CAMPBELL, CA — (Marketwire) — 03/25/13 — Rainmaker Systems, Inc. (NASDAQ: RMKR), a recognized technology leader in the rapidly emerging Cloud-Based B2B e-Commerce market, today reported financial results for its fourth quarter and year ended December 31, 2012.
Net revenue for 2012 was $25.4 million, compared to $26.4 million in 2011. Net revenue in the fourth quarter of 2012 was $5.2 million, compared to net revenue in the fourth quarter of 2011 of $7.1 million. Gross margin for the year ended 2012 improved sequentially to 43%, compared to 42% in the 2011 comparative period.
Net loss from continuing operations for the fourth quarter of 2012 was $921,000, or a net loss of $0.04 per share, compared with a net loss from continuing operations in the preceding quarter of $944,000, or a net loss of $0.03 per share, and a net loss from continuing operations in the fourth quarter of 2011 of $2 million, or a net loss of $0.07 per share. Net loss from continuing operations for the fourth quarter of 2012 included approximately $3.3 million attributable to the loss on the sale of discontinued operations in Manila.
Fourth quarter 2012 non-GAAP net loss from continuing operations, which excludes from net loss from continuing operations stock-based compensation expense of $202,000, amortization of intangible assets from acquisitions of $2,000, and a $484,000 favorable change in fair value of warrant liability, was $1.2 million, or a net loss of $0.04 per share, compared with a non-GAAP net loss from continuing operations in the fourth quarter of 2011 of $1.7 million, or a net loss of $0.06 per share, which excludes from net loss from continuing operations stock-based compensation expense of $465,000, a $203,000 favorable change in fair value of warrant liability and amortization of intangible assets from acquisitions of $35,000. See Exhibit A for a reconciliation of GAAP net loss from continuing operations to non-GAAP net loss from continuing operations.
Non-GAAP net loss from continuing operations for the year ended 2012, which excludes from net loss from continuing operations stock-based compensation expense of $810,000, amortization of intangible assets from acquisitions of $87,000, and a $169,000 favorable change in fair value of warrant liability, was $3.2 million, or a net loss of $0.12 per share, compared with a 2011 non-GAAP net loss from continuing operations of $8.4 million, or a net loss of $0.33 per share, which excludes from net loss from continuing operations stock-based compensation expense of $2 million, a $298,000 favorable change in fair value of warrant liability, amortization of intangible assets from acquisitions of $229,000 and facility closure costs of $99,000. See Exhibit A for a reconciliation of GAAP net loss from continuing operations to non-GAAP net loss from continuing operations.
Fourth quarter 2012 adjusted EBITDA, which excludes non-cash stock compensation expense, was negative $589,000, compared with negative $1.3 million in the comparative period of 2011. See Exhibit B for a reconciliation of GAAP net loss from continuing operations to EBITDA and adjusted EBITDA.
Total shares outstanding at December 31, 2012 were approximately 28.4 million common shares, which include approximately 2.3 million unvested restricted shares. In addition, Rainmaker had 1.2 million unexercised options outstanding with a weighted average exercise price of approximately $1.26 per share and 1.6 million unexercised warrants outstanding with a weighted average exercise price of approximately $1.38.
Total cash and cash equivalents were $4.5 million at December 31, 2012, compared to $4.4 million at September 30, 2012.
Rainmaker Chief Executive Officer Don Massaro, who joined the company in December, will provide details of Rainmaker-s restructuring and growth in today-s conference call, scheduled today at 2 p.m. Pacific Daylight Time (5 p.m. Eastern Daylight Time). Dial-in information for the conference call is below.
Rainmaker Systems will host a conference call and webcast today at 2 p.m. Pacific Daylight Time (5 p.m. Eastern Daylight Time) to provide details of its plan for repositioning and growth and to discuss its fourth quarter and full year 2012 financial results. Those wishing to participate in the live call should dial using the passcode 9256461. A replay of the call will be available for one week beginning approximately two hours after the call-s conclusion by dialing and entering the passcode 9256461. To access the live webcast of the call, go to the Investors section of Rainmaker-s website at . A webcast replay of the conference call will be available for one year on the Conference Calls/Events page of the Investors section at .
Rainmaker Systems- management evaluates and makes operating decisions using various performance measures. In addition to GAAP results, Rainmaker also considers non-GAAP net loss and non-GAAP net loss per share, EBITDA and adjusted EBITDA, which excludes non-cash stock compensation expense from EBITDA. These non-GAAP measures are derived from the revenue generated by Rainmaker-s business and the costs directly related to the generation of that revenue, such as costs of services, sales and marketing expenses, technology expenses and general and administrative expenses, that management considers in evaluating the Company-s operating performance. These non-GAAP measures exclude certain expenses that management does not consider to be related to the Company-s core operating performance.
