Wireless Ronin Technologies, Inc. (RNIN)

Q2 2010 Earnings Call Transcript

August 12, 2010 4:30 pm ET

Executives

Erin Flor – Manager of Communications & IR

James Granger – CEO

Darin McAreavey – VP and CFO

Scott Koller – President and COO

Analysts

Darren Aftahi – Northland Securities

Rick D’Auteuil – Columbia Management

Dick Ryan – Dougherty

Richard Dearnley – Longport Partners

Adam Peck – Heartland Funds

Presentation

Operator

Good day, ladies and gentlemen, and welcome to Wireless Ronin 2010 second quarter earnings call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. (Operator Instructions) As a reminder, this conference call is being recorded.

I would now like to turn the conference over to Erin Flor, Manager of Communications and Investor Relations. Ma’am you may begin.

Erin Flor

Thank you and welcome everyone to our 2010 second quarter conference call. With me today are James C. Granger (Jim), our Chief Executive Officer; Darin McAreavey, Vice President and Chief Financial Officer; and Scott Koller, President and Chief Operating Officer. After Jim’s opening remarks, Darin’s detailed financial review, and Scott’s sales update, we will open up the call to your questions.

Before we begin, please note that the information presented and discussed today includes forward-looking statements, which are made under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Our actual results in future periods may differ materially and you should not attribute undue certainty to our forward-looking statements.

Risks and uncertainties that could cause our actual results to differ from those expressed or implied by forward-looking statements, include those set forth in the risk factor section of the annual report on Form 10-K we filed on March 26, 2010.

In addition, our comments may contain certain non-GAAP financial measures including non-GAAP operating loss per share. For additional information, including the reconciliation for GAAP results to non-GAAP measures, how the non-GAAP measures provide useful information and why we use non-GAAP measures, please see the reconciliation section of our press release, which appears on our website at www.wirelessronin.com.

Now, I’d like to turn the call over to Jim.

James Granger

Thanks, Erin, and good afternoon everyone. Thank you for joining us on today’s call to discuss Wireless Ronin’s 2010 second quarter results. As I indicated, on the first quarter earnings call, Scott Koller was promoted to President and Chief Operating Officer.

During the time that he had spent in this role, I have become increasingly confident and his ability to take this company to the next level. The strength of Wireless Ronin continues to grow and much of the strength has happened under the direction of Scott and Darin McAreavey. Their team has put great effort and to improving the business model.

I would like to highlight a few key points from the second quarter of 2010, which took place under the direction of Scott and his team to illustrate why I have such confidence in him, the team and the direction of the company.

Wireless Ronin has clearly demonstrated the capacity for delivering on key financial performance metrics over the past quarter. First, we have recorded the highest level of revenue since the fourth quarter of 2008. Revenues almost doubled year-over-year and increased 78% on a quarter-over-quarter basis. Our gross margin dollars increased fourfold year-over-year and gross margin on a percentage basis continue to improve for the eighth consecutive quarter reaching 48%.

Secondly, WRT is on track to provide a breakeven business model if the company achieves quarterly revenues of approximately $3.8 million. Scott and Darin along with the rest of the management team, have been successfully executing against an ongoing cost optimization plan to position WRT for a future non-GAAP EBITDA breakeven quarter.

And thirdly, as the press release has outlined, our digital signage products and services are being widely deployed across our key vertical markets of food service, automotive and branded retail. In addition, we continue to focus on operational improvements including high availability, scalability, and software quality. Now with real revenue momentum, we hope to illustrate the true scalability of the business for the second half of 2010 and beyond. We believe the concurrent growth of revenue and margins demonstrates that our business model works.

I would like now to turn the call over to Darin for an update on our financials for the second quarter of 2010.

Darin McAreavey

Thanks, Jim, and good afternoon. We reported revenue of $1.9 million for the second quarter of 2010, a 99% increase from $1 million in the second quarter of 2009. As of June 30, 2010, WRT have received purchase orders totaling approximately $1.1 million for which it did not recognize revenue. The increase in our year-over-year revenue was primarily the result of revenue generated from four of the company’s marquee customers

Chrysler, Thomson Reuters, YUM! and ARAMARK.

In addition to working closely with Chrysler on multiple requests for additional enhancements to iShowroom, Chrysler is also looking ways to extend the platform as an effective launch tool for its new 2011 lineup this fall. We also experienced a favorable increase in sales to Thomson Reuters as it continues to expand its InfoPoint network and its most recently launched interactive application, Reuters Insider. Sales to Thomson Reuters during the three month period ending June 30, 2010, totaled approximately 400,000, up 126% when compared to the same period in the prior year.

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