InterCloud Systems Sees Significant Revenue Growth & Margin Expansion

Zacks Small Cap Research

Ken Nagy, CFA

On November 14, 2013, InterCloud Systems Inc. (ICLD),  the end-to-end solution provider of value added cloud and managed service based platforms, professional services, applications and infrastructure to both the telecommunications industry and corporate enterprises, reported financial results for its third quarter and nine months, ended September 30, 2013.

Third quarter ended, year over year revenues rocketed $13.207 million to $16.158 million from $2.950 million for the comparable quarter of 2012. Sequentially, revenues improved by nearly 13 percent or $1.802 million from $14.356 million for the second quarter fiscal 2013.

The year over year increases in revenues resulted primarily from the company’s inclusion of revenues from its acquisitions as well as organic growth.

Gross profit for the quarter was $5.498 million resulting in gross margin of 34.0 percent. This compares to gross profit of $4.249 million and gross margin of 29.6 percent for the second quarter fiscal 2013 and gross profit of $1.221 million and gross margin of 41.4 percent during the quarter ended September 30, 2012.
 The difference in gross margin was a result of the acquisitions completed in 2012 and April 2013.

Operating expenses increased to $3.437 million for the third quarter, up $1.546 million from the comparable three months of 2012.
Operating expenses were $3.712 million for the second quarter 2013.

Operating income for the three months ended September 30, 2013 was $2.061 million compared to an operating loss of $669,132 million for the third quarter 2012.
Operating income for the three months ended June 30, 2013 was $537,251.

Net income attributable to common shareholders increased year over year by $2.144 million to net income of $1.297 million for the third quarter. This compares to a net loss attributable to common shareholders of $847,737 for three months ended September 30, 2012.
During the three months ended June 30, 2013, net loss attributable to common shareholders was $1.314 million.

Based on a weighted average number of diluted shares of 6.852 million, diluted net income per share resulted in net income of $0.12 per share for the third quarter of fiscal 2013. This compared to a basic and diluted net loss per share of $2.16 based on a weighted average number of basic and diluted shares of 392,860 during the three months ended September 30, 2012.

As of September 30, 2013, the Company had $3.361 million in cash and cash equivalents and total current assets of $18.652 million.
  This compares to $2.277 million in cash and cash equivalents and $16.033 million in current assets as of June 30, 2013.

IDC reports that enterprise cloud application revenues reached $22.9B in 2011 and expects it to reach $67.3B by 2016, attaining a CAGR of 24%.  Furthermore, IDC anticipates that $1 of every $5 will be spent on cloud-based software and infrastructure by 2106.Similarly, Cisco Global Cloud Index expects Global cloud traffic to account for nearly two-thirds of total data center traffic by 2016 while total data center traffic is anticipated to grow from 39% in 2011 to 64% in 2016. Likewise, Cisco predicts that by 2016, three out of five data center workloads will be processed in the cloud.

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

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