GlobalSCAPE Announces First Quarter 2011 Financial Results
Increases Revenue and Cash Compared with Q1 Fiscal 2010
SAN ANTONIO - GlobalSCAPE, Inc. (NYSE Amex: GSB), a leading developer of secure information exchange solutions, today announced financial results for its first quarter of fiscal year 2011, ending March 31, 2011.
Revenue was $4.6 million for the first quarter of fiscal year 2011, an increase of five percent when compared with revenue of $4.4 million in the same quarter last year. Net income for the first quarter was $59,000, or $0.00 per diluted share, compared with net income of $364,000, or $0.02 per diluted share, in the same quarter last year. Cash grew to $11.4 million, representing a 25 percent increase from the first quarter of 2010 and a 2 percent improvement since the end of fiscal 2010.
Adjusted EBITDA for the first quarter of 2011 was $0.5 million, a 45 percent decrease compared with the same quarter last year, and a 25 percent decrease compared with the fourth quarter of 2010. The Adjusted EBITDA margin for the first quarter of 2011 was 11.9 percent, compared with 23.1 percent in the first quarter of 2010, and 14.7 percent in the fourth quarter of 2010.
"Our first quarter performance continued our year-over-year revenue growth," said Jim Morris, GlobalSCAPE president and CEO. "In particular, we have continued to increase recurring revenue which was 48 percent of total revenue in the first quarter, up from 40 percent in the same period last year," Morris continued.
Professional Services represented approximately $404,000 or almost nine percent of GlobalSCAPE's total revenue in the first quarter, up from three percent in the same period last year. Morris indicated that this record contribution from professional services contributed to reduced operating margins during the quarter. "Increased professional services give us a considerable performance history and insight into our customers' operational activities which position us well for future businesses opportunities," Morris noted. "However, professional services typically have much lower margins than software sales and this effect was evident in the first quarter, especially with some software sales slipping into the second quarter. As we close these software opportunities and gain market traction with additional solutions, especially those already accounted for in our current expense run rate, I expect earnings to increase in line with the additional revenue."
GlobalSCAPE First Quarter 2011 Financial Statements
During the first quarter, GlobalSCAPE announced new additions to the Company's solution portfolio, greatly expanded delivery of professional services, and gained additional industry recognitions.
During February, GlobalSCAPE announced ongoing development of appShield™, a consumer endpoint security solution to protect computers against the rapid growth of viruses and other malicious software. The appShield solution uses application whitelisting technology to block execution of malicious software with much greater effectiveness than traditional antivirus software. The traditional approach to antivirus software operation is to develop specific signatures for malware, detect the presence of files matching those defined signatures, and then block or quarantine the assessed malware. Application whitelisting inverts the traditional approach by allowing the end user or an administrator to explicitly designate which software applications will be allowed to run. The resulting ‘whitelist' then governs software execution privileges. The appShield solution is the result of a joint development agreement established with CoreTrace Corporation in December 2009. GlobalSCAPE plans for appShield to be generally available in summer 2011.
Also in February, GlobalSCAPE announced general availability of a Hosted Enhanced File Transfer Server™ service. This service expands GlobalSCAPE's cloud-based solution portfolio by integrating a hosted version of the market-leading Enhanced File Transfer Server solution with infrastructure from Rackspace Hosting. This scalable and tiered service is structured for the small and medium-sized business ("SMB") market, and also allows customers of all sizes to outsource all or part of their complex and demanding secure information exchange needs. Through such outsourcing, customers can greatly reduce costs, increase efficiencies, track and audit transactions, and provide a greater level of security and compliance, at affordable price points. The Hosted EFT Server offering delivers these benefits while allowing direct customer management of the Enhanced File Transfer Server solution (as contrasted with the previously announced Managed Information Xchange, or MIX, service which is fully managed by GlobalSCAPE).
