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Wireless Ronin Technologies, Inc. (NASDAQ:RNIN)

Q3 2010 Earnings Call

October 28, 2010 04:30 am ET

Executives

Erin Haugerud - Manager of Communication and IR

Jim Granger - CEO

Darin McAreavey - Vice President & CFO

Scott Koller - President & CFO

Analysts

Darren Aftahi - Northland Securities

Dick Ryan - Dougherty

Operator

Good day ladies and gentlemen and welcome to Wireless Ronin Technologies third quarter 2010 earnings conference call. At this time all participants are in a listen-only mode. Later we'll conduct the question-and-answer session and instructions will be given at that time. (Operator Instructions). As a reminder this conference call is being recorded. I would now like to hand the conference over to Ms. Erin Haugerud, Manager of Communication and Investor Relations. Ma'am you may begin.

Erin Haugerud

Thank you and welcome everyone to our 2010 third quarter conference call. With me today are Jim Granger our Chief Executive Officer; Darin McAreavey, Vice President and Chief Financial Officer; and Scott Koller, President and Chief Operating Officer. After Jim's opening remarks; Darin's detailed financial review and Scott's sales update, we will open up the call to your questions.

Before we begin, please not that the information presented and discussed today include forward-looking statements which are made under the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Our actual results and future periods may differ materially and you should not attribute undue certainty to our forward-looking statements.

Risks and uncertainties that could cause our actual results to differ from those expressed or implied by forward-looking statements, include those set forth in the risk factor section of the annual report on Form 10-K we filed on March 26, 2010.

In addition, our comments may contain certain non-GAAP financial measures including non-GAAP operating loss per share. For additional information, including reconciliation from GAAP results to non-GAAP measures, how the non-GAAP measures provide useful information and why we use non-GAAP measures, please see the reconciliation section of our press release, which appears on our website at wirelessronin.com.

Now I would like to turn the call over to Jim.

Jim Granger

Thanks Erin and good afternoon everyone and thanks for joining us for today's call. But we are obviously very pleased with the results of the third quarter, which again illustrates that our business model works.

First we continue to receive additional orders from our key marquee customers; Chrysler, Thomson Reuters, YUM! and ARAMARK, resulting in an increase of revenues to 2.7 million, a 148% increase for the third quarter on a year-over-year basis. Secondly, gross margins hit an all time high up 50% in the third quarter. Thirdly, we are starting to see real movement and traction with large scale rollouts.

First, Chrysler has begun the roll out of its retail branded tower salon concept featuring iShowroom to the dealers. Today Wireless Ronin has received $1.2 million worth of orders to install over 400 screens to 100 locations and we clearly anticipate additional orders in the near future.

Secondly, with the roll-out of our rolling cash offering services for all 2,000 Snap Fitness locations which is the fastest growing franchisor of compact, state of the art 24/7 fitness centers.

And fourth, during the quarter we recorded the lowest quarterly non-GAAP operating loss of $1 million in the company's history. Now both Darin and Scott will provide some additional commentary on these items during their remarks.

I continue to applaud the successful leadership efforts of Scott Koller, Darin McAreavey and their team along with all the WRT employees for their perseverance and dedication. If current trends hold, I believe their hard work will soon be rewarded in achieving a non-GAAP EBITDA breakeven quarter. Now let me see early signs of larger scale roll out commencing. We can share the true scalability of the business models to our shareholders.

I would now like to turn the call over to Darin for an update on our financials for the third quarter.

Darin McAreavey

Thanks Jim and good afternoon everyone. We reported revenue of 2.7 million for the third quarter of fiscal 2010 and 148% increase from 1.1 million in last year's third quarter. As of September 30, 2010 we had received purchase orders totaling approximately 1.7 million that had not been recognized as revenue.

The increase in our year-over-year revenue continue to be generated primarily from our marquee customers Chrysler, Thomson Reuters, YUM! and ARAMARK. Also as Jim mentioned during the third quarter 2010 Snap Fitness awarded Wireless Ronin the 2000 site software and services contract.

At September 2010, we received a 1.2 million order from Chrysler topped to the total of 100 dealers with Chrysler's retail branded tower salon featuring the iShowroom application. During the third quarter, we also recognized total revenue of approximately $700,000 from ARAMARK which is the largest amount of quarterly revenue recognizing this customer in Wireless Ronin's history.

