Q1 shows record profits
Record Profits follow year of heavy re-investment by Ivrnet
CALGARY, May 02 – Ivrnet Inc., (TSX-V: IVI), is pleased to report its financial results for the first quarter of 2013. Following a re-investment in the company of nearly $1M in 2012, Ivrnet posted a record profit of $154,559 in the first quarter of 2013.
“2012 was primarily about the continued integration of ITSportsNet into Ivrnet, a process that took longer than anticipated at acquisition, but looks to reap larger than anticipated rewards long term”, said David Snell, CEO of Ivrnet. “At the same time, a lot of effort was spent rationalizing the traditional Ivrnet business, ensuring we are only engaged with profitable clients” he continued.
With the integration mostly complete, staff rationalizations and process improvements have reduced combined operating costs by nearly $60,000 per month from their peak in 2012. Revenues increased slightly, despite the company parting ways with a number of unprofitable clients. “Ivrnet appreciates our relationships with all our clients, but at the end of the day these relationships need to be mutually beneficial”, expressed Chris Topolniski, Vice President of Corporate Finance. “Hard decisions have to be made sometimes.”
Top line revenues would have further increased had a major client not taken over a large portion of their telecom costs directly, rather than have them purchased and passed through at cost by Ivrnet. The value added work with this client continues to grow.
In addition to a stronger financial performance a number of new products were released by Ivrnet by the end of Q1, including Community Central, Quicknotes, and a new version of Safeteam. Additional products have been released in Q2, and further information on all these products will be provided in subsequent releases by the company. Finally, two major enhancements were made to the ITSN software, one at the end of 2012, and another subsequent to closing Q1 2013. These enhancements fundamentally improved the speed and stability of the ITSN platform.
Revenues for the first quarter of 2013 were up 2.6% to $1,149,149 compared to $1,119,679 for the same quarter in 2012. Included in the first quarter of 2013 was $205,920 in revenues from the new community central product. The Company had net income of $154,559 versus a net income of $20,676 in 2012. A new accounting policy adopted by Ivrnet for 2012, consistent with the introduction of IFRS, has increased the amortization of past acquisitions by $15,500 per quarter, which is already reflected in the Q1 numbers. This new policy does not impact cash flow.
Summary of Operating Results
Professional services $ 133,836 $ 241,600
Network services 197,597 197,143
Hosted services 468,707 285,617
Hosted applications 109,948 73,906
Telephony applications 239,061 318,701
Agency fees 2,712
Cost of Sales 216,448 251,541
Gross Margin 932,701 868,138
General and administrative 638,164 723,318
Marketing and sales 3,931 20,413
Research development 3,300 3,300
Interest 37,430 12,332
Interest on capital lease 10,608 12,684
Depreciation of property and
equipment 43,033 56,458
Depreciation of intangible assets 41,676 18,957
A more complete analysis of the Company’s Q1 financial results can be found by visiting www.sedar.ca.
Ivrnet expects subsequent quarters in 2013 to be stronger than their counterparts in 2012, though Q1 is likely to remain the strongest of the quarters. New customer growth is expected in all future quarters of 2013.