- Net Income for fiscal year 2009 was $104 million compared to a loss of
($32) million in the year-ago period; Excluding the EchoStar damages award
fiscal year 2009 net income would have been $0.3 million
- Record Adjusted EBITDA for fiscal year 2009 was $120 million, compared
to a loss of ($3) million in the year-ago period and a loss of ($31) million
in fiscal 2007; Excluding the EchoStar damages award fiscal year 2009 Adjusted
EBITDA would have been $32 million
- Net loss for fourth quarter was ($3.6) million compared to ($6.4) in the
year-ago period
- Adjusted EBITDA for fourth quarter was $2.5 million compared to $0.9
million in the year-ago quarter, exceeding guidance
- Significant progress in litigation with EchoStar; injunction enforcement
stage underway
- Teaming with SeaChange would enable cable operators to quickly deploy
TiVo branded DVRs with Video on Demand and broadband services available via
the TiVo service.
- Deal with Alticast to help boost progress of TiVo's mass distribution
efforts
- TiVo Search revolutionizes the way viewers navigate and find content
amid millions of broadcast, cable and broadband choices
ALVISO, Calif., March 2 /PRNewswire-FirstCall/ -- TiVo Inc. (Nasdaq:
TIVO), the creator of and a leader in television services for digital video
recorders (DVRs), today reported financial results for the fourth quarter and
fiscal year ended January 31, 2009.
"This was another solid quarter for TiVo and we now bring to a close our
most financially successful year ever as we recorded our first Adjusted EBITDA
and net income positive year in Company history with or without the EchoStar
litigation proceeds," said Tom Rogers, President and CEO of TiVo. "This
significant milestone is the result of advancing our long-term growth drivers
and future prospects and from more efficiently operating our business. As the
economic turmoil continues to exert downward pressure on the entire consumer
electronic industry, our strategy so far has proven effective. As of year end,
the Company is on solid financial footing with a strong balance sheet with
over $200 million in cash, cash equivalents, and short-term investments, no
debt, and improved cash flow."
Mr. Rogers continued, "Importantly our litigation with EchoStar has
entered the final enforcement stage. We won the original trial and received
nearly $105 million in initial damages from EchoStar's infringement of our
Time Warp patent. We believe they continue to infringe our patent and violate
the injunction issued by the District Court requiring them to disable the DVR
functionality in their infringing models. Last month, the District Court held
an evidentiary hearing to assess EchoStar's new software and to determine
whether EchoStar is in violation the injunction. We are awaiting the Court's
ruling on these final matters and are confident in the outcome."
For the fourth quarter, Adjusted EBITDA was $2.5 million compared to $0.9
million in year-ago quarter, and exceeded guidance of ($2) million to ($4)
million due in part to the Company's continued efforts to keep costs in line.
TiVo reported a net loss of ($3.6) million, compared to guidance of a net loss
of ($10) to ($12) million and a net loss of ($6.4) million in the fourth
quarter of last year. Net loss per share was ($0.04), compared to a loss of
($0.06) per share for the fourth quarter of last year. Service and technology
revenues were $48.5 million, compared with $58.1 million for the same period
last year.
For the full year, Adjusted EBITDA for fiscal year 2009 was $120 million,
compared to a loss of ($3) million in the prior year and a loss of ($31)
million in fiscal year 2007. Excluding the EchoStar damages award, fiscal year
2009 Adjusted EBITDA would have been $32 million. TiVo reported net income of
$104 million and a net income per basic share of $1.03, compared to a net loss
of ($31.6) million, or ($0.32) per share, for the last fiscal year. Service
and technology revenues were $209 million for the year, compared with $231
million for the prior year.
Rogers continued, "Comcast is fully marketing our product in the New
England market and is in the process of adding and sharpening offers. For
example, Comcast has just introduced a DVR with free TiVo service as an option
for their triple play with HD. This makes Comcast DVR with TiVo service only
$9.95 (as opposed to $2.95 for TiVo on top of the regular DVR service fee)
all-in for anyone subscribing to triple play with HD. They are also working to
prepare for the launch of TiVo in Chicago. Further, the work Comcast is doing
in the NorthCentral division has been useful for them as they roll-out the
tru2way technology infrastructure across their entire footprint.
