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Crexendo Inc.
Crexendo Inc.
11/05/2012 | Press release
Crexendo Reports Third Quarter 2012 Financial Results
distributed by noodls on 11/05/2012 18:35
PHOENIX, AZ -- (Marketwire) -- Nov 05, 2012 -- Crexendo, Inc.
(NYSE MKT: ), a hosted services company that provides
e-commerce software, website development, web hosting, search
engine optimization, link building, hosted telecommunication
services and broadband internet for businesses and
entrepreneurs, today reported financial results for its third
quarter ended September 30, 2012. Net loss for the third
quarter of 2012 was $806,000 or $0.08 per diluted common share,
compared to net income of $4,507,000 or $0.42 per diluted
common share in the prior year quarter. Loss before income tax
provision for the third quarter of 2012 was $796,000 compared
to income of $4,546,000 in the prior year quarter. The income
tax provision for the third quarter of 2012 was $10,000,
compared to an income tax provision of $39,000 in the prior
year quarter. Cash provided from operations for the nine month
period ended September 30, 2012 was $248,000 compared to cash
used for operations of $3,089,000 for the prior year quarter.
As of September 30, 2012, cash, cash equivalents, and
restricted cash were $9,604,000 working capital was $8,707,000,
and working capital excluding deferred revenue was $12,941,000.
Total current and long-term trade receivables were $5,046,000
as of September 30, 2012. Revenue for the third quarter of 2012
decreased 68% to $3,055,000 compared to $9,542,000 for the
prior year quarter. Total segment operating expenses decreased
72% to $791,000 compared to $2,850,000 for the prior year
quarter. Segment other income, primarily related to interest on
the collection of accounts receivable for the third quarter of
2012 decreased 67% to $406,000 compared to $1,241,000 in the
prior year quarter. Total segment income before income taxes
for the third quarter of 2012 decreased 66% to $2,670,000
compared to $7,933,000 in the prior year quarter. Revenue for
the third quarter of 2012 decreased 11% to $575,000, from
$648,000 in the prior year quarter. Web Services backlog, which
is anticipated to be recognized within the next twelve months,
was $904,000 at September 30, 2012 compared to a backlog of
$1,135,000 at September 30, 2011. Total segment operating
expenses for the third quarter of 2012 increased 19% to
$1,406,000 compared to $1,185,000 in the prior year quarter.
The increase in segment operating expenses is primarily due to
higher expenses associated with the increase in our sales
representatives. Total segment operating loss increased 55% to
$831,000 compared to $537,000 in the prior year quarter.
Revenue for the third quarter of 2012 increased 352% to
$235,000 from $52,000 in the prior year quarter. Network
Services backlog, which is anticipated to be recognized within
the next thirty-six months, was $2,221,000 at September 30,
2012 compared to no backlog at September 30, 2011. Total
Network Services operating expenses for the third quarter of
2012 increased 44% to $827,000 compared to $573,000 in the
prior year quarter. The increase in segment operating expenses
is primarily related to increased customer support and sales
representative's salaries and benefits and bandwidth costs
as revenue in our Network Services segment continues to
increase each quarter. Total segment operating loss increased
14% to $592,000 compared to $521,000 in the prior year quarter.
Steven G. Mihaylo, Chief Executive Officer, commented,
"While we are disappointed with the results, I believe we
are still on track to achieve profitability by the end of 2013.
I had expected sales to ramp up faster than they have, but for
the most part we are operating as anticipated. I am
particularly pleased with the fact that we have grown our
Network Services backlog to $2M and I fully expect that number
will continue to multiply. As we discussed previously, we are
essentially in a startup mode and we are operating the Company
on that premise. We have the benefit of having an excellent
infrastructure including our web building software, which we
are utilizing in our University Program. Our telecom products
are world class, and we are working to improve our sales
processes and infrastructure to increase productivity of our
direct sales representatives. We are starting to sign up
dealers in our dealer programs and I have high expectations of
sales and recurring revenue being derived from that channel. We
believe that the dealer program will work as a supplement to
our direct sales channel. I am working with our sales
management team to continue to improve our training and lead
generation. The University Program continues to gain acceptance
and we now have three universities teaching on our web builder,
with five classes. We expect to have 30 schools and 60 classes
on line by the end of 2013 and we also believe there are big
opportunities with junior colleges, community colleges,
vocational schools, trade schools and high schools, which we
will start to address. I have very high expectations of our
University Program increasing our brand recognition, leads and
cross sell opportunities." Mihaylo added, "I am very
excited by what we are working on. We work on improving our
products and services every day. We need to make a few changes
to our mobile apps, but when we have that completed, I have
expectations that we should be amongst the lowest cost
providers in the market with excellent products and services.
