Rentrak Reports Fiscal 2012 First Quarter Financial Results

-- Advanced Media Information Revenues Reach 40% of Total Revenues --

-- Significant Progress Made in Attracting Major TV Advertising Agencies --

Aug 04, 2011, 16:05 ET from Rentrak Corporation

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PORTLAND, Ore., Aug. 4, 2011 /PRNewswire/ -- Rentrak Corporation (NASDAQ: RENT), a leader in multi-screen media measurement serving the advertising, television and entertainment industries, today announced financial results for its fiscal first quarter ended June 30, 2011.

Fiscal 2012 First Quarter Financial Results

Consolidated revenues were $22.4 million for the first quarter of fiscal 2012, compared with $24.6 million for last year's first quarter, reflecting a decline in the company's Home Entertainment segment related to fewer customers and fewer rental units distributed for the six month period ended June 30, 2011 compared with the same period last year.

Revenues in the company's AMI division grew approximately 13 percent for the fiscal 2012 first quarter, increasing to 40 percent of Rentrak's consolidated revenues from 33 percent for the prior-year period. AMI recorded gross margin of 63 percent for the fiscal 2012 first quarter, compared with 72 percent a year ago.  The reduction in AMI gross margin related to higher fixed costs associated with obtaining data for the company's TV business.

Revenues in the company's Home Entertainment business declined approximately 19 percent from the year-ago period to $13.4 million.  

($ in millions)

1Q FY12

1Q FY11

Percent Change

AMI revenue

  TV Essentials™

  Box Office Essentials™

  OnDemand Essentials™

$9.1

$1.7

$5.0

$2.3

$8.0

$1.4

$4.4

$2.1

13%

21%

13%

9%

Home Entertainment revenue

$13.4

$16.6

-19%

"Our census-like media measurement services provide a critical tool for advertising, TV and entertainment industry participants, and I am proud that our Advanced Media group now accounts for 40% of our revenues, up from 12% about two years ago when I joined the company as your CEO," said Bill Livek, Rentrak's Chief Executive Officer.  "During the quarter, new television stations, networks and ad agencies clients began utilizing our measurement platform, while we successfully built a strong pipeline of new clients by demonstrating the significant benefits of working with Rentrak.  We are developing a strong syndicated and recurring revenue business which should provide increasing value to Rentrak's shareholders."

Gross margin for Rentrak was 46 percent of consolidated revenues for the fiscal 2012 first quarter, compared with 43 percent of consolidated revenues for the same period last year, due to a larger contribution of revenues from the company's AMI division, which generates higher margins.

Operating expenses for the fiscal 2012 first quarter amounted to $10.0 million, or 45 percent of consolidated revenues, compared with $10.7 million, or 44 percent of consolidated revenues, for the fiscal 2011 first quarter. The decrease in operating expenses primarily reflected lower compensation costs associated with a stock-based compensation agreement that fluctuates based on changes in the company's stock price, offset by costs associated with the expansion of Rentrak's AMI division.  

Operating income for the first quarter of 2012 was $246,000, which included $307,000 relating to acquisition and transition costs, offset by a net reduction in stock-based compensation costs of $734,000.  Operating loss for the first quarter of last year was $34,000, which included $412,000 in costs related to the acquisition of EDI and $1.7 million in stock-based compensation expense.

Net income was $399,000, or $0.03 per diluted share, for the first quarter of fiscal 2012, compared with $87,000, or $0.01 per diluted share, for the similar period last year.  Excluding the acquisition and stock-based compensation costs, net income for the fiscal 2012 first quarter would have been $113,000, or $0.01 per diluted share, compared with $1.3 million, or $0.12 per diluted share, for the first quarter of fiscal 2011.  The reconciliation of these non-GAAP earnings per share (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 fiscal 2012 first quarter was $571,000, compared with $2.5 million for the fiscal 2011 first quarter.  Excluding the acquisition costs already mentioned for both periods, adjusted EBITDA would have been $878,000 for the fiscal 2012 first quarter, compared with $2.9 million for the fiscal 2011 first quarter.  The reconciliation of adjusted EBITDA to net income, the most comparable financial measure based upon 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 benefit of $43,000 for the first quarter of fiscal 2012, compared with a tax benefit of $27,000 for the prior year period.  The change in tax was primarily due to the impact of research and experimentation credits.  

