TiVo Reports Results for the Third Quarter Ended October 31, 2013
SAN JOSE, CA--(Marketwired - Nov 26, 2013) - TiVo Inc. (NASDAQ:
TIVO)
- Record Service & Technology revenues of $81.7 million in
the third quarter, an increase of 34% year over-year, meeting the
high end of guidance
- Adjusted EBITDA of $23.8 million, exceeding guidance
- Net Income of $12.5 million, exceeding guidance
- Total TiVo subscriptions now at approximately 3.9 million, up
32% year-over-year
- Strong quarter of MSO gross subscription additions of close to
300 thousand; TiVo's strongest quarter of cable subscription
additions to date, making it the largest quarterly growth in
several years -- since the early days of TiVo entering the cable
DVR market
- TiVo now covering nearly half of the subscribers at Virgin
Media and a third at ONO
- Com Hem, Sweden's Largest Cable Operator, rolls out TiVo's IPTV
service
- Blue Ridge Communications, a top 20 cable service provider,
selects TiVo to deliver its advanced multi-screen television
solution and user experience; Atlantic Broadband recently launched
its TiVo solution
- Out-of-Home Streaming launched on TiVo Roamio™ DVRs
- Next generation network DVR prototype unveiled at the
International Broadcasting Conference
- TRA and comScore sign 'first of its kind' deal with P&G to
be its single-source audience measurement solution
TiVo Inc. (NASDAQ: TIVO), a leader in the advanced television
entertainment market, today reported financial results for the
third quarter ended October 31, 2013.
Tom Rogers, President and CEO of TiVo, said, "This was another
solid quarter for TiVo. Service and technology revenue grew 34%
year-over-year and Adjusted EBITDA was $23.8 million, exceeding
guidance. Further, TiVo subscriptions rose to approximately 3.9
million in total, a 32% increase year-over-year; driven by a strong
quarter of close to 300,000 MSO additions, our strongest cable
distribution results to date as well as best subscription growth in
several years. In fact the best quarter for TiVo subscription
growth since TiVo began mass distribution of its technology and
services in the cable DVR market. This growth is in stark contrast
to the loss of video subs throughout the cable industry. The
combination of subscription adds, the overwhelming response to the
innovation TiVo Roamio represents, and the important audience
research embrace from a top brand, demonstrate the progress TiVo
has made over the last quarter and last several quarters.
"We continued to increase our operator distribution reach,
signing a deal with Blue Ridge Communications. We launched our
first IPTV implementation with Com Hem, highlighting our ability to
offer the unique TiVo experience through virtually any type of
video delivery platform and on numerous types of devices, and
Atlantic Broadband recently launched our multi-screen offering. In
addition, TiVo Roamio continues to be well received both by
consumers and the press, with Roamio driving year-over-year
increases in TiVo-Owned gross additions, at lower acquisition
costs. We also continued our focus on innovation as we
recently launched Out-of-Home Streaming on Roamio boxes."
For the third quarter, service and technology revenues were
$81.7 million. This compared to guidance of $80 million to $82
million and $61.0 million for the same quarter last year. TiVo
reported net income of $12.5 million, compared to guidance of net
income of $6 million to $8 million. This compared to a net income
of $59.0 million in the same quarter last year. Adjusted EBITDA was
$23.8 million, compared to guidance of $20 million to $22 million
and to Adjusted EBITDA of $71.9 million for the same quarter last
year. The year-ago net income and Adjusted EBITDA included one-time
litigation proceeds of $78.4 million relating to the Verizon
intellectual property settlement, and excluding the impact of the
litigation proceeds and related spend both net income and Adjusted
EBITDA grew significantly on year-over-year basis.
Rogers continued, "Our success to date has come as a result of
TiVo's ability to constantly evolve through innovation -- whether
this evolution is in the context of the retail product or for our
MSO partners. Over the last several quarters, we have made
significant progress on our three stages of product development
focus -- organization, mobilization and personalization, the
combination of which makes for a very unique product
offering.
"TiVo Roamio is the embodiment of this innovation and continues
to garner positive critical acclaim. Over the quarter, we continued
to enhance the Roamio platform, and recently launched Out-of-Home
Streaming on our top Roamio products and TiVo Stream device, which
allows users to stream and download live TV and favorite recorded
content to their smart phones and tablets outside the home.
