Corporate Sales Help Drive Quarterly TRX Revenue
NOVEMBER 14, 2008 -- TRX's third-quarter adjusted data reporting revenues are up 17 percent year-over-year due to higher direct corporate sales and the exclusion of Citibank data reporting engagements, the travel technology company's executives today announced during an earnings call. Meanwhile, the company has lightened its expectations for full-year 2009 amid some revenue shortcomings and third-quarter net income losses attributed to the whirlwind economy.
Over the past several months, TRX has pulled away from its labor-intensive outsourced services and processing relationships with its five largest clients, which until recently drove 80 percent of its revenue, according to TRX president and CEO Trip Davis. In the second quarter of 2009, Citibank purchased a non-exclusive license for TRX's DataTrax reporting tool and migrated TRX-supplied outsourced services in-house. Including Citibank, data reporting revenues decreased 17 percent year-over year to $3.5 million.
Although TRX maintains more limited relationships with its top five clients, including American Express, Citibank and Expedia, its move to hosted software as a service business model has enabled the company to further penetrate the direct corporate market. From the start of the third quarter, TRX has 23 new accounts, the majority of which are corporate travel programs, Davis said.
"We are reducing our reliance on per ticket processing and increasing what we hope to be positive exposure to software subscription and usage based revenue by our clients. That way, when you see the ups and downs of travel transactions, we should have our exposure to that mitigated compared to other companies that might be purely exposed to the number of tickets or hotel rooms," Davis told Business Travel News. "It's enabled us to refocus that entire team on serving the corporate travel marketplace for data reporting and data analytics."
Despite its corporate sales success, CFO David Cathcart said TRX continued "to aggressively navigate all elements [expenses] downward." During the quarter, operating expenses decreased 15 percent to $12.1 million. Capital expenditures, which include money allocated for long-term growth projects, are down 68.2 percent. Davis said the company next year will "hold firm" on technology development, which dropped 12.8 percent to $3.0 million in the quarter.
Davis would not disclose plans for headcount reduction. He said the company has about 800 employees worldwide, including 250 in Bangalore, India.
Transaction processing revenues, which includes those generated from TRX's Correx mid-office software platform and the ResX online booking tool decreased 6.5 percent to $16.1 million in the quarter, "reflecting degradation in both corporate and leisure volumes primarily in the U.S. and consistent with the broad trends present in the global travel industry," Cathcart said. Transaction processing volumes decreased 4.8 percent year-over-year to 20.1 million. The company lost $2.1 million in the quarter, albeit better than the third quarter of 2007 when it lost $3.9 million.
surf's up......crikey