During the third quarter we also successfully completed the installation of 37 new locations which more than doubled the total number of ARAMARK sites managed by our network operations center or NOC. Our recurring host in the service revenue during the third quarter of 2010 totaled 352,000 representing an increase of 189% from the same period in the prior year.

Since the majority of our third quarter orders including Snap Fitness, Chrysler and ARAMARK who received and/or process during the last month through third quarter. But the additional hosting and service revenue for these installs will be reflected starting next quarter which will further increase our recurring revenue.

Revenue for the first nine months of fiscal 2010 totaled 5.7 million compared to 3.5 million for the same period in the prior year representing an increase of 63%. The increase in revenue when comparing the first nine months of fiscal 2010, to the first nine months of fiscal 2009 was again primarily due to the business generator from our marquee customers. As our installed base grew, we obtained additional recurring revenue related to hosting and services which totaled $960,000 during the first nine months of fiscal 2010 representing a approximate 180% increase from the same period in the prior year.

Our recent order activity demonstrates that our customers existing and new are now beginning to connect capital dollars towards large scale digital signage deployments. However until we see a broader rollout from our existing customer base, we are unable to provide future revenue guidance at this time.

Our gross margins on a percentage basis continued to expand from 48% in the second quarter of fiscal 2010 to approximate 50% in the third quarter which is up from 34% from the year ago period. This represents our ninth consecutive quarter of improving gross margin on a percentage basis.

We caution our investors again that our ability to maintain these high levels of gross margin on a percentage basis can be impacted in any given quarter by shifts in our sales mix. However we continue to believe over the long-term, our gross margins on a percentage basis will increase as a recurring revenue growth. On a GAAP basis our third quarter fiscal 2010 net loss totaled 1.4 million or $0.08 per basic and diluted share, an improvement from our net loss of 2.5 million or $0.17 per basic and diluted share for the same period a year ago, and our net loss of 2.1 million or $0.12 per basic and diluted share on a sequential basis.

Our net loss during the third quarter significantly improved over the same period in the prior year as a result of the increase in gross margin dollars of approximately $1 million. Sequentially we reduced our net loss by approximately 700,000. During the third quarter we successfully completed our cost optimization plan resulting in savings of approximately 2.5 million on an annualized basis which at our current gross margin level of 50% provides for a future non-GAAP EBITDA breakeven at a quarterly revenue level of less than 4 million based on our current operating expense levels and financial model.

Excluding one time expenses and non-cash charges, the third quarter fiscal 2010 non-GAAP operating loss totaled $1 million or $0.06 per basic and diluted share versus a non-GAAP operating loss of 2.1 million or $0.14 per basic and diluted share in the third quarter of fiscal 2009. Sequentially our non-GAAP operating loss improved $700,000. Included in today's earnings release and financial results is a reconciliation between GAAP and non-GAAP operating loss. This highlights one way in which we look at profitability and cash utilization for the company. It is similar to EBITDA but adjusted for certain either one time non-cash items. The supplementary schedule details the items and effects of non-cash and one time adjustments.

Turning to the balance sheet. At the end of the third quarter of fiscal 2010 cash, cash equivalents in combination with restricted cash totaled approximately 6.6 million compared to 8.2 million at the end of June 2010. Our cash burn for the third quarter was approximately 1.5 million which is the lowest quarterly cash burn in the company's history and a sequential improvement of approximately $900,000.

As previously mentioned in March of this year we entered into a loan of secured agreement with Silicon Valley Bank to make available a line of credit up 2.5 million. But the recent savings in operating cost and assuming continued improvements as seen recently in the business. We believe our current cash balance, and access to capital is sufficient to support our operations loan for 2011.

As recently announced, the NASDAQ stock market has approved the company's application to transfer the listing of the common stock from the NASDAQ global market to the NASDAQ capital market. This transfer did not affect the trading of our stock and ultimately result in incremental cost savings to the company as a result of lower annual listing fees.

In summary we are very pleased with the financial progress we've made since the beginning of this year and based on our current order level and expense levels, we're growing increasingly optimistic of our ability to achieve our financial goal of a non-GAAP EBITDA breakeven quarter.

Now I'd like to turn the call over to Scott for an update on our sales and operational efforts.

Scott Koller

Thank you very much, Darin. As Darin highlighted, our third quarter results coupled with the improvements in the second quarter clearly demonstrate Wireless Ronin's continued focus on top line sales growth in our ongoing commitment to managing our scalable resource expenses. In addition, with the Chrysler and Snap Fitness implementations we see tangible progress towards broader, large scale roll outs which is clearly the primary focus of our business model.

