Rentrak Reports Fiscal 2010 Third Quarter Financial Results
— AMI Division Revenues Grow 34 Percent; Represent 19% of Total Revenue —
— Landmark Agreements Set Strong Foundation for Future Growth —
PORTLAND, Ore., Feb 8, 2010 --
Rentrak Corporation (NASDAQ: RENT) Rentrak Corporation (NASDAQ: RENT), a leader in multi-screen media measurement serving the entertainment and advertising industries, today announced financial results for its fiscal third quarter ended December 31, 2009.Consolidated revenues totaled $23.1 million for the fiscal 2010 third quarter, compared with $23.0 million for the fiscal 2009 third quarter.
- Revenues in the company's Advanced Media Information (AMI) division grew 34 percent to $4.3 million from $3.2 million for the third quarter of fiscal 2009, primarily reflecting incremental revenues generated from the company's Essentials suite of multimedia measurement services. The AMI segment represented 19 percent of consolidated revenues, up from 14 percent for the third quarter of fiscal 2009.
- Revenues in the company's Pay-Per-Transaction® (PPT) division were $18.8 million, compared with $19.7 million for the third quarter of fiscal 2009.
“Rentrak has been successful in moving our revenue and profit mix toward our AMI division, which is now close to 20 percent of our total revenue,” said Bill Livek, Rentrak's Chief Executive Officer. “Our Essentials suite of multimedia measurement services is gaining significant traction in the marketplace as we demonstrate the clear value of our second-by-second measurement capabilities.”
Rentrak said that it recently accomplished several important milestones, including:
- Entering into an agreement with Dish Network Corporation to commercially expand its TV Essentials™ service. This agreement provides Rentrak with a national footprint from which to provide national networks, local stations, advertisers and advertising agencies with detailed second-by-second aggregated anonymous information about who is watching their programming and ads in all 210 TV markets;
- Joining forces with the Open Mobile Video Coalition (OMVC), an alliance of broadcasters that is comprised of 800 local commercial and public television stations, to study consumer usage habits of mobile television. Rentrak's Mobile Essentials™ service will be utilized in a trial to measure and perform a detailed analysis of consumer viewing trend patterns;
- Expanding its premier box office measurement business internationally with the acquisition of Nielsen EDI, a global leader in measurement, information and research solutions for the motion picture industry. The acquisition will provide increased value to Rentrak's studio partners, while providing Rentrak with the international infrastructure from which to expand the company's other measurement franchises.
“Six months ago we established our vision of becoming the leading provider of consumer entertainment behavior and segmentation databases across all digital media distribution platforms, including theatrical, home video, television, mobile and broadband,” said Livek. “Since that time, through a series of recent landmark agreements, we are on track to achieve our strategic objectives. We are the only company that can measure second-by-second television viewing in all 210 DMAs across the United States from 15 million TV sets and video on demand viewing from 70 million digital set-top devices; we are the only company that can provide our motion picture customers with the global digital box office currency they require; and we are the only company that can provide robust measurement of the emerging mobile content space.
“One of our primary objectives is to expand our business to drive earnings growth and enhance shareholder value,” Livek said. “With this in mind, we will make strategic investments to solidify our position and increase our value to the entertainment and advertising industries. Although these investments may impact our short-term results from time to time, we believe they are necessary to help our industry evolve by providing the most granular, robust viewership data available, anywhere and any way content is consumed.”
Rentrak said it recently concluded several additional important agreements, including:
- Entering into a TV Essentials agreement to provide BLOOMBERG TELEVISION® with detailed insights into viewer consumption;
- Successfully launching its StationView Essentials™ service with 11 local stations in five markets now using Rentrak's granular and robust television viewing information via its digital set-top device database reporting system;
- Entering into an agreement with in-airport retailer InMotion Entertainment, which will be ordering DVD content through Rentrak's popular revenue sharing program for rental in the retailer's store locations across the U.S.;
- Entering into a data integration contract with Electronic Entertainment Design and Research (EEDAR), a leading business intelligence and research firm offering expert insight into the video game industry. The integration of Rentrak's Video Game Ad Monitor data into EEDAR's GamePulse application will allow clients to further analyze methods of marketing video games to more effectively promote future titles.
