Rentrak Reports Fiscal 2011 First Quarter Financial Results

Rentrak Reports Fiscal 2011 First Quarter Financial Results

-Advanced Media Information (AMI) Division Revenue Rises 132% -

PORTLAND, Ore., Aug. 3 /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 first quarter ended June 30, 2010.

Consolidated revenues increased more than 13 percent to $24.6 million for the fiscal 2011 first quarter, versus $21.6 million for the fiscal 2010 first quarter, driven primarily by strong growth in the company's Advanced Media Information (AMI) division.

-- Revenues in the company's AMI division grew 132 percent to $8.3
million, from $3.6 million for the first quarter of fiscal 2011,
reflecting a full quarter contribution from the company's acquisition
of Nielsen EDI and incremental revenues generated from the company's
Essentials© suite of multimedia measurement services. The AMI segment
grew to 34 percent of consolidated revenues, from 17 percent for the
prior-year period.
-- Revenues in the company's Home Entertainment division were $16.3
million, compared with $18.1 million for the first quarter of fiscal
2010.

"Our results this quarter were fantastic, including triple-digit growth in our AMI business and non-GAAP earnings per share of $0.12 before increased stock compensation expense and costs relating to our acquisition of Nielsen EDI. Adding EDI boosted our global box office currency business while Rentrak's TV database currencies continue to show strong results," said Bill Livek, Rentrak's Chief Executive Officer. "We are continuing to successfully execute against our business initiatives as we become the database currency of choice throughout the entertainment and advertising industries."

Gross margin improved to $10.7 million, or 43 percent of consolidated revenues, for the first quarter of fiscal 2011, versus $7.4 million, or 34 percent of consolidated revenues, for the same period last year, as the company continues to shift its revenue and profit mix toward its AMI division, which generates significantly higher returns than its Home Entertainment business. Gross margin in the company's AMI division totaled 72 percent of AMI revenues and 56 percent of consolidated gross profit.

Operating expenses for the fiscal 2011 first quarter were $10.7 million, or 44 percent of consolidated revenues, compared with $7.3 million, or 34 percent of consolidated revenues, for last year's fiscal first quarter. The increase primarily reflects $400,000 in one-time charges related to the acquisition of EDI, $1.4 million in recurring EDI operating expenses, and a $1.6 million increase in stock-based compensation expense.

Operating loss for the fiscal 2011 first quarter was $34,000, which included the one-time item and stock-based compensation costs already mentioned. Operating income for the fiscal 2010 first quarter was $112,000, which included $120,000 in stock-based compensation expense and an asset impairment charge of $65,000. Excluding the one-time items and stock-based compensation costs in both periods, operating income would have been $2.1 million for the fiscal 2011 first quarter, versus $300,000 for the fiscal 2010 first quarter.

Net income totaled $87,000, or $0.01 per diluted share, for the first quarter of fiscal 2011, compared with $282,000, or $0.03 per diluted share, for the first quarter of fiscal 2010. Excluding the one-time costs and stock-based compensation expense already mentioned in both quarters, net income for the fiscal 2011 first quarter would have been $1.3 million, or $0.12 per diluted share, compared with $390,000, or $0.04 per diluted share, for the fiscal 2010 first quarter. The reconciliation of non-GAAP 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 for the first quarter of fiscal 2011 grew substantially to $2.5 million from $756,000 for the same quarter of the prior fiscal year. Excluding the one-time costs already mentioned in both quarters, adjusted EBITDA would have been $2.9 million for the fiscal 2011 first quarter, versus $821,000 for the fiscal 2010 first 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 at the end of this press release.

The company recorded a tax benefit of $27,000 for the first quarter of fiscal 2011, versus an expense of $129,000 for the prior-year period. The change was due primarily to tax benefits related to stock options that were exercised and the reversal of a tax contingency due to a lapse in the statute of limitations.

The company generated $3.8 million in cash from operating activities for the first quarter of fiscal 2011, compared with $2.6 million for the first quarter of fiscal 2010.

Rentrak's cash, cash equivalents and marketable securities balance rose to $23.9 million at June 30, 2010, from $19.9 million at March 31, 2010.

