Rainmaker Sees Sequential Revenue Growth and New Orders

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Rainmaker Sees Sequential Revenue Growth and New Orders

By Ken Nagy, CFA

On October 30, 2012, Rainmaker Systems, Inc. (RMKR), the Campbell, California based provider of business-to-business (B2B) e-commerce solutions, reported financial results for its third quarter and nine months, ended September 30, 2012.

The Company reported mixed results with third quarter revenues declining $189,000 or 2.7 percent year over year to revenues of $6.900 million compared to revenues of $7.089 million for the three months ended September 30, 2011.

Still, revenues improved slightly over the $6.895 million from the second quarter of 2012.

Gross margin, for the three months ended September 30, 2012, continued its recent trend by improving to 44.8 percent from 44 percent for the second quarter of 2012 and from 40.9 percent from the third quarter of 2011.

Furthermore, the Company achieved continued improvement to its adjusted EBITDA (which excludes non-cash stock compensation expense) with a positive adjusted EBITDA of $100,000 for the three months ended September 30, 2012.  This was a strong sequential improvement over a negative adjusted EBITDA of $191,000 during the three months ended June 30, 2012 and year over year advancement from negative $1.3 million.

Rainmaker’s net loss from continuing operations for the third quarter fiscal 2012 was $944,000, improving year over year by $1.497 million from a net loss from continuing operations of $2.441 million for the quarter ended September 30, 2011.

Based on a weighted average number of basic and diluted common shares of 27.066 million shares, basic and diluted net loss per share from continuing operations for the third quarter resulted in net loss of $0.03 per basic and diluted share during the three months ended September 30, 2012.  This compared to a basic and diluted net loss per share from continuing operations of $0.10 on a weighted average number of basic and diluted shares of 24.900 million shares during the three months ended September 30, 2011.

Non-GAAP net loss for the third quarter of 2012 decreased sequentially by $311,000 and year over year by $1.466 million to a non-GAAP net loss of $362,000 while non-GAAP loss per diluted share was $0.01 compared to a loss of $0.02 per diluted share for the second quarter 2012 and from a net loss per diluted share of $0.07 from the three months ended September 30, 2011.

For the nine months ended September 30, 2012, year over year revenues improved by nearly 5 percent or $914,000 to $20.196 million from $19.282 million for the first nine months of 2011.

Gross margin for the first nine months of 2012 improved to 44 percent compared to gross margin of 41.2 percent for the nine months ended September 30, 2011.

Rainmaker’s net loss from continuing operations for the nine months ended September 30, 2012 was $3.044 million, a $5.416 million improvement over a net loss from continuing operations of $8.460 million for the first nine months of 2011.

Based on a weighted average number of basic and diluted common shares of 27.013 million shares, basic and diluted net loss per share from continuing operations for the first nine months resulted in a net loss of $0.11 per basic and diluted share during the nine months ended September 30, 2012.  This compared to a basic and diluted net loss per share from continuing operations of $0.38 on a weighted average number of basic and diluted shares of 22.385 million shares during the first nine months of 2011.

Rainmaker’s cash and equivalents for the third quarter ended September 30, 2012, equaled $4.425 million while its working capital deficit totaled $1.493 million. 

During the quarter the Company announced a new $2 million two-year agreement for B2B sales with an existing major global software client.

Furthermore, Rainmaker recently signed three new clients for the B2B e-commerce solution with Cox Communications, Leads360 and Vendavo and was awarded a multi-year expansion with Polycom.


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