[November 12, 2008] Telanetix Reports Third Quarter 2008 Results Tweet BELLEVUE, Wash., Nov. 12 /PRNewswire-FirstCall/ -- Telanetix, Inc. (OTC BB: TNXI) a leading IP solutions provider offering telepresence and VoIP services to the SMB and SME markets, reported financial results for its third quarter ended September 30, 2008. Doug Johnson, Telanetix's CEO, said, "During the third quarter, we continued to drive to our goal of long-term sustainable, profitable growth by delivering total revenue increase of 6.2% from last quarter and improving Adjusted EBITDA loss of $138,000, compared to an Adjusted EBITDA loss of $1.3 million last quarter. Our performance was anchored by our solid Voice revenue growth of 6.2% quarter-over-quarter. Even as the economic environment has become challenging, our core voice line count grew quarter-over-quarter 7% to 81,200 lines. We maintained another strong quarter in low customer churn of 1.9%. Additionally, we continued to execute our Video expansion strategy, hiring key telepresence veterans to develop more distribution channels for 2009. Our strategy was supported by both our cost reductions and our successful capital raise of $2 million in August." Financial Highlights for the Third Quarter of 2008 Compared to the Second Quarter of 2008 -- Revenue was $8.5 million, up from $8.0 million. - Video revenue was $1.7 million, up from $1.6 million. - Voice and network revenue was $6.8 million, up from $6.4 million. -- Gross profit was $4.5 million, or 53.4% of revenue, compared to $3.7 million, or 46.8% of revenue. - Voice gross margin was 59.3%, compared to 53.4%. - Video gross margin was 29.9%, compared to 20.8%. -- SG&A was $4.4 million including $715,000 in stock-based compensation, compared to $6.0 million including $2.0 million in stock-based compensation. -- Total operating expense was $6.5 million including $775,000 in stock-based compensation, compared to $8.5 million including $2.4 million in stock-based compensation. -- Net loss was $619,000, or $0.02 per diluted share, compared to a net income, which included the recognition of $10.9 million for the change in fair market value of derivative liabilities, of $4.4 million, or $0.15 per share, in second quarter 2008. -- Third quarter 2008 Adjusted EBITDA was a loss of $138,000, compared to a loss of $1.3 million last quarter. The improvement in Adjusted EBITDA reflects improved revenue, gross margins and the initial impact of cost cutting programs. -- At September 30, 2008, the cash and cash equivalents balance was $1.4 million. "We understand that economic challenges increase the need for companies to operate even more prudently. Telanetix delivers low-cost, IP-based communication services via broadband that can be easily integrated into an existing infrastructure instantly creating cost savings for our customers. Our strong foundation in core voice services combined with improvements to our video sales program position us well with SMB and SME. Even in this difficult economic environment, we expect we will continue to drive revenue growth and Adjusted EBITDA progress and generally improve the health of our company," concluded Johnson. Management believes certain non-GAAP measures provide relevant and meaningful measures by which investors can evaluate the business. 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. A reconciliation can be found at the end of this release. Recent Corporate Highlights -- Successfully launched Digital Phone Service (DPS) at Costco via combined business phone service and business phone system package to Costco's Membership, targeted at members running small businesses with five or fewer employees. This segment represents over 60% of all registered businesses in the U.S. -- Hired three veteran telepresence sales leaders who will report to J.D. Vaughn, Vice President of Worldwide Video Sales: Brice Drogosch, Western Vice Regional Vice President of Video Sales; Steve Parrish, Eastern Region Vice President of Video Sales; and Linda Bickelman, Director of Channel Development -- Video. -- Launched "Represence," a new upgrade program to layer full telepresence functionality into existing video conferencing rooms regardless of existing hardware solution. -- Won Digital Presence(TM) Telepresence Service order from St. Vincent Catholic Medical Centers of New York for a variety of organizational applications including intercampus Executive Communication, Remote Staff Training, Organization-wide "Public Forum" Virtual Meetings, and Disaster Preparedness Communications. -- Received proceeds of $2.0 million August 13th by increasing the six-year, interest only, non-amortizing debentures to an aggregate principal amount of $28.2 million, up from the $26.1 million principal announced on July 1st. -- Appointed Doug Johnson to chairman of the board in addition to his duties as chief executive officer. Conference Call Information Management will conduct a conference call at 10:00 am PT/1:00 pm ET on November 12, 2008 to discuss the company's third quarter 2008 results. To access the call in the United States, dial 888-680-0865; to dial-in internationally, dial 617-213-4853 and enter passcode 63240796. The call will also be broadcast live over the Internet and will be available for replay for 90 days at http://www.telanetix.com/. A telephone replay will be available two hours after the call through November 19, 2008 by dialing 888-286-8010 for domestic callers and 617-801-6888 for international callers. All parties will need the following replay pass code 46739717. About Telanetix, Inc. Telanetix is a leading IP solutions provider offering telepresence and advanced communication services to the SMB (small to medium business) and SME (small to medium enterprise) markets. By leveraging on ubiquitous network infrastructures, Telanetix's solutions meet the real-world communications demands of its customers. The company's core technologies include a Telepresence offering, called Digital Presence(TM), designed to create fully immersive and interactive meeting environments that incorporate voice, video and data from multiple locations into a single environment; and IP enabled enhanced services that give companies flexible calling solutions at a fraction of the price of traditional telecom providers. Additional information can be found at the Telanetix corporate website, http://www.telanetix.com/. 