Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message|
( followers)  

Executives

John Heyman – Director, CEO

Mark Haidet – CFO

Andy Heyman – COO and President, Hospitality Division

Analysts

Terry Tillman – Raymond James

Chad Bennett – Northland Securities

Nick Sation [ph] – Wedbush

Scott Stevens – Strata Capital

Radiant Systems, Inc. (RADS) Q3 2008 Earnings Call Transcript October 30, 2008 4:30 PM ET

Operator

Good day and welcome to the Radiant Systems Q3 earnings release conference call. At this time, I would like to turn the conference over to your host, Mr. John Heyman. Please go ahead sir.

John Heyman

Karen, thank you very much, and I appreciate everybody being on the line with us during what is an obviously busy earnings season. With me here today are Andy Heyman, our Chief Operating Officer, as well as Mark Haidet, our Chief Financial Officer.

Before we get started this afternoon, I am going to ask Mark to run through the forward-looking caveats.

Mark Haidet

Thanks, John. As always, certain statements contained in this conference call are forward-looking statements within the meaning of the Securities Act of 1995, such as statements relating to financial results and plans for future business development activities, and are thus prospective. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, many of which are beyond the company's ability to control. These risks are detailed in our most recent 10-K filed with the Securities and Exchange Commission.

During this call, we will also discuss certain non-GAAP financial measures. Reconciliation of these financial measures to comparable GAAP financial measures can be found in our earnings release and on our website at www.radiantsystems.com under Investor Relations.

John?

John Heyman

Mark, thank you very much. Again, thanks everybody for being with us this afternoon. Let me try to cover four topics today. First, I would like to run through the quarter’s performance and what we see for the rest of 2008. Second, I would like to talk about the contribution we are seeing from our acquisitions we have made this year. Third, I would like to summarize the success we have had with growth initiatives and wins with new customers. And fourth, obviously, at the top of everyone’s mind is the discussion of the economy, what we are doing about it as a company, and provide some insight into 2009.

First, let me say that in these turbulent times, our quarterly results were very strong, organic and inorganic growth allowed us to achieve record revenues during the quarter growing to over $82 million from roughly $63 million a year ago. This was despite a weak last half of September. For the nine months, our revenues were up 24% from the same period last year.

Behind this growth is our operating model. Our focus the past few years on software as a service offering and on ensuring we establish very strong relationships with our customers has allowed us to build a very strong recurring revenue base. These recurring services drove 35% of our revenues in the quarter and are the fastest growing line item we have up over 40% year-to-date.

We have introduced a number of new services this year to our customers, and given their subscription model, and demonstrated returns and thousands of sites, they are driving growth and profits for our company and value for our customers. Complementing our recurring revenue model is our long-term relationships with many of our direct customers to rollout our products to their existing as well as their new sites, while many industry operators have cut back on new site openings, many are continuing to expand and we continue to see operators looking for ways to improve revenues and productivity in their existing sites.

For instance, Chipotle has just announced a nation-wide online ordering program fueled by our new products. Overall, our pipeline is actually quite strong right now with a number of recent wins either just signed or eminent, but we have also seen some of our customers deferring expenditures.

From an acquisition point of view, the acquisitions we completed earlier this year have established Radiant as the leader in the mobile ordering and payment device market. They have created – they have allowed us to create a broad European distribution platform and they have also cemented our position as the premier provider in the stadium and arena market. These acquisitions will contribute to our growth for years to come.

Orderman and Quest, our two most significant acquisitions this year, are generally performing in line with expectations. We have won a number of high profile stadium deals this year and further cemented our leadership position in this industry. Orderman, as expected, lost money in the quarter, but in our visits with our new European channel partners, it is quite apparent they are hungry for our other offerings, which will be launched to them in the second half of next year.

As to some of the growth initiatives we have talked about, I am frequently asked if Radiant can grow in this environment while we have certainly tempered our growth expectations for 2009, the answer is, yes, we can grow. I see three major reasons for this growth.

