DPSI: New Software Orders at DecisionPoint Systems Point to Higher Margins

Zacks Small Cap Research

By Ken Nagy, CFA

On November 14, 2013, DecisionPoint Systems, Inc.(OTC BB:DPSI), enterprise mobility and RFID systems integrator, reported financial results for its third quarter and nine months, ended September 30, 2013.

Revenues for the quarter declined year over year by $992,000 to $17.575 million from $18.567 million for the three months ended September 30, 2012.  Still, on a quarter over quarter basis, revenues improved by $2.854 million from $14.721 million for second quarter fiscal 2013.

Although unit volumes were up, the drop in revenue compared with the same period last year was largely related to an increase in the number of consumer devices sold with much lower unit prices and a consequent decrease in the higher priced rugged devices sold.

Still, it should be noted that s
ignificant new software orders were received as well as important new software contracts booked during the third quarter.

Gross margin fell to 19.7 percent in the third quarter 2013, down from 22.2 percent in the comparable period of 2012 and from 24.2 percent for the quarter ended June 30, 2013. The drop was largely attributed to the timing of revenue recognition related to in process software orders, to the timing of orders and shipments, with some orders anticipated for the third quarter slipping to the fourth quarter.

As higher-margin software and service revenue continue to grow, margins will continue to return to the long-term increasing trend starting in the fourth quarter. 

EBITDA for the third quarter of 2013 was a positive $466,000, an approximately $849,000 positive swing from the second quarter of this year.

Net loss improved to a loss of $390,000 for the third quarter 2013. This compares to a net loss of $1.263 million for third quarter 2012 and a net loss was $1.116 million for the three months ended June 30, 2013.

Based on a weighted average number of basic and diluted shares of 10.019 million, basic and diluted net loss per share resulted in a net loss of $0.04 per share for the third quarter of fiscal 2013. This compared to a basic and diluted net loss per share of $0.15 based on a weighted average number of basic and diluted shares of 8.182 million during the three months ended September 30, 2012.

The Company ended the quarter with $270,000 in cash and $18.807 million in total current assets which compares to $1,103,000 in cash and $18.708 million in total current assets for the end of 2012.

In January 2013, DecisionPoint announced that it launched a new sales and marketing initiative and dedicated a team to accelerate the Company's expansion into enterprise mobile software, software subscriptions and professional services.

The newly created Enterprise Solutions Group will lead the new effort by expanding the sales and marketing of APEXWare™ software throughout the United States.Similarly, the company has now added Android Operating Systems to the family of APEXWare software compatibility, which vastly expands the addressable market.

A copy of the full research report can be downloaded here >> 
 DecisionPoint Systems Report

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