RRsat Global Communications Network's (RRST) CEO Avi Cohen on Q2 2014 Results - Earnings Call Transcript

Aug. 5.14 | About: RR Media (RRM)

RRsat Global Communications Network Ltd. (RRST) Q2 2014 Earnings Conference Call August 5, 2014 9:00 AM ET

Executives

Miri Segal-Scharia - Hayden MS-IR, Investor Relations

Avi Cohen - Chief Executive Officer

Shmulik Koren - Chief Financial Officer

Analysts

James Breen - William Blair

John Tinker - Maxim

Jim McIlree - Chardan Capital

Operator

Good day and welcome to the RRSat Global Communications Network Second Quarter 2014 Financial Results Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Miri Segal of Hayden MS-IR. Please go ahead.

Miri Segal-Scharia - Hayden MS-IR, Investor Relations

Thank you, operator. Good day, everyone and thanks for joining us for RRSat Global Communications’ second quarter 2014 financial results conference call. Joining us today on the call are Mr. Avi Cohen, CEO; and Mr. Shmulik Koren, CFO. Following the prepared statements by management, we will open the call to the question-and-answer session.

I would like to remind our listeners that comments made today will contain forward-looking statements and management may make additional forward-looking statements in response to your questions. Such written and oral disclosures are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

Please note that the Safe Harbor statement in today’s press release also applies to this conference call. Please also note that the results presented today include results that are on a non-GAAP basis. A full reconciliation table of the non-GAAP measures to GAAP measures can be found in the company press release issued earlier today. If you have not received this, please contact us at 646-536-7331 or 917-607-8654.

And with that, I would like to hand the call over to Avi Cohen, CEO of RRSat. Avi, please go ahead.

Avi Cohen - Chief Executive Officer

Thank you, Miri and good day everyone. Thank you all for joining us today. For the second quarter of this year, we continued to deliver double-digit top line growth well ahead of the low single-digit industry average. We are significantly outpacing the industry goals due to our strategy of expanding our service capabilities and placing talent personnel newer customers in key geographic areas that are world recognized centers for media.

This strategy, which combines organic and non-organic growth, is clearly working and we are increasingly encouraged about the opportunities in front of us. We continue to move upstream targeting upper tier content owners and capturing a large share of their outsourced digital content management and distribution business. Our Global Media Services platforms offer our customers a global single point of contact for handling any media, preparing it and delivering it to any screen, anywhere in the world, in any form of video consumption. We expect that the trend for converged, hybrid end-to-end service solutions to continue and remain a key growth driver for RRsat.

Our revenues from Content Management and Distribution Services, our core business and primary growth driver grew in excess of 10% year-to-year to $29.7 million. We also reported backlog of business to be delivered over the next 12 months of $89 million continuing to build a stream of future revenues. During this quarter, we had an increase in the satellite capacity managed on the company’s global network. Shmulik will provide some additional color particularly as it relates to the impact to our financials, but briefly during this quarter, we experienced higher than normal level of unutilized satellite capacity on our global network resulting in higher capacity cost and lower gross and operating margins. This was a result of expanding our network resources to support future business on one hand and terminating some customers with continued business issues on the other hand.

We expect margin to improve in the third quarter and return to historical level or better by the fourth quarter. Despite this challenge, we successfully executed on our goal of accelerating our growth during the quarter. A key area of focus for us continued to be the sports and live events space. Our sports and live events revenue in the first half of 2014 were up 40% compared to the same period last year. By integrating the state-of-the-art capabilities we gained through recent acquisitions with our existing capabilities, we have now uniquely positioned to capture additional market share in multiple markets.

Most recently, we partnered with EBU the provider of the largest live sports delivery platform to broadcasters worldwide to provide the required solutions to carry 4K feeds of the World Cup over to the Asian footprint of EBU’s Eurovision network. So, as millions of the soccer fans around the world to watch the World Cup earlier this summer, our servicing structure was the backbone for distribution delivery of the programming. The breadth and depth to which this programming was delivered in 4K resolution speak volumes about our distribution capabilities to a massive worldwide audience. The project follows our successful work with National Football League to translate, localize, and distribute NFL games outside of North America and business with additional major sport organizations.

