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GlobalSCAPE, Inc. Announces Financial Results for the Fourth Quarter and Fiscal 2016

GlobalSCAPE, Inc. (NYSE MKT: GSB), a pioneer and worldwide leader in the secure and reliable exchange of business information, today announced its financial results for the fourth quarter and fiscal year, which ended December 31, 2016.

Fourth Quarter 2016 Financial Summary:

  • Revenue for the fourth quarter of 2016 was $9 million, an increase of 7 percent when compared with the fourth quarter of 2015. This is the highest revenue quarter in Globalscape’s history.
  • For the fourth quarter of 2016, the Company’s net income was $1.3 million, an 8 percent increase when compared to net income for the fourth quarter of 2015.
  • Basic earnings per share was $0.06 for the fourth quarter of 2016.  

Fiscal 2016 Financial Summary:

  • Revenue for fiscal 2016 was $33.3 million, an 8 percent increase when compared to the same time period in 2015.
  • Adjusted EBITDA for fiscal 2016 was $7.1 million compared with $7.2 million for the same period in 2015. Adjusted EBITDA is not a measure of financial performance under GAAP. It should not be considered as a substitute for net income presented on our condensed consolidated statement of operations and comprehensive income or for cash flow from operating activities presented on our condensed consolidated statement of cash flows.
  • The Company had cash, cash equivalents and short-term investments of $24 million on December 31, 2016.
  • Other than liabilities for normal trade payables and taxes, the Company has no debt.  

Fiscal 2016 Business Highlights:

Corporate: Globalscape had several corporate milestones in 2016, including:


Technology: Globalscape refocused on extending the capabilities of its Enhanced File TransferTM (EFTTM) platform, releasing a number of new features and functionalities in 2016, including:

  • Accelerate Module: provides fast file transfers which increase the speed, efficiency and reliability of data movement.
  • Advanced Authentication Module (AAM) and the Workspaces Outlook plugin: AAM provides a single source of authentication across a customer’s infrastructure. The Workspaces Outlook plugin performs secure ad hoc file transfers via email, providing customers with the reporting features in EFT and combining them with the simplicity and security of sending files with Mail Express®. The integration of the two products takes the best features in Mail Express and incorporates them into EFT.
  • Globalscape also made EFT Enterprise available in the Amazon Web Services and Microsoft Azure Marketplaces.  

Technology Alliances: In keeping with a core pillar for growth, Globalscape expanded key technology alliances in 2016, including:

  • Joining F5 Networks’ Technology Alliance Program (TAP): offering an interoperable solution with EFT with High Availability and F5 BIG-IP® Local Traffic Manager™ (LTM®). In jointly deploying the companies’ products, customers will have horizontal scalability, reduced system downtime and enhanced network reliability, when compared with other file transfer platforms.
  • Joining Hewlett Packard Enterprise (HPE) Partner Ready for OEM program: allowing the two companies to work together to provide solutions and resources to address organizations’ struggle to manage and secure data at rest or in motion.
     

Supporting Quote:

Matt Goulet, President and Chief Executive Officer at Globalscape

“Data is the cornerstone of Globalscape’s business, and while we had another record-breaking revenue quarter, we realize that we have only scratched the surface when seeking to help businesses protect and secure their data. The commitment we made in the second half of 2016 to focus on our core EFT platform is propelling the product line forward to proactively address the future data management challenges of our customers. Our sustained focus on strengthening our technology ecosystem while investing in research and development, technology alliance partnerships and technology acquisition is critical to our long-term success and growth.”

Conference Call January 26, 2017 at 4:30 p.m. ET

Globalscape management will hold a conference call on January 26, 2017, at 4:30 p.m. Eastern Time/3:30 p.m. Central Time to discuss financial results and other corporate matters for the fourth quarter and fiscal 2016. Those wanting to join may call 888-438-5448 or 719-325-2244 and use Conference ID # 3545702. A live webcast of the conference call will also be available on the Investor Relations page of the Company's website at www.globalscape.com. A webcast replay will be made available on the Company’s website shortly after the call is completed.

About Globalscape

GlobalSCAPE, Inc. (NYSE MKT: GSB) is a pioneer in the reliable exchange of mission-critical business data and intellectual property. Globalscape’s leading enterprise suite of solutions delivers military-proven security for achieving best-in-class control and visibility of data across multiple locations. Founded in 1996, Globalscape’s software and services are trusted by tens of thousands of customers worldwide, including global enterprises, governments, and small and medium enterprises. For more information, visit www.globalscape.com or follow the blog and 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,” “expect,” 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 2015 fiscal year, filed with the Securities and Exchange Commission on March 3, 2016.

Use of Non-GAAP Measures

The Company uses Adjusted EBITDA (Earnings Before Interest, Taxes, Total Other Income/Expense, Depreciation, Amortization, other than amortization of capitalized software development costs, and Share-Based Compensation Expense) to provide it with a view of cash flow from operations that is supplemental and secondary to its primary assessment of cash flow from operating activities as presented in its condensed consolidated statement of cash flows. The Company uses EBITDA to assess cash flow from our operations prior to considering the cost of financing its business and the effects of income taxes.

Adjusted EBITDA is not a measure of financial performance under GAAP. It should not be considered as a substitute for net income presented on our condensed consolidated statement of operations and comprehensive income or for cash flow from operating activities presented on our condensed consolidated statement of cash flows. Adjusted EBITDA has limitations as an analytical tool and when assessing our operating performance. Adjusted EBITDA should not be considered in isolation or without a simultaneous reading and consideration of our financial statements prepared in accordance with GAAP.

