July 27, 2006, 12:00 AM

64% spike in online revenue helps Blockbuster post $68.4 million profit

Increased revenue from Blockbuster Online and a favorable tax audit settlement helped offset lower store revenue, leaving Blockbuster Inc. with second quarter net income of $68.4 million, the company said.

Increased revenue from Blockbuster Online and a favorable tax audit settlement helped offset lower store revenue, leaving Blockbuster Inc. with second quarter net income of $68.4 million, the company said. Blockbuster reported a net loss of $57.2 million in 2005’s second quarter.

Revenue from online movie rentals totaled $57.6 million for the quarter ended June 30, up 64% from $35.2 million a year earlier. Online revenue accounted for 5.8% of total revenue for the quarter, up from 3.5% of revenue in Q2 2005.

Blockbuster, No. 70 in the Internet Retailer Top 500 Guide to Retail Web Sites, had 1.4 million online subscribers at the end of quarter. The company says it still expects to hit its goal of 2 million subscribers by year-end.

Total Q2 revenue dropped 5% to $1.32 billion from $1.39 million a year earlier, primarily due to reduced revenue from the closure of stores and lower margin retail sales.

Worldwide same-store rental revenue for the quarter was flat compared with last year’s second quarter, reflecting an increase in domestic same-store rental revenue and a decline in international same-store rental revenue. Worldwide same-store retail revenue dropped 9.2% year-over-year.

"Our second quarter 2006 results mark our third consecutive quarter of solid performance and demonstrate successful execution of our business plan,” said John Antioco, chairman and CEO. “Our profitability and cash flow have improved significantly year-over-year, and as a result, our balance sheet is much healthier. We have also gained momentum in our online business.”

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