Concurrently, we have been working to expand our digital content management business. This effort was accelerated last year by our acquisition of JCA. Our expanded capabilities has helped us to further penetrate our existing customer base as customers ask us to do more work for them on the content management side. During this quarter, one of our largest Tier 1 customers for whom we have been providing content preparation and management services for many years has decided to outsource a larger part of its content work to us. The main reason for this decision was the high quality of service provided by JCA over the years prior to the acquisition and the fact that if it is now part of a larger stable company with a wider scope of media services. As a result we have signed a new agreement with that customer for multiple years. In the last few months we have undertaken several very unique content management opportunities. Most recently we completed our first 4K restoration project the collaboration effort with Cohen Films and the BFI to bring the Alfred Hitchcock classic Jamaica Inn back to its former glory.

Our team was challenged with achieving the best possible restoration at the highest suitable data rate in order to create the high quality master for the Hitchcock film. The complexity of this work including effects of image wrapping, scratches and like that present the unique capabilities of our team and our services. This was our first 4K restoration project. The content prior to restoration was suffering from number of issues, which prevented promotion of the film to its full extent.

The movie Jamaica Inn was the last Hitchcock film to be made in the UK. We took great pride in creating a master of the highest quality. So far with the project that we held a screening of the film at this year’s Cannes Film Festival, where it was well received and applauded for our digital mass suite. This is the prime example of why 4K is a technique that will be used over and over for future projects. We also signed a three years contract with DOGTV, the first and only television network significantly developed just for dogs. The partnerships allows DOGTV to focus on its content creation, channel programming and marketing, while we provide the full range of extended media services including content preparation, management, play-out services and global distribution they otherwise would not be able to accomplish.

In addition, we have recently won and started the services for one of the largest producers of Spanish language content in the Americas as well as the owner of an operator of pay TV channels in the region. RRsat provides that customer with full play-out and global distribution services of the pay TV channels. And finally in our least of unique content management project is to work with the film for British Pathé, the world’s leading multimedia resources. For this engagement, we reformatted and delivered one of the largest archives of historic audio visual content to the online video platform YouTube. With over 85,000 pieces of video content the RRsat contains footage from some of the most significant moments in the 20th century history including news from the First and Second World Wars the 1937 Hindenburg disaster and the Titanic. Audiences can now access 3500 hours of the high resolution content on any device for free on YouTube providing an enhanced overall user experience. In conjunction with this client, our team works to create a complete metadata package for each of the 85,000 clips digitizing the full library enabling users to access the video content more effectively on YouTube with a simplified search process. British Pathé is now able to offer global audiences a glimpse into the 20th Century British’s story in high-resolution.

To services such as the above, our work and overall strategy of being a one-stop shop with global media services and local access for these services is receiving resounding conversion validation. We are building a strong brand and a strong growth path and will continue to aggressively pursue opportunities to deploy our technologies and to capitalize on our investments.

Now, I would like to turn the call over to Shmulik Koren for the review of the financial results.

Shmulik Koren - Chief Financial Officer

Thank you, Avi. First, I will provide some about the quarter’s result and then I will discuss our first half year results. After that, we will open the call for Q&A.

Revenues for the second quarter of 2014 totaled $32.5 million compared to $29.5 million in the second quarter of 2013, an increase of 10.2% and down from $32.9 million in the first quarter of 2014. Breaking this down by business unit, Content Management and Distribution Services revenues were $29.7 million, up 10.3% compared to $26.9 million in the second quarter last year.

