Rentrak Reports Fiscal 2011 Second Quarter Financial Results

PORTLAND, Ore., Nov. 2, 2010 /PRNewswire-FirstCall/ -- Rentrak Corporation (Nasdaq: RENT), the leader in multi-screen media measurement serving the advertising and entertainment industries, today announced financial results for its fiscal second quarter ended September 30, 2010.

Consolidated revenues for the fiscal 2011 second quarter increased more than 13 percent from the year-ago period, principally reflecting continued strong growth in the company’s Advanced Media Information (AMI) division.

• Revenues in the company’s AMI division grew 65 percent to $8.3 million for the second quarter of fiscal 2011. Excluding $2.7 million in revenues in the fiscal 2011 period associated with the company’s acquisition of Nielsen EDI and $1.1 million in revenues associated with a long-term development contract completed in the fiscal 2010 period, AMI division revenue would have grown 41 percent.
  • TV Essentials® revenues grew 159 percent, excluding the $1.1 million long-term development contract for the second quarter of fiscal 2010, to $1.5 million.
  • Revenues for the company’s Box Office Essentials® business grew 192 percent from the prior year second quarter to $4.4 million. Excluding the contribution from EDI, Box Office revenues would have grown 11 percent.
  • OnDemand Essentials® revenues grew 36 percent over the second quarter of fiscal 2010 to $2.0 million.
  • The AMI segment represented 34 percent of consolidated revenues, up from 24 percent for the year-ago period.
  • Gross margin in the company’s AMI division totaled 71 percent of AMI revenues.

• Revenues in the company’s Home Entertainment division were $15.9 million, versus $16.3 million for the second quarter of fiscal 2010.

“This quarter we continued to make progress with our multi-screen database currency as we strengthened our position as the market leader in providing must-have media measurement services to the entertainment and advertising industries,” said Bill Livek, Rentrak’s Chief Executive Officer. “Our accomplishments continued as we signed several new agreements with a variety of TV networks and stations, driving substantial growth in each key product line in our AMI division. In addition to identifying new opportunities to bring our services to a greater number of customers in the U.S., we are also actively building our international platform to bring our unique set of measurement capabilities to international markets.”

Gross margin improved to $11.0 million, or 46 percent of consolidated revenues, for the second quarter of fiscal 2011, from $8.4 million, or 39 percent of consolidated revenues, for the same period last year, as the company continued to shift its revenue and profit mix toward its AMI division, which generates significantly higher returns than its Home Entertainment business.  

Operating expenses for the fiscal 2011 second quarter were $10.8 million, or 45 percent of consolidated revenues, compared with $7.9 million, or 37 percent of consolidated revenues, for the fiscal 2010 second quarter. The increase in operating expenses primarily reflected $500,000 in one-time charges related to the transition/expansion of EDI, $1.6 million in recurring EDI operating expenses, and $1.7 million in stock-based compensation expense.

Operating income for the fiscal 2011 second quarter was $241,000, which included the one-time item and stock-based compensation costs.  Operating income for the fiscal 2010 second quarter was $502,000, which included $400,000 in severance expense, $100,000 in legal expense and $700,000 in stock-based compensation expense. Excluding one-time items and stock-based compensation costs in both periods, operating income would have been $2.4 million for the fiscal 2011 second quarter, versus $1.7 million for the fiscal 2010 second quarter.

Net income was$ 408,000, or $0.04 per diluted share, for the second quarter of fiscal 2011, compared with $676,000, or $0.06 per diluted share, for the second quarter of fiscal 2010. Excluding the one-time costs and stock-based compensation expense in both periods, net income for the fiscal 2011 second quarter would have been $2.3 million, or $0.21 per diluted share, compared with $1.5 million, or $0.14 per diluted share, for the second quarter of fiscal 2010. The reconciliation of non-GAAP EPS to EPS, the most comparable financial measure based upon generally accepted accounting principles (GAAP), as well as a further explanation about non-GAAP EPS, is included in the financial tables at the end of this press release.

Adjusted EBITDA for the second quarter of fiscal 2011 grew to $2.9 million from $1.7 million for the same quarter of the prior fiscal year. Excluding the one-time costs in both periods, adjusted EBITDA would have been $3.4 million for the fiscal 2011 second quarter, versus $2.2 million for the fiscal 2010 second quarter. The reconciliation of adjusted EBITDA to net income, the most comparable financial measure based upon generally accepted accounting principles (GAAP), as well as a further explanation about adjusted EBITDA, is included in the financial tables at the end of this press release.  

