GlobalSCAPE Announces Second Quarter 2010 Financial Results
SAN ANTONIO - GlobalSCAPE, Inc. (NYSE Amex: GSB), a leading developer of secure information exchange solutions, today announced financial results for its second quarter of fiscal year 2010, ended June 30, 2010.
Revenue was $4.5 million for the second quarter of fiscal year 2010, a decrease of 6 percent when compared with revenue of $4.7 million in the same quarter last year. Jim Morris, GlobalSCAPE president and CEO, notes that the revenue and other key financials from the second quarter of last year were influenced by a large U.S. Army contract announced in April 2009. "We are very pleased with our second quarter performance," said Morris. "Our baseline revenue actually increased, considering we had a single $2.7 million order from the Army in the same quarter of last year that contributed more than $1 million dollars in revenue during that quarter. In addition to increasing baseline revenue, we continued our strong financial results from the first quarter of 2010, with total revenue for the first six months of fiscal year 2010 outpacing the same period a year ago."
Net income for the second quarter was $134,000, or $0.01 per diluted share, compared with net income of $943,000, or $0.05 per diluted share, in the same quarter last year. Cash and short term investments grew to $9.5 million, representing a four percent increase from the first quarter. Cash flow from operating activities for the six months ended June 30, 2010 was $1.3 million compared with $3.2 million for the same period in 2009, a decrease of 60 percent. Finally, Adjusted EBITDA for the second quarter of 2010 was $603,000, a 57 percent decrease compared with the same quarter last year. The Adjusted EBITDA margin for the second quarter of 2010 was 13.5 percent, compared with 29.3 percent in the second quarter of 2009. Net income, cash flow from operating activities, and Adjusted EBITDA for the prior year were largely affected by the Army order.
"At the midpoint of the year, we are on a revenue run rate of almost $18 million, which significantly exceeds our 2009 results, even with the inclusion of the large Army order last year," Morris continued. "We look forward to establishing a new high water mark for GlobalSCAPE revenue and entering 2011 with the momentum necessary to continue growing the business significantly. As we make the investments necessary to achieve these results, we also plan to manage expenses closely and sustain our profitability."
GlobalSCAPE Second Quarter 2010 Financial Statements
During the second quarter, GlobalSCAPE continued to deliver solid results by raising the Company's visibility within the marketplace and investment community, establishing a new partnership with Rackspace® Hosting, and winning key industry awards.
In June, GlobalSCAPE announced in June that it entered into a partnership with Rackspace® Hosting, the world's leader in the hosting and cloud computing industry. Through Rackspace's infrastructure, GlobalSCAPE is able to deliver cloud-based managed file transfer solutions for the secure exchange of business-to-business data, including large files and sensitive data. The initial GlobalSCAPE product offering, GlobalSCAPE Managed Information Xchange™ (or MIX), integrates GlobalSCAPE's market-leading EFT Server solution with Rackspace's infrastructure. It allows customers to outsource all or part of their complex and demanding information exchange needs to reduce costs, improve operational efficiencies, track and audit transactions, and provide a greater level of security.
Thomas Skybakmoen, a senior research analyst with Gartner, Inc, commented on the market need for cloud-based managed solutions in July, as GlobalSCAPE announced the availability of the MIX offering. "As organizations adopt cloud computing, they demand solutions that offer comprehensive security capabilities for exchanging important data and confidential files," said Skybakmoen. "In addition to security, they look to take advantage of cloud efficiencies, offered by technology leaders in managed file transfer."
During the second quarter, GlobalSCAPE also was recognized with two prestigious awards. In April, GlobalSCAPE announced that it was chosen as one of the "Best Places to Work" for 2010 by the San Antonio Business Journal. The award honors companies with the best workplaces in the greater San Antonio area. In June, GlobalSCAPE announced that it was chosen as a 2010 "Best Places to Work in IT" honoree by IDG's Computerworld. Each year, Computerworld ranks the top 100 work environments for technology professionals. The organizations selected are those that challenge their IT staff with exciting projects, offer them access to and training with today's hottest technology, and provide great benefits and compensation. These industry awards demonstrate GlobalSCAPE's continuing commitment to establishing and maintaining a work environment that allows the Company to attract and retain the best possible personnel.
Non-GAAP Financial Measures
We define Adjusted EBITDA as Net Income, plus Income Taxes, Total Other Income (Expense), Depreciation and Amortization, and non-cash charges for share-based compensation and asset impairments.
Adjusted EBITDA is a metric that is used in our industry by the investment community for comparative and valuation purposes. We disclose this metric in order to support and facilitate the dialogue with research analysts and investors.
Note that Adjusted EBITDA is not a measure of financial performance under accounting principles generally accepted in the United States (GAAP) and should not be considered a substitute for net income. Adjusted EBITDA has limitations as an analytical tool, and when assessing our operating performance, you should not consider Adjusted EBITDA in isolation, or as a substitute for net income or other income statement data prepared in accordance with GAAP. Other companies may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure. See our Adjusted EBITDA to net income reconciliations in the table below.
- Adjusted EBITDA (PDF)
Conference Call August 12, 2010 At 4:30 p.m. ET
GlobalSCAPE management will hold a conference call Thursday, August 12 to discuss the second quarter 2010 financial results and other corporate matters at 4:30 p.m. Eastern Time/3:30 p.m. Central Time. Those wishing to join should dial 1-800-380-1061 and use Conference ID # 87434214. A live webcast of the conference call will also be available in the investor relations page of the company's website at www.globalscape.com. A webcast replay of the conference call will be available on the Company's website through September 12, 2010.
GlobalSCAPE, Inc. (NYSE Amex: GSB), headquartered in San Antonio, TX, is a leading provider of secure information exchange solutions. Since the release of CuteFTP in 1996, GlobalSCAPE's solutions have continued to evolve to meet the business and technology needs of an increasingly interconnected global marketplace. Serving a customer base that spans more than 150 countries and includes the majority of Fortune 100 companies, GlobalSCAPE's primary focus is providing customers with intuitive and efficient managed file transfer (MFT) solutions while also ensuring end-to-end security. For more information, visit www.globalscape.com, Blog, or Twitter.
Safe Harbor Statement
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The words "would," "exceed," "should," "anticipates," believe," "steady," "dramatic," and variations of such words and similar expressions identify forward-looking statements, but their absence does not mean that a statement is not a forward-looking statement. These forward-looking statements are based upon the Company's current expectations and are subject to a number of risks, uncertainties and assumptions. The Company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. Among the important factors that could cause actual results to differ significantly from those expressed or implied by such forward-looking statements are risks that are detailed in the Company's Annual Report on Form 10-K for the 2009 calendar year, filed with the Securities and Exchange Commission on March 30, 2010.