Rentrak Corp. Reports Record Earnings Despite Drop in PPT Revenues15 Aug, 2001 By: Joan Villa
Although Rentrak Corp.'s Pay-Per-Transaction (PPT) revenue dropped 27% to $16.26 million for the fiscal first quarter ended June 30 versus the year-ago period, the company reported record net earningsthanks to a $6.8 million payment from its restructuring agreement withRentrak Japan.
Rentrak reported net earnings of $4.7 million compared to $250,000 in last year's first quarter. Net earnings excluding Web fulfillment arm3PF.com were $6.8 million.
Chairman and c.e.o. Paul Rosenbaum credits the Rentrak Japan deal for boosting revenues, earnings and cash flow. The company finished thequarter with $5.4 million in cash and a zero line of credit. Another $2.4 million payment from the Rentrak Japan restructuring is due inOctober, he says.
Pointing to the “dramatic turnaround” in stock prices of top video specialty retailers primarily achieved through DVD rental growth,Rosenbaum admits that so far Rentrak has not participated. However, “that situation will change dramatically when studios decide to offer aDVD rental window and two-tiered pricing,” he says.
Despite the revenue downturn, Rentrak sees a “much stronger growth opportunity” for PPT with 600,000 tapes shipped in the fiscal first quarter, slightly more than last year, Rosenbaum says. But rental turns were down across the industry due to a weaker slate of titles comparedto last year's slate. In late June, Rentrak also shipped some high box office titles that incurred order processing costs but did not yet generate transaction revenues.
So far in the fiscal second quarter, shipments “are running 15% ahead” of last year and he predicts strong titles will drive thirdquarter revenues. The company affirms that it will hit previous earnings per share projections for the full year of 80 cents to 85 cents pershare.
To further boost PPT revenues, Rosenbaum plans to grow the field sales force to expand Rentrak's retailer base. He predicts retailers,attempting to balance their buys between VHS and DVD, will turn to PPT to reduce risk.