Q2 2015 @RMGNetworks Results
Gail Chiasson, North American Editor
Dallas-based RMG Networks Holding Corporation announced its second quarter, 2015, financial results Aug, 13, highlighting that: product revenue increased 32% sequentially, reflecting improved sales execution; maintenance revenue increased 4% sequentially, stabilizing from recent quarterly declines; and total revenues from continuing operations were $9.3 million, compared to total reported revenue from continuing operations of $8.2 million for Q2, 2014.
RMG Networks launched its largest software platform upgrade more than five years ahead of schedule. It also completed its strategic divestiture of Airline Media Network business.
And while it happened subsequent to quarter-end, RMG noted that it has been awarded a multimillion dollar contract to provide a transformational retail solution, representing one of the largest project wins in RMG Networks’ history. Name of the client was not divulged.
“During the second quarter, we made significant progress on a number of initiatives that have advanced our strategy to reinvigorate growth,” said Robert Michelson, CEO. “Since joining RMG Networks as CEO one year ago, we have significantly enhanced our innovative solutions offerings, refocused our strategy on specific vertical markets where we see significant growth opportunities, significantly reduced our overall cost structure, strengthened our balance sheet and bolstered our leadership team.
“Our focus on innovative solutions that help organizations increase productivity and save money via intelligent visual communication tools continues to drive our strategy and is the key to achieving sustainable top-line growth. The launch of our software platform upgrade last month represents the most significant technological advancement our company has achieved in over five years and provides our customers with greater functionality, enhanced security and enriched visualization. With a strong foundation laid in several key areas over the last year, and a refined focus as a result of the strategic divestiture of our Airline Media Network business, we are shifting our efforts in the second half of 2015 to focus on improving sales effectiveness. I firmly believe that today we have the right sales leadership in place and a comprehensive, process-driven plan to improve sales execution.
“I am proud to say that Q2 represented some of the first positive top-line results of these sales efforts. Continuing progress in improving sales effectiveness is evidenced by the signing of a multimillion dollar, transformational retail solution contract that we announced subsequent to the end of the quarter. This represents one of the largest project wins in RMG Networks’ history. As we execute on our sales enhancement programs, we believe the effect of our work will be evident in improving financial results going forward.”
In its report, 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. Prior year results have also been adjusted to report this business as discontinued operations. As a result, the financial results reflect the remaining business at RMG Networks, reported as continuing operations.
In addition, ‘as-reported’ results include the effects of purchase accounting, the impact of a large non-recurring contract and certain other items that management does not believe reflect the underlying performance of its business.
Maintenance and content services revenue has stabilized from the significant slide experienced during the first quarter of 2015 as a result of the proactive decision made in early 2014 to ‘end-of-life’ maintenance services on certain products.
Professional services revenue of $1.5 million declined 41.6% from $2.6 million in the first quarter of 2015, resulting primarily from the completion of a large implementation in the first quarter of 2015. Additionally, given an increase in sales support related to pre-sales activities, the company experienced lower realization rates.
“Over the past year, we have made tremendous operational progress in executing our turnaround strategy at RMG Networks,” said Michelson. “While we are not yet satisfied with the financial results, we believe the foundation we have laid and continue to strengthen each quarter has put us back on the right track to delivering revenue growth and generating positive adjusted EBITDA over the intermediate- and long-term. Although we continue to make progress, the exact timing of the financial impact of these initiatives is still not clear. As such, it continues to remain premature to provide specific, near-term guidance.”
Bob Michelson is speaking at The DailyDOOH Investor Conference on Wednesday November 4, 2015 as part of New York Digital Signage Week on the subject of ‘Why Visual Communications is the Hot Topic in Digital Signage‘.
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