MADISON, Wis., Dec. 22, 2020 (GLOBE NEWSWIRE) -- Sonic Foundry, Inc. (OTC Pink Sheets: SOFO), the trusted leader for video creation and management solutions, as well as virtual and hybrid events, today announced consolidated financial results for its fiscal 2020 fourth quarter and fiscal year ended September 30, 2020.

Fiscal 2020 Fourth Quarter Highlights

  • Billings of $11 million in the fourth quarter of 2020, a $1.2 million increase over the same quarter last year
  • Total revenues of $10.2 million compared to $9.2 million in the fourth quarter of 2019, a 10 percent increase
  • Gross margin was $7.3 million, or 72 percent in the fourth quarter of 2020 compared to $6.5 million, or 70 percent in the fourth quarter of 2019
  • Net income attributable to common stockholders of $439,000, or $0.06 per share, compared to a net loss of $(179,000), or $(0.03) per share, in the fourth quarter of 2019, an improvement of $618,000
  • Adjusted EBITDA of $1.6 million for the fourth quarter of 2020 compared to $744,000 in the same quarter last year, a 115% improvement
  • Unearned revenue was $12.1 million as of September 30, 2020 and $11.5 million as of September 30, 2019

Fiscal 2020 Year-End Highlights

  • Billings totaled $35.4 million in fiscal 2020 compared to $35.1 million in the prior year
  • Revenue remained flat year over year at $34.8 million despite impacts from COVID-19
  • Gross margin declined slightly from 73 percent in fiscal 2019 to 72 percent in fiscal 2020
  • Net loss attributable to common stockholders of $(179,000), or $(0.02) per share compared to a net loss of $(3.7) million, or $(0.64) per share in fiscal 2019
  • Adjusted EBITDA was $2.4 million for the year compared to $(450,000) in the prior year. The company adjusts EBITDA for non-cash stock compensation expense and severance expense

Fiscal 2020 Fourth Quarter Review

Product billings were $2.9 million during the fourth quarter of 2020 compared to $3.7 million in the same quarter last year. Service billings, including support, hosting, events and installs were $8 million, compared to $6.1 million in the prior year.  Notably, billings related to hosting increased 86 percent in the fourth quarter of 2020 compared to the same quarter last year.  These increases in services are indicative of the acceleration in video content creation across the globe. The company expects to recognize $4.1 million of the current unearned revenue in the first quarter of fiscal 2021. Recurring revenue of $6.8 million was 67 percent of total revenue in the fourth quarter of 2020, compared to $5.9 million, or 64 percent of total revenue, in the fourth quarter of 2019. 

“It has been incredibly exciting for me to join Sonic Foundry at this pivotal point in its 30-year history,” said Joe Mozden Jr., CEO, Sonic Foundry. “Every organization across the world has been impacted by COVID-19 in a profound way. We have had the sincere privilege of being positioned to help our customers navigate unchartered waters – new users like Norland College in the United Kingdom and Hamid Bin Khalifa University, part of the Qatar Foundation, and longtime clients like Florida Atlantic University and Texas A&M University. Our solutions are helping them continue, if not grow their businesses, by keeping their classes, trainings, work and events going virtually, despite distance.”  

Mozden continued: “Whether it’s migrating a health organization’s in-person conference to a virtual platform to ensure they continue to exchange vital information with thousands of users, or enabling teachers to connect with their students in more thoughtful and engaging ways, we’re proud to be a lifeline to our customers in this new video-centric world.” 

“We are rapidly adapting our business to the trends that we are seeing, and are accelerating our investments and focus on high value-add markets which we believe will grow in a post COVID world. Increased demand for hosting, our virtual events platform and our video content management capabilities reflect significant opportunities for Sonic Foundry and are the basis for changes we are making in our business. I am extremely proud of our team for quickly pivoting to meet our customers’ needs during this difficult year. We are beginning a new journey with greater emphasis on product orientation coupled with our historical customer-centric focus. A great example of that is the innovations we are driving for in the new hybrid world for the classroom, the office, and the events industry,” he concluded.  

