Rentrak Reports Fiscal 2010 Fourth Quarter and Full Year Financial Results
PORTLAND, Ore., June 14 /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 fourth quarter and full year ended March 31, 2010.
Consolidated revenues increased more than 12 percent to $25.0 million for the fiscal 2010 fourth quarter, versus $22.3 million for the fiscal 2009 fourth quarter, driven primarily by strong growth in the company’s Advanced Media Information (AMI) division.
- Revenues in the company’s AMI division more than doubled to $6.9 million, from $3.3 million for the fourth quarter of fiscal 2009, reflecting a partial-quarter contribution from the acquisition of Nielsen EDI, as well as incremental revenues generated from the company’s Essentials suite of multimedia measurement services. The AMI segment represented nearly 28 percent of consolidated revenues, up from 15 percent for the prior-year period.
- Revenues in the company’s Pay-Per-Transaction® (PPT) division were $18.1 million, compared with $19.0 million for the fourth quarter of fiscal 2009.
“Our AMI division grew exceptionally well this quarter and represents almost 28 percent of our total revenue and is now roughly half of our gross margin dollars,” said Bill Livek, Rentrak’s Chief Executive Officer. “With many new customers now utilizing our suite of multimedia measurement services, we are cementing our marketplace position by successfully establishing new metrics and a new database currency to help our customers increase their revenue and profits.”
Gross margin improved to $10.4 million, or 41 percent of consolidated revenues, for the fourth quarter of fiscal 2010, compared with $8.7 million, or 39 percent of consolidated revenues, for the same period last year, related primarily to changes in the company’s business mix. Gross margin in the company’s AMI division totaled 73 percent of AMI revenues.
Operating expenses for the fiscal 2010 fourth quarter were $10.6 million, or 42 percent of consolidated revenues, compared with $6.8 million, or 31 percent of consolidated revenues, for last year’s fiscal fourth quarter. The change primarily reflects approximately $2.0 million in one-time items, including $1.3 million related to the company’s acquisition of Nielsen EDI, $0.5 million related to a previously disclosed management transition and a $0.1 million asset impairment related to a former non-core business line. Additionally, Rentrak continued its ongoing investment in the company’s Multi-Screen business development and implementation activities during the quarter.
Operating loss for the fiscal 2010 fourth quarter was $0.2 million, versus operating income of $1.8 million in the fiscal 2009 fourth quarter. Operating loss in the fiscal 2010 period included the one-time items already mentioned, as well as $0.9 million in non-cash stock compensation expense. Operating income for the fiscal 2010 fourth quarter before those items would have been $2.6 million, versus $2.0 million in the fiscal 2009 fourth quarter, which included $0.1 million in one-time items and $0.1 million in non-cash stock compensation expense.
Net income totaled $0.2 million, or $0.02 per diluted share, for the fourth quarter of fiscal 2010, versus net income of $2.2 million, or $0.21 per diluted share, for the fourth quarter of fiscal 2009. Excluding the one-time costs and non-cash stock compensation expense described above, net income for the fiscal 2010 fourth quarter would have been $2.2 million, or $0.20 per diluted share, compared with $2.4 million, or $0.22 per diluted share, for the fiscal 2009 fourth quarter, which included a tax benefit of $0.9 million primarily due to adjustments that resulted from the completion of a federal tax audit, one-time items of $0.1 million and $0.1 million in non-cash stock based compensation.
The company generated adjusted EBITDA of $1.3 million for the fiscal 2010 fourth quarter, compared with $2.4 million in the same quarter of the prior fiscal year. Excluding the one-time costs described above in both quarters, adjusted EBITDA would have been $3.3 million for the fiscal 2010 fourth quarter, versus $2.5 million for the fiscal 2009 fourth 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.
The company recorded a tax benefit for the fourth quarter of fiscal 2010 of $285,000, compared with a benefit of $90,000 for the fourth quarter of fiscal 2009. The change in the tax benefit was due primarily to lower tax rates in foreign jurisdictions, as well as tax benefits relating to net reductions in tax contingencies. Last year’s tax benefit resulted from favorable settlements relating to the completion of a tax audit.
Rentrak said that it recently accomplished several important milestones, including:
- Growing its local station measurement service, StationView Essentials, to include 25 stations in 13 markets that are now using Rentrak’s robust television viewing information via its digital set-top device database reporting system to better monetize TV viewership. New StationView Essentials customers are being added on a regular basis. .
