Crossroads Systems Reports Fiscal Third Quarter 2011 Financial Results
Post on: 2011-09-05 By: admin
AUSTIN, TX--(Marketwire - Aug 24, 2011) -Crossroads Systems, Inc. (PINKSHEETS: CRDS) (PINKSHEETS: CRDSD), a global provider of solutions and services that ensure stored data is proactively protected and reliably recovered, reported financial results for its fiscal third quarter ending July 31, 2011 (Q3 2011).
Product revenue increased 15% compared to the same quarter a year ago, driven primarily by a significant sale of the Crossroads ReadVerify Appliance (RVA)
Signed a worldwide cross-license agreement with IBM to offer Crossroads RVA to IBM customers
Achieved early adopter program milestone by shipping StrongBox solution to Crossroads Customer Advisory Board (CAB) members
Fiscal Q3 2011 Financial Results
Revenue totaled $2.6 million, a decrease of 18% from $3.2 million in the same quarter a year ago. The decline was primarily due to a 31% decrease in revenue from intellectual property (IP) licensing, royalty and other, from $2.3 million to $1.6 million. IP licensing contracts can vary significantly from quarter to quarter and should be considered on an annual basis, as Crossroads does not control the pace of negotiations. The decrease in revenue from IP licensing, royalty and other was partially offset by a 15% increase in product revenue to $1.0 million in Q3 2011 from $884,000 in the same period a year ago.
Gross profit was $2.3 million or 88% of total revenue, as compared to $2.7 million, or 86% of total revenue in the same quarter a year ago.
Operating expenses totaled $4.9 million, including $137,000 of stock-based compensation, as compared to $4.2 million and $55,000 of stock-based compensation in the same period a year ago. The increase was primarily due to increased headcount.
Net loss was $2.7 million or $(0.06) loss per share based on 43.5 million weighted average shares outstanding, as compared to a net loss of $1.5 million or $(0.05) loss per share based on 30.4 million weighted average shares outstanding in the same quarter a year ago. The 43% increase in weighted average shares outstanding compared to the same period a year ago relates to the private equity financing the company completed in October 2010.
At July 31, 2011, cash, cash equivalents and short-term investments totaled $9.5 million, as compared to $12.7 million at April 30, 2011. The decrease in cash was due to the continued development and associated capital requirements of StrongBox.
Management Commentary
"Our Q3 results were largely in line with our expectations, including the fluctuation in IP revenue," said Rob Sims, president and CEO of Crossroads Systems. "Subsequent to the quarter's end, we came to an agreement in principal with a large licensee of our IP, which upon execution of the agreement, is expected to contribute significantly to our IP revenue in fiscal Q4. We continue to expect our cash balance at the end of our fiscal year to remain above $10 million, and total revenue to be in line with fiscal 2010 levels.
"We made critical market acceptance of RVA during the quarter, including forming a strategic partnership with IBM, as well as a major sale into a global media conglomerate end user. Our channel growth from both a revenue and partner perspective continues for our SPHiNX solution. We are confident Crossroads branded products will replace declining legacy OEM revenue and continue to contribute to top line revenue growth in the near-term.
"During the quarter we also achieved critical milestones for StrongBox, which is our upcoming LTFS tape-based data vault. We met our early adopter ship date milestone and received tremendous initial feedback. One of the consistent requests included calls for expanding StrongBox functionality in regard to file retention and access. This capability brings the solution closer in line with a Tier 2 file system while retaining all of the Tier 3 functionality. Although implementing these changes will delay general availability by about four weeks, it will make the product even more attractive to the market place and expand revenue opportunities."
Conference Call
Crossroads will hold a conference call later today (Wednesday, August 24, 2011) to discuss its financial results. President and CEO Rob Sims and CFO Jennifer Crane will host the call starting at 4:30 p.m. Eastern time. A question and answer session will follow management's presentation.
To participate in the call, dial the number 5-10 minutes prior to the start time and ask for the Crossroads Systems conference call:
Date: Wednesday, August 24, 2011
Time: 4:30 p.m. Eastern time (3:30 p.m. Central time)
Dial-In Number: 877-221-8809
International: 706-679-8667
The conference call will be broadcasted and available for replay on the company's Web site in the Investor Relations EventsPresentations section and is also available by clicking here.