"Speaking of cable partnerships, this quarter we have also embarked on two
important initiatives to make it easier for cable operators to offer the truly
differentiated TiVo experience to their subscribers. First, we have announced
a relationship with SeaChange, one of the leading providers of cable video on
demand solutions, with whom we would be able to integrate cable operators'
video on demand services with current and future generations of retail TiVo
hardware. This is a significant milestone for the industry, as it provides a
way for cable operators to deploy a low cost TiVo platform that seamlessly
combines the unique capability of cable VOD with the complete portfolio of
broadband services now available via the TiVo service - all without having to
invest in a major software porting effort. This collaboration would make it
possible for consumers to experience the benefits of "two-way" cable
programming services with existing "one-way" TiVo HD DVRs. We are excited
about this development and its potential to enhance the competitive position
of small and large cable operators alike by accelerating the deployment of
next generation cable TV services.
"Our goal of lowering the deployment hurdle for operators also sparked
another initiative we announced this quarter with Alticast, a leading provider
of middleware software to pay television operators internationally. Porting
TiVo software to the Alticast platform would make it easier for domestic and
international operators to deploy the TiVo service on set top box platforms
that run the Alticast software. We believe our efforts with Alticast will
present some welcome new options for pay television providers who are rapidly
being confronted with the two-fold challenge of needing to differentiate their
consumer services while also reducing capital expenditures and operating
expenses.
"Additionally, we continue to work on our new DIRECTV HD DVR. The new HD
DVR will include popular TiVo broadband features, and will be immediately
accessible to DIRECTV's entire national customer base on day-one of the
launch. We have had a very successful history with DIRECTV and those
subscribers are some of our most loyal customers. Now, as these customers
look to upgrade from standard definition programming, they will have the
option to choose the TiVo experience to help them truly get the most out of
their high definition viewing experience.
"On the TiVo-Owned side of the business, we have made incredible strides
toward creating the ultimate in-home media center that combines the best way
to search and watch traditional television with the ability to access the vast
amount of video and music choices available via broadband, delivering the most
dynamic user experience on the market today. From our partnerships with
Amazon, You Tube, Rhapsody and Netflix, to name a few, broadband enabled TiVo
subscribers have access to more than five million pieces of content that are
not available on cable or satellite.
"In a world of infinite content choice, channel flipping with the remote
has become completely obsolete. TiVo not only facilitates the delivery of
millions of pieces of content directly to the TV, but also provides viewers
with the best experience for easily finding what they want to watch. To that
end, last month we rolled out our revolutionary new TiVo Search, which
features a high definition design that takes full advantage of the extra real
estate that large flat screen TVs provide and makes searching millions of
pieces of content even faster and easier. TiVo is the only solution with an
interface that integrates broadband, broadcast and cable content delivery with
the ability to search this content.
"In terms of our important partnership with Netflix, our users have wasted
no time in adopting this feature, which allows many TiVo subscribers who also
have a Netflix subscription to instantly stream thousands of movies directly
to their television sets for no incremental charge. Almost half of TiVo users
who are also Netflix subscribers have already accessed the Netflix library of
more than 12,000 movies and TV episodes, after only launching a few short
months ago. Such broad adoption speaks to the value and convenience of this
service and it is already resulting in significant cross pollination between
our two subscriber bases. In these difficult economic times, this is an ideal
solution for consumers looking to cut back on discretionary spending with an
in-home entertainment alternative to expensive nights out at the movies.
"Our strategy to keep acquisition costs and marketing spend down proved to
be particularly effective this quarter as SAC was $114, down 17 percent from
the year-ago quarter and was the lowest SAC in three years. As we have
discussed in the past, we have benefitted in part from third party marketing
efforts from retailers, content owners and consumer electronic manufacturers
that market the TiVo product on our behalf as well as prior standard
definition inventory reserve releases."
TiVo-Owned subscription gross additions for the fourth quarter were
approximately 59,000, compared to 109,000 gross additions for the year-ago
period. The TiVo-Owned monthly churn rate was 1.3%, down from both the third
quarter and the year-ago quarter. Overall, TiVo-Owned subscriptions ended the
quarter at approximately 1.6 million. As expected, TiVo reported a net decline
in MSOs/Broadcaster subscriptions as many of our mass distribution deals are
still in early phases of deployment and/or development. Cumulative total
subscriptions as of January 31, 2009 were 3.3 million.
Rogers continued, "In a keynote address during the annual National
Association of Television Program Executives (NATPE) conference last month, we
addressed the challenges that commercial avoidance and infinite content choice
present for advertisers and programmers and cautioned that if they do not
confront these challenges with a greater sense of urgency, the economic
consequences for the entire TV industry can be devastating. TiVo's role here
is not only to encourage the industry to act, but just as important, to offer
solutions that can help develop a television business model that actually
creates new opportunities. If the industry acts to meet these challenges head
on and doesn't sit idle, we believe that the golden age of television can
still be ahead of us.
"To that end, even in a market where advertising expenditures are being
pulled back, our advertising and audience measurement business continues to
gain mind share. The expansion of the sample size from which our
Stop||Watch(TM) ratings service derives anonymous, second-by-second audience
research data, making it 25 times larger than other ratings services, has been
lauded by agencies, marketers and networks. Just last month we added 17
additional names to our growing list of cable networks that we are now able to
produce stable ratings measurements for, bringing the total to 93 broadcast
and cable channels - 16 of which were previously unmeasured by the industry
currency. In December, we launched a new interactive ad feature allowing
advertisers to reach audiences with targeted product messages displayed within
the pause screen of a Live or timeshifted program. In an age of infinite
choice where the viewer is in total control of the content they watch, we
continue to develop the innovative solutions that will help the media industry
reach consumers in a DVR world."
Mr. Rogers concluded, "We have made significant progress during fiscal
2009. With uncertain economic conditions still ahead, we will continue to
efficiently manage our standalone business while aggressively developing our
relationships on the mass distribution, international and advertising fronts
and fight to uphold the value of our intellectual property. We are beginning
to see our long-term strategic initiatives bear fruit and are confident that
our forward momentum will continue to produce solid financial performance and
success in fiscal year 2010."
Management Provides Financial Guidance
For the first quarter of fiscal 2010, TiVo anticipates service and
technology revenues in the range of $47 million to $49 million, a net loss in
the range of ($6) million to ($8) million, and Adjusted EBITDA in the range of
breakeven to $2 million.
This financial guidance is based on information available to management as
of March 2, 2009. TiVo expressly disclaims any duty to update this guidance.
Management's guidance includes Adjusted EBITDA, a non-GAAP financial
measure as defined in Regulation G. TiVo has provided a reconciliation of
EBITDA and Adjusted EBITDA to net income (loss) in the attached schedules
solely for the purpose of complying with Regulation G and not as an indication
that EBITDA or Adjusted EBITDA is a substitute measure for net income (loss).
Conference Call and Webcast
TiVo will host a conference call and Webcast to discuss the fourth quarter
financial and operating results and guidance outlook at 2:00 pm PT (5:00 pm
ET), today, March 2, 2009. To listen to the discussion, please visit
http://www.tivo.com/ir and click on the link provided for the Webcast or dial
(888) 713-3587 (no password required). The Webcast will be archived and
available through March 9, 2009 at http://www.tivo.com/ir or by calling (719)
457-0820 and entering the conference ID number 9600433.
About TiVo Inc.
Founded in 1997, TiVo (Nasdaq: TIVO) pioneered a brand new category of
products with the development of the first commercially available digital
video recorder (DVR). Sold through leading consumer electronic retailers and
TiVo.com, TiVo has developed a brand which resonates boldly with consumers as
providing a superior television experience. Through agreements with leading
satellite and cable providers, TiVo also integrates its DVR service features
into the set-top boxes of mass distributors. TiVo's DVR functionality and ease
of use, with such features as Season Pass(TM) recordings and WishList(R)
searches and TiVo KidZone, have elevated its popularity among consumers and
have created a whole new way for viewers to watch television. With a continued
investment in its patented technologies, TiVo is revolutionizing the way
consumers watch and access home entertainment. Rapidly becoming the focal
point of the digital living room, TiVo's DVR is at the center of experiencing
new forms of content on the TV, such as broadband delivered video, music, and
photos. With innovative features, such as TiVoToGo(TM) transfers and online
scheduling, TiVo is expanding the notion of consumers experiencing "TiVo, TV
your way.(R)" The TiVo(R)service is also at the forefront of providing
innovative marketing solutions for the television industry, including a unique
platform for advertisers and audience research measurement.
