What Management had to Say at Amaru: Revenue Climbs 123%
Amaru, Inc. (OTC: AMRU)
Amaru Inc. Reported Record Financial Results for Second Quarter FY06; Revenue Climbed 123% to $7.4 Million; Net Income Reached Record Level of $0.9 Million Amaru, Inc., a leading provider of interactive broadband entertainment and media on demand streaming over broadband channels, Internet portals and 3G devices globally, today announced record financial results for its second quarter and six months ended June 30, 2006.
2Q06 Highlights – Revenues increased 123% year-over-year to a record $7.4 million – Entertainment revenue growth more than doubled sequentially
– Net income grew to record levels of $0.9 million
– Partnered with Sony/MGM for distribution deal to film library
– Launched Global Broadband TV Service, M2Btv, and innovative PONY set-top boxes
Link here to Amaru’s 10Q.
Second Quarter FY06 Financial Results
Revenue for the second quarter of fiscal year 2006 (FY06) grew to record levels of $7.4 million, an increase of 123% over second quarter FY05 revenue of $3.3 million. Gross profits for the second quarter of FY06 were $2.2 million, an increase of 356% compared to gross profit of $0.5 million for the same period in FY05. Gross margin doubled to over 30% up from 14.8% for the same period in FY05.
Income from operations for the second quarter of FY06 was approximately $0.9 million, a significant increase over the operating income loss reported a year earlier. Operating margin for the second quarter of FY06 was 12%, as compared to a loss for the second quarter of FY05. Net income for the second quarter of FY06 reached record levels of $0.9 million, a substantial increase over second quarter FY05 net income of $0.03 million. Diluted earnings per share for the second quarter FY06 was $0.01, up from second quarter FY05 EPS of $0.00.
“We are pleased with our strong results for the quarter,” said Colin Binny, Amaru Inc.’s Chief Executive Officer. “We achieved record revenues, gross profits, operating income and net income. Our strong growth can be attributed to substantial revenues generated from our digit gaming business, but more significantly from the increasing success and growth of our entertainment businesses. We anticipate this trend will continue as we begin expanding our broadband coverage by launching our broadband digital entertainment platform and new broadband sites in North America, Japan and Australia. We also plan to launch an innovative travel e-commerce portal by year-end 2006.”
Revenue growth in the quarter was driven by digit gaming which grew 166% year over year and accounted for 70% of total revenues. Also contributing to the record quarter was a significant increase in Entertainment revenues which generated 29.8% of total revenues this quarter, more than doubling from first quarter 2006 levels of 14.6%. Entertainment revenues benefited from the sale of PONY set-top box licensing rights on a non-exclusive basis in four Asian countries. On a year-over-year basis, Entertainment revenues grew 62% and 121% sequentially.
The Company continued to solidify its leadership in broadband entertainment on demand, with the launch of its PONY broadband set-top boxes and with its distribution deal with Sony Pictures. “This agreement is a result of the unique synergy that traditional Hollywood entertainment companies are seeking as consumers begin to embrace what we call the ‘on demand digital lifestyle,’” said Binny. “It is essentially the melding of the highly recognizable content that viewers are looking for with easily accessible distribution vehicles, such as our broadband channels, that offer consumers the highest quality feeds in a way that fits within their limited schedules.”
The distribution agreement is a multi-year deal for films in both the Sony/MGM library that allows for first-run films to be available, on-demand, to subscribers of Amaru’s Global Broadband TV service (M2Btv), accessible through the company’s PONY set-top Box, as well as through online websites.
For the quarter, cost of sales was $5.2 million, or nearly 70% of revenues, as compared to $2.8 million or 85% of revenues, in the comparable quarter last year. The increase in cost of sales was mainly attributable to the cost of managing and operating the operations and game centers in Cambodia for digit games. On a sequential basis, the cost of sales were down 10%.
Distribution expenses for the quarter were $0.3 million, an increase of 121% when compared to $0.1 million in the comparable quarter last year. The increase is attributable to higher advertising and marketing expenditures from a publicity launch for the Company’s global broadband TV services. On a sequential basis, distribution expenses increased 26%.
Administrative expenses for the quarter grew to over $1 million, an increase of 167% when compared to $0.4 million in the comparable quarter last year. The main reasons for the significant increase are due to rising staff costs resulting from new hires and due to the payment of mid-year bonuses. In addition, depreciation and license amortization contributed to the increase in administrative expenses. During the quarter, the Company expanded its office and leased new editing suites to meet the growing demands of the business. Also, the amortization of the digit games license for Cambodia increased substantially when compared year over year.
The conference call was broadcast live over the Internet. If you missed it you can listen from Amaru’s web site at http://www.amaruinc.com.
Source:
Amaru, Inc. (OTC: AMRU)
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AMRU — Amaru, Inc.
112 Middle Road
#08-01 Middland House
Singapore 188970
Phone: (65) 6332-9287
Officers:
Colin Binny, President; Francis Foong Keong Kwong, CFO
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