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| TiVo Reports Results for the Third Quarter Fiscal Year 2010 Ended October 31, 2009 |
"TiVo recorded another strong quarter, posting the ninth straight quarter of Adjusted EBITDA profitability, exceeding guidance," said "Importantly, we continued our successful defense of our intellectual property this quarter as the For the third quarter, service and technology revenues were Revenue, Adjusted EBITDA, and net income were each lower by Rogers continued, "On the international distribution front, we made significant progress since last quarter in our ongoing efforts to expand our global reach. Today, we announced a long-term, strategic partnership with "We also recently marked the official launch of TiVo in "During the quarter, we also continued our progress with our domestic mass distribution efforts. The new DIRECTV TiVo HD DVR is on track for launch next year, and we believe this will provide "Furthermore, during the quarter, we also continued other progress with our domestic mass distribution efforts. In particular, we expect to continue to partner with "Our mass distribution deal with Cox is also progressing as the rollout of TiVo has moved out of the testing phase and is in the very early stage of deployment in its "Additionally, we continue our efforts to work with small and medium sized operators that are looking to differentiate themselves from larger competitors in the television market. To that end, RCN has announced that it is on track to roll out the TiVo/RCN HD DVR as its primary DVR offering in early 2010. Speaking about the TiVo relationship on its recent earnings call, RCN CEO Rogers continued, "We believe others in the industry will follow RCN's lead and embrace both TiVo's hardware and software platforms as an efficient, cost effective way to fully integrate linear television and VOD service with TiVo's robust broadband delivered content, stitched together with TiVo's intuitive user interface. "On the TiVo-Owned side of the business, "At the core of our retail distribution efforts is the fact that TiVo is a television viewing behavior company focused on how people consume television. TiVo truly understands how viewers want to watch television in a linear and on-demand world and is the only retail solution that seamlessly ties these options together into a single user experience. The idea that the TiVo service offers millions of content options to the television beyond what cable and satellite are doing today is still something that is not understood by a vast majority of television viewers. We believe this fact is a very powerful differentiator of the TiVo brand and we expect "To that end, while the ongoing expansion of our global footprint underpinned by our DVR intellectual property form a valuable foundation for the company, we expect the opportunities presented by broadband connections to the TV to create some very interesting product opportunities for our next generation TiVo products and services. TiVo continues its leadership in the development and formulation of advanced television features and we have begun to accelerate the level of investment around various research and development initiatives which we currently consider the best use of our substantial cash resources. "One small example of these efforts is a new keyboard remote control that we are developing, which will build on the ease of the original TiVo remote control and will enable users to get even more out of the broadband experience that TiVo delivers." TiVo-Owned subscription gross additions for the third quarter were approximately 34,000, compared to 44,000 gross additions for the year-ago period. The TiVo-Owned monthly churn rate was 1.7%. Overall, TiVo-Owned subscriptions ended the quarter at approximately 1.5 million. Cumulative total subscriptions as of Rogers continued, "In addition to our ongoing efforts to increase distribution of our products, we continue our efforts to provide the media world with advanced interactive television advertising and research. In particular, earlier today we announced that we entered into an audience research agreement with "Additionally, as one of the leading firms providing set-top-box data to the marketplace, TiVo was recently invited by the "On the intellectual property front, we scored another significant win this quarter when the Mr. Rogers concluded, "We have devoted a significant amount of time and effort putting the key catalysts for the growth of the Company in place including significant strategic alliances and distribution deals ranging from Management Provides Financial Guidance For the fourth quarter of fiscal 2010, TiVo anticipates service and technology revenues in the range of This financial guidance is based on information available to management as of 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 third quarter financial and operating results and guidance outlook at About Founded in 1997, TiVo, "TiVo, TV your way." 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 and the timing of additional mass distribution deals, profitability and financial guidance, scope and timing of distribution of the TiVo service domestically with
