Platform and Technology Revenue Increases 1% Year over Year to 67% of Total Revenue
RALEIGH, NC / ACCESSWIRE / April 30, 2020 / Issuer Direct Corporation (NYSE American:ISDR) (the "Company"), an industry-leading communications and compliance company, today reported its operating results for the three months ended March 31, 2020.
Brian Balbirnie, CEO of Issuer Direct, commented, "Due to the COVID-19 pandemic, we ended the quarter making it a priority to protect our employees, their families and our communities. Our work from home process began in mid-March and still remains in effect and likely will continue throughout Q2. Our employees have done an outstanding job not only ensuring our current customers continue to receive excellent care but also gaining new customers, both for our platform as well as entirely new products developed to address this global emergency."
"Q1 2020 is the final quarter we are reporting a year-over-year revenue comparison against prior year revenues that include a full quarter of the discontinued press release commentary business. Removing the $335,000 of discontinued commentary business revenue from Q1 2019 our total revenue during the first quarter of 2020 grew 4% year over year and our ACCESSWIRE revenue grew 36%. We are pleased that our Q1 2020 EBITDA increased 11% and net income grew by 10% year over year."
Mr. Balbirnie concluded, "We have done a good job pivoting several areas of our business, to address customers' needs during this challenging time. Specifically, we upgraded our conference platform and refocused our annual meeting business to take advantage of new business opportunities in response to the coronavirus. Neither of these products had a robust virtual component prior to March, but our teams quickly delivered solutions that will become an important part of our business for the foreseeable future. While in-person events may not be held for many months, our newly enhanced product platforms allow investor conferences to be held virtually and annual shareholder meetings to be done in a remote, real-time, compliant manner. We believe revenue from these offerings will help offset revenue loss from other segments of our business during this uncertain period."
First Quarter 2020 Highlights:
- Revenue - Total revenue was $4,016,000, a 4% decrease from $4,179,000 in Q1 2019 and a 1% increase from $3,959,000 in Q4 2019. Platform and Technology revenue increased 1% from Q1 2019 and 1% from Q4 2019. The increase in Platform and Technology revenue was due to an increase in revenue from subscriptions of Platform id. Platform & Technology revenue increased to 67% of total revenue for Q1 2020, compared to 64% for Q1 2019. Services revenue decreased $183,000, or 12%, primarily due to a decrease in revenue from transfer agent services, print and proxy fulfillment services due to a one-time project in the prior year and continued decline of revenue from our ARS services.
- Gross Margin - Gross margin for Q1 2020 was $2,763,000, or 69% of revenue, compared to $2,877,000, also 69% of revenue, during Q1 2019 and $2,653,000, or 67%, in Q4 2019. Platform and Technology gross margin was 74%, compared to 75% in Q1 2019 and 71% in Q4 2019.
- Operating Income - Operating income was $248,000 for Q1 2020, as compared to $147,000 during Q1 2019. The increase in operating income despite the decrease in gross margin is the result of lower operating expenses. General and Administrative Expenses decreased $145,000, or 11%, due to a decrease in bad debt expense and a decrease in acquisition related expenses incurred in Q1 2019. Product development expense decreased $143,000, or 42%, due to a decrease in headcount.
- Net Income - On a GAAP basis, net income was $226,000, or $0.06 per diluted share, during Q1 2020, compared to $205,000, or $0.05 per diluted share, during Q1 2019.
- Operating Cash Flows - Cash flows from operations for Q1 2020 were $602,000 compared to $536,000 in Q1 2019.
- Non-GAAP Measures - Q1 2020 EBITDA was $622,000, or 15% of revenue, compared to $558,000, or 13% of revenue, during Q1 2019. Non-GAAP net income for Q1 2020 was $397,000, or $0.10 per diluted share, compared to $518,000, or $0.13 per diluted share, during Q1 2019.
- Stock Repurchase Plan - The Company repurchased an additional 21,700 of its shares at a total aggregate value of $202,000, under the Company's $2,000,000 share repurchase program originally announced on August 7, 2019 and increased on March 16, 2020. As of March 31, 2020, we have purchased a total of 97,780 shares under the stock repurchase plan.
Key Performance Indicators:
- During the quarter, the Company worked with 1,473 publicly traded customers, compared to 1,482 during the same period last year.