GlobalSCAPE, Inc.
Condensed Consolidated Balance Sheets
(in thousands except share amounts)
December 31,
  2016 2015
Assets
Current assets:
Cash and cash equivalents  $8,895  $15,885
Short term investments 2,754 3,254
Accounts receivable, net 6,964 5,875
Federal income tax receivable 170 547
Prepaid expenses 521 511
Total current assets   19,304  26,072
Property and equipment, net 456 498
Long term investments  12,779  -
Capitalized software development costs 3,743 3,982
Goodwill  12,712  12,712
Deferred tax asset 942 940
Other assets 245  60
Total assets   $50,181  $44,264
 Liabilities and Stockholders’ Equity 
Current liabilities:
Accounts payable   $876  $839
Accrued expenses  1,835 1,893
Deferred revenue   13,605  12,460
Income taxes payable  -  -
Total current liabilities   16,316  15,192
Deferred revenue, non-current portion 3,840 3,808
Other long term liabilities 147 134
Commitments and contingencies
Stockholders’ equity:
Preferred stock, par value $0.001 per share, 10,000,000 authorized, no shares issued or outstanding  -  -
Common stock, par value $0.001 per share, 40,000,000 authorized, 21,920,912 and 21,303,467 shares issued at December 31, 2016 and December 31, 2015, respectively  22  21
Additional paid-in capital   21,650  19,583
Treasury stock, 403,581 shares, at cost, at
 December 31, 2016 and December 31, 2015 (1,452) (1,452)
Retained earnings 9,658 6,978
Total stockholders’ equity   29,878  25,130
Total liabilities and stockholders’ equity   $50,181  $44,264

GlobalSCAPE, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Income 
(in thousands, except per share amounts)
  For the Three Months For the Year 
   Ended December 31,  Ended December 31,
  2016 2015 2016 2015
Operating revenues:
Software licenses  $ 3,419  $3,433  $11,985  $12,023
Maintenance and support 4,939 4,351 18,668 16,489
Professional services 671 692  2,684 2,223
Total revenues  9,029 8,476 33,337 30,735
Costs of revenues
Software licenses 807 777  3,110 2,428
Maintenance and support 396 409  1,541 1,466
Professional services 403 422  1,671 1,394
Total costs of revenues  1,606 1,608  6,322 5,288
Gross Profit  7,423 6,868 27,015 25,447
Operating expenses
Sales and marketing  2,808 3,061 11,682 10,406
General and administrative  1,891 1,539  6,975 6,168
Research and development 811 730  2,539 2,562
Total operating expenses  5,510 5,330 21,196 19,136
Income from operations  1,913 1,538  5,819 6,311
Other income (expense):
Interest expense   -   -   - (4)
Interest income  70 26 159 82
Total other income (expense)   70 26 159 78
Income before income taxes  1,983 1,564  5,978 6,389
Provision for income taxes 717 317  2,027 1,867
Net income  $ 1,266  $1,247  $ 3,951  $4,522
Comprehensive income  $ 1,266  $1,247  $ 3,951  $4,522
Net income per common share - basic  $0.06  $0.06  $0.19  $ 0.22
Net income per common share - diluted  $0.06  $0.06  $0.18  $ 0.21
Weighted average shares outstanding:
Basic 21,318 20,949 21,126 20,824
Diluted 21,802 21,562 21,677 21,366

GlobalSCAPE, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
For the Year Ended December 31,
  2016 2015
Operating Activities:
Net income   $3,951  $4,522
Adjustments to reconcile net income to net cash provided by operating activities:
Bad debt expense  72 62
Depreciation and amortization  2,045 1,553
Stock-based compensation 973  647
Deferred taxes  (2) (248)
Excess tax deficiency from exercise of share based compensation 24  (58)
Subtotal before changes in operating assets and liabilities 7,063 6,478
Changes in operating assets and liabilities:
Accounts receivable  (1,161) 1
Prepaid expenses   (10)  (23)
Federal income taxes 353 (137)
Accrued interest receivable (163)  (69)
Other assets  (185) 40
Accounts payable  37 (272)
Accrued expenses   (58)  303
Deferred revenues  1,177  708
Other long-term liabilities  13 (8)
Net cash provided by (used in) operating activities  7,066 7,021
Investing Activities:
Software development costs (1,538)  (1,967)
Purchase of property and equipment  (226) (152)
Purchase of certificates of deposit (12,116) -
Net cash provided by (used in) investing activities  (13,880)  (2,119)
Financing Activities:
Proceeds from exercise of stock options 1,119  508
Tax deficiency (benefit) from stock-based compensation  (24) 58
Dividends paid (1,271) (941)
Net cash provided by (used in)financing activities  (176) (375)
Net increase (decrease) in cash  (6,990) 4,527
Cash at beginning of period  15,885  11,358
Cash at end of period   $8,895  $ 15,885
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest   $-  $-
Income taxes   $1,638  $2,146

GlobalSCAPE, Inc.
Adjusted EBITDA 
(in thousands)
  Three Months Ended Year Ended
  December 31 December 31
  2016 2015 2016 2015
Net Income  $ 1,266  $ 1,247  $3,951  $4,522
Add (subtract) items to determine adjusted EBITDA:
Income tax expense  717  317 2,027 1,867
Interest (income) expense, net (70)  $(26) (159)  $ (78)
Depreciation and amortization:
Total depreciation and amortization  520  438 2,045 1,553
Amortization of capitalized software development costs (459) (371) (1,777) (1,283)
Stock-based compensation expense  252  165 973 647
Adjusted EBITDA   $ 2,226  $ 1,770  $7,060  $7,228

Globalscape Press Contact

Ciri Haugh
Senior Marketing Communications Manager
pr (at) globalscape (dot) com

Phone Number: (210) 308-8267