Crossroads: Fiscal 4Q12 Financial Results

(in US$ million)	4Q11	4Q12	FY11	FY12
Revenues	6.2	4.4	15.0	14.0
*Growth*		-29%		*-7%*
Net income (loss)	(0.7)	(2.6)	(7.5)	(10.7)

Crossroads Systems, Inc. reported financial results for its fiscal fourth quarter and full year ended October 31, 2012.

Total revenue for fiscal Q4 2012 decreased 29% to $4.4 million from $6.2 million in the same quarter a year ago. The decrease was due to a 38% decrease in IP licensing, royalty and other revenue offset by an increase of 21% in product revenue from fiscal Q4 2011.

Total revenue for the fiscal full year 2012 decreased 7% to $14 million from $15 million in the prior year. The decrease was due to a 23% decrease in IP licensing, royalty and other revenue, offset by a 32% increase in product revenue. The company’s IP licensing campaign resulted in fewer contractual settlements in fiscal year 2012. We intend on continuing our IP licensing campaign in fiscal year 2013.

Gross profit for fiscal Q4 2012 was $3.1 million or 70% of total revenue, as compared to $4.7 million, or 76% of total revenue in the same quarter a year ago. Gross profit for fiscal year 2012 was $11.1 million or 79% of total revenue, as compared to $12.3 million or 82% of total revenue in fiscal 2011. The decrease was mainly due to the lower margin associated with the recognition of the Iron Mountain service revenue in fiscal 2012.

Operating expenses for fiscal Q4 2012 totaled $5.7 million, including $400,000 of stock-based compensation, as compared to $5.4 million, including $575,000 of stock-based compensation in the same period a year ago. Operating expenses for fiscal year 2012 totaled $21.5 million, including $1.7 million of stock-based compensation, as compared to $19.7 million, including $877,000 of stock-based compensation in the prior year. The increase was primarily due to increased headcount in order to support the sales and marketing efforts around the company’s StrongBox product.

Net loss for fiscal Q4 2012 totaled $2.6 million or $(0.23) loss per share, as compared to a net loss of $726,000 or $(0.07) loss per share in the same quarter a year ago. Net loss for fiscal year 2012 totaled $10.7 million or $(0.95) loss per share, as compared to a net loss of $7.5 million or $(0.69) loss per share in fiscal 2011.

At October 31, 2012, cash and cash equivalents totaled $6.9 million as compared to $10.3 million in the previous quarter. The decrease in cash was due to the timing of payments received as well as increased costs related to the company’s StrongBox initiative.

"Our StrongBox go-to-market strategy remains on plan," said Rob Sims, president and CEO of Crossroads. "Our sales team along with our channel partners, continue to successfully penetrate key market verticals where we believe Strongbox is poised to become a leader in long-term archive solutions. Additionally, the revenue pipeline continues to grow over the prior quarter. We saw our first follow-on order from a StrongBox customer, confirming the capacity-based revenue model that StrongBox brings. The Iron Mountain development effort is on schedule and we remain excited about this pivotal relationship. The overall strength of our model was shown over the course of this last year as product revenue increased 32% from the prior year, positioning Crossroads for continued market leadership in 2013 and beyond."