Rentrak Announces 27 Percent Revenue Growth For Fiscal 2014 Third Quarter

By PR Newswire,  February 06, 2014, 04:05:00 PM EDT


-- TV Business Revenue Increases 84 Percent; AMI Operating Income More than Doubles; Company Generates $5.0 Million in Cash Flow from Operations for Three-Month Period --

PORTLAND, Ore., Feb. 6, 2014 /PRNewswire/ -- Rentrak Corporation (Nasdaq:RENT), the leader in precisely measuring movies and TV everywhere, today announced substantially improved financial results for its third fiscal quarter ended December 31, 2013. 

Consolidated revenue increased 27 percent to $31.6 million for the third quarter of fiscal 2014, up from $24.9 million for the same period last year, reflecting 35 percent growth in Rentrak'sAdvanced Media and Information (AMI) business, and 17 percent growth in the company's Home Entertainment business.

Revenue in the company's AMI division increased to $18.5 million for the fiscal 2014 third quarter, up from $13.7 million for the same period last year, and represented 59 percent of Rentrak's consolidated revenue, versus 55 percent last year.  Revenue in the company's Home Entertainment business rose to $13.1 million, up from $11.2 million a year ago. 

"Rentrak had a fantastic quarter, as the team worked together to sign a significant number of new clients and expand several long-standing client relationships.  We are focused on continuing on our current growth path by expanding our suite of census-based products and analytic services that precisely measure movies and TV everywhere," said Bill Livek, Vice Chairman and Chief Executive Officer of Rentrak.  "Rentrak continues to expect substantial growth in revenues, which should create additional leverage in our operating model and drive improved earnings.  We are committed to delivering strong revenue growth and expanding profits for Rentrak's shareholders."

(revenue in millions)

3Q FY14

3Q FY13

Percent Change

TV Essentials®

$8.4

$4.6

84 %

Box Office Essentials®

$6.7

$6.1

11 %

OnDemand Everywhere™

$3.4

$3.1

10 %

Total AMI

$18.5

$13.7

35 %









Total Home Entertainment

$13.1

$11.2

17 %









Consolidated Revenue

$31.6

$24.9

27 %



Numbers may not sum due to rounding.

Gross margin rose to 48 percent of consolidated revenue for the third quarter of fiscal 2014, compared with 44 percent for the same period last year.  Gross margin for the company's AMI business increased to 63 percent for the third quarter of fiscal 2014, compared with 60 percent a year ago.  Gross margin for Rentrak'sHome Entertainment business was 26 percent for the third quarters of fiscal 2014 and fiscal 2013.

Operating expenses for the fiscal 2014 third quarter totaled $15.8 million, compared with $12.9 million for the fiscal 2013 third quarter.  The increase mainly reflected increased costs related to the expansion of the company's AMI division, most of which was related to growth in Rentrak's TV Essentials® service, as well as costs associated with the company's acquisition of iTVX and increased headcount in its information technology department. 

The operating loss for the third quarter of fiscal 2014 was reduced to $695,000, which included $1.8 million in stock-based compensation costs and $24,000 in acquisition-related costs.  The $1.8 million in stock-based compensation was comprised of $1.5 million of routine stock-based compensation costs, as well as $300,000 in costs related to the revaluation of the estimated earn out related to the company's acquisition of iTVX.  For last year's third fiscal quarter, the operating loss totaled $1.8 million, which included $1.5 million of stock-based compensation costs.  Excluding these amounts for both periods, operating income would have improved to $1.2 million for the fiscal 2014 third quarter, up from an operating loss of $241,000 for the fiscal 2013 third quarter.

The net loss was reduced to $343,000, or $0.03 per share, for the third quarter of fiscal 2014, from a net loss of $1.8 million, or $0.15 per share, for the same period last year.  Excluding the costs already mentioned for both periods, net income for the fiscal 2014 third quarter would have increased to $1.5 million, or $0.12 per diluted share, compared with a net loss of $286,000, or $0.02 per share, for the third quarter of fiscal 2013.  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 (a non-GAAP measure) grew to $2.7 million for the third quarter of fiscal 2014, up from $1.0 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 about adjusted EBITDA, is included in the financial tables at the end of this press release.

