TRX To Focus On Europe, Asia After Poor Quarterly Earnings

With expectations that domestic travel demand will continue to soften, data reporting and travel software company TRX plans to focus on European and Asian growth in 2008. TRX is set to further roll out its new Correx Gen6 agency mid-office software platform and quality control e-ticketing software as well as provide a lower-cost model for reservation processing and data reporting, TRX president and CEO Trip Davis said in the company's fourth-quarter earnings call, during which the company disclosed continued revenue losses and small increases in transaction processing volumes.

Despite poor earnings, Atlanta-based TRX increased its technology development spending in the fourth quarter to $3.1 million and in 2007 spent $13.2 million, up from $11.0 million in 2006. Davis told Business Travel News that technology development expenditures would increase at a similar rate this year.

Part of that technology development is enhancements to and the reconfiguration of the Correx mid-office software, which includes a component purchasing ability that yields an overall lower-cost model. In addition, Expedia in Europe and American Express in Asia are expanding data reporting and reservation processing through TRX and will deploy them further in those regions this year, according to Davis.

The Correx Gen6 initiative utilizes software programming in India and a development team from Europe and the United States. In December, 250 outsourced personnel formerly from Siemens Shared Services in Bangalore, India, joined TRX. The Indian personnel handle some software programming and development. "We will expand this operation in 2008 to address the growing market opportunities in Asia and to achieve a balanced cost structure between the U.S., Europe and India," Davis said.

Meanwhile, TRX today announced continued revenue losses in the fourth quarter of 2007 and a full-year 2007 revenue decrease of more than 20 percent. Davis said he is "not satisfied with the 2007 financial performance" and the company will "move deliberately and aggressively" with opportunities for long-term growth.

"We are not going to manage TRX based on quarterly cycles," Davis said. "Based on the nature of the travel industry with globalization and economic cycles, I view it as a non-starter for us as a management team to manage on quarterly or short-term cycles."

The company reported fourth-quarter revenues, excluding client reimbursements, of $18.6 million compared with $26.1 million in the fourth quarter of 2006. For 2007, TRX's revenues decreased 21 percent to $89.5 million, which includes an increase in data reporting revenues to $20.9 million, up from $17.8 million in 2006.

While transaction-processing volumes increased marginally to 19.58 million transactions, processing services revenues decreased to $14 million from $15.6 million compared with the fourth quarter of 2006. While data reporting revenues increased in 2007 to $20.9 million, the same segment revenues fell to $3.3 million in the fourth quarter, down from $5.1 million the same period in 2006.