BroadVision's (BVSN) Management on Q4 2015 Results - Earnings Call Transcript

| About: BroadVision, Inc. (BVSN)

BroadVision, Inc. (NASDAQ:BVSN)

Q4 2015 Earnings Conference Call

February 3, 2016 5:00 PM ET

Executives

Peter Chu – Chief Financial Officer and Vice President-Strategy and Products

Ty Levine - Vice President-Marketing

Analysts

Operator

Welcome to the BroadVision Q4 Year 2015 Earnings Announcement and Investor Conference Call. My name is Ethan and 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 that this conference is being recorded.

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

Peter Chu

Thank you Ethan and good afternoon everyone. My name is Peter Chu, CFO and Vice President of Strategy and Products at BroadVision. Welcome to our 2015 Q4 financial results announcement and conference call. I will first provide our standard cautionary comments on forward-looking statements and other legal matters, then review the fourth quarter results, which were announced in the press release earlier this afternoon. Next I will provide product and marketing updates together with my colleague and wrap up with a summary. As always, I will be pleased to take your questions following the formal portion of this call.

Some administrative information, 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 section called About Us, under Investor Relations, under Overview page. You can also view our SEC filings and historical financial results under the About Us section, under Investor Relations, under SEC Filings page.

Now, on to the fourth quarter results; our Q4 2015 results in terms of P&L, balance sheet and other operating highlights. First revenue, Q4 revenues were $2.7 million with $1.2 million in licenses, $0.7 million in maintenance, and $0.8 million in consulting services. Sequentially, this compares to Q3 total revenue up $2.1 million with $1 million in licenses, $0.7 million in maintenance, and $0.4 in consulting services.

In comparison, Q4 2014 total revenues on a year ago were $4.3 million with $2.7 million in licenses, $0.8 million in maintenance, and $0.8 million in consulting services. The Q4 2015 revenues by region were 34% Americas, 22% EMEA, and 43% APJ, compared to 45% Americas, 23% EMEA, and 32% APJ in Q3 2015, and 60% Americas, 13% EMEA and 27% APJ in Q4 2014. As we discussed in the past, we expect our global geographical mix to fluctuate somewhat from quarter-to-quarter, mainly due to our very small footprint.

And on to expenses. On GAAP basis, total operating cost plus cost of revenue were $5.1 million in Q4 2015, compared to $4.5 million in Q3 2015, and $5 million in Q4 2014. Now, on to the income. In Q4 2015, we generated a GAAP net loss of $2.7 million, or $0.56 per basic and diluted share, compared to a net loss of $2.1 million, or $0.42 per basic and diluted share in Q3 2015, and a net loss of $1.6 million, or $0.32 per basic and the diluted share in Q4 of 2014.

Looking at the cost centers. Looking at our four main cost centers, first, the cost of goods sold concentrated mainly on cost of services and cloud hosting was $1.2 million in Q4 2015, compared to $0.7 million in Q3 of 2015. Second, R&D expenses for Q4 2015 were $1.8 million same as Q3 2015. Sales and marketing expenses for Q4 2015 were $1.2 million same as Q3 2015. Finally, G&A expenses for Q4 2015 were $0.9 million, same as that in Q3 of 2015.

Looking at our balance sheet, as of December 31, 2015, we had $29.7 million of cash and cash equivalents and short-term investments with no long-term debt, compared to $32.2 million at the end of Q3 2015. Accounts receivable were $1.8 million at the end of Q4 2015, compared to $0.8 million at the end of Q3 2015. Days sales outstanding in Q4 2015 was 61 days, compared to 36 days in Q3 2015. Prepaid expenses and other current assets were $1.1 million at the end of Q4 2015, compared to $1.5 million in Q3 2015.

Other non-current assets were $0.2 million at the end of Q4 2015, compared to $0.3 million in Q3 2015. Accounts payable were $0.6 million at the end of Q4 2015, compared to $0.5 million in Q3 2015. Accrued expenses were $2.2 million at the end of Q4 2015, compared to $1.8 million in Q3 2015. Deferred maintenance was $1.6 million at the end of Q4 2015, compared to $1.4 million in Q3 2015. Unearned revenue was $1.5 million at the end of Q4 2015, which is the same as Q3 2015. Other non-current liabilities were $0.9 million at the end of Q4 2015, compared to $1.1 million in Q3 2015.

Let me just provide a business summary based on what we just heard. Q4 2015 revenues were higher than earlier quarters in the year, but lower on a year-to-year basis, mainly due to declines in renewal patterns in our legacy business. We continue to be impacted by currency fluctuations and this quarter’s impact was over $350,000. The declining legacy revenue base, which is the majority of our revenue mix, will continue to dominate the overall financial performance until a significant install base of new product revenue is established. The company is committed to invest and focus on our mobile and collaboration products and we’ll continue to execute diligently.

So at this time, I will invite Ty Levine, Vice President of Marketing, to provide an update on sales and marketing.

