XRS Corporation (formerly Xata Corporation) reported results for its fiscal 2013 third quarter ended June 30, 2013.
For a third consecutive quarter, the company reported net income to common shareholders. Specifically, for the third quarter of fiscal 2013, net income to common shareholders was $0.2 million, or $0.01 per diluted share, an increase of $6.4 million compared to a fiscal 2012 third quarter net loss to common shareholders of $6.2 million, or $0.58 per diluted share. The third quarter of fiscal 2012 included impairment and business realignment charges of $5.7 million, or $0.54 per diluted share.
Fiscal 2013 third quarter mobile software revenue grew 21 percent. XRS reported total software revenue and total revenue of $11.3 million and $13.4 million, respectively, for the third quarter of fiscal 2013, compared to total software revenue and total revenue of $11.8 million and $15.6 million, respectively, for the comparable period in fiscal 2012. Further highlights for the quarter include:
- Software revenue accounted for approximately 84 percent of total revenue, compared to 76 percent for the same period of fiscal 2012, contributing to continuing improvement in overall gross margins.
- The company signed 69 new mobile customers.
- Net income of $0.2 million contributed to free cash flow of $1.7 million, compared to free cash flow of $29,000 for the same period in fiscal 2012.
“A significant highlight this past quarter was bringing our new XRS mobile solution to market and the high level of interest it has already received,” said Jay Coughlan, XRS Corporation chairman and chief executive officer. “At the same time, we were able to achieve three consecutive quarters of profitability and positive cash flow.”
For the third quarter of fiscal 2013, selling, general and administrative expenses decreased to $5.1 million, compared to $6.5 million for the comparable period in fiscal 2012. The intangible asset impairment and workforce reduction charges recorded in the third quarter of fiscal 2012 continue to drive favorability in the Company’s amortization and personnel expenses.
Research and development expenses were $2.9 million and $4.0 million for the third quarter of fiscal 2013 and 2012, respectively. During the third quarter of fiscal 2013, the Company capitalized $0.1 million in software development costs associated with the Company’s XRS mobile system.
The company reported non-GAAP earnings of $2.1 million, or $0.07 per diluted share for the third quarter of fiscal 2013, compared to a non-GAAP loss of $0.3 million, or $0.03 per diluted share for the same period in fiscal 2012. Fiscal 2012 non-GAAP earnings was impacted by $1.8 million of business realignment charges. The improvement in non-GAAP earnings is a reflection of improved overall gross margins and a reduced cost structure.
“Consistent with our strategy, XRS Corporation will continue to invest in mobile revenue growth while continuing to meet the current needs of our existing customers and working with them to transition to the XRS solution,” said Coughlan.
For the nine months ended June 30, 2013, mobile software revenue increased 22 percent, while total software revenue remained relatively consistent with the comparable period in fiscal 2012. Total revenue was $42.1 million for the nine months ended June 30, 2013, compared to $48.1 million for the comparable period in fiscal 2012 as a result of decreased hardware revenue as customers continue to adopt mobile solutions with no upfront hardware costs.
For the nine months ended June 30, 2013, the Company reported non-GAAP earnings of $6.5 million, or $0.23 per diluted share, compared to $0.4 million, or $0.01 per diluted share, for the comparable period in fiscal 2012, an increase of $6.1 million.
As of June 30, 2013, the company maintained a debt-free balance sheet and reported an increase of $2.6 million in working capital to $12.2 million, compared to $9.6 million in working capital as of September 30, 2012. Free cash flow was $4.5 million for the nine months ended June 30, 2013, compared to negative $2.9 million for the comparable period in fiscal 2012.
