CIMdata PLM Industry Summary Online Archive

5 August 2004

Financial News

netGuru Reports Fiscal 2005 First Quarter Results

netGuru, Inc. reported financial results for fiscal 2005 first quarter ended June 30, 2004.

Net revenues for the quarter were $3.7 million compared to $4.3 million in fiscal 2004 first quarter. Net loss was $738,000, or $0.04 per diluted share, compared to a net loss of $403,000, or $0.02 per diluted share, in fiscal 2004 first quarter.

Net revenues for fiscal 2005 first quarter decreased by $514,000, or approximately 12.1%, compared to the same quarter in the prior year. Engineering and collaborative software sales decreased $278,000, or approximately 10.2%, primarily due to revenues from two large projects completed in the first quarter of the prior year. No similar projects were completed in the current first quarter.

Although overall engineering and collaborative software net revenues decreased in the first quarter of fiscal 2005 to $2.4 million from $2.7 million in the first quarter of fiscal 2004 due to the absence of such projects, core engineering software net revenues improved 15.4% compared to the prior year's first quarter to $2.3 million from $2.0 million due to higher sales in Europe and Asia, and due to incremental sales of the Company's new, advanced bridge-engineering software and 3-D modeling engineering software.

Net revenues from IT services fell $132,000, or 10.9%, to $1.1 million due to continuing weak demand in the IT sector in the U.S. and Europe, but this decrease was partially offset by an increase in IT services revenues in India. Web-based telecommunications services revenues declined $104,000, or 31.9%, due to intense price competition as well as reduced volume.

Overall gross margins rose to 69.7% from 68.2% in first quarter of last year due to improved margins from IT services business. This improvement was primarily a result of scaling back in one of the domestic offices as well as the acquisition of a higher margin IT services company engaged in steel detailing services in India.

Total operating expenses of $3.1 million for fiscal 2005 first quarter were relatively flat compared to first quarter of last year. Selling, general, and administrative expenses of $2.3 million for fiscal 2005 first quarter were also flat. Bad debt expense increased to $165,000 in fiscal 2005 first quarter from $11,000 in the prior year first quarter primarily due to one collaborative software customer.

netGuru Chairman and Chief Executive Amrit Das remarked: "Despite a seasonally weak first quarter, we were pleased to see that our core engineering software sales improved and are also encouraged by the progress we are making to increase revenues from our eReview collaborative software, which includes the recently announced collaborative software project with BIW Technologies.

"Our strategy to increase revenues from business process outsourcing is also taking hold," Das continued. "We believe interest from engineering-related businesses in our business process outsourcing capabilities and services is strong, as evidenced by the recent DOWCO agreement. Based on these indications, we expect to be profitable in the second quarter of fiscal 2005 and for the fiscal year."

With the exception of historical or factual information, the matters discussed in this press release, including sales/revenue growth, future demand for business process outsourcing services, market trends, timing of sales, expected profitability, and timing of profitable quarters are forward looking statements that involve risks and uncertainties. Please see the"Risk Factors" Section of the company's Form 10-KSB for the fiscal year ended March 31, 2004, as filed with the U.S. Securities and Exchange Commission for more information.

 

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