x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Oregon | 93-0780536 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
7700 NE Ambassador Place, Portland, Oregon | 97220 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer | ¨ | Accelerated filer | x | ||
Non-accelerated filer | ¨ | (Do not check if a smaller reporting company) | Smaller reporting company | ¨ |
Common stock $0.001 par value | 15,204,978 | |
(Class) | (Outstanding at February 1, 2015) |
Page | ||
PART I - FINANCIAL INFORMATION | ||
Item 1. | Financial Statements | |
Condensed Consolidated Balance Sheets - December 31, 2014 and March 31, 2014 (unaudited) | ||
Condensed Consolidated Statements of Operations - Three and Nine Months Ended December 31, 2014 and 2013 (unaudited) | ||
Condensed Consolidated Statements of Comprehensive Loss - Three and Nine Months Ended December 31, 2014 and 2013 (unaudited) | ||
Condensed Consolidated Statements of Cash Flows - Nine Months Ended December 31, 2014 and 2013 (unaudited) | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 1A. | ||
Item 6. | ||
ITEM 1. | FINANCIAL STATEMENTS |
December 31, 2014 | March 31, 2014 | ||||||
Assets | |||||||
Current Assets: | |||||||
Cash and cash equivalents | $ | 6,007 | $ | 5,102 | |||
Marketable securities | 79,011 | 16,868 | |||||
Accounts receivable, net of allowances for doubtful accounts of $83 and $162 | 19,031 | 12,199 | |||||
Taxes receivable and prepaid taxes | — | 122 | |||||
Deferred tax assets, net | 34 | 44 | |||||
Assets held for sale | 4,120 | 5,443 | |||||
Other current assets | 2,595 | 2,818 | |||||
Total Current Assets | 110,798 | 42,596 | |||||
Property and equipment, net of accumulated depreciation of $27,387 and $23,785 | 21,657 | 17,891 | |||||
Goodwill | 136,127 | 7,034 | |||||
Other intangible assets, net of accumulated amortization of $4,023 and $3,447 | 16,821 | 12,724 | |||||
Other assets | 1,003 | 1,022 | |||||
Total Assets | $ | 286,406 | $ | 81,267 | |||
Liabilities and Stockholders’ Equity | |||||||
Current Liabilities: | |||||||
Accounts payable | $ | 4,066 | $ | 1,766 | |||
Accrued liabilities | 557 | 370 | |||||
Accrued data provider liabilities | 9,580 | 4,460 | |||||
Accrued compensation | 7,038 | 6,743 | |||||
Deferred revenue and other credits | 3,281 | 2,644 | |||||
Liabilities held for sale | 4,163 | 3,858 | |||||
Total Current Liabilities | 28,685 | 19,841 | |||||
Deferred rent, long-term | 2,238 | 2,413 | |||||
Accrued compensation, long-term | 5,700 | 4,700 | |||||
Taxes payable, long-term | 568 | 520 | |||||
Deferred tax liability, net, long-term | 1,946 | 759 | |||||
Total Liabilities | 39,137 | 28,233 | |||||
Commitments and Contingencies | — | — | |||||
Stockholders’ Equity: | |||||||
Preferred stock, $0.001 par value; 10,000 shares authorized; none issued | — | — | |||||
Common stock, $0.001 par value; shares authorized: 75,000 and 30,000; shares issued and outstanding: 15,195 and 12,213 | 15 | 12 | |||||
Capital in excess of par value | 282,341 | 83,562 | |||||
Accumulated other comprehensive income (loss) | (376 | ) | 409 | ||||
Accumulated deficit | (35,449 | ) | (31,823 | ) | |||
Stockholders’ Equity attributable to Rentrak Corporation | 246,531 | 52,160 | |||||
Noncontrolling interest | 738 | 874 | |||||
Total Stockholders’ Equity | 247,269 | 53,034 | |||||
Total Liabilities and Stockholders’ Equity | $ | 286,406 | $ | 81,267 |
For the Three Months Ended December 31, | For the Nine Months Ended December 31, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Revenue | $ | 26,874 | $ | 19,517 | $ | 74,459 | $ | 54,042 | |||||||
Cost of revenue | 9,538 | 6,820 | 25,182 | 19,938 | |||||||||||
Gross margin | 17,336 | 12,697 | 49,277 | 34,104 | |||||||||||
Operating expenses: | |||||||||||||||
Selling, general and administrative | 16,383 | 12,274 | 43,761 | 34,460 | |||||||||||
Research, technology and innovation | 3,308 | 2,265 | 9,645 | 6,256 | |||||||||||
Total operating expenses | 19,691 | 14,539 | 53,406 | 40,716 | |||||||||||
Loss from continuing operations | (2,355 | ) | (1,842 | ) | (4,129 | ) | (6,612 | ) | |||||||
Other income, net | 82 | 53 | 122 | 144 | |||||||||||
