MILWAUKEE, March 15, 2012 /PRNewswire/ -- ARI Network
Services (OTCBB: ARIS), a leader in creating, marketing, and
supporting software, SaaS, and DaaS solutions that connect
consumers, dealers, distributors, and manufacturers in the outdoor
power, power sports, marine, RV, and white goods markets, reported
financial results today for the second quarter of fiscal year 2012
ended January 31, 2012.
Highlights for the second quarter of fiscal 2012
included:
- Total revenue for the second quarter of fiscal 2012 increased
5.0% to $5.5 million compared to
$5.2 million in the second quarter of
fiscal 2011.
- Recurring revenue for the quarter increased 7.4% to
$4.7 million, or 84.6% of total
revenue, from $4.3 million, or 82.7%
of total revenue, in the second quarter of fiscal 2011; compared to
the first quarter of fiscal 2012, recurring revenue increased 2.5%.
- Operating cash flows for the quarter were $540,000, a 29.9% decline from the second quarter
of last year, resulting from strategic technology investments.
- The Company paid down $287,000 of
debt in the second quarter; whereas for the same period last year
the Company increased its debt obligations by $92,000.
- In the second quarter the Company added 156 new customers and a
new reseller agreement;
- For the six-month period, churn (the measure of customers that
do not renew) improved 23.3% compared to the first half of fiscal
year 2011.
Second quarter 2012 Financials
For the second fiscal quarter ended January 31, 2012, ARI reported revenue of
$5.5 million versus $5.2 million in the comparable quarter of fiscal
2011; an increase of 5.0%. Total operating expenses in the second
quarter were $4.1 million, up 4.7%,
compared to $3.9 million in the
fiscal 2011 second quarter. This increase resulted from investments
made to the Company's internal technology infrastructure and the
roll out of the Company's fiscal 2012 investor relations
initiative. As a result of these investments, operating
income for the second quarter was $170,000 compared to $254,000 in the second quarter of 2011.
The company reported net income of $61,000, or $0.01
per share, in the second quarter of 2012, compared to net income of
$123,000, or $0.02 per share in the second quarter of 2011.
Recurring revenue for the quarter was $4.7 million, or 84.6% of total revenue, versus
$4.3 million, or 82.7% of total
revenue, for the second quarter last year.
Second quarter revenue and operating income were also impacted
by the Company's fiscal 2011 divestiture of its AgChem EDI
business. The Company reported revenue of $114,000 related to this business in the second
quarter of fiscal 2011, which did not repeat this year.
Excluding this revenue, the Company achieved organic total
revenue growth of 7.4% year over year.
EBITDA for the second quarter was $934,000, comparable to EBITDA of $943,000 in the second quarter last year.
Management Discussion
Roy W. Olivier, president and
chief executive officer of ARI, commented, "We are pleased with the
results of the quarter and the first half of the year as we
continue to make strategic investments to better position the
Company for improved operational and financial performance. Our
recurring revenue for the first half of the year increased to 84.6%
of total revenue. Additionally, we reduced our rate of churn by 23%
over this period. These improvements resulted in an increase
in recurring revenue of nearly 7%. As we add new customers,
continue to expand recurring revenue and reduce the number of
existing customers that drop our service, we expect to produce more
consistent revenue growth and profitability."
Mr. Olivier continued, "We are focused on the execution of our
revenue growth strategy. We are updating our products to
allow us to electronically distribute them to a large number of
potential new users in an extremely cost efficient manner.
This will also enable our international growth strategy.
As these new customers come to recognize the operational
value that our products deliver to their businesses, we expect them
to become long-term subscribers. This is a strategy that has been
successfully employed by a number of highly prominent SaaS
companies and we believe that ARI will benefit from this strategy
in its chosen vertical markets."
Darin Janecek, chief financial
officer of ARI, commented, "A critical component of executing on
our growth strategy is the ability to provide our customers with
multiple subscription options, including not only our existing
annual subscription, but variable and usage-based subscriptions as
well. We are investing in our internal technology
infrastructure in order to support these new strategies in an
efficient and scalable manner. We believe this will allow the
Company to generate revenue from prospective dealer users who
previously could not afford the cost of our product. We believe
this strategy will enhance our ability to drive future sustainable
revenue and profitability."
Non-GAAP Measures
EBITDA, a non-GAAP measure, is defined as earnings before
interest, income taxes, depreciation and amortization.
Management believes EBITDA, to be a meaningful indicator of
our performance that provides useful information to investors
regarding our financial condition and results of operations. While
management considers EBITDA to be an important measure of
comparative operating performance, it should be considered in
addition to, but not as a substitute for, net income and other
measures of financial performance reported in accordance with
generally accepted accounting principles (GAAP). Not all companies
calculate EBITDA in the same manner and the measure as presented
may not be comparable to similarly titled measures presented by
other companies. A reconciliation of net income to EBITDA can
be found on the investor relations section of our website for all
periods presented.
