RMG Networks Reports Q2 Results

Author:
Publish date:
Social count:
0

RMG Networks announced its results for the second quarter ended June 30, 2013.

Over the past quarter, RMG Networks has completed the following actions:

•Acquired and substantially integrated Symon Communications
•Combined and reorganized these management teams
•Laid groundwork for international expansion by establishing presence in SE Asia and Latin America
•Pro forma combined total and core revenues increased 14% and 22%, respectively, from Q2 2012
•Completed, on August 2, 2013, a $40 million follow-on offering of common stock to repay debt, fund growth initiatives and fund strategic acquisitions

Garry McGuire, CEO of RMG Networks, said, "RMG's second half year priorities focus on capturing cross-selling opportunities between our two divisions, adding new ad inventory and inventory partners, and expanding our geographic and vertical market presences. With our existing global footprint, our reputation with large-enterprise customers, our solutions offerings, and our track record, our mission is to be the leader in the marketplace through organic growth, to be the consolidator of a fragmented industry, and to deliver increasing profitability."

Second Quarter 2013 Review

RMG Networks completed the business combinations of Reach Media Group Holdings Group, Inc. and Symon Holdings Corporation, or Symon, on April 8 and April 19, 2013, respectively. Symon was determined to be the Predecessor Company for accounting purposes and accordingly Symon's historical financials are included for comparison in RMG Networks' "as-reported" financials. Because Symon recorded results of operations on a January 31 fiscal year the second quarter 2013 results as reported are not comparable with the predecessor company's results for second quarter 2012. Therefore, for ease of comparison, the following results and tables contain pro forma combined results for the 2013 and 2012 second quarters as if the companies had existed as a combined entity for the relevant periods.

Total second quarter 2013 revenues were $18.9 million, an increase of 14% from $16.6 million in the second quarter of 2012. Included in 2012 revenue was $1.1 million of non-recurring software development revenue. Excluding this revenue from the prior period, second quarter 2013 revenue increased 22%.

•Advertising revenue of $6.9 million increased 23% from $5.6 million in second quarter 2012 due to increased demand from advertisers embracing video ad platforms.
•Product sales revenue of $5.3 million increased 35% from $3.9 million second quarter 2012 due to increasing demand from businesses looking to utilize digital signage in their workplace.
•Maintenance and content services revenue of $4.1 million remained relatively flat from $4.2 million in second quarter 2012.
•Professional services revenue of $2.6 million decreased 9% from $2.8 million in second quarter 2012. The abovementioned $1.1 million in non-recurring software development revenue is included in the year ago revenue figure. Excluding this amount, professional services revenue increased 49% due to greater services provided in connection with product sales.

Operating loss was $4.5 million compared to operating income of $0.9 million in the second quarter of 2012. This decrease is attributable to: lower gross margin as a percentage of sales in the current year period, resulting from lower sales of our high margin proprietary software; the inclusion of $4.0 million in acquisition-related costs in the quarter; increases in sales and marketing expenses as the company invests in new sales and marketing staff to support growth initiatives, and higher R&D expense.

Adjusted EBITDA was $0.8 million compared to $1.7 million in the second quarter of 2012; the decrease was driven by the change in product mix and the sales and marketing investments, as mentioned above.

Reported Results

Total revenue for the successor company from April 20, 2013 through June 30, 2013 was $15.0 million; for RMG Networks from April 1, 2013 through April 19, 2013 was $1.8 million; and for the Predecessor Company from April 1, 2013 through April 19, 2013 was $1.4 million. This compares to Predecessor Company's total revenue from May 1, 2013 through July 31, 2012 of $9.5 million.

Operating loss for the successor company from April 20, 2013 through June 30, 2013, was $2.9 million; for RMG Networks from April 1, 2013 through April 19, 2013 was $2.5 million; and for the Predecessor Company from April 1, 2013 through April 19, 2013 was $3.1 million. This compares to Predecessor Company's operating income from May 1, 2013 through July 31, 2012 of $1.0 million.

2013 and 2014 Outlook

RMG Networks anticipates 2013 revenue to be in the range of $76 million to $78 million compared to $68.2 million in 2012, and Adjusted EBITDA in the range of $5 million to $6 million compared to $7.5 million in 2012; the decrease in 2013 Adjusted EBITDA reflects, as the company has previously disclosed, integration costs and the company's investment in growth initiatives. For 2014, RMG Networks is anticipating revenue in the range of $105 million to $110 million and Adjusted EBITDA in the range of $16 million to $18 million.

Related

RMG Enterprise Solutions President Announces Retirement

Charles Ansley has announced his plan to retire from his position as President, RMG Enterprise Solutions, effective July 12th, 2013. Mr. Ansley served as Chief Executive Officer of Symon Communications from 2002 until its acquisition by RMG Networks earlier this year.

RMG Networks Names Robert Michelson CEO

RMG Networks Holding Corporation, or RMG Networks announced that its board of directors has removed the interim designation from Robert Michelson's title, naming him the Company's President and Chief Executive Officer, effective immediately.

RMG Networks Enters the Mall Media Segment

RMG Networks has signed an operating agreement to launch a new mall media digital-based network based upon assets from the former Akoo International Mall Network. This arrangement allows RMG to extend its media offering with full sight, sound and motion into another captive environment that delivers valuable audience segments. RMG will leverage its position in digital place-based media sales and build a separate business unit focused on captive mall media.

PQ Media Reports Double-Digit DOOH Growth

Defying economic and political headwinds worldwide, digital out-of-home (DOOH) media operators ground out a 9.3% revenue gain to $8.86 billion in 2013, a solid increase tempered by it being the third straight year of slower growth, according to PQ Media's annual performance benchmark.

Image placeholder title

mTAG Deployed Across RMG Network Locations

  San Francisco, CA-- RMG Networks and Blue Bite have announced the deployment of NFC (Near-Field-Communication) technology across RMG’s San Francisco network locations.   The move is the first part of a long-term strategy to bring this interactive mobile medium to RMG’s entire network foot

Image placeholder title

AVB Networking Conference Reports Success at InfoComm

Following the AVB Networking Conference held at InfoComm12 on June 12, co-sponsors Avid, Biamp Systems, Extreme Networks, Harman, Lab X Technologies, Meyer Sound and Riedel Communications, all of whom have AVB-capable devices in the market today, stated that a full house in attendance included market leaders from the systems integration community.