GlobalSCAPE, Inc. (NYSE Amex: GSB), a leading developer of
secure information exchange solutions, today announced financial
results for its first quarter of fiscal year 2010, ending March 31,
2010.
Revenue was $4.4 million for the first quarter of fiscal year
2010, an increase of 37 percent when compared with revenue of $3.2
million in the same quarter last year. Net income for the first
quarter was $364,000, or $0.02 per diluted share, compared with a
net loss of ($244,000), or ($0.01) per diluted share, in the same
quarter last year. Cash and short term investments grew to $9.1
million, representing a 46 percent increase from the first quarter
of 2009 and a 10 percent improvement since the end of fiscal 2009.
Cash flow from operating activities for the first quarter of fiscal
year 2010 was $896,000 compared with $123,000 for the same
quarter last year, an increase of 628 percent. Cash flow from
operating activities for the prior year was largely affected by the
net loss.
Finally, Adjusted EBITDA for the first quarter of 2010 was $1.0
million, a 378 percent increase compared with the same quarter last
year; and a 61 percent increase compared with the fourth quarter of
2009. The Adjusted EBITDA margin for the first quarter of 2010 was
23.1 percent, compared with 6.6 percent in the first quarter of
2009, and 15.2 percent in the fourth quarter of 2009.
“Our first quarter performance was very strong and we
dramatically improved every major financial indicator compared to
the same quarter last year,” said Jim Morris, GlobalSCAPE president
and CEO. “We are pleased to see financial results significantly
better than our prior quarter,” Morris continued. “We are running
in front of the broad guidance provided in our March 31 earnings
call, and continue to look forward to the second half of the year
where we expect to see even greater performance, driven by new
solutions and partnerships.”
Quarterly Highlights
During the first quarter, GlobalSCAPE continued to increase
sales of its enterprise solutions, enhance and extend its
solutions, add reference accounts, and establish relationships with
industry leaders.
Sales of GlobalSCAPE’s enterprise solutions continued to climb,
to almost 90 percent of revenues, in the first quarter, continuing
a trend that began several years ago. Increased enterprise revenue
resulted primarily from continued growth in sales of the Enhanced
File Transfer Server™ (EFT Server) solution. EFT Server sales
increased to over $3.3 million in the first quarter, compared with
just under $2.3 million in the first quarter a year ago. Similarly,
sales of the Wide Area File Services (WAFS™) application increased
to $530,000 as compared to approximately $421,000 in the first
quarter of 2009.
Increasing enterprise revenue led to continued growth of
maintenance and support (M&S) revenues during the first
quarter, as more customers contracted for ongoing support of
GlobalSCAPE’s business-critical solutions. GlobalSCAPE’s M&S
revenue grew to over $1.9 million, or almost 44 percent of total
revenue, in the first quarter, compared to just under $1.3 million,
or 40 percent of total revenue, a year ago. Increasing M&S
revenue further strengthens GlobalSCAPE’s long-term financial
position and reflects continued customer confidence in the
Company’s solutions.
During March, GlobalSCAPE announced the latest version of EFT
Server, with multi-platform support through a DMZ Gateway ("edge
server") module, advanced workflow automation (including the
ability to automate Twitter updates), and enhanced logging and
security capabilities. The considerable capabilities and ease of
use delivered by EFT Server led Network Products Guide, the
industry's leading information technology research and advisory
guide, to name EFT Server a winner of the 2010 Product Innovation
Awards for Managed File Transfer (MFT). This prestigious award
recognizes and honors vendors, large and small, from all over the
world with innovative and ground-breaking products that are
bringing essential and incremental changes and are setting the bar
higher for others in all areas of information technology.
GlobalSCAPE also announced in March that it is a worldwide
reseller of BOUNCER by CoreTrace™, the most tamper-proof and
automated application whitelisting solution in the industry.
Compared to alternative solutions, CoreTrace BOUNCER stops even the
most sophisticated malware attacks (such as root kits, memory
exploits, and zero-day threats) and unauthorized applications from
compromising data and systems. GlobalSCAPE's announcement as a
reseller of CoreTrace BOUNCER follows the Company's $2.3 million
investment in CoreTrace in December 2009. EFT Server, the DMZ
Gateway, and BOUNCER are key enablers of end-to-end Total Path
Security™ which protects information at rest and in motion.
