Wireless Ronin Technologies, Inc. ( RNIN)

Q3 2011 Earnings Call

November 4, 2011 10:00 AM ET

Executives

Erin Haugerud – Manager, Communications and IR

Scott Koller – President and CEO

Darin McAreavey – VP and CFO

Analysts

Darren Aftahi – Northland Securities

Marco Rodriguez – Stonegate Securities

Ty Lilga – Feltl & Company

Dick Ryan – Dougherty & Company

Nick Mara – Sidoti & Co

Arthur Freedman – Freedman Asset Management

Tom Pierce – Feltl & Company

Rick D’Auteuil – Columbia Management

Don McKiernan – Landolt Securities

Dwayne Kennedy – Private Investor

Presentation

Operator

Good morning, welcome to the Wireless Ronin Technologies Third Quarter 2011 earnings call. My name is Christina and I will be your conference operator today. (Operator Instructions) I would like to remind everyone that this call be available for replay through December 4, 2011 starting later this evening. A webcast replay will also be available via the link provided in yesterday’s press release as well as available on the company’s website at www.wirelessronin.com.

I would now like to turn the call over to Erin Haugerud, Manager of Communications and Investor Relations for Wireless Ronin.

Erin Haugerud

Thank you and welcome everyone to our third quarter 2011 earnings call. With me today are Scott Koller, President and CEO, and Darin McAreavey, Vice President and CFO. Following Scott’s opening remarks, Darin will review our financial performance for the quarter and nine months and then turn the call back over to Scott for an operational update. Then we will open up the call to your questions.

Today’s call will be an interactive webcast that will feature presentation slides of our Q3 2011 financial results. To access the webcast, please go to the investor section of our corporate website at www.wirelessronin.com.

Please note that the information presented and discussed today include forward-looking statements made on the Safe Harbor Provision 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 are forward-looking statements, including those set forth in the risk factors section of our Annual Report on Form 10-K we filed on March 22, 2011.

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

Now I’ll turn the call over to Scott Koller. Scott?

Scott Koller

Thank you Erin. Good morning everyone and thank you for joining us on today’s call to discuss Wireless Ronin’s third quarter 2011 results. The third quarter marked our first cash flow positive quarter since going public in 2006. In addition, revenue for the first nine months of 2011 increased 37% to a record $7.8 million. This improvement in year-to-date top line performance validates our business plan and demonstrates our ability to execute.

But before I comment out further, I’d like to now turn the call over to Darin McAreavey, our CFO who will take you through the financial details of our results. Afterwards, I will talk about our operational highlights and business outlook. Darin?

Darin McAreavey

Thanks Scott and good morning everyone. Turning to our financial results; our Q3 2011 revenue decreased 25% to $2.3 million in the prior quarter and decreased 14% from the same year-ago quarter. The decline was primarily attributable to the lower Chrysler deployment which was partially offset by 20 additional Fiat dealership installations for the iShowroom application which is being featured in the Fiat Style Center of the New Fiat Studio Facilities.

We expect continued rollout to the iShowroom branded tower application with future dealership adoptions. The purchase of the iShowroom branded towers will remain within the discretion of the individual dealerships making it difficult to predict our forecasts of timing and value of each order.

Recurring revenue in Q3 2011 generated from our hosting and support services was approximately $400,000 or 17% of total revenue. We do expect that our recurring revenue to increase once we complete the branded tower installations at the dealerships. At the end of the quarter, we received purchase orders totaling approximately $1.4 million that was not recognized as revenue during Q3. We expect to fulfill and recognize those revenues, a significant portion of these orders in the fourth quarter of 2011.

Revenue for the first nine months of 2011 increased to 37% to a record $7.8 million with $5.7 million in the same year-ago period. The sequential improvement in our services revenue was primarily driven by additional orders from Chrysler as a result of further enhancements to the iShowroom application which included content updates and the e-learning programs. Growth in the third quarter 2011 was 49%, up 3% from the previous quarter and declined 50% in the third quarter of 2010.

These margin fluctuations results from to us a slight change in the mix of hardware and software sales during the relative quarters. On a GAAP basis, our Q3 2011 net loss totaled $1.4 million or $0.07 per basic and diluted share which included a $169,000 of non-cash stock compensation expense. This compares to a net loss of $1.4 million or $0.07 per basic and diluted share in the previous quarter and a net loss of $1.4 million or $0.08 per basic and diluted share in the same quarter of year-ago.

Excluding non-cash charges, our Q3 2011 non-GAAP operating loss totaled $1.1 million or $0.06 per basic and diluted share, compared to a non-GAAP operating loss of $1.1 million or $0.06 per basic and diluted share in the previous quarter and a non-GAAP operating loss of $1 million or $0.06 per basic and diluted share in Q3 of 2010. Our GAAP expenses for the third quarter of 2011 totaled $2.5 million sequentially down $300,000 from $2.8 million from the previous quarter and down approximately $200,000 from $2.7 million from the same period in the prior year.

We continued to diligently manage our expenses focusing on achieving a breakeven non-GAAP EBITDA quarter. Now turning to the balance sheet, our networking capital position was $3.5 million at the end of the third quarter compared to $4.6 million at June 30, 2011. Our overall cash, cash equivalents and restricted cash totaled $4.3 million, up approximately $400,000 from previous quarter.

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