Rentrak recorded a tax provision of $66,000 for the second quarter of fiscal 2011, versus $32,000 for the prior-year period. The change was due primarily to the tax impact of income generated in foreign locations.

The company generated $2.9 million in cash from operating activities for the second quarter of fiscal 2011 and $6.7 million for the six months ended September 30, 2010, compared with $2.1 million for the second quarter of fiscal 2010 and $4.7 million for the six months ended September 30, 2009.

Rentrak’s cash, cash equivalents and marketable securities balance rose to $27.1 million at September 30, 2010, from $19.9 million at March 31, 2010.  

Rentrak said that it recently accomplished several important milestones including:

• Bringing several new TV network clients to its TV Essentials® measurement product, including Olympusat, Smithsonian and Trinity Broadcasting, bringing total network clients to approximately 55.
• Growing StationView Essentials to include approximately 55 TV stations in roughly 30 TV markets, including the recent addition of eight new TV stations from station groups Barrington Broadcasting, New Vision Television and Nexstar Broadcasting. In June the company reported approximately 25 TV station customers in roughly 10 TV markets.
• Adding set-top-box viewing information data from Midcontinent, the leading provider of cable television in the upper Midwest, to Rentrak’s TV Essentials® national and local TV database services.
• Fully integrating DISH Network’s data into TV Essentials®, the company’s viewership measurement service, making Rentrak the only company to provide a comprehensive database look at television viewing habits in all 210 television markets throughout the U.S.
• Signing several new agreements for its OnDemand Essentials® video-on-demand measurement service, including Cinetic’s “FilmBuff” service, Gravitas Ventures and RightNetwork.

Long-Term Business Metrics

Rentrak anticipates that its Box Office business will grow in the 5 percent range annually, after taking into account the addition of the EDI business. The company’s video-on-demand business is expected to grow approximately 15 percent annually. Gross margins in Rentrak’s AMI business are projected to decline from the current 70 percent range to the 50 to 60 percent range over the long-term, due to the expected strong growth of the company’s TV Essentials business. The company’s Home Entertainment business should decline approximately 5 to 10 percent per year, with gross margins approximating 30 percent.

Conference Call

Rentrak will hold a conference call at 5:00 p.m. (ET) / 2:00 p.m. (PT) today to discuss its 2011 second quarter financial results. Shareowners, members of the media and other interested parties may participate in the call by dialing 877-941-0844 from the U.S. or Canada, or 480-629-9645 from international locations, passcode 4375425. This call is being webcast and can be accessed at Rentrak’s web site at www.rentrak.com where it will be archived through November 2, 2011. An audio replay of the conference call is available through midnight November 9, 2010 by dialing 800-406-7325 from the U.S. or Canada, or 303-590-3030 from international locations, passcode 4375425.

About Rentrak Corporation

Rentrak (NASDAQ: RENT) is a global digital media measurement and research company, serving the most recognizable companies in the entertainment industry. With a reach across numerous platforms including box office, multi-screen television, and home video, Rentrak has developed more efficient metrics to be used as alternative currencies for the evaluation and selling of media. Rentrak is headquartered in Portland, Oregon, with additional U.S. and international offices. For more information on Rentrak, please visit www.rentrak.com.

Safe Harbor Statement

When used in this discussion, the words “anticipate,” “expects,'' “intends,'' “projects” and similar expressions are intended to identify forward-looking statements. Such statements relate to, among other things, that Rentrak is the market leader in providing must-have media measurement services to the entertainment and advertising industries, and that the company will be successful in expanding its services to additional international markets and Rentrak’s anticipated gross margins in its business offerings and segments, and are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. Factors that could affect Rentrak's financial results include customer demand for movies in various media formats subject to company guarantees, the company’s ability to attract new revenue-sharing customers and retain existing customers, the company’s success in maintaining its relationships with studios and other product suppliers, the company’s ability to successfully develop and market new services to create new revenue streams, its ability to successfully integrate acquired businesses, and Rentrak’s customers continuing to comply with the terms of their agreements. Additional factors that could affect Rentrak's financial results are described in Rentrak's March 31, 2010 annual report on Form 10-K filed with the Securities and Exchange Commission. Results of operations in any past period should not be considered indicative of the results to be expected for future periods.

(Financial Tables Follow)

SOURCE Rentrak Corporation