Radiant Communications Announces First Quarter 2009 Results

Radiant Communications Announces First Quarter 2009 Results

Company records 28% revenue growth with positive net income and cash flows

May 20, 2009 (Vancouver, BC) – Radiant Communications Corp. (“Radiant”) (TSX Venture Exchange: RCN), Canada's leading supplier of Broadband Solutions for Business™, today announced its financial results for its 2009 first quarter ended March 31, 2009.

HIGHLIGHTS:

• Revenue of $7.3 million for the quarter increased by 28.1% compared to revenue of $5.7 million for the first quarter of 2008.
• Gross margin was $3.2 million or 43.6% for the quarter.
• The Company recorded EBITDA of $560,291 in the quarter.
• Net income for the quarter was $254,174 or $0.02 per share.
• The Company ended the quarter with cash and short-term investments of $2.6 million.
• During the quarter Radiant provisioned over 550 new North American locations for new and existing customers across a wide range of industries, incuding quick service hospitality, specialty retail, engineering, finance, and professional services
• Radiant’s AlwaysThere™ Cloud Computing and Hosted Exchange services continued  to demonstrate solid growth with billings increasing by 19% compared to the fourth quarter of 2008.

“In spite of the shrinking economy we were able to grow revenue by over 28%, improve margins over our previous quarter, hold the line on operating expenses, and deliver a positive bottom line,” said David Buffett, President and CEO of Radiant. “With more than 1000 locations in backlog waiting to be provisioned coupled with our new Always There Cloud Computing services, Radiant is in a solid position to execute on its growth strategy for 2009.


Financial Review

Revenues for the quarter ended March 31, 2009 increased 28.1% to $7.3 million compared to $5.7 million in the first quarter of 2008.  The increase is a result of ongoing sales of new services directed at retailers and larger national businesses as well as the addition of new locations and services to existing customers. Radiant’s revenues are primarily recurring in nature and due to extended two and three year customer contracts quarterly revenue growth is relatively predictable and consistent over time.  One time hardware revenues can fluctuate from quarter to quarter depending on requirements of customer rollouts that occur each quarter. In the first quarter growth in revenue was attributable to the continuing roll-out of the large customer we announced in September of 2008 as well as the ongoing growth in the new cloud computing services.

For the quarter ended March 31, 2009, the Company’s gross profit was $3.2 million compared to $2.8 million in the first quarter of 2008.  Gross profit as a percent of revenue was 43.6% for the quarter ended March 31, 2009 compared to 46.2% for the same period in 2008 and 41.0% in the immediately preceding quarter.  Approximately 90% of all the Company’s access and bandwidth costs are directly variable with revenue, and accordingly, margin percentages are relatively predictable.  Overall margin percentage can vary with revenue mix, as hardware revenues carry lower margins than the Company’s higher value connectivity and managed services. Additionally, installation and activation efforts and costs, including third party services, are often higher during periods of strong growth.

Operating expenses, including sales and marketing, general and administrative, and amortization costs increased by 4.3% to $2.9 million in the first quarter of 2009 compared to $2.8 million in the first quarter of 2008. Operating expenses decreased by 4.4% in the first quarter of 2009 compared to the preceding fourth quarter of 2008 as a result of cost control efforts across both Sales and marketing expenses include compensation expenses, agent and channel distribution, and marketing costs.  For the quarter ended March 31, 2009, sales and marketing expense increased 2.1% to $536,571 compared to $525,282 in the first quarter of 2008. Sales and marketing expenses in the first quarter of 2009 were $46,486 lower than the expenses recorded in the fourth quarter of 2008.The first quarter of 2009 experienced somewhat slower sales volumes, particularly in the retail sector, which resulted in lower commission costs and agent fees.

General and administrative expenses, which include customer care, technical, network, executive and administrative staff, systems development, hardware, software, premises, office and general expenses, were up 6.0% to $2.1 million for the quarter ended March 31, 2009 compared to $2.0 million in the first quarter of 2008.  The increase is primarily due the resources required to support a 28% growth in revenue. General and administrative expenses in the first quarter of 2009 decreased by $49,945 compared to the fourth quarter of 2008.

For the quarter ended March 31, 2009 amortization expenses of $262,216 were 8.8% higher than amortization expenses in the first quarter of 2008 of $240,935 as the company invested in a new private network infrastructure as well as virtual server capability and stored area networks to support the new cloud computing offering.

The Company had net income of $254,174 or $0.02 per share for the quarter ended March 31, 2009 compared to a net loss of $157,077 or ($0.01) per share in the first quarter of 2008.  The weighted average number of shares outstanding for the first quarter of 2009 and 2008 was 10.9 million.

LIQUIDITY AND CAPITAL RESOURCES
At March 31, 2009 Radiant had cash and short term investments of $2.6 million compared to $2.3 million at December 31, 2008. Radiant has achieved a consistent record of positive cash flows from operations that are sufficient to fund all expected capital acquisitions in 2009.

Additional details on the first quarter results, including the unaudited Financial Statements and Management Discussion and Analysis, will be made available at http://www.sedar.com/ under Radiant Communications Corp.

Radiant will hold a conference call to discuss its results for the quarter ended March 31, 2009 on May 21, at 1:30 p.m. PDT (4:30 p.m. EDT). Access to the call may be obtained by calling the operator at 1-866-215-0058 (Toll Free North America), or 416-915-9616 (International) 10 minutes prior to the scheduled start time. A playback version of the call will be available for 7 days after the call at 1-866-245-6755 (Toll Free North America) or 416-915-1035 (International). The passcode for the playback is 798302. The audio web cast will be archived for replay on Radiant's web site at www.radiant.net.

Non-GAAP Measures
The Company reports EBITDA because it is a key measure used by management to evaluate the Company's performance. The Company believes that EBITDA is useful supplemental information as it provides an indication of the results generated by the Company's main business activities prior to taking into consideration how those activities are financed and taxed and also prior to taking into consideration asset depreciation and other non-cash expenses. EBITDA is not a recognized measure under Canadian GAAP, and accordingly investors are cautioned that EBITDA should not be construed as an alternative to net earnings or loss determined in accordance with Canadian GAAP as an indicator of the financial performance of the Company or as a measure of the Company's liquidity and cash flows. The Company's method of calculating EBITDA differs from other issuers and, accordingly, EBITDA may not be comparable to similar measures presented by other issuers. Please see the schedule below that sets out the Company's EBITDA calculations.

EBITDA

Earnings before Interest, Taxes, Depreciation and Amortization is calculated as follows: