Sign in

You're signed outSign in or to get full access.

CE

CFN Enterprises Inc. (CNFN)·Q4 2017 Earnings Summary

Executive Summary

  • Q4 2017 revenue was $6.09M, modestly above Q3’s $6.07M, with gross margin recovering to ~60.5% as the hosting migration completed, consistent with prior guidance to normalize margins by year-end .
  • Full-year 2017 net loss narrowed 37% to $2.42M and Adjusted EBITDA turned positive at $0.37M, reflecting lower G&A and a mix shift toward recurring license fees .
  • Management launched the Journey enterprise platform late-Q3 and began ramping sales in Q4, citing an expanding high-margin pipeline into 2018, supported by a $7MM credit facility secured in January 2018 .
  • No Q4 earnings call transcript or Wall Street consensus estimates were available in S&P Global; comparisons to consensus are not possible (S&P Global consensus unavailable).

What Went Well and What Went Wrong

  • What Went Well

    • License revenue mix and recurring model strengthened: software licensing rose to $19.5M for FY17 and comprised 81% of total revenue; international revenue expanded to 43% .
    • Margin trajectory improved into Q4, consistent with plans to subside redundant hosting costs post-migration, helping gross margin recover from Q3’s compression .
    • Strategic launch of Journey and financing flexibility: Journey went live late-Q3 with new enterprise wins and a strong pipeline; a $7MM facility was secured to fuel growth. “We are confident that Journey will generate a progressively expanding high margin revenue stream…” .

  • What Went Wrong

    • Gross profit pressure in 2017 from hosting migration and higher web hosting fees to support client volumes; R&D and S&M rose with Journey launch, while G&A declined but overall operating loss remained .
    • Liquidity and leverage concerns persisted: cash fell to $0.17M at year-end, liabilities exceeded assets (stockholders’ deficit of $(5.22)M) and covenants required multiple amendments/waivers during 2017 .
    • No call transcript or numeric guidance ranges for Q4; limited visibility for traders on near-term targets, and no consensus estimates available to benchmark EPS/revenue performance (S&P Global consensus unavailable).

Financial Results

MetricQ1 2017Q2 2017Q3 2017Q4 2017
Revenue ($USD Millions)$5.96 $5.99 $6.07 $6.09 (FY $24.10 − 9M $18.02)
Gross Profit ($USD Millions)$4.41 $3.63 $3.32 $3.68 (FY $15.04 − 9M $11.36)
Gross Margin %74.1% (4.41/5.96) 60.6% (3.63/5.99) 54.7% (3.32/6.07) 60.5% (3.68/6.09)
Operating Income (Loss) ($USD Millions)$0.23 $(0.34) $(0.39) $(0.60) (FY $(1.10) − 9M $(0.50))
EBIT Margin %3.8% (0.23/5.96) −5.7% (−0.34/5.99) −6.4% (−0.39/6.07) −9.9% (−0.60/6.09)
Net Income (Loss) ($USD Millions)$(0.06) $(0.62) $(0.70) $(1.06) (FY $(2.42) − 9M $(1.37))
Net Income Margin %−0.9% (−0.06/5.96) −10.3% (−0.62/5.99) −11.5% (−0.70/6.07) −17.4% (−1.06/6.09)
EPS ($USD)$(0.00) $(0.01) $(0.01) (Basic/Diluted) n/a (quarterly EPS not disclosed; FY $(0.04))

Segment breakdown (reported items):

SegmentQ3 2017 ($USD Millions)FY 2017 ($USD Millions)
License$4.83 $19.50
Usage$1.00 $3.70 (software overage fees)
Other$0.24 n/a (not explicitly disclosed)

KPIs:

KPIQ1 2017Q2 2017FY 2017
Recurring license fees as % of revenue83% 82% 81%
International revenue share41% 42% 43%
Total customers YoY change+9% +5% +6%
Avg license revenue per customer YoY change+3% +1% +1%
Customer concentrationNo customer >5% in each period

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Gross Margin trajectoryQ4 2017“Expect gross margins to return to historical levels by Q4 as redundant migration costs subside” Gross margin recovered to ~60.5% (from 54.7% in Q3) Maintained (achieved recovery)
Journey revenue ramp2H 2018Journey launch late-Q3 with Q4 ramp planned “Journey will generate a progressively expanding high margin revenue stream… more prominent in the second half of 2018” Maintained (directional)
Financing capacity2018Exploring expanded borrowing capabilities Secured $7MM credit facility in Jan 2018 to fuel Journey expansion Raised

Note: No numeric guidance ranges for revenue/EPS/OpEx/OI&E/tax rate/dividends were provided in Q4/FY materials .