Loss from continuing operations before income taxes | (2,273 | ) | (1,789 | ) | (4,007 | ) | (6,468 | ) | |||||||
Provision (benefit) for income taxes | 377 | (758 | ) | 743 | (2,020 | ) | |||||||||
Loss from continuing operations, net of income taxes | (2,650 | ) | (1,031 | ) | (4,750 | ) | (4,448 | ) | |||||||
Income from discontinued operations, net of income taxes | 332 | 665 | 988 | 2,228 | |||||||||||
Net loss | (2,318 | ) | (366 | ) | (3,762 | ) | (2,220 | ) | |||||||
Net loss attributable to noncontrolling interest | (31 | ) | (23 | ) | (135 | ) | (52 | ) | |||||||
Net loss attributable to Rentrak Corporation | $ | (2,287 | ) | $ | (343 | ) | $ | (3,627 | ) | $ | (2,168 | ) | |||
Loss per share from continuing operations attributable to Rentrak Corporation common stockholders: | |||||||||||||||
Basic | $ | (0.19 | ) | $ | (0.08 | ) | $ | (0.36 | ) | $ | (0.36 | ) | |||
Diluted | $ | (0.19 | ) | $ | (0.08 | ) | $ | (0.36 | ) | $ | (0.36 | ) | |||
Income per share from discontinued operations attributable to Rentrak Corporation common stockholders: | |||||||||||||||
Basic | $ | 0.02 | $ | 0.05 | $ | 0.08 | $ | 0.18 | |||||||
Diluted | $ | 0.02 | $ | 0.05 | $ | 0.08 | $ | 0.18 | |||||||
Net loss per share attributable to Rentrak Corporation common stockholders: | |||||||||||||||
Basic | $ | (0.17 | ) | $ | (0.03 | ) | $ | (0.28 | ) | $ | (0.18 | ) | |||
Diluted | $ | (0.17 | ) | $ | (0.03 | ) | $ | (0.28 | ) | $ | (0.18 | ) | |||
Shares used in per share calculations: | |||||||||||||||
Basic | 13,516 | 12,181 | 12,875 | 12,116 | |||||||||||
Diluted | 13,516 | 12,181 | 12,875 | 12,116 |
Rentrak Corporation and Subsidiaries Condensed Consolidated Statements of Comprehensive Loss (Unaudited) (In thousands, except footnote references) | ||||||||||||||||
For the Three Months Ended December 31, | For the Nine Months Ended December 31, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Net loss | $ | (2,318 | ) | $ | (366 | ) | $ | (3,762 | ) | $ | (2,220 | ) | ||||
Other comprehensive income (loss): | ||||||||||||||||
Foreign currency translation adjustments | (246 | ) | 77 | (631 | ) | 372 | ||||||||||
Unrealized holding gains (losses) which arose during the period on available-for-sale securities(1) | (122 | ) | 19 | (157 | ) | (74 | ) | |||||||||
Recognition of previously unrealized losses on available-for-sale securities included in net loss(2) | 4 | — | 4 | 2 | ||||||||||||
Other comprehensive income (loss) | (364 | ) | 96 | (784 | ) | 300 | ||||||||||
Comprehensive loss | (2,682 | ) | (270 | ) | (4,546 | ) | (1,920 | ) | ||||||||
Comprehensive loss attributable to noncontrolling interest | (31 | ) | (23 | ) | (135 | ) | (52 | ) | ||||||||
Comprehensive loss attributable to Rentrak Corporation | $ | (2,651 | ) | $ | (247 | ) | $ | (4,411 | ) | $ | (1,868 | ) |
Rentrak Corporation and Subsidiaries Condensed Consolidated Statements of Cash Flows (Unaudited) (In thousands) | |||||||
For the Nine Months Ended December 31, | |||||||
2014 | 2013 | ||||||
Cash flows from operating activities: | |||||||
Net loss | $ | (3,762 | ) | $ | (2,220 | ) | |
Income from discontinued operations, net of income taxes | (988 | ) | (2,228 | ) | |||
Adjustments to reconcile net loss to net cash flows provided by operating activities of continuing operations: | |||||||
Depreciation and amortization | 5,366 | 4,326 | |||||
Stock-based compensation | 6,900 | 5,082 | |||||
Deferred income taxes | 1,272 | (62 | ) | ||||
Loss on disposition of assets | 117 | — | |||||
Realized loss on marketable securities | 4 | 2 | |||||
Adjustment to allowance for doubtful accounts | (79 | ) | (130 | ) | |||
(Increase) decrease, net of effect of acquisition, in: | |||||||
Accounts receivable | (6,010 | ) | (1,623 | ) | |||
Taxes receivable and prepaid taxes | 122 | (237 | ) | ||||
Other assets | 781 | (793 | ) | ||||
Increase (decrease), net of effect of acquisition, in: | |||||||
Accounts payable | 1,757 | 343 | |||||
Taxes payable | 197 | (196 | ) | ||||
Accrued liabilities and compensation | 1,853 | 4,181 | |||||
Deferred revenue | 460 | (761 | ) | ||||
Deferred rent | (123 | ) | 254 | ||||
Net cash provided by operating activities of discontinued operations | 2,881 | 5,099 | |||||