Additionally, the TiVo Roamio platform will include the Opera TV
solution in the near future, which at its launch will enable over
100 apps built on HTML5, and will include ones focused on
entertainment, sports, weather, gaming, news and more. Further,
this solution is expected to make it easier for content publishers
to get apps onto the television and allow our MSO partners to bring
more content to their subscribers. In addition, TiVo Roamio
Pro and the TiVo Mobile iOS experience were named CES Innovations
Honorees.
"The Roamio product suite also helped to drive TiVo-Owned gross
subscription addition growth during the quarter -- 10%
year-over-year and 65% as compared to the second quarter. These
subscriptions came in at a lower subscription acquisition cost due
to better hardware economics, which is something we also expect to
continue during Q4. Based on current trends, we expect to see
accelerated year-over-year growth rates for TiVo-Owned gross
additions in the fourth quarter, due to continued momentum
and increased marketing efforts.
"As a result of our ability to innovate, evolve and enhance our
product offering, our operator business continues to grow
nicely. During the quarter we added approximately 300,000 MSO
subscriptions, almost 25% better than last quarter's growth.
Roughly 80% of the increase in quarter over quarter net adds, of
close to 60,000, was driven by MSO providers other than Virgin.
This acceleration over both the second quarter and the prior year's
quarter led to our strongest subscription addition results since
we've launched our cable operator activity. Additionally, our
recently launched deployments have broadened the contributions to
our sub growth, which are now coming from many operators. For
example, Com Hem, Sweden's largest cable provider, recently began
rollout of the TiVo IPTV solution and is now marketing across its
entire footprint. Early results have been positive and we look
forward to seeing significant growth in our Com Hem deployment
going forward.
"Additionally, Virgin Media and ONO in Spain continue to rapidly
deploy TiVo, with TiVo now covering nearly half of the subscribers
at Virgin Media and a third at ONO. Virgin Media also announced in
September that it is offering access to Netflix to its TiVo
subscribers. This is the first time an over the top offering such
as Netflix has been accessible by subscribers through a Pay-TV
platform, and the market really took note of the potential growth
opportunity that broadband TV presents through cable. Additionally,
working with TiVo, Com Hem is expected to be the second Pay-TV
operator in the world to offer Netflix in December. We have the
technology to allow multiple over the top providers to be
seamlessly integrated into the cable operator's experience which
allows the operator to develop a broad portfolio of over the top
content without being dependent on one provider.
"In the U.S., our momentum continued with strong results across
multiple deployments, and Atlantic Broadband, owned by
Montreal-based Cogeco Cable Inc., which serves more than 250,000
customers, recently began its TiVo deployment, and announced that
it will be the first U.S. provider to deploy Roamio. Additionally,
we announced yet another operator deal with Blue Ridge, a top 20
cable service provider based in Pennsylvania, that has selected
TiVo to exclusively provide a next-generation whole home television
solution and user experience for its advanced TV offerings across
TV, Web and Mobile platforms.
"Further, at the International Broadcasting Conference this
quarter, we highlighted some of our upcoming innovations including
our Network DVR prototype, which will not only help operators
transition storage from the set-top box to the cloud, but will more
importantly help them better manage content in a cloud-based, TV
Everywhere world as they deliver new features and increased
personalization and experiences onto even more devices. While
much of the TiVo service is already in the cloud, including
features such as search and the TiVo recommendation engine,
bringing our DVR capabilities into the cloud as well will provide
operators with a flexible comprehensive solution that covers how
current television is delivered today to a future, fully
cloud-based offering, and almost everything in between.
"In terms of our audience research and measurement business, TRA
recently announced new deals with P&G, dunnhumbyUSA and
Simulmedia. The P&G deal is especially exciting as it
expands the scope of our relationship with P&G by providing, in
conjunction with comScore, one of the largest single-source
cross-media solutions that anonymously matches media exposure from
millions of households (TV, online video and banners) with actual
purchase behavior from those same households. We believe our deal
with P&G, a top consumer product advertiser on television, is a
validation of TRA's approach to helping make TV advertising buying
more efficient and effective, and highlights the value TRA can
drive for its customers."
