GlobalSCAPE, Inc. (NYSE Amex: GSB), a leading developer of
secure information exchange solutions, today announced financial
results for its third quarter of fiscal year 2010, ended September
30, 2010.
Revenue was $4.8 million for the third quarter of fiscal year
2010, an increase of 11 percent when compared with revenue of $4.3
million in the same quarter last year. Revenue for the first nine
months of 2010 was $13.6 million, up from $12.3 million. “We have
increased our revenue in each of the last three quarters, in line
with our previously stated emphasis on increasing top-line
performance during 2010,” said Jim Morris, GlobalSCAPE president
and CEO. “To put our third quarter revenue in perspective, we
achieved the second highest revenue quarter in GlobalSCAPE’s
history, exceeded only by the second quarter of 2007 which included
a large order for almost three million dollars. I couldn’t be more
proud of the sustained execution of our team as we look forward to
a record year for sales.”
GlobalSCAPE net income for the third quarter decreased to
$233,000 or $0.01 per diluted share, compared with net income of
$576,000, or $0.03 per diluted share, in the same quarter last year
as the company continued to make strategic investments in
accordance with previously announced plans. Cash and short term
investments grew to $10.1 million, representing a seven percent
increase from the second quarter. Cash flow from operating
activities for the nine months ended September 30, 2010 was $1.9
million compared with $4.2 million for the same period in
2009, a decrease of 56 percent. This decrease is largely due to the
deferred revenue of $1.9 million from the 2009 U.S. Army order of
which half has been recognized into revenue. Adjusted EBITDA for
the third quarter of 2010 was $744,000, a 43 percent decrease
compared with the same quarter last year. The Adjusted EBITDA
margin for the third quarter of 2010 was 15.6 percent, compared
with 30.2 percent in the third quarter of 2009. This decrease is
largely attributable to the decrease in GAAP net income.
Morris expects that GlobalSCAPE’s investments in key personnel,
revenue-enabling infrastructure, and new technologies will allow
the company to reach new heights in future periods. “We made a
conscious business decision to increase our operating expenses
during 2010 as necessary to fund our organic growth initiatives,
and increase long-term shareholder value, while still generating
cash and remaining profitable,” Morris continued. “We have
assembled a world-class team, made substantial infrastructure
investments, and obtained access to innovative technologies since I
joined GlobalSCAPE a little over two years ago. We are just
beginning to monetize some of these investments and I believe 2011
will be a strong growth year for GlobalSCAPE sales and net
income.”
Quarterly Highlights
During the third quarter, GlobalSCAPE launched new solutions,
established additional partner relationships, and continued to
enhance its leadership team.
In July, GlobalSCAPE announced the availability of GlobalSCAPE
Managed Information Xchange™. This hosted, managed service is the
initial solution available as part of the new GlobalSCAPE Managed
Solutions™ line of business announced in the second quarter.
Through this unique offering, GlobalSCAPE delivers a hosted managed
file transfer (MFT) solution that enables cost effective, secure
exchange of business-to-business data, including large files and
sensitive data. The tiered service allows customers to outsource
all or part of their complex and demanding information exchange
needs to reduce costs, improve operational efficiencies, track and
audit transactions, and provide a greater level of security. As
Managed Information Xchange sales grow in future periods,
GlobalSCAPE may notably increase recurring revenue, which already
represents more than 40 percent of total revenue.
In August, the company released a major upgrade to its Mail
Express™ solution. Mail Express enables Microsoft Outlook email
users to send and receive large files on demand – removing a widely
recognized email infrastructure constraint. Users can simply and
transparently send sensitive and large files, up to 25GB, without
resorting to unapproved and potentially non-secure methods such as
private email accounts, social media sites, CDs, and USB drives.
Mail Express provides increased benefits for the IT organization as
well, offering greater visibility into email-based file movement
across the enterprise, including robust tracking and auditing. It
allows for centralized policy management so that IT can enforce
policies on each user’s email account. In addition, Mail Express
reduces costs by offloading expensive email attachments to less
expensive storage.
