ARI Network Services Announces Fiscal 2015 First Quarter Results

MILWAUKEE, Dec 11, 2014 -- ARI Network Services, Inc.,  an award-winning provider of data-driven software tools and marketing services that help dealers, distributors and manufacturers Sell More Stuff!™, reported financial results today for its fiscal 2015 first quarter ended October 31, 2014.

Highlights for the fiscal first quarter included:

• The company completed its acquisition of Tire Company Solutions, LLC ("TCS Technologies") on September 30, 2014, further consolidating its position as the leader in eCommerce-enabled websites and digital marketing services in the automotive tire and wheel industry.
• Total revenues for the first quarter of fiscal year 2015 were $9.1 million, which compares with $8.2 million for the same period last year and $8.5 million in 4Q14.
• Operating income was $0.3 million for the first quarter of fiscal 2015, compared with operating income of $0.2 million for the same period last year and $0.4 million in 4Q14.
• Net income was $104,000 or $0.01 per diluted share for the first quarter of fiscal 2015, compared with net income of $25,000 or $0.00 per share for the same period last year and $174,000 or $0.01 per share in 4Q14.
• EBITDA, a non-GAAP measure, adjusted for non-cash charges, was $1.2 million or 13.2% of revenue in the first quarter of fiscal year 2015. This compares with EBITDA of $1.0 million or 11.8% of revenue in the same period last year and $1.4 million or 16.1% of revenue in 4Q14.
• Cash generated from operations was $1.6 million for the first quarter of fiscal 2015, compared with ($26,000) for the same period last year and $1.3 million in 4Q14.

Fiscal Year 2015 First Quarter Financials

ARI experienced 11.7% revenue growth as it reported revenues of $9.1 million for the first quarter of fiscal year 2015 compared with $8.2 million for the same period last year. Recurring revenues for the first quarter of fiscal year 2015 were $8.2 million versus $7.7 million in the same period last year. Recurring revenue comprised 89.5% of total revenue for the first quarter versus 94.7% for the same period last year.

Gross margin for the first quarter of fiscal year 2015 was 80.8% versus 80.9% last year.

Operating income was $283,000 for the first quarter of fiscal year 2015, compared with operating income of $167,000 for the same period last year, a 69.5% increase. The increase in results from operations is attributed to cost efficiencies and reductions made in fiscal year 2014, partially offset by incremental costs in the quarter related to the acquisition of TCS Technologies.

The company reported net income of $104,000 or $0.01 per diluted share for the quarter, compared with a net income of $25,000 or $0.00 per share last year.

Management Discussion

Roy W. Olivier, President and Chief Executive Officer of ARI, commented, "With our first quarter results, we are off to a great start for our fiscal year. We closed the TCS Technologies acquisition on September 30, 2014, and with the incremental revenue they contributed for the quarter, ARI revenue topped $9.0 million in quarterly revenue for the first time. In addition to the revenue growth, we were able to improve upon both our profit and EBITDA performance from the prior year."

William Nurthen, Chief Financial Officer, commented, "Our profit and EBITDA performance in the quarter was strong given we experienced more than $200,000 in charges related to the TCS Technologies acquisition in the quarter. In addition, we posted our largest quarterly cash flow from operations performance ever at $1.6 million. We are pacing well ahead of last year as this result represents more cash flow than we generated in the first three quarters of fiscal 2014."

About ARI

ARI Network Services, Inc. offers an award-winning suite of data-driven software tools and marketing services to help dealers, equipment manufacturers and distributors in selected vertical markets Sell More Stuff!™ – online and in-store. Our innovative products are powered by a proprietary data repository of enriched original equipment and aftermarket electronic content spanning more than 17 million active part and accessory SKUs and 750,000 equipment models. Business is complicated, but we believe our customers' technology tools don't have to be. We remove the complexity of selling and servicing new and used vehicle inventory, parts, garments and accessories (PG&A) for customers in the automotive tire and wheel aftermarket, power sports, outdoor power equipment, marine, home medical equipment, recreational vehicles and appliance industries. More than 23,500 equipment dealers, 195 distributors and 3,360 brands worldwide leverage our web and eCatalog platforms to Sell More Stuff!™ 

Briggs and Stratton Corporation Selects ARI's PartStream®

MILWAUKEE -- Nov 18, 2014 -- ARI Network Services, Inc. announced today that Briggs and Stratton Corporation has launched ARI's PartStream® illustrated parts look-up on its consumer-facing website at BriggsandStratton.com.