Our Engineering team continues to add enhancements to our
mobile offering and we will enhance our marketing of the
product in the summer. We believe this will be a substantial
value to our customers and build additional sales. We continue
to have very positive feedback from our telecom and web
customers and I am convinced that our products and services
will be what drive sales, profits and shareholder value. We are
watching our expenses very carefully and running a lean and
aggressive Company. Our team and I are fully aware of our need
to increase shareholder value." The Company is hosting a
conference call tomorrow, November 6, 2012 at 8:30 AM EST. The
conference call will be broadcast live over the Internet at .
If you do not have Internet access, the telephone dial-in
number is 888-427-9419 for domestic participants and
719-325-2323 for international participants. The conference ID
to join the call is 3994287. Please dial in five to ten minutes
prior to the beginning of the call at 8:30 AM EST. Crexendo is
a hosted services company that provides e-commerce software,
website development, web hosting, search engine optimization,
link building, hosted telecommunication services, and broadband
Internet for businesses and entrepreneurs. Crexendo's
services are designed to make enterprise-class hosting services
available to small and medium-sized businesses without any
capital expense, at affordable monthly rates. This press
release contains forward-looking statements. The Private
Securities Litigation Reform Act of 1995 provides a "safe
harbor" for such forward-looking statements. The words
"believe," "expect,"
"anticipate," "estimate," "will"
and other similar statements of expectation identify
forward-looking statements. Specific forward-looking statements
in this press release include information about Crexendo (i)
continuing to be on track to achieve profitability by the end
of 2013; (ii) for the most part operating as anticipated; (iii)
Network Services backlog continuing to multiply; (iv) being
essentially in startup mode and operating the Company on that
premise; (v) having the benefit of an excellent infrastructure;
(vi) telecom product being world class; (vii) working to
improve its sales process and infrastructure; (viii) having
high expectations of sales and recurring revenue being derived
from the Dealer channel; (ix) working to continue to improve
training and lead generation; (x) University Program continuing
to gain acceptance; (xi) having a big opportunity with
vocational schools in the University Program as well as having
that program increase name recognition and cross sell
opportunities; (xii) improving our products and services every
day; (xii) mobile apps allowing it to be amongst the lowest
cost providers in the market (xiv) enhancing our marketing of
the product in the summer;(xv) products and services will be
what drive sales profits and shareholder value, and (xvi)
watching its expenses very carefully and running a lean and
aggressive Company with the management team working to increase
shareholder value. For a more detailed discussion of risk
factors that may affect Crexendo's operations and results,
please refer to the company's Form 10-K for the period
ended December 31, 2011 and Forms 10Q for the periods ending
March 31, 2012 and June 30, 2012. These forward-looking
statements speak only as of the date on which such statements
are made, and the company undertakes no obligation to update
such forward-looking statements, except as required by law.
CREXENDO, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands, except par value and share data)
(unaudited)
September 30, December 31,
2012 2011
------------- -------------
Assets
Current Assets:
Cash and cash equivalents $ 7,639 $ 8,658
Restricted cash 1,965 1,965
Trade receivables, net of allowance of
doubtful accounts of $1,993 as of September
30, 2012 and $3,512 as of December 31, 2011 4,326 9,420
Inventories 185 232
Equipment financing receivables 11 -
Income taxes receivable 339 552
Prepaid expenses and other 821 725
------------- -------------
Total Current Assets 15,286 21,552
Certificate of deposit 500 500
Long-term trade receivables, net of allowance
of doubtful accounts of $349 as of September
30, 2012 and $1,949 as of December 31, 2011 720 6,097
Long-term equipment financing receivables 48 -
Property and equipment, net 3,568 4,055
Deferred income tax assets, net 272 279
Intangible assets 24 79
Goodwill 265 265
Other long-term assets 188 233
------------- -------------
Total Assets $ 20,871 $ 33,060
============= =============
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ 638 $ 1,153
Accrued expenses and other 1,435 2,240
Dividend payable - 211
Deferred income tax liability 272 279
Deferred revenue, current portion 4,234 9,288
------------- -------------
Total Current Liabilities 6,579 13,171
Deferred revenue, net of current portion 728 6,123
Other long-term liabilities 252 419
------------- -------------
Total Liabilities 7,559 19,713
------------- -------------
Stockholders' Equity:
