Magor's revenues fall in Q3, net loss rises

Ottawa-based video conferencing firm Magor reported a steep decline in third-quarter revenues and a much higher net loss compared with a year earlier, but CEO Mike Pascoe said the company is poised for strong growth in high-margin software sales.

Magor (TSX-V: MCC) posted total revenues for the three-month period ended Jan. 31 of $365,118, a drop of 55 per cent from the $810,862 it reported for the same period in fiscal 2015.

The company’s total year-to-date revenues of $868,564 for the nine-month period ended Jan. 31 fell 17 per cent from $1,048,091 a year earlier.

CEO Mike Pascoe blamed some of the drop on a late surge in orders that couldn’t be filled in time to go on the company’s third-quarter books, adding he expects to see significant growth in Magor’s software revenues in the near future.

Magog’s order backlog on Jan. 31 was $713,069, 39 per cent higher than at the end of October.

“Timing of some orders received in Q3 came in too late for shipping the associated hardware, but did result in the company growing the backlog going into Q4,” Mr. Pascoe said in a statement.

“In addition, we are seeing a growing amount of recurring revenue business which results in an initial sale of lower-margin hardware without the software revenue. Subsequent quarters for those sales then become predictable high-margin software revenue and over time recurring software becomes a larger portion of the overall revenue mix.”

Magor reported a net loss for the quarter of $1.87 million, or four cents per share, nearly 84 per cent higher than the $1.02-million loss it booked during the same period a year ago.

The company’s quarterly software revenue plummeted nearly 96 per cent to $27,792 from $630,697. Magor said last year’s numbers were inflated by a one-time sale of perpetual licences in fiscal 2015 of about $600,000, adding the overall sale of perpetual licences is declining as more customers move to software-as-a-service contracts.

The company did report good news on the recurring revenue front. Those revenues grew by 8.4 per cent to $123,432 during the quarter, while year-to-date recurring revenues for the nine-month period increased by 54.2 per cent to $388,355.

Magor still has some cash on hand, but that total fell to $82,062, compared with $201,086 on April 30, 2015.

Its gross margin also declined sharply to 37 per cent from 85 per cent a year earlier, which the company attributed to a higher mix of lower-margin hardware sales and inventory write-downs.

Magor’s stock was down 17 per cent to 10 cents a share in mid-afternoon trading on the TSX Venture Exchange.