"We strive to continue to improve the user experience on our website. We actively solicit and review user feedback and in doing so, uncovered that our parts lookup could use improvement," said Dave Cluka, Director of Customer Experience at Briggs and Stratton. "We believe that PartStream® can not only provide a better user experience, but also reduce the burden on our team to maintain the previous, custom-built parts lookup tool."

The launch of PartStream® builds upon a 15-year relationship with the manufacturer. Briggs and Stratton also uses ARI's B2B electronic parts lookup application, PartSmart Web®, as well as ARI's data publishing tool, PartSmart Data Manager®. In addition, ARI provides Briggs and Stratton's dealer network with access to parts catalogs for the manufacturer's complete brand portfolio through PartSmart®, ARI's award-winning electronic parts lookup tool.

"We welcome the opportunity to extend our relationship with Briggs and Stratton to provide consumers with a better online parts lookup experience," said Roy W. Olivier, President and CEO of ARI. "Identifying and ordering the right part online can be frustrating, even for the most technically-savvy consumer. We're confident that PartStream^® will reduce frustration, improve customer satisfaction and drive more online parts sales."

PartStream® ARI's illustrated parts lookup solution, can easily be added to any existing website to fuel eCommerce sales. Part numbers and descriptions are automatically indexed for search engine optimization, making it easy for buyers to find and purchase parts online.

ARI Network Services Announces Fiscal 2014 Results

MILWAUKEE -- October 28 -- ARI Network Services, an award-winning provider of data-driven software tools and marketing services that help dealers, distributors and manufacturers Sell More Stuff!™, reported financial results today for its fiscal fourth quarter and fiscal year ended July 31, 2014.

Highlights for the fiscal year 2014 included:

The company reported record revenues of $33.0 million, a 9.7% increase over fiscal year 2013.

Recurring revenues for fiscal 2014 were $30.9 million, a 14.4% increase over fiscal year 2013. As a percentage of total revenues, recurring revenues were 93.6% in fiscal year 2014 versus 89.7% in fiscal year 2013.

EBITDA, a non-GAAP measure, adjusted for non-cash charges, was $3.9 million, or 11.7% of revenue in fiscal year 2014, an increase of 10.4% from fiscal year 2013.

Highlights for the fourth quarter of fiscal year 2014 included:

Revenues for the fourth quarter were $8.5 million, an increase of 4.5% over 3Q14 and 1.1% over the same period last year.

Gross margin was 81.6% in the fourth quarter compared with 80.9% in 3Q14 and 80.8% in the same period last year.

EBITDA, a non-GAAP measure, adjusted for non-cash charges, was $1.4 million or 16.1% of revenue in the fourth quarter. This compares with EBITDA of $1.3 million or 15.4% of revenue in 3Q14 and $1.5 million or 17.7% of revenue in the same period last year.

Cash generated from operations was $1.3 million for the fourth quarter of fiscal 2014, compared with $1.0 million in 3Q14 and $0.9 million for the same period last year.

Fiscal Year 2014 Financials

Fiscal 2014 was a record year for ARI, with revenues of more than $33 million. Total revenue increased 9.7% or $2.9 million during fiscal 2014. Recurring revenues were $30.9 million, a $3.9 million increase over the prior year. The increase in revenue and recurring revenue was primarily driven by growth in the company's website solution offerings, which in fiscal 2014 accounted for 51% of the firm's revenues.

Gross margin for fiscal year 2014 was 80.7% versus 78.0% last year, with the increase being largely attributable to the growth in the firm's recurring revenues which have a higher gross profit.

The company recorded an operating profit of $0.4 million in fiscal 2014 versus an operating loss of $0.2 million in fiscal 2013. Net loss for the fiscal year was $102,000 or ($0.01) per share, compared with a net loss of $753,000 or ($0.08) per share last year.

