Crexendo Reports First Quarter 2012 Financial Results


PHOENIX, May 8, 2012 (GLOBE NEWSWIRE) -- Crexendo, Inc. (AMEX:EXE), a provider of Cloud based infrastructure services to businesses, including telecom and website hosting services, e-commerce software, website development, and internet marketing services, today reported financial results for its first quarter ended March 31, 2012.

First Quarter 2012 Compared to 2011

Net income for the first quarter of 2012 was $197,000 or $0.02 per diluted common share, compared to a net loss of $1,851,000 or $0.17 per diluted common share in the prior year quarter. Income before income tax provision for the first quarter of 2012 was $44,000 compared to a loss of $2,973,000 in the prior year quarter. The income tax benefit for the first quarter of 2012 was $153,000, compared to an income tax benefit of $1,122,000 in the prior year quarter.

Cash from operations for the first quarter of 2012 was $652,000 compared to cash used in operations of $3,307,000 for the prior year quarter. As of March 31, 2012, cash, cash equivalents, and restricted cash were $10,688,000 working capital was $8,999,000, and working capital excluding deferred revenue was $17,869,000. Total current and long-term trade receivables were $12,338,000 as of March 31, 2012.

Segment Results

StoresOnline

Revenue for the first quarter of 2012 decreased 69% to $4,410,000 compared to $14,089,000 for the prior year quarter. Total segment operating expenses decreased 92% to $1,224,000 compared to $14,874,000 for the prior year quarter. 

Segment other income, primarily related to interest on the collection of accounts receivable decreased 34% to $764,000 during the first quarter of 2012 from $1,158,000 in the prior year quarter.

Total segment income before income tax provision increased 959% to $3,950,000 in the first quarter of 2012 from $373,000 in the prior year quarter.

Crexendo Web Services

Revenue for the first quarter of 2012 increased 61% to $770,000, from $479,000 in the prior year quarter. Crexendo backlog, which is anticipated to be recognized within the next twelve months, was $1,212,000 at March 31, 2012 compared to a backlog of $972,000 at March 31, 2011.

Total segment operating expenses increased 16% to $1,333,000 during the current quarter compared to $1,149,000 in the prior year quarter. The increase in segment operating expenses is primarily due to an increase in fulfillment costs associated with increase in sales. Total segment operating loss decreased 16% to $563,000 in the first quarter of 2012 compared to $670,000 in the prior year quarter.

Crexendo Network Services

Revenue for the first quarter of 2012 was $75,000 compared to no revenue in the prior year quarter. Total Crexendo Network Services operating expenses were $763,000 for the first quarter of 2012 compared to $486,000 in the prior year quarter. 

Steven G. Mihaylo, Chief Executive Officer of Crexendo, stated, "I am pleased with the advances we made this quarter as we are starting to see improvements in our sales process and sales efforts specifically in our telecom division. This quarter was a milestone for us as we rolled out our nationwide telecom offering, including our home state of Arizona. As a result of this roll out, we had telecom bookings of over $800,000 this quarter. We are starting to see the progress we were seeking in our hiring process as we have seen improved success with our recent new hires and believe we will have  improved retention rates going forward. As of today we have 24 direct sales representatives selling both our web services and our telecom offerings, which is flat with the prior quarter with several more representatives in the pipeline. We are building sales momentum and expect continued improvements.  

I continue to be impressed with how our products and services continue to improve and develop.  I am absolutely convinced we are focused on the right market segment and know our products and services can compete with anyone's. Our primary job continues to be to grow and develop our sales teams, and I am confident with the changes we have made that we will be able to attract and retain quality sales representatives to sell the highest quality products. We are working toward expanding our product offerings to include other cloud based services, with the continued goal of creating a sustainable recurring revenue model."

Conference Call

The Company is hosting a conference call today, May 8, 2012 at 4:30 pm ET (1:30 pm PT). The conference call will be broadcast live over the Internet at http://www.crexendo.com. If you do not have Internet access, the telephone dial-in number is 800-479-9001 for non-domestic participants and 719-457-2662 for international participants. The conference ID to join the call is 5948878. Please dial in five to ten minutes prior to the beginning of the call at 4:30 PM EDT.

About Crexendo

Crexendo provides Cloud-based infrastructure services to businesses, which includes telecom and website hosting services, ecommerce software, website development and internet marketing services. These Cloud-based services help businesses build internet strategies to market and sell their products, accept online orders, analyze marketing performance and manage pricing and customers over the Internet. In addition to software, training and Cloud-based telecom and website hosting services, Crexendo offers site development, search engine optimization (SEO), link building and training. Crexendo, Crexendo Business Solutions, Crexendo Network Services are trademarks of Crexendo, Inc.

The Crexendo, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=7604

Safe Harbor Statement

This press release contains forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for such forward-looking statements. The words "believe," "expect," "anticipate," "estimate," "will" and other similar statements of expectation identify forward-looking statements. Specific forward-looking statements in this press release include information about Crexendo (i)being pleased with the improvements made this quarter, (ii) realizing and sustaining improvements in its sales process and sales efforts specifically in the telecom division, (iii) starting to see progress in its hiring process, (iv) having seen improved success with recent hires and having the belief that retention rates will improve on a go forward, (v) building sales momentum and expecting continued improvements, (vi) continuing to be impressed with how products and services continue to improve and develop, (vii) being convinced it is focused on the right market segment and that its products and services can compete with anyone's, (viii) primary job continuing to be to grow and develop its sales teams, (ix) being confident with the changes made it will be able to attract and retain quality sales reps and (x) working toward expanding product offerings to include other cloud based services, with the continued goal of creating a sustainable recurring revenue model.

