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BroadVision, Inc. (NASDAQ:BVSN)

Q1 2014 Results Earnings Conference Call

April 30, 2014 05:00 PM ET

Executives

Peter Chu - VP of Strategy and Products

Dr. Shin-Yuan Tzou - Chief Financial Officer

Analysts

Operator

Hello, and welcome to the BroadVision, Q1 Year 2014 Earnings Announcement and Investor Conference Event. My name is Eric, I will be your operator for today's call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session. Please note this conference is being recorded.

I will now turn the call over to Peter Chu. Mr. Chu, you may begin.

Peter Chu

Thank you, Eric. Good afternoon, everyone. My name is Peter Chu, Vice President of Strategy and Products at BroadVision. Welcome to our 2014 Q1 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 first quarter results, which were announced in the press release earlier this afternoon. Next, I will provide product and marketing update and then 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, Investor Information tab, Press Releases page. You can also view our SEC filings and historical financial results under the Company/Investor Information section under SEC Filings.

Now I will turn the call over to Shin-Yuan.

Dr. Shin-Yuan Tzou

Thanks Peter. Now our Q1 2014 results in terms of P&L, balance sheet and other operating highlights. Revenues; Q1 total revenues were $3.0 million with $1.2 million in licenses, $1.2 million in maintenance and the $0.6 million in consulting services. Sequentially this compares to Q4 ‘13 total revenues up $3.7 million, with $1.4 million in licenses, $1.3 million in maintenance and $1.0 million in consulting services.

In comparison Q1 ‘13 total revenues were $3.8 million, with $1.6 million in licenses, $1.7 million in maintenance and the $0.5 million in consulting services. Q1 ‘14 revenues by region were 39% Americas; 26% EMEA; and 35% APJ; compared to 33% Americas; 29% EMEA; and 38% APJ in Q4 ’13 and 49% Americas, 29% EMEA and 22% APJ in Q1 ‘13. As we have discussed in the past, we expect our geographical mix to fluctuate somewhat from quarter-to-quarter mainly due to our small footprint.

Q1 ‘14 revenues were significantly lower both sequentially and year-to-year, mainly due to declines in our legacy business. As we transition into our new enterprise social networking business, our legacy business will continue to see pressures and the fluctuations.

Expenses; on GAAP basis, Total operating costs plus cost of revenues were $5.4 million in Q1 ‘14 compared to $5.2 million in Q4 ‘13 and $5.4 million in Q1 ‘13. In Q1 ‘14, we generated a GAAP net loss of $2.3 million or $0.49 per basic and diluted share compared to a net loss of $1.3 million or $0.28 per basic and diluted share in Q4 ‘13 and a net loss of $2.1 million or $0.46 per basic and diluted share in Q1 ‘13.

Looking at our four main cost centers. First, cost of goods sold concentrated mainly on cost of services and cloud hosting were $1.0 million in Q1 ‘14 compared to $1.3 million in Q4 ‘13. Second, R&D expenses for Q1 ‘14 were $1.8 million compared to $1.7 million in Q4 ‘13. Sales and marketing expenses for Q1 ‘14 were $1.5 million compared to $1.3 million in Q4 ‘13. Finally, G&A expenses for Q1 ‘14 were $1.0 million compared to $0.9 million in Q4 ‘13.

Balance sheet. At the end of Q1 ‘14, we had $45.9 million of cash and cash equivalents and a short-term investments with no long-term debt compared to $46.4 million at the end of Q4 ‘13. Accounts receivable were $2.7 million at the end of Q1 ‘14 compared to $3.5 million at the end of Q4 ‘13. Days sales outstanding in Q1 ‘14 was 80 days compared to 88 days in Q4 ‘13. Prepaid expenses and other current assets were $1.4 million at the end of Q1 ‘14 compared to $1.4 million at the end of Q4 ‘13. Other non-current assets were $0.4 million at the end of Q1 ‘14 same as in Q4 ‘13. Account payables were $0.4 million at the end of Q1 ‘14 compared to $0.5 million at the end of Q4 ‘13. Accrued expenses were $2.3 million at the end of Q1 ‘14 compared to $2.4 million at the end of Q4 ‘13. Deferred maintenance was $2.6 million at the end of Q1 ‘14 compared to $2.0 million in Q1 ‘13. Our earned revenues were $2.5 million at the end of Q1 ‘14 same as in Q4 ‘13. Other non-current liabilities were $0.8 million at the end of Q1 ‘14 same as in Q4 ‘13.

