Revenues continue to slide in Q2 for Ottawa-based Espial


Ottawa-based Espial Group (TSX:ESP) continued to struggle in the second quarter of the year as it attempts to convert customers to a new SaaS model that it hopes will become an engine for future growth.

The video software provider reported revenues of $7.0 million for the quarter ending June 30, a decrease of 11 per cent year-over-year. Software license revenue, the firm’s largest sales segment, was down more than 40 per cent from last year with maintenance and support revenues dropping 24 per cent.

The decrease in these segments was due in part to fewer sales as well as Espial converting existing customers to its new SaaS solution, the firm wrote in financial filings. The first Q2 revenues in this vertical came in at $1.2 million, a 10 per cent growth quarter-to-quarter and in line with the firm’s previously-stated expectations.

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Also contributing to the drop was a slow down in Espial’s North American sales channel, previously an area of growth for the firm. Revenues from customers in this geography were $4.2 million in the past quarter compared to $4.7 million over the same period in 2017. European revenues were up slightly.

In financial filings, Espial says it remains confident that TV service providers will view video content delivery as critical to future success, but points to increased competition from online and over-the-top competitors in the industry as a disrupting effect. The Ottawa-based firm says it expects continued variability in its revenues for the foreseeable future.

Espial trimmed its net loss to roughly $480,000 this quarter compared to $3.8 million a year ago.

The firm announced last quarter that it would shutter multiple offices worldwide and layoff a number of employees in its engineering division. Espial said then that it expects these consolidations to save the firm $6 million annually as it shifts to focus on IP and cloud-based solutions.

Espial’s shares were up two per cent in midday trading on the Toronto Stock Exchange. Today’s stock price of roughly $1.50 is more than 30 per cent lower than its value a year ago.

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