SEDONA® Corporation (OTCBB: SDNA), a leading provider of Customer and Member Relationship Management (CRM/MRM) solutions for small and mid-size financial services organizations, announced its operating results for the third quarter and nine-month periods ended September 30, 2007.
Total revenues reported for the third quarter 2007 were $354,000 compared to $389,000 a year ago. Product license revenue totaled $167,000 and $248,000 in the three months ended September 30, 2007 and 2006 respectively. SEDONA's license fees are based on the total asset size of the financial institutions that the Company serves. Product license revenue decreased in the third quarter of 2007 because the Company sold a number of license agreements to smaller financial services institutions, compared to the same period in 2006, when the Company completed a sale to a large financial institution with a significantly higher asset value.
During the third quarter of 2007, the Company recognized $187,000 in services revenue from unrelated parties compared to $141,000 during the same quarter in 2006. The increase in services revenue from unrelated parties was primarily due to additional training and professional services rendered to new customers. For the nine-month period ended September 30, 2007, revenues were $984,000 compared to $1,167,000 a year ago. Revenue from license fees was $390,000 and $486,000 for the nine months ended September 30, 2007 and 2006.
Revenues from license fees decreased in 2007 due to a shift in the asset size of the financial institutions which licensed the product as explained above. Services revenue from unrelated parties increased to $594,000 from $441,000 for the period ended September 30, 2007 and 2006, respectively. The increase in revenue is attributed to the increased demand for professional services and maintenance from SEDONA's growing customer base. The Company did not recognize any revenue from related parties for the nine months ended September 30, 2007. In the same period a year ago, the Company recorded $240,000 of related-party service fee revenue.
As of September 30, 2007, SEDONA reported $499,000 in current and noncurrent accounts receivable and associated deferred revenue for monthly subscription fees from its distribution partners' ASP contracts that will be recognized ratably over the contract terms. This represents an 88% annual increase over the $266,000 reported as of September 30, 2006.
Gross profit reported for the three months ended September 30, 2007 and 2006, remained constant at $272,000, or 77% of revenue and $298,000, or 77% of revenue, for 2006. For the nine-month period ended September 30, 2007, gross profit reported was $712,000, or 72% of revenue, compared to $928,000, or 80% of revenue in the same period a year ago. The decrease is attributed to an increase in cost of revenue resulting from additional direct labor provided to support the growing customer base.
Operating expenses reported for the third quarter 2007 decreased 13% to $652,000, compared to $751,000 a year ago, primarily due to a decrease in the charges for stock-based compensation. For the nine-month period ended September 30, 2007, operating expenses decreased 2% or $44,000 to $2,063,000 versus $2,107,000 in 2006. This was primarily due to a decrease in the charges for stock-based compensation and voluntary staffing changes offset by higher litigation legal expenses.
Net loss applicable to shareholders decreased in the third quarter 2007 to $538,000, or ($.01) per share, compared to $566,000, or ($.01) per share reported in the third quarter 2006. For the nine-month period ended September 30, 2007, net loss applicable to shareholders increased to $1,800,000, or ($.02) per share, versus $1,521,000, or ($0.02) per share, a year ago.
Notable business developments in the third quarter 2007 were:
- In July 2007, Bradford-Scott Data Corporation, headquartered in Indianapolis, IN, selected SEDONA as its partner to sell Intarsia, SEDONA's MRM application, to its credit union customers. Since the announcement of the partnership, Bradford-Scott has completed three sales of Intarsia to the credit unions they serve.
- In September 2007, SEDONA announced that its partner, Profit Technologies of Huntersville, NC, had entered into an agreement to sell SEDONA's Intarsia software to its first bank, an institution with assets in excess of $800 million.
- American Spirit Federal Credit Union, a CU ink client, selected SEDONA for MRM application and services.
For additional information please consult the Company's Form 10-QSB filed with the Securities and Exchange Commission on November 14, 2007.
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