Crossroads Systems: Fiscal 4Q15 Financial Results

(in $ million)	4Q14	4Q15	FY14	FY15
Revenue	2.6	1.8	11.1	7.8
*Growth*		-31%		*-30%*
Net income (loss)	NA	NA	(9.2)	(9.0)

Crossroads Systems, Inc. reported financial results for its fiscal fourth quarter and full year ended October 31, 2015.

Fiscal Q4 and Full Year 2015 Financial Results

Total revenue for fiscal Q4 2015 decreased 32% to $1.8 million from $2.6 million in the same quarter a year ago. The decrease is primarily due to lower revenue from our SPHiNX OEM and StrongBox products.
Total revenue for the fiscal full year 2015 decreased 30% to $7.8 million from $11.1 million in the prior year. The decrease was mainly due to lower SPHiNX OEM and custom development revenue as well as lower intellectual property (“IP”) licensing revenue.
Gross profit for fiscal Q4 2015 was $1.3 million or 75% of total revenue, compared to $2.1 million or 79% of total revenue in the same quarter a year ago. Gross profit for fiscal year 2015 was $5.8 million or 74% of total revenue, compared to $9.1 million or 82% of total revenue in fiscal year 2014. The period-to-period and year-over-year decreases were mainly due to the higher concentration of lower margin products.
Excluding IP litigation and prosecution expenses, fiscal Q4 2015 operating expenses decreased 8% to $2.7 million, compared to $2.9 million in the same period a year ago. Excluding IP litigation and prosecution expenses, fiscal year 2015 operating expenses decreased 15% to $11.2 million, compared to $13.1 million in the prior year. The decreases were primarily due to lower employee related expenses.
Net loss available to common stockholders for fiscal year 2015 was $9.3 million or $(0.48) loss per share, compared to a net loss of $9.7 million or $(0.69) loss per share in fiscal year 2014.
At October 31, 2015, cash, cash equivalents and restricted cash totaled $11.8 million compared to $4.9 million in the previous year.

Richard K. Coleman, Jr., president and CEO, said: “I believe this quarter marks a significant turning point for Crossroads. In addition to ongoing StrongBox sales and delivery progress, we strengthened our balance sheet. Our recent $10 million financing puts us in a strong position to continue funding our patent monetization, and allowed us to pay off our Fortress loans in their entirety. For the first time since 2007, Crossroads is debt-free. We’re also looking forward to the next steps in our patent litigation and expect our long-awaited patent validity rulings beginning next month.“

Comments

Jennifer Crane, CFO:
"The decrease was primarily due to a reduction in our legacy OEM SPHiNX product as well as lower StrongBox revenue.
"StrongBox product and maintenance revenue was $652,000 compared to $975,000 during the same quarter last year, a 33% decrease. In the fourth quarter, we generated new StrongBox purchase orders of nearly $1.2 million including maintenance. This figure represents our highest sales quarter to-date and includes a single $410,000 order, our largest ever.
"In Q4, we spent $1.9 million on legal expenses.
"For our fiscal year ended October 31 (...) The primary factors contributing to the decrease were a $1.4 million decrease in product revenue primarily due to HP's transition from our OEM SPHiNX product to their own platform, a $750,000 decrease in custom development revenue due to our decision to focus on commercially available products and $872,000 decrease in IP license revenue mainly due to IBM's acquisition of one of our licensees."