Crossroads: Fiscal 4Q11 Financial Results

Crossroads Systems, Inc. reported financial results for its fiscal fourth quarter and full year ended October 31, 2011.

Fiscal Q4 2011 Highlights

• Revenue increased 14% to $6.2 million versus the same period a year ago
• Cash, cash equivalents and short-term investments increased 13% to $10.7 million from the previous quarter
• Partnered with Aspera to enhance SPHiNX and StrongBox with data replication and WAN acceleration technology
• Released SPHiNX 8.1, the company’s virtual tape appliance that provides a comprehensive and cost-effective disaster recovery solution for small businesses
• Obtained listing on the NASDAQ Capital Market

Fiscal Q4 and Full Year 2011 Financial Results
Revenue for fiscal Q4 2011 increased 14% to $6.2 million from $5.4 million in the same year-ago quarter. The increase was primarily due to a 26% increase in IP licensing, royalty and other revenue from fiscal Q4 2010.

Revenue for the fiscal full year 2011 decreased 8% to $15.0 million from $16.4 million in the prior year. The decrease was primarily due to a 13% decrease in IP licensing, royalty and other revenue, offset by an increase in product revenue. The company’s IP licensing revenue can vary significantly from quarter to quarter and should be considered on an annual basis, as Crossroads does not control the timing or pace of negotiations.

Gross profit for fiscal Q4 2011 was $4.7 million or 76% of total revenue, as compared to $4.7 million, or 87% of total revenue in the same quarter a year ago. Gross profit for fiscal year 2011 was $12.3 million or 82% of total revenue, as compared to $13.9 million or 85% of total revenue in fiscal 2010. The decrease was due to increased costs associated with the company’s IP licensing campaign in fiscal 2011.

Operating expenses for fiscal Q4 2011 totaled $5.4 million, including $575,000 of stock-based compensation, as compared to $4.8 million, including $193,000 of stock-based compensation in the same period a year ago. Operating expenses for fiscal year 2011 totaled $19.7 million, including $877,000 of stock-based compensation, as compared to $18.0 million, including $764,000 of stock-based compensation in the prior year. The increase was primarily due to increased headcount in order to launch and support the company’s new StrongBox product.

Net loss for fiscal Q4 2011 totaled $724,000 or $(0.07) per share, as compared to a net loss of $171,000 or $(0.02) per share in the same quarter a year ago. Net loss for fiscal year 2011 totaled $7.5 million or $(0.69) per share, as compared to a net loss of $4.3 million or $(0.56) loss per share in fiscal 2010.

At October 31, 2011, cash and cash equivalents and short-term investments totaled $10.7 million, an increase of 13% from $9.5 million in the previous quarter. The increase in cash was due to receipt of an outstanding IP licensing royalty payment, offset by costs related to the company’s StrongBox initiative.

"Q4 and fiscal 2011 were in line with our expectations," said Rob Sims, president and CEO of Crossroads Systems. "With double-digit revenue growth in Q4 driven by a large IP licensing royalty. We ended the year with a strong balance sheet, including more than $10 million in cash."

"StrongBox met its general availability date of December 5th, and we announced our first shipment to Capgemini earlier this week. So, as we begin this new fiscal year, we believe Crossroads has arrived at a pivotal moment in its development, as we release this disruptive new technology into what we believe is the highest growth segment of the IT market."