TIVO INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share and share amounts)
(unaudited)
Three Months Ended Nine Months Ended
October 31, October 31,
2009 2008 2009 2008
---- ---- ---- ----
Revenues
Service revenues $37,701 $47,676 $121,330 $144,293
Technology revenues 9,351 3,997 23,086 15,773
Hardware revenues 9,808 12,777 24,717 30,421
----- ------ ------ ------
Net revenues 56,860 64,450 169,133 190,487
Cost of revenues
Cost of service
revenues (1) 10,021 10,984 30,002 33,423
Cost of technology
revenues (1) 5,924 2,516 16,269 9,560
Cost of hardware
revenues 14,436 16,339 37,947 41,978
------ ------ ------ ------
Total cost of revenues 30,381 29,839 84,218 84,961
------ ------ ------ ------
Gross margin 26,479 34,611 84,915 105,526
------ ------ ------ -------
Research and
development (1) 15,370 16,553 44,794 46,624
Sales and marketing (1) 5,727 6,585 16,885 18,427
Sales and marketing,
subscription acquisition
costs 1,206 2,301 3,026 4,348
General and
administrative (1) 11,165 10,344 34,634 31,549
Litigation proceeds - (87,811) - (87,811)
--- ------ --- ------
Total operating
expenses 33,468 (52,028) 99,339 13,137
------ ------ ------ ------
Income (loss) from
operations (6,989) 86,639 (14,424) 92,389
Interest income, includes
TIVO INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share and share amounts)
(unaudited)
October 31, January 31,
----------- -----------
2009 2009
---- ----
ASSETS
CURRENT ASSETS
Cash and cash equivalents $84,015 $162,337
Short-term investments 161,021 44,991
Accounts receivable, net of
allowance for doubtful
accounts of $916 and $770 15,251 14,283
Inventories 6,807 13,027
Prepaid expenses and other,
current 11,441 4,896
------ -----
Total current assets 278,535 239,534
LONG-TERM ASSETS
Property and equipment, net 10,744 10,285
Purchased technology,
capitalized software, and
intangible assets, net 9,799 10,597
Prepaid expenses and other,
long-term 1,361 1,268
Long-term investments 7,136 3,944
----- -----
Total long-term assets 29,040 26,094
------ ------
Total assets $307,575 $265,628
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
CURRENT LIABILITIES
Accounts payable $19,284 $9,844
Accrued liabilities 24,970 25,054
Deferred revenue, current 41,663 47,560
------ ------
85,917 82,458
Total current liabilities
LONG-TERM LIABILITIES
Deferred revenue, long-
term 25,744 28,557
Deferred rent and other
long-term liabilities 126 126
--- ---
Total long-term
liabilities 25,870 28,683
------ ------
Total liabilities 111,787 111,141
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
109,886,157 and
103,604,015, respectively
and outstanding shares are
109,328,600 and
103,370,523, respectively 110 104
Additional paid-in capital 886,994 829,273
Accumulated deficit (685,931) (672,196)
Treasury stock, at cost -
557,557 shares and 233,492
shares, respectively (4,251) (1,659)
Accumulated other
comprehensive loss (1,134) (1,035)
------ ------
Total stockholders' equity 195,788 154,487
------- -------
Total liabilities and
stockholders' equity $307,575 $265,628
======== ========
TIVO INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
Nine Months Ended October 31,
-----------------------------
2009 2008
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net income(loss) $(13,735) $107,159
Adjustments to reconcile net income
(loss) to net cash provided by (used in)
operating activities:
Depreciation and amortization of
property and equipment and intangibles 6,859 7,469
Stock-based compensation expense 19,203 17,420
Inventory write-down 742
Utilization of trade credits 23 -
Allowance for doubtful accounts 147 658
Changes in assets and liabilities:
Accounts receivable (1,115) 2,462
Inventories 6,220 3,838
Prepaid expenses and other (6,661) (1,337)
Accounts payable 8,799 (10,057)
Accrued liabilities (36) (3,910)
Deferred revenue (5,897) (19,928)
Deferred rent and other long-term
liabilities (2,813) 667
------ ---
Net cash provided by operating
activities $10,994 $105,183
------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of short-term investments (268,852) (14,950)
Sales or maturities of short-term
investments 152,931 15,317
Purchase of long-term investment (3,400) -
Acquisition of property and equipment (4,347) (3,786)
Acquisition of intangibles (1,532) (319)
------ ----
Net cash used in investing
activities $(125,200) $(3,738)
--------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock
related to exercise of common stock
options 36,204 7,471
Proceeds from issuance of common stock
related to employee stock purchase plan 2,320 2,844
Treasury Stock - repurchase of stock for
tax withholding (2,592) (813)
Payment under capital lease obligation (48) (1)
--- ---
Net cash provided by financing
activities $35,884 $9,501
------- ------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS $(78,322) $110,946
-------- --------
CASH AND CASH EQUIVALENTS:
Balance at beginning of period 162,337 78,812
------- ------
Balance at end of period $84,015 $189,758
======= ========
TIVO INC.