For a more detailed discussion of risk factors that may affect Crexendo's operations and results, please refer to the company's Form 10-K for the period ended December 31, 2011 These forward-looking statements speak only as of the date on which such statements are made, and the company undertakes no obligation to update such forward-looking statements, except as required by law.

CREXENDO, INC. AND SUBSIDIARIES 
Condensed Consolidated Balance Sheets 
(In thousands, except par value and share data)
(unaudited)
     
     
  March 31, 2012 December 31, 2011
Assets    
     
Current Assets:    
 Cash and cash equivalents  $ 8,723  $ 8,658
 Restricted cash  1,965  1,965
Trade receivables, net of allowance for doubtful accounts of $1,626 as of March 31, 2012 and $3,512 as of December 31, 2011  9,012  9,420
 Inventories  263  232
 Income taxes receivable  534  552
 Prepaid expenses and other  590  725
 Total Current Assets  21,087  21,552
     
Certificate of deposit  500  500
 Long-term trade receivables, net of allowance for doubtful accounts of $814 as of March 31, 2012 and $1,949 as of December 31, 2011  3,326  6,097
Property and equipment, net  3,863  4,055
Deferred income tax assets, net  272  279
Intangible assets  61  79
Goodwill  265  265
Other long-term assets  231  233
 Total Assets  $ 29,605  $ 33,060
     
Liabilities and Stockholders' Equity     
     
Current Liabilities:    
 Accounts payable  $ 1,059  $ 1,153
 Accrued expenses and other  1,676  2,240
 Dividend payable  211  211
 Deferred income tax liability  272  279
 Deferred revenue, current portion  8,870  9,288
 Total Current Liabilities  12,088  13,171
     
Deferred revenue, net of current portion  3,344  6,123
Other long-term liabilities  251  419
 Total Liabilities  15,683  19,713
     
Stockholders' Equity:    
Preferred stock, par value $0.001 per share - authorized 5,000,000 shares; none issued  --   -- 
Common stock, par value $0.001 per share - authorized 100,000,000 shares; 10,623,081 shares outstanding as of March 31, 2012 and 10,523,078 shares outstanding as of December 31, 2011  11  11
 Additional paid-in capital  49,316  48,938
 Accumulated deficit  (35,405)  (35,602)
 Total Stockholders' Equity   13,922  13,347
     
 Total Liabilities and Stockholders' Equity   $ 29,605  $ 33,060
 
CREXENDO, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations 
(In thousands, except per share and share data)
(unaudited)
  Three Months Ended March 31,
  2012 2011
     
Revenue  $ 5,255  $ 14,568
Operating expenses:    
 Cost of revenue  1,421  6,305
 Selling and marketing  933  8,763
 General and administrative  3,033  2,759
 Research and development  594  872
 Total operating expenses  5,981  18,699
     
Loss from operations  (726)  (4,131)
     
Other income (expense):    
 Interest income  742  1,153
 Interest expense  --  (1)
 Other income (expense), net  28  6
 Total other income, net  770  1,158
     
Income (loss) before income tax benefit (provision)  44  (2,973)
     
Income tax benefit (provision)  153  1,122
     
Net income (loss)  $ 197  $ (1,851)
     
Net income (loss) per common share:    
 Basic  $ 0.02  $ (0.17)
 Diluted  $ 0.02  $ (0.17)
     
Dividends per common share:  $ 0.02  $ 0.02
     
Weighted average common shares outstanding:    
 Basic  10,530,066  10,638,597
 Diluted  10,559,273  10,638,597
 
CREXENDO, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
(unaudited)
  Three Months Ended March 31,
  2012 2011
     
CASH FLOWS FROM OPERATING ACTIVITIES    
Net income (loss)  $ 197  $ (1,851)
Adjustments to reconcile net income to net    
 cash provided by (used for) operating activities:    
Depreciation and amortization  391  349
Expense for stock options issued to employees  253  174
Deferred income tax benefit  --   (1,103)
Change in uncertain tax positions  (167)  -- 
Changes in assets and liabilities net of effects from acquisition:    
Trade receivables  3,179  (1,725)
Inventories  (31)  27
Income taxes receivable  18  641
Prepaid expenses and other  135  (831)
Other long-term assets  2  2
Accounts payable, accrued expenses and other   (128)  (1,351)
Deferred revenue  (3,197)  2,397
Other long-term liabilities  --   (36)
Net cash provided by (used for) operating activities  652  (3,307)
     
CASH FLOWS FROM INVESTING ACTIVITIES    
 Acquisition of property and equipment  (711)  (54)
 Investment in subsidiary  --   (56)
 Net cash used for investing activities  (711)  (110)
     
CASH FLOWS FROM FINANCING ACTIVITIES    
 Proceeds from exercise of stock options and related income tax benefit  336  25
 Repurchase of common stock  --   (89)
 Payments made on contingent consideration  (1)  -- 
 Dividend payments  (211)  (214)
 Net cash provided by (used for) financing activities  124  (278)
     
NET DECREASE IN CASH AND CASH EQUIVALENTS  65  (3,695)
     
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD  8,658  14,207
CASH AND CASH EQUIVALENTS, END OF PERIOD  $ 8,723  $ 10,512
     
Supplemental disclosure of cash flow information:    
Cash paid (received) during the period:    
Interest $ --   $1
Income taxes  (4)  (618)
Supplemental disclosure of non-cash investing and financing information:  
Dividends declared  211  213
Purchase of property and equipment included in accounts payable  125  57

            

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