At DATATRAK Record Backlog Levels Will Drive Sales Growth - Analyst Blog

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At DATATRAK Record Backlog Levels Will Drive Sales Growth

Ken Nagy, CFA

On August 15, 2012, DATATRAK International, Inc. ( DATA ) , the Mayfield Heights, Ohio based technology and service provider of electronic clinical trial technology solutions for the clinical trials industry, reported financial results for its fiscal 2012 second quarter and six months, ended June 30, 2012.

The Company reported solid results with second quarter revenues improving nearly 10 percent year over year to $2.336 million, compared to $2.132 million for the three months ended June 30, 2011.

The jump in quarterly revenues was primarily due to the Company's continued improvement in backlog and new contract sales.

Still, operating loss for the three months increased to $458,304 compared to an operating loss of $153,813 for the three months ended June 30, 2011, which reflects the Company's strategic investments in Sales, Marketing and Software Development, the accrual of management incentive plan awards and sales compensation awards, as well as costs incurred to protect the Company's intellectual property for its customers and partners.

During the three months ended June 30, 2012, DATATRAK's net loss increased to $462,148 from a net loss of $158,255 for the second quarter fiscal 2011.

The increase in net loss was primarily a result of slightly lower gross margin as well as an increase in selling, general and administrative expense.

Gross margin for the quarter fell slightly to 82.7 percent compared to 84.3 percent for the quarter ended June 30, 2011.

Selling, general and administrative expense increased year over year by $437,952 to $2.351 million.

Here again, the increase was a result of the Company's strategic investments in Sales, Marketing and Software Development, the accrual of management incentive plan awards and sales compensation awards, as well as costs incurred to protect the Company's intellectual property for its customers and partners.

Still, it should be noted that DATATRAK's Sales and Marketing efforts improved the Unified message of DATATRAK ONE™ and enabled the Company to expand its market position which resulted in record backlog levels (highest in six years), which drive top-line growth.

DATATRAK's backlog at June 30, 2012 improved to $15.8 million compared to a backlog of $11.6 million at December 31, 2011.  

The improvement in backlog was a result of increased new contract sales which outpaced 2011 new contract sales by 33%.

Based on a weighted average number of basic and diluted shares of 15.311 million, basic and diluted net loss per share resulted in a net loss of $0.03 per share for the second quarter of fiscal 2012.  This compares to a basic and diluted net loss per share of $0.01 based on a weighted average number of basic and diluted shares of 14.325 million during the three months ended June 30, 2011.

Revenues for the six months ended June 30, 2012 improved nearly 11% to $4.455 million compared to $4.021 million for the first half of 2011.

Still, net loss for the first six months of 2012 jumped to $978,948 from $358,708 during the comparable period of 2011.

Gross margin for the 2012 first half fell slightly to 82 percent compared to 83 percent during the first six months of 2011 while selling, general and administrative expense increased year over year by $941,849 to $4.550 million.

Based on a weighted average number of basic and diluted shares of 15.013 million, basic and diluted net loss per share resulted in a net loss of $0.07 per share for the first half of fiscal 2012.  This compares to a basic and diluted net loss per share of $0.03 based on a weighted average number of basic and diluted shares of 14.217 million during the six months ended June 30, 2011.

The Company's second quarter cash balance remained strong with cash and investments at $1.557 million. This compares to cash and investments of $1.431 million as of March 31, 2012.

Finally, management continues to execute against a solid business strategy, expanding its global reach into China and posting steady increases in clients, trials and financial results.
 

Please visit scr.zacks.com to access a free copy of the full DATA research report.


 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



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