- Sequential revenue increased 43% with stable mix of new & existing clients
- CMS related customized solutions, system integration and maintenance dominated revenue mix
- Gross and operating margin of 40% and 9%, respectively, despite higher y/y marketing and ongoing public company costs
- As of September 30, 2018, backlog and pipeline stood at approximately $2.1 million and $5.0 million, respectively
- Balance sheet healthy with $3.2 million cash, $494K of long-term debt, assets of $7.9 million and book value of $5.4 million
- Marketing initiatives across sports ICT vertical and SE Asia expansion progressing well
- Conference call with management is scheduled for Wednesday, November 14th at 8:30AM EST -- Conference dial-in number is as follows: 877-876-9176 or 785-424-1670 with meeting ID 343-012-0000 (Please note the change from previously issued information)
SEOUL, South Korea, Nov. 14, 2018 /PRNewswire/ -- I-ON Communications Corp. ("I-ON" or the "Company") (OTCQB: IONI), www.i-on.net, a Seoul, South Korea-based global enterprise software company focused on delivering leading CMS, unstructured data management and digital marketing products and solutions to mid- and large-scale private and public sector enterprises, is pleased to announce financial results for the quarter ended September 30, 2018, reflected in I-ON's current report on Form 10-Q filed with the SEC on November 13, 2018.
Total revenue grew 43% q/q during the period to $1.87 million compared to $2.24 million in the same period for the previous year and was of comprised primarily of CMS related customized solutions and services both domestic and from Japan (53% of total), royalty and subscription contribution primarily out of SE Asia (6% of total) and maintenance/SI revenue across all geographies (37% of total). While the y/y declines continued to reflect the Company´s larger focus on driving newly launched product and solutions sales (such as TAMM/sports ICT and SaaS in Singapore/SE Asia), revenue recognition and implementation delays experienced in the first half of the year were partially made up for during the September period as expected, helping fuel the q/q growth. Declines y/y also continue to reflect a stable and improving, yet uncertain geopolitical forecast, and a slight deterioration in the overall state of South Korea's domestic economy, which is reflected across East Asia in general. However, the Company notes that its backlog as of the end of September remained healthy at roughly $2.1 million, while its pipeline of engagements stood at approximately $5 million comprising of a more diversified mix of CMS, SaaS, energy ICT and sports ICT potential.
During the period, I-ON's previously announced sports ICT initiative, working in conjunction with the Ministry of Culture, Sports and Tourism continued to progress well domestically, particularly as it relates to the Company's alliance with the Korean Ladies Professional Golf Association and the event sponsorship commitments the women's professional golf association has received for the new season from the likes of SBS, Hite, Hyundai and Seri Park Invitational, among others. Additionally, a new CMS overhaul for South Korea's ChunNam University were among I-ON's roster of new and ongoing engagements during the period, including with Samsung Life Insurance, DB Insurance, CJ Digital Music and the National Palace Museum.
As anticipated and owing partially to seasonality and timing of certain implementations, gross and operating margin turned positive during the quarter, coming in at 40% and 9%, respectively, a meaningful improvement over last year. This was despite a ramp in sales and marketing spend and public company related costs, which will continue going forward. Similar to 2Q18, both G&A and traditional R&D expenses totaling $657,152 was pared down during the September period to drive more efficiencies and focus on driving sales.
The Company's balance sheet as of the end of the September period remained healthy with total cash and equivalents of approximately $3.2 million, current assets of $6.54 million, total assets of $7.92 million, long-term debt of $494K, and shareholders' equity of approximately $5.37 million.
I-ON had and continues to have available lines of credit with financial institutions for up to $3.6 million on very good terms, of which there were no outstanding balances as of the end of September. During the period, and as previously announced in late August, the Company entered into a debt financing agreement for up to $600,000 with an accredited U.S. investor. The Company will continue to opportunistically explore all growth financing alternatives suitable to fund long-term growth and goals and is in discussions with financial institutions and middle market investment banking firms to assist with our financing strategies.