Non-GAAP net loss, non-GAAP net loss per share, EBITDA and adjusted EBITDA are supplemental measures of Rainmaker-s performance that are not required by, or presented in accordance with, GAAP. Moreover, they should not be considered as an alternative to any performance measure derived in accordance with GAAP, or as an alternative to cash flow from operating activities or as a measure of liquidity. Rainmaker presents these non-GAAP measures because management considers them to be important supplemental measures of Rainmaker-s operating performance and profitability trends, and because management believes they give investors useful information on period-to-period performance as evaluated by management. Rainmaker believes that the use of these non-GAAP measures provides consistency and comparability with Rainmaker-s past financial reports and also facilitates comparisons with other companies in Rainmaker-s industry, a number of which use similar non-GAAP financial measures to supplement their GAAP results. Management has used these non-GAAP measures when evaluating operating performance because management believes that the inclusion or exclusion of the items described above provides an additional measure of the Company-s core operating results and facilitates comparisons of the Company-s core operating performance against prior periods and the Company-s business model objectives. Rainmaker has chosen to provide this information to investors to enable them to perform additional analysis of past, present and future operating performance and as a supplemental means to evaluate the Company-s ongoing core operations.
Non-GAAP net loss from continuing operations was $1.2 million for the fourth quarter of 2012 and consists of net loss from continuing operations excluding stock based compensation expense, amortization of purchased intangible assets, loss on fair value re-measurement and change in fair value of warrant liability. Stock based compensation expense was $202,000 for the three months ended December 31, 2012 and represents the current quarter recognition of compensation expense related to stock options and restricted stock awards granted prior to and during the quarter. The change in fair value of warrant liability was a $484,000 gain for the three months ended December 31, 2012 and related to a reduction in the fair value of the common stock warrant liability. Amortization of intangible assets was $2,000 for the three months ended December 31, 2012. See Exhibit A for a reconciliation of GAAP net loss from continuing operations to non-GAAP net loss.
EBITDA was negative $791,000 for the fourth quarter of 2012. EBITDA consists of net loss from continuing operations excluding interest and other expense, income taxes, depreciation and amortization and certain other non-cash items. Non-cash charges for depreciation of property and equipment were $414,000 for the three months ended December 31, 2012. The change in fair value of warrant liability was a $484,000 gain for the three months ended December 31, 2012 and related to a reduction in the fair value of the common stock warrant liability. Interest and other expense was $82,000 for the three months ended December 31, 2012. We have income tax expense of $116,000 for the three months ended December 31, 2012. Non-cash charges for amortization of acquisition related intangibles were $2,000 for the three months ended December 31, 2012. Adjusted EBITDA was negative $589,000 for the three months ended December 31, 2012 and adds back to EBITDA non-cash stock based compensation expense of $202,000 incurred in the fourth quarter of 2012. See Exhibit B for a reconciliation of GAAP net loss from continuing operations to EBITDA and adjusted EBITDA.
Rainmaker is a Commerce-as-a-Service (“CaaS”) company that helps large enterprises gain greater market share and increased brand awareness for their cloud-based or on-premise based product offerings in the worldwide SMB markets. Rainmaker-s GrowCommerce does this with an advanced e- Commerce open architecture SaaS platform that easily integrates with other B2B cloud-based applications and on-premise applications. GrowCommerce can be augmented with Rainmaker-s 34-language Global Commerce Services for a turnkey solution that provides our clients with a strategic partnership, quick market entry, and rapid growth. For more information, visit or call 800-631-1545.
NOTE: Rainmaker Systems and the Rainmaker logo are registered with the U.S. Patent and Trademark Office. All other service marks or trademarks are the property of their respective owners.
This press release may contain forward-looking statements regarding future events. These forward-looking statements are based on information available to Rainmaker as of this date and we assume no obligation to update any such forward-looking statements. These statements are not guarantees of future performance, and actual results could differ materially from current expectations. Among the important factors which could cause actual results to differ materially from those in the forward-looking statements are our ability to raise additional equity or debt financing to fund our operations, our client concentration, as we depend on a small number of clients for a significant percentage of our revenue, the possibility of the discontinuation and/or realignment of some client relationships, general market conditions, the current difficult macro-economic environment and its impact on our business, as our clients are reducing their overall marketing spending and our clients- customers are reducing their purchase of services contracts, the high degree of uncertainty and our limited visibility due to economic conditions, our ability to execute our business strategy, our ability to integrate acquisitions without disruption to our business, our ability to transition to a new Chief Executive Officer without disruption to our business, the effectiveness of our sales team and approach, our ability to target, analyze and forecast the revenue to be derived from a client and the costs associated with providing services to that client, the date during the course of a calendar year that a new client is acquired, the length of the integration cycle for new clients and the timing of revenues and costs associated therewith, our ability to expand our channel hosted contract solution and drive adoption of this solution by resellers, potential competition in the marketplace, the ability to retain and attract employees, market acceptance of our service programs and pricing options, our ability to maintain our existing technology platform and to deploy new technology, our ability to sign new clients and control expenses, the financial condition of our clients- businesses, and other factors detailed in the Company-s filings with the Securities and Exchange Commission (“SEC”), including our filings on Forms 10-K and 10-Q.
– Financial tables to follow –
Mallorie Burak
Chief Financial Officer
Rainmaker Systems, Inc.
(408) 340-2510
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