Q2 2015 revenue increases 40% year-over-year and 5.1% sequentially
Company achieves 16% year-over-year growth in average number of customers and 14% growth in average revenue per customer
Company reaches milestone of 100+ advertiser clients included within its growing SaaS client base
NEWPORT BEACH, Calif. – August 14, 2015 – Accelerize Inc. (OTCQB: ACLZ) (OTCBB: ACLZ), a leader in marketing technology solutions, today announced financial results for its fiscal second quarter ended June 30, 2015.
Company Highlights for Q2 2015
- New Customer Acquisition and Recurring-revenue Wins: Record second quarter revenues of $5.5MM were driven by CAKE, the Company’s digital marketing software division. During the quarter the Company increased adoption of the CAKE SaaS platform that enables marketers to accurately track, attribute and optimize advertising spend. By the end of Q2 2015, the Company reached a significant milestone as its customer roster now includes more than 100 advertisers. Additionally, CAKE continues to add larger clients to its platform leading to average revenue per customer increasing by 14% year-over-year.
- New Global Partner Marketplace: The Company launched CAKE Connect, a new worldwide digital marketing ecosystem that includes Neo@Ogilvy, Marketo, Google, Forensiq, Bing and more. Through CAKE Connect, customers as well as the Company’s extensive network of industry-leading agency, technology, media and network partners are enabled to easily collaborate and generate additional revenues.
- International Expansion: The Company continued to achieve significant global client growth with 28% of overall revenue being derived outside the U.S. in Q2 2015, up from 24% in Q2 2014.
“We finished the second quarter with strong performance across the board – the acquisition of new customers, expansion of relationships with existing customers and the increase of our international footprint,” said Brian Ross, CEO and Chairman of Accelerize Inc. “We also recognize and appreciate the contribution that partners have played in our growth. Our recent investments in people, product and partners paid off with record revenue coupled with strong customer adoption and retention. Moving forward we will continue to invest in product innovation and advancing our marketing platform to bring even more value to our growing global customer base.”
Financial Highlights for Q2 2015
- Revenues: Total revenues for Q2 2015 reached a record $5.5MM, a 40% increase from $3.9MM recorded in Q2 2014, and a 5.1% sequential increase from Q1 2015. Revenue growth was largely driven by a 16% increase in the average number of customers and a 14% increase in average revenue per customer year-over-year. Geographically, 28% of revenues in Q2 2015 were derived from outside the U.S. as compared to 24% in Q2 2014 reflecting the success of the Company’s international expansion efforts. While this revenue is derived from international expansions it is important to note it is denominated in U.S. dollars and not subject to foreign currency risks and fluctuations.
- Operating (Loss) Income:Operating loss for Q2 2015 was $(1.7MM), compared to operating loss of ($711K) recorded in Q2 2014. The loss in Q2 2015 was largely attributed to a $514K increase in sales and marketing expenses to drive customer growth, a $784K increase in general and administrative expenses to bolster its management and support staff, and a $726K increase in ongoing research and development expenses to foster product innovation, partially offset by a $1.6MM increase in revenue. Sequentially, Q2 2015 sales and marketing expenses declined by 10.3% and G&A expenses declined by 4.2% compared to Q1 2015. The Company sees these expenses continuing to decline as a percentage of revenue in future quarters.
- Adjusted EBITDA: Adjusted EBITDA for Q2 2015 was ($831K). Adjusted EBITDA is a non-GAAP financial measure that excludes stock option and warrant expense and is defined below.
- Cash Flow: Net cash used in Q2 2015 was ($727K), compared to net cash provided of $264K during Q2 2014.
- Operating Expenses: The Company’s total operating expenses in Q2 2015 increased 57% year-over-year to $5.6MM inclusive of $490K of stock option and warrant expense, and $388K of depreciation and amortization expense. During Q2 2015 the Company’s investment in ongoing research and development to drive product innovation was $1.3MM, a 121% year-over-year increase. As a result, free cash flow, which amounts to cash flow from operations less capital expenditures, totaled $(2.3MM).
- Balance Sheet: Total cash as of June 30, 2015 was $404K compared to $1.5MM on March 31, 2015. Total current assets as of June 30, 2015 decreased to $3.1MM, a decrease of 15% compared to $3.7MM on March 31, 2015. Total working capital decreased to $1.3MM compared to $1.9MM on March 31, 2015.
“Our strong financial results in revenue and customer growth reflect the unique value proposition of our CAKE platform and the success of our effort to expand into larger clients in the advertiser market,” said Michael Lin, CFO of Accelerize Inc. “As we move through 2015 we expect the growth in our expenses to moderate and decline as a percentage of revenue. We believe we have adequately staffed our organization and the Company is well-positioned to achieve sustained growth for the foreseeable future. ”
Accelerize Inc. (OTCQB: ACLZ) (OTCBB: ACLZ) offers marketing technology solutions that revolutionize the way advertisers leverage their digital advertising data. For more information, visit www.accelerize.com.