The company generated $213,000 in cash from operating activities for the first quarter of fiscal 2012, compared with $3.8 million for the first quarter of fiscal 2011.

During the quarter, Rentrak purchased 82,491 shares of its common stock at an average price of $17.36 per share under the company's $5.0 million share repurchase program authorized in May 2011.  The total purchase price was approximately $1.4 million.

Rentrak's cash, cash equivalents and marketable securities balance was $24.2 million at June 30, 2011, compared with $26.4 million at March 31, 2011, primarily reflecting the $1.4 million in stock repurchases and $1.7 million of investments in computer equipment and systems.

Rentrak announced several recent important developments including:

  • Strengthening its StationView Essentials™ product to include an expanded relationship with Gray Television for its ABC affiliate in Nevada, a new relationship with Morgan Media Group, a new relationship with Bonneville International Corporation's Salt Lake City NBC affiliate, a new PBS affiliate in Ohio and a new NBC affiliate serving Western Kentucky, Southern Illinois and Southeastern Missouri.  Rentrak now has 80 local TV station clients in 27 station groups in 45 local TV markets.
  • Growing its TV Essentials™ client base through the addition of several cable channels owned by NBC Universal Media.  Rentrak now has 36 TV network clients in 20 network groups.
  • Redesigning its industry-leading OnDemand Essentials™ service into a multi-screen measurement system to capture the rapid growth of on-demand content distribution across multiple delivery channels, including pay TV, the Internet and over-the-top and mobile platforms.
  • Adding to the group of advertising and media buying agencies that are utilizing the company's audience measurement services, including three Omnicom Media Group businesses (Annalect, OMD and PHD).Rentrak now has agreements with six of the top 13 media-buying ad agencies.
  • Entering into a new agreement for the integration of the company's audience measurement services into the system of software provider MediaBank for media planning, buying and posting.
  • Expanding its relationship with Relativity Media to include Rentrak's Digital Download Essentials service, which provides performance reporting for the studio's Internet Video-on-Demand (iVOD) and Electronic Sell-Through (EST) content.
  • Augmenting the company's Home Entertainment content offering with the addition of Anderson Merchandisers, one of the nation's largest distributors of pre-recorded music, movies, and books.
  • Entering into a contract with Capcom Entertainment, a leading developer and publisher of video games, for use of the company's Ad Monitor for Video Games.

Conference Call

Rentrak will hold a conference call at 5:00 p.m. (ET) /2:00 p.m. (PT) today to discuss its fiscal 2012 first 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, conference ID 4456433. An audio replay of the conference call will be available through midnight August 11, 2011 by dialing 800-406-7325 from the U.S. or Canada, or 303-590-3030 from international locations, passcode 4456433. This call is being webcast and can be accessed at Rentrak's Web site at www.rentrak.com, where it will be archived through August 3, 2012.  

About Rentrak Corporation

Rentrak Corporation 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 the database currency 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

The foregoing paragraphs contain forward-looking statements within the meaning of the federal securities laws, including, without limitation, execution of the company's business plan, growth in its client base and in the movie segment and the growing importance of its database, or census-like, measurement services.  These forward-looking statements are based on Rentrak's current expectations, estimates and projections about its business and industry, management's beliefs, and certain assumptions, all of which are subject to change.  Forward-looking statements are not guarantees of future performance and Rentrak's actual results may differ significantly as a result of a number of factors, including 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 reports on Form 10-K, 10-Q and other filings 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.

