ATLANTA, 14 August 2008 — TRX, Inc. (NASDAQ: TRXI), a global technology company that develops and hosts software applications to process data records and automate manual processes, today reported financial results for the quarter ended 30 June 2008.
Total revenues excluding client reimbursements for the second quarter of 2008 were $37.5 million compared with $24.5 million in the second quarter of 2007. Net income for the second quarter was $13.1 million compared with net loss of ($0.4) million in the second quarter of 2007. Net income per diluted share was $0.71 compared to net loss per diluted share of ($0.02) for the second quarter of 2007.
Revenues from transaction processing services for the second quarter of 2008 decreased to $16.5 million from $17.7 million in the second quarter of 2007. Revenues from data reporting services were $21.0 million, compared with $6.8 million in the prior year.
Adjusted revenues for the second quarter of 2008 were $27.6 million compared with $24.5 million in the second quarter of 2007. Adjusted revenues from data reporting services were $11.0 million, compared with $6.8 million in the second quarter of 2007. Adjusted revenues exclude $10.0 million of recurring data reporting services provided to Citibank which were required to be deferred under US GAAP until the Company’s sale of a non-exclusive DATATRAX license. The license sale occurred on April 30, 2008. Adjusted EBITDA was $6.0 million for the quarter, compared with $2.7 million in the second quarter of 2007.
“Our business is delivering as expected thus far in 2008,” said TRX President & CEO Trip Davis. “Our team did a great job assisting Citibank in migrating their platform this quarter, delivering $4.5 million for our stakeholders. The Citibank relationship continues to be an important one for us, and this new phase is off to a good start. Organic volumes in transaction processing are moderating in this tough economic environment, as we expected, and we continue to project that data reporting and new client additions will largely offset those challenges this year.”
Based upon its expectations, TRX reiterated its guidance for fiscal 2008, inclusive of the $4.5 million DATATRAX license sale referred to above:
* Adjusted revenues of $92 to $95 million, of which $20 to $23 million is from data reporting.
* Adjusted EBITDA of $8 to $10 million.
* Capital expenditures of $7 to $8 million.
Use of Non-GAAP Financial Measures
TRX provides financial measures and terms not calculated in accordance with accounting principles generally accepted in the United States (GAAP). Presentation of non-GAAP measures such as Adjusted Revenue, Adjusted Data Reporting Revenue, EBITDA and Adjusted EBITDA provide investors with an alternative method for assessing our operating results in a manner that enables investors to more thoroughly evaluate our performance. These non-GAAP measures provide a baseline for assessing the company’s future earnings expectations. TRX management uses these non-GAAP measures for the same purpose. The non-GAAP measures included in this release are provided to give investors access to the types of measures that we use in analyzing our results.
Adjusted Revenue and Adjusted Data Reporting Revenue consist of GAAP transaction and other revenues, adjusted for the revenue earned from Citibank for providing routine services, which was required under US GAAP to be deferred until the sale of a software license to Citibank was complete, which occurred on April 30, 2008. The deferral of revenue recognition was required in the absence of vendor-specific objective evidence of the fair value of the license. Management uses Adjusted Revenue and Adjusted Data Reporting Revenue as additional measures for evaluating the performance of the business, because the pricing for and level of routine services currently being provided to Citibank are equivalent to those provided to Citibank before the arrangement to sell a license was consummated in July 2007.
EBITDA consists of GAAP net income (loss) adjusted for the items included in the accompanying reconciliation. EBITDA provides useful information to investors about the Company’s performance because it eliminates the effects of period to period changes in the cost associated with capital investments and interest expense. Adjusted EBITDA consists of EBITDA adjusted for the items included in the accompanying reconciliation. EBITDA and Adjusted EBITDA do not give effect to the cash the Company must use to service its debt or pay its income taxes and thus do not reflect the funds generated from operations or actually available for capital expenditures.
TRX’s calculation of Adjusted Revenue, Adjusted Data Reporting Revenue, EBITDA and Adjusted EBITDA is not necessarily comparable to similarly titled measures reported by other companies. These non-GAAP measures may be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to GAAP results. Schedules that reconcile Adjusted Revenue, EBITDA and Adjusted EBITDA to GAAP net income (loss) are included with this release.
surf's up......crikey
