Sonic Foundry, Inc. (SOFO) research, news, and more from GeoInvesting

Company description

Fri, 26 Apr 2013 04:00:00 GMT

Sonic Foundry, Inc., a Web communications company, provides enterprise solutions and services for education institutions, corporations, and government agencies worldwide. Its principal product line, Mediasite, is a Web communication and content management system that Webcasts lectures and presentations. The company sells Mediasite Recorders for capturing video and media presentations; Mediasite EX, a video content management platform for distributing and archiving live and on-demand content; Mediasite Events for turnkey meeting, conference, and event Webcasting services based on the Mediasite platform; Mediasite Services for hosting, installation, training, and integration; and Mediasite Customer Assurance for annual hardware and software maintenance, and technical support. It also offers server software products and related services contracts, such as customer support, installation, training, content hosting, and event services. The company markets its products through reseller networks, a direct sales effort, and partnerships with system integrators. Sonic Foundry, Inc. was founded in 1991 and is headquartered in Madison, Wisconsin.

Research

Thu, 04 Jan 2024 15:08:27 GMT

Sonic Foundry Inc (OTC:SOFO) ($0.26; $3.1M market cap) has agreed to sell its Mediasite business to Enghouse Systems for $15.5 million.

This leaves the company with two of its newer business segments launched in the last couple years. We assume that Mediasite comprises most of the company’s revenue. However, this could allow the company to pay down its entire debt balance of about $15 million and leave it with roughly $4.5 million in cash or $0.37 cash per share to use/promote their new business ventures.

It appears the company will be left with two business segments:

Vidable - Vidable AI turns video libraries into dynamic assets that empower users
Global Learning Exchange - provides students around the world access to high-quality online education in a locally supported environment, ensuring students everywhere can grow, learn and reach their full potential.

Research

Mon, 18 Apr 2022 11:49:30 GMT

Sonic Foundry, Inc. (NASDAQ:SOFO)

Momentum in the company’s turnaround has significantly stalled over the last two quarters. Furthermore, 2022 guidance is not impressive. The conviction was stated as a 2, but since the forum we have decided to remove it from our Model Portfolios.

Research

Fri, 11 Mar 2022 15:06:06 GMT

Sonic Foundry Inc (OTC:SOFO) ($3.80; $34.6M market cap), is the global leader in video capture, management and streaming solutions as well as virtual and hybrid events. SOFO shares rose 25% in yesterday’s trading session on the heels of the company hosting its analyst day.

It is unclear exactly what drove the shares higher, but it is our belief that when management was talking about the revenue potential from its Global Learning Exchange that pushed the stock higher.

So here's the way I think about and I'm kind of -- I'm sizing up the market. There are today, I think it's like 185, give or take, countries in the world. 35 are fully developed countries. They're off the table for us, at least today. So that leaves 150 countries. If you look at that, half of those are pretty small. Those kind of come off the table. So now you have about 80 countries worldwide that I think are truly well positioned for this. Let's say we can get 25% of those. Maybe the number is only 10 countries, either way, we're talking about very large markets here. But say it's 20 countries. Where we know there is this compelling supply-demand imbalance and opportunity for our business. While I just shared with you that Nigeria is pushing back 1.5 million students a year, 1.5 million students who want to go to school or motivated to go to school, who have the money to go to school. If we could get a fraction of 1%, a fraction of 1%, and that's got to feel doable to everyone. So say we get 10,000 to 20,000 students per country. Then depending on the degree, the way this education is apply, you buy it annually, if you will, it's the format, if you will, from a global perspective. That education could be anywhere from $5,000 to $10,000 per year. You do the math on that, and this is not the market opportunity. This is what we believe can be the revenue potential for the ecosystem, $1 billion to $4 billion. Does that feel big to you? I hope so. To me, these are the types of markets we will play in, we will win in. And so $1 billion to $4 billion, and I said there's 4 stakeholders. Really, there's 3 stakeholders to share that. That's a lot of money for any one of those business groups.

You can watch our fireside chat with the CEO of SOFO here to learn about the turnaround he is attempting to execute.

Research

Mon, 24 Jan 2022 16:07:22 GMT

Sonic Foundry Inc (OTC:SOFO) ($3.20; $29.1M market cap), is the global leader in video capture, management and streaming solutions as well as virtual and hybrid events. The company announced its uplisting to the Nasdaq Capital Markets.