Gross margin was $6.6 million for the third quarter of fiscal 2010, compared with $7.2 million for the same period last year. The reduction in gross margin principally resulted from increased costs associated with the company's AMI division, specifically $0.9 million in one-time expense related to data integration services. Gross margin in the company's AMI division was 68 percent of AMI revenues, before this item, for the third quarter of fiscal 2010.
Selling and administrative expenses for the fiscal 2010 third quarter were $7.8 million, or 34 percent of consolidated revenues, compared with $6.7 million, or 29 percent of revenues, in last year's third fiscal quarter. The change primarily reflects $0.4 million in one-time items related to the company's acquisition of Nielsen EDI, as well as ongoing investment in the company's multi screen business development and implementation activities, investments in new senior executives and sales talent, and the addition of sales offices in New York City.
Operating loss for the fiscal 2010 third quarter was $1.3 million, versus operating income of $475,000 in the fiscal 2009 third quarter. Operating loss in the fiscal 2010 period included $1.4 million in one-time items, including the fee for data integration services, costs associated with the EDI acquisition, and $0.1 million related to previously announced executive changes, as well as $0.7 million in non-cash stock compensation expense. Operating income for the fiscal 2010 third quarter before those items would have been $0.8 million, versus $0.7 million in the fiscal 2009 third quarter.
Net loss totaled $579,000, or $0.05 per share, for the third quarter of fiscal 2010, versus net income of $1.2 million, or $0.11 per diluted share, for the third quarter of fiscal 2009. Excluding the one-time costs described above, net income in the fiscal 2010 third quarter would have been $0.8 million, or $0.07 per diluted share, compared with $1.3 million, or $0.12 per diluted share, in the fiscal 2009 third quarter, which included $0.1 million in non-cash stock based compensation.
The company generated an adjusted EBITDA loss of $71,000 for the fiscal 2010 third quarter, compared with adjusted EBITDA of $1.1 million in the same quarter of the prior fiscal year. Excluding the one-time costs described above, adjusted EBITDA would have been $1.4 million, versus $1.1 million in the fiscal 2009 third 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 included with this press release.
Rentrak's cash, cash equivalents and marketable securities balance increased by $3.7 million to $38.2 million at December 31, 2009, compared with $34.5 million at March 31, 2009. The company's effective tax rate for the third quarter of fiscal 2010 was a benefit of 28 percent, compared with a benefit of 43.5 percent for the third quarter of fiscal 2009. The change in the tax rate was due primarily to the magnitude of the company's permanent book/tax differences, including earnings on marketable securities that are exempt from federal income taxes, current year federal and state tax credits generated, and income tax contingency reversals compared with earnings.
Conference Call
Rentrak will hold a conference call at 5:00 p.m. (ET) / 2:00 p.m. (PT) today to discuss the company's third quarter financial performance. Shareowners, members of the media and other interested parties may participate in the call by dialing 866-700-7173 from the U.S. or Canada, or 617-213-8838 from international locations, passcode 25157232. This call is being webcast and can be accessed at Rentrak's web site at www.rentrak.com where it will be archived through February 2, 2011. An audio replay of the conference call is available through midnight February 15, 2010 by dialing 888-286-8010 from the U.S. or Canada, or 617-801-6888 from international locations, passcode 81030418.
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About Rentrak Corporation
Rentrak Corporation (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, home entertainment, on-demand and linear television, broadband and mobile, Rentrak is headquartered in Portland, Oregon, with additional offices worldwide in Los Angeles, New York City, Miami/Ft. Lauderdale, Argentina, Australia, Canada, France, Germany, Mexico, Spain and the United Kingdom. For more information on any of Rentrak's services, please visit www.rentrak.com.
Safe Harbor Statement
When used in this discussion, the words “anticipates,” “expects,” “intends” and similar expressions are intended to identify forward-looking statements. Such statements relate to, among other things, the company's ability to successfully manage expenses and run its business as efficiently as possible; the ability to successfully grow revenues, effectively manage costs, steadily generate cash and maintain strong and flexible balance sheet; the ability for Rentrak to create new and valuable products and services that best serve the company's customers and industry; the company's ability to monetize and reach the full potential of its development activities; 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, 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, 2008 annual report on Form 10-K and subsequent quarterly reports 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.
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