MAM Software Group Inc., a global provider of on-premise and cloud-based business management solutions for the auto parts, tire and vertical distribution industries, has announced its financial results for its fourth fiscal quarter and year ended June 30, 2018.

Fourth quarter highlights included:

• Net revenues of $9.5 million were up 15.1 percent compared to $8.3 million for the same period last year. On a constant currency basis, revenues were up 10.5 percent over the same period last year.
• Recurring revenues were 81 percent of total revenues compared to 82.9 percent of total revenues for the same period last year.
• Total Software as a Service (SaaS) revenues increased 25 percent year-over-year and 1.8 percent sequentially.
• Operating income was $1.3 million, or 13.9 percent of revenues, compared to $1.6 million, or 19.2 percent of revenues, for the same period last year.
• Net income was $958,000 compared to $2.4 million in the same period last year.
• Adjusted EBITDA was $1.6 million, or 17 percent of revenues, compared to $1.9 million, or 22.3 percent of revenues, for the same period last year.

Michael Jamieson, MAM’s president and CEO, commented, “Our financial results for fiscal 2018 included revenue growth of 13 percent, or 9 percent on a constant currency basis, and Adjusted EBITDA of just over $6 million, which exceeded the high end of our guidance. We also invested over $6 million in research and development that is being leveraged for the benefit of our existing customers and is helping to drive an increase in our pipeline of new business opportunities, reinforcing our optimism for profitable growth in fiscal 2019 and beyond.”

Jamieson concluded, “Our business is generating substantial levels of cash from operations that sufficiently funded our investments in research and development, funded our debt service and increased our cash reserves. Our balance sheet and our business remain healthy, and we are energized by the direction we are taking our business for the long-term. We have a business plan for fiscal 2019 that we believe will deliver both top-line growth and increased profitability.”

Fiscal 2018 Full Year Financial Results

Net revenues were $35.8 million compared to $31.6 million for the same period last year, an increase of $4.2 million, or 13.2 percent. On a constant currency basis, revenue was up 8.9 percent over the same period last year.Recurring revenue for fiscal 2018 was $29.8 million, or 83.3 percent of total revenue, an increase of $3.8 million, or 14.4 percent, compared to $26 million, or 82.4 percent of total revenue, for fiscal 2017.

Total Software as a Service (SaaS) revenue for fiscal 2018 was $11.2 million, an increase of $2.5 million, or 29 percent, year-over-year. The increase in the SaaS revenue was primarily attributable to a 20 percent increase in Autowork Online (SaaS) revenue for fiscal 2018 to $6.4 million, and a 43.5 percent increase in Autopart Online (SaaS) revenue for fiscal 2018 to $4.8 million.

Total Data as a Service (DaaS) revenue for fiscal 2018 was $9.8 million, an increase of $943,000, or 10.7 percent, compared to fiscal 2017.

Gross profit for fiscal 2018 was $19.7 million, or 55 percent of total revenue, an increase of $2.3 million compared to $17.4 million, or 55.1 percent of total revenue, for the same period last year.

Operating expenses for fiscal 2018 increased by $1.6 million to $14.8 million, an increase of 12.2 percent compared to $13.2 million for the same period last year. MAM said the increase was primarily the result of increased R&D expenses as a result of lower capitalization rates and resources to support product enhancements and new client developments, increased general and administrative expenses due to taxes on the vesting of equity compensation awards and unfavorable foreign exchange rate currency movements, which were partially offset by lower sales and marketing expenses as a result of lower headcount in the U.K. and lower commission expense from perpetual sales.

Operating income for fiscal 2018 increased by $677,000, or 16.1 percent, to $4.9 million, compared to $4.2 million for the same period last year. Interest expense for fiscal 2018 decreased by $148,000, or 26.5 percent, to $411,000, compared to $559,000 for the same period last year.

Net income for fiscal 2018 was $3.2 million, or 27 cents per basic and diluted share, compared to $4.6 million, or 39 cents per basic and diluted share, for the same period last year. Net income for fiscal year 2017 included a tax benefit of $920,000 primarily related to a partial release of the valuation allowance and the impact of adopting a new accounting pronouncement.

Business Outlook

The company said it expects continued revenue growth during fiscal 2019 of approximately 10 percent and continuing improvement in profitability with 2019 Adjusted EBITDA in the range of $6.2 million to $6.7 million, on a constant currency basis. The company also expects to invest approximately $7 million in research and development, including capitalized software development costs.

Brian Callahan, MAM’s chief financial officer, commented, “I am very pleased with the operating results and our financial position for fiscal year 2018, and I believe we are well-positioned to achieve our plan for fiscal year 2019. We are working to achieve certain key milestones, including launching the deployment of VAST Online for Goodyear and the initial group of their independent dealers, which we expect to continue well into fiscal year 2020. I am also very excited about new opportunities we are seeing for our new and existing products, and we believe executing on our plan for fiscal year 2019 will position us to capitalize on many of these opportunities. We are continuing to invest in R&D, which we believe will help us capture and accelerate these new opportunities. It is important to note that although our overall level of investment will not materially fluctuate from fiscal year 2018, most of this investment reduces Adjusted EBITDA since it will not be capitalized at the same levels as we saw in prior years.”