Rogers concluded, "We executed well this past quarter,
delivering strong financial results, adding MSO and retail
subscriptions, driving new distribution, and continuing to bring to
market innovative product features that we believe will define the
future of the television industry. Together with further
R&D cost reductions and smart capital allocation, we are
confident that we are setting the stage for strong future
performance."
Management Provides
Financial Guidance
For the fourth quarter of Fiscal Year 2014, TiVo anticipates
service and technology revenues in the range of $83 million to $85
million, the midpoint of which is a close to a 30% increase from
the $65.7 million reported in last year's fourth quarter.
Benefiting Q4 is an expected increase in MSO revenue growth, driven
by a partial quarter of Virgin revenue recognition in Service
revenue.
TiVo anticipates net income in the range of $2 million to $5
million, and an Adjusted EBITDA of $16 million to $19 million,
which includes $4 million to $5 million of incremental seasonal
marketing spend versus the prior quarter and an expected decline in
hardware margin as MSO partners begin to deploy TiVo on 3rd party
hardware.
This financial guidance is based on information available to
management as of November 26, 2013. 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
third quarter ended October 31, 2013 financial and operating
results and guidance outlook at 2:00 pm PT (5:00 pm ET), today,
November 26, 2013. 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 96412192).
The Webcast will be archived and available through December 3,
2013 at http://www.tivo.com/ir or by calling (404) 537-3406; and
entering the conference ID number 96412192.
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 the ultimate 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 and the TiVo Logo are trademarks or registered trademarks
of TiVo Inc. or its subsidiaries worldwide. © 2013 TiVo Inc. All
rights reserved. All other trademarks are the property of their
respective owners.
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 future distribution
agreements as well as revenue and subscription growth from MSO
customers (both domestically and internationally), future growth in
TiVo's overall subscription base, future growth in our
deployments with our MSO partners including Virgin Media, ONO, Com
Hem, Atlantic Broadband, and Blue Ridge next year, future launch
and features of the Opera TV solution on TiVo Roamio, lower
subscription acquisition costs in TiVo's fourth quarter, increased
year-over-year growth rates for TiVo's gross TiVo-Owned
subscriptions in TiVo's fourth quarter, future TiVo product
innovations such as a network DVR and cloud-based TV Everywhere
solutions, future growth in TiVo's audience research and
measurement business, future decreases in TiVo R&D spending,
and the future strength and value of TiVo's intellectual property
portfolio. 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, including the Company's Annual Report on Form 10-K for
the fiscal year ended January 31, 2013, our Quarterly Reports on
Form 10-Q for the periods ended April 30, 2013, July 31, 2013, and
October 31, 2013, 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 INCOME |
|
(In
thousands, except per share and share amounts) |
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
Three Months Ended October 31, |
|
|
Nine Months Ended October 31, |