Non-core mobile satellite services or MSS revenues were $2.8 million, up 9.5% compared to $2.6 million in the second quarter last year. As a reminder, our MSS business remains stable and profitable, but does not generate the same growth rate or margin profile as our Content Management and Distribution Services business. The increase in revenues in our Content Management and Distribution Services segment was driven primarily by growth in Content Management and Preparation Services and core 24/7 permanent services.

Our second revenues breakdown by geography was 42% in Europe, 28% in North America, 13% in Asia, 8% in the Middle East, excluding Israel, 6% in Israel and 3% in the rest of the world. Our largest customer accounted for approximately 3.8% of our revenues and the 10 largest customers contributed approximately 21.7% of our revenues.

Gross profit was $6.9 million in the quarter, down from $7.4 million in the second quarter of last year. Gross profit from our Content Management and Distribution Services revenues was $6.6 million or 22.2% gross profit margin compared to gross profit of $6.8 million or 25.2% gross profit margin in the second quarter of last year. MSS gross profit was $323,000 or 11.4% gross profit margin compared to gross profit of $564,000 or 21.8% gross margin last year. The decrease in gross margin of our MSS business is permanent and derives mainly from changes in the capacity cost of our main vendor Inmarsat and we expect these levels of gross profit margins in the rest of 2014. The decrease in gross profit in the first year at margins is a result of the capacity position Avi mentioned before.

During the quarter, we acquired additional capacity to serve new customers coming online in the third and fourth quarters. We also invested to expand our fiber infrastructure to support the NFL as well as other sports and other live events. This capacity will help us with the upcoming 2014/15 NFL league season, but the revenue from this contract has not started since the season begins in August. In addition, as part of the effort to upgrade our customer mix, we have terminated several small customers for non-payment and other commercial reasons. These terminations had negligible impact on revenues and we were able to resell the capacity. However, in the short-term, it resulted in some unutilized capacity on our network.

This was a short-term situation and in a result of investing in anticipation of revenue growth that in turn will reduce the level of unused satellite capacity and bring margins back to recent levels. We have returned some unused capacity to our partners helping to reduce the margin impact. We have also brought online new customers at the very end of the second quarter and early in the third quarter adding revenues that caused us the increase in capacity.

We continue to expect gradual improvements in our gross profitability over the long-term driven primarily by the changing product mix, which includes more value-added services at higher mix of sports and live events and better leverage of our infrastructure we have created as we scale. Taking a look at our operating expense, total operating expenses were $5.9 million for the second quarter compared to $5 million reported in the second quarter of last year and compared to $5.5 million reported last quarter. The increase in operating expense is mainly due to the JCA acquisition and the increase in our sales and marketing and business development activities we are performing in order to implement a growth strategy such as geographic expansion and upper tier penetration costs. Excluding these additional costs, we will be able to see a reduction of approximately $200,000 of operating related expenses in Q2.

Our non-GAAP operating income excluding non-cash stock-based compensation expense, amortization of acquisition-related intangibles and better derivatives and acquisition-related prepaid compensation expense was $1.3 million during the quarter compared to $2.5 million in the second quarter of last year and $2.8 million in the first quarter of 2014. Continuing down to the income statement to the net income, foreign currency fluctuations specifically movement of the U.S. dollar against the euro and the Israeli shekel again negatively impacted our GAAP net income during the quarter by $170,000 as part of the operational expense and $165,000 as part of the financial expenses.

Net income on GAAP basis was $630,000 for the quarter compared with $1.7 million for the second quarter of 2013 and $1.7 million in the previous quarter. Non-GAAP net income totaled $1 million compared to $1.9 million in the same quarter last year and compared to $2 million in the previous quarter. Non-GAAP fully diluted net income per share totaled $0.06 compared to $0.11 in the second quarter of 2013 and $0.12 in the previous quarter.

Finally, our adjusted EBITDA in the second quarter of 2014 totaled $3.6 million compared to $4.6 million in the second quarter of 2013 and $5 million in the previous quarter.

