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TiVo Reports Results for the First Quarter Ended April 30, 2010

  • TiVo exceeds revenue, net income, and Adjusted EBITDA guidance
  • Q1 net revenue was $61.4M; up compared to $55.1M in the year-ago quarter and the highest Q1 net revenue in three years
  • Technicolor, formerly Thomson, Inc., to offer multichannel operators set-top box compatible with TiVo's software and user interface
  • TiVo and Best Buy's Insignia developing connected television for superior, seamless consumer experience
  • RCN launches TiVo-enabled DVR in Washington, D.C. and New York City; additional markets to follow

ALVISO, CA, May 25, 2010 (MARKETWIRE via COMTEX) --TiVo Inc. (NASDAQ: TIVO), a leader in advanced television services, including digital video recorders (DVRs) for consumers and content distributors, today reported financial results for the first quarter ended April 30, 2010.

"TiVo kicked off the fiscal year on a strong note, exceeding our revenue, net income and Adjusted EBITDA guidance, and maintaining our strong balance sheet of $255 million in cash and short-term investments, and no debt," said Tom Rogers, President and CEO of TiVo. "This quarter we continued to aggressively drive our long-term growth initiatives in the U.S. and internationally through strategic partnerships that further distinguish TiVo as a leader in advanced television solutions and bring the TiVo experience into more homes though new distribution partners.

"With the recent launch of our next-generation user interface, TiVo has established itself as so much more than simply a DVR company, redefining the future of television consumption and highlighting an unmatched ability to deliver a superior viewing experience through customizable software and set-top box solutions to meet the varying needs of consumers and operators. Today, in addition to being a universal cable box, TiVo provides an intuitive platform for search and navigation of content across television whether stemming from traditional linear channels, broadband or video-on-demand (VOD). As a result, we are seeing increased interest from operators looking for a comprehensive one-stop-shop solution that addresses the ongoing shift in how viewers are consuming video content.

"In terms of an update on our efforts to protect our intellectual property, EchoStar was recently granted an en banc review, which is disappointing because the en banc process will take many months to complete. In its order to grant an en banc review, the Court did not raise any specific issues with respect to the facts of our case against EchoStar. As such, we believe that this order is instead about an opportunity for the Court to clarify a number of key policy issues with respect to patent law. With that said, we remain confident in our position as we believe the facts continue to support the well-reasoned and carefully applied decision from the Texas court, just as the facts supported our case the two prior times we argued an appeal in front of Federal Circuit judges."

For the first quarter, service and technology revenues were $43.2 million, compared with $48.5 million for the same period last year and $45.3 million in the prior quarter. Additionally, first quarter net revenue was $61.4M; up compared to $55.1M in the year-ago quarter and the highest Q1 net revenue in three years. Adjusted EBITDA was ($6.7) million, compared to guidance of ($9) million to ($11) million, and $5.3 million in the same period a year ago. Increased legal spend as well as research & development expenses relating to new products and distribution were a significant driver in the year-over-year Adjusted EBITDA decline. TiVo reported a net loss of ($14.2) million, compared to guidance of a net loss of ($19) million to ($21) million, and a ($3.9) million net loss in the year-ago quarter. Net loss per share this quarter was ($0.13).

Rogers continued, "On the mass distribution front, earlier this month RCN commenced the roll-out of TiVo boxes as its primary DVR offering in its Washington, D.C. market. New York City is in the early stages of deployment and Boston, Chicago, Philadelphia and Lehigh Valley are set to follow quickly. We are extremely pleased with the speed at which the RCN implementation made it to market, and we believe RCN is providing a blueprint for how to quickly and efficiently deploy an advanced television solution that encompasses traditional linear, VOD broadband and DVR viewing seamlessly into one interface. RCN and TiVo believe this is a great model for the many similarly situated mid and smaller sized cable operators.

"On the international front, we increased the potential for further distribution of TiVo's advanced television solution through a deal with Technicolor, formerly Thomson, Inc., a leading global set-top box manufacturer serving numerous cable and satellite television operators around the world, which builds on our alliance with Conax. This partnership will allow Technicolor to port TiVo's software and user interface directly onto Technicolor HD PVR set-top boxes which incorporate Conax's conditional access technology, providing international operators that choose to license TiVo's software with a cost effective, rapidly deployable set-top-box option with TiVo's middleware, user interface, and backend services. We are in discussions with various operators regarding this solution and are hopeful that we will have additional details to share as the year progresses.