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Use of Forward-looking Statements
This press release may contain forward-looking statements from Accelerize Inc. within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 and federal securities laws. For example, when Accelerize Inc. says that it will continue to invest in product innovation and advancing its marketing platform to bring more value to its growing customer base, that it sees operating expenses continuing to decline as a percentage of revenues in future quarters, that it expects growth in expenses to moderate and decline as a percentage of revenue through the remainder of 2015, that it is well positioned to achieve sustained growth for the foreseeable future, and other statements containing the words “believes,” “anticipates,” “plans,” “expects,” “will” and similar expressions, Accelerize Inc. is using forward-looking statements. These forward-looking statements are based on the current expectations of the management of Accelerize Inc. only, and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. The following factors, among others, could cause actual results to differ materially from those described in the forward-looking statements: changes in technology and market requirements; our technology may not be validated as we progress further; we may be unable to retain or attract key employees whose knowledge is essential to the development of our products and services; unforeseen market and technological difficulties may develop with our products and services; inability to timely develop and introduce new technologies, products and applications; loss of market share and pressure on pricing resulting from competition, which could cause the actual results or performance of Accelerize Inc. to differ materially from those contemplated in such forward-looking statements. Except as otherwise required by law, Accelerize Inc. undertakes no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. For a more detailed description of the risk and uncertainties affecting Accelerize Inc., reference is made to Accelerize Inc.’s reports filed from time to time with the Securities and Exchange Commission.
Use of Non-GAAP Financial Information
Accelerize provides financial statements that are prepared in accordance with generally accepted accounting principles (GAAP). To help understand Accelerize’s financial performance the Company has supplemented its financial results that it provides in accordance with GAAP with certain non-GAAP financial measures. The method Accelerize uses to produce non-GAAP financial results is not computed according to GAAP and may differ from the methods used by other companies. Non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with the company’s consolidated financial statements prepared in accordance with GAAP. Specifically, management is excluding the following items from its non-GAAP Adjusted EBITDA calculation:
Stock-Based Compensation and Warrant Expenses: The company’s compensation strategy includes the use of stock-based compensation and warrants to attract and retain employees and executives. It is principally aimed at aligning their interests with those of our stockholders and at long-term employee retention, rather than to motivate or reward operational performance for any particular period. Thus, stock-based compensation and warrant expense varies for reasons that are generally unrelated to operational decisions and performance in any particular period.
CONDENSED CONSOLIDATED BALANCE SHEETS
|June 30,||December 31,|
|Accounts receivable, net of allowance for bad debt of $5,364 and $212,113, respectively||2,286,592||1,749,566|
|Prepaid expenses and other assets||402,846||204,268|
|Total current assets||3,093,112||3,084,501|
|Property and equipment, net of accumulated depreciation of $1,322,431 and $826,802, respectively||1,450,304||1,424,858|
|Customer relationships, net of accumulated amortization of $1,000,000 and $703,704, respectively||–||296,296|
|Deferred financing costs, net of accumulated amortization of $37,899 and $19,317, respectively||59,957||37,750|
|LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)|
|Accounts payable and accrued expenses||$||1,689,693||$||1,202,495|
|Other current liabilities||2,310||–|
|Total current liabilities||1,749,137||1,408,970|
|Line of credit||4,500,000||2,900,000|
|Commitments and contingencies|
|Stockholders’ Equity (Deficit):|
|Common stock; $0.001 par value; 100,000,000 shares authorized; 62,837,351 and 62,816,554 shares issued and outstanding, respectively||62,836||62,815|
|Additional paid-in capital||20,791,623||19,618,153|
|Accumulated other comprehensive loss||(8,943||)||(10,971||)|
|Total stockholders’ equity (deficit)||(1,511,200||)||667,423|
|Total liabilities and stockholders’ equity (deficit)||$||4,737,937||$||4,976,393|
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|Three-month periods ended||Six-month periods ended|
|June 30,||June 30,|
|Cost of revenue||1,591,345||1,049,668||2,909,111||1,838,767|
|Research and development||1,326,410||600,259||2,201,792||1,177,045|
|Sales and marketing||1,915,053||1,400,559||4,048,977||3,023,008|
|General and administrative||2,351,430||1,567,342||4,805,876||2,370,510|
|Total operating expenses||5,592,893||3,568,160||11,056,645||6,570,563|
|Other income (expense):|
|Total other (expenses)||(41,506||)||4,932||(53,872||)||1,623|
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|Six-month periods endedJune 30,|
|Cash flows from operating activities:|
|Adjustments to reconcile net loss to net cash used in operating activities:|
|Depreciation and amortization||791,926||578,278|
|Amortization of debt discount||18,583||3,750|
|Provision for bad debt||(206,749||)||(20,628||)|
|Fair value of options||1,126,615||287,985|
|Changes in operating assets and liabilities:|
|Accounts payable and accrued expenses||446,136||9,160|
|Net cash used in operating activities||(1,855,093||)||(771,667||)|
|Cash flows from investing activities:|
|Capitalized software for internal use||(368,041||)||(311,106||)|
|Net cash used in investing activities||(483,514||)||(498,103||)|
|Cash flows from financing activities:|
|Proceeds from line of credit||1,600,000||1,000,000|
|Payment of financing costs||–||(40,000||)|
|Net proceeds from exercise of options and warrants||9,586||571,219|
|Net cash provided by financing activities||1,609,586||1,531,219|
|Effect of exchange rate changes on cash||2,028||2,399|
|Net (decrease) increase in cash||(726,993||)||263,848|
|Cash, beginning of period||1,130,667||1,157,315|
|Cash, end of period||$||403,674||$||1,421,163|