- During the quarter, the Company worked with 1,289 privately held customers compared to 764 during the same period last year.
- During the quarter we signed 30 new Platform id. subscriptions to new or existing customers with a total annual contract value of $181,000.
- Total Platform id. subscriptions as of March 31, 2020 were 273, with an annual contract value of $2,098,000, compared to 255 subscriptions with an annual contract value of $2,033,000 as of December 31, 2019.
Non-GAAP Information
Certain Non-GAAP financial measures are included in this press release. In the calculation of these measures, the Company excludes certain items, such as amortization of intangible assets, stock-based compensation, integration and acquisition costs, the impact of discrete items impacting income tax expense and tax impact of adjustments. The Company believes that excluding such items provides investors and management with a representation of the Company's core operating performance and with information useful in assessing its prospects for the future and underlying trends in the Company's operating expenditures and continuing operations. Management uses such Non-GAAP measures to evaluate financial results and manage operations. The release and the attachments to this release provide a reconciliation of each of the Non-GAAP measures referred to in this release to the most directly comparable GAAP measure. The Non-GAAP financial measures are not meant to be considered a substitute for the corresponding GAAP financial statements and investors should evaluate them carefully. These Non-GAAP financial measures may differ materially from the Non-GAAP financial measures used by other companies.
CALCULATION OF EBITDA
($ in ‘000's)
|
|
Three Months ended March 31, | |||||||
|
|
2020 | 2019 | ||||||
|
|
Amount | Amount | ||||||
|
|
||||||||
|
Net income:
|
$ | 226 | $ | 205 | ||||
|
Adjustments:
|
||||||||
|
Depreciation and amortization
|
374 | 412 | ||||||
|
Interest expense (income)
|
(58 | ) | (72 | ) | ||||
|
Income tax expense
|
80 | 13 | ||||||
|
EBITDA:
|
$ | 622 | $ | 558 | ||||
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES
($ in ‘000's, except per share amounts)
|
|
Three Months ended March 31, | |||||||||||||||
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|
2020 | 2019 | ||||||||||||||
|
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Amount | Per diluted share | Amount | Per diluted share | ||||||||||||
|
|
||||||||||||||||
|
Net income:
|
$ | 226 | $ | 0.06 | $ | 205 | $ | 0.05 | ||||||||
|
Adjustments:
|
||||||||||||||||
|
Amortization of intangible assets (1)
|
172 | 0.04 | 191 | 0.05 | ||||||||||||
|
Stock-based compensation (2)
|
45 | 0.01 | 137 | 0.03 | ||||||||||||
|
Integration and acquisition costs (3)
|
- | - | 112 | 0.03 | ||||||||||||
|
Tax impact of adjustments (4)
|
(46 | ) | (0.01 | ) | (92 | ) | (0.02 | ) | ||||||||
|
Impact of discrete items impacting income tax expense (5)
|
- | - | (35 | ) | (0.01 | ) | ||||||||||
|
Non-GAAP net income:
|
$ | 397 | $ | 0.10 | $ | 518 | $ | 0.13 | ||||||||
1) The adjustments represent the amortization of intangible assets related to acquired assets and companies.
2) The adjustments represent stock-based compensation expense related to awards of stock options, restricted stock units or common stock in exchange for services. Although the Company expects to continue to award stock in exchange for services, the amount of stock-based compensation is excluded as it is subject to change as a result of one-time or non-recurring projects.
3) The adjustments represent legal and accounting fees and other non-recurring costs in connection with the acquisition of VisualWebcaster Platform.
4) This adjustment gives effect to the tax impact of all non-GAAP adjustments at the current Federal rate of 21%.
5) The adjustments eliminate discrete items impacting income tax expense. For the period ended March 31, 2019, the discrete items relate to either the excess stock-based compensation benefit recognized in income tax expense during the period.
Conference Call Information
To participate in this event, dial approximately 5 to 10 minutes before the beginning of the call.
Date: April 30, 2020
Time: 4:30 PM ET
Participant: 877-407-8133 | 201-689-8040
Live Webcast: https://www.webcaster4.com/Webcast/Page/842/34408
Conference Call Replay Information
The replay will be available beginning approximately 1 hour after the completion of the live event, ending at midnight eastern on May 14, 2020.
