RRSat reported first-quarter revenue of $32.9 million, a year-over-year increase of 12.3%. In addition, management announced a $0.05 per share dividend, carrying through on the company’s intention to distribute 50% of net income to shareholders. Revenue growth accelerated from 10.6% last quarter and was driven by new-contract wins and a full quarter with the JCA acquisition, which closed September 3, 2013.
The company continued its improved execution under new leadership. Now that the integration of JCA is largely complete, we expect that it will allow RRSat to attract larger contract wins with tier-1 content providers. The company is investing in its infrastructure with the goal of accelerating sales in 2014. Indicative of recent momentum, short-term backlog at the end of the year increased to $94 million from $92 million last quarter.
While the positive bookings are a step in the right direction and the service provider should benefit from near-term catalysts, such as the 2014 World Cup, we believe that RRSat will struggle to accelerate revenue in the long term as the distribution of content shifts from satellite networks to the Internet. Over the long term, we believe that RRSat needs to obtain more exposure to the digital content ecosystem to keep pace in the fast-changing competitive environment. Based on these industry trends, RRSat’s latest results, and valuation, we reiterate our Market Perform rating on shares.
Revenue was $32.9 million compared with guidance of between $31.5 million and $33.5 million. Sales increased 10.6% year-over-year and 6.2% sequentially. The gross margin of 24.5% was up from 24.1% last year and 23.3% last quarter. Gross margin is expected to expand on more efficient use of existing satellite capacity and an increasing percentage of higher-margin ondemand services. Adjusted EBITDA of $5.0 million increased 8.4% but were down from $5.2 million last quarter.