PHOENIX, Nov. 7, 2011 (GLOBE NEWSWIRE) -- Crexendo, Inc. (AMEX:EXE), a provider of Cloud based infrastructure services to small and mid-sized businesses, including telecom and website hosting services, e-commerce software, website development, and Internet marketing services, today reported financial results for its third quarter ended September 30, 2011.
Third Quarter 2011 Compared to 2010
Net Income for the third quarter of 2011 was $4,507,000 or $0.42 per diluted common share, compared to a net loss of $79,000 or $0.01 per diluted common share in the prior year quarter. Income before income tax provision for the third quarter of 2011 was $4,546,000, which included $209,000 in restructuring related charges related to office space impairments and other one-time charges associated with the announced restructuring of our StoresOnline division, compared to a loss of $455,000 in the prior year quarter. Cash used in operating activities for the third quarter of 2011 was $320,000, compared to $601,000 for the prior year quarter. As of September 30, 2011, cash and cash equivalents were $10,096,000, which included $1,088,000 of restricted cash, working capital was $8,376,000, and working capital excluding deferred revenue was $19,809,000. Total current and long-term trade receivables were $19,348,000 as of September 30, 2011.
Segment Results
StoresOnline
Revenue for the third quarter of 2011 decreased 32% to $9,542,000 compared to $13,969,000 for the prior year quarter. Total segment operating expenses decreased 78% to $2,850,000 in the current quarter from $12,764,000 in the prior year quarter.
Segment other income, primarily related to interest on the collection of accounts receivable decreased 15% to $1,241,000 in the current quarter from $1,452,000 in the prior year quarter.
Total segment income before income tax provision increased 199% to $7,933,000 in the current quarter from $2,657,000 in the prior year quarter.
Crexendo Web Services
Revenue for the third quarter of 2011 increased 106% to $648,000 compared to $315,000 in the prior year quarter. Crexendo Web Services backlog was $1,135,000 at September 30, 2011 compared to a backlog of $692,000 at September 30, 2010.
Total segment operating expenses increased 58% to $1,185,000 during the current quarter compared to $750,000 in the prior year quarter. The increase in segment operating expenses is primarily due to an increase in direct sales costs and fulfillment costs as we prepare for increases in sales.
Total segment operating loss increased 23% to $537,000 in the current quarter compared to $435,000 in the prior year quarter.
Crexendo Network Services
Revenue for the third quarter of 2011 was $52,000 compared to no revenue in the prior year quarter. Total Crexendo Network Services operating expenses were $573,000 for the current quarter compared to $435,000 in the prior year quarter.
Nine months ended September 30, 2011 compared to 2010
Net loss for the nine months ended September 30, 2011 was $6,689,000 or $.63 per diluted common share, compared to Net income of $95,000 or $0.01 per diluted common share in the comparable period last year. Revenue for the nine months ended September 30, 2011 decreased 13% to $42,306,000 compared to $48,826,000 for the comparable period last year. Revenue from our Crexendo Web Services division was $1,677,000 compared to $922,000 in the comparable period last year. Total operating expenses decreased 10% to $47,600,000 for the nine months ended September 30, 2011 compared to $52,656,000 for the comparable period last year. Cash used in operating activities was $3,089,000 for the nine months ended September 30, 2011, compared to cash used of $626,000 for the comparable period last year.
Steven G. Mihaylo, Chief Executive Officer of Crexendo stated, "The results of this quarter are in line with our restructuring plan. We have continued to ramp up the number of direct sales representatives. Today we have 28 direct sales representatives selling both our web services offerings and our telecom offering, with plans to hire an additional three to four sales representatives per month. We concluded the initial testing of pricing plans for selling our web builder software online and are in the process of analyzing the results. We will continue to test market strategies and make the changes we believe are in our best long term interest of the Company. We are also continuing to test webinars and strategic partnerships. We expect that we will delay an aggressive online marketing campaign as we focus our efforts and resources on our direct sales channel.
I continue to believe we have made the right strategic decisions regarding the long term growth of our company. I am impressed with the breadth and strength of our offerings, and believe we are in the right market. Our primary job is to continue to grow and mature the sales team, aggressively pursue additional sales channels and create long lasting customer relationships, which we believe will result in a sustainable recurring revenue model."
Conference Call
The company is hosting a conference call today, November 7, 2011, at 1:30 p.m. PT (4:30 p.m. ET). The conference call will be broadcast live over the Internet at www.crexendoinc.com. If you do not have Internet access, the telephone dial-in number is 888-690-2873 for domestic participants and 913-312-1453 for international participants. The conference ID to join the call is 7051947. Please dial in five to ten minutes prior to the beginning of the call at 4:30 PM EST. A telephone replay will be available two hours after the call for 4 days by dialing 888-203-1112 for domestic callers or 719-457-0820 for international callers and entering access code 7051947.