- Extending its industry-leading OnDemand Essentials business to the equivalent of 80 million set-top boxes through expansion of Rentrak’s video-on-demand measurement capabilities to customers in Canada and United States.
- Increasing the number of networks utilizing TV Essentials to gain access to anonymous second-by-second audience viewing patterns in all facets of programming and advertising to 47 networks. New TV Essentials customers include MTV Networks, the first major cable group to become a Rentrak customer; Daystar TV, one of the world’s largest Christian television networks; Zee TV, the leading television network in South Asian entertainment; and the Hispanic Information TV Network, the first Latino public television network in the United States.
- Working with Zenith Media USA, one of the premier strategic media planning and buying agencies in the U.S., which is using Rentrak’s second-by-second information from 300 ad-supported networks to help build the agency’s strategy for this year’s television upfront.
“We are extremely gratified by the tremendous progress that has been made, particularly over the past six months as we’ve successfully delivered on our promise to measure entertainment viewership wherever and whenever it is being consumed,” said Livek. “Rentrak is continuing to demonstrate the significant value of providing industry participants, including studios; national networks; cable, satellite, and telco-TV operators: local TV stations; and advertising agencies, with Rentrak’s viewership currencies.
“As we work to further educate the marketplace, establish new customer relationships and achieve our vision of becoming the leading provider of consumer entertainment behavior and segmentation database currencies across all media distribution platforms, we will carefully balance anticipated growth with the investments necessary to facilitate that growth. While we recognize that this may impact our short-term results as they did this quarter, these strategic investments ultimately improve our marketplace position, which we believe will result in improved and sustainable shareholder value.”
Fiscal 2010 Full Year Financial Results
Consolidated revenues were $91.1 million for fiscal 2010, versus $95.0 million for fiscal 2009. AMI division revenues rose 57 percent to $19.8 million from $12.6 million for fiscal 2009, demonstrating continued growth of the company’s Essentials suite of services. Revenues in the company’s PPT division were $71.3 million, compared with $82.3 million for the last fiscal year.
Operating loss for fiscal 2010 was of $0.9 million, compared with operating income of $5.2 million in fiscal 2009. The fiscal 2010 operating loss included $4.2 million in one-time items and $2.1 million in non-cash stock compensation expense. Fiscal 2009 operating income included $0.3 million in one-time items and $0.5 million in non-cash stock compensation expense. Operating income for fiscal 2010 before those items would have been $5.3 million, versus $6.1 million in fiscal 2009, which included $0.3 million in one-time items and $0.5 million in non-cash stock compensation expense.
Net income was $0.6 million, or $0.05 per diluted share, for fiscal 2010, compared with $5.4 million, or $0.49 per diluted share, last year. Excluding the one-time costs and non-cash stock compensation expense described in both periods, and the tax benefit in the fourth quarter of fiscal 2009, net income would have been $4.7 million, or $0.43 per diluted share, in fiscal 2010, versus $4.9 million, or $0.45 per diluted share, in the prior year.
Adjusted EBITDA was $3.8 million for fiscal 2010, compared with $7.5 million for fiscal 2009. Excluding the one-time costs described above in both years, adjusted EBITDA would have been $7.7 million for fiscal 2010, versus $7.8 million for fiscal 2009.
The company generated $4.0 million in cash from operating activities in fiscal 2010, compared with $8.0 million in fiscal 2009.
Rentrak’s cash, cash equivalents and marketable securities balance was $19.9 million at March 31, 2010 compared with $34.5 million at March 31, 2009. The reduction in cash related primarily to the company’s acquisition of Nielsen EDI and to a lesser extent the purchase of equipment and certain capitalized IT costs.
Conference Call
Rentrak will hold a conference call at 5:00 p.m. (ET) / 2:00 p.m. (PT) today to discuss 2010 fourth quarter and full year end results. Shareowners, members of the media and other interested parties may participate in the call by dialing 866-788-0538 from the U.S. or Canada, or 857-350-1676 from international locations, passcode 97272648. This call is being webcast and can be accessed at Rentrak’s web site at www.rentrak.com where it will be archived through June 14, 2011. An audio replay of the conference call is available through midnight June 21, 2010 by dialing 888-286-8010 from the U.S. or Canada, or 617-801-6888 from international locations, passcode 12238363.