Net cash provided by operating activities | 10,748 | 11,037 | |||||
Cash flows from investing activities: | |||||||
Purchase of marketable securities | (69,800 | ) | (6,137 | ) | |||
Sale of marketable securities | 7,500 | 1,000 | |||||
Payments made to develop intangible assets | (84 | ) | (104 | ) | |||
Purchase of property and equipment | (7,716 | ) | (5,643 | ) | |||
Net cash used in investing activities of discontinued operations | — | (114 | ) | ||||
Cash paid for acquisition, net of cash acquired | (207 | ) | (372 | ) | |||
Net cash used in investing activities | (70,307 | ) | (11,370 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from issuance of common stock | 61,092 | 1,479 | |||||
Net cash provided by financing activities | 61,092 | 1,479 | |||||
Effect of foreign exchange translation on cash | (628 | ) | 244 | ||||
Increase in cash and cash equivalents | 905 | 1,390 | |||||
Cash and cash equivalents: | |||||||
Beginning of period | 5,102 | 3,835 | |||||
End of period | $ | 6,007 | $ | 5,225 | |||
Supplemental non-cash information: | |||||||
Capitalized stock-based compensation | $ | 677 | $ | 870 | |||
Common stock used to pay for option exercises | 4,108 | 199 | |||||
Common stock used to pay for taxes associated with option exercises | 990 | — | |||||
Common stock used to pay for taxes associated with vested restricted stock units | 2,611 | 1,046 | |||||
Decrease in leasehold improvements related to forgiven loan | — | 550 | |||||
Common stock used to pay for acquisition | 114,120 | 375 |
Note 1. | Basis of Presentation |
Note 2. | Net Loss Per Share |
Three Months Ended December 31, | Nine Months Ended December 31, | ||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||
Basic EPS: | |||||||||||
Weighted average number of shares of common stock outstanding and vested deferred stock units (“DSUs”) (1) | 13,516 | 12,181 | 12,875 | 12,116 | |||||||
Diluted EPS: | |||||||||||
Effect of dilutive stock options and unvested DSUs | — | — | — | — | |||||||
13,516 | 12,181 | 12,875 | 12,116 | ||||||||
Total outstanding options not included in diluted EPS as they would be antidilutive | 2,882 | 2,917 | 2,882 | 2,917 | |||||||
Performance and market-based grants not included in diluted EPS | 1 | 160 | 1 | 160 |
(1) | Includes 178,703 and 184,458 vested cumulative DSUs, respectively, for the three months ended December 31, 2014 and 2013 and 176,701 and 177,648 vested cumulative DSUs, respectively, for the nine months ended December 31, 2014 and 2013 that will not be issued until the directors holding the DSUs retire from our Board of Directors. |
Three Months Ended December 31, | Nine Months Ended December 31, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Revenue | $ | 7,479 | $ | 12,092 | $ | 23,384 | $ | 35,884 | |||||||
Income from operations | $ | 562 | $ | 1,147 | $ | 1,688 | $ | 3,842 | |||||||
Other expense | — | — | 37 | — | |||||||||||
Income before income taxes | 562 | 1,147 | 1,651 | 3,842 | |||||||||||
Income tax provision | 230 | 482 | 663 | 1,614 | |||||||||||
Income from discontinued operations, net of income taxes | $ | 332 | $ | 665 | $ | 988 | $ | 2,228 |
December 31, 2014 | March 31, 2014 | ||||||
Accounts receivable, net of allowances of $178 and $218 | $ | 3,812 | $ | 5,015 | |||
Other current assets | 188 | 167 | |||||
Property, plant and equipment, net of accumulated depreciation of $931 and $1,086 | 120 | 261 | |||||
Total assets held for sale | $ | 4,120 | $ | 5,443 | |||
Accounts payable | $ | 3,600 | $ | 3,009 | |||
Accrued liabilities | — | 1 | |||||
Accrued compensation | 563 | 848 | |||||
Total liabilities held for sale | $ | 4,163 | $ | 3,858 |
Three Months Ended | Nine Months Ended | |||||||
December 31, 2014 | December 31, 2014 | |||||||
Option grant: | ||||||||
Shares granted from 2011 Incentive Plan to non-executive director | — | 5,267 | ||||||
Fair market value per share on date of grant | $ | — | $ | 46.92 | ||||
Expiration period, in years | 10 | |||||||
Vesting period, in years | 1 | |||||||
Compensation information related to option granted in period(1) (in thousands): | ||||||||
Total valuation, recognized over vesting period | $ | — | $ | 100 | ||||
