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Telanetix Reports Fourth Quarter 2008 Results

March 27, 2009 | Chris Payatagool

- Delivers total revenue of $8.5 million, increasing 14.4% from the fourth quarter of 2007 and equal to the third quarter 2008, which had 7% more business days -

- Improves core voice gross margin for the third consecutive quarter to 59.6% -

- Expects to deliver double digit revenue growth and to be cash flow positive in 2009

BELLEVUE, Wash., March 25 -- Telanetix, Inc. (OTC BB: TNXI), a leading communications solutions provider offering video telepresence solutions and next generation voice services to all business market segments, reported financial results for its fourth quarter and year ended December 31, 2008.


Doug Johnson, Telanetix's CEO, said, "During 2008, we successfully grew our award winning voice business, significantly reduced costs and transformed our capital structure during the challenging economic environment. Mid-year, we launched our Digital Phone Service (DPS) and quickly partnered with Costco Wholesale. In March 2009, Costco honored DPS as "Service of the Month," and we expanded our channel distribution solidifying another partnership with one of the world's largest sellers of office products. Our voice products continue to perform well in this economy as our customers look for cost saving alternatives."

"In 2009, we will concentrate our resources on growing our high-margin core voice offering, broadening sales channels, opportunistically pursuing video relationships, and maintaining expense controls. Combined with our debt restructuring, we believe we will improve our financial position in 2009. Furthermore in 2009, we expect to deliver double digit annual revenue growth, to continue to improve our gross margin and to benefit from first quarter 2009 cost reductions. As such, during 2009, we expect to reach cash flow positive and to position the company to be able to service our debt obligations during 2010," concluded Johnson.

Financial Highlights for the Fourth Quarter of 2008 Compared to the Third Quarter of 2008

* Revenue was $8.5 million for both periods, even with 7% fewer billing days for the fourth quarter.
- Voice and network revenue was $6.7 million, compared to $6.8 million.

- Video revenue was $1.8 million, compared to $1.7 million.

* Gross profit was $4.2 million, or 49.8% of revenue, compared to $4.5 million, or 53.4% of revenue.

- Voice gross margin was 59.6%, compared to 59.3%.

- Video gross margin was 12.4%, compared to 29.9%, reflecting a shift in revenue mix.

* Total operating expense was $8.9 million including $270,000 for stock and warrant compensation expense and a $2.4 million non-cash charge for impairment of intangibles, compared to $6.5 million including $751,000 in stock and warrant compensation expense.

* Net loss was $6.9 million including, a $1.7 million expense for interest and a $429,000 non-cash charge for fair market valuation of warrants and beneficial conversion feature liabilities, compared to net loss of $619,000 including a non-cash credit of $2.8 million for fair market valuation of warrants and beneficial conversion feature liabilities and a $1.5 million expense for interest. Net loss per share was $0.22, compared $0.06 per share.

* Adjusted EBITDA loss was $959,000, compared to $138,000.

* At December 31, 2008, the cash and cash equivalents balance was $975,000.

Financial Highlights for the Year Ended 2008 Compared to the Year Ended 2007

The results for 2007 include the results of AccessLine following its acquisition in September.

* Revenue was $32.6 million, compared to $12.2 million.

* Net loss was $9.7 million, or $0.36 per share, compared to $10.6 million, or $0.58 per share.

* Net loss applicable to common shareholders was $12.9 million, or $0.48 per share, compared to $19.5 million, or $1.06 per share.

The figures for Adjusted EBITDA are non-GAAP financial measure. Management believes certain non-GAAP measures provide relevant and meaningful measures by which investors can evaluate the business. EBITDA is defined as earnings or loss before interest, income taxes, depreciation and amortization, and the company defines Adjusted EBITDA as EBITDA adjusted for non-cash items including stock-based and warrant compensation, charges related to changes in fair market value of warrant and beneficial conversion feature liabilities. A reconciliation can be found at the end of this release.

Recent Corporate Highlights

* Formed a partnership with one of the world's largest sellers of office products in March 2009 to extend Telanetix's DPS channel distribution.

* Selected as Costco Wholesale's "Service of the Month" for March 2009 for Telanetix's DPS under the AccessLine brand.

* Co-hosted Elliot Gold's "Annual Telespan Teleconferencing Industry Predictions" webconference in January 2009.

* Raised $1.5 million in December 2008 to significantly expand retail marketing, particularly for AccessLine DPS.

* Expanded Telepresence(TM) channel relationships by adding distributor Target Distributing in December 2008 to market and distribute digital presence to over 35,000 resellers and integrators.

Conference Call Information

Management will conduct a conference call at 10:00 am PT/1:00 pm ET on March 25, 2009 to discuss the company's fourth quarter and year end 2008 results. To access the call in the United States, dial 888-680-0878; to dial-in internationally, dial 617-213-4855 and enter passcode 32847015. The call will also be broadcast live over the Internet and will be available for replay for 90 days at A telephone replay will be available two hours after the call through March 27, 2009 by dialing 888-286-8010 for domestic callers and 617-801-6888 for international callers. All parties will need the following replay pass code 78045101.

About Telanetix, Inc.

Telanetix is a leading communications solutions provider offering video telepresence solutions and next generation voice services to all business market segments. Telanetix solutions meet the real-world communications demands of its customers with an powerful, cost effective industry-leading proposition. The company's video telepresence offering, called Digital Presence(TM), creates fully immersive and interactive meeting environments that incorporate voice, video and data from multiple locations into a single environment. The company's Voice offerings, marketing under the "AccessLine" brand, give business customers a flexible, easy to use, cost effective alternative to today's traditional phone service, offering flexible calling solutions, a simpler installation experience, and a greater range of support options than traditional telecom providers. Additional information may be found at the Telanetix corporate website,

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