Glowpoint Reports Second Quarter 2012 Results

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Aug 14, 2012, 04:10 ET

MURRAY HILL, N.J., Aug. 14, 2012 /PRNewswire/ -- Glowpoint, Inc. (NYSE MKT: GLOW), a leading global provider of cloud managed video services, today reported its financial results for the second quarter ended June 30, 2012.

Second quarter revenues for cloud managed video services ("Managed Services Combined" as reported) were $3.2 million, an increase of 5% over the same period last year. Managed Services Combined represents 47% of total revenues in the quarter, up from 44% in the prior year period. Network services revenues for the quarter were $3.0 million, a decrease of 10% over the same period last year. One-time and event-based revenues ("Professional and other services" as reported) were $566,000 for the quarter, compared to $542,000 in the same period last year.

Adjusted EBITDA (as defined and reconciled to GAAP) for the second quarter was $850,000, an increase of $449,000 or 112% over the same period last year. Adjusted EBITDA margin was 13% compared to 6% in the same period last year. Net income for the second quarter was $248,000, an increase of $231,000 over the same period last year.

For the six months ended June 30, 2012, cloud managed video services revenues ("Managed Services Combined" as reported) were $6.5 million, an increase of 5% as compared to the same period last year. Network services revenues for the six-month period were $6.2 million, a decrease of 10% over the same period last year. One-time and event-based revenues ("Professional and other services" as reported) were $875,000 for the six-month period, compared to $876,000 in the same period last year.

Adjusted EBITDA for the six-month period ended June 30, 2012 was $1.6 million, an increase of $742,000 over the same period last year. Net income for the six months ended June 30, 2012 was $420,000, an increase of $371,000 over the same period last year.

"The sales pipeline for our suite of cloud managed video services is expanding, although elongated sales cycles continues to impact immediate growth levels," said Joe Laezza, Glowpoint's president and CEO. "We are seeing delays in highly qualified sales opportunities and attribute this to changes in the buying decision making process during the rapid shift in enterprise needs for video communications moving from on premise and appliance devices to cloud and software based services."

"We believe these conditions and trends in the buying process are very advantageous to Glowpoint's long term operating model as our OpenVideo® cloud and managed services are specifically designed to deliver on these shifting demands. We have begun to close the new significant contracts referenced in previous periods and see these deals beginning to positively impact our growth levels by year end," added Laezza.

"Adjusted EBITDA results and trends remain strong, and in fact continue to grow," said Tolga Sakman, Glowpoint's acting CFO. "We believe this is evidence of the good operating leverage in our business model and we've now delivered seven consecutive quarters of positive Adjusted EBITDA while EPS continues to grow. We are getting more aggressive with our investments in product development and sales and marketing, and we are confident that we will begin to see the benefits of these crucial investments and meet our long-term 20% EBITDA margin objectives as our revenue growth picks up."

Key business metrics

Number of managed telepresence and video conferencing rooms increased 38% to 1,270 as compared with the same period a year ago.
Number of managed conferences increased 41% to 39,000 as compared with the same six-month year to date period a year ago.
Number of certified enterprise video systems on OpenVideo® increased 18% to 46,400 as compared with the same period a year ago.
Usage on OpenVideo® cloud increased 4% to more than 8.9 million minutes as compared to the same six month period a year ago.

"The volume of managed conferences for our managed service contracted clients on unlimited plans continues to grow, which validates the reliability and levels of service we deliver and our customers expect. Usage on the OpenVideo® cloud platform is driven by the most diverse set of collaboration needs and applications of video communication from traditional conference calls over video to business-to-business communication for business meetings," added Laezza.

For the six-month period ended June 30, 2012, capital expenditures were $353,000, and as of August 14, 2012 there were 25,593,967 shares of common stock outstanding.

Definitive agreement to acquire Affinity VideoNet

As previously announced (http://www.glowpoint.com/press-releases/Affinity), the Company has entered into a definitive agreement to acquire privately held Affinity VideoNet and expects this transaction to close in the third quarter.

