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Executives

Rosemary Moothart - Director of Investor Relations

Paul D. Davis - Chief Executive Officer, President, Chief Operating Officer and Director

J. Scott Di Valerio - Chief Financial Officer and Interim President of Redbox Automated Retail, Llc

Analysts

Michael J. Olson - Piper Jaffray Companies, Research Division

John Kraft - D.A. Davidson & Co., Research Division

Paul Coster - JP Morgan Chase & Co, Research Division

Darren Aftahi - Northland Capital Markets, Research Division

Andy Hargreaves - Pacific Crest Securities, Inc., Research Division

Ronald Bookbinder - The Benchmark Company, LLC, Research Division

Steven L. Dyer - Craig-Hallum Capital Group LLC, Research Division

Eric Wold - B. Riley & Co., LLC, Research Division

Coinstar (CSTR) Q2 2012 Earnings Call July 26, 2012 5:00 PM ET

Operator

Good day, ladies and gentlemen, my name is Kim and I will be your conference coordinator for today. Thank you for joining the Second Quarter 2012 Coinstar Earnings Conference Call. [Operator Instructions] At this time, I would like to turn the call over to Ms. Moothart, your Director of Investor Relations. Please proceed.

Rosemary Moothart

Thank you, Kim. Good afternoon and welcome back to Coinstar's 2012 Second Quarter Earnings Call. Our call today will be hosted by CEO, Paul Davis; and CFO, Scott Di Valerio. We will follow the same format as last quarter. Paul and Scott will make brief introductory remarks, and the majority of our time will be allotted to Q&A.

In our earnings press release, we noted that we have provided prepared remarks from Paul and Scott that include additional information related to Q2 results and 2012 Q3 and full year guidance. The prepared remarks are posted on the Investor Relations section of Coinstar's website at www.coinstarinc.com. We also have posted this segment's supplement, which provides historical data in Excel format and replaces the investor update. And finally, the 10-Q has been filed.

During this call, Paul and Scott may reference non-GAAP financial measures. A reconciliation of differences between GAAP and non-GAAP financial measures is provided in the appendix of the earnings release, which is posted on the Investor Relations website. Also during this call, various remarks we make about future expectations, plans and prospects for the company constitute forward-looking statements for the purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from expectations, plans and prospects contemplated in these forward-looking statements as a result of various factors, including those discussed in our latest 10-K and subsequent 10-Q filings with the SEC.

And now I'll turn the call over to Paul.

Paul D. Davis

Thanks, Rosemary, and I'd like to thank each of you for joining us today. We're pleased with our performance in Q2. We had revenue growth of 22%, 26% growth from Redbox. With Redbox, we had nearly 180 million rentals and we now have 38,500 Redbox kiosks in over 31,100 locations. We're particularly excited about the growth that we experienced at the market share. We -- for the quarter, we are on a unit basis at 42.5%, which is up a full 8 percentage points year-over-year. We lead our online by mail competitor now by over 15 percentage points.

We had 38 million unique credit cards used in the quarter, which was up 13% from Q2 of last year and we track email addresses. We into the quarter had 43.5 million unique email addresses, which was up 3.5 million in the quarter and up 42% from a year ago.

We're in a great position to increase our Redbox footprint and gain additional share with the closing of the NCR transaction. We're particularly excited about the new retailers that we are now working with, including Publix and Safeway, allowing us to fill out markets that where we didn't have presence before and allow us to bring Redbox value and convenience to additional consumers.

We're also about the expansion of the dollar channel as we continue to progress down that path. We're excited about progress on key initiatives for this year. We launched the Rubi and announced an agreement to feature Seattle's Best Coffee. We are at about 50 -- 50-plus kiosks as we speak, and we're projected to be around 500 by the end of the year. We're making great progress with our other new self-service retail concepts. For this year, we expect to increase our kiosks counts for the new ventures for the year right at about tenfold. We expect similar growth in kiosk from our equity investments. So net-net, we are very, very pleased with the momentum we're seeing with our new ventures group.

As we talked last quarter, we're expanding into Canada with both our Coin business, which is over 4 [ph] but in particular, our Redbox business. They've initially, in the last quarter, replaced 60 Redbox kiosks in Toronto, Vancouver, and we're projected to be between 700 and 900 by year end. We've made great progress with the leading retailers across multiple channels. We've been expanding with Wal-mart Canada. We have agreements with Loblaws, which is, for those of you who know the Canadian market, the largest supermarket retailer, and also an agreement with Shoppers Drug Mart, which is the largest pharmacy chain in Canada, and it will begin out rollout with Safeway Canada beginning Q3.