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 as well as severance expense 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 loss to adjusted EBITDA for the fourth quarter ended September 30, 2020, and 2019 are included in the release.

About Sonic Foundry®, Inc.
Sonic Foundry (OTC Pink Sheets: SOFO) is the global leader for video capture, management and streaming solutions. 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.

© 2020 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.

Contact:
Nicole Wise, Director of Communications
920.226.0269
nicolew@sonicfoundry.com



Sonic Foundry, Inc.
Consolidated Balance Sheets
(in thousands, except for share data)
(Unaudited)

  September 30, 
  2020  2019 
Assets        
Current assets:        
Cash and cash equivalents $7,619  $4,295 
Accounts receivable, net of allowances of $236 and $135  6,250   6,532 
Inventories  1,167   558 
Investment in sales-type lease, current  275   163 
Capitalized commissions, current  440   464 
Prepaid expenses and other current assets  1,065   972 
Total current assets  16,816   12,984 
Property and equipment:        
Leasehold improvements  1,128   1,121 
Computer equipment  7,960   5,610 
Furniture and fixtures  1,366   1,233 
Total property and equipment  10,454   7,964 
Less accumulated depreciation and amortization  7,295   6,396 
Property and equipment, net  3,159   1,568 
Other assets:        
Investment in sales-type lease, long-term  76   134 
Capitalized commissions, long-term  100   106 
Right-of-use assets under operating leases  2,081   — 
Other long-term assets  397   388 
Total assets $22,629  $15,180 
Liabilities and stockholders’ equity (deficit)        
Current liabilities:        
Accounts payable  2,689   843 
Accrued liabilities  2,565   2,216 
Unearned revenue  10,402   9,610 
Current portion of finance lease obligations  119   194 
Current portion of operating lease obligations  1,425   — 
Current portion of notes payable and warrant debt, net of discounts  1,104   968 
Total current liabilities  18,304   13,831 
Long-term portion of unearned revenue  1,736   1,842 
Long-term portion of finance lease obligations  89   179 
Long-term portion of operating lease obligations  665   — 
Long-term portion of notes payable and warrant debt, net of discounts  2,673   5,429 
Derivative liability, at fair value  66   9 
Other liabilities  144   143 
Total liabilities  23,677   21,433 
Commitments and contingencies        
Stockholders’ equity (deficit):        
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 10,000,000 shares; 7,965,325 and 6,749,359 shares issued and 7,952,609 and 6,736,643 shares outstanding  80   67 
Additional paid-in capital  209,022   203,735 
Accumulated deficit  (209,519)  (209,340)
Accumulated other comprehensive loss  (462)  (546)
Treasury stock, at cost, 12,716 shares  (169)  (169)
Total stockholders’ equity (deficit)  (1,048)  (6,253)
Total liabilities and stockholders’ equity (deficit) $22,629  $15,180 



Sonic Foundry, Inc.
Consolidated Statements of Operations
(in thousands, except for share and per share data)
(Unaudited)

  Quarters Ended September 30,  Years Ended September 30, 
  2020  2019  2020  2019 
Revenue:                
Product and other $2,727  $3,863  $10,339  $11,631 
Services  7,427   5,351   24,414   23,150 
Total revenue  10,154   9,214   34,753   34,781 
Cost of revenue:                
Product and other  1,243   1,534   4,430   4,387 
Services  1,638   1,219   5,204   4,893 
Total cost of revenue  2,881   2,753   9,634   9,280 
Gross margin  7,273   6,461   25,119   25,501 
Operating expenses:                
Selling and marketing  3,591   3,163   13,025   14,727 
General and administrative  1,408   1,437   5,055   5,929 
Product development  1,703   1,736   6,303   7,353 
Total operating expenses  6,702   6,336   24,383   28,009 
Income/(loss) from operations  571   125   736   (2,508)
Non-operating income (expenses):                
Interest expense, net  (37)  (240)  (658)  (897)
Other expense, net  41   (51)  (109)  (117)
Total non-operating expenses  4   (291)  (767)  (1,014)
Loss before income taxes  575   (166)  (31)  (3,522)
Income tax provision  (136)  (13)  (148)  (90)
Net loss $439  $(179) $(179) $(3,612)
Dividends on preferred stock  —   —   —   (122)
Net loss attributable to common stockholders $439  $(179) $(179) $(3,734)
Loss per common share:                
Basic net loss per common share $0.06  $(0.03) $(0.02) $(0.64)
Diluted net loss per common share $0.05  $(0.03) $(0.02) $(0.64)
Weighted average common shares – Basic  7,940,480   6,736,285   7,216,135   5,833,301 
                                                  – Diluted  8,346,877   6,736,285   7,216,135   5,833,301 



