Rainmaker Reports Positive Adjusted EBITDA for the Third Quarter of 2012
Announces Financial Results for the Third Quarter and Nine Months Ended September 30, 2012
(firmenpresse) - CAMPBELL, CA -- (Marketwire) -- 10/30/12 -- Rainmaker Systems, Inc. (NASDAQ: RMKR), a leading global e-Commerce software company that helps multi-national companies address the B2B market by maximizing sales revenue for their products and services, today reported financial results for its third quarter and nine months ended September 30, 2012.
Net revenue for the third quarter ended September 30, 2012 was $6.9 million. Net revenue in the nine months ended September 30, 2012 was $20.2 million, a 5% year-over-year increase from net revenue of $19.3 million in the same period of 2011.
Achieved positive adjusted EBITDA of $100,000 for the third quarter of 2012 compared to negative $191,000 in the second quarter of 2012
Announced during the quarter new $2 million two-year agreement for B2B sales with existing major global software client
Launched new e-commerce platform, GrowCommerce for Renewals, on SalesForce.com's AppExchange
Signed three new clients for the B2B e-commerce solution with Cox Communications, Leads360 and Vendavo
Awarded multi-year expansion with Polycom that includes all customer, partner and employee training
Ranked one of the world's top software companies by Software Magazine
Named David Guercio as Senior Vice President of Sales and Marketing
Gross margin in the third quarter of 2012 increased to 45%, compared to 44% in the preceding quarter and 41% in the third quarter of 2011. Gross margin in the nine months ended September 30, 2012 increased to 44%, compared to 41% in the same period of 2011.
Net loss from continuing operations for the third quarter of 2012 was $944,000, or a loss of $0.03 per share, compared to a net loss from continuing operations in the third quarter of 2011 of $2.4 million, or a loss of $0.10 per share. Net loss from continuing operations for the nine months ended September 30, 2012 was $3 million, or a loss of $0.11 per share, compared to a net loss from continuing operations in the same period of 2011 of $8.5 million, or a loss of $0.38 per share.
Third quarter 2012 non-GAAP net loss, which excludes stock-based compensation expense, amortization of purchased intangible assets, and a loss due to change in fair value of warrant liability was $362,000, or a loss of $0.01 per share, compared to a non-GAAP net loss in the preceding quarter of $673,000, or a loss of $0.02 per share, and a non-GAAP net loss in the third quarter of 2011 of $1.8 million, or a loss of $0.07 per share. See Exhibit A for a reconciliation of GAAP net loss from continuing operations to non-GAAP net loss.
Third quarter 2012 adjusted EBITDA, which excludes non-cash stock compensation expense, was $100,000, compared to negative $191,000 in the preceding quarter and negative $1.3 million in the third quarter of 2011. See Exhibit B for a reconciliation of GAAP net loss from continuing operations to EBITDA and adjusted EBITDA.
Total shares outstanding at September 30, 2012 were approximately 27.3 million common shares, which include approximately 1.3 million unvested restricted shares. In addition, Rainmaker had 735,000 unexercised options outstanding with a weighted average exercise price of approximately $1.63 per share and 1.6 million unexercised warrants outstanding with a weighted average exercise price of approximately $1.38 per share.
Total cash and cash equivalents were $4.4 million at September 30, 2012, compared to $8.5 million at December 31, 2011. Approximately 75% of the Company's cash burn over the first nine months of 2012 related to its call center operations in Manila. Total cash used by discontinued operations was $2.6 million for the nine month ended September 30, 2012.
Rainmaker Systems will host a conference call and webcast today at 1:30 p.m. Pacific Time to discuss its third quarter 2012 financial results. Those wishing to participate in the live call should dial using the password "Rainmaker." A replay of the call will be available for one week beginning approximately one hour after the call's conclusion by dialing and entering followed by the "#" key when prompted for a code. 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 is an e-Commerce software company that helps multi-national companies address the B2B market by maximizing sales revenue for their products and services. The Rainmaker e-Commerce platform can be enhanced with Rainmaker global telesales agents to maximize revenue and customer satisfaction through the entire customer life cycle. 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 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 sell our Manila operations in a timely manner and reduce its use of our cash, 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, our ability to raise additional equity or debt financing, 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 -
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 was $362,000 for the third quarter of 2012 and consists of net loss from continuing operations excluding stock based compensation expense, amortization of purchased intangible assets and a loss due to change in fair value of warrant liability. The change in fair value of warrant liability was a $337,000 loss for the three months ended September 30, 2012 and related to an increase in the fair value of the common stock warrant liability. Stock based compensation expense was $217,000 for the three months ended September 30, 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. Amortization of intangible assets was $28,000 for the three months ended September 30, 2012. See Exhibit A for a reconciliation of GAAP net loss from continuing operations to non-GAAP net loss.
EBITDA was negative $117,000 for the third quarter of 2012. EBITDA consists of net loss from continuing operations excluding interest and other expense, income taxes, depreciation & amortization and certain other non-cash items. Non-cash charges for depreciation of property and equipment were $392,000 for the three months ended September 30, 2012. Non-cash charge for the change in fair value of warrant liability was a $337,000 loss for the three months ended September 30, 2012 and related to an increase in the fair value of the common stock warrant liability. Net interest and other expense was $63,000 for the three months ended September 30, 2012. Non-cash charges for amortization of acquisition related intangibles were $28,000 for the three months ended September 30, 2012. Income tax expense was $7,000 for the three months ended September 30, 2012.
Adjusted EBITDA was positive $100,000 for the three months ended September 30, 2012 and adds back to EBITDA non-cash stock based compensation expense of $217,000 incurred in the third quarter of 2012. See Exhibit B for a reconciliation of GAAP net loss from continuing operations to EBITDA and adjusted EBITDA.
Timothy Burns
Chief Financial Officer
Rainmaker Systems, Inc.
(512) 949-6021
Steve Polcyn
Investor Relations
Rainmaker Systems, Inc.
(925) 548-3516
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