Company expands market opportunity through the launch of Journey, its new enterprise software platform for large advertisers, publishers and brands
NEWPORT BEACH, Calif. – November 15, 2017 – Accelerize (OTCQB: ACLZ), a leader in marketing technology solutions, today announced financial results for its third quarter ended September 30, 2017.
Accelerize 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 Q3 2017
- Completed the Launch of Journey, the Company’s New Cloud-based Enterprise Software Platform: The Company launched its new Journey platform late in Q3 2017 and has already generated significant initial interest from a number of large advertisers, publishers and brands. Journey’s visualization and analytics tools empower customers with the ability to identify trends and optimize marketing tactics in real-time. Through Journey, campaign and cost data are transformed into actions that quickly improve marketing performance and ultimately boost return on ad spend. The Company expects the Journey enterprise SaaS platform to begin contributing higher margin recurring revenue in Q1 2018 and to grow progressively throughout the year.
- Continued Growth of Monthly Recurring License Fees, Average Revenue per Customer and Total Number of Customers: Q3 2017 software license fee revenues increased 4% year-over-year to $4.8MM and comprised 80% of total revenue compared to 77% in Q3 2016. Total number of customers increased by 7% year-over-year with average license revenue per customer increasing by 1% for the 9 month period in 2017 compared to the same period in 2016. Revenue remained broad-based with no single customer representing more than 5% of total revenue.
- Continued International Expansion: The Company achieved significant global diversification in Q3 2017 with 44% of overall revenue derived outside the U.S., up from 34% in Q3 2016. The Company provides CAKE platform services for customers in more than 50 countries worldwide.
“We are excited to have begun the launch of Journey late in Q3 2017 as we position the Company to accelerate its recurring revenue growth in 2018 and beyond,” said Brian Ross, Chairman and CEO of Accelerize. “We believe that the favorable response we have seen from our initial marketing efforts of this dynamic software platform to a select group of large advertisers, publishers and brands demonstrates that we have developed a SaaS-based product that is on point and poised for success. We anticipate that Journey will deliver a progressive expansion in higher margin recurring revenue throughout 2018 as we successfully penetrate this very large market opportunity. We are confident this will enable us to build lasting value to our stockholders for many years to come.”
Financial Highlights for Q3 2017
- Revenues: Total revenues for Q3 2017 were $6.1MM, compared to $6.0 million during the comparable period in 2016. Software Licensing revenue rose to $4.8MM, a 4% increase compared to $4.6MM in Q3 2016. The increase in software licensing revenue was driven by a 7% increase in number of customers and a 1% increase in average license revenue per customer on the CAKE software platform during the 9-month period. Other revenue, consisting primarily of professional service fees and other partner revenue, decreased by 43.4% year-over-year to $237K, as a result of the Company’s strategic decision to transition away from certain non-core revenue streams. Software Usage revenue in Q3 2017 increased by 4.1% to $1.0 million. The Company anticipates future revenues to be driven by ongoing organic growth, international expansion and penetration into new larger markets through its Journey enterprise software platform.
- Operating Income (Loss):For Q3 2017, the Company recorded an operating loss of ($390K) compared to an operating profit of $109K in the same period in 2016. This was mainly a result of a $677K increase in cost of sales partially offset by a $128K reduction in operating expenses. The increase in cost of sales was largely due to certain redundant hosting expenditures and one-time expenses associated with the completion of its platform migration and new hosting services agreement with Amazon Web Services. The Company expects margins to increase beginning in Q4 2017 as these expenses moderate and costs are lowered through greater scalability of the AWS platform.
- Net Loss:Net loss for Q3 2017 was ($696K), or ($0.01) per share on 65.5 million weighted average shares outstanding, compared to a net loss of ($134k) or ($0.00) per share on 65.1 million weighted average shares outstanding in Q3 2016.
- Adjusted EBITDA:Adjusted EBITDA in Q3 2017 was $15K compared to adjusted EBITDA of $568K recorded in Q3 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).
“In the third quarter we continued to lay the foundation for our expansion into a much larger and higher margin revenue opportunity with the launch of our Journey enterprise software platform,” said Andy Mazzarella, CFO of Accelerize. “While the migration and set up costs associated with our new three year hosting services agreement with Amazon had a short term negative impact on margins, it sets the stage for tremendous scalability that will ultimately result in reduced costs and greater profitability as we grow. We expect to see a progressive uptick in margins beginning in Q4 as costs begin to normalize and we achieve greater utilization rates through the addition of new customers on the Journey platform in 2018. We are in continued discussions to expand our borrowing capabilities to support our anticipated market expansion and look forward to delivering strengthening financial performance for the benefit of our stockholders.”
About Accelerize Inc.
Accelerize Inc. (OTCQB: ACLZ) offers marketing technology solutions that revolutionize the way advertisers leverage their digital advertising data. For more information, visit www.accelerize.com.
Use of Forward-looking Statements
This press release may contain forward-looking statements from Accelerize Inc. within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 and federal securities laws. For example, when Accelerize Inc. describes the benefits and impact of its new enterprise software including contributing higher margin recurring revenue in Q1 2018 and thereafter, the market opportunity from its new enterprise software, the benefits of its hosting services agreement, its sales and revenue growth goals, the growth of future revenues, expectations for gross margins, expansion of borrowing capabilities, and uses other statements containing the words “believes,” “anticipates,” “plans,” “expects,” “will” and similar expressions, Accelerize Inc. is using forward-looking statements. These forward-looking statements are based on the current expectations of the management of Accelerize Inc. only, and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. The following factors, among others, could cause actual results to differ materially from those described in the forward-looking statements: changes in technology and market requirements; our technology may not be validated as we progress further; we may be unable to retain or attract key employees whose knowledge is essential to the development of our products and services; unforeseen market and technological difficulties may develop with our products and services; inability to timely develop and introduce new technologies, products and applications; or, loss of market share and pressure on pricing resulting from competition, which could cause the actual results or performance of Accelerize Inc. to differ materially from those contemplated in such forward-looking statements. Except as otherwise required by law, Accelerize Inc. undertakes no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. For a more detailed description of the risk and uncertainties affecting Accelerize Inc., reference is made to Accelerize Inc.’s reports filed from time to time with the Securities and Exchange Commission.
Use of Non-GAAP Financial Information
Accelerize Inc. provides financial statements that are prepared in accordance with generally accepted accounting principles (GAAP). To help understand Accelerize Inc.’s financial performance the Company has supplemented its financial results that it provides in accordance with GAAP with certain non-GAAP financial measures. The method Accelerize Inc. uses to produce non-GAAP financial results is not computed according to GAAP and may differ from the methods used by other companies. Non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with the Company’s consolidated financial statements prepared in accordance with GAAP. Specifically, management is excluding the following items from its non-GAAP Adjusted EBITDA calculation:
Stock-Based Compensation and Warrant Expenses: The Company’s compensation strategy includes the use of stock-based compensation and warrants to attract and retain employees and executives. It is principally aimed at aligning their interests with those of our stockholders and at long-term employee retention, rather than to motivate or reward operational performance for any particular period. Thus, stock-based compensation and warrant expense varies for reasons that are generally unrelated to operational decisions and performance in any particular period.