Management Discussion

Roy W. Olivier, President and Chief Executive Officer of ARI, commented, "Fiscal 2014 was a year of growth and accomplishments for ARI. We recorded the highest revenue in company history and were able to grow EBITDA 10% versus the prior year. In the early part of our fiscal year, we acquired DUO Web Solutions and through that were able to re-launch our Digital Marketing Services offering, which we expect to be one of our key drivers of organic growth in fiscal 2015.

In December of 2013, we successfully re-listed on the Nasdaq Capital Market and recently were added to the Russell Microcap Index. Throughout the year, we were also able to enhance our product offerings and expand our customer base in our primary growth verticals of automotive tire and wheel and home medical equipment, which we entered during fiscal 2013."

Mr. Olivier continued, "Subsequent to the end of our fiscal year, we completed the acquisition of TCS Technologies. This acquisition further solidifies our leadership position in the automotive tire and wheel industry and expands our product offerings. We are excited about the growth prospects of this acquisition as we look ahead to fiscal 2015."

William Nurthen, Chief Financial Officer of ARI, commented, "The company experienced marked improvement in profitability and cash flow in the back half of fiscal 2014. EBITDA for the third and fourth quarters of fiscal 2014 were 15.4% and 16.1%, respectively, and the fourth quarter performance was inclusive of more than $100,000 in charges related to the company's acquisition of TCS. In addition, cash flow from operations for the last two quarters combined was $2.4 million which was the best six-month performance in the company's history."

ARI and Fidelitone to Deliver Unified eCommerce and Supply Chain Solutions

MILWAUKEE, Aug 07 -- ARI Network Services, Inc. has partnered with Fidelitone Logistics to offer manufacturers and distributors end-to-end eCommerce technology and supply chain management, lowering the barrier for entry into B2C eCommerce sales for enterprises traditionally focused on a B2B distribution model. 

"This solution marries ARI's SaaS and DaaS technologies with Fidelitone's industry-leading supply chain capabilities to deliver robust solutions to handle every step of product fulfillment from the online order to pick, pack and shipping," said ARI President and CEO, Roy W. Olivier.

"Our combined capabilities will help our customers who are set up for B2B distribution to quickly move to a B2C model without extensive changes to their infrastructure. Through our combined capabilities, we can quickly provide a turnkey B2C solution that will compete with any current online retailers."

ARI and Fidelitone Logistics offer true full-service parts and product distribution management solutions, which include:

• ·         Product data conversion and optimization
• ·         eCommerce website development
• ·         Forecasting and inventory management
• ·         Vendor management
• ·         Procurement
• ·         Order management
• ·         Valued-added warehousing
• ·         Fulfillment

"The combination of a powerful eCommerce website matched with a robust inventory forecasting model will provide laser focus to the complexities of parts and product management," said Fidelitone Logistics Vice President of Business Development, John Bauschka. "Add in the operational benefits of working with an experienced supply chain management company to bring the execution of the plan together, and you have a compelling solution."

ARI To Provide Websites to Kymco USA's Dealers

MILWAUKEE – February 11, -- ARI Network Services announced today that it has signed an agreement with KYMCO USA to offer the manufacturer's more than 620 independent dealers in the U.S. KYMCO USA-branded websites.

Harnessing the power of ARI's award-winning dealer website platform, the branded sites will give authorized KYMCO USA dealers exclusive features including factory promotions, pre-loaded inventory data and access to KYMCO USA's image library. In addition, the websites will be included in KYMCO USA's dealer locator.

"We look forward to working with KYMCO USA and their dealers to help drive more traffic, leads and sales not only to their websites, but to dealers' brick and mortar stores," said Roy W. Olivier, ARI President and CEO. "With the majority of consumers researching products online, it's more important than ever for dealers to not only have an online presence, but to make sure that consumers visiting OEM websites can find their dealership."

Each site also includes used equipment pages, which dealers can utilize to load their entire inventory of pre-owned vehicles. Plus, the website enables dealers to automatically feed their inventory data to third-party classified sites, including CycleTrader.com, Motorcycleinventory.com, ATV.com, Motorcycle.com, Chopper Exchange and CarSoup.

