Edgar Filing: RENTRAK CORP

RENT-2015.3.31-10K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

_______________________________________

FORM 10-K



[X]		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the Fiscal Year Ended: March 31, 2015
OR
[ ]		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 000‑15159

RENTRAK CORPORATION

(Exact name of registrant as specified in its charter)



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)
	Registrant’s telephone number, including area code: 503‑284-7581
	Securities Registered pursuant to Section 12(b) of the Act:
Title of each class		Name of each exchange on which registered
Common Stock, $0.001 par value per share		The NASDAQ Stock Market LLC (NASDAQ Global Market)
	Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act: Yes ¨ No ý

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act: Yes ¨ No ý

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K, or any amendment to this Form 10-K. ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer	ý		Accelerated filer	¨
Non-accelerated filer	¨	(Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No ý

The aggregate market value of the voting and non-voting common equity held by non-affiliates, computed by reference to the last sales price ($60.94) as reported by the NASDAQ Global Market, as of the last business day of the Registrant’s most recently completed second fiscal quarter (September 30, 2014), was $732,097,022.

The number of shares outstanding of the Registrant’s Common Stock as of May 22, 2015 was 15,253,468 shares.

Documents Incorporated by Reference

The Registrant has incorporated into Part III of Form 10‑K, by reference, portions of its Proxy Statement for its 2015 Annual Meeting of Shareholders.

RENTRAK CORPORATION

2015 FORM 10-K ANNUAL REPORT

TABLE OF CONTENTS



		Page
Forward-Looking Statements		2

	PART I

Item 1.	Business	3

Item 1A.	Risk Factors	10

Item 1B.	Unresolved Staff Comments	13

Item 2.	Properties	14

Item 3.	Legal Proceedings	14

Item 4.	Mine Safety Disclosures	14

	PART II

Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	15

Item 6.	Selected Financial Data	17

Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19

Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	34

Item 8.	Financial Statements and Supplementary Data	35

Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	69

Item 9A.	Controls and Procedures	69

Item 9B.	Other Information	71

	PART III

Item 10.	Directors, Executive Officers and Corporate Governance	71

Item 11.	Executive Compensation	71

Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	71

Item 13.	Certain Relationships and Related Transactions, and Director Independence	71

Item 14.	Principal Accountant Fees and Services	72

	PART IV

Item 15.	Exhibits and Financial Statement Schedules	72

Signatures		73

Table of Contents

Forward-Looking Statements

Certain information included in this Annual Report on Form 10-K (including Management’s Discussion and Analysis of Financial Condition and Results of Operations regarding revenue growth, gross profit margin and liquidity) constitute forward-looking statements that involve a number of risks and uncertainties. Forward-looking statements may be identified by the use of forward-looking words such as “could,” “should,” “plan,” “depends on,” “predict,” “believe,” “potential,” “may,” “will,” “expects,” “intends,” “anticipate,” “estimates” or “continues” or the negative thereof or variations thereon or comparable terminology. Forward-looking statements in this Annual Report on Form 10-K include, in particular, statements regarding:


•	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;


•	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 2016 for the capitalization of internally developed software, computer equipment, and other purposes;


•	expected amortization of our deferred rent;


•	the integration of the U.S. television measurement business related to television tuning analytics utilizing return path data of WPP’s Kantar business unit; 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 March 31, 2016.

These forward-looking statements involve known and unknown risks and uncertainties that may cause our results to be materially different from results implied by such forward-looking statements. These risks and uncertainties include, in no particular order, whether we will be able to:


•	successfully develop, expand and/or market new services to new and existing customers, including our media measurement and advanced consumer targeting 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 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.

Please refer to Item 1A. Risk Factors in this Annual Report on Form 10-K for a discussion of reasons why our actual results may differ materially from our forward-looking statements. Although we may elect to update forward-looking statements in the future, we specifically disclaim any obligation to do so, even if our expectations change.

PART I


ITEM 1.	BUSINESS

Overview

We are a global media measurement and advanced consumer targeting company serving the entertainment, television, video and advertising industries. Our Software as a Service (“SaaS”) technology merges television viewership information from over 117 million TVs and devices with consumer behavior and purchase information (“Advanced Demographics”) across multiple platforms, devices and distribution channels. We also measure box office results from more than 125,000 movie screens in 47 countries throughout the world. We process and aggregate hundreds of billions of data transactions from multiple screens wherever entertainment content is viewed, whether at the box office, on a television screen, over the Internet, on a smart phone or other portable device. Rentrak measures live TV, recorded TV (“DVR”), and Video on Demand (“VOD”), whether the content is free, purchased, rented, recorded, downloaded or streamed from multiple channels. These massive content databases provide stable and granular viewership information across every screen (“multiscreen”) and are anonymously matched with information from third-party consumer segmentation and purchase databases using privacy compliant methodologies. By linking multiscreen viewership information with information about the products viewers consume and prefer, we provide our clients, such as content producers, distributors, advertisers and advertising agencies, with the knowledge necessary to more effectively manage their businesses, program and market their networks and more precisely target and sell their advertising inventory. Some examples of the benefits to the advertising community are improved profitability by effectively targeting viewers of specific TV shows through the products they buy, the cars they drive and how they are likely to vote in elections. Some examples of the benefits to the movie industry and video (TV) content owners are that they can manage their businesses in real time or near real time and also improve their profitability. Additionally, certain clients use our advanced analytics to populate automated buying systems. These systems automate the buying process for TV commercials and introduce efficiencies for both advertising agencies and their clients.

Rentrak Corporation is an Oregon corporation and was incorporated in 1977. It is headquartered in Portland, Oregon, with additional offices in the United States and around the world.

Prior to the fiscal year ended March 31, 2014 (“Fiscal 2014”), we had two operating divisions within our company, and we reported certain financial information by individual segment under this structure. Those two operating divisions were our Advanced Media and Information (“AMI”) operating division, which included our media measurement services, and our Home Entertainment operating division, which primarily included our distribution services as well as services that measure, aggregate and report consumer rental activity on packaged media products from traditional “brick-and-mortar,” online and kiosk retailers.

During the fourth quarter of Fiscal 2014, we initiated our plan to sell our Pay Per Transaction^® (“PPT^®”) business, which had been a longstanding legacy business of Rentrak, and a significant component of the Home Entertainment operating division. Our PPT^® business had been in a state of decline due to the decline of physical DVD rentals from retail stores. The sale of PPT^® was completed as of January 31, 2015. The strategic decision to sell PPT^® enables us to focus more fully on the growth of our media measurement and advanced consumer targeting business. Accordingly, we have restated our financial results and the PPT^® business is reported as discontinued operations for all periods presented. See additional information in Note 18 of Notes to Consolidated Financial Statements.

As a result of our sale of the PPT^® business, we operate in a single business segment encompassing our media measurement and advanced consumer targeting services which are primarily delivered through scalable, SaaS tools within our Essentials^® product lines. These syndicated big data services, offered primarily on a recurring subscription basis, provide consumer viewership information integrated with information from consumer segmentation and purchase behavior databases. We provide movie studios, television networks and local stations, cable, satellite and telecommunications company (“telco”) operators, advertisers and advertising agencies unique insights into consumer viewing and purchasing patterns through our comprehensive and expansive information on local, national, VOD and “Over the Top” (“OTT”) television performance and worldwide box office results. Our movie measurement products measure more than 95% of the ticket sales globally in real or near real time, allowing our customers to make decisions to market, promote and manage the industry for maximum profitability.

Our Products and Services

Our media measurement services are distributed to clients through patent pending software systems and business processes into two broad areas within the entertainment industry, which we refer to as TV Everywhere^™and Movies Everywhere^™. The content viewership and Advanced Demographics (the products we buy and the “lifestyles” we lead) included in our TV Everywhere^™ products are from nearly every ZIP code in America, projected to all 210 local TV markets and to a national level across multiple distribution platforms. This method results in granular levels of processing from billions of transactions and establishes us as a premier source of television ratings with consumer targeting using Advanced Demographics.

We are also the only source of worldwide movie box office results, trends and insights. Our business growth within the Movies Everywhere^™ product lines is due to our continued expansion of our global footprint, as well as the introduction of new products to help studios and content creators better monetize their content for maximum profitability. We have also seen significant growth within our TV Everywhere^™ service offerings and believe there is opportunity for continued growth. As the TV, video and advertising sectors continue to evolve, they are becoming increasingly more fragmented, and consumers can view a wide variety of entertainment content wherever and whenever they choose via an expanding array of devices and technologies. We have invested heavily in our systems, processes and databases in order to address the evolving needs of the industry and help our clients maximize the efficiency and effectiveness of their advertising programs. Our systems capture total television audience information by providing the largest coverage from multiple screens and providers and merge that information with Advanced Demographics and information relating to actual consumer purchase behavior.

Our services are designed to help our clients understand consumer viewing, reaction and purchase behavior everywhere content and advertising are consumed to allow both sellers and buyers to more precisely target the most relevant viewing audience. This precise targeting enables our clients to optimize their marketing, sales and advertising strategies. The majority of our service offerings are related to four major types of content: 1) ad-supported content, specifically linear television which can be viewed as a scheduled program, in a time-shifted manner, on VOD, or streamed or downloaded from the Internet or via a mobile device, 2) subscription- or transactional-based programming content, 3) advanced media and analytics, which provides audience targets, measurement and marketing mix optimization for television and digital viewing content combined and 4) theatrical box office content. Typical customers utilizing our services include content producers, studios, distributors, national networks, local stations, satellite and cable operators, agencies, and a wide spectrum of advertisers, ranging from traditional consumer brands to various political groups. We also provide many of our clients tailored research and analytical solutions unique to their needs and specifications.

Our most significant product offerings, which we refer to as Essentials^®, are:


•	TV Everywhere^™, which includes TV Essentials^® and StationView Essentials^™;


•	Movies Everywhere^™, which includes Box Office Essentials^®, International Box Office Essentials^™, PostTrak^® and PreAct^™;


•	OnDemand Everywhere^®, which includes OnDemand Essentials^®, Digital Download Essentials^®, Multiscreen Essentials^® and other Over the Top measurement tools and related products; and


•	Other services, which includes Studio Revenue Share Essentials^™ (“SRSE”) and other products relating to measurement of physical content in the home video rental industry.

In December 2014, we acquired the U.S. television measurement business related to television tuning analytics utilizing return path data (the “RPD Business”) of WPP’s Kantar business unit. We also entered into agreements with GroupM and The Kantar Group, which are related WPP entities. Under the agreements, Rentrak will integrate its national and local TV measurement with a number of Kantar’s U.S.-based services that focus on digital media, advertising expenditure and purchase data. The integration will provide advertisers, agencies, TV networks, multichannel video program distributors (“MVPDs”) and local television stations throughout the U.S. with even more powerful tools to understand consumers’ purchasing habits and the ability to link TV viewing habits with purchase and other behavior in the United States. We believe these transactions give us better scale to rapidly innovate our products and services in the U.S., and we expect the agreements to produce multiple long-term revenue streams as a result of the company’s expanded relationship with GroupM and WPP. The financial results of the RPD Business from the date of acquisition are included within our TV Everywhere^™ product line. See Note 4 of Notes to Consolidated Financial Statements.

In August 2013, we acquired iTVX, a provider of branded entertainment analytics, insight and research. Going beyond traditional product placement, branded entertainment is the creation and integration of original branded content into television, movie and other digital entertainment content types. Successful branded entertainment spurs consumers to engage and interact with a brand through the strategic placement of marketing messages across every screen. Our branded entertainment services provide our clients with the impact brand integration has on consumers across movie and television content on all screens, which enables users

to assess the total media value of their campaigns. The financial results of iTVX, now called Rentrak Branded Entertainment^™, from the date of acquisition are included within our TV Everywhere^™ product line. See Note 4 of Notes to Consolidated Financial Statements.

Our revenue increased $27.3 million, or 36.1%, in the fiscal year ended March 31, 2015 (“Fiscal 2015”) compared to Fiscal 2014. Our current spending, investments and long-term strategic planning are heavily focused on the innovation, development, growth and expansion of our services and product lines, both domestically and internationally. As such, we continue to allocate significant resources towards innovation and the expansion of our data assets and technology as well as our research, analytics and sales groups. These strategic investments, many of which are expensed as incurred, have lowered our overall operating performance. As a result, we had operating losses from continuing operations of $6.1 million, $9.5 million and $26.5 million for Fiscal 2015, 2014 and 2013 respectively.

