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Telanetix Reports 117% Adjusted EBITDA Growth in Third Quarter 2012

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BELLEVUE, Wash.--(BUSINESS WIRE)--

Telanetix, Inc. (OTCBB: TNIX), a leading cloud based communications solutions provider offering next generation voice services and solutions to the business market, today reported financial results for its 2012 third quarter ended September 30, 2012.

Third Quarter Financial Highlights

  • Record total revenue of $8.0 million, up 10.4% from $7.3 million in the third quarter last year.
  • Record core voice revenue of $7.3 million, up 15.7% from $6.3 million in the third quarter last year.
  • Net loss improved to $596,000, or a loss of $0.12 per share, compared to a net loss of $1.5 million, or a loss of $0.31 per share, in the third quarter last year.
  • Adjusted EBITDA was $1.3 million, compared to $600,000 in the third quarter last year, an improvement of 117% which also results in 12 consecutive quarters of positive adjusted EBITDA
  • Total cash and cash equivalents were $2.2 million at September 30, 2012. Cash used for debt service totaled $1.3 million in the quarter.

Doug Johnson, Telanetix' CEO said, “Our record revenue and continued strong adjusted EBITDA results for the quarter reflect the continued positive momentum and significant progress we have made to expand market reach and accelerate revenue growth. Our cloud-based business voice products, namely DPS and SIP trunking, are the drivers behind our year-over-year growth, and when combined together, grew 54% over prior year. All of our products and services are built on our proprietary software, giving us significant technology and cost advantages, which are now being realized in our financial results and are reflected in adjusted EBITDA, at 16% of total revenue in the third quarter. We see strong continued acceptance in the market of our cloud based products and consequently remain focused on further growing our go-to-market channels to drive growth of both our top and bottom line.”

FY-2012 Financial Guidance

Based on the continued strong market acceptance Telanetix has seen for its DPS and SIP trunking services, the Company is reiterating its 2012 financial guidance to achieve total revenue for 2012 of between $31.5 million to $32.0 million, representing growth of approximately 10% to 12%, and core voice revenue for 2012 of between $28.0 million and $28.5 million, representing growth of between 13% and 15%. The Company also expects to achieve adjusted EBITDA for 2012 of between $4.50 million and $4.75 million, representing growth of approximately 73% to 83%. Telanetix expects to fund this growth organically without the need to raise additional capital.

Adjusted EBITDA is a non-GAAP financial measure. Management believes certain non-GAAP measures provide relevant and meaningful measures by which investors can evaluate the business. Management uses adjusted EBITDA to evaluate changes in the company's core earnings from operations, unaffected by non-cash expenses, expenses related to the company's capital structure, taxes or extraordinary events. EBITDA is defined as earnings or loss before interest, income taxes, depreciation and amortization, and the company defines Adjusted EBITDA as EBITDA adjusted for non-cash items including stock-based and warrant compensation, charges related to changes in fair market value of warrant and beneficial conversion feature liabilities, and severance charges. A reconciliation of net income to adjusted EBITDA can be found at the end of this release.

Conference Call Information

Management will conduct a conference call at 1:30 p.m. PT (4:30 p.m. ET) today. To access the call in the United States, dial (866) 271-5140 and to access the call internationally, dial (617) 213-8893 and enter pass code 55141899. The call will also be broadcast live over the Internet and will be available for replay for 90 days at www.telanetix.com. A telephone replay will be available two hours after the call through November 1, 2012 by dialing (888) 286-8010 in the United States and (617) 801-6888 for international callers. All parties will need the following replay pass code 20788429.

About Telanetix, Inc.

Telanetix, Inc. (OTCBB: TNIX) is a leading cloud based communications solutions provider offering next generation voice services to all business market segments. Telanetix solutions meet the real-world communications demands of its customers with an industry-leading value proposition of cutting edge products and technology that brings enhanced productivity and industry-leading savings to our customers. The company's cloud based hosted telecom voice services, marketed under the "AccessLine" brand, give companies flexible calling solutions, a simpler installation experience, and a greater range of support options than traditional telecom providers. With a history of serving over 100,000 business customers, including Fortune 50 companies, we've scaled our award-winning technologies to meet the needs of entrepreneurial-minded small businesses.

Safe Harbor Statement

Certain statements contained in this press release are “forward-looking statements” within the meaning of applicable federal securities laws, including, without limitation, our expectations regarding growth in our revenue for 2012, anything relating or referring to future financial results and plans for future business development activities, including anticipated effects of distribution relationships, and are thus prospective. Forward-looking statements are inherently subject to risks and uncertainties some of which cannot be predicted or quantified based on current expectations. Such risks and uncertainties include, without limitation, the risks and uncertainties set forth from time to time in reports filed by the company with the Securities and Exchange Commission could materially and adversely affect our business, operating results and financial condition. Although the company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Consequently, future events and actual results could differ materially from those set forth in, contemplated by, or underlying the forward-looking statements contained herein. The companies undertake no obligation to publicly release statements made to reflect events or circumstances after the date hereof.

