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Issuer Direct Reports Second Quarter 2022 Results - AccessWire

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Quarterly Results Were Led by Growth in Our Communications Business, Which Increased 5% to $3.7 million from Q2 2021, and now Represents 64% of Total Revenue

RALEIGH, NC / ACCESSWIRE / August 4, 2022 / Issuer Direct Corporation (NYSE American:ISDR) (the "Company"), an industry-leading communications and compliance company, today reported its operating results for the three and six months ended June 30, 2022.

Issuer Direct Corporation, Thursday, August 4, 2022, Press release picture

Brian Balbirnie, CEO of Issuer Direct, commented, "Despite many uncertainties in the market, we delivered strong cashflows from operations, gross margin improvement and sustained customer count levels during the second quarter. Additionally, we repurchased approximately $3.9 million dollars of our outstanding common stock during the quarter for a total of approximately 163,000 shares, which, as we have said, is part of our capital allocation strategy and we believe benefits our shareholders both in the short and long term."

Mr. Balbirnie continued, "During the quarter, our ACCESSWIRE business performed similar to the first quarter of this year and was up 16% year-over-year. ACCESSWIRE is a product we continue to invest in both from a technological perspective as well as entry into new markets that will further build both our brand and customers counts globally."

Second Quarter 2022 Highlights:

  • Revenue - Total revenue was $5,807,000, a 2% increase from $5,720,000 in Q2 2021 and a 10% increase from $5,288,000 in Q1 2022. Communications revenue increased 5% from Q2 2021 and 9% from Q1 2022. The increase in Communications revenue from Q2 2021 was primarily due to an increase in revenue from our ACCESSWIRE news brand, partially offset by a decrease in demand from our events and webcasting business. The increase in Communications revenue from Q1 2022 was due to an increase in ACCESSWIRE revenue as well as an increase in revenue from our events and webcasting business due to seasonality of virtual annual meeting events. Communications revenue was 64% of total revenue for Q2 2022, compared to 61% for Q2 2021 and 64% for Q1 2022. Revenue from our Compliance business decreased 4% from Q2 2021 and increased 11% from Q1 2022. The decrease in Compliance revenue from Q2 2021 was primarily due to a decrease in revenue from our transfer agent services due to less corporate actions and directives and our disclosure services and legacy ARS services due to customer attrition. These decreases were partially offset by an increase in revenue from our print and proxy fulfillment services due to an increase in special projects. The increase in Compliance revenue from Q1 2022 is primarily due to seasonality of or print and proxy fulfillment services.
  • Gross Margin - Gross margin for Q2 2022 was $4,443,000, or 77% of revenue, compared to $4,240,000, or 74% of revenue, during Q2 2021 and $4,056,000, or 77%, in Q1 2022. Communications gross margin percentage was 80%, an increase of 5% from Q2 2021 and 2% from Q1 2022.
  • Operating Income - Operating income was $1,148,000 for Q2 2022, as compared to $1,361,000 during Q2 2021. The decrease in operating income despite the increase in revenue and gross margin is due to an increase in operating expenses, primarily due to continued investment and expansion of our headcount, including our corporate and sales and marketing teams.
  • Net Income - On a GAAP basis, net income was $841,000, or $0.22 per diluted share, during Q2 2022, compared to $1,106,000, or $0.29 per diluted share, during Q2 2021.
  • Operating Cash Flows - Cash flows from operations for Q2 2022 were $1,096,000 compared to $812,000 in Q2 2021.
  • Non-GAAP Measures - Q2 2022 EBITDA was $1,310,000, or 23% of revenue, compared to $1,641,000, or 29% of revenue, during Q2 2021. Non-GAAP net income for Q2 2022 was $1,075,000, or $0.29 per diluted share, compared to $1,185,000, or $0.31 per diluted share, during Q2 2021.
  • Stock Repurchase Plan - During the quarter, the Company purchased 163,201 shares of common stock for $3,859,000 under the Company's previously announced $5,000,000 stock repurchase plan.

