Rentrak Reports Fiscal 2015 Second Quarter Financial Results

PORTLAND, Ore., Nov. 6, 2014 /PRNewswire/ -- Rentrak Corporation (Nasdaq: RENT), the leader in precisely measuring movies and TV everywhere, today announced financial results for its second fiscal quarter ended September 30, 2014.

Revenue for Rentrak's TV Everywhere^™ business increased 85 percent for the second quarter of fiscal 2015 to $13.3 million, up from $7.2 million for the same period last year.  Total company revenue⁽¹⁾ increased 41 percent to $25.2 million for the second quarter of fiscal 2015, up from $17.8 million for the same period last year.

"Our second quarter was solid, with accelerating quarterly total revenue growth, 85 percent gains in our TV business and 16 percent gains in our movie business," said Bill Livek, Rentrak's Vice Chairman and CEO.  "We have generated strong momentum over the last few months, including the acquisition of WPP's Kantar's U.S.-based television measurement assets, the addition of GroupM as a client and partner and the expansion of our relationship with Fox to include several of their broadcast networks.  We look forward to the future with optimism as we continue to develop innovative products that provide increasing value to the entertainment and advertising industries."

Gross margin improved to 68 percent of revenue for the second quarter of fiscal 2015, up from 62 percent for the same period last year.  The increase was primarily due to the growth in revenue, since the costs associated with the company's data supplier agreements are largely fixed.

Operating expenses for the second quarter of fiscal 2015 totaled $17.6 million, versus $13.5 million for the second quarter of fiscal 2014.  The increase primarily related to increases in headcount and stock-based compensation expenses.

Operating loss for the second quarter of fiscal 2015 was reduced to $416,000, which included $2.1 million in stock-based compensation costs, $600,000 in costs related to the contingent consideration associated with the company's acquisition of iTVX in August 2013 and $270,000 in acquisition costs.  Operating loss for the second quarter of fiscal 2014 was $2.4 million, which included $1.2 million in stock-based compensation costs, $800,000 in costs related to the contingent consideration associated with the acquisition of iTVX and $106,000 in acquisition costs.  Excluding these amounts for both periods, operating income would have improved significantly to $2.5 million for the second quarter of fiscal 2015, compared with a loss of $293,000 for the second quarter of fiscal 2014.

Loss from continuing operations, net of income taxes, totaled $733,000, or $0.06 per share, for the second quarter of fiscal 2015, versus a loss of $1.5 million, or $0.12 per share, for the same period last year.  Excluding the costs mentioned above for both periods, as well as the net loss attributable to noncontrolling interest, income from continuing operations, net of income taxes, for the second quarter of fiscal 2015 would have been $2.3 million, or $0.17 per diluted share, compared with $386,000, or $0.03 per diluted share, for the same period last year.

Net loss, including discontinued operations, was $374,000, or $0.03 per share, for the second quarter of fiscal 2015, compared with a loss of $634,000, or $0.05 per share, for the second quarter of fiscal 2014.  Excluding the costs mentioned above for both periods, net income would have been $2.6 million, or $0.19 per diluted share, compared with net income of $1.2 million, or $0.10 per diluted share, for the same period last year. 

Adjusted EBITDA (a non-GAAP measure) grew to $4.3 million for the second quarter of fiscal 2015, from $1.2 million for the same period last year.  The reconciliation of adjusted EBITDA to net income, the most comparable financial measure based upon GAAP, as well as a further explanation of adjusted EBITDA, is included in the financial tables at the end of this press release.

Rentrak generated $6.7 million in cash from operating activities, including discontinued operations, for the second quarter of fiscal 2015, compared with $2.9 million for the second quarter of fiscal 2014.  The company generated $6.1 million in cash from operating activities, including discontinued operations, for the first half of fiscal 2015, compared with $6.2 million for the first half of fiscal 2014.

Rentrak's cash, cash equivalents and marketable securities balance increased to $23.3 million at September 30, 2014, up from $22.0 million at March 31, 2014.

Rentrak's recent milestones include:

• Agreeing to acquire the assets of the U.S. television measurement business of WPP's Kantar business unit.
• Entering into an agreement with WPP's GroupM to provide Rentrak's national and local TV measurement services to GroupM's U.S. media agencies.
• Expanding its agreement with Fox Networks Group to include TV ratings measurement and single source consumer data reporting for FOX Broadcasting, FX Networks and The National Geographic Channel.
• Working with Zenith Media to provide Rentrak's massive and passive TV currency for local television buying.
• Being awarded a patent for the identification of when TV sets are off but the set-top-box is on, which is crucial to the measurement of viewing based on return-path TVs.

