Revenue from continuing operations decreased by $0.5 million or 7% to $7.2 million for the first quarter of 2008 compared to revenues of $7.7 million for the first quarter of 2007. Net loss from continuing operations for the first quarter of 2008 was $2.3 million compared to a net loss of $0.8 million for the first quarter of 2007. Although the customer site count declined by only approximately 4.5% comparing the 2008 first quarter with the equivalent period of 2007, revenue decreased by a higher percentage due to the longer-term effect on recurring revenues of a net decline in sites over recent quarters.
Gross margin as a percentage of revenue remained the same at 71% in the first quarter of 2008 compared to the first quarter of 2007.
Selling, general and administrative expenses increased $1.5 million or 27%, to $7.2 million for the first quarter of 2008 from $5.7 million for the first quarter of 2007. The increase was due to several factors. Salaries and related expenses increased primarily due to an increase in headcount in content/programming, marketing, advertising and business development functions, including senior positions. Also contributing to increased SG&A totals was the abandonment of a software development project, increased bad debt expense related to subscriber cancellations, marketing expenses incurred to conduct audience research and measurement studies and increased severance payments related to a workforce reduction that took place during the first quarter of 2008.
Gross margin as a percentage of revenue remained the same at 71% in the first quarter of 2008 compared to the first quarter of 2007.
Selling, general and administrative expenses increased $1.5 million or 27%, to $7.2 million for the first quarter of 2008 from $5.7 million for the first quarter of 2007. The increase was due to several factors. Salaries and related expenses increased primarily due to an increase in headcount in content/programming, marketing, advertising and business development functions, including senior positions. Also contributing to increased SG&A totals was the abandonment of a software development project, increased bad debt expense related to subscriber cancellations, marketing expenses incurred to conduct audience research and measurement studies and increased severance payments related to a workforce reduction that took place during the first quarter of 2008.
Our take:
Compared to AirMedia's impressive results announced yesterday, NTN's operations don't look quite so polished. Of course, the companies operate different businesses in different countries, so this can't be an apples-to-apples comparison. Still, while in-store media and digital signage in particular continue to grow and progress, NTN's results seem to indicate a step backwards for the firm. Most concerning is the statement that "revenue decreased by a higher percentage due to the longer-term effect on recurring revenues of a net decline in sites over recent quarters." That's not a one-time hit or unrelated result -- that's basically the CEO of the company saying that they're losing customers and revenue as part of a longer-term trend. That's not good news, but while the release doesn't indicate that the firm has a new plan of action to turn things around, we suspect that they aren't just sitting still either.
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