TiVo, "TiVo, TV your way." Season Pass, WishList, TiVoToGo, and the TiVo
Logo are trademarks or registered trademarks of TiVo Inc.'s subsidiaries
worldwide. (C) 2009 TiVo Inc. All rights reserved
This release contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. These statements relate to,
among other things, TiVo's future business and growth strategies including
TiVo's mass distribution strategy, profitability and financial guidance,
distribution of the TiVo service domestically with Comcast and DIRECTV as well
as internationally, future initiatives with SeaChange and Alticast, growth and
innovation in TiVo's advertising and audience research measurement business,
the timing and availability of broadband content, the results of TiVo's
litigation with EchoStar, how TiVo intends to exploit its intellectual
property, TiVo's future marketing spend and related activities, and financial
performance. Forward-looking statements generally can be identified by the use
of forward- looking terminology such as, "believe," "expect," "may," "will,"
"intend," "estimate," "continue," or similar expressions or the negative of
those terms or expressions. Such statements involve risks and uncertainties,
which could cause actual results to vary materially from those expressed in or
indicated by the forward-looking statements. Factors that may cause actual
results to differ materially include delays in development, competitive
service offerings and lack of market acceptance, as well as the other
potential factors described under "Risk Factors" in the Company's public
reports filed with the Securities and Exchange Commission, including the
Company's Annual Report on Form 10-K for the fiscal year ended January 31,
2008, our Quarterly Reports on Form 10-Q for the fiscal periods ended April
30, 2008, July 31, 2008, and October 31, 2008 and our Current Reports on Form
8-K. The Company cautions you not to place undue reliance on forward-looking
statements, which reflect an analysis only and speak only as of the date
hereof. TiVo disclaims any obligation to update these forward-looking
statements.
TIVO INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share and share amounts)
(unaudited)
Three Months Ended Twelve Months Ended
January 31, January 31,
------------------ -------------------
2009 2008 2009 2008
---- ---- ---- ----
Revenues
Service revenues $44,115 $51,025 $188,408 $211,496
Technology revenues 4,353 7,027 20,126 19,382
Hardware revenues 10,712 16,066 41,133 41,798
------- ------- ------- -------
Net revenues 59,180 74,118 249,667 272,676
Cost of revenues
Cost of service
revenues (1) 11,180 12,019 44,603 42,976
Cost of technology
revenues (1) 2,740 5,252 12,300 17,367
Cost of hardware
revenues 15,764 23,929 57,742 92,052
------- ------- ------- -------
Total cost of revenues 29,684 41,200 114,645 152,395
------- ------- ------- -------
Gross margin 29,496 32,918 135,022 120,281
------- ------- ------- -------
Research and
development (1) 15,459 15,416 62,083 58,780
Sales and
marketing (1) 6,517 7,336 24,944 23,987
Sales and marketing,
subscription
acquisition costs 1,690 7,195 6,038 31,050
General and
administrative (1) 11,382 10,234 42,931 42,954
Litigation proceeds - - (87,811) -
------- ------- ------- -------
Total operating
expenses 35,048 40,181 48,185 156,771
------- ------- ------- -------
Income (loss) from
operations (5,552) (7,263) 86,837 (36,490)
Interest income,
includes $16,789
related to litigation
proceeds in the twelve
months ended
January 31, 2009 423 1,066 18,636 5,031
Interest expense and
other (278) (183) (553) (102)
------- ------- ------- -------
Income (loss)
before income
taxes (5,407) (6,380) 104,920 (31,561)
Provision for
income taxes 1,840 (22) (1,328) (30)
------- ------- ------- -------
Net income (loss) $(3,567) $(6,402) $103,592 $(31,591)
======= ======= ======== ========
Net income (loss)
per common
share - basic $(0.04) $(0.06) $1.03 $(0.32)
======= ======= ======= ========
Net income (loss) per
common share -
diluted $(0.04) $(0.06) $1.01 $(0.32)
======= ======= ======= ========
Weighted average
common shares
used to calculate
basic net income
(loss) per share 101,303,123 98,517,991 100,389,980 97,510,576
=========== ========== =========== ==========
Weighted average
common shares
used to calculate
diluted net income
(loss) per share 101,303,123 98,517,991 102,595,607 97,510,576
=========== ========== =========== ==========
(1) Includes stock-based
compensation expense
as follows :
Cost of service
revenues $229 $216 $903 $729
Cost of technology
revenues 477 729 2,071 2,422
Research and
development 2,235 1,934 8,805 7,326
Sales and marketing 557 737 2,089 2,205
General and
administrative 2,501 2,081 9,552 10,157
TIVO INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
(unaudited)
January 31, January 31,
2009 2008
---- ----
ASSETS
CURRENT ASSETS
Cash and cash equivalents $162,337 $78,812
Short-term investments 44,991 20,294
Accounts receivable, net of allowance for
doubtful accounts of $770 and $1,194 14,283 20,019
Inventories 13,027 17,748
Prepaid expenses and other, current 4,896 3,792