During March, GlobalSCAPE announced significant enhancements to the Enhanced File Transfer Server and Mail Express™ software solutions. The new version of Enhanced File Transfer Server delivers additional security and visibility features, along with improved workflow tools, to both enterprise and SMB customers. New features in Enhanced File Transfer Server include industry-leading two-factor authentication, real-time visibility into all ongoing file transfers passing through the server, integration with Microsoft® SharePoint® Server, improved worldwide scalability with UTF-8 encoding, an enhanced user experience for browser-based access, and simplified corporate branding and customization.
The new version of Mail Express, GlobalSCAPE's email-based file transfer solution for business customers, now supports communication through the GlobalSCAPE DMZ Gateway™, which allows customers to implement Mail Express behind a DMZ firewall. This implementation approach provides an added layer of protection for data storage and retrieval, user authentication, and firewall traversal. To ensure customers have complete email attachment management and security in diverse user environments, the latest version also includes the Mail Express Internal Web Portal. The portal provides full Mail Express functionality via a standard web browser to customer employees who may not use Microsoft Outlook as their primary mail client. The portal also allows approved partners to send large files back to Mail Express users, ensuring the files and data remain secure at all times. Other key features of this new version of Mail Express include support for Microsoft Outlook and Exchange 2010, improved performance and optimization when interacting with anti-virus software, and increased capacity and number of users per Mail Express Server, supporting the growing demands of larger enterprises.
At the end of March, GlobalSCAPE announced that the Company had increased its engineering support as a subcontractor on the McLane Advanced Technologies ("MAT") industry team that won the $52.3 million re-compete contract for the US Army Standard Army Maintenance System - Enhanced ("SAMS-E") in September 2010. GlobalSCAPE has provided more than a dozen engineers to work onsite at MAT facilities in Temple, Texas, and is now under contract to deliver more than $1 million of professional services support to the SAMS-E program during the government fiscal year 2011. This SAMS-E support represents the largest professional services engagement in GlobalSCAPE's 15-year history. Under the contract terms, GlobalSCAPE is providing professional services to sustain integration of the Company's Secure FTP Server™ and CuteFTP® solutions within the SAMS-E environment. In addition to the contracted services, GlobalSCAPE may deliver enhanced software solutions for SAMS-E under the subcontractor agreement.
During the first quarter, GlobalSCAPE also received additional workplace and solution recognitions. In January, GlobalSCAPE was named by one of the 2011 "Best Companies to Work for in Texas." This awards program, created in 2006, is a project of Texas Monthly, the Texas Association of Business ("TAB"), the Texas State Council of the Society for Human Resource Management, and Best Companies Group. The statewide survey and awards program identifies, recognizes, and honors the best places of employment in Texas. Companies from across the state competed to be named to the 2011 "Best Companies to Work for in Texas" list. One hundred companies were selected, all identified as benefiting the state's economy, its workforce, and businesses.
In addition, Info Security Products Guide recognized MIX as the winner of the 2011 Global Excellence Award in the Cloud category. The Info Security Products Guide, a leading information security advisory guide, honored the global award winners for their ground-breaking advancements in information security at an awards gala held in San Francisco during February. This year's Global Excellence Awards attracted entries from all over the world, and more than 50 judges from a broad spectrum of industries determined the winners. This award for MIX continues GlobalSCAPE's tradition of solution excellence. Enhanced File Transfer Server, the solution on which the MIX service is based, won Network Products Guide's 2010 Product Innovation Award for Managed File Transfer. The Product Innovation Award recognized Enhanced File Transfer Server for bringing innovative and essential capabilities to the information technology market.
Conference Call May 12, 2011 At 4:30 p.m. ET
GlobalSCAPE management will hold a conference call Thursday, May 12 to discuss the first quarter 2011 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 # 62309027. 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 June 12, 2011.
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 GlobalSCAPE, or subscribe to our Blog or Twitter updates.
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 2010 calendar year, filed with the Securities and Exchange Commission on March 29, 2011.