RENTRAK
ANNOUNCES 27 PERCENT REVENUE GROWTH FOR FISCAL 2014 THIRD QUARTER
-- 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, OR (February 6, 2014) - 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’s Advanced 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’s Home Entertainment business was 26 percent for the third quarters of fiscal 2014 and fiscal 2013.
Rentrak Announces 27 Percent Revenue Growth
for Fiscal 2014 Third Quarter
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.
Rentrak Announces 27 Percent Revenue Growth for Fiscal 2014 Third Quarter
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’s Home 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
# # #
(Financial Tables Follow)
Rentrak Announces 27 Percent Revenue Growth for Fiscal 2014 Third Quarter
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.
Dates Referenced Herein and Documents Incorporated by Reference