Earlier this week, we announced our -- the leadership team for the joint venture with Verizon, CEO being Shawn Strickland, and also a brand name, Redbox Instant by Verizon, which really leverages 2 wonderful businesses and leveraging all the equity building those 2 companies.

Both Scott and Gregg will be sitting on the board and I encourage each of you to sign up for updates by going to our website which is now live, which is www.redboxinstant.com.

So with that, I'll turn it over to Scott, who will provide highlights of our financial performance.

J. Scott Di Valerio

Thanks, Paul. We did report solid Q2 results today with revenue of $532 million, up 22%, as Paul said, really driven out of our Redbox business, which grew at 26%, according to same-store sales of 16.5%. This is particularly strong growth given the overall and evenness of the release schedule that we experienced in the second quarter, as well as it being down a bit release schedule quarter -- second quarter to second quarter. We also had nice growth out of our Coin business at 4%, really driven out of the new kiosks that were put in around the Safeway chain over the last 13 months.

It's interesting to note that we've crossed the $1 billion mark in the first half of the year and well on the way to cross well over the $2 billion mark for the rest of the year as we go through the rest of the year. And it was only 3 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.

As we look at our core diluted EPS from continuing operations, it grew to $1.25 or 26% growth from over a year ago, again driven by solid growth in our Redbox segment, as well as us leveraging our efficiencies and processes across the business, and solid performance from our Coin business, certainly offset by continued investments in our new business -- new ventures business segment, as Paul mentioned, launching Rubi, as well as continuing development on our seed [ph] businesses for the long term growth of the company.

As we look around our operations, we're pleased to announce the workaround process that we put in place in the first quarter. We're able to purchase desired quantities that we have to meet demand and get the products into the kiosk centers which are helping us drive good revenue and margins from that particular part of business. We continue to stay focused on driving and optimizing our field service work that we do in field optimization, as well as efficiencies across the company.

As we turn -- looking at guidance for the full year and for the quarter, a couple of key things to take into account. First off, the full year guidance includes NCR kiosk acquisition that we completed in the end of June of this year. It contemplates integrating approximately 2,500 to 2,900 slot kiosks that's moving the blue kiosks out and putting the Redbox kiosks in and we're really off to a nice start. We've started that on July 9 and we've had over 500 of those swaps completed to date, so certainly a nice strong start to that. We also are working through to pick out and -- a number of kiosks that are not going to be replaced by Redbox kiosks and that will be about 900 to 1,000 for the full year.

We're very confident in this business and in the swaps and believe that in -- and are expecting in 2013 it will be accretive, which is a strong statement of acquiring a business and then turning it accretive within the year.

As we take a look at the third quarter, there's some key things to think about as we go through the third quarter release schedule, including the fact that we have 23% less titles this third quarter versus third quarter last year. In a box office, that's about 13% lower with a couple of titles that are really driving some of the box office in the latter part of this quarter, The Hunger Games and The Lorax. Having said all that, we’re looking at strong revenue from a third quarter perspective of $550 million to $575 million and core EPS from continuing operations of $1.09 to $1.24.

And as we look at the full year guidance, we're taking a full year guidance both in revenue, EBITDA and EPS. As we take a look -- and that's inclusive of the $0.40 to $0.50 downward impact from the NCR acquisition that we announced when we announced the closing of the deal. Full year EPS, the full year revenue will be at $2.21 billion to $2.31 billion and full year core EPS between $4.60 and $4.90.

So as we move into the second half of the year, we're going to stay focused on -- in addition to integrating the blue kiosks to red, rolling out approximately 500 Rubi kiosks by year end, signing new retailers and the continued Redbox installations in Canada, driving increased operations and efficiencies across our businesses, making investments in our business to drive growth and shareholder value and bringing a streaming product offering to market with our JV partner, Verizon underneath the Redbox Instant by Verizon brand.

And with that, I'll turn it over for Q&A.

Question-and-Answer Session

Operator

[Operator Instructions]

And your first question comes from the line of Mike Olson with Piper Jaffray.