"We are excited about the opportunity to deliver our broad suite of cloud and managed services for the Affinity VideoNet customer base," commented Laezza. "This is a big step in the evolution of Glowpoint and we expect this acquisition to represent considerable top and bottom line contribution," added Sakman.

Teleconference

Glowpoint will host a conference call at 4:30 p.m. EDT today to discuss the financial results for Q2 2012. To view the webcast, please visit: http://video.webcasts.com/events/glow001/43579. To participate in the teleconference, callers may dial the toll free number (877) 407-1869 (U.S. callers only) or (201) 689-8044 (from outside the U.S.). For those unable to view or participate in the live call, a recording of the call will be archived for viewing two hours following the call at www.glowpoint.com/investor-relations.

Supporting Link:

Glowpoint Investor Information

About Glowpoint

Glowpoint, Inc. (NYSE MKT: GLOW) provides cloud managed video services that make the delivery of consistently high-quality video conferencing and telepresence service as simple as using the internet, between any technology, network and business. Using our OpenVideo® cloud architecture, Glowpoint enables organizations of all sizes to adopt business-class video easily, scale instantly and collaborate openly, yet securely across technology boundaries – to realize the full value of visual communications. To learn more please visit www.glowpoint.com.

Non-GAAP Financial Information

Adjusted EBITDA is defined as income from continuing operations before depreciation, amortization, interest expense, interest income, taxes, stock-based compensation, and severance. Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by total revenues. Adjusted EBITDA is not intended to replace operating income, net income, cash flow or other measures of financial performance reported in accordance with generally accepted accounting principles. Rather, Adjusted EBITDA is an important measure used by management to assess the operating performance of the company. Adjusted EBITDA as defined here may not be comparable to similarly titled measures reported by other companies due to differences in accounting policies. Additionally, Adjusted EBITDA as defined here does not have the same meaning as EBITDA as defined in our Securities and Exchange Commission filings prior to this date. A reconciliation of Adjusted EBITDA to net income from continuing operations is shown below.

Forward looking and cautionary statements

The information in this release may contain statements that are or may be deemed to be forward-looking statements and involve factors, risks, and uncertainties that may cause actual results in future periods to differ materially from such statements. These factors, risks, and uncertainties include market acceptance and availability of new video communications services; the non-exclusive and terminable-at-will nature of sales agreements; rapid technological change affecting demand for our services; competition from other video communication service providers; and the availability of sufficient financial resources to enable us to expand our operations, as well as other risks detailed from time to time in our filings with the Securities and Exchange Commission. We make no representation or warranty that the information contained herein is complete and accurate; we have no duty to correct or update any information.

INVESTOR CONTACT:
Investor Relations
Glowpoint, Inc.
+1 973-855-3411
[email protected]
www.glowpoint.com

GLOWPOINT, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except par value) (Unaudited)

	June 30,	December 31,
	2012	2011
ASSETS
Current assets:
Cash	$ 1,689	$ 1,818
Accounts receivable, net of allowance for doubtful accounts of
$149 and $147, respectively	3,041	2,520
Prepaid expenses and other current assets	382	330
Total current assets	5,112	4,668
Property and equipment, net	4,325	4,738
Other assets	68	59
Total assets	$ 9,505	$ 9,465

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Revolving loan facility	$ 750	$ 750
Current portion of capital lease	219	177
Accounts payable	1,369	1,382
Accrued expenses	405	1,024
Accrued sales taxes and regulatory fees	514	434
Customer deposits	167	139
Net current liabilities of discontinued operations	-	50
Deferred revenue	175	235
Total current liabilities	3,599	4,191
Noncurrent liabilities:
Capital lease, less current portion	320	334
Total noncurrent liabilities	320	334
Total liabilities	3,919	4,525

