RMG Networks Blog

$1.2 million yOy improvement in ebitda; improved sales productivity drives 25% yoy increase in product revenues

DALLAS, TX — (Marketwired) — 05/12/16 — RMG Networks Holding Corporation (NASDAQ: RMGN)

First Quarter Highlights

  • EBITDA1 loss of $0.4 million narrowed by $1.2 million year-over-year
  • Total revenues of $8.7 million decreased 7% year-over-year
  • Product revenues increased 25% year-over-year
  • Operating expenses2 decreased 22% year-over-year
  • Awarded a Gold APEX Award at the Digital Signage Expo (DSE), the world’s largest and longest-running trade show showcasing innovative digital communications

RMG Networks Holding Corporation (NASDAQ: RMGN), or RMG Networks™, a leading provider of technology-driven visual communications solutions, today announced its financial results for the first quarter ended March 31, 2016.

“The fundamentals of our business continue to improve each quarter as we execute against our strategic plan to deliver innovative and value-added solutions in new market verticals and further diversify sales beyond our core contact center business,” commented Robert Michelson, Chief Executive Officer. “We are particularly encouraged by the improvement in the efficiency and productivity of our sales organization during the first quarter, which drove a 25% increase in product revenue on a year-over-year basis. Simultaneously, our cost rationalization efforts over the past year resulted in a 22% year-over-year decline in operating expenses, ultimately driving a $1.2 million improvement in EBITDA.”

“We made progress on our key growth initiatives, including closing sales orders for three supply chain pilots, a million dollar retail banking deal and a $425,000 deal with a large telecommunications customer,” Mr. Michelson continued. “We also advanced discussions with specific, targeted, third-party sales channel partners, who have the potential to augment our growth, and look forward to announcing new partnerships in the coming months. Overall, we are pleased with the strategic and financial progress made during the first quarter. We continue to broaden our customer base, expand our pipeline with larger and more meaningful sales opportunities and are optimistic in our outlook for 2016.”

First Quarter Financial Review

Prior year financial results from RMG Networks’ Airline Media Networks business have been excluded from continuing operations and are reported as discontinued operations in the Consolidated Statement of Comprehensive Loss, due to the completion of the sale of this business on July 1, 2015. As a result, the financial results below reflect the Enterprise business at RMG Networks, reported as continuing operations.

Adjusted Results3

  • Total revenues of$8.7 million represented a decrease of 7% from$9.3 million in the first quarter of 2015.
    • Product sales revenue of $3.9 million increased 25% from $3.1 million in the first quarter of 2015, driven by improved sales productivity during the quarter.
    • Maintenance & content services revenue of $3.4 million remained flat from the first quarter of 2015.
    • Professional services revenue of $1.4 million decreased 51% from $2.9 million in the first quarter of 2015, resulting primarily from installation services performed during the first quarter of 2015, associated with the sale of a large customer solution made during the fourth quarter of 2014.
  • Gross margin of 58.0% was driven by a favorable sales mix, resulting from a larger amount of software sales. Adjusted gross margin was 57.9% in the same period last year.
  • Operating expenses, excluding depreciation, amortization and stock-based compensation expenses, declined to $5.5 million in the first quarter of 2016 from $7.0 million in the first quarter of 2015, resulting from the company’s cost rationalization efforts during 2015.
  • EBITDA4 loss of $0.4 million narrowed from an adjusted EBITDA loss4 of $1.6 million in the first quarter of 2015.

Reported Results
First Quarter. Total reported revenue for the quarter ended March 31, 2016 was $8.7 million compared to total reported revenue of $9.3 million for the same quarter last year.

Operating loss for the quarter ended March 31, 2016 was $1.6 million compared to $4.0 million for the same quarter last year.

Business Outlook

“As expected, we experienced the historical seasonality that generally impacts our revenues in the first quarter,” noted Mr. Michelson. “Despite top-line seasonality, we narrowed our first quarter EBITDA loss to just over $400,000, a significant improvement over the EBITDA loss reported in each of the first three quarters of 2015 and every quarter of 2014. Looking forward, we are encouraged by the progress we continue to make in our key growth initiatives, and believe the investments we are making in our sales organization will lead to continued sequential revenue growth in 2016.”

Conference Call

Management will host a conference call to discuss these results today, May 12, 2016 at 9 a.m. ET. To access the call, please dial1-877-890-5060 (toll free) or 1-678-967-4604 and reference conference 98964161. The conference call will also be broadcast live over the Internet with an accompanying slide presentation, which can be accessed via the Investor Relations section of RMG Networks’ web site at http://ir.rmgnetworks.com/phoenix.zhtml?c=251935&p=irol-calendar. All participants should call or access the website approximately 10 minutes before the conference begins. The webcast and slide presentation will be available for replay for at least 90 days.

A telephonic replay of this conference call will also be available by dialing 1-855-859-2056 (toll free) or 1-800-585-8367 or1-404-537-3406 and entering passcode: 98964161 from 12 p.m. ET on May 12, 2016 until 11:59 p.m. ET on May 19, 2016.

© 2016 RMG Networks Holding Corporation. RMG Networks and its logo are trademarks and/or service marks of RMG Networks Holding Corporation.

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