- Software licensing revenue in Q2 2017 rose 6.1% to $4.9 million
- Company increased R&D and marketing expenses in preparation for the launch of its new enterprise software in Q3 2017
- Completed a $15 million three-year hosting service extension in July 2017 to support anticipated growth from its enterprise software launch
NEWPORT BEACH, Calif. – August 9, 2017 – Accelerize Inc. (OTCQB: ACLZ), a leader in marketing technology solutions, today announced financial results for its second quarter which ended June 30, 2017.
Accelerize Inc. owns and operates CAKE, a technology provider of customer journey analytics solutions that measurably improve marketing campaign performance and return on advertising spend. CAKE’s powerful software-as-a-service (SaaS) enterprise platform provides unparalleled insight into every step in the customer journey and sophisticated tools that enable advertisers, publishers, agencies and affiliate networks to maximize the effectiveness of their marketing efforts across the digital spectrum.
Business Highlights for Q2 2017
- Continued Growth of Monthly Recurring License Fees, Average Revenue per Customer and Total Number of Customers: Q2 2017 software license fee revenues increased 6.1% year-over-year to $4.9MM and comprised 82% of total revenue compared to 77% in Q2 2016. Total number of customers increased by 5% with average license revenue per customer increasing by 1% year-over-year through broader usage of the Company’s SaaS platform. Revenue remained broad-based with no single customer representing more than 5% of total revenue.
- Increased Investment in Technology for Cloud-based Enterprise Software Platform: During Q2 2017 the Company completed the development of its new enterprise software platform scheduled to be launched in Q3 2017. The Company expects this new enterprise product launch to significantly broaden the size and scope of its recurring-revenue opportunities, especially with large advertisers, publishers and brands.
- Completed a $15 million three year hosting service extension to fuel future growth: In July 2017, the Company arranged a three-year $15 million hosting service extension with its primary hosting partner to support anticipated future growth.
- Continued International Expansion: The Company achieved significant global diversification in Q2 2017 with 42% of overall revenue derived outside the U.S., up from 33% in Q2 2016. The Company provides CAKE platform services for customers in more than 40 countries worldwide.
“Our Q2 2017 results reflect the significant steps we have taken to prepare our Company for future success,” said Brian Ross, Chairman and CEO of Accelerize Inc. “We have invested considerable resources in completing the development of our enterprise software platform in order to position Accelerize Inc. to capitalize on a much larger market opportunity with large brands and advertisers. While this effort has resulted in some additional short term expenses and our moving away from certain non-core revenue streams, we are confident that it places us in a position to achieve substantial long term growth and build lasting value for our stockholders. Our new $15 million hosting service commitment also provides us with a solid foundation to help us achieve our aggressive sales goals for the future. We are excited about the launch of this dynamic new software product in Q3 and look forward to a progressive acceleration in revenue growth in the quarters and years to come.”
Financial Highlights for Q2 2017
- Revenues: Total revenues for Q2 2017 were $6.0MM, consistent with the comparable period in 2016. Software Licensing revenue rose to $4.9MM, a 6.1% increase compared to $4.6MM in Q2 2016. The increase in software licensing revenue was driven by a 5% increase in number of customers and a 1% increase in average license revenue per customer on the CAKE software platform. Other revenue, consisting primarily of professional service fees and other partner revenue, decreased by 51.7% year-over-year to $243K, as a result of the Company’s strategic decision to transition away from certain non-core revenue streams. The Company anticipates future revenues to be driven by ongoing organic growth, international expansion and penetration into new larger markets through product innovation and the launch of its new enterprise software platform.
- Operating Loss: For Q2 2017, the Company recorded an operating loss of ($340K) compared to an operating loss of ($123K) in the same period in 2016. This was mainly a result of a $344K decrease in gross profit partially offset by a $127K reduction in operating expenses. The decline in gross profit was largely due to certain redundant hosting expenditures resulting from its migration to a new hosting service. The Company expects these redundant expenses to continue through Q3 2017 and thereafter result in a significant reduction in costs.
- Net Loss: Net loss for Q2 2017 was ($617K), or ($0.01) per share on 65.3 million weighted average shares outstanding, compared to a net loss of ($333k) or ($0.01) per share on 65.1 million weighted average shares outstanding in Q2 2016.
- Adjusted EBITDA: Adjusted EBITDA in Q2 2017 was $67K compared to adjusted EBITDA of $519K recorded in Q2 2016. Adjusted EBITDA is a non-GAAP measure management believes provides important insight into the Company’s operating results (see “Use of Non-GAAP Financial Information” and the reconciliations of non-GAAP financial measures later in the press release).
“We continued to maintain positive adjusted EBITDA in Q2 2017 while we positioned the Company for the imminent launch of our enterprise product,” said Andy Mazzarella, CFO of Accelerize Inc. “Our migration to a new hosting service and the new three-year hosting services agreement will help us reduce costs and give us ample room to grow in the coming years. We expect gross margins to return to historical levels by Q4 of this year as redundant migration costs subside and recurring licensing revenues continue to expand. Additionally, we are in discussions to expand our borrowing capabilities in order to support our expansion into larger market opportunities with advertisers and large brands. We remain committed to our growth strategy and look forward to our new product launch delivering strengthening future financial performance for the benefit of our stockholders.”
About Accelerize Inc.
Accelerize Inc. (OTCBB: ACLZ) offers marketing technology solutions that revolutionize the way advertisers leverage their digital advertising data. For more information, visit www.accelerize.com.