Ottawa’s Espial reports 34% drop in Q4 revenue despite surging SaaS segment

espial
Espial CEO Jaison Dolvane.

Ottawa-based Espial Group’s revenues dropped sharply in the fourth quarter of fiscal 2018 as the company increasingly focused on its burgeoning SaaS-based business.

Espial (TSX:ESP), which develops television and video platforms for cable operators and streaming services, reported revenues of $6.7 million for the three-month period ending Dec. 31, a drop of 34 per cent from a year earlier.

The Ottawa firm saw a substantial drop in its software licensing revenue stream this past quarter: Revenues in this segment were $2.4 million in the fourth quarter compared with $6.1 million over the same period in 2017. Maintenance and support revenues were down as well, but the company saw a bright spot with annualized software subscription sales of $1.9 million at the end of the quarter, compared with just over $1 million a year ago.

In a call with investors Thursday evening after the firm reported its results, Espial CEO Jaison Dolvane highlighted the company’s progress on selling its SaaS-based Elevate platform. At the beginning of this past year he said the company set a goal of increasing its annual recurring revenue between 50 per cent and 75 per cent by the end of fiscal 2018 – the company finished the year up 81 per cent in the segment.

“Since the launch of our Elevate video platform (in late 2017), we have demonstrated very good progress in a short period of time,” Dolvane said on the call. The firm now has 30 operators using its SaaS platform with apps on Google, Amazon, Apple and Roku stores.

Despite the overall drop in sales, a cutback on expenses earlier in the year – including shuttering a few of the firm’s international offices – drove Espial to a net income of $258,734 in the quarter, up slightly from the year before.

Espial reported revenues of $26.7 million for the full year fiscal 2018, down $6.7 million year-over-year. The company cut its net loss on the year to $4.5 million from $8.5 million in 2017.

On Friday, shares of Espial started trading on the TSX down roughly eight per cent before rebounding later in the day. Espial’s stock price was around $1.19, down roughly 2.5 per cent, in late afternoon trading.