-------- --------
Total current assets 239,534 140,665
LONG-TERM ASSETS
Property and equipment, net 10,285 11,349
Purchased technology, capitalized software,
and intangible assets, net 10,597 13,522
Prepaid expenses and other, long-term 1,268 1,513
Long-term investments 3,944 -
-------- --------
Total long-term assets 26,094 26,384
-------- --------
Total assets $265,628 $167,049
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
CURRENT LIABILITIES
Accounts payable $9,844 $23,615
Accrued liabilities 25,054 29,536
Deferred revenue, current 47,560 59,341
-------- --------
Total current liabilities 82,458 112,492
LONG-TERM LIABILITIES
Deferred revenue, long-term 28,557 38,128
Deferred rent and other long-term liabilities 126 309
------ ------
Total long-term liabilities 28,683 38,437
-------- --------
Total liabilities 111,141 150,929
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock, par value $0.001:
Authorized shares are 10,000,000;
Issued and outstanding shares -
none - -
Common stock, par value $0.001:
Authorized shares are 275,000,000;
Issued shares are 103,604,015 and
100,098,426, respectively, and
outstanding shares
are 103,370,523 and 99,970,947,
respectively 104 100
Additional paid-in capital 829,273 792,654
Accumulated deficit (672,196) (775,788)
Treasury stock, at cost - 233,492 shares
and 127,479 shares, respectively (1,659) (846)
Unrealized loss on marketable securities (1,035) -
-------- --------
Total stockholders' equity 154,487 16,120
-------- --------
Total liabilities and
stockholders' equity $265,628 $167,049
======== ========
TIVO INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
Twelve Months
Ended January 31,
------------------
2009 2008
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net income(loss) $103,592 $(31,591)
Adjustments to reconcile net
income(loss) to net cash provided
by(used in) operating activities:
Depreciation and amortization of
property and equipment and
intangibles 9,783 10,326
Stock-based compensation expense 23,420 22,839
Inventory write-down - 5,892
Loss on inventory barter transaction,
utilization, and write-down of
trade credits 638 1,331
Allowance for doubtful accounts 470 923
Changes in assets and liabilities:
Accounts receivable 5,266 (301)
Inventories 4,721 3,566
Prepaid expenses and other (1,497) 227
Accounts payable (14,623) (12,437)
Accrued liabilities (4,530) (9,358)
Deferred revenue (21,352) (22,254)
Deferred rent and other long-term
liabilities (183) (1,253)
-------- ---------
Net cash provided by(used in)
operating activities $105,705 $(32,090)
-------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of short-term and long-term
investments (49,976) (30,808)
Sales of short-term investments 20,300 50,200
Acquisition of property and equipment (4,549) (7,422)
Acquisition of intangibles (319) (375)
-------- ---------
Net cash provided by (used in)
investing activities $(34,544) $11,595
-------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common
stock related to exercise of common
stock options 9,240 7,107
Proceeds from issuance of common
stock related to employee stock
purchase plan 3,963 3,397
Treasury Stock - repurchase of stock
for tax withholding (813) (276)
Payment under capital lease obligation (26) -
-------- ---------
Net cash provided
by financing activities $12,364 $10,228
-------- ---------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS $83,525 $(10,267)
-------- ---------
CASH AND CASH EQUIVALENTS:
Balance at beginning of period 78,812 89,079
-------- ---------
Balance at end of period $162,337 $78,812
======== =========
TIVO INC.
OTHER DATA
Guidance
Reconciliation
Three Months Twelve Months Three Months
Ended Ended Ending
January 31, January 31, April 30,
-------------- -------------- --------------
2009 2008 2009 2008 2009
---- ---- ---- ---- ----
(In thousands) (In thousands) (In millions)
Net income (loss) $(3,567) $(6,402)$103,592 $(31,591) $(8) - $(6)
Add back:
Depreciation &
amortization 2,314 2,675 9,783 10,326 $2 - $3
Interest income &
expense (418) (1,050) (18,583) (4,975) $(1)
Provision for
income tax (1,840) 22 1,328 30 $0
-------- -------- -------- -------- --------
EBITDA (3,511) (4,755) 96,120 (26,210) $(6) - $(4)
Stock-based
compensation 5,999 5,697 23,420 22,839 $6
-------- -------- -------- -------- --------
Adjusted
EBITDA $2,488 $942 $119,540 $(3,371) $0 - $2
======== ======== ======== ======== ========
Provision for income tax. The income tax expense of $1.3 million for the
year ended January 31, 2009 differs from expected tax expense of $36.7 million
at the statutory rate of 35% primarily due to utilization of $48 million of
net operating losses and $63 million of other deferred tax assets. The income
tax expense for the year ended January 31, 2009 is comprised primarily of
federal and state alternative minimum taxes. As of January 31, 2009, the
Company had net operating loss carryforwards for federal and state income tax
purposes of approximately $410 million and $119 million respectively,
available to reduce future income subject to income taxes.
