Press release
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| TiVo Reports Results for the Second Quarter Fiscal Year 2010 Ended July 31, 2009 |
"This was a solid quarter for TiVo as we posted our eighth straight quarter of Adjusted EBITDA profitability, exceeding guidance," said For the second quarter, service and technology revenues were "On the mass distribution front, in addition to our ongoing efforts with large multichannel operators, one of our key strategies has been to focus on small and medium sized cable operators that cannot make the significant investments in new technologies necessary to compete. To that end, we recently announced that RCN has chosen TiVo as its primary DVR offering. This will be the first time any cable provider is utilizing both TiVo's hardware and software platforms, helping RCN provide its customers a seamless experience that fully integrates RCN's linear and VOD service with a complete array of TiVo delivered broadband content, thereby creating an entertainment package via TiVo's user interface and easy-to-use remote that goes well beyond what other cable and satellite providers can currently offer. The TiVo/RCN DVR will be based on our existing standalone platform and does not require working through the middleware and infrastructure complexities that other mass distribution deployments do. As such, a roll out is only months away and will provide RCN customers with the retail product's latest features." Updating the progress of Lastly, the new DIRECTV TiVo HD DVR remains on track for its rollout and, as we stated previously, once launched, it will be immediately accessible to "In terms of our work to distribute TiVo internationally, we continue to build our global footprint through strategic alliances with international broadcasters. We have now come upon the one-year anniversary of our successful launch with Mr. Rogers continued, "Turning to the TiVo-Owned side of the business, this quarter we announced a significant strategic alliance with "As part of this deal, TiVo and "This past quarter we also announced the addition of hundreds of new free Web videos available directly to many TiVo subscribers, as well as the ability for any video podcast provider to publish video content to TiVo DVRs using industry-standard Really Simple Syndication (RSS) and H.264 video. This new feature provides a way for branded channels on the Web to be brought to the television set with the look and feel of television. Already hundreds of new channels are being added to TiVo's current suite of free Web videos, including mainstream outlets such as TiVo-Owned subscription gross additions for the second quarter were approximately 31,000, compared to 36,000 gross additions for the year-ago period. The TiVo-Owned monthly churn rate was 1.5%. Overall, TiVo-Owned subscriptions ended the quarter at 1.6 million. Cumulative total subscriptions as of "On the intellectual property front, we scored a significant victory this quarter when Additionally, today we filed complaints in the Rogers continued, "In terms of our advertising and audience research business, our role in a constantly changing world of television consumption is to offer solutions that can help develop a business model that works with the television industry. This past quarter, we announced a deal with Quantcast, a pioneering Web-based audience insights service focused on enabling addressable advertising, that provide for the very first time advertisers and media companies with the ability to measure all the television and online video consumption from a single household. Importantly, through this data, we will be able to answer whether online video consumption and television viewing are complementary, or if one adversely affects the other. "In addition, we also launched in the quarter our Stop||Watch(TM) Local Markets ratings service, which we first announced in April, is now collecting anonymous TiVo subscriber viewing habits in three key local markets: Rogers concluded, "We made significant progress during the second quarter and are beginning to see our long-term initiatives bear fruit. We have a strategic relationship with the largest electronics retailer, Management Provides Financial Guidance For the third 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 second 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, 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 Six Months Ended
July 31, July 31,
------------------- -----------------
2009 2008 2009 2008
---- ---- ---- ----
Revenues
Service revenues $41,500 $48,174 $83,629 $96,617
Technology revenues 7,349 5,369 13,735 11,776
Hardware revenues 8,533 11,699 14,909 17,644
----- ------ ------ ------
Net revenues 57,382 65,242 112,273 126,037
Cost of revenues
Cost of service
revenues (1) 9,831 11,245 19,981 22,439
Cost of technology
revenues (1) 5,862 3,124 10,345 7,044
Cost of hardware
revenues 12,935 15,274 23,511 25,639
------ ------ ------ ------
Total cost of revenues 28,628 29,643 53,837 55,122
------ ------ ------ ------
Gross margin 28,754 35,599 58,436 70,915
------ ------ ------ ------
Research and
development (1) 14,358 15,323 29,424 30,071
Sales and
marketing (1) 5,463 5,906 11,158 11,842
Sales and marketing,
subscription
acquisition costs 838 888 1,820 2,047
General and
administrative (1) 11,227 10,869 23,469 21,205
------ ------ ------ ------
Total operating
expenses 31,886 32,986 65,871 65,165
------ ------ ------ ------
Income (loss)
from operations (3,132) 2,613 (7,435) 5,750
Interest income 136 421 326 1,000