|
|
2013 |
|
|
2012 |
|
|
2013 |
|
|
2012 |
|
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service revenues |
|
33,526 |
|
|
|
35,228 |
|
|
|
102,518 |
|
|
|
98,151 |
|
|
|
Technology revenues |
|
48,133 |
|
|
|
25,727 |
|
|
|
117,914 |
|
|
|
71,439 |
|
|
|
Hardware revenues |
|
35,597 |
|
|
|
21,072 |
|
|
|
79,487 |
|
|
|
45,462 |
|
Net revenues |
|
117,256 |
|
|
|
82,027 |
|
|
|
299,919 |
|
|
|
215,052 |
|
Cost of revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of service revenues |
|
11,233 |
|
|
|
11,238 |
|
|
|
33,446 |
|
|
|
28,488 |
|
|
|
Cost of technology revenues |
|
5,612 |
|
|
|
5,779 |
|
|
|
21,190 |
|
|
|
15,857 |
|
|
|
Cost of hardware revenues |
|
33,017 |
|
|
|
23,434 |
|
|
|
73,470 |
|
|
|
56,336 |
|
|
Total cost of revenues |
|
49,862 |
|
|
|
40,451 |
|
|
|
128,106 |
|
|
|
100,681 |
|
|
|
|
Gross
margin |
|
67,394 |
|
|
|
41,576 |
|
|
|
171,813 |
|
|
|
114,371 |
|
|
|
Research and development |
|
27,242 |
|
|
|
28,277 |
|
|
|
80,009 |
|
|
|
88,489 |
|
|
|
Sales and marketing |
|
10,189 |
|
|
|
7,958 |
|
|
|
27,765 |
|
|
|
21,425 |
|
|
|
Sales and marketing, subscription acquisition
costs |
|
2,628 |
|
|
|
1,560 |
|
|
|
6,483 |
|
|
|
5,189 |
|
|
|
General and administrative |
|
15,839 |
|
|
|
21,772 |
|
|
|
60,850 |
|
|
|
63,367 |
|
|
|
Litigation proceeds |
|
-- |
|
|
|
(78,441 |
) |
|
|
(108,102 |
) |
|
|
(78,441 |
) |
|
|
|
Total
operating (income) expenses |
|
55,898 |
|
|
|
(18,874 |
) |
|
|
67,005 |
|
|
|
100,029 |
|
|
|
Income from operations |
|
11,496 |
|
|
|
60,450 |
|
|
|
104,808 |
|
|
|
14,342 |
|
|
|
Interest income |
|
1,133 |
|
|
|
1,383 |
|
|
|
3,455 |
|
|
|
3,143 |
|
|
|
Interest expense and other expense, net |
|
(2,165 |
) |
|
|
(1,958 |
) |
|
|
(6,104 |
) |
|
|
(5,906 |
) |
|
|
|
Income before income taxes |
|
10,464 |
|
|
|
59,875 |
|
|
|
102,159 |
|
|
|
11,579 |
|
|
|
|
Benefit (provision) for income taxes |
|
2,023 |
|
|
|
(848 |
) |
|
|
168,947 |
|
|
|
(1,067 |
) |
|
|
Net income |
$ |
12,487 |
|
|
$ |
59,027 |
|
|
$ |
271,106 |
|
|
$ |
10,512 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per common share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.11 |
|
|
$ |
0.49 |
|
|
$ |
2.28 |
|
|
$ |
0.09 |
|
|
|
|
Diluted |
$ |
0.10 |
|
|
$ |
0.44 |
|
|
$ |
1.98 |
|
|
$ |
0.09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income for purposes of computing net income per
share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
12,487 |
|
|
$ |
59,027 |
|
|
$ |
271,106 |
|
|
$ |
10,512 |
|
|
|
|
Diluted |
$ |
13,739 |
|
|
$ |
60,992 |
|
|
$ |
274,863 |
|
|
$ |
10,512 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common and common equivalent
shares: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
116,760,061 |
|
|
|
119,363,613 |
|
|
|
118,913,986 |
|
|
|
119,149,010 |
|
|
|
|
Diluted |
|
136,736,001 |
|
|
|
138,587,931 |
|
|
|
139,124,386 |
|
|
|
123,353,443 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TIVO INC. |
|
CONDENSED CONSOLIDATED BALANCE SHEETS |
|
(In thousands, except per share and share
amounts) |
|
(unaudited) |
|
|
|
|
October 31, 2013 |
|
|
January 31, 2013 |
|
ASSETS |
|
|
|
|
|
|
|
CURRENT ASSETS |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
196,259 |
|
|
$ |
157,104 |
|
|
Short-term investments |
|
831,607 |
|
|
|
470,136 |
|
|
Accounts receivable, net of allowance for doubtful
accounts of $425 and $362, respectively |
|
37,938 |
|
|
|
40,102 |
|
|
