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XATA Reports YTD XATANET Sales Growth of 59 Percent
MINNEAPOLIS, August 2, 2007—XATA Corporation (Nasdaq:XATA), announced today that third quarter sales of $8.0 million grew by 7 percent compared to $7.4 million for the same period of fiscal 2006. For the nine months ended June 30, 2007, total net sales also increased 7 percent to $23.9 million, compared to $22.3 million for the same period of fiscal 2006. Sales of XATANET systems and subscriptions grew 18 percent and 59 percent, respectively, for the third quarter and the first nine months of fiscal 2007 versus the same periods in fiscal 2006. XATANET system and subscription sales contributed 63 percent and 71 percent of total net sales for the three and nine months ended June 30, 2007, respectively, compared to 58 percent and 48 percent for the same periods of fiscal 2006. Deferred revenue of $10.4 million decreased $1.6 million compared to the previous year end.
The growth in XATANET sales activity continues to replace revenue activity from its legacy OpCenter product platform. OpCenter platform sales decreased by 7 percent and 40 percent for the three and nine months ended June 30, 2007, respectively. The decrease of OpCenter sales was impacted by the fulfillment of a large order from a customer in the government sector during the nine months ended June 30, 2006.
“Although we are not content with seven percent growth on a year-over-year basis, we are pleased that our software-as-a-service, recurring business model now generates 71 percent of our total revenue stream versus 48 percent in fiscal 2006,” said Jay Coughlan, XATA chairman and CEO. “The investments we are making in research and development continue to expand the functionality in our XATANET host-based applications which will provide the visibility and control solutions that our customers need to reduce costs and increase compliancy.”
Non-GAAP earnings before interest, taxes, depreciation, amortization, stock based compensation and preferred stock dividends and deemed dividends (modified EBITDA) increased as a result of XATANET revenue growth and improved margins. Modified EBITDA for the three months ended June 30, 2007 improved by 50 percent to a loss of $0.03 per share compared to a loss of $0.06 per share for the same period of fiscal 2006. For the nine months of June 30, 2007, modified EBITDA improved 33 percent to a loss of $0.06 per share, compared to a loss of $0.09 per share in the nine months of fiscal 2006.
Gross margins as a percent of sales increased to 46 percent for the three months ended June 30, 2007 compared to 40 percent for the same period of fiscal 2006 as the result of increased XATANET subscription sales. Overall XATANET gross margins for the third quarter of fiscal 2007 increased to 39 percent, compared to 23 percent for the same quarter of fiscal 2006 due to XATANET subscription margins improving to 59 percent for the third quarter of fiscal 2007 in comparison to 31 percent in the same period last year.
For the nine months ended June 30, 2007 gross margins as a percent of sales improved to 45 percent in comparison to 43 percent for the same period last year. XATANET subscription margins have been driving this increase as subscription margins have improved to 56 percent for the nine months ended June 30, 2007 in comparison to 35 percent in the same period last year.
Selling, general and administrative costs were $10.1 million and $7.9 million for the nine months ended June 30, 2007 and 2006, respectively. The increase of $2.2 million was primarily due to increases in stock based compensation, legal costs and a write-off of capitalized system development costs related to a product that will not be going to market.
Research and development costs for the nine months ended June 30, 2007 of $3.3 million increased by $0.3 million compared to the same period of fiscal 2006. The increase in research and development costs was the result of spending associated with the company’s next release of fleet management solutions.
Non-GAAP vs. GAAP Financials
To supplement the Company's consolidated
