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Glowpoint Reports Third Quarter 2008 Results

November 15, 2008 | Chris Payatagool

glowpoint_160x53px.jpgHILLSIDE, N.J. --- Glowpoint, Inc. (OTC BB: GLOW), a premiere, IP-based managed video communications services provider, today announced financial results for the three and nine month periods ended September 30, 2008.

Selected Financial Highlights

-- Core revenue subscription services increased 11.8% for the third quarter 2008 and 13.8% for the nine months ending September 2008.

-- Multi-Point conferencing services increased 15.1% for the third quarter 2008 and 18.1% for the nine months ending September 30, 2008.

-- Gross margin for the third quarter of 2008 increased 800 basis points to 40.2% from 32.2% in third quarter 2007 and 990 basis points to 42.0% from 32.1% in the nine months ending September 30, 2007.

-- Loss from operations decreased 27.1% to $0.6 million from a loss of $0.9 million in the third quarter of 2007 and 55.4% to $1.5 million from $3.3 million in the nine months ended September 30, 2007.

Selected Operational Highlights

-- Closed a record $6.5 million in contract value in the third quarter of 2008, higher than any other quarter in the Company's history; expect to begin generating revenue from these contracts in the fourth quarter 2008.

-- Awarded a number of Telepresence VNOC services contracts, including a global electric energy company to interconnect with Glowpoint's exchange platform (TEN) for access to hosted services for business-to-business interconnectivity and interoperability.

-- Telepresence rooms under contract grew to over 80 rooms from approximately 20 at the end of the second quarter.

-- Joined Carbon Free Coalition to promote video services as a "green" technology.

-- Continued expansion of Broadcast revenue with revenue associated with Broadcast customers growing by 55% of the same period in 2007.

Michael Brandofino, chief executive officer of Glowpoint, commented, "Economic and environmental issues are driving requirements for increased productivity and global competitive advantages. Our managed video services and custom-developed applications are becoming recognized as a critical component to solutions being demanded by enterprises, equipment manufacturers, and global carriers to address these requirements.

While we are not immune to the economic conditions and have been impacted in recent months by downsizing within certain segments, especially in the real estate and financial sectors we continue to see demand for our services and anticipate continued growth, which has been positive for eight consecutive quarters. Customer downsizing has been reflected in slower revenue growth in the third quarter due to lost revenue from some accounts combined with normal summer seasonality. We have seen multi-point bridging revenue recover in September and October from seasonal summer lows and have more than made up for any monthly recurring churn experienced so far this year.

Overall, in these challenging economic times, we feel well positioned to weather an economic downturn due to the recurring nature of our revenue stream and historically low churn combined with the fact that video communications is often viewed as a cost savings measure. While we can make no predictions on how the current economy will affect us or the video industry, we continue to work to leverage our diverse distribution model to pursue new opportunities on a global basis."

Financial Results for the Three Months Ended September 30 2008

For the third quarter of 2008, total revenue increased 4.5%, to $6.1 million from $5.8 million in the third quarter of 2007. Overall Core revenue grew by 10.4%, to $5.4 million from $4.9 million. Non-core revenue, which consists of ISDN resale revenues and integration services, decreased 27.4 %, to $0.7 million from $0.9 million.

Gross margin increased 30.2% to $2.4 million from $1.9 million in the third quarter of 2007. Gross margin as a percentage of sales was 40.2% compared to 32.2% in the third quarter of 2007, an 800 basis point improvement.

Total operating expenses for the quarter increased 11.8%, to $3.1 million from $2.8 million in the third quarter 2007. The loss from operations decreased 27.1%, or $0.24 million, to $0.64 million from $0.88 million in the third quarter of 2007. Net loss attributable to common stockholders decreased 68.8% to $1.9 million, or $0.04 per basic and diluted share, in the second quarter of 2008 compared to a loss of $5.9 million, or $0.13 per basic and diluted share, in the second quarter of 2007.

Ed Heinen, chief financial officer of Glowpoint, commented, "We indicated earlier this year that we felt it was imperative for Glowpoint to invest in the ability to provide Telepresence VNOC services. As such, throughout the first half of the year we saw our pipeline of opportunities grow. The increase in VNOC services sales for telepresence rooms in the third quarter demonstrates that our investment is beginning to pay off and we are well-positioned to continue our growth. We made the investment in training, equipment and resources to scale our VNOC Support services for telepresence and most of the increased investment for additional 24/7 staffing and other support services is now reflected in our third quarter operating expenses. We made these investments based on contracts in hand and we expect to begin generating revenues from them late in the fourth quarter and into Q1 2009. With the basic infrastructure in place, we are better equipped to scale as other VNOC services customers come online."

Mr. Heinen continued, "Again this quarter, we see continued improvement in our key operational metrics year-over-year. Management remains focused on effectively leveraging our existing business capabilities and investments as we drive toward our goal of achieving consistent profitability and enhancing shareholder value. The results can be seen in the increase in our gross margin as a percentage of sales for both the three and nine month periods compared to last year's same period. This, coupled with our close monitoring of expenses, helped decrease our operating and net loss for the quarter by over 27% and 68%, respectively."

Financial Results for the Nine Months Ended September 30 2008

For the nine months ended September 30, 2008, total revenue increased 7.2%, to $18.6 million from $17.3 million in the nine months ended September 30, 2007. Overall Core revenue grew by 15.1%, to $16.4 million from $14.2 million. Non-core revenue decreased 29.6% to $2.2 million from $3.1 million.

Gross margin increased 40.3%, to $7.8 million in the first nine months of 2008 from $5.6 million in the same period of 2007. Gross margin as a percentage of sales was 42.0% in the first nine months of 2008 compared to 32.1% in the same period of 2007, a 990 basis point improvement.

Total operating expenses for the nine months ended September 30, 2008 increased 4.5% to $9.3 million compared to $8.9 million in the same period of 2007.

The loss from operations decreased 55.4%, or $1.8 million, to $1.5 million from $3.3 million in the first nine months of 2007. Net loss attributable to common stockholders decreased by 56.7% to $5.1 million, or $0.11 per basic and diluted share, in the first nine months of 2008 compared to a loss of $11.8 million, or $0.25 per basic and diluted share in the same period of 2007.

About Glowpoint


Glowpoint, Inc. (OTC: GLOW), is a premiere, IP-based managed video
communications services provider. Glowpoint is innovating video
communications with services supporting traditional video conferencing,
Telepresence VNOC, Broadcast Content Acquisition and Delivery, and Call
Center Applications. Glowpoint's services are delivered over a robust,
video-centric network that reaches around the world and serves clients
ranging from Fortune 100 enterprises and leading broadcast networks to
SMB markets. Glowpoint is headquartered in Hillside, New Jersey. To
learn more, visit www.glowpoint.com.

[via TMCnet]







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