SOURCE: RoomLinX

May 20, 2013 18:55 ET

Roomlinx Reports 2013 First Quarter Results and Business Strategy Outlook

Monthly Hospitality Recurring Revenue Increased 75% Year Over Year

DENVER, CO--(Marketwired - May 20, 2013) -  Roomlinx, Inc. (OTCQB: RMLX), the innovative developer of media networks and interactive TV (iTV) applications for the hospitality industry, today announced financial results for the three months ended March 31, 2013 and its business strategy outlook for the remainder of the year.

In the first quarter of 2013, total revenue increased 38% to $2.1 million compared to first quarter of 2012. Hospitality revenue in the first quarter of 2013 increased 47% to $1.9 million, compared to $1.3 million in same period in 2012. This increase is primarily related to the increase in the Company's monthly recurring revenue associated with its revenue generating units ("RGUs"). 

An RGU is defined as a product or service for which the Company invoices the hotel monthly, including interactive television, video on demand, free to guest programming, and high speed internet access. As of March 31, 2013, the Company was servicing approximately 78,000 RGUs within the hospitality sector, a 151% increase over RGUs being serviced March 31, 2012.

Hospitality Revenue Generating Units (RGU) as of March 31, 2013:

         
Revenue Generating Units   RGUs in Service   Approximate Monthly Recurring   Revenue
Free-To-Guest   14,000   $140,000
High Speed Internet   32,000   $90,000
Video-On-Demand   20,000   $70,000
Interactive TV   12,000   $130,000
Total   78,000   $430,000
         

The company also realizes approximately $70,000 in monthly recurring revenue within its residential segment.

The hospitality segment consists of service revenue which is monthly recurring revenue attributable to RGUs and product, plus installation revenue which is one-time revenue. Hospitality service revenue increased to $1.4 million in the first quarter of 2013 compared to $0.8 million in the same period in 2012, a 75% increase, while hospitality product and installation revenue remained flat with 2012 at $0.5 million. Residential revenue was down to $217,000 in the first quarter of 2013 compared to $239,000 in the same period in 2012, a 9% decrease.

Basic and diluted weighted average shares outstanding for the three months ended March 31, 2013 were 6,405,413 compared to 5,118,877 in the year-earlier period.

The net loss in the 2013 first quarter of $1.4 million, or $0.22 per share, exceeded the net loss of $1.0 million, or $0.20 per share in last year's first quarter. $328,000 of the loss is attributable to non-cash items. At the end of 2012, the Company had operations personnel to support multiple installations per quarter. In the first quarter of 2013, the Company observed a decline in the number of installations and, accordingly, management decreased infrastructure and personnel to better align with projected installations for the remainder of the year. Such cost containment steps have continued into the second quarter. 

Recent key accomplishments at Roomlinx include:

1. Increased hospitality recurring revenue by 75% from first quarter 2012 to the first quarter 2013.
2. First quarter 2013 RGUs in service increased 151% compared to the first quarter of 2012.
3. Reduced operating expenses by over $200,000 in the first quarter of 2013 as compared to the fourth quarter of 2012.

The Roomlinx management team recognizes the ongoing challenges of the evolving technology space within the hospitality industry. One of the greatest hurdles is the cost of installation for properties seeking to upgrade their current infrastructure to meet the technology demands of the end users. Properties resist purchasing a high cost in-room entertainment solution because traditional revenue streams, such as pay-per-view movies, continue to decline. Roomlinx is committed to developing and offering technology solutions that match the right product to each hotel's existing TV and cabling infrastructure while still meeting the increasingly complex expectations of tech savvy guests.

In May of 2013, Roomlinx executed a Fourth Amendment to its Revolving Credit, Security and Warrant Purchase Agreement with Cenfin LLC. The amendment provided Cenfin (the lender) discretion as it relates to funding requests. Management is closely monitoring the cash balances, cash needs and expense levels and has implemented a cost reduction plan. 

To that end, Roomlinx presents the following business strategy outlook for 2013. We are focused on the following goals:

1. Decrease costs and increase revenues in an effort to attain profitability.
2. Raise additional capital to meet current and projected capital needs.
3. Increase monthly recurring revenue streams.
4. Launch iTV Mobile in the fourth quarter and aggressively seek pre-sales of iTV Mobile.
5. Evaluate strategic alternatives that allow the Company to return value to our stakeholders.