Total expected expense to be recognized in Fiscal 2015 | $ | — | $ | 64 | ||||
Expense recognized as a component of operating expenses | $ | 27 | $ | 36 | ||||
Restricted Stock (“RSU”) grants: | ||||||||
Units granted from 2011 Incentive Plan | 68,522 | 598,052 | ||||||
Vesting period, in years - high | 10 | 10 | ||||||
Vesting period, in years - low | 5 | 1 | ||||||
Compensation information related to RSUs granted in period (in thousands): | ||||||||
Total fair market value, recognized over vesting period | $ | 5,553 | $ | 31,614 | ||||
Total expected expense to be recognized in Fiscal 2015 | $ | 233 | $ | 2,858 | ||||
Expense recognized as a component of operating expenses | $ | 52 | $ | 1,799 | ||||
Expense capitalized in property and equipment, net (2) | $ | 3 | $ | 81 | ||||
RSUs vesting in period: | 21,025 | 108,293 | ||||||
Shares withheld in payment for taxes associated with vested RSUs | 7,991 | 49,196 | ||||||
DSU grants: | ||||||||
Units granted from 2011 Incentive Plan to non-executive directors | — | 14,917 | ||||||
Vesting period, in years | 1 | |||||||
Compensation information related to DSUs granted in period (in thousands): | ||||||||
Total fair market value, recognized over vesting period | $ | 700 | ||||||
Total expected expense to be recognized in Fiscal 2015 | $ | 445 | ||||||
Expense recognized as a component of operating expenses | $ | 191 | $ | 255 | ||||
DSUs converted to common shares in period | — | 30,581 | ||||||
Note 5. | Fair Value Disclosures |
• | Level 1 – quoted prices in active markets for identical securities; |
• | Level 2 – quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations whose significant inputs are observable; and |
• | Level 3 – significant unobservable inputs, including our own assumptions in determining fair value. |
December 31, 2014 | March 31, 2014 | ||||||||||
Fair Value | Input Level | Fair Value | Input Level | ||||||||
Available-for-sale marketable securities | |||||||||||
Fixed-income securities | $ | 79,011 | Level 1 | $ | 16,868 | Level 1 |
December 31, 2014 | March 31, 2014 | ||||||
Available-for-sale marketable securities | |||||||
Amortized cost | $ | 79,164 | $ | 16,868 | |||
Gross unrecognized holding losses | (153 | ) | — | ||||
Fair value | $ | 79,011 | $ | 16,868 |
Useful Life | ||||||
Accounts receivable | $ | 821 | — | |||
Goodwill | 129,406 | Indefinite | ||||
Other intangible assets: | ||||||
Customer relationships | 5,000 | 10 years | ||||
135,227 | ||||||
Accounts Payable | (543 | ) | — | |||
Deferred revenue | (71 | ) | — | |||
(614 | ) | |||||
$ | 134,613 | |||||
For the Three Months Ended December 31, | For the Nine Months Ended December 31, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Total revenue | $ | 28,322 | $ | 21,195 | $ | 80,253 | $ | 59,077 | |||||||
Net loss attributable to Rentrak Corporation | (1,868 | ) | (1 | ) | (1,952 | ) | (982 | ) | |||||||
Basic earnings per share | (0.12 | ) | — | (0.13 | ) | (0.07 | ) | ||||||||
Diluted earnings per share | (0.12 | ) | — | (0.12 | ) | (0.07 | ) |
Note 7. | Goodwill and Other Intangible Assets |
Nine Months Ended December 31, 2014 | |||
Beginning balance | $ | 7,034 | |
Acquisition of RPD Business | 129,406 | ||
Currency translation | (313 | ) | |
Ending balance | $ | 136,127 |
Year Ended March 31, 2014 | |||
Beginning balance | $ | 4,998 | |
Acquisition of iTVX | 1,888 | ||
Currency translation | 148 | ||
Ending balance | $ | 7,034 |
Amortization Period | December 31, 2014 | March 31, 2014 | |||||||
Customer relationships | 6 to 10 years | $ | 12,530 | $ | 7,941 | ||||
Accumulated amortization | (3,750 | ) | (3,251 | ) | |||||
8,780 | 4,690 | ||||||||
Trade names | 2 to 3 years | 75 | 75 | ||||||
Accumulated amortization | (67 | ) | (58 | ) | |||||
8 | 17 | ||||||||
Existing technology | 4 years | 334 | 334 | ||||||
Accumulated amortization | (158 | ) | (108 | ) | |||||
176 | 226 | ||||||||
Patents | 20 years | 503 | 419 | ||||||
Accumulated amortization | (46 | ) | (29 | ) | |||||
457 | 390 | ||||||||
Order backlog | 1 year | 2 | 2 | ||||||
Accumulated amortization | (2 | ) | (1 | ) | |||||
— | 1 | ||||||||
Global customer relationships | Indefinite | 7,400 | 7,400 | ||||||
Total | $ | 16,821 | $ | 12,724 |