"With Comcast, Cox, RCN, DIRECTV, and internationally with Virgin Media in the UK, Seven Networks in Australia, Telecom New Zealand, Conax, and now Technicolor, what we are seeing is a preference for an integrated linear, broadband and VOD solution by operators, networks and technology providers of all sizes as they embrace TiVo's highly differentiated and quality advanced television solution. Standalone broadband boxes simply don't.

"On the TiVo-Owned side of the business, the new TiVo Premiere box, which launched in late-March, features our next-generation user interface, and is a more cost efficient hardware platform than our previous HD products. On that note, for the first time in TiVo's history, when looking strictly at hardware revenues and costs (excluding revenue share payments and market development fund costs), we generated a positive net hardware margin from the sale of our Premiere boxes. We are excited about the potential of Premiere and are working aggressively to further improve performance and augment its feature set through software upgrades over the coming months.

"In terms of our strategic alliance with Best Buy, we announced earlier today that development is underway between TiVo and Best Buy's Insignia brand to integrate TiVo's software and advanced television services into broadband-connected Insignia televisions. The new Insignia televisions will provide Best Buy customers with an exceptional, intuitive user experience for accessing online content by utilizing our latest non-DVR software, giving the viewer a one-stop-shop for delivering and searching content right on the television. This offering will add to the arsenal of unique approaches that TiVo has to shape the advanced television experience. Whether through the retail box, an operator provisioned box, software built into another box, a software upgrade to someone else's DVR and non-DVR set-top boxes, and now software built directly into the television set, we are focused on taking numerous alternative means to affecting the television experience and providing a TiVo solution to each.

"We are also making notable progress with our audience research business as TiVo data becomes an increasingly important part of how the media industry evaluates viewership behavior and the effectiveness of ad campaigns. To that end, we recently teamed with Millward Brown, a global leader in marketing research that works with a significant portion of the top 100 global brands, to use TiVo's audience research capabilities to test commercial effectiveness prior to and throughout its run to help these brands achieve more cost effective media-planning. We believe working with Millward Brown and some of the world's top brands in this regard opens up a whole new avenue of growth for our audience research business."

Rogers concluded, "We continue to expand our strategic initiatives demonstrating our potential for broad distribution in many incarnations. Our new broadened advanced television approach with its unique user interface has played a significant part in driving a range of new distribution partners. We remain a financially strong company with exciting growth prospects that will begin to play out in the years ahead, particularly with TiVo at the forefront of innovation and a driving force that defines how television viewers will access and consume content in an ever-changing media landscape."

Management Provides Financial Guidance

For the second quarter of fiscal 2011, TiVo anticipates service and technology revenues in the range of $40 million to $42 million, a net loss in the range of ($17) million to ($19) million, and an Adjusted EBITDA loss in the range of ($9) million to ($11) million. This includes expected increased litigation expense and higher research & development costs due to increased product development and distribution.

This financial guidance is based on information available to management as of May 25, 2010. 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 first quarter financial and operating results and guidance outlook at 2:00 pm PT (5:00 pm ET), today, May 25, 2010. To listen to the discussion, please visit http://www.tivo.com/ir and click on the link provided for the Webcast or dial (877) 618-4505 (conference ID number is 74281085). The Webcast will be archived and available through June 1, 2010 at http://www.tivo.com/ir or by calling (706) 645-9291; and entering the conference ID number 74281085.

About TiVo Inc.

Founded in 1997, TiVo Inc. (NASDAQ: TIVO) developed the first commercially available digital video recorder (DVR). TiVo offers the TiVo service and TiVo DVRs directly to consumers online at www.tivo.com and through third-party retailers. TiVo also distributes its technology and services through solutions tailored for cable, satellite, and broadcasting companies. Since its founding, TiVo has evolved into a premier single solution media center by combining its patented DVR technologies and universal cable box capabilities with the ability to aggregate, search, and deliver millions of pieces of broadband, cable, and broadcast content directly to the television. An economical, one-stop-shop for in-home entertainment, TiVo's intuitive functionality and ease of use puts viewers in control by enabling them to effortlessly navigate the best digital entertainment content available through one box, with one remote, and one user interface, delivering the most dynamic user experience on the market today. TiVo also continues to weave itself into the fabric of the media industry by providing interactive advertising solutions and audience research and measurement ratings services to the television industry.