TELANETIX, INC.
Condensed Consolidated Balance Sheets
 
September 30, 2012   December 31, 2011
(Unaudited)
ASSETS
Current assets
Cash $ 2,177,781 $ 1,840,265
Accounts receivable, net 1,802,135 1,925,955
Inventory 58,946 113,305
Prepaid expenses and other current assets   1,046,233     675,045  
Total current assets 5,085,095 4,554,570
Property and equipment, net 1,004,452 1,683,337
Goodwill 7,044,864 7,044,864
Purchased intangibles, net 7,388,337 8,978,337
Other assets   279,602     379,496  
Total assets $ 20,802,350   $ 22,640,604  
 
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Accounts payable $ 1,588,424 $ 1,524,645
Accrued liabilities 2,723,823 2,538,829
Deferred revenue 1,115,081 1,063,548
Current portion of capital lease obligations 615,341 356,227
Current portion of long-term debt   4,604,426     3,502,213  
Total current liabilities   10,647,095     8,985,462  
Non-current liabilities
Deferred revenue, net of current portion 148,550 170,219
Capital lease obligations, net of current portion 962,463 353,860
Long-term, accounts payable 22,836 39,444
Long-term debt, net of current portion   2,187,262     4,306,218  
Total non-current liabilities   3,321,111     4,869,741  
Total liabilities   13,968,206     13,855,203  
Stockholders' equity (deficit)
Common stock, $.0001 par value; Authorized: 8,000,000 shares;
Issued and outstanding: 4,820,098 at September 30, 2012
and December 31, 2011, respectively 482 482
Additional paid in capital 44,390,181 44,084,429
Warrants 56,953 56,953
Accumulated deficit   (37,613,472 )   (35,356,463 )
Total stockholders' equity (deficit)   6,834,144     8,785,401  
Total liabilities and stockholders' equity (deficit) $ 20,802,350   $ 22,640,604  
 
TELANETIX, INC.
Condensed Consolidated Statements of Operations
(Unaudited)
   
Three months ended September 30, Nine months ended September 30,
2012   2011 2012 2011
     
Revenues $ 8,010,965 $ 7,254,405 $ 23,692,633 $ 21,183,708
 
Cost of revenues   3,309,164   3,003,187   9,788,598   8,865,016
 
Gross profit 4,701,801 4,251,218 13,904,035 12,318,692
 
Operating expenses
Selling and marketing 1,710,639 1,749,676 5,061,829 5,225,081
General and administrative 1,941,889 2,088,608 5,695,792 5,828,805
Research, development and engineering 412,619 480,090 1,389,634 1,423,226
Depreciation 149,906 160,227 467,072

472,111

Amortization of purchased intangibles   490,000   550,000   1,590,000   1,650,000
Total operating expenses   4,705,053   5,028,601   14,204,327   14,599,223
 
Operating loss (3,252 ) (777,383 ) (300,292 ) (2,280,531 )
 
Other income (expense)
Interest income 23 17 81 214
Interest expense (592,416 ) (721,676 ) (1,899,498 ) (2,485,604 )
Total other income (expense)  

(592,393

)

   

(761,659

)

   

(1,899,417

)

   

(2,485,390

)

 
(Loss) from continuing operations before taxes

(595,645

)

(1,499,042

)

(2,199,709

)

 

(4,765,921

)

 
Income tax (expense)

(626

)

(57,300

)

                       
 
Net (loss) $

(596,271

)

$

(1,499,042

)

$

(2,257,009

)

 

$

(4,765,921

)

 
Net (loss) per share – basic and diluted                        
Net (loss) per share $

(0.12

)

$

(0.31

)

$

(0.47

)

 

$

(1.01

)

 
Weighted average shares outstanding – basic and diluted   4,820,098     4,820,098     4,820,098     4,723,311  
 
TELANETIX, INC.
Net Loss to EBITDA Reconciliation
(Unaudited)
 
  Three months ended September 30,   Nine months ended September 30,
2012   2011   2012   2011
Adjusted EBITDA (earnings release purposes only)
Net Profit / (Loss) $

(596,271

)

$ (1,499,042 ) $ (2,257,009 ) $ (4,765,921 )
Depreciation and amortization of purchased intangibles 1,202,551 1,013,296 3,565,814 3,006,912
Interest Expense 592,393 721,659 1,899,417 2,485,390
State income tax 626   -   57,300   -  
EBITDA 1,199,299

235,913

3,265,522 726,381
Adjustments for certain non-cash expenses:
Severance Costs - 234,791 862 234,791
Stock based compensation 101,379   128,966   305,752   379,410  
Adjusted EBITDA $ 1,300,678   $ 599,670   $ 3,572,136   $ 1,340,582  

Telanetix, Inc.
Paul Bogonis, CFO, 206-529-6542

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