Sonic Foundry Announces Second Fiscal Quarter 2022 Financial Results
Sonic Foundry, Inc. (NASDAQ: SOFO) reported a total revenue of $7.2 million for Q2 fiscal 2022, a 19% decrease from $8.7 million in Q2 2021 due to deferred customer support revenue and economic issues in Japan. The net loss was $0.15 per share compared to net income of $0.03 per share last year. Adjusted EBITDA was a loss of $787 thousand, down from a positive $852 thousand. Year-to-date revenues fell to $14.5 million from $17.9 million. The CEO highlighted challenges in the events business but expressed confidence in future growth through new initiatives like Vidable™ and Global Learning Exchange™.
- Gross margin improved to 71% from 70% year-over-year.
- Raised $4.3 million through a public offering to fund new ventures.
- Plans to scale Vidable™ across 1,600+ existing customers.
- Total revenue decreased by $3.4 million or 19% year-to-date.
- Net loss of $2.9 million for the year-to-date compared to net income last year.
- Decline in service revenue to $5.1 million from $6.1 million year-over-year.
Highlights for the Second Quarter Ended
-
Total revenue was
compared to$7.2 million in the prior year quarter primarily due to deferred customer support revenue related to COVID and economic weakness in$8.7 million Japan . -
Gross margin was
71% of sales versus70% of sales in the comparable quarter, the slight change being due primarily to a shift in revenue mix during the quarter. -
Net loss attributable to common stockholders was
per share compared to net income of$0.15 per diluted share in the second fiscal quarter of 2021, reflecting investments made to enter new markets per previously disclosed strategy.$0.03 -
Adjusted EBITDA was a negative
compared to positive$787 thousand in the second fiscal quarter of 2021.$852 thousand
Year-to-date Financial Highlights
-
Total year-to-date revenues of
compared to$14.5 million in the same period of 2021, a$17.9 million or 19 percent decrease.$3.4 million -
Year-to-date gross margin was
, or 71 percent of sales, compared to$10.3 million , or 72 percent of sales, in the same period of 2021.$12.9 million -
Year-to-date net loss attributable to common stockholders of
, or$2.9 million per share, compared to net income of$0.35 or$889 thousand per share, in the same period of 2021.$0.11 -
Year-to-date adjusted EBITDA was a loss of
compared to$1.8 million , in the same year-to-date period of 2021.$2.2 million
Management Commentary:
“While our second quarter financial results were sub-optimal, they were in line with our expectations for multiple reasons. First, even with the world gradually returning to in-person meetings and conferences, our events business continued to reflect slower demand than we experienced pre-pandemic. Second, sales for Mediasite enterprise systems declined as increased economic uncertainty began motivating organizations to closely evaluate variable expenses. As I said in my first quarter commentary, we can assume these disruptions to our base video business will eventually be resolved, and when they are, we’ll see a lift in its revenues and profitability,” said
“Regardless of factors currently dampening our core business, we recognized two years ago that Mediasite products and services had growth and scale limitations even in the best of times. It was at that point that I joined
“To give you context on how our legacy business is the springboard for our new ventures, I’ll start with Vidable™, which is a next-gen software solution for video, beyond Mediasite’s hardware capabilities. Vidable™ sits at the intersection of video editing, enterprise video, and AI and addresses a
“Our second major initiative is Global Learning Exchange™, which will enable students in emerging countries to attain first-class higher education in a flexible, cost-effective, locally supported environment. This is a groundbreaking solution that creates access to educational opportunity, which is a known driver of social mobility. Higher education has always been a strong vertical for
“Transformation is never easy but it’s absolutely necessary in order to create sustainable value for all our stakeholders. To fund our new businesses, we successfully raised
Fiscal Second Quarter 2022 Operating Results:
Service revenue, which included support, cloud services, events, and professional services 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 from the
About Sonic Foundry®, Inc.
