Redbox Owner CoinStar Reports Disappointing Second-Quarter Profit
UPDATED: Revenue for Redbox has grown 26 percent in the past year, although the results weren't as great as analysts had hoped.
Coinstar, the parent company of DVD rental kiosk owner Redbox, reported its second-quarter earnings on Thursday, indicating growth although missing analyst expectations.
The company posted earnings of $36.9 million, an increase of about 13 percent from the previous year. The company also reported revenue of $532.2 million, a 22 percent increase from $435 million in the same quarter in 2011.
The increase was driven primarily by Redbox revenue growth of 26 percent to $458 million, which the company attributed to new kiosk installations, growth in same store sales and a price increase implemented last October.
Analysts had expected an 18 percent rise in earnings and about $545 million in revenue, according to a analysis of the consensus projections.
"Coinstar's second quarter was marked by strong bottom line performance and significant progress against key initiatives positioning the company for long-term growth," said Coinstar CEO Paul Davis.
In trading today, Coinstar's stock was basically unchanged at about $59 a share. That price represents a drop of a couple of dollars from a few months ago. But in after hours trading, the stock price was hit hard, down about 15 percent in the first hour after results were announced.
Earlier in the week, Coinstar and Verizon Communications announced they had begun to test their streaming-video joint project that was announced in February. The product is called Redbox Instant by Verizon, and Coinstar hopes it will represent the future for Redbox as the market for physical DVDs faces maturity.
On a conference call with analysts after the earnings announcement, Davis wouldn't say much about Redbox Instant including whether the company would be bringing wholly owned content. "As we get ready to go to market, we'll give more details," he said. "It'll become more clear what the product offering will be. I feel good and confident about what we'll be bringing. It will be content that counts.
The company is projecting about $2.2 billion in revenue for the year in total.