First Half 2022 Highlights:

  • Revenue - Total revenue was $11,095,000, a 4% increase from $10,700,000 during the first half of 2021. Communications revenue increased 6% during the first half of 2022 compared to the same period of the prior year. The increase in Communications revenue from Q2 2021 was primarily due to an increase in revenue from our ACCESSWIRE product, partially offset by a decrease in demand from our events and webcasting business. Communications revenue was 64% of total revenue for the first half of 2022, compared to 63% for the first half of 2021. Revenue from our Compliance business was flat during the first half of 2022 compared to the same period of 2021. An increase in revenue from our print and proxy fulfillment services was partially offset by a decline in revenue from our stock transfer services due to less corporate actions and directives and legacy ARS services.
  • Gross Margin - Gross margin for the first half of 2022 was $8,499,000, or 77% of revenue, compared to $7,826,000, or 73% of revenue, during the first half of 2021. Communications gross margin percentage was 79% during the first half of 2022, up 5% from the first half of 2021.
  • Operating Income - Operating income was $1,836,000 for the first half of 2022, as compared to $2,068,000 during the first half of 2021. The decrease in operating income despite the increase in revenue and gross margin is due to an increase in operating expenses, primarily due to continued investment and expansion of our corporate and sales and marketing teams.
  • Net Income - On a GAAP basis, net income was $1,357,000, or $0.36 per diluted share, during the first half of 2022, compared to $1,651,000, or $0.43 per diluted share, during the first half of 2021.
  • Operating Cash Flows - Cash flows from operations for the first half of 2022 were $1,644,000 compared to $2,081,000 in the first half of 2021.
  • Non-GAAP Measures - EBITDA for the first half of 2022 was $2,160,000, or 19% of revenue, compared to $2,633,000, or 25% of revenue, during the first half of 2021. Non-GAAP net income for the first half of 2022 was $1,905,000, or $0.50 per diluted share, compared to $1,872,000, or $0.49 per diluted share, during the first half of 2021.
  • Stock Repurchase Plan -During the six months ended June 30, 2022, the Company repurchased 169,401 shares of common stock for $4,041,000 under the Company's previously announced $5,000,000 stock repurchase plan.

Key Performance Indicators:

  • During the quarter, the Company worked with 3,715 customers, compared to 3,754 during the same period last year.
  • During the quarter, the Company had 966 active customers subscribing to our products, compared to 804 customers during the same period last year. The Company defines a subscription as any customer who enters into a contract for a minimum of one year for one or more products.

Non-GAAP Information

Certain Non-GAAP financial measures are included in this press release. In the calculation of these measures, the Company excludes certain items, such as amortization of intangible assets, stock-based compensation, tax impact of adjustments, other unusual items and discrete items impacting income tax expense. The Company believes that excluding such items provides investors and management with a representation of the Company's core operating performance and with information useful in assessing its prospects for the future and underlying trends in the Company's operating expenditures and continuing operations. Management uses such Non-GAAP measures to evaluate financial results and manage operations. The release and the attachments to this release provide a reconciliation of each of the Non-GAAP measures referred to in this release to the most directly comparable GAAP measure. The Non-GAAP financial measures are not meant to be considered a substitute for the corresponding GAAP financial statements and investors should evaluate them carefully. These Non-GAAP financial measures may differ materially from the Non-GAAP financial measures used by other companies.

RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES
($ in ‘000's, except per share amounts)
CALCULATION OF EBITDA

Three Months ended June 30,
2022 2021
Amount Amount

Net income:

$ 841 $ 1,106

Adjustments:

Depreciation and amortization

162 280

Interest income

(20 ) (1 )

Income tax expense

327 256

EBITDA:

$ 1,310 $ 1,641
Six Months ended June 30,
2022 2021
Amount Amount

Net income:

$ 1,357 $ 1,651

Adjustments:

Depreciation and amortization

324 565

Interest income

(22 ) (2 )

Income tax expense

501 419

EBITDA:

$ 2,160 $ 2,633

CALCULATION OF NON-GAAP NET INCOME

Three Months ended June 30,
2022 2021
Amount

Per diluted

share

Amount

Per diluted

share

Net income:

$ 841 $ 0.22 $ 1,106 $ 0.29

Adjustments:

Amortization of intangible assets (1)

108 0.03 116 0.03

Stock-based compensation (2)