Inventories |
|
18,514 |
|
|
|
14,500 |
|
|
Deferred cost of technology revenues, current |
|
7,839 |
|
|
|
14,713 |
|
|
Deferred tax asset, current |
|
92,178 |
|
|
|
-- |
|
|
Prepaid expenses and other, current |
|
14,630 |
|
|
|
9,168 |
|
|
|
Total current assets |
|
1,198,965 |
|
|
|
705,723 |
|
LONG-TERM ASSETS |
|
|
|
|
|
|
|
|
Property and equipment, net of accumulated depreciation
of $51,599 and $51,012, respectively |
|
11,379 |
|
|
|
10,300 |
|
|
Developed technology and intangible assets, net of
accumulated amortization of $24,949 and $21,323, respectively |
|
12,460 |
|
|
|
16,086 |
|
|
Deferred cost of technology revenues, long-term |
|
21,655 |
|
|
|
16,011 |
|
|
Deferred tax asset, long-term |
|
79,586 |
|
|
|
-- |
|
|
Goodwill |
|
12,266 |
|
|
|
12,266 |
|
|
Prepaid expenses and other, long-term |
|
2,602 |
|
|
|
3,267 |
|
|
|
Total long-term assets |
|
139,948 |
|
|
|
57,930 |
|
|
|
|
Total
assets |
$ |
1,338,913 |
|
|
$ |
763,653 |
|
LIABILITIES AND STOCKHOLDERS'EQUITY |
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
|
CURRENT LIABILITIES |
|
|
|
|
|
|
|
|
Accounts payable |
$ |
33,278 |
|
|
$ |
24,492 |
|
|
Accrued liabilities |
|
47,100 |
|
|
|
50,043 |
|
|
Deferred revenue, current |
|
172,036 |
|
|
|
103,505 |
|
|
|
Total current liabilities |
|
252,414 |
|
|
|
178,040 |
|
|
LONG-TERM LIABILITIES |
|
|
|
|
|
|
|
|
Deferred revenue, long-term |
|
357,869 |
|
|
|
71,823 |
|
|
Convertible senior notes |
|
172,500 |
|
|
|
172,500 |
|
|
Deferred rent and other long-term liabilities |
|
405 |
|
|
|
526 |
|
|
|
Total long-term liabilities |
|
530,774 |
|
|
|
244,849 |
|
|
|
|
Total
liabilities |
|
783,188 |
|
|
|
422,889 |
|
|
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 134,192,051 and 129,545,267,
respectively, and outstanding shares are 121,929,986 and
125,622,357, respectively |
|
134 |
|
|
|
129 |
|
|
Treasury stock, at cost: 12,262,065 shares and
3,922,910 shares, respectively |
|
(133,090 |
) |
|
|
(37,791 |
) |
|
Additional paid-in capital |
|
1,099,459 |
|
|
|
1,060,532 |
|
|
Accumulated deficit |
|
(411,222 |
) |
|
|
(682,328 |
) |
|
Accumulated other comprehensive income |
|
444 |
|
|
|
222 |
|
|
|
|
Total
stockholders' equity |
|
555,725 |
|
|
|
340,764 |
|
|
|
|
Total
liabilities and stockholders' equity |
$ |
1,338,913 |
|
|
$ |
763,653 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TIVO INC. |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
(In thousands) |
(unaudited) |
|
|
Nine Months Ended October 31, |
|
|
2013 |
|
|
2012 |
|
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
Net income |
$ |
271,106 |
|
|
$ |
10,512 |
|
|
Adjustments to reconcile net income to net cash
provided by operating activities: |
|
|
|
|
|
|
|
|
|
Depreciation and amortization of property and equipment
and intangibles |
|
7,778 |
|
|
|
6,622 |
|
|
|
Stock-based compensation expense |
|
27,453 |
|
|
|
25,163 |
|
|
|
Amortization of discounts and premiums on
investments |
|
5,591 |
|
|
|
4,097 |
|
|
|
Deferred income taxes |
|
(171,764 |
) |
|
|
-- |
|
|
|
Amortization of deferred debt issuance costs |
|
721 |
|
|
|
721 |
|
|
|
Excess tax benefits from employee stock-based
compensation |
|
(515 |
) |
|
|
-- |
|
|
|
Allowance for doubtful accounts |
|
199 |
|
|
|
196 |
|
|
Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
1,965 |
|
|
|
(3,124 |
) |
|
|
Inventories |
|
(4,014 |
) |
|
|
1,545 |
|
|
|
Deferred cost of technology revenues |
|
1,499 |
