BroadVision, Inc. (BVSN) Q2 2016 Results - Earnings Call Transcript

| About: BroadVision, Inc. (BVSN)

BroadVision, Inc. (NASDAQ:BVSN)

Q2 2016 Earnings Call

August 10, 2016 5:00 PM ET

Executives

Peter Chu - CFO and VP of Strategy and Products

Ty Levine - VP of Marketing

Analysts

Operator

Welcome to the BroadVision Q2 year 2016 Earnings announcement and Investor Conference Call. My name is Adrian and I’ll be your operator for today’s call. At this time all lines are in a listen-only mode, later we conduct a question and answer session. Please note this conference is being recorded.

I’ll now turn the call over to Peter Chu. Peter Chu, you may begin.

Peter Chu

Thank you, Adrian. Good afternoon everyone. My name is Peter Chu, CFO and Vice President of Strategy and Products at BroadVision. Welcome to our 2016 Q2 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 second quarter results, which were announced in the press release earlier this afternoon. Next, I will provide product and marketing updates and then wrap up with a summary. As always, I will be pleased to take your questions following the formal portion of this call.

So first on to 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 except as required by law.

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 are set forth in BroadVision's most recent annual report on Form 10-K as amended and subsequent reports filed with SEC.

All statements and information can also be found on our website at www.broadvision.com under the About Us section, 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, and under SEC Filings page.

Now, on to the second quarter results; our Q2 2016 results in terms of P&L, balance sheet and other operating highlights. First revenue, Q2 total revenues were $1.9 million with $1 million in licenses, and $0.5 million in maintenance, and $0.4 million in consulting services. Sequentially, this compares to Q1 2016 total revenue up $2.0 million with $1 million in licenses, $0.6 million in maintenance, and $0.4 million in consulting services.

In comparison, Q2 2015 total revenues were $2.2 million with $1.1 million in licenses, $0.7 million in maintenance, and $0.4 million in consulting services. Q2 2016 revenues by region were 45% America's, 17% EMEA, 38% APJ compared to 48% America's, 15% EMEA and 37% APJ in Q1 2016 and 44% America's, 20% EMEA and 36% APJ in Q2 2015. As we've discussed in the past we expect our geographical mix to fluctuate somewhat from quarter-to-quarter mainly due to our small footprint.

Next, expenses. On GAAP basis, total operating cost plus cost of revenue were $4.6 million in Q2 2016, compared to $4.7 million in Q1 2016, and $4.8 million in Q2 2015. And next on to the income section. In Q2 2016, we generated a GAAP net loss of $2.6 million, or $0.53 per basic and diluted share, compared to a net loss of $2.1 million, or $0.42 per basic and diluted share in Q1 2016, and a net loss of $2.5 million or $0.51 per basic and diluted share in Q2 of 2015.

And on to cost centers. Looking at our four main cost centers, first, cost of goods sold concentrated mainly on cost of services and cloud hosting was $0.8 million in Q2 2016, which is the same as Q1 2016. Second, R&D expenses for Q2 2016 were $1.7 million which is the same as Q1 2016. Sales and marketing expenses for Q2 2016 were $1.1 million compared to $1.2 million in Q1 2016. Finally, G&A expenses for Q2 2016 were $1 million which is the same as Q1 2016.

Next, I’ll cover the balance sheet. As of June 30, 2016 we had $25 million of cash and cash equivalents and short-term investments. With no long term debt, compared to $27.3 million at the end of Q1 2016. Accounts receivable were $0.9 million at the end of Q2 2016, compared to $1.0 million at the end of Q1 2016. Days sales outstanding in Q2 2016 was 43 days, compared to 47 days in Q1 2016. Prepaid expenses and other current assets were $1.1 million at the end of Q2 2016, compared to $1.2 million in Q1 2016.

Other non-current assets were $0.2 million at the end of Q2 2016, which is the same as Q1 2016. Accounts payable were $0.5 million at the end of Q2 2016, which is the same as Q1 2016. Accrued expenses were $2.0 million at the end of Q2 2016, compared to $1.9 million in Q1 2016. Deferred maintenance was $1.1 million at the end of Q2 2016, compared to $1.2 million in Q1 2016. Unearned revenue was $1.6 million at the end of Q2 2016 compared to $1.7 million in Q1 2016. Other current liabilities were $0.8 million at the end of Q2 2016, same as Q1 2016.

A quick business summary first. Q2 2016 revenues were lower both sequentially and year-to-year. This is mainly due to declines in the legacy business. The decline in legacy revenue base which is the majority of revenue mix will continue to dominate the overall financial performance until a significant installed base of new product revenue is established. The company is committed to invest and focus on our mobile collaboration and knowledge management products. And we’ll continue to invest and execute diligently.