Now for a quick update on our sales efforts. Starting with automotive and to expand on Jim and Darin's comments regarding Chrysler, as a result of the Chrysler's new dealer standards program, interestingly the ice removing program has grown substantially. As discussed in our last calls, dealer should meet the criteria of the new standards programs or receive up to $200,000 per quarter in cash incentives.

These incentives more than cover the initial investment in iShowroom and the brand towers. Year-to-date we have received purchase orders from Chrysler for 100 dealers which represents 400 brand towers. These initial dealer installations had begun and are expected to be finished in the next 60 to 90 days. The brand towers is specific to each of Chryslers four brands, Dodge, Ramp, Chrysler and Jeep and the iShowroom software built on the RoninCast platform has been monetized to present brand specific data to each respective tower.

Dealer solicitation by Chrysler for this program will continue through the remainder of 2010 and into 2011. All dealers signing up iShowroom agreed to a three year support program paid in annual installments. In addition, Chrysler is awarded WRT a project to modify the iShowroom presentation layer were to include Chrysler's newest brand Fiat with a launch of early November 2010.

We also outlined in our last call that Chrysler has not generated our only activity in this key vertical. The automotive industry continues its slow but steady recovery and as a result we are engaged at various levels with several automotive manufacturers and then just in to our work with Chrysler.

Moving to our work in the food services industry, ARAMARK continues it's rollout of brand refreshers for Burger Studio and Tokyo. As well as several new installs in healthcare and corporate accounts. The total installed base coupled with scheduled deployments is currently at 90 sites. In addition, WRT is working with ARAMARK on several development projects leveraging its existing digital signage network.

On the KFC front, KFC is currently going through its 2011 budget process. We hope to have a clear insight into KFC digital menu board objectives for 2011 as a result of this training. However, digital menu boards continue to be installed in new store openings and remodels of company restaurants and is in an option for franchisee or restaurants to order at any time. This is encouraging that further demonstrate KFC's commitment to its digital initiative.

Beyond ARAMARK and KFC, we continue to test, develop and gain fraction in the food service industry. As highlighted in the recent press release, we have a new client in the fast casual space Mooyah a rapidly growing fast casual establishment ranked number one in the fastcasual.com 2009 top 100 movers and shakers. In everything that Mooyah does, (inaudible) wow factor.

Mooyah selected Wireless Ronin and because we understood the restaurant's unique and creative atmosphere while offering a highly scalable and reliable solution. Mooyah has indicated that they plan to implement the RoninCast promotional board systems in all of its other restaurants due to success of the three systems now in place.

WRT will provide Mooyah with hardware, RoninCast software, 24/7, 365 support through our NOC and content development. In addition to our work with ARAMARK, KFC and Mooyah, we continue ongoing market tense with other QSR clients and this activity is an indication that we are making significant progress in this key vertical.

Now for a quick update on Thomson Reuters. As mentioned in our third quarter press release, we are starting to see increased interest in the Thomson Reuters Infopoint product. In September we received a 50 site order to be deployed at a financial service institution which has over 3,000 locations. We plan to completely install in the fourth quarter of this year, in addition Thomson Reuters continues to develop its relationships with other countries in this space as well as expanding its own internal Infopoint network.

We have not just developed business from current customers. We have a particularly notable new customer in Snap Fitness, Snap Fitness the fastest-growing franchisor of compact, state-of-the-art 24/7 fitness centers with locations worldwide such that WRT to provide software and hosting to all 2,000 plus franchisee locations across the United States. Snap Fitness and WRT plan to deploy RoninCast software to 1,000 locations by January 1st, 2011 with another 500 locations anticipated by June 1, 2011 with the balance by the end of 2011.

We are excited to be working with Snap Fitness and our (inaudible) digital signage needs of such a fast growing company and Workforce providing Snap Fitness with world class support and search network.

Prior to closing, I think it's important to update the investment committee on our development efforts. In September we successfully implemented our new RoninCast X software into two installations. This is a significant milestone as it relates to our development efforts and the initial customer feedback has been tremendous. As a result and with testing completed, we will officially launch RoninCast X in early November when the anticipation and confidence that this development milestone will help fuel our continued success.