Nine Months Ended December 31, | |||||||
2014 | 2013 | ||||||
Customer relationships | $ | 736 | $ | 649 | |||
Trade names | 9 | 5 | |||||
Existing technology | 50 | 25 | |||||
Patents | 17 | 12 | |||||
Order backlog | 1 | 1 | |||||
Currency translation | (237 | ) | 142 | ||||
$ | 576 | $ | 834 |
Fiscal | Customer Relationships | Trade names | Existing Technology | Patents | |||||||||||
Remainder of Fiscal 2015 | $ | 363 | $ | 3 | $ | 17 | $ | 6 | |||||||
2016 | 1,452 | 5 | 67 | 25 | |||||||||||
2017 | 1,452 | — | 67 | 25 | |||||||||||
2018 | 1,338 | — | 25 | 25 | |||||||||||
2019 | 869 | — | — | 25 | |||||||||||
Thereafter | 3,306 | — | — | 351 | |||||||||||
$ | 8,780 | $ | 8 | $ | 176 | $ | 457 |
Note 8. | Income Taxes |
Note 9. | New Accounting Guidance |
Note 10. | Line of Credit |
Note 11. | Subsequent Events |
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
• | the future growth prospects for our business as a whole and individual business lines in particular, including adding new clients, adjusting rates and increasing business activity, and using funds in our foreign bank accounts to fund our international expansion and growth; |
• | increases in our costs over the next twelve months; |
• | future acquisitions or investments; |
• | our plans or requirements to hold or sell our marketable securities, including shares of our unregistered common stock; |
• | our relationships with our customers and suppliers; |
• | our ability to attract new customers; |
• | market response to our products and services; |
• | increased spending on property and equipment in Fiscal 2015 for the capitalization of internally developed software, computer equipment and other purposes; |
• | expected amortization of our deferred rent; and |
• | the sufficiency of our available sources of liquidity to fund our current operations, the continued current development of our business information services and other cash requirements through at least December 31, 2015 |
• | successfully develop, expand and/or market new services to new and existing customers, including our media measurement services, in order to increase revenue and/or create new revenue streams; |
• | timely acquire and integrate into our systems various third party databases; |
• | compete with companies that may have financial, marketing, sales, technical or other advantages over us; |
• | successfully deal with our data providers, who are much larger than us and have significant financial leverage over us; |
• | successfully manage the impact on our business of the economic environment generally, both domestic and international, and in the markets in which we operate, including the financial condition of any of our suppliers or customers or the impact of the economic environment on our suppliers’ or customers’ ability to continue their services with us and/or fulfill their payment obligations to us; |
• | effectively respond to rapidly changing technology and consumer demand for entertainment content in various media formats; |
• | manage and/or offset any cost increases; |
• | add new clients, retain existing clients or adjust rates for our services; |
• | adapt to government restrictions; |
• | leverage our investments in our systems and generate revenue and earnings streams that contribute to our overall success; |
• | enhance and expand the services we provide in our foreign locations and enter into additional foreign locations; and |
• | successfully integrate business acquisitions or other investments in other companies, products or technologies into our operations and use those acquisitions or investments to enhance our technical capabilities, expand our operations into new markets or otherwise grow our business. |
• | TV Everywhere™, which includes TV Essentials® and StationView Essentials™; |
• | Movies Everywhere™, which includes domestic and international Box Office Essentials®, PostTrak® and PreAct™; |
• | OnDemand Everywhere®, which includes OnDemand Essentials® and “Over the Top” measurement products and related products; and |
• | Other services, which includes our Studio Direct Revenue Sharing (“DRS”) and other products relating to content in the home video rental industry. |
