Top Image Systems Reports Third Quarter Financial Results


TEL AVIV, Israel and PLANO, Texas, Nov. 10, 2015 (GLOBE NEWSWIRE) -- Top Image Systems, Ltd. (NASDAQ:TISA), a global innovator of intelligent content processing solutions, today announced its financial results for the third quarter and nine months ended September 30, 2015.

Third Quarter 2015 Highlights:

  • Year-to-date revenues have grown in constant currency by 16% compared to the same period in 2014;
  • Revenues of $9.0 million, compared to $9.6 million in Q3 2014; in constant currency, revenues reached $10.0 million in the current quarter;
  • Recurring revenues represented 52% of total revenues;
  • Adjusted EBITDA* of $(0.2) compared to an Adjusted EBITDA of $(2.6) million in Q3 2014;
  • Signed a multi-year, multi-million dollar SaaS agreement with a Top Five bank in the U.S.;  
  • Signed a $250,000 mobile-initiated enrollment project with an online financing company in India;
  • Pursuing strategic channel agreements with new print services, outsourcing and system integration partners;
  • Launched focused go-to-market strategy and consolidated product roadmap around cloud and SaaS;
  • Increased investment in R&D and marketing, including opening of new R&D center in Germany and sales and marketing office in the U.S.

“While we continue to invest in our core growth markets, our third quarter results were adversely impacted by a few factors,” stated Michael Schrader, Chief Executive Officer, Top Image Systems. “Beyond the impact of typical seasonality, our currency basket declined 15.8% in Q3 2015 compared to Q3 2014; in constant currency our revenues were $10.0 million.” 

“2015 continues to be challenging due to continued market consolidation. While these market conditions have had some short-term impact on TIS revenues, in the long run they are working in our favor,” said Mr. Schrader. “First, we were able to recruit our new CMO Andrew Pery, our new CTO Carsten Nelk and our new President of TIS Americas Bob Fresneda to the TIS Executive Management Team. Each of these leaders brings to TIS years of experience and proven success in our market. In order to capitalize on the business opportunities that have opened up, management is driving its proactive Strategic Global Alliances program in which we have invested substantial resources to expand global partnerships and channel infrastructure and exponentially grow our channel business. TIS stands out as one of the few solid, stable independent vendors in today’s market, a factor that will ultimately work to increase our market share.”

Mr. Schrader added, “During Q3 TIS has made considerable progress in focusing our go-to-market strategy and accelerating investments in consolidating our product portfolio, expanding our cloud, SaaS and mobile solutions for which demand is accelerating, particularly for document process automation solutions for the mid-market. To this end, we have invested substantial resources in both R&D and marketing and sales, including opening new offices in Germany and the U.S., hiring additional engineers and marketing professionals and stepping up our co-marketing activities with our strategic partners. We continue to focus chiefly on the high-growth Americas market, where we are building up our US team and steadily expanding our sales and marketing infrastructure. In parallel we continue to proactively seek strategic M&A opportunities to expand our U.S. footprint.”   

Mr. Schrader concluded, “This quarter TIS has closed new business, expanded our direct and indirect sales pipelines and further refined our business model to increase recurring revenue and expand our U.S. customer base. We have signed a multi-year SaaS contract with BNY Mellon, a Top-Five U.S. bank, which, although not yet evident in Q3 financial results, will increase our recurring revenue in upcoming quarters. To accelerate achievement of our targets, we have undertaken significant changes in senior management, sales leadership and our go-to-market and product development strategies, implementing a global lead generation system and attending more trade shows to generate high potential sales leads. We are confident that these steps will deliver better results next quarter and in 2016 and beyond for the long-term benefit of our customers and shareholders.”

Third Quarter 2015 Year-over-Year Results

Total revenues for the third quarter of 2015 were $9.0 million, a decrease of 6% compared to third quarter 2014 revenues of $9.6 million; In constant currency, revenues were $10 million, an increase of 4% year over year.

Product (license) revenues for the third quarter of 2015 were $2.3 million, compared to $2.4 million for the third quarter last year. Professional services revenues were $2.0 million compared to $2.2 million in the same period last year. Recurring (SaaS and maintenance) revenues for the third quarter of 2015 were $4.7 million, compared to $5.0 million in the same period last year. In constant currencies, Q3 recurring revenues were $5 million.

Gross profit for the third quarter of 2015 was $4.7 million, unchanged from the year-ago quarter.

Gross margin for the third quarter of 2015 was 52%, compared to 49% for the third quarter last year.

Adjusted EBITDA was a loss of $(0.2) million for the third quarter of 2015, compared to an adjusted EBITDA loss of $(2.6) million for the third quarter of 2014. Third quarter 2015 Non-GAAP diluted loss per share* was $ (0.06) compared to $(0.17) for the third quarter of 2014. GAAP loss was $(1.6) million for the third quarter of 2015 compared to $(5.9) million for the third quarter of 2014. Third quarter 2015 GAAP diluted loss per share was $(0.09) compared to $(0.35) for the third quarter of 2014.