One, we have a number of, what I call, green field initiatives in process, either through the introduction of new products and services or the entry into new geographies that are under way from which we currently derive almost nothing in the way of revenues.

Products such as kitchen production, guest manager, takeout and delivery, payments, as well our European hardware terminal will contribute minimal growth in 2008, but they together with other new products and services will jointly contribute significantly to our revenues next year.

Two, we will grow our business organically in some areas. Our hospitality, sports and entertainment, and retail businesses have all grown this year and our petroleum and convenience retail business should moderate or even pick up heading into next year as oil prices have recently declined. Supporting this growth, we have won a number of high-profile deals during the third quarter.

While we certainly expect contribution from these deals in 2009, we also have a lot of work ahead of us on these and do not believe they will impact revenue in a significant manner until the second half of 2009 and 2010, but these are sizable relationships won on the merits of our products and our people.

While we know some existing customers will defer spending, others are moving forward with their plans due to the return on investment from our products and the continued strength of their businesses. In sum, even in a weak environment, the plusses outweigh the minuses and will provide us with an opportunity to continue our growth, albeit lower than what we have been accustomed to.

The third and the final reason I believe we can continue to grow in this climate is that we will realize a full year contribution from growth of our recurring revenue business, which has been growing quite steadily throughout the year as well as a full year contribution from the Orderman business, both of these will be significant contributors to our revenues next year.

Finally, let me talk about the economy clearly. We as every other operator is feeling the impact of the economy, many of our customers are cutting back on site openings and others are having trouble just to find or financing even high pay back capital expenditures in this environment. So while some areas of the business are seeing continued growth, others have taken a small step backwards.

Credit is tougher to come by for end markets, fewer shopping centers are being built, and many buyers are just spending more conservatively; however, sites are still opening. Thinly capitalized competitors with lumpy business models are having significant challenges to their businesses and thus we continue to gain share in this environment. Supporting these share gains are the pay back of our products and the ease of entry into certain of them with our incremental investment approach or our subscription model.

Across retail and hospitality, our channel partners have felt the economy in their businesses in late September and in early October causing weakness in the channel, but we have seen improvements in the past couple of weeks and we continue to watch this part of the business carefully.

We think right now rather than provide specific guidance for 2009 in this environment, I would just like to make just some overall comments for you and we will follow up with more specific guidance in numbers on our call early in 2009 regarding our fourth quarter.

Specifically, we felt a cost plan today that is based on a more moderate revenue growth plan in this environment for 2009 for reasons I cited earlier. Our moderate growth plan includes the growth impact of initiatives I discussed earlier, which will make up for potential flatness or even declines in other areas.

Our plan will permit us to continue to deliver earnings growth that outpaces the revenue growth we forecast, and while we believe upside exists in many areas of the business, we are being prudent with our investments given the uncertain environment. Again, we will provide more specific guidance early next year.

With that, I am going to – we will take questions in just a bit. I am going to turn it over to Mark to run through the quarter and more specific guidance comments for the fourth quarter.

Mark Haidet

Thanks, John. As John described, we had a very successful quarter. Our revenue increased 32% over 2007 and exceeded our guidance range. Specifically, our restaurant business continued to see strong growth exceeding 31% in the quarter. This was driven by increased system sales and recurring services, both quarterly and on an annual basis. Our systems revenue grew 22% and service revenue grew 44% compared to the third quarter of 2007. The service revenue growth was led by increased recurring revenue, which now makes up approximately 35% of our total revenue.

Our gross profit margin decreased 110 basis points from the second quarter due to lower systems margin. This is a result of hardware sales being a higher portion of systems revenue in the quarter. Our adjusted operating income grew 14% compared to the third quarter of 2007, which resulted in adjusted operating margin of 11.2%, a decrease of 170 basis points from the same quarter last year, primarily due to the dilutive impact of the Orderman acquisition.

