MAM Software Reports Fiscal 2nd Quarter Results

Michael Jamieson, MAM’s President and Chief Executive Officer commented, “MAM delivered solid first half results in a positional year for us. Our continued progress towards completion of our 2017 development projects coupled with recent commercial market wins not only affirms the strength of our brand and demonstrates the strong market reception to our product investments, but also provides us with the confidence to reaffirm our fiscal 2017 full year guidance.”

“We showcased our new VAST Online product at the Goodyear Dealer Conference at the end of January and we were encouraged by the response.  We gathered great feedback about our product and we received deposits from more than 50 dealers, representing about 150 locations or 25% of the dealer network that use the current Goodyear system. The deposit allows the dealers to join the queue and plan their implementation.”

Second Quarter Highlights:

  • Net revenues of $7.4 million were down 6.6% contrast to $7.9 million for the same period last year. On a constant currency basis, revenues were up 6.8% over the same period last year.
  • Recurring revenues were 85.3% of total revenues contrast to 78.9% of total revenues for the same period last year.
  • Total Software as a Service (SaaS) revenues raised 23.3% year-over-year and 4.2% sequentially.
  • Operating income was $402,000, or 5.4% of revenues, as contrast to $758,000, or 9.6% of revenues, for the same period last year. Changes in foreign currency exchange rates negatively influenced operating income by $214,000 as contrast to the same period last year.
  • Adjusted EBITDA* was $642,000, or 8.7% of revenues, as contrast to $1.3 million, or 15.9% of revenues, for the same period last year. Changes in foreign currency exchange rates negatively influenced Adjusted EBITDA* by $230,000 as contrast to the same period last year.
  • Net income was $250,000 as contrast to $738,000 in the same period last year. Changes in foreign currency exchange rates negatively influenced net income by $198,000, or $0.02 per basic and diluted share, as contrast to the same period last year.

Second Quarter Financial Results:

Net revenues were $7.4 million for the quarter ended December 31, 2016, as contrast to $7.9 million for the same period last year, a decrease of $519,000, or 6.6%.

  • On a constant currency basis, revenue was up 6.8% over the same period last year.
  • Recurring revenue for the quarter was $6.3 million, or 85.3% of total revenue, a boost of $62,000, or 1%, over $6.2 million, or 78.9% of total revenue, for the second quarter last year. Sequentially, recurring revenue reduced $118,000, or 1.8%, contrast to $6.4 million in the fiscal first quarter of 2017. On a constant currency basis, recurring revenue raised $1.0 million, or 16.0%, as contrast to the second quarter last year, and raised by $127,000, or 1.8%, sequentially.
    • Total Software as a Service (SaaS) revenue for the quarter was $2.1 million, a boost of $394,000, or 23.3%, year-over-year and a boost of $85,000, or 4.2%, sequentially when contrast to the fiscal first quarter of 2017. On a constant currency basis, SaaS revenue raised $740,000, or 43.7%, as contrast to the second quarter last year, and raised by $184,000, or 8.2%, sequentially. The increase in the SaaS revenue was mainly attributable to a 20.8% increase in Autowork Online (SaaS) revenue for the quarter to $1.3 million, and a 27.5% increase in Autopart Online (SaaS) revenue for the quarter to $806,000.
    • Total Data as a Service (DaaS) revenue for the quarter was $2.1 million, a decrease of $298,000, or 12.3%, year over year, and $125,000, or 5.5%, sequentially when contrast to the fiscal first quarter of 2017. On a constant currency basis, DaaS revenue raised $30,000, or 1.2%, as contrast to the same period last year, and reduced $51,000, or 2.0%, sequentially.

Gross profit for the quarter was $3.9 million, or 52.7% of total revenue, a decrease of $373,000 contrast to $4.3 million, or 53.9% of total revenue, for the same period last year. Changes in foreign currency exchange rates negatively influenced gross profit by $568,000 as contrast to the same period last year.

Operating expenses for the quarter reduced by $17,000 to $3.49 million, a decrease of 0.5% as contrast to the $3.50 million for the same period last year. The decrease was mainly the result of changes in foreign currency exchange rates, partially offset by higher general and administrative expenses because of increases in annual incentive plans and higher tradeshow costs.

Operating income for the quarter reduced by $356,000 or 46.9%, to $402,000, as contrast to $758,000, for the same period last year. Changes in foreign currency exchange rates negatively influenced operating income by $214,000 as contrast to the same period last year.

Other expense for the quarter of $122,000 was the result of raised interest expense on borrowings used to fund a public tender offer accomplished in the second quarter of fiscal 2016 and compares to other income of $173,000 for the same period last year. Other income in the fiscal second quarter of 2016 included a $217,000 gain from the settlement of liabilities with certain vendors and net interest expense of $44,000.

Net income for the quarter reduced by $488,000, or 66.1%, to $250,000, or $0.02 per basic and diluted share, contrast to net income of $738,000, or $0.06 per basic and diluted share, for the same period last year. Changes in foreign currency exchange rates negatively influenced net income by $198,000, or $0.02 per basic and diluted share, as contrast to the same period last year.