Michael J. Olson - Piper Jaffray Companies, Research Division

A couple of quick ones here. I think it said in the prepared remarks that you were going to break out the impact of the NCR kiosks on revenue in the guidance, but I'm not sure I actually heard. Maybe I missed it or saw what the impact is going to be. Can you just share what the impact of NCR is in the revenue guidance?

J. Scott Di Valerio

Well, I think what we said us we would be breaking out any actuals as we go through. I think we've provided, Mike, the amount of swaps that we're doing and we've also talked about, as you look at guidance, that we expect the blue kiosks to perform at about the levels that they had prior to our acquisition, so we expect the Redbox kiosks to get swapped out to ramp up somewhere to our current Redbox kiosks, the blue kiosks to perform at the levels that they had when they were under NCR's tutelage and then we'll move forward from there, so that should give you a range. Certainly as we report in the third quarter and fourth quarter, we'll provide the breakout of those revenues.

Michael J. Olson - Piper Jaffray Companies, Research Division

Okay. And then you said you planned to swap around 2,700 at the midpoint of the 6,200 kiosks by year end and then remove about 1,000 that will not be replaced. So by the end of the year, you'll still have around 2,500 Blockbuster kiosks out there, I think I'm doing that math right. How many of those will be swapped out versus shut down? I guess in other words, when all is said and done, how many of the 6,200 kiosks will become Redboxes and how many will be shut down when -- and when will the transition be totally completed?

J. Scott Di Valerio

Yes, well, we'll provide insight and that with our -- as we provide guidance on 2013, Mike, on what the final swap outs will be. But again right now, we're set up for the 2,500 to 2,900 swap outs and the installs at 900 to 1,000. What I will say is we don't expect to be going across the entire NCR network, obviously, but the amounts that we will remove and how we're going through and about this is really running the same filters and looking at the same IRRs and running tests with the retail partners in order to be able to make sure we're bringing and putting in kiosks in the place that's going to give the right level of return. We do have 13 pilots that will be going on in order to test those things out, and again, we'll provide more insight into that as we get into our '13 guidance.

Operator

Your next question comes from of John Kraft with D.A. Davidson.

John Kraft - D.A. Davidson & Co., Research Division

I just wanted to clarify a little bit here, specifically around the core EPS guidance. You've raised the consolidated number despite all of the dilution, and I guess I was just curious if you could talk a little bit about where things are a bit better than expected?

J. Scott Di Valerio

Sure. As we've taken a look at the third quarter release schedule at Redbox, certainly, we got -- we know what that release schedule is as well and so we're getting a little bit better run on the product costs there and how we're buying opportunities to streamline that. And we're sort of looking at ways to improve and be more efficient around our cost structure and so we continue to put things in place around that. But the main driver is around costs, the COGS portion of the business, because as you get more insight into what's going to get released and how much you're going to purchase and how that's going to drive revenue, I think that's a key into driving the big chunk of the improvement in EPS.

John Kraft - D.A. Davidson & Co., Research Division

And I guess a higher percent of the workaround titles, too?

J. Scott Di Valerio

Yes, we're pleased with where we are with the workaround titles and in our ability to get content at the levels that we set out to get and to be able to get those into the kiosks sooner than we were able to under the 28-day release time frame. As we talked about while we're getting the quantities that we set out to get and getting those turn quite well, the revenue still going to be below what you would get under a distribution deal but the margin percentages are better and the margin dollars are a bit lower.

Paul D. Davis

John, this is Paul. The other thing I would add, I mean, we're really, really focused on the consumer and we measured both of the market share. We have nice, nice market share gains. We also measured Net Promoter Score. And on a sequential basis, our Net Promoter Score has grown, so we are getting quantities and I think our consumers really appreciate getting it closer to street [ph] date and the efficiency that Scott addressed earlier, the operations team is doing a terrific job in making sure the product gets there as soon as possible and as efficiently as possible.

John Kraft - D.A. Davidson & Co., Research Division

Okay, that's helpful. And if I could just add -- ask a couple on the blue kiosks, the return only period that you mentioned in the prepared remarks, how long is that?

J. Scott Di Valerio

It will vary a little bit, but it will be somewhere between 10 and 14 days is the standard set on that, so we can get the disks back and be able to get them back and in the right places from a destroy standpoint and the like. And actually during that time frame, we're not generating new revenue but certainly you're generating revenue for as long as the disks are around on that.