|
|
|
(1,916 |
) |
|
|
Prepaid expenses and other |
|
(3,049 |
) |
|
|
(1,947 |
) |
|
|
Accounts payable |
|
8,961 |
|
|
|
(6,377 |
) |
|
|
Accrued liabilities |
|
(2,307 |
) |
|
|
(3,619 |
) |
|
|
Deferred revenue |
|
354,577 |
|
|
|
20,122 |
|
|
|
Deferred rent and other long-term liabilities |
|
(121 |
) |
|
|
21 |
|
|
|
|
Net
cash provided by operating activities |
$ |
498,080 |
|
|
$ |
52,016 |
|
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
Purchases of short-term investments |
|
(747,404 |
) |
|
|
(429,262 |
) |
|
Sales or maturities of short-term investments |
|
378,095 |
|
|
|
427,925 |
|
|
Acquisition of business, net of cash and cash
equivalents acquired |
|
-- |
|
|
|
(24,481 |
) |
|
Acquisition of property and equipment |
|
(5,406 |
) |
|
|
(4,594 |
) |
|
Acquisition of capitalized software and
intangibles |
|
-- |
|
|
|
(95 |
) |
|
|
|
Net
cash used in investing activities |
$ |
(374,715 |
) |
|
$ |
(30,507 |
) |
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
Proceeds from issuance of common stock related to
exercise of common stock options |
|
6,783 |
|
|
|
5,788 |
|
|
Proceeds from issuance of common stock related to
employee stock purchase plan |
|
3,791 |
|
|
|
3,741 |
|
|
Excess tax benefits from employee stock-based
compensation |
|
515 |
|
|
|
-- |
|
|
Treasury stock - repurchase of stock |
|
(95,299 |
) |
|
|
(23,127 |
) |
|
|
|
Net
cash used in financing activities |
$ |
(84,210 |
) |
|
$ |
(13,598 |
) |
NET INCREASE IN CASH AND CASH EQUIVALENTS |
$ |
39,155 |
|
|
$ |
7,911 |
|
CASH AND CASH EQUIVALENTS: |
|
|
|
|
|
|
|
|
Balance at beginning of period |
|
157,104 |
|
|
|
169,555 |
|
|
Balance at end of period |
$ |
196,259 |
|
|
$ |
177,466 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TIVO INC. |
OTHER DATA |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended October 31 |
|
|
Guidance Reconciliation |
|
|
2013 |
|
|
2012 |
|
|
Three Months Ending January 31, 2014 |
|
|
(In thousands) |
|
|
(In millions) |
Net Income |
|
$ |
12,487 |
|
|
$ |
59,027 |
|
|
$2 - $5 |
Add back: |
|
|
|
|
|
|
|
|
|
|
|
Depreciation & amortization |
|
|
2,459 |
|
|
|
2,463 |
|
|
$3 |
|
Interest income & expense, other |
|
|
1,032 |
|
|
|
582 |
|
|
$1 |
|
Benefit (provision) for income tax |
|
|
(2,023 |
) |
|
|
848 |
|
|
-- |
|
EBITDA |
|
|
13,955 |
|
|
|
62,920 |
|
|
$6 - $9 |
|
Stock-based compensation |
|
|
9,843 |
|
|
|
9,018 |
|
|
$10 - $10 |
|
Adjusted EBITDA |
|
$ |
23,798 |
|
|
$ |
71,938 |
|
|
$16 - $19 |
|
Litigation expenses |
|
|
1,408 |
|
|
|
9,473 |
|
|
-- |
|
Litigation proceeds (past damage awards) |
|
|
-- |
|
|
|
(78,441 |
) |
|
-- |
|
Adjusted EBITDA excluding litigation expense and litigation
proceeds (past damage awards) |
|
$ |
25,206 |
|
|
$ |
2,970 |
|
|
$16 - $19 |
|
|
|
|
|
|
|
|
|
|
|
|
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 to
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) |
2013 |
|
|
2012 |
|
TiVo-Owned Subscription Gross Additions: |
33 |
|
|
30 |
|
Subscription Net Additions/(Losses): |
|
|
|
|
|
TiVo-Owned |
(21 |
) |
|
(15 |
) |
MSOs |
295 |
|
|
240 |
|
|
Total
Subscription Net Additions/(Losses) |
274 |
|
|
225 |
|
Cumulative Subscriptions: |
|
|
|
|
|
TiVo-Owned |
960 |
|
|
1,042 |
|
MSOs |
2,930 |
|
|
1,898 |
|
|
Total
Cumulative Subscriptions |
3,890 |
|
|
2,940 |
|
Fully Amortized Active |
169 |
|
|
208 |
|
% of TiVo-Owned Cumulative Subscriptions paying
recurring fees |
52 |
% |
|
54 |