In conclusion, similar to our second quarter results, the news from the third quarter continues to be positive. First, the Chrysler dealer standards program is off to a great start and we anticipate continuous success as Chrysler continues to encourage dealer adoption. Secondly, growth with Thomson Reuters, ARAMARK and Chrysler coupled of new accounts like Snap Fitness and Mooyah gives us confidence to our sales and marketing initiatives are generating results. And in conclusion, out team has demonstrated that we are committed to managing our scalable resource expenses in executing on our business plan as the company works towards profitability.

Thank you for joining us on today's call and we look forward to your any questions.

Question-and-Answer Session

Operator

(Operator Instructions). We have a question from Timothy Myers, Private investor

Unidentified Analyst

Yes, first of all thank you very much for the information today. Regarding Mr. Koller you mentioned Thomson Reuters in September of 50 site order and then you also mentioned like another number like a 1000 or something screens or something like that. Can you expand on that or tell me what that number was?

Scott Koller

Yes, we were seeking an order for Thomson Reuters for financial services institution for 50 sites to install to install their Infopoint. This particular financial services institution has 3,000 sites in total so the start with the 50 sites is just the beginning of what we hope is a long and fruitful relationship.

Operator

Our next question comes from Darren Aftahi from Northland Securities.

Darren Aftahi - Northland Securities

Hi guys. Just a couple of quick questions. Just follow-up on the first gentlemen's question, is this new 3,000 location financial service is firm, is this kind of new avenue with Thomson Reuters in terms of marketing to financial service firms? Is it kind of different than kind of your core business with them?

Erin Haugerud

Yes Darren, actually we highlighted on the last call that Thomson Reuters was starting to see interest of their Infopoint project outside their internal network in financial institutions looking to it to have sort of an advertising if you will free entertainment type digital signage application in their waiting area. And so with that type of interest, with ability for Thomson Reuters to put together specific template and a specific news based on that company's desires has been well received thus far as they've talked to different financial institutions. So there is actually peripheral expansion of their Infopoint project.

Darren Aftahi - Northland Securities

Can you give more clarity; is this 55 project is for a multi-national government or is it a domestic financial services firm?

Erin Haugerud

Domestic.

Scott Koller

It's domestic.

Darren Aftahi - Northland Securities

And then my same question and I'll jump back in the queue. In terms of kind of a big jump sequentially in hardware revenue, is that a direct relationship with Chrysler. Is that something that's kind of across the board and what are your general thoughts in terms of sustainability of that hardware level going forward?

Darin McAreavey

It was largely due to the shipment, the revenue we recognized relates to the brand tower. Its order we received from Chrysler.

Scott Koller

And I would add Darren, to answer the second part of your question, the sustainability of that, as you know, we will sell the hardware when this makes sense for us to sell hardware as part of the package and where the margins are appropriate. And so that's what we found in this case. Do we think that's sustainable? Well certainly we've proven it's sustainable with certain customers, ARAMARK and Chrysler to be a couple. That being said, other customers will continue to buy their hardware elsewhere and generally that's when we probably couldn't make much of a margin out anyway.

Operator

Thank you. (Operator Instructions). Our next question comes from Dick Ryan from Dougherty.

Dick Ryan - Dougherty

Can you give us an add-on from KFC in Q2? It sounds like you added some restaurants either new or upgrade in September and also where the Thomson Reuters internal network it all stands out?

Scott Koller

I think the internal network for Thomson Reuters right now is around the 350 unit base. And then we have incrementally restaurants to the KFC network and I think we're 205, I think we are just north of 200 sites for KFC.

Dick Ryan - Dougherty

What is Thomson Reuters planning on for their internal network?

Scott Koller

I think they will continue to see a big push. They have lots of offices worldwide and numerous places so they can clearly end. I think you will continue to see a push and probably a little more aggressive than you've seen thus far.

Dick Ryan - Dougherty

With the introduction of RoninCast X could we see R&D expenses come down either in Q4 or moving into 2011?

Darin McAreavey

Correct, yes. You will continue to see the 2.5 million the cost optimization plan that we completed, goes through reductions we made through the third quarter. So we'll pay full effect starting in the fourth quarter and one of from is clearly in the R&D area.

Dick Ryan - Dougherty

Where would you see R&D kind of base out then kind of be a steady state level going forward Darin, at what level?

Darin McAreavey

What we've got modeled right now is between that 500,000 and 600,000 on a quarterly basis.

