financials ling well, future is bright. PNI Digital Media Reports Fiscal 2014 First Quarter Financial Results Records Highest Revenue Generating Quarter in Company History MarketwiredPress Release: PNI Digital Media Inc. – 2 hours 32 minutes ago.. . . Email Recommend Tweet Print ... . .Related Content. . .. . .RELATED QUOTES. . Symbol Price Change PNDMF 1.34 +0.13 . .. . . . VANCOUVER, BRITISH COLUMBIA--(Marketwired - Feb 11, 2014) - PNI Digital Media (PN.TO)(PNDMF), ("PNI" or the "Company"), the leading innovator in digital media solutions for retailers, today reported financial results for the Company's fiscal 2014 first quarter ended December 31st, 2013 and discussed key operational developments. "Our investment in HTML5, mobile, cloud media and responsive site design for tablets is paying off and I am proud to announce our highest revenue generating quarter in Company history," said Kyle Hall, Chief Executive Officer of PNI Digital Media. "Paramount to the growth we are seeing is the success of our HTML5 builders which enable the creation and ordering of products from any tablet, smartphone, desktop or connected device. Through our use of HTML5 and focus on delivering user experiences with responsive design optimized for tablets, we saw impressive growth this quarter coming from all major product categories including, prints, photobooks, canvas, and cards and invitations. Augmented by our successful renegotiation of key customer contracts last year, we were able to deliver record results." "Furthermore, our mobile efforts continue to accelerate, driving record sales in the quarter and expanding our user base, as it is the fastest growing channel for new users to our Platform. Having strengthened our balance sheet with a successful financing of $7.5 million, we are in a stronger position to explore the growing opportunities available to the Company. Our focus now is on rolling out with Office Depot and bringing all of our builders onto our new HTML5 platform, while continuing to expand our footprint connecting any device or service to retail stores with our order routing API." Fiscal 2014 First Quarter Financial Highlights •Revenue for the first quarter of fiscal 2014 was $8.2 million, as compared to $6.6 million in the three months ended December 31, 2012, a 24% increase. The increase in fees as compared to prior year is due to higher print revenue, the launch of our HTML5 cards and invitations product line with select major retailers, improved contract terms as all remaining customers on the upload model have been transitioned to the Company's preferred transaction revenue share model, and the strengthening of the US dollar relative to the Canadian dollar. •Gross margin was $5.1 million as compared to $3.6 million in the three months ended December 31, 2012, resulting in an increase of gross margin from 55% to 62%. The increase in gross margin as compared to prior year is due to increased revenues, offset by increased costs of sales resulting from higher licensing costs and intangible asset amortization. However, as a percentage of sales, cost of sales declined, primarily due to greater efficiencies associated with higher transaction volumes, and to foreign exchange as a majority of costs of sales are denominated in Canadian dollars. •Generated a net income for the quarter of $0.9 million, as compared to a net loss of $0.3 million in the first quarter of fiscal 2013. •Non-IFRS adjusted EBITDA1 was $2.0 million, as compared to non-IFRS adjusted EBITDA of $0.3 million in the first quarter of fiscal 2013. •The Company ended the quarter with $6.0 million in cash and cash equivalents. In the three months ended December 31, 2013, the Company repaid $1.4 million owing on its line of credit. •The Company ended the quarter with $9.7 million in working capital, as compared to $1.2 million at September 30, 2013. •Completed a financing for total gross proceeds of $7.5 million. The Company issued 7,119,650 Common Shares priced at $1.05 per Common Share. Fiscal 2014 First Quarter and Subsequent Operational Highlights •The dollar value of online transactions processed for retail partners over the PNI Digital Media Platform increased to $121 million in retailer revenues, a 17% increase compared to the same quarter last year. This was led by significant double digit year-over-year growth in all of our major categories, including prints, cards & invitations, canvas, and photobooks, and the strengthening of the US dollar relative to the Canadian dollar. The revenue was generated in two main categories: •Traditional prints revenue processed for our partners increased 17% to $45.5 million, representing 38% of total transactions, driven by the growth of mobile orders and our integrations with cloud media sources including Dropbox, Google drive, Facebook, and Instagram. This increase has come despite the overall downward trend in prints. •Non-prints revenue from value add services such as cards and invitations, canvas, photobooks and gifts increased 17% to $75.5 million, representing 62% of total transactions, as a result of our investment in HTML5 user experience and increased overall user adoption. This category of revenue is yet to benefit from launch of our new mobile apps, which currently only process prints. We are planning to launch value added services in our mobile apps in advance of the 2014 holiday season. •Processed a record 7.5 million transactions across the PNI Digital Media Platform, an 8% increase from the same period last year. •Completed development for the first phase of the Office Depot launch. The Company expects full integration to take 12 months as it deploys across all of Office Depot's 1,500 stores. •Samsung published the 'Samsung PrinTap' App in the Google Play Store, which allows U.S. Android users to send pictures for printing at PNI connected retailers directly from their phone's gallery. This app is the first stage of the Company's partnerships with Samsung and connects to all major US retailers via the PNI order routing API. •Transitioned all retailers to contracts based on percentage of the retailer's revenue earned, rather than the number of photos uploaded. With a transaction fee model, PNI is now better positioned to participate in the revenue growth along with retailers.