MILWAUKEE, WI --(Marketwired - October 27, 2016) - ARI Network Services, Inc. (
Highlights for the fiscal year 2016 included:
- Revenue increased 17.9% to $47.7 million, which compares with $40.4 million for the same period last year. Recurring revenues increased 20.4% and were $43.9 million, or 92.1% of revenue, compared with $36.5 million, or 90.2% of revenue, for the same period last year.
- Operating income was $3.5 million, compared with $2.3 million for the same period last year, an increase of 53.2%. Net income was $1.7 million, compared with net income of $1.1 million last year. The Company produced earnings per share of $0.10 versus $0.07 in the prior year.
- Adjusted EBITDA, a non-GAAP measure, was $8.5 million or 17.8% of revenue compared with Adjusted EBITDA of $6.6 million or 16.3% of revenue in the same period last year, an increase of 29.3%.
- Cash generated from operations was $7.7 million, compared with $6.3 million for the same period last year, an increase of 22.4%.
Highlights for the fourth quarter of fiscal 2016 included:
- Revenue increased 12% to $12.2 million, which compares with $10.9 million for the same period last year. Recurring revenues were $11.4 million, or 93.1% of revenue, which compares with $9.8 million, or 90.1% of revenue for the same period last year. The quarter marked our tenth consecutive quarter of revenue growth.
- Operating income was $942,000, compared with $686,000 for the same period last year an increase of 37.3%. Net income increased 24.5% to$458,000, or $0.03 per share, compared with $368,000, or $0.02 per share for the same period last year.
- Adjusted EBITDA was $2.2 million, or 18.0% of revenue compared with Adjusted EBITDA of $1.8 million, or 16.5% of revenue in the same period last year, an increase of 22.2%.
- Cash generated from operations was $2.2 million, compared with $1.7 million for the same period last year, an increase of 27.0%.
Fiscal Year 2016 Financials Fiscal 2016 was another record year for ARI. The Company achieved record results in total revenues, operating income, Adjusted EBITDA and cash flow from operations.
Recurring revenues grew faster than overall revenue and increased as a total percentage of revenue. In addition, operating income and Adjusted EBIDTA continued to grow at a pace exceeding our growth in revenue, indicating the leverage in the Company's operating model.
Management Discussion Roy W. Olivier, President and Chief Executive Officer of ARI, commented, "I am proud of the ARI team who have worked hard to consistently deliver improving performance throughout the year. We continue to focus on executing our strategy, and the Company's financial performance in the fourth quarter and fiscal 2016 are representative of our continued ability to deliver outstanding results. In the fourth quarter, I am delighted to report that our annualized churn rates trended down to 13.1%, the lowest rate in the last seven quarters. This gives us further confidence in our ability to grow organic revenues at a faster pace as we head into fiscal 2017."
William Nurthen, Chief Financial Officer of ARI, commented, "In fiscal 2016, we focused on integrating the acquisitions we completed in fiscal 2015. The result was that we were able to expand our margins and improve our cash flow performance. Through the course of fiscal 2016, we generated cash from operations of $7.7 million and reduced our net debt by $4.5 million. We accomplished all this, while at the same time making significant investments in product development and operational scale, which leaves us well positioned to continue to grow and leverage the business in the years to come."
Fiscal 2016 Conference Call ARI will conduct a conference call on Thursday October 27, 2016, at 4:30 p.m. EDT, to review the financial results for the year ended and fiscal quarter ended July 31, 2016. Investors and interested parties can access the conference call by dialing 877.359.3639 or 408.427.3725 and referring to Conference ID: 79342981. The conference call is also being webcast and is available via the Company's investor relations website at investor.arinet.com . A replay of the webcast will be archived on the Company's investor relations website for 60 days.
Non-GAAP Measures
Adjusted EBITDA, a non-GAAP measure, is defined as earnings before interest, income taxes, depreciation and amortization, excluding stock-based compensation. Management believes Adjusted 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 Adjusted 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 Adjusted 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 Adjusted EBITDA can be found in this release and at the Company's investor relations website for all periods presented.
