Record quarterly revenue of $12.0 million and Adjusted EBITDA of $2.2 million

 Milwaukee, Wis., June 9,  2016 — ARI Network Services, Inc. (NASDAQ:ARIS), an award-winning provider of SaaS, software tools and marketing services that help dealers, distributors and manufacturers Sell More Stuff!™, reported financial results today for its fiscal 2016 third quarter ended April 30, 2016.

Highlights for the fiscal third quarter included:

  • Ninth consecutive quarter of revenue growth for the firm.
  • Revenue increased 16.6% to $12.0 million, which compares with $10.3 million for the same period last year and $11.8 million in 2Q16. Recurring revenue growth continued to outpace overall revenue growth as it increased 18.8% to $11.1 million, which compares with $9.3 million for the same period last year and $10.8 million in 2Q16.
  • Operating income was $921, 000, compared with $675, 000 for the same period last year and $873, 000 in 2Q16.
  • Adjusted EBITDA, a non-GAAP measure, increased 26.5% to $2.2 million, or 18.2% of revenue. This compares with Adjusted EBITDA of $1.7 million, or 16.8% of revenue in the same period last year and $2.1 million, or 17.8% of revenue in 2Q16.
  • Cash generated from operations was $2.6 million, compared with $1.9 million for the same period last year and $1.2 million in 2Q16.

Fiscal Year 2016 Third Quarter Financials
ARI achieved 16.6% revenue growth as it reported revenues of $12.0 million for the third quarter of fiscal year 2016, compared with $10.3 million for the same period last year. Recurring revenue comprised 92.2% of total revenue versus 90.5% for the same period last year and 91.6% from the previous quarter.

Gross margin for the third quarter of fiscal year 2016 was 80.5% versus 82.7% last year.

Operating income was $921, 000, or 7.7% of revenue, for the third quarter of fiscal year 2016, compared with operating income of $675, 000, or 6.6% of revenue for the same period last year, a 36.4% increase.

The company reported net income of $448, 000, or $0.03 per diluted share for the quarter, compared with net income of $339, 000, or $0.02 per share last year.

Financial Results

Management Discussion
Roy W. Olivier, President and Chief Executive Officer of ARI, commented, “I am proud of the ARI team, who have worked hard to consistently deliver improving performance throughout the year. We continue to focus on executing our strategy, and our third quarter results are representative of our continued ability to deliver results. We delivered strong new and upsell bookings in all the vertical markets we serve, resulting in over $3.0 million in new bookings and, for the first time, over $11.0 million in new bookings on a trailing twelve month basis. The scale we have added to the business over the past few years is allowing us to make additional investments in enhancing our products and services that I believe will drive growth in the coming years. I am confident that we remain well positioned to have a strong finish to our fiscal year.”

William Nurthen, Chief Financial Officer of ARI, commented, “As we enter the fourth quarter of our fiscal year, we continue to experience improvements in our financial performance both on a year-over-year and trailing twelve month basis. In the third quarter of fiscal 2016, the Company was able to establish new quarterly highs for revenue, operating income, cash flow from operations and Adjusted EBITDA. From a profitability standpoint, we reached an important milestone for the Company as our trailing twelve month’s Adjusted EBITDA topped $8.0 million for the first time. Perhaps the most notable achievement of the quarter was our cash flow from operations of $2.6 million. This is more cash flow than the firm produced in all of its fiscal 2014 and represents a 39% increase over the prior high for quarterly cash flow. As a result of this performance, we achieved our balance sheet targets for fiscal 2016 a quarter early, as our total cash balance at quarter-end stood at more than $4.4 million.”

Fiscal 2016 First Quarter Conference Call
ARI will conduct a conference call on Thursday, June 9, 2016, at 4:30 p.m. EDT, to review the financial results for the fiscal quarter ended April 30, 2016. Interested parties can access the conference call by dialing 877.359.3639 or 408.427.3725 and referring to Conference ID: 5628613. The conference call is also being webcast and is available via the Company’s investor relations website at investor.arinet.com. A replay of the webcast will be archived on the Company’s investor relations website for 60 days.

Non-GAAP Measures
EBITDA is calculated as net income adjusted to exclude interest expense, amortization, depreciation and income tax expense. Adjusted EBITDA further eliminates non-cash, stock-based compensation expense. Management believes Adjusted EBITDA is helpful in understanding period-over-period operating results separate and apart from non-operating expenses and expenses pertaining to prior period investing activities, particularly given the Company’s significant investments in capitalized software and its continuing efforts in completing acquisitions, which typically result in significant non-cash depreciation and amortization expense in subsequent periods. However, Adjusted EBITDA has significant limitations as an analytical tool and should only be used cautiously in addition to, and never as a substitute for, operating income, cash flows or other measures of financial performance prepared in accordance with generally accepted accounting principles and may not necessarily be comparable to similarly titled measures of other companies. A reconciliation of net income to Adjusted EBITDA can be found in this release and at the Company’s investor relations website for all periods presented.

Reconciliation of Non-GAAP

About ARI

ARI Network Services, Inc. (ARI) (NASDAQ: ARIS) offers an award-winning suite of SaaS, 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, powersports, 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!™  For more information on ARI, visit investor.arinet.com.

Additional Information

Images for media use only
Roy W. Olivier Hi Res | Roy W. Olivier Low Res
ARI Logo Hi Res | ARI Logo Low Res

Forward-Looking Statements
Certain statements in this news release contain “forward‐looking statements” regarding future events and our future results that are subject to the safe harbors created under the Securities Act of 1933. All statements other than statements of historical facts are statements that could be deemed to be forward-looking statements. These statements are based on current expectations, estimates, forecasts, and projects about the markets in which we operate and the beliefs and assumptions of our management. Words such as “expects, ” “anticipates, ” “targets, ” “goals, ” “projects”, “intends, ” “plans, ” “believes, ” “seeks, ” “estimates, ” “endeavors, ” “strives, ” “may, ” or variations of such words, and similar expressions are intended to identify such forward-looking statements. Readers are cautioned that these forward‐looking statements are subject to a number of risks, uncertainties and assumptions that are difficult to predict, estimate or verify. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. Such risks and uncertainties include those factors described in Part 1A of the Company’s most recent annual report on Form 10‐K, as such may be amended or supplemented by subsequent quarterly reports on Form 10-Q, or other reports filed with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward‐looking statements. The forward‐looking statements are made only as of the date hereof, and the Company undertakes no obligation to publicly release the result of any revisions to these forward‐looking statements. For more information, please refer to the Company’s filings with the Securities and Exchange Commission.

For media inquiries, contact:
Colleen Malloy, Director of Marketing, ARI, +1. 414.973.4323,  Colleen.Malloy@arinet.com

Investor inquiries, contact:
Steven Hooser, Three Part Advisors, +1.214.872.2710,  shooser@threepa.com

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