Second quarter Conference Call
ARI will conduct a conference call today, Thursday, March 15, 2012 at 4:30 pm EDT to review the financial results for
the second quarter of fiscal year 2012 ended January 31, 2012. Interested parties can access
the conference call by dialing (877) 317-6789 or (412) 317-6789 or
can listen via a live Internet web cast, which is available in the
Investor Relations section of the Company's website at
http://www.arinet.com.
A teleconference replay of the call will be available for three
days at (877) 344-7529 or (412) 317-0088, confirmation #10011378. A
web cast replay will be available in the Investor Relations section
of the Company's website at http://www.arinet.com until the next
earnings conference call.
About ARI
ARI Network Services, Inc. ("ARI" or the "Company") is a leader
in creating, marketing, and supporting software, software as a
service ("SaaS") and data as a service ("DaaS") solutions that
enhance revenue and reduce costs for our customers. Our innovative,
technology-enabled solutions connect the community of consumers,
dealers, distributors, and manufacturers to help our customers
efficiently service and sell more whole goods, parts, garments, and
accessories ("PG&A") worldwide in selected vertical markets
that include power sports, outdoor power equipment, marine, and
white goods. We estimate that approximately 18,000 equipment
dealers, 125 manufacturers, and 150 distributors worldwide leverage
our technology to drive revenue, gain efficiencies and increase
customer satisfaction.
Forward-Looking Statements
Certain statements in this news release contain
"forward-looking statements" regarding future events and our future
results that are subject to the safe harbors created under the
Securities Act of 1933. All statements other than statements
of historical facts are statements that could be deemed to be
forward-looking statements. These statements are based on
current expectations, estimates, forecasts, and projects about the
markets in which we operate and the beliefs and assumptions of our
management. Words such as "expects," "anticipates,"
"targets," "goals," "projects", "intends," "plans," "believes,"
"seeks," "estimates," "endeavors," "strives," "may," or variations
of such words, and similar expressions are intended to identify
such forward-looking statements. Readers are cautioned that these
forward-looking statements are subject to a number of risks,
uncertainties and assumptions that are difficult to predict,
estimate or verify. Therefore, actual results may differ
materially and adversely from those expressed in any
forward-looking statements. Such risks and uncertainties
include those factors described in Part 1A of the Company's annual
report on Form 10-K for fiscal year ended July 31, 2011, filed with the Securities and
Exchange Commission. Readers are cautioned not to place undue
reliance on these forward-looking statements. The forward-looking
statements are made only as of the date hereof, and the Company
undertakes no obligation to publicly release the result of any
revisions to these forward-looking statements. For more
information, please refer to the Company's filings with the
Securities and Exchange Commission.
For more information, contact:
Darin Janecek, Chief Financial
Officer
ARI Network Services
Phone: (414) 973-4300
Investor Contact:
Joe Dorame, Robert Blum, Joe
Diaz
Lytham Partners, LLC
Phone: (602) 889-9700
Email: aris@lythampartners.com
ARI Network
Services, Inc.
|
|
Consolidated
Statements of Income
|
|
(Dollars in
Thousands, Except per Share Data)
|
|
|
|
|
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
|
Three months
ended January 31
|
|
Six months
ended January 31
|
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
Net revenue
|
|
$ 5,501
|
|
$ 5,238
|
|
$ 10,911
|
|
$ 10,562
|
|
Cost of revenue
|
|
1,251
|
|
1,086
|
|
2,387
|
|
2,253
|
|
Gross profit
|
|
4,250
|
|
4,152
|
|
8,524
|
|
8,309
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
Sales and
marketing
|
|
1,118
|
|
1,084
|
|
2,151
|
|
2,226
|
|
Customer operations and
support
|
|
850
|
|
922
|
|
1,696
|
|
1,711
|
|
Software development and
technical support (net of
|
|
|
|
|
|
|
|
|
|
capitalized software
product costs)
|
|
490
|
|
454
|
|
878
|
|
776
|
|
General and
administrative
|
|
1,218
|
|
1,028
|
|
2,326
|
|
2,080
|
|
Depreciation and
amortization (exclusive of
|
|
|
|
|
|
|
|
|
|
amortization of software
product costs included in
|
|
|
|
|
|
|
|
|
|
cost of
revenue)
|
|
404
|
|
410
|
|
807
|
|
817
|
|
Net operating
expenses
|
|
4,080
|
|
3,898
|
|
7,858
|
|
7,610
|
|
Operating income
|
|
170
|
|
254
|
|
666
|
|
699
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
(59)
|
|
(203)
|
|
(121)
|
|
(404)
|
|
Other, net
|
|
11
|
|
6
|
|
17
|
|
6
|
|
Total other income
(expense)
|
|
(48)
|
|
(197)
|
|
(104)
|
|
(398)
|
|
Income before provision for
income tax
|
|
122
|
|
57
|
|
562
|
|
301
|
|
Income tax (expense)
benefit
|
|
(61)
|
|
66
|
|
(229)
|
|
(79)
|
|
Net income
|
|
$
61
|
|
$
123
|
|
$
333
|
|
$
222
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per common
share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$0.01
|
|
$0.02
|
|
$0.04
|
|
$0.03
|
|
Diluted
|
|
$0.01
|
|
$0.02
|
|
$0.04
|
|
$0.03
|
|
|
|
|
|
|
|
|
|
|
ARI Network
Services, Inc.
