Posts Year-to-date Subscription Growth of 22%, Third Successive Quarterly Increase in GAAP Net Earnings
Numerex Corp (NASDAQ: NMRX), a leading provider of business services, technology, and products for the worldwide machine-to-machine (M2M) market, today announced financial results for its third quarter ended September 30, 2011.
“Numerex delivered another solid performance in the third quarter with 22% growth in its M2M subscription base and 15% growth in recurring revenues compared to the third quarter of last year. We finished the quarter with over 1.3 million subscriptions that now generate nearly $10 million in quarterly recurring revenues,” stated Stratton Nicolaides, chairperson and CEO of Numerex.
“Strong demand from our channel partners for our M2M services, particularly our network and application platforms, was the main catalyst for growth. We will continue to concentrate our resources on developing and marketing our ‘network-as-a-service’ and horizontal M2M platforms, in addition to providing our cloud-based ‘software-as-a-service’ that enables M2M application deployment in nearly any vertical market.”
Financial metrics for the third quarter of 2011 include:
|Three Months Ended||Nine Months Ended|
|September 30||September 30|
|M2M Recurring Revenue ($ millions)||9.8||8.6||28.3||24.7|
|M2M Embedded Device and Hardware Revenue||4.9||6.3||14.1||17.4|
|GAAP Net earnings ($ millions)||0.6||0.7||1.2||1.0|
|Earnings Per Share||0.04||0.04||0.08||0.07|
|Non-GAAP Net Earnings before non-Cash &
exceptional Items ($ millions)
Mr. Nicolaides continued, “Our strategy to focus on our subscription-based platform services has successfully led to the generation of incremental recurring revenue and led to a decline in hardware revenue. As a result, revenue derived from hardware comprises a significantly lower percentage of overall revenues compared to prior years. Although we can expect future fluctuations in hardware revenue, our M2M business will continue to focus on delivering actionable “smart” information to our customers through our products and platforms. While the loss of margin from hardware revenues has negatively impacted short-term results, we believe that our highly scalable recurring revenue model creates operating leverage and thereby enhances shareholder value.”
The Company’s Financial Highlights include:
- Increased subscriptions by 22% to 1,346,000 at the end of the third quarter of 2011, compared to 1,266,000 and 1,102,000 recorded at the end second quarter of 2011 and at the end of the third quarter of 2010, respectively. During the third quarter of 2011, the Company added 79,000 net subscriptions, as compared to 42,000 net subscriptions added in the second quarter of 2011 and the 75,000 net subscriptions added in the third quarter of 2010.
- Reported M2M revenues of $14.7 million in the third quarter of 2011, compared to $14.2 million in the second quarter of 2011 and $14.9 million in the third quarter of 2010. During the quarter ended September 30, 2011, the Company reported M2M recurring revenues of $9.8 million, as compared $9.4 million in the second quarter of 2011 and $8.6 million during the third quarter of 2010.
- Consolidated gross margin for the third quarter of 2011 was 45.4% compared to 43.8% in the second quarter of 2011 and 44.6% during the third quarter in 2010.
- GAAP net earnings for third quarter of 2011 were $592,000 compared to $340,000 in the second quarter of 2011 and $657,000 during the third quarter of 2010.
- Non-GAAP net earnings before non-cash charges and litigation related legal fees was $1.9 million during the third quarter of 2011 compared to $1.3 million for the second quarter of 2011 and $1.8 million for the third quarter of 2010. A reconciliation of this measure to GAAP results has been provided in the financial table below and further discussion of this measure as compared to GAAP is included elsewhere in this press release.
|Three Months Ended|
|September 30,||June 30,||September 30,|
|Net income||$ 592||$ 340||$ 657|
|Litigation related fees and settlement costs||169||–||83|
|Depreciation and amortization||799||766||810|
|Net income before non-cash items||$ 1,918||$ 1,343||$ 1,813|
|Basic earnings per common share||$ 0.13||$ 0.09||$ 0.12|
|Diluted earnings per common share||$ 0.12||$ 0.08||$ 0.12|
|Number of shares used in per share calculation|
The Company’s Operational Highlights include:
- Named by Connected World magazine on the list of the 100 most innovative M2M technology and connected device providers (“CW 100”). Numerex’s continuing presence on this prestigious international list recognizes the company’s overall success and impact on the direction of the fast-paced M2M industry.
- Launched FASTTrack Fleet™ tracking, monitoring and theft recovery platform which integrates a configurable web-based application with a variety of monitoring devices that connects via satellite or cellular.
- Announced the introduction of the 2550 GSM Alarm Communicator with Underwriters Laboratory (UL) Listing and expanded alarm protocols for greater compatibility. The model now carries a UL Listing for UL-1023 (Standard for Household Burglar Alarm System Units) and UL-985 (Standard for Household Fire Warning System Units).
- Launched its new satellite-based product (Numerex Satellite FLEX™) which is a lightweight, yet rugged GPS-enabled asset tracking solution. The multi-year battery powered device with highly-reliable worldwide coverage can also be used as a wireless sensor hub to provide additional systems monitoring.
- Developed a new partner program allowing hardware and original equipment manufacturers (OEMs) to effectively reduce the price of their smart devices, modules, and modems by embedding Numerex network technology through a credit-based program.
- Organized a well attended international M2M conference in Atlanta, GA, in collaboration with the Georgia Institute of Technology and the Telecommunications Industry Association.
In addition, Mr. Tony Holcombe joined Numerex’s Board of Directors effective October 1, 2011. Currently, Mr. Holcombe is Vice Chairman of the Board of Directors of Syniverse, a global leader in mobile interoperability, mobile communications and mobile expertise that provides diverse roaming, messaging and network services to more than 900 mobile operators, cable and Internet providers, and enterprises in over 160 countries.
Mr. Nicolaides concluded, “Numerex is poised to benefit from the ramp-up of a number of projects previously commercialized, the on-boarding of several new customers, and a significant managed services project expected to begin this year. As a result, we are affirming our 2011 subscription growth guidance range of 20% to 25% and recurring revenue growth range of 18% to 23%.“