About ARI ARI Network Services, Inc. (ARI) (
Additional Information
- Follow @ARI_Net on Twitter: twitter.com/ARI_Net
- Become a fan of ARI on Facebook: www.facebook.com/ARInetwork
- Join us on G+: plus.google.com/117293073211296447579
- LinkedIn: linkedin.com/company/ari_2
- Read more about ARI: investor.arinet.com/about-us
Images for media use only
Roy W. Olivier Hi Res | Roy W. Olivier Low Res
ARI Logo Hi Res | ARI Logo Low Res
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 most recent annual report on Form 10‐K, as such may be amended or supplemented by subsequent quarterly reports on Form 10-Q, or other reports 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.
| ARI Network Services, Inc. | |||||||||||||||||
| Consolidated Statements of Operations | |||||||||||||||||
| (Dollars in Thousands, Except per Share Data) | |||||||||||||||||
| Three months ended July 31 | Twelve months ended July 31 | ||||||||||||||||
| 2016 | 2015 | 2016 | 2015 | ||||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||
| Net revenue | $ | 12,220 | $ | 10,912 | $ | 47,693 | $ | 40,443 | |||||||||
| Cost of revenue | 2,339 | 1,911 | 8,806 | 7,302 | |||||||||||||
| Gross profit | 9,881 | 9,001 | 38,887 | 33,141 | |||||||||||||
| Operating expenses: | |||||||||||||||||
| Sales and marketing | 2,533 | 2,499 | 10,847 | 10,427 | |||||||||||||
| Customer operations and support | 2,692 | 2,419 | 9,940 | 7,811 | |||||||||||||
| Software development and technical support (net of capitalized software product costs) | 1,298 | 1,153 | 5,093 | 4,199 | |||||||||||||
| General and administrative | 1,809 | 1,731 | 7,056 | 6,634 | |||||||||||||
| Depreciation and amortization (exclusive of amortization of software product costs included in cost of revenue) | 607 | 513 | 2,407 | 1,756 | |||||||||||||
| Net operating expenses | 8,939 | 8,315 | 35,343 | 30,827 | |||||||||||||
| Operating income | 942 | 686 | 3,544 | 2,314 | |||||||||||||
| Other income (expense): | |||||||||||||||||
| Interest expense | (110 | ) | (113 | ) | (460 | ) | (465 | ) | |||||||||
| Other, net | 5 | - | 10 | 33 | |||||||||||||
| Total other income (expense) | (105 | ) | (113 | ) | (450 | ) | (432 | ) | |||||||||
| Income before provision for income tax | 837 | 573 | 3,094 | 1,882 | |||||||||||||
| Income tax expense | (379 | ) | (205 | ) | (1,351 | ) | (811 | ) | |||||||||
| Net income | $ | 458 | $ | 368 | $ | 1,743 | $ | 1,071 | |||||||||
| Weighted average common shares outstanding: | |||||||||||||||||
| Basic | 17,274 | 16,721 | 17,218 | 14,849 | |||||||||||||
| Diluted | 17,792 | 17,117 | 17,710 | 15,279 | |||||||||||||
| Net income per common share: | |||||||||||||||||
| Basic | $ | 0.03 | $ | 0.02 | $ | 0.10 | $ | 0.07 | |||||||||
| Diluted | $ | 0.03 | $ | 0.02 | $ | 0.10 | $ | 0.07 | |||||||||
| ARI Network Services, Inc. | |||||||||||
| Consolidated Balance Sheets | |||||||||||
| (Dollars in Thousands, Except per Share Data) | |||||||||||
| (Unaudited) | (Unaudited) | ||||||||||
| July 31 | July 31 | ||||||||||
| 2016 | 2015 | ||||||||||
| ASSETS | |||||||||||
| Cash and cash equivalents | $ | 5,118 | $ | 2,284 | |||||||
| Trade receivables, less allowance for doubtful accounts of $211 | |||||||||||
| and $372 at July 31, 2016 and 2015, respectively | 1,942 | 2,046 | |||||||||
| Work in process | 132 | 165 | |||||||||
| Prepaid expenses and other | 781 | 820 | |||||||||
| Deferred income taxes | 3,182 | 3,092 | |||||||||
| Total current assets | 11,155 | 8,407 | |||||||||
| Equipment and leasehold improvements: | |||||||||||
| Computer equipment and software for internal use | 3,575 | 2,800 | |||||||||
| Leasehold improvements | 639 | 629 | |||||||||
| Furniture and equipment | 2,544 | 2,981 | |||||||||
| Total equipment and leasehold improvements | 6,758 | 6,410 | |||||||||