Dick Ryan - Dougherty

Okay. And comment on breakeven kind of overall $4 million or whatever the commentary was. Has that been edging up just a little bit?

Scott Koller

I think it was initial…

Darin McAreavey

That was going to be a 3.8 million, a slight right around and that we've run internally here suggest that if we get to out 3.8 million at our current margin levels that will be right in at that breakeven level.

Dick Ryan - Dougherty

Okay. One more from you, Scott, RFPs can you give us a sense either qualitative or quantitative what's out there for either QSRs or any of the other channels?

Scott Koller

Yes, we continue to see the most RFP activity in QSR by and say its 4 to 1 ratio compared to automotive and branded retail specifically still recovering from our top 2009. So the activity I would say a majority of our efforts when it comes to RFP responses is in the QSR space.

Dick Ryan - Dougherty

How is that (inaudible) any of them coming up for a war or they kind of at the early stages or would you characterize that?

Scott Koller

It's a mix, there are some of them at the early stages, there are some we hope to see awarded here in the next (inaudible).

Jim Granger

New year one came in this quarter we get the other one very similarly coming in pretty shortly.

Scott Koller

So to answer the question and try not to be vague but we some that are very early development, we have some there in customer making a decision.

Operator

Thank you. Our next question comes from…

Unidentified Company Representative

(inaudible)

Unidentified Analyst

Hi, this is (inaudible) Capital. You guys sound about as upbeat as I think I ever heard you and I have to say that this is probably the first time that Scott, you spoke slow enough that I could almost take notes.

Scott Koller

Well I took advice from some investors.

Unidentified Analyst

You sound very upbeat and its pretty exciting because I get the sense that there is an internal feeling that you really have turned the corner and you have got sustainability ahead of you. Scott, if you could expand this a little bit on the current marketing sort of approach. I am going to take a little bit different approach on the question. How is new business coming in these days and sort of what percent do you have to go out and get, what percent comes in over the trends, what percent is coming in from referral? And then I have got a bunch of questions after that.

Scott Koller

Okay, well this is coming in a variety of different ways, in QSR being added to this RFP is there is a handful of players who are being invited to most of the RFP its really the same five or six companies being invited and we are included in that mix. We have the internal sales effort that calls to qualify leads to every single QSR automotive and branded retail location or into that has 20 or plus location. So we're constantly trying to connect with theses clients to get an idea where they are with digital signage? Are they coming out with an RFP in the near term and do they need somebody to help them even create the RFP. So we take a very active approach and once we get to the right person within that entity that is going to make a decision or at least head up the effort to explore digital signage it then gets passed off to the regional VP that takes it from there and moves forward with the opportunity. So there is word of mouth in QSR, definitely word a mouth in automotive via iShowroom video that we did has exchanged a lot of hands and it has actually brought in interest from other manufacturers. So this is a direct effort on our part, there is a referral effort and then there is that word of mouth effort and I would say right now that we're generating a lot of it ourselves.

Unidentified Analyst

Definitely a lot more proactive than in prior quarters and sounded like you would go to convention to make exhibition and help the business kind of came to you. So Scott do you have enough staff to be able to handle all this?

Scott Koller

Yes, and we need to appropriately and when the timing is right make sure that our Senior VP of Sales and Marketing, Terri Sayler has all the resources she needs to increase our penetration and increase our revenue. She's done an outstanding job and a lot of this is a result, many of us being much more focused going into 2009 and into 2010, on what products and where we will sell them. We've really focused very hard on automotive QSR branded retail and within each one of those we have an interactive, a non-interactive or service less menu board component. Three products, three verticals and focused very hard on making sure that we have the software. The sales and marketing support and the NOC support for those specific applications. So Terri is doing a fantastic job of driving the sales force for results, following the accountability for the (inaudible) and their sales targets and we're seeing the result of it.

Unidentified Analyst

And thinking of those sales results, it was 1.7 million of purchase orders in total for the fourth quarter that came?

Darin McAreavey

Ours was at the end of September. we had $1.7 million worth of purchase orders; we have yet to take revenue on.

Unidentified Analyst

So, that's 1.2 of that would be Chrysler, the way I understand the sense, you said that was the purchase order for the fourth quarter?

Darin McAreavey

No, 1.7 million of total…

Unidentified Analyst

Let me ask this differently. Where does it stand today?

Darin McAreavey

Where we stand today in terms of our total backlog? I don't have that as of right today. Again as of the end of September we are 1.7. I don't have that number right handy right now.

