PHOENIX, AZ — (Marketwired) — 08/13/13 — (NYSE MKT: EXE), a hosted services company that provides web hosting, hosted telecommunications services, search engine optimization management, link building, e-commerce software, website development and broadband internet services for businesses and entrepreneurs, today reported financial results for its second quarter of 2013.
Consolidated revenue for the second quarter of 2013 decreased 45% to $2.7 million compared to $4.9 million for the second quarter of prior year.
Net loss for the second quarter of 2013 was $(1.1) million or $(0.10) per diluted common share, compared to net loss of $(117,000) or $(0.01) per diluted common share for the second quarter of prior year.
Cash used for operations for the second quarter of 2013 was $(585,000) compared to cash used for operations of $(1.8) million in first quarter of 2013 and cash provided by operations of $759,000 for the second quarter of prior year.
The Company has three operating segments, which consist of Crexendo Network Services, Crexendo Web Services and StoresOnline. Effective October 1, 2012, the Company changed its reporting segments to reflect the allocation of previously unallocated corporate expenses to each of the three operating segments. The Company revised its segment reporting to reflect changes in how the Chief Operating Decision Maker (CODM) internally measures performance and allocates resources. Segment operating results for the prior year has been revised to conform to current year segment operating results presentation.
StoresOnline
Revenue for the second quarter of 2013 decreased 59% to $1.7 million compared to $4.0 million for the prior year quarter.
Total segment operating expenses decreased 56% to $1.0 million compared to $ 2.4 million for the prior year quarter.
Segment other income, primarily related to interest on the collection of accounts receivable for the second quarter of 2013 decreased 76% to $120,000 compared to $504,000 in the prior year quarter.
Total segment income before income taxes for the second quarter of 2013 decreased 66% to $749,000 compared to $2.2 million in the prior year quarter.
Crexendo Web Services
Revenue for the second quarter of 2013 decreased 18% to $569,000 from $692,000 in the prior year quarter. Web Services backlog, which is anticipated to be recognized within the next twelve months, was $1.2 million at June 30, 2013 compared to a backlog of $1.0 million at June 30, 2012.
Total segment operating expenses for the second quarter of 2013 decreased 35% to $1.2 million compared to $1.8 million in the prior year quarter.
Total segment loss before income taxes for the second quarter of 2013 decreased 46% to $(594,000) compared to $(1.1) million in the prior year quarter.
Crexendo Network Services
Revenue for the second quarter of 2013 increased 192% to $491,000 compared to $168,000 in the prior year quarter. Network Services backlog, which is anticipated to be recognized within the next thirty-six to sixty months, was $4.3 million at June 30, 2013 compared to a backlog of $1.3 million at June 30, 2012.
Total Network Services operating expenses for the second quarter of 2013 increased 28% to $1.7 million compared to $1.4 million in the prior year quarter.
Total segment loss before income taxes for the second quarter of 2013 increased 5% to $(1.3) million compared to $(1.2) million in the prior year quarter.
Steven G. Mihaylo, Chief Executive Officer, commented, “The operating loss this quarter is in line with expectations. As we have discussed the revenues from our legacy business have decreased drastically as our payment arrangements from those customers come to an end. Our telecom and web service revenues are in line with our internal plan, but we are always working to improve results. We continue to experience some growing pains with finding the right mix in our sales force, and I continue to work with Doug Gaylor to find the best sales force we can assemble. We have added internal resources to our dealer program, and we continue to add dealers that I believe will have a long term benefit to Crexendo. I know from experience that with the right dealers you can build a very successful recurring revenue stream. Our dealer sales to date are encouraging. We are also working to build our affiliate program which I also believe can have a long term benefit and particularly drive telecom sales. We continue to improve our telecom product, and I am convinced that the service, features and benefits that we provide are cutting edge and compare favorably to any competing product offering.”
Mihaylo continued, “We are integrating our acquisition of PBX Central into Crexendo; we are closely monitoring our progress and our processes so we can improve those to accommodate additional and hopefully larger acquisitions. I am presently working with our team reviewing potential acquisitions. The acquisition process is time consuming, and for competitive reasons we obviously cannot discuss what is on our radar screen, I do hope to grow the business with appropriate and accretive acquisitions. We continue to believe in the University Program, but we are waiting to expand the program until our new web-builder, -Slingshot,- is completed. Once Slingshot is completed, we will continue expanding our University Program and expand the use of our web-builder software to the developer community. The entire management team is taking steps to assure liquidity and continue our path toward profitability.”
The Company is hosting a conference call today, August 13, 2013 at 5:00 PM EDT. The conference call will be broadcast live over the Internet at . If you do not have Internet access, the telephone dial-in number is 800-768-6544 for domestic participants and 785-830-7990 for international participants. The conference ID to join the call is 7276122. Please dial in five to ten minutes prior to the beginning of the call at 5:00 PM EDT.
Crexendo is a hosted services company that provides web hosting, hosted telecommunications services, search engine optimization management, link building, e-commerce software, website development and broadband internet services for businesses and entrepreneurs. Our services are designed to make enterprise-class hosting services available to small and medium-sized businesses at affordable monthly rates.
Safe Harbor Statement
This press release contains forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for such forward-looking statements. The words “believe,” “expect,” “anticipate,” “estimate,” “will” and other similar statements of expectation identify forward-looking statements. Specific forward-looking statements in this press release include information about Crexendo (i) operating loss this quarter and telecom and web service revenues meeting internal plans and expectations; (ii) always working to improve results; (iii) experiencing some growing pains finding the right mix in the sales force while working to find the best sales force that can be assembled; (iv) continuing to add dealers that will have a long term benefit to Crexendo; (v) having the right dealers building a very successful recurring revenue stream; (vii) dealer sales being encouraging; (vii) building its affiliate program which can have a long term benefit and particularly drive telecom sales; (vii) improving its telecom product with service, features and benefits that are cutting edge and compare favorably to any competing product offering; (viii) integrating the acquisition of PBX Central and closely monitoring progress and our processes to accommodate additional and larger acquisitions; (ix) growing the business with appropriate and accretive acquisitions; (x) continuing to believe in the University Program but waiting to expand the program; (xi) completing the new web-builder, “Slingshot” and (xi) taking steps to assure liquidity and continue our path toward profitability.
For a more detailed discussion of risk factors that may affect Crexendo-s operations and results, please refer to the company-s Form 10-K for the year ended December 31, 2012, and Form 10Q for the period ending June 30, 2013. These forward-looking statements speak only as of the date on which such statements are made, and the company undertakes no obligation to update such forward-looking statements, except as required by law.
Crexendo, Inc.
Steven G. Mihaylo
CEO
602-345-7777
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