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RDM Corporation reports record first quarter results - Digital Imaging revenues triple over same period prior year

Tuesday, February 06, 2007 (RDM Corporation)

WATERLOO, ON, Feb. 6 /CNW/ - RDM Corporation, a leading provider of specialized software and hardware products for electronic payment processing, today reported its financial results for the three month period ended December 31, 2006.

Q1 2007 Highlights
  • Total revenues for the first quarter of fiscal 2007 were $11.7 million, an increase of 134% from $5.0 million in Q1 2006.
  • Revenue growth was driven by the Digital Imaging segment, which grew by $7.3 million over the first quarter of 2006 to $10.6 million of revenues, on the strength of strong demand for electronic check scanners.
  • Gross profits were $4.5 million or 38% of revenues in the quarter, compared to $2.0 million or 39% of revenues a year earlier.
  • Net earnings were $1.3 million or $0.06 per share, compared to a net loss of $10,000 or $0.00 per share in the first quarter of 2006.
  • Transaction volumes for RDM's Image & Transaction Management System (ITMS) averaged 995,000 items per week during the first quarter, compared to 550,000 items per week a year earlier, and 859,000 items per week in Q4 2006.
  • ITMS end user locations increased from 3,300 to 4,100 during the first quarter of 2007.
  • RDM launched ITMS WebClient during the quarter. WebClient is a secure, feature-rich, browser-based payment processing platform that can be deployed quickly and easily with little to no capital investment with no software to install.
"I'm very pleased that we were able to deliver a strong start to fiscal 2007 with record revenues and earnings for the quarter," said Douglas Newman, President and CEO of RDM Corporation. "We had strong demand for all of our products and services during the quarter and all areas of the Company executed well during the period. The adoption rate of remote deposit services in the United States is steadily increasing and fuelling the growth of both our scanner and ITMS business." Financial Review

Revenues grew year-over-year by $6.7 million to $11.7 million in the first quarter of 2007. The increase was attributable to growth in the Digital Imaging segment, which encompasses both scanner sales and the ITMS transaction revenue. Digital Imaging revenues grew by 226% from $3.3 million a year ago to $10.6 million, driven by increasing adoption of remote deposit capture services. Scanner revenues were particularly strong for the quarter with over 20,000 units shipped. Approximately 5,000 of the units shipped were from a backlog of orders carried over from the fourth quarter of Fiscal 2006. Demand for RDM's scanners remains very strong, however, the order backlog has been addressed.

Revenues in the Electronic Payments Solutions segment, comprised of custom development projects for government agencies and financial institution customers, were $635,000 in the quarter compared to $1.3 million a year earlier. The Quality Assurance segment, comprised of quality control products sold to commercial check printers and processors, generated revenues of $518,000, compared to $435,000 in Q1 2006. Results in the two smaller segments were in line with management expectations, and both segments made a positive contribution to operating income in the quarter.

Gross profit grew by $2.5 million or 128% to $4.5 million. Expressed as a percentage of revenue, gross margin declined from 39% to 38% due to a change in the comparable weighting of revenue attributable to each business segment. The Electronic Payments Solutions and Quality Assurance segments realize higher margins than the Digital Imaging segment which enjoyed strong growth.

Among the major operating expenses, sales and marketing costs grew 61% to $1.0 million and general and administration costs grew 51% to $512,000, both as a result of increasing levels of activity associated with the Company's growth. Research and development expenses increased 16% to $969,000. Interest and other expenses increased $220,000 due to an unrealized foreign exchange loss relating to the Company's foreign exchange contracts. On a relative basis, total operating expenses declined to 25% of revenue in the first quarter of 2007 compared to 39% of revenue in the prior year period.

The Company's income tax expense at $208,000 was reduced from the statutory rates due to the recognition of $350,000 in previously unclaimed scientific research and experimental development expenditures carried forward. Net earnings of $1.3 million represented $0.06 per share, compared to $0.00 per share a year earlier.

RDM's operations generated $2.0 million of cash flow in the quarter, compared to $1.0 million of cash used in Q1 2006. Financing activities generated $972,000 of cash due to the exercise of warrants during the period. Overall, the Company's cash and equivalents increased $2.7 million during the quarter to $8.9 million.

RDM has been advised by Xign Corporation, a private company in which RDM holds a 13% stake (fully diluted), that Xign Corporation has been working with an investment bank advisor to explore strategic options with respect to maximizing its business potential and shareholder value. There can be no assurance that the exploration of such strategic options will result in any transaction.

Conference Call

RDM will be hosting a conference call to discuss the Company's first quarter 2007 financial results on February 6, 2007 at 9:00 a.m. EST. Dial-in numbers are 416-644-3414 or 1-800-732-6179. A live audio webcast of the call will be available at

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