Archipelago Learning, Inc. (ARCL, Financial) filed Quarterly Report for the period ended 2012-03-31.
Archipelago Lrn has a market cap of $292.2 million; its shares were traded at around $11.09 with a P/E ratio of 39.6 and P/S ratio of 4.
Revenue for the three months ended March 31, 2012 was $19.2 million, representing an increase of $1.9 million, or 11%, as compared to revenue of $17.3 million for the three months ended March 31, 2011. This increase in revenue during the period is due to higher cash sales in the cumulative previous 5 quarters ending March 31, 2012 compared to the same period in 2011, This included approximately $0.4 million more in ReadingEggs cash sales, which are recognized at the time of sale, less the royalty payment, and the run-off of purchase accounting adjustments related to the EducationCity acquisition in 2010. The Company continues to be impacted by uncertainty in state and local funding to schools as reflected in the 1% increase in total invoiced sales for the three months ended March 31, 2012 compared to the three months ended March 31, 2011.
Due to purchase accounting for the acquisition of EducationCity, we do not recognize the full amounts paid by customers for acquired subscriptions prior to the acquisition. Consequently, the deferred revenue balance at the date of acquisition was reduced from $15.6 million to $9.9 million. The purchase accounting adjustment reduced our revenues by $0.4 million and $0.7 million for the three months ended March 31, 2012 and 2011, respectively. For the Alloy Multimedia acquisition, the deferred revenue balance at the date of acquisition was not materially reduced, and therefore, the purchase accounting adjustment did not materially impact revenue for the three months ended March 31, 2012.
Cost of revenue for the three months ended March 31, 2012 increased by $0.1 million, or 3.0%, to $1.8 million from $1.7 million for the three months ended March 31, 2011. The increase in cost of revenue was primarily attributable to increased costs for the Companys disaster recovery sites.
Net cash used in operating activities was $3.3 million for the three months ended March 31, 2012, compared to net cash provided by operating activities of $2.1 million during the three months ended March 31, 2011. This $5.4 million decrease was primarily due to a decrease in deferred revenue of $3.7 million resulting from more revenue recognized in the first quarter than invoice sales booked and an increase in accounts receivable balances because a large portion of the quarterly sales were booked in late March. Also, the Company paid $1.0 million in income taxes in 2012, primarily due to the gain on the sale of Edline in 2011.
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Archipelago Lrn has a market cap of $292.2 million; its shares were traded at around $11.09 with a P/E ratio of 39.6 and P/S ratio of 4.
Highlight of Business Operations:
In addition, most of our U.S. customers are public schools and school districts that are dependent on the availability of public funds, with about 46% of total education expenditures coming from state funds and 45% coming from local funds, which have become more limited as many states or districts face budget cuts due to decreases in their tax bases and rates. State and federal educational funding is primarily funded through income taxes, and local educational funding is primarily funded through property taxes. As a result of the ongoing recession, income tax revenue for the 2008 and 2009 tax years has decreased, which has put pressure on state and federal budgets. However, according to the Nelson A. Rockefeller Institute of Government, state tax revenues grew by 3.6% in the fourth quarter of 2011, representing the eighth consecutive quarter that states reported growth in collections on a year-over-year basis. Overall, state tax revenues are now above the peak levels which occurred during 2007 and 2008. Local property tax revenues grew by a modest 0.6 % in the fourth quarter, but declined in inflation-adjusted terms. Preliminary figures for January and February 2012 indicate further growth in revenues. Overall collections in 45 early-reporting states showed growth of 4.0 % compared to the same months of 2011.Revenue for the three months ended March 31, 2012 was $19.2 million, representing an increase of $1.9 million, or 11%, as compared to revenue of $17.3 million for the three months ended March 31, 2011. This increase in revenue during the period is due to higher cash sales in the cumulative previous 5 quarters ending March 31, 2012 compared to the same period in 2011, This included approximately $0.4 million more in ReadingEggs cash sales, which are recognized at the time of sale, less the royalty payment, and the run-off of purchase accounting adjustments related to the EducationCity acquisition in 2010. The Company continues to be impacted by uncertainty in state and local funding to schools as reflected in the 1% increase in total invoiced sales for the three months ended March 31, 2012 compared to the three months ended March 31, 2011.
Due to purchase accounting for the acquisition of EducationCity, we do not recognize the full amounts paid by customers for acquired subscriptions prior to the acquisition. Consequently, the deferred revenue balance at the date of acquisition was reduced from $15.6 million to $9.9 million. The purchase accounting adjustment reduced our revenues by $0.4 million and $0.7 million for the three months ended March 31, 2012 and 2011, respectively. For the Alloy Multimedia acquisition, the deferred revenue balance at the date of acquisition was not materially reduced, and therefore, the purchase accounting adjustment did not materially impact revenue for the three months ended March 31, 2012.
Cost of revenue for the three months ended March 31, 2012 increased by $0.1 million, or 3.0%, to $1.8 million from $1.7 million for the three months ended March 31, 2011. The increase in cost of revenue was primarily attributable to increased costs for the Companys disaster recovery sites.
Net cash used in operating activities was $3.3 million for the three months ended March 31, 2012, compared to net cash provided by operating activities of $2.1 million during the three months ended March 31, 2011. This $5.4 million decrease was primarily due to a decrease in deferred revenue of $3.7 million resulting from more revenue recognized in the first quarter than invoice sales booked and an increase in accounts receivable balances because a large portion of the quarterly sales were booked in late March. Also, the Company paid $1.0 million in income taxes in 2012, primarily due to the gain on the sale of Edline in 2011.
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