In September, GlobalSCAPE expanded its global channel sales
network by partnering with Lifeboat Distribution, an international
specialty software distributor for technically sophisticated
products. GlobalSCAPE is working closely with Lifeboat Distribution
to recruit, build, and power a network of solution providers for
GlobalSCAPE’s award-winning products to drive incremental sales
revenues that complement GlobalSCAPE’s existing sales channels.
Lifeboat Distribution serves leading corporate resellers, large
account resellers (LAR), value added resellers (VAR), and solution
providers across North America and throughout Latin America and the
Caribbean. By partnering with Lifeboat Distribution, GlobalSCAPE
increases its channel network growth potential by recruiting and
training resellers from the existing Lifeboat Distribution
network.
During September, GlobalSCAPE also extended its partner
relationship with Network Automation. GlobalSCAPE began its
original OEM partnership with Network Automation in July of 2008,
embedding Network Automation's AutoMate product as an Advanced
Workflow Engine (AWE) module to its Enhanced File Transfer (EFT)
Server™ solution. During the third quarter, GlobalSCAPE expanded
its partner agreement to become a worldwide reseller of Network
Automation's software solutions, AutoMate 7 and AutoMate Business
Process Automation (BPA) Server 7.
In late September, GlobalSCAPE announced that it is a
subcontractor on the McLane Advanced Technologies (MAT) industry
team that won a $52.3 million re-compete contract for the U.S. Army
Standard Army Maintenance System (SAMS-E). Work on this contract
will begin in late 2010 for a period of three years. Under the new
contract, GlobalSCAPE will provide professional and technical
services to support the SAMS-E program, including Secure FTP
Server™ and CuteFTP®, secure information exchange solutions
integrated into the SAMS-E environment. The company may also
deliver enhanced software solutions for SAMS-E under the new
contract. As a maintenance systems modernization initiative, SAMS-E
is a bridge between current system functionality and the U.S.
Army's future Global Combat Support System (GCSS-Army). GlobalSCAPE
has been helping the U.S. Army ensure secure delivery of
mission-critical data around the world since 2005. GlobalSCAPE has
received several substantial product license and maintenance and
support orders from the U.S. Army, including a $2.7 million order
in April 2009 and other substantial orders in May 2007 and
September 2005.
Also in the third quarter, GlobalSCAPE hired Mark Perry as Vice
President of Managed Solutions. Mr. Perry is an industry executive
with over 25 years of technical and management experience with
world-class technology, information security, and professional
services companies. Prior to joining GlobalSCAPE, Mr. Perry was
Senior Vice President of Enterprise Business Solutions with
Fujitsu, a global IT services, hardware and software provider,
where he was responsible for the U.S. professional services
division with more than $365 million in annual revenues. Prior to
Fujitsu, Mr. Perry was Vice President of Global Consulting Services
at Symantec Corporation where he developed the key business
standards and practices necessary for the successful delivery of
products and services by Symantec's consulting services division.
Mr. Perry previously was a partner in KPMG, LLP, where he directed
the delivery of risk and advisory services to a broad range of
public sector and commercial clients.
