Q2 2010 Earnings Call

July 27, 2010 4:30 p.m. ET


Steve Mihaylo - CEP

Jeff Korn - CLO

John Erickson - CFO

Clint Anderson - SVP


Neal Goldman - Goldman Capital Management

Jeff Bash - Private Investor

Robin Lochner - Private Investor

Vishal Gupta - Private Investor



Good day everyone, and welcome to the iMergent, Incorporated Second Quarter Calendar 2010 Financial Results Conference Call. Today's conference is being recorded. At this time I'd like to turn the conference over to Mr. Steve Mihaylo, Chief Executive Officer. Please go ahead sir.

Steve Mihaylo

Thank you, good afternoon everyone. I'm Steve Mihaylo, the CEO of iMergent, and I want to take this opportunity to welcome all you to the iMergent second quarter 2010 quarterly results conference call. With me today are Clint Sanderson, the President of our StoresOnline and Crexendo division. Jon Erickson, our Chief Financial Officer, David Krietzberg, our Chief Administrative Officer, Jeff Korn, our Chief Legal Officer. I'll have Jeff Korn read our Safe Harbor statement. After that I'll give you a brief overview of the quarter. Jon Erickson will then provide some granularity on the Q2 numbers, and then we'll open up the call to questions. Jeff, would you please provide the Safe Harbor Statement?

Jeff Korn

Thank you, Steve. I want to take this opportunity to remind listeners that this call will contain forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. The Private Securities Litigation Reform Act of 1995 provides a Safe Harbor for such forward-looking statements. All statements made in this conference call other than statements of historical fact are forward-looking statements. Forward-looking statements include, but are not limited to words likes believe, expect, anticipate, estimate, will, and other similar statements of expectation identifying forward-looking statements.

Investors should be aware that any forward-looking statements are based upon assumptions and are subject to risks and uncertainties that could cause actual results to differ materially from those discussed here today. These risk factors are explained in detail in the Company's filings with the Securities and Exchange Commission including the Form 10-K for fiscal year ended December 30, 2009 and the Forms 10-Q for the periods ended March 31, 2010 and June 30, 2010. iMergent does not undertake any obligation to publicly update or revive any forward-looking statements, whether as a result of new information, future events or otherwise. And now I'd like to turn the call back to Steve for some comments.

Steve Mihaylo

Net income for the second quarter of 2010 was $50,000 or 10% per diluted common share, compared to 8,535,000 or 75, $0.74 per diluted common share in the comparable quarter last year. Please keep in mind that the earnings per share in the June 30, 2009 results included a benefit of $0.62 per share from the settlement of IRS in connection with our IRS solvent.

Revenue for the second quarter of 2010 decreased 5% to 17.448 million compared to 18.278 million for the comparable quarter last year. However, the revenue results are sequential 8% higher than revenue from the March 31, 2010 quarter when excluding the 1 million one time benefit related to avail during the March quarter.

The lower revenues when compared to 2009 were results of the 13% reduction in the number of workshops conducted during the second quarter of 2010 as compared to the comparable (audio gap) portfolio on a 17% decrease in the number of preview buyers attending our workshops compared to the prior quarter.

We believe that the high end employment rate, general down turn in the economy and the lack of credit available to our customers continue to negatively effect our workshops and numbers of buyers.

However, we have seen some hopeful signs; there was an increase in the percentage of attendees purchasing products to 27% in the second quarter of 2010 compared to 24% in the comparable quarter of 2009.

Revenues from our Crexendo Business Solutions division were $365,000 to zero revenue in the comparable quarter last year. Total operating expenses for iMergent increased to 18.491 million for the second quarter of 2010 compared to 18.774 million for the comparable quarter in 2009 primarily as a result of an increase in the number of international events which have higher marketing and an event cost and an increase in expenses associated with the company's Crexendo division.

We believe the timing is right to increase our direct sales efforts by hiring additional direct sales representatives for the Crexendo division finally an anticipation of the nationwide launch of our host of telecom offering in the first quarter of 2011, we have increased our development team to allow us to go to market with a robust offering that will include premium services such as operative services eventually conferencing such as the one you are on and sometime probably towards the end of next year, the first part of 2012 a very robust multi-party video conference to service the expected needs of our customers.

While these additional investments in sales and research and development may impact our short term profitability, we believe these are necessary investments in our business to achieve future long-term success. I am also pleased with increase in the percentage of attendees purchasing and we believe that is impart due to selling more of our StoresOnline products and services as a service model in other words the SaaS is supposed to a traditional software and license sale which we believe there is better job of meeting with the needs to train and there is a better job of qualifying our purchasers.

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