Exhibit 99.1
Sonic Foundry Announces First Quarter 2022 Financial Results
MADISON, Wis. – February 10, 2022 - Sonic Foundry, Inc. (NASDAQ: SOFO), the trusted leader in video creation and management solutions, and virtual and hybrid events, today announced consolidated financial results for its first quarter 2022 ended December 31, 2021.
Highlights for the First Quarter Ended December 31, 2021
| • | Total revenue was $7.3 million compared to $9.2 million in the prior year quarter due to reduced event revenue associated with in-person events being cancelled or delayed as a result of COVID. | |
| • | Gross margin was 71% of sales versus 74% of sales in the prior year quarter, reflecting hardware cost increases from global supply chain pressure. | |
| • | Net loss attributable to common stockholders was $0.17 per share compared to net income of $0.08 per diluted share in the first fiscal quarter of 2021, reflecting new investments made in product development and marketing to address new markets. | |
| • | Adjusted EBITDA was a negative $1.1 million compared to $1.3 million in the first fiscal quarter of 2021. | |
| • | On January 25, 2022, SOFO began trading on the Nasdaq Capital Market. |
Management Commentary
“As I indicated last quarter, we expect that fiscal 2022 revenues will be relatively flat with momentum building throughout the year and beyond. While our first quarter performance was down year-over-year, it was in line with fluctuations in the events industry and economic distruption caused by the lingering pandemic. It’s not surprising that the omicron variant caused renewed confusion and delays in the marketplace, just when event organizers began to schedule more in-person and hybrid gatherings. The same also applies to corporate workplaces where management teams are still working to determine whether and how to bring their employees back to the office safely and productively. While we can assume these situations will eventually be resolved, the current uncertainty leads to disruption in our base video business,” said Joe Mozden, Jr., Chief Executive Officer of Sonic Foundry.
“While we always aim at steadily improving results, we recognize growth constraints in our existing business and therefore are far more focused on building our runway for future growth. As I shared in my year-end commentary, we are very energized by our new initiatives that will address tomorrow’s needs and generate future growth. First, we are expanding our cloud capabilities to better support our customers’ video-first journey. This is an important step in moving Sonic Foundry from primarily a hardware provider to a SaaS service provider with recurring revenue streams. Second, next-gen Sonic Foundry is materializing before our eyes. We are building the world’s most complete library of AI -enabled video solutions that can deliver instant, comprehensive, and automated video enhancement at scale. We call this: better video every time, in no time, and we are confident the market for this technology provides our Company with an ability to generate impressive growth.
“The third key component of our growth strategy has the potential to democratize global higher education. U.S. and U.K. universities are being increasingly challenged with lower enrollment and are looking for ways to expand into new growth markets. In close collaboration with several university clients, we identified a global supply-demand imbalance. There are many students worldwide that can afford a higher education yet do not have access to it for a variety of reasons—geo/political instability; international travel restrictions; and inadequate infrastructure. Our innovative solution will allow students to have an in-person experience in locally supported, affordable, community-centric environments that offer aggregated educational content through our Mediasite platform. Think of it this way—master classes taught by top professors that encourage students to engage with one another in a collaborative and supported setting. Our team is thrilled to be part of a solution that bridges the educational gap and offers education opportunities in economically disadvantaged regions.”
“This quarter is the beginning of our transformation from focusing solely on our existing business to investing substantially, not only in our current space, but in adjacent markets where we have the right to win. I promised to keep you updated on our progress regarding these top-priority initiatives and am pleased to share that we have deals with key enterprise clients who are excited to bring these new ventures to market with us. The other piece of news is that we achieved our goal of uplisting to the Nasdaq Capital Market, which I believe will improve our visibility to new investors and our trading liquidity. Our team has accomplished a lot in a short period of time, yet we’re just getting started.”