TV Everywhere^™

We provide our customers with second-by-second performance metrics that deliver consumer viewing behavior for scheduled, interactive, and DVR television content. We aggregate transaction-level data across all 210 designated local television markets in the United States, which are projected to the complete footprint of television households resulting in massive amounts of information regarding viewing behavior from every market. We currently have multi-year contracts with a number of data providers including DISH Network L.L.C. (“DISH”), AT&T Services, Inc. (“AT&T), Charter Communications, Inc., DIRECTV LLC, FourthWall Media, Inc. and Cox Communications, Inc. (“Cox”). Our viewership information, which integrates satellite, telco, cable and projects Over the Air viewing, provides our customers with a deep level of granularity and stability, and thus the competitive advantage of a more informed understanding of the viewing audience. We provide our customers with access to information from hundreds of networks, which is significantly more than the information available elsewhere. Our technology includes web-based reporting systems, which provide clients with instant access to the measurement metrics and detailed analytics key to tracking content and consumer behavior across multiple platforms and devices. We also provide Advanced Demographics, which allow our customers to more accurately pinpoint audiences they want to reach, by combining our massive viewership information with third party consumer behavior information from a variety of industry-leading sources, enabling our customers to develop more targeted approaches to ad selling and buying. As an example of our status as a valued currency, our roster of political advertisers continues to expand because we help candidates target the audiences they want to reach and more efficiently and effectively utilize their campaign funds. Our most significant products for measurement of national and local television audiences within our TV Everywhere^™ services include TV Essentials^®and StationView Essentials^™.

TV Essentials^® is a comprehensive suite of research and analytical tools that reports network television audience viewership patterns across all facets of television programming and advertising, including linear and DVR television viewing. By providing transaction-level performance metrics from tens of millions of televisions across the United States, TV Essentials^® helps our national network, agency and advertiser clients make better decisions by giving them a greater and more relevant and reliable understanding of the true value of their viewing audiences. We provide insight into programming effectiveness, enabling networks and network operators to optimize their TV advertising inventory. Developed with the potential capacity to handle data from all of the nation’s television households, the system can isolate individual market, network, series or telecast performances, administer national and local estimates and provide an evaluation of influencing factors such as purchase behaviors and Advanced Demographics for competitive, in-depth intelligence. One of the biggest advantages of TV Essentials^® is that it combines the stability and granularity of TV viewing information with marketing segmentation and advertiser databases, resulting in robust targeted TV viewership intelligence. Our advanced television targeting enables our customers to spend their advertising dollars more efficiently and effectively since they are able to target consumers who they believe will purchase their products. In addition, with TV Essentials^® Exact Commercial Ratings^®, we are able to provide our national clients with the ability to determine the performance of a specific commercial on their network campaigns so they can plan, buy and sell advertising more strategically.

StationView Essentials^™ is a local market television measurement and analytical service specifically designed to meet the unique needs of local television station and cable sales, news and management teams, as well as local agency media directors, planners and buyers. StationView Essentials^™ allows clients to better understand consumer viewing patterns across local TV stations and cable channels in their market(s), monitor and maximize daily program performance by evaluating viewing trends down to the minute, and identify how similar audiences view programming across multiple stations and local cable channels to (a) more efficiently and effectively promote viewership to a particular station (“ratings”) and (b) negotiate inventory pricing. Additionally, with our stable and reliable ratings information and our highly targeted Advanced Demographics, our clients identify those programs that have higher densities of consumers most likely to purchase a given product, and thereby sell or buy their advertising far more effectively and profitably. Our local market services services allows local television stations, cable channels, agencies and advertisers to sell and buy

television inventory not only based on the size of the audience, but more importantly on its value and relevance of the audience to the specific client. We empower our local clients to utilize television as a highly effective advertising targeting channel in much the same way that the Internet and direct marketing are used.

Technology has evolved in terms of how television advertising is bought and sold. Systems have been developed to automate the TV ad buying and selling processes, which is referred to as programmatic or automated buying/selling for television advertising (“automated TV”). Automated TV is different from current sales methods because it enables sellers and buyers to use computer software to automatically sell/buy inventory based on the relevance of the audience and efficiency of the pricing. With our Advanced Demographics and granular currency, used by several companies utilizing automated TV systems, we can help our clients target their desired audiences far more effectively. For example, local cable and satellite providers are embracing automated TV because the technology allows them to use audience viewing information to more effectively understand the type of people who are watching their ads. Our services would show our clients that viewers of a particular network at a particular time are more likely to be in the market for a particular product. This knowledge enables them to increase the value of their advertising inventory and increase the likelihood that specific targeted audiences are exposed to specific ads, thereby adding to our client’s profitability.

We have recently launched a new product offering, which we refer to as “Rubik”, which is an extension of our existing services. Rubik is a national television analytical platform that includes Advanced Demographics, enabling our clients to optimize planning and buying at the national level by creating unique target groups based on program viewing patterns or advertising exposure. Clients can also define and calculate analytic reports, such as reach and frequency or subsequent program viewership (also known as promo effectiveness). Rubik utilizes a subset of our data, including data from hundreds of national networks and, as such, is able to more quickly provide our customers with flexible analytics.

See below for a discussion within the “Innovation, Research, Development and Technology” section for more information on new products which are currently being developed.

OnDemand Everywhere^®

The VOD market continues to evolve and the amount of time consumers spent with On Demand broadcast primetime content increased by 22% in calendar 2014. Innovation and technological advances continue to provide improved viewer experiences across a growing number of distribution platforms. Consumers are demonstrating increased control over what entertainment content they watch, when they watch it and on what device, whether a live broadcast, on a DVR, on VOD, or from a wide variety of OTT platforms, such as Netflix, Hulu, VUDU and iTunes, and TV Everywhere^™ platforms such as Xfinity, FiOS, and AT&T U-Verse, which continues to increase the breadth of entertainment content available to the consumer. Another significant shift continues to occur as consumers move away from paid VOD content to what is known as “Free on Demand,” or ad-supported, content. Currently, more than 77% of all VOD content viewed is Free on Demand and more than 60% of its viewing happens after the seventh day that it is aired. These trends are also changing the way TV operators perceive the advertising opportunity, how advertisers look at viewership information and how content providers monetize their content. We are uniquely positioned as the only company with full census measurement of VOD. We currently collect 100% of all VOD television viewing data in the United States. We measure VOD viewing from more than 117 million television sets in the U.S. and Canada and report information relating to how consumers interact with this content.

Our information includes VOD, broadband, video and mobile device content transactions. Our OnDemand Everywhere^® products include OnDemand Essentials^®, Multiscreen Essentials^®, AdEssentials^®, Internet TV Essentials^®, Digital Download Essentials^®, Digital Download Essentials Industry^™, Dynamic Studio Share^™, VOD Monitor^™ and Mobile OnDemand Essentials^™. The most significant service is OnDemand Essentials^®.

OnDemand Essentials^® (“ODE”) provides multichannel video programming distributors (“MVPDs”) and content providers (including broadcast/cable networks and studios) with a transactional tracking and reporting system to view and analyze the performance of VOD content. This web-based system provides clients throughout the United States with access to the tools needed to track On Demand content, trends and consumer behavior and represents information from over 117 million televisions from every U.S. operator offering VOD programming. In addition, we measure VOD programming from operators in Canada, Spain and China. Our system includes daily, census-level data of current and historical market- and title-level content performance from 56 MVPDs.

We are the planning currency for VOD advertising today. Our other services within OnDemand Everywhere^® currently include the measurement of VOD advertising across our national footprint of operators as well as tracking and reporting on the availability of VOD content. We also provide an auditing service which contains performance intelligence on purchased and rented movie and television content downloaded or streamed via the Internet, including royalty report

tracking. Additionally, our systems process online usage data to help clients manage their ad-supported and subscription-based television programming content streamed online.

There are also some significant advances in the industry relating to television advertising technology which will allow our clients to better monetize their content and capture more of the growing number of people who watch television on a time-shifted basis, often days or weeks after a show airs. This newer technology, Dynamic Ad Insertion (“DAI”), enables TV networks to switch out and replace ads on programs that air on VOD in as little as 24 hours, instead of having to wait weeks which has been the case previously. DAI will make it much easier for networks to remove ads that can become stale or irrelevant after a few days, thus making VOD a more attractive medium for advertisers. VOD content providers will be able to use our OnDemand Essentials^® system to better understand viewership, make more informed advertising decisions using our Advanced Demographics and more precisely target the right consumers at the right time. Dynamic advertising represents a great opportunity for growth for Rentrak as we expand our services to include ad measurement in addition to content measurement.

Our arrangements with our clients and the information we provide them are also changing and expanding. Historically, our content providers could only access information relating to how their own content performed across all MVPDs. They were not able to see the performance of the content of other providers. Now, we are able to show how a title performs compared to all other titles. We believe our title-level transparency capabilities, which extend across many networks, including all our major networks, will create value for our clients and will enable us to expand our product offerings relating to VOD advertising and content performance. We are also working on initiatives to apply the same Advanced Demographics to VOD as we have in our TV Essentials^® service, which will help our clients understand the quality of the VOD audience and not just the size.

Our Multiscreen Essentials^®service expands the capability of our ODE service to provide cross-platform reporting for VOD content viewed beyond the television set (e.g., Internet streaming, portable and mobile devices). We currently have all the data from major MVPDs for multiple platforms, totaling approximately eight million households. We intend to sign more data providers to expand our household coverage and create a large amount of cross-platform information, similar to how we use our large amount of information in linear TV.

See “Innovation, Research, Development and Technology” for more information on a comprehensive product solution which combines both our TV and OnDemand Everywhere^® data assets. We continue to work to obtain and/or incorporate data from new and existing providers relating to online, mobile and OTT content. We are well positioned to continue to grow this business by adding new clients and adjusting rates as business activity increases and as advanced advertising technology is rolled out by the industry.

Movies Everywhere^™

As the global movie currency, precisely measuring movie viewership from more than 95% of the worldwide box offices, Rentrak goes beyond simply reporting what movies people saw to answer three key questions: Will they go? How much did they spend? And, what did they think? Our most significant products for measurement of box office results, as well as audience sentiment, within our Movies Everywhere^™ services include Box Office Essentials^®, International Box Office Essentials^™, PostTrak^® and PreAct^™.

Box Office Essentials^® and International Box Office Essentials^™provide a detailed measurement of domestic and international theatrical gross receipts and attendance information combined with detailed analytics to motion picture studios and movie theater owners from more than 125,000 movie screens in 47 countries throughout the world. Rentrak is the only provider of this key information to the motion picture industry. We provide studios with access to box office performance information pertaining to specific motion pictures and movie theater circuits, including real-time, geographic-specific and historical information. Data is obtained via Internet or phone connectivity to theater box offices and is collected for an aggregate of more than 95% of all movie theaters in Argentina, Armenia, Australia, Austria, Azerbaijan, Belarus, Bolivia, Brazil, Canada, Chile, China (including Hong Kong), Colombia, Costa Rica, El Salvador, France, Georgia, Germany, Guatemala, Honduras, India, Italy, Japan, Kazakhstan, Kyrgyzstan, Malaysia, Mexico, Moldova, the Netherlands, New Zealand, Nicaragua, Panama, Paraguay, Peru, Portugal, Russia, Singapore, South Africa, South Korea, Spain, Taiwan, Turkey, the United Kingdom & Ireland, United Arab Emirates, the United States, Uruguay and Venezuela.

PostTrak^® is our exit polling service, which delivers additional real-time insights relating to a movie’s performance, such as audience reaction about the movie, as well as specific demographic information relating to attendance, such as gender, ethnicity and age.

PreAct^™ is a long-lead measurement tool that helps clients gauge the performance of a theatrical marketing campaign. PreAct^™ allows users to effectively monitor the strength of a movie’s marketing campaign up to a year in advance of its release by monitoring audience sentiment from social media. PreAct^™ quantifies these insights, allowing users the opportunity to modify their campaigns accordingly during the critical marketing stage of a movie.

We are also planning to release our new product, eBOR^™, which stands for Electronic Box Office Reports. This system will be rolled out to the U.S. market in Fiscal 2016 and provides audited, movie-level performance data electronically to studios for reconciliation and invoicing purposes.

Box Office Essentials^® information is used around the world by major news channels, such as CNBC, as well as major sites, such as Yahoo and in major news publications around the world, like Bloomberg News, The Wall Street Journal, The Hollywood Reporter, USA Today, and The New York Times, to name a few. We are the source for box office reporting globally.

We have long-term relationships with each of the major Hollywood studios (“Global Clients”) in the United States and abroad. Currently, there are no competitors who provide a service comparable to Box Office Essentials^® and International Box Office Essentials^™, and we believe that the barriers to entry are quite high because the Global Clients prefer a single system with worldwide reporting capabilities. In particular, our service provides these Global Clients with access to information relating to all other market participants.

Other Services

Our Other Services include products relating to physical content in the home video rental industry, the most significant of which is Studio Revenue Share Essentials^™.

Studio Revenue Share Essentials^™ (SRSE) is a service that grants content providers timely and consistent insights, plus valuable checks and balances, regarding how both their video products and their retail customers are performing. Data relating to rented entertainment content is received on physical product under established agreements on a fee-for-service basis.