EBITDA and Adjusted EBITDA Results. TiVo's "EBITDA" means income before
interest income and expense, provision for income taxes and depreciation and
amortization. TiVo's "Adjusted EBITDA" is EBITDA less expense for stock-based
compensation. EBITDA and Adjusted EBITDA are not measures of financial
performance under generally accepted accounting principles, which we refer to
as GAAP. We have presented EBITDA and Adjusted EBITDA solely as supplemental
disclosure because we believe they allow for a more complete analysis of our
results of operations and we believe that EBITDA and Adjusted EBITDA are
useful to investors because EBITDA and Adjusted EBITDA are commonly used to
analyze companies on the basis of operating performance. In addition, because
of the variety of equity awards used by companies, the varying methodologies
for determining stock-based compensation expense, and the subjective
assumptions involved in those determinations, we believe excluding stock-based
compensation enhances the ability of management and investors evaluate our
operating performance over multiple periods. Management does not use EBITDA or
Adjusted EBITDA as a measure of liquidity because, among other things, they do
not exclude the impact of deferred revenues associated with the amortization
of product lifetime subscriptions. We do not use stock-based compensation
expense in our internal measures. A limitation associated with these non-GAAP
measures is that they do not include any stock-based compensation expense
related to hiring, retaining, and incentivizing the Company's workforce.
EBITDA and Adjusted EBITDA are not intended to represent, and should not be
considered more meaningful than, or as an alternative to, measures of
operating performance as determined in accordance with GAAP.
Adjusted EBITDA and Net Income Excluding EchoStar Damages Award. We have
presented Adjusted EBITDA and Net Income for fiscal year 2009, excluding the
impact of the approximately $103.3 million in EchoStar damages received by us
in fiscal year 2009, net of tax expense of approximately $1.3 million, solely
as supplemental disclosure because we believe the presentation of these
non-GAAP measures will allow for a more complete analysis by our investors of
our prior year results and our on-going results of operations when compared to
our fiscal year 2009 results given our belief of the non-ordinary nature of
EchoStar damages award when compared to prior and future years.
TIVO INC.
OTHER DATA
Subscriptions
Three Months Twelve Months
Ended Ended
January 31, January 31,
------------ ------------
(Subscriptions in thousands) 2009 2008 2009 2008
---------------------------- ---- ---- ---- ----
TiVo-Owned Subscription Gross Additions 59 109 187 276
Subscription Net Additions/(Losses):
TiVo-Owned (4) 33 (91) 19
MSOs/Broadcasters (121) (155) (520) (518)
---- ---- ---- ----
Total Subscription Net Additions/
(Losses) (125) (122) (611) (499)
Cumulative Subscriptions:
TiVo-Owned 1,654 1,745 1,654 1,745
MSOs/Broadcasters 1,681 2,201 1,681 2,201
----- ----- ----- -----
Total Cumulative Subscriptions 3,335 3,946 3,335 3,946
% of TiVo-Owned Cumulative Subscriptions
paying recurring fees 59% 61% 59% 61%
Included in the 1,654,000 TiVo-Owned subscriptions are approximately
225,000 lifetime subscriptions that have reached the end of the period
TiVo uses to recognize lifetime subscription revenue. These lifetime
subscriptions no longer generate subscription
Subscriptions. Management reviews this metric, and believes it may be
useful to investors, in order to evaluate our relative position in the
marketplace and to forecast future potential service revenues. The TiVo-Owned
lines refer to subscriptions sold directly or indirectly by TiVo to consumers
who have TiVo-enabled DVRs and for which TiVo incurs acquisition costs. The
MSOs/Broadcasters lines refer to subscriptions sold to consumers by
MSOs/Broadcasters such as DIRECTV, Cablevision Mexico, Seven (Australia), and
Comcast for which TiVo expects to incur little or no acquisition costs.
Additionally, we provide a breakdown of the percent of TiVo-Owned
subscriptions for which consumers pay recurring fees, including on a monthly
and a prepaid one, two, or three year basis, as opposed to a one-time prepaid
product lifetime fee.
