TRX Claims Stabilization With First-Quarter Earnings
TRX showed stabilization despite its continued decrease in revenues during the first quarter of 2008, according to TRX president and CEO Trip Davis, who said corporate travel volumes remain strong outside of the financial services sector and a decelerated transaction growth in Europe. In addition, TRX's balance sheet has moved past the financial impact from its sale of the company's call center business to a wholly owned subsidiary within Indian conglomerate TATA Group, the 2006 acquisitions of Hi-Mark Software and Travel Analytics, and the launch of in-house operations in Bangalore, India late last year.
"We have seen the corporate travel marketplace be quite resilient and it seems to be in a bit of a wait-and-see mode," Davis told Business Travel News." On a sector-by-sector basis, there has been a little more of a significant reaction in financial services, for example, in cost controls and reducing travel spending. In the other sectors and regionally, it has been pretty consistent with one exception. Europe has been a little bit softer in its corporate travel transaction growth rate than in the Americas and Asia."
Davis said European operations account for 20 percent of TRX's business and the mortgage crisis had a bigger impact in the region than originally predicted, which accounts for the waning growth rate. "It doesn't appear to be incredibly deep or systemic yet," he said. "Everybody is waiting to see if they really needed to cut travel this much across the board and that's what we find a bit odd about this economic cycle. Normally, corporate travel is the first to get controlled and reduced and we haven't seen that yet."
During the quarter, which ended March 31, TRX increased its technology development to $3.87 million, up from $3.02 million in the same period last year. The company also is considering a number of "tuck-in" acquisitions, similar to Hi-Mark and Travel Analytics, for later this year, Davis said. The company does not have a specified sum of money reserved for acquisition, but as a public company Davis said there is cash on hand with access to capital through banks and debt agreements and through its shareholders, including the company's largest single shareholder, billionaire and BCD Holdings shareholder John Fentener van Vlissingen.
Total revenues excluding client reimbursements for the first quarter decreased to $21.9 million compared with $25.3 million for the same period in 2007. Transaction processing revenues decreased 4.9 percent to $17.6 million. Data reporting services revenue decreased 37.3 percent to $4.2 million. The company increased its technology development to $3.87 million up from $3.021 million in the first quarter of 2007.
On April 30, TRX closed a non-exclusive license sale of its DataTrax product to Citibank for $3.5 million. According to Davis. TRX has handled data processing and data consolidation for some of Citibank's financial services.