Earnings Call Themes & Trends

No Q4 earnings call transcript was found; themes are drawn from Q1/Q2 press releases and FY/Q4 8-K.

TopicPrevious Mentions (Q1 & Q2 2017)Current Period (Q4/FY 2017)Trend
Enterprise platform launch (Journey)Completed development; launch targeted Q3; increased R&D/marketing to support Launched late-Q3; began ramping marketing in Q4; new customers added; strong pipeline into 2018 Positive execution, early traction
Hosting migration & costsRedundant hosting expenditures compressed margins in Q2; expected normalization by Q4 Gross margin recovered in Q4 vs Q3 as migration effects subsided Improving
International expansion41–42% revenue outside U.S. in Q1/Q2 43% of revenue outside U.S. for FY17 Gradual increase
Liquidity/LeverageBorrowings under SaaS Capital; planned covenant flexibility Year-end cash $0.17M; stockholders’ deficit $(5.22)M; additional credit facility secured Still a risk; financing flexibility added
Legal/regulatoryLitigation settlement booked in 2016; G&A declines YoY in 2017 No new legal developments in Q4 materials; G&A down 11.9% in FY17 Stable/improving G&A baseline

Management Commentary

  • “We made important strides in 2017 to position the Company to achieve sustainable high margin revenue growth from our dynamic Journey platform beginning in 2018… We are confident that revenue derived from Journey, coupled with our existing SaaS revenue base, will enable Accelerize to achieve a progressive improvement in financial performance beginning in Q2 2018.” — Brian Ross, CEO .
  • “We believe Journey unlocks a tremendous opportunity… with the capacity for an increase in gross margin… we are confident that Journey will generate a progressively expanding high margin revenue stream that will become more prominent in the second half of 2018.” — Andy Mazzarella, CFO .
  • “We expect gross margins to return to historical levels by Q4 of this year as redundant migration costs subside and recurring licensing revenues continue to expand.” — Andy Mazzarella, CFO (Q2 release) .
  • “CAKE is established as the premier software in the performance-based marketing space… poised to further our reach into a much larger market opportunity with brands and advertisers.” — Brian Ross (Q1 release) .

Q&A Highlights

  • No Q4 2017 earnings call transcript available; no Q&A or live guidance clarifications were identified via our document search [List: earnings-call-transcript=none, 2017–2018].

Estimates Context

  • Wall Street consensus EPS and revenue estimates via S&P Global were unavailable; we attempted retrieval but could not obtain data, so comparisons to consensus for Q4 2017 cannot be provided (S&P Global consensus unavailable).

Key Takeaways for Investors

  • Q4 revenue and gross margin stabilization indicate the hosting migration headwind has largely passed, aligning with prior margin normalization guidance; watch for sustained mid-60s gross margin as Journey scales .
  • Journey is the core 2018–2019 growth vector; early signs (new enterprise customers, pipeline) support a mix shift to higher-margin revenue, but sales cycles are longer—expect a gradual ramp rather than a step change .
  • Balance sheet leverage and liquidity remain the principal risk: year-end cash of $0.17M, significant debt, and stockholders’ deficit necessitate careful monitoring of covenant compliance and capital access, despite the new $7MM facility .
  • Recurring license revenue strength (81% FY mix) and reduced G&A underpin improved operating leverage; execution in S&M and R&D should translate to expanding margins if Journey contributes as planned .
  • Absent consensus estimates and a call transcript, near-term trading catalysts center on Journey customer wins, margin trajectory, and financing updates; consider position sizing accordingly until visibility improves .

Supporting Documents and Data:

  • Q4/FY 2017 8-K press release and financials
  • Q3 2017 Form 10-Q (financials, MD&A, liquidity and loan amendments)
  • Q2 2017 8-K press release and financials
  • Q1 2017 8-K press release and financials