In-Touch Survey Systems Ltd. Announces Q3 2011 Financial Results with 63% Increase in Sales
OTTAWA, Nov. 29, 2011 /CNW/ - In-Touch Survey Systems Ltd. ("In-Touch") (TSXV: INX.V - News) announces revenues increased 63% to $2,762,963 in Q3 2011 compared to $1,692,155 in Q3 2010. Net earnings for Q3 2011 were $197,281 compared to net earnings of $377,534 in Q3 2010. The Company-defined adjusted EBITDA was $376,000 in Q3 2011, compared to EBITDA of $480,000 in Q3 2010.
On Aug 4, 2011 Global Compliance Services ("GCS") entered into an Agreement with In-Touch whereby GCS outsourced the management of its Service Intelligence ("SI") customers to In-Touch. SI (www.serviceintelligence.com) is a mystery shopping company based in Charlotte, North Carolina. The Agreement included the right for In-Touch to assume direct ownership of these customers at the end of the outsourcing period. As part of the agreement, In-Touch acquired the right to use the Service Intelligence name and will pay GCS a royalty of 10% for the first twelve months and 5% for the second twelve months paid on outsourced customers to a maximum revenue of $3.5 million - a potential cost to In-Touch of $350,000 in the first year and $175,000 in the second year.
The SI customer base uses multiple platform software solutions and under GCS was generating lower gross margin than In-Touch's mystery shopping customer base. In-Touch estimates that it will take between six and twelve months to migrate the SI customers onto In-Touch products and systems. During this six to twelve month period In-Touch will benefit from the increased revenue, especially in the USA, but lower gross margins and will also be faced with increased operational costs as it manages, and migrates, the SI customer base.
"Q3 2011 was our seventh consecutive quarter of revenue growth and profitability, and revenues exceeded both original growth targets and our revised guidance. Revenues for Q4 2011 will also exceed original recent guidance and the Company anticipates significant revenue growth above $10M in 2012 - assuming positive economic externalities," said Michael Gaffney, Chief Executive Officer.
"Our business focus on the data capture market, especially mobile applications, is gaining more and more traction in Fortune 1000 customers. Over three years ago we were one of the first companies to design and deploy enterprise-grade HTML5 solutions for the marketplace and this market leadership is now translating into strong revenue growth. In addition, the newly formed IMS group is very exciting as we are making significant inroads in sales to governments: IMS sales will exceed $1,000,000 in its first full year. To support further growth of our IMS group we intend to implement a branding and marketing strategy for our IMS Service Transformation product line early in 2012. With respect to costs, we will continue to ramp our investment in Marketing and Product Development, which we did in the first three quarters of 2011 as this will maintain and extend our position as a technology leader in our markets and ensure that a growing number of potential customers are aware of our capabilities," said Gaffney.
Consolidated Statements of Operations Q3 2011 Q3 2010
Revenue $ 2,762,963 $ 1,692,155
Cost of services and goods sold 1,431,422 571,959
Gross profit 1,331,541 1,120,196
Total operating expenses (1,034,277) (679,226)
Results from operating activities 297,264 440,970
Interest expense (19,947) (28,156)
Loss on fair value of derivative (80,398) (6,000)
Gain on foreign exchange 362 (26,324)
Gain on disposal of property and equipment - (2,956)
Net earnings $ 197,281 $ 377,534
Certain statements included in this news release contain forward looking statements, which by their nature are necessarily subject to risks and uncertainties and other factors that may cause actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such statements reflect the Company's current views with respect to future events, and are based on information currently available to the Company and on hypotheses which it considers to be reasonable; however, management warns the reader that hypotheses relative to future events which are beyond the control of management could prove to be false, given that they are subject to certain risks and uncertainties.
The TSX Venture Exchange has not reviewed the foregoing and has neither approved or disapproved the contents of this press release.
Contacts
gpretli@intouchsurvey.com
Controller and Corporate Secretary
613-270-7916
@yahoofinance on Twitter, become a f