“Our uplisting signals our solid progress in stabilizing the business as well as our long-term potential to be the leader in this new era of video engagement that will span across all sectors…

…We believe the pandemic is a 10-year accelerant in the way people create and consume video content, and Sonic Foundry is uniquely positioned to build upon our 30-year leadership in providing solutions that empower companies to advance their digital-first profile in scalable and cost-effective ways. Being on the Nasdaq Capital Market expands our audience of investors to improve the liquidity of our stock as we seek to create long-term shareholder value by moving boldly to execute our strategic growth initiatives. Our entire team is incredibly energized by the opportunities before us,”

Please see our full research on SOFO here.

Research

Fri, 10 Dec 2021 16:13:06 GMT

Sonic Foundry Inc (OTC:SOFO) ($3.34; $30.1M market cap), a company that provides enterprise solutions and services for the Web communications market in the United States, Europe, the Middle East, Asia, and internationally, announced Q4 2021 results:

Sales of $8.6 million vs $10.2 million in the prior year
Loss of $0.05 vs $0.05 in the prior year

The prior year quarter had a $1.3 million impact of a one-time project to migrate a significant on-premises deployment to the Mediasite Cloud.

“I believe that the greatest opportunity in our 30-year history lies just ahead. The pandemic accelerated how content is delivered and consumed, and we have optimized our platform to capitalize on this powerful and permanent shift in how people work and learn. Every day, we work with customers to adopt a new paradigm that makes any event or classroom—whether virtual, hybrid or in person—more engaging, more personalized, and more impactful. We are expanding our cloud capabilities to better support our customers as they adapt to a digital-first world. At the same time, we are moving from primarily a hardware provider to a SaaS service provider, which will ultimately generate more recurring revenue.”

Research

Fri, 13 Aug 2021 17:34:59 GMT

Sonic Foundry Inc (OTC:SOFO) ($4.34; $35.0M market cap), a company that provides enterprise solutions and services for the Web communications market in the United States, Europe, the Middle East, Asia, and internationally, announced Q3 2021 results:

Sales of $8.7 million vs $7.9 million in the prior year
EPS of $0.02 vs $0.01 in the prior year

“This has been a big quarter for us as we continue to achieve our growth plan,” said Joe Mozden Jr., CEO, Sonic Foundry. “I’m pleased to once again say that our quarter delivered strong results across several key financial metrics and we’ve made some exciting progress including acquiring several new investors with a lead investment by the Roumell Opportunistic Value Fund which is run by James Roumell, a highly acclaimed Chevy Chase, MD money manager. Additionally, we secured a new line of credit with U.S. Bank for $3 million. These new contributions allow us to continue to create substantial growth by investing in new markets and providing new working capital that we can invest in future projects.

While presentation spaces such as classrooms and training rooms will continue to play a key role in our success in the future, we made the strategic decision at the start of the pandemic to focus more on two new large growth opportunities – cloud video services and hybrid events. We’ve made tremendous progress in these areas over the past months, increasing events and cloud services 17 percent and 34 percent respectively. We’re encouraged by the overall growth from both of these areas and we believe they will continue to be contributors to our growth going forward.”

Research

Fri, 30 Jul 2021 18:29:07 GMT

Sonic Foundry Inc (OTC:SOFO) ($3.90; $31.4M market cap), a company that provides enterprise solutions and services for the Web communications market in the United States, Europe, the Middle East, Asia, and internationally, announced it has sold 945,946 shares at a price of $3.70, raising $3.4 million. While we are surprised by the raise at these prices given the bullish comments shared with us during our fireside chat from June 30th, 2021, the offering was not overly dilutive ( 12%) and has support from insiders and investors who are aligned with the company’s long term growth objectives. We actually think the market may react positively to this offering, especially in light of the company’s intention to list its shares on the NASDAQ again.

Takeaways from offering:

Sonic Foundry’s chairman and largest shareholder, Mark Burish, purchased $1.25 million worth of shares.
A portion of the proceeds will allow Sonic Foundry to meet the listing requirements of the NASDAQ capital markets, reversing a decision made earlier by the company to voluntarily delist from NASDAQ.