The company generated nearly $5.0 million in cash from operating activities for the third quarter of fiscal 2014, compared with $3.0 million for the third quarter of fiscal 2013.  Rentrak generated $11.0 million in cash from operating activities for the first nine months of fiscal 2014, compared with $1.1 million for the comparable fiscal 2013 period. 

Rentrak's cash, cash equivalents and marketable securities balance grew to $26.9 million at December 31, 2013, up from $20.4 million at March 31, 2013.

Rentrak recently achieved several important milestones including:

  • Signing national TV Essentials® contracts with CBS and CBS Sports Network, marking the first time a major broadcast network has subscribed to Rentrak's advanced demographics ratings service, bringing Rentrak's total number of network clients to approximately 75.
  • Signing seven CBS-owned television stations in four major markets and renewing and expanding several long-standing local station group relationships. Rentrak has added 55 local TV station clients over the last three months for a total of more than 290.
  • Signing first MVPD (multichannel video programming distributor) partner to provide cross platform, census-like viewing data including TV, VOD, online and mobile.
  • Launching the company's Total Television service to provide clients with the ability to better understand and monetize cross-platform viewing.
  • Continuing to grow the company's client base through the addition of top local and national advertising agencies. Rentrak has added more than 70 local advertising agency clients fiscal year-to-date, including more than 20 in the month of December.

Long-Term Outlook

Rentrak said that it remains confident in its ability to continue generating substantial growth in revenue including:

  • 80 percent annual revenue growth in its TV business for the next several years, with business line break-even operating income expected in the fourth quarter of fiscal 2014.
  • 12 percent annual revenue growth in the company's Box Office business for the foreseeable future.
  • 20 percent annual revenue growth in its OnDemand Everywhere™ business for the foreseeable future.
  • Seven to 10 percent revenue growth in Home Entertainment revenue for fiscal 2014. The company is exploring strategic alternatives for its Home Entertainment business.

Conference Call

Rentrak will hold a conference call at 5:00 p.m. ET/2:00 p.m. PT today to discuss its 2014 third quarter financial results.  Shareholders, members of the media and other interested parties may participate in the call by dialing 877-941-9205 from the U.S. or Canada, or 480-629-9771 from international locations, conference ID 4661730.  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 6, 2015.  An audio replay of the conference call will be available through midnight February 13, 2014 by dialing 800-406-7325 from the U.S. or Canada, or 303-590-3030 from international locations, passcode 4661730.

About Rentrak Corporation

Rentrak (Nasdaq: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 our 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, including, without limitation, expected rates of revenue increase in Rentrak'sHome Entertainment business for fiscal 2014, Rentrak's ability to continue generating substantial growth in AMI revenue, and expected break-even operating income for the TV business line in the fourth quarter of fiscal 2014.  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, the company's 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

(Logo: http://photos.prnewswire.com/prnh/20130114/LA42144LOGO)

CONTACT:

Investors

PondelWilkinson Inc.

Laurie Berman

310-279-5962

lberman@pondel.com

(Financial Tables Follow)

 

 



Rentrak Corporation and Subsidiaries

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)















For the Three Months Ended



For the Nine Months Ended





December 31,



December 31,





2013



2012



2013



2012

Revenue



$

31,609



$

24,948



$

89,926



$

70,662

Cost of sales



16,458



13,847





48,013



37,343

Gross margin



15,151



11,101





41,913



33,319

Operating expenses:



















Selling and administrative



15,846



12,870





44,683



54,150

Loss from operations



(695)



(1,769)





(2,770)



(20,831)

Other income:



















Interest income, net



53



41





144



390

Loss before income taxes



(642)



(1,728)





(2,626)



(20,441)

Provision (benefit) for income taxes



(276)



117





(406)



