Issuer Direct Reports Second Quarter 2020 Results

Platform and Technology Revenue Increased 24% to $3.3 million, 68% of Total Revenue; Year-over-Year EBITDA margins more than doubled to 28% or $1.4 Million

RALEIGH, NC / ACCESSWIRE / July 30, 2020 / Issuer Direct Corporation (NYSE American:ISDR) (the “Company”), an industry-leading communications and compliance company, today reported its operating results for the three months ended June 30, 2020.

Brian Balbirnie, CEO of Issuer Direct, commented, “The second quarter was a record quarter for us in terms of top-line revenue, operating income, EBITDA and cash flow from operations, as we benefited from our virtual product line-up and continued newswire expansion.”

Mr. Balbirnie continued, “Looking at our growth drivers, they were threefold. First, ACCESSWIRE continues to be a steady contributor to our top line results, growing 19% year-over-year. This is a product offering we believe can continue its strong growth in both customer counts and revenue for years to come. Secondly, despite the current environment caused by the COVID-19 pandemic, the rest of our business performed well and exceeded our expectations in many ways. We believe this is a good indicator for us as we move to the back half of the year. Finally, in terms of new offerings, we delivered on our product pivot with a virtual focus, which supported our revenue growth, increased our profitability and also drove our overall platform branding and marketplace awareness.”

Mr. Balbirnie concluded, “It is encouraging to see the growth in revenue and EBITDA margins in the quarter. We remain committed to continue the innovation of our products, the search for acquisition targets in the communications industry and the drive to increase market awareness through our sales and marketing teams.”

Second Quarter 2020 Highlights:

  • Revenue – Total revenue was $4,884,000, an 18% increase from $4,138,000 in Q2 2019 and a 22% increase from $4,016,000 in Q1 2020. Platform and Technology revenue increased 24% from Q2 2019 and 23% from Q1 2020. The increase in Platform and Technology revenue was due to an increase in webcasting revenue as a result of our new virtual products, increased revenue from our newswire business and additional subscriptions of Platform id. Platform & Technology revenue increased to 68% of total revenue for Q2 2020, compared to 64% for Q2 2019. Services revenue increased 7% from Q2 2019 and 19% from Q1 2020.
  • Gross Margin – Gross margin for Q2 2020 was $3,522,000, or 72% of revenue, compared to $2,888,000, or 70% of revenue, during Q2 2019 and $2,763,000, or 69%, in Q1 2020. Platform and Technology gross margin was 78%, compared to 73% in Q2 2019 and 74% in Q1 2020. The increase in gross margin is primarily related to the increase in revenue from our virtual products.
  • Operating Income Operating income was $1,001,000 for Q2 2020, as compared to $130,000 during Q2 2019. The increase in operating income is due to the increase in gross margin as well as a decrease in operating expenses. General and Administrative Expenses decreased $125,000, or 9%, primarily due to a decrease in bad debt expense due to a large reserve in Q2 2019. Product development expense decreased $178,000, or 52% from Q2 2019 due to a decrease in headcount.
  • Net Income Net income was $772,000, or $0.21 per diluted share, during Q2 2020, compared to $212,000, or $0.05 per diluted share, during Q2 2019.
  • Operating Cash Flows – Cash flows from operations for Q2 2020 were $1,477,000 compared to $259,000 in Q2 2019 and $602,000 in Q1 2020
  • Non-GAAP Measures Q2 2020 EBITDA was $1,354,000, or 28% of revenue, compared to $550,000, or 13% of revenue, during Q2 2019. Non-GAAP net income for Q2 2020 was $974,000, or $0.26 per diluted share, compared to $477,000, or $0.12 per diluted share, during Q2 2019.
  • Stock Repurchase Plan – During the quarter, the Company repurchased an additional 62,198 of its shares at a total aggregate value of $580,000, under the Company’s $2,000,000 share repurchase program originally announced on August 7, 2019 and increased on March 16, 2020. As of June 30, 2020, we have purchased a total of 160,068 shares under the stock repurchase plan.

