DENVER – Glowpoint, Inc., providers of cloud-based video collaboration services, has reported a 27 percent year-over-year increase in third-quarter revenue. The company says the gains come primarily from its acquisition last year of Denver-based Affinity VideoNet.
Revenue was up $1.7 million, from $6.6 million in the third quarter last year to $8.3 million in Q3 2013 and adjusted net income doubled — $1.2 million in the third quarter, compared with $600,000 for the same period last year.
However, adding costs of interest, depreciation, stock-based compensation, severance and acquisition costs, the company showed a loss of $551,000 for the quarter, a slight improvement over a loss of $592,000 in last year’s third quarter.
Glowpoint, headquartered in New Jersey, bought Affinity VideoNet last October for $7.75 million in cash, a $2.75 million two-year seller’s note and 2.65 million shares of common stock, which at the time represented about 10 percent of Glowpoint’s diluted shares outstanding. Affinity VideoNet provided public videoconferencing rooms and managed videoconferencing services.
Glowpoint originally partnered with Affinity VideoNet in 2009 to offer Glowpoint’s video network and video services to Affinity VideoNet clients. The agreement also enabled Glowpoint’s resellers and customers to join the Affinity VideoNet network of public video conferencing suites.
In October 2012, Glowpoint bought Affinity VideoNet outright and Affinity CEO Peter Holst joined Glowpoint as Senior Vice President of Business Development. Last January, Holst was promoted to President and CEO of Glowpoint. Affinity VideoNet now operates as a subsidiary of Glowpoint, with offices on Lincoln Avenue in Denver.
Glowpoint provides video collaboration, network, and support services to large enterprises and mid-sized companies to support their unified communications strategies. The company claims more than 600 customers in 96 countries are using its cloud-based services to collaborate with colleagues, business partners, and customers.
"We've made great strides this year in capital restructuring, organizational and personnel enhancements, and re-positioning our services for the next wave of video collaboration,” said CEO Holst. “We're producing tangible results, strengthening our balance sheet, and gradually showing improvement in our core services.” He said the company will continue to focus on enhancing the leadership team and creating new services.
While revenues are well ahead of last year, the company will likely fall short of the $40 million predicted by Holst at the time of the merger with Affinity VideoNet. At the end of the third quarter, total revenues for the year stood at $25.5 million, compared with $20.1 million at the same time last year. Most of that — about $15 million — has come from the managed services category, which is up more than $5 million over the same period last year. It is in this category that the Affinity acquisition has had the most impact.
Network services has brought in about $9 million so far this year, and professional and other services earned about $1.4 million. Both categories are up slightly from the same period last year.
Adjusted income so far this year shows a healthy gain over the same period last year -- $3.2 million compared to $2.1 million. But interest, depreciation and other costs still leave the company with a loss of about $2.7 million at this point in the year.
Nevertheless, Glowpoint CFO David Clark is optimistic. The company, he said, has paid down $500,000 on its line of credit, resulting in no outstanding balance at the end of the third quarter. The firm also retired all outstanding shares of Series B-1 preferred stock in exchange for common stock, which retired a total of $10.2 million of liquidation preference and eliminated any future dividends related to the exchanged shares of preferred stock. And last month, the company refinanced its debt facilities and borrowed $9.2 million to repay existing term loans of $8.5 million.
"Adjusted EBITDA of $1.2 million for the third quarter more than doubled from the third quarter of last year and slightly improved from the second quarter of 2013," Clark said. "We generated $1.8 million of cash flow from operations and paid down $0.8 million on our revolver to $0 during the first nine months of 2013, while ending the quarter with $2.1 million in cash. We were very pleased to complete the preferred stock exchange and debt refinancing as these transactions simplify our capital structure and provide us with greater liquidity and financial flexibility."
This fall Glowpoint introduced Glowpoint Now, a reservation-less videoconferencing service that supports multiple screens including BYOD. As a cloud-based service, Glowpoint Now eliminates the need for a company’s own collaboration system. The platform includes management and reporting features, such as performance and trend reports, the capability to add or remove participants, set or change security levels, and monitor usage.
The reservation-less service allows participants to start or join a meeting from a web browser, schedule meetings, dynamically include participants using Outlook, and add meeting participants on the fly.
“Many reservation-less videoconferencing startups lead you to believe that as video becomes more pervasive, support requirements diminish or go away,” says Holst. “The exact opposite is true. The demand for secure, enterprise-grade video collaboration is expanding globally, and, with that expansion, the need to provide business-class services and support is increasing. Glowpoint Now, in combination with our other video collaboration and support services, meets our customers' needs today and in to the future.”