Turning to the year-to-date results, for the six months ended June 30, 2014, revenues were $65.4 million, up 11.3% compared to $58.7 million for the same period in 2013. Gross profit and gross margin for the year were $14.9 million and 22.8% respectively compared to $14.4 million and 24.5% respectively for 2013. Once again, the gross profit in 2014 was mainly impacted by the short-term hiccup related to capacity management, which we are dealing with.

Non-GAAP operating income and operating margin were $4.1 million or 6.3% respectively for the six months of 2014 compared to $5 million and 8.7% respectively in 2013. GAAP operating income of $3.5 million compared to $4.7 million in 2013. Gross operating margin was 5.4% compared to 8% in 2013.

Non-GAAP net income for the six months period was $3.2 million, a decrease of 16% compared to $3.8 million in 2013. Non-GAAP net income per share on a fully diluted basis was $0.18 compared to $0.22 in 2013. GAAP net income was $2.5 million compared to $3.3 million 2013. GAAP net income per share on a fully diluted basis was $0.14 compared to $0.19 in 2013.

Adjusted EBITDA was $8.6 million for the six months of 2014, down compared to $9.3 million in 2013. Backlog of services to be delivered in the next 12 months to that $89 million as of June 30, 2014, we expect to recognize these bookings as revenues during the next four quarters, 12 months backlog in the year ago quarter was $88 million and $94 million at the end of the previous quarter.

Our total backlog, which includes all signed agreements to provide all the company’s broadcasting services and mobile satellite services, was approximately $206 million as of June 30, 2014, compared to $205 million at the end of the second quarter of 2013 and compared to $215 million at the end of the previous quarter.

Turning to the balance sheet. Cash and cash equivalents and marketable securities as of June 30, 2014, totaled $22.4 million, compared to $24.2 million as of December 31, 2013. Our current ratio as of June 30, 2014 remains healthy at 1.87 and our shareholders’ equity remains constant at $81.8 million, representing approximately 63% of our total balance sheet.

We generated $2.2 million in operating cash flow in the second quarter of 2014. In line with our recently adopted dividend policy, the Board of Directors approved an authorized payment of cash dividend in the amount of $0.02 per ordinary share and in aggregate amount of approximately $338,000, representing approximately 50% of the company’s net income for the second quarter of 2014.

The dividend is to be payable on September 3, 2014 throughout the company’s shareholders of record at the end of the trading day on NASDAQ on August 18, 2014. Finally, let me reiterate the guidance we previously provided for fiscal 2014. We previously provided full year 2014 total revenue guidance of between $129 million to $134 million representing a year-to-year growth of between 6.2% to 10%.

We are reiterating that guidance year-to-date with two quarters behind us and plans in place for further growth, the business and broaden our portfolio of capabilities, we are confident that we can achieve our stated goal. The second quarter is indicative of the quarter at quarter fluctuations we maybe experiencing along the way, but our full year plan remains intact.

With that, I’d like to open the call for Q&A.

Question-And-Answer Session

Operator

Thank you. (Operator Instructions) And we will take our first question from James Breen with William Blair. Please go ahead.

James Breen - William Blair

Thanks for taking the question. Just a couple of questions. One, could you just explain again sort of the impact in the margins on some of the customers you turned off and why you feel confident of that improving again going into third quarter? And then just from a market size perspective, obviously the World Cup was a pretty large event in terms of streaming video and we are starting to see more and more of this. Could you just talk about how that impacts different parts of your business up and down the line? Thanks.

Avi Cohen

Do you want to take, Shmulik the margin outlook point?

Shmulik Koren

Yes. These customers that we terminated, James.

Avi Cohen

What’s the impact of that?

James Breen - William Blair

Yes.

Shmulik Koren

Okay. So, the impact of – I’ll tell you what – the impact on revenues as I said was negligible, but the capacity cost associated to that in Q2 I think was over $150,000. And as I said before, we were able to find new customers on using this exact capacity and we believe that in Q3, we won’t see the influence of this termination in our P&L.