First Half 2020 Highlights:

  • Revenue – Total revenue was $8,900,000, a 7% increase from $8,317,000 during the first half of 2019. The increase in Platform and Technology revenue was due to an increase in webcasting revenue as a result of our new virtual products, increased revenue from our newswire business and additional subscriptions of Platform id. Platform & Technology revenue increased to 67% of total revenue for the first half of 2020, compared to 64% for the first half of 2019. Services revenue decreased 3% from the first half of 2019.
  • Gross Margin – Gross margin for the first half of 2020 was $6,285,000, or 71% of revenue, compared to $5,765,000, or 69% of revenue, during the first half of 2019. Platform and Technology gross margin was 76%, compared to 74% during the first half of 2019. The increase in gross margin is primarily related to the increase in revenue from our virtual products.
  • Operating Income Operating income was $1,249,000 for the first half of 2020, as compared to $277,000 during the first half of 2019. The increase in operating income is due to the increase in gross margin as well a decrease in operating expenses as noted for Q2 2020.
  • Net Income Net income was $998,000, or $0.26 per diluted share, during the first half of 2020, compared to $417,000, or $0.11 per diluted share, during the first half of 2019.
  • Operating Cash Flows – Cash flows from operations for the first half of 2020 were $2,079,000 compared to $795,000 during the first half of 2019.
  • Non-GAAP Measures – EBITDA for the first half of 2020 was $1,976,000, or 22% of revenue, compared to $1,108,000, or 13% of revenue, during the first half of 2019. Non-GAAP net income for the first half of 2020 was $1,372,000, or $0.36 per diluted share, compared to $995,000, or $0.26 per diluted share, during the first half of 2019.

Key Performance Indicators:

  • During the quarter, the Company worked with 1,477 publicly traded customers, compared to 1,440 during the same period last year.
  • During the quarter, the Company worked with 1,390 privately held customers compared to 997 during the same period last year
  • During the quarter we signed 35 new Platform id. subscriptions to new or existing customers with a total annual contract value of $225,000
  • Total Platform id. subscriptions as of June 30, 2020 were 295, with an annual contract value of $2,228,000, compared to 273 subscriptions with an annual contract value of $2,098,000 as of March 31, 2020.

Non-GAAP Information

Certain Non-GAAP financial measures are included in this press release. In the calculation of these measures, the Company excludes certain items, such as amortization of intangible assets, stock-based compensation, integration and acquisition costs, the impact of discrete items impacting income tax expense and tax impact of adjustments. The Company believes that excluding such items provides investors and management with a representation of the Company’s core operating performance and with information useful in assessing its prospects for the future and underlying trends in the Company’s operating expenditures and continuing operations. Management uses such Non-GAAP measures to evaluate financial results and manage operations. The release and the attachments to this release provide a reconciliation of each of the Non-GAAP measures referred to in this release to the most directly comparable GAAP measure. TheNon-GAAP financial measures are not meant to be considered a substitute for the corresponding GAAP financial statements and investors should evaluate them carefully. These Non-GAAP financial measures may differ materially from the Non-GAAP financial measures used by other companies.

CALCULATION OF EBITDA
($ in ‘000’s)

       
 
  Three Months ended June 30,  
 
  2020     2019  
 
  Amount     Amount  
 
           
Net income:
  $ 772     $ 212  
Adjustments:
               
Depreciation and amortization
    353       419  
Interest expense (income)
    (1 )     (114 )
Income tax expense
    230       33  
EBITDA:
  $ 1,354     $ 550  
                 
                 
 
  Six Months ended June 30,  
 
  2020     2019  
 
  Amount     Amount  
 
           
Net income:
  $ 998     $ 417  
Adjustments:
               
Depreciation and amortization
    727       831  
Interest expense (income)
    (59 )     (186 )
Income tax expense
    310       46  
EBITDA:
  $ 1,976     $ 1,108  
                 

RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES
($ in ‘000’s, except per share amounts)

       
 
  Three Months ended June 30,  
 
  2020     2019  
 
  Amount   Per diluted share     Amount   Per diluted share  
 
                   
Net income:
  $ 772   $ 0.20     $ 212   $ 0.05  
Adjustments:
                           
Amortization of intangible assets (1)
    172     0.05       191     0.05  
Stock-based compensation (2)
    84     0.02       131     0.03  
Tax impact of adjustments (4)
    (54 )   (0.01 )     (68 )   (0.02 )
Impact of discrete items impacting income tax expense (5)
              11     0.01  
Non-GAAP net income:
  $ 974   $ 0.26     $ 477   $ 0.12  
                             
                             
 
  Six Months ended June 30,  
 
  2020     2019  
 
  Amount   Per diluted share     Amount   Per diluted share  
 
                   
Net income:
  $ 998   $ 0.27     $ 417   $ 0.11  
Adjustments:
                           
Amortization of intangible assets (1)
    344     0.09       382     0.10  
Stock-based compensation (2)
    129     0.03       268     0.07  
Integration and acquisition costs (3)
              112     0.03  
Tax impact of adjustments (4)
    (99 )   (0.03 )     (160 )   (0.04 )
Impact of discrete items impacting income tax expense (5)
              (24 )   (0.01 )
Non-GAAP net income:
  $ 1,372   $ 0.36     $ 995   $ 0.26  
                             

1) The adjustments represent the amortization of intangible assets related to acquired assets and companies.

