BELLEVUE, WA -- Rapid expansion of the Redbox movie-rental business fueled Coinstar Inc.'s second-quarter profit of $13.4 million, or 41¢ a share, almost double the $7 million, or 23¢ a share, posted a year earlier. Quarterly revenue rose 35% to $342.4 million. But delayed access to some new releases resulted in lower-than-expected same-store sales, prompting the company to reduce full-year guidance.
Revenue from the Redbox business climbed 44% to $271.9 million, driven by the additional placement of 7,000 self-service DVD rental and 600 coin-counting kiosks.
Same-store DVD kiosk sales rose only 3.5%, following two quarters of 21% growth. The company attributed the slowdown to new agreements with three studios that delayed Redbox's access to some new releases until 28 days after they go on sale in stores. In addition, second-quarter expenses included $2.2 million in share-based payments related to supply agreements with Sony Pictures Home Entertainment and Paramount Home Entertainment Inc., which are not requiring Redbox to delay rental of new releases.
Revenue in the company's coin-counting business grew 8.5% to $70.4 million in the second quarter as a 10% price increase offset a decline in the number of transactions.
Coinstar sold its electronic-payments unit in May, which was in line with the strategy to focus on movie rentals and coin processing. It lowered its second-quarter outlook as a result of earnings from continuing operations of 28¢ to 32¢ on revenue of $363 million to $383 million.
Reflecting the sale of the e-payment business and plans to sell its money transfer businesses as discontinued operations, the company now projects earnings for the full year will be $1.88 to $2, up from its prior forecast of $1.74 to $1.86.
But following the slowdown in second-quarter DVD volume, the company lowered its full-year revenue forecast to a range of $1.43 billion to $1.51 billion from its May projection of $1.51 billion to $1.6 billion. For the third quarter, Coinstar expects earnings from continuing operations of 46¢ to 52¢ a share on revenue of $370 million to $390 million.