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RMG Reports Third Quarter 2016 Results

DALLAS, TX — (Marketwired) — 11/03/16 — RMG Networks Holding Corporation (NASDAQ: RMGN)

Total revenues of $9.5 million increased 9% sequentially

Loss from continuing operations of $0.9 million narrowed by $0.4 million sequentially; Positive Adj. EBITDA(1) of $85 thousand

Signed distribution / technology partnership with Airbus DS Communications, a global leader and trusted source for mission-critical communications technologies, establishing a key new sales channel for the company

Signed strategic partnership with Ragan Communications, the nation–s leading Internal Communications consulting organization, providing enhanced credibility for RMG solutions and an expanded reach to prospective customers

Released enhancements to the core software platform, including adding new features to the INVIEW product line, specifically with a new version of INVIEW Mobile® application

Subsequent to quarter-end, launched RMG MAX, customizable LED display solutions for indoor and outdoor market applications

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

“During the third quarter we delivered sequential revenue growth, achieved positive Adj. EBITDA and made significant progress against key strategic initiatives that we believe will accelerate our business momentum, expand our sales pipeline and drive long-term profitable growth,” commented Robert Michelson, Chief Executive Officer. “Our new strategic partnerships with Manhattan Associates, Ragan Communications and Airbus DS Communications, meaningfully advance our position in the key solution areas we are targeting by expanding our market reach. We are already seeing tangible benefits of these relationships in our sales pipeline. In addition, our recent RMG MAX LED product launch and INVIEW Mobile® software enhancements deepen our innovative solution portfolio and provide new opportunities to connect with our customers.”

“We continue to be encouraged by the traction we are gaining in North America resulting from improved sales effectiveness and our focus on larger, more profitable deals,” Michelson continued. “Internationally, we experienced a noticeable rebound in sales from the EurAsia region during the third quarter, following a brief slowdown in the second quarter resulting from economic uncertainty around Brexit. We remain cautiously optimistic on our outlook in the Middle East given our strong pipeline and key partnerships in the region, despite continued economic uncertainty associated with low oil pricing, which has continued to delay the timing of certain orders. Overall, we were very pleased with our third quarter financial results and strategic progress year-to-date and believe we are well positioned to build on this momentum for the remainder of 2016 and into 2017.”

Total revenue of $9.5 million increased 9% from $8.7 million in the second quarter of 2016 and decreased 7% from $10.2 million in the same quarter last year.

Products revenue of $4.2 million increased 37% from $3.1 million in the second quarter of 2016, resulting primarily from strong sales performance in North America and improving market conditions in Europe.

Maintenance & content services revenue of $3.5 million remained flat from the second quarter of 2016.

Professional services revenue of $1.8 million decreased 15% from $2.1 million in the second quarter of 2016, resulting primarily from large 3rd party project implementations in the second quarter of 2016.

Gross margin of 63.6% increased from 58.3% in the second quarter of 2016, resulting primarily from a favorable sales mix with a higher proportion of software sales and non-recurring credits in the third quarter of 2016 to product and maintenance costs from a component manufacturer and resolution of a vendor billing matter.

Total operating expenses were $6.9 million, a 5% increase from $6.6 million in the second quarter of 2016, resulting primarily from investment in sales and marketing initiatives.

GAAP loss from continuing operations of $0.9 million improved from a loss of $1.3 million in the second quarter of 2016, resulting primarily from increased revenues and a higher gross margin. On a non-GAAP basis, Adj. EBITDA of $85 thousand improved from a loss of $438 thousand in the second quarter of 2016.

“We are pleased with the progress we are making and believe we are well positioned heading into the fourth quarter, which historically is our strongest quarter of the year,” Michelson concluded. “We remain optimistic about the long-term financial prospects of the business and believe the strategic elements we have put in place over the past 2 years, in conjunction with our experienced leadership team, positions the company to take advantage of our large addressable market, our superior product offering and our strong go to market plan. We remain focused on building on the key initiatives of our multi-year strategic plan by investing in our products, improving our business efficiency, generating ROI for our customers and achieving long-term growth and shareholder value. We have established a track record of continued, measurable progress and improvement in our financial results and are encouraged by the momentum we see in the market.”

Management will host a conference call to discuss these results on Thursday, November 3, 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 2947816. 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: 2947816 from 12 p.m. ET on November 3, 2016 until 11:00 p.m. ET on November 10, 2016.

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

RMG (NASDAQ: RMGN) goes beyond traditional communications to help businesses increase productivity, efficiency, and engagement through digital signage messaging. By combining best-in-class software, hardware, business applications, and services, RMG offers a single point of accountability for integrated data visualization and real-time performance management. The company 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 Adj. EBITDA, a non-GAAP financial measure as defined under SEC regulations. In evaluating its business, RMG Networks considers and uses Adj. 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 Adj. EBITDA is set forth in footnote (1) above, and a reconciliation between Adj. 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, 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 any implicit continuing improvement in financial performance.

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.

(1) A non-GAAP measure, we define Adj. EBITDA as income (loss) from continuing operations with adjustments for interest expense and other income, income tax expense, gain (loss) on change in warrant liability, depreciation and amortization expenses and stock-based compensation expense. See “About Non-GAAP Financial Measures” below and the reconciliation tables at the end of this release for more information regarding this non-GAAP financial measure.

For RMG Networks Holding Corporation

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

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