Scott Koller

But the 1.7 backlog walking into the fourth quarter does not include the entire 1.2 million. We did recognize Chrysler revenue in the third quarter from the 1.2 million purchase order.

Unidentified Analyst

So the 1.7, well actually that's good. So the 1.7 million of margin composed of the 1.2 Chrysler. Is Snap Fitness you figured would be doing with the 1000 locations by January for Snap?

Darin McAreavey

Correct.

Scott Koller

Correct.

Unidentified Analyst

Okay, so that would be in the 1.7?

Darin McAreavey

Correct.

Unidentified Analyst

Okay and Mooyah is that included in that too?

Darin McAreavey

I don't know of the top of head whether or not their owners are included or not, I have to check. It would not be significant in terms of dollar amounts.

Unidentified Analyst

It sounds like pretty much that 1.7 will be realized in the fourth quarter, the way these things come in and sort of get the board pretty quickly. Is that the correct way of thinking about it?

Darin McAreavey

It would be our anticipation that we would try the revenue as much as we could during the quarter and we'll be working diligently to do that in the fourth quarter year.

Unidentified Analyst

Okay, if you don't mind I'd like to ask about a couple of projects. Back this summer we snagged Mall of America and got one of, I can't remember its five or six wings and that came in as a referral. So, somebody came knocking on your door saying we heard your [greg] we want you to do this. How is that working out for them?

Jim Granger

It's working out real well, we have a very strong relationship with the Mall of America as they build out each of the remaining five sections or six totaled with the five sections, we will be doing the digital signs implementation since we did the first section. The key of this is a part of a larger remodel of that a piece of those wings. So there is some timing to it but we will be digital signs component in each one of those.

Unidentified Analyst

So you got basically all six. Did you put out a revenue associated with that one wing, I can't recall?

Scott Koller

I don't think we specifically mentioned how much..

Jim Granger

Yeah, I think we specifically mentioned on what the opportunities were for each section.

Darin McAreavey

It was a multi six career opportunity though.

Unidentified Analyst

Yeah, it was a big one as I recall.

Darin McAreavey

Yeah, it was.

Unidentified Analyst

Moving to the ARAMARK-Anaheim Convention Center that was another big one, this hit recent terms of visibility. You installed 18 menu systems there. When we see you announced a contract like that how should we think about that, I mean in terms of recurring revenue in terms of, is there a way to break that down, are they just all way to individual?

Jim Granger

Let me check that. Let's turn it over to Darin, because they are very individual. And so it's hard to characterize in a simple sentence. Darin?

Darin McAreavey

In terms of the amount of revenue and when we take it obviously in the case of like the Anaheim, I know that there was -- I believe there were 18 screens so there would a hardware component, software and services related, and upon installation and there'd be an ongoing hosting and support revenue stream. And I can't sit and tell you exactly what that monthly amount is, but rest assured we are dealing and collecting our monthly basis, and it's a series based on the size of the implementation obviously.

Unidentified Analyst

You mentioned in the press release that you expected 600,000 of additional hosting revenues on an annual basis, an additional 6,600 nodes, so that would come up to about $90 per year in hosting revenues per node. Am I looking at that one correctly?

Darin McAreavey

No, I think in total what we said in the press release upon the implementation of installing all of the snap locations for 2,000, and the anticipation order of what we already have and what we've been communicated that we will be receiving from Chrysler that will have an access of 6,600 nodes we'll responsible for.

Jim Granger

I want to make sure, can I just try interrupt, Darin I apologize, but we were struggling with how exactly to write that. What we are saying is with the orders that we've already communicated to you about, we already talked about, we have clear sight to 6,600 nodes and tomorrow we will get some new sales and will add to that clear line of sight of greater than 6,600 nodes, and if you noticed optimism in our voices that's exactly the reason that you do.

Unidentified Analyst

I definitely notice optimism. If I recall from a few conference calls ago and I appreciate it. One more quick question here about that, for example back to the ARAMARK-Anaheim Convention Center with the 18 menu systems installed, would that the 18 nodes just to understand?

Jim Granger

Correct.

Unidentified Analyst

And last question. Okay, go ahead. Sorry.

Darin McAreavey

Well, I just wanted to clarify your reference to the 600,000 of annual recurring revenue. That would will incremental to the 352,000 that we recognized this quarter as an ongoing basis. So it's not our total recurring revenue stream.

