Favorable Taxes Buoy Rentrak Results10 Jun, 2008 By: Erik Gruenwedel
Despite a 25% decline in revenue from its pay-per-transaction (PPT) DVD rental division, Rentrak Corp. reported fourth quarter (ended March 31) income of $1.7 million, compared to income of $1.6 million during the previous-year period.
Favorable tax adjustments of $560,000 contributed to the profit.
PPT revenue for the Portland, Ore.-based media data tracking company totaled $19.5 million compared to $25.9 million last year.
In a call with investors, EVP and CFO Mark Thoenes said the loss of Rentrak's fifth-largest (Warner Home Video) and sixth-largest (Walt Disney Studios Home Entertainment) PPT suppliers in fiscal 2007 continued to impact fiscal 2008 results.
He said the loss of these suppliers' product and associated revenue directly contributed to the decline in PPT revenues from last year's fourth quarter to this year.
The CFO said despite Warner's return to PPT this fiscal year, the financial terms of the deal would not yield revenues or margins comparable to the studio's prior agreement terms.
Rentrak also has PPT agreements with 20th Century Fox Home Entertainment, Sony Pictures Home Entertainment, First Look Studios Home Entertainment and Lionsgate.
“Despite that, it is important to note that our PPT division continues to generate the necessary cash flow to support further development of our Essentials Media Measurement Suite, the company's future growth engine,” Thoenes said.
Indeed, revenue for Rentrak's Advanced Media Information (AMI) division grew 29% to $2.8 million, compared to $2.2 million during the previous-year period.
Chairman and CEO Paul Rosenbaum said Rentrak now collects and analyzes VOD data from 54 million set-top boxes representing 28 multiple service operators (cable, Internet and telecommunications) and 100 content providers.
“Our tremendous success in the VOD market lays the foundation for Rentrak also becoming a major player in linear TV measurement,” Rosenbaum said.
Rentrak is currently testing a TV ratings and usage service (TV Essentials) in more than 2 million set-top boxes (directly targeting Nielsen) and is expected to launch the service in the first quarter of calendar 2009.
The company is also eyeing tracking broadband video (Digital Download Essentials) and mobile phone data usage.
“What the broadband industry is demanding in terms of measurement capability is … what we're doing with TV,” Rosenbaum said.
For the fiscal year, net income fell $1.3 million to $4.6 million, with consolidated revenues of $93.2 million, compared to $105.7 million last year.