Crossroads Systems: Fiscal 3Q08 Financial Results

Crossroads Systems, Inc. announced results for its fiscal third quarter ended July 31, 2008 (Q3’08).

Revenue for Q3’08 totaled $4.1 million, compared to $5.1 million in the fiscal second quarter ended April 30, 2008 (Q2’08). Product revenue totaled $2.2 million for Q3’08 compared to $2.3 million for Q2’08. Revenue from IP license, royalty and other totaled $1.9 million for Q3’08 compared to $2.8 million for Q2’08. The IP license, royalty and other revenue decrease in Q3’08 was related to lower than expected shipments by one of the Company’s OEM relationships as well as a decrease in IP license revenue.

Gross profit was $3.4 million, or 82 percent for Q3’08, compared to $4.1 million, or 81 percent for Q2’08. The increase in gross profit as a percentage of revenue was driven by a higher mix of sales of ReadVerify (RVA), FileMigrator Agent (FMA) and VirtualTape Server (VTS) products. Net income for Q3’08 was $1.2 million, or $0.04 cents gain per share, compared to a net loss of $2.5 million, or $0.09 cents loss per share in Q2’08. Other income for Q3’08 includes a one-time increase related to some legal settlements.

“During this quarter we have achieved several key milestones as we continue the turnaround of the Company,” said Rob Sims, CEO & President of Crossroads Systems. ”We reached a critical inflection point, with revenue from new products outpacing revenues from our legacy product lines. We now are gaining traction with our full suite of storage and security products addressing a much larger and growing market opportunity. We are very optimistic about the potential of our strong partnerships and solid sales pipeline.”

"We now believe we have built the proper infrastructure and have positioned the company well as we transition from a router company to a leading provider of data security, resiliency and connectivity solutions with a product suite unmatched in the marketplace today,” Sims continued.