|
|
Consolidated
Balance Sheets
|
|
(Dollars in
Thousands, Except per Share Data)
|
|
|
|
|
|
(Unaudited)
|
(Audited)
|
|
|
|
January
31
|
|
July
31
|
|
|
2012
|
|
2011
|
|
Current assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
841
|
|
$
1,134
|
|
|
Trade receivables, less
allowance for doubtful accounts of $335
|
|
|
|
|
|
|
and $383 at January 31, 2012 and
July 31, 2011, respectively
|
1,040
|
|
1,179
|
|
|
Work in process
|
166
|
|
169
|
|
|
Prepaid expenses and
other
|
611
|
|
802
|
|
|
Deferred income taxes
|
2,730
|
|
2,693
|
|
|
|
Total current
assets
|
5,388
|
|
5,977
|
|
Equipment and leasehold
improvements:
|
|
|
|
|
|
Computer equipment and software
for internal use
|
2,473
|
|
2,304
|
|
|
Leasehold
improvements
|
584
|
|
558
|
|
|
Furniture and
equipment
|
2,139
|
|
2,000
|
|
|
|
|
|
5,196
|
|
4,862
|
|
|
Less accumulated depreciation
and amortization
|
3,421
|
|
2,988
|
|
|
|
Net equipment and leasehold
improvements
|
1,775
|
|
1,874
|
|
Capitalized software product
costs:
|
|
|
|
|
|
Amounts capitalized for software
product costs
|
17,500
|
|
16,693
|
|
|
Less accumulated
amortization
|
14,563
|
|
13,878
|
|
|
|
Net capitalized software product
costs
|
2,937
|
|
2,815
|
|
Deferred income taxes
|
2,325
|
|
2,607
|
|
Other long term
assets
|
337
|
|
346
|
|
Other intangible
assets
|
1,682
|
|
2,041
|
|
Goodwill
|
5,439
|
|
5,439
|
|
Total assets
|
$
19,883
|
|
$
21,099
|
|
|
|
|
|
|
|
|
ARI Network
Services, Inc.
|
|
Consolidated
Balance Sheets
|
|
(Dollars in
Thousands, Except per Share Data)
|
|
|
(Unaudited)
|
|
(Audited)
|
|
|
|
January
31
|
|
July
31
|
|
|
2012
|
|
2011
|
|
Current liabilities:
|
|
|
|
|
|
Current borrowings on line of
credit
|
$
-
|
|
$
245
|
|
|
Current portion of long-term
debt
|
1,207
|
|
917
|
|
|
Accounts payable
|
375
|
|
561
|
|
|
Deferred revenue
|
4,855
|
|
5,282
|
|
|
Accrued payroll and related
liabilities
|
964
|
|
1,264
|
|
|
Accrued taxes
|
36
|
|
106
|
|
|
Other accrued
liabilities
|
494
|
|
473
|
|
|
Current portion of capital lease
obligations
|
122
|
|
127
|
|
|
|
Total current
liabilities
|
8,053
|
|
8,975
|
|
Non-current
liabilities:
|
|
|
|
|
|
Long-term debt
|
3,376
|
|
4,083
|
|
|
Capital lease
obligations
|
145
|
|
210
|
|
|
|
Total non-current
liabilities
|
3,521
|
|
4,293
|
|
Total liabilities
|
11,574
|
|
13,268
|
|
|
|
|
|
|
|
|
|
Shareholders' equity:
|
|
|
|
|
|
Cumulative preferred stock, par
value $.001 per share,
|
|
|
|
|
|
|
1,000,000 shares authorized; 0
shares issued and outstanding
|
|
|
|
|
|
|
at January 31, 2012 and July 31,
2011, respectively
|
-
|
|
-
|
|
|
Junior preferred stock, par
value $.001 per share, 100,000
|
|
|
|
|
|
|
shares authorized; 0 shares
issued and outstanding
|
|
|
|
|
|
|
at January 31, 2012 and July 31,
2011, respectively
|
-
|
|
-
|
|
|
Common stock, par value $.001
per share, 25,000,000 shares
|
|
|
|
|
|
|
authorized; 8,014,000 and
7,901,774 shares issued and outstanding
|
|
|
|
|
|
|
at January 31, 2012 and July 31,
2011, respectively
|
8
|
|
8
|
|
|
Common stock options
|
1,135
|
|
1,092
|
|
|
Additional paid-in
capital
|
95,913
|
|
95,834
|
|
|
Accumulated deficit
|
(88,731)
|
|
(89,064)
|
|
|
Other accumulated comprehensive
loss
|
(16)
|
|
(39)
|
|
Total shareholders'
equity
|
8,309
|
|
7,831
|
|
Total liabilities and
shareholders' equity
|
$
19,883
|
|
$
21,099
|
|
|
|
|
|
|
|
|
SOURCE ARI Network Services, Inc.