GlobalSCAPE, Inc. Reports First Quarter 2017 Financial Results
First Quarter 2017 Financial Results
- Revenue for the first quarter of 2017 increased 13 percent to $8.3 million from $7.4 million in the first quarter of 2016. The increase was driven by a 16 percent increase in revenue from EFT platform products that accounted for more than 90 percent of total revenue.
- Gross profit for the first quarter of 2017 was $6.8 million (82 percent of total revenue) compared to $5.9 million (80 percent of total revenue) in the first quarter of 2016.
- Net income totaled $751,000 or $0.03 per diluted share, an improvement from $392,000 or $0.02 per diluted share in the first quarter of 2016. The first quarter of 2017 marked the company’s 18th consecutive quarter of profitability.
- Adjusted EBITDA increased 69 percent to $1.4 million for the first quarter of 2017 from $826,000 in the first quarter of 2016. 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 consolidated statement of operations and comprehensive income or for net cash provided by operating activities presented on our condensed consolidated statement of cash flows.
- As of March 31, 2017, the Company had cash, cash equivalents and short-term investments of $13.2 million and long-term investments of $12.8 million. Total cash resources were $26.0 million as of March 31, 2017. Total cash resources is not a measure of financial position under GAAP and should not be considered a substitute for cash and cash equivalents, short-term investments and long-term investments as presented on our condensed consolidated balance sheet.
First Quarter 2017 Technology and Operational Highlights
- Released the Unified Communications Backup Appliance, combining Hewlett Packard Enterprise and Globalscape technology, aimed at better management of corporate data flow
- Achieved a second Cisco Compatibility Certification with the Cisco Solution Partner Program
- Received three 2017 Global Excellence Awards from Info Security Products Guide for distinguished achievements in product innovation, including Gold for both Innovation in Compliance and Cloud/SaaS Solutions as well as the Bronze for BYOD Security
- Named a Best Company to Work for in Texas for seventh consecutive year by Best Companies Group, Texas Monthly, the Texas Association of Business (TAB), and Texas SHRM
Management Commentary from Matt Goulet, President and CEO of Globalscape
“Q1 was yet another strong quarter for Globalscape both financially and operationally. Despite the expected seasonality during this period, revenue increased 13 percent to $8.3 million, which is the highest Q1 revenue ever achieved in our company history. Supplementing this record achievement was the encouraging growth seen across all of our major revenue streams when compared to the same time period in 2016. Most notably, revenue from our EFT platform grew 16 percent compared to the first quarter of 2016. To add to our strong topline growth, we achieved our 18th consecutive quarter of profitability, with earnings per share of $0.03, which was up 50 percent year-over-year for the quarter.
“Operationally, the start of 2017 validated the vision of our new roadmap, which is centered on accelerating our organic growth through our EFT platform, expanding our strategic partnerships, and developing and acquiring technologies that broaden our EFT capabilities and facilitate our expansion into adjacent and complementary markets. In terms of accelerating our organic growth, our demand generation activities have led to a 150 percent year-over-year increase in leads delivered to our salesforce this quarter. Expanding our strategic partnerships is a key area for enhancing and strengthening Globalscape’s existing ecosystem. At the end of the first quarter, we achieved our second Cisco Compatibility Certification with the Cisco Solution Partner Program. We also announced the availability of a Unified Communications Backup Appliance, which is focused on the management of corporate data flow. This appliance deploys our award-winning EFT SMB platform on a HPE ProLiant Server. Finally, with respect to our third key growth initiative, we made considerable progress on several data integration, cloud and data analytics offerings we currently have in the pipeline.
“Altogether, the encouraging financial results and operational progress achieved this quarter indicate that we’re on the right track to expand our leadership position in the managed file transfer market and become one of the preeminent leaders in solving the data-related challenges of today and the future."
Globalscape management will hold a conference call today (April 27, 2017) at 4:30 p.m. Eastern Time (3:30 p.m. Central Time) to discuss these results. Globalscape President and CEO Matt Goulet and CFO Jim Albrecht will host the conference call, followed by a question and answer period.
Date: Thursday, April 27, 2017
Time: 4:30 p.m. Eastern Time (3:30 p.m. Central Time)
U.S. Dial-In Number: 1-888-208-1814
International Number: 1-719-457-2080
Conference ID: 2907005
Please call the conference telephone number 10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Liolios Group at 1-949-574-3860.
A replay of the conference call will be available after 7:30 p.m. Eastern Time on the same day through May 27, 2017.