Full Year 2015 Expectations

As we stated in Q2, management expects H2 2015 revenues to continue to grow sequentially over H1 2015.  The Company expects full-year 2015 revenues in constant currency compared to 2014 revenues to grow between 8% and 12%.

Conference Call

The Company will host a conference call and webcast today, Tuesday, November 10th, 2015 at 10 a.m. ET, during which TIS management will present and discuss the financial results and be available to answer questions from investors.

To join the conference call, please dial in to one of the following teleconference phone lines using the numbers listed below. Please begin placing your calls at least 5 minutes before the conference call commences. If you are unable to connect using the toll-free number, please try the U.S. Toll/International dial-in number.

US Toll-Free Dial-in Number: 1-877-407-0784

US Toll/INTERNATIONAL Dial-in Number: 1-201-689-8560

Israel Toll-Free Dial-in Number: 1-809-406-247

The conference call is scheduled to begin at:

10 a.m. Eastern Time

7 a.m. Pacific Time

5 p.m. Israel Time

To join the live webcast, please click on the following link: http://public.viavid.com/index.php?id=117144.  For those unable to attend the live call or webcast, from the following day a recording of the call will be made available for download from the Investors section of the Top Image Systems’ website www.topimagesystems.com; during the next three months the recorded webcast can be viewed by clicking on the same link as for the live webcast: http://public.viavid.com/index.php?id=117144.

* Non-GAAP Financial Measures

This release includes non-GAAP financial measures, including, without limitation, adjusted EBITDA (which eliminates the impact of interest, taxes, amortization and depreciation expenses, as well as non-cash stock-based compensation expenses and other non-recurring items not part of regular business), Adjusted EBITDA margin, Non-GAAP Net Income (Loss) (which eliminates the impact of amortization expenses as well as non-cash stock-based compensation expenses and other non-recurring items not part of regular business) and Non-GAAP Income (Loss) per share. Non-GAAP measures are reconciled to comparable GAAP measures in the tables entitled "GAAP and Non-GAAP Statements of Operations".

The presentation of these non-GAAP financial measures should be considered as an addition to TIS' GAAP results provided in the attached financial statements for the third quarter and nine months ended September 30, 2015, and is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. The attached tables reconcile each non-GAAP financial measure to its most directly comparable GAAP financial measure. TIS' management believes that these non-GAAP financial measures provide meaningful supplemental information regarding TIS' performance by excluding the impact of certain charges and gains that may not be indicative of TIS' core business operating results. TIS' management believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing TIS' performance. These non-GAAP financial measures also facilitate comparisons to TIS' historical performance and its competitors' operating results. TIS includes these non-GAAP financial measures because management believes they are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision-making.

About Top Image Systems

Top Image Systems™ (TIS™) is a leading innovator of enterprise solutions for managing and validating content entering organizations from various sources. Whether originating from mobile, electronic, paper or other sources, TIS solutions deliver the content to applications that drive the organization. TIS's eFLOW is a common platform for the company's solutions. TIS markets its platform in more than 40 countries through a multi-tier network of distributors, system integrators, value-added resellers as well as strategic partners. Visit the company's website http://www.TopImageSystems.com for more information.

Caution Concerning Forward-Looking Statements

Certain matters discussed in this news release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results to be materially different from any future results expressed or implied in those forward looking statements. Words such as "will," "expects," "anticipates," "estimates," and words and terms of similar substance in connection with any discussion of future operating or financial performance identify forward-looking statements. These statements are based on management's current expectations or beliefs and are subject to a number of risks and uncertainties that could cause actual results to differ materially including, but not limited to, risks in product development, approval and introduction plans and schedules, rapid technological change, customer acceptance of new products, the impact of competitive products and pricing, the lengthy sales cycle, proprietary rights of TIS and its competitors, risk of operations in Israel, government regulation, litigation, general economic conditions and other risk factors detailed in the Company's most recent annual report on Form 20-F and other subsequent filings with the United States Securities and Exchange Commission. We are under no obligation to, and expressly disclaim any obligation to, update or alter our forward-looking statements, whether as a result of new information, future events or otherwise.

    
Top Image Systems Ltd.   
Consolidated Balance Sheet as of   
    
    
    
    
 September 30, December 31,
  2015   2014 
        
 In thousands
 Unaudited Audited
    
Assets   
    
Current Assets:   
Cash and cash equivalents$  1,212  $  4,386 
Restricted cash 72   132 
Trade receivables, net 12,477   12,034 
Other accounts receivable and prepaid expenses 1,469   787 
Deferred tax asset 749   749 
    
Total current assets 15,979   18,088 
    
Long-Term Assets:   
Severance pay funds 1,310   1,235 
Restricted cash 344   366 
Non-current deferred tax assets 522   522 
Long-term deposits and long-term assets 207   245 
Property and equipment, net 1,507   1,180 
Intangibles assets, net 5,367   6,293 
Goodwill 19,168   19,377 
    
