Rainmaker Systems Inc. (RMKR, Financial) filed Quarterly Report for the period ended 2010-09-30.
Rainmaker Systems Inc. has a market cap of $26.9 million; its shares were traded at around $1.2 with and P/S ratio of 0.5. RMKR is in the portfolios of Jim Simons of Renaissance Technologies LLC.
Net Revenue. Net revenue decreased $3.7 million, or 28.2%, to $9.4 million in the three months ended September 30, 2010, as compared to the three months ended September 30, 2009, primarily resulting from the cancellation of our contract with Sun Microsystems following Suns acquisition by Oracle in the first quarter of 2010, and a $1.4 million one-time settlement amount from a claim against a prior client recorded in the three months ended September 30, 2009.
Costs of Services and Gross Margin. Costs of services decreased $296,000, or 4.6%, to $6.2 million in the three months ended September 30, 2010, as compared to the 2009 comparative period. The decrease is attributable primarily to reductions in our facilities costs and reductions in our telesales workforce related to declining sales across our product lines. Cost reductions were offset by increases in Asian call center expenses. Our gross margin percentage decreased to 34.1% in the three months ended September 30, 2010, as compared to 50.4% for the three months ended September 30, 2009, primarily as a result of a continued shift in the mix of our business during the quarter and a one-time settlement payment in the 2009 comparative 3 month period. We anticipate gross margin to increase slightly for the remainder of the year as we have implemented cost reduction actions, including exiting our call center in Montreal, Canada.
Net Revenue. Net revenue decreased $3.4 million, or 9.3%, to $33.6 million in the nine months ended September 30, 2010, as compared to the nine months ended September 30, 2009. The Company benefitted from the receipt of a one-time settlement payment received during the 2010 fiscal year of approximately $4.6 million for a contract termination/buyout. Excluding the one-time settlement payment received in 2010, net revenue decreased $8.0 million, or 21.6%, as compared to the prior year. Net revenue from continuing client programs in the nine months ended September 30, 2010 was $25.6 million which excludes a one-time adjustment of $809,000 in net revenue and excludes the contract buyout of $4.6 million and revenue of $2.6 million from the discontinuing Sun programs.
Costs of Services and Gross Margin. Costs of services decreased $1.8 million, or 8.9%, to $18.1 million in the nine months ended September 30, 2010, as compared to the 2009 comparative period. The decrease is attributable primarily to reductions in our facilities costs and reductions in our telesales workforce related to declining sales across our product lines. Our gross margin percentage decreased slightly to 46.0.% in the nine months ended September 30, 2010, as compared to 46.3% for the nine months ended September 30, 2009.
Depreciation and Amortization Expenses. Depreciation and amortization expenses decreased $981,000, or 22.2.%, to $3.4 million for the nine months ended September 30, 2010, as compared to the 2009 period. Depreciation expense decreased by approximately $492,000 in the 2010 period, primarily as a result of assets retired or written off during our 2009 fiscal year. A portion of these assets retired and written off relate to our facility changes in Manila and Austin during 2009. Amortization of acquisition related intangible assets decreased by approximately $489,000 in the 2010 period primarily due to intangible assets from our previous Sunset Direct and View Central acquisitions becoming fully amortized.
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Rainmaker Systems Inc. has a market cap of $26.9 million; its shares were traded at around $1.2 with and P/S ratio of 0.5. RMKR is in the portfolios of Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:
With the establishment of our Canadian foreign subsidiary and the subsequent purchase of Canadian based assets in 2007, we adopted a policy for recording foreign currency transactions and translation in accordance with ASC 830, Foreign Currency Matters. For our Canadian subsidiary, the functional currency has been determined to be the local currency, and therefore, assets and liabilities are translated at period-end exchange rates, and statement of operations items are translated at an average exchange rate prevailing during the period. Such translation adjustments are recorded in accumulated comprehensive income (loss), a component of stockholders equity. Also in 2007, we acquired Qinteraction Limited and its Philippine-based subsidiary. As a result of this acquisition, we also adopted the policy mentioned above for recording foreign currency transactions and translations for this subsidiary as the functional currency has been determined to be the local currency for the Philippine-based subsidiary. In January of 2009, we established our Rainmaker Europe subsidiary in the United Kingdom. We adopted the policy mentioned above for recording foreign currency transactions and translations for this subsidiary as the functional currency has been determined to be the local currency (Great Britain Pound) for the UK based subsidiary. Gains and losses from foreign currency denominated transactions are included in interest and other income (expense), net in the consolidated statements of operations. Losses from foreign currency denominated transactions amounted to $38,000 for the three months ended September 30, 2010, as compared to gains of approximately $46,000 for the three months ended September 30, 2009. Losses from foreign currency denominated transactions amounted to approximately $34,000 and $12,000 for the nine months ended September 30, 2010 and 2009, respectively.Net Revenue. Net revenue decreased $3.7 million, or 28.2%, to $9.4 million in the three months ended September 30, 2010, as compared to the three months ended September 30, 2009, primarily resulting from the cancellation of our contract with Sun Microsystems following Suns acquisition by Oracle in the first quarter of 2010, and a $1.4 million one-time settlement amount from a claim against a prior client recorded in the three months ended September 30, 2009.
Costs of Services and Gross Margin. Costs of services decreased $296,000, or 4.6%, to $6.2 million in the three months ended September 30, 2010, as compared to the 2009 comparative period. The decrease is attributable primarily to reductions in our facilities costs and reductions in our telesales workforce related to declining sales across our product lines. Cost reductions were offset by increases in Asian call center expenses. Our gross margin percentage decreased to 34.1% in the three months ended September 30, 2010, as compared to 50.4% for the three months ended September 30, 2009, primarily as a result of a continued shift in the mix of our business during the quarter and a one-time settlement payment in the 2009 comparative 3 month period. We anticipate gross margin to increase slightly for the remainder of the year as we have implemented cost reduction actions, including exiting our call center in Montreal, Canada.
Net Revenue. Net revenue decreased $3.4 million, or 9.3%, to $33.6 million in the nine months ended September 30, 2010, as compared to the nine months ended September 30, 2009. The Company benefitted from the receipt of a one-time settlement payment received during the 2010 fiscal year of approximately $4.6 million for a contract termination/buyout. Excluding the one-time settlement payment received in 2010, net revenue decreased $8.0 million, or 21.6%, as compared to the prior year. Net revenue from continuing client programs in the nine months ended September 30, 2010 was $25.6 million which excludes a one-time adjustment of $809,000 in net revenue and excludes the contract buyout of $4.6 million and revenue of $2.6 million from the discontinuing Sun programs.
Costs of Services and Gross Margin. Costs of services decreased $1.8 million, or 8.9%, to $18.1 million in the nine months ended September 30, 2010, as compared to the 2009 comparative period. The decrease is attributable primarily to reductions in our facilities costs and reductions in our telesales workforce related to declining sales across our product lines. Our gross margin percentage decreased slightly to 46.0.% in the nine months ended September 30, 2010, as compared to 46.3% for the nine months ended September 30, 2009.
Depreciation and Amortization Expenses. Depreciation and amortization expenses decreased $981,000, or 22.2.%, to $3.4 million for the nine months ended September 30, 2010, as compared to the 2009 period. Depreciation expense decreased by approximately $492,000 in the 2010 period, primarily as a result of assets retired or written off during our 2009 fiscal year. A portion of these assets retired and written off relate to our facility changes in Manila and Austin during 2009. Amortization of acquisition related intangible assets decreased by approximately $489,000 in the 2010 period primarily due to intangible assets from our previous Sunset Direct and View Central acquisitions becoming fully amortized.
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