“The proceeds from this sale allow us to continue to execute the strategy I outlined in our most recent shareholder meeting with an emphasis on driving greater awareness of the momentum we are creating,” said Joe Mozden, Jr., CEO, Sonic Foundry. “I greatly appreciate the continued support and confidence from our existing investors and I’m excited to welcome new investor partners who have aligned with us to help us achieve our video content-first growth objectives going forward.”

Research

Fri, 14 May 2021 04:00:00 GMT

Sonic Foundry Inc (OTC:SOFO) ($4.20; $33.65M market cap), a company that provides enterprise solutions and services for the Web communications market in the United States, Europe, the Middle East, Asia, and internationally, announced fiscal Q2 2021 results:

Sales of $8.7 million vs $8.7 million in the prior year
EPS of $0.03 vs a net loss of $0.01

“We believe these new areas of focus will continue to grow substantially for us. We're encouraged by the overall growth in both our hosting and events businesses. The hosting business has increased by 42%. We believe the events business will grow based on year-to-date sales activity and growing pipeline. Post-COVID, we anticipate not only the positive momentum from our new businesses but also a renewed energy and growth in the traditional classroom. Classrooms will open again in the near future, and the need for video technologies like Mediasite to deliver anytime, anywhere education is a critical piece of the puzzle for schools.”

Research

Fri, 12 Feb 2021 17:28:37 GMT

Sonic Foundry Inc (OTC:SOFO) ($4.60; $36.6M market cap), a company that provides enterprise solutions and services for the Web communications market in the United States, Europe, the Middle East, Asia, and internationally, announced Q1 2021 results:

Sales of $9.2 million vs $8 million in the prior year
EPS of $0.08 vs a net loss of $0.12

“I’m pleased that our first quarter delivered solid results across several key financial metrics. These results were driven by the informed bold decisions we’ve made to pursue high-demand, high-growth markets and anticipating our client needs in a video-centric world. We continue to maintain positive momentum across several important business segments, including our virtual events platform and Mediasite Video Cloud, two key areas we continue to invest in as we adjust our model to focus on solving new client business issues....

I am even more enthusiastic and confident today than when I joined the team last fall. While we have some challenges ahead, we have a vision and mentality for growth and have the right team in place to drive that growth. We are thinking about our business differently, aligning to our clients’ needs and proudly serving as their trusted partner to help them grow and lead them through the uncertainty,”

Please see our full research on SOFO here.

Research

Wed, 23 Dec 2020 05:00:00 GMT

Sonic Foundry Inc (OTC:SOFO) ($3.13; $24.7M market cap), a company that provides enterprise solutions and services for the Web communications market in the United States, Europe, the Middle East, Asia, and internationally, announced Q4 2020 results:

Sales of $10.1 million vs $9.2 million in the prior year
EPS of $0.05 vs a loss of $0.03 in the prior year

“billings related to hosting increased 86 percent in the fourth quarter of 2020 compared to the same quarter last year. These increases in services are indicative of the acceleration in video content creation across the globe. The company expects to recognize?$4.1 million?of the current unearned revenue in the first quarter of fiscal?2021. Recurring revenue of?$6.8 million?was?67 percent?of total revenue in the?fourth?quarter of?2020, compared to?$5.9 million, or?64 percent?of total revenue, in the?fourth?quarter of?2019...

...We are rapidly adapting our business to the trends that we are seeing, and are accelerating our investments and focus on high value-add markets which we believe will grow in a post COVID world. Increased demand for hosting, our virtual events platform and our video content management capabilities reflect significant opportunities for Sonic Foundry and are the basis for changes we are making in our business. I am extremely proud of our team for quickly pivoting to meet our customers’ needs during this difficult year. We are beginning a new journey with greater emphasis on product orientation coupled with our historical customer-centric focus. A great example of that is the innovations we are driving for in the new hybrid world for the classroom, the office, and the events industry,”

Q4 sales of $10.2 million were up strongly sequentially from Q3 2020 of $7.9 million and mark the highest level of quarterly revenues in over 5 years.

From our initial interview with management we understood that the sales cycle for new customers takes a little time to get started so it was nice to see that the company was able to increase revenue and achieve profitability this quarter. Maybe some of the partnerships and contracts they've been inking over last year are starting to pay off.