These services include entertainment content relating to units rented and/or sold by large online retailers, kiosk operators, and “brick-and-mortar” retailers, such as Netflix, Redbox and Hastings Entertainment (“SRSE Retailers”). Our services are tailored to meet the needs of content providers, which include major studios and independent program suppliers, such as Twentieth Century Fox Home Entertainment, Inc., Warner Home Video, and Sony Pictures Home Entertainment, Inc. For each SRSE client, we collect, process, audit, summarize and report the number of transactions and corresponding revenue generated on each title distributed to SRSE Retailers on a revenue sharing basis. We also provide in-depth inventory tracking by title, retailer and location. Additionally, we conduct numerous periodic physical and electronic audits of SRSE Retailers, combined with actual testing of transactions processed through their POS systems, to ensure all SRSE inventory is utilized in a manner consistent with the terms of the SRSE Retailer’s revenue sharing arrangement with our SRSE clients.

Innovation, Research, Development and Technology

We are making significant investments in our systems, which support our existing product lines. We continue to integrate various third-party databases with our products, which we believe will help advertisers deliver the right message at the right time to the right consumer group. We continue to build our analytic capabilities, which enable us to move our products from data-based to more comprehensive and applicable knowledge-based products and services. We are also continuing to integrate our ratings and Advanced Demographics into various ad buying and selling systems. These expenditures will likely increase our costs over the next twelve months. We believe we will be able to leverage these investments and generate revenue and earnings streams that contribute to our overall success.

We are also investing significant resources in, and continue to develop and expand, our comprehensive services that provide business analytics and research across multiple media platforms to provide our clients with insights into movies and television content from every viewing device. Our comprehensive services currently include live TV, DVR, Internet TV, mobile, and VOD and are being expanded to include digital content. This system compiles viewing data, using common metrics, to illustrate each platform’s individual contribution and compares it against other media platforms. With the ability to track viewing across various media, this expanded multiscreen product helps our clients better understand how content is being consumed by end users in order to interpret the effect such consumption has on other media platforms. Our clients are able to understand consumer adoption of new platforms, visualize cross-platform consumption and support more complex advertising models by targeting audiences on every platform.

We are also working on developing products which will enable us to offer a consumer targeting engine to our customers through cross media data management platforms that can be used to build unique consumer targets across both TV and digital information assets.

Competition

Our primary competitors in the market for global media measurement and advance consumer targeting in the entertainment, television, video and advertising industries are Nielsen and TiVo, which are companies with significantly greater resources than Rentrak. Nielsen’s service is largely based on a sampling methodology with a small sample in each market which is used to measure television viewing behaviors, and is currently the television industry’s standard measurement of television ratings behavior for advertising purposes, referred to as the “sample currency”. TiVo offers audience research and measurement products to advertisers based on the data obtained from their proprietary technology.

We compete in these markets primarily on the basis of product performance. Our services and systems differ from the competing services described above in that we offer a measurement system based on a massive amount of passively-collected viewing activity, from a number of sources, which results in far more granular, reliable and predictable solutions as compared to the small, compensated sample approach used by most of our competitors. Our approach projects the results to local and national levels across multiple platforms. This method results in granular levels of processing from billions of transactions and establishes us as the only company that provides television ratings with such a massive and passive TV measurement footprint. We believe this positions us to offer a more comprehensive, representative, targeted, and relevant system that networks, stations, agencies and advertisers are demanding and, consequently, that the market will continue to purchase our measurement products.

Trademarks, Copyrights, Proprietary Rights and Patents

In the United States, we have registered our RENTRAK^®, Essentials^®, Box Office Essentials^®, PostTrak^®, Home Video Essentials^®, OnDemand Everywhere^®, OnDemand Essentials^®, AdEssentials^®, TV Essentials^®, Digital Download Essentials^®, Exact Commercial Ratings^®, Internet TV Essentials^®, Multiscreen Essentials^® trademarks, among others, and applied to register other marks under federal trademark laws. We have applied to register and obtained registered status in several foreign countries for many of our trademarks. We believe our Essentials^® software is entitled to copyright protection. We believe that our intellectual property is important to our marketing efforts and the competitive value of our services, and we intend to take appropriate action to halt infringement and protect against improper usage.

We own two patents directed to techniques for extracting revenue information from point-of-sale terminals, as well as nine patents for linear data collection, projections, and analysis. Among the linear TV patents are two for our sophisticated "TV-off" methodology, which accurately accounts for cases when the TV is turned off but the set-top box (“STB”) is left on. We also own patents for a new way to combine transactional data (such as TV STB data) with traditional survey- or census-based datasets, a system and method for measuring TV audience engagements, and a number of patents for proprietary methods to clean and adjust return-path data. We believe our proprietary technologies, in combination with our ability to innovate and our dedicated, skilled personnel, provide us with advantages over our competitors’ technologies. There is no assurance, however, that we will be able to obtain patents covering such proprietary technologies.

Employees

As of March 31, 2015, we employed 419 full-time associates and 113 part-time associates. We consider our relations with our associates to be good.

Financial Information About Industry Segments, Enterprise-Wide Data and Geographic Information

See Note 16 of Notes to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K.

Available Information

We file annual, quarterly and other reports, proxy statements and other information with the Securities and Exchange Commission (“SEC”) under the Securities Exchange Act of 1934, as amended (“Exchange Act”). We also make available, free of charge on our website at www.rentrak.com, our Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after they are filed electronically with the SEC. Information on our website does not constitute part of this report or of any other report we file or furnish with the SEC. You can inspect and copy our reports, proxy statements and other information filed with the SEC at the offices of the SEC’s Public Reference Room located at 100 F Street, NE, Washington D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of Public Reference Rooms. The SEC also maintains an Internet website at http://www.sec.gov/ where you can obtain most of our SEC filings. You can also obtain paper copies of these reports, without charge, by contacting Investor Relations at (503) 284-7581.


ITEM 1A.	RISK FACTORS

Certain Essentials^® services face various obstacles to widespread market adoption, including competition from companies with significantly greater resources than ours.

Our Essentials^® services are dependent on several factors for long-term success, including our ability to compete with larger and more seasoned competitors in this market. Our primary competitors currently are Nielsen and TiVo. Each of these competitors has significantly greater resources than we do, which could allow them to become more formidable competitors with enhanced technology service solutions. Additionally, we face other obstacles. For instance, we may be unable to reasonably obtain data and/or data providers may be reluctant or ultimately decide not to grant us adequate access to their digital transaction data, which is a key component of our systems. The owners of data may also impose greater restrictions on the use and reporting of such data, which may make it difficult to fully realize the opportunities we anticipate for our products and related services. Further, the marketplace (such as advertisers, advertising agencies and television networks) may be reluctant to adopt a new standard of viewership measurement. These factors could have an adverse effect on our ability to grow these services, which could lead to a material adverse effect on our results of operations, financial condition and cash flows.

We may lose a significant number of clients if we are unable to obtain requisite data and other content to source our systems which provide our Essentials^® services.

Our Essentials^® services rely on data collected from a wide variety of sources. Once received, the data must be reviewed, processed, integrated and, at times, converted to our required file format. If we are unable to obtain quality data feeds and process that data in a timely manner, we may not be able to meet the needs of our clients, and we could lose clients. The loss of a significant number of Essentials^® clients would have an adverse impact on our ability to grow our Essentials^® product lines and related revenue, which could result in a material adverse effect on our results of operations, financial condition and cash flows.

We have operations outside of the United States that subject us to legal, business, political, cultural and other risks of international operations.

We operate globally, which subjects us to a number of risks and burdens, including:


•	staffing and managing international operations across different geographic areas;


•	multiple, conflicting and changing governmental laws and regulations;


•	the possibility of protectionist laws and business practices that favor local companies;


•	price and currency exchange rates and controls;


•	taxes and tariffs;


•	different business practices and legal standards, particularly with respect to intellectual property;


•	difficulties in collecting accounts receivable, including longer payment cycles;


•	political, social, and economic instability;


•	designing and maintaining effective operating and financial controls;


•	the possibility of failure of internal controls, including any failure to detect unauthorized transactions; and


•	increased costs relating to personnel management as a result of government and other regulations.

In addition, economic conditions in our overseas markets may negatively impact the demand for our products abroad and benefits we receive from those operations.

We may acquire or invest in other companies, products or technologies, which may be costly, dilutive to stockholders and, in the event we experience difficulties in assimilating and integrating the personnel, technologies, operating systems and products and services of acquired businesses, less beneficial than we anticipate.

As part of our business strategy, we may acquire or invest in other companies, products or technologies that complement our current product offerings, enhance our technical capabilities, expand our operations into new markets or offer other growth opportunities. Such acquisitions may be costly and potentially dilutive to existing shareholders in the event we offer capital stock as consideration in an acquisition. For example, we issued shares of our capital stock in the acquisition of the U.S. television measurement business related to television tuning analytics utilizing return path data of WPP’s Kantar business unit. Acquisitions could also pose risks to our operations and operating results, including the possibilities of:


•	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.

The described risks would be magnified as the size of an acquisition increases or if the acquisitions are in geographic or business markets in which we have little or no prior experience. As a result of these and other challenges, we may not realize any anticipated benefits from acquisitions even if we can find suitable acquisition opportunities at what we believe to be attractive valuations, which we do not assure.

Economic conditions could negatively impact our business.

We primarily operate within the media, advertising and entertainment industry. Our overall success depends on the success of national networks and local stations, studios, cable operators, data providers, advertisers, and advertising agencies. The success of these businesses is dependent on consumer economic activity. For example, our Box Office Essentials^® clients depend on consumers being interested in, and financially able to attend, movies in theaters. Changes in the economic climate and consumer spending could impact the financial condition of our clients. Such changes that affect our clients could, in turn, decrease the demand for our products, which could have a material adverse effect on our results of operations, financial condition and cash flows.

Additionally, if our clients experience financial difficulties, they may be unable to continue to purchase our services or pay for services in a timely manner, if at all. This could have a material adverse effect on our results of operations, financial condition and cash flows.

We face intense competition in the markets in which we operate and those in which we are currently developing new service offerings.

Some of our competitors have extensive distribution networks, long-standing relationships with our suppliers and customers, stronger brand name recognition and significantly greater financial resources than we do. These factors may enable our competition to have increased bargaining and purchasing power relating to resources that could enable them to operate in a more cost effective manner and/or to surpass our technological advancements. This could have a material adverse effect on our ability to grow our lines of business, including growing new lines of business and expanding existing lines of business related to our expanded relationship with GroupM and WPP.

Our SRSE business is dependent on studios maintaining direct revenue sharing relationships with “brick-and-mortar,” kiosks and online retailers.

We currently collect, process, audit, summarize and report transactional data relating to rental and sales activity of home entertainment content at traditional and online retailers and kiosk locations that have revenue sharing agreements directly with major studios. There are a number of risks that may adversely affect the size and profitability of this SRSE business. First and foremost, our business is dependent on the SRSE clients maintaining SRSE relationships with the SRSE Retailers. Should these clients end those relationships, they would have no need for our services. Second, our SRSE clients could decide to invest the resources necessary to provide these services internally. Lastly, if the overall size of the home entertainment rental market contracts significantly, or the large “brick-and-mortar” and online retailers’ share of the overall rental market declines substantially, the amount of data we process and audit on behalf of our clients would also be reduced, resulting in a decrease in our revenue. These and other factors could potentially reduce the demand for our SRSE services and the quantity of data we process, which would negatively affect our results of operations, financial condition and cash flows.

The future success of our company is highly dependent on our ability to maintain and grow our base of clients who subscribe to our Essentials^® product offerings.

Our success depends on effective software solutions, marketing, sales and customer relations for our Essentials^® services, as well as acceptance of future enhancements and new services by our existing and prospective clients. If we are unable to both retain existing clients and secure new clients for our Essentials^® services, our results of operations, financial condition and cash flows will be adversely affected.

We have voluntarily applied for accreditation from the Media Rating Council (the “MRC”) for certain TV Essentials^®products and services within our Essentials^® product lines and we cannot predict when we will receive such accreditation, if at all.

We have voluntarily applied for accreditation from the MRC for our TV Essentials^®products and services. The MRC is a third party nonprofit industry association whose members consist of companies within our industry, including television broadcasters, cable casters, advertisers, Internet organizations, advertising agencies and industry trade associations. The MRC’s goal is to ensure measurement services are valid, reliable and effective. While we believe we will be successful in achieving this accreditation, and we have made significant investments and progress towards this initiative, there is no assurance we will receive this accreditation in the near future, if at all, and we cannot predict the impact this accreditation would have on our business.

Our Essentials^® services are highly dependent on employees who are skilled and experienced in information technologies.

If we are unable to attract, hire and retain high quality information technology personnel at a reasonable cost, we may not be able to meet the needs of existing clients, enhance existing services, or develop new lines of business. This inability could have a material adverse effect on our results of operations, financial condition and cash flows.

Measurement services are receiving a high level of consumer group and government scrutiny relating to the privacy issues around the methodologies used in targeted advertising.

Although we are confident that our anonymous data aggregation methodologies are compliant with all current privacy laws, it is possible that privacy trends and market perceptions of the transparency of data could result in additional government restrictions or limitations on the use of that data, which would adversely affect many of our products. If additional government restrictions are imposed, such restrictions could slow our ability to realize a return on our investments in new data-driven products or result in additional costs not currently anticipated.