John Kraft - D.A. Davidson & Co., Research Division

True. And then just lastly as you evaluate options, maybe in the international markets for placement, is there costs, significant costs involved in -- or requirements to integrate those -- update those systems to integrate them into the existing Redbox system or will those be run independently?

J. Scott Di Valerio

Well, we're looking at a variety of different opportunities to repurpose those kiosks, whether it be outright sale versus partnering and the like. There will be localization and such that would have to get done in any case around the kiosks depending on which country you're going to and we'll continue to evaluate the best return on those as we move forward.

Operator

Your next question comes from the line of Paul Coster with JPMorgan.

Paul Coster - JP Morgan Chase & Co, Research Division

The CapEx in the quarter was a little lighter than I was expecting and thus if the prior guidance still stands, then obviously there's a big ramp in the second half of the year. Can you just talk us through the shape and the rationale for still the original guidance? Has anything changed?

J. Scott Di Valerio

Sure. We were a little bit light on CapEx during the second quarter, some of that relates to our rollout in Canada as we were little late in getting started on that as we were signing retailer contracts and a few of the projects that we're continuing to work on, both from the timing of the projects but also in the amounts they get capitalized as you kind of work through some of these projects, some get -- more gets into expense versus capital. So those things were what drove us to be a little bit light in CapEx as we move through the second quarter. However, as we guided to going forward, we certainly have an increase in CapEx as it relates to Redbox surrounding the NCR swaps that we're doing and an adjustment of CapEx around to be reflective in corporate, to be a little bit lower than what we had originally anticipated. So I think we made the appropriate adjustments there. And again, the ramp should be kind of in line with what we have expect coming out of the gate if you lay or if you take out the factor of the swap outs, the red for the blue.

Paul Coster - JP Morgan Chase & Co, Research Division

Can you -- now that we're a little bit closer to the reality of Redbox Instant, is there any commitment in the CapEx line to that undertaking? And for that matter, how do you see that evolving in time in terms of cash flow over the short to medium term anyway, maybe in long term?

Paul D. Davis

Yes, as we get closer and as we get ready to go in the market on a broad national launch, we'll give a lot more detail around that. We're doing an internal test right now with our alpha. We've talked about the announcement earlier today about -- we've had a leadership team in place working on the technology, procuring the content, all of that getting lined up so that when we hit the market, we'll be in full stride. But the specific details that you're asking for will have to wait a bit but as soon as we get into market, we'll give a lot more clarity around that.

Paul Coster - JP Morgan Chase & Co, Research Division

Do you think there will be wholly owned content that the entity will need to empty up for?

J. Scott Di Valerio

Well, we'll talk more about the operating. I think it will become clear when we get to launch, Paul, around what the product offering is going to be and how it's going to play out and I think that's probably the best time to bring light to that from a competitive perspective. But we feel very good and confident in what we're going to be bringing to the market that will be compelling, that will be -- content that counts, and I think that the combination of having the subscription model with new release content at the kiosks, great content, the accounts that's relevant and compelling, from a streaming perspective, will be very interesting to consumers. And again, we'll provide more details as we get closer to launch in order to make sure we're right, in the right competitive sense.

Operator

Your next question comes from the line of Darren Aftahi with Northland Securities.

Darren Aftahi - Northland Capital Markets, Research Division

I just got a couple around NCR, et cetera. So just to be clear, you talked about $0.40 or $0.50 dilution, just to be clear, is your core continuing operations EPS for the year sort of x the dilution, $5 to $5.30? I know on print, you're saying $4.60, but I'm just trying to make sure I get this on an apples to apples stand.

J. Scott Di Valerio

The core EPS from continuing operations is inclusive of the impact of the NCR, the blue kiosks operating, switching out to the Redbox kiosks and the amortization and such related to the assets, the purchase accounting that's been -- what's detailed in the prepared remarks. What's not in the core are deal costs, which were about $2 million this quarter. But the -- taking the kiosks out, replacing the kiosks, the amortization, all those types of things are included in the core EPS from continuing operations, which effectively means the $0.40 to $0.50 dilution is included in there.