179

Net loss



(366)



(1,845)





(2,220)



(20,620)

Net loss attributable to noncontrolling interest



(23)



(31)





(52)



(31)

Net loss attributable to Rentrak Corporation



$

(343)



$

(1,814)



$

(2,168)



$

(20,589)

Net loss per share attributable to Rentrak Corporation common stockholders:

















Basic



$

(0.03)



$

(0.15)



$

(0.18)



$

(1.77)

Diluted



$

(0.03)



$

(0.15)



$

(0.18)



$

(1.77)

Shares used in per share calculations:

















Basic



12,181



11,996





12,116



11,634

Diluted



12,181



11,996





12,116



11,634

 











Rentrak Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

(In thousands, except per share amounts)

(Unaudited)











Assets



December 31,

2013



March 31,

2013

Current Assets:









Cash and cash equivalents



$

5,225



$

3,835

Marketable securities



21,651



16,588

Accounts and notes receivable, net of allowances for doubtful accounts of  $414 and $866



15,460



16,682

Taxes receivable and prepaid taxes



237



Other current assets



2,539



2,188

Total Current Assets



45,112



39,293

Property and equipment, net of accumulated depreciation of $23,620 and $19,925



16,757



14,262

Goodwill



7,024



4,998

Other intangible assets, net of accumulated amortization of $3,177 and $2,343



12,941



12,396

Other assets



716



830

Total Assets



$

82,550



$

71,779

Liabilities and Stockholders' Equity









Current Liabilities:









Accounts payable



$

6,355



$

5,856

Accrued liabilities



403



910

Accrued data provider liabilities



8,025



3,459

Accrued compensation



9,045



5,862

Deferred tax liabilities



46



36

Deferred revenue and other credits



1,940



2,610

Total Current Liabilities



25,814



18,733

Deferred rent, long-term portion



2,450



2,238

Taxes payable, long-term



517



713

Deferred tax liability, long-term



799



574

Note payable and accrued interest





550

Total Liabilities



29,580



22,808

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: 12,048 and 11,892



12



12

Capital in excess of par value



81,427



75,508

Accumulated other comprehensive income



331



31

Accumulated deficit



(29,737)



(27,569)

Stockholders' Equity attributable to Rentrak Corporation



52,033



47,982

Noncontrolling interest



937



989

Total Stockholders' Equity



52,970



48,971

Total Liabilities and Stockholders' Equity



$

82,550



$

71,779









Rentrak Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(In thousands)

(unaudited)





For the Nine Months Ended December 31,



2013



2012

Cash flows from operating activities:







Net loss

$

(2,220)



$

(20,620)

Adjustments to reconcile net loss to net cash flows provided by operating activities:







Depreciation and amortization

4,449



3,607

Stock-based compensation

5,376



17,781

Deferred income taxes

(62)



(3)

Gain on disposition of assets



(26)

Realized (gain) loss on marketable securities

2



(196)

Interest on note payable



19

Adjustment to allowance for doubtful accounts

(452)



63

(Increase) decrease, net of effect of acquisition, in:







      Accounts and notes receivable

1,222



1,906

      Taxes receivable and prepaid taxes

(237)



      Other assets

(809)



(291)

Increase (decrease), net of effect of acquisition, in:







      Accounts payable

329



1,185

      Taxes payable

(196)



(78)

      Accrued liabilities and compensation

4,142



(1,918)

      Deferred revenue

(761)



(178)

      Deferred rent

254



(148)

            Net cash provided by operating activities

11,037



1,103

Cash flows from investing activities:







Purchase of marketable securities

(6,137)



(22,987)

Sale of marketable securities

1,000



23,793

Proceeds from the sale of assets



47

Payments made to develop intangible assets

(104)



(113)

Purchase of property and equipment

(5,757)



(4,304)

Cash paid for acquisition, net of cash acquired, and equity investment

(372)



            Net cash used in investing activities

(11,370)



(3,564)

Cash flows from financing activities:







