XATA Reports Second Quarter Fiscal 2010 Results

MINNEAPOLIS, May 6 /PRNewswire-FirstCall/ -- XATA Corporation (Nasdaq: XATA), today reported revenue of $18.1 million for the quarter ended March 31, 2010 compared to $16.9 million for the same period of fiscal 2009. This revenue growth was driven by a 35 percent growth in total software revenue over the same period of fiscal 2009.  Fiscal 2010 second quarter software revenue accounted for 63 percent of total revenue compared to 50 percent for the same period of fiscal 2009. The Company acquired 42 new customers in the second quarter of fiscal 2010.  

"The second quarter represented a very strong software quarter for us," said Jay Coughlan, chairman and president of XATA. "Our ability to continue to renew existing customers and our ability to acquire new customers through our XATANET and new Turnpike platforms drove our software growth."

Operationally, software gross margins increased to 73 percent for the second quarter of fiscal 2010 compared to 71 percent for the same period of fiscal 2009. This improvement was driven by the Company's ability to leverage its SaaS infrastructure by expanding its software subscriptions and the addition of new revenue through the launch of new functionality. Overall gross margins were 50 percent for the second quarter of fiscal 2010 compared to 45 percent for the same period of fiscal 2009. The improved margins were the result of software revenue growth and improved software margins.

Selling, general and administrative costs were $6.9 million or 38 percent of revenue and $5.8 million or 34 percent of revenue for the second quarter of fiscal 2010 and 2009, respectively. The increase in selling, general and administrative costs as a percentage of revenue was driven by additional costs associated with the Turnpike Global Technologies infrastructure. The Company's expectation is that these costs will be refined in the upcoming quarters as the integration continues allowing for further leveraging of selling, general and administrative costs.

Research and development costs were $1.6 million or 9 percent of revenue and $1.4 million or 8 percent of revenue for the second quarter of fiscal 2010 and 2009, respectively.  The increase was driven by additional investment in research and development costs associated with new functionality.  

Operating income for the second quarter of fiscal 2010 and 2009 was $0.5 million. Excluding acquisition and integration related costs that occurred totaling approximately $0.3 million, operating income on a non-GAAP basis, increased 50 percent on a year-over-year basis to 4.4 percent in fiscal 2010.

For the second quarter of fiscal 2010, the Company reported a $0.7 million or 41 percent improvement in non-GAAP earnings (earnings before interest (net), non-recurring acquisition and financing related costs, taxes, depreciation, amortization, stock based compensation and preferred stock dividends and deemed dividends) of $2.4 million compared to $1.7 million for the same period of fiscal 2009.

As of March 31, 2010, the Company held $13.9 million in cash and cash equivalents and had working capital of $19.9 million excluding the current portion of long-term obligations and deferred revenue.

"Our operating results for the quarter were very strong on a year-over-year basis," said Mark Ties, chief financial officer of XATA. "The performance of our existing software business and the addition of Turnpike's software stream drove a 2 percentage point increase in our software margins and allowed us to improve operating income performance."

Non-GAAP vs. GAAP Financials

To supplement the Company's consolidated financial statements presented in accordance with GAAP, the Company provides certain non-GAAP measures of financial performance. These non-GAAP measures include non-GAAP earnings, which is earnings before interest (net), acquisition and financing related costs, taxes, depreciation, amortization, stock based compensation and preferred stock dividends and deemed dividends, and non-GAAP earnings per diluted share. The Company's reference to these non-GAAP measures should be considered in addition to results prepared under current accounting standards, but are not a substitute for, or superior to, GAAP results.

These non-GAAP measures are provided to enhance investors' overall understanding of the Company's current financial performance and ability to generate cash flow. In many cases non-GAAP financial measures are used by analysts and investors to evaluate the Company's performance. Reconciliation to the nearest GAAP measure of all non-GAAP measures included in this press release can be found in a financial table included below.

About XATA

Based in Minneapolis, MN, XATA Corporation (Nasdaq: XATA) is an expert in optimizing fleet operations by reducing costs and ensuring regulatory compliance for the trucking industry. Our customers have access to current vehicle data anywhere, anytime, through our monthly service packages. Our software and professional services help companies manage fleet operations, enhance driver safety and deliver a higher level of customer satisfaction.  XATA provides expert services to develop the business processes required to deliver the profitability, safety and service level demanded by today's competitive transportation environments.  Today, XATA systems increase the productivity of approximately 104,000 trucks across North America.  For more information, visit www.xata.com or call 1-800-745-9282.

Cautionary note regarding forward-looking statements.  

This announcement includes forward-looking statements.  Statements that are not historical or current facts, including statements about beliefs and expectations, are forward-looking statements.  Such statements are based on current expectations, and actual results may differ materially. The forward-looking statements in this announcement are subject to a number of risks and uncertainties including, but not limited to, the possibility of continuing operating losses, the ability to adapt to rapid technological change, dependence on positioning systems and communication networks owned and controlled by others, the receipt and fulfillment of new orders for current products, the timely introduction and market acceptance of new products, the ability to fund future research and development activities, the ability to establish and maintain strategic partner relationships, and the other factors discussed under "Risk Factors" in Part IA, Item 1 of our Annual Report on Form 10-K for the fiscal year ended September 30, 2009 (as updated in our subsequent reports filed with the SEC).  These reports are available under the "Investors" section of our Web site at www.xata.com and through the SEC Web site at www.sec.gov.  Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update them in light of new information or future events.

SOURCE XATA Corporation