SOURCE: Accelerize

Accelerize

November 09, 2016 06:00 ET

Accelerize Inc. Reports Record Revenue of $6.0 Million in the Third Quarter of 2016 With Monthly Recurring License Fees Increasing 23% Year-Over-Year

Q3 net loss improves by $2.0MM to ($134K) as Adjusted EBITDA reaches $568K; New innovations to its proprietary software platform build value to drive recurring revenue growth

NEWPORT BEACH, CA--(Marketwired - Nov 9, 2016) - Accelerize Inc. (OTCQB: ACLZ) (OTCBB: ACLZ), a leader in marketing technology solutions, today announced financial results for its fiscal third quarter ended September 30, 2016. Owned and operated by Accelerize, CAKE provides a proprietary Software as a Service (SaaS) enterprise solution to track and analyze the performance of digital marketing return on investment.

Company Highlights

  • Customer Adoption and Usage Increases Drive Continued Growth of Monthly Recurring License Fees: Contractual license fee revenues increased to $4.6MM in Q3 2016, up 23% year-over-year. Total revenue per customer increased 11% in Q3 2016 as compared with the same period in 2015. Customers have shown increased adoption of the Company's SaaS platform through broader usage and higher transaction volumes. Additionally, from a customer concentration perspective, no single customer represented more than 5% of overall revenue in the quarter. The Company intends to continue to focus its sales efforts on recurring revenue opportunities.
  • Technology Investment Builds Valuable Software Platform: With over 500 customers driving billions of consumer actions monthly through its system, CAKE has become the industry standard for networks and publishers seeking to optimize campaign performance. Recently, the Company completed a significant investment in a new architecture and platform designed to address the expanding needs of the modern marketer including a broad spectrum of digital marketers and advertisers. The re-architecture provides virtually limitless scalability, enabling CAKE to deliver additional robust, value-add features and capabilities. This new approach to digital marketing, realized by advancements in CAKE's technology, empowers marketers to achieve a precise, data-driven view of their multi-channel digital marketing spend and performance.
  • Filing of Provisional Patent: As part of Accelerize's intellectual property development strategy, CAKE recently filed a provisional patent application with the United States Patent and Trademark Office. This patent covers technology of an algorithmic attribution server and method that analyzes marketing effectiveness.
  • International Sales Expansion: The Company achieved further global diversification with 34% of overall revenue being derived outside the U.S. in Q3 2016, up from 31% in Q3 2015. During the third quarter of 2016, the Company continued to add new clients from virtually all regions of the world.

"Through our commitment to product innovation we continue to add value to our proprietary software architecture, and as that value increases, we are beginning to see how our recurring revenue growth is rapidly flowing through our income statement. We decreased our net loss, generated increasing positive EBITDA throughout the year and have now reached operational profitability," said Brian Ross, CEO and Chairman of Accelerize Inc. "While we are excited about our performance thus far in 2016, I believe we are only beginning to scratch the surface of the economic power of our proprietary technology. With CAKE's new architecture now complete we have set the stage for additional expansion in the quarters and years to come as we move into new and more expansive markets. Our entire team is dedicated toward building shareholder value through technology advancement and continued improvements in our financial performance."

Financial Highlights for Q3 2016

  • Revenues: Total revenues for Q3 2016 reached a record $6.0MM, a 14% increase from $5.3MM recorded in Q3 2015. Moreover, monthly recurring license fee revenue increased 23% year-over-year to a total of $4.6MM for Q3 2016. The revenue increase was driven by an 11% year-over-year increase in average revenue per customer, reflecting the Company's continuing success in adding larger customer opportunities that progressively grow in overall usage. Q3 2016 revenue was negatively impacted by approximately $250K as a result of the Company's decision to discontinue servicing certain low-quality emailing businesses late in Q2 2016. Geographically, the Company continued to successfully implement its international expansion efforts with 34% of revenues in Q3 2016 derived from outside the U.S. compared to 31% in Q3 2015. The Company expects future revenues to be driven by ongoing international expansion, organic growth, up-selling existing customers, product innovation, as well as streamlined sales and marketing efforts.
  • Operating Income (Loss): The Company recorded operating income of $109K in Q3 2016, a $2.2MM improvement compared to an operating loss of $(2.1MM) in Q3 2015. The significant improvement in operating results was largely attributable to a 32% reduction in operating expense which enabled the Company to achieve a $900K reduction in sales and marketing expenditures year-over-year while expanding revenue. The Company also achieved a $437K reduction in general and administrative expenses. Research and development expenses also decreased by $439K year-over-year while the Company continued to invest in product innovation.
  • Net Income (Loss): The Company recorded a net loss of ($134K) compared to a net loss of ($2.2) million in Q3 2015.
  • Adjusted EBITDA: Company achieved positive adjusted EBITDA growth. Adjusted EBITDA rose to $568K in Q3 2016 representing and an improvement of $1.9MM compared to an adjusted EBITDA loss of ($1.3MM) recorded in Q3 2015. Adjusted EBITDA is a non-GAAP measure management believes provides important insight into the Company's operating results (see "Use of Non-GAAP Financial Information" and the reconciliations of non-GAAP financial measures later in the press release).
  • Revenue Model: The Company's revenue model is fundamentally a monthly recurring license fee structure with associated usage fees based on the volume of online events. The Company also earns a small portion of its revenue from training and implementation of new customers, professional services, partnerships and royalties.