"It's very exciting to be partnering with ARI and to have the opportunity to offer our dealers KYMCO USA-branded websites," said Rick Pawelka, KYMCO USA Director of Marketing. "As an emerging brand, it's important that our dealers follow the coordinated national advertising programs developed by KYMCO USA's advertising department. Having a brand-specific, online presence that reflects the image and marketing direction created by KYMCO USA is just another step in the right direction."

About KYMCO USA

KYMCO is the largest scooter manufacturer in Taiwan, and currently exports to 86 countries worldwide. The company's partner in the United States is KYMCO USA, with headquarters, marketing and distribution centered in Spartanburg, South Carolina. 

KYMCO USA is dedicated to building the brand's reputation and market share through superior value, frequent new product introductions, strategic industry partnerships, and excellence in dealer network support. KYMCO USA has a reputation and expertise gained through more than 30 years in the U.S. power sports industry. An ever-expanding dealer network currently serves more than 600 U.S. locations.

About ARI

ARI Network Services, Inc. (ARI) ARIS -0.90%  offers award-winning eCommerce and eCatalog platforms, lead management tools and digital marketing services that help dealers, equipment manufacturers and distributors in selected vertical markets Sell More Stuff!(TM) - online and in-store. Our innovative products are powered by a proprietary data repository of enriched original equipment and aftermarket content that spans more than 10.5 million active part and accessory SKUs, 469,000 models and $1.7 billion in retail product value. 

Business is complicated, but we believe our customers' technology tools don't have to be. We remove the complexity of selling and servicing new and used vehicle inventory, parts, garments and accessories (PG&A) for customers in the automotive tire and wheel aftermarket, power sports, outdoor power equipment, marine, recreational vehicles and white goods industries. More than 22,000 equipment dealers, 195 distributors and 140 manufacturers worldwide leverage our web and eCatalog platforms to Sell More Stuff!(TM).

ARI Network Services Announces Fiscal 2013 Results

ARI NETWORK SERVICES ANNOUNCES FISCAL 2013 RESULTS

MILWAUKEE, Oct. 29 -- ARI Network Services (ARIS), a leading provider of website, software, and data solutions that help dealers, distributors, and manufacturers Sell More Stuff!(TM), reported financial results today for its fiscal fourth quarter and fiscal year ended July 31, 2013.

Highlights For The Fiscal Fourth Quarter Included:

·         Revenues for the fourth quarter of fiscal year 2013 were $8.5 million, a 44.0% increase over the same period last year.

·         Recurring revenues for the fourth quarter of fiscal year 2013 were $7.9 million, a 65.1% increase over the fourth quarter of fiscal year 2012. As a percentage of total revenues, recurring revenues in the fourth quarter were 93.6% in fiscal year 2013 versus 81.7% for the same period in fiscal year 2012.

·         EBITDA, a non-GAAP measure, adjusted for non-cash charges, was $1.5 million in the fourth quarter, an increase of 36.4% over the same period last year.

Highlights For The Fiscal Year 2013 Included:

·         The Company reported record revenues of $30.1 million, a 33.8% increase over fiscal year 2012.

·         Recurring revenues for the fiscal year 2013 were $27.0 million, a 44.3% increase over fiscal year 2012.       As a percentage of total revenues, recurring revenues were 89.7% in fiscal year 2013 versus 83.2% in          fiscal year 2012.

·         EBITDA, a non-GAAP measure, adjusted for non-cash charges, was $3.5 million in fiscal year 2013, a decline of 19.5% from fiscal year 2012, which was related to costs associated with the two fiscal year 2013 acquisitions.

·         On August 17, 2012, the Company acquired substantially all of the assets of Ready2Ride, Inc., the first-to-market and leading provider of aftermarket fitment data to the powersports industry. The Company leveraged this data in its February 2013 release of AccessorySmart(TM), a fitment driven parts lookup solution, which won a Nifty 50 Award at the powersports industry's largest trade show.

·         On November 28, 2012, the Company acquired the assets of the retail division of 50 Below Sales and Marketing, Inc., a leading provider of eCommerce websites to the powersports, automotive tire and wheel and durable medical equipment industries. The 50 Below operation, which was purchased out of bankruptcy, is already generating positive cash flow.