Year-to-Date Highlights

  • Revenues were $15.4 million, a decrease of 2.8% contrast to $15.9 million in the same period last year. On a constant currency basis, revenues would have been $17.4 million.
  • Recurring revenues raised 1.2% to $12.7 million contrast to $12.6 million in the same period last year. Recurring revenues were 82.3% of total revenues contrast to 79% in the same period last year.
  • Total Software as a Service (SaaS) revenue raised 26.1% to $4.1 million contrast to $3.2 million in the same period last year.
  • Operating income was $1.8 million, or 11.5% of revenues, as contrast to $1.8 million, or 11.2% of revenues, for the same period last year. Changes in foreign currency exchange rates negatively influenced operating income by $481,000, as contrast to the same period last year.
  • Adjusted EBITDA* was $2.2 million, or 14.4% of revenues, as contrast to $2.5 million, or 15.6% of revenues, for the same period last year. Changes in foreign currency exchange rates negatively influenced Adjusted EBITDA* by $511,000, as contrast to the same period last year.
  • Net income was $1.5 million as contrast to $1.6 million in the same period last year. Changes in foreign currency exchange rates negatively influenced net income by $426,000, or $0.04 per basic and diluted share, as contrast to the same period last year.

Year-to-Date Financial Results:

Revenues were $15.4 million for the six months ended December 31, 2016 as contrast to $15.9 million for the same period last year, a decrease of $452,000 or 2.8%.

  • On a constant currency basis, revenues were up 9.6% over the same period last year.
  • Recurring revenues for the six months were $12.7 million, or 82% of total revenues, a boost of $147,000 or 1.2%, over $12.6 million, or 79% of total revenues for the same period last year. On a constant currency basis, recurring revenue raised $1.9 million, or 15.1%, as contrast to the same period last year.
    • Total Software as a Service (SaaS) revenues for the six months were $4.1 million, a boost of $846,000, or 26%, year-over-year. On a constant currency basis, SaaS revenue raised $1.5 million, or 45.6%, as contrast to the same period last year. The increase in the SaaS revenues was mainly attributable to a 22.5% increase in Autowork Online (SaaS) revenues for the six months to $2.5 million, and a 32.3% increase in Autopart Online (SaaS) revenues for the six months to $1.6 million.
    • Total Data as a Service (DaaS) revenues for the six months were $4.4 million, a decrease of $552,000, or 11%, year over year. On a constant currency basis, DaaS revenue raised $70,000, or 1.4%, as contrast to the same period last year.

Gross profit for the six months ended December 31, 2016 was $8.6 million, or 55.9% of total revenue, a boost of $90,000 contrast to $8.5 million, or 53.7% of total revenue, for the same period last year. Changes in foreign currency exchange rates negatively influenced gross profit by $1.1 million, as contrast to the same period last year. The increase in gross profit margins was mainly the result of a boost in higher margin nonrecurring revenues mainly related to Autopart software license deals and raised ALLDATA user counts, pricing, and customization, partially offset by increases in professional services headcount to support growth.

Operating expenses for the six months ended December 31, 2016 raised by $103,000 to $6.9 million, a boost of 1.5% as contrast to the $6.8 million for the same period last year. The increase was mainly the result of increases in R&D expenses mainly to support new client development, annual incentive plans, allowance for bad debts, and changes within the accounting and financing organization, partially offset by changes in foreign currency exchange rates and a decrease in sales and marketing expenses related to lower headcount.

Operating income for the six months ended December 31, 2016 reduced by $13,000, or 0.7%, to $1.77 million as contrast to $1.78 million for the same period last year. Changes in foreign currency exchange rates negatively influenced operating income by $481,000, as contrast to the same period last year.

Other expense for the six months ended December 31, 2016 of $242,000 was the result of raised interest expense on borrowings used to fund a public tender offer accomplished in the second quarter of fiscal 2016 and compares to other income of $163,000 for the same period last year. Other income for the six months ended December 31, 2015 included a $217,000 gain from the settlement of liabilities with certain vendors and net interest expense of $54,000.

Net income for the six months ended December 31, 2016 reduced by $105,000, or 6.7%, to $1.5 million, or $0.12 per basic and diluted share, contrast to net income of $1.6 million, or $0.12 per basic and diluted share, for the same period last year. Changes in foreign currency exchange rates negatively influenced net income by $426,000, or $0.04 per basic and diluted share, as contrast to the same period last year.

Balance Sheet and Other Financial Highlights

  • The Company ended the quarter with $632,000 in cash after capital expenditures and capitalized software development costs of $1.6 million.
  • As of December 31, 2016, the Company had $8.9 million of debt outstanding under its $12 million credit facility.
  • Stockholders’ equity raised from $5.0 million at June 30, 2016, or 18.6%, to $6.0 million at December 31, 2016.
  • As of December 31, 2016, there were 12.2 million shares of common stock outstanding.

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