For the webcast, please go to the Web site at least 15 minutes early to register, download, and install any necessary audio software. If you have difficulty connecting with the conference call or webcast, please contact Liolios Group at 949-574-3860.
About Crossroads Systems
Crossroads Systems, Inc. (PINKSHEETS: CRDS) (PINKSHEETS: CRDSD) is a global provider of solutions and services that ensure stored data is proactively protected and reliably recovered. Crossroads offers organizations powerful data protection, proactive data security, intelligent storage connectivity, unmatched performance, and significant cost savings. Founded in 1996 and headquartered in Austin, Texas, Crossroads holds more than 100 patents granted and pending and has been honored with numerous industry awards for innovation in data protection and storage. Visit www.crossroads.com.
Important Cautions Regarding Forward-Looking Statements
This press release includes forward-looking statements that relate to the business and future events or future performance of Crossroads Systems, Inc. and involve known and unknown risks, uncertainties and other factors that may cause its actual results, levels of activity, performance or achievements to differ materially from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Words such as, but not limited to, "believe," "expect," "anticipate," "estimate," "intend," "plan," "targets," "likely," "will," "would," "could," and similar expressions or phrases identify forward-looking statements. Forward-looking statements include, but are not limited to, statements about Crossroads Systems' ability to implement its business strategy, including the transition from a hardware storage company to a software solutions and services provider, its ability to expand its distribution channels, its ability to maintain or broaden relationships with existing distribution channels and strategic alliances and develop new industry relationships, the performance of third parties in its distribution channels and of its strategic alliances, uncertainties relating to product development and commercialization, the ability to obtain, maintain or protect patent and other proprietary intellectual property rights, technological change in its industry, market acceptance of its products and services, future capital requirements, regulatory actions or delays, competition in general and other factors that may cause actual results to be materially different from those described herein. Forward-looking statements in this press release are based on management's beliefs and opinions at the time the statements are made. Crossroads Systems does not intend, and undertakes no duty, to update this information to reflect future events or circumstances.
©2011 Crossroads Systems, Inc. Crossroads and Crossroads Systems are registered trademarks of Crossroads Systems, Inc. All trademarks are the property of their respective owners. All specifications are subject to change without notice.
CROSSROADS SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share Data)
Cash and cash equivalents
Short-term investments
Total cash, cash equivalents and short-term investments
Accounts receivable, net of allowance for doubtful accounts of $19 and $17, respectively
Prepaid expenses and other current assets
Property and equipment, net
Intangible assets, net
LIABILITIES AND STOCKHOLDERS' EQUITY
Total current liabilities
Long term deferred revenue
Commitments and contingencies (See Note 8)
Stockholders' equity:
Common stock, $.001 par value, 75,000,000 shares authorized, 42,945,102 and 43,603,463 shares issued and outstanding, respectively
Additional paid-in capital
Accumulated other comprehensive loss
Total stockholders' equity
Total liabilities and stockholders' equity
CROSSROADS SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Share and Per Share Data)
IP license, royalty and other
IP license, royalty and other
Research and development
General and administrative
Amortization of intangible assets
Total operating expenses
Basic and diluted net loss per share
Basic and diluted average common shares outstanding
CROSSROADS SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Cash flows from operating activities:
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Amortization of intangible assets
Loss on disposal of fixed assets
Stock-based compensation
Provision for doubtful accounts receivable
Provision for excess and obsolete inventory
Changes in assets and liabilities:
Prepaids and other current assets
Net cash provided by (used in) operating activities
Cash flows from investing activities:
Purchase of property and equipment
Purchase of held-to-maturity investments
Maturity of held-to-maturity investments
Net cash used in investing activities
Cash flows from financing activities:
Proceeds from issuance of common stock, net of expenses
Net cash provided by financing activities
Effect of exchange rate on cash
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period
Investor Contact: Jennifer Crane
Crossroads Systems Email Contact
512.928.6897 or 800.643.7148 Investor Contact:Scott Liolios or Matt Glover
Liolios GroupEmail Contact
949.574.3860Press Contact:Matthew Zintel
Zintel Public RelationsEmail Contact
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