Darren Aftahi - Northland Capital Markets, Research Division

Okay. And then second question, with the 6,200 active, if we just assume you could get rid of 1,000, of the roughly 2,700 at the midpoint and then 2,500 that are operating under the blue brand, is that sort of historical NCR averages on the blue, but for the -- call it, the 2,700 that are going to be replaced throughout the back half of 2012, what kind of monthly ASPs are you assuming? Is this something that needs to build in the corporate average? Is it nowhere near that? Just give me some clarity, it will be helpful.

J. Scott Di Valerio

Yes. We're planning on those kiosks, performing similar to a new Redbox kiosk going into market. And so we're putting and focusing the initial rollout on Safeway and Publix, which are 2 obviously great retail partners, and Publix being the new retail partner for us, and in areas where that we have a little less coverage of Redbox covered. So we do expect the kiosks coming in should ramp at the level that -- under the new Redbox kiosks ramps.

Darren Aftahi - Northland Capital Markets, Research Division

And then my last question and I'll let others ask, so your assumption that NCR closing transactions is $40 million to $50 million of CapEx for the back half of the year, does that still hold true for the 2,500 to 2,900 range of replacement or has that number changed?

J. Scott Di Valerio

Well, we're basically -- we're replacing them with Redbox kiosks and so the normal cost of Redbox kiosks, the average cost is $15,000 is what we kind of loaded in there, again, with the mix between indoor and outdoor. The majority of the blue replacements are indoor versus outdoor units. And then we do have some costs to rip out or to take out the blue kiosks that are -- that is included in those costs and I think that's on the $4.5 million to $5 million range.

Operator

Your next question comes from the line of Andy Hargreaves with Pacific Crest.

Andy Hargreaves - Pacific Crest Securities, Inc., Research Division

Just wondering if you could talk a little bit more about the transaction volume and demand levels in Redbox. It seems like that was down pretty significantly sequentially on a per kiosk basis and the title line seemed to be pretty good. So can you just give us a little more detail on what you think the driving forces behind that?

Paul D. Davis

Yes. I mean first off, we're pleased with the 8 percentage point increase in market share that we realized, taking us to 42.5% which still put us, from a revenue standpoint, within the guidance range. As we discussed the last call, that both the seasonality and the clumpiness of the titles, we needed to have that as a key consideration. So as a result, I mean, there was somewhat of an impact on the revenue but all in, we were pretty pleased and we're also able to adjust the cost structure underneath that to ensure that it flows through nicely to the EPS and that's a reason, on the core EPS, we were kind of at the over top end of the range of what we guided to.

Andy Hargreaves - Pacific Crest Securities, Inc., Research Division

Do you see any, I mean, if you guys have talked about the nonwindowed -- or excuse me, the workaround titles having a revenue impact from maybe not buying so many titles or whatever, was there anything material there?

Paul D. Davis

Actually, we were pleased with the workaround titles even though we had like twice the number of titles in Q2 versus Q1. So we -- what it really means is that even if you buy fewer titles, we're able to turn them more than we did before, which delivered great results. So we did not have consumer complaints of consumers. We always focused on making sure that we win with the consumer. We measure this by the Net Promoter Score and that was up. We had really solid comp store sales. So all in, we consider it as a nice win for us this last quarter.

J. Scott Di Valerio

And to layer on this [ph], Paul, I mean, when we set out the quarter what we expected our workaround titles that do based off of the quantities we expected to get, they outperformed that on top line as well as on the margin line, and we feel good about that, that we're one, able to get the products that we wanted, the amounts that we wanted and set up in the time frame that we needed it, in fact, sometimes it's sooner than that, as well as the ability to get it into the kiosks well in advance of the time frames that we used to under the delay contracts. So again, we're pleased with how the workaround went. And with the other thing that I think Paul reiterated on, yes, I set the schedule over the titling, looked good this quarter. And the second quarter I think the titles were good but remember, we had 23% less titles this quarter than we did in the second quarter of last year and a lot lower, 13% lower box office. And we had titles coming in, in an uneven fashion where we have 1 or 2 relatively lean titles and then we would have a week where we had no titles to new release content coming out of the kiosks. So we feel good about driving the revenue that we did, and with the -- kind of how these lates are coming in, as well as the number of titles coming in and again we're driving good revenues as we look out into Q3 and then in Q4 as well.

Operator

Your next question comes from the line of Ronald Bookbinder with Benchmark.

