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Radiant Systems Inc. Q2 2010 Earnings Call Transcript

Radiant Systems Inc. Q2 2010 Earnings Call Transcript

Radiant Systems Inc. (RADS)

Q2 2010 Earnings Call

August 05, 2010 04:30 pm ET


John Heyman - CEO

Alon Goren - Chairman and CTO

Andy Heyman - COO

Mark Haidet - CFO

Rob Ellis - VP, Finance and Accounting


Andrew Jeffrey - Suntrust

Rich Kugele - Needham & Company

Gil Luria - Wedbush Securities

Terry Tillman - Raymond James & Associates

Dan Rice - Northland Securities

Brad Whitt - Gleacher & Co.

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Good day and welcome to the Radiant Systems Second Quarter 2010 Earnings Release. At this time, I would like to turn the call over to your host, Mr. John Heyman. Please go ahead.

John Heyman

Thanks to everyone for joining us this afternoon. With me here today are Alon Goren, our Chairman and Chief Technology Officer, Andy Heyman, our Chief Operating Officer, Mark Haidet, our Chief Financial Officer; and Rob Ellis, our Vice President of Finance and Accounting.

Before we get started, Mark is going to run through the forward-looking caveats.

Mark Haidet

As always, certain statements contained in this conference call are forward-looking statements within the meaning of the Securities Act of 1995, such as statements relating to financial results and plans for future business development activities, and are thus prospective. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, many of which are beyond the company’s control. These risks are detailed in our most recent 10-K filed with the Securities and Exchange Commission.

During this call, we will also discuss certain non-GAAP financial measures. Reconciliation of these financial measures to comparable GAAP measures can be found in our earnings release and on our website at under Investor Relations.

John Heyman

Thank you very much Mark and again, thanks everybody for joining us this afternoon. We know everybody has a very busy schedule. Before I say anything, I want to address our employees and our channel partners many of whom are shareholders of the company.

Let me express our deepest gratitude to, from all of our investors to each of you, your hard work is driving results for our customers, our company, and our shareholders, and on behalf of all of them, I just would like to pass on a huge thanks, like never before this quarter validates your hard work and exceptional dedication, and we all know the best is yet to come.

As a preface to my otherwise short comments today, a number of things have come together to lead to these incredible results and increased forecast for the remainder of the year. Large direct customer wins are resulting in significant long-term roll outs, new product launches are yielding strong adoption and our channel partners have picked up steam across the industries and the geographies that we serve.

We are winning share from our competitors and we are continuing to penetrate our installed base with new products that are helping our customers drive revenue growth and operating efficiencies in their size.

Just a few quick highlights, revenues grew 22%, the direct wins and the momentum of our channel partner business are increasing system sales, which were up over 40% for the quarter and recurring revenues continued their strong growth, led by 41% growth of our SaaS

businesses. Overall recurring revenues grew approximately 16%, when adjusted for our business change Mark, who describe a bit later.

Historically, we have laid out our long-term operating margins, at the targets of 15%. The revenues in this quarter are combined with good mix and a leverageable operating model allowed us to achieve this target.

It is clear to us that achieving 15% on a sustainable basis is within our sides, and that higher operating margins are achievable over the long-term. The profitability in the business is helping us drive very strong cash flow, we have cut our debt by $30 million over the past 12 months and we are continuing to strengthen our balance sheet.

Off course all of this is now history and while it was an outstanding quarter by almost any measure that you or that we would look at in the business. The really good news is the sustainability of these results and the growth we foresee into the future.

Specifically, I will talk about five quick points. Number one, we are in the early phases of long-term rollouts with series of recent wins amongst large direct customers with significant franchisee channels. Number two, our pipeline remains very strong across all of our businesses. Three, our channel partner businesses, which were down significantly in 2009 are now up and gaining momentum. Four, we are eyeing the continued launch of new products later this year and into 2011 and five; we are ramping up our very successful sales efforts around current and planned SaaS offerings.

So, I am encouraged by these strong results. I am even more encouraged by the sustainability of the momentum in the business, which we believe will continue throughout this year and propel us into a prosperous 2011 as well.

Mark, will run through the financials and our guidance increases in a moment. One component, we are very excited about given the revenue and earnings acceleration that we have seen is that we can more quickly fund some of the important growth initiatives before us such as the continued build out of our SaaS sales force.

With that, I will turn it over to Mark and then I will make some concluding comments.

Mark Haidet

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