See our past coverage on SOFO here. (Initial RFT here)

Research

Fri, 14 Aug 2020 19:21:33 GMT

Sonic Foundry Inc (OTC:SOFO) ($4.70; $31.9M market cap), is a company that provides enterprise solutions and services for the Web communications market in the United States, Europe, the Middle East, Asia, and internationally announced Q3 2020 results:

Sales of $7.9 million vs $10.1 million in the prior year
EPS of $0.01 vs a loss of $0.03 in the prior year

"The company expects to recognize $4.6 million of the current unearned revenue in the fourth quarter of fiscal 2020. Recurring revenue of $5.6 million was 70 percent of total revenue in the third quarter of 2020, compared to $6.3 million, or 63 percent of total revenue, in the third quarter of 2019.

In this new video-centric world, Sonic Foundry is well positioned to help schools and organizations react quickly to meet their expanding communication needs with Mediasite. I am proud of how the team has innovated to launch additional products and services that are in high demand. We expect that Mediasite Mosaic, our new personal capture app, and our expanded Zoom integration will be integral to hybrid back-to-school plans around the world. Our Mediasite Events team pivoted almost overnight to a complete virtual event offering that grew out of our 15-year history of creating dynamic online experiences – a business segment we expect to grow as the long-reaching effects of the pandemic on in-person conferences continues into next year,”

Research

Tue, 16 Jun 2020 16:40:19 GMT

Sonic Foundry Inc (OTC:SOFO) ($4.50; $30.5M market cap), is a company that provides enterprise solutions and services for the Web communications market in the United States, Europe, the Middle East, Asia, and internationally. On the heels of a new integration with Zoom Video Communications, Inc. (NASDAQ:ZM) announced on July 30, 2019, the company just announced advanced integrations with ZM for hybrid learning.

“Web and video conference systems like Zoom are being used prolifically by schools from primary to collegiate levels to facilitate the new normal for teaching and learning,” said Elizabeth Collins, SVP of Sonic Foundry, maker of Mediasite. “The coming academic year will include an essential mix of flipped lectures and real-time discussions delivered live with video technology like Mediasite and collaborative conferencing tools. Mediasite recognizes that the market dynamics are rapidly changing in this new world, and we are committed to evolving and innovating to meet the ever-changing needs. The latest Mediasite-Zoom integration gives users more ubiquitous ability to record content, schedule recordings and decide what content will most benefit from the full functionality of being uploaded into Mediasite.”

The company also announced Mediasite launched a new one click video capture tool.

More than 1,500 users are already creating content with Mediasite Mosaic on macOS Catalina, contributing to the massive year-over year increase of Mediasite. Since the start of social distancing and quarantine in March, the usage increase includes:

123 percent increase in videos created
109 percent increase in live sessions
83 percent increase in views

You can see our industry landscape note here and the company’s strong Q2 earnings results here.

Research

Mon, 01 Jun 2020 00:16:52 GMT

Industry landscape

In our view, the solutions offered by SOFO fit within the broader enterprise video market. Video is gaining prominence across the enterprises fuelled by digitization. When it comes to communications, meetings, training, security, and many other use cases, video communications and video content is the new preferred choice. Key use cases for Sonic Foundry include lecture capture, training, corporate webcasts, and enterprise communications. Of these, lecture capture remains its main offering and education institutes account for majority of its revenues ( 67%).

According to Frost & Sullivan, the lecture capture solutions (LCS) market crossed $290 million in revenue in 2018, up from $162 million in 2013. LCS allows educators or teachers to record lectures and deliver them to students remotely. The lectures can be live streamed or uploaded to be consumed by the students. LCS solutions also offers to attach metadata to videos to improve searchability. The students can visit the LCS platform, search for videos and consume as and when required. The major factor influencing the growth of the market is the surge in digitalization of education and the corporate sector. All major universities and schools in the US and Canada are providing lecture capture solutions to students so that they can access videos at their own convenience. The LCS market has primarily been moving toward cloud-based deployments away from on-premise solutions. Uploading content to a cloud repository coupled with metadata and tagging can enable quicker access to the video lectures. This is particularly important in higher education settings where students need to access a lecture for preparation or course review.

In the wake of the COVID-19 outbreak, the market is witnessing rapid growth and demand. More than 776.7 million children and youth are out of school, according to UNESCO. As such, educational institutes are more than ever relying on video streaming and lecture capture solutions to deliver much needed learning to students remotely. The trend to capture lectures and offer MOOCs (Massive Open Online Courses) is increasingly becoming the standard for major universities as they grapple with the COVID-19 fallout.