James Breen - William Blair

So, basically you had it through the short period of time when you had capacity cost, that didn’t have offsetting revenues and you since sold that and now that you have offsetting revenues?

Avi Cohen

Exactly.

James Breen - William Blair

Okay, great. And then just on the bigger picture stuff around things like the World Cup basically and then we had the Olympics this year as well, how does that impact the different parts of your business going forward? It seems we are going to see more of these events that are more global in nature? Thanks.

Avi Cohen

So just to make sure I understand you are asking about the globality nature of the event or the delivery mechanisms.

James Breen - William Blair

Well, it’s really both, the sales as well as the region.

Avi Cohen

So, look I think it’s a great question. And it explains really well into our capabilities why because we have always a company long before my time, but certainly in the last two years since I came on board, we have been stressing the fact that we provide a Global Media Services platform, okay, versus many other smaller ones that have some capabilities, but they are not global, okay, their ability to really fulfill a need that is global for a customer that needs to get his content either because he has delight for them like EBU or that he is the producer of content and really in order to monitor the powerful innings to get as far as he gets in terms of globality is limited, if he goes and get the services or outsource those services to a local or if you may a regional player. There are not too many global player who can get all the services and as an end-to-end solution and also in the global fashion. And we happened to be one of them, not the only one, but one of them.

So, I think the fact that contents over the next year certainly sports, but not only is becoming more and more global, the fact that there is multiple alternatives for viewing that content. And again, if you look at recent market studies and market researches, you will find out that still everybody is saying that all the new alternatives for watching delivery et cetera, which we are part of is additive, it’s not – instead it’s really additive. And I think we are enjoying, we will enjoy both the fact that we have always been able to position ourselves as a global provider and also provided in a global fashion as well as the fact that all these new services, new alternatives, new viewing possibilities all additive to what has been along for a long time. So, I think those are two ends that we strongly believe are helping us in our passing our journey to create better goals and to keep outpacing the industry goals in an organic side and of course growth in our case as we have always been seeing, it’s going to be partially organic and partially non-organic. So I hope I answered your question.

James Breen - William Blair

That’s great. And then just one follow-up from a technology standpoint, obviously more video is getting watched over handsets and iPads and things other than the television. How do you – do you have to sort of buy things or change things in your business to reformat content and so forth for those types of devices? Is that something that you have the capability to do now and we (indiscernible)?

Avi Cohen

Yes, absolutely. As a matter of fact, our recent, well it’s not that recent so really what 10 months acquisition in the UK has put us ahead of the curve in that respect. The company we acquired in London to a large extent was in the business of doing exactly that, which is there is a media factory, where you take media in any format, in any way, shape or form and you prepare it for multitude of delivery platform over the internet as well as others, but over the internet for multiple type of screens though if somebody comes and brings some content and they want this thing to be delivered on platforms like Hulu, Netflix, iTunes and few others. And they also want that stuff to be able to be reviewed in multiple type of screens. It all gets prepared in an automatic fashion by the way in our factory, so that particular piece of video is ready in those multiple – fully with multiple platforms, which run for viewing in multiple screens. So, yes, that creates more work and it creates more opportunity for us. Again, as I said before as viewing video is becoming (indiscernible) in terms of alternatives both in terms of where it’s watching and what that of screen everything needs to be handled, managed and you need to have the same type of content, which has been prepared in 30 different formats.

James Breen - William Blair

Great, thank you.

Avi Cohen

You’re welcome.

Operator

We will now hear from John Tinker with Maxim. Please go ahead.

John Tinker - Maxim

Thank you. The slightly higher level question obviously, I still remember you do a fair amount of business with Fox, if Fox (indiscernible) Warner Brothers, is that going to be helpful to your business or does it really not make much difference?