RENTF

(Financial Tables Follow)

CONTACT: Investors PondelWilkinson Inc. Laurie Berman 310-279-5962 lberman@pondel.com

Rentrak Corporation and Subsidiaries

Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)

For the Three Months Ended June 30,

2011

2010

Revenue

$

22,408

$

24,561

Cost of sales

12,148

13,904

Gross margin

10,260

10,657

Operating expenses:

   Selling and administrative

9,962

10,574

   Provision for doubtful accounts

52

117

10,014

10,691

Income (loss) from operations

246

(34)

Other income:

   Interest income, net

110

94

110

94

Income before income taxes

356

60

Benefit for income taxes

(43)

(27)

Net income

$

399

$

87

Basic net income per share

$

0.04

$

0.01

Diluted net income per share

$

0.03

$

0.01

Shares used in per share calculations:

Basic

11,311

10,725

Diluted

11,503

11,226

Rentrak Corporation and Subsidiaries

Consolidated Balance Sheets

(In thousands, except per share amounts)

(Unaudited)

June 30,

March 31,

2011

2011

Assets

Current Assets:

   Cash and cash equivalents

$

1,551

$

3,821

   Marketable securities

22,670

22,556

   Accounts and notes receivable, net of allowances for

      doubtful accounts of $627 and $645

14,360

16,713

   Taxes receivable and prepaid taxes

1,815

1,726

   Deferred tax assets

107

152

   Other current assets

959

1,091

       Total Current Assets

41,462

46,059

Property and equipment, net of accumulated

 depreciation of $14,440 and $13,750

9,795

8,834

Deferred tax assets

1,270

1,242

Goodwill

5,275

5,222

Other intangible assets, net of accumulated

 amortization of $977 and $724

13,921

14,122

Other assets

706

696

       Total Assets

$

72,429

$

76,175

Liabilities and Stockholders' Equity

Current Liabilities:

   Accounts payable

$

4,797

$

7,223

   Accrued liabilities

2,840

3,022

   Accrued compensation

4,017

6,144

   Deferred revenue

1,513

1,210

       Total Current Liabilities

13,167

17,599

Deferred rent, long-term portion

940

942

Taxes payable, long-term

1,244

1,261

Long-term debt

506

-

       Total Liabilities

15,857

19,802

Commitments and Contingencies

-

-

Stockholders' Equity:

   Preferred stock, $0.001 par value; 10,000

     shares authorized; none issued

-

-

   Common stock, $0.001 par value; 30,000

     shares authorized; shares issued and outstanding:  

    11,222 and 11,243

11

11

   Capital in excess of par value

53,998

54,358

   Accumulated other comprehensive income

690

530

   Retained earnings

1,873

1,474

      Total Stockholders' Equity

56,572

56,373

      Total Liabilities and Stockholders' Equity

$

72,429

$

76,175

Rentrak Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

For the Three Months Ended June 30,  

2011

2010

Cash flows from operating activities:

  Net income

$

399

$

87

  Adjustments to reconcile net income to net cash flows

        provided by operating activities:

        Tax benefit from stock-based compensation

-

785

        Depreciation and amortization

1,059

756

        Stock-based compensation

(734)

1,744

        Excess tax benefits from stock-based compensation

-

(654)

        Deferred income taxes

(18)

(31)

        Realized gain on marketable securities

(7)

(2)

        Adjustment to allowance for doubtful accounts

(18)

(45)

        (Increase) decrease in:

           Accounts and notes receivable

2,371

2,708

           Taxes receivable and prepaid taxes

(89)

(470)

           Other assets

22

304

        Increase (decrease) in:

           Accounts payable

(2,436)

(117)

           Taxes payable

(17)

(17)

           Accrued liabilities and compensation

(639)

(1,124)

           Deferred revenue

302

(98)

           Deferred rent

18

(16)

              Net cash provided by operating activities

213

3,810

Cash flows from investing activities:

  Purchase of marketable securities

(3,000)

(6,583)

  Sale or maturity of marketable securities

3,000

1,800

  Purchase of property and equipment

(1,677)

(1,074)

              Net cash used in investing activities

(1,677)

(5,857)

Cash flows from financing activities:

  Proceeds from notes payable

500

-

  Issuance of common stock

10

1,030

  Excess tax benefits from stock-based compensation

-

654

  Repurchase of common stock

(1,432)

-

              Net cash provided by (used in) financing activities

(922)