Our services are highly dependent on the effective and efficient use of technology and our overall information management infrastructure.

If we are unable to acquire, establish and maintain our information management systems to ensure accurate, reliable and timely data processed in an efficient and cost effective manner, we may not be able to meet the needs of existing clients, enhance existing services or develop new lines of business. This inability could have an adverse effect on our business and long-term growth prospects.

Interruption or failure of our information technology and communications systems could hurt our ability to effectively provide our products and services, which could damage our reputation and harm our operating results.

The availability of our products and services depends on the continuing operation of our information technology and communications systems. Our systems are vulnerable to damage or interruption from earthquakes, floods, fires, power loss, telecommunications failures, computer viruses, computer denial of service attacks, terrorist attacks, or other attempts to harm our systems. Our data centers are located in areas with potential risk of earthquakes. Our data centers are also exposed to risks of break-ins, sabotage, intentional acts of vandalism, and to potential disruptions if the operators of these facilities have financial difficulties. Some of our systems are not fully redundant, and our disaster recovery planning cannot account for all eventualities. The occurrence of a natural disaster, a decision to close a facility we are using without adequate notice for financial reasons, or other unanticipated problems at our data centers could result in lengthy interruptions in our service. In addition, our products and services are highly technical and complex and may contain errors or vulnerabilities. Any errors or vulnerabilities in our products and services, or damage to or failure of our systems, could result in interruptions in our services, which could reduce our revenue and results of operations.

The loss of our executive officers and key employees could have an adverse impact on our business and development initiatives.

We believe that the development of our business has been, and will continue to be, dependent on certain key executives and employees of Rentrak. The loss of any of these individuals could have a material adverse effect upon our business and development, and there is no assurance that adequate replacements could be found in the event of their unavailability.

Our stock is subject to price and volume fluctuations due to a number of factors, many of which are beyond our control and may prevent our shareholders from reselling our common stock at a profit.

The trading price of our common stock has, at times, experienced substantial price volatility and may continue to be volatile. For example, our common stock price has fluctuated from a high of $85.69 to a low of $45.57 for the 52 weeks ended March 31, 2015. This market volatility, as well as general economic, market or political conditions, could reduce the market price of our common stock. The trading price of our common stock may fluctuate widely in response to various factors, some of which are beyond our control. These factors include:


•	quarterly variations in our results of operations or those of our competitors;


•	announcements by us or our competitors of acquisitions, new products, significant contracts, commercial relationships, or capital commitments;


•	recommendations by securities analysts or changes in earnings estimates;


•	announcements about our earnings that are not in line with analyst expectations;


•	announcements by our competitors of their earnings that are not in line with analyst expectations;


•	the volume of shares of our common stock available for public sale;


•	sales of stock by us or by our shareholders (including sales by our directors, executive officers and other employees); and


•	short sales, hedging and other derivative transactions on shares of our common stock.

Oregon law may have anti-takeover effects.

The Oregon Control Share Act and the Business Combination Act limit the ability of parties who acquire a significant amount of voting stock to exercise control over us. These provisions may have the effect of lengthening the time required to acquire control of us through a proxy contest or the election of a majority of the Board of Directors. The provisions of the Oregon Control Share Act and the Business Combination Act could have the effect of delaying, deferring or preventing a change of control of us, could discourage bids for our common stock at a premium over the market price of our common stock and could materially adversely impact the market price of, and the voting and other rights of the holders of, our common stock.


ITEM 1B.	UNRESOLVED STAFF COMMENTS

None.


ITEM 2.	PROPERTIES

Our most significant locations, all of which are leased under operating leases, include the following:



Location		Use
Portland, Oregon		Corporate headquarters
Los Angeles, California		Sales and Operations
New York, New York		Sales and Operations
Munich, Germany		Sales and Operations
Madrid, Spain		Sales and Operations
London, England		Sales and Operations
Paris, France		Sales and Operations
Sydney, Australia		Sales and Operations
Mexico City, Mexico		Sales and Operations
Buenos Aires, Argentina		Sales and Operations
Rio de Janeiro, Brazil		Sales and Operations

See Note 13 of Notes to Consolidated Financial Statements for additional information.


ITEM 3.	LEGAL PROCEEDINGS

We currently have no material outstanding litigation.


ITEM 4.	MINE SAFETY DISCLOSURES

Not applicable.

PART II


ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Stock Price and Dividends

Our common stock, $0.001 par value, is traded on the NASDAQ Global Market, where its prices are quoted under the symbol “RENT.” The closing price of our common stock on the NASDAQ Global Market on May 22, 2015 was $67.16. As of May 22, 2015 there were 166 holders of record of our common stock.

The following table sets forth the reported high and low closing sales prices of our common stock for each of the quarters in the last two fiscal years as regularly quoted on the NASDAQ Global Market:



Fiscal 2015	High		Low
Quarter 1	$	61.10	$	45.57
Quarter 2	61.84		46.92
Quarter 3	85.69		59.08
Quarter 4	82.08		52.82



Fiscal 2014	High		Low
Quarter 1	$	24.68	$	19.92
Quarter 2	34.29		19.96
Quarter 3	40.50		32.73
Quarter 4	66.95		36.44

Holders of our common stock are entitled to receive dividends if, as, and when declared by the Board of Directors out of funds legally available therefor, subject to the dividend and liquidation rights of any preferred stock that may be issued.

No cash dividends have been paid or declared during the last 16 fiscal years. The present policy of the Board of Directors is to retain earnings to provide funds for operation and expansion of our business. We do not intend to pay cash dividends in the foreseeable future.

Securities Authorized for Issuance

Information regarding securities authorized for issuance under equity compensation plans is included in Item 12 of this Annual Report on Form 10-K.

Stock Performance Graph

This chart compares the five-year cumulative total return on our common stock with that of the NASDAQ Composite index, a new peer group and our previous peer group, both of which were selected by us. The chart assumes $100 was invested on March 31, 2010, in our common stock, the NASDAQ Composite index and the peer groups, and that any dividends were reinvested. For Fiscal 2015, we updated our peer group (“New Peer Group”) to make it more reflective of our peers going forward. The New Peer Group is composed of Acxiom Corp., comScore, Inc., Forrester Research Inc., Nielsen Holdings N.V., and Rocket Fuel Inc. Our previous peer group was composed of: Acxiom Corp., comScore, Inc., Hastings Entertainment, Inc. and Nielsen Holdings N.V. The peer group indices utilize the same methods of presentation and assumptions for the total return calculation as does Rentrak and the NASDAQ Composite index. All companies in the peer group index are weighted in accordance with their market capitalizations.



	Base		Indexed Returns
	Period		Year Ended
Company/Index	3/31/2010		3/31/2011		3/31/2012		3/31/2013		3/31/2014		3/31/2015
Rentrak Corporation	$	100.00	$	124.92	$	105.34	$	102.00	$	279.72	$	257.82
NASDAQ Composite	100.00		116.88		132.91		143.55		188.17		219.78
New Peer Group	100.00		114.39		120.25		141.09		186.96		174.97
Previous Peer Group	100.00		105.83		112.63		133.26		177.62		174.90


ITEM 6.	SELECTED FINANCIAL DATA



(In thousands, except per share amounts)	Year Ended March 31,
Statement of Operations Data⁽¹⁾	2015⁽⁵⁾			2014			2013			2012			2011
Revenue	$	102,922		$	75,600		$	57,033		$	47,044		$	40,383
Cost of revenue⁽²⁾	35,848			27,247			21,347			14,775			11,276
Gross margin	67,074			48,353			35,686			32,269			29,107
Operating expenses:
Selling, general and administrative⁽²⁾⁽³⁾	59,861			48,799			55,998			38,245			33,545
Research, technology and innovation⁽²⁾⁽³⁾	13,292			9,014			6,215			4,662			4,498
Total operating expenses	73,153			57,813			62,213			42,907			38,043
Loss from continuing operations	(6,079		)	(9,460		)	(26,527		)	(10,638		)	(8,936		)
Other income:
Other income, net	291			125			378			477			483
Loss from continuing operations before income taxes	(5,788		)	(9,335		)	(26,149		)	(10,161		)	(8,453		)
Income tax benefit	(424		)	(2,183		)	(980		)	(982		)	(3,956		)
Loss from continuing operations, net of income taxes	(5,364		)	(7,152		)	(25,169		)	(9,179		)	(4,497		)
Income from discontinued operations, net of income taxes^(1)(2)(3)	3,151			2,783			2,491			2,753			3,730
Net loss	(2,213		)	(4,369		)	(22,678		)	(6,426		)	(767		)
Net loss attributable to noncontrolling interest	(225		)	(115		)	(61		)	—			—
Net loss attributable to Rentrak Corporation	$	(1,988	)	$	(4,254	)	$	(22,617	)	$	(6,426	)	$	(767	)

Loss per share from continuing operations attributable to Rentrak Corporation common stockholders:
Basic	$	(0.38	)	$	(0.59	)	$	(2.14	)	$	(0.82	)	$	(0.41	)
Diluted	$	(0.38	)	$	(0.59	)	$	(2.14	)	$	(0.82	)	$	(0.41	)
Income per share from discontinued operations attributable to Rentrak Corporation common stockholders:
Basic	$	0.23		$	0.24		$	0.21		$	0.25		$	0.34
Diluted	$	0.23		$	0.24		$	0.21		$	0.25		$	0.34
Net loss per share attributable to Rentrak Corporation common stockholders:
Basic	$	(0.15	)	$	(0.35	)	$	(1.93	)	$	(0.57	)	$	(0.07	)
Diluted	$	(0.15	)	$	(0.35	)	$	(1.93	)	$	(0.57	)	$	(0.07	)
Shares used in per share calculations:
Basic	13,508			12,177			11,733			11,197			10,962
Diluted	13,508			12,177			11,733			11,197			10,962
(1) All prior periods presented have been restated as a result of reporting our PPT^® business as discontinued operations. See Note 18 of Notes to Consolidated Financial Statements.
(2) Depreciation and amortization expense is included in the line items above as follows:
Cost of revenue	$	4,008		$	3,175		$	2,638		$	2,168		$	1,753
Selling, general and administrative	2,418			2,037			1,841			1,842			1,413
Research, technology and innovation	1,094			717			311			170			110
Net income from discontinued operations	104			162			161			171			155
	$	7,624		$	6,091		$	4,951		$	4,351		$	3,431
(3) Stock-based compensation expense is included in the line items above as follows:
Selling, general and administrative⁽⁴⁾	$	6,640		$	7,361		$	20,864		$	4,593		$	5,397
Research, technology and innovation	985			697			544			359			1,278
Net income from discontinued operations	283			397			384			166			39
	$	7,908		$	8,455		$	21,792		$	5,118		$	6,714
DISH & iTVX⁽⁴⁾	$	(200	)	$	2,700		$	15,864		$	527		$	2,430
(4) Stock-based compensation in the years ended March 31, 2015 and 2014 includes expense related to contingent consideration associated with our acquisition of iTVX. Stock-based compensation in the years ended March 31, 2013, 2012, and 2011includes expense related to our agreement with DISH.
(5) Fiscal 2015 includes the acquisition of the RPD Business as of December 1, 2014, the date of acquisition. See additional information in Note 4 of Notes to Consolidated Financial Statements.



	March 31,
	2015		2014		2013		2012		2011
Balance Sheet Data⁽¹⁾⁽⁵⁾
Cash and marketable securities	$	84,009	$	21,970	$	20,423	$	27,753	$	26,377
Working capital	78,096		23,081		20,919		24,231		28,947
Net current assets of discontinued operations	—		1,585		4,019		3,227		4,302
Total assets	284,523		81,267		71,781		72,881		76,175
Long-term liabilities	5,141		8,392		4,075		3,154		2,203
Stockholders’ Equity attributable to Rentrak Corporation	251,948		52,160		47,982		50,525		56,373

Footnotes on previous page.

Table of Contents


ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Business Overview

We are a global media measurement and advanced consumer targeting company serving the entertainment, television, video and advertising industries. Our Software as a Service (“SaaS”) technology merges television viewership information from over 117 million TVs and devices with consumer behavior and purchase information (“Advanced Demographics”) across multiple platforms, devices and distribution channels. We also measure box office results from more than 125,000 movie screens in 47 countries throughout the world. We process and aggregate hundreds of billions of data transactions from multiple screens wherever entertainment content is viewed, whether at the box office, on a television screen, over the Internet, on a smart phone or other portable device. Rentrak measures live TV, recorded TV (“DVR”), and Video on Demand (“VOD”), whether the content is free, purchased, rented, recorded, downloaded or streamed from multiple channels. These massive content databases provide stable and granular viewership information across every screen (“multiscreen”) and are anonymously matched with third-party consumer segmentation and purchase databases using privacy compliant methodologies. By linking multiscreen viewership information with information about the products viewers consume and prefer, we provide our clients, such as content producers, distributors, advertisers and advertising agencies, with the knowledge necessary to more effectively manage their businesses, program and market their networks and more precisely target and sell their advertising inventory. Some examples of the benefits to the advertising community are improved profitability by effectively targeting viewers of specific TV shows based on the demographics of the show’s viewership, including, for example, the products they buy, the cars they drive and how they are likely to vote in elections. Some examples of the benefits to the movie industry and video (TV) content owners are they can manage their businesses in real time or near real time and also improve their profitability. Additionally, certain clients use our advanced analytics to populate automated buying systems. These systems automate the buying process and introduce efficiencies for both advertising agencies and their clients.

