Crexendo Reports Second Quarter 2012 Financial Results
FOR: CREXENDO, INC.
AUG 9, 2012 - 17:03 ET
PHOENIX, AZ--(Marketwire - August 9, 2012) - Crexendo, Inc. (
Second Quarter 2012 Compared to 2011
Net loss for the second quarter of 2012 was $117,000 or $0.01 per diluted common share, compared to a net loss of $9,345,000 or $0.88 per diluted common share in the prior year quarter. Loss before income tax provision for the second quarter of 2012 was $104,000 compared to a loss of $3,183,000 in the prior year quarter. The income tax provision for the second quarter of 2012 was $13,000, compared to an income tax provision of $6,162,000 in the prior year quarter.
Cash provided from operations for the second quarter of 2012 was $87,000 compared to cash provided by operations of $538,000 for the prior year quarter. As of June 30, 2012, cash, cash equivalents, and restricted cash were $10,408,000 working capital was $9,405,000, and working capital excluding deferred revenue was $17,179,000. Total current and long-term trade receivables were $9,360,000 as of June 30, 2012.
Revenue for the second quarter of 2012 decreased 76% to $4,054,000 compared to $16,928,000 for the prior year quarter. Total segment operating expenses decreased 95% to $944,000 compared to $18,103,000 for the prior year quarter.
Segment other income, primarily related to interest on the collection of accounts receivable decreased 61% to $504,000 during the second quarter of 2012 from $1,276,000 in the prior year quarter.
Total segment income before income taxes increased 3,478% to $3,614,000 in the second quarter of 2012 from $101,000 in the prior year quarter.
Crexendo Web Services
Revenue for the second quarter of 2012 increased 26% to $692,000, from $550,000 in the prior year quarter. Web Services backlog, which is anticipated to be recognized within the next twelve months, was $1,007,000 at June 30, 2012 compared to a backlog of $1,196,000 at June 30, 2011. The decrease in our backlog is the result of increased fulfillment efforts during the quarter which generated the $142,000 increase in revenue over the prior year quarter.
Total segment operating expenses increased 18% to $1,358,000 during the current quarter compared to $1,149,000 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 11% to $666,000 in the second quarter of 2012 compared to $599,000 in the prior year quarter.
Crexendo Network Services
Revenue for the second quarter of 2012 increased to $168,000 from $18,000 in the prior year quarter. Total Network Services operating expenses were $851,000 for the second quarter of 2012 compared to $507,000 in the prior year quarter. Network Services backlog, which is anticipated to be recognized within the next thirty-six months, was $1,292,000 at June 30, 2012 compared to no backlog at June 30, 2011.
Steven G. Mihaylo, Chief Executive Officer of Crexendo, stated, "Our business continues to be effected by improvements to our sales channel. I am pleased with the advances we made this quarter. We are starting to see improvements in our sales process and sales efforts specifically in our network services division. Our hosted telecommunications offering continues to show growth, with a 124% increase in revenue in the second quarter compared to the first quarter of 2012. Although we have not made as many hires as I would like, we are starting to see progress in our hiring process. We have seen improved success with our recent new hires and believe we will have improved retention rates going forward. As of today we have 29 direct sales representatives selling both our web services and our hosted telecommunications offerings, which is an increase of 5 from the prior quarter. We are building sales momentum and expect continued improvements.
"I continue to be impressed with how our products and services continue to improve and develop. We are continuing to improve our lead generation process. We rolled out our University Program curriculum, and it has been excitedly embraced in our first classroom setting. We expect to have our University Program offerings in four universities by year end. We anticipate that by the end of 2013 to have the program offered at a far greater number of universities. We believe the University Program will provide increased lead flow, improved market acceptance and brand recognition of our products. On other fronts we continue to reduce costs and improve efficiencies. I am absolutely convinced we are focused on the right market segment and know our products and services are competitive in the marketplace. Our primary job and focus is to grow and develop the efficiencies of our sales teams, and I am confident with the changes we have made that we will be able to attract and retain quality sales representatives to sell our products. We are guided by the core principle of providing the best products and services to our customers and increase shareholder value."
