Creative Professional revenue was $32.8 million and $35.0 million for the three
months ended March 31, 2019 and 2018, respectively, a decrease of $2.2 million, or 6.4%, due to a decline in certain SAAS-based revenue and
web-based
sales mainly due to increased customer churn in
the last half of 2018.
OEM revenue decreased $3.1 million, or 14.3%, to $18.6 million in the first quarter of 2019, as compared
to $21.7 million in the first quarter of 2018, mainly due to a decline in printer revenue. The decrease in printer revenue, period over period, is largely due to a decline in revenue from our printer imaging electronic OEM customers.
Cost of Revenue and Gross Profit
Cost of
revenue, excluding amortization of acquired technology, decreased $2.8 million, or 22.8%, to $9.6 million and $12.4 million in the three months ended March 31, 2019 and 2018, respectively. In the first quarter of 2018, there was
$2.2 million of
non-recurring
royalty expense in connection with the adoption of ASC 606. As a percentage of sales, cost of revenue, excluding amortization of acquired technology, was 18.7% and 22.0% of
total revenue in the three months ended March 31, 2019 and 2018, respectively, a decline of 3.3%.
The portion of cost of revenue
consisting of amortization of acquired technology was unchanged at $0.9 million for the three months ended March 31, 2019 and 2018, respectively.
Gross profit increased 3.1% to 79.6% in the three months ended March 31, 2019, as compared to 76.5% in the three months ended
March 31, 2018. The increase in gross profit in the three months ended March 31, 2019, as compared to the same period in 2018, was primarily due to the
one-time
additional
non-recurring
royalty expense in the prior period that did not occur in the current period, as described above.
Operating Expenses
Marketing and
Selling.
Marketing and selling expense decreased $3.0 million, or 14.7%, to $17.1 million in the three months ended March 31, 2019, as compared to $20.1 million in the three months ended March 31, 2018, primarily due to
lower personnel expenses. Personnel and personnel related expenses decreased $2.4 million in the first quarter of 2019, as compared to the same period in 2018, primarily due to lower headcount from our restructuring actions in the second and
fourth quarters of 2018 and other decreases in headcount and lower variable compensation as a result of lower revenue. Targeted marketing spending decreased $0.4 million in the three months ended March 31, 2019, as compared to the same
period in 2018, due to portfolio decisions around discretionary programs.
Research and Development.
Research and development
expense decreased $1.9 million, or 20.0%, to $7.4 million in the three months ended March 31, 2019, as compared to $9.3 million in the three months ended March 31, 2018, primarily due to lower personnel expenses. Personnel
and personnel related expenses decreased mainly due to lower headcount from restructuring actions in the second and fourth quarters of 2018.
General and Administrative.
General and administrative expense decreased $3.6 million, or 23.0%, to $12.0 million in the
three months ended March 31, 2019, as compared to $15.6 million in the three months ended March 31, 2018. Outside consulting and legal expenses decreased $3.2 million in the three months ended March 31, 2019, as compared to
the same period in 2018, primarily due to additional expenses incurred in the prior period related to shareholder activities. Personnel and personnel related expenses decreased $0.4 million in the three months ended March 31, 2019, as
compared to the same period in 2018, mainly the result of restructuring actions in the fourth quarter of 2018.
Restructuring.
Restructuring expense decreased $0.2 million, or 112.4%, due to a credit of $24 thousand in the three months ended March 31, 2019 from $0.2 million in the three months ended March 31, 2018 due to severance expense and
charges associated with the closure of one of our regional offices in the prior period.
Amortization of Other Intangible Assets.
Amortization of other intangible assets was $0.8 million and $1.0 million for the three months ended March 31, 2019 and 2018, respectively, a decrease of $0.2 million, or 18.8%, mainly due to the write off intangible assets
associated with the Swyft business in the second quarter of 2018.
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