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, anything relating or referring to future financial results and plans for future business development activities, 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. 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. -Tables to Follow - TELANETIX, INC. Condensed Consolidated Balance Sheets September 30, December 31, 2008 2007 (Unaudited) Current assets Cash $1,406,399 $3,779,821 Accounts receivable, net 2,825,746 2,406,885 Inventory 559,208 230,590 Prepaid expenses and other current assets 673,101 455,577 Total current assets 5,464,454 6,872,873 Property and equipment, net 5,483,346 5,844,421 Goodwill 7,821,728 6,934,304 Purchased intangibles, net 19,198,336 20,953,333 Other assets 1,105,919 738,024 Total assets $39,073,783 $41,342,955 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $2,655,513 $1,897,165 Accrued liabilities 2,820,299 2,618,305 Line of credit - 503,590 Deferred revenue 1,000,498 1,018,515 Deferred compensation, current portion 130,834 445,389 Current portion of capital lease obligations 993,618 1,200,989 Convertible debentures, current portion - 3,670,734 Warrant and beneficial conversion feature liabilities 4,702,811 9,103,923 Total current liabilities 12,303,573 20,458,610 Non-current liabilities Capital lease obligations, net of current portion 1,026,582 1,433,694 Deferred revenue 166,215 69,700 Convertible debentures, less current portion 18,600,929 1,003,178 Total non-current liabilities 19,783,726 2,506,572 Total liabilities 32,097,299 22,965,182 Stockholders' equity Preferred stock, $.0001; Authorized: 10,000,000; Issued and outstanding: None at September 30, 2008 and 13,000 at December 31, 2007 - 1 Common stock, $.0001 par value; Authorized: 200,000,000 shares; Issued and outstanding: 29,364,292 at September 30, 2008 and 23,079,576 at December 31, 2007 2,937 2,308 Additional paid in capital 32,361,364 39,011,923 Warrants 10,000 10,000 Accumulated deficit (25,397,817) (20,646,459) Total stockholders' equity 6,976,484 18,377,773 Total liabilities and stockholders' equity $39,073,783 $41,342,955 TELANETIX, INC. Condensed Consolidated Statements of Operations (Unaudited) Three months ended Nine months ended September 30, September 30, 2008 2007 2008 2007 (Restated) (Restated) Revenues Product revenues $1,654,038 $1,185,941 $4,460,756 $3,589,929 Service revenues 6,843,547 1,075,774 19,692,125 1,179,366 Total revenues 8,497,585 2,261,715 24,152,881 4,769,295 Cost of revenues Cost of product revenues 1,122,393 1,158,750 3,507,050 2,684,818 Cost of service revenues 2,836,558 575,274 8,925,787 663,772 Total cost of revenues 3,958,951 1,734,024 12,432,837 3,348,590 Gross profit 4,538,634 527,691 11,720,044 1,420,705 Operating expenses Selling, general and administrative 4,435,280 1,927,957 14,940,248 4,651,221 Research, development and engineering 1,266,947 473,444 4,311,154 832,551 Depreciation 230,733 134,966 635,930 171,710 Amortization of purchased intangibles 584,999 108,333 1,754,997 108,333 Total operating expenses 6,517,959 2,644,700 21,642,329 5,763,815 Operating loss (1,979,325) (2,117,009) (9,922,285) (4,343,110) Other income (expense) Interest income 283 47,500 17,076 70,144 Interest expense (1,480,689) (3,080,358) (4,469,134) (4,607,409) Change in fair market value of warrant and beneficial conversion feature liabilities 2,840,233 2,686,252 11,572,985 (524,532) Gain on disposal of fixed assets - - - 4,339 Total other income (expense) 1,359,827 (346,606) 7,120,927 (5,057,458) Net income (loss) (619,498) (2,463,615) (2,801,358) (9,400,568) Series A preferred stock dividends, accretion and increase in stated value - (8,716,480) (3,178,003) (8,716,480) Net income (loss) applicable to common stockholders $(619,498) $(11,180,095) $(5,979,361) $(18,117,048) Net income (loss) per share - basic $(0.02) $(0.59) $(0.24) $(1.07) Weighted average shares outstanding - basic 27,854,837 18,970,142 25,266,459 16,926,615 TELANETIX, INC. Supplemental Table of Revenue Breakdown Three months ended September 30, Video Solutions Voice and Network Solutions Total 2008 Revenues $1,710,873 $6,786,712 $8,497,585 2007 Revenues $1,226,691 $1,035,024 $2,261,715 Nine months ended September 30, Video Solutions Voice and Network Solutions Total 2008 Revenues $4,764,791 $19,388,090 $24,152,881 2007 Revenues $3,734,271 $1,035,024 $4,769,295 TELANETIX, INC. Reconciliation from Net Income to EBITDA and Adjusted EBITDA Three months ended September 30, 2008 June 30, 2008 Net Income (loss) $(619,498) $4,428,291 Depreciation and amortization of purchased intangibles 1,065,764 1,038,053 Interest expense 1,480,689 1,722,850 EBITDA 1,926,955 7,189,194 Adjustments for certain non-cash expenses: Change in fair market value of warrant and beneficial conversion feature liabilities (2,840,233) (10,941,244) Stock and warrant compensation (1) 775,290 2,418,342 Adjusted EBITDA $(137,988) $(1,333,708) (1) Stock-based and warrant compensation for the period ended June 30, 2008 included $1.8 million in severance costs, including accelerated vesting and modifications to options. Telanetix, Inc. CONTACT: Investor Relations, Salzwedel Financial Communications, Inc.,+1-503-722-7300, [email protected], for Telanetix, Inc. Web site: http://www.telanetix.com/ [ Back To TMCnet.com's Homepage ]