188 0.05 69 0.02

Tax impact of adjustments (4)

(62 ) (0.01 ) (39 ) (0.01 )

Impact of discrete items impacting income tax expense (5)

- - (67 ) (0.02 )

Non-GAAP net income:

$ 1,075 $ 0.29 $ 1,185 $ 0.31
Six Months ended June 30,
2022 2021
Amount

Per diluted

share

Amount

Per diluted

share

Net income:

$ 1,357 $ 0.35 $ 1,651 $ 0.43

Adjustments:

Amortization of intangible assets (1)

216 0.06 233 0.06

Stock-based compensation (2)

372 0.10 132 0.04

Other unusual items (3)

106 0.03 - -

Tax impact of adjustments (4)

(146 ) (0.04 ) (77 ) (0.02 )

Impact of discrete items impacting income tax expense (5)

- - (67 ) (0.02 )

Non-GAAP net income:

$ 1,905 $ 0.50 $ 1,872 $ 0.49

1) The adjustments represent the amortization of intangible assets related to acquired assets and companies.

2) The adjustments represent stock-based compensation expense related to awards of stock options, restricted stock units or common stock in exchange for services. Although the Company expects to continue to award stock in exchange for services, the amount of stock-based compensation is excluded as it is subject to change as a result of one-time or non-recurring projects.

3) For the six months ended June 30, 2022, this adjustment gives effect to a one-time executive recruiting fee of $90,000 and merger and acquisition expenses of $16,000.

4) This adjustment gives effect to the tax impact of all non-GAAP adjustments at the current Federal rate of 21%.

5) This adjustment eliminates discrete items impacting income tax expense. For the three and six months ended June 30, 2021, the discrete items relate to an excess stock-based compensation benefit recognized in income tax during the periods.

Conference Call Information

To participate in this event, dial approximately 5 to 10 minutes before the beginning of the call.

Date: August 4, 2022
Time: 4:30 p.m. eastern time
Toll & Toll Free: 833-492-0063 | 973-528-0002
Access Code: 585909
Live Webcast: https://www.webcaster4.com/Webcast/Page/1/46183

Conference Call Replay Information

The replay will be available beginning approximately 1 hour after the completion of the live event.

Toll & Toll Free: 877.481.4010 | 919-882-2331
Passcode: 46183
Webcast Replay & Transcript: http://www.issuerdirect.com/earnings-calls-and-scripts/

About Issuer Direct Corporation

Issuer Direct ® is a leading communications and compliance company, providing solutions for both Public Relations and Investor Relations Professionals. Our comprehensive solutions are used by thousands of customers from emerging startups to multi-billion-dollar global brands, ensuring their most important moments are reaching the right audiences, via our industry leading newswire, IR website solutions, events technology, and compliance solutions. For more information, please visit www.issuerdirect.com.

Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act") (which Sections were adopted as part of the Private Securities Litigation Reform Act of 1995). Statements preceded by, followed by or that otherwise include the words "believe," "anticipate," "estimate," "expect," "intend," "plan," "project," "prospects," "outlook," and similar words or expressions, or future or conditional verbs, such as "will," "should," "would," "may," and "could," are generally forward-looking in nature and not historical facts. These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the Company's actual results, performance, or achievements to be materially different from any anticipated results, performance, or achievements for many reasons including the impact of the coronavirus pandemic. The Company disclaims any intention to, and undertakes no obligation to, revise any forward-looking statements, whether as a result of new information, a future event, or otherwise. For additional risks and uncertainties that could impact the Company's forward-looking statements, please see the Company's Annual Report on Form 10-K for the year ended December 31, 2021, including but not limited to the discussion under "Risk Factors" therein, which the Company filed with the SEC and which may be viewed at http://www.sec.gov/.