We define a "subscription" as a contract referencing a TiVo-enabled DVR
for which (i) a consumer has committed to pay for the TiVo service and (ii)
service is not canceled. We count product lifetime subscriptions in our
subscription base until both of the following conditions are met: (i) the
period we use to recognize product lifetime subscription revenues ends; and
(ii) the related DVR has not made contact to the TiVo service within the prior
six month period. Product lifetime subscriptions past this period which have
not called into the TiVo service for six months are not counted in this total.
Effective November 1, 2008, we extended the period we use to recognize product
lifetime subscription revenues from 54 months to 60 months for all product
lifetime subscriptions acquired on or before October 31, 2007. We now amortize
all product lifetime subscriptions over a 60 month period. We are not aware
of any uniform standards for defining subscriptions and caution that our
presentation may not be consistent with that of other companies. Additionally,
the subscription fees that some of our MSOs/Broadcasters pay us may be based
upon a specific contractual definition of a subscriber or subscription which
may not be consistent with how we define a subscription for our reporting
purposes.
TIVO INC.
OTHER DATA - KEY BUSINESS METRICS
Three Months Twelve Months
Ended Ended
January 31, January 31,
----------- -----------
TiVo-Owned Churn Rate 2009 2008 2009 2008
--------------------- ---- ---- ---- ----
(In thousands, except churn
rate per month)
Average TiVo-Owned subscriptions 1,656 1,727 1,695 1,721
TiVo-Owned subscription cancellations (63) (76) (278) (257)
---- ---- ---- ----
TiVo-Owned Churn Rate per month -1.3% -1.5% -1.4% -1.2%
---- ---- ---- ----
TiVo-Owned Churn Rate per Month. Management reviews this metric, and
believes it may be useful to investors, in order to evaluate our ability to
retain existing TiVo-Owned subscriptions (including both monthly and product
lifetime subscriptions) by providing services that are competitive in the
market. Management believes factors such as service enhancements, service
commitments, higher customer satisfaction, and improved customer support may
improve this metric. Conversely, management believes factors such as increased
competition, lack of competitive service features such as high definition
television recording capabilities in our lowest cost product offerings, and
increased price sensitivity may cause our TiVo-Owned Churn Rate per month to
increase.
We define the TiVo-Owned Churn Rate per month as the total TiVo-Owned
subscription cancellations in the period divided by the Average TiVo-Owned
subscriptions for the period (including both monthly and product lifetime
subscriptions), which then is divided by the number of months in the period.
We calculate Average TiVo-Owned subscriptions for the period by adding the
average TiVo-Owned subscriptions for each month and dividing by the number of
months in the period. We calculate the average TiVo-Owned subscriptions for
each month by adding the beginning and ending subscriptions for the month and
dividing by two. We are not aware of any uniform standards for calculating
churn and caution that our presentation may not be consistent with that of
other companies.
Three Months Ended Twelve Months Ended
January 31, January 31,
------------- --------------
2009 2008 2009 2008
---- ---- ---- ----
Subscription Acquisition Costs (In thousands, except SAC)
------------------------
Sales and marketing,
subscription
acquisition costs $1,690 $7,195 $6,038 $31,050
Hardware revenues (10,712) (16,066) (41,133) (41,798)
Less: MSOs/Broadcasters-
related hardware revenues 362 - 9,333 -
Cost of hardware revenues 15,764 23,929 57,742 92,052
Less: MSOs/Broadcasters-
related cost of
hardware revenues (385) - (8,590) -
------ ------ ------ ------
Total Acquisition Costs 6,719 15,058 23,390 81,304
====== ====== ====== ======
TiVo-Owned Subscription
Gross Additions 59 109 187 276
Subscription Acquisition
Costs (SAC) $114 $138 $125 $295
====== ====== ====== ======
Subscription Acquisition Cost or SAC. Management reviews this metric, and
believes it may be useful to investors, in order to evaluate trends in the
efficiency of our marketing programs and subscription acquisition strategies.
