By @NY Staff
Content aggregation firm ScreamingMedia Inc.
said it took a $12 million restructuring charge in the third quarter directly related to lease obligation write-offs and staff cuts that affected approximately 70 employees.
The New York-based company said the cost-cutting moves were necessary after third quarter net losses reached $16.7 million (42 cents per share), almost 80 percent wider than the $9.4 million it posted a year ago.
With revenues slipping to $9.7 million, down from $11.7 million in the previous quarter, ScreamingMedia said it would focus on reducing operating expenses and minimize its burn rate, which reached $5.2 million in the third quarter.
“Despite the current economic environment, ScreamingMedia continues to execute on its goals of signing higher contract value deals with enterprise customers, reducing customer attrition, dramatically reducing its operating expenses, taking steps towards reducing its EBITDA loss and minimizing its cash burn,” the company said.
During the most recent quarter, the company inked content syndication deals with a slew of business clients, including high-profile partners like Tribune Media Services, Comcast, Citrix, British Petroleum, Nestle, Sprint Canada, Anheuser Busch and WR Hambrecht.
As it continues to integrate the technology of Stockpoint, a company it acquired in July, ScreamingMedia said its operating expenses, excluding items, reached $10.3 million, down from $14.1 million in the same year-ago quarter.
Approximately 90 percent of the $12 million restructuring charge was attributed to the write-off of remaining lease obligations and warrants associated with a portion of the company’s Manhattan headquarters and satellite offices in San Francisco, UK and Miami.
It also included the write-off of certain other fixed assets rendered obsolete or impaired.
The company, which now employs approximately 220, said it had cash, cash equivalents, and marketable securities of approximately $75.8 million at the end of the quarter.
David Obstler, ScreamingMedia’s CFO, said “significant wins” in October helped the company secure $2.7 million in new contract value, representing almost 50 percent of the $6 million in contract value added in all of the third quarter
In the third quarter, ScreamingMedia said it signed up 78 new customers, 39 upsells and 154 renewals for a total contract value of $8.5 million. The average contract value for all new deals in the third quarter increased to $68,000 with an average contract term of 1.6 years from $60,000 per new deal in the second quarter.
At the end of the quarter, ScreamingMedia had 909 customers, $57 million in total contract value and total backlog or unrecognized revenue of $36.4 million.