Avi Cohen

That’s a great question, John. Thank you. Well, I think it should be good, but it’s really a little bit hard to say it depends on the – what type of integration they will do, which I am not ready to the plans, right. But, I think if the more integration, they do the better we are. We do have Fox as a large customer. We do a lot of business with Fox around the world and it’s increasing. I think we are continuing to gain their comfort and trust in the type of thing we do. So, depending on what type of PMI they are going to be doing that that asset, I think it will to some extent it will result with more or less effect on what we can gain out of fit. Does that make sense?

John Tinker – Maxim

Sure. Good luck. And just as a quick follow up, you mentioned the 4K restoration method on movies I think Jamaica Inn, how big could that market be?

Avi Cohen

It’s a great question, John. And I will tell you why, because look it’s so much less expensive to do restoration than create – than you do production. I think you know that. It’s a lot more economical. So, as content creation becomes more and more expensive as you are well aware of and the market prices are not simple to achieve especially because unless you do the – you can monetize it really globally in multiple platforms in multiple fashion, it becomes tough to monetize it in a way that the ROI is reasonable. Then the restoration approach becomes an interesting phenomena, because if you have good content, the people are not going to watch, because it’s not great quality in terms of the viewing, but it’s very nice quality in terms of the content. Then one great option is to restore it, take an old movie and restore it to HD with nice 3D colors and now people are going to watch it. So, I think it’s a great opportunity. We have been – JCA, now it’s us have been developing this capability over the past few years to the level that they are one of the leading provider in that area. And although it’s not the only business we do there, we do think to getting more and more opportunities in that respect to restore content and we have been now doing few (indiscernible) in the UK with HD and they will produced many years ago at much low resolution with different type of quality.

John Tinker – Maxim

Thank you.

Avi Cohen

You are welcome.

Operator

Our next question is from Jim McIlree with Chardan Capital. Please go ahead.

Jim McIlree - Chardan Capital

Thank you. Can you tell us how much of the increased costs related to the increased capacity that you purchased for the upcoming projects that you are contemplating?

Shmulik Koren

Jim, I think the total excess cost of capacity in the Q was a bit over $700,000, same came from termination, some came from additional infrastructural putting mainly fiber in the United States for the NFL and other sports and live events and than somewhat excess we have purchased new platforms that we only had the cost on most of the cost was associated in Q2 and the revenues in the customers came in late Q2 and early Q3.

Jim McIlree - Chardan Capital

And how long will this capacity last you, is this – do we see another step up in Q3?

Shmulik Koren

We believe that we took the right actions to go back to our normal margins and contribution in our margins. Hopefully, we have done enough, but there are some geopolitical situations around the world by the way that can harness again and things are happening in Thailand these days, which can also affect us, but in general, we believe that we took the right measures. We are not sure we will back on track – full track in Q3, but surely in the mid-term Q4 in 2015 we will keep on improving our gross margins and contribution.

Avi Cohen

I think Jim, if I can add few words as I said in my discussion likely, we are looking at the numbers analyzing it, looking at the customers are coming out of the platform and the capacity that Shmulik was alluding to. We believe that what we will see in Q3 is more or less maintaining the cost of capacity while increasing revenue which was held. That will get us better and I think we should be able to get back to recent levels of contribution with gross margin. When I say contribution, I think you mean capacity that we have been used to previously.

Jim McIlree - Chardan Capital

Okay. And did backlog again impacted by the contract terminations, were there – did you take something out of backlog for that?

Avi Cohen

Yes. Again, one of the things we will be saying that, which has been a cornerstone for our strategy is the change of revenue – of customer mix. We are not going to customers saying hey, we are not interested in your business, but certainly if we have a small customer, who is generating a lot of pain for us, we have a tendency these days to say thank you, take him off and spend out volume and energy on upper tier. So, this – and it’s sort of a cleaning process a little bit as we are going up and moving to become a company that is more focused in upper tier, less so in Tier 2 and below, sorry Tier 3 and below. And as in that process, we have tightened up our criteria in terms of why do we deal with customers if that goes (indiscernible) if you understand what I am saying. So that certainly is part of it, the termination. We also acquired capacity as Shmulik said which hasn’t been filled yet. Q2 has less – had a little bit less sports activity on an infrastructure that we have been – we have built conducted a first quarter event. And that altogether a little bit here, a little bit there changed the little things to balance and we have that more than what usually we had in terms of unutilized capacity. (Technical Difficulty)

Jim McIlree - Chardan Capital

Yes. You went blank there. My last one is you talked about the sports and live revenue up I think you said 40% year-over-year, how big is the sports and live revenue currently?

