Rentrak Revenues Grew 31 Percent For Fiscal 2014 Second Quarter

Rentrak Revenues Grew 31 Percent For Fiscal 2014 Second Quarter

-- Generated $2.9 Million in Cash Flow from Operations for Three-Month Period; $6.2 Million for First Six Months --

PORTLAND, Ore., Nov. 7, 2013 /PRNewswire/ -- Rentrak Corporation (Nasdaq: RENT), the leader in precisely measuring movies and TV everywhere, today announced improved financial results for its second fiscal quarter ended September 30, 2013.

Consolidated revenue increased 31 percent to $29.5 million for the second quarter of fiscal 2014, up from $22.5 million for the same period last year, reflecting 29 percent growth in Rentrak's Advanced Media and Information (AMI) business, and 35 percent growth in the company's Home Entertainment business.

Revenue in the company's AMI division increased to $17.0 million for the fiscal 2014 second quarter, up from $13.2 million for the same period last year, and represented 58 percent of Rentrak's consolidated revenue, versus 59 percent last year. Revenue in the company's OnDemand business was impacted by a delay in the launch of Rentrak's Digital Download Essentials industry service for TV, which is now on track for launch before the end of calendar year 2013. Revenue in the company's Home Entertainment business rose to $12.5 million from $9.3 million a year ago.

"We are highly confident that our strong leadership position in precisely measuring movies and TV everywhere will allow Rentrak to continue being a high-growth company with thousands of very happy clients," said Bill Livek, Vice Chairman and Chief Executive Officer of Rentrak. "Rentrak has built the only census currencies for measuring the movies and TV everywhere, and we believe we are in the early stage of very substantial revenue growth."



(revenue in millions) 2Q FY14 2Q FY13 Percent Change

Box Office
Essentials(R) $6.3 $5.7 11%

TV Essentials(R) $7.2 $4.1 74%

OnDemand Everywhere(TM) $3.4 $3.3 2%

Total AMI $17.0 $13.2 29%
--------- ----- ----- ---


Total Home
Entertainment $12.5 $9.3 35%


Consolidated Revenue $29.5 $22.5 31%
-------------------- ----- ----- ---


Numbers may not sum due to rounding.
Gross margin was 46 percent of consolidated revenue for the second quarter of fiscal 2014, compared with 48 percent for the same period last year. Gross margin for the company's AMI business increased to 60 percent for the second quarter of fiscal 2014, compared with 59 percent a year ago. Gross margin for Rentrak's Home Entertainment business was 28 percent for the second quarter of fiscal 2014, versus 32 percent last year.

Operating expenses for the fiscal 2014 second quarter decreased to $14.7 million, from $29.1 million for the fiscal 2013 second quarter. The decrease mainly reflected a decline in stock-based compensation expense, partially offset by an increase in costs associated with the expansion of Rentrak's AMI business, including $1.0 million in costs related to the company's August 2013 acquisition of iTVX, Inc. ("iTVX"). Fiscal 2013 second quarter operating expenses included $16.5 million related to the amendment of the company's stock-based compensation agreement with DISH Network L.L.C.

Operating loss for the second quarter of fiscal 2014 amounted to $1.1 million, which included $2.1 million in stock-based compensation costs and $106,000 in acquisition-related costs. For last year's second fiscal quarter, operating loss was $18.4 million, which included $18.0 million of stock-based compensation costs, including the $16.5 million of DISH-related stock-based compensation expense noted above, $63,000 in acquisition-related costs, and $14,000 in reorganization costs. Excluding these amounts for both periods, operating income would have improved to $1.2 million for the fiscal 2014 second quarter, up from an operating loss of $370,000 for the fiscal 2013 second quarter.

Net loss totaled $633,000, or $0.05 per share, for the second quarter of fiscal 2014, compared with a net loss of $18.2 million, or $1.56 per share, for the same period last year. Excluding the costs already mentioned for both periods, net income for the fiscal 2014 second quarter would have increased to $1.3 million, or $0.11 per diluted share, compared with a net loss of $109,000, or $0.01 per share, for the second 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 second quarter of fiscal 2014, up from $829,000 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 $2.9 million in cash from operating activities for the second quarter of fiscal 2014, compared with using $2.2 million for the second quarter of fiscal 2013. Rentrak generated $6.2 million in cash from operating activities for the first six months of fiscal 2014, compared with using $1.8 million for the comparable fiscal 2013 period.

Rentrak's cash, cash equivalents and marketable securities balance grew to $23.5 million at September 30, 2013, up from $20.4 million at March 31, 2013.