Fiscal First Quarter 2022 Operating Results
Service revenue, which included support, cloud services, events, and professional services was $5.2 million for fiscal quarter ended December 31, 2021, compared to prior year quarter service revenue of $7.0 million. Product revenue was $2.0 million compared to $2.2 million during the same period last year. Cloud services revenue, including event related cloud services, decreased 23% to $1.8 million in the first quarter of 2022 compared to $2.4 million in the same quarter last year. Event revenue in the first quarter of 2022 was $1.4 million, compared with $1.9 reported in the comparable year-ago quarter. Gross margin was $5.1 million for the first quarter of fiscal 2022, compared with $6.8 million in the same period of the prior fiscal year.
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 SEC definition of EBITDA. As such, our adjusted EBITDA may not be comparable to similarly titled measures reported by other companies and should not be viewed as an alternative to net income as a measurement of our operating performance. A reconciliation of net income to adjusted EBITDA for the first quarter ended December 31, 2022, and 2021 are included in the release.
About Sonic Foundry®, Inc.
Sonic Foundry (NASDAQ:SOFO) is the global leader for video capture, management, and streaming solutions as well as virtual and hybrid events. Trusted by more than 5,200 educational institutions, corporations, health organizations and government entities in over 65 countries, its Mediasite Video Platform quickly and cost-effectively automates the capture, management, delivery, and search of live and on-demand streaming videos. Learn more at www.sonicfoundry.com.
© 2022 Sonic Foundry, Inc. Product and service names mentioned herein are the trademarks of Sonic Foundry, Inc. or their respective owners.
Forward Looking Statements
This news release contains forward-looking statements about the products and services of Sonic Foundry within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements include statements about our products and services, our customer base, strategic investments, new partnerships, our future operating results and any statements we make about the company’s future. These types of statements address matters that are subject to many risks and uncertainties. Actual results could differ materially from the forward-looking guidance we provide. Any forward-looking statements should be considered in context of the risk factors disclosed in our periodic forms 10Q, 10K and other filings with the SEC. These filings can be accessed on-line at www.sec.gov and other websites or can be obtained from the company’s investor relations department. All of the information and disclosures we make in this news release regarding our business, including any forward-looking guidance, are as of the date given and we assume no obligation to update or change this information, regardless of subsequent events.
Contacts
Media:
Maggie Habib, mPR, Inc.
maggie@mpublicrelations.com
310-916-6934
Investors:
Margaret Boyce, Financial Profiles
mboyce@finprofiles.com
310-622-8247
Sonic Foundry, Inc.
Consolidated Balance Sheets
(in thousands, except for share data)
(Unaudited)
| December 31, | September 30, | |||||||
|
2021 |
2021 |
|||||||
|
Assets |
||||||||
|
Current assets: |
||||||||
|
Cash and cash equivalents |
$ | 6,521 | $ | 9,989 | ||||
|
Accounts receivable, net of allowances of $198 and $236 |
5,303 | 5,167 | ||||||
|
Inventories, net |
717 | 442 | ||||||
|
Investment in sales-type lease, current |
267 | 294 | ||||||
|
Capitalized commissions, current |
341 | 360 | ||||||
|
Prepaid expenses and other current assets |
1,168 | 1,153 | ||||||
|
Total current assets |
14,317 | 17,405 | ||||||
|
Property and equipment: |
||||||||
|
Leasehold improvements |
1,085 | 1,111 | ||||||
|
Computer equipment |
8,840 | 8,527 | ||||||
|
Furniture and fixtures |
1,547 | 1,528 | ||||||
|
Total property and equipment |
11,472 | 11,166 | ||||||
|
Less accumulated depreciation and amortization |