I'll now turn to Peter for products and marketing updates. Peter?

Peter Chu

The first quarter was a challenging one for us, but I would like to share some very exciting news about a new product family which will be released this quarter. Vmoso is a family of next generation unified communication and collaboration also known as UCC solutions for the enterprise which has been under development for the past three years.

Let me talk little bit about Vmoso. Vmoso is the real time mobile social enterprise UCC tool that unifies your business communication in a single easy to use solution. Users can chat or messages, manage emails and tasks, carry on credit discussions, share files and organize all communications for sharing and referencing.

The personalization capability of Vmoso allows you to receive notification, follow others’ activities and perform real time actions all within a system that you control. By unifying and prioritizing business communication through filtering and [sorting], users can assist to a large volume of notifications to access relevant information, gather context and take well informed actions. Timely and educated responses create rich engagement experience across employees, partners and customers.

The organizational system within Vmoso enables logical and fast retrieval of conversations, participants, content and action history for accountability and visibility. Vmoso’s organization [scheme] can be made to easily limit any organization’s departmental and functional structures for easy on-boarding and immediate engagement. The enterprise great security built into Vmoso protects your business communication which otherwise flows freely across many consumer social applications.

Vmoso supports leading corporate encryption and application standards to protect users and corporate assets throughout the system. Vmoso allows clear separation of personal and corporate activities and enable in organization IT managers to secure the corporate activities behind organizational boundaries.

Finally, Vmoso’s interoperability offers integration with existing enterprise systems as well as new application development efforts to leverage its rich social, communication and collaborative capabilities.

The integration approach’s support includes an open API for access, messaging integration and traditional import and export of data.

Let me [take] this in the light of BroadVision roadmap. The introduction of the Vmoso’s UCC capability complements BroadVision's existing product offering to deliver a full engagement suite.

Comprehensive engagement solutions encompass aspects of unified communication collaboration from myVmoso, personalization to e-commerce technology from our BV 9 product line and social and portal capabilities from our Clearvale product line.

We are very excited to be able to offer a comprehensive portfolio of engagement solutions to a wide base of customers.

After three years of development, which includes being awarded a technology patent, we have created a new secure and scalable high grade clouds architecture, which was seamlessly [weaved] together public and private cloud installation.

This new infrastructure is essential for enhancing our data privacy offering such that customers and partners can deploy global solution and yet be able to manage data to comply with company or country specific privacy requirement. The robust and extensible logic infrastructure will provide the intelligent and flexible organization of information for prioritization and access.

Last but not least, we have created a modern UI framework that leverages real time and mobile capabilities. With the addition of Vmoso products, we're able to deliver to our vision of a comprehensive enterprise engagement solution suite.

Since the beginning, BroadVision’s e-business roadmap has been focused on the needs of agile organizations facing dynamic and global environment.

The participants in such an ecosystem of employees, partners and customers are global, flexible and transient. The amount of information and data flowing through the business is ever increasing, and everyone is flooded with notifications across multiple communication platforms.

The popularity of mobile technology has introduced many innovative consumer centric tools such as WhatsApp, Skype, Dropbox, Google Drive, Line, iMessage to name a few for a personal and professional use. This personal approach through the so called bring your own device, BYOD and BYOA bring your application improves productivity for the individuals, but of course force fall short for the organization, which must balance, which must balance speed, transparency, visibility and security. Today’s agile organizations need a communication collaboration solutions that is unified, personalized, organized and secure.

So in conclusion after three years of development and testing, we’re truly excited to announce the availability of myVmoso which is the quick start version of Vmoso for enterprise and for SMBs, social as well as individual users, in a data program scheduled to commence next month. Other products in the Vmoso family will be released over the next few months.

