SoundBite Communications Reports Second Quarter 2010 Financial Results

Revenues of $9.8 Million; International expansion underway

Bedford, Mass., August 4, 2012 – SoundBite Communications, Inc. (NASDAQ:  SDBT) today announced its financial results for the second quarter, 2010.  Second quarter revenues, computed in accordance with U.S. generally accepted accounting principles (GAAP), were $9.8 million, an increase of 1% compared to the same quarter in 2009.  On a GAAP basis, net loss per share was $0.07 in the second quarter versus a net loss per share of $0.10 in the same quarter of 2009.  On a non-GAAP basis, after excluding non-cash stock compensation expense, amortization of intangibles, impairment of goodwill and severance expense, net loss per share was $0.05 in the second quarter compared to $0.04 in the same quarter in 2009.

“Considering the challenges our clients still face with the economy, we are pleased with our second quarter results which were in line with our financial guidance. We continue to develop and introduce new services and solutions to our large B2C and collection agency clients and they have responded well.  For example, our recently released hosted predictive dialer has been well received, generating strong interest from clients, and we have gained additional traction this quarter with our interactive mobile messaging initiative.  Also encouraging is the early success we are experiencing with our international expansion this quarter as evidenced in our recent press release.  Overall, we are seeing growing demand across much of our business and we are optimistic that we will deliver solid growth in the second half,” stated Jim Milton, president and CEO of SoundBite Communications.  


Highlights of the Quarter

• Announced significant enhancements to the SoundBite Engage platform.  In addition to the more powerful segmentation strategies through contact suppression and improvements in the multi channel blending and escalation features, this release supports the needs of SoundBite’s multi-national clients who require global communications strategies to interact with consumers. Specifically, globally focused enhancements include multiple character sets that support global interactive text messaging dialogs, multiple language, dialect and text-to-speech options to provide more personalized voice messages, and an expanded library of professional voice talents that enable localized language options.
• Introduced the general availability of the SoundBite Fraud Management Solution (FMS) a real-time, multi-channel fraud resolution solution for card issuing banks and announced a leading global issuing bank completed the deployment of SoundBite FMS with integration to a leading fraud detection system.
• Introduced its Customer Lifecycle and Optimization Solution Suites, both powered by SoundBite Engage™.  SoundBite’s interactive Customer Lifecycle Solutions address key business challenges to help businesses build strong customer relationships from acquisition through retention, while its Optimization Solutions provide enterprise-wide solutions that enable more efficient and effective customer interactions.  These solution suites are packaged to deliver quick time to value to our clients.

Quarterly Results
GAAP Results
Gross margin for the second quarter of 2010 was 59.7% versus 60.9% in the second quarter of 2009.  Operating expenses were $6.9 million in the second quarter of 2010 and as a percentage of revenues were 71.1% versus 77.5% in the year-earlier period.     

Net loss was $1.1 million for the second quarter of 2010 versus a net loss of $1.6 million in the second quarter of 2009.  Net loss per share for the second quarter of 2010 was $0.07, versus a net loss per share of $0.10 in the same quarter of 2009. 

Net loss in the second quarter of 2010 included stock-based compensation expense of $344,000 and amortization of intangible assets of $13,000.  Net loss in the second quarter of 2009 included severance expense of $553,000, stock-based compensation expense of $284,000, a charge of $69,000 resulting from the impairment of goodwill and amortization of intangibles of $30,000 associated with the Company’s acquisition of Mobile Collect (see the attached table for a breakdown of stock-based compensation expense by operating statement line item). 

In terms of free cash flow, our operating activities offset by non-cash charges, changes in working capital, contingent consideration related to our Mobile Collect acquisition and capital expenditures resulted in a negative free cash flow in the second quarter of approximately $800,000.

Non-GAAP Results
Second quarter 2010 non-GAAP net loss per share was $0.05, compared to a non-GAAP net loss per share of $0.04 for the same period in 2009.  Non-GAAP net loss computations exclude stock compensation expense, amortization, impairment of goodwill and severance expense.  A reconciliation of the most comparable GAAP financial measure to the non-GAAP measure used above is included with the financial tables at the end of this release.

Third Quarter and Full Year Guidance
Based on information available as of August 4, 2010, SoundBite is issuing guidance for the third quarter and full year 2010 as follows:

For the third quarter of 2010, SoundBite currently projects revenues in the range of $9.7 million to $10.3 million and gross margin in the range of 58% to 59%.  Operating expenses are expected to be approximately $7.2 million.  The projection for GAAP operating loss is in the range of $1.1 million to $1.5 million, or a net loss per share of $0.07 to $0.09 for the third quarter of 2010. 