1,684

Effect of foreign exchange translation on cash

116

(449)

Decrease in cash and cash equivalents

(2,270)

(812)

Cash and cash equivalents:

  Beginning of period

3,821

2,435

  End of period

$

1,551

$

1,623

Supplemental information:

Capitalized stock-based compensation

$

91

$

165

Rentrak Corporation and Subsidiaries

Information by Segment

(Unaudited)

(In thousands)

For the Three Months

Ended June 30,  

2011

2010

HOME

Sales to external customers

$     13,351

$    16,573

ENTERTAINMENT

Gross margin

$       4,532

$      4,924

AMI

Sales to external customers

$       9,057

$      7,988

Gross margin

$       5,728

$      5,733

Total

Sales to external customers

$     22,408

$    24,561

Gross margin

$     10,260

$    10,657

Rentrak Corporation and Subsidiaries

Reconciliation of GAAP and Non-GAAP Financial Measures

Adjusted EBITDA

(Unaudited)

(In thousands)

For the Three Months

Ended June 30,

2011

2010

Net Income

$     399

$         87

Adjustments:

Benefit for income taxes

(43)

(27)

Interest income, net

(110)

(94)

Depreciation and amortization

1,059

756

Stock-based compensation

(734)

1,744

Adjusted EBITDA

$     571

$    2,466

About Adjusted EBITDA

From time to time, we may refer to Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, Amortization and Stock-based Compensation) in our conference calls and discussions with analysts in connection with our reported historical financial results.  Adjusted EBITDA does not represent cash flows from operations as defined by generally accepted accounting principles ("GAAP"), is not derived in accordance with GAAP and should not be considered by the reader as an alternative to net income (the most comparable GAAP financial measure to Adjusted EBITDA).  The reconciliation of GAAP and Non-GAAP financial measures for the three month periods ended June 30, 2011 and 2010, is included in the above table.  Management of the Company believes that Adjusted EBITDA is helpful as an indicator of the current financial performance of the Company and its capacity to operationally fund capital expenditures and working capital requirements.  Due to the nature of the Company's internally-developed software policies and the Company's use of stock-based compensation, the Company incurs significant non-cash charges for depreciation, amortization and stock-based compensation expense that may not be indicative of its operating performance from a cash perspective. Therefore, the Company believes that using the measure of Adjusted EBITDA will help provide a better understanding of the Company's underlying financial performance and ability to generate cash flows from operations.  

Rentrak Corporation and Subsidiaries

Reconciliation of GAAP and Non-GAAP Financial Measures

Non-GAAP Diluted EPS

(Unaudited)

For the Three Months

Ended June 30,

2011

2010

Diluted EPS, as reported

$ 0.03

Diluted EPS, as reported

$ 0.01

Acquisitions

0.02

Acquisitions

0.02

Stock-based compensation

(0.04)

Stock-based compensation

0.09

Total acquisition costs and stock-based compensation

(0.02)

Total acquisition costs and stock-based compensation

0.11

Diluted EPS, non-GAAP

$ 0.01

Diluted EPS, non-GAAP

$ 0.12

From time to time, Management may refer to "non-GAAP diluted EPS" in our conference calls and discussions with analysts in connection with the Company's reported historical financial results.  This financial measure does not represent diluted EPS as defined by generally accepted accounting principles ("GAAP"), is not derived in accordance with GAAP and should not be considered by the reader as an alternative to reported diluted EPS.  The reconciliation of GAAP and Non-GAAP financial measures for the three month period ended June 30, 2011 and 2010, is included in the above table.  Management of the Company believes that acquisition costs and stock-based compensation should be factored out of reported EPS in order to provide a more useful indicator of the current financial performance of the Company.  Due to the nature of the Company's equity and stock-based compensation plans and costs associated with acquisitions, the Company's diluted EPS, which includes these items, may not be indicative of its on-going operating performance. Therefore, the Company believes that using the measure of "non-GAAP diluted EPS" may help provide a better understanding of the Company's underlying financial performance.

SOURCE Rentrak Corporation



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