Ruby Tuesday Inc (RT) Q2 2015 Earnings Call Transcript

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Below is the Ruby Tuesday Inc. (NYSE:RT) Q2 2015 earnings conference call held on Thursday, January 8, 2015, 5:00 PM ET. The Ruby Tuesday Inc reported overall business performance and financial earnings for the second quarter of fiscal 2015 ended December 2, 2014.

Ruby Tuesday RT

Ruby Tuesday Inc. (NYSE:RT) operates 744 company-owned and franchise restaurants across 44 states in the United States and 13 other foreign countries including Guam. As of the fiscal 2015 second quarter ending, Ruby Tuesday earned a total revenue of $262,659 and a diluted net loss per share at $0.15. Ruby Tuesday is committed in providing casual dining services without compromising freshness and quality of its products.

Company Representatives:
Richard Jenkins – Human Resources General Manager, Ruby Tuesday
David Syarto – Vice President Operations, Ruby Tuesday

Tal Leoni – Bank of America
Mark Kelleher – D.A. Davidson Companies
Rob Owens – Pacific Crest Securities
Michael Kim – Imperial Capital LLC
Aaron Schwartz – McCrorey
Michael Steger – ROTH Capital LLC

It seems like the billings growth 18% to 20%, whether it is consequence or not, matches up pretty well to the growth in the actual subscriber base. If we suggest that not making sort of too much headway in terms of getting additional revenues or additional billings out of the existing customers, am I reading that the right way and where are we in the efforts to sort of increase the contribution from each individual subscriber?

Richard Jenkins, Human Resources General Manager, Ruby Tuesday
I think the first thing I’d say is what we do not give you every quarter; we talk about it on a yearly basis, Keith. New subscribers could be coming from an existing customer, so I wouldn’t make that guess. In fact, you know, because we have to do the true up every year, we have the view of the data. It is just not completely done, but we think our cross-sell activities have been very strong year-to-date and you know we continue to improve on the number of products that a customer has.

Just remember that when we add a new subscriber, it could be into an existing customer already. I would just tell you that right now where we stand three quarters in, we feel like we are having a very good cross-sell and upsell year. We are a quarter away from being able to do that true up activity we do. We will be able to give you some more concrete data on that at the turn of the year. So far we are very happy with the cross-sell and upsell.

David Syarto, Vice President Operations, Ruby Tuesday
Yes. Just to reiterate in definition what an active subscriber represents is an installation. Again, as we have suggested, it can be multiple installations within an existing customer but it is an active serial number if you will that is entitled to services for any number of our products.

As a reminder ladies and gentlemen, please limit yourself to one question with one follow-up. Your next question is from Tal Leoni with Bank of America. Your line is open.

Tal Leoni, Bank of America
Hello. I have two questions and I will ask them together. If I look at the appliance revenue this quarter, they were flat sequentially and all the growth was from subscription. Can you discuss the patterns and why are you not concerned from the fact that the appliance sell did not grow sequentially?

The second question is when I look at your expenses this quarter, the expenses apex grew about 6.6% sequentially, which was almost double the growth of revenues. Given that a lot of the growth in revenues was subscription, and the question is why is apex growing like that more than revenues and what is the outlook for this year? I know it is a long question but when I look at your guidance for 2015, you are actually expecting operating margin to be slightly better than expected versus the street. Why was this quarter higher but for the year you expect better margin? Thanks.

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