iPass Inc. Reports Operating Results (10-Q)
Ipass Inc. has a market cap of $141 million; its shares were traded at around $2.29 with and P/S ratio of 1.
Highlight of Business Operations:For the three months ended June 30, 2012, network revenue decreased $4.8 million or 21.1%, compared to the same periods in 2011, as a result of the decline in Wi-Fi revenue of $2.7 million caused by Wi-Fi usage decline in legacy Mobile Office users, which was partially offset by revenue increases from Open Mobile-driven Wi-Fi usage, as well as anticipated declines in 3G revenue of $1.2 million, dial up revenue of $0.5 million, and minimum commitment revenue of $0.4 million, respectively. For the six months ended June 30, 2012, network revenue decreased $9.7 million or 20.7%, compared to the same periods in 2011, as a result of the decline in Wi-Fi revenue of $5.3 million, as well as the anticipated declines in 3G, dial-up and minimum commitment revenue of $2.5 million, $1.1 million and $0.8 million, respectively.
For the three and six months ended June 30, 2012, platform revenue increased $0.8 million or 16.2%, and $1.8 million or 20.2%, respectively, compared to the same periods in 2011, primarily due to growth in revenues from our Open Mobile platform of $2.0 million and $4.3 million, respectively, partially offset by decline in revenue from our legacy Mobile Office product of $1.2 million and $2.5 million, respectively, as we continue to migrate existing enterprise customers from our legacy product to our Open Mobile platform and sign new enterprise customers.
General and administrative expenses for the six months ended June 30, 2012 was $0.5 million higher when compared to the same period in the prior year, primarily due to a $0.8 million increase in salaried headcount related expense and a $0.6 million increase in tax expenses driven by benefits realized from cash collections on invoiced sales taxes in the prior year; these increases were partially offset by a $0.4 million decrease in consulting spend and a $0.5 million decrease in bad debt expense as a result of recoveries made on previously reserved doubtful accounts.
Income tax expense for the three and six months ended June 30, 2012 was approximately $10,000 and $0.1 million, respectively, and $15,000 and $0.2 million for the three and six months ended June 30, 2011. The income tax expense recorded in the three and six months ended June 30, 2012 and 2011, primarily related to foreign and state taxes on expected profits in the foreign and state jurisdictions. The effective tax rate was 1.1% and 1.4% for the three months ended June 30, 2012 and 2011, respectively, and 7.3% and 10.7% for the six months ended June 30, 2012 and 2011, respectively.
The amount of cash and cash equivalents held by our foreign subsidiaries as of June 30, 2012, and December 31, 2011, was $1.8 million and $1.3 million, respectively. We currently do not intend to distribute any of our cumulative earnings by our foreign subsidiaries to the parent company in the U.S. As of June 30, 2012, accounts receivables from European customers represented 37% of total accounts receivable of which 49% were aged within our standard credit term of 30 days and 99% were aged less than 90 days.
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