Top Image Reports Second Quarter 2013 Financial Results

TEL AVIV, Israel, Aug. 1, 2013 (GLOBE NEWSWIRE) -- Top Image Systems, Ltd. (TIS) (Nasdaq:TISA), a leading ECM (Enterprise Content Management) intelligent content capture, workflow and delivery and mobile payments solutions provider, today announced its financial results for the second quarter ended June 30, 2013.

Dr. Ido Schechter, CEO of Top Image Systems, commented, "The launch of our state-of-the-art, web-enabled eFLOW®5 platform, coupled with our revamped sales structure, has enabled us to deploy a Software as a Service (SaaS)-based business model that is in line with evolving customer expectations and better matches the economic challenges in Europe. This model helps our customers reduce up-front capital expenditures and provides more predictable expenses throughout the life of the agreement, and as such, we believe this will help Top Image to more rapidly capture market share. While the revenue is recognized in smaller incremental amounts spread out over several quarters, the business model itself provides us with a steady and stable stream of predictable revenue, and it provides investors with an important metric - recurring revenue. We are confident that the wider deployment of this business model, coupled with the ongoing strength we see in the U.S. market, will greatly contribute towards a strong second half of 2013."

Second Quarter 2013 Highlights include:
  • Revenue for the quarter was $6.4 million;
  • Recurring revenue from maintenance was $2.0 million, compared to $1.8 million in the second quarter of 2012;
  • Recognized SaaS Revenues of $171,000, representing contracts of 12 – 24 months in duration;
  • Partnered with K2 and Amazon Web Services and with Feith to offer joint capture and workflow solutions to Oracle users in the U.S.;
  • Officially launched eFLOW5, Top Image's next-generation web-enabled multichannel capture & workflow platform, including hosting first launch events in New York and London;
  • Signed eFLOW INVOICE AP Automation and Digital Mailroom agreements with several well-known Swiss companies;
  • Reached targeted Phase I sales headcount for U.S. and achieved stated U.S. strategic targets according to plan.

Dr. Schechter continued, "In the short term, current economic conditions outside the U.S. have had strong impact on the purchasing behavior of enterprises, including that of some of our target customers. The slowdown has caused delays in closing sales in Southern Europe and in the UK. However, our sales pipeline, particularly in the U.S., continues to expand and we expect to convert a high percentage of this potential business. We also expect that our investment in the U.S. will deliver meaningful revenue in 2013."

Dr. Schechter continued, "In June we released our latest platform, eFLOW5, which received very positive feedback from analysts, customers and prospects. We are deeply invested in carrying out multifaceted sales of mobile and core enterprise capture and process automation solutions, both in the U.S. and in many deals around the globe. We have supported the launch of this innovative solution by participating in many exhibitions and other marketing events, as well as developing important partnerships with technology leaders such as Amazon Web Services, complementary solution providers like K2 and Feith, as well as with more and more BPOs. Furthermore, we are investing in patents on new innovative technologies and we are implementing our global product distribution strategy, which is helping us share knowledge and expand our business capabilities and potential in all geographies. These activities, and especially our investment in the high-growth potential mobile market, will result in growing the company, both in terms of the extent of our business activities and in terms of our overall value."

Dr. Schechter added, "We are optimistic and pleased by the sales activities executed by our team, especially in mobile and in the U.S., and we feel certain that we will see improvement in revenue in the second half of 2013."

Second Quarter 2013 Year over Year Results

Revenue for the second quarter of 2013 was $6.4 million, compared to $8.0 million for the second quarter of 2012. Non-GAAP operating loss was $0.5 million for the second quarter of 2013, compared to Non-GAAP operating income of $1.2 million for the second quarter of 2012. Non-GAAP net loss was $0.7 million for the second quarter of 2013, compared to Non-GAAP net income of $1.1 million for the second quarter of 2012. Non-GAAP diluted loss per share was $0.06 for the second quarter of 2013 compared to Non-GAAP diluted earnings per share of $0.10 for the second quarter of 2012.

2013 Outlook

Concluded Dr. Schechter, "A realistic evaluation of current market conditions and the impact of our new business model, which results in revenue recognition spread out over several quarters rather than upfront license revenues, warrants reconsideration of our full-year 2013 guidance. Management remains confident in our long-term profitability, and we are increasingly optimistic regarding our overall sales activity, particularly in the U.S. We continue to expect overall improvement in the second half of 2013 and look forward to significant top- and bottom-line improvement in 2014, based on expanded contribution from our U.S. sales efforts and from our SaaS model. As these strategic changes take hold, and our visibility improves, we will revisit our guidance policy."

Conference Call

The Company will host a conference call and webcast at 10 a.m. ET on Thursday, August 1, 2013, during which TIS management will present and discuss the financial results and be available to answer any questions from investors.