And our adjusted net income from the quarter was $6 million or $0.18 per diluted share for the quarter. This represents a decrease of $0.01 over the same quarter last year in alliance with the high end of our quarterly guidance previously provided.

Now turning to the balance sheet, in the cash flow our cash from operations was $1.4 million for the quarter and $10.7 million year-to-date. We improved our day sales outstanding during the quarter from 59 days to 56 days and improved our inventory turns from 3.1 to 3.4 turns.

And in conjunction with the acquisition of Orderman, we expanded our credit facility by $20 million. We currently have a facility with a $30 million term loan and an $80 million revolver, and as of September 30th, the balances were $27 million on the term loan and $74 million on the revolver.

Now, I would like to turn to the future into our guidance. Based on our current visibility and market assumptions, we are providing the following guidance. For the fourth quarter of 2008, we expect revenue in the range of $77 million to $80 million, a growth rate of approximately 14% over the same period last year. We expect this to result in earnings – adjusted earnings in the range of $0.16 to $0.18 per share.

And the resulting annual revenue guidance is a range of $304 million to $307 million with adjusted earnings ranging from $0.71 to $0.73 per diluted share. Based on this guidance, we expect adjusted operating margin to be approximately 11% to 12% for the quarter.

On a final note, it is important to remember that all of our earnings guidance is on an adjusted basis, which excludes amortization of acquisition related intangible assets, employee stock comp expense, nonrecurring charges, and includes the ongoing cash benefit of utilization of net operating losses and tax credits. John?

John Heyman

Mark, thank you. Karen, we will now open it up for questions.

Question-and-Answer Session

Operator

(Operator instructions) And we will take our first question from Terry Tillman with Raymond James.

Terry Tillman – Raymond James

Hi guys, good afternoon. Thanks for taking my questions. You know, John in terms of the softness, I was hoping we could touch on restaurants, which is – that is still the flagship part of your business. It has been growing at 20% type plus year-over-year. Can you give us a character sketch in terms of softness in that business specifically? Is it more on the direct side or indirect side or just a better sense, it is broad based across all the different parts of that business or is it more isolated in some areas?

John Heyman

Right, Andy is here, so let me just turn it over to Andy and then I will make some comments as well.

Terry Tillman – Raymond James

Okay.

Andy Heyman

We had really strong growth Terry, in the quarter, well north of 20%. So, if you are looking at that as a kind of a marker, we are well north of that. So, I think that is the first part of your question. The second part is just to kind of characterize what we are seeing. First of all, from an overall perspective, I would say we are feeling very good about the future in the restaurant business in the three areas as we look at, kind of the channel, the international, and the direct United States business.

In the direct United States business, the pipeline continues to grow. The contracted backlog continues to grow and we are feeling really good overall there, a lot based on the demand of new products that are helping operators make more money on existing sites either through increased revenues or controlling costs better. In terms of – what the other thing we are seeing on the direct side is site openings are down and that will obviously have an impact to our business and we have taken into account very conservative plans based on discussions with direct customers about what this impacts would be.

On the channel side, it is a little bit of the same here in the United States. It is – we continue to do very well. We had a very good quarter. We are being cautious as the site openings have slowed a bit, and we believe going into next year it is prudent for us to consider continued reduction of site growth, and that is the kind of plans we have built in, but the sales people, obviously 15 of them, two days ago in the channel, they are feeing darn good. They have got a lot of deals that they are working on.

The competition especially along with the smaller competitors are hurting pretty badly and so we are seeing a pullback there and I think that is brining us greater share as a percentage of the total sold.

On the international front, we are coming off a small base. We have really a wide open market in both Europe and Asia that grew for us very nicely in the quarter. Certainly, the economic climate is cautious just like it is here in the United States, but we see darn good growth ahead especially with the Orderman acquisition as we look at a European distribution strategy.

