SAN JOSE, CA, July 22, 2020 (GLOBE NEWSWIRE) — via NEWMEDIAWIRE — Sonasoft Corp. (OTCQB: SSFT), a leader in innovative artificial intelligence (AI) and data management solutions, today reports its financial results for its fiscal year 2019 and First Quarter 2020.
2019 In Review
Sonasoft Corp. generated audited full-year 2019 revenue of $13.33M, an increase of $12.35M over its 2018 full-year result. The company reported an operating loss of $4.57M, versus $1.55M in 2018. Excluding stock-based compensation and accruals for royalties, this loss reduces to $3.2M, a $1.7M increase over 2018 result. This increase is largely due to the acquisition, integration, and legal expenses incurred by the four acquisitions Sonasoft completed in 2019, as well as significant new investment in sales, marketing, and research and development.
Of Sonasoft’s four sub-entities, Cornerstone Tech. Inc. contributed approximately $10.6M in revenue, E-Connect approximately $2.2M (over 7 months), Sonavault approximately $0.5M, and Sona-AI less than $0.1M (over 9 months).
Despite the limited revenue contributions of Sona-AI’s NuGene artificial intelligence platform for 2019, the company has been extremely pleased with results in this area of the business. The technology has gained significant traction with several successful proof of concept (POC) demonstrations for large OEM partners as detailed in our recent 8-K announcements. These early green shoots are anticipated to drive rapid growth in AI-based revenues from both POC’s and product licensing agreements in 2020, as the company solidifies its AI-first orientation. Opportunities in the search, energy, and financial sectors are particularly promising.
Sales for the Cornerstone business were relatively stable, despite margin pressures in the hardware and software reseller markets. Sonasoft’s strategy for the Cornerstone business is to leverage the customer network and presence it provides to drive AI sales, pivoting Cornerstone resources towards the expanding AI sector. Similarly, Sonasoft’s data science and data analytics support capabilities act as a complement to our AI efforts, expanding the service offering we can deliver to customers.
As a result of the merger activity, Sonasoft’s balance sheet strengthened considerably in 2019, with shareholder’s equity growing from ($1.93 M) as of December 31, 2018 to $3.73M as of December 31, 2019. The cash balance as of December 31, 2019, was $3.13M versus $1.02M as of December 31, 2018.
First Quarter 2020
Revenues for the quarter ended Mar. 31, 2020 were $2.88M vs $1.96M for the quarter ended Mar. 31, 2019. Gross profit in Q1 2020 was $612k vs. $579k for Q12019. Gross profit margins were 21.3% in Q1 2020, vs. 29.5% in Q1 2019.
The Company had operating losses of $1.49M during the quarter ended Mar. 31, 2020, vs. a loss of $0.58M for Q1 2019, an increase of $0.91M. Of this increase, $297k can be attributed to stock-based compensation for the post-completion issuance of stock related to the acquisitions of E-Connect Inc. and Optimaize Inc. Excluding these costs, operating expenses increased by $0.65M from Q1 2019 to Q1 2020. The year-over-year increase in revenue was driven both by the acquisitions of Hotify Inc. and E-Connect Inc. over the course of 2019 and by improved sales from the Cornerstone subsidiary, driven by a significant increase in software sales vs. the year-ago quarter.
Cornerstone contributed approximately $2.30M in revenues in the quarter, vs. $1.8M in Q1 2019. Revenues from the legacy Sonavault software suite were $179k vs. $136k in Q1 2019. E-Connect contributed approximately $0.57M. Hotify Inc. contributed $59k in licensing revenues, as OEM AI projects began to come on-stream.
Looking ahead, the business has successfully consolidated multiple entities into the Sonasoft business and is now returning its focus to optimizing operations and execution. In response to the onset of the Coronavirus pandemic, the company took steps to streamline operating expenses, effecting changes that should deliver net quarterly savings on the order of $200k per quarter. We anticipate additional cost savings going forward as we achieve further synergies in administration and finance. This improvement in operational efficiency is expected to offset margin pressures in the Cornerstone business while creating new opportunities for AI revenue growth as we pursue AI opportunities across all of the entities. Ongoing investment in AI development, sales, and marketing will result in continued net losses for 2020, but the resulting OEM partnerships are expected to result in a rapid increase in AI revenues as OEM AI opportunities reach fruition.
1. Sonasoft was founded in Silicon Valley in 2003. For more information about the company, please visit: https://www.sonasoft.com
2. Sonasoft NuGene is a unified AI platform that can process any type of data and generate autonomous AI models. For more information about Sonasoft’s Artificial Intelligence (AI) Solutions, please visit: https://www.sonasoft.com/products/artificial-intelligence-ai/
3. For investor-specific information, please visit: https://www.sonasoft.com/investors/
Mike Khanna, CEO
Phone: (408) 708-4000 X7104
This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934. These outcomes may be materially impacted by various risks set forth in the Company’s filings, as well as: (i) trends affecting the Company’s financial condition, financings and capability to pursue and to use proceeds to pursue certain product opportunities; (ii) trends affecting various technological and financial sectors, including, without limitation, AI, data science, data intelligence and advanced analytics and related market results, customer and regulatory acceptance of such technology and results; (iii) the Company’s and its strategic partners’ abilities to successfully collaborate and optimize resources and focus toward successful AI, data, analytics and other technological implementations; and (iv) trends affecting the Company’s growth, operating, and technology strategy and focus. Investors are cautioned that any such forward-looking expectations are not guarantees of future performance and involve risks and uncertainties, many of which are beyond the Company’s ability to control and that actual results may differ materially from those projected in the disclosure as a result of various factors including statements as a result of various factors.