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RMG Networks Reports Second Quarter 2016 Results




DALLAS, TX — (Marketwired) — 08/11/16 — RMG Networks Holding Corporation (NASDAQ: RMGN) –

RMG Networks Holding Corporation (NASDAQ: RMGN), or , a leading provider of technology-driven visual communications solutions, today announced its financial results for the second quarter ended June 30, 2016.

“During the second quarter, we continued to deliver tangible progress against our strategic initiatives, while also delivering substantially improved Adjusted EBITDA over last year,” commented Robert Michelson, Chief Executive Officer. “We are excited about the meaningful progress we made in expanding our third-party sales channels, finalizing agreements with two new third-party sales channel partnerships, including Manhattan Associates. We anticipate these relationships will supplement our sales growth plans and help expand our sales pipeline.”

“We also significantly strengthened our executive management team with the addition of George Clopp, Chief Technology Officer, and Jerry Rosen, Global Chief Marketing & Creative Officer,” continued Michelson. “The addition of George and Jerry are meaningful to our organization, as they each bring a breadth of leadership, accomplishments and innovative ideas to their positions. They are highly engaged to further our focus on leading with innovative products and solutions and bringing those offerings to the market in a cost-efficient and compelling way to reach both new and existing customers around the globe.”

“In North America, we drove sequential revenue growth in the second quarter, representing encouraging progress. The positive results in North America were partially offset by challenges experienced in our international business that delayed the timing of some orders, in part due to the impact of oil pricing on the macroeconomic environment in the Middle East and the economic uncertainty created by Brexit in the U.K. and Europe,” continued Michelson. “The mix of second quarter revenue, led by stronger professional services revenue, drove strong gross margin and material improvement in Adjusted EBITDA. We remain optimistic about our outlook as we enter the second half of 2016.”

Total revenue of $8.7 million was flat sequentially compared to the first quarter of 2016, and decreased 7% from $9.3 million in the same quarter last year.

Gross margin was 58.3% compared to 71.4% in the second quarter of 2015, as reported under U.S. GAAP. On a non-GAAP basis, excluding a $1.5 million net gain recorded on a non-recurring long-term contract in the second quarter of 2015, gross margin improved from 55.6% in the same quarter last year, driven by a favorable sales mix, resulting primarily from an increase in professional services revenue.

Total operating expenses were $6.6 million, a 27% decrease from $9.0 million in the same quarter last year, resulting primarily from the company–s cost rationalization efforts in 2015.

GAAP operating loss of $1.5 million improved from a loss of $2.4 million in the same quarter last year, resulting primarily from lower operating expenses, partially offset by a net gain recorded on a non-recurring long-term contract in the second quarter of 2015. On a non-GAAP basis, Adj. EBITDA loss of $0.4 million narrowed from a loss of $2.4 million in the same quarter last year.

Prior year 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. As a result, the financial results above reflect the Enterprise business at RMG Networks, reported as continuing operations.

“We remain optimistic about the long-term financial prospects of the business, as the core geographical U.S. business continues to perform well, offset by the uncertainty associated with Brexit in the U.K. and oil prices in the Middle East. We believe that our strategic positioning in conjunction with our experienced leadership team positions the company for profitability. We remain focused on continuing to build on the key strategic initiatives of our multi-year strategic plan. We do recognize that we are still impacted by quarter to quarter fluctuations that are inherent in our sales delivery and business model,” concluded Michelson. “We are investing in and improving our business continually with a focus on long-term, sustainable growth, which we believe best serves our customers and our shareholders. We have established a track record of continued strategic progress and improvement in financial results and are encouraged by the trajectory our business is on for 2016 and beyond.”

Management will host a conference call to discuss these results on Thursday, August 11, 2016 at 9 a.m. ET. To access the call, please dial 1-877-890-5060 (toll free) or 1-678-967-4604 and reference conference 54202038. The conference call will also be broadcast live over the Internet with an accompanying slide presentation, which can be accessed via the Investor Relations section of RMG Networks– web site at All participants should call or access the website approximately 10 minutes before the conference begins. The webcast and slide presentation will be available for replay for at least 90 days.

A telephonic replay of this conference call will also be available by dialing 1-855-859-2056 (toll free) or 1-800-585-8367 or 1-404-537-3406 and entering passcode: 54202038 from 12 p.m. ET on August 11, 2016 until 11:59 p.m. ET on August 18, 2016.

(1) A non-GAAP measure, we define Adj. EBITDA as operating income (loss) plus depreciation and amortization expenses and stock-based compensation expense. We have also excluded the impact of a $1.5 million net gain recorded on a non-recurring long-term contract in the second quarter of 2015. See “About Non-GAAP Financial Measures” below and the reconciliation tables at the end of this release for more information regarding non-GAAP financial measures used in this release.

© 2016 RMG Networks Holding Corporation. RMG Networks and its logo are trademarks and/or service marks of RMG Networks Holding Corporation.

RMG NETWORKS (NASDAQ: RMGN) is a worldwide leader in intelligent visual communications that help businesses increase productivity, efficiency and engagement through digital messaging. By combining best-in-class software, hardware, business applications and services, RMG Networks offers a single point of accountability for integrated data visualization and real-time performance management. The company, who values 70% of the Fortune 100 as clients, is headquartered in Dallas, Texas, with additional offices in the United States, United Kingdom and the United Arab Emirates. For more information, visit .

This release includes certain non-GAAP financial measures as defined under SEC regulations, including Adjusted EBITDA. In evaluating its business, RMG Networks considers and uses Adjusted EBITDA as a supplemental measure of its operating performance, and believes that many of the company–s investors use this non-GAAP measure to monitor the company–s performance. This measure should not be considered as a substitute for the most directly comparable GAAP measure and should not be used in isolation, but in conjunction with this GAAP measure. Our definition of Adjusted EBITDA is set forth in footnote (1) above, and a reconciliation between Adjusted EBITDA and the relevant GAAP measure is set forth in the table at the end of this press release.

This press release contains “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as: “anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,” “project,” “estimate,” “expect,” “strategy,” “future,” “likely,” “may,” “should,” “will” and similar references to future periods. Examples of forward-looking statements include, among others, compensation and other benefits derived from the sale of the Airline Media Networks business, guidance relating to future financial performance and expected operating results, such as revenue growth, our ability to achieve profitability, our position within the markets that we serve, our ability to introduce new or improved products and services, our ability to better market our products and services, our efforts to grow our business and the impact of litigation.

Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following: the company–s ability to raise additional capital on satisfactory terms, or at all; success in retaining or recruiting, or changes required in, its management and other key personnel; the limited liquidity and trading volume of the company–s securities; the ability of the company to maintain its Nasdaq listing; the competitive environment in the markets in which the company operates; the risk that the anticipated benefits of acquisitions that the company may complete, may not be fully realized; the risk that any projections, including earnings, revenues, margins or any other financial items are not realized; changing legislation and regulatory environments; business development activities, including the company–s ability to contract with, and retain, customers on attractive terms; the general volatility of the market price of the company–s common stock; risks and costs associated with regulation of corporate governance and disclosure standards (including pursuant to Section 404 of the Sarbanes-Oxley Act); and general economic conditions.

Any forward-looking statement made by us in this press release is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

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. As a result, these financial results reflect the Enterprise business at RMG Networks, reported as continuing operations.

For RMG Networks Holding Corporation

Brett Maas / Rob Fink
646-536-7331 / 646-415-8972

Julie Rasco
800-827-9666





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