Rentrak recently achieved several important milestones including:


-- Signing six A&E television networks, including A&E(®), HISTORY(®),
Lifetime(®), H2((TM)), bio((TM)) and Lifetime Movie Network(®), as
well as The Weather Channel, as new clients of the company's TV
Essentials(®) service.
-- Acquiring iTVX, the global leader in measuring and providing analytics
for branded TV and movie entertainment.
-- Obtaining two patents for Rentrak's census-based TV measurement service.
-- Contracting with several Hollywood studios for the company's new
PostTrak(TM) service.
-- Launching the industry's first digital download report for movies,
combining U.S. Internet Video-On-Demand (iVOD) and Electronic Sell
Through (EST) viewership information.
-- Continuing to grow the company's client base through the addition of top
local and national advertising agencies, advertisers, television
networks and local TV stations. During the second quarter of fiscal
2014, we added more than 20 local advertising agency clients.
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 revenue growth in the company's Box Office business annually
for the foreseeable future.
-- 20 percent annual revenue growth in its OnDemand Everywhere((TM))
business for the foreseeable future, excluding any impact from the
company's new "Total Television" suite of products.
-- Seven to 10 percent revenue growth in Home Entertainment revenues for
fiscal 2014.
Conference Call
Rentrak will hold a conference call at 5:00 p.m. ET/2:00 p.m. PT today to discuss its 2014 second quarter financial results. Shareholders, members of the media and other interested parties may participate in the call by dialing 877-941-1466 from the U.S. or Canada, or 480-629-9724 from international locations, conference ID 4646704. This call is being webcast and can be accessed at Rentrak's Web site at www.rentrak.com, where it will be archived through November 7, 2014. An audio replay of the conference call will be available through midnight November 14, 2013 by dialing 800-406-7325 from the U.S. or Canada, or 303-590-3030 from international locations, passcode 4646704.

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, expected break-even operating income for the TV business line in the fourth quarter of fiscal 2014 and expected launch of new Digital Download Essentials industry service for TV. 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 Six Months
Ended

September 30, September 30,
------------- -------------

2013 2012 2013 2012
---- ---- ---- ----

Revenue $29,475 $22,491 $58,317 $45,714

Cost of
sales 15,863 11,785 31,555 23,496
------ ------ ------ ------

Gross margin 13,612 10,706 26,762 22,218

Operating
expenses:

Selling and
administrative 14,667 29,124 28,837 41,280
------ ------ ------ ------

Loss from
operations (1,055) (18,418) (2,075) (19,062)

Other
income:

Interest
income, net 44 270 91 349
--- --- --- ---

Loss before
income
taxes (1,011) (18,148) (1,984) (18,713)

Provision
(benefit)
for income
taxes (356) 9 (130) 62
---- --- ---- ---

Net loss (655) (18,157) (1,854) (18,775)

Net loss
attributable
to
noncontrolling
interest (22) - (29) -
--- --- --- ---

Net loss
attributable
to Rentrak
Corporation $(633) $(18,157) $(1,825) $(18,775)
===== ======== ======= ========

Net loss per
share
attributable
to Rentrak
Corporation
common
stockholders:

Basic $(0.05) $(1.56) $(0.15) $(1.64)
====== ====== ====== ======

Diluted $(0.05) $(1.56) $(0.15) $(1.64)
====== ====== ====== ======

Shares used
in per
share
calculations:

Basic 12,104 11,669 12,083 11,451
====== ====== ====== ======

Diluted 12,104 11,669 12,083 11,451
====== ====== ====== ======















Rentrak Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

(In thousands, except per share amounts)

(Unaudited)


September 30, March 31,
2013 2013
---- ----

Assets

Current Assets:

Cash and cash equivalents $5,457 $3,835

Marketable securities 17,995 16,588

Accounts and notes
receivable, net of
allowances for doubtful
accounts of $624 and
$866 15,064 16,682

Taxes receivable and
prepaid taxes 142 -

Other current assets 2,505 2,188
----- -----

Total Current Assets 41,163 39,293

Property and equipment,
net of accumulated
depreciation of $22,333
and $19,925 15,528 14,262

Goodwill 6,837 4,998

Other intangible assets,
net of accumulated
amortization of $2,880
and $2,343 13,157 12,396

Other assets 752 830
--- ---

Total Assets $77,437 $71,779
======= =======

Liabilities and
Stockholders' Equity

Current Liabilities:

Accounts payable $5,747 $5,856

Accrued liabilities 6,635 4,369

Accrued compensation 7,118 5,862

Deferred tax liabilities 47 36

Deferred revenue and
other credits 2,277 2,610

Total Current Liabilities 21,824 18,733

Deferred rent, long-term
portion 2,304 2,238

Taxes payable, long-term 664 713

Deferred tax liability,
long-term 1,052 574

Note payable and accrued
interest - 550
--- ---

Total Liabilities 25,844 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:
11,954 and 11,892 12 12

Capital in excess of par
value 79,779 75,508

Accumulated other
comprehensive income 235 31

Accumulated deficit (29,393) (27,569)
------- -------

Stockholders' Equity
attributable to Rentrak
Corporation 50,633 47,982

Noncontrolling interest 960 989
--- ---

Total Stockholders'
Equity 51,593 48,971
------ ------

Total Liabilities and
Stockholders' Equity $77,437 $71,779
======= =======





Rentrak Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

For the Six Months Ended September 30,
--------------------------------------

2013 2012
---- ----

Cash flows from operating activities:

