Glowpoint Reports Third Quarter 2011 Results

Growth In Cloud Managed Video Service Exceeds 20% - Profit Metrics Show Continued Momentum

Oct 18, 2011, 16:00 ET from Glowpoint, Inc.

MURRAY HILL, N.J., Oct. 18, 2011 /PRNewswire/ -- Glowpoint, Inc. (OTCBB: GLOW), a leading global provider of cloud managed video services, today reported its financial results for the third quarter ended September 30, 2011.

Total revenues for the third quarter were $6.8 million.  Cloud-based managed video service (MVS) revenues for the quarter were $3.2 million, an increase of 20% over the same period last year.  Cloud-based MVS revenues were 46% of total revenues in the quarter, up from 38% in the prior year period.  Network revenues for the quarter were $3.3 million, a decrease of 18% over the same period last year.

Adjusted EBITDA (as defined and reconciled to GAAP) for the third quarter was $837,000, an increase of $1.2 million over the same period last year.  Adjusted EBITDA margin was positive 12% compared to a negative 5% in the same period last year.  Net income was $36,000, an increase of $880,000 over the same period last year.

For the nine months ended September 30, 2011, total revenues were $20.8 million.  Cloud-based MVS revenues for the nine-month period were $9.3 million, an increase of 24% over the same period last year.  Network revenues for the nine-month period were $10.2 million, a decrease of 17% over the same period last year.

"We continue to see growing demand for our OpenVideo™ suite of services, and these revenues are expected to become a majority of overall revenues in the fourth quarter," said Joe Laezza, Glowpoint's President and Chief Executive Officer.  "The leverage in our business model is producing sequential improvement in all profit metrics, and we are well positioned to maintain the pace of our strong operating results.  The network services component of our business performed as expected, and we anticipate that revenue from this lower margin business will decline moderately or remain flat in the coming quarters."

Adjusted EBITDA for the nine months ended September 30, 2011 was $1.7 million, an increase of $2.7 million over the same period last year.  Adjusted EBITDA margin was positive 8% compared to a negative 5% in the same period last year.  Net income for the nine months ended this period was $85,000, an increase of $2.3 million over the same period last year.

"Three consecutive quarters of positive earnings and $2.4 million of operating income improvement for the year sets a new milestone for Glowpoint," commented John McGovern, Glowpoint's Executive Vice President and Chief Financial Officer.  "The revenue mix shift to a majority of cloud managed video services, combined with strong operating leverage, puts us in a position to continue on a positive trajectory."

Key business metrics

  • Sales bookings (defined as new sales to be delivered over a current average contract term of 21 months) in the third quarter were $1.8 million in contract value.  Year to date sales bookings increased 14% to $8.8 million in contract value compared to the same nine-month period last year.
  • Number of managed telepresence and video conferencing rooms increased 120% to 1,097 compared to 498 in the same period last year.
  • Managed conferences on a trailing twelve-month basis increased 68% to 113,550, compared to 67,730 in the same period last year.
  • Number of certified enterprise video systems on OpenVideo™ increased 24% to 42,438, compared to 34,355 in the same period last year.

"The pipeline growth continues to be strong and usage is appreciating as we exit the third quarter, which is traditionally slower due to seasonality.  We are maintaining our baseline position that annualized revenue growth rates for our cloud managed service business will be in the 20%-30% range and expect profitability to continue on a positive trajectory.  Additionally, we are working on a number of initiatives that we believe could accelerate our growth rates in 2012," added Laezza.

Q3 Highlights

  • Reached new milestones with 450 enterprises connected to OpenVideo™ for B2B exchange services.
  • Announced breakthrough growth in immersive telepresence usage across OpenVideo™ cloud.
  • Launched OpenVideo Mobile™ app for enterprise mobile workforce use of cloud managed video services.
  • Launched enhanced cloud managed video service offering for Cisco enterprise communities.
  • Simplified capital structure by eliminating substantially all convertible preferred stock and warrants outstanding.

For the nine months ended September 30, 2011, capital expenditures were $793,000 and as of October 17, 2011, there were 25,143,750 shares of common stock issued and outstanding.

"Our partners and prospects recognize the value that our services offer to the mission-critical nature of visual communications as the industry continues to evolve and grow.  With the deployment of new (and management of existing) enterprise video environments rapidly shifting from enterprise hosted and managed to more cloud based and outsourced support, our OpenVideo™ suite of services is perfectly positioned to capitalize on these trends," added Laezza.

The company plans to announce a date for a management presentation webcast event in the near future.  

Supporting Resources


About Glowpoint

Glowpoint, Inc. (OTCBB: 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 net income or loss from continuing operations before depreciation, amortization, interest expense, interest income, sales taxes and regulatory fee expense or benefit, loss on extinguishment of debt, changes in fair value of derivative financial instruments and stock-based compensation, and severance. Adjusted EBITDA is not intended to replace operating income (loss), net income (loss), 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 SEC filings prior to this date.  A reconciliation of Adjusted EBITDA to net loss is shown below.

Forward Looking Statements

Some statements set forth in this release, other than historical information, constitute forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. Statements that include words such as "anticipate," "believe," "estimate" or "expect" and statements in the future tense are forward-looking statements.  These forward-looking statements are subject to risks and uncertainties that could cause actual events or actual future results to differ materially from the expectations set forth in the forward-looking statements.  Certain factors that could cause our results to differ materially from our expectations are described in our filings with the Securities and Exchange Commission.  We do not undertake, and specifically disclaim any obligation, to publicly release the results of any revisions that may be made to any forward-looking statements in order to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.

