Xata 1Q results: margins rise, net loss shrinks

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Updated Feb 4, 2011

Xata Corporation reported results for its first quarter fiscal year 2011 period ended December 31, 2010. Total revenue was $14.0 million for the quarter ended December 31, 2010, compared to $17.5 million for the same period of fiscal 2010. Net loss to common shareholders was $0.1 million, compared to $1.7 million for the same period in fiscal 2010. Other comments include:

• Software revenue grew 17 percent to $11.3 million for the quarter ended December 31, 2010, compared to $9.7 million for the same period of fiscal 2010.
• The Company acquired 48 new customers in the first quarter of fiscal 2011, bringing its total customer count to approximately 1,500.
• Software revenue grew approximately 5 percent on an organic basis in the first quarter of fiscal 2011, with its flagship Xatanet and Turnpike products growing at approximately 13 percent.
• Fiscal 2011 first quarter software revenue accounted for 81 percent of total revenue, compared to 55 percent for the same period of fiscal 2010.
• System and service revenues were $2.6 million in the first quarter of fiscal 2011 compared to $7.3 million in the first quarter of fiscal 2010.
• Cash flow from operations was $1.5 million for the first quarter of fiscal 2011.

“Continued improvement in our software margins again allowed the company to generate positive non-GAAP earnings and cash flow from operations,” said Mark Ties, chief financial officer of Xata.

The company reported non-GAAP earnings (earnings before interest (net), non-recurring acquisition and financing related costs, taxes, depreciation, amortization, stock based compensation and preferred stock dividends and deemed dividends) of $1.6 million which is flat as compared to the same period of fiscal 2010.

Gross margins were 60 percent for the first quarter of fiscal 2011, compared to 45 percent for the same period of fiscal 2010. This margin increase was driven largely by a favorable revenue mix shifting towards higher margin software revenue. Software margins of 75.5 percent for the first quarter of fiscal 2011 were consistent with the same period of fiscal 2010.

For the first quarter of fiscal 2011 selling, general and administrative costs of $6.1 million remained flat with the first quarter of fiscal 2010. The company’s ability to streamline its operations allowed it to hold these costs flat with fiscal 2010 which only contained one month of the Turnpike operations which were acquired in December 2009.

Research and development costs were $2.2 million and $1.3 million for the first quarter of fiscal 2011 and 2010, respectively. The increase in fiscal 2011 was driven by additional investment in research and development costs associated with new functionality and the impact of the Turnpike acquisition.

As of December 31, 2010, the Company held $14.0 million in cash and cash equivalents and had working capital of $18.0 million, excluding the current portion of long-term obligations and deferred revenue and applicable deferred costs.