Unidentified Analyst

Now, I get that it was incremental but I was mixing apples and oranges adding in the current nodes. So it was actually…

Darin McAreavey

I just want to make sure I was clear to you.

Unidentified Analyst

Yes, it's clear now. I appreciate that. Last question here, are you seeing any seasonality at all this year? In other words does there seem to be a feeling that there's a fourth quarter push to get some of these systems deployed?

Jim Granger

With retail being the softer of our three verticals right now, retail is the one that usually provides that type of seasonality as they set down before things give in and really don't do anything until January 1st. So I think we may still see a little as people go through the budget process and plan for the following year, but I don't think it will be a wise swing as we've seen in the past based on the influence of retail.

Operator

(Operator Instructions). And our next question comes Dick Ryan from Dougherty.

Dick Ryan - Dougherty

A couple of follow-up guys. Scott, you mentioned something specific about Fiat in early November and I am not sure if I caught that. Is that something independent of the dealer's showrooms, standards program or what?

Scott Koller

What we've been awarded thus far is to take the [iServer] what you've seen even in our conference room, Dick and add Fiat as a brand to it. And they've been pretty hush-hush about the work and feel about Fiat brand but we are pretty excited to add that to iShowroom. Currently, the brand towers are for the other four product lines, so clearly any one of them can turn into a Fiat. So for example if the dealership is just Chrysler, Dodge and Fiat, the brand towers will reflect that only. So, again we can put the content in any place we want to and from the iShowroom we can turn it on or turn off a brand as we see fit or as Chrysler wants to. So, it's adding that product lines to the iShowroom which will then be available on Chrysleracademy.com and then be available into the showroom when needed.

Dick Ryan - Dougherty

Do you have visibility into the first 100 that maybe they signed up for the iShowroom, but they were Fiat-based or don't you have that visibility?

Scott Koller

We do not have visibilities to that yet. Again, Chrysler has been pretty hush-hush as fast as Fiat goes. Well this is basically they have something special coming out here and we are looking to a wild factor if you will. So, they've been pretty hush-hush.

Dick Ryan - Dougherty

And one other question for me, back on the RFP side in your commentary that's kind of a usual cash to characters get invited or kind of show up for the RFP, strategically what are you guys thinking from a partnering standpoint? I mean you got down as NEC but it's not an exclusive on either side. Kind of hearing out that some large remedies are moving into this space or getting interested in this space. What's your strategy there from a partnering concept?

Jim Granger

Well, Dick, we are constantly in conversations with various partners and potential partners throughout the industry. They may be people who provide hardware, they may be people who provide services, they may be who are connected to, for example the restaurant industry in other ways or in a more traditional way. But we continue to take a high interest in creating those partnerships that deliver on what we see as providing our value and we really have something unique here with our mission-critical application, our network operation center and the total solution particularly really in these three verticals but particularly in the QSR industry and the answer to your question is, yes of course we like our relationship with and we still we think its strong relationship we value it but we constantly look at the potential for relationships and partnerships across the industry again whether they might be hardware, software services, other or as I mentioned to you, other parts of the people who are dealing in the financing industry.

Dick Ryan - Dougherty

Any of RFPs that are out there, are you formally partnering with anybody in addition to anything anybody else?

Jim Granger

That will be a difficult thing to have our conference call like this. We would handle that off case-by-case, Dick.

Operator

Thank you. Our next question comes from (inaudible).

Unidentified Analyst

Useful question, a good catalyst for you guys would be the telecom issue. I think the borders forcefully, menu boards are forcefully (inaudible) that's a great catalyst for you guys, I would suspect. Any comments on that?

Jim Granger

Well clearly, it's a driver in that vertical right now, the state's management and it comes down to appear at state's management this year and what we've learned in this vertical is calorie count continues probably more frequently and does than even pricing. So, it becomes an operational management issue and state's management issue. So clearly, it's one of the key drivers in menu board adoption, digital menu board adoption in QSR.

Operator

This concludes our question-and-answer session for today. I'm showing no further questions at this time.

Erin Haugerud

I'd like to thank everyone for his/her participation on today's call. The dial-in information from domestic and international locations along with the archived recordings can be found in our website at www.wirelessronin.com. Thank you and goodbye.

Operator

Ladies and gentlemen, thank you for participating in today's conference. This concludes our program for today. You may all disconnect and have a wonderful day.

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