Three Months Ended December 31,(1) | Nine Months Ended December 31, (1) | ||||||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||||||||
Dollars | % of revenue | Dollars | % of revenue | Dollars | % of revenue | Dollars | % of revenue | ||||||||||||||||||||
Revenue | $ | 26,874 | 100.0 | % | $ | 19,517 | 100.0 | % | $ | 74,459 | 100.0 | % | $ | 54,042 | 100.0 | % | |||||||||||
Cost of revenue(2) | 9,538 | 35.5 | 6,820 | 34.9 | 25,182 | 33.8 | 19,938 | 36.9 | |||||||||||||||||||
Gross margin | 17,336 | 64.5 | 12,697 | 65.1 | 49,277 | 66.2 | 34,104 | 63.1 | |||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||||||
Selling, general and administrative(2)(3) | 16,383 | 61.0 | 12,274 | 62.9 | 43,761 | 58.8 | 34,460 | 63.8 | |||||||||||||||||||
Research, technology and innovation(2)(3) | 3,308 | 12.3 | 2,265 | 11.6 | 9,645 | 13.0 | 6,256 | 11.6 | |||||||||||||||||||
Total operating expenses | 19,691 | 73.3 | 14,539 | 74.5 | 53,406 | 71.7 | 40,716 | 75.3 | |||||||||||||||||||
Loss from continuing operations | (2,355 | ) | (8.8 | ) | (1,842 | ) | (9.4 | ) | (4,129 | ) | (5.5 | ) | (6,612 | ) | (12.2 | ) | |||||||||||
Other income, net | 82 | 0.3 | 53 | 0.3 | 122 | 0.2 | 144 | 0.3 | |||||||||||||||||||
Loss from continuing operations before income taxes | (2,273 | ) | (8.5 | ) | (1,789 | ) | (9.2 | ) | (4,007 | ) | (5.4 | ) | (6,468 | ) | (12.0 | ) | |||||||||||
Provision (benefit) for income taxes | 377 | 1.4 | (758 | ) | (3.9 | ) | 743 | 1.0 | (2,020 | ) | (3.7 | ) | |||||||||||||||
Loss from continuing operations, net of income taxes | (2,650 | ) | (9.9 | ) | (1,031 | ) | (5.3 | ) | (4,750 | ) | (6.4 | ) | (4,448 | ) | (8.2 | ) | |||||||||||
Income from discontinued operations, net of income taxes(2)(3) | 332 | 1.2 | 665 | 3.4 | 988 | 1.3 | 2,228 | 4.1 | |||||||||||||||||||
Net loss | (2,318 | ) | (8.6 | ) | (366 | ) | (1.9 | ) | (3,762 | ) | (5.1 | ) | (2,220 | ) | (4.1 | ) | |||||||||||
Net loss attributable to noncontrolling interest | (31 | ) | (0.1 | ) | (23 | ) | (0.1 | ) | (135 | ) | (0.2 | ) | (52 | ) | (0.1 | ) | |||||||||||
Net loss attributable to Rentrak Corporation | $ | (2,287 | ) | (8.5 | )% | $ | (343 | ) | (1.8 | )% | $ | (3,627 | ) | (4.9 | )% | $ | (2,168 | ) | (4.0 | )% | |||||||
(1) Percentages may not sum due to rounding. All prior periods presented have been restated as a result of reporting our PPT® business as discontinued operations. See Note 3 of Notes to Condensed Consolidated Financial Statements. | |||||||||||||||||||||||||||
(2) Depreciation and amortization expense is included in the line items above as follows: | |||||||||||||||||||||||||||
Cost of revenue | $ | 1,062 | $ | 784 | $ | 2,936 | $ | 2,363 | |||||||||||||||||||
Selling, general and administrative | 617 | 529 | 1,733 | 1,486 | |||||||||||||||||||||||
Research, technology and innovation | 287 | 189 | 697 | 477 | |||||||||||||||||||||||
Net income from discontinued operations | 20 | 41 | 98 | 123 | |||||||||||||||||||||||
$ | 1,986 | $ | 1,543 | $ | 5,464 | $ | 4,449 | ||||||||||||||||||||
(3) Stock-based compensation expense is included in the line items above as follows: | |||||||||||||||||||||||||||
Selling, general and administrative | $ | 1,892 | $ | 1,235 | $ | 5,180 | $ | 3,483 | |||||||||||||||||||
iTVX contingent consideration | 900 | 300 | 1,000 | 1,100 | |||||||||||||||||||||||
Research, technology and innovation | 246 | 202 | 720 | 499 | |||||||||||||||||||||||
3,038 | 1,737 | 6,900 | 5,082 | ||||||||||||||||||||||||
Net income from discontinued operations | 103 | 105 | 309 | 294 | |||||||||||||||||||||||
$ | 3,141 | $ | 1,842 | $ | 7,209 | $ | 5,376 | ||||||||||||||||||||
Three Months Ended December 31, | Dollar Change | % Change | |||||||||||
2014 | 2013 | ||||||||||||
TV Everywhere™ | $ | 14,792 | $ | 8,399 | $ | 6,393 | 76.1% | ||||||
Movies Everywhere™ | 7,425 | 6,743 | 682 | 10.1% | |||||||||
OnDemand Everywhere® | 3,732 | 3,112 | 620 | 19.9% | |||||||||
Other services | 925 | 1,263 | (338 | ) | (26.8)% | ||||||||
$ | 26,874 | $ | 19,517 | $ | 7,357 | 37.7% | |||||||
Nine Months Ended December 31, | Dollar Change | % Change | |||||||||||
2014 | 2013 | ||||||||||||