·         On March 13, 2013, the Company announced that it entered into agreements with various accredited investors in a private placement of 3.2 million shares ($4.8 million) of its common stock at a purchase price of $1.50 per share. The Company also issued warrants to purchase 1.1 million shares, all but 214,000 of which have been exercised to date. The funds raised in the private placement were used to pay down a substantial portion of the Company's outstanding debt.

·         On April 25, 2013, the Company announced that it closed new senior secured credit facilities with Silicon Valley Bank. The facilities include a $4.5 million term loan and a $3.0 million revolving credit facility. The proceeds from the transaction were used to pay down the remaining portion of the Company's outstanding debt with Fifth Third Bank and with a shareholder.

Fiscal Year 2013 Financials

ARI reported revenues of $30.1 million for fiscal year 2013 versus $22.5 million for fiscal year 2012, an increase of 33.8%. Recurring revenue comprised 89.7% of total revenue during fiscal year 2013 versus 83.2% in fiscal year 2012. The increase in revenues was driven by the Company's November 2012 acquisition of the assets of the retail division of 50 Below Sales and Marketing, Inc.

Overall gross margin for fiscal year 2013 was 78.0%, versus 76.6% last year. The gross margin improvement resulted from the Company's focus on higher margin, recurring revenue streams and its continued shift away from one-time revenue sources.

The company incurred a net loss of $753,000 or ($0.08) per share for the year, compared to net income of $1,055,000 or $0.13 per share last year. The loss incurred in fiscal 2013 was driven by acquisition-related costs of approximately $1,200,000, a non-cash loss on the fair market valuation of stock warrants of $635,000, a non-cash loss of $682,000 related to the early repayment of debt and a $420,000 non-cash impairment charge to a long-lived asset. These charges were offset in part by a non-cash gain recognized on a change in estimate of contingent liabilities of $180,000 and an income tax benefit of $1,133,000.

Management Discussion

Roy W. Olivier, President and Chief Executive Officer of ARI, commented, "Fiscal 2013 was a transformational year for ARI. We completed two acquisitions, which provided us with a first-to-market opportunity in the powersports industry and introduced ARI to several new markets -- aftermarket wheel and tire and durable medical equipment. 

We raised $4.5 million in a private placement transaction that was used to reduce our post-acquisition debt and are excited about our new relationship with Silicon Valley Bank, which we believe will be a critical growth partner for the Company."

Mr. Olivier continued, "Our acquisition of 50 Below in November 2012 was a game changer for ARI. We posted record revenues in fiscal 2013, exceeding $30 million for the first time in the Company's history and now host and maintain more than 5,500 websites. 

ARI has proven time and time again that it is highly capable of acquiring and efficiently integrating companies. The 50 Below operation, which we acquired out of bankruptcy in November 2012, recorded an operating loss of $3.4 million on revenues of $9.2 million for the trailing twelve months ended October 31, 2012. By the quarter ended April 30, 2013, we had already achieved positive cash flow and EBITDA for 50 Below, ahead of our original expectations."

Darin Janecek, Chief Financial Officer of ARI, commented, "ARI's overall profitability was affected in fiscal year 2013 as a result of the one-time acquisition-related costs and other non-cash charges. Excluding these charges, ARI generated adjusted EBITDA of $1.5 million in the fourth fiscal quarter; it's the first quarter since the acquisitions of both Ready2Ride and 50 Below of year over year EBITDA growth, an indication that we are successfully integrating the acquisitions. 

Further, we continued to improve on two of our most important growth metrics -- recurring revenue and churn. Recurring revenues exceeded 90% of total revenue in the fourth fiscal quarter and our overall rate of churn improved to 12.8% in fiscal year 2013 versus 13.4% last year. The private placement and Silicon Valley Bank financing transactions enabled us to improve our balance sheet substantially following the two acquisitions, leaving us poised for continued growth as we head into fiscal 2014."

ARI Named One of Wisconsin's Fastest-Growing Public Companies

MILWAUKEE, April 25 -- ARI Network Services, a leader in creating, marketing, and supporting software, SaaS and DaaS solutions that connect consumers, dealers, distributors, and manufacturers in selected vertical markets, announced today that it was recognized in The Business Journal's Top 25 List as one of Wisconsin's fastest-growing public companies.

