Fewer rental transactions drags Rentrak's fiscal Q2

By Ned Randolph -- Video Business, 11/13/2007

NOV. 13 | Fiscal second-quarter revenue in Rentrak's pay-per-transaction segment totaled $20.4 million, a decline of 8% from last year's comparable quarter, reflecting fewer rental transactions.

Earnings fell by more than a third over the same period last year to $1.2 million, or 10¢ a share.

Consolidated revenue likewise fell 5% to $22.9 million in the three-month period ended Sept. 30.

Despite the decline, Rentrak chairman and CEO Paul Rosenbaum said the company exceeded expectations primarily due to tight control of operating expenses.

Rosenbaum said the company's investments in its new Advanced Media Information segment and new media measure services will continue to hurt the bottom line but will eventually pay off. Quarterly revenue for the division increased 27.8% to $2.5 million compared to last year's second fiscal quarter.

"We expect the combination of our planned investment spending, together with reduced availability of revenue-sharing titles, to impact earnings per share during the third fiscal quarter, but expect a sequential increase in earnings in the fourth quarter driven by improved margins on revenue-sharing titles and continued steady growth in our AMI segment," he said.

Rosenbaum was bullish on Rentrak's new TV measurement program, TV Essentials, which began testing in September. The service measures anonymous, second-by-second audience viewing patterns around all TV programming and advertising through 500,000 set-top boxes from multiple network operators in different TV markets.

"Assuming the development process continues smoothly and we continue to gain access to sufficient quantities of [set-top box] data, we plan to launch TV Essentials in the second half of calendar 2008," Rosenbaum said.

In other earnings highlights:

• selling and administrative expenses in the quarter totaled $6.3 million, a 6.8% increase compared to last year.

• during the quarter, the company repurchased 104,571 shares of its common stock for approximately $1.2 million, or an average price of $11.69 per share, under the board of directors' January 2006 authorization to repurchase up to 1,000,000 shares. As of Sept. 30, approximately 701,929 shares remained available for repurchase under this plan.