As reflected in the Company’s increasing enterprise revenue,
more customers are adopting GlobalSCAPE’s enterprise solutions to
satisfy compliance and security mandates. For example, GlobalSCAPE
announced in first quarter that Advanced Micro Devices (AMD) had
deployed EFT Server as a standard method for transferring data with
business partners. "We chose GlobalSCAPE products to facilitate the
delivery of large, confidential files between our geographically
dispersed partners. We quickly found that with GlobalSCAPE's proven
technology, we could quickly transfer important files. We also
appreciated its robust security, reliability, and reporting
capabilities," said Richard Crawford, AMD IT Networking.
GlobalSCAPE announced on its 2009 Fiscal Year End earnings call
in March that the Company intended to focus additional activity on
channel sales and potentially enter adjacent markets. For example,
GlobalSCAPE has signed an initial partnership agreement with
Rackspace Hosting Inc, a global leader in web hosting and hosted
cloud system infrastructure services. The current partner agreement
allows GlobalSCAPE to resell Rackspace’s services. While declining
to provide more specific information at this time, CEO Morris
stated, “We recognize and appreciate the growing importance of the
cloud and cloud-based services. We are working with Rackspace to
identify and define mutual business opportunities that best
leverage our collective capabilities.”
Conference Call May 13, 2010 At 4:30 p.m. ET
GlobalSCAPE management will hold a conference call Thursday, May
13 to discuss the first quarter 2010 financial results and other
corporate matters at 4:30 p.m. Eastern Time/3:30 p.m. Central Time.
Those wishing to join should dial 1-800-380-1061 and use Conference
ID # 73228586. A live webcast of the conference call will also be
available in the investor relations page of the company's website
at www.globalscape.com. A webcast replay of the conference call
will be available on the Company’s website through June 13,
2010.
About GlobalSCAPE
GlobalSCAPE, Inc. (NYSE Amex: GSB), headquartered in San
Antonio, TX, is a global provider of managed file transfer (MFT)
and wide area file services (WAFS) solutions for securely
exchanging critical information over the Internet, within an
enterprise, and with business partners. Since the release of Cute
FTP in 1996, GlobalSCAPE's solutions have continued to evolve to
meet the business and technology needs of an increasingly
interconnected global marketplace. For more information about
GlobalSCAPE's products, visit www.globalscape.com or the Company’s
Secure Info Exchange blog.
Safe Harbor Statement
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. The words
"would," "exceed," "should," "anticipates," believe," "possibly,"
"steady," "dramatic," and variations of such words and similar
expressions identify forward-looking statements, but their absence
does not mean that a statement is not a forward-looking statement.
These forward-looking statements are based upon the Company's
current expectations and are subject to a number of risks,
uncertainties, and assumptions. The Company undertakes no
obligation to update any forward-looking statements, whether as a
result of new information, future events or otherwise. Among the
important factors that could cause actual results to differ
significantly from those expressed or implied by such
forward-looking statements are risks that are detailed in the
Company's Annual Report on Form 10-K for the 2009 calendar year,
filed with the Securities and Exchange Commission on March 30,
2010.
Summary Financial Data
GlobalSCAPE, Inc.
Statements of
Operations
(Unaudited)
Three Months Ended March 31, (In thousands,
except per share data)
2010 2009
OPERATING REVENUE: Software product revenues $ 2,471 $ 1,947
Maintenance and support revenues 1,942 1,293
Total revenue 4,413 3,240 OPERATING EXPENSES: Cost of
revenues 102 52 SG&A expenses 2,909 2,583 R&D expenses 646
675 Depreciation and amortization 200 172
Total operating expenses 3,857 3,482
OPERATING INCOME (LOSS) 556 (242 ) Other income (expense)
1 11 INCOME (LOSS) BEFORE INCOME TAXES
557 (231 ) PROVISION FOR INCOME TAXES 193 13
NET INCOME (LOSS) $ 364 $ (244 ) Net income (loss) per
common share - basic 0.02 (0.01 ) Net income (loss) per common
share – diluted 0.02 (0.01 ) Weighted average shares outstanding:
Basic 17,283 17,227 Diluted 17,876 17,227
GlobalSCAPE, Inc.