TiVo, "TiVo, TV your way." Season Pass, WishList, TiVoToGo, and the TiVo Logo are trademarks or registered trademarks of TiVo Inc.'s subsidiaries worldwide. Copyright 2010 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 and the timing of additional mass distribution deals, profitability and financial guidance, scope and timing of distribution of the TiVo service domestically with DIRECTV, Comcast, Cox and RCN and internationally the UK (with Virgin Media) and other regions, our new relationship with Conax and Technicolor and our expectations regarding future operator distribution deals in connection with this integrated solution, the expectations regarding future results of TiVo's litigation with EchoStar, TiVo intent to protect and defend its intellectual property, future TiVo products, services, and upgrades including the new TiVo Premiere box, future new Insignia-branded televisions with TiVo interface and search features, future new avenues for growth in TiVo's audience research business 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, 2010 and 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 April 30,
                                              ----------------------------
                                                  2010           2009
                                              -------------  -------------
Revenues
  Service revenues                            $      36,244  $      42,129
  Technology revenues                                 6,973          6,386
  Hardware revenues (2)                              18,169          6,606
                                              -------------  -------------
Net revenues                                         61,386         55,121
Cost of revenues
  Cost of service revenues (1)                       10,403         10,150
  Cost of technology revenues (1)                     5,021          4,483
  Cost of hardware revenues                          19,219         10,576
                                              -------------  -------------
 Total cost of revenues                              34,643         25,209
                                              -------------  -------------
     Gross margin                                    26,743         29,912
                                              -------------  -------------
  Research and development (1)                       18,628         15,066
  Sales and marketing  (1)                            7,760          5,695
  Sales and marketing, subscription
   acquisition costs                                  3,191            982
  General and administrative (1)                     11,697         12,242
                                              -------------  -------------
     Total operating expenses                        41,276         33,985
                                              -------------  -------------
     Loss from operations                           (14,533)        (4,073)
  Interest income                                       369            190
  Interest expense and other                             (2)             0
                                              -------------  -------------
     Loss before income taxes                       (14,166)        (3,883)
     Provision for income taxes                         (34)           (16)
                                              -------------  -------------
  Net loss                                    $     (14,200) $      (3,899)
                                              =============  =============
  Net loss per common share - basic           $       (0.13) $       (0.04)
                                              =============  =============
  Net loss per common share - diluted         $       (0.13) $       (0.04)
                                              =============  =============
  Weighted average common shares used to
   calculate basic net loss per share           111,490,152    102,278,944
                                              =============  =============
  Weighted average common shares used to
   calculate diluted net loss per share         111,490,152    102,278,944
                                              =============  =============
  (1) Includes stock-based compensation
   expense as follows:
     Cost of service revenues                 $         132  $         263
     Cost of technology revenues                        484            557
     Research and development                         1,786          2,491
     Sales and marketing                                817            685
     General and administrative                       2,367          3,074
(2) The consolidated statement of operations for the three months ended
    April 30, 2009 has been revised to reflect the increase of $230,000
    in net hardware revenues with a corresponding reduction in net loss
    to correct immaterial errors related to over payments of revenue
    share in fiscal year 2010.
                                TIVO INC.
                  CONDENSED CONSOLIDATED BALANCE SHEETS
            (In thousands, except per share and share amounts)
                                                  April 30,   January 31,
                                                    2010          2010
                                                ------------  ------------
                                                 (unaudited)
                   ASSETS
CURRENT ASSETS
Cash and cash equivalents                       $     68,121  $     70,891
Short-term investments                               187,355       173,691
Accounts receivable, net of allowance for
 doubtful accounts of $342 and $409                   19,683        16,996
Inventories                                           12,368        12,110
Prepaid expenses and other, current (1)                9,529         8,686
                                                ------------  ------------
  Total current assets                               297,056       282,374
LONG-TERM ASSETS
Property and equipment, net of accumulated
 depreciation of $42,503 and $40,934,
 respectively                                         10,966        10,098
Purchased technology, capitalized software, and
 intangible assets, net of accumulated
 amortization of $13,153 and $12,501, respectively     9,185         9,565
Prepaid expenses and other, long-term                  1,281         1,263
Long-term investments                                  7,548         7,512
                                                ------------  ------------
  Total long-term assets                              28,980        28,438
                                                ------------  ------------
      Total assets                              $    326,036  $    310,812
                                                ============  ============
        LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
  CURRENT LIABILITIES
  Accounts payable                              $     21,715  $     20,712
  Accrued liabilities                                 24,654        24,786
  Deferred revenue, current                           35,283        38,952
                                                ------------  ------------
    Total current liabilities                         81,652        84,450
  LONG-TERM LIABILITIES
  Deferred revenue, long-term                         30,819        28,990
  Other long-term liabilities                            255           231
                                                ------------  ------------
    Total long-term liabilities                       31,074        29,221
                                                ------------  ------------
      Total liabilities                              112,726       113,671
  COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
  Preferred stock, par value $0.001:
    Authorized shares are 10,000,000;
    Issued and outstanding shares - none                   0             0
  Common stock, par value $0.001:
    Authorized shares are 275,000,000;
    Issued shares are 116,294,027 and
     110,434,022, respectively and outstanding
     shares are 115,411,307 and 109,869,062,
     respectively                                        116           110
  Additional paid-in capital                         930,926       896,695
  Treasury stock, at cost - 882,720 shares and
   564,960 shares, respectively                       (8,117)       (4,325)
  Accumulated deficit (1)                           (708,913)     (694,713)
  Accumulated other comprehensive loss                  (702)         (626)
                                                ------------  ------------
      Total stockholders' equity                     213,310       197,141
                                                ------------  ------------
      Total liabilities and stockholders'
       equity                                   $    326,036  $    310,812
                                                ============  ============
(1) The consolidated balance sheet as of January 31, 2010 has been revised
    to reflect the increase of $1,399,000 in prepaid expenses and other,
    current with a corresponding reduction in accumulated deficit to
    correct immaterial errors related to over payments of revenue share
    in fiscal years 2010 and 2009.
                                TIVO INC.
              CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                              (In thousands)
