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The Orchard Reports Revenue Increase Of 13% In Second Quarter 2009 As Compared To Second Quarter 2008 August 17, 2009

Posted by David W. King in Uncategorized.
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The Orchard reported financial results for the second quarter of 2009.

Second Quarter Results

For the second quarter of 2009, revenues were $15.1 million, compared to $13.4 million for the second quarter of 2008, an increase of 13%.

The Orchard’s gross profit margin was 27% in the second quarter of 2009, as compared to 26% in the second quarter of 2008.

As of June 30, 2009, there were approximately 1.5 million music tracks available for sale, an increase of 29% from the same date in 2008. During the second quarter of 2009, there were approximately 15.1 million paid downloads from The Orchard’s catalogue, an increase of 29% as compared to the second quarter of 2008.

Operating expenses totaled $5.1 million for the second quarter of 2009, as compared to $4.4 million for the second quarter of 2008, an increase of 16% or $0.7 million. This increase was primarily due to (1) a $0.4 million increase in personnel-related expenses primarily due to staff added to support The Orchard’s new physical distribution channel (which The Orchard acquired as part of its acquisition of TeeVeeToons) and to enhance The Orchard’s technology infrastructure, (2) a $0.2 million increase in office expenses following the relocation of The Orchard’s New York headquarters and (3) a $0.1 million increase in other expenses.

The net loss for the second quarter of 2009 was $1.1 million as compared with a net loss of $0.8 million for the second quarter of 2008. The Orchard’s net loss for the second quarter of 2009 was $0.18 per share.

EBITDA for the second quarter of 2009 was a loss of $0.6 million compared with a loss of $0.5 million for the second quarter of 2008. A reconciliation of GAAP net income to EBITDA is provided in the financial tables that accompany this release.

As of June 30, 2009, cash and cash equivalents were $4.2 million and The Orchard had no debt. Net cash provided by operations for each of the six months ended June 30, 2009 and June 30, 2008 was $0.8 million.

Management Comment

Commenting on the second quarter results, Greg Scholl, president and chief executive of The Orchard said, “During the second quarter of 2009, we grew revenues as compared to the same period in 2008, despite a marked deceleration in digital media growth, and again saw new client wins as we increased the number of tracks we have available for download and the size of our video catalogue.”

Scholl continued, “Like many other companies, we continue to operate in a tough market environment and are focused on finding ways to reduce operating expenses. We remain confident in the long-term prospects of our company and sector and are optimistic about our continued platform and service innovations and new label and store signings.”

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