BroadVision, Inc. (NASDAQ:BVSN) Q4 2013 Earnings Conference Call January 29, 2014 5:00 PM ET
Peter Chu - VP of Strategy and Products
Dr. Shin-Yuan Tzou - Chief Financial Officer
Patrick Lin - Primarius Capital
Welcome to the BroadVision’s Q4 Year 2013 Earnings Announcement and Investor Conference Event. My name is Adrian 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 this conference is being recorded.
I’ll now turn the call over to Mr. Peter Chu. Peter Chu, you may begin.
Thank you, Adrian. Good afternoon, everyone. My name is Peter Chu, Vice President of Strategy and Products at BroadVision. Welcome to our 2013 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 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/Investor Information/Press Releases page. You can also view our SEC filings and historical financial results under the Company/Investor Information/SEC Filings page.
Now I will turn the call over to Shin-Yuan.
Dr. Shin-Yuan Tzou
Thanks, Peter. Now our Q4 2013 results in terms of P&L, balance sheet and other operating highlights. Revenue. Q4 total revenues were $3.7 million with $1.4 million in licenses, $1.3 million in maintenance and $1.0 million in consulting services. Sequentially this compares to Q3 '13 total revenue of $4.0 million, with $1.3 million in licenses, $1.6 million in maintenance and the $1.1 million in consulting services.
In comparison, Q4 '12 total revenues were $4.1 million, with $1.3 million in licenses, $1.9 million in maintenance and the $0.9 million in consulting services. Q4 '13 revenues by region were 33% Americas, 29% EMEA, and 38% APJ, compared to 34% Americas, 26% EMEA, and 40% APJ in Q3 '13, and 41% Americas, 34% EMEA, and 25% APJ in Q4 '12.
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.
Expenses on a GAAP basis. Total operating cost plus cost of revenues were $5.2 million in Q4 ‘13, compared to $5.3 million in Q3 ‘13 and $5.5 million in Q4 ‘12. In Q4 ‘13 we generated a GAAP net loss of $1.3 million or $0.28 per basic and diluted share, compared to a net loss of $0.8 million or $0.18 per basic and diluted share in Q3 ‘13, and a net loss of $1.1 million or $0.25 per basic and diluted share in Q4 ‘12.
Looking at our four main cost centers. First, cost of goods sold, concentrated mainly on cost of services and the cloud hosting was $1.3 million in Q4 ‘13 same as in Q3 ‘13. Second, R&D expenses for Q4 ‘13 were $1.7 million compared to $1.8 million in Q3 ‘13. Sales and marketing expenses for Q4 ‘13 were $1.3 million same as in Q3 ‘13. Finally, G&A expenses for Q4 ‘13 were $0.8 million compared to $0.9 million in Q3 ‘13.
At the end of Q4 ‘13 we had $46.4 million of cash and cash equivalents and the short-term investments, with no long-term debt, compared to $47.7 million at the end of Q3 ‘13. Accounts receivable were $3.5 million at the end of Q4 ‘13 compared to $2.5 million at the end of Q3 ‘13. Days sales outstanding in Q4 ‘13 were 88 days compared to 58 days in Q3 ‘13. Prepaid expenses and other current assets were $1.2 million at the end of Q4 ‘13 compared to $1.3 million at the end of Q3 ‘13.
Other non-recurring assets were $0.4 million at the end of Q4 ‘13 compared to $0.5 million at the end of Q3 ‘13. Accounts payable was $0.5 million at the end of Q4 ‘13 compared to $0.6 million at the end of Q3 ‘13. Accrued expenses were $2.4 million at the end of Q4 ’13 same as in Q3 ‘13.
Deferred maintenance was $2.0 million at the end of Q4 ‘13 compared to $1.8 million in Q3 ‘13. Earned revenue was $2.5 million at the end of Q4 ‘13 compared to $2.0 million in Q3 ‘13. Other non-current liabilities was $0.8 million at the end of Q4 ‘13 compared to [$0.9] million in Q3 ‘13.
I'll now turn to Peter for product and marketing update. Peter?
Thank you, Shin-Yuan. Our R&D efforts have been focused on meeting critical customer need to expand the reach and functional depth of our engagement management solution. Our customers have chosen Clearvale for ease of customization and deployment, mobility coverage, the social analytics and workflow capabilities.
We continue to enhance our solutions to better support deal room and escalation situations, compliance management, employee and partner on-boarding and off-boarding, as well as knowledge circulation.