Balance Sheets
(In thousands, except share and per share data)
March 31, 2010
December 31,
2009
(Unaudited) Assets Cash and cash equivalents $ 8,455
$ 7,026 Short term investments 650 1,205
Accounts receivable (net of
allowance for doubtfulaccounts of $89 and $217 on March 31, 2010
andDecember 31, 2009, respectively)
2,227 2,162 Federal income tax receivable - 36 Current deferred tax
assets 703 130 Prepaid expenses 194 132
Total current assets 12,229 10,691 Fixed assets, net 1,550
1,653 Investment in CoreTrace 2,278 2,278 Intangible assets, net
757 833 Goodwill 619 619 Deferred tax assets - 46 Other assets 54
53 Total assets $ 17,487 $ 16,173
Liabilities and Stockholders’ Equity Current
liabilities: Accounts payable $ 376 $ 316 Accrued expenses 597 764
Income tax payable 557 - Deferred revenue 4,211
4,071 Total current liabilities 5,741 5,151
Deferred tax liabilities 120 - Other long term liabilities 1,057
1,080 Commitments and contingencies - - Stockholders’
equity:
Preferred stock, par value $0.001
per share,10,000,000 authorized, no shares issued oroutstanding
- -
Common stock, par value $0.001 per
share,40,000,000 authorized, 17,686,252 issued atMarch 31, 2010 and
December 31, 2009
18 18 Additional paid-in capital 11,064 10,801
Treasury stock, 403,581 shares, at
cost,at March 31, 2010 and December 31, 2009
(1,452 ) (1,452 ) Retained earnings 939 575
Total stockholders’ equity 10,569 9,942
Total liabilities and stockholders’ equity $
17,487 $ 16,173
GlobalSCAPE, Inc.
Statements of Cash
Flows
(Unaudited)
Three Months Ended March 31, (In thousands)
2010 2009 Operating Activities: Net
income (loss) $ 364 $ (244 )
Adjustments to reconcile net
income (loss) to netcash provided by operating activities:
Bad debt recoveries (137 ) (43 ) Depreciation and amortization 200
172 Gain on disposition of assets - (1 ) Share-based compensation
263 283 Deferred taxes (407 ) 82 Changes in operating assets and
liabilities: Accounts receivable 72 287 Prepaid expenses (62 ) 27
Federal income tax receivable 594 (106 ) Other assets (1 ) (5 )
Accounts payable 60 (57 ) Accrued expenses (167 ) (162 ) Deferred
revenues 113 101 Deferred compensation - (216 ) Other long-term
liabilities 4 5 Net cash provided by
operating activities 896 123
Investing Activities: Proceeds from sale of property and
equipment - 1 Purchase of property and equipment (22 ) (221 )
Purchase of short-term investments (350 ) - Redemption of
short-term investments 905 - Net cash
provided by (used in) investing activities 533 (220 ) Net increase
(decrease) in cash 1,429 (97 ) Cash at beginning of period
7,026 6,319 Cash at end of period $ 8,455
$ 6,222
Non-GAAP Financial Measures
Adjusted EBITDA
(In thousands)
We define Adjusted EBITDA as Net Income, plus Income Taxes,
Total Other Income (Expense), Depreciation and Amortization, and
non-cash charges for share-based compensation and asset
impairments.
Adjusted EBITDA is a metric that is used in our industry by the
investment community for comparative and valuation purposes. We
disclose this metric in order to support and facilitate the
dialogue with research analysts and investors.
Note that Adjusted EBITDA is not a measure of financial
performance under accounting principles generally accepted in the
United States (GAAP) and should not be considered a substitute for
net income. Adjusted EBITDA has limitations as an analytical tool,
and when assessing our operating performance, you should not
consider Adjusted EBITDA in isolation, or as a substitute for net
income or other income statement data prepared in accordance with
GAAP. Other companies may calculate Adjusted EBITDA differently
than we do, limiting its usefulness as a comparative measure. See
our Adjusted EBITDA to net income reconciliations in the table
below.
Three Months Ended (Unaudited)
March 31,
March 31, 2010 2009 Net
Revenue $ 4,413 $ 3,240 Income (loss) from operations $ 556
$ (242 ) Net income (loss): $ 364 $ (244 ) Plus: Income
taxes 193 13
Plus: Total other
(income)expense
(1 ) (11 )
Plus: Depreciation
andamortization
200 172
Plus: Share-basedcompensation
expense
263 283 Adjusted EBITDA $ 1,019
$ 213 Operating income margin 12.6 % -7.5 %
Adjusted EBITDA margin 23.1 % 6.6 %
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