To join the conference call, please dial in to one of the following teleconference phone lines using the numbers listed below. Please note the Conference ID number: 418133. Please begin placing your calls at least 5 minutes before the conference call commences. If you are unable to connect using the toll-free number, please try the U.S. Toll/International dial-in number.
US Toll-Free Dial-in Number: 1-877-407-0784
US Toll/INTERNATIONAL Dial-in Number: 1-201-689-8560
Israel Toll-Free Dial-in Number: 00-800-2246-2666
   
Conference ID Number: 418133  

The conference call is scheduled to begin at:
10 a.m. Eastern Time 
7 a.m. Pacific Time
5 p.m. Israel Time 

To join the live webcast, please click on the following link http://public.viavid.com/index.php?id=105435. For those unable to attend the live call or webcast, during the next three months the recorded webcast can be viewed by clicking on the same link as for the live webcast: http://public.viavid.com/index.php?id=105435 and a recording of the call will be made available for download from the Investors section of the Top Image Systems' website www.topimagesystems.com.

Non-GAAP Financial Measures

This release includes non-GAAP financial measures, including, without limitation, Non-GAAP Operating Income (which details amortization expenses and non-cash stock-based compensation expenses), and Non-GAAP Net Income (which details the impact of amortization expenses and non-cash stock-based compensation expenses). Non-GAAP measures are reconciled to comparable GAAP measures in the tables entitled "GAAP and Non-GAAP Statements of Operations".

The presentation of these non-GAAP financial measures should be considered as an addition to TIS's GAAP results provided in the attached financial statements for the second quarter ended June 30, 2013, and is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. The attached tables reconcile each non-GAAP financial measure to its most directly comparable GAAP financial measure. TIS's management believes that these non-GAAP financial measures provide meaningful supplemental information regarding TIS's performance by excluding the impact of certain charges and gains that may not be indicative of TIS's core business operating results. TIS management believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing TIS's performance. These non-GAAP financial measures also facilitate comparisons to TIS's historical performance and its competitors' operating results. TIS includes these non-GAAP financial measures because management believes they are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision-making.

About Top Image Systems

Top Image Systems (TIS) is a leading innovator of enterprise solutions for managing and validating content entering organizations from various sources. Whether originating from mobile, electronic, paper or other sources, TIS solutions deliver the content to applications that drive the organization. TIS's eFLOW® Platform is a common platform for the company's solutions. TIS markets its platform in more than 40 countries through a multi-tier network of distributors, system integrators, value-added resellers as well as strategic partners. Visit the company's website http://www.TopImageSystems.com for more information.

Caution Concerning Forward-Looking Statements

Certain matters discussed in this news release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results to be materially different from any future results expressed or implied in those forward looking statements. Words such as "will," "expects," "anticipates," "estimates," and words and terms of similar substance in connection with any discussion of future operating or financial performance identify forward-looking statements. These statements are based on management's current expectations or beliefs and are subject to a number of risks and uncertainties that could cause actual results to differ materially including, but not limited to, risks in product development, approval and introduction plans and schedules, rapid technological change, customer acceptance of new products, the impact of competitive products and pricing, the lengthy sales cycle, proprietary rights of TIS and its competitors, risk of operations in Europe and Israel, government regulation, litigation, general economic conditions and other risk factors detailed in the Company's most recent annual report on Form 20-F and other subsequent filings with the United States Securities and Exchange Commission. We are under no obligation to, and expressly disclaim any obligation to, update or alter our forward-looking statements, whether as a result of new information, future events or otherwise.
     
Top Image Systems Ltd.    
Consolidated Balance Sheet as of    
     
  June 30, December 31,
  2013 2012
  In thousands
  Unaudited Audited
     
Assets    
     
Current Assets:    
Cash and cash equivalents  $ 2,195  $ 2,223
Restricted cash 253 212
Trade receivables, net 8,605 8,618
Other accounts receivable and prepaid expenses 1,039 737
Deferred tax asset 719 785
     
Total current assets 12,811 12,575
     
Long-Term Assets:    
Severance pay funds 1,651 1,577
Restricted cash 442 381
Long-term deposits and long-term assets 40 66
Deferred tax asset 452 438
Property and equipment, net 315 377
Goodwill 5,839 6,121
     
Total long-term assets 8,739 8,960
     
Total Assets  $ 21,550  $ 21,535
     
     
Liabilities and Shareholders' Equity    
     
Current Liabilities:    
     
Short term bank loan   $ 597  $ -- 
Trade payables 586 684
Deferred revenues 2,456 1,467
Accrued expenses and other accounts payable 2,524 2,750
     