Net loss $(1,854) $(18,775)

Adjustments to reconcile net loss to
net cash flows provided by (used in)
operating activities:

Depreciation and
amortization 2,906 2,349

Stock-based
compensation 3,534 16,253

Deferred income
taxes 154 (2)

Gain on disposition
of assets - (26)

Realized (gain)
loss on marketable
securities 2 (193)

Interest on note
payable - 12

Adjustment to
allowance for
doubtful accounts (242) (6)

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

Accounts and notes
receivable 1,680 1,992

Taxes receivable
and prepaid taxes (142) -

Other assets (145) 12

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

Accounts payable (102) (16)

Taxes payable (142) (64)

Accrued liabilities
and compensation 857 (3,335)

Deferred revenue (382) 58

Deferred rent 64 (105)
--- ----

Net cash provided
by (used in)
operating
activities 6,188 (1,846)

Cash flows from investing activities:

Purchase of
marketable
securities (2,500) (20,987)

Sale of marketable
securities 1,000 22,293

Proceeds from the
sale of assets - 47

Payments made to
develop intangible
assets (104) (101)

Purchase of
property and
equipment (3,554) (2,876)

Cash paid for
acquisition, net
of cash acquired,
and equity
investment (322) -
---- ---

Net cash used in
investing
activities (5,480) (1,624)

Cash flows from financing activities:

Contributions from
noncontrolling
interest - 1,020

Issuance of common
stock 653 551
--- ---

Net cash provided
by financing
activities 653 1,571

Effect of foreign
exchange
translation on
cash 261 (11)
--- ---

Increase (decrease)
in cash and cash
equivalents 1,622 (1,910)

Cash and cash equivalents:

Beginning of period 3,835 5,526
----- -----

End of period $5,457 $3,616
====== ======

Supplemental non-cash information:

Capitalized stock-
based compensation $511 $198

Common stock used
to pay for option
exercises 69 63

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 For the Six Months
Ended Ended
September 30, September 30,

2013 2012 2013 2012
---- ---- ---- ----

AMI

Sales to external
customers $16,961 $13,230 $32,719 $25,841

Gross margin $10,131 $7,764 $19,601 $16,081

Income (loss) from
operations $1,603 $(15,691) $3,369 $(13,749)


HOME ENTERTAINMENT

Sales to external
customers $12,514 $9,261 $25,598 $19,873

Gross margin $3,481 $2,942 $7,161 $6,137

Income from operations $2,232 $1,694 $4,433 $3,493


TOTAL OPERATING
SEGMENTS

Sales to external
customers $29,475 $22,491 $58,317 $45,714

Gross margin $13,612 $10,706 $26,762 $22,218

Income (loss) from
operations $3,835 $(13,997) $7,802 $(10,256)



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 For the Six
Months Ended Months Ended
September 30, September 30,
-------------- --------------

2013 2012 2013 2012
---- ---- ---- ----

Net loss
attributable to
Rentrak
Corporation $(633) $(18,157) $(1,825) $(18,775)

Adjustments:

Provision (benefit)
for income taxes (356) 9 (130) 62

Interest income,
net (44) (270) (91) (349)

Depreciation and
amortization 1,489 1,199 2,906 2,349

Stock-based
compensation (1) 2,135 1,486 3,534 3,016
----- ----- ----- -----

Adjusted EBITDA $2,591 $(15,733) $4,394 $(13,697)
------ ------- ------ -------

DISH stock-based
compensation - 16,485 15,864

Acquisition costs 106 63 190 193

Reorganization
costs - 14 - 212
--- --- --- ---

Adjusted EBITDA
before DISH stock-
based
compensation,
acquisition and
reorganization
costs $2,697 $829 $4,584 $2,572
====== ==== ====== ======


(1) Excludes DISH stock-based compensation




For the Three For the Six
Months Ended Months Ended
September 30, September 30,
-------------- --------------

2013 2012 2013 2012
---- ---- ---- ----

Diluted EPS, as
reported $(0.05) $(1.56) $(0.15) $(1.64)

DISH stock-based
compensation - 1.41 - 1.39

Other items:

Acquisition costs 0.01 0.01 0.02 0.02

Reorganization
costs - - - 0.02

Reduction in
valuation
allowance on
deferred tax
assets (0.03) - (0.03) -

Stock-based
compensation(1) 0.18 0.13 0.29 0.26
---- ---- ---- ----

Total other items 0.16 0.14 0.28 0.30
----

Diluted EPS, non-
GAAP $0.11 $(0.01) $0.13 $0.05
===== ====== ===== =====


(1) Excludes DISH 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 six month periods ended September 30, 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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Rentrak Corporation

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


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