Call Start: 17:00
Call End: 17:17
Q4 2012 Earnings Call
January 30, 2013 05:00 PM ET
Shin-Yuan Tzou - VP, Strategy & Product Management
Peter Chu - CFO
Welcome to the BroadVision Q4 Year 2012 Earnings Announcement and Investor Conference Call. At this time all lines are in a listen only mode. Later we will conduct a question and answer session. Please note that this conference is being recorded.
I would now like to turn the conference over to Peter Chu. Please go ahead.
Good afternoon everyone. My name is Peter Chu, Vice President of Strategy and Products and Marketing at BroadVision. Welcome to our 2012 Q4 Financial Results Announcement and Conference Call. I will first provide our standard cautionary comments on forward-looking statements and other legal matters. Next, Dr. Shin-Yuan Tzou, our CFO, will review the fourth quarter results which were announced in a press release earlier this afternoon. Next I will provide product and marketing updates and wrap up with a summary.
As always we will be pleased to take your questions following the formal portion of the call. During the course of this conference call BroadVision may make forward-looking statements. All forward-looking statements included in this call are based upon information available to BroadVision as of the date of this call, including statements regarding our expectations of future financial results and product releases and BroadVision assumes no obligation to update or correct any such forward-looking statements. These statements are not guarantees of future performance and actual results could differ materially from BroadVision’s current expectations.
Actual future results may be impacted by various important factors including without limitation, changes in the market, competitive environment and macroeconomic conditions. Additional information on potential factors that could affect the company’s financial results is included in the company’s periodic reports on Forms 10-K and 10-Q and other documents filed with the SEC.
All statements and information can also be found on our website at www.broadvision.com under the Company tab, under Investor Information, under Press Releases page. You can also view our SEC filings and historical financial results under the Company tab under Investor Information under the section SEC Filings on that page.
Now I will turn the call over to Shin-Yuan.
Thanks Peter. Now our Q4 ’12 results in terms of P&L, balance sheet and other operating highlights. Q4 total revenues were $4.1 million, with $1.3 million in license, $1.9 million in maintenance and $0.9 million in consulting services. Sequentially this compares to Q3's share of total revenues of $3.6 million with $1.3 million in licenses, $1.7 million in maintenance and $0.6 million in consulting services. In comparison Q4’11 total revenues were $4.2 million with $1.6 million in licenses, $2.0 million in maintenance and $0.6 million in consulting services. Q4 2012 revenues by region were 41% Americas, 34% EMEA and 25% APJ, compared to 44% Americas, 35% EMEA and 21% APJ in Q3 ’12 and 43% Americas, 36% EMEA and 21% APJ in Q3 ’11.
As we have discussed in the past, we expect our earning to fluctuate somewhat from quarter-to-quarter mainly due to our software. On a GAAP basis, total operating costs plus costs on revenues were $5.5 million in Q4 ’12, compared to $4.9 million in Q3 ’12 and $5.3 million in in Q4 '11.
In Q4 '12 we generated a GAAP net loss of 1.1 million or $0.25 per basic and the diluted share compared to the net loss of 0.7 million or 1 penny per basic and a diluted share in Q3 '12 and a net loss of 1.8 million or $0.40 per basic and a diluted share in Q4 '11.
Looking at our four main cost centers, first cost of goods sold concentrated mainly in cost of services was $1.3 million in Q4 '12, compared to 1.2 million in Q3 '12. Second, R&D expenses for Q4 '12, was 1.6 million, same as in Q3 '12. Sales and marketing expenses for Q4 '12 was 1.5 million compared to 1.3 million in Q3 '12. Finally, G&A expense for Q4 '12 was 0.9 million same as in Q3 '12.
As of December 31st '12 we have $62.3 million of cash and cash equivalents and short term investments with no long term debt, compared to 52.0 million at the end of Q3 '12. Q4 '12 cash included $1 million previously classified as restricted cash which was cashed to a letter of credit for the security deposit of our old headquarter office lease. The security deposit was released in Q4 after the expiration of the lease. We have no exposure in any auction rate securities or ARS.
