Rentrak's Q2 Revenues Dip; Slight Earnings Gain Supplants Loss7 Nov, 2001 By: Hive News
Rentrak Corporation on Wednesday reported net earnings of $398,114, or $0.04 per diluted share for its second fiscal quarter ended Sept. 30, 2001, on 11 million diluted sharesoutstanding, compared with a net loss of $9.6 million, or $0.77 cents a share on 12.4 million diluted shares outstanding for the second quarter of last year.
The entertainment sector of the business, which includesPay-Per-Transaction (PPT) and Blowout Video, earned the equivalent of $0.11 per diluted share, the company said in a press release.
Total revenues were $23.7 million, down 5% from $24.9 million in the same quarter last year. Revenues for the company's core PPT businesssegment increased 9% over last year's second quarter, benefiting from increased videocassette shipments during the quarter. As previously reported, the company shipped 663,252 videocassettes, an increase of 28% over the comparable quarter last year and a 12% increase over the first quarter of the current fiscal year.
Paul Rosenbaum, Rentrak's chairman and c.e.o., said,"We were very pleased with the performance of the company's entertainmentsector during the quarter. Video retailers across the industry generally performed well during the quarter just ended, and we expect that trend to continue.
"While videocassette shipments will continue to be the primary driver of Rentrak's revenues in the near term, we are pursuing a number of opportunities to offer DVDs to our video retailer clients," Rosenbaum said.
"Rentrak recently signed a new agreement with MGM Home Entertainment to provide MGM's titles to PPT retailers in both VHS and DVD formats,"Rosenbaum said. "We are very excited to offer this additional opportunity for revenue-sharing on DVD products. As customer rental demand for the DVD format continues to grow, we hope to develop agreements with other studios that allow video retailers to obtain DVDs on favorable terms."
Revenues at the company's third-party fulfillment subsidiary, 3PF, were $2.5 million in the second quarter, down 47% from the comparable period last year. On a Rentrak diluted earnings per share basis, 3PF lost$0.07 during the second quarter.
Rosenbaum added, "Rentrak formed 3PF as a separate subsidiary in 1999 primarily to provide third-party e-fulfillment services to the burgeoning Internet retail market. However, with the slowdown in Internet retailing and the general economic downturn, we now have significant over-capacity at 3PF.
"We are in the process of optimizing our warehouse capacity and reducingexpenses to reflect the current business volume. Rentrak will pursue allavailable options to improve the financial performance of this subsidiary," he said.
"Basically, we have a very healthy core businessthat has grown significantly this quarter and promises to be further enhanced by the DVD agreement we have reached with MGM. On the other hand, we have a potentially significant asset in 3PF that is not being properly utilized. On balance, we remain highly confident in affirming the previously announced expected annual earnings per share in the $0.80-0.85 range," Rosenbaum said.
"As to broader applications of Rentrak's information management expertise, we are encouraged by the response of studios to our efforts to develop and implement a software solution that processes transaction data for any entertainment software delivered digitally or non-digitally to a consumer, including movies, special events, computer gamesand music."
Rosenbaum further reported, "We remain on schedule to test our first applications of the new software by year-end."
The company reported that for the six months ended Sept. 30, 2001, total revenues were $52.7 million, down 3.1% from $54.4 million in the prior year. Net earnings for the six-month period were $5.1 million, or $0.46 per dilutedshare, compared with a net loss of $9.3 million or $0.80 per diluted share for the comparable six-month period last year.