SoundBite Posts Loss as Revenues, Customers Grow

SoundBite Communications reported a net loss in the third quarter due to a one-time charge and an expense write-off, overriding the positive news of strong growth in its revenue and customer base and an increasing shift of customers from third-party firms to first-party firms for collections, customer care and marketing services.

The Bedford, Mass.-based provider of on-demand voice messaging reported a net loss of $277,000, or 44 cents a share, compared to net income of $10,000 in the comparable year ago period before the company was publicly traded. Net income for the third quarter of 2007 included a non-cash charge of $389,000 to mark to market then-outstanding redeemable preferred stock warrants and a non-recurring write-off of $435,000 associated with the relocation of the company’s corporate headquarters. 

SoundBite (Nasdaq: SDBT) began trading the first week of November at $8 a share, below its initial projections of $12 to $14. It was trading midday today at $7.71, up more than 2 percent.

Revenues grew to $10.1 million, an increase of nearly 30 percent from the same period last year. The company said that it had 188 active clients in the quarter, an increase of 23 percent from 153 during the prior year quarter.

The mix of those customers continues to shift in line with the company’s strategy, according to Robert Leahy, chief financial officer and chief operating officer. First-party client revenues were 46 percent of total revenues and third-party client revenues were 54 percent of total revenues, compared to 38 percent and 62 percent, respectively, in the third quarter of last year.  New and existing clients contributed approximately equal amounts to revenue growth.

“The ... revenue growth we experienced in first-party revenues demonstrates our further penetration in this market, where SoundBite’s technology is being used for both collections and a growing number of customer care applications,” Peter Shields, president and CEO of SoundBite Communications, said in a prepared statement following the earnings release. 

For the fourth quarter of 2007, SoundBite is projecting revenues in the range of $10.5 million to $10.9 million, gross margins in the range of 63 percent to 65 percent, total operating expenses of $7 million to $7.3 million, and interest income of approximately $275,000.  SoundBite is forecasting GAAP net income to be between $200,000 and $700,000 for the fourth quarter of 2007. The fully diluted weighted average share count is expected to be approximately 15.2 million for the fourth quarter of 2007 and 13.1 million for full year 2007.