"It's an honor to be included in the Top 25 List this year," said Roy W. Olivier, CEO and President of ARI. "Despite a sluggish economy in the vertical markets we serve, we have been able to successfully execute on our strategic growth objectives. We have a lot of momentum that sets the stage for sustained, profitable growth and I'm excited about our future," added Olivier. "The progress we make every day is a direct result of our employees, customers and loyal shareholders hard work and support."  According to Olivier, ARI has been on the Top 25 List in four out of the last five years.

The Top 25 List is published annually by The Business Journal . All public companies headquartered in Wisconsin with a stock price of $1 or more between February and April 2012, and positive revenue growth from fiscal 2011 to 2012 were considered for the list.  The information on each company is gathered by The Business Journal from annual reports and financial statements.

ARI Network Services, Inc. ("ARI") creates award-winning software-as-a-service ("SaaS") and data-as-a-service ("DaaS") solutions that help equipment manufacturers, distributors and dealers in selected vertical markets Sell More Stuff!™ – online and in-store. Our innovative products are powered by a proprietary library of enriched original equipment and aftermarket content that spans more than 10.5 million active part and accessory SKUs, 469,000 models and $1.7 billion in retail product value.  We remove the complexity of selling and servicing new and used inventory, parts, garments, and accessories ("PG&A") for customers in automotive tire and wheel, powersports, outdoor power equipment, marine, RV and white goods industries. More than 22,000 equipment dealers, 195 distributors and 140 manufacturers worldwide leverage our web and eCatalog platforms to Sell More Stuff!™.

ARI Network Services Announces Fiscal Year 2013 2nd Quarter Financial Results

MILWAUKEE -- March 12 -- ARI Network Services, a leader in creating, marketing, and supporting SaaS and DaaS solutions that connect consumers, dealers, distributors, and manufacturers in selected vertical markets, reported financial results today for the second quarter of fiscal 2013 ended January 31, 2013. The Company also announced today that it has entered into definitive agreements with various accredited investors in a private placement of $4.8 million of common stock at a price of $1.50 per share.

Highlights for the quarter included:

-- On November 28, 2012, the Company acquired the assets of the retail division of 50 Below Sales and Marketing, Inc., a leading provider of eCommerce websites to the powersports, automotive tire and wheel aftermarket, medical equipment and pool and spa industries. The acquisition brings with it over 3,500 dealer websites, more than doubling the size of ARI's website business and making websites the Company's largest source of revenue.

-- Total revenue for the second quarter of fiscal 2013 increased 35.9% to $7.5 million compared to $5.5 million in for the same period in fiscal 2012, primarily as a result of the acquisition.

-- Recurring revenue for the quarter increased 41.9% to $6.6 million, or 88.3% of total revenue, from $4.7 million, or 84.6% of total revenue, for the same period in fiscal 2012.

-- For the quarter ended January 31, 2013, churn (the measure of customers that do not renew) improved approximately 28.4% compared to the same quarter last year.

Fiscal Year 2013 Second Quarter Financials

ARI reported revenue of $7.5 million for the second quarter of fiscal 2013 versus $5.5 million for the same period last year, an increase of 35.9%. Recurring revenue comprised approximately 88.3% of total revenue during the quarter and 86.0% of total year to date revenue in fiscal 2013, compared to 84.6% and 84.2% for the same periods last year.

Total operating expenses increased 55.0% to $6.3 million for the three months ended January 31, 2013 compared with $4.1 million for the three months ended January 31, 2012. This increase resulted primarily from the addition of the Ready2Ride and 50 Below operations. Of this increase, approximately $625,000 represents acquisition-related legal and professional fees. The company reported a loss from operations of $566,000 during the quarter, versus operating income last year of $170,000. This loss stems primarily from the acquisition-related fees as well as ongoing integration activities.

The company reported net income of $4,000, or $0.00 per share, for the quarter ended January 31, 2013, compared to $61,000 or $0.01 per share for the same period last year. EBITDA, a non-GAAP measure, was $241,000 for the second quarter of fiscal 2013, compared to $935,000 for the same period last year.

