XRS Corporation (formerly Xata Corporation) reported its results for its fiscal 2013 second quarter ended March 31, 2013.
The Company reported net income to common shareholders for the second quarter of fiscal 2013 of $0.1 million, or $0.01 per diluted share, compared to net loss to common shareholders of $2.1 million, or $0.20 per diluted share for the comparable period in fiscal 2012. Total revenue was $14.5 million for the quarter ended March 31, 2013, compared to $15.9 million for the comparable period in fiscal 2012. Further highlights for the quarter include:
• Mobile software revenue growth of 27 percent drove total software revenue to $11.6 million for the second quarter of fiscal 2013.
• Fiscal 2013 second quarter software revenue accounted for approximately 80 percent of total revenue, compared to 74 percent for the same period of fiscal 2012, contributing to a 7 percentage point improvement in overall gross margins.
• The Company signed 98 new customers in the second quarter of fiscal 2013, all of whom selected the Turnpike mobile solution.
• Net income of $0.2 million contributed to free cash flow of $1.2 million for the second quarter of fiscal 2013, compared to negative free cash flow of $2.2 million for the same period in fiscal 2012.
“We are encouraged by our second consecutive quarter of net income,” said Jay Coughlan, chairman and chief executive officer of XRS Corporation. “This performance is consistent with our strategy of shifting our business to a mobile solution. We are continuing to invest in the XRS mobile solution and the growth opportunities in that market, while at the same time maintaining our commitment to provide support to our existing customers.”
During the second quarter of fiscal 2013, the Company continued to invest in the development of the XRS mobile solution. The company capitalized $0.3 million in software development costs associated with the XRS mobile solution in the second quarter of fiscal 2013, representing approximately 9 percent of total research and development costs.
The Company reported non-GAAP earnings of $2.2 million, or $0.08 per diluted share for the second quarter of fiscal 2013, compared to non-GAAP earnings of $0.2 million, or $0.01 per diluted share for the same period in fiscal 2012, an increase of $2.0 million. The increase in non-GAAP earnings is a reflection of improved overall gross margins and a reduced cost structure.
“We had an enthusiastic response to our announcement in March that the new XRS mobile solution for compliance and fleet optimization is available for sale,” said Coughlan. “With the commencement of shipment of XRS mobile subscriptions in April, new and existing customers will be able to experience the benefits of the leading fleet management platforms in a single mobile package.”
For the six months ended March 31, 2013, mobile software revenue increased 23 percent, while total software revenue remained relatively consistent with the comparable period in fiscal 2012. Total revenue was $28.7 million for the six months ended March 31, 2013, compared to $32.5 million for the comparable period in fiscal 2012 as a result of decreased hardware revenue as adoption of the the Turnpike no upfront hardware cost solution continues to increase.