Sonic Foundry (SOFO) saw its loss widen to $1.46 million, or $0.33 a share for the quarter ended Mar. 31, 2017. In the previous year period, the company reported a loss of $0.71 million, or $0.16 a share. Revenue during the quarter dropped 10.94 percent to $8.56 million from $9.61 million in the previous year period. Gross margin for the quarter contracted 482 basis points over the previous year period to 70.84 percent. Operating margin for the quarter stood at negative 14.88 percent as compared to a negative 2.23 percent for the previous year period.
Operating loss for the quarter was $1.27 million, compared with an operating loss of $0.21 million in the previous year period.
However, the adjusted EBITDA for the quarter stood at negative $0.74 million compared with $0.46 million in the prior year period. At the same time, adjusted EBITDA margin stood at negative 8.60 percent for the quarter compared to 4.80 percent in the last year period.
"While our North American business performed close to expectations for the quarter, our results reflect the impact of unique circumstances in the Asia-PAC and Europe, Middle East and Africa regions. Transaction structure and channel performance in Japan, timing in EMEA, and slower than anticipated growth in China resulted in performance below our expectations. We have already begun to make meaningful improvements, both in mitigating the root causes of the underperformance, and in reducing our cost structure. It’s unlikely we can recover the missed billings for the year, but combined, these changes will produce significant benefit for the long term, including the remainder of this fiscal year and into the next, and also help us achieve our goal of improving bottom line performance over fiscal 2016," said Gary Weis, chief executive officer of Sonic Foundry.
Operating cash flow turns negative
Sonic Foundry has spent $1.62 million cash to meet operating activities during the first half as against cash inflow of $1.04 million in the last year period. The company has spent $0.59 million cash to meet investing activities during the first six months as against cash outgo of $0.15 million in the last year period.
Cash flow from financing activities was $1.22 million for the first six months as against cash outgo of $0.96 million in the last year period.
Cash and cash equivalents stood at $0.85 million as on Mar. 31, 2017, down 54.88 percent or $1.03 million from $1.88 million on Mar. 31, 2016.
Working capital remains negative
Working capital of Sonic Foundry was negative $4.44 million on Mar. 31, 2017 compared with negative $0.60 million on Mar. 31, 2016. Current ratio was at 0.78 as on Mar. 31, 2017, down from 0.96 on Mar. 31, 2016.
Cash conversion cycle (CCC) has decreased to 88 days for the quarter from 146 days for the last year period. Days sales outstanding went up to 113 days for the quarter compared with 95 days for the same period last year.
Days inventory outstanding has decreased to 26 days for the quarter compared with 90 days for the previous year period. At the same time, days payable outstanding went up to 51 days for the quarter from 38 for the same period last year.
Debt moves up
Sonic Foundry has witnessed an increase in total debt over the last one year. It stood at $6.32 million as on Mar. 31, 2017, up 21.53 percent or $1.12 million from $5.20 million on Mar. 31, 2016. Total debt was 20.35 percent of total assets as on Mar. 31, 2017, compared with 16.11 percent on Mar. 31, 2016. Debt to equity ratio was at 1.76 as on Mar. 31, 2017, up from 0.75 as on Mar. 31, 2016.
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