Private Placement Transaction

The Company entered into definitive agreements with various accredited investors in a private placement of approximately $4.8 million of common shares at a price of $1.50 per share. In addition, the Company will issue to the investors warrants to purchase 1,066,667 shares of common stock. The warrants have an exercise price of $2.00 per share and are exercisable for five years.

New institutional investors accounted for the majority of the financing and existing investors made up the remainder. The signing of the purchase agreements occurred on Tuesday, March 12, 2013. The offering is expected to close on or about Monday, March 18, 2013, subject to satisfaction of customary closing conditions. Ascendiant Capital Markets LLC acted as the exclusive placement agent for the transaction.

The securities offered in this private placement have not been registered under the Securities Act of 1933, as amended, or applicable state securities laws. Accordingly, the securities may not be offered or sold in the United States except pursuant to an effective registration statement or an applicable exemption from the registration requirements of the Securities Act of 1933 and such applicable state securities laws. The securities were offered only to accredited investors.

Management Discussion

Roy W. Olivier, President and Chief Executive Officer of ARI, commented, "50 Below integration activities are well underway; this acquisition will be a game changer for ARI. The integration of 50 Below into ARI makes us one of the leading providers of websites to the powersports market, and the addition of Ready2Ride's aftermarket fitment data to our product offering makes ARI one of the most comprehensive providers of eCommerce solutions to the powersports industry. This acquisition also provides us with a footprint in the automotive aftermarket industry with more than 2,000 wheel and tire dealer websites."

Mr. Olivier continued, "The recent acquisitions should rapidly facilitate the growth of the company, and the synergistic opportunities from integrating operations significantly enhance the scalability of the combined organization. We expect both of these acquisitions to be accretive to earnings in fiscal 2014 and anticipate EBITDA returning to historical levels in fiscal 2015, as we continue to consolidate operations and further leverage our fixed operating cost structure. We remain very focused on our organic growth strategy as well and released numerous product upgrades and new features, including the roll out of our new AccessorySmartTM aftermarket parts lookup solution, a first for the powersports industry. I am extremely excited with the future prospects for our organization."

Darin Janecek, Chief Financial Officer of ARI, commented, "While our operating results will be affected over the remainder of fiscal 2013 from the acquisition-related legal and professional fees as well as ongoing integration activities, we anticipate significant year-over-year revenue growth from these acquisitions. We expect both the Ready2Ride and 50 Below acquisitions to be accretive to earnings in fiscal 2014 and anticipate additional revenue growth next year as well."

With respect to the private placement transaction, Mr. Olivier commented, "we are also very pleased to announce this significant financing transaction, the proceeds of which will be used to pay down the debt used to finance our recent acquisitions. Reducing our debt structure to pre-acquisition levels will allow us to prioritize our efforts on integrating the acquired companies, which will position us to further advance our competitive position in the marketplace and opportunistically take advantage of strategic situations."

About ARI

ARI Network Services, Inc. is a leader in creating, marketing, and supporting software, software as a service ("SaaS") and data as a service ("DaaS") solutions that enhance revenue and reduce costs for our customers. Our innovative, technology-enabled solutions connect the community of consumers, dealers, distributors, and manufacturers to help our customers efficiently service and sell more whole goods, parts, garments, and accessories worldwide in selected vertical markets that include powersports, outdoor power equipment, marine, and white goods. We estimate that more than 22,000 equipment dealers, 140 manufacturers, and 195 distributors worldwide leverage our technology to drive revenue, gain efficiencies and increase customer satisfaction.

ARI Network Services Announces 3rd Quarter 2012 Financial Results

MILWAUKEE, Wis., June 14 -- ARI Network Services, a leader in creating, marketing, and supporting software, SaaS, and DaaS solutions that connect consumers, dealers, distributors, and manufacturers in selected vertical markets, reported financial results today for the third quarter of fiscal year 2012 ended April 30, 2012.