Toll-free: 877.481.4010
International: 919.882.2331
Reference ID: 34408
Web replay: http://www.issuerdirect.com/earnings-calls-and-scripts/
About Issuer Direct Corporation
Issuer Direct®is an industry-leading communications and compliance company focusing on the needs of corporate issuers. Issuer Direct's principal platform, Platform id.™, empowers users by thoughtfully integrating the most relevant tools, technologies, and services, thus eliminating the complexity associated with producing and distributing financial and business communications. Headquartered in Raleigh, NC, Issuer Direct serves thousands of public and private companies globally. For more information, please visit www.issuerdirect.com.
Forward-Looking Statements
This press release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act") (which Sections were adopted as part of the Private Securities Litigation Reform Act of 1995). Statements preceded by, followed by or that otherwise include the words "believe," "anticipate," "estimate," "expect," "intend," "plan," "project," "prospects," "outlook," and similar words or expressions, or future or conditional verbs, such as "will," "should," "would," "may," and "could," are generally forward-looking in nature and not historical facts. These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the Company's actual results, performance, or achievements to be materially different from any anticipated results, performance, or achievements for many reasons including the impact of the coronavirus pandemic. The Company disclaims any intention to, and undertakes no obligation to, revise any forward-looking statements, whether as a result of new information, a future event, or otherwise. For additional risks and uncertainties that could impact the Company's forward-looking statements, please see the Company's Annual Report on Form 10-K for the year ended December 31, 2019 and Form 10-Q for the quarter ended March 31, 2020, including but not limited to the discussion under "Risk Factors" therein, which the Company filed with the SEC and which may be viewed at http://www.sec.gov/.
For Further Information:
Issuer Direct Corporation
Brian R. Balbirnie
(919)-481-4000
[email protected]
Hayden IR
Brett Maas
(646)-536-7331
[email protected]
Hayden IR
James Carbonara
(646)-755-7412
[email protected]
ISSUER DIRECT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
|
|
March 31, | December 31, | ||||||
|
|
2020 | 2019 | ||||||
|
ASSETS
|
(unaudited) | |||||||
|
Current assets:
|
||||||||
|
Cash and cash equivalents
|
$ | 16,197 | $ | 15,766 | ||||
|
Accounts receivable (net of allowance for doubtful accounts of $534 and $700, respectively)
|
2,172 | 2,051 | ||||||
|
Income tax receivable
|
- | 48 | ||||||
|
Other current assets
|
241 | 141 | ||||||
|
Total current assets
|
18,610 | 18,006 | ||||||
|
Capitalized software (net of accumulated amortization of $2,323 and $2,153, respectively)
|
964 | 1,134 | ||||||
|
Fixed assets (net of accumulated amortization of $213 and $181, respectively)
|
867 | 899 | ||||||
|
Right-of-use asset - leases
|
2,053 | 2,127 | ||||||
|
Deferred tax asset
|
294 | 256 | ||||||
|
Other long-term assets
|
67 | 77 | ||||||
|
Goodwill
|
6,376 | 6,376 | ||||||
|
Intangible assets (net of accumulated amortization of $5,109 and $4,937, respectively)
|
3,343 | 3,515 | ||||||
|
Total assets
|
$ | 32,574 | $ | 32,390 | ||||
|
|
||||||||
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
|
Current liabilities:
|
||||||||
|
Accounts payable
|
$ | 383 | $ | 266 | ||||
|
Accrued expenses
|
1,060 | 1,151 | ||||||
|
Note payable - short-term (net of discount of $13 and $19, respectively)
|
307 | 301 | ||||||
|
Income taxes payable
|
374 | 310 | ||||||
|
Deferred revenue
|
1,879 | 1,812 | ||||||
|
Total current liabilities
|
4,003 | 3,840 | ||||||
|
Deferred income tax liability
|
137 | 141 | ||||||
|
Lease liabilities - long-term
|
2,226 | 2,309 | ||||||
|
Total liabilities
|
6,366 | 6,290 | ||||||
|
Commitments and contingencies
|
||||||||
|
Stockholders' equity:
|
||||||||
|
Preferred stock, $0.001 par value, 1,000,000 shares authorized, no shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively.
|
- | - | ||||||
|
Common stock $0.001 par value, 20,000,000 shares authorized, 3,772,700 and 3,786,398 shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively.