Next, I will invite Ty Levine, VP of Marketing, to provide an update on sales and marketing.

Ty Levine

Thanks Peter. Marketing continues to make positive strides in promoting BroadVision, if knowledge management focused mobile workforce collaboration product Vmoso and supporting the global sales organization. As legacy customers continue with BroadVision legacy products, they are introduced to Vmoso. The feedback and uptick has been positive with a slow but steady inclusion of Vmoso in renewals.

Vmoso was not the first to the very crowded team collaboration category, but it is different from all the rest. While names like Slack, HipChat, Facebook and Microsoft have dominated the headlines, they focus on one aspect of workspace and team communication chats. These tools or apps are primarily simple tools focused on group communications. At BroadVision, we develop Vmoso from a mobile centric perspective, based on a platform allowing users to seamlessly move from desktop to laptop to mobile.

Vmoso goes beyond the simple chat tools to the others. As I’ve said in previous quarters announcement, Vmoso was a tool to get real work done. It is where knowledge management meets mobile collaboration. This message has slowly gained traction with customers who value a universal inbox, a single source of truth. An organizational structure to information, the ability to integrate outside of the team or specific channel created, file versioning, so everyone in the channel are actually working on the most current document version and an integration with email. There were always be related doctors who still rely on email to communicate. These are areas of differentiation for Vmoso and the other more well-known names in the communication and collaboration space.

These tools have garnered much publicity in the market place but we believe and feedback from large enterprise customers have told us, the last of sophistication and depth required to meaningfully increase workplace productivity.

Our focus on content and field marketing activities have begun to payoff. The BroadVision website remains the focal point of our content delivery and traffic is up 25% year-over-year. In Europe, where geography allows us to be efficient with our marketing spend or more efficient I should say, we have increased our conference participation five-fold from a year ago. These activities have rapidly increased our touch points with prospects and accelerated conversations throughout the Vmoso ecosystem.

In Japan, Jujutsu systems web technology limited is a new Vmoso customer. In the U.S. and EMEA we’ve launched pilot programs with leading enterprise customers and system integrators. These will continue throughout 2016.

On a tactical front, we continue to be aggressive in developing video show casing how Vmoso works across numerous workplace challenges and in multiple vertical industries. There are now over 125 currently or will be shortly available on broadvision.com.

In the coming weeks, the BroadVision website will be available in Portuguese for the first time. Later in Q3, all 10 Vmoso supported languages will have a broadvision.com refresh with content in native language. I encourage everyone to check out broadvision.com to learn more about Vmoso. It is a cutting edge platform for business leaders who are serious about transformational change and workplace productivity.

I’ll turn it back over to Peter.

Peter Chu

Thank you, Ty. Bringing us to conclusion, in Q2 we closed deals, continue to build our pipeline, expanded our trials around the world in various industries including services, retail, telecom, finance and utilities. The demand for enterprise grade mobile collaboration is strong where organizations need security, accountability and knowledge capture. We’re assigning new partners around the world as services and telecom partners embrace Vmoso’s value proposition and market potential. We’re executing to our two-pronged go-to-market approach with partners acting as resellers, hosting partners and system’s integrators. Following the announcement of the Vmoso developes network, we’re now adding [indiscernible] partners.

Vmoso offers partners a robust platform built on secure cloud technology and industry leading data location capabilities, for security and privacy minded customers. Accountability, personalized notification, task work flow and knowledge management are rich business tools that can be leveraged to build enterprise grade mobile cloud applications.

Last but not least, the openness of Vmoso’s open integration approach which includes email, document repositories and enterprise applications preserves the customer’s extensive information investment.

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. We have done our sweet spot in secure and mobile cloud based enterprise collaboration and knowledge management, whether it is a company of a few hundred people located across multiple locations or multinational enterprise with hundreds of thousands of employees, they share the same need for productivity and effectiveness.

To grow in a high potential market place, 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 hyper link and information organization infrastructure transforms data and information into corporate knowledge. Three, an open extensive integration architecture offers the customers the ability to create a secure and unified infrastructure for documents, email and messaging as well as workflow and engagement with existing information investments.

Vmoso is a productivity solution. A knowledge management solution for mobile collaboration and it enables users to engage with anyone about anything from anywhere at any time.

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

Question-and-Answer Session

Thank you. [Operator Instructions].

Peter Chu

Okay, Adrian. I guess there is no question from the audience for this quarter. We would like to thank everybody for their participation. And we will see in one quarter’s time.

Operator

Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating and you may now disconnect.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!