Doug Gaylor, COO and President, stated, "I am very proud of the commitment and caliber of our employees. The team is working together toward a common goal of providing world-class products and services. Some of the changes we have made to our sales process are beginning to take hold. I am impressed with the quality of our recent hires, and I am also very pleased with the changes we have made to our training program which I believe increases the likelihood of our sales representatives being successful. Our lead generation process is also getting better; we have made improvements to our process and recently hired a director to manage lead generation. We will be concentrating our lead process efforts on a number of sources including trade shows, speaking engagements, associations and organizations, webinars, drip campaigns and the University Program. I am very excited about our progress and our future."
The Company is hosting a conference call today, August 9, 2012 at 4:30 PM EST. The conference call will be broadcast live over the Internet at http://www.crexendo.com. If you do not have Internet access, the telephone dial-in number is 888-500-6974 for domestic participants and 719-457-2658 for international participants. The conference ID to join the call is 4290549. Please dial in five to ten minutes prior to the beginning of the call at 4:30 PM EST.
Crexendo is a hosted services company that provides e-commerce software, website development, web hosting, search engine optimization, link building, cloud based 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 at affordable monthly rates.
Safe Harbor Statement
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) business being effected by economic conditions and improvements to the sales channel; (ii) being pleased with the advances made this quarter; (iii) seeing improvements in the sales process and sales efforts; (iii) seeing progress in hiring process as well as improved success with recent new hires resulting in improved retention rates going forward; (iv) building sales momentum and expect continued improvements; being impressed with how its products and services continue to improve and develop; (v) continuing to improve lead generation process; (vi) rolling out the University Program curriculum with it being excitedly embraced in the first classroom setting; (vii) rolling out the University Program offerings in four universities by year end and that by the end of 2013 to have the program rolled out offered at a far greater number of universities; (viii) believing the University Program will increase lead flow, improve market acceptance and brand recognition of products; (ix) continuing to reduce costs and improve efficiencies; (x) being focused on the right market segment and knowing its products and services are competitive in the marketplace; (xi) primary job and focus is to grow and develop the efficiencies of our sales teams; (xii) being confident that the Company will be able to attract and retain quality sales representatives to sell products; (xiii) being guided by the core principal of providing the best products and services to customers and increase shareholder value; (xiv) being very proud of the commitment and caliber of our employees; (xv) team working together toward a common goal of providing world class products and services; (xv) having some of the changes made to sales process beginning to take hold; (xvi) being impressed with the quality of our recent hires and with the changes we have made to its training program; (xvii) changes increasing the likelihood of our sales representatives being successful; (xvii) lead generation process getting better with improvements to process; and (xviii) concentrating lead process efforts on a number of sources including trade shows, speaking engagements, associations and organizations, webinars, drip campaigns and the University Program.
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)|
|June 30 2012||December 31, 2011|
|Cash and cash equivalents||$||8,443||$||8,658|
|Trade receivables, net of allowance of doubtful accounts of $852 as of June 30, 2012 and $3,512 as of December 31, 2011||
|Equipment financing receivables||9||-|
|Income taxes receivable||514||552|
|Prepaid expenses and other||762||725|
|Total Current Assets||19,632||21,552|
|Certificate of deposit||500||500|