Ronald Bookbinder - The Benchmark Company, LLC, Research Division

I'm looking at the workarounds that you were just talking about versus the window, so is the operating margin compared to where you were under the window contracts, is it about the same or is it actually -- has it increased? Has the workarounds actually been accretive for you?

Paul D. Davis

That's a very good question because actually the percentage, that's increased. But the absolute dollars might be less because you are buying quite as many titles. But on a margin percent basis, we're actually seeing an improvement.

Ronald Bookbinder - The Benchmark Company, LLC, Research Division

And the debit card fees, have you -- did you continue to work with the banks this past quarter? And how should we look at that going forward?

J. Scott Di Valerio

Yes, we were at that the -- certainly, at the full rate this quarter as we talked about when we set guidance. We continue to work with Visa and MasterCard and have discussions with Visa and MasterCard around a rate for small dollar transactions. Having said that, we implemented the -- fully implemented the single billing engine at the end of the first quarter, which has really helped us in getting the costs in line around the interchange rates and as a percentage of revenue, the processing rates for us now are on the same percentage of revenue as they were prior to the increase in the interchange rates. So we're going to continue to work and focus on kind of trying to get better rates in those -- in the interchange, in the debit cards set. But we believe we've done a pretty good job about neutralizing that now it's about to extending out and seeing if we can't drive a little bit more margin across that.

Ronald Bookbinder - The Benchmark Company, LLC, Research Division

And lastly, on the blue boxes versus the red boxes, how are you getting the information, the data from those boxes? Do you now have access into NCR systems such that you can see inventories and adjust that and get -- well, sell-through data?

J. Scott Di Valerio

We are working under -- we signed a number of transactional services agreements, which allow us to get access to that data as well as we have a variety of different agreements on merchandising the kiosks and taking the kiosks out and those kinds of things which we traditionally would have in an acquisition like this. So yes, we have access to that data and the ability to track what's going on as we move through.

Operator

[Operator Instructions]

Your next question comes from the line of Steve Dyer with Craig-Hallum.

Steven L. Dyer - Craig-Hallum Capital Group LLC, Research Division

Scott, could you break out both the cash and the noncash impact of the NCR acquisition?

J. Scott Di Valerio

As you know, Steve, we paid $100 million, obviously, cash for the acquisition which crosses the assets that we acquired, the kiosks, the retailer contracts, and the other intangibles, including goodwill that they go through, so that's certainly cash as that goes out. As we move forward, the cash that will be going out as it relates primarily to the CapEx that we're putting in with the new Redbox machine and then the inventory, obviously the inventory that we're filling those machines with. So again, I think once we kind of move through the amortization periods of the kiosks and some of the other intangibles, that's -- as you look at the purchase accounting that we laid out in the prepared remarks and in the 10-Q, those will be noncash charges that come through over the next, in the case of the kiosks, 10 months, in the case of the retailer contracts, 10 years, and in the case of the other intangibles, 8 years. So that will be the noncash transaction expenses that will happen over those time periods. Does that answer the question, Steve?

Steven L. Dyer - Craig-Hallum Capital Group LLC, Research Division

Yes, I just need to refer to those tables. I appreciate it. Another question with respect to the Verizon joint venture, can you remind me again sort of what your limit or your cap was for capital going into that?

J. Scott Di Valerio

Yes, we -- there's a $450 million total investment for both parties. We are responsible for 35% of that. So to the extent that we invest up to that 35% then, if additional investments go through and we don't want to participate, then we cannot be dilutive below 10%. But we have a requirement to do 35% of $450 million. Having said that, I think our losses from the joint venture this quarter were about $4 million, and we made our initial investment of $14 million, we expect to make a couple 1, maybe 2 capital contributions as we move through the rest of the year that will be pretty moderate in the scheme of things, and so we're very excited about that. We think it's within range and I think as we talked about when we announced the JV initially, neither us nor Verizon expect to have to invest [ph] up to that limit, assuming that we move through and do the things we need to do around subscribers.

Steven L. Dyer - Craig-Hallum Capital Group LLC, Research Division

Okay, that's helpful. So a comment -- earlier question asked a different way, there's no plans to become voracious acquirers of content, correct?