                                (unaudited)
                                                       Three Months Ended
                                                            April 30,
                                                      --------------------
                                                        2010       2009
                                                      ---------  ---------
CASH FLOWS FROM OPERATING ACTIVITIES
   Net loss                                           $ (14,200) $  (3,899)
   Adjustments to reconcile net loss to net
    cash provided by (used in) operating activities:
      Depreciation and amortization of property and
       equipment and intangibles                          2,221      2,310
      Loss on disposal of fixed assets                       42          0
      Stock-based compensation expense                    5,586      7,070
      Utilization of trade credits                           19         11
      Allowance for doubtful accounts                        32         97
   Changes in assets and liabilities:
      Accounts receivable                                (2,719)     2,541
      Inventories                                          (258)     6,101
      Prepaid expenses and other                           (880)       831
      Accounts payable                                     (567)    (1,160)
      Accrued liabilities                                  (132)    (3,588)
      Deferred revenue                                   (1,840)    (4,852)
      Deferred rent and other long-term liabilities          24          0
                                                      ---------  ---------
        Net cash provided by (used in) operating
         activities                                   $ (12,672) $   5,462
                                                      ---------  ---------
CASH FLOWS FROM INVESTING ACTIVITIES
   Purchases of short-term investments                  (45,775)   (99,936)
   Sales or maturities of short-term investments         31,999     79,927
   Acquisition of property and equipment                   (909)    (2,022)
   Acquisition of  capitalized software and
    intangibles                                            (272)    (1,532)
                                                      ---------  ---------
        Net cash used in investing activities         $ (14,957) $ (23,563)
                                                      ---------  ---------
CASH FLOWS FROM FINANCING ACTIVITIES
   Proceeds from issuance of common stock related to
    exercise of common stock options                     28,651      7,957
   Treasury Stock - repurchase of stock for tax
    withholding                                          (3,792)    (2,007)
   Payment under capital lease obligation                     0        (19)
                                                      ---------  ---------
        Net cash provided by financing activities     $  24,859  $   5,931
                                                      ---------  ---------
NET DECREASE IN CASH AND CASH EQUIVALENTS             $  (2,770) $ (12,170)
                                                      ---------  ---------
CASH AND CASH EQUIVALENTS:
   Balance at beginning of period                        70,891    162,337
                                                      ---------  ---------
   Balance at end of period                           $  68,121  $ 150,167
                                                      =========  =========
TiVo Key Financial Metric Trend Sheet
                                TIVO INC.
                                OTHER DATA
                                                               Guidance
                                                            Reconciliation
                                                             Three Months
                             Three Months Ended April 30,       Ending
                            ------------------------------  --------------
                                 2010            2009       July 31, 2010
                            ------------------------------  --------------
                                    (In thousands)           (In millions)
Net loss (1)                $      (14,200) $       (3,899)    $19 - $17
Add back:
   Depreciation &
    amortization                     2,221           2,310      $2 - $3
   Interest income &
    expense                           (369)           (190)     $0 - $(1)
   Provision for income tax             34              16        $0
                            --------------  --------------  --------------
     EBITDA (1)                    (12,314)         (1,763)  $(17) - $(15)
   Stock-based compensation          5,586           7,070        $6
                            --------------  --------------  --------------
     Adjusted  EBITDA (1)   $       (6,728) $        5,307   $(11) - $(9)
                            ==============  ==============  ==============
(1) The Net loss, EBITDA, and adjusted EBITDA for the quarter ended
    April 30, 2009, has been revised to reflect an increase of
    $230,000 to correct immaterial errors related to over payments
    of revenue share in fiscal year 2010.
                                TIVO INC.
                                OTHER DATA
Subscriptions
                                                       Three Months Ended
                                                            April 30,
                                                      --------------------
       (Subscriptions in thousands)                      2010       2009
                                                      ---------  ---------
TiVo-Owned Subscription Gross Additions                      33         37
Subscription Net Additions/(Losses):
TiVo-Owned                                                  (51)       (30)
MSOs/Broadcasters                                           (45)      (109)
                                                      ---------  ---------
   Total Subscription Net Additions/(Losses)                (96)      (139)
Cumulative Subscriptions:
TiVo-Owned                                                1,414      1,624
MSOs/Broadcasters                                         1,095      1,572
                                                      ---------  ---------
   Total Cumulative Subscriptions                         2,509      3,196
% of TiVo-Owned Cumulative Subscriptions paying
 recurring fees                                              57%        59%
                                                      ---------  ---------
Included in the 1,414,000 TiVo-Owned subscriptions are approximately
282,000 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 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. We 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 Ended April 30,
                                              ----------------------------
TiVo-Owned Churn Rate                             2010           2009
                                              -------------  -------------
                                              (In thousands, except churn
                                                    rate per month)
Average TiVo-Owned subscriptions                      1,437          1,639
TiVo-Owned subscription cancellations                   (84)           (67)
                                              -------------  -------------
TiVo-Owned Churn Rate per month                        -2.0%          -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 older model DVRs or access to certain digital television channels or MSO Video on Demand services, as well as, 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 April 30,   Ended April 30,
                                        ----------------  ----------------
                                          2010     2009     2010     2009
                                        ----------------  ----------------
Subscription Acquisition Costs              (In thousands, except SAC)
Sales and marketing, subscription
 acquisition costs                      $ 3,191  $   982  $ 7,257    5,861
Hardware revenues (1)                   (18,169)  (6,606) (60,350) (42,313)
Less: MSOs/Broadcasters-related
 hardware revenues                        5,437      (27)  19,961    8,608
Cost of hardware revenues                19,219   10,576   74,552   57,953
Less: MSOs/Broadcasters-related cost of
 hardware revenues                       (4,158)      (6) (17,858)  (8,015)
                                        -------  -------  -------  -------
    Total Acquisition Costs (1)           5,520    4,919   23,562   22,094
                                        =======  =======  =======  =======
    TiVo-Owned Subscription Gross
     Additions                               33       37      144      176
    Subscription Acquisition Costs
     (SAC)                              $   167  $   133  $   164  $   126
                                        =======  =======  =======  =======
(1) The hardware revenues  for the three and twelve months ended April 30,
    2009 have been revised to reflect the increase of $230,000 and
    $749,000, respectively in net hardware revenues with a corresponding
    reduction in total acquisition costs associated with immaterial errors
    related to over payments of revenue share in fiscal years 2010 and
    2009.