|Long-term trade receivables, net of allowance of doubtful accounts of $185 as of June 30, 2012 and $1,949 as of December 31, 2011||
|Long term equipment financing receivables||16||-|
|Property and equipment, net||3,718||4,055|
|Deferred income tax assets, net||272||279|
|Other long-term assets||213||233|
|Liabilities and Stockholders' Equity|
|Accrued expenses and other||1,718||2,240|
|Deferred income tax liability||272||279|
|Deferred revenue, current portion||7,774||9,288|
|Total Current Liabilities||10,227||13,171|
|Deferred revenue, net of current portion||1,637||6,123|
|Other long-term liabilities||250||419|
|Preferred stock, par value $0.001 per share - authorized 5,000,000 shares; none issued||-||-|
|Common stock, par value $0.001 per share - authorized 100,000,000 shares; 10,669,201 shares outstanding as of June 30, 2012 and 10,523,078 shares outstanding as of December 31, 2011||
|Additional paid-in capital||49,680||48,938|
|Total Stockholders' Equity||14,169||13,347|
|Total Liabilities and Stockholders' Equity||$||26,283||$||33,060|
|CREXENDO, INC. AND SUBSIDIARIES|
|Condensed Consolidated Statements of Operations|
|(In thousands, except per share and share data)|
|Three Months Ended
|Six Months Ended
|Cost of revenue||1,298||7,675||2,719||13,980|
|Selling and marketing||984||10,076||1,917||18,839|
|General and administrative||2,741||3,333||5,774||6,092|
|Research and development||505||871||1,099||1,743|
|Total operating expenses||5,528||21,955||11,509||40,654|
|Loss from operations||(614||)||(4,459||)||(1,340||)||(8,590||)|
|Other income (expense):|
|Other income (expense), net||(14||)||(39||)||14||(33||)|
|Total other income, net||510||1,276||1,280||2,434|
|Loss before income tax provision||(104||)||(3,183||)||(60||)||(6,156||)|
|Income tax benefit (provision)||(13||)||(6,162||)||140||(5,040||)|
|Net (loss) income||$||(117||)||$||(9,345||)||$||80||$||(11,196||)|
|Net income (loss) per common share:|
|Dividends per common share:||$||0.00||$||0.02||$||0.02||$||0.04|
|Weighted average common shares outstanding:|
|CREXENDO, INC. AND SUBSIDIARIES|
|Condensed Consolidated Statement of Stockholders' Equity|
|Six Months Ended June 30, 2012|
|(In thousands, except share data)|
|Shares||Amount||Additional Paid-in Capital||Accumulated Deficit||Total Stockholders' Equity|
|Balance, December 31, 2011||10,523,078||$||11||$||48,938||$||(35,602||)||$||13,347|
|Expense for stock options granted to employees||-||-||455||-||455|
|Proceeds from the exercise of stock options||146,123||-||498||-||498|
|Balance, June 30, 2012||10,669,201||$||11||$||49,680||$||(35,522||)||$||14,169|
|CREXENDO, INC. AND SUBSIDIARIES|
|Condensed Consolidated Statements of Cash Flows|
|Six Months Ended June 30,|
|CASH FLOWS FROM OPERATING ACTIVITIES|
|Net income (loss)||$||80||$||(11,196||)|
|Adjustments to reconcile net income to net cash provided by (used for) operating activities:|
|Depreciation and amortization||759||704|
|Impariment of inventory and intangible assets||-||1,075|
|Expense for stock options issued to employees||455||362|
|Deferred income tax provision||-||5,973|
|Change in uncertain tax positions||(167||)||-|
|Changes in assets and liabilities:|
|Equipment financing receivables||(25||)||-|
|Income taxes receivable||38||570|
|Prepaid expenses and other||(37||)||411|
|Other long-term assets||20||(8||)|
|Accounts payable, accrued expenses and other||(573||)||(1,624||)|
|Other long-term liabilities||4||(931||)|
|Net cash provided by (used for) operating activities||739||(2,769||)|
|CASH FLOWS FROM INVESTING ACTIVITIES|
|Acquisition of property and equipment||(1,024||)||(348||)|
|Investment in subsidiary||-||(56||)|
|Net cash used for investing activities||(1,024||)||(404||)|
|CASH FLOWS FROM FINANCING ACTIVITIES|
|Proceeds from exercise of stock options||498||60|
|Repurchase of common stock||-||(89||)|
|Payments made on contingent consideration||(6||)||-|
|Net cash provided by (used for) financing activities||70||(456||)|
|NET DECREASE IN CASH AND CASH EQUIVALENTS||(215||)||(3,629||)|
|CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD||8,658||14,207|
|CASH AND CASH EQUIVALENTS, END OF PERIOD||$||8,443||$||10,578|
|Supplemental disclosure of cash flow information:|
|Cash paid (received) during the period:|
|Supplemental disclosure of non-cash investing and financing information:|
|Purchase of property and equipment included in accounts payable||16||395|
FOR FURTHER INFORMATION PLEASE CONTACT:
Steven G. Mihaylo