$68.7 million later, "the business model works …"

August 13, 2010 by Dave Haynes

“Under the leadership of Scott Koller and Darin McAreavey, we have clearly demonstrated a capacity for delivering on key financial performance metrics over the past quarter,” said James C. (Jim) Granger, chief executive officer at Wireless Ronin. “We delivered double digit growth both sequentially and on an annual basis — the highest revenue levels since fourth quarter of 2008 and a more than fourfold improvement in gross margin dollars year-over-year at 48 percent — marking this as the eighth consecutive quarter of improvement and the highest percentage in Wireless Ronin’s history. Scott, Darin and the rest of the management team have been successfully executing against an ongoing cost optimization plan during the second and third quarters of 2010 to position the Company for a future non-GAAP EBITDA break-even quarter. Now with concurrent growth in both revenues and gross margins, we believe we have validated that the business model works.”

I got curious, and dug into SEC filings …

2004 – $3.3 million

2005 – $4.8 million

2006 – $14.8 million

2007 – $10.1 million

2008 – $20.7 million

2009 – $10.2 million

2010 (so far) – $4.8 million

Those are all net loss numbers available in SEC filings, and they add up to almost $69 million in net losses since 2004. I wonder if all the companies and individuals who have put money in RNIN since 2004 and watched it vaporize are as convinced the business model works.

Again, for the sake of hard-to-come-by jobs for the rank and file people working at Ronin, I hope they are turning things around. But as assertions go, the company CEO is, ummm, reaching.

  1. James says:

    this is a case study for the theory of constraints. The goal is not achieved via pretty financial ratios – its about making money. I sincerely hope they do better in the future for the people of Ronin, and the cities in which they operate. They have great people and it is within reach.

  2. analyst2 says:

    Recall that this Company has raised nearly $90 million. In the face of that, quarterly revenue under $2 million and 6 month revenue under $3 million in the 7th (?) year of operations should be a source of embarrassment for all involved. The identified % increases over prior periods are meaningless in comparison.

    Note that in the quarter and six months ended June 30, 2007, for example, the revenues were higher and the losses smaller than for the same periods in 2010.

    A review of RNIN’s business over the last 5 or 6 years can only lead to one conclusion: the Company has never had a successful business or business model, does not NOW have a successful business or business model, and shows no signs of ever being able to claim either.

    A side note: I have never had any position, long or short, in RNIN securities.

  3. Why is Wireless Ronin one of the most talked about companies in Digital Signage?

  4. Dave Haynes says:

    Very simple Steve. The SEC requires that their books be open for investors and everyone else to see. It’s a rare glimpse into a DS company’s boardroom and the spreadsheets.

    They have also encouraged a lot of attention by splashing out BIG at most industry trade shows, even when it was clear they burning through money at warp speed.

    Ronin is just one of numerous software companies in the sector that are having, umm, money issues. They’re just the only that by law has to let everyone else know.

    The great thing about going public is the access to piles of capital. Then there’s the not so great stuff, which RNIN is living through now.

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