About Accelerize Inc.
Accelerize Inc. (OTCQB: ACLZ) (OTCBB: ACLZ) offers marketing technology solutions that revolutionize the way advertisers leverage their digital advertising data. For more information, visit www.accelerize.com.

Use of Forward-looking Statements

This press release may contain forward-looking statements from Accelerize Inc. within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 and federal securities laws. For example, when Accelerize Inc. describes its growth prospects, the economic power of its technology, future expansion and expectations for future improvements in financial performance and revenues, and other statements containing the words "believes," "anticipates," "plans," "expects," "will" and similar expressions, Accelerize Inc. is using forward-looking statements. These forward-looking statements are based on the current expectations of the management of Accelerize Inc. only, and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. The following factors, among others, could cause actual results to differ materially from those described in the forward-looking statements: changes in technology and market requirements; our technology may not be validated as we progress further; we may be unable to retain or attract key employees whose knowledge is essential to the development of our products and services; unforeseen market and technological difficulties may develop with our products and services; inability to timely develop and introduce new technologies, products and applications; loss of market share and pressure on pricing resulting from competition, which could cause the actual results or performance of Accelerize Inc. to differ materially from those contemplated in such forward-looking statements. Except as otherwise required by law, Accelerize Inc. undertakes no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. For a more detailed description of the risk and uncertainties affecting Accelerize Inc., reference is made to Accelerize Inc.'s reports filed from time to time with the Securities and Exchange Commission.

Use of Non-GAAP Financial Information

Accelerize Inc. provides financial statements that are prepared in accordance with generally accepted accounting principles (GAAP). To help understand Accelerize's financial performance the company has supplemented its financial results that it provides in accordance with GAAP with certain non-GAAP financial measures. The method Accelerize uses to produce non-GAAP financial results is not computed according to GAAP and may differ from the methods used by other companies. Non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with the company's consolidated financial statements prepared in accordance with GAAP. Specifically, management is excluding the following items from its non-GAAP Adjusted EBITDA calculation:

Stock-Based Compensation and Warrant Expenses: The Company's compensation strategy includes the use of stock-based compensation and warrants to attract and retain employees and executives. It is principally aimed at aligning their interests with those of our stockholders and at long-term employee retention, rather than to motivate or reward operational performance for any particular period. Thus, stock-based compensation and warrant expense varies for reasons that are generally unrelated to operational decisions and performance in any particular period.

 
ACCELERIZE INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
 
    September 30,
2016
    December 31,
2015
 
    (Unaudited)        
ASSETS                
Current Assets:                
  Cash   $ 614,865     $ 908,095  
  Restricted cash     200,000       -  
  Accounts receivable, net of allowance for bad debt of $366,198 and $395,147, respectively     2,273,738       1,833,007  
  Prepaid expenses and other current assets     507,744       239,921  
    Total current assets     3,596,347       2,981,023  
                 
  Property and equipment, net of accumulated depreciation of $2,355,962 and $1,854,351, respectively     2,782,159       1,956,864  
  Other assets     108,020       124,882  
    Total assets   $ 6,486,526     $ 5,062,769  
                 
LIABILITIES AND STOCKHOLDERS' DEFICIT                
                 
Current Liabilities:                
  Accounts payable and accrued expenses   $ 1,812,619     $ 2,236,750  
  Deferred revenues     70,278       10,436  
  Line of credit, net of deferred financing cost of $0 and $36,559, respectively     -       4,598,441  
  Other short term loan, net of deferred financing cost of $7,893 and $0, respectively     517,107       -  
    Total current liabilities     2,400,004       6,845,627  
Line of credit, net of deferred financing cost of $469,531 and $0, respectively     5,530,469       -  
    Total liabilities     7,930,473       6,845,627  
                 