John Heyman

Let me just add a few things, one anecdotally and then a couple of metrics, the business was up 31% compared to last year and 20% of that was organic, and if you look at some – a couple of important metrics, the recurring revenues in the business grew 47% over last year and they grew 11% compared to just last quarter. So, the quality of the revenues is improving as well. The reseller, the channel grew 5% from the second quarter, and it grew 16% from last year. So, these are all, I think, just showing kind of the pervasive strength of the business in many areas, and then anecdotally, we have just – I think we have just seen a number of wins, kind of late, in the third quarter with some pretty significant brands/chains that we are really excited about. I think we temper our expectations for next year given the economic environment and how fast customers will spend money, but we have just had a series of very competitive wins where the power of our products and the customer sat we have out there is just winning the day.

Terry Tillman – Raymond James

Well, as it relates to, you know, the new wins and feeling good about your business obviously, just with the headwind more broadly speaking, in the past on the third quarter calls, you had actually given some guidance, now last year is more like a paragraph of just a more general stuff, I think the year before may have been even more specific, I mean, why not at least give us some sort of planning parameter, because I mean, my worry is like, we could be all over the place for next year, I mean, is there any way you could help us at all with a range or anything at all to think about? And if you cannot do that, John you did talk about maybe some businesses could decline, at least may you could help us with risk mitigation where the biggest risk would be.

John Heyman

I think Terry from our – let me walk through the business units quickly, and maybe you can do some translation as you guys build your model. We feel like in this environment it is too – we want to rather flush out these wins we have had and see what they are going to mean next year exactly and we want to keep an eye on the economy and what is happening in the channel before we give specific guidance. Here is what we know today. We know our petroleum and convenience store business has had a tough year because of oil prices. It feels like as tough as this year has been with oil prices moderating and just there is some pent up demand that spending should improve next year.

Our retail business has been – grew a little less than 10% last quarter. I think it was right around 8% last quarter and that is a business that obviously could be impacted by this economy, and so we keep an eye on that. Our hospitality business has been continuing to grow. That growth could be based on these wins very significant, but I think we are just trying to be cautious as we think about this environment, and that business is going to continue to grow nicely.

We are ramping up the international business with the Orderman channel. We are ramping up the payments business. The recurring revenue business is continuing to moderate – is continuing to grow, so you know, our typical goal has been to grow our revenues in the mid teens each year organically. We do not foresee that kind of growth next year in this current environment, and therefore we have made some adjustments to our cost structure so we can continue to grow our earnings as fast if not faster than we have before, but we are going to do that of a more moderate revenue growth plan for now.

That plan could have lots of upside because of the caution we are brining to it, and I think that is as much as we really want to say about it now given the environment.

Terry Tillman – Raymond James

Okay, well that was helpful. I appreciate that, and I guess just the last thing, Mark, I do not know if you can help me with this, but can you just remind us again in terms of any commentary you had given before in terms of what Orderman could do this year and it sounded like at least it is on plan today, thanks.

Mark Haidet

Yes, I think we initially said that Orderman would add roughly $8 million to $9 million to the second half of the year, but obviously subjective to what is happening to the European economy and exchange rates and what not, but that is generally the level of that business.

Terry Tillman – Raymond James

Okay thanks a lot.

Operator

We will take our next question from Chad Bennett with Northland Securities.

Chad Bennett – Northland Securities

Yes, hi guys. A couple questions Mark. The services business, client support maintenance, other services jumped up pretty dramatically sequentially and year-over-year for that matter and you talked a lot about lot about sats and reoccurring revenue, was there, I guess, first of all – the majority of the Orderman business is probably system related. What caused the jump in service revenue?

Mark Haidet

Yes, the – you are right on your second statement; the Orderman business is much more weighted towards systems than services. If you look at our service makeup across the board, really all of our service areas were up, our support business, our hardware maintenance business, the overall growth of the business, you know, that pulls those services forward through it were all up.

Andy Heyman

Yes, this is Andy, let me just add some color to that. The – it is mostly driven from the recurring services businesses. There has been tremendous demand on – we have been in development on several new products in other lines of business for several years now. This is the first year that we have come to market with many of those products and the demand has been exceptional, so I think we are starting to really see the power of that impact in the service line.