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, 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 “anticipate,” “expects,” “intends” and similar expressions are intended to identify forward-looking statements. Such statements relate to, among other things, that Rentrak is cementing its marketplace position; has delivered on its promise to measure entertainment viewership wherever and whenever it is being consumed; provides significant value to industry participants; and that strategic investments will ultimately improve its marketplace position and result in improved and sustainable shareholder value; 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, 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.
CONTACT:
Investors
PondelWilkinson Inc.
Laurie Berman
310-279-5962
lberman@pondel.com
Rentrak Corporation and Subsidiaries
Consolidated Income Statements
(In thousands, except per share amounts)
For the Three Months Ended
March 31,
--------------------------
2010 2009
---- ----
(Unaudited) (Unaudited)
Revenue $25,006 $22,313
Cost of Sales 14,629 13,660
Gross Margin 10,377 8,653
Operating expenses:
Selling and administrative 10,416 6,604
Provision for doubtful accounts 52 102
Asset impairment 134 136
10,602 6,842
------ -----
Income (loss) from operations (225) 1,811
Other income:
Interest income, net 137 346
--- ---
Income before income taxes (88) 2,157
Provision (benefit) for income
taxes (285) (90)
Net income $197 $2,247
==== ======
Basic net income per share $0.02 $0.21
===== =====
Diluted net income per share $0.02 $0.21
===== =====
Shares used in per share
calculations:
Basic 10,607 10,481
====== ======
Diluted 11,172 10,914
====== ======
For the Twelve Months Ended
March 31,
---------------------------
2010 2009
---- ----
(Audited) (Audited)
Revenue $91,076 $94,966
Cost of Sales 58,277 62,575
------ ------
Gross Margin 32,799 32,391
Operating expenses:
Selling and administrative 33,055 26,619
Provision for doubtful accounts 469 269
Asset impairment 199 257
--- ---
33,723 27,145
------ ------
Income (loss) from operations (924) 5,246
Other income:
Interest income, net 1,151 1,108
----- -----
Income before income taxes 227 6,354
Provision (benefit) for income
taxes (349) 991
---- ---
Net income $576 $5,363
==== ======
Basic net income per share $0.05 $0.51
===== =====
Diluted net income per share $0.05 $0.49
===== =====
Shares used in per share
calculations:
Basic 10,527 10,561
====== ======
Diluted 11,013 11,047
====== ======
Rentrak Corporation and Subsidiaries
Consolidated Balance Sheets
(Audited)
(In thousands, except per share amounts)
March 31,
---------
2010 2009
---- ----
Assets
Current Assets:
Cash and cash equivalents $2,435 $4,601
Marketable securities 17,490 29,874
Accounts and notes receivable, net of
allowances for
doubtful accounts of $565 and $597 19,862 16,406
Taxes receivable and prepaid taxes 1,235 1,231
Deferred income taxes - 135
Other current assets 916 960
--- ---
Total Current Assets 41,938 53,207
Property and equipment, net of
accumulated
depreciation of $10,985 and $9,472 7,569 6,128
Goodwill 3,396 -
Other intangible assets, net of
accumulated
amortization of $76 and $0 11,344 -
Other assets 559 543
--- ---
Total Assets $64,806 $59,878
======= =======
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $6,170 $6,738
Accrued liabilities 1,390 595
Accrued compensation 2,327 1,100
Deferred income tax liabilities 68 -
Deferred revenue 1,356 1,530
----- -----
Total Current Liabilities 11,311 9,963
Deferred rent, long-term portion 924 982
Deferred income tax liabilities 328 714
Taxes payable, long-term 1,015 1,242
----- -----
Total Liabilities 13,578 12,901
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:
10,595 and 10,421 11 11
Capital in excess of par value 48,887 45,504
Accumulated other comprehensive income
(loss) 89 (203)
Retained earnings 2,241 1,665
----- -----
Total Stockholders' Equity 51,228 46,977
Total Liabilities and Stockholders'
Equity $64,806 $59,878