Highlighting mobility while emphasizing enterprise class security Vmoso unifies email, instant messaging, file sharing, work flow and social networking into one cohesive and convenient user experience enabling everyone to engage with anyone about anything from anywhere at any time. Vmoso enables organizations to connect securely and effectively with a internal and external workforce, partners and customers. It is built on a secured cloud based infrastructure and embraces the most effective mobile communication paradigm. It is a unified communication collaboration center for the digitally connected individuals, which can be easily organized and managed by an organization to offer secure and effective communications collaboration.

With that we thank you for listening. Now let’s open it up for your questions.

Question-and-Answer Session

Operator

Thank you. We will now begin the question-and-answer session. (Operator Instructions). And our first question comes from Jonathan. Please go ahead.

Unidentified Analyst

Good afternoon. I’ve been a shareholder for a long time. I am probably the single largest shareholder after Mr. Chen in the company. And I am confused every quarter we’re talking about the new product Clearvale, today it’s Vmoso and we’re trading on a negative enterprise value. And what is it that I am missing because it doesn’t seem like the Board or any of the people in the management are even buying shares at this level. So, can you address that first?

Peter Chu

Well (inaudible), this is Peter. Let me speak to -- Jonathan thank you for your question, speak to the product side. We're in a very dynamic marketplace where we had Clearvale out there for three plus years. And as we learned from our customers, they had our legacy solutions, people are embracing the Clearvale Enterprise Social Networking Solutions, but as the market evolves going to as more mobile, more dynamic workforces and with new information sources they’re demanding additional needs for them to better engage with their customers.

So, in that sense, this is really deferred piece of adding on top of our Legacy e-Commerce Solutions, Personalization Solutions, which we later added the Enterprise Social Networking Technology to provide certain capabilities.

This last piece, third piece based on our conversations with customers will complete the way that they want to fully engage with their customers, which is now global and is moving in and out of their networks. They want to stay nimble and they’ve asked for this. So we’ve actually put a lot of our resources into building what the customer is asking for.

Unidentified Analyst

Okay. In regards to the fact that nobody in investment community knows very much about BroadVision Clearvale, this new product that just was announced today, I mean is there a way to go out there and try to like reach out to the shareholder community, I mean we are trading at less than cash, our R&D has been fixed $8 million a year, we have a legacy business that’s definitely worth something to just brining cash flow to the bottom-line, I mean it just doesn’t make any sense. I mean no one on the Board want by shares, there has been change of the Board of Directors overall these years, there has been no buying. I mean I think we should give a $5 dividend then we’ve burn through the rest of the money, this was just a failure. I can imagine, I mean from personal standpoint I wanted to succeed, but I also want you guys to be excited about in share, your excitement and enthusiasm with all the other investors that see the stock trading at less than cash. So, I mean, I think you guys have to go out and reach and talk to the community and go out there and hire an IR firm and go on a road show whatever it is, if you really feel that this is going to work and we’re dirt cheap right here in my opinion. I mean I own 5% of your company. And I’ve called your company and sent emails over the past three months and I am not gotten one response back. So I just don’t know why the company is not shareholder friendly in anyway?

Peter Chu

Okay. So Jonathan on last point, we certainly will do better than that. But getting back to this with the new product, I think there is a well thought strategy on how to promote this and a lot of that is geared on actually having the product in the marketplace, in customers’ hands. And as we say we are talking about releasing this and stat beta testing but with the customers actually enhanced when we feel that we will be able to make a substantial announcement and we really hope that we will follow through a lot of the recommendations you have to really show people on all the communities what their true value is.

Unidentified Analyst

Okay, I appreciate it. Thank you.

Dr. Shin-Yuan Tzou

Okay, thanks Jonathan.

Operator

And at this time, I am showing no further questions.

Peter Chu

Okay, Eric, if there are no questions at this time, then we like to thank everybody for their participation today and we will see you next quarter.

Operator

Thank you. Ladies and gentlemen, this conclude today's conference. Thank you for participating. You may now disconnect.

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