ARI Network Services (OTCBB: ARIS) has reported financial results for its third quarter of fiscal 2013 ended April 30, 2013.
Total revenue for the quarter was $8.2 million, a 44.0 percent increase over the third quarter of fiscal year 2012. Recurring revenue for the quarter increased 60.1 percent to $7.7 million, or 93.0 percent of total revenue, from $4.8 million, or 83.7 percent of total revenue, for the same period in fiscal 2012.
On Nov. 28, 2012, the company acquired the assets of the retail division of 50 Below Sales & Marketing Inc., a leading provider of e-commerce websites to the powersports, automotive tire and wheel aftermarket and medical equipment industries. The 50 Below operation, which was purchased out of bankruptcy, generated an operating profit during the quarter, only the second quarter under ARI ownership.
On March 13, 2013, the company announced that it entered into agreements with various accredited investors in a private placement of $4.8 million (3.2 million shares) of its common stock at a purchase price of $1.50 per share. The company also issued warrants to purchase 1.1 million shares at a price per share of $2.00. The funds raised in the private placement were used to pay down a substantial portion of the company’s outstanding debt.
On April 25, 2013, the company announced that it closed new senior secured credit facilities with Silicon Valley Bank. The facilities include a $4.5 million term loan and a $3.0 million revolving credit facility. The proceeds from the transaction were used to pay down the remaining portion of the company’s outstanding debt with Fifth Third Bank and with a shareholder.
“We are pleased with the progress we have made integrating our two fiscal 2013 acquisitions," said Roy W. Olivier, president and CEO of ARI. "We were able to generate a profit from the 50 Below operation in the second quarter of our ownership. For the most recent fiscal year prior to the acquisition ended July 31, 2012, the 50 Below operations lost approximately $4 million on $9 million revenue. Integration activities will continue over the next 9-12 months and we expect the 50 Below operations, as well as our combined operations, to become increasingly more profitable.
“ARI is now one of the leading providers of websites in each of the markets we serve; we currently host and maintain more than 5,500 sites, and we expect this number to continue to grow," he continued. "Our new AccessorySmart aftermarket parts lookup solution, which is a first of its kind in the powersports industry, continues to gain traction in the marketplace after its February launch. We have also launched significant improvements to our products aimed at the automotive wheel and tire aftermarket, a market for which we have significant growth expectations.”
Added Darin Janecek, chief financial officer, “While our fiscal 2013 operating results continue to be affected by the various events and one-time charges that have occurred year-to-date, including two acquisitions, a $4.8 million private placement, and a debt refinancing and transition to a new banking partner, we do expect a return to profitability in the fourth quarter and anticipate further revenue growth and increased profitability in fiscal 2014.”