Total current liabilities 6,163 4,901
     
Long-Term Liabilities:    
Accrued severance pay 1,869 1,808
     
Total long-term liabilities 1,869 1,808
     
Total Liabilities  $ 8,032  $ 6,709
     
Shareholders' Equity 13,518 14,826
     
Total Liabilities and Shareholders' Equity  $ 21,550  $ 21,535
             
             
Top Image Systems Ltd.            
GAAP and Non-GAAP Statements of Operations for the:             
U.S. dollars in thousands (except per share data)            
             
  Three months ended  Three months ended 
  June 30, 2013 June 30, 2012
  GAAP  Adjustments (1) Non-GAAP GAAP  Adjustments (1) Non-GAAP
  Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
             
Revenues  $6,368  $--  $6,368 $8,024  $--  $8,024
Cost of Revenues   2,644  (16)  2,628  3,056  (16)  3,040
Gross Profit   3,724  16  3,740  4,968  16  4,984
             
Research and Development   706  (6)  700  649  (6)  643
Selling & Marketing  2,552  (14)  2,538  2,163  (14)  2,149
General and Administrative   1,044  (7)  1,037  1,260  (260)  1,000
   4,302  (27)  4,275  4,072  (280)  3,792
             
Operating Income (Loss)  (578)  43  (535)  896  296  1,192
             
Financial Expenses, net   (117)  --  (117)  (97)  --  (97)
             
Income (loss) before Taxes on Income   (695)  43  (652)  799  296  1,095
             
Income Tax Expenses (Tax benefit)  87  --  87  (53)  --  (53)
             
Net Income (Loss)  ($782)  $43  ($739) $852 $296 $1,148
             
Basic Earnings (loss) per Share  ($0.07)   ($0.06) $0.07   $0.10
             
Weighted average number of shares used in computing basic net earnings per share   11,665    11,665  11,436    11,436
             
Diluted Earnings (loss) per Share ($0.07)   ($0.06) $0.07   $0.09
             
Weighted average number of shares used in computing diluted net earnings per share   11,665    11,665  12,491    12,491
             
             
(1) Adjustments reflect the effect of (i) non-cash stock options expenses as per SFAS 123R :
             
    Three months ended      Three months ended   
    June 30, 2013     June 30, 2012  
    Adjustments      Adjustments   
    Unaudited     Unaudited  
Stock-based compensation expenses   43      296  
    $43     $296  
             
Top Image Systems Ltd.            
GAAP and Non-GAAP Statements of Operations for the:             
U.S. dollars in thousands (except per share data)            
             
  Six months ended  Six months ended 
  June 30, 2013 June 30, 2012
  GAAP  Adjustments (1) Non-GAAP GAAP  Adjustments (1) Non-GAAP
  Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
             
Revenues  $13,121  --  $13,121 $15,708  --  $15,708
Cost of revenues   5,632  (32)  5,600  5,908  (32)  5,876
Gross Profit   7,489  32  7,521  9,800  32  9,832
             
Research and development   1,460  (12)  1,448  1,337  (12)  1,325
Selling & marketing  4,726  (28)  4,698  4,240  (39)  4,201
General and administrative   2,127  (14)  2,113  2,884  (784)  2,100
   8,313  (54)  8,259  8,461  (835)  7,626
             
Operating Income (Loss)   (824)  86  (738)  1,339  867  2,206
             
Financial expenses, net   (156)  --  (156)  (17)  --  (17)
             
Income (loss) before taxes on income   (980)  86  (894)  1,322  867  2,189
             
Income tax expenses (tax benefit)   104  --   104  (16)  --  (16)
             
Net income (Loss)  ($1,084)  $86  ($998) $1,338  $867  $2,205
             
Basic earnings (loss) per share  ($0.09)   ($0.09) $0.12   $0.20
             
Weighted average number of shares used in computing of basic net earnings per share   11,657    11,657  11,206    11,206
             
Diluted earnings (loss) per share ($0.09)   ($0.09) $0.11   $0.18
             
Weighted average number of shares used in computing of diluted net earnings per share   11,657    11,657  12,332    12,332
             
             
(1) Adjustments reflect the effect of (i) non-cash stock options expenses as per SFAS 123R and (ii) amortization of intangible assets related to acquisition transactions:
             
    Six months ended      Six months ended   
    June 30, 2013     June 30, 2012  
    Adjustments (1)     Adjustments (1)  
    Unaudited     Unaudited  
Stock-based compensation expenses   86      856  
Amortization of intangible assets related to acquisition    --      11  
    $86     $867  
CONTACT: Shelli Zargary         Director of Corporate Marketing         shelli.zargary@topimagesystems.com         +972 3 767 9114                  Investors:         James Carbonara         Regional Vice President, Hayden IR         james@haydenir.com         + 1 646 755 7412

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