| Less accumulated depreciation and amortization | (4,237 | ) | (3,989 | ) | |||||||
| Net equipment and leasehold improvements | 2,521 | 2,421 | |||||||||
| Capitalized software product costs: | |||||||||||
| Amounts capitalized for software product costs | 24,774 | 25,463 | |||||||||
| Less accumulated amortization | (19,743 | ) | (20,337 | ) | |||||||
| Net capitalized software product costs | 5,031 | 5,126 | |||||||||
| Deferred income taxes | 1,112 | 2,398 | |||||||||
| Other intangible assets | 7,890 | 10,116 | |||||||||
| Goodwill | 21,634 | 21,168 | |||||||||
| Total non-current assets | 38,188 | 41,229 | |||||||||
| Total assets | $ | 49,343 | $ | 49,636 | |||||||
| LIABILITIES | |||||||||||
| Current portion of long-term debt | $ | 2,417 | $ | 1,338 | |||||||
| Current portion of contingent liabilities | 331 | 754 | |||||||||
| Accounts payable | 718 | 708 | |||||||||
| Deferred revenue | 6,763 | 7,327 | |||||||||
| Accrued payroll and related liabilities | 1,817 | 1,752 | |||||||||
| Accrued sales, use and income taxes | 297 | 140 | |||||||||
| Other accrued liabilities | 677 | 748 | |||||||||
| Current portion of capital lease obligations | 50 | 174 | |||||||||
| Total current liabilities | 13,070 | 12,941 | |||||||||
| Long-term debt | 6,658 | 9,079 | |||||||||
| Long-term portion of contingent liabilities | 60 | 362 | |||||||||
| Capital lease obligations | 63 | 106 | |||||||||
| Other long-term liabilities | 166 | 199 | |||||||||
| Total non-current liabilities | 6,947 | 9,746 | |||||||||
| Total liabilities | 20,017 | 22,687 | |||||||||
| SHAREHOLDERS' EQUITY | |||||||||||
| Cumulative preferred stock, par value $.001 per share, 1,000,000 shares authorized; 0 shares issued and outstanding at July 31, 2016 and 2015, respectively | - | - | |||||||||
| Junior preferred stock, par value $.001 per share, 100,000 shares authorized; 0 shares issued and outstanding at July 31, 2016 and 2015, respectively | - | - | |||||||||
| Common stock, par value $.001 per share, 25,000,000 shares authorized; 17,310,763 and 17,097,426 shares issued and outstanding at July 31, 2016 and 2015, respectively | 17 | 17 | |||||||||
| Additional paid-in capital | 115,364 | 114,700 | |||||||||
| Accumulated deficit | (86,050 | ) | (87,793 | ) | |||||||
| Other accumulated comprehensive income | (5 | ) | 25 | ||||||||
| Total shareholders' equity | 29,326 | 26,949 | |||||||||
| Total liabilities and shareholders' equity | $ | 49,343 | $ | 49,636 | |||||||
| ARI Network Services, Inc. | |||||||||||
| Consolidated Statements of Cash Flows | |||||||||||
| (Dollars in Thousands) | |||||||||||
| Twelve months ended July 31 | |||||||||||
| 2016 | 2015 | ||||||||||
| (Unaudited) | (Unaudited) | ||||||||||
| Operating activities: | |||||||||||
| Net income | $ | 1,743 | $ | 1,071 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Amortization of software products | 2,108 | 2,023 | |||||||||
| Amortization of deferred loan fees and imputed interest expense | 42 | 77 | |||||||||
| Depreciation and other amortization | 2,407 | 1,756 | |||||||||
| Gain on change in fair value of earn-out receivable and payable | (5 | ) | (28 | ) | |||||||
| Provision for bad debt allowance | 55 | 168 | |||||||||
| Deferred income taxes | 1,196 | 720 | |||||||||
| Stock based compensation | 427 | 446 | |||||||||
| Net change in assets and liabilities: | |||||||||||
| Trade receivables | 74 | 114 | |||||||||
| Work in process, prepaid expenses and other | 68 | 153 | |||||||||
| Other long-term assets | - | (50 | ) | ||||||||
| Accounts payable | (1 | ) | (75 | ) | |||||||
| Deferred revenue | (618 | ) | (584 | ) | |||||||
| Accrued payroll and related liabilities | 167 | 266 | |||||||||
| Accrued taxes and other accrued liabilities | 62 | 256 | |||||||||
| Net cash provided by operating activities | $ | 7,725 | $ | 6,313 | |||||||