© 2022
Forward Looking Statements
This news release contains forward-looking statements about the products and services of
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Consolidated Balance Sheets |
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(in thousands, except for share data) |
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(Unaudited) |
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2022 |
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2021 |
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Assets |
|
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|
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Current assets: |
|
|
|
|
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|
|
|
Cash and cash equivalents |
|
$ |
4,411 |
|
|
$ |
9,989 |
|
Accounts receivable, net of allowances of |
|
|
4,434 |
|
|
|
5,167 |
|
Inventories, net |
|
|
1,125 |
|
|
|
442 |
|
Investment in sales-type lease, current |
|
|
278 |
|
|
|
294 |
|
Capitalized commissions, current |
|
|
287 |
|
|
|
360 |
|
Prepaid expenses and other current assets |
|
|
1,160 |
|
|
|
1,153 |
|
Total current assets |
|
|
11,695 |
|
|
|
17,405 |
|
Property and equipment: |
|
|
|
|
|
|
|
|
Leasehold improvements |
|
|
1,100 |
|
|
|
1,111 |
|
Computer equipment |
|
|
9,177 |
|
|
|
8,527 |
|
Furniture and fixtures |
|
|
1,620 |
|
|
|
1,528 |
|
Total property and equipment |
|
|
11,897 |
|
|
|
11,166 |
|
Less accumulated depreciation and amortization |
|
|
8,597 |
|
|
|
8,368 |
|
Property and equipment, net |
|
|
3,300 |
|
|
|
2,798 |
|
Other assets: |
|
|
|
|
|
|
|
|
Investment in sales-type lease, long-term |
|
|
376 |
|
|
|
490 |
|
Capitalized commissions, long-term |
|
|
69 |
|
|
|
76 |
|
Right-of-use assets under operating leases |
|
|
2,390 |
|
|
|
2,441 |
|
Other long-term assets |
|
|
1,354 |
|
|
|
805 |
|
Total assets |
|
$ |
19,184 |
|
|
$ |
24,015 |
|
Liabilities and stockholders’ equity |
|
|
|
|
|
|
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Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
|
2,043 |
|
|
|
1,072 |
|
Accrued liabilities |
|
|
1,756 |
|
|
|
2,522 |
|
Current portion of unearned revenue |
|
|
6,973 |
|
|
|
9,413 |
|
Current portion of finance lease obligations |
|
|
41 |
|
|
|
79 |
|
Current portion of operating lease obligations |
|
|
1,128 |
|
|
|
930 |
|
Total current liabilities |
|
|
11,941 |
|
|
|
14,016 |
|
Long-term portion of unearned revenue |
|
|
1,577 |
|
|
|
1,614 |
|
Long-term portion of finance lease obligations |
|
|
20 |
|
|
|
26 |
|
Long-term portion of operating lease obligations |
|
|
1,338 |
|
|
|
1,583 |
|
Long-term portion of notes payable and warrant debt |
|
|
541 |
|
|
|
556 |
|
Derivative liability, at fair value |
|
|
23 |
|
|
|
53 |
|
Other liabilities |
|
|
111 |
|
|
|
27 |
|
Total liabilities |
|
|
15,551 |
|
|
|
17,875 |
|
Commitments and contingencies |
|
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Stockholders’ equity: |
|
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|
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Preferred stock, |
|
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— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
Common stock, |
|
|
91 |
|
|
|
91 |
|
Additional paid-in capital |
|
|
213,812 |
|
|
|
213,278 |
|
Accumulated deficit |
|
|
(209,306 |
) |
|
|
(206,442 |
) |
Accumulated other comprehensive loss |
|
|
(795 |
) |
|
|
(618 |
) |
|
|
|
(169 |
) |
|
|
(169 |
) |
Total stockholders’ equity |
|
|
3,633 |
|
|
|
6,140 |
|
Total liabilities and stockholders’ equity |