OTHER DATA
Three Months Ended Guidance Reconciliation
October 31, Three Months Ending
2009 2008 January 31, 2010
---- ---- ----------------
(In thousands) (In millions)
Net income (loss) $(6,669) $100,626 $(15) - $(13)
Add back:
Depreciation & amortization 2,249 2,399 2 - 3
Interest income & expense (287) (17,197) 0 - (1)
Provision for income tax (24) 3,132 0
--- ----- ---
EBITDA (4,731) 88,960 (13) - (11)
Stock-based compensation 6,149 6,370 $6
----- ----- ---
Adjusted EBITDA $1,418 $95,330 $(7) - $(5)
====== ======= ===========
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.
TIVO INC.
OTHER DATA
Subscriptions
-------------
Three Months Ended October 31,
------------------------------
(Subscriptions in thousands) 2009 2008
---- ----
TiVo-Owned Subscription Gross
Additions 34 44
Subscription Net Additions/(Losses):
TiVo-Owned (45) (28)
*MSOs/Broadcasters (269) (135)
---- ----
Total Subscription Net Additions/
(Losses) (314) (163)
Cumulative Subscriptions:
TiVo-Owned 1,537 1,658
MSOs/Broadcasters 1,199 1,802
----- -----
Total Cumulative Subscriptions 2,736 3,460
% of TiVo-Owned Cumulative
Subscriptions paying recurring fees 58% 60%
Included in the 1,537,000 TiVo-Owned subscriptions are approximately
237,000 lifetime subscriptions that have reached the end of the period
TiVo uses to recognize lifetime subscription revenue. These lifetime
subscriptions no longer generate subscription revenue.
* MSOs/Broadcasters Subscription Net Additions/(Losses) in the third quarter ended 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 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
TIVO INC.
OTHER DATA - KEY BUSINESS METRICS
Three Months Ended October 31,
------------------------------
TiVo-Owned Churn Rate 2009 2008
--------------------- ---- ----
(In thousands, except churn rate per month)
Average TiVo-Owned
subscriptions 1,560 1,675
TiVo-Owned subscription
cancellations (79) (72)
--- ---
TiVo-Owned Churn Rate per month -1.7% -1.4%
---- ----
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, current economic conditions, 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 October 31, Twelve Months Ended October 31,
------------------------------ -------------------------------
2009 2008 2009 2008
---- ---- ---- ----
Subscription
Acquisition
Costs (In thousands, except SAC)
------------
Sales and
marketing,
subscription
acquisition
costs $1,206 $2,301 $4,716 11,543
Hardware
revenues (9,808) (12,777) (35,429) (46,487)
Less:
MSOs/
Broadcasters-
related
hardware
revenues 190 3,339 2,041 8,971
Cost of
hardware
revenues 14,436 16,339 53,711 65,907
Less:
MSOs/
Broadcasters-
related
cost of
hardware
revenues (203) (3,100) (2,027) (8,205)
---- ------ ------ ------
Total
Acquisition
Costs 5,821 6,102 23,012 31,729
===== ===== ====== ======
TiVo-
Owned
Subscription
Gross
Additions 34 44 161 237
Subscription
Acquisition
Costs
(SAC) $171 $139 $143 $134
==== ==== ==== ====
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
October 31,
------------------
TiVo-Owned Average Revenue per
Subscription 2009 2008
------------------------------ ---- ----
(In thousands, except ARPU)
Total Service revenues $37,701 $47,676
Less: MSOs/Broadcasters-related
service revenues (1,893) (5,772)
------ ------
TiVo-Owned-related service revenues 35,808 41,904
Average TiVo-Owned revenues per month 11,936 13,968
Average TiVo-Owned per month
subscriptions 1,560 1,675
----- -----
TiVo-Owned ARPU per month $7.65 $8.34
===== =====
Three Months Ended
October 31,
------------------
MSOs/Broadcasters Average Revenue per
Subscription 2009 2008
------------------------------------- ---- ----
(In thousands, except ARPU)
Total Service revenues $37,701 $47,676
Less: TiVo-Owned-related service
revenues (35,808) (41,904)
------- -------
* MSOs/Broadcasters-related service
revenues 1,893 5,772
Average MSOs/Broadcasters revenues per
month 631 1,924
Average MSOs/Broadcasters per month
subscriptions 1,378 1,868
----- -----
*MSOs/Broadcasters ARPU per month $0.46 $1.03
===== =====
*MSOs/Broadcasters-related ARPU in the third quarter ended 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. SOURCE Investor Relations, Derrick Nueman of TiVo Inc., +1-408-519-9677, ir@tivo.com, or |