Highlights for the third quarter of fiscal 2012 included:

• Total revenue for the third quarter of fiscal 2012 increased 6.7% to $5.7 million compared to $5.4 million in the third quarter of fiscal 2011.
• Recurring revenue for the quarter increased 9.8% to $4.8 million, or 83.7% of total revenue, from $4.4 million, or 81.3% of total revenue, in the third quarter of fiscal 2011; compared to the second quarter of fiscal 2012, recurring revenue increased 2.7%, representing the seventh straight quarter of growth.
•  During the quarter, the Company invested $851,000 in strategic research and technology investments to support future new product introductions and revenue growth.
• The Company paid down $398,000 of debt in the third quarter.  In fiscal 2012 the Company reduced its total debt from $5.6 million at July 31, 2011 to $4.5 million at April 30, 2012.
• In the third quarter, the Company added 103 new customers and 2 new reseller agreements;
• For the nine-month period ended April 30, 2012, churn (the measure of customers that do not renew) improved 15% compared to the end of the third fiscal quarter of 2011.

Third quarter 2012 Financials

For the third fiscal quarter ended April 30, 2012, ARI reported revenue of $5.7 million versus $5.4 million in the comparable quarter of fiscal 2011; an increase of 6.7%. Total operating expenses in the third quarter were $4.0 million, up 11.8%, compared to $3.6 million in the fiscal 2011 third quarter. This increase resulted from investments made in product research and development, the Company's internal technology infrastructure and the roll out of the Company's fiscal 2012 investor relations initiative.  As a result of these investments, operating income for the third quarter was $327,000 compared to $675,000 in the third quarter of 2011.

The company reported net income of $210,000, or $0.03 per share, in the third quarter of 2012, compared to net income of $541,000, or $0.07 per share in the third quarter of 2011.  The decline was largely due to a $433,000 gain on the disposition of a component of the business recognized in the third quarter of fiscal 2011 that did not recur in fiscal 2012. Recurring revenue for the quarter was $4.8 million, or 83.7% of total revenue, versus $4.4 million, or 82.8% of total revenue, for the third quarter last year.

EBITDA for the third quarter was $1.1 million, comparable to EBITDA of $1.9 million in the third quarter last year.

Management Discussion

Roy W. Olivier, president and chief executive officer of ARI, commented, "We are pleased with the results of the quarter in regards to top line revenue growth. Our fiscal 2012 recurring revenue has increased to 84.0% of total revenue, compared to 81.4% last year, and we reduced our rate of churn by 15% over this same period.  These improvements resulted in an increase in recurring revenue of nearly 8%. We have signed on two new resellers, added over 100 new customers and signed a deal with a national retailer to use our catalog content in their 1,200 service centers, all of which will contribute to recurring revenue growth."

Mr. Olivier continued, "We are very focused on the execution of our revenue growth strategy and are making strategic investments in technology to achieve this growth.  We have expanded our product research and development resources to focus solely on providing our customers with easy access to the innovative technology they need to grow their businesses.  We continue to integrate several of our core product offerings and have updated our lead management tools to allow us to electronically distribute them to a large number of potential new users in an extremely cost efficient manner, which is a critical driver of revenue growth. "

Darin Janecek, chief financial officer of ARI, commented, "We had a year over year decline in operating income for the quarter of 27.7% or $381,000 due to planned investments in our products, technology infrastructure and our investor relations program.  These investments are critical components of executing on our growth strategy and increasing shareholder value. Since the beginning of Fiscal 2012, we have seen substantial increases in both our average daily trading volume and our stock price during this time. Several of these costs are one-time and will not continue into the fourth quarter."

About ARI

ARI Network Services, Inc. ("ARI" or the "Company") is a leader in creating, marketing, and supporting software, software as a service ("SaaS") and data as a service ("DaaS") solutions that enhance revenue and reduce costs for our customers. Our innovative, technology-enabled solutions connect the community of consumers, dealers, distributors, and manufacturers to help our customers efficiently service and sell more whole goods, parts, garments, and accessories worldwide in selected vertical markets that include power sports, outdoor power equipment, marine, and white goods.  We estimate that approximately 18,000 equipment dealers, 125 manufacturers, and 150 distributors worldwide leverage our technology to drive revenue, gain efficiencies and increase customer satisfaction.