|
$ |
19,184 |
|
|
$ |
24,015 |
|
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Consolidated Statements of Operations |
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(in thousands, except for share and per share data) |
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(Unaudited) |
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Three Months Ended |
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Six Months Ended |
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2022 |
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|
2021 |
|
|
2022 |
|
|
2021 |
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Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product and other |
|
$ |
2,162 |
|
|
$ |
2,586 |
|
|
$ |
4,171 |
|
|
$ |
4,747 |
|
Services |
|
|
5,081 |
|
|
|
6,125 |
|
|
|
10,325 |
|
|
|
13,129 |
|
Total revenue |
|
|
7,243 |
|
|
|
8,711 |
|
|
|
14,496 |
|
|
|
17,876 |
|
Cost of revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product and other |
|
|
748 |
|
|
|
951 |
|
|
|
1,609 |
|
|
|
1,764 |
|
Services |
|
|
1,331 |
|
|
|
1,624 |
|
|
|
2,575 |
|
|
|
3,222 |
|
Total cost of revenue |
|
|
2,079 |
|
|
|
2,575 |
|
|
|
4,184 |
|
|
|
4,986 |
|
Gross margin |
|
|
5,164 |
|
|
|
6,136 |
|
|
|
10,312 |
|
|
|
12,890 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and marketing |
|
|
3,233 |
|
|
|
2,895 |
|
|
|
6,324 |
|
|
|
5,905 |
|
General and administrative |
|
|
1,268 |
|
|
|
1,055 |
|
|
|
3,066 |
|
|
|
2,253 |
|
Product development |
|
|
1,918 |
|
|
|
1,731 |
|
|
|
3,692 |
|
|
|
3,472 |
|
Total operating expenses |
|
|
6,419 |
|
|
|
5,681 |
|
|
|
13,082 |
|
|
|
11,630 |
|
Income (Loss) from operations |
|
|
(1,255 |
) |
|
|
455 |
|
|
|
(2,770 |
) |
|
|
1,260 |
|
Non-operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
|
(10 |
) |
|
|
(23 |
) |
|
|
(5 |
) |
|
|
(52 |
) |
Other expense, net |
|
|
(17 |
) |
|
|
(38 |
) |
|
|
(36 |
) |
|
|
(27 |
) |
Total non-operating expense |
|
|
(27 |
) |
|
|
(61 |
) |
|
|
(41 |
) |
|
|
(79 |
) |
Income (Loss) before income taxes |
|
|
(1,282 |
) |
|
|
394 |
|
|
|
(2,811 |
) |
|
|
1,181 |
|
Income tax expense |
|
|
(54 |
) |
|
|
(137 |
) |
|
|
(53 |
) |
|
|
(292 |
) |
Net income (loss) |
|
$ |
(1,336 |
) |
|
$ |
257 |
|
|
$ |
(2,864 |
) |
|
$ |
889 |
|
Dividends on preferred stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Net income (loss) attributable to common stockholders |
|
$ |
(1,336 |
) |
|
$ |
257 |
|
|
$ |
(2,864 |
) |
|
$ |
889 |
|
Income (Loss) per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income (loss) per common share |
|
$ |
(0.15 |
) |
|
$ |
0.03 |
|
|
$ |
(0.35 |
) |
|
$ |
0.11 |
|
Diluted net income (loss) per common share |
|
$ |
(0.15 |
) |
|
$ |
0.03 |
|
|
$ |
(0.35 |
) |
|
$ |
0.11 |
|
Weighted average common shares – Basic |
|
|
9,114,451 |
|
|
|
8,040,513 |
|
|
|
9,095,810 |
|
|
|
8,001,723 |
|
– Diluted |
|
|
9,114,451 |
|
|
|
8,557,788 |
|
|
|
9,095,810 |
|
|
|
8,451,913 |
|
Consolidated Statements of Cash Flows |
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(in thousands) |
||||||||
(Unaudited) |
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Six Months Ended |
|
|||||
|
|
|
|
|||||
|
|
2022 |
|
|
2021 |
|
||
Operating activities |
|
|
|
|
|
|
|
|
Net Income (Loss) |
|
$ |
(2,864 |
) |
|
$ |
889 |
|
Adjustments to reconcile net income (loss) to net cash used in operating activities: |
|
|
|
|
|
|
|
|
Amortization of warrant debt, debt discount and debt issuance costs |
|
|
15 |
|
|
|
33 |
|
Depreciation and amortization of property and equipment |