In Q4, we have enhanced our encryption capability, augmented API support for better integration with other applications and added enhancements to the network storage dashboard and events and calendars.
We continue to invest in the latest mobile and infrastructure technologies to create greater choices and options for our valued customers.
In Q4, we conducted 30 Clearvale partner and paid customer transactions in financial, healthcare, services and IT industry sectors. Clearvale customers come in all sizes and from different verticals worldwide including knowledge intensive, interaction intensive and service intensive industries.
While the most bookings remain relatively small because customers generally start with a limited trial, they could lead to considerable upside for future growth if these customers expand their usage in the future upon successful adoption. We’re also excited to continue to report that leading accounts, which include some very large organizations, continue to increase their user base significantly after their initial adoption period.
In Q4, we've added customers to many different partners. And this is a strong validation of our partner focus. We’re committed to our two pronged direct and partnership go-to-market strategy. The addition of [IDEA] Data in China and ENM in Austria furthers the expansion of our global partners’ ecosystem.
Thus, we continue to enhance our integrated enterprise 2.0 suite Clearvale, which consists of the following components. Clearvale enterprise, the comprehensive enterprise platform of engagements, it offers the most expensive network of networks which maximizes business returns through effective knowledge distribution and powerful workflow to get more work done.
Second, Clearvale Express, the simplified version of Clearvale targeted for easy adoption and viral expansion, it is easily upgradable to our enterprise solution. Three, Clearvale Passport, our platform as a service solution created for telcos and ISPs, as well as reseller such as systems integrators, hardware OEMs and vertical or horizontal software buyers. This solution enables our partners to offer their own cloud-based social business ecosystem without any heavy upfront investment.
And last but not least, BroadVision 9, our mobile and social engagement management solution integrated with K2 e-business relationship management platform.
In conclusion, we continue our development to establish BroadVision as a key player in enterprise 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 the two-pronged approach to acquire lighthouse customers through direct sales efforts and in parallel, the development of a valuable and global network of partners through our Passport channel program, where partners can market their own branded, cloud-based social enterprise ecosystems 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. We will continue to invest in the success of our Clearvale social communication collaboration platform, which is now integrated with our full suite of e-businesses platform under the BroadVision 9 engagement platform. Our product teams continue to enhance our mobile and cloud-based enterprise social networking solutions to increase productivity and efficiency across business processes.
We believe our success lies in the focus on our product strategy on four core areas of differentiation where we lead our industry. They are; one, social business processes. Two, social ecosystems or network of networks built to mimic real business relationships and processes. Three, social analytics for accountability and engagement adoption; and four, most partner friendly enablement platform.
With that, we thank you for listening. And now, let’s open it up for your questions.
Thank you. We’ll now begin the question-and-answer session. (Operator Instructions). And we have Patrick Lin from Primarius Capital on line with the question. Please go ahead.
Patrick Lin - Primarius Capital
Hi gentlemen, thanks for doing the call here. And I just had a couple of quick questions.
Yeah, go ahead please.
Patrick Lin - Primarius Capital
Can you please start with in terms of the new products giving a little bit of background in terms of competitive landscape and what the customers are facing and why they would use your product?
And then as a follow up, if you could give us an idea of what you're seeing in terms of customer acceptance and enthusiasm for the product. In other words, is this something that is -- that people are potentially getting very excited about or are we still in the early stages of kind of timing on these sales here?
Yeah. I think we're talking about Clearvale which is the social enterprise networking solution set. The whole space relatively speaking is young. We're into the market for four years, pretty early in the market. The market has evolved. I mean there are some larger players that are out there, but everybody has a different approach. And I think instead of looking at inherent landscape, what we're seeing in general is that the solutions and the customer behaviors are starting to take shape. That is I think people were very excited in the first three years, because what it promises is a more effective communication and collaboration approach through sharing knowledge, enabling the entire organization of participating problem solving, as well as identifying experts, their merits of need that have not been met by traditional IT solutions.
So the product is great, but at the same time a lot of people don’t spend both on vendor side as well as on the customer side in the first three years trying to figure out what is that they can do with this. And what we’re seeing is that in the last two years which is where we started getting more attraction, getting true adoption is that the noise level of just being social and just being very lightweight in terms of engaging your -- they can call it, you can call it engaging your employees or engaging customers, that didn’t go very far.