Previously, we had two operating divisions within our corporate structure and we reported certain financial information by individual segment under this structure. Those two operating divisions were our Advanced Media and Information (“AMI”) operating division, which included our media measurement services, and our Home Entertainment operating division, which included our distribution services as well as services that measure, aggregate and report consumer rental activity on packaged media products from traditional “brick-and-mortar,” online and kiosk retailers.

During the fourth quarter of the fiscal year ended March 31, 2014 (“Fiscal 2014”), we initiated our plan to sell our Pay Per Transaction^® (“PPT^®”) business, which had been a longstanding legacy business of Rentrak, and a significant component of the Home Entertainment operating division. Our PPT^® business had been in a state of decline due to the decline of physical DVD rentals from retail stores. The strategic decision to sell PPT^® enables us to focus more fully on the growth of our media measurement and advanced consumer targeting business. Accordingly, we have restated our financial results and the PPT^® business is reported as discontinued operations for all periods presented. The sale of PPT^® was completed as of January 31, 2015. See additional information in Note 18 of Notes to Consolidated Financial Statements.

As a result of our sale of the PPT^® business, we operate in a single business segment encompassing our media measurement and advanced consumer targeting services which are primarily delivered through scalable, SaaS tools within our Essentials^® product lines. These syndicated big data services, offered primarily on a recurring subscription basis, provide consumer viewership information integrated with information from consumer segmentation and purchase behavior databases. We provide movie studios, television networks and local stations, cable, satellite and telecommunications company (“telco”) operators, advertisers and advertising agencies unique insights into consumer viewing and purchasing patterns through our comprehensive and expansive information on local, national, VOD and “Over the Top” television performance and worldwide box office results. Our movie measurement products measure more than 95% of the ticket sales globally in real or near real time allowing for decisions to be made to market, promote and manage the industry for maximum profitability.

Our Products and Services

We provide media measurement and consumer targeting services across multiple screens and platforms delivered as SaaS. These services, offered primarily on a recurring subscription basis, are distributed to clients through patent pending software systems and business processes into two broad areas within the entertainment industry, which we refer to as TV Everywhere^™ and Movies Everywhere^™. Our systems capture total television audience information by providing the largest coverage from multiple screens and providers and merge that information with Advanced Demographics and information relating to actual consumer purchase behavior.

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Typical customers utilizing our services include content producers, studios, distributors, national networks, local stations, satellite and cable operators, agencies, and a wide spectrum of advertisers, ranging from traditional consumer brands to various political groups. We also provide many of our clients tailored research and analytical solutions unique to their needs and specifications.

Our most significant product offerings, which we refer to as Essentials^®, are:


•	TV Everywhere^™, which includes TV Essentials^® and StationView Essentials^™;


•	Movies Everywhere^™, which includes Box Office Essentials^®, International Box Office Essentials^™, PostTrak^® and PreAct^™;


•	OnDemand Everywhere^®, which includes OnDemand Essentials^®, Digital Download Essentials^®, Multiscreen Essentials^® and other Over the Top measurement tools and related products; and


•	Other Services, which includes Studio Revenue Share Essentials^™ (“SRSE”) and other products relating to measurement of physical content in the home video rental industry.

In August 2013, we acquired iTVX, a provider of branded entertainment analytics, insight and research. The financial results of iTVX, from the date of acquisition, are included within our TV Everywhere™ product line.

Our revenue increased $27.3 million, or 36.1%, in Fiscal 2015 compared to Fiscal 2014. Our current spending, investments and long-term strategic planning are heavily focused on the innovation, development, growth and expansion of our services and product lines, both domestically and internationally. As such, we continue to allocate significant resources toward innovation and the expansion of our data assets and technology as well as our research, analytics and sales groups. These strategic investments, many of which are expensed as incurred, have lowered our overall operating performance and, as a result, we had operating losses from continuing operations of $6.1 million, $9.5 million and $26.5 million for Fiscal 2015, 2014 and 2013, respectively.

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Results of Operations

Our results are as follows (dollars in thousands):



	Year Ended March 31, ⁽¹⁾
	2015⁽⁵⁾					2014					2013
(Dollars in thousands)	Dollars			% of revenue		Dollars			% of revenue		Dollars			% of revenue
Revenue	$	102,922		100.0	%	$	75,600		100.0	%	$	57,033		100.0	%
Cost of revenue⁽²⁾	35,848			34.8		27,247			36.0		21,347			37.4
Gross margin	67,074			65.2		48,353			64.0		35,686			62.6
Operating expenses:
Selling, general and administrative⁽²⁾⁽³⁾	59,861			58.2		48,799			64.5		55,998			98.2
Research, technology and innovation⁽²⁾⁽³⁾	13,292			12.9		9,014			11.9		6,215			10.9
Total operating expenses	73,153			71.1		57,813			76.5		62,213			109.1
Loss from continuing operations	(6,079		)	(5.9	)	(9,460		)	(12.5	)	(26,527		)	(46.5	)
Other income:
Other income, net	291			0.3		125			0.2		378			0.7
Loss from continuing operations before income taxes	(5,788		)	(5.6	)	(9,335		)	(12.3	)	(26,149		)	(45.8	)
Income tax benefit	(424		)	(0.4	)	(2,183		)	(2.9	)	(980		)	(1.7	)
Loss from continuing operations, net of income taxes	(5,364		)	(5.2	)	(7,152		)	(9.5	)	(25,169		)	(44.1	)
Income from discontinued operations, net of income taxes⁽²⁾⁽³⁾	3,151			3.1		2,783			3.7		2,491			4.4
Net loss	(2,213		)	(2.2	)	(4,369		)	(5.8	)	(22,678		)	(39.8	)
Net loss attributable to noncontrolling interest	(225		)	(0.2	)	(115		)	(0.2	)	(61		)	(0.1	)
Net loss attributable to Rentrak Corporation	$	(1,988	)	(1.9	)%	$	(4,254	)	(5.6	)%	$	(22,617	)	(39.7	)%
(1) Percentages may not add due to rounding. All prior periods presented have been restated as a result of reporting our PPT^® business as discontinued operations. See Note 18 of Notes to Consolidated Financial Statements.
(2) Depreciation and amortization expense is included in the line items above as follows:
Cost of revenue	$	4,008				$	3,175				$	2,638
Selling, general and administrative	2,418					2,037					1,841
Research, technology and innovation	1,094					717					311
Net income from discontinued operations	104					162					161
	$	7,624				$	6,091				$	4,951
(3) Stock-based compensation expense is included in the line items above as follows:
Selling, general and administrative⁽⁴⁾	$	6,640				$	7,361				$	20,864
Research, technology and innovation	985					697					544
Net income from discontinued operation	283					397					384
	$	7,908				$	8,455				$	21,792
DISH & iTVX⁽⁴⁾	$	(200	)			$	2,700				$	15,864
(4) Stock-based compensation in the year ended March 31, 2015 and 2014 includes expense related to contingent consideration associated with our acquisition of iTVX. Stock-based compensation in the year ended March 31, 2013 includes expense related to our agreement with DISH.
(5) Fiscal 2015 includes the acquisition of the RPD Business as of December 1, 2014, the date of acquisition. See additional information in Note 4 of Notes to Consolidated Financial Statements.

Net Loss to Adjusted EBITDA Reconciliation

We define Adjusted EBITDA as earnings before interest, taxes, depreciation, amortization and stock-based compensation expense and other non-operating items from our Consolidated Statements of Operations as well as certain other items specifically described below.

We believe that Adjusted EBITDA is helpful as an indicator of the current financial performance of our company and our capacity to operationally fund capital expenditures and working capital requirements. Due to the nature of our internally developed software which supports our Essentials^® services and use of stock-based compensation, we incur significant non-cash charges for depreciation, amortization and stock-based compensation expense that may not be indicative of our operating performance from

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a cash perspective. From Adjusted EBITDA, we also adjust for non-cash items, such as stock-based compensation for DISH and iTVX, as well as cash-settled items, such as acquisition and non-recurring costs, as we believe these are not representative of our ongoing operating performance and we believe excluding these costs provide a useful metric by which to compare performance from period to period.

Adjusted EBITDA before DISH and iTVX stock-based compensation, acquisition and reorganization costs is a non-GAAP measure and should not be considered as an alternative to net loss (the most comparable GAAP financial measure to Adjusted EBITDA before DISH and iTVX stock-based compensation, acquisition and reorganization costs).

The table below presents a reconciliation from net loss to Adjusted EBITDA before DISH and iTVX stock-based compensation, acquisition and reorganization costs for the years ended March 31, 2015, 2014 and 2013 (dollars in thousands):



	Year Ended March 31,
	2015			2014			2013
Net loss attributable to Rentrak Corporation	$	(1,988	)	$	(4,254	)	$	(22,617	)
Adjustments:
Income from discontinued operations, net of income taxes	(3,151		)	(2,783		)	(2,491		)
Income tax benefit	(424		)	(1,859		)	(980		)
Reduction in valuation allowance on deferred tax assets	—			(324		)	—
Investment income, net	(418		)	(196		)	(209		)
Depreciation and amortization from continuing operations	7,520			5,929			4,790
Stock-based compensation from continuing operations⁽¹⁾	7,825			5,358			5,544
Adjusted EBITDA	9,364			1,871			(15,963		)
DISH & iTVX stock-based compensation	(200		)	2,700			15,864
Acquisition and reorganization costs	4,803			325			405
Adjusted EBITDA, before DISH and iTVX stock-based compensation, reorganization and acquisition costs	13,967			4,896			306

⁽¹⁾ Excludes DISH and iTVX stock-based compensation.

Adjusted EBITDA before DISH and iTVX stock-based compensation, acquisition and reorganization costs increased $9.1 million from Fiscal 2014 due primarily to the growth in revenue.

Revenue

Our revenue mix by product line as well as increases (decreases) in revenue are as follows (dollars in thousands):



	Year Ended March 31,								Dollar Change			% Change
	2015		% of revenue		2014		% of revenue		Dollar Change			% Change
TV Everywhere^™	$	55,046	53.5	%	$	31,316	41.4	%	$	23,730		75.8%
Movies Everywhere^™	29,542		28.7		26,493		35.0		3,049			11.5
OnDemand Everywhere^®	14,265		13.9		12,841		17.0		1,424			11.1
Other services	4,069		3.9		4,950		6.6		(881		)	(17.8)
Total revenue	$	102,922	100.0	%	$	75,600	100.0	%	$	27,322		36.1%

	Year Ended March 31,								Dollar Change			% Change
	2014		% of revenue		2013		% of revenue		Dollar Change			% Change
TV Everywhere^™	$	31,316	41.4	%	$	17,599	30.9	%	$	13,717		77.9%
Movies Everywhere^™	26,493		35.0		23,949		42.0		2,544			10.6
OnDemand Everywhere^®	12,841		17.0		11,498		20.2		1,343			11.7
Other services	4,950		6.6		3,987		6.9		963			24.2
Total revenue	$	75,600	100.0	%	$	57,033	100.0	%	$	18,567		32.6%

Revenue increased $27.3 million, or 36.1%, to $102.9 million in Fiscal 2015, compared to $75.6 million in Fiscal 2014. Revenue increased $18.6 million, or 32.6%, to $75.6 million in Fiscal 2014, compared to $57.0 million in Fiscal 2013. For Fiscal 2015,

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2014 and 2013, recurring subscription revenue comprised 88.9%, 93.1% and 97.5% of our consolidated revenues, respectively. As previously described, our revenue is primarily recurring, subscription based fees.

TV Everywhere^™ product lines

Revenue from our TV Everywhere^™ product lines was as follows (dollars in thousands):



	Year Ended March 31,
TV Everywhere^™	2015			2014			2013
Revenue	$	55,046		$	31,316		$	17,599
% of Total Revenue	53.5		%	41.4		%	30.9		%

$ Growth	$	23,730		$	13,717		$	8,373
% Growth over Prior Year	75.8		%	77.9		%	90.8		%

Our TV Everywhere revenue grew by $23.7 million, or 75.8%, in Fiscal 2015 over Fiscal 2014. Revenue from new and acquired clients and new services represented $19.9 million, or 83.7% of this increase. Additionally, more than half of our revenue in Fiscal 2015 and Fiscal 2014 was generated from agreements with national broadcast networks, local broadcast stations and local agencies. The increase in revenue from local stations in Fiscal 2015 was due primarily to an increase in the number of local station clients as well as expansions within station groups. The increase in revenue from national networks in Fiscal 2015 was due to an increase in subscription agreements including more of the largest national broadcast networks.