Outlook & Guidance
Chairman and CEO Jae Cheol James Oh commented, "We continue to remain focused on growing all facets of our business and will continue to invest accordingly while being keenly focused on cost synergies. Over the past few months of being a public company, we have achieved real milestones such as opening our New York office to serve as a future presence for both business development and investor relations, establishing new distribution channels in targeted markets such as our recently announced partnership with Singapore-based Hypersource, forging public private partnerships related to our Sports ICT/TAMM initiatives, launching marketing initiatives for non-core CMS related products and solutions in SE Asia, establishing our full board of directors including four independent directors, all while adding new clients for our core CMS suite of solutions.
As we have stated in the recent past and as I-ON seeks to continue its global expansion, we believe that historical y/y comparisons are less relevant today, then they will be a year or two years from now. That being said, our financial condition remains healthy and we will continue to pursue growth financing avenues as necessary, subject to right market conditions while looking out in the best interest of shareholders. Key acquisitions and alliances have always been and will continue to be a core tenet of our near and long-term strategy, and we look forward to keeping the market abreast on these developments."
I-ON's current 2018 pro forma revenue guidance of $15 million, which assumes the consummation of at least one acquisition in the current half of 2018, remains the Company's goal, though the Company acknowledges that organic growth y/y is likely to be flat due to overall market conditions and sustained volatility, which has the potential of carrying over certain engagements into early 2019. The Company also continues to implement a multi-faceted strategy to attain a revenue goal of $25-30 million by the end of 2019, which would likely reflect more international contribution, an improving revenue mix of less core CMS solutions contribution and higher y/y gross and operating margins, well above 40% and 15%, respectively.
Mr. Oh added, "While our business will always remain dependent on it, our goal ultimately remains to be less dependent on core domestic CMS solutions revenue and more so on a diversified and higher gross margin revenue mix, which can be achieved both through sustained marketing efforts behind new product and solution launches such as TAMM and sports ICT, energy ICT, SaaS and licensing initiatives, as well as through key partnerships."
Conference Call Details
Management of the Company will host a conference call on Wednesday November 14, 2018 at 8:30AM (Eastern Standard Time). The dial-in information is as follows: 877-876-9176 or 785-424-1670 with meeting ID 343-012-0000.
About I-ON Communications Corp.
I-ON Communications, Corp, is a Seoul, South Korea-based enterprise software company founded in 1999. After being awarded its first of six patents by 2003, the Company has since evolved into an industry-leading and recognized developer of enterprise-class unstructured data management and digital marketing software solutions. I-ON has sold to over 1,000 mid to large clients across numerous verticals in both the private and public sectors, primarily throughout South Korea, Japan and Southeast Asia. The Company has 11 products at market that enable clients to create, measure, and optimizes digital experiences for their audiences across marketing channels and devices. These encompass enterprise web content management (CMS), web experience and service delivery software, digital marketing, smart mobility and analytics tools and energy management systems. I-ON's large R&D team has designed and developed industry-leading technologies that are compliant with global standards including GS (Good Software) and NET (New Excellent Technology), while holding numerous domestic and global industry awards and recognition from the likes of Gartner and Red Herring.
Forward Looking Statements
Statements in this document contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended. These statements are based on many assumptions and estimates and are not guarantees of future performance. These statements may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. The Company assumes no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. Our actual results may differ materially from the results anticipated in these forward-looking statements due to a variety of factors, including, without limitation those set forth as "Risk Factors" in our filings with the Securities and Exchange Commission ("SEC"). There may be other factors not mentioned above or included in the Company's SEC filings that may cause actual results to differ materially from those projected in any forward-looking statement. The Company assumes no obligation to update any forward-looking statements as a result of new information, future events or developments, except as required by securities laws.
Sang Min Lee/Byung Woo Yu
Lisa Gray, Investor Relations
Scott Powell, Investor Relations
Skyline Asia Investor Relations, LLC
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