TV Everywhere™ | $ | 38,618 | $ | 21,311 | $ | 17,307 | 81.2% | ||||||
Movies Everywhere™ | 22,191 | 19,548 | 2,643 | 13.5% | |||||||||
OnDemand Everywhere® | 10,321 | 9,585 | 736 | 7.7% | |||||||||
Other services | 3,329 | 3,598 | (269 | ) | (7.5)% | ||||||||
$ | 74,459 | $ | 54,042 | $ | 20,417 | 37.8% |
Three Months Ended December 31, | Dollar Change | % Change | |||||||||||
2014 | 2013 | ||||||||||||
Costs related to: | |||||||||||||
Amortization of internally developed software | $ | 1,061 | $ | 785 | $ | 276 | 35.2% | ||||||
Call center operation | 1,412 | 1,327 | 85 | 6.4% | |||||||||
Obtaining and processing data | 7,065 | 4,708 | 2,357 | 50.1% | |||||||||
$ | 9,538 | $ | 6,820 | $ | 2,718 | 39.9% | |||||||
Nine Months Ended December 31, | Dollar Change | % Change | |||||||||||
2014 | 2013 | ||||||||||||
Costs related to: | |||||||||||||
Amortization of internally developed software | $ | 2,935 | $ | 2,364 | $ | 571 | 24.2% | ||||||
Call center operation | 4,294 | 4,062 | 232 | 5.7% | |||||||||
Obtaining and processing data | 17,953 | 13,512 | 4,441 | 32.9% | |||||||||
$ | 25,182 | $ | 19,938 | $ | 5,244 | 26.3% |
Three Months Ended December 31, | Nine Months Ended December 31, | ||||||
2014 | 2013 | 2014 | 2013 | ||||
Gross margin | 64.5% | 65.1% | 66.2% | 63.1% |
Three Months Ended December 31, | Dollar Change | % Change | |||||||||||
Operating expenses | 2014 | 2013 | |||||||||||
Entertainment Essentials™ | $ | 10,214 | $ | 8,615 | $ | 1,599 | 18.6% | ||||||
Research, technology and innovation | 3,308 | 2,265 | 1,043 | 46.0% | |||||||||
Stock-based compensation costs for iTVX | 900 | 300 | 600 | 200.0% | |||||||||
Acquisition & reorganization related costs | 974 | 24 | 950 | nm | |||||||||
Corporate | 4,295 | 3,335 | 960 | 28.8% | |||||||||
$ | 19,691 | $ | 14,539 | $ | 5,152 | 35.4% | |||||||
Nine Months Ended December 31, | Dollar Change | % Change | |||||||||||
Operating expenses | 2014 | 2013 | |||||||||||
Entertainment Essentials™ | $ | 29,676 | $ | 24,046 | $ | 5,630 | 23.4% | ||||||
Research, technology and innovation | 9,645 | 6,256 | 3,389 | 54.2% | |||||||||
Stock-based compensation costs for iTVX | 1,000 | 1,100 | (100 | ) | (9.1)% | ||||||||
Acquisition and reorganization related costs | 1,290 | 214 | 1,076 | nm | |||||||||
Corporate | 11,795 | 9,100 | 2,695 | 29.6% | |||||||||
$ | 53,406 | $ | 40,716 | $ | 12,690 | 31.2% |
Three Months Ended December 31, | Dollar Change | % Change | |||||||||||
2014 | 2013 | ||||||||||||
Income from discontinued operations, net of income taxes | $ | 332 | $ | 665 | $ | (333 | ) | (50.1)% | |||||
Nine Months Ended December 31, | Dollar Change | % Change | |||||||||||
2014 | 2013 | ||||||||||||
Income from discontinued operations, net of income taxes | $ | 988 | $ | 2,228 | $ | (1,240 | ) | (55.7)% |
Three Months Ended December 31, | Nine Months Ended December 31, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Net loss attributable to Rentrak Corporation | $ | (2,287 | ) | $ | (343 | ) | $ | (3,627 | ) | $ | (2,168 | ) | |||
Income from discontinued operations, net of income taxes | (332 | ) | (665 | ) | (988 | ) | (2,228 | ) | |||||||
Non-recurring adjustments: | |||||||||||||||
Reduction in valuation allowance on deferred tax assets | — | — | — | (324 | ) | ||||||||||
Recurring adjustments: | |||||||||||||||
iTVX stock-based compensation | 900 | 300 | 1,000 | 1,100 | |||||||||||
Acquisition and reorganization costs | 974 | 24 | 1,290 | 214 | |||||||||||
Stock-based compensation from continuing operations | 2,138 | 1,437 | 5,900 | 3,982 | |||||||||||
Income tax provision (benefit) | 377 | (758 | ) | 743 | (1,696 | ) | |||||||||
Investment income, net | (105 | ) | (53 | ) | (206 | ) | (146 | ) | |||||||
Depreciation and amortization from continuing operations | 1,966 | 1,502 | 5,366 | 4,326 | |||||||||||
Adjusted EBITDA | $ | 3,631 | $ | 1,444 | $ | 9,478 | $ | 3,060 |
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK. |
ITEM 4. | CONTROLS AND PROCEDURES |
ITEM 1A. | RISK FACTORS |
• | increased costs relating to the integration of acquired businesses or technologies; |
• | difficulties assimilating the acquired operations, personnel, technologies or products into our company; |
