"We are very pleased to report growing Adjusted EBITDA from continuing operations and the completion of a highly successful sale of NextBus," said Scott Edmonds, President and CEO. "We will continue to focus on our pursuit of sustainable, repeatable, high margin revenue from our core verticals in order to accelerate growth and drive free cash flow."
Mr. Edmonds continued. "Webtech expects to produce free cash, grow its core business, continue to improve its bottom line performance, and build on a very strong balance sheet. As of today, Webtech has cash of $21.8 million, restricted cash of $1.0 million and a holdback of $2.1 million related to the NextBus sale. Our vision of 'Fleet Intelligence Anywhere' is being well received by our customers and prospects and we will continue to deliver on it throughout the coming year to produce growth and cash flow for our shareholders."
Financial Highlights of Continuing Operations
---------------------------------------------------------------------------- Three months ended---------------------------------------------------------------------------- March 31, March 31,('000 of Cdn $) 2013 2012----------------------------------------------------------------------------Hardware revenue $ 2,419 $ 2,287Recurring revenue 4,715 4,840Services and other revenue 284 549---------------------------------------------------------------------------- 7,418 7,676----------------------------------------------------------------------------Gross margin ($) 4,245 3,986Gross margin (%) 57% 52%Total operating expenses 4,440 4,947--------------------------------------------------------------------------------------------------------------------------------------------------------Net income (loss) from continuing operations $ (18) $ (1,004)Adjusted EBITDA (1) $ 483 $ (35)----------------------------------------------------------------------------Revenue
Hardware revenues for the quarter increased 6% over the prior year. Excluding the revenues of the theft recovery vertical, which the Company exited in Q2 2012, hardware revenues increased 26% over the prior year. The growth was due to significant commercial and OEM deliveries in the quarter. However, commercial service revenue and both government hardware and service revenues declined due to project deliveries in the prior year that were not repeated in 2013.
Recurring revenues were down 3% over the same quarter of the prior year. The performance was due to a decline in low ARPU subscribers from the planned exit of the theft recovery vertical and departure from Brazil in Q2 2012. Despite the decrease, the Company has added new, high ARPU subscribers from sales and implementations over the past nine months across the Quadrant and InterFleet product lines. The Company's shift away from hardware to a majority of subscription, software and services revenue continues to reflect management's focus on developing the Software as a Service ("SaaS") model.