We also generate revenue from advertising agencies and numerous brand advertisers, and this category has grown significantly since Fiscal 2013. The increase in revenue from advertisers was due to an increase in our political category in Fiscal 2015 compared to Fiscal 2014, which we expect will fluctuate based on the timing of political races, as well as the full year impact of iTVX, which was acquired in August 2013.

Revenue has also increased due to the addition of new advertising agencies, rate increases from existing agency clients and analytical services. When advertising agencies increase their utilization of our products and services and base their ad buying decisions on our ratings information, their adoption drives new subscribers, such as national networks and brand advertisers. We now have the top five agency holding companies as clients along with several of the top media agencies, which continues to solidify our position as the premier source of television ratings and advanced consumer targeting.

Many of our data providers also subscribe to our services and revenue from this group increased in Fiscal 2015 due to the addition of new data providers. Also, we acquired Kantar’s RPD business in December 2014. Revenue from acquired contracts added $2.9 million in Fiscal 2015 revenue.

Our TV Everywhere^™ revenue grew by $13.7 million, or 77.9%, in Fiscal 2014 over Fiscal 2013. Revenue from new and acquired clients and new services represented $11.7 million, or 85.1% of this increase. Revenue from national broadcast networks, local broadcast stations and local agencies contributed the largest portion of this growth due to the addition of new clients as well as rate increases from existing clients. Revenue from advertisers also increased in Fiscal 2014 and was primarily due to an increase in revenue from political advertisers, the addition of new clients and sales of new services. Revenue from advertising agencies and media analytics also increased due to the addition of new agency clients. The remaining increase was due to an increase in revenue from data providers.

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Movies Everywhere^™ product lines

Revenue from our Movies Everywhere^™ product lines was as follows (dollars in thousands):



	Year Ended March 31,
Movies Everywhere™	2015			2014			2013
Revenue	$	29,542		$	26,493		$	23,949
% of Total Revenue	28.7		%	35.0		%	42.0		%

$ Growth	$	3,049		$	2,544		$	2,903
% Growth over Prior Year	11.5		%	10.6		%	13.8		%

The increase in Movies Everywhere^™ revenue in Fiscal 2015 compared to Fiscal 2014 was primarily due to sales of our newer services, PreAct^™ and PostTrak^®, and the addition of new clients, the total of which represented 57.1% of the overall increase, as well as rate adjustments for our existing clients. Our Fiscal 2015 results were also impacted by declines in foreign currency, which lowered revenue by $0.4 million. On a constant currency basis, assuming foreign exchange rates were held constant with exchange rates for fiscal 2014, Movies Everywhere^™revenue would have increased by $3.4 million, or 12.9% over Fiscal 2014.

The increase in Movies Everywhere^™ revenue in Fiscal 2014 compared to Fiscal 2013 was primarily due to rate increases for existing clients, as well as the sales of our newer services, PostTrak^® and PreAct^™and the addition of new clients, the total of which represented 24.0% of the increase. On a constant currency basis, assuming foreign exchange rates were held constant with exchange rates for fiscal 2013, Movies Everywhere^™ revenue would have increased by $1.8 million, or 7.7%, over Fiscal 2013.

OnDemand Everywhere^®product lines

Revenue from our OnDemand Everywhere^® product lines was as follows (dollars in thousands):



	Year Ended March 31,
OnDemand Everywhere^®	2015			2014			2013
Revenue	$	14,265		$	12,841		$	11,498
% of Total Revenue	13.9		%	17.0		%	20.2		%

$ Growth	$	1,424		$	1,343		$	1,519
% Growth over Prior Year	11.1		%	11.7		%	15.2		%

The increase in OnDemand Everywhere^® revenue in Fiscal 2015 resulted primarily from the addition of new clients and increased usage of our ratings information by ad agency holding companies, the total of which represented 44.9% of the overall increase, price increases and analytical services.

The increase in OnDemand Everywhere^® revenue in Fiscal 2014 was due to the addition of new clients, which represented 46.8% of the overall increase, as well as rate increases for existing clients.

Other Services

Revenue from our Other Services was as follows (dollars in thousands):



	Year Ended March 31,
Other Services	2015			2014			2013
Revenue	$	4,069		$	4,950		$	3,987
% of Total Revenue	3.9		%	6.6		%	6.9		%

$ Growth	$	(881	)	$	963		$	(2,806	)
% Growth (decline) over Prior Year	(17.8		)%	24.2		%	(41.3		)%

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Other services primarily includes SRSE revenue. As our other product lines have grown and expanded, this product line as a percentage of total revenue has declined. The decrease in SRSE revenue in Fiscal 2015 compared to Fiscal 2014 was primarily due to an overall decrease in home video rental transactions of physical product. The increase in SRSE revenue in Fiscal 2014 compared to Fiscal 2013 was due to an increase in transactions which we process.

Cost of Revenue and Gross Margin

Cost of revenue includes direct costs relating to our Essentials^® product lines and consists of costs associated with the operation of a call center for our Movies Everywhere^™ products, as well as costs associated with amortizing capitalized, internally developed software used to provide the corresponding services and direct costs incurred to obtain and process data and maintain our systems.

Cost of revenue increased $8.6 million, or 31.6%, in Fiscal 2015 compared to Fiscal 2014, and increased $5.9 million, or 27.6%, in Fiscal 2014 compared to Fiscal 2013.

Cost of revenue information is as follows (dollars in thousands):



	Year Ended March 31,				Dollar Change		% Change
	2015		2014		Dollar Change		% Change
Costs related to:
Amortization of internally developed software	$	4,008	$	3,175	$	833	26.2%
Call center operation	5,613		5,487		126		2.3
Obtaining and processing data	26,227		18,585		7,642		41.1
	$	35,848	$	27,247	$	8,601	31.6%

	Year Ended March 31,				Dollar Change		% Change
	2014		2013		Dollar Change		% Change
Costs related to:
Amortization of internally developed software	$	3,175	$	2,639	$	536	20.3%
Call center operation	5,487		5,253		234		4.5
Obtaining and processing data	18,585		13,455		5,130		38.1
	$	27,247	$	21,347	$	5,900	27.6%

The increases in cost of revenue in the Fiscal 2015 and the Fiscal 2014 periods compared to the same periods of the prior years, resulted primarily from expanding household coverage with existing data supplier agreements, the addition of new data supplier agreements and the amendment to our data supplier agreement with DISH, which occurred in the second quarter of Fiscal 2013, and requires minimum payments relating to predefined net profit sharing provisions of portions of our TV Essentials^® product lines.

Gross margin as a percentage of revenue and revenue mix by major product line was as follows:



	Year Ended March 31,
	2015	2014	2013
Consolidated Gross Margin	65.2%	64.0%	62.6%

Revenue Mix by Major Product Lines:
TV Everywhere^™	53.5%	41.4%	30.9%
Movies Everywhere^™ and OnDemand Everywhere^®	42.6%	52.0%	62.2%

Our consolidated gross margin was 65.2%, 64.0% and 62.6% of consolidated revenue for Fiscal 2015, 2014 and 2013, respectively. We incur data costs for all of our product lines, and our most significant costs are within our TV Everywhere^™ product lines. Currently, our most significant agreements with our largest data suppliers for TV Essentials^® are mostly fixed. This, coupled with the increases in revenue noted above and the corresponding change in revenue mix, resulted in improvements in consolidated gross margin in all periods. As our revenue grows, we expect our margins to continue to expand. However, our margins could

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change significantly if we add more data suppliers in the future, change terms with existing data supplies or experience a significant shift in our overall revenue mix by product line.

Operating Expenses

Operating expenses consist primarily of compensation and benefits, information technology, development, innovation and analytics, marketing and advertising costs, legal and professional fees, communications costs, depreciation and amortization of tangible and intangible assets and software, real and personal property leases, as well as other general corporate expenses.

Operating expense information is as follows (dollars in thousands):



	Year Ended March 31,					Dollar Change			% Change
Operating expenses	2015			2014		Dollar Change			% Change
Essentials^®	$	40,007		$	33,376	$	6,631		19.9%
Research, technology and innovation	13,292			9,014		4,278			47.5
Stock-based compensation costs for iTVX	(200		)	2,700		(2,900		)	nm
Acquisition and reorganization costs	4,731			325		4,406			nm
Corporate	15,323			12,398		2,925			23.6
	$	73,153		$	57,813	$	15,340		26.5%

	Year Ended March 31,					Dollar Change			% Change
Operating expenses	2014			2013		Dollar Change			% Change
Essentials^®	$	33,376		$	28,438	$	4,938		17.4%
Research, technology and innovation	9,014			6,215		2,799			45.0
Stock-based compensation costs for iTVX and DISH	2,700			15,864		(13,164		)	nm
Acquisition and reorganization costs	325			405		(80		)	nm
Corporate	12,398			11,291		1,107			9.8
	$	57,813		$	62,213	$	(4,400	)	(7.1)%

Essentials^®

The increase in operating expense for our Essentials^® services groups in Fiscal 2015 compared to Fiscal 2014 was primarily due to increased headcount in our sales and client services groups as well as other costs associated with the expansion of our product lines, additional operating costs relating to the RPD business, which was acquired on December 1, 2014, and the full year impact of operating costs relating to iTVX, which was acquired on August 16, 2013.

The increase in operating expense for our Essentials^® services groups in Fiscal 2014 compared to Fiscal 2013 was primarily due to increased headcount and other costs associated with the expansion of TV Essentials^®, as well as operating costs relating to iTVX.

Our long-term strategic plan is heavily focused on the development, growth and expansion of our Essentials^® product lines and services, both domestically and internationally, and we consider these expenses to be investments which will leverage these services.

Research, Technology and Innovation

We are making significant investments in our systems which support our existing product lines, as well as products which are in the planning and development phases. We continue to integrate new data providers and various third-party segmentation databases with our data further expanding our analytic capabilities. We are also continuing to expand the integration of our data into the various buying systems used by advertising agencies. The increases in these costs relate to additional headcount, as well as increased costs relating to our systems. Additionally, we are incurring costs associated with our MRC accreditation process. These expenditures will likely increase our costs over the next twelve months. We believe we will be able to leverage these investments and generate revenue and earnings streams that contribute to our overall success.

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Stock-based compensation costs for iTVX and DISH

Our acquisition of iTVX in August 2013 included contingent consideration, which, if earned, will be paid in January 2016. Changes in the fair value of contingent consideration arrangements are recorded as income or expense in our Consolidated Statements of Operations. As of March 31, 2015 and 2014, the fair value of the estimated contingent consideration arrangement decreased by $0.2 million and increased by $2.7 million, respectively, compared to the acquisition date fair value. The changes were a result of changes in the value of our common stock price. The common stock portion of the contingent consideration arrangement has a fixed price of $21.795 per share, and any fluctuation in our common stock price above or below this amount will impact the fair value of the payment and our results of operations.

In Fiscal 2013, we incurred costs related to the cancellation of a stock award granted to DISH that had been previously revalued at the end of each reporting period. In exchange for canceling the stock award and as compensation for past services, we paid DISH $5.8 million and issued 700,000 shares of our common stock during the second quarter of Fiscal 2013, and we recorded $15.9 million in expense related to this amendment and related stock award.

Acquisition and Reorganization Costs

Acquisition and reorganization costs in Fiscal 2015 included costs relating to acquiring the RPD business, such as legal and other professional services, as well as transition services. In connection with the acquisition, we also reorganized and consolidated certain functions and incurred severance costs relating to consolidating and eliminating certain positions.

Acquisition and reorganization costs in Fiscal 2014 included costs associated with the acquisition of iTVX. Acquisition and reorganization costs in Fiscal 2013 included costs related to our acquisition of Media Salvation, costs associated with our Chinese joint venture, Sinotrak, as well as other reorganization related costs associated with consolidating and eliminating certain positions.

Corporate

The increase in Corporate expenses in Fiscal 2015 compared to Fiscal 2014 was primarily due to increases in stock based compensation and higher bonus accruals.

The increase in Corporate expenses in Fiscal 2014 compared to Fiscal 2013 was primarily due to increases in headcount, professional services fees and higher bonus accruals.

Income Taxes

Our effective tax rate was 7.3% for Fiscal 2015 and was driven by tax expense related to amortization of indefinite-lived intangible assets. This expense was partially offset by a tax benefit related to the allocation of tax expense to discontinued operations.

Primarily due to our investments in acquisitions, as well as the growth in our media measurement services and our equity compensation structure, we have cumulative operating losses over the past three fiscal years. As a result, we evaluated various factors relating to these assets and determined in Fiscal 2012 that it was not more likely than not that all of our deferred tax assets would be realized and, accordingly, we recorded a full valuation allowance. This position did not change in Fiscal 2013, 2014 or 2015. In the future, if we generate taxable income, we would re-evaluate our ability to utilize these deferred tax assets and the need for the valuation allowance, which could reduce future tax expense.