Rentrak said that it recently accomplished several important milestones during the quarter including:

-- The integration of DISH Network's data into TV Essentials®, the
company's national viewership measurement service, and StationView
Essentials, the company's local measurement service, making Rentrak
the only service to provide a comprehensive database look at
television viewing habits in all 210 television markets throughout the
U.S. The data is expected to be commercially available during the
company's quarter ending September 30, 2010, combining viewership
information from satellite TV, telco TV and cable TV...an industry
first.
-- Signing an agreement to integrate Charter Communications' set-top-box
data from all of their markets, further extending Rentrak's leadership
role in combining viewership intelligence from satellite TV, telco TV
and cable TV.
-- Integrating Experian-Simmons' national and local consumer purchase
propensity information with TV Essentials® and StationView Essentials.
By combining these powerful information databases, advertisers can
better reach their targets; networks and local stations can attract
new advertisers; and consumers will see messages and offers that are
more relevant to them.
-- Growing StationView Essentials to include 42 TV stations in 23 TV
markets, up from 25 TV stations in 13 TV markets in June.
-- Expanding its board of directors with the nomination of William Engel,
a 40-year media and marketing veteran and co-holder of a patent for
the integration of disparate datasets, and Martin O'Connor, a
prominent attorney with extensive international media relationships
and involvement in the digital film industry.

Conference Call

Rentrak will hold a conference call at 5:00 p.m. (ET) / 2:00 p.m. (PT) today to discuss its 2011 first quarter financial results. Shareowners, members of the media and other interested parties may participate in the call by dialing 800-706-7745 from the U.S. or Canada, or 617-614-3472 from international locations, passcode 77948202. This call is being webcast and can be accessed at Rentrak's web site at www.rentrak.com where it will be archived through August 3, 2011. An audio replay of the conference call is available through midnight August 10, 2010 by dialing 888-286-8010 from the U.S. or Canada, or 617-801-6888 from international locations, passcode 36216216.

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, Chicago, 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 "anticipate," "expects,'' "intends'' and similar expressions are intended to identify forward-looking statements. Such statements relate to, among other things, that Rentrak will continue to execute against its business initiatives and become the database currency of choice, 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, 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 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.

(Financial Tables Follow)

Rentrak Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands, except per share amounts)

March
June 30, 31,
2010 2010
---- ----

Assets
Current Assets:
Cash and cash equivalents $1,623 $2,435
Marketable securities 22,273 17,490
Accounts and notes receivable, net of
allowances for
doubtful accounts of $520 and $565 17,267 19,862
Taxes receivable and prepaid taxes 1,705 1,235
Other current assets 818 916
--- ---
Total Current Assets 43,686 41,938

Property and equipment, net of
accumulated
depreciation of $11,613 and $10,985 8,159 7,569
Goodwill 3,283 3,396
Other intangible assets, net of
accumulated
amortization of $193 and $76 11,090 11,344
Other assets 624 559
--- ---
Total Assets $66,842 $64,806
======= =======

Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $6,073 $6,170
Accrued liabilities 1,337 1,174
Accrued compensation 3,060 2,543
Deferred income tax liabilities 67 68
Deferred revenue 1,258 1,356
----- -----
Total Current Liabilities 11,795 11,311

Deferred rent, long-term portion 908 924
Deferred income tax liabilities 298 328
Taxes payable, long-term 998 1,015
--- -----
Total Liabilities 13,999 13,578

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:
10,886 and 10,595 11 11
Capital in excess of par value 50,818 48,887
Accumulated other comprehensive income
(loss) (314) 89
Retained earnings 2,328 2,241
----- -----
Total Stockholders' Equity 52,843 51,228
Total Liabilities and Stockholders'
Equity $66,842 $64,806
======= =======

Rentrak Corporation and Subsidiaries
Condensed Consolidated Income Statements
(Unaudited)
(In thousands, except per share amounts)

For the Three Months
Ended June 30,
--------------------
2010 2009
---- ----

Revenue $24,561 $21,637
Cost of sales 13,904 14,237
------ ------
Gross margin 10,657 7,400

Operating Expenses:
Selling and administrative 10,574 7,052
Provision for doubtful accounts 117 171
Asset impairment - 65
10,691 7,288
------ -----

Income (loss) from operations (34) 112

Other income:
Interest income, net 94 299
--- ---

Income before income taxes 60 411
(Benefit) provision for income
taxes (27) 129
--- ---
Net income $87 $282
=== ====

Basic net income per share $0.01 $0.03
===== =====

Diluted net income per share $0.01 $0.03
===== =====

Shares used in per share
calculations:
Basic 10,725 10,492
====== ======
Diluted 11,226 10,908
====== ======

Rentrak Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)

