Crossroads: Fiscal 4Q14 Systems Preliminary Results

Crossroads Systems, Inc. announced preliminary estimated financial results for the fiscal fourth quarter and full year ended October 31, 2014.
 
The company expects to report $2.5-$2.6 million in total revenue in the quarter ending October 31, 2014, as compared to $2.1 million for the quarter ended July 31, 2014.

The principal factor in the expected quarterly revenue increase is the increase in expected StrongBox unit sales revenue over the prior quarter. For the fourth quarter, the company expects to report StrongBox revenue of approximately $1.0 million, an increase of approximately $0.7 million in StrongBox sales from the quarter ended July 31, 2014, and a highest quarterly StrongBox revenue amount to date. It expects total revenue to reflect a decrease from the $3.6 million reported for the three months ended October 31, 2013, due to a reduction in revenue received from our OEM SPHiNX product as HP transitions the product to their own platform. Year over year, the company expects to report decreased revenue due to the decrease in OEM SPHiNX revenue.

The company expects to report gross profit of $1.9-$2.1 million for the three months ended October 31, 2014, reflecting an increase over the $1.7 million in gross profit reported in the three months ended July 31, 2014, due to the increase of $0.6 million in StrongBox sales. It expects to report gross profit lower than the $2.8 million reported for the quarter ended October 31, 2013, due to the reduction in revenue received from our OEM SPHiNX product as HP transitions the product to their own platform. Year over year, it expects to report decreased gross profit due to the decrease in OEM SPHiNX revenue.

The company expects to report total operating expenses of $3.7-$3.9 million for the quarter ended October 31, 2014, reflecting an increase over the $3.4 million in operating expenses it reported for the three months ended July 31, 2014, due to increased IP litigation and additional year-end expenses. It expects to report total operating expenses reflecting a decrease from the $4.9 million we reported for the three months ended October 31, 2013, primarily due to our reduction in force in October 2013.

Headcount went from 82 in September 2013 to 48 in October 2014.

Year over year, the compay expects to report decreased operating expenses due to the company’s decreased headcount and related expenses.

The company expects to report a loss from operations of $(1.7)-$(1.9) million for the three months ended October 31, 2014, reflecting an increased loss as compared to the $(1.7) million loss reported for the three months ended July 31, 2014, due to increased IP litigation and additional year-end expenses. It expects to report a decreased loss from operations from that reported in the three months ended October 31, 2013 due to reduced expenses from our October 2013 reduction in force. Year over year, it expects to report decreased loss from operations due to the company’s decreased headcount and related expenses.

Richard K. Coleman, Jr., president and CEO, Crossroads, said: “Preliminary StrongBox revenue was $1,025,000 in the fourth quarter, our highest quarterly StrongBox revenue to date, representing a $651,000 or a 174% increase over StrongBox revenue from the prior quarter ended July 31, 2014. We believe much of this estimated increase was driven by StrongBox’s evolution from an archive only appliance to a network-attached storage solution, completed in July 2014.”