Total long-term assets 28,425   29,218 
    
Total Assets$  44,404  $  47,306 
    
    
Liabilities and Shareholders' Equity   
    
Current Liabilities:   
    
Trade payables$  1,191  $  1,593 
Deferred revenues 1,927   3,573 
Deferred tax liability 171   133 
Accrued expenses and other accounts payable 3,606   3,815 
    
Total current liabilities 6,895   9,114 
    
Long-Term Liabilities:   
    
Accrued severance pay$  1,501  $  1,378 
Non-current deferred revenues 3,546   2,212 
Deferred tax liability 180   318 
Other long-term liabilities  515   447 
    
Total long-term liabilities 5,742   4,355 
    
Total Liabilities$  12,637  $  13,469 
    
Total parent shareholders' equity $  31,747  $  33,831 
Non-controlling interest  20   6 
Shareholders' Equity 31,767   33,837 
    
Total Liabilities and Shareholders' Equity$  44,404  $  47,306 
 
 


        
Top Image Systems Ltd.       
Statements of Operations for the       
        
        
        
 Three months ended Three months ended Nine months ended Nine months ended
 September 30, September 30, September 30, September 30,
  2015   2014   2015   2014 
                
 In thousands, except per share data
 Unaudited
        
        
        
Revenues$8,983  $9,564  $27,158  $25,811 
        
Cost of revenues  4,317   4,835   11,881   10,426 
        
Gross profit 4,666   4,729   15,277   15,385 
        
Expenses       
        
Research and development 1,170   1,473   3,427   3,508 
Selling and marketing 2,802   4,583   8,344   10,254 
General and administrative 1,611   4,362   4,209   6,634 
Amortization costs  74   120   222   120 
        
  5,657   10,538   16,202   20,516 
        
Operating income (991)  (5,809)  (925)  (5,131)
        
Financing income (expenses), net (510)  (218)  (1,030)  (188)
        
Other income (loss), net 9   (17)  4   (8)
        
Income (loss) before taxes on income (1,492)  (6,044)  (1,951)  (5,327)
        
Tax expenses 74   131   231   348 
        
Net income (loss)  (1,566)  (6,175)  (2,182)  (5,675)
        
Net income attributable to noncontrolling interest  (3)  269   (14)  (5)
        
Net income (loss)  (1,569)  (5,906)  (2,196)  (5,680)
        
        
        
Earnings per Share       
        
Basic earnings (loss) per share $(0.09) $(0.35) $(0.12) $(0.37)
        
Weighted average number of shares used in computation of basic net income (loss) per share 17,902   16,901   17,856   15,483 
        
Diluted earnings (loss) per share $(0.09) $(0.35) $(0.12) $(0.37)
Weighted average number of shares used in computation of diluted net (loss) earnings per share 17,902   16,901   17,856   15,483 
 
 


         
Adjusted EBITDA results:         
         
 Three months ended Three months ended  Nine months ended Nine months ended
 September 30, September 30,  September 30, September 30,
  2015   2014    2015   2014 
                 
 In thousands, except per share data
         
Adjusted EBITDA:         
Net income (loss) (1,569)  (5,906)   (2,196)  (5,680)
Interest  19   19    70   19 
Exchange rate differences  531   -    999   - 
Taxes 74   131    231   348 
Depreciation  179   81    485   170 
Amortization 336   354    1,008   354 
Stock-based compensation expenses 141   171    398   470 
Acquisition related costs -   1,170    -   1,170 
Post merger integration costs -   303    -   303 
Legal costs related to law suit settlement -   444    -   444 
Debt reserve adjustment -   601    -   601 
One-time payment 127   -    127   - 
Total Adjusted EBITDA   (162)    (2,632)     1,122      (1,801)
         
         
Reconciliation of GAAP to Non-GAAP results:       
         
Net income (loss)  (1,569)  (5,906)   (2,196)  (5,680)
Amortization 336   354    1,008   354 
Stock-based compensation expenses 141   171    398   470 
Acquisition related costs -   1,170    -   1,170 
Post merger integration costs -   303    -   303 
Legal costs related to law suit settlement -   444    -   444 
Debt reserve adjustment -   601    -   601 
Non-GAAP net income (loss)   (1,092)    (2,863)     (790)    (2,338)
         
Non-GAAP net income (loss) used for basic earnings per share  (1,092)  (2,863)   (790)  (2,338)
Shares used in basic earnings per share calculation  17,902   16,901    17,856   15,483 
Non-GAAP basic earnings (loss) per share$(0.06) $(0.17)  $(0.04) $0.15)
Non-GAAP Net income (loss) used for diluted earnings per share  (1,092)  (2,863)   (790)  (2,338)
         
Shares used in diluted earnings per share calculation  17,902   16,901    17,856   15,483 
         
Non-GAAP diluted earnings (loss) per share$(0.06) $(0.17)  $(0.04) $(0.15)
 



            

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