For the Three Months
Ended June 30,
--------------------
2010 2009
---- ----

Cash flows from operating
activities:
Net income $87 $282
Adjustments to reconcile net
income to net cash flows
provided by operating activities:
Tax benefit (expense) from stock-
based compensation 785 (15)
Depreciation and amortization 756 524
Impairment of capitalized software
projects - 65
Adjustment to allowance for
doubtful accounts (45) 49
Stock-based compensation 1,744 120
Excess tax benefits from stock-
based compensation (654) (15)
Deferred income taxes (31) 525
Realized gain on marketable
securities (2) -
(Increase) decrease in:
Accounts and notes receivable 2,708 2,277
Taxes receivable and prepaid taxes (470) (175)
Other current assets 304 (30)
Increase (decrease) in:
Accounts payable (117) (1,001)
Taxes payable (17) 55
Accrued liabilities and
compensation (1,124) 6
Deferred revenue and other
liabilities (114) (32)
---- ---
Net cash provided by operating
activities 3,810 2,635

Cash flows from investing
activities:
Purchase of marketable securities (6,583) -
Sale or maturity of marketable
securities 1,800 -
Purchase of property and equipment (1,074) (771)
Net cash used in investing
activities (5,857) (771)

Cash flows from financing
activities:
Issuance of common stock 1,030 250
Excess tax benefits from stock-
based compensation 654 15
Repurchase of common stock - (302)
Net cash provided by (used in)
financing activities 1,684 (37)

Effect of foreign exchange
translation on cash (449) 90
---- ---

Increase (decrease) in cash and
cash equivalents (812) 1,917

Cash and cash equivalents:
Beginning of year 2,435 4,601
----- -----
End of period $1,623 $6,518
====== ======

Supplemental non cash information:
Capitalized stock-based
compensation $165 $ -

Rentrak Corporation and Subsidiaries
Information by Segment
(Unaudited)
(in thousands)

For the Three Months
Ended June 30,
--------------

2010 2009
---- ----
Sales to external
HOME customers $16,290 $18,066
Gross
ENTERTAINMENT margin $4,737 $5,138

Sales to external
AMI customers $8,271 $3,571
Gross
margin $5,920 $2,262

Sales to external
Total customers $24,561 $21,637
Gross
margin $10,657 $7,400

Rentrak Corporation and Subsidiaries
Reconciliation of GAAP and Non-GAAP Financial Measures
Adjusted EBITDA
(Unaudited)
(in thousands)

For the Three
Months
Ended June 30,
--------------

2010 2009
---- ----

Net Income $87 $282
Adjustments:
(Benefit) provision for income taxes (27) 129
Interest income, net (94) (299)
Depreciation and amortization 756 524
Stock-based compensation 1,744 120

Adjusted EBITDA $2,466 $756
====== ====

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 month periods ended June 30,
2010 and 2009, is 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.

Rentrak Corporation and Subsidiaries
Reconciliation of GAAP and Non-GAAP Financial Measures
Non-GAAP EPS
(Unaudited)

For the Three
Months
Ended June 30,
--------------

2010 2009
---- ----

EPS, Diluted $0.01 $0.03
Impact of:
One-time item(s) $0.02 $0.00
Stock-based
compensation $0.09 $0.01
----- -----

Non-GAAP EPS, Diluted $0.12 $0.04
===== =====

About Non-GAAP EPS,
Diluted

From time to time, we may refer to "non-GAAP EPS" in our conference
calls and discussions with analysts in connection with our reported
historical financial results. This financial measure does not
represent EPS
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 reported EPS. The reconciliation of GAAP
and
Non-GAAP financial measures for the three month periods ended June
30,
2010 and 2009, is included in the above table. Management of the
Company believes that one-time item(s) and 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. Due
to the
nature of the Company's equity and stock-based compensation plans
and
items which are considered nonrecurring in nature, the Company's EPS,
which includes these items, may not be indicative of its on-going
operating
performance . Therefore, the Company believes that using the measure
of
"non-GAAP EPS" will help provide a better understanding of the
Company's underlying financial performance.

CONTACT:
Investors
PondelWilkinson Inc.
Laurie Berman
310-279-5962
lberman@pondel.com

Source: Rentrak Corporation

CONTACT: Laurie Berman of PondelWilkinson Inc., +1-310-279-5962,
lberman@pondel.com, for Rentrak Corporation

Web Site: http://www.rentrak.com/

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