ARI Network Services, Inc. reported $8.1 million in second quarter revenues, an increase of 8.8 percent over Q2 2013.
During the quarter ending Jan. 31, 2014, recurring revenues equaled 94.7 percent of total revenue, compared to 87.9 percent in the year-ago quarter. Overall gross margin was 79.3 percent, compared to 77.0 percent in Q2 2013. This was primarily the result of growth in recurring revenues, which has a higher gross profit.
A $606,000 operating loss was reported, compared to a loss of $566,000 in last year’s second quarter. A $234,000 charge related to termination benefits was cited as the primary cause of that decrease. ARI’s net loss for the quarter was $461,000, or $0.03 per share, compared to net income of $4,000 or $0.00 per share in Q2 2014.
Roy W. Olivier, president and CEO of ARI, commented, “We continue to make good progress from our increased investment in sales and marketing which we initiated in the fiscal first quarter of 2014 and continued in the fiscal second quarter. During the second quarter of fiscal 2014, we invested 30.0 percent of revenue in sales and marketing versus 25.6 percent for the same period last year. Early indications are that these investments are having a positive impact as new dealer sales and upsells, measured as the annual contract value (“ACV”), are up 28.1 percent year to date versus last year. “
Olivier continued, “In addition, the company showed improvement year over year in both its gross margin and recurring revenue as a percent of total revenue.”
William Nurthen, chief financial officer, said, “In the second quarter, we took action to reduce our headcount as we continue to see cost saving opportunities from the ongoing integration of our recent acquisitions. This action was in line with our goal of increasing EBITDA and profitability in the back half of our fiscal year while at the same time preserving our ability to continue making investments in sales and marketing.”