Contributions from noncontrolling interest



1,020

Issuance of common stock

1,479



551

            Net cash provided by financing activities

1,479



1,571

Effect of foreign exchange translation on cash

244



49

Increase (decrease) in cash and cash equivalents

1,390



(841)

Cash and cash equivalents:







Beginning of period

3,835



5,526

End of period

$

5,225



$

4,685

Supplemental non-cash information:







Capitalized stock-based compensation

$

870



$

348

Common stock used to pay for option exercises

199



Common stock used to pay for taxes associated with vested restricted stock units

1,046



Decrease in leasehold improvements related to forgiven loan

550



Common stock used to pay for acquisition

375



 

Rentrak Corporation and Subsidiaries

Information by Segment

(In thousands)

(Unaudited)







For the Three Months Ended December 31,



For the Nine Months Ended December 31,





2013



2012



2013



2012

AMI

















Sales to external customers



$

18,510



$

13,712



$

51,229



$

39,553

Gross margin



$

11,690



$

8,210



$

31,291



$

24,291

Income (loss) from operations



$

2,841



$

1,194



$

6,210



$

(12,555)



















HOME ENTERTAINMENT

















Sales to external customers



$

13,099



$

11,236



$

38,697



$

31,109

Gross margin



$

3,461



$

2,891



$

10,622



$

9,028

Income from operations



$

2,124



$

1,523



$

6,557



$

5,016



















TOTAL OPERATING SEGMENTS

















Sales to external customers



$

31,609



$

24,948



$

89,926



$

70,662

Gross margin



$

15,151



$

11,101



$

41,913



$

33,319

Income (loss) from operations



$

4,965



$

2,717



$

12,767



$

(7,539)





Note:     The segment operating income figures do not include corporate and other expenses which are not allocated to a specific segment.

 





Rentrak Corporation

Reconciliation of GAAP and Non-GAAP Financial Measures

Adjusted EBITDA & Non-GAAP Diluted EPS

(In thousands, except per share amounts)

(Unaudited)







For the Three Months Ended December 31,



For the Nine Months Ended December 31,





2013



2012



2013



2012

Net loss attributable to Rentrak Corporation



$

(343)



$

(1,814)



$

(2,168)



$

(20,589)

Adjustments:

















Provision (benefit) for income taxes



(276)



117



(406)



179

Interest income, net



(53)



(41)



(144)



(390)

Depreciation and amortization



1,543



1,258



4,449



3,607

Stock-based compensation (1)



1,542



1,528



4,276



4,544

Adjusted EBITDA



$

2,413



$

1,048



$

6,007



$

(12,649)

DISH & iTVX stock-based compensation



300





1,100



15,864

Acquisition costs



24





214



193

Reorganization costs









212

Adjusted EBITDA before DISH stock-based compensation, acquisition and reorganization costs



$

2,737



$

1,048



$

7,321



$

3,620



(1)  Excludes DISH & iTVX stock-based compensation









For the Three Months Ended December 31,



For the Nine Months Ended December 31,





2013



2012



2013



2012

Diluted EPS, as reported



$

(0.03)



$

(0.15)



$

(0.18)



$

(1.77)

DISH & iTVX stock-based compensation



0.02





0.09



1.36

Other items:

















Acquisition costs







0.02



0.02

Reorganization costs









0.02

Reduction in valuation allowance on deferred tax assets







(0.03)



Stock-based compensation(1)



0.13



0.13



0.35



0.39

Total other items



0.13



0.13



0.34



0.43

Diluted EPS, non-GAAP



$

0.12



$

(0.02)



$

0.25



$

0.02



(1)  Excludes DISH & iTVX stock-based compensation

 

About Adjusted EBITDA and Non-GAAP Diluted EPS

From time to time, Rentrak may refer to 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 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.  The reconciliation of GAAP and non-GAAP financial measures for the three and nine month periods ended December 31, 2013 and 2012 are included in the above table.  Rentrak's management 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 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. 

SOURCE Rentrak Corporation



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