J. Scott Di Valerio

I think the way to answer that is just we believe we're going to be able to bring great content that's compelling and relevant to our consumers and do it in a way that is reflective of how both Verizon and quite candidly, Coinstar Redbox have done in the past, which is driving great value and convenience and simplicity and doing that at a place to drive bottom line.

Operator

Your next question comes from the line of Eric Wold with B. Riley.

Eric Wold - B. Riley & Co., LLC, Research Division

2 questions. First one, not to beat on a dead horse, but I saw on the guidance in terms of including NCR or not, so it's asked another way, had the acquisition of NCR do not happen, would you be raising guidance by essentially $0.50 to $0.70, including what it was raised by and getting back to $0.40, $0.50?

J. Scott Di Valerio

Yes, well, certainly if we hadn't acquired the assets of NCR, we wouldn't have the $0.40 to $0.50 drag so you could add that back in, yes. But again, that's -- we have acquired it, we are in this process and we're pretty excited about turning the acquisition through and getting the assets in place and turning this thing accretive in a pretty short period of time.

Eric Wold - B. Riley & Co., LLC, Research Division

No, I agree. I think it was a great acquisition. Only I think they're still a little confused and I know it's been asked a million ways just wanted to get that last one in there. And then I guess, another way, not sure I missed this on the first part of the opening comments but now that we're a couple of quarters passed the price increase taken late last year, as you kind of dig into this data that you're seeing, are you seeing any changes in terms of consumer behavior, in terms of number of disks out per transaction, number of visits on average per known customer, average holding period for the disk [ph]? Anything that would be indicative of kind of a push back on the price increase?

Paul D. Davis

Yes, Eric, that's a great question. And what -- the short answer is no big change. If you want to look at the performance in Q2 versus the prior quarter and then kind of the last month, 1.5 months in Q4 when we had a price increase, it's been incredibly consistent. So there was a bit of a demand follow-up, but we saw both in the test and roll out and that was between 6% to 8%, and that's held very, very constant.

Operator

[Operator Instructions]

I don't have any questions at this time, sir. I would like to turn the call back over to Mr. Davis for closing remarks.

Paul D. Davis

Yes. Thank you. And I'd like to thank everyone for taking time out of their day to listen to our recap of the quarter. We're really excited. I mean when you look at the Redbox business, we're winning with consumers, evidenced by the market share gains of 8 points, it's been at 42.5% and a significant increase over our next closest competitor. We're also growing our consumer base, evidenced by the email addresses growing 42% versus the same time a year ago. One of our most powerful assets is the -- just the connection with the consumers and on a unique email address, we're now up at 43.5 million addresses and continuing to grow. Also, I'm incredibly excited about the new revenue streams that Redbox has planned. So we've talked a fair a bit and you're going to see it in the market with our joint venture with Verizon, so Redbox Instant will be in the market, will put us in a whole new channel of business that we really looking forward to competing in. We're also expanding our core business in both the dollar channel plus expanding into Canada. Scott gave a lot of detail about the acquisition of NCR Express and Blockbuster Express and how that's going. I think we're pleased with how quickly that's happening and the reaction of retailers and the receptivity in the marketplace for putting us in arm's reach or closer to more and more consumers.

And then we also talked at Analyst Day about our enthusiasm. We're a bit vague about another new product that we will be testing with Redbox by the end of the year. That is complementary that we're excited about. As it relates to new ventures, for 2012, you go back to the first year, our kiosk footprint across our -- our [indiscernible] has increased -- will be increasing tenfold. So the point is we are going across 6 organic businesses and 2 external businesses, all of which we're very optimistic about and believe they'll be successful. There will be some that will fail, but we have had a very really high batting average on the success rate thus far. So really with their coffee businesses, the first one out of the queue and then we're looking at a couple of others that are very exciting as well.

And then lastly, when you just look at our P&L and our balance sheet, Scott talked earlier, we're taking our guidance up on all 3 of the measures, both revenue, EBITDA and EPS, despite overlapping a price increase in Q4 and absorbing the $0.40 to $0.50 EPS hit as a result of the NCR Blockbuster Express acquisition. So we have built this business by focusing on the consumer and delivering against value, simplicity and convenience. We feel like the fundamentals of the business are very solid. We're well positioned and continue to grow. So with that, I thank you for your time and I look forward to talking to you soon. Thank you.

Operator

Thank you for your participation in today's conference. This will conclude the presentation. You may now disconnect. Have a great day.

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