2) The adjustments represent stock-based compensation expense related to awards of stock options, restricted stock units or common stock in exchange for services. Although the Company expects to continue to award stock in exchange for services, the amount of stock-based compensation is excluded as it is highly variable based on the stock price and not tied directly to the operations of the business.

3) The adjustments represent legal and accounting fees and other non-recurring costs in connection with the acquisition of VisualWebcaster Platform.

4) This adjustment gives effect to the tax impact of all non-GAAP adjustments at the current Federal rate of 21%.

5) The adjustments eliminate discrete items impacting income tax expense. For the periods ended June 30, 2019, the discrete items relate to either the excess or shortfall stock-based compensation benefit recognized in income tax expense during the period.

Conference Call Information

To participate in this event, dial approximately 5 to 10 minutes before the beginning of the call.

Date: July 30, 2020
Time: 4:30 PM ET
Participant: 877-407-8133 | 201-689-8040

Live Webcast: https://www.webcaster4.com/Webcast/Page/842/36011

Conference Call Replay Information

The replay will be available beginning approximately 1 hour after the completion of the live event, ending at midnight eastern on August 13, 2020.

Toll-free: 877.481.4010
International: 919.882.2331
Reference ID: 36011

Web replay: http://www.issuerdirect.com/earnings-calls-and-scripts/

About Issuer Direct Corporation

Issuer Direct® is an industry-leading communications and compliance company focusing on the needs of corporate issuers. Issuer Direct’s principal platform, Platform id. ™, empowers users by thoughtfully integrating the most relevant tools, technologies, and services, thus eliminating the complexity associated with producing and distributing financial and business communications. Headquartered in Raleigh, NC, Issuer Direct serves thousands of public and private companies globally. For more information, please visit www.issuerdirect.com.

Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (which Sections were adopted as part of the Private Securities Litigation Reform Act of 1995). Statements preceded by, followed by or that otherwise include the words “believe,” “anticipate,” “estimate,” “expect,” “intend,” “plan,” “project,” “prospects,” “outlook,” and similar words or expressions, or future or conditional verbs, such as “will,” “should,” “would,” “may,” and “could,” are generally forward-looking in nature and not historical facts. These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the Company’s actual results, performance, or achievements to be materially different from any anticipated results, performance, or achievements for many reasons including the impact of the coronavirus pandemic. The Company disclaims any intention to, and undertakes no obligation to, revise any forward-looking statements, whether as a result of new information, a future event, or otherwise. For additional risks and uncertainties that could impact the Company’s forward-looking statements, please see the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 and Form 10-Q for the quarter ended June 30, 2020, including but not limited to the discussion under “Risk Factors” therein, which the Company filed with the SEC and which may be viewed at http://www.sec.gov/.

For Further Information:

Issuer Direct Corporation
Brian R. Balbirnie
(919)-481-4000
brian.balbirnie@issuerdirect.com

Hayden IR
Brett Maas
(646)-536-7331
brett@haydenir.com

Hayden IR
James Carbonara
(646)-755-7412
james@haydenir.com

ISSUER DIRECT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)

             
 
  June 30,     December 31,  
 
  2020     2019  
ASSETS
  (unaudited)        
Current assets:
           
Cash and cash equivalents
  $ 17,097     $ 15,766  
Accounts receivable (net of allowance for doubtful accounts of $601 and $700, respectively)
    2,599       2,051  
Income tax receivable
          48  
Other current assets
    273       141  
Total current assets
    19,969       18,006  
Capitalized software (net of accumulated amortization of $2,472 and $2,153, respectively)
    815       1,134  
Fixed assets (net of accumulated amortization of $245 and $181, respectively)
    839       899  
Right-of-use asset – leases
    1,979       2,127  
Deferred tax asset
    292       256  
Other long-term assets
    64       77  
Goodwill
    6,376       6,376  
Intangible assets (net of accumulated amortization of $5,281 and $4,937, respectively)
    3,171       3,515  
Total assets
  $ 33,505     $ 32,390  
 
