MATTHEWS, NC -- (Marketwire) -- 03/07/13 -- PokerTek, Inc. (NASDAQ: PTEK) today reported financial results for the fourth quarter and full year ended December 31, 2012.
Results strengthening on second-half revenue growth and expense management
•Recurring revenue increased 41% sequentially from Q2 2012 to Q4 2012 •Gross Margins at 70% •Operating expenses decreased 26% for the year and 18% for the quarter •Net loss from continuing operations improved 48% for the year and 57% for the quarter •Positive EBITDAS for second consecutive year
"Business momentum and recurring revenue trends strengthened significantly in the second half of the year," commented Mark Roberson, Chief Executive Officer. "We increased our penetration in the United States and Canada and also began our re-entry into Mexico, driving a 41% sequential increase in recurring revenue over the past six months. Compared to prior year, fourth quarter operating results improved 57%, bringing PokerTek to within 2 cents of EPS profitability in the fourth quarter.
"Entering 2013, our growth plans include entering several new markets including Macau, Colombia, Uruguay and Peru, while also expanding our current presence in the United States, Canada and Mexico. Building on our momentum from 2012, we are well positioned to deliver recurring revenue and earnings growth in 2013."
Revenue from North America increased with new installations in Canada and the United States in the second half of 2012. However, revenue comparisons to prior year were impacted by several factors, including the timing of our reentry in Mexico, a trend of declining economic conditions in Eastern Europe, and a shift in our revenue mix from hardware sales to more recurring revenue in 2012. As a result, total annual revenue was $5.2 million in 2012 compared to $6.5 million in 2011, a reduction of 20.3%. For the fourth quarter, total revenue was $1.3 million for both 2012 and 2011.
Revenue from license and service fees increased $0.2 million for the fourth quarter and decreased $0.6 million on an annual basis, compared to the respective periods in 2011 for the reasons noted above. On a sequential basis, revenue from license and service fees increased 41% from June 2012 as recent installations began contributing recurring revenue.
Revenue from sales of systems and equipment decreased $0.1 million for the fourth quarter and $0.7 million on an annual basis, compared to the respective periods in 2011. In 2012, our revenue was more heavily weighted towards recurring revenue license and service fees, whereas the prior year was more heavily weighted towards sales of systems and equipment. The change in sales mix creates unfavorable total revenue comparisons to prior year, but also represents an increase in the base of recurring revenue carrying forward to 2013.
Gross profit was $0.9 million for the both fourth quarter of 2012 and 2011. Gross profit margins were essentially flat in the fourth quarter of 2012 compared to 2011 at approximately 70%. Gross profit was $3.8 million in 2012 compared to $4.6 million in 2011, a reduction of $0.8 million, or 17.5%. Gross profit margins increased to 72.6% in 2012 compared to 70.1% in 2011. On an annual basis, gross profit margins improved primarily due to changes in sales mix which are more heavily weighted to higher margin recurring revenue, as well as reduced product costs and depreciation.
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