Wireless Ronin‘s latest financials suggest the digital signage software company is finally starting to do business like a normal company, coming off a quarter when it was kinda sorta actually but not really profitable.
The company has reported that Q2 2013 marked the company’s “first quarter of profitability on a non-GAAP basis,” with revenue up $1 million from the same quarter a year earlier.
“Now let’s drill down to what drove this record,” said Darin McAreavey, Senior Vice President and CFO, in the earnings call. “Second quarter revenue was up 69%, 2.6 million, 1.6 million in Q2 of 2012. For the six months ended June 30th, revenue was up 21% to 4 million and 3.3 million in the comparable period. The increase was due to the $750,000 license sale to Delphi Display Systems as well as new orders from Indian Motorcycle and ARAMARK.”
“Q2 recurring revenue from our hosting and support services increased 3% 489,000 or 19% of total revenue up from 474,000 or 30% of total revenue in Q2 of 2012. For the first six months of 2013, recurring revenue totaled 984,000 or 24% of total revenue compared to 941,000 or 28% of total revenue in the same year ago period. The increase in recurring revenue was driven by continued expansion of support services to more nodes supported by our company’s network operations center.”
“Q2 gross margin was a record 1.8 million or 69% of total revenue compared to 945,000 or 61% of total revenue in Q2 of 2012. For the first six months of 2013, gross margin was 2.6 million or 64% of revenue compared to 1.9 million or 57% of revenue in the same year ago period. The increase in gross margin percentage was primarily due to the $750,000 software license sale recognized in the quarter. Our ability to maintain similar gross margin levels on a percent basis can be impacted by shifts in our sales mix. Total operating expenses in Q2 of 2013, decreased 12% to 1.90 million from 2.2million in Q2 of 2012. For the first six months of 2013, total operating expenses decreased 18% to 4 million from 4.9 million in the same year ago period. We continue to remain focused on effectively managing our cost and overhead.”
So, costs are getting cut, but really, the reason the company can report profitability by one measure is the $750K it got from Delphi Display Systems as a license to secure gas station and QSR market exclusivity. The counter argument would be that a sale is a sale, no matter how you want to interpret it or whatever the back-story might be. But it’s a spike, not a trend.
The company still had a net loss of $76K, which is dramatically better than previous quarters, and for the year RNIN is down almost $1.5 million.
The real story is that the company is now closing in on an accumulated deficit of $100 million, dating back to 2007. At last count, the number was north of a remarkable $96 million, based on quarterly losses dating back through the years.