• | loss of key personnel at an acquired business who decide not to work for us; |
• | diversion of management’s attention from our existing operations; |
• | adverse effects on relationships with our existing suppliers, customers or partners; |
• | a need for additional capital or debt financing to complete acquisitions; and |
• | the impairment of intangible assets acquired. |
ITEM 6. | EXHIBITS |
Incorporated by Reference | ||||||||||||
Exhibit Number | Exhibit Description | Form | File Number | Exhibit | Filing Date | Filed Herewith | ||||||
10.1 | Credit Agreement, dated December 1, 2014 between Rentrak Corporation and Wells Fargo Bank, National Association | X | ||||||||||
10.2 | Revolving Line of Credit Note, dated December 1, 2014 between Rentrak Corporation and Wells Fargo Bank, National Association | X | ||||||||||
10.3 | Addendum to Promissory Note, dated December 1, 2014 between Rentrak Corporation and Wells Fargo Bank, National Association | X | ||||||||||
31.1 | Certification of Chief Executive Officer pursuant to Rule 13a-14(a). | X | ||||||||||
31.2 | Certification of Chief Financial Officer pursuant to Rule 13a-14(a). | X | ||||||||||
31.3 | Certification of Principal Accounting Officer pursuant to Rule 13a-14(a). | X | ||||||||||
32.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350. | X | ||||||||||
32.2 | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350. | X | ||||||||||
32.3 | Certification of Principal Accounting Officer pursuant to 18 U.S.C. Section 1350. | X | ||||||||||
101.INS | XBRL Instance Document. | X | ||||||||||
101.SCH | XBRL Taxonomy Extension Schema Document. | X | ||||||||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. | X | ||||||||||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document. | X | ||||||||||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document. | X | ||||||||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document. | X |
Date: | February 5, 2015 | RENTRAK CORPORATION | |||
By: | /s/ David I. Chemerow | ||||
David I. Chemerow Chief Operating Officer and Chief Financial Officer |
RENTRAK CORPORATION | WELLS FARGO BANK, | |||
NATIONAL ASSOCIATION | ||||
By: | /s/ David I Chemerow | By: | /s/ Victoria K. Dunn | |
David I. Chemerow, CFO, COO, and Secretary | Victoria K. Dunn, Vice President |
RENTRAK CORPORATION | |
By: | /s/ David I Chemerow |
David I. Chemerow, CFO, COO, and Secretary |
Net Profit/Loss to | Applicable LIBOR Margin | |
Net Loss of greater than $5,000,000.00 | 2.00% | |
Net Profit of at least $0.00 but net loss less than $5,000,000.00 | 1.75% | |
Net Profit of $1.00 and greater | 1.50% |
RENTRAK CORPORATION | |
By: | /s/ David I Chemerow |
David I. Chemerow, CFO, COO, and Secretary |
1. | I have reviewed this quarterly report on Form 10-Q of Rentrak Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
By: | /s/ William P. Livek | ||
William P. Livek | |||
Director and Chief Executive Officer | |||
Rentrak Corporation |
1. | I have reviewed this quarterly report on Form 10-Q of Rentrak Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
By: | /s/ David I. Chemerow | ||
David I. Chemerow | |||
Chief Operating Officer and Chief Financial Officer | |||
Rentrak Corporation |
1. | I have reviewed this quarterly report on Form 10-Q of Rentrak Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
By: | /s/ Michelle R. Spencer | ||
Michelle R. Spencer | |||
Senior Vice President of Finance and Deputy Chief Financial Officer | |||
Rentrak Corporation |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
By: | /s/ William P. Livek | ||
William P. Livek | |||
Director and Chief Executive Officer | |||
Rentrak Corporation | |||
February 5, 2015 |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
By: | /s/ David I. Chemerow | ||
David I. Chemerow | |||
Chief Operating Officer and Chief Financial Officer | |||
Rentrak Corporation | |||
February 5, 2015 |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
By: | /s/ Michelle R. Spencer | ||
Michelle R. Spencer | |||
Principal Accounting Officer | |||
Rentrak Corporation | |||
February 5, 2015 |
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