Preferred stock, par value $0.001 per share
- authorized 5,000,000 shares; none issued - -
Common stock, par value $0.001 per share -
authorized 100,000,000 shares; 10,669,201
shares outstanding as of September 30, 2012
and 10,523,078 shares outstanding as of
December 31, 2011 11 11
Additional paid-in capital 49,629 48,938
Accumulated deficit (36,328) (35,602)
------------- -------------
Total Stockholders' Equity 13,312 13,347
------------- -------------
Total Liabilities and Stockholders' Equity $ 20,871 $ 33,060
============= =============
CREXENDO, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(In thousands, except per share and share data)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------ ------------------------
2012 2011 2012 2011
----------- ----------- ----------- -----------
Revenue $ 3,865 $ 10,242 $ 14,034 $ 42,306
Operating expenses:
Cost of revenue 1,233 2,057 3,952 16,037
Selling and marketing 987 806 2,904 19,645
General and
administrative 2,440 3,276 8,214 9,368
Research and
development 420 807 1,519 2,550
----------- ----------- ----------- -----------
Total operating
expenses 5,080 6,946 16,589 47,600
----------- ----------- ----------- -----------
Income (loss) from
operations (1,215) 3,296 (2,555) (5,294)
----------- ----------- ----------- -----------
Other income (expense):
Interest income 383 1,306 1,649 3,775
Interest expense - - - (2)
Other income
(expense), net 36 (56) 50 (89)
----------- ----------- ----------- -----------
Total other income,
net 419 1,250 1,699 3,684
----------- ----------- ----------- -----------
Income (loss) before
income tax provision (796) 4,546 (856) (1,610)
Income tax benefit
(provision) (10) (39) 130 (5,079)
----------- ----------- ----------- -----------
Net income (loss) $ (806) $ 4,507 $ (726) $ (6,689)
=========== =========== =========== ===========
Net income (loss) per
common share:
Basic $ (0.08) $ 0.43 $ (0.07) $ (0.63)
Diluted $ (0.08) $ 0.42 $ (0.07) $ (0.63)
Dividends per common
share: $ 0.02 $ 0.02 $ 0.04 $ 0.06
Weighted average common
shares outstanding:
Basic 10,666,816 10,589,132 10,610,813 10,623,341
Diluted 10,666,816 10,618,254 10,610,813 10,623,341
CREXENDO, INC. AND SUBSIDIARIES
Condensed Consolidated Statement of Stockholders' Equity
Nine Months Ended September 30, 2012
(In thousands, except share data)
(unaudited)
Common Stock Additional Total
------------------- Paid-in Accumulated Stockholders'
Shares Amount Capital Deficit Equity
---------- --------- ----------- ----------- -------------
Balance,
January 1,
2012 10,523,078 $ 11 $ 48,938 $ (35,602) $ 13,347
Expense for
stock
options
granted to
employees - - 617 - 617
Proceeds
from the
exercise of
stock
options 146,123 - 498 - 498
Dividends
declared - - (424) - (424)
Net loss - - - (726) (726)
---------- --------- ----------- ----------- -------------
Balance,
September 30,
2012 10,669,201 $ 11 $ 49,629 $ (36,328) $ 13,312
========== ========= =========== =========== =============
CREXENDO, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
(unaudited)
Nine Months Ended
September 30,
------------------------
2012 2011
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (726) $ (6,689)
Adjustments to reconcile net loss to net cash
provided by (used for) operating activities:
Depreciation and amortization 1,042 1,000
Impairment of inventory and intangible assets - 1,169
Loss on subsidiary - 56
Expense for stock options issued to employees 617 686
Deferred income tax provision - 5,973
Change in uncertain tax positions (165) -
Changes in assets and liabilities:
Trade receivables 10,471 2,216
Equipment financing receivables (59) -
Inventories 47 419
Income taxes receivable 213 583
Prepaid expenses and other (96) 557
Other long-term assets 45 (15)
Accounts payable, accrued expenses and other (696) (4,171)
Deferred revenue (10,449) (3,942)
Other long-term liabilities 4 (931)
----------- -----------
Net cash provided by (used for) operating
activities 248 (3,089)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and equipment (1,124) (764)
Investment in subsidiary - (56)
----------- -----------
Net cash used for investing activities (1,124) (820)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from exercise of stock options 498 68
Repurchase of common stock - (682)
Payments made on contingent consideration (6) (36)
Dividend payments (635) (640)
----------- -----------
Net cash used for financing activities (143) (1,290)
----------- -----------
NET DECREASE IN CASH AND CASH EQUIVALENTS (1,019) (5,199)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 8,658 14,207
----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 7,639 $ 9,008
=========== ===========
Supplemental disclosure of cash flow information:
Cash received during the period:
Income taxes $ 178 $ 530
Supplemental disclosure of non-cash investing and
financing information:
Dividends declared - 211
Purchase of property and equipment included in
accounts payable 31 313
Contact: Crexendo, Inc. Steven G. Mihaylo CEO 775-530-3955 Stevemihaylo@crexendo.com