Mark Haidet

Okay, so there was not anything one time in nature. This should be kind of, I do not know if you if want to call the baseline going forward for the service segment, and I am just surprised that you could see almost a $5 million sequential increase for a reoccurring model based on revenue recognition restrictions and what not, so just making sure this is kind of a run rate where we are comfortable with.

John Heyman

My personal opinion Chad, based on kind of the pipeline is, is we would expect that to grow each quarter less than what it has grown over last year, yes, but from quarter to quarter, in other words, in the fourth quarter, we will not see as much growth as that.

Chad Bennett – Northland Securities

Okay.

John Heyman

Now, we will see it in the fourth quarter compared to last year’s fourth quarter.

Chad Bennett – Northland Securities

Yes, significantly, okay. And then, on the system side, you know, the – I guess the majority of Orderman’s business is probably system related and I assume a lot of the Quest business is system related, may be a bad assumption there, but if you were to back out those two segments, how would the systems business have looked kind of year-over-year? Is there a way of looking at it that way?

Operator

And moving on to Gil Luria with Wedbush.

Andy Heyman

Karen, we did not get a chance to answer that question.

Operator

I am sorry.

John Heyman

We need to answer Chad’s last question around the roughly the – Chad, I think you were asking and it is – you probably you are on the line now, but hopefully, it is around roughly the organic growth of the systems line. Mark?

Mark Haidet

Yes, so, I would say generally it is overall in line with our organic growth. Our services did grow a bit faster, but if you look at the organic growth of the business being in the kind of mid teens, the systems growth is similar to that, slightly less, but it would be in the same general ballpark as the overall organic growth of the company.

Chad Bennett – Northland Securities

Okay, and it sounds like from a gross margin perspectively, heavy mix towards hardware on the systems piece, how should we look at – Mark, how should we look at gross margins on the systems side going forward? Is the mix going to go back to more of a normal mix or is this kind of a steady state for a while?

Mark Haidet

Yes, generally on margins, I would model our service margins fairly consistently. I do think we have room to bring those up more towards 40%, but not necessarily saying that is going to happen in the fourth quarter, but it is a little lower than I think we would like. So, you can take that with what you will as far as over a period of longer than just in the next quarter, but from a systems standpoint, I would leave those fairly consistent, our mix can change from quarter to quarter, I think to be safe, I would leave those in that general range, we are generally happy with the systems margin where they are at and while there may be some improvement there as the mix changes, I would not rely on that and I would just go ahead and model it consistently.

Chad Bennett – Northland Securities

Okay, and then just lastly trying to really drill down on where you guys are seeing some of the softness, and this is probably redundant with the prior question, but I get a sense you are seeing – you saw a little bit of softness towards the end of the quarter out of the channel. You are seeing some on the direct side. It is related to both – it seems like retail is seeing at a decent amount and then hospitality to some extent, is that a good way of – and PCS has been somewhat soft for a couple of quarters now, is that a good way of characterizing it?

John Heyman

I think so. I think it is hard to generalize upon the channel, some areas are doing well, and some are not. We had a couple of tough weeks with all the economic news in October, and now we see it picking up. We also know we are heading into the Christmas season, so we are just trying to be exceptionally cautious right now, so within all this, we can point to a lot of wins in the business and new initiatives that are clearly growing, but with that – with the economic uncertainly as a backdrop, we are just cautious with some of these weak areas potentially getting weaker or returning to the weakness they had in October. Overall, we know we are going to exceed growth next year. We are going to be cautious – hopefully we are being too cautious and growth will be higher than we anticipate in those areas.

Chad Bennett – Northland Securities

Okay, fair enough, thanks.

John Heyman

Andy wanted to add something to that Chad.