Long-Term Outlook
Rentrak said that it remains confident in its ability to continue generating substantial growth in revenue, including:

• 80 percent annual growth in its TV Everywhere^™ business through fiscal 2016.
• 15 percent annual growth in its Movies Everywhere^™ business for the foreseeable future, up from a prior forecast of 12 percent.
• 20 percent annual growth in its OnDemand Everywhere^® business for the foreseeable future.
• 5 percent annual decline in its Other services that measure physical DVDs.

Conference Call
Rentrak will hold a conference call at 5:00 p.m. ET/2:00 p.m. PT today to discuss its fiscal 2015 second quarter financial results.  Shareholders, members of the media and other interested parties may participate in the call by dialing 866-652-5200 from the U.S. or Canada, or 412-317-6060 from international locations, conference ID 10054494.  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 6, 2015.  An audio replay of the conference call will be available until November 14, 2014 by dialing 877-344-7529 from the U.S. or Canada, or 412-317-0088 from international locations, passcode 10054494.

About Rentrak Corporation
Rentrak (RENT) is the entertainment and marketing industries' premier provider of worldwide consumer viewership information, precisely measuring actual viewing behavior of movies and TV everywhere.  Using its proprietary intelligence and technology, combined with advanced demographics, only Rentrak is the census currency for VOD and Movies.  Rentrak provides the stable and robust audience measurement services that movie, television and advertising professionals across the globe have come to rely on to better deliver their business goals and more precisely target advertising across numerous platforms including box office, multiscreen television and home video.  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.  Forward-looking statements may be identified by the use of forward-looking words such as "should," "plan," "believe," "expects," "anticipate," or "continues" or the negative thereof or variations thereon or comparable terminology.  Forward-looking statements in this release include, without limitation, Rentrak's ability to continue generating substantial growth in its TV Everywhere^™ business and expected rates of growth for Rentrak's Movies Everywhere^™ and OnDemand Everywhere^® businesses, expected rate of decrease in its service that measures physical DVDs, expected completion of the acquisition of the assets of the U.S. television measurement business of WPP's Kantar business unit, and expected divestiture of the PPT^® business.  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  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 products 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

⁽¹⁾ Rentrak's Pay Per Transaction^® (PPT^®) business is now reflected in its entirety as discontinued operations as a result of the company's plan to divest this business. All periods presented have been revised to reflect this presentation. Unless otherwise noted, all discussions in this press release relate to continuing operations.

CONTACT:
Investors
PondelWilkinson Inc.
Laurie Berman
310-279-5962
[email protected]

(Financial Tables Follow)

About Non-GAAP net income, Adjusted EBITDA and Non-GAAP Diluted EPS
From time to time, Rentrak may refer to Non-GAAP net income, Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, Amortization and Stock-based Compensation) and "non-GAAP diluted EPS" in its conference calls and discussions with investors and analysts in connection with the company's reported historical financial results.  Adjusted EBITDA does not represent cash flows from operations as defined by U.S. 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).  Non-GAAP diluted EPS does not measure diluted EPS as defined by GAAP, is not derived in accordance with GAAP and should not be considered by the reader as an alternative to reported diluted EPS.  Non-GAAP Diluted EPS uses non-GAAP net income in lieu of GAAP income in calculating EPS.  The reconciliation of GAAP and non-GAAP financial measures for the three and six month periods ended September 30, 2014 and 2013 are included in the above table.  Rentrak's management believes that Non-GAAP Diluted EPS and Adjusted EBITDA are helpful as indicators 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 its use of stock-based compensation, Rentrak 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.  Rentrak also adjusts for acquisition and non-recurring costs as Rentrak's management believes this provides a useful metric by which to compare the performance from period to period.  In addition, Rentrak's management believes that these costs as well as 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.  No tax rate was applied to these adjustments because the company has established a valuation reserve against its deferred tax assets.  Due to the nature of the company's equity and stock-based compensation plans and arrangements, costs associated with acquisitions and items which are considered nonrecurring in nature, the company's diluted EPS, which includes these items, may not be indicative of its on-going operating performance. 

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