Interest expense
and other 78 (94) 78 (181)
--- --- --- ----
Income (loss)
before income
taxes (2,918) 2,940 (7,031) 6,569
Provision for
income taxes (19) (23) (35) (36)
--- --- --- ---
Net income (loss) $(2,937) $2,917 $(7,066) $6,533
======= ====== ======= ======
Net income (loss)
per common
share - basic $(0.03) $0.03 $(0.07) $0.07
====== ===== ====== =====
Net income (loss)
per common
share - diluted $(0.03) $0.03 $(0.07) $0.06
====== ===== ====== =====
Weighted average
common shares
used to calculate
basic net
income (loss)
per share 105,840,076 100,025,002 104,076,621 99,705,914
=========== =========== =========== ==========
Weighted average
common shares
used to calculate
diluted net
income (loss)
per share 105,840,076 102,217,222 104,076,621 102,489,411
=========== =========== =========== ===========
(1) Includes stock-based compensation expense as follows:
Cost of service
revenues $289 $239 $552 $430
Cost of
technology
revenues 614 507 1,171 1,113
Research and
development 1,960 2,140 4,451 4,122
Sales and marketing 550 336 1,235 876
General and
administrative 2,571 2,352 5,645 4,510
TIVO INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share and share amounts)
(unaudited)
July 31, January 31,
2009 2009
-------- -----------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $147,007 $162,337
Short-term investments 90,864 44,991
Accounts receivable, net of allowance for doubtful
accounts of $960 and $770 12,964 14,283
Inventories 4,849 13,027
Prepaid expenses and other, current 4,640 4,896
----- -----
Total current assets 260,324 239,534
LONG-TERM ASSETS
Property and equipment, net 10,709 10,285
Purchased technology, capitalized software, and
intangible assets, net 10,526 10,597
Prepaid expenses and other, long-term 1,479 1,268
Long-term investments 7,087 3,944
----- -----
Total long-term assets 29,801 26,094
------ ------
Total assets $290,125 $265,628
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
CURRENT LIABILITIES
Accounts payable $10,935 $9,844
Accrued liabilities 22,448 25,054
Deferred revenue, current 40,705 47,560
------ ------
Total current liabilities 74,088 82,458
LONG-TERM LIABILITIES
Deferred revenue, long-term 26,054 28,557
Deferred rent and other long-term liabilities 126 126
--- ---
Total long-term liabilities 26,180 28,683
------ ------
Total liabilities 100,268 111,141
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock, par value
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
July 31,
-----------
(Subscriptions in thousands) 2009 2008
---------------------------- ---- ----
TiVo-Owned Subscription Gross Additions 31 36
Subscription Net Additions/(Losses):
TiVo-Owned (42) (42)
MSOs/Broadcasters (104) (136)
---- ----
Total Subscription Net Additions/(Losses) (146) (178)
Cumulative Subscriptions:
TiVo-Owned 1,582 1,686
MSOs/Broadcasters 1,468 1,937
----- -----
Total Cumulative Subscriptions 3,050 3,623
% of TiVo-Owned Cumulative Subscriptions
paying recurring fees 59% 60%
Included in the 1,582,000 TiVo-Owned subscriptions are approximately
219,000 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.
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 July 31,
------------
TiVo-Owned Churn Rate 2009 2008
--------------------- ---- ----
(In thousands, except churn
rate per month)
Average TiVo-Owned subscriptions 1,604 1,712
TiVo-Owned subscription cancellations (73) (78)
---- ----
TiVo-Owned Churn Rate per month -1.5% -1.5%
---- ----
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 Twelve Months
Ended July 31, Ended July 31,
--------------- ---------------
2009 2008 2009 2008
---- ---- ---- ----
Subscription Acquisition Costs (In thousands, except SAC)
------------------------------
Sales and marketing, subscription
acquisition costs $838 $888 $5,811 18,292
Hardware revenues (8,533) (11,699) (38,398) (50,950)
Less: MSOs/Broadcasters-related
hardware revenues 1,516 4,934 5,190 5,632
Cost of hardware revenues 12,935 15,274 55,614 78,712
Less: MSOs/Broadcasters-related cost
of hardware revenues (1,433) (4,524) (4,924) (5,105)
------ ------ ------ ------
Total Acquisition Costs 5,323 4,873 23,293 46,581
===== ===== ====== ======
TiVo-Owned Subscription Gross
Additions 31 36 171 262
Subscription Acquisition Costs
(SAC) $172 $135 $136 $178
==== ==== ==== ====
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 July 31,
---------------
TiVo-Owned Average Revenue per
Subscription 2009 2008
------------------------------- ---- ----
(In thousands, except ARPU)
Total Service revenues $41,500 $48,174
Less: MSOs/Broadcasters-related service
revenues (4,315) (5,781)
------ ------
TiVo-Owned-related service revenues 37,185 42,393
Average TiVo-Owned revenues per month 12,395 14,131
Average TiVo-Owned per month subscriptions 1,604 1,712
----- -----
TiVo-Owned ARPU per month $7.73 $8.25
===== =====
Three Months
Ended July 31,
---------------
MSOs/Broadcasters Average Revenue per
Subscription 2009 2008
-------------------------------------- ---- ----
(In thousands, except ARPU)
Total Service revenues $41,500 $48,174
Less: TiVo-Owned-related service revenues (37,185) (42,393)
------- -------
MSOs/Broadcasters-related service revenues 4,315 5,781
Average MSOs/Broadcasters revenues per
month 1,438 1,927
Average MSOs/Broadcasters per month
subscriptions 1,521 2,009
----- -----
MSOs/Broadcasters ARPU per month $0.95 $0.96
===== =====
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, +1-408-519-9677, ir@tivo.com, or Media Relations, Krista Wierzbicki, +1-408-519-9438, kwierzbicki@tivo.com, both of TiVo Inc. |