Commitments and contingencies	-	-

Stockholders' equity:
Preferred stock Series B-1, non-convertible; $.0001 par value	$ 10,000	$ 10,000
Preferred stock Series A-2, convertible; $.0001 par value	167	297
Common stock, $.0001 par value	3	3
Additional paid-in capital	159,695	159,339
Accumulated deficit	(164,279)	(164,699)
Total stockholders' equity	5,586	4,940
Total liabilities and stockholders' equity	$ 9,505	$ 9,465

GLOWPOINT, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS and GAAP to Non-GAAP Reconciliation (In thousands, except per share data) (Unaudited)

	Six Months Ended		Three Months Ended
	June 30,		June 30,
	2012	2011	2012	2011

Managed Services Combined	$ 6,501	$ 6,180	$ 3,204	$ 3,046
Network services	6,170	6,879	3,030	3,366
Professional and other services	875	876	566	542
Total revenue	13,546	13,935	6,800	6,954

Network and infrastructure	4,221	4,883	2,145	2,471
Global managed services	3,461	3,873	1,765	1,979
Sales and marketing	1,864	1,824	878	902
General and administrative	2,652	2,688	1,302	1,282
Depreciation and amortization	865	573	425	297
Total operating expenses	13,063	13,841	6,515	6,931
Income from operations	483	94	285	23
Interest/Financing	58	63	32	30
Income (loss) from continuing operations	425	31	253	(7)
Income from discontinued operations	-	18	-	24
Income before provision for income taxes	$ 425	$ 49	$ 253	$ 17

Provision for income taxes	5	-	5	-
Net income	420	49	248	17

Net income per share:
Continuing operations	$ 0.02	$ -	$ 0.01	$ -
Discontinued operations	$ -	$ -	$ -	$ -
Basic net income per share	$ 0.02	$ -	$ 0.01	$ -

Continuing operations	$ 0.02	$ -	$ 0.01	$ -
Discontinued operations	$ -	$ -	$ -	$ -
Diluted net income per share	$ 0.02	$ -	$ 0.01	$ -

Weighted average number of common shares:
Basic	24,440	20,714	24,525	20,753
Diluted	25,742	24,594	25,874	24,594

ADJUSTED EBITDA - GAAP to Non GAAP Reconciliation
Income (loss) from continuing operations	$ 425	$ 31	$ 253	$ (7)

Interest/Financing	58	63	32	30
Depreciation	865	573	425	297
Stock-based compensation	219	147	140	70
Severance	-	11	-	11
Adjusted EBITDA	$ 1,567	$ 825	$ 850	$ 401

GLOWPOINT, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)

							Six Months Ended
							June 30,
							2012	2011
Cash flows from Operating Activities:
	Net income						$ 420	$ 49
	Adjustments to reconcile net income to net cash provided by (used in)
		operating activities:
			Depreciation and amortization				865	573
			Amortization of deferred financing costs				29	31
			Bad debt expense				52	(9)
			Loss on disposal of equipment				10	(12)
			Stock-based compensation				219	147
			Increase (decrease) attributable to changes in assets
				and liabilities:
					Accounts receivable		(573)	(151)
					Other current assets		(52)	(100)
					Other assets		(38)	(43)
					Accounts payable		(13)	(444)
					Customer deposits		28	(85)
					Accrued expenses, sales taxes and regulatory fees		(539)	(258)
					Deferred revenue		(61)	39
						Net cash provided by (used in) continuing operating activities	347	(263)
						Net cash (used in) provided by discontinuing operating activities	(50)	40
						Net cash provided by (used in) operating activities	297	(223)

Cash flows from Investing Activities:
	Proceeds from sale of equipment						11	-
	Purchases of property and equipment						(353)	(554)
						Net cash used in investing activities	(342)	(554)

Cash flows from Financing Activities:
	Proceeds from exercise of stock options						7	-
	Principal payments for capital lease						(91)	-
						Net cash used in financing activities	(84)	-

Decrease in cash							(129)	(777)

Cash at beginning of period							1,818	2,035

Cash at end of period							$ 1,689	$ 1,258