Accounts receivable were 4.0 million at the end of Q4 '12, compared to $2.2 million at the end of Q3 '12. Days sales outstanding in Q4 '12 was 91 days compared to 55 days in Q3 '12. Prepaid expenses and other current assets were $1.1 million at the end of Q4 '12, compared to $2.1 million at the end of Q3 '12. The decrease is due to the release of $1 million cash as mentioned above.
Other noncurrent assets were 0.5 million at the end Q4 '12, same as Q3 '12. Accounts payable was 0.7 million at the end of Q4 '12, same as Q3 '12. Accrued expenses were $2.2 million at the end of Q4 '12, compared to $2.0 million in Q3 '12.
Deferred maintenance were $3.8 million at the end of Q4 '12 compared to 2.8 million in Q3 '12. Earned revenue were $2.3 million at the end of Q4 '12, compared to $1.8 million in Q3 '12. Other noncurrent liabilities were $1.2 million at the end of Q2 '12 same as in Q3 '12.
I'll now turn to Peter for product and marketing updates. Peter?
Thank you, Shin-Yuan. Yesterday we accounted a new BroadVision 9 solution to kickoff 2013, and through BroadVision 9 we expect to create a unified engagement solutions leveraging our e-business, enterprise social networking technologies. BroadVision 9 integrates collateral, social and mobile capabilities in with K2 (ph) e-business or relationship management platform which is a robust personalization and transaction management solution.
BroadVision 9 will be added to our product portfolio and be distributed through our channel partners and direct sales efforts. As engagement solutions continue to reach the mainstream, we believe BroadVision with our social and mobile technology investments is very well positioned to dramatically change how people and businesses collaborate.
BroadVision 9 revolutionizes e-business platforms by seamlessly tying cloud engagement management to existing relationship management solutions and consolidates into a cohesive offering to move customers into the age of customer engagement.
The employee, partner, supplier and customer engagement management is at the heart of companies looking to move to enterprise 2.0 which is a very exciting new megatrend in IT and global business evolution especially when put in the context of cloud computing.
The adoption as an enterprise social networking or enterprise 2.0 and engagement management solutions continues to grow both in terms of its applicability to different business functional areas, as well as diverse industry sectors.
Enterprises looked to invest in virtual, social and mobile technologies, want solutions that will deliver immediate top and bottom line impact. Engagement solutions enable enterprise 2.0 companies to directly engage with our customers, partners, suppliers and employees through transparent and enhanced services.
For example, BroadVision's engagement management solution offers companies the flexibility to conduct discreet and yet collaborative interactions on a single network between their clients, account managers and third party partners or suppliers.
Nevertheless, these opportunities and growth rates are still modest with respect to the full market potential of the substantive business paradigm shift.
Beyond business services and consumer sectors such as retail, travel, we are seeing adoption in real estate, industrial and financial sectors. The proliferation of our solution both in terms of digital footprint and engagement of customers have been fuelled by the growth of mobile devices across the enterprise. (Inaudible) create a compelling multi-platform mobility strategy across leading devices such as iOS and Android smartphones and tablets has been well received by our customers.
Our ability to offer both native apps in conjunction with mobile browser support has provided our customers a greater choices and options. Our valuable proposition to deliver a virtual, mobile social platform of engagement is well aligned with enterprises needs to transform their communication and collaboration efforts within and outside the enterprise.
Additionally, enterprise social network, an engagement management are becoming an necessity for global enterprises with increasing and critical needs to engage more effectively and seamlessly across employees, partners, suppliers and customers as well as collaborating across time zones and geographies.
Our support for 12 leading European and Asian languages has differentiated our product for many multi-national organizations.
In Q4, we did 18 Clearvale partner and paid customer transactions across manufacturing, travel, real estate, finance and IT industry sectors. Clearvale customers come in all sizes while primarily midsized enterprises and from different verticals worldwide, including all of our key focuses being knowledge-intensive, interaction intensive and service intensive industries such as technology, telecom, consulting, healthcare, retail, education et cetera.
While most bookings remain relatively small because customers generally start with a limited trial for something as new as social business, they could lead to considerable upsides for future growth, if these customers expand their usage in the future upon successful adoption, the so called long tail effect. We’re also excited to report that leaving accounts continues to increase the user base significantly after their first year of adoption.