The corporate sector is using SOFO’s solutions for live streaming of meetings and training their geographically diversified employees. The benefits offered by the technology should foster its faster adoption going forward.

The market for lecture capture solutions is highly competitive with large number of players. TechSmith Inc. is the leader in the market with just 17.3% market share as per Frost & Sullivan. This suggests that the market is highly fragmented. Some of the other primary competitors include Echo360, Panopto and Kaltura. There are no pure-play listed players.

As per its 10-K, SOFO claims that it has competitive advantages given its end-to-end product offering that addresses all phases of the video content lifecycle. However, we have yet to verify this.

"Various vendors provide lecture capture, enterprise webcasting or video content management capabilities, but few offer an end-to-end solution that addresses all phases of the video content lifecycle (capture, delivery, transformation and management) in a single platform like Mediasite."

“Few lecture capture vendors offer a mix of all lecture capture approaches to best suit customers’ needs. Most vendors, including Crestron and Panopto support only one approach to lecture capture. Likewise, a very small number of vendors provide an integrated platform like Mediasite to archive and manage video and rich media recorded with their solution. Most rely on a third-party platform, typically the institution’s learning or course management system, to publish, search and secure content."

Its primary direct competitors include the following companies.

Name	Type	Description
Qumu Corp	Public	Qumu offers an enterprise video platform that creates, manages, secures and distributes live and on-demand video. The platform is offered as SaaS, on-premise or hybrid solution.
Brightcove	Public	Brightcove Inc. is a leading provider of cloud-based video management platform. The company offers a suite of products and services that allows publishing, distributing, measuring and monetizing of video content.
Haivision	Private	Haivision provides end-to-end video streaming solutions for encoding, recording, managing, publishing and distributing secure video content.
Panopto	Private	Panopto is an online video platform providing video capture and management software for educators, businesses and government agencies.
Kaltura	Private	Kaltura provides live and on-demand video SaaS solutions to thousands of organizations around the world. Kaltura’s products are used by global enterprises, media companies, service providers and educational institutions
Sonic Foundry	Public	Sonic Foundry is a provider for video capture, management and webcasting solutions in education, business and government.

SOFO Versus ZOOM

Zoom is primarily a videoconferencing tool, while Sonic Foundry Inc. is a videoconference capture solution that automatically transforms video calls and meetings into engaging, searchable on-demand video. Sonic Foundry Inc. acts as a central depository for Zoom cloud recordings and makes the video rich by adding metadata to enhance search capabilities. When the Zoom call is done, Mediasite downloads the content from Zoom – along with corresponding metadata such as the meeting name, creation date, author and associated email addresses – and turns it into rich video. Users can then go to their Mediasite profile and search any video and share it as needed. Mediasite makes it easier for attendees to reference key moments in meetings or for people who missed the sessions to watch at their convenience.

In short, the Mediasite platform is a solution for consolidating recorded lectures, meetings, live events, how-to videos, and video training into a secure, searchable library.

Peer Group

The peer group for SOFO is primarily comprised of companies catering to the enterprise video management market. As can be seen below, SOFO shares are trading at an EV/Sales of 1.0x, which is at a slight discount to most of its peer group (excluding Akamai). However, we believe that SOFO's valuation may not reflect the potential for accelerated adoption of LCS due to COVID-19 and a recently improved balance sheet. Furthermore, we believe that the company’s educational institution customers are not fully deploying SOFO's services throughout their classrooms.

Source: Yahoo Finance, Company data

Research

Fri, 15 May 2020 19:20:57 GMT

Sonic Foundry Inc (OTC:SOFO) ($4.59; $31.1M market cap), a company that provides enterprise solutions and services for the Web communications market in the United States, Europe, the Middle East, Asia, and internationally, announced Q2 2020 results:

Sales of $8.6 million vs $7.9 million in the prior year
EPS of $0.01 vs a loss of $0.29 in the prior year

“I’m very pleased with our financial performance for the quarter and in particular the significant improvement in our bottom line. We laid the groundwork before the effects of COVID-19 began to spread, including our initiative to move more customers to the cloud. Working with a large customer to implement a custom cloud project illustrates our efforts are paying off...

In today’s uncertain environment, we understand how critical the ability to communicate with video is to our customers in the industries they serve, and we will continue to do our best to meet the new challenges they face by strengthening our services and product offerings. The efforts we undertook last year to improve our execution and reduce operational expenses will be beneficial as we go forward."