The projection for non-GAAP operating loss is in the range of $700,000 to $1.2 million, or a non-GAAP net loss per share of $0.05 to $0.07.  Non-GAAP net loss per share estimates exclude the effects of estimated stock-based compensation expense of approximately $300,000 and amortization of intangibles of $50,000 associated with the Company’s acquisition of Mobile Collect and assumes a basic weighted share count of approximately 16.4 million shares for the third quarter of 2010.    SoundBite expects capital expenditures to be approximately $450,000 and depreciation expense to be approximately $450,000.

For the fourth quarter of 2010, SoundBite projects revenues in the range of $10.8 million to $11.6 million which means full year revenue guidance will be in the range of $40.1 million to $41.5 million.  On a full year basis, it estimates that gross margin will be in the range of 59% to 60%.  Operating expenses are expected to be approximately $28.0 million to $29.0 million.  The projection for full year 2010 operating loss is in the range of $4.0 million to $5.0 million, with a net loss per share range of $0.23 to $0.29.  The Company expects to exit the year with positive operating income. 

On a non-GAAP basis, full year operating loss is projected to be $2.0 million to $3.0 million, with non-GAAP net loss per share in the range of $0.14 to $0.20.  Non-GAAP net loss per share estimates exclude the effects of estimated stock-based compensation expense of approximately $1.4 million and amortization of intangibles of $100,000 associated with the Company’s acquisition of Mobile Collect and assume a basic weighted share count of approximately 16.4 million shares for the full year 2010.  SoundBite expects capital expenditures to be approximately $1.8 million and depreciation expense to be approximately $1.8 million*.

Webcast and Teleconference Information
The Company will host a conference call today at 5:00 p.m. ET to discuss its financial results.  A live and archived webcast of the event will be available at http://ir.soundbite.com/events.cfm.  A live dial-in is available domestically at 888-350-0137 and internationally at 970-315-0478.  A replay of the call will be available two hours after the live call until 11:59 p.m. ET on August 22, 2010 and can be accessed by dialing 800-642-1687 for domestic callers and 706-645-9291 for international callers and entering passcode 89821841.

Non-GAAP Measures
To supplement its statements of operations information presented in accordance with GAAP, SoundBite uses a non-GAAP measure for net loss per share.  In order for investors to be better able to compare its current results with those of previous periods, SoundBite has shown a reconciliation of GAAP to non-GAAP financial measures.  This reconciliation adjusts the GAAP net loss per share to exclude stock compensation expense, amortization, impairment of goodwill, and severance expense.  SoundBite believes the presentation of this non-GAAP financial measure enhances investors’ overall understanding of SoundBite’s historical financial performance.  The presentation of non-GAAP net loss per share is not meant to be considered in isolation or as a substitute for SoundBite’s financial results prepared in accordance with GAAP, and SoundBite’s non-GAAP financial measure may be different from non-GAAP financial measures used by other companies.

About SoundBite Communications
SoundBite Communications is a leading provider of on-demand, multi-channel proactive customer communications solutions designed to transform the way organizations communicate throughout the customer lifecycle to build trusted, lifelong and profitable relationships.  Clients can leverage SoundBite’s proactive customer communications offering and expertise in designing, executing and optimizing communications strategies to engage in relevant customer interactions that deliver long-term business value.  Visit SoundBite.com for more information.

Forward-Looking Statement
This is a “safe harbor” statement under the Private Securities Litigation Reform Act of 1995.  Any forward-looking statements contained in this press release, including statements made  under “Third  Quarter and Full Year 2010 Guidance,” are based upon SoundBite’s historical performance and its current plans, estimates and expectations.  The inclusion of this forward-looking information should not be regarded as a representation by SoundBite, its management or any other person that the future plans, estimates or expectations contemplated by SoundBite will be achieved.  These forward-looking statements represent SoundBite’s expectations as of the date of this press release.  Subsequent events may cause these expectations to change, and SoundBite disclaims any obligation to update the forward-looking statements in the future.  Matters subject to forward-looking statements involve known and unknown risks and uncertainties, including:  slower than anticipated development of the market for automated voice messaging services; defects in SoundBite’s platform; disruptions in its service or errors in its execution; discontinued or decreased use of SoundBite’s service by its clients, which are not subject to minimum purchase requirements for any reason, including market conditions and regulatory developments; and the occurrence of events adversely affecting the collection agencies industry or in-house collection departments, which account for a significant portion of SoundBite’s revenues.  These and other factors, including the factors set forth under the caption “Item 1A. Risk Factors” of Part II in SoundBite's most recent quarterly report on Form 10-Q filed with the Securities and Exchange Commission, could cause SoundBite's performance or achievements to be materially different from those expressed or implied by the forward-looking statements.

[* Corrected as of 08/09/10]

SoundBite is a registered service mark of SoundBite Communications, Inc.