For Further Information:

Issuer Direct Corporation
Brian R. Balbirnie
(919)-481-4000
[email protected]

Hayden IR
Brett Maas
(646)-536-7331
[email protected]

Hayden IR
James Carbonara
(646)-755-7412
[email protected]

ISSUER DIRECT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)

June 30, December 31,
2022 2021

ASSETS

(unaudited)

Current assets:

Cash and cash equivalents

$ 21,458 $ 23,852

Accounts receivable (net of allowance for doubtful accounts of $802 and $675, respectively)

3,484 3,291

Income tax receivable

276 -

Other current assets

847 750

Total current assets

26,065 27,893

Capitalized software (net of accumulated amortization of $3,332 and $3,301, respectively)

170 201

Fixed assets (net of accumulated depreciation of $533 and $456, respectively)

674 713

Right-of-use asset - leases

1,405 1,533

Other long-term assets

91 94

Goodwill

6,376 6,376

Intangible assets (net of accumulated amortization of $6,221 and $6,005, respectively)

2,231 2,447

Total assets

$ 37,012 $ 39,257

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable

$ 584 $ 695

Accrued expenses

1,739 1,975

Income taxes payable

244 46

Deferred revenue

3,481 3,086

Total current liabilities

6,048 5,802

Deferred income tax liability

113 176

Lease liabilities - long-term

1,501 1,659

Total liabilities

7,662 7,637

Commitments and contingencies

Stockholders' equity:

Preferred stock, $0.001 par value, 1,000,000 shares authorized, no shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively.

- -

Common stock $0.001 par value, 20,000,000 shares authorized, 3,646,902 and 3,793,538 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively.

4 4

Additional paid-in capital

18,790 22,401

Other accumulated comprehensive loss

(35 ) (19 )

Retained earnings

10,591 9,234

Total stockholders' equity

29,350 31,620

Total liabilities and stockholders' equity

$ 37,012 $ 39,257

ISSUER DIRECT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except share and per share amounts)

For the Three Months Ended For the Six Months Ended
June 30, June 30, June 30, June 30,
2022 2021 2022 2021

Revenues

$ 5,807 $ 5,720 $ 11,095 $ 10,700

Cost of revenues

1,364 1,480 2,596 2,874

Gross profit

4,443 4,240 8,499 7,826

Operating costs and expenses:

General and administrative

1,563 1,261 3,246 2,665

Sales and marketing expenses

1,371 1,210 2,635 2,284

Product development

214 256 489 505

Depreciation and amortization

147 152 293 304

Total operating costs and expenses

3,295 2,879 6,663 5,758

Operating income

1,148 1,361 1,836 2,068

Interest income

20 1 22 2

Income before taxes

1,168 1,362 1,858 2,070

Income tax expense

327 256 501 419

Net income

$ 841 $ 1,106 $ 1,357 $ 1,651

Income per share - basic

$ 0.22 $ 0.29 $ 0.36 $ 0.44

Income per share - fully diluted

$ 0.22 $ 0.29 $ 0.36 $ 0.43

Weighted average number of common shares outstanding - basic

3,741 3,770 3,767 3,770

Weighted average number of common shares outstanding - fully diluted

3,772 3,820 3,802 3,819

ISSUER DIRECT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)

For the Six Months Ended
June 30, June 30,
2022 2021

Cash flows from operating activities:

Net income

$ 1,357 $ 1,651

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

324 565

Bad debt expense

197 163

Deferred income taxes

(63 ) (10 )

Stock-based compensation expense

372 132

Changes in operating assets and liabilities:

Decrease (increase) in accounts receivable

(390 ) (1,262 )

Decrease (increase) in other assets

(245 ) (43 )

Increase (decrease) in accounts payable

(111 ) 454

Increase (decrease) in accrued expenses

(194 ) (87 )

Increase (decrease) in deferred revenue

397 518

Net cash provided by operating activities

1,644 2,081

Cash flows from investing activities:

Capitalized software

- (161 )

Purchase of fixed assets

(38 ) (40 )

Net cash used in investing activities

(38 ) (201 )

Cash flows from financing activities:

Exercise of stock options

58 219

Payment for stock repurchase and retirement

(4,041 ) (452 )

Net cash used in financing activities

(3,983 ) (233 )

Net change in cash and cash equivalents

(2,377 ) 1,647

Cash - beginning

23,852 19,556

Currency translation adjustment

(17 ) (44 )

Cash and cash equivalents - ending

$ 21,458 $ 21,159

Supplemental disclosures:

Cash paid for income taxes

$ 643 $ 664

SOURCE: Issuer Direct Corporation

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