||
Stock-based compensation expense related to stock options |
|
747 |
|
487 |
||||
Stock issued for board of director's fees |
|
49 |
|
70 |
||||
Remeasurement gain on derivative liability |
|
(53 |
) |
|
(13 |
) |
||
Gain on debt forgiveness |
|
— |
|
(2,325 |
) |
|||
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
(37 |
) |
|
821 |
|||
Inventories |
|
(1,034 |
) |
|
734 |
|||
Investment in sales-type lease |
|
143 |
|
(452 |
) |
|||
Capitalized commissions |
|
170 |
|
104 |
||||
Prepaid expenses and other current assets |
|
12 |
|
(121 |
) |
|||
Right-of-use assets under operating leases |
|
222 |
|
(387 |
) |
|||
Operating lease obligations |
|
(213 |
) |
|
445 |
|||
Other long-term assets |
|
365 |
|
(438 |
) |
|||
Accounts payable and accrued liabilities |
|
530 |
|
(989 |
) |
|||
Other long-term liabilities |
|
90 |
|
(110 |
) |
|||
Unearned revenue |
|
(881 |
) |
|
(1,015 |
) |
||
Net cash used in operating activities |
|
(5,558 |
) |
|
1,246 |
|||
Investing activities |
|
|
|
|
|
|
|
|
Purchases of property and equipment |
|
(2,596 |
) |
|
(1,482 |
) |
||
Capitalization of software development costs |
|
(2,445 |
) |
|
— |
|||
Net cash used in investing activities |
|
(5,041 |
) |
|
(1,482 |
) |
||
Financing activities |
|
|
|
|
|
|
|
|
Proceeds from notes payable |
|
441 |
|
— |
||||
Payments on notes payable |
|
— |
|
(935 |
) |
|||
Proceeds from issuance of common stock, net of issuance costs |
|
3,967 |
|
3,447 |
||||
Proceeds from exercise of common stock options |
|
122 |
|
263 |
||||
Payments on finance lease obligations |
|
(75 |
) |
|
(120 |
) |
||
Net cash provided by (used in) financing activities |
|
4,455 |
|
2,655 |
||||
Changes in cash and cash equivalents due to changes in foreign currency |
|
(546 |
) |
|
(49 |
) |
||
Net decrease in cash and cash equivalents |
|
(6,690 |
) |
|
2,370 |
|||
Cash and cash equivalents at beginning of year |
|
9,989 |
|
7,619 |
||||
Cash and cash equivalents at end of year |
|
$ |
3,299 |
|
$ |
9,989 |
||
Supplemental cash flow information: |
|
|
|
|
|
|
|
|
Interest paid |
|
$ |
2 |
|
$ |
32 |
||
Income taxes paid, foreign |
|
88 |
|
97 |
||||
Non-cash financing and investing activities: |
|
|
|
|
|
|
|
|
Property and equipment financed by finance lease or accounts payable |
|
73 |
|
152 |
||||
|
|
|
|
|
|
|
|
|
Consolidated Non-GAAP Adjusted EBITDA Reconciliation (in thousands) |
||||||||||||||||
|
|
Years Ended |
|
Quarters Ended |
||||||||||||
|
|
2022 |
|
2021 |
|
2022 |
|
2021 |
||||||||
Net income (loss) |
|
$ |
(7,083 |
) |
|
$ |
3,077 |
|
$ |
(2,712 |
) |
|
$ |
(458 |
) |
|
Add: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
1,305 |
|
1,263 |
|
444 |
|
255 |
||||||||
Income tax expense (benefit) |
|
(235 |
) |
|
15 |
|
49 |
|
(178 |
) |
||||||
Interest expense (income) |
|
31 |
|
44 |
|
9 |
|
2 |
||||||||
Stock-based compensation expense |
|
747 |
|
487 |
|
138 |
|
109 |
||||||||
Severance |
|
85 |
|
157 |
|
12 |
|
- |
||||||||
Subtract: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain from debt forgiveness |
|
- |
|
2,325 |
|
- |
|
- |
||||||||
Adjusted EBITDA |
|
$ |
(5,150 |
) |
|
$ |
2,718 |
|
$ |
(2,060 |
) |
|
$ |
(270 |
) |
View source version on businesswire.com: https://www.businesswire.com/news/home/20221208005825/en/
608.310.5891
eamon.doyle@sonicfoundry.com
Source:
FAQ
What were Sonic Foundry's Q4 2022 earnings results?
How did Sonic Foundry perform in fiscal year 2022?
What are the future growth strategies for Sonic Foundry?