Ronin revenues up, but so is burn rate

August 12, 2010 by Dave Haynes

The latest required filings for publicly-listed Wireless Ronin show hardware, software and services sales are heading in the right direction, but the burn rate the company was trying to slow is actually up, not down.

Sales are almost double that of Q2 2009 (aka depths of recession), which is good to see. However, despite something called a cost optimization program the firm is burning through cash at an increased rate, having seen it slow down in past quarters. The company has the cash to hang on past new year’s, which is longer than some observers gave them.

Darin McAreavey, Wireless Ronin’s vice president and chief financial officer, said, “Our cash burn for the second quarter of $2.4 million was sequentially up from $2.0 million for the first quarter of 2010. This increase was primarily the result of us coming off a very soft first quarter and billing a significant portion of our revenues in the last month of the second quarter. Excluding our cash balance, our working capital accounts increased sequentially by approximately $0.7 million. We continue to believe with the cost savings we are already realizing, our current cash reserves are adequate to fund our operations well into 2011.”

Rather boldly, the latest filing asserts the company expects to break even on EBITDA soon and suggests all this increased business proves the Ronin business model works. There are still a lot of people working there, so for the sake of their jobs I hope that is indeed the case.

However, a $2 million net loss in the quarter is not many people’s idea of a validated business model. The loss comes on quarter after quarter after quarter of big, big losses, as well.

A transcript of the earnings call with execs is posted here …