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RMG Networks Reports Robust Sequential Revenue Growth for Third Quarter of 2015

Continues Strong Progress on Key Strategic Initiatives; Further Reduces Quarterly Cash Operating Expenses(1); Significant Narrowing of Adjusted EBITDA Loss(1)

RMG Networks Holding Corporation (NASDAQ: RMGN)

Third Quarter Highlights

RMG Networks Holding Corporation (NASDAQ: RMGN), or RMG Networks™, a leading provider of technology-driven visual communications solutions, today announced its financial results for the third quarter ended September 30, 2015.

RMG Networks helps businesses increase productivity, efficiency and engagement through digital messaging. By combining best-in-class software, business applications, services and hardware, RMG Networks offers a single point of accountability for integrated data visualization and real-time performance management.

"In the third quarter, we saw solid progress in our strategy to reinvigorate growth and build towards achieving sustainable profitability," commented Robert Michelson, Chief Executive Officer. "During the quarter, our Enterprise revenues increased 9% sequentially, and for the first quarter since Q1 2014, revenues remained stable on a year-over-year basis. In addition to increasing revenue, we also further reduced our overall cost structure, positioning us closer to generating positive EBITDA."

"During the third quarter, we increased sales in the U.S., our largest market, on a year-over-year basis for the first time in almost two years," Mr. Michelson continued. "Globally, we increased new sales orders per sales person by over 90% versus the same quarter last year. We also brought to market the largest enhancement to our software platform in over 5 years, are delivering on our goal of diversifying away from contact center solutions and won several large contracts from high profile clients. Our introduction of new, innovative solutions that help organizations increase productivity and reduce costs is driving much of this progress."

Michelson added, "This quarter marks the end of my first year with the company. It has been a productive year for RMG Networks, and I believe we are a much stronger company today than we were a year ago. Over the past several quarters, we have significantly enhanced our leadership team, strengthened our balance sheet, rationalized our cost structure and refined our focus with the strategic divestiture of our Airline Media Network business. Today, our sales and pipeline trends are encouraging, and we have a broader suite of solutions for an increasingly efficient and effective sales organization to sell. I believe that we can further reduce our cost structure and capitalize on growth opportunities in our pipeline. I also expect that the effect of our work will be evident in improving financial results going forward."

Third Quarter Financial Review

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. Prior year results have also been adjusted to report this business as discontinued operations. As a result, the financial results below reflect the Enterprise business at RMG Networks, reported as continuing operations.

In addition, "as-reported" results include the effects of purchase accounting, the impact of a large non-recurring contract and certain other items that management does not believe reflect the underlying performance of its business. Therefore, for ease of comparison, the following provides adjusted results for 2015 and 2014.

Adjusted Results2,3 Sequential Trends. Total adjusted revenues from continuing operations in the third quarter of 2015 were $10.2 million, up 9.2% from the second quarter of 2015.

Adjusted gross margin from continuing operations was 53.3% in the third quarter of 2015, compared to 55.6% in the second quarter of 2015, declining primarily due to a shift in sales mix consistent with typical seasonality.

Cash operating expenses from continuing operations declined to $6.8 million in the third quarter of 2015 from $7.6 million in the second quarter of 2015, resulting from continued efforts to reduce the company's overall cost structure.

Adjusted EBITDA loss from continuing operations was $1.3 million, improving from a loss of $2.4 million in the second quarter of 2015, resulting primarily from an increase in revenue and reduction in operating expenses.

Year-over-Year Trends. Total adjusted revenues...