About Crexendo
Crexendo provides Cloud-based infrastructure services to small and mid-sized businesses, which includes telecom and website hosting services, ecommerce software, website development and Internet marketing services. These Cloud-based services help small and mid-sized businesses build Internet strategies to market and sell their products, accept online orders, analyze marketing performance and manage pricing and customers over the Internet. In addition to software, training and Cloud-based telecom and website hosting services, Crexendo offers site development, search engine optimization (SEO), link building and training. Crexendo, Crexendo Business Solutions, Crexendo Network Services and StoresOnline are trademarks of Crexendo, Inc.
Safe Harbor Statement
This press release contains forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for such forward-looking statements. The words "believe," "expect," "anticipate," "estimate," "will" and other similar statements of expectation identify forward-looking statements. Specific forward-looking statements in this press release include information about Crexendo, (i) that the results of this quarter are in line with the Company restructuring plan, (ii) plans to hire an additional three to four sales representatives per month, (iii) that the Company has concluded the initial testing of pricing plans for selling its web builder software online and the Company is in the process of analyzing the results, (iv) that the Company will continue to test market strategies and make the changes that are in our best long term interest of the Company, (v) that the Company will continue to test webinars and strategic partnerships, (vi) that the Company will delay an aggressive online marketing campaign, (vii) that the Company will focus its efforts and resources on its direct sales channel, (iix) that the Company continues to believe it has made the right strategic decisions regarding the long term growth of the Company, (ix) it is impressed with the breadth and strength of its offerings, (x) belief that it is in the right market, (xi) primary job being to continue to grow and mature the sales team, aggressively pursue additional sales channels and create long lasting customer relationships, and (xii) belief that those actions will result in a sustainable recurring revenue model.
For a more detailed discussion of risk factors that may affect Crexendo's operations and results, please refer to the company's Form 10-Q for the quarters ended March 31, 2011, June 30, 2011 and September 30, 2011 as well as the Form 10-K for the year ended December 31, 2010. These forward-looking statements speak only as of the date on which such statements are made, and the company undertakes no obligation to update such forward-looking statements, except as required by law.
| CREXENDO, INC. AND SUBSIDIARIES | ||
| Condensed Consolidated Balance Sheets | ||
| (In thousands, except par value and share data) | ||
| (unaudited) | ||
| September 30, 2011 | December 31, 2010 | |
| Assets | ||
| Current Assets: | ||
| Cash and cash equivalents | $ 9,008 | $ 14,207 |
| Restricted cash | 1,088 | 1,088 |
|
Trade receivables, net of allowance for doubtful accounts of $6,540 as of September 30, 2011 and $10,464 as of December 31, 2010 |
11,481 | 12,122 |
| Inventories | 421 | 1,067 |
| Income tax receivable | 656 | 1,239 |
| Deferred income tax assets, net | -- | 949 |
| Prepaid expenses and other | 819 | 1,376 |
| Total Current Assets | 23,473 | 32,048 |
| Certificate of deposit | 500 | 500 |
|
Long-term trade receivables, net of allowance for doubtful accounts of $4,880 as of September 30, 2011 and $7,957 as of December 31, 2010 |
7,867 | 9,442 |
| Property and equipment, net | 3,446 | 3,139 |
| Deferred income tax assets, net | 376 | 5,024 |
| Intangible assets | 97 | 987 |
| Goodwill | 265 | 265 |
| Other long-term assets | 254 | 239 |
| Total Assets | $ 36,278 | $ 51,644 |
| Liabilities and Stockholders' Equity | ||
| Current Liabilities: | ||
| Accounts payable | $ 886 | $ 3,328 |
| Accrued expenses and other | 2,191 | 3,361 |
| Dividend payable | 211 | 214 |
| Deferred income tax liability | 376 | -- |
| Deferred revenue, current portion | 11,433 | 13,757 |
| Total Current Liabilities | 15,097 | 20,660 |
| Deferred revenue, net of current portion | 7,905 | 9,523 |
| Other long-term liabilities | 410 | 1,341 |
| Total Liabilities | 23,412 | 31,524 |
| Commitments and contingencies | ||
| Stockholders' Equity: | ||
| Preferred stock, par value $0.001 per share - authorized 5,000,000 shares; none issued | -- | -- |
|