8,374 | 8,368 | ||||||
|
Property and equipment, net |
3,098 | 2,798 | ||||||
|
Other assets: |
||||||||
|
Investment in sales-type lease, long-term |
436 | 490 | ||||||
|
Capitalized commissions, long-term |
75 | 76 | ||||||
|
Right-of-use assets under operating leases |
2,786 | 2,441 | ||||||
|
Other long-term assets |
1,130 | 805 | ||||||
|
Total assets |
$ | 21,842 | $ | 24,015 | ||||
|
Liabilities and stockholders’ equity |
||||||||
|
Current liabilities: |
||||||||
|
Accounts payable |
1,444 | 1,072 | ||||||
|
Accrued liabilities |
2,020 | 2,522 | ||||||
|
Current portion of unearned revenue |
8,352 | 9,413 | ||||||
|
Current portion of finance lease obligations |
60 | 79 | ||||||
|
Current portion of operating lease obligations |
1,128 | 930 | ||||||
|
Total current liabilities |
13,004 | 14,016 | ||||||
|
Long-term portion of unearned revenue |
1,495 | 1,614 | ||||||
|
Long-term portion of finance lease obligations |
22 | 26 | ||||||
|
Long-term portion of operating lease obligations |
1,759 | 1,583 | ||||||
|
Long-term portion of notes payable and warrant debt |
554 | 556 | ||||||
|
Derivative liability, at fair value |
26 | 53 | ||||||
|
Other liabilities |
118 | 27 | ||||||
|
Total liabilities |
16,978 | 17,875 | ||||||
|
Commitments and contingencies |
||||||||
|
Stockholders’ equity: |
||||||||
|
Preferred stock, $.01 par value, authorized 500,000 shares; none issued |
— | — | ||||||
|
9% Preferred stock, Series A, voting, cumulative, convertible, $.01 par value (liquidation preference of $1,000 per share), authorized 4,500 shares; zero shares issued and outstanding, at amounts paid in |
— | — | ||||||
|
5% Preferred stock, Series B, voting, cumulative, convertible, $.01 par value (liquidation preference at par), authorized 1,000,000 shares, none issued |
— | — | ||||||
|
Common stock, $.01 par value, authorized 15,000,000 shares; 9,108,071 and 9,064,821 shares issued and 9,095,355 and 9,052,105 shares outstanding |
91 | 91 | ||||||
|
Additional paid-in capital |
213,557 | 213,278 | ||||||
|
Accumulated deficit |
(207,970 | ) | (206,442 | ) | ||||
|
Accumulated other comprehensive loss |
(645 | ) | (618 | ) | ||||
|
Treasury stock, at cost, 12,716 shares |
(169 | ) | (169 | ) | ||||
|
Total stockholders’ equity |
4,864 | 6,140 | ||||||
|
Total liabilities and stockholders’ equity |
$ | 21,842 | $ | 24,015 | ||||
Sonic Foundry, Inc.
Consolidated Statements of Operations
(in thousands, except for share and per share data)
(Unaudited)
|
Three Months Ended December 31, |
||||||||
|
2021 |
2020 |
|||||||
|
Revenue: |
||||||||
|
Product and other |
$ | 2,009 | $ | 2,161 | ||||
|
Services |
5,244 | 7,004 | ||||||
|
Total revenue |
7,253 | 9,165 | ||||||
|
Cost of revenue: |
||||||||
|
Product and other |
861 | 813 | ||||||
|
Services |
1,244 | 1,598 | ||||||
|
Total cost of revenue |
2,105 | 2,411 | ||||||
|
Gross margin |
5,148 | 6,754 | ||||||
|
Operating expenses: |
||||||||
|
Selling and marketing |
3,091 | 3,010 | ||||||
|
General and administrative |
1,798 | 1,198 | ||||||
|
Product development |
1,774 | 1,741 | ||||||
|
Total operating expenses |
6,663 | 5,949 | ||||||
|
Income (Loss) from operations |
(1,515 | ) | 805 | |||||
|
Non-operating income (expenses): |
||||||||
|
Interest income (expense), net |
5 | (29 | ) | |||||
|
Other income (expense), net |
(19 | ) | 11 | |||||
|
Total non-operating expense |
(14 | ) | (18 | ) | ||||
|
Income (Loss) before income taxes |
(1,529 | ) | 787 | |||||
|
Income tax benefit (expense) |
1 | (155 | ) | |||||
|
Net income (loss) |
$ | (1,528 | ) | $ | 632 | |||
|
Dividends on preferred stock |
— | — | ||||||
|
Net income (loss) attributable to common stockholders |
$ | (1,528 | ) | $ | 632 | |||
|
Income (Loss) per common share: |
||||||||
|
Basic net income (loss) per common share |
$ | (0.17 | ) | $ | 0.08 | |||
|
Diluted net income (loss) per common share |
$ | (0.17 | ) | $ | 0.08 | |||
|
Weighted average common shares – Basic |
9,077,492 | 7,963,775 | ||||||
|
– Diluted |
9,077,492 | 8,336,028 | ||||||
Sonic Foundry, Inc.
Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
|
Three Months Ended |
||||||||
|
December 31, |
||||||||
|
2021 |
2020 |
|||||||
|
Operating activities |
||||||||
|
Net Income (Loss) |
$ | (1,528 | ) | $ | 632 | |||
|
Adjustments to reconcile net income (loss) to net cash used in operating activities: |
||||||||
|
Amortization of warrant debt, debt discount and debt issuance costs |
8 | 19 | ||||||
|
Depreciation and amortization of property and equipment |
252 | 268 | ||||||
|
Loss on sale of fixed assets |
167 | — | ||||||
|
Provision for doubtful accounts |
(63 | ) | 22 | |||||
|
Stock-based compensation expense related to stock options |
221 | 119 | ||||||
|
Remeasurement (gain) loss on derivative liability |
(27 | ) | 5 | |||||
|
Changes in operating assets and liabilities: |
||||||||
|
Accounts receivable |
(171 | ) | 1,079 | |||||
|
Inventories |
(279 | ) | (42 | ) | ||||
|
Investment in sales-type lease |
60 | 63 | ||||||
|
Capitalized commissions |
20 | 95 | ||||||
|
Prepaid expenses and other current assets |
(34 | ) | 45 | |||||
|
Right-of-use assets under operating leases |
(371 | ) | 285 | |||||
|
Operating lease obligations |
404 | (295 | ) | |||||
|
Other long-term assets |
(21 | ) | (91 | ) | ||||
|
Accounts payable and accrued liabilities |
(177 | ) | (2,053 | ) | ||||
|
Other long-term liabilities |
95 | 12 | ||||||
|
Unearned revenue |
(1,122 | ) | (1,431 | ) | ||||
|
Net cash used in operating activities |
(2,566 | ) | (1,268 | ) | ||||
|
Investing activities |
||||||||
|
Purchases of property and equipment |
(616 | ) | (287 | ) | ||||
|
Capitalization of software development costs |
(328 | ) | — | |||||
|
Net cash used in investing activities |
(944 | ) | (287 | ) | ||||
|
Financing activities |
||||||||
|
Payments on notes payable |
— | (368 | ) | |||||
|
Proceeds from exercise of common stock options |
58 | 142 | ||||||
|
Payments on capital lease and financing arrangements |
(23 | ) | (41 | ) | ||||
|
Net cash provided by (used in) financing activities |
35 | (267 | ) | |||||
|
Changes in cash and cash equivalents due to changes in foreign currency |
7 | 48 | ||||||
|
Net decrease in cash and cash equivalents |
(3,468 | ) | (1,774 | ) | ||||
|
Cash and cash equivalents at beginning of year |
9,989 | 7,619 | ||||||
|
Cash and cash equivalents at end of year |
$ | 6,521 | $ | 5,845 | ||||
|
Supplemental cash flow information: |
||||||||
|
Interest paid |
$ | 2 | $ | 20 | ||||
|
Income taxes paid, foreign |
28 | 44 | ||||||
|
Non-cash financing and investing activities: |
||||||||
|
Property and equipment financed by finance lease or accounts payable |
253 | — | ||||||
Sonic Foundry, Inc.
Consolidated Non-GAAP Adjusted EBITDA Reconciliation
(in thousands)
|
Three Months Ended December 31, |
||||||||
|
2021 |
2020 |
|||||||
|
Net income (loss) |
$ | (1,528 | ) | $ | 632 | |||
|
Add: |
||||||||
|
Depreciation and amortization |
252 | 268 | ||||||
|
Income tax expense (benefit) |
(1 | ) | 155 | |||||
|
Interest expense (income) |
(5 | ) | 29 | |||||
|
Stock-based compensation expense |
221 | 119 | ||||||
|
Severance |
- | 101 | ||||||
|
Adjusted EBITDA |
$ | (1,061 | ) | $ | 1,304 | |||