GLOWPOINT, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value)

(Unaudited)



September 30,

December 31,


2011


2010

ASSETS




Current assets:




    Cash

$    1,359


$    2,035

    Accounts receivable, net of allowance for doubtful accounts of




         $214 and $250, respectively

2,655


2,706

    Net current assets of discontinued operations

-


15

    Prepaid expenses and other current assets

397


377

         Total current assets

4,411


5,133

Property and equipment, net

5,051


3,148

Other assets

75


83

         Total assets

$    9,537


$    8,364





LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




    Accounts payable

$    1,589


$    2,333

    Accrued expenses

1,106


1,352

    Net current liabilities of discontinued operations

50


-

    Accrued sales taxes and regulatory fees

511


739

    Revolving loan facility

750


750

    Customer deposits

151


243

    Current portion of capital lease

161


-

    Deferred revenue

266


242

         Total current liabilities

4,584


5,659

Noncurrent liabilities:




    Capital lease, less current portion

351


-

         Total liabilities

4,935


5,659









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

297


3,354

    Common stock, $.0001 par value

2


9

    Additional paid-in capital

159,286


154,410

    Accumulated deficit

(164,983)


(165,068)

         Total stockholders' equity

4,602


2,705

         Total liabilities and stockholders' equity

$    9,537


$    8,364



GLOWPOINT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

and GAAP to Non-GAAP Reconciliation

(In thousands, except per share data)

(Unaudited)



Nine Months Ended


Three Months Ended


September 30,


September 30,


2011


2010


2011


2010









Managed video services combined (Cloud-based MVS)

$ 9,344


$  7,547


$ 3,164


$  2,629

OV Connect (Network services)

10,162


12,165


3,282


3,984

Professional and other services

1,258


829


383


331

Total revenue

20,764


20,541


6,829


6,944









Network and infrastructure

7,156


8,768


2,273


2,896

Global managed services

5,671


6,203


1,798


2,049

Sales and marketing

2,627


3,187


803


1,086

General and administrative

4,180


3,860


1,492


1,504

Depreciation and amortization

981


812


408


270

Total operating expenses

20,615


22,830


6,774


7,805









Income (loss) from operations

149


(2,289)


55


(861)

Interest/Financing

93


107


30


51

Net income (loss) from continuing operations

56


(2,396)


25


(912)









Income from discontinued operations

29


180


11


68

Net income (loss)

85


(2,216)


36


(844)

Redemption of preferred stock

-


(934)


-


(156)

Net income (loss) attributable to common stockholders

$      85


$ (3,150)


$      36


$ (1,000)









Net income (loss) attributable to common  stockholders per share:
















         Continuing operations

$       -


$   (0.16)


$       -


$   (0.04)

         Discontinued operations

$       -


$          -


$       -


$          -

    Basic net income (loss) per share

$       -


$   (0.16)


$       -


$   (0.04)









         Continuing operations

$       -


$   (0.16)


$       -


$   (0.04)

         Discontinued operations

$       -


$          -


$       -


$          -

    Diluted net income (loss) per share

$       -


$   (0.16)


$       -


$   (0.04)









Weighted average number of common shares:








    Basic

21,590


18,630


23,324


19,891

    Diluted

22,643


18,630


24,396


19,891









ADJUSTED EBITDA - GAAP to Non GAAP Reconciliation








Net income (loss) from continuing operations

$      56


$ (2,396)


$      25


$    (912)









Interest/Financing

93


107


30


51

Depreciation

981


812


408


270

Stock-based compensation

181


445


34


216

Severance

351


-


340


-

Adjusted EBITDA

$ 1,662


$ (1,032)


$    837


$    (375)



GLOWPOINT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)









Nine Months Ended








September 30,








2011


2010

Cash flows from Operating Activities:





Net income (loss)



$      85


$ (2,216)


Adjustments to reconcile net income (loss) to net cash provided by (used in)






operating activities:







Depreciation and amortization

981


812




Amortization of deferred financing costs

46


18




Loss on disposal of equipment

1


(11)




Bad debt expense

44


345




Stock-based compensation

181


445




Increase (decrease) attributable to changes in assets








and liabilities:









Accounts receivable

7


(706)






Prepaids and other current assets

(20)


(197)






Other assets

(38)


(86)






Accounts payable

(744)


(193)






Customer deposits

(92)


(52)






Accrued expenses, sales taxes and regulatory fees

(423)


225






Deferred revenue

24


(35)







Net cash provided by (used in) continuing operating activities

52


(1,651)







Net cash provided by discontinuing operating activities

65


88







Net cash provided by (used in) operating activities

117


(1,563)











Cash flows from Investing Activities:





Purchases of property and equipment  

(793)


(959)







Net cash used in investing activities

(793)


(959)











Cash flows from Financing Activities:





Proceeds from preferred stock offering

-


4,008


Proceeds from revolving loan, net

-


750


Receivable from sale of Series A Preferred Stock

-


(1,000)


Costs related to private placement

-


(307)







Net cash provided by financing activities

-


3,451











Increase (decrease) in cash

(676)


929











Cash at beginning of period

2,035


587











Cash at end of period



$ 1,359


$  1,516



(Logo:  http://photos.prnewswire.com/prnh/20100420/GLOWPOINTLOGO)

INVESTOR RELATIONS CONTACT:

John McGovern

Glowpoint, Inc.

+1 973-855-3411, ext. 2037

jmcgovern@glowpoint.com

www.glowpoint.com



SOURCE Glowpoint, Inc.



RELATED LINKS

http://www.glowpoint.com