Calls off $5 offer from Chairman:

Following the previously announced intention to pursue a transaction whereby Mr. Burish would purchase all outstanding shares of common stock not presently held by Mr. Burish at $5.00 per share, a number of shareholders advised that they were opposed to the transaction and that opportunities available to the company now, in view of the distance learning environment occasioned by the COVID virus crisis, may provide pathways to achieve greater value. Concerned that a proposal would not obtain the required shareholder approval, the company and Mr. Burish agreed to not pursue the transaction at this time, and instead pursue other strategic alternatives to enhance both company and shareholder value, improve the company's financial position, and provide the company with resources to further its growth opportunities.

As we mentioned here in our last Weekly Wrap Up, we did not agree with the company accepting the $5 per share offer, given the recent bullish news flow and the Company selling at a meager EV/S of around 1. We voiced our opinion as many other shareholders likely did and are pleased to see that management listened.

Research

Mon, 27 Apr 2020 15:19:11 GMT

Sonic Foundry Inc (OTC:SOFO) ($4.76; $32.3M market cap) provides enterprise solutions and services for the Web communications market in the United States, Europe, the Middle East, Asia, and internationally.

The company announced it has accepted the $5.00 per share offer from Chairman of the Board, Mark Burish for him to “purchase all outstanding shares of the Company’s common stock not presently held by Mr. Burish”. The transaction is expected to close in the third calendar quarter of 2020. As previously announced, the Company formed the Special Committee to consider strategic alternatives.

“During the last eight months, the Special Committee conducted a thorough and independent process through which we carefully reviewed a number of strategic alternatives. With the assistance of our independent financial advisor, Silverwood Partners, a broad array of potential financial and strategic buyers were contacted. Following that extensive process, we determined it is in the best interest of Sonic Foundry’s shareholders to accept the $5.00 per share offer from Mr. Burish. We are particularly pleased that the transaction represents a substantial premium for our shareholders measured from the onset of the Special Committee’s formation,” said David Slayton and Nelson Murphy, members of the Special Committee.

We do not agree with the company accepting the $5 a share offer, given the recent bullish news flow and the Company selling at a meager EV/S of around 1.

See our recent reasons for tracking note on what got us excited about the SOFO story

Call to Action

Mon, 06 Apr 2020 18:00:42 GMT

*Call to Action Update - SOFO

Sonic Foundry Inc (OTC:SOFO)

Our bullish thesis (published last week) on video capture and remote conferencing company, Sonic Foundry Inc (OTC:SOFO), has been strengthened by an interview we just had with company management. We are reviewing our interview notes and will publish an update soon. We will likely look to add to our position.

Reasons For Tracking

Mon, 30 Mar 2020 04:00:00 GMT

*Reasons For Tracking SOFO

(Note: This note is a revised, more detailed version of the 3/30/2020 research note originally alerting you to our coverage of SOFO)

Sonic Foundry Inc (OTC:SOFO) ($3.70; $25.1M market cap)

We were recently alerted by GeoInvesting premium member Morgan Martindell that we should take a look at Sonic Foundry Inc.

It looks like the company could be firmly positioned to benefit from the increased demand in the online webcasting services industry.

SOFO provides enterprise solutions and services for the Web communications market in the United States, Europe, the Middle East, Asia, and internationally. It offers Mediasite Video Platform, an on-premises solution to publish, stream, manage, search, and analyze videos; and Mediasite Video Cloud, a Software as a Service solution, which provides hosting and management of content.

Over the last several years, revenues have been stuck at around $35 million and the Company has been losing money.

The long-term stock chart illustrates the lack of success prior management had in growing the company.

It was our intention to take a deeper dive into the strategy new management initiated to turn the company around before taking a position in the stock. However, SOFO has more than doubled over the past two weeks, and our attempts to secure an interview with management on multiple occasions has been unsuccessful.

So, we decided to take an initial position as we continue our research. Please note that the stock trades on the OTC and is extremely illiquid.

A first look at our reasons for tracking the company include:

1) Schools are going on-line

With schools closing due to Covid-19, what are the usage time frames that SOFO expects to see from entities across the globe? Will COVID-19 also accelerate customer adoption? Will there be temporary anomalies as well as permanent increases in the use of their Mediasite platform?