As a result of our acquisition of the RPD business, we expect our tax provision will increase by $875,000 each quarter due to the increase in our deferred tax liabilities for indefinite-lived assets. We expect this will continue until we determine a valuation allowance against our deferred tax liabilities is no longer required. This determination occurs when it is more likely than not that we will be able to realize our deferred tax assets, typically when profits are generated on a cumulative basis in future periods.

Our effective tax rate was 23.4% in Fiscal 2014. The rate was affected by a change in state law allowing research credits to be used to offset minimum tax in Oregon, as well as a benefit related to the release of valuation allowance upon the acquisition of iTVX.

Our effective tax rate was 3.7% in Fiscal 2013. The rate was negatively affected by the recording of a $10.0 million valuation allowance to fully reserve our deferred tax assets offset by a tax benefit related to the allocation of tax expense to discontinued operations.

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Income from Discontinued Operations, net of income taxes

Income from discontinued operations, net of income taxes for Fiscal 2015, 2014, and 2013 includes the results of our PPT^® business and is as follows (dollars in thousands):



	Year Ended March 31,				Dollar Change		% Change
	2015		2014		Dollar Change		% Change
Income from discontinued operations, net of income taxes	$	3,151	$	2,783	$	368	13.2%

	Year Ended March 31,				Dollar Change		% Change
	2014		2013		Dollar Change		% Change
Income from discontinued operations, net of income taxes	$	2,783	$	2,491	$	292	11.7%

We completed our sale of the PPT^® business as of January 31, 2015. For Fiscal 2015, income from discontinued operations, net of tax includes a gain recorded on the sale of the business. We recorded a gain of $2.2 million, net of tax expense of $1.5 million.

The increase in income from discontinued operations, net of income taxes in Fiscal 2014 compared to Fiscal 2013 was due to an increase in revenue as a result of the addition of Blockbuster as a major customer and the addition of a major supplier during our third quarter of Fiscal 2013. In January 2014, Blockbuster exited the market.

Inflation

We believe that inflation did not have a material impact on our business in Fiscal 2015, 2014 and 2013.

Liquidity and Capital Resources

Our sources of liquidity include our cash and cash equivalents, marketable securities, cash expected to be generated from future operations and investments and our ability to borrow on our $15.0 million line of credit. Based on our current financial projections and projected cash needs, we believe that our available sources of liquidity will be sufficient to fund our current operations, the continued current development of our business information services and other cash requirements through at least April 1, 2016.

Cash and cash equivalents and marketable securities increased $62.0 million to $84.0 million at March 31, 2015 from March 31, 2014. This increase resulted primarily from $62.3 million in proceeds from the issuance of our common stock and $9.8 million provided by operating activities, partially offset by $10.9 million used for the purchase of equipment and capitalized information technology costs. Portions of our cash and cash equivalents are held in our foreign subsidiaries. In the event the foreign subsidiaries repatriate these earnings, the earnings may be subject to United States federal, state and foreign income taxes. As of March 31, 2015, we had $3.2 million in foreign bank accounts, of which we plan to use $1.8 million to fund our international expansion and growth. The remaining cash is held by Sinotrak, our Chinese joint venture, and will be used to support growth for that operation.

We had $80.3 million invested in a fixed-income security fund as of March 31, 2015. Fund values fluctuate in response to the financial condition of individual issues, general market and economic conditions and changes in interest rates. In general, when interest rates rise, security fund values fall and investors may lose principal value. While we currently have no plans or requirements to sell the securities in the foreseeable future, we are exposed to market risks and cannot predict what impact fluctuations in the market may have on the value of these funds.

Accounts receivable, net of allowances, increased $4.4 million to $16.9 million at March 31, 2015 from March 31, 2014, primarily due to revenue growth.

Other current assets increased $1.1 million to $3.9 million at March 31, 2015 from March 31, 2014 primarily due to a receivable from Vobile related to our sale of the PPT^® business.

During Fiscal 2015, we spent $10.9 million on property and equipment, including $7.6 million for the capitalization of internally developed software for our business information service offerings. We anticipate spending a total of approximately $13.8 million on property and equipment for all of Fiscal 2016, of which approximately $9.7 million is for the capitalization of internally developed software, primarily for the development of systems for our Essentials^® product lines. The remaining amounts include primarily purchases of computers, servers and networking equipment.

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Accounts payable increased $1.6 million to $4.0 million at March 31, 2015 from March 31, 2014, primarily due to the timing of payments and costs relating to our Essentials^® product lines.

Accrued data provider liabilities increased $2.8 million to $6.7 million at March 31, 2015 from March 31, 2014, primarily due to increased expenses incurred related to our data suppliers.

Accrued compensation, including the current and long-term portion, increased $0.4 million to $11.8 million at March 31, 2015 from March 31, 2014, primarily due to $0.6 million in increases in payroll related accruals offset by a $0.2 million credit related to the contingent consideration associated with our acquisition of iTVX.

Deferred revenue and other credits increased $1.2 million to $3.8 million at March 31, 2015 from March 31, 2014, primarily due to our increases in revenue. This balance includes amounts related to quarterly and annual subscriptions for our services, as well as the current portion of our deferred rent credits.

Deferred rent of $2.7 million at March 31, 2015, including both the current and long-term portion, represented amounts received for qualified renovations to our corporate headquarters and our offices in Portland and New York, as well as free rent for a portion of the lease terms. The deferred rent related to qualified renovations is being amortized against rent expense over the remaining lease terms, which extend through June 30, 2023, at the rate of approximately $65,000 per quarter. The deferred rent related to free rent is also being amortized against rent expense over the remaining lease term and is expected to be approximately $15,000 per quarter for Fiscal 2016.

Cash provided by discontinued operations was $1.3 million and $2.5 million, respectively, for the years ending March 31, 2015 and March 31, 2014. We sold our PPT^® Business, which was the only business line within discontinued operations, on January 31, 2015. Given that the PPT^® Business was in a state of decline, we do not expect this to have a material impact on our future cash flows. See Note 18.

In January 2006, our Board of Directors authorized the repurchase of up to 1.0 million shares of our common stock. As of March 31, 2015, 276,633 shares remained available for repurchase under this plan at a per share price not to exceed $12.75. This plan does not have an expiration date. Common stock repurchases may be made from time to time in the open market at prevailing market prices or through privately negotiated transactions. The amount and timing of all repurchase transactions are contingent upon market conditions, regulatory requirements and alternative investment opportunities. No shares have been purchased pursuant to the January 2006 authorization in the last three fiscal years.

We currently have a revolving line of credit for $15.0 million that matures February 1, 2017. Interest accrues on outstanding balances under the line of credit at a rate equal to LIBOR plus 2.0% per annum, and is adjusted on a quarterly basis, beginning as of March 31, 2015, based on agreed upon criteria. The maximum interest rate that can be charged is LIBOR plus 2.0 and the minimum rate is LIBOR plus 1.5. Fees on the unused portion of the line are accrued at 0.15% per annum, and are also adjusted on a quarterly basis. The maximum fee on the unused portion of the line is 0.25% per annum and the minimum rate is 0.1% per annum. The agreement provides for letters of credit to be issued, provided that at any time the amount of outstanding letters of credit shall not exceed $1.0 million. The letters of credit are reserved under the line of credit and will reduce the amount available for borrowing. At March 31, 2015, issued and outstanding letters of credit of $0.3 million were reserved against the line of credit, and we had no outstanding borrowings under the agreement. The credit line is secured by substantially all of our assets and includes certain liquidity, asset and financial covenants. As of March 31, 2015, we were in compliance with those covenants.

In the first quarter of Fiscal 2012, we received a loan from the State of Oregon for $0.5 million for the purpose of facility renovations. The loan bore interest at 5% per annum and contained provisions relating to forgiveness if we met certain requirements. On April 3, 2013, the loan was forgiven in full. The balance of this loan was recorded as an offset to leasehold improvements and is being amortized as an offset to depreciation expense over the life of the related lease.

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Contractual Payment Obligations

A summary of our contractual commitments and obligations as of March 31, 2015 follows (dollars in thousands):



	Payments Due By Fiscal Period
Contractual Obligations	Total		2016		2017 and 2018		2019 and 2020		2021 and beyond
Operating lease obligations	$	16,866	$	3,018	$	5,568	$	4,099	$	4,181
Purchase obligations	44,230		20,586		23,102		542		—
Total Contractual Obligations	$	61,096	$	23,604	$	28,670	$	4,641	$	4,181

Critical Accounting Policies and Estimates

The preparation of our financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses. Our estimates are based on historical experience and on various other assumptions that are believed to be reasonable in the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Following is a discussion of our critical accounting policies and estimates.

Segment Information

Our chief operating decision maker is our Chief Executive Officer, who reviews financial information presented on a consolidated basis. Accordingly, we have determined that we operate and report on one segment, media measurement and advanced consumer targeting. We do not operate any material separate lines of business or separate business entities.

Revenue Recognition

We generate our revenue from the delivery of subscription services and by providing analytical services and other information obtained from our systems, usually in the form of various reports delivered on a periodic basis. Our subscription contracts do not provide customers with the right to take possession of the software supporting the applications and, as a result, are accounted for as service contracts.

We recognize revenue for our services when all of the following conditions are met:


•	Persuasive evidence of an arrangement exists;


•	The products or services have been delivered;


•	The fee is fixed or determinable; and


•	Collection of the fee is reasonably assured based on our collection history.

Subscription fees are recognized ratably over the period of service as of the date that our service or data is made available to the customer. Revenue related to the various reports we generate is recognized as value is delivered to the customer. The pattern of revenue recognition for these reports varies depending on the terms of the individual contracts and may be recognized proportionally or deferred until the end of the contract term and recognized when the information has been delivered to the customer.

We also enter into arrangements with multiple-elements, generally including subscription, analytic services and other reporting. We recognize revenue under these arrangements in accordance with current accounting guidance which requires us to allocate consideration at the inception of the arrangement to all elements, if they represent a separate unit of accounting, based on their relative selling prices. The guidance establishes a hierarchy to determine the selling price to be used for allocating arrangement consideration to deliverables: (i) vendor-specific objective evidence of fair value (“VSOE”), (ii) third-party evidence of selling price (“TPE”) if VSOE is not available, or (iii) a best estimated selling price (“BESP”) if neither VSOE nor TPE are available. VSOE generally exists only when we sell the deliverable separately and is the price actually charged by us for that deliverable on a standalone basis. BESP reflects our estimate of what the selling price of a deliverable would be if it was regularly sold on a standalone basis.

We have concluded that we do not have VSOE for these types of arrangements, and TPE is generally not available because our service offerings are highly differentiated and we are unable to obtain reliable information on the pricing practices of our competitors. As such, BESP is used to allocate the total arrangement consideration at the arrangement’s inception based on each element’s relative selling price.

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We determine BESP for our deliverables based on our overall pricing objectives, taking into consideration several internal and external factors including, but not limited to, current pricing practices, pricing concentrations (such as industry, channel, customer class or geography), internal costs and market penetration of a product or service. The total arrangement consideration is allocated to each of the elements based on the relative selling price. Once the total arrangement consideration has been allocated to each element, we commence revenue recognition for each element on a standalone basis as the data or service is delivered. In the future, as our pricing strategies and market conditions change, modifications may occur in the determination of BESP to reflect these changes. As a result, the future revenue recognized for these arrangements could differ from results in the current period.

Advance payments are recorded as deferred revenue until services are delivered or obligations are met and revenue can be recognized. Deferred revenues represent the excess of amounts invoiced over amounts recognized as revenues. A number of our customers have the right to cancel their contracts by providing written notice of cancellation. In the event that a customer cancels its contract, the customer is not entitled to a refund for prior services, and will be charged for costs incurred plus services performed up to the cancellation date.

Accounts Receivable and Allowance for Doubtful Accounts

Trade accounts receivable are recorded at the invoiced amount and do not bear interest. Included within accounts receivable are unbilled accounts receivable, which relate to situations in which we have recognized revenue prior to invoicing a customer. Typically, unbilled accounts receivable are invoiced in the following period. Credit limits are established through a process of reviewing the financial history and stability of each customer. We regularly evaluate the collectibility of accounts receivable by monitoring past due balances. If it is determined that a customer may be unable to meet its financial obligations, a specific reserve is established based on the amount we expect to recover. If circumstances change related to specific customers, overall aging of accounts receivable or collection experience, our estimate of the recoverability of accounts receivable could materially change. Our allowance for doubtful accounts totaled $0.2 million at both March 31, 2015 and 2014, respectively. See also Schedule II, Valuation and Qualifying Accounts included in Item 8 of this Annual Report on Form 10-K.