Sonic Foundry, Inc.
Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)

  Years Ended 
  September 30, 
  2020  2019 
Operating activities        
Net loss $(179) $(3,612)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:        
Amortization of other intangibles  231   307 
Depreciation and amortization of property and equipment  889   970 
Loss on sale of fixed assets  —   8 
Provision for doubtful accounts - including financing receivables  111   116 
Provision for inventory reserve  122   — 
Loss on conversion of related party debt to equity  26   — 
Stock-based compensation expense related to stock options and warrants  158   177 
Stock issued for board of director’s fees  63   246 
Deferred loan interest to related party  317   259 
Remeasurement gain on derivative liability  57   (8)
Changes in operating assets and liabilities:        
Accounts receivable  268   950 
Financing receivables  —   293 
Inventories  (729)  472 
Investment in sales-type lease  (48)  120 
Capitalized commissions  30   123 
Prepaid expenses and other current assets  (57)  15 
Right-of-use assets under operating leases  492   — 
Operating lease obligations  (528)  — 
Other long-term assets  —   — 
Accounts payable and accrued liabilities  1,503   (204)
Other long-term liabilities  (2)  (68)
Unearned revenue  617   (900)
Net cash used in operating activities  3,341   (736)
Investing activities        
Purchases of property and equipment  (1,736)  (433)
Net cash used in investing activities  (1,736)  (433)
Financing activities        
Proceeds from notes payable  3,157   5,500 
Proceeds from lines of credit  —   9,199 
Payments on notes payable  (1,358)  (833)
Payments on lines of credit  —   (10,098)
Payments of debt issuance costs  —   (110)
Payments to settle put on term debt  —   — 
Proceeds from issuance of preferred stock and common stock  73   873 
Payments on capital lease and financing arrangements  (202)  (250)
Net cash provided by financing activities  1,670   4,281 
Changes in cash and cash equivalents due to changes in foreign currency  49   (6)
Net increase (decrease) in cash and cash equivalents  3,324   3,106 
Cash and cash equivalents at beginning of year  4,295   1,189 
Cash and cash equivalents at end of year $7,619  $4,295 
Supplemental cash flow information:        
Interest paid $148  $618 
Income taxes paid, foreign  154   99 
Non-cash financing and investing activities:        
Property and equipment financed by finance lease or accounts payable  724   186 
Debt discount and warrant  —   679 
Preferred stock dividend paid in additional shares  —   122 
Conversion of preferred shares to common shares  —   1,773 
Conversion of related party debt to common shares  5,005   — 



Sonic Foundry, Inc.
Consolidated Non-GAAP Adjusted EBITDA Reconciliation
(in thousands)

  Quarters Ended September 30,  Years Ended September 30, 
  2020  2019  2020  2019 
Net income (loss) $439  $(179) $(179) $(3,612)
Add:                
Depreciation and amortization  235   228   883   977 
Income tax expense  136   13   148   90 
Interest expense  37   240   658   897 
Stock-based compensation expense  55   (25)  158   175 
Severance  705   467   705   1,023 
Adjusted EBITDA $1,607  $744  $2,373  $(450)

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