Avi Cohen

We are not disclosing these numbers simply because not because I am worried about you knowing, I am worried about my competition knowing some detail, but I would say that much. It’s getting close to being 10% of our business. And as I said over the first half of the year, we grew 40% compared to the same period the year before. So, again – and by the way, the same period a year before up we are fully acquiring and integrating SM2. So, it is really if you may an organic growth. So, that’s something that we have been focused on. And we think there is a lot of potential in this business.

Jim McIlree - Chardan Capital

Okay. That’s helpful. Thank you.

Avi Cohen

Sure. Thanks Jim

Operator

(Operator Instructions) We will now hear form (Ira Krauss) who is a Private Investor. Please go ahead.

Unidentified Analyst

Hello. I really don’t mind that LiveView company which supplies cellular broadcasting technology bought a new contract with a Israeli news company, which before that used the satellite technology and I heard that they even supply manuals of the world major sports events in HD. So, I want to know what are your plans to deal with this technology?

Avi Cohen

I think – thanks for the question. But I think that there is nothing very little to do with our business. We are not in their business. They basically do contributions which means they go to where there is a live event and they are able to pick up the signal and bring it to aggregation point. We don’t do that. We do everything from the aggregation point on without replacing is the old fashion DSNGs, which we are not in the business of. We have SNGs only in Israel but that’s a very, very small business. It’s a very small part of what it is 6% of our business in Israel and we are keeping it because of some historical reasons if you may. But we are not in that business as you guys explain we got a lot of customers that use LiveView to get the signals from – to continue to get signals from the event to the aggregation point.

When we talk about sports and live event, we talk about what you do with it from the aggregation point. We will give you an example. The NFL, who doesn’t use LiveView, okay, because it doesn’t come close to the quality that LiveView need – that NFL needs. By the way, NFL signals get from the venues at 18 megabits per second, okay. You can’t do that with LiveView as far as I know. But it doesn’t matter, it gets to us over fiber or through satellite, because that’s the way the NFL gets the signal from the venue. Our work and what we get paid for is what we do after that, okay. So even if they did it with LiveView it wouldn’t be taking the business away from us, because we deal with the content once it gets to us as an aggregation point then we manage to content, we do it or they will be required do with it and then we distribute it over our network. So it’s LiveView and us are very different companies. And there is no question that technologies are changing. We are not a technology company remember we use very, very high-tech sophisticated infrastructure, okay, to deliver our services. So, we are a technology-driven service company, but we are not a technology company. LiveView is a technology company, I know that’s right to call them some service but look they have developed this technology which is leading nice that’s not our business. I hope I answered your question.

Unidentified Analyst

Yes. You did. Thanks.

Avi Cohen

Sure

Operator

And it appears there are no further questions at this time. I would like to turn the conference back to Mr. Cohen for any additional or closing remarks.

Avi Cohen - Chief Executive Officer

Thank you all for joining us today. This was the challenging quarter given the geopolitical situation around the world, such as the state of event in Thailand and a beat of a lumpy one with regard to our bottom line. But as we continued to grow our base of business, I am confident that we are headed in the right direction for the long-term top and bottom line growth. We look forward to updating you next quarter on our progress. Have a good day.

Operator

And that concludes today’s conference. Thank you for your participation.

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RRSat Global (NASDAQ:RRST): Q2 EPS of $0.06 Revenue of $32.5M (+10.2% Y/Y) beats by $0.08M.