Cautious optimism over ARC results
ARC International has announced results for the first quarter ended 31st March 2002
Commenting on the results, Mike Gulett, Chief Executive Officer of ARC International, said: "I am very pleased to report further healthy revenue growth and an encouraging level of customer activity that resulted in a strong increase in bookings of new orders. We also successfully concluded eight new design licence agreements for the ARCtangent processor.
Six new ARCtangent customers were added, including a significant supplier to the wireless communications market, and two of our established customers relicensed the technology.
I am also pleased that we had more than fifty customers who licensed our software or development tools in Q1.
Our continuing tight cost control contributed to a further reduction in both cash burn and the quarterly net loss.
The new management team is making good progress in implementing the strategic and operational changes announced in February.
We remain focused on delivering sustained revenue growth and accelerating our progress towards profitability.
I am cautiously optimistic about the next few quarters' outlook for continuing gradual improvements in sequential quarterly revenue".
Total turnover for the first quarter was 20% higher than in the fourth quarter of 2001 at GBP 2.7 million (Q4 2001: GBP 2.3 million) although it was below the level of a year previously (Q1 2001: GBP 3.7 million).
Licence income was GBP 2.1 million (Q4 2001: GBP 1.8 million; Q1 2001: GBP 3.0 million), maintenance and service income was GBP 0.5 million (Q4 2001: GBP 0.4 million; Q1 2001: GBP 0.5 million) and royalties were GBP 0.1 million (Q4 2001: GBP 0.1 million; Q1 2001: GBP 0.1 million).
The number of ARCtangent designs being shipped by our customers remained unchanged at 11.
Cost of sales was GBP 0.4 million (Q4 2001: GBP 0.4 million), resulting in an increase in gross margin to 85% (Q4 2001: 83%).
Total operating expenses, including cost of sales but excluding exceptional costs, amortisation of goodwill and depreciation, were GBP 7.5 million, a reduction of 4% from GBP 7.9 million in the previous quarter.
The company had 227 employees on 31st March 2002 compared with 223 on 31st December 2001.
Research and development costs were GBP 3.0 million (Q4 2001: GBP 3.3 million), sales and marketing costs were GBP 2.7 million (Q4 2001: GBP 2.9 million) and general and administration costs were GBP 1.4 million (Q4 2001: GBP 1.3 million).
The accrual for National Insurance contributions on the exercise of share options has been reduced slightly, principally due to the fall in the company's share price during the quarter.
This has resulted in a credit of GBP 0.1 million (Q4 2001: a debit of GBP 0.1 million) to the profit and loss account.
Interest income was lower at GBP 1.1 million (Q4 2001: GBP 1.3 million) principally as a result of the lower cash balance and the fall in average interest rates.
The increased turnover and lower costs resulted in the net loss before exceptional costs being 12% lower at GBP 5.5 million (Q4 2001: GBP 6.2 million).
The net cash outflow from operations was GBP 6.0 million (Q4 2001: GBP 7.1 million).
Capital expenditure was GBP 1.3 million (Q4 2001: GBP 0.4 million).
The movement in net funds during the quarter was an outflow of GBP 5.3 million (Q4 2001:GBP 5.8 million).
Net assets at 31st March 2002 were GBP 131.7 million (at 31st December 2001: GBP 136.1 million), including net cash of GBP 115.6 million (at 31st December 2001: GBP 120.8 million).
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