Ty Levine

Thanks Peter. Marketing continues to effectively and efficiently support our global sales organization, while at the same time positioning BroadVision and Vmoso for success while Q4 is naturally slower with the December month part of the quarter. We continue to see strength in web traffic and engagement. In the past few months, BroadVision and Vmoso have been recognized for innovation and product leadership by both CIO Magazine last November and most recently being placed in the Leaders Quadrant by Experton Group's Social Business Vendor Benchmark 2016 Germany, enterprise networking suite study. Experton Group is one of Europe’s leading analyst firms.

We continue to see strong global response for Vmoso with large enterprise customers and trials have either begun or will begin shortly around the world in Japan, China, EMEA and the Americas. A new partnership with Tees in Brazil was just signed and we’ll launch over the next quarter. Recently, we formally launched Vmoso in China with our strategic partner CS&S, China National Software and Services, and one of China’s leading retailers Wal-Mart. A highlight of the program was the announcement of Vmoso’s integration into WeChat Enterprise accounts.

In addition to news on the customer front, we recently launched the Vmoso Developer Network or VDN. The Vmosa developers kit allows third-party developers to easily leverage Vmoso’s full functionality via open APIs to create two-way integration with any back end systems, front end portal or mobile applications. This means activities from any external sources requiring close monitoring, immediate action or superior collaboration can be achieved by integrated into Vmoso. Developers anywhere can build and/or enrich any new or existing mobile or PC apps with universal high-touch engagement experience.

On the core marketing front, our primary focus continues to be Vmoso. Our partnerships continue to gain strength. In addition to the new partners mentioned above, BroadVision recently hosted its first global partners summit and conference. Over 22 partners attended from seven different countries. One reason for our efficiency and success on the marketing front has been the continued focus on content development. We are expanding our content development efforts globally to get inside and perspective from around world.

We expect this to be a differentiator for us as we compete in this exciting space. Vmoso is well positioned to be the leader where knowledge management meets mobile collaboration. With an open, yet secure, platform Vmoso offers enterprise customers a solution that is unviable by others that focus on closed systems that teacher just chat or team collaboration. Long-term persistent value of information that becomes corporate knowledge is what competent and visionary executives want, especially in a collaboration and communication solution.

Moving forward with a solid basic content and focus on creating deeper content and targeted verticals, marketing will spend even more time supporting the global sales organization. I believe in a strong partnership between sales and marketing and this is how marketing will focus moving forward. We will unveil a new website shortly that will eventually be translated into ten languages, so that all of our employees, prospects, and customers can communicate and engage in native language.

We were extending this mission to our collateral at the blog level and you’ll see this rollout throughout 2016. From a marketing perspective, the BroadVision is specifically Vmoso positioning along with content development, the web experience and sales support. We believe we are in the right place and have never been stronger and more supportive of the larger organization.

Vmoso is available through broadvision.com and mobile stores such as App Store and Google Play. Users can download the free personal and so-ho version of the product. The enterprise version is available through our sales team, which can be reached at sales@broadvision.com.

Now, back to Peter.

Peter Chu

Thank you, Ty. Bringing just to conclusion, in Q4, we started trials in multiple regions in multiple industries including retail, telecom, services, and utilities. We’re executing on our two prolonged approach to go-to-market with partners including resellers, hosting partners and systems integrators. Through these partnerships, we gain industry and geographical depth to engage large enterprises. We have sharpened our product and strategy focus on mobile and dynamic collaboration in response to current market demands and to differentiate from the overcrowded market of chat and messaging tools.

While there are many tools focused on facilitating the communication, we are unique in our ability to meet the needs of enterprises, who want to embrace the mobile and flexible workforce with rich engagement, accountability, knowledge capture, and security. We have done our sweet spot in secure and mobile centric enterprise communications collaborations, whether it is a company of a few 100 people located across multiple locations or multinational enterprises with hundreds of thousands of employees, they share the same need for productivity and effectiveness.

To compete in the very exciting marketplace, we continue to focus on three core technology differentiators. One, the private hosting capabilities offers our customers the flexibility to host data at specific locations for security and privacy concerns. Two, an intuitive hyperlink and information organization infrastructure that transforms data and information into corporate knowledge. And three, an open and extensive integration architecture that offers our customers the ability to create a secure and unified infrastructure for document, email and messaging, workflow and engagement management, while preserving existing information investments.

So equally important is the need to manage such communication and collaboration for security and accountability. Last but not least to capture and transform such valuable information into corporate knowledge. These are some of the key assets held by BroadVisions’s approach, built for the enterprise with emphasis on security and privacy.

Vmoso highlights mobility and active engagement through the unification of email, instant messaging, file sharing, workflow and social networking into one cohesive and convenient user experience. Our open architecture offers integration with key corporate IT assets to extend the enterprise’s existing investments, while creating new engagement capabilities to empower internal and external workforce, partners, and customers. Vmoso is a productivity tool that enables users to engage with anyone about anything, from anywhere, at anytime.

So with that, thank you for listening. And now, let’s open it up for questions.

Question-and-Answer Session

Operator

Peter Chu

Well, on behalf of BroadVision, I want to thank you all for joining in our earnings call this quarter and we look forward to seeing you in one quarter’s time. Thank you very much.

Operator

Thank you, ladies and gentlemen. This concludes today’s call. Thank you for your participation. You may now disconnect.

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