| Investing activities: | |||||||||||
| Purchase of equipment, software and leasehold improvements | (1,090 | ) | (692 | ) | |||||||
| Cash received on earn-out from disposition of a component of the business | - | 111 | |||||||||
| Cash paid for contingent liabilities related to acquisitions | (626 | ) | (250 | ) | |||||||
| Cash paid for net assets related to acquisitions | - | (9,700 | ) | ||||||||
| Software development costs capitalized | (1,780 | ) | (1,411 | ) | |||||||
| Net cash used in investing activities | $ | (3,496 | ) | $ | (11,942 | ) | |||||
| Financing activities: | |||||||||||
| Payments on long-term debt | (1,298 | ) | (622 | ) | |||||||
| Borrowings under long-term debt | - | 2,168 | |||||||||
| Payments of capital lease obligations | (176 | ) | (253 | ) | |||||||
| Net proceeds from public equity offering | - | 4,756 | |||||||||
| Proceeds from exercise of common stock options and warrants | 93 | 78 | |||||||||
| Net cash provided by (used in) financing activities | $ | (1,381 | ) | $ | 6,127 | ||||||
| Effect of foreign currency exchange rate changes on cash | (14 | ) | (22 | ) | |||||||
| Net change in cash and cash equivalents | 2,834 | 476 | |||||||||
| Cash and cash equivalents at beginning of period | 2,284 | 1,808 | |||||||||
| Cash and cash equivalents at end of period | $ | 5,118 | $ | 2,284 | |||||||
| Cash paid for interest | $ | 442 | $ | 350 | |||||||
| Cash paid for income taxes | $ | 46 | $ | 64 | |||||||
| Reconciliation of Non-Gaap Measures | ||||||||||||||
| (Unaudited) | ||||||||||||||
| Earnings before interest, taxes, depreciation and amortization (EBITDA) and Adjusted EBITDA for the three and twelve | ||||||||||||||
| months ended July 31, 2016 and 2015, respectively: | ||||||||||||||
| EBITDA: | FY2016 | FY2015 | FY2016 | FY2015 | ||||||||||
| Q4 | Q4 | YTD | YTD | |||||||||||
| Net Income (loss) | $ | 458 | $ | 368 | $ | 1,743 | $ | 1,071 | ||||||
| Interest | 110 | 113 | 460 | 465 | ||||||||||
| Amortization of software products | 537 | 463 | 2,108 | 2,023 | ||||||||||
| Other depreciation and amortization | 607 | 511 | 2,407 | 1,756 | ||||||||||
| Income taxes | 379 | 205 | 1,351 | 811 | ||||||||||
| EBITDA | $ | 2,091 | $ | 1,660 | $ | 8,069 | $ | 6,126 | ||||||
| Stock-based compensation | 111 | 141 | 427 | 446 | ||||||||||
| Adjusted EBITDA | $ | 2,202 | $ | 1,801 | $ | 8,496 | $ | 6,572 | ||||||
Management believes Adjusted EBITDA is helpful in understanding period-over-period operating results separate and apart from non-operating expenses and expenses pertaining to prior period investing activities, particularly given the Company's significant investments in capitalized software and its continuing efforts in completing acquisitions, which typically result in significant depreciation and amortization expense in subsequent periods. The Company uses Adjusted EBITDA as a factor in evaluating potential acquisition targets and analyzing the pro forma impact of the acquisition on the Company. However, Adjusted EBITDA has significant limitations as an analytical tool and should only be used cautiously in addition to, and never as a substitute for, operating income, cash flows or other measures of financial performance prepared in accordance with generally accepted accounting principles and may not necessarily be comparable to similarly titled measures of other companies.
The Company began using EBITDA, adjusted to add back non-cash, stock-based compensation, as a performance measure during the fourth quarter of fiscal 2015. All prior periods have been updated to reflect this presentation.
For media inquiries, contact: Colleen Malloy Director of Marketing ARI 414.973.4323 colleen.malloy@arinet.com Investor inquiries, contact: Theresa DeNicola ARI 414.973.4334 theresa.deNicola@arinet.com