======= =======
Rentrak Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(Audited)
(In thousands)
For the Year Ended March
31,
-------------------------
2010 2009 2008
---- ---- ----
Cash flows from
operating
activities:
Net income $576 $5,363 $4,594
Adjustments to
reconcile net
income to net cash
flows
provided by
operating
activities:
Tax benefit
(expense) from
stock-based
compensation 461 (31) 493
Depreciation and
amortization 2,329 1,750 1,433
Loss on disposal of
fixed assets - - 14
Gain on liquidation
of foreign
investment - - (144)
Impairment of
capitalized
software projects 199 257 85
Adjustment to
allowance for
doubtful accounts (32) 25 (27)
Stock-based
compensation 2,361 487 975
Excess tax benefits
from stock-based
compensation (332) (8) (272)
Deferred income
taxes (245) 661 (283)
Realized gain on
marketable
securities (374) - -
(Increase) decrease,
net of effect of
acquisition, in:
Accounts and notes
receivable (982) (1,076) 4,654
Interest and
dividends
receivable 82 (106) 4
Taxes receivable and
prepaid taxes (4) 224 (1,423)
Other current assets 31 487 (524)
Increase (decrease),
net of effect of
acquisition, in:
Accounts payable (942) 50 (6,944)
Taxes payable (227) (723) 636
Accrued liabilities
and compensation 1,659 3 (556)
Deferred rent (59) (7) (61)
Deferred revenue and
other liabilities (549) 659 424
---- --- ---
Net cash provided by
operating
activities 3,952 8,015 3,078
Cash flows from
investing
activities:
Purchase of
marketable
securities (7,300) (30,000) -
Sale or maturity of
marketable
securities 20,200 4,986 17,119
Purchase of property
and equipment (3,703) (2,953) (2,568)
Cash paid for
acquisition, net of
cash acquired (16,659) - -
------- --- ---
Net cash provided by
(used in) investing
activities (7,462) (27,967) 14,551
Cash flows from
financing
activities:
Issuance of common
stock 1,043 150 889
Excess tax benefits
from stock-based
compensation 332 8 272
Repurchase of common
stock (302) (2,291) (3,253)
Net cash provided by
(used in) financing
activities 1,073 (2,133) (2,092)
Effect of foreign
exchange
translation on cash 271 (176) (26)
--- ---- ---
Increase (decrease)
in cash and cash
equivalents (2,166) (22,261) 15,511
Cash and cash
equivalents:
Beginning of year 4,601 26,862 11,351
----- ------ ------
End of year $2,435 $4,601 $26,862
====== ====== =======
Supplemental
information:
Income taxes paid $384 $810 $3,240
Income tax refunds 643 1 -
Deferred gain
related to forgiven
loan for capital
assets - 967 -
Rentrak Corporation and Subsidiaries
Information by Segment
(Unaudited)
(in thousands)
For the Three
Months
Ended March 31,
---------------
2010 2009
---- ----
Sales to external
HOME customers $18,084 $19,021
Gross
ENTERTAINMENT margin $5,339 $6,344
Sales to external
AMI customers $6,922 $3,292
Gross
margin $5,038 $2,309
Sales to external
Total customers $25,006 $22,313
Gross
margin $10,377 $8,653
For the Year
Ended March 31,
---------------
2010 2009
---- ----
Sales to external
HOME customers $71,252 $82,320
Gross
ENTERTAINMENT margin $19,821 $22,828
Sales to external
AMI customers $19,824 $12,646
Gross
margin $12,978 $9,563
Sales to external
Total customers $91,076 $94,966
Gross
margin $32,799 $32,391
Rentrak Corporation
Reconciliation of GAAP and Non-GAAP Financial Measures
Adjusted EBITDA
(Unaudited)
(in thousands)
For the Three Months For the Twelve Months
Ended March 31, Ended March 31,
--------------- ---------------
2010 2009 2010 2009
---- ---- ---- ----
Net Income $197 $2,247 $576 $5,363
Adjustments:
Provision (benefit) for
income taxes (285) (90) (349) 991
Interest income, net (137) (346) (1,151) (1,108)
Depreciation and
amortization 687 494 2,329 1,750
Stock-based compensation 883 94 2,361 487
Adjusted EBITDA $1,345 $2,399 $3,766 $7,483
====== ====== ====== ======
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 and twelve month
periods ended March 31, 2010 and 2009 are 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.
SOURCE Rentrak Corporation