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Redbox has been the key to Coinstar's second-quarter revenue growth of 22 percent, to $532.2 million, said CEO Paul Davis during the company's Thursday earnings call. The company profited $26.7 million because of a 26-percent income spike to $458 million, which was primarily the result of new kiosk installations, growth in same-store sales and the price increase implemented in October 2011.
This year, Redbox began its expansion into Canada; extended its lead in physical rentals, achieving more than 42 percent unit market share; and closed a deal with NCR to purchase all of its 6,200 Blockbuster-branded kiosks.
"Coinstar's second quarter was marked by strong bottom line performance and significant progress against key initiatives, positioning the company for long-term growth," Davis said.
The company's shares dropped, however, to $48.14 thursdsay from a close of $59.22 because despite the growth, it was still short of the $545.7 million average expected, according to Bloomberg.
Coin-counting revenue grew 4 percent to $73.9 million, driven by new kiosks put in across the Safeway chain over the last 13 months, said CFO J. Scott Di Valerio
"It's interesting to note that we've crossed the $1 billion mark in the first half of the year and (are) well on the way to cross well over the $2 billion mark for the rest of the year," he said. "And it was only three years ago that we crossed the $1 billion mark for the first time as a company, so certainly nice strong growth from a revenue perspective."
Coinstar launched its Rubi coffee kiosk business this quarter in partnership with Seattle's Best Coffee and expects it to be profitable. Currently, there are 50 coffee kiosks deployed, but the company plans to have 500 in place by the end of the year.
What about Verizon?
Although Coinstar announced in February that it was launching a streaming service in partnership with Verizon in the second half of 2012, neither Davis nor Di Valerio mentioned any details about it. The initial announcement said the service, which will compete with Netflix, would "offer all of the convenience, simplicity and value of Redbox rentals combined with a new content-rich, video on-demand streaming and download service from Verizon."
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