Roomlinx's flagship product and highest gross margin contributor is iTV. Roomlinx iTV continues to record strong guest usage rates (currently averaging over 3 million clicks per month); however, the high installation cost of iTV remains prohibitive for some potential customers. Roomlinx's sales and product initiatives are aimed at accelerating market penetration by significantly reducing the cost of installation while still meeting the needs of hotel guests and generating an attractive gross margin. 

Roomlinx is excited to announce that it is targeting a launch of its iTV Mobile platform during the fourth quarter of 2013. Roomlinx iTV Mobile is the next progression in the Roomlinx suite of product offerings designed to meet the diverse needs of the hospitality industry. While Roomlinx iTV brings the internet, content and guest services to the hotel room TV, Roomlinx iTV Mobile expands the benefits of iTV to guests' personal devices. Roomlinx believes its iTV Mobile platform will accelerate market penetration by allowing properties to choose between a full iTV integration or a more cost effective Roomlinx iTV Mobile offering intended solely for guests' personal devices.

The Company believes the value proposition of iTV Mobile include:

  • Strong recurring revenue model for Roomlinx -- targeted at $3-$4 per room per month with approximately a 90% gross margin.
  • Minimal or no cost installation option for hotels, which the Company believes allows for a quicker market penetration.
  • Significantly lower cost for Roomlinx to service and support.
  • Expanded market opportunity to attract limited service hotels with a lower cost installation.
  • Rapid installation.
  • Guest will appreciate multiple options to access media and entertainment through personal devices.
  • Provides for a new service offering and revenue stream for hotels.

Roomlinx CEO Michael Wasik summed up his near term strategy for the Company by stating, "Our team is dedicated to creating value for our shareholders and customers. As we tackle the challenges of a constantly evolving technology environment and financial constraints, we remain dedicated to providing innovative, first-to-market products and services to our hospitality partners. Following a quick and aggressive expansion over the past year, it made sense for us to refocus our business strategy to better accommodate the needs of the industry. I am excited about what the future offers and confident that Roomlinx will continue to develop and deploy smart solutions that meet and exceed the needs of our customers, thus positioning our company for long-term success."

About Roomlinx
Headquartered in Broomfield, Colorado, Roomlinx, Inc. develops interactive TV applications for the hospitality industry, serving hoteliers in the United States, Canada and selected global markets. The company delivers world-class in-room entertainment technology, allowing hotel guests to enjoy the best of HD TV, the Internet, PC functionality and Video on Demand. For more information, visit www.roomlinx.com.

Safe Harbor Cautionary Statement
This news release may contain forward-looking statements within the meaning of the federal securities laws. Statements regarding future events, developments, the Company's future performance, as well as management's expectations, beliefs, intentions, plans, estimates or projections relating to the future are forward-looking statements within the meaning of these laws. These forward-looking statements are subject to a number of risks and uncertainties, some of which are outlined below. As a result, actual results may vary materially from those anticipated by the forward-looking statements. Among the important factors that could cause actual results to differ materially from those indicated by such forward-looking statements are: the Company's successful implementation of new products and services (either generally or with specific key customers), the Company's ability to satisfy the contractual terms of key customer contracts, demand for the new products and services, the Company's ability to successfully compete against competitors offering similar products and services, general economic and business conditions; unexpected changes in technologies and technological advances; ability to commercialize and manufacture products; results of experimental studies research and development activities; changes in, or failure to comply with, governmental regulations; the ability to obtain adequate financing in the future; the Company's ability to establish and maintain strategic relationships, including the risk that key customer contracts may be terminated before their full term; the possibility of product-related liabilities; the Company's ability to attract and retain qualified personnel; the Company's ability to maintain its intellectual property rights and litigation involving intellectual property rights; risks related to third-party suppliers; the Company's ability to obtain, use or successfully integrate third-party licensed technology; breach of the Company's security by third parties; matters relating to the Company's Master Services Agreement with Hyatt; matters relating to the claims by Technology Integration Group; and the disclosure and risk factors detailed from time to time in the Company's reports filed with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2012 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2013 available through the web site maintained by the Securities and Exchange Commission at www.sec.gov. The Company undertakes no obligation to update publicly any forward-looking statement, whether as a result of new information, future events or otherwise.

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