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
                                                            April 30,
                                                        ------------------
TiVo-Owned Average Revenue per Subscription               2010      2009
                                                        --------  --------
                                                          (In thousands,
                                                           except ARPU)
Total Service revenues                                  $ 36,244  $ 42,129
Less:  MSOs/Broadcasters-related service revenues         (3,760)   (4,522)
                                                        --------  --------
TiVo-Owned-related service revenues                       32,484    37,607
Average TiVo-Owned revenues per month                     10,828    12,536
Average TiVo-Owned per month subscriptions                 1,437     1,639
                                                        --------  --------
TiVo-Owned ARPU per month                               $   7.54  $   7.65
                                                        ========  ========
                                                        Three Months Ended
                                                            April 30,
                                                        ------------------
MSOs/Broadcasters Average Revenue per Subscription        2010      2009
                                                        --------  --------
                                                          (In thousands,
                                                           except ARPU)
Total Service revenues                                  $ 36,244  $ 42,129
Less:  TiVo-Owned-related service revenues               (32,484)  (37,607)
                                                        --------  --------
MSOs/Broadcasters-related service revenues                 3,760     4,522
Average MSOs/Broadcasters revenues per month               1,253     1,507
Average MSOs/Broadcasters per month subscriptions          1,120     1,625
                                                        --------  --------
MSOs/Broadcasters ARPU per month                        $   1.12  $   0.93
                                                        ========  ========

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. The above table shows this calculation.

SOURCE: TiVo