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.