So now what people are doing, they are doing more collaboration which involves workflow, which involves providing accountability. That’s why I think when we look at our solution set, three things really stand out. One is we have a very, very deep workflow which is it’s great to have social which is great way of discriminating information. People get information instantly some internally, some externally. But you need to be able to act on that, you need a system that can transform that into workflow which is getting a work done. And what comes with that is accountability, to have workflow is one thing, but to have accountability means that now you’re following to it at a workflow to see things are getting done. So that’s the second part, when you hear about us talking about core investment.
I think the third part is really putting these uniqueness together providing solutions that customer wants, but going to market for us as well as all the small company is key to enable a partner friendly platform which is where our customization, letting large and small partners to be able to in a way brand it as their own service, carry it out there to allow different customers. So, I think these three things and the timing of that is pulling together, bringing us into a marketplace that shows a lot of promise, but we’re still very early in that process.
Patrick Lin - Primarius Capital
So, let’s imagine that you’re still early if you were to look out the next three to six months, what does the visibility look like? And can you see a potential for acceleration or are you still not sure when that could happen?
Well, I think that we are seeing steady progress, meaning that we are seeing that instead of trial, instead of just people curious about a certain technology and its promises, people are actually trying that in limited numbers as we see. We’re seeing people start with small numbers, actually now I think the market is beyond just the first three years of pure high. People are actually -- they've heard the story, they’ve heard where people have failed, they’ve heard people where they’ve succeeded and people are actually much more diligently finding real problems to solve within organization. So, we see that our trials are becoming more real. It’s not just entertaining because they want to do, they’ve heard about this new way of doing things.
So from that standpoint, I see we are making steady progress. Obviously, we are doing everything we can to put our solution out there into more partners’ hand, pushing our sales and marketing efforts and we hope to see acceleration. And given what we’ve seen in the last couple of years, it’s definitely pointing in the right direction. But in terms of velocity, I can’t give you much more than that.
Patrick Lin - Primarius Capital
So, in terms of the growth, I know you said a steady interest, what are the metrics then as investors that we should be looking at and what’s on your dashboard? Is it the number of trials, you’re looking conversions; you’re looking at revenues, what are the things that we should look for the next 6 to 12 months?
Well, at this time, we actually don’t breakout our legacy business, as well as the new business, because the new business has been a small part of the business so far. But I think as we -- in terms of what you can look at is the overall performance of the company. But what -- I think what we can talk about a little bit is that there is a switch over of putting more and more weight into the new product in its revenue. And when it’s appropriate, I think we will start disclosing that.
Patrick Lin - Primarius Capital
Terrific, thank you very much.
Okay Adrian, if there are no more questions, perhaps we -- you can maybe announce the conclusion of the conference for today.
Okay. Thank you. Thank you, ladies and gentlemen. This concludes today’s conference. And actually, do we have time for one person who just queued up?
Yes, we do. Absolutely.
Okay. Thank you. [Don Phil] with IBI Mutual Fund is on line with the question. Please go ahead.
Hi guys. Thank you for the conference call. I have a question about your businesses in Japan. You had a contract I think nine months ago with NTT about the business there and potential.
Yeah. I think we talked upon that on last call as well. I think this was a very, very significant move for us into one of the major distribution channels actually not in Japan, but I think globally. And the relationship has been going very, very well. We've actually been, both rolling out products within NTT for internal adoption, as well as moving it through NTT down customer base.
What they have done is that they combined their sort of office suite and add-in the capability of social and task workflow as I mentioned earlier into their bundles. And it’s actually -- it’s going as well as we can imagine this to go.
Having said that, it is really -- we are talking about within a year of pushing something like this out there. We are seeing some early trials and some pretty big marquee names that are also Japan centric for their global names. And we hope to be able to talk about them more in the upcoming calls. But I think everything is actually doing very, very well especially working with a very large partner that’s sometime hard to mobilize. But this seems to be in the right place at the right time for aligning to company’s interest.
Should we expect this year you can sign a very big agreement with big names, a multi-million dollar agreement?
I wish, we always like to do bigger deals, but I am not in a position to sort of discuss specific quantity and perhaps forecast along those lines.
Okay. Thank you, again.
Thank you, Don.
And we have no further questions.
Okay. Well, thank you everybody for attending today’s call. And we’ll look forward to seeing you in another quarter’s time.
Thank you, ladies and gentlemen. This concludes today’s conference. Thank you for participating. You may now disconnect.
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