Xplore Announces Profitable First Quarter Results
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Xplore Announces Profitable First Quarter ResultsXplore
Global rugged computing solutions provider Xplore Technologies is pleased to announce a successful first quarter for fiscal 2018, ended 30 June 2017.
Fiscal First Quarter 2018 and Recent Highlights
- Reported revenue of $20m, an increase of 21.4% from $16m in the year-ago first quarter, reflecting increased sales of rugged tablets, as well as resolution of previously disclosed supply chain constraints
- Ended the quarter with backlog of $4.5m compared with $7.4m at 31 March 2017, reflecting shipment of orders previously held up by supply chain constraints
- Achieved gross margin of 30.9%, compared with 28.1% for the previous quarter and 29.5% in the first quarter 2017
- Reported continued low operating expenses of $6m, a further reduction of 7.3% from the prior year first quarter, reflecting Xplore's lower operating expense business model implemented throughout fiscal 2017
- Reported GAAP net profit of $239,000, or $0.02 per share, compared with a net loss of $1.7m, or $0.16 per share in the previous year first quarter
- Generated adjusted EBITDA of $839,000, Xplore's fourth consecutive quarter of positive adjusted EBITDA, compared with adjusted EBITDA of negative $1.1m in the prior year first quarter
- Furthered restructuring of Xplore's management and corporate governance with the appointment of Mark Holleran as CEO and the decision of Brian Usher-Jones to not stand for re-election as an independent director
- Secured a $16m, two-year customer refresh agreement as a major telecommunications customer standardises its construction and engineering division field workers on Xplore rugged tablets
- Won multiple additional large follow-on orders, including US manufacturing employees at an automotive customer, conversion of another group at an existing telecommunications customer, and property assessment field workers at a Canadian customer
- Launched an upgraded XSLATE D10 with Android 6.0.1 Marshmallow operating system; and
- Secured a new $15m line of credit from Bank of America, including expanded support for inventory financing
Xplore CEO Mark Holleran said: "We are pleased to begin fiscal 2018 with a profitable fiscal first quarter driven by a 21% increase in revenue and continued low operating expenses under our leaner, more cost-efficient business model.
"Demand for rugged tablets improved as customers continue to realise the unique cost and time efficiencies inherent to our devices, and we secured a number of notable sales wins as both existing and new customers increase their adoption of rugged technologies for a growing number of workforce roles.
"We also secured a number of key wins for a strong start to our fiscal year, including a two-year refresh project for a major telecommunications customer, an expansion into a new working group at this customer, an expansion by a European customer into its US manufacturing facilities, a refresh with a Canadian property assessment customer and others.
"These and other customers continue to find improved reliability, performance and return on investment (ROI) through the adoption of rugged tablet computing, further documenting the value proposition Xplore brings to a growing number of vertical industries.
"We continue to focus on expanding sales in key markets, including telecommunications, logistics and international opportunities, as well as working closely with a number of partners on additional initiatives to further our sales reach."
Fiscal 2018 First Quarter Financial Results
Xplore reported revenue of $20m for the fiscal first quarter ended June 30, 2017, compared to revenue of $16.9 million in the fiscal fourth quarter of 2017 and compared to $16.5 million in the year-ago first quarter.
The change in revenue reflected increased sales as demand for rugged tablets improved, combined with further resolution of the previously disclosed short-term supply chain constraints that limited shipments during the March 2017 quarter.
Gross profit in the first quarter was $6.2m, or 30.9% of revenue, compared to $4.8m, or 28.1% of revenue, in the preceding quarter and $4.9m, or 29.5% of revenue, in the prior year first quarter.
The change in gross margin was primarily attributable to product mix and improved efficiencies as revenue scales.
Operating expenses were $6million for the fiscal first quarter, a further 7.3% reduction from $6.4m in the prior year first quarter.
The company believes the reduction in operating expenses by more than 20% year-over-year throughout fiscal 2017 reflects the company's focus on operating efficiency to drive profitability as revenue grows.
A portion of the cost reduction benefit is being reinvested in new sales hires and marketing initiatives to drive revenue growth into fiscal 2018 and beyond.
For the quarter, Xplore reported net income of $239,000, or $0.02 per share, compared to a net loss of $488,000, or ($0.04) per basic share in the fiscal fourth quarter 2017, and a net loss of $1.7m, or ($0.16) per basic share, in the first quarter of fiscal 2017.
The shift to profitable operations reflects improved revenue and significantly lower expenses under Xplore's new operating model.
EBITDA adjusted for non-cash compensation and historical integration costs was $839,000, compared with $30,000 in the preceding quarter and negative adjusted EBITDA of $1.1m in the fiscal first quarter 2017.
Xplore CFO Tom Wilkinson said: "The first quarter of fiscal 2018 further documented the capabilities of our profit-focused, low-opex model implemented throughout fiscal 2017.
"With our significantly lower break-even point and more efficient balance sheet, we anticipate multiple profitable quarters in Fiscal 2018 on improving revenue, as well as solid free cash flow to fund operations and investment in planned platform refreshes."