ARI Network Services, creator of SaaS and DaaS solutions that connect consumers, dealers, distributors, and manufacturers in selected vertical markets, recently reported their financial results for the second quarter of fiscal 2013 ending January 31, 2013. The Company also announced that it has entered into definitive agreements with various accredited investors in a private placement of $4.8 million of common stock at a price of $1.50 per share.
Highlights for the quarter included:
- On November 28, 2012, the Company acquired the assets of the retail division of 50 Below Sales & Marketing Inc., a leading provider of eCommerce websites to the powersports, automotive tire and wheel aftermarket, medical equipment and pool and spa industries. The acquisition brings with it over 3,500 dealer websites, more than doubling the size of ARI’s website business and making websites the Company’s largest source of revenue.
- Total revenue for the second quarter of fiscal 2013 increased 35.9% to $7.5 million compared to $5.5 million in for the same period in fiscal 2012, primarily as a result of the acquisition.
- Recurring revenue for the quarter increased 41.9% to $6.6 million, or 88.3% of total revenue, from $4.7 million, or 84.6% of total revenue, for the same period in fiscal 2012.
- Total operating expenses increased 55.0% to $6.3 million for the three months ended January 31, 2013 compared with $4.1 million for the three months ended January 31, 2012. This increase resulted primarily from the addition of the Ready2Ride and 50 Below operations. Of this increase, approximately $625,000 represents acquisition-related legal and professional fees.
- For the quarter that ended January 31, 2013, churn (the measure of customers that do not renew) improved approximately 28.4% compared to the same quarter last year.
Roy W. Olivier, president and chief executive officer of ARI, commented, “50 Below integration activities are well underway; this acquisition will be a game changer for ARI. The integration of 50 Below into ARI makes us one of the leading providers of websites to the powersports market, and the addition of Ready2Ride’s aftermarket fitment data to our product offering makes ARI one of the most comprehensive providers of eCommerce solutions to the powersports industry. This acquisition also provides us with a footprint in the automotive aftermarket industry with more than 2,000 wheel and tire dealer websites.”
Private Placement Transaction
The company also announced their entrance into definitive agreements with various accredited investors in a private placement of approximately $4.8 million of common shares at a price of $1.50 per share. In addition, the company will issue to the investors warrants to purchase 1,066,667 shares of common stock. The warrants have an exercise price of $2.00 per share and are exercisable for five years.
New institutional investors accounted for the majority of the financing and existing investors made up the remainder. The signing of the purchase agreements occurred on Tuesday, March 12, 2013. The offering is expected to close on or about Monday, March 18, 2013, subject to satisfaction of customary closing conditions.
