Wireless Ronin Technologies CEO Discusses Q1 2012 Results - Earnings Transcript

Wireless Ronin Technologies Inc. (RNIN)

Q1 2012 Earnings Call

May 10, 2012

Executives

Erin Haugerud – Manager of Communications and Investor Relations

Scott Koller – President and Chief Executive Officer

Darin McAreavey – Senior Vice President & Chief Financial Officer

Analysts

Ty Lilja – Feltl & Company

Dwayne Nick (ph) – Private Investor

Jack Fred – Discovery Investments

Russell Wagner – Quartz (ph)

Presentation

Operator

Good afternoon ladies and gentlemen. Welcome to the Wireless Ronin Technologies’ First Quarter 2012 Earnings Call. My name is Eliza and I will be your conference operator this afternoon.

Before we begin today’s call, I would like to remind everyone that this call will be available for replay through June 10, 2012 starting later this evening. A webcast replay will also be available via the link provided in today’s press release as well as available on the company’s website at wirelessronin.com.

I would now like to turn the conference over to Erin Haugerud, Wireless Ronin, Manager of Communications and Investor Relations. Please go ahead.

Erin Haugerud

Thank you and welcome to Wireless Ronin’s first quarter 2012 earnings call. With me today are Scott Koller, President and CEO and Darin McAreavey, Senior Vice President and CFO. Following Scott’s opening remarks, Darin will review our financial performance for the quarter and turn the call back over to Scott for an operational update. Then we will open up the call for your questions.

To access today’s webcast, please go to Investor section of our corporate website at wirelessronin.com.

Please note that the information presented and discussed today includes forward-looking statements made under 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 certainties to our forward-looking statements. Risk and uncertainties that could cause our actual results to differ from those expressed or implied by forward-looking statements, including those set forth in the Risk Factors section of the annual report on Form 10-K we filed on March 21, 2012.

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

Now, I’ll turn the call over to our President and CEO, Scott Koller. Scott?

Scott Koller

Thank you, Erin. Good afternoon, everyone, and thank you for joining us on today’s call to discuss our first quarter 2012 results. Our performance in Q1 reflects our continued focus on driving and recurring revenue growth, margin expansion and expense reduction.

The first quarter marked the highest quarterly recurring revenue in our company’s history and second highest gross margin quarter driven by higher margin software services and hosting fees.

I’ll talk more about our operational highlights and business outlook in a few minutes. But now I’d like to turn it over to our CFO Darin McAreavey to walk you through the financial results for the period. Darin?

Darin McAreavey

Thanks Scott and good afternoon everyone. Revenue in the first quarter of 2012 increased 16% sequentially to $1.8 million from the prior quarter and decreased 26% from the same year ago period. The year-over-year decrease resulted primarily from low orders of the iShowroom branded tower location received from individual Fiat dealerships partially offset by increased development from constant [ph] [00:01:51] orders in Chrysler.

We believe Chrysler will continue to rollout iShowroom branded tower applications with further dealership adoption. Additionally, Chrysler has required all Fiat dealerships to adopt the iShowroom interactive application which is being featured in the Fiat Style Center of the new Fiat Studio Facilities.

However, since we do not have a contract with Chrysler requiring it to source all the various components of these solutions through us, and iShowroom branded tower purchases still remain within the discretion of the individual dealerships, we cannot predict the forecast of timing or value of future iShowroom orders.

Today we have received purchase orders for 400 Chrysler and 200 Fiat dealerships. Chrysler continues to invest in new ways to expand the iShowroom interactive application. Most recently in Beijing, Wireless run into develop iShowroom Web 2.0 program which we delivered during the first quarter, the projects that we’ll discuss further in a few moments.

At the end of the first quarter, we have recognized the total of $1 million of purchase orders for which revenue will be recognized in future quarters. Recurring revenue in the first quarter of 2012 increased 10% from the previous quarter to a record $466,000 or 26% of revenue. Recurring revenue increased 18% in the same year ago period.

Gross profit increased to $949,000 or record 54% of total revenue compared to $446,000 or 29% of total revenue in the previous quarter and $1.1 million or 46% of total revenue in the same year ago period.

The sequential and year-over-year improvements in recurring revenue and gross margins on a percentage basis demonstrate our focus on increasing our higher margin software and hosting services. It also reflects our continuing shift from a digital signage company to a marketing technology company.

Net loss totaled $1.8 million or $0.08 per basic and diluted share incurred to a net loss of $1.7 million or $0.08 per basic and diluted share in the previous quarter and a net loss of $2.3 million or $0.12 per basic and diluted share in the same year ago period.

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