BELLEVUE, WA -- Outerwall Inc.'s financial performance fell short of Wall Street's expectations in the second quarter, hurt by declines in DVD rentals at its Redbox kiosks.
The company, which changed its name from Coinstar in early July, also announced that it has completed its $262.9 million acquisition of ecoATM, the creator of an automated self-serve kiosk system that buys used mobile phones, tablets and MP3 players for cash. | SEE STORY
Outerwall's net income rose to $46.9 million, or $1.64 a share, in the second quarter from $36.9 million, or $1.11 a share, a year earlier.
Excluding a one-time tax benefit and accounting change, however, Outerwall earned 91¢ a share in the quarter, down 27% year over year and below Wall Street's forecast for earnings of 99¢ a share.
Total Outerwall revenue rose 4% to $554.2 million. Analysts had forecast $564.9. Redbox revenue climbed 4.5% to $478.5 million during the quarter, which the company attributed primarily to new kiosk installations. The figure was about $10 million below Wall Street's estimate. Revenue generated by Coinstar coin-counting kiosks edged up 1% to $74.5 million.
Outerwall chief executive Scott Di Valerio expressed optimism for Redbox in the second half of 2013.
"Redbox eclipsed 50% of the physical rental market for the first time during the second quarter, and we expect rentals and revenue per kiosk to exceed 2012 levels in the second half of the year as stronger content and enhanced marketing efforts drive improved customer frequency and retention," Di Valerio said.
Outerwall lowered its revenue guidance for the full year by more than $40 million. It now expects to earn between $5.76 and $6.26 a share in 2013. It is projecting $2.37 billion to $2.48 billion in revenue, below its previous estimate of $2.39 billion to $2.55 billion.