|
4 | 4 | ||||||
|
Additional paid-in capital
|
22,117 | 22,275 | ||||||
|
Other accumulated comprehensive income (loss)
|
24 | (16 | ) | |||||
|
Retained earnings
|
4,063 | 3,837 | ||||||
|
Total stockholders' equity
|
26,208 | 26,100 | ||||||
|
Total liabilities and stockholders' equity
|
$ | 32,574 | $ | 32,390 | ||||
ISSUER DIRECT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except share and per share amounts)
|
|
For the Three Months Ended | |||||||
|
|
March 31, | March 31, | ||||||
|
|
2020 | 2019 | ||||||
|
|
||||||||
|
Revenues
|
$ | 4,016 | $ | 4,179 | ||||
|
Cost of revenues
|
1,253 | 1,302 | ||||||
|
Gross profit
|
2,763 | 2,877 | ||||||
|
Operating costs and expenses:
|
||||||||
|
General and administrative
|
1,216 | 1,361 | ||||||
|
Sales and marketing expenses
|
896 | 820 | ||||||
|
Product development
|
194 | 337 | ||||||
|
Depreciation and amortization
|
209 | 212 | ||||||
|
Total operating costs and expenses
|
2,515 | 2,730 | ||||||
|
Operating income
|
248 | 147 | ||||||
|
Interest income, net
|
58 | 71 | ||||||
|
Income before income taxes
|
306 | 218 | ||||||
|
Income tax expense
|
80 | 13 | ||||||
|
Net income
|
$ | 226 | $ | 205 | ||||
|
Income per share - basic
|
$ | 0.06 | $ | 0.05 | ||||
|
Income per share - fully diluted
|
$ | 0.06 | $ | 0.05 | ||||
|
Weighted average number of common shares outstanding - basic
|
3,788 | 3,850 | ||||||
|
Weighted average number of common shares outstanding - fully diluted
|
3,824 | 3,869 | ||||||
ISSUER DIRECT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
|
|
For the Three Months Ended | |||||||
|
|
March 31, | March 31, | ||||||
|
|
2020 | 2019 | ||||||
|
Cash flows from operating activities:
|
||||||||
|
Net income
|
$ | 226 | $ | 205 | ||||
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
|
Depreciation and amortization
|
374 | 412 | ||||||
|
Bad debt expense
|
93 | 224 | ||||||
|
Deferred income taxes
|
(42 | ) | 6 | |||||
|
Non-cash interest expense
|
6 | 7 | ||||||
|
Stock-based compensation expense
|
45 | 137 | ||||||
|
Changes in operating assets and liabilities:
|
||||||||
|
Decrease (increase) in accounts receivable
|
(219 | ) | (869 | ) | ||||
|
Decrease (increase) in other assets
|
32 | (273 | ) | |||||
|
Increase (decrease) in accounts payable
|
118 | 254 | ||||||
|
Increase (decrease) in accrued expenses
|
(105 | ) | 218 | |||||
|
Increase (decrease) in deferred revenue
|
74 | 215 | ||||||
|
Net cash provided by operating activities
|
602 | 536 | ||||||
|
|
||||||||
|
Cash flows from investing activities:
|
||||||||
|
Purchase of VisualWebcaster Platform
|
- | (2,788 | ) | |||||
|
Purchase of fixed assets
|
- | (6 | ) | |||||
|
Net cash used in investing activities
|
- | (2,794 | ) | |||||
|
|
||||||||
|
Cash flows from financing activities:
|
||||||||
|
Payment for stock repurchase and retirement
|
(203 | ) | - | |||||
|
Net cash used in financing activities
|
(203 | ) | - | |||||
|
|
||||||||
|
Net change in cash
|
399 | (2,258 | ) | |||||
|
Cash - beginning
|
15,766 | 17,222 | ||||||
|
Currency translation adjustment
|
32 | (3 | ) | |||||
|
Cash - ending
|
$ | 16,197 | $ | 14,961 | ||||
|
|
||||||||
|
Supplemental disclosures:
|
||||||||
|
Cash paid for income taxes
|
$ | 10 | $ | 37 | ||||
|
Non-cash activities:
|
||||||||
|
Right-of-use assets obtained in exchange for lease liabilities
|
$ | - | $ | 260 | ||||
SOURCE: Issuer Direct Corporation