We define SAC as our total TiVo-Owned acquisition costs for a given period
divided by TiVo-Owned subscription gross additions for the same period. We
define total acquisition costs as sales and marketing, subscription
acquisition costs less net TiVo-Owned related hardware revenues (defined as
TiVo-Owned related gross hardware revenues less rebates, revenue share and
market development funds paid to retailers) plus TiVo-Owned related cost of
hardware revenues. The sales and marketing, subscription acquisition costs
line item includes advertising expenses and promotion-related expenses
directly related to subscription acquisition activities, but does not include
expenses related to advertising sales. We do not include third parties
subscription gross additions, such as MSOs/Broadcasters' gross additions with
TiVo subscriptions, in our calculation of SAC because we typically incur
limited or no acquisition costs for these new subscriptions, and so we also do
not include MSOs/Broadcasters' sales and marketing, subscription acquisition
costs, hardware revenues, or cost of hardware revenues in our calculation of
TiVo-Owned SAC. We are not aware of any uniform standards for calculating
total acquisition costs or SAC and caution that our presentation may not be
consistent with that of other companies.
Three Months Ended Twelve Months Ended
January 31, January 31,
------------- -------------
TiVo-Owned Average Revenue per
Subscription 2009 2008 2009 2008
------------------------------ ---- ---- ---- ----
(In thousands, except ARPU)
Total Service revenues $44,115 $51,025 $188,408 $211,496
Less: MSOs/Broadcasters-related
service revenues (5,137) (7,133) (22,412) (27,440)
------ ------ ------- -------
TiVo-Owned-related service revenues 38,978 43,892 165,996 184,056
Average TiVo-Owned
revenues per month 12,993 14,631 13,833 15,338
Average TiVo-Owned per month
subscriptions 1,656 1,727 1,695 1,721
------ ------ ------ ------
TiVo-Owned ARPU per month $7.85 $8.47 $8.16 $8.91
====== ====== ====== ======
Three Months Ended Twelve Months Ended
January 31, January 31,
------------- -------------
MSOs/Broadcasters Average Revenue
per Subscription 2009 2008 2009 2008
--------------------------------- ---- ---- ---- ----
(In thousands, except ARPU)
Total Service revenues $44,115 $51,025 $188,408 $211,496
Less: TiVo-Owned-related
service revenues (38,978) (43,892) (165,996) (184,056)
------- ------- -------- --------
MSOs/Broadcasters-related
service revenues 5,137 7,133 22,412 27,440
Average MSOs/Broadcasters
revenues per month 1,712 2,378 1,868 2,287
Average MSOs/Broadcasters per
month subscriptions 1,743 2,279 1,939 2,481
------- ------- ------- -------
MSOs/Broadcasters ARPU per month $0.98 $1.04 $0.96 $0.92
======= ======= ======= =======
Average Revenue Per Subscription or ARPU. Management reviews this metric,
and believes it may be useful to investors, in order to evaluate the potential
of our subscription base to generate revenues from a variety of sources,
including subscription fees, advertising, and audience research measurement.
ARPU does not include rebates, revenue share, and other payments to channel
that reduce our GAAP revenues. As a result, you should not use ARPU as a
substitute for measures of financial performance calculated in accordance with
GAAP. Management believes it is useful to consider this metric excluding the
costs associated with rebates, revenue share, and other payments to channel
because of the discretionary and varying nature of these expenses and because
management believes these expenses, which are included in hardware revenues,
net, are more appropriately monitored as part of SAC. We are not aware of any
uniform standards for calculating ARPU and caution that our presentation may
not be consistent with that of other companies.
We calculate ARPU per month for TiVo-Owned subscriptions by subtracting
MSOs/Broadcaster-related service revenues (which includes MSOs/Broadcasters'
subscription service revenues and MSOs/Broadcasters'-related advertising
revenues) from our total reported net service revenues and dividing the result
by the number of months in the period. We then divide by Average TiVo-Owned
subscriptions for the period, calculated as described above for churn rate.
The above table shows this calculation.
We calculate ARPU per month for MSOs/Broadcasters' subscriptions by first
subtracting TiVo-Owned-related service revenues (which includes TiVo-Owned
subscription service revenues and TiVo-Owned related advertising revenues)
from our total reported service revenues. Then we divide average revenues per
month for MSOs/Broadcasters'-related service revenues by the average
MSOs/Broadcasters' subscriptions for the period.
Beginning in February 2006, TiVo began deferring a portion of the DIRECTV
subscription fees equal to the fair value of the undelivered development
services. Additionally, beginning in February 2007, DIRECTV began paying us a
monthly fee for all DIRECTV households with DIRECTV receivers with TiVo
service similar to the lower amount paid by DIRECTV for households with
DIRECTV receivers with TiVo service deployed since March 15, 2002, subject to
a monthly minimum payment by DIRECTV.
SOURCE TiVo Inc.
