Record quarterly revenue of $11.7 million, Adjusted EBITDA tops $2 million

Milwaukee, Wis., December 9, 2015 – 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 first quarter ended October 31, 2015.

Highlights for the fiscal first quarter included:

  • Revenue increased 28.8% to $11.7 million, which compares with $9.1 million for the same period last year and $10.9 million in 4Q15. Recurring revenue increased 31.4% to $10.7 million, which compares with $8.2 million for the same period last year and $9.8 million in 4Q15.
  • Operating income was $808, 000, compared with $283, 000 for the same period last year and $686, 000 in 4Q15.
  • Adjusted EBITDA, a non-GAAP measure, increased 54.7% to $2.0 million, or 17.2% of revenue. This compares with Adjusted EBITDA of $1.3 million, or 14.3% of revenue in the same period last year and $1.8 million, or 16.5% of revenue in 4Q15.
  • Cash generated from operations was $1.7 million, compared with $1.6 million for the same period last year and $1.7 million in 4Q15.

Fiscal Year 2016 First Quarter Financials
ARI achieved 28.8% revenue growth as it reported revenues of $11.7 million for the first quarter of fiscal year 2016, compared with $9.1 million for the same period last year. Recurring revenue comprised 91.2% of total revenue versus 89.4% for the same period last year. Gross margin for the first quarter of fiscal year 2016 was 82.4% versus 80.8% last year. Operating income was $808, 000 for the first quarter of fiscal year 2016, compared with operating income of $283, 000 for the same period last year, a 185.5% increase. The company reported net income of $389, 000, or $0.02 per diluted share for the quarter, compared with net income of $104, 000 or $0.01 per share last year.

Financial Statements

Management Discussion
Roy W. Olivier, President and Chief Executive Officer of ARI, commented, “In the first quarter of fiscal 2016, we were able to experience the full impact of all three of the acquisitions we completed in fiscal 2015. The results demonstrate the significant progress we have made over the past year in expanding our product and service offerings and increasing the size of our total addressable market. Recurring revenue increased at a faster rate than our overall revenue, which is indicative of the growing number of customers subscribing to our SaaS and other recurring revenue offerings, as well as an increase in the overall spend of those customers. This is a strong start to our fiscal 2016, and we look forward to building upon this performance through the remainder of the year.”

William Nurthen, Chief Financial Officer of ARI, commented, “In the first quarter of fiscal 2016, we were able to reverse a three-year trend in which we experienced a sequential drop in Adjusted EBITDA from the prior fourth quarter. Adjusted EBITDA not only improved over 4Q15, but it also topped $2 million for the first time in the Company’s history. We also experienced another strong quarter of cash flow, despite transitioning some of our customers to monthly billing, and were able to increase our overall cash balance to $3.2 million at period end. The Adjusted EBITDA and cash flow performance continue to better position us to execute on future investment opportunities that align with our growth strategy.”

Fiscal 2016 First Quarter Conference Call
ARI will conduct a conference call on Wednesday December 9, 2015, at 4:30 p.m. EDT, to review the financial results for the fiscal quarter ended October 31, 2015. Interested parties can access the conference call by dialing 877.359.3639 or 408.427.3725 and referring to Conference ID: 56616344. 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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