Stockholders' Deficit                
  Common stock; $0.001 par value; 100,000,000 shares authorized; 65,125,254 and 65,069,327 shares issued and outstanding at September 30, 2016 and December 31, 2015, respectively     65,124       65,068  
  Additional paid-in capital     24,869,327       23,440,366  
  Accumulated deficit     (26,317,115 )     (25,266,612 )
  Accumulated other comprehensive loss     (61,283 )     (21,680 )
                 
    Total stockholders' deficit     (1,443,947 )     (1,782,858 )
                 
    Total liabilities and stockholders' deficit   $ 6,486,526     $ 5,062,769  
                     
                     
 
ACCELERIZE INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS 
 
    Three-month periods ended
September 30,
    Nine-month periods ended
September 30,
 
    2016     2015     2016     2015  
                                 
Revenues:   $ 6,015,800     $ 5,288,628     $ 17,883,105     $ 15,954,114  
    Cost of revenue     2,073,018       1,797,056       6,035,828       4,706,167  
      Gross profit     3,942,782       3,491,572       11,847,277       11,247,947  
                                 
Operating expenses:                                
  Research and development     952,704       1,391,301       2,957,140       3,593,093  
  Sales and marketing     924,415       1,824,046       2,791,715       5,873,023  
  General and administrative     1,956,991       2,394,092       6,492,958       7,199,968  
    Total operating expenses     3,834,110       5,609,439       12,241,813       16,666,084  
                                 
Operating income (loss)     108,672       (2,117,867 )     (394,536 )     (5,418,137 )
                                 
Other income (expense):                                
  Other (loss) income     (153 )     9,475       20,781       63,840  
  Other expense     (242,516 )     (73,897 )     (676,748 )     (182,134 )
    Total other (expense)     (242,669 )     (64,422 )     (655,967 )     (118,294 )
                                 
Net loss   $ (133,997 )   $ (2,182,289 )   $ (1,050,503 )   $ (5,536,431 )
                                 
                                 
 
ACCELERIZE INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
    Nine-month periods ended
September 30,
 
    2016     2015  
Cash flows from operating activities:                
Net loss   $ (1,050,503 )   $ (5,536,431 )
Adjustments to reconcile net loss to net cash used in operating activities:                
  Depreciation and amortization     522,202       1,065,624  
  Impairment of fixed assets     275,029       -  
  Amortization of debt discount and deferred financing cost     125,183       30,282  
  Provision for bad debt     (28,949 )     (98,169 )
  Fair value of options and warrants     1,037,400       1,632,029  
  Non-cash expenses paid on company's behalf     204,920       -  
  Gain on sale of fixed assets     (246 )     -  
Changes in operating assets and liabilities:                
  Accounts receivable     (411,782 )     (563,531 )
  Prepaid expenses and other assets     (267,823 )     (130,258 )
  Restricted cash     (200,000 )     -  
  Accounts payable and accrued expenses     (449,131 )     (1,244,171 )
  Deferred revenues     59,842       (187,091 )
  Other assets     15,406       1,574  
Net cash used in operating activities     (168,451 )     (2,541,800 )
                 
Cash flows from investing activities:                
  Capitalized software for internal use     (1,606,887 )     (952,216 )
  Capital expenditures     (20,206 )     (152,080 )
  Proceeds from sale of assets     6,267       5,630  
Net cash used in investing activities     (1,620,826 )     (1,098,666 )
                 
Cash flows from financing activities:                
  Principal repayments of line of credit     (137,777 )     -  
  Proceeds from line of credit     1,803,105       1,315,000  
  Payment of financing costs     (129,678 )     -  
  Net proceeds from exercise of options and warrants     -       9,586  
  Net proceeds from issuance of shares of Common Stock     -       1,852,362  
  Payments related to issuance of shares of Common Stock             (143,169 )
Net cash provided by financing activities     1,535,650       3,033,779  
                 
Effect of exchange rate changes on cash     (39,603 )     (4,335 )
                 
Net decrease in cash     (293,230 )     (611,022 )
                 
                 
   
ACCELERIZE INC.  
UNAUDITED RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES  
   
GAAP Net loss   $ (133,997 )   $ (2,182,289 )   $ (1,050,503 )   $ (5,536,431 )
EBITDA Calculation                                
  Interest     219,942       72,601       639,744       179,484  
  Depreciation-US     40,839       62,605       191,414       194,470  
  Depreciation-UK     11,364       12,246       34,851       35.593  
  Amortization     195,387       200,133       570,966       835,561  
EBITDA:   $ 333,535     $ (1,834,704 )   $ 386,472     $ (4,291,323 )
  Stock-based compensation expense     108,150       221,321       356,932       779,751  
  Warrant expense     125,867       284,093       680,467       852,278  
Adjusted EBITDA:   $ 567,551     $ (1,329,290 )   $ 1,423,872     $ (2,659,294 )
                                 

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