Andy Heyman

Yes, let me add one thing, which is around what is going on in these markets. First of all we are definitely seeing an uptick in the convenience store business right now in terms of the tone of the operators and the desire to consider investment relative to where we were three months ago. So, we are feeling better, cautiously so in that business. In terms of the channel business, while there is softness, generally speaking, if you look at any given market, where say, we might have 20% ship share, we have been doing many things over the last few years to try to increase sales people productivity and add sales people, and it is working in many markets. You can look at, at least ten markets right now that make up good volumes for us where we have doubled our ship share this year versus last year, so even in this climate both because there is competitors falling off at a decent rate and we are really going to market with much – with improved productivity and more people on the street, that is why we think that we are able to still grow through this time versus some others.

Chad Bennett – Northland Securities

Okay, thanks guys.

Operator

And we will move on to Gil Luria with Wedbush.

Nick Sation – Wedbush

Thank you. Would you mind breaking out the growth for us on the segment. If I heard it correctly, your restaurants were up 31%, 20% organically and 11% inorganically, and specialty retail was up 8%, would you mind talking about the petrol and convenience business and also the entertainment business?

Mark Haidet

Hi Gil, this is Mark. Yes, I would say the convenience store business continued to be down. It was down roughly 15% to 16%. The entertainment business was up around 9% or so, and the Quest business is obviously new year-over-year to the company although it had a good overall quarter and obviously Orderman is new to the business, so those are outside, so it is hard to give you a growth rate on those, but generally both were trending well.

Nick Sation – Wedbush

Thank you. I apologize. This is actually Nick Sation [ph] instead of Gill. You guys – you mentioned that 11% was in organic for restaurant, would you mind breaking up the Orderman part of that? I know you had some reseller acquisitions that were part of that as well?

Mark Haidet

Yes, so again, just to clarify to it, we have given some rough numbers on the organic versus inorganic, but those numbers do not include Orderman. When we talked about the restaurant, we were not lumping Orderman into that, so the 31% restaurant growth was without Orderman included in the restaurant revenue.

Nick Sation – Wedbush

I see, thanks. And also, I know you spoke about and I understand you want to probably be cautious about 2009, last quarter you said that you would expect adjusted operating margins to kind of trend back towards that mid teens level directionally from where we are now, would you still expect margins to back to that level in 2009?

Mark Haidet

So, for 2009, obviously, as I said, we have not given the guidance and we are going through our plans. Our, overall planning goal is yes, it is that we would expect our operating – our adjusted operating margins to increase from the current level more towards the track we were on prior to the Orderman acquisition, where we did see some dilution, so we have not pegged a specific number, but, for the year, this year will be based on our guidance in the range of a little over 12%, next year, I would expect us to get back on the track of being able to improve that. Our normal improvement is typically a 100 basis points to 200 basis points a year, and I would expect a similar goal for next year when we go through our planning process.

Nick Sation – Wedbush

Great, thanks so much.

Operator

(Operator instructions) And we will move on to Scott Stevens with Strata Capital.

Scott Stevens – Strata Capital

Hi, just to clarify, did you guys say that organic growth for food services was 21% or 11%?

Mark Haidet

It was approximately 20%.

Scott Stevens – Strata Capital

Okay, so not 11%, okay. Then how much came from international this quarter?

Mark Haidet

Total revenue from international was right around 15%.

Scott Stevens – Strata Capital

Okay, and you mentioned on the – before some of the services and some of the pent up demand from some of the clients, can you talk about what kind of services and what things you are selling that the customers are really looking for and that are being picked up pretty well from them?

Andy Heyman

Yes, Scott, this is Andy. Let me give you an example and this is the kind of thing happening in the industry. We – this afternoon I was hungry and I went on Chipotle.com and ordered a mid-afternoon snack on the Internet, and it routed it to the nearest store, I paid for it online, I remembered my order, and I went there and picked it up and it was ready, by the way they have great food. So we are the technology enabler there for all 800 sites and that is a very complex kind of offering and it is much different than any other Internet ordering system, because it is real-time, it is going right into the point of sale, and the quote time that is coming back to me is based on all the other orders that exist inside that store. We are the only people to do this. There are a lot of other benefits to that, but basically we have significantly expanded our relationship with Chipotle and that is the kind of thing that businesses are looking for in tougher times where they are trying to really increase the productivity of their operation in their sites and technology is a way to do that.