               
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
Current liabilities:
               
Accounts payable
  $ 430     $ 266  
Accrued expenses
    1,385       1,151  
Note payable – short-term (net of discount of $6 and $19, respectively)
    314       301  
Income taxes payable
    614       310  
Deferred revenue
    2,015       1,812  
Total current liabilities
    4,758       3,840  
Deferred income tax liability
    130       141  
Lease liabilities – long-term
    2,138       2,309  
Total liabilities
    7,026       6,290  
Commitments and contingencies
               
Stockholders’ equity:
               
Preferred stock, $0.001 par value, 1,000,000 shares authorized, no shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively.
           
Common stock $0.001 par value, 20,000,000 shares authorized, 3,734,502 and 3,786,398 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively.
    4       4  
Additional paid-in capital
    21,619       22,275  
Other accumulated comprehensive income (loss)
    21       (16 )
Retained earnings
    4,835       3,837  
Total stockholders’ equity
    26,479       26,100  
Total liabilities and stockholders’ equity
  $ 33,505     $ 32,390  
                 

ISSUER DIRECT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

(in thousands, except share and per share amounts)

             
 
  For the Three Months Ended     For the Six Months Ended  
 
  June 30,     June 30,     June 30,     June 30,  
 
  2020     2019     2020     2019  
Revenues
  $ 4,884     $ 4,138     $ 8,900     $ 8,317  
Cost of revenues
    1,362       1,250       2,615       2,552  
Gross profit
    3,522       2,888       6,285       5,765  
Operating costs and expenses:
                               
General and administrative
    1,197       1,322       2,413       2,683  
Sales and marketing expenses
    950       875       1,846       1,695  
Product development
    165       343       359       680  
Depreciation and amortization
    209       218       418       430  
Total operating costs and expenses
    2,521       2,758       5,036       5,488  
Operating income
    1,001       130       1,249       277  
Interest income (expense), net
    1       115       59       186  
Income before income taxes
    1,002       245       1,308       463  
Income tax expense
    230       33       310       46  
Net income
  $ 772     $ 212     $ 998     $ 417  
Income per share – basic
  $ 0.21     $ 0.05     $ 0.27     $ 0.11  
Income per share – fully diluted
  $ 0.21     $ 0.05     $ 0.26     $ 0.11  
Weighted average number of common shares outstanding – basic
    3,736       3,857       3,762       3,854  
Weighted average number of common shares outstanding – fully diluted
    3,761       3,873       3,789       3,871  
                                 

ISSUER DIRECT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

(in thousands)

       
 
  For the Six Months Ended  
 
  June 30,     June 30,  
 
  2020     2019  
Cash flows from operating activities:
           
Net income
  998     417  
Adjustments to reconcile net income to net cash provided by operating activities:
               
Depreciation and amortization
    727       831  
Bad debt expense
    182       555  
Deferred income taxes
    (51 )     6  
Non-cash interest expense
    13       13  
Stock-based compensation expense
    129       268  
Changes in operating assets and liabilities:
               
Decrease (increase) in accounts receivable
    (730 )     (1,384 )
Decrease (increase) in other assets
    77       (266 )
Increase (decrease) in accounts payable
    164       67  
Increase (decrease) in accrued expenses and other liabilities
    367       (87 )
Increase (decrease) in deferred revenue
    203       375  
Net cash provided by operating activities
    2,079       795  
 
               
Cash flows from investing activities:
               
Purchase of VisualWebcaster Platform
          (2,788 )
Capitalized software
          (20 )
Purchase of fixed assets
    (4 )     (6 )
Net cash used in investing activities
    (4 )     (2,814 )
 
               
Cash flows from financing activities:
               
Payment for stock repurchase and retirement
    (785 )      
Net cash used in financing activities
    (785 )      
 
               
Net change in cash
    1,290       (2,019 )
Cash – beginning
    15,766       17,222  
Currency translation adjustment
    41       (7 )
Cash – ending
  17,097     15,196  
 
               
Supplemental disclosures:
               
Cash paid for income taxes
  12     128  
Non-cash activities:
               
Right-of-use assets obtained in exchange for lease liabilities
      260  
                 

SOURCE: Issuer Direct Corporation

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