Deferred Taxes

Deferred tax assets arise from the tax benefit of amounts expensed for financial reporting purposes but not yet deducted for tax purposes, from tax credits which have not been utilized, and from net operating loss carry-forwards. We calculate deferred tax assets and liabilities using enacted laws and tax rates that will be in effect when we expect the differences to reverse and be applied to taxable income in the years in which those temporary differences are expected to be recovered or settled. A deferred tax asset is not recorded for net operating loss carryforwards created by excess tax benefits from the exercise of stock options. To the extent such net operating loss carryforwards are utilized, stockholders’ equity will increase. We evaluate our deferred tax assets on a regular basis to determine if a valuation allowance is required. To the extent it is determined the recoverability of the deferred tax assets is not more likely than not, we will record a valuation allowance against deferred tax assets. As of March 31, 2015 and 2014, we had a valuation allowance of $19.4 million and $17.2 million, respectively, recorded against our federal net operating and capital loss carry-forwards, as well as those net operating and capital loss carry-forwards in various state and foreign jurisdictions. As of March 31, 2015 and 2014, net deferred tax liabilities related to continuing operations totaled $2.2 million and $0.7 million, respectively.

Accounting for Unrecognized Tax Benefits

We record a benefit for uncertain tax positions only when we determine that those tax positions are more likely than not to be sustained on audit, based on the technical merits of the position. As of March 31, 2015 and 2014, the total amount of unrecognized tax benefits was $1.0 million and $0.8 million, respectively, excluding penalties and interest of $57,000 and $60,000, respectively. All unrecognized tax benefits at March 31, 2015 would affect the effective tax rate if recognized. Our policy is to recognize interest expense and penalties related to income tax matters as a component of income tax expense in our Consolidated Statements of Operations. See Note 11 of Notes to Consolidated Financial Statements.

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Capitalized Software

Capitalized software, which is included in property and equipment, net, consists of costs to purchase and develop internal-use software, as well as costs to develop internal software, which is used by us to provide various services to clients. The internal and external costs to develop the internal software used to support these services are capitalized after the technological and business feasibility of the project is determined and the preliminary project stage is completed. We continue to develop our internal software systems in order to expand our service offerings. Once this software is ready for use in our products, these costs are amortized on a straight-line basis over the estimated economic life of the software, which is five years from the date of utilization. Capitalized software is reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. During Fiscal 2015, we recorded asset impairment charges of $46,000 related to various software components of our Essentials^® products. Management concluded it was likely the components would not be placed in service or used in the foreseeable future. No impairment charges were recorded in Fiscal 2014 or 2013. Changes in technology could affect our estimate of the useful life of those assets. Capitalized software costs, net of accumulated amortization, totaled $12.8 million and $8.7 million at March 31, 2015 and 2014, respectively. We also had $4.1 million and $4.4 million as of March 31, 2015 and 2014, respectively, of capitalized costs associated with software projects which are still in the application development stage.

Stock-Based Compensation

We are required to measure and recognize compensation expense for all stock-based awards granted to our employees and directors, including employee stock options, deferred stock units (“DSUs”), stock appreciation rights (“SARs”), stock-settled stock appreciation rights (“SSARs”), restricted stock units (“RSUs”) and employee stock purchase plan (“ESPP”) shares, based on the estimated fair value of the award on the grant date. We utilize the Black-Scholes options pricing model and Monte Carlo simulations for valuing our stock-based awards with a conversion or exercise price.

The use of the Black-Scholes and Monte Carlo valuation models to estimate the fair value of stock option awards requires us to make judgments on assumptions regarding the risk-free interest rate, expected dividend yield, expected term and expected volatility over the expected term of the award. The assumptions used in calculating the fair value of share-based payment awards represent management’s best estimates, but these estimates involve inherent uncertainties and the application of expense could be materially different in the future.

Compensation expense is only recognized on awards that ultimately vest and market-based awards. However, we have not reduced the stock-based compensation expense for estimated forfeitures because there is no basis for estimating future forfeitures since most unvested awards are held by members of senior management. We update for forfeitures as they occur and recognize any changes to accumulated compensation expense in the period of change. If actual forfeitures are significant, our results of operations could be materially affected.

Stock-Based Compensation Agreements with Non-Employees

We are required to recognize compensation expense for stock-based compensation agreements with non-employees based on the estimated fair value of the award on the grant date and at the end of each reporting period. We utilize the Black-Scholes valuation model to determine the end of period fair value of these awards and record the cumulative incremental change in value as compensation expense over the life of the award.

Marketable Securities

We classify our marketable securities as “available for sale” securities and, accordingly, they are marked to market on a quarterly basis, with unrealized gains and losses being excluded from earnings and reflected as a component of other comprehensive income (loss). Dividend and interest income is recognized when earned. Realized gains and losses are included in earnings and are derived using the specific identification method for determining the cost of securities sold.

Fair Value of Financial Assets and Liabilities

We evaluate the fair value of certain assets and liabilities using the fair value hierarchy. Fair value is an exit price representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. We estimate the fair value of our monetary assets and liabilities based upon comparison of such assets and liabilities to the current market values for instruments of a similar nature and degree of risk. Our monetary assets and liabilities include cash and cash equivalents, marketable securities, accounts receivable, accounts payable, accrued liabilities and accrued compensation. Based on the short-term nature of these instruments, we estimate that the recorded value of all our monetary assets and liabilities approximates fair value as of March 31, 2015 and 2014. See Note 6 of Notes to Consolidated Financial Statements.

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We estimated the fair value of the contingent consideration associated with our acquisition of iTVX using unobservable inputs, reflecting our assessment of the assumptions market participants would use to value the liability. Changes in the fair value of contingent consideration agreements are recorded as income or expense in our Consolidated Statements of Operations. See Note 4 of Notes to Consolidated Financial Statements for additional information.

Goodwill and Intangible Assets

In assessing the fair value of goodwill and other indefinite lived intangible assets, we first make a qualitative assessment of whether it is more likely than not that a reporting unit’s fair value is less than its carrying amount before applying the two-step goodwill impairment test. If, after completing our qualitative assessment, we determine that it is more likely than not that the carrying value exceeds estimated fair value, we compare the fair value to our carrying value (including goodwill). If the estimated fair value is greater than the carrying value, we conclude that no impairment exists. If the estimated fair value of the reporting unit is less than the carrying value, a second step is performed in which the implied fair value of goodwill is compared to its carrying value. If the implied fair value of goodwill is less than its carrying value, goodwill must be written down to its implied fair value, resulting in goodwill impairment. We test goodwill for impairment during the fourth quarter of every fiscal year and when an event occurs or circumstances change such that it is reasonably possible that an impairment may exist.

The qualitative analysis includes assessing the impact of changes in certain factors including: (1) changes in forecasted operating results and a comparison of actual results to projections, (2) changes in the industry or our competitive environment since the acquisition date, (3) changes in the overall economy, our market share and market interest rates since the acquisition date, (4) trends in the stock price and related market capitalization and enterprise values, (5) trends in peer companies’ total enterprise value metrics, and (6) additional factors such as management turnover and changes in regulations.

Based on our qualitative assessment performed during the fourth quarter of Fiscal 2015, we concluded that it was more likely than not that the estimated fair values of our reporting units exceeded their carrying values as of March 31, 2015 and, therefore, determined it was not necessary to perform the two-step goodwill impairment test.

We amortize intangible assets with definite lives over their estimated useful lives using the straight-line method. We evaluate the estimated remaining lives of intangible assets and whether events or changes in circumstances warrant a revision to the remaining periods of amortization. We test these assets for impairment annually, or more frequently if events or changes in circumstances indicate that they might be impaired, based on undiscounted cash flows attributable to that asset or group of assets. There were no impairment charges related to intangible assets during the years ended March 31, 2015, 2014 and 2013.

Long-Term Investments

Long-term investments, included in other assets on the Consolidated Balance Sheets, includes investments in equity securities of privately-held companies. We determine the appropriate classification of our investments at the time of purchase. Investments in equity securities of privately-held companies without a readily determinable fair value, where we do not exercise significant influence over the investee, are recorded using the cost method of accounting. We periodically evaluate the fair value of all cost method investments to determine if an other-than-temporary decline in value has occurred or circumstances have occurred that indicate our ability to exercise influence over the investee has changed.

New Accounting Guidance

See Note 3 of Notes to Consolidated Financial Statements for a discussion of the impact of new accounting guidance.

Off-Balance Sheet Arrangements

Other than as disclosed above under “Contractual Payment Obligations,” we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

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ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We operate globally and have exposure to market risk from changes in foreign exchange rates. In most markets, we generate revenue and expenses in local currencies. Foreign currency translation risk is the risk that exchange rate gains or losses arise from translating foreign entities’ statements of operations and balance sheets from functional currency to our reporting currency (the United States Dollar) for consolidation purposes. Our most significant foreign currency risks relate to the Euro, the Australian Dollar, the Mexican Peso, and the Canadian Dollar. We have evaluated and assessed the potential effect of this risk and concluded that near-term changes in currency rates should not materially adversely affect our financial position, results of operations or cash flows. We performed a sensitivity analysis, assuming a 10% decrease in the value of foreign currencies in which we operate. Our analysis has determined that a 10% decrease in value would have resulted in a $66,000 increase to our operating loss for the year ended March 31, 2015. Excluding the effect of the Canadian Dollar (due to our sale of the PPT^® business), we determined that a 10% decrease in value would have resulted in a $47,000 increase to our operating loss for the year ended March 31, 2015.

We have exposure to interest rate risk related to our marketable securities and, to a lesser extent, our cash deposits. Our marketable securities are investments in fixed-income securities. We monitor this account regularly and have evaluated and assessed the potential effect of this risk and concluded that near-term changes in interest rates should not materially adversely affect our financial position, results of operations or cash flows. Unrealized gains and losses on these investments will fluctuate and, historically, have not been significant.

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ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Report of Independent Registered Public Accounting Firm

Board of Directors and Shareholders

Rentrak Corporation

We have audited the accompanying consolidated balance sheets of Rentrak Corporation (an Oregon corporation) and subsidiaries (the “Company”) as of March 31, 2015 and 2014, and the related consolidated statements of operations, comprehensive loss, stockholders’ equity, and cash flows for each of the three years in the period ended March 31, 2015. Our audits of the basic consolidated financial statements included the financial statement schedule listed in the index appearing under Item 15. These financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements and schedule referred to above present fairly, in all material respects, the financial position of Rentrak Corporation and subsidiaries as of March 31, 2015 and 2014, and the results of their operations and their cash flows for each of the three years in the period ended March 31, 2015 in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of March 31, 2015, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated May 29, 2015 expressed an unqualified opinion thereon.

/s/ GRANT THORNTON LLP

Portland, Oregon

May 29, 2015

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Rentrak Corporation and Subsidiaries

Consolidated Balance Sheets

(In thousands, except per share amounts)



	March 31,
	2015			2014
Assets
Current Assets:
Cash and cash equivalents	$	3,691		$	5,102
Marketable securities	80,318			16,868
Accounts receivable, net of allowances for doubtful accounts of $179 and $162	16,884			12,525
Taxes receivable and prepaid taxes	—			122
Deferred tax assets, net	60			44
Assets held for sale	—			5,443
Other current assets	3,928			2,818
Total Current Assets	104,881			42,922
Property and equipment, net of accumulated depreciation of $29,121 and $23,785	23,035			17,891
Goodwill	135,890			7,034
Other intangible assets, net of accumulated amortization of $4,203 and $3,447	16,384			12,724
Other assets	4,333			696
Total Assets	$	284,523		$	81,267
Liabilities and Stockholders’ Equity
Current Liabilities:
Accounts payable	$	3,967		$	2,339
Accrued liabilities	592			370
Accrued data provider liabilities	6,690			3,887
Accrued compensation	11,724			6,743
Deferred revenue and other credits	3,812			2,644
Liabilities held for sale	—			3,858
Total Current Liabilities	26,785			19,841
Deferred rent, long-term	2,358			2,413
Accrued compensation, long-term	90			4,700
Taxes payable, long-term	465			520
Deferred tax liability, net, long-term	2,228			759
Total Liabilities	31,926			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; 75,000 and 30,000 shares authorized; shares issued and outstanding: 15,251 and 12,213	15			12
Capital in excess of par value	285,280			83,562
Accumulated other comprehensive income	464			409
Accumulated deficit	(33,811		)	(31,823		)
Stockholders’ Equity attributable to Rentrak Corporation	251,948			52,160
Noncontrolling interest	649			874
Total Stockholders’ Equity	252,597			53,034
Total Liabilities and Stockholders’ Equity	$	284,523		$	81,267

See accompanying Notes to Consolidated Financial Statements.

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Rentrak Corporation and Subsidiaries

Consolidated Statements of Operations

(In thousands, except per share amounts)



	For the Year Ended March 31,
	2015		2014		2013
Revenue	$	102,922	$	75,600	$	57,033
Cost of revenue	35,848		27,247		21,347
Gross margin	67,074		48,353		35,686
Operating expenses:
Selling, general and administrative	59,861		48,799		55,998
Research, technology and innovation	13,292		9,014		6,215		<