Scott Stevens – Strata Capital

Right, so, just to these – on that one is, I assume there is the whole bunch of other customers that you are going to now roll this online ordering product out to, and two is Chipotle going to be the first customer to potentially use kind of Orderman mobile online type ordering system?

Andy Heyman

Well, just to be clear, that is – what I just talked about is unrelated to Orderman, that is all about – several different R&D efforts that we have had, so I do not want you to think that there is – that Orderman is related to Chipotle right now in any way.

Scott Stevens – Strata Capital

Yes, I understand.

Andy Heyman

Yes, but in terms of opportunities with Orderman, there are certainly many opportunities in the United States with kind of that mobile ordering and payment device, and more than any thing, what we are seeing is people are looking at our entire suite of products because that is an add on whether or not they might be using that today or tomorrow.

Scott Stevens – Strata Capital

And to the online ordering system, you are – or is it now – I assume there are opportunity with other customers as well?

Andy Heyman

Yes, many other customers are looking at it because it is – online ordering is a piece and the other piece is just the takeout and delivery piece and the right kitchen production systems, and these are all the kind of products that we have been in development on and we are seeing tremendous demand for in the industry right now and that we have won lots of business on over the last 3 to 6 months.

Scott Stevens – Strata Capital

Well, just overall, I know it is a tough environment, but the one thing I would think is helpful is, hopefully you guys breakout recurring revenue going forward, because I think it is helpful for people understand the business model as far more occurring in nature than people may perceive it to be and I think the number going forward, it should be helpful for people, so thanks.

Mark Haidet

Thank you.

Operator

And we will take a follow-up question from Terry Tillman with Raymond James.

Terry Tillman – Raymond James

Payment processing, and there should have – was there anything that we saw on the income statement or the balance sheet that relates to that initiative and given – it seems like that is a pretty big opportunity, I mean could there be another stair-step function on the services revenue like this quarter where it was up a lot sequentially, at some point, could that really take hold and actually drive a bit of a stair-step function in terms of the growth in that line?

Mark Haidet

Hi Terry, this is Mark and I think one important thing to understand about the payment processing business is it has been a part of our business in a smaller way historically as we have built up over time a customer base. We have now changed that relationship, which has given us a platform to grow that much more aggressively as we go forward, so the answer to your question is yes, you will see numbers in our financial statements, they are not broken out separately, but it is part of and has been part of our financial statements and we did see good growth in that business in the quarter as we have been able to drive more of that.

John Heyman

I think it is a good – you know, specifically the previous question was around what types of services customers are demanding and payment processing is a mission-critical service obviously and it is a new service now that we are offering with our partner and the way we have kind of constructed the offering around technology and the sales and servicing of that technology, and we are going to be providing a product to the market that is frankly better than any other product that is out there and we would expect it to be an 8-figure contributor to the P&L for next year.

Terry Tillman – Raymond James

Great thanks.

Operator

And there are no further questions at this time. Mr. Heyman, I will turn the conference back over to you for any closing remarks.

John Heyman

Okay, thanks Karen, and again thank you for everyone being here today. For those of you in Philadelphia, congrats on the Phillies [ph] win. I want to thank in what is obviously a very tough environment, I want to thank all of our employees. They continue to win the day out there and provide exceptional service to our customers. We look forward to completing the year strong and talking to you again in late January or early February, and take care.

Operator

And again ladies and gentlemen, that does conclude today’s conference. Thank you for your participation and have a wonderful day.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: Radiant Systems, Inc. Q3 2008 Earnings Call Transcript
This Transcript
All Transcripts