DATATRAK Sees Traction in New Contract Sales - Analyst Blog

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DATATRAK Sees Traction in New Contract Sales

Ken Nagy, CFA

On May 9, 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 first quarter, ended March 31, 2012.

The Company reported mixed results with first quarter revenues improving nearly 14 percent year over year to $2.119 million, compared to $1.888 million for the three months ended March 31, 2011.

The jump in quarterly revenues was primarily due to new contract sales from the fourth quarter with new contract sales increasing by 170% compared to the first quarter of 2011.

Still, operating loss for the three months increased to $515,227 compared to an operating loss of $197,959 for the three months ended March 31, 2011 reflecting the Company's strategic investments in Sales, Marketing and Software Development, the accrual of management incentive plan awards, as well as costs incurred to protect the Company's intellectual property.

During the three months ended March 31, 2012, DATATRAK's net loss increased to $516,800 from a net loss of $200,453 for the first quarter fiscal 2011.

The increase in net loss was primarily a result of an increase in selling, general and administrative expense.

Selling, general and administrative expense increased year over year by nearly 30 percent or $503,897 to $2.199 million.

Gross margin for the quarter remained steady at 81.3% compared to 81.4 for the quarter ended March 31, 2011.

Based on a weighted average number of basic and diluted shares of 14.714 million, basic and diluted net loss per share resulted in a net loss of $0.04 per share for the first quarter of fiscal 2012.  This compared to a basic and diluted net loss per share of $0.01 based on a weighted average number of basic and diluted shares of 14.107 million during the three months ended March 31, 2011.

Still, DATATRAK's backlog as of March 31, 2012 jumped 20 percent year over year to $14.0 million compared to a backlog of $11.6 million at December 31, 2011.

Furthermore, the first quarter resulted in a jump in new contract sales as well as a 38% year-over-year increase in the number of clients and a 233% year-over-year increase in clinical and consulting services clients.

The Company's first quarter cash balance remained strong with cash and investments at $1.431 million. This compares to cash and investments of $2.298 million as of December 31, 2011.

Finally, the Company believes its strategic growth investments over the last six months are starting to yield tangible results and believes it is achieving traction in exposing a larger audience.

To view a free copy of our most recent research report on SILC or subscribe to our daily morning email alert, visit Ken Nagy's coverage page at .


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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 Nasdaq, Inc.

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