Common stock, par value $0.001 per share - authorized 100,000,000 shares; 10,523,078 shares outstanding as of September 30, 2011 and 10,664,878 shares outstanding as of December 31, 2010 |
11 | 11 |
| Additional paid-in capital | 48,916 | 49,481 |
| Accumulated deficit | (36,061) | (29,372) |
| Total Stockholders' Equity | 12,866 | 20,120 |
| Total Liabilities and Stockholders' Equity | $ 36,278 | $ 51,644 |
| CREXENDO, INC. AND SUBSIDIARIES | ||||
| Condensed Consolidated Statements of Operations | ||||
| (In thousands, except per share and share data) | ||||
| (unaudited) | ||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||
| 2011 | 2010 | 2011 | 2010 | |
| Revenue | $ 10,242 | $ 14,284 | $ 42,306 | $ 48,826 |
| Operating expenses: | ||||
| Cost of revenue | 2,057 | 4,707 | 16,037 | 15,032 |
| Selling and marketing | 806 | 7,232 | 19,645 | 25,019 |
| General and administrative | 3,276 | 3,295 | 9,368 | 10,395 |
| Research and development | 807 | 957 | 2,550 | 2,210 |
| Total operating expenses | 6,946 | 16,191 | 47,600 | 52,656 |
| Income (Loss) from operations | 3,296 | (1,907) | (5,294) | (3,830) |
| Other income (expense): | ||||
| Interest income | 1,306 | 1,137 | 3,775 | 3,571 |
| Interest expense | -- | (1) | (2) | (3) |
| Other income (expense), net | (56) | 316 | (89) | 182 |
| Total other income, net | 1,250 | 1,452 | 3,684 | 3,750 |
| Income (loss) before income tax provision | 4,546 | (455) | (1,610) | (80) |
| Income tax benefit (provision) | (39) | 376 | (5,079) | 175 |
| Net income (loss) | $ 4,507 | $ (79) | $ (6,689) | $ 95 |
| Net income (loss) per common share: | ||||
| Basic | $ 0.43 | $ (0.01) | $ (0.63) | $ 0.01 |
| Diluted | $ 0.42 | $ (0.01) | $ (0.63) | $ 0.01 |
| Dividends per common share: | $ 0.02 | $ 0.02 | $ 0.06 | $ 0.06 |
| Weighted average common shares outstanding: | ||||
| Basic | 10,589,132 | 11,383,464 | 10,623,341 | 11,403,148 |
| Diluted | 10,611,254 | 11,383,464 | 10,623,341 | 11,422,471 |
| CREXENDO, INC. AND SUBSIDIARIES | ||
| Condensed Consolidated Statements of Cash Flows | ||
| (In thousands) | ||
| (unaudited) | ||
| Nine Months Ended September 30, | ||
| 2011 | 2010 | |
| CASH FLOWS FROM OPERATING ACTIVITIES | ||
| Net income (loss) | $ (6,689) | $ 95 |
|
Adjustments to reconcile net income (loss) to net cash used for operating activities: |
||
| Depreciation and amortization | 1,000 | 1,030 |
| Impairment of inventory, intangible assets, and lease cancellation | 1,169 | -- |
| Loss on Subsidiary | 56 | -- |
| Expense for stock options issued to employees | 686 | 855 |
| Tax benefit upon issuance of common stock | -- | (3) |
| Deferred income tax provision (benefit) | 5,973 | (709) |
| Changes in assets and liabilities net of effects from acquisition: | ||
| Trade receivables | 2,216 | 2,900 |
| Inventories | 419 | (720) |
| Income tax receivable | 583 | (519) |
| Prepaid expenses and other | 557 | 505 |
| Other long-term assets | (15) | 51 |
| Accounts payable, accrued expenses and other | (4,171) | (1,575) |
| Income taxes payable | -- | 5 |
| Deferred revenue | (3,942) | (3,383) |
| Other long-term liabilities | (931) | 842 |
| Net cash used for operating activities | (3,089) | (626) |
| CASH FLOWS FROM INVESTING ACTIVITIES | ||
| Acquisition of property and equipment | (764) | (2,356) |
| Acquisition of company | -- | (250) |
| Proceeds from sale of property held for sale | -- | 210 |
| Investment in subsidiary | (56) | -- |
| Net cash used for investing activities | (820) | (2,396) |
| CASH FLOWS FROM FINANCING ACTIVITIES | ||
| Proceeds from exercise of stock options and related income tax benefit | 68 | 13 |
| Repurchase of common stock | (682) | (323) |
| Payments made on contingent consideration | (36) | (61) |
| Dividend payments | (640) | (686) |
| Net cash used for financing activities | (1,290) | (1,057) |
| NET DECREASE IN CASH AND CASH EQUIVALENTS | (5,199) | (4,079) |
| CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 14,207 | 21,549 |
| CASH AND CASH EQUIVALENTS, END OF PERIOD | $ 9,008 | $ 17,470 |
| Supplemental disclosure of cash flow information: | ||
| Cash paid (received) during the period: | ||
| Interest | -- | 1 |
| Income taxes | (530) | 190 |
| CREXENDO, INC. AND SUBSIDIARIES | ||
| Condensed Consolidated Statements of Cash Flows (CONTINUED) | ||
| (In thousands) | ||
| Nine Months Ended September 30, | ||
| 2011 | 2010 | |
| Supplemental disclosure of non-cash investing and financing information: | ||
| Dividends declared | $ 211 | $ 228 |
| Purchase of property and equipment included in accounts payable | 313 | 82 |
| Acquisition of company with stock | -- | 117 |
| Contingent consideration related to acquisition | -- | 128 |