|
|
534 |
|
|
|
539 |
|
Loss on sale of fixed assets |
|
|
167 |
|
|
|
5 |
|
Provision for doubtful accounts |
|
|
(83 |
) |
|
|
3 |
|
Stock-based compensation expense related to stock options |
|
|
409 |
|
|
|
283 |
|
Remeasurement (gain) loss on derivative liability |
|
|
(30 |
) |
|
|
19 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
654 |
|
|
|
925 |
|
Inventories |
|
|
(689 |
) |
|
|
71 |
|
Investment in sales-type lease |
|
|
87 |
|
|
|
63 |
|
Capitalized commissions |
|
|
80 |
|
|
|
154 |
|
Prepaid expenses and other current assets |
|
|
(63 |
) |
|
|
(45 |
) |
Right-of-use assets under operating leases |
|
|
(16 |
) |
|
|
655 |
|
Operating lease obligations |
|
|
27 |
|
|
|
(665 |
) |
Other long-term assets |
|
|
358 |
|
|
|
(93 |
) |
Accounts payable and accrued liabilities |
|
|
176 |
|
|
|
(1,628 |
) |
Other long-term liabilities |
|
|
94 |
|
|
|
17 |
|
Unearned revenue |
|
|
(2,349 |
) |
|
|
(2,495 |
) |
Net cash used in operating activities |
|
|
(3,493 |
) |
|
|
(1,270 |
) |
Investing activities |
|
|
|
|
|
|
|
|
Purchases of property and equipment |
|
|
(1,017 |
) |
|
|
(448 |
) |
Capitalization of software development costs |
|
|
(954 |
) |
|
|
— |
|
Net cash used in investing activities |
|
|
(1,971 |
) |
|
|
(448 |
) |
Financing activities |
|
|
|
|
|
|
|
|
Payments on notes payable |
|
|
— |
|
|
|
(618 |
) |
Proceeds from exercise of common stock |
|
|
20 |
|
|
|
10 |
|
Proceeds from exercise of common stock options |
|
|
105 |
|
|
|
209 |
|
Payments on capital lease and financing arrangements |
|
|
(43 |
) |
|
|
(76 |
) |
Net cash provided by (used in) financing activities |
|
|
82 |
|
|
|
(475 |
) |
Changes in cash and cash equivalents due to changes in foreign currency |
|
|
(196 |
) |
|
|
(1 |
) |
Net decrease in cash and cash equivalents |
|
|
(5,578 |
) |
|
|
(2,194 |
) |
Cash and cash equivalents at beginning of year |
|
|
9,989 |
|
|
|
7,619 |
|
Cash and cash equivalents at end of year |
|
$ |
4,411 |
|
|
$ |
5,425 |
|
Supplemental cash flow information: |
|
|
|
|
|
|
|
|
Interest paid |
|
$ |
2 |
|
|
$ |
31 |
|
Income taxes paid, foreign |
|
|
41 |
|
|
|
44 |
|
Non-cash financing and investing activities: |
|
|
|
|
|
|
|
|
Property and equipment financed by finance lease or accounts payable |
|
|
234 |
|
|
|
— |
|
|
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Consolidated Non-GAAP Adjusted EBITDA Reconciliation |
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(in thousands) |
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Three Months Ended |
|
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Six Months Ended |
|
||||||||||
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
Net income (loss) |
|
$ |
(1,336 |
) |
|
$ |
257 |
|
|
$ |
(2,864 |
) |
|
$ |
889 |
|
Add: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
281 |
|
|
|
270 |
|
|
|
534 |
|
|
|
539 |
|
Income tax expense |
|
|
54 |
|
|
|
137 |
|
|
|
53 |
|
|
|
292 |
|
Interest expense |
|
|
10 |
|
|
|
23 |
|
|
|
5 |
|
|
|
52 |
|
Stock-based compensation expense |
|
|
188 |
|
|
|
165 |
|
|
|
409 |
|
|
|
283 |
|
Severance |
|
|
16 |
|
|
|
- |
|
|
|
16 |
|
|
|
101 |
|
Adjusted EBITDA |
|
$ |
(787 |
) |
|
$ |
852 |
|
|
$ |
(1,847 |
) |
|
$ |
2,156 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20220511005338/en/
Media:
maggie@mpublicrelations.com
310-916-6934
Investors:
mboyce@finprofiles.com
310-622-8247
Source:
FAQ
What were Sonic Foundry's Q2 2022 earnings results for SOFO?
How has Sonic Foundry's revenue changed year-to-date in 2022?