I.D. Systems Inc. (
Q3 2011 Earnings Call
October 31, 2011 10:30 AM ET
Jeffery Jagid, Chairman and CEO
Ned Mavrommatis – Chief Financial Officer
Darryl Miller – Chief Operating Officer
Ken Ehrman – President
Matthew Hoffman – Cowen & Company
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Good day, ladies and gentlemen. And welcome to the I.D. Systems Inc. Q3 2011 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. (Operator Instructions)
As a reminder, this conference call is being recorded. I would now like to introduce your host for today’s conference, Jeffery Jagid, Chairman and CEO.
Thank you. Welcome to I.D. Systems fiscal 2011 third quarter conference call. Thank you for joining us today. I’m Jeffrey Jagid, the Chairman and CEO of I.D. Systems. Joining me our CFO, Ned Mavrommatis; our Chief Operating Officer, Darryl Miller; and Ken Ehrman, the President of the company.
I will provide a brief overview of the quarter, Ned will detail our financials, Darryl will update you on our operations and the performance of our Asset Intelligence subsidiary, and Ken will discuss other highlights. We will then open the call to your questions.
Before we begin, let me reiterate the Safe Harbor statement under the Private Securities Litigation Reform Act of 1995. The following discussion contains forward-looking statements that are subject to risks and uncertainties, including, but not limited to, the impact of competitive products, product demand and market acceptance risks, fluctuations in operating results and other risks detailed from time to time in I.D. Systems’ filings with the Securities and Exchange Commission.
These risks could cause the company’s actual results for the current fiscal year and beyond to differ materially from those expressed in any forward-looking statements made by or on behalf of the company.
The third quarter of 2011 fully met or exceeded our expectations in almost every respect. As we have stated on prior calls, our goals for 2011 included, resuming strong topline revenue growth, diversifying revenue sources, controlling costs and achieving net profitability by years end.
I am pleased to report, that our Q3 revenue of $11.3 million represents our highest ever quarterly revenue to date, a 74% year-over-year improvement from Q3 2010 and our fifth consecutive quarter of sequential revenue growth.
With this increase in revenue plus a stable gross margin of over 50% and our continued focus on managing overhead costs, we achieved non-GAAP net income of -- in Q3 of $0.06 per share.
Needless to say, we are gratified by the success of our growth strategy and very happy about meeting so many key goals this quarter for our shareholders.
Our Q3 revenue growth was driven by three factors that speak to the continued expansion of applications for unique wireless asset management technology and to the diversification of our customer and revenue base.
First, we generated significant revenue from our rental fleet management solutions, which are now being deployed by Avis Budget Group. Second, we continue to achieve robust sales of our core industrial vehicle management systems adding several more Fortune 500 and industry leading customers from a broad range of vertical markets, as well as maintaining successful business relationships with our core blue chip customers. And third, our Asset Intelligence subsidiary achieved record orders for its transportation management solutions during the quarter.
In a few minutes, Darryl will provide more granularity on the performance of our AI unit and Ken will discuss the highlights of our rental and industrial vehicle management businesses.
Not surprisingly with our consistent quarter-to-quarter improvements, our year-to-date performance in 2011 has also met or exceeded our expectations. I.D. Systems revenue for the first nine months of 2011 was $27.5 million, a 47% increase compared to the same period a year ago. At the same time, our SG&A and R&D expenses decreased 9% compared to the same year ago period.
We continue to believe that we can drive our revenue up to approximately 50% with the overhead structure we currently have in place. Our focus on Q4 2011 and beyond remains the same. We continue to target new customers and applications, as well as organic opportunities for topline revenue growth, we strive to increase predictable recurring revenue as a percentage of total revenue, we are committed to maintaining discipline on costs and our ultimate goal remains to further improve our net results and increase shareholder value.
Thank you for your time today, I look forward to your questions later on the call. Now, let me turn it over to our CFO, Ned Mavrommatis to detail our financial results.
Thank you, Jeff, and hello to everyone on the call today. As Jeff noted, our revenue for the third quarter ended September 30, 2011, increased 74% to $11.3 million from same $6.5 million for the third quarter of 2010. The in revenue was due to increase sales of our company’s wireless vehicle management systems for fleets of rental cars and industrial trucks. Recurring revenue for the quarter was $4.2 million.
Our gross margins for the quarter were 52%, reflecting continued price stability of our systems and high margins for our recurring revenues, primarily from the transportation asset management systems of our Asset Intelligence subsidiary.
Operating expenses for the quarter remain flat at $6.5 million, if you exclude stock-based compensation and depreciation and amortization of intangible assets of $880,000, non-GAAP operating expenses for the quarter were $5.6 million.