In Q4, we continue our efforts to focus our R&D investments to meet critical customer needs, which are to expand our reach, engagement and functional depth of engagement management solutions. We continue to build on our platform of enterprise grade services with focus on security, flexibility and scalability.
Our Clearvale (inaudible) are being deployed to implement social B2B and B2C applications. Let me share with you two options of driving adoption. First is the application in partner and supplier engagement and management networks. The utilization of social collaboration tools enhances what has been in place with traditional CRM solutions. But it adds a dimension of dynamic engagement of internal and external participants namely employees and partners.
The cloud based and mobile enabled social enterprise solutions off anytime, anywhere collaborations which increases speed, quality and discovery of critical information for improved productivity and results.
Our second area of new development and customer interest is in the area of financial service providers. The applications in demand are for collaboration between service providers and partners to jointly engage and manage clients. The financial service industry requires speedy and accurate product in compliance information distribution, but also requires discretion tailored to the recipient groups.
Thus Clearvale stands out as an enterprise social network built with a powerful information sharing and distribution capability combined with comparable levels of security and control over where and whom and which information will be shared. Similar models also engage and can apply to many other verticals. We hope to report these new industries and new application areas in due course.
We continue to enhance our integrated Enterprise 2.0 Suite Clearvale which consists of the following components. Clearvale Enterprise, a comprehensive enterprise platform of engagement. It offers an extensible network of networks, which maximizes business returns by embedding valuable social behavior into real business relationships and processes.
Clearvale Express, the simplified version of Clearvale targeted for easy adoption and viable expansions. It is easily upgradeable to enterprise solution. Clearvale Passport which embodies the above solutions in one integrated suite. It is our platform as a service solution targeting both cloud host, such as Telcos and IRTs as well as resellers such as systems integrators, hardware OEMs and vertical and horizontal software bars.
This solution enables our partners to opt for their own cloud based social business ecosystems without any heavy upfront investment. Last but not least, BroadVision 9, our mobile and social engagement management solution is a solution that is integrated with K2 e-business relationship management platform.
With respect to go-to-market strategy, we continue to invest both in direct and partnership approach. We extended our web presence to our company portal as well as launching newer brand in select geographies around the world. We launched the [inaudible] just last quarter. We continue to develop Clearvale PassPort channel programs on a worldwide basis and have made very exciting progress across, including Telcos and other service providers, large systems integrators and smaller regional resellers.
Last but not least, we are in active discussion with our existing customers to extent our offerings with the new BroadVision 9 which is designed to enable customers to unify e-business with enterprise social networking all into one cohesive and robust solution.
In conclusion, we continue our developments to establish BroadVision as a key player in the enterprise and social network business. We continue to focus and invest in our product solutions and go-to-market strategy. The go-to-market strategy consists of a two-prong approach to acquired our lighthouse customers to direct the sales efforts, and in parallel the development of our valuable global network of partners through our PassPort channel program whereby partners can market their own branded cloud based social enterprise ecosystem powered by Clearvale.
In closing, Clearvale is unique in its depth and breadth as a comprehensive platform for enterprises embracing the virtual, mobile and social business paradigm. Our compelling cloud based mobile and multi-lingual offerings will enable greater penetration of organizations across industries.
Our product teams continue to enhance the Clearvale collaboration solution to increase productivity and efficiency across business processes. The integration with K2 through B9 is an effort to unify Clearvale social and mobile engagement capabilities on top of K2’s deep and robust e-business capabilities.
The focus of our product strategy has always been to focus on four core areas of differentiation where we meet our industry. One, social business processes; two, social ecosystem or network of networks built to mimic real business relationships and processes; three, social analytics for engagements; four, full solution delivered as a partner enabled platform.
With that, we thank you for listening and now let’s open it up for your questions.
Thank you. (Operator Instructions). We have no questions in queue this time.
If there are no questions, then I want to thank everybody for participating on our earnings announcement and we'll see you in a quarter.
Thank you ladies and gentlemen. This concludes this conference. Thank you for participating. You may now disconnect.
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