Conference Call November 10, 2010 At 4:30 p.m. ET
GlobalSCAPE management will hold a conference call Wednesday,
November 10 to discuss the third 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 #19779974. 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 December
10, 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) (in thousands, except per
share amounts) Three months ended September 30, Nine months
ended September 30, 2010 2009 2010 2009 Operating Revenues:
Licenses $ 2,652 $ 2,633 $ 7,652 $ 7,798 Maintenance and support
2,005 1,581 5,642 4,356 All others 112 82 353
128 Total Revenues 4,769 4,296 13,647 12,282
Operating Expenses: Cost of revenues 142 102 389 230 Selling,
general and administrative expenses 3,326 2,396 9,449 7,825
Research and development expenses 832 729 2,203 2,094 Depreciation
and amortization 201 187 599 537
Total operating expenses 4,501 3,414 12,640
10,686 Income from operations 268 882 1,007 1,596
Other income (expense) - 3 6 (38 )
Income before income taxes 268 885 1,013 1,558 Provision for income
taxes 35 309 282 283 Net Income
$ 233 $ 576 $ 731 $ 1,275 Net income per common share
- basic $ 0.01 $ 0.03 $ 0.04 $ 0.07 Net income per common share -
diluted $ 0.01 $ 0.03 $ 0.04 $ 0.07 Average shares outstanding:
Basic 17,652 17,254 17,430 17,238 Diluted 18,610 18,243 18,174
17,800
GlobalSCAPE,
Inc. Balance Sheets (in thousands except share
amounts)
September 30,
December 31, 2010 2009 (Unaudited)
Assets Current assets: Cash and cash equivalents $ 10,141 $
7,026 Short term investments - 1,205 Accounts receivable (net of
allowance for doubtful accounts of $59 and $217 on September 30,
2010 and December 31, 2009, respectively) 2,861 2,162 Federal
income tax receivable 276 36 Current deferred tax assets 809 130
Prepaid expenses 293 132 Total current
assets 14,380 10,691 Fixed assets, net 1,389 1,653
Investment - CoreTrace, at cost 2,278 2,278 Intangible assets, net
606 833 Goodwill 619 619 Deferred tax assets - 46 Other assets
43 53 Total assets $ 19,315
$ 16,173
Liabilities and Stockholders’
Equity Current liabilities: Accounts payable $ 296 $ 316
Accrued expenses 1,183 764 Income tax payable - - Deferred revenue
4,992 4,071 Total current liabilities
6,471 5,151 Deferred tax liabilities 26 - Other long term
liabilities 1,169 1,079 Commitments and contingencies - -
Stockholders’ equity: Preferred stock, par value $0.001 per
share, 10,000,000 authorized, no shares issued or outstanding - -
Common stock, par value $0.001 per share, 40,000,000
authorized, 17,881,682 and 17,686,252
issued September 30, 2010
and December 31, 2009 18 18 Additional paid-in capital 11,777
10,802
Treasury stock, 403,581 shares, at cost,
at September 30, 2010
and December 31, 2009. (1,452 ) (1,452 ) Retained earnings
1,306 575 Total stockholders’ equity
11,649 9,943 Total liabilities and
stockholders’ equity $ 19,315 $ 16,173
GlobalSCAPE, Inc. Statements
of Cash Flows (Unaudited) (in thousands) For the
nine months ended September 30, 2010 2009
Operating Activities: Net income $ 731 $ 1,275 Adjustments
to reconcile net income to net cash provided by operating
activities: Bad debt recoveries (148 ) (164 ) Depreciation and
amortization 599 537 Loss on disposition of assets 52 53
Stock-based compensation 756 769 Deferred taxes (607 ) (342 )
Excess tax benefits from exercise of stock-based compensation 66 -
Changes in operating assets and liabilities: Accounts receivable
(551 ) 190 Prepaid expenses (161 ) (50 ) Federal income tax (291 )
319 Other assets 10 (7 ) Accounts payable (20 ) (210 ) Accrued
expenses 419 76 Deferred revenues 921 1,981 Deferred compensation -
(216 ) Other long-term liabilities 90 14
Net cash provided by operating activities 1,866
4,225 Investing Activities: Proceeds from sale
of property and equipment - 1 Purchase of property and equipment
(160 ) (519 ) Purchase of short-term investments (350 ) (1,405 )
Redemption of short-term investments 1,555 -
Net cash provided by (used in) investing activities 1,045
(1,923 ) Financing Activities: Proceeds from exercise of stock
options 153 33 Tax benefit from stock-based compensation 51
- Net cash provided by financing activities
204 33 Net increase in cash 3,115 2,335 Cash at beginning of period
7,026 6,319 Cash at end of period $
10,141 $ 8,654 Cash paid during the period
for: Income taxes $ 1,125 $ 311
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)
September 30, September 30,
2010 2009 Net Revenue $ 4,769 $ 4,296 Income
from operations $ 268 $ 882 Net income: $ 233 $ 576 Plus:
Income taxes 35 309 Plus: Total other (income) expense - (3 ) Plus:
Depreciation and amortization 201 187 Plus: Share-based
compensation expense 275 228 Adjusted
EBITDA $ 744 $ 1,297 Operating income margin
5.6 % 20.5 % Adjusted EBITDA margin 15.6 % 30.2 %
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