Quarterly revenue tops $10 million, EBITDA $1.6 million, EBITDA margin 16.1%

Milwaukee, Wis., March 5,  2015 – ARI Network Services, Inc. (NASDAQ: ARIS), 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 second quarter ended January 31, 2015.

Highlights for the second quarter of fiscal 2015 included:

  • Revenue was $10.1 million, which compares with $8.1 million for the same period last year and $9.1 million in 1Q15.
  • Operating income was $0.7 million, compared with ($0.6 million) for the same period last year and $0.3 million in 1Q15.
  • EBITDA, a non-GAAP measure, adjusted for non-cash charges, was $1.6 million or 16.1% of revenue. This compares with EBITDA of $0.3 million or 3.2% of revenue in the same period last year and $1.2 million or 13.2% of revenue in 1Q15.
  • Cash generated from operations was $1.1 million, compared with $53, 000 for the same period last year and $1.6 million in 1Q15.
  • Total debt (debt from the company’s line of credit, notes payable and capital lease obligations) was reduced by approximately $500, 000 in the quarter while increasing cash on hand.

Fiscal Year 2015 Second Quarter Financial
ARI experienced 24.6% revenue growth as it reported revenues of $10.1 million for the second quarter of fiscal year 2015 compared with $8.1 million for the same period last year. Recurring revenues were $9.1 million versus $7.7 million in the same period last year. Recurring revenue comprised 90.2% of total revenue versus 94.7% for the same period last year.

Gross margin for the second quarter of fiscal year 2015 was 81.6% versus 79.3% last year.

Operating income was $670, 000 for the second quarter of fiscal year 2015, compared with an operating loss of ($606, 000) for the same period last year.

The company reported net income of $260, 000 or $0.02 per diluted share for the quarter, compared with a net loss of ($461, 000) or ($0.03) per share last year.

The increases in results from operations and net income are attributable to revenue growth combined with cost efficiencies and reductions made in fiscal year 2014, which included a $234, 000 charge for termination benefits experienced in the second quarter of fiscal 2014.

Financial Statements

Management Discussion
Roy W. Olivier, President and Chief Executive Officer of ARI, commented, “Our results for the second quarter and the mid-point of our fiscal year reflect continued execution against our goals. We achieved high single-digit organic growth and have also grown revenue through our integration of the TCS transaction. As a result, our quarterly revenue topped $10 million for the first time, and we achieved overall revenue growth of 24.6%. In addition, we were able to significantly improve upon both our profit and EBITDA performance from the prior year.”

William Nurthen, Chief Financial Officer, commented, “Our results over the trailing 12 months and for the first six months of fiscal 2015 demonstrate the significant improvements we have made in both profitability and cash flow since the anniversary of the cost reductions we made in January 2014. For the first half of the year, our EBITDA was $2.8 million which compares to $1.2 million for the same period in fiscal 2014, a 132% increase. In addition, in the first two quarters of fiscal 2015, we generated $2.7 million of operational cash flow, which is more than $300, 000 in excess of the $2.4 million we generated for all of fiscal 2014.”

Second Quarter Fiscal 2015 Conference Call
ARI will conduct a conference call on Thursday, March 5, 2015 at 4:30 pm ET to review the financial results for the fiscal quarter ended January 31, 2015. Interested parties can access the conference call by dialing 877.359.3639 or 408.427.3725 and referring to conference ID: 74152099. 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 website for 60 days.

Non-GAAP Measures

EBITDA, a non-GAAP measure, is defined as earnings before interest, income taxes, depreciation and amortization. Management believes EBITDA, to be a meaningful indicator of our performance that provides useful information to investors regarding our financial condition and results of operations. While management considers EBITDA to be an important measure of comparative operating performance, it should be considered in addition to, but not as a substitute for, net income and other measures of financial performance reported in accordance with generally accepted accounting principles (GAAP). Not all companies calculate EBITDA in the same manner and the measure as presented may not be comparable to similarly titled measures presented by other companies. A reconciliation of net income to EBITDA can be found 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 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, 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:

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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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