Trusted by 5,200 educational institutions, corporations, health organizations and government entities in 65 countries, the Mediasite video content management and webcasting system quickly and cost-effectively automates the capture, management, delivery and search of live and on-demand videos.

Mediasite Video Platform is "a scalable on-premise solution to publish, stream, manage, search and analyze video. With Mediasite Video Platform, enterprises and education institutions":

Stream live and on-demand video to any device
Create an enterprise or campus YouTube
Automatically publish video to their learning management system (LMS), content management system (CMS), training portal or any website
Deepen engagement and improve learning with quizzing, annotations, comments, polls, surveys and other interactive tools
Search everything with fully indexed audio, video and slide content
Analyze who is watching what videos and when in order to measure learner engagement and outcomes
Centrally manage and secure any video

2. Relationship with Zoom Video Communications, Inc. (NASDAQ:ZM) (warning: not to be confused with Zoom Technologies Inc. (OOTC:ZOOM))

By now, you are probably aware that shares of ZM have exploded in recent weeks, as its webcasting communication platform has seen a surge in use. Interestingly, a July 2019 press release stated that SOFO’s Mediasite platform has been integrated with Zoom Video Communications

“...users can now automatically publish and manage all their Zoom Video Communications cloud recordings directly in Mediasite thanks to a new integration between the two technologies. Mediasite announced its new Mediasite for Zoom app, designed to extend the value of unified communications (UC) for its customers.”

From what we are reading, it seems that the Mediasite has been more of an on-premise solution, and it’s possible that the ZM relationship provides the company an opportunity to expand its cloud solution offerings. We are also interested to see if the ZM relationship will allow SOFO to expand more aggressively outside the education arena.

Expanding its cloud capabilities and market breadth seems to be part of the company’s restructuring process:

“When I took the helm at the beginning of Q3 (2019), we refined our strategic focus and put a plan in place to trim costs, drive additional revenue streams and ultimately become a profitable, more sustainable company. “We acknowledge the mature nature of the enterprise video market but are optimistic about the year ahead. Our teams are realigning to focus on the path forward; offering better and more comprehensive professional services and helping customers solve their unified communications challenges. In the coming year we will apply focused resources in helping our customers move to the cloud, with customers like Penn Medicine – which has successfully made the transition – leading the way,” Norregaard continued.

“The strategic plan and involvement of all employees has injected a new energy into the business that I am very excited about. We commit to making continual improvements to the core business, ramp up our efforts to define additional revenue streams and ultimately drive shareholder value.”

3. Exploring strategic alternatives

On March 5, 2020 the company announced it had hired Silverwood Partners LLC, a Boston-based investment banking firm specializing in digital media technology, to evaluate strategic alternatives.

"Mediasite is a market leader in the development of industry-leading solutions for the capture and streaming of video over enterprise, broadband and mobile networks," stated David Slayton and Nelson Murphy, members of the Special Committee. "In order to take full advantage of the market opportunity and maximize Mediasite’s business potential, we plan to review the full range of strategic alternatives that better position Mediasite for a new phase of growth and that realize the full value of Mediasite for the benefit of Sonic Foundry’s shareholders."

Despite the fact that SOFO is losing money and has a shareholder deficit, shares are trading at a meager EV/Sales of 0.8, which may not reflect the growth opportunity Covid-19 and its relationship with ZM present to the company. Thus, there could be an ample amount of suitors. In fact, UCaaS company Broadvision, Inc. (NASDAQ:BVSN) just entered into an agreement to sell its company for $4.375/shr to Aurea, whose parent company, ESW Capital, LLC, is an activist entity (it’s worth noting that the stock is still trading under $4/shr). Our analysis showed that BVSN is selling an inferior product and has had no market traction over the last several years. This possibly shows that there could be a flurry of acquisition activity in the UCaaS space, even of inferior companies. Maj Soueidan and Mike Woloski went into detail discussing the BVSN story, here, after Aurea announced its intent to acquire BVSN.

Caveats:

We need to perform much more research
We are not at all impressed with the Company's financial progress recently and over the past decade
We are a bit skeptical of the fact that the company does a good portion of business in China, especially without having done a deeper dive on-the-ground research.
The stock has more than doubled over the last couple of weeks.
SOFO has around $8 million in long term debt and negative shareholder equity as of last quarterly filing.