Toll-Free Replay Number: 1-844-512-2921
International Replay Number: 1-412-317-6671
Replay ID: 2907005
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 2016 fiscal year, filed with the Securities and Exchange Commission on March 27, 2017.
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.
|Condensed Consolidated Balance Sheets|
|(in thousands except share amounts)|
|March 31,||December 31,|
|Cash and cash equivalents||$ 10,400||$ 8,895|
|Short term investments||2,759||2,754|
|Accounts receivable, net||5,499||6,964|
|Federal income tax receivable||-||169|
|Prepaid and other expenses||492||521|
|Total current assets||19,150||19,303|
|Property and equipment, net||577||456|
|Long term investments||12,837||12,779|
|Capitalized software development costs, net||3,731||3,743|
|Deferred tax asset, net||1,190||942|
|Total assets||$ 50,261||$ 50,180|
|Liabilities and Stockholders’ Equity|
|Accounts payable||$ 657||$ 876|
|Income Tax Payable||474||-|
|Total current liabilities||15,763||16,367|
|Deferred revenue, non-current portion||3,618||3,790|
|Other long term liabilities||163||147|
|Commitments and contingencies|
|Preferred stock, par value $0.001 per share, 10,000,000|
|authorized, no shares issued or outstanding||-||-|
|Common stock, par value $0.001 per share, 40,000,000|
|authorized, 21,970,412 and 21,920,912 shares issued|
|at March 31, 2017, and December 31, 2016, respectively||22||22|
|Additional paid-in capital||22,064||21,650|
|Treasury stock, 403,581 shares, at cost, at|
|March 31, 2017 and December 31, 2016||(1,452)||(1,452)|
|Total stockholders’ equity||30,717||29,876|
|Total liabilities and stockholders’ equity||$ 50,261||$ 50,180|
|Condensed Consolidated Statements of Operations and Comprehensive Income|
|(in thousands except share amounts)|
|Three months ended March 31,|
|Software licenses||$ 2,464||$ 2,299|
|Maintenance and support||5,121||4,446|
|Cost of revenues|
|Maintenance and support||412||394|
|Total cost of revenues||1,525||1,446|
|Sales and marketing||3,330||3,048|
|General and administrative||1,721||1,733|
|Research and development||739||627|
|Total operating expenses||5,790||5,408|
|Income from operations||1,003||533|
|Income before income taxes||1,073||566|
|Income tax expense||322||174|
|Net income||$ 751||$ 392|
|Comprehensive income||$ 751||$ 392|
|Net income per common share -|
|Basic||$ 0.03||$ 0.02|
|Diluted||$ 0.03||$ 0.02|
|Weighted average shares outstanding:||21,544||21,033|
|Cash dividends declared per share||$ 0.015||$ 0.015|
|Condensed Consolidated Statements of Cash Flows|
|For the Three Months Ended March 31,|
|Net income||$ 751||$ 392|
|Items not involving cash at the time they are recorded in the statement of operations:|
|Provision for sales returns and doubtful accounts receivable||11||43|
|Depreciation and amortization||541||501|
|Excess tax benefit from share-based compensation||-||(3)|
|Subtotal before changes in operating assets and liabilities||1,379||1,136|
|Changes in operating assets and liabilities:|
|Accrued interest receivable||(63)||(16)|
|Other long-term liabilities||16||3|
|Income tax receivable and payable||643||150|
|Net cash provided by operating activities||2,389||1,207|
|Software development costs capitalized||(462)||(488)|
|Purchase of property and equipment||(188)||(90)|
|Net cash (used in) investing activities||(650)||(578)|
|Proceeds from exercise of stock options||90||122|
|Excess tax benefit from share-based compensation||-||3|
|Net cash (used in) financing activities||(234)||(190)|
|Net increase in cash||1,505||439|
|Cash at beginning of period||8,895||15,885|
|Cash at end of period||$ 10,400||$ 16,324|
|Supplemental disclosure of cash flow information:|
|Cash paid during the period for:|
|Interest||$ -||$ -|
|Income taxes||$ 15||$ 22|
|Three Months Ended|
|Net Income||$ 751||$392|
|Add (subtract) items to determine adjusted EBITDA:|
|Income tax expense||322||174|
|Interest (income) expense, net||(70)||(33)|
|Depreciation and amortization:|
|Total depreciation and amortization||541||501|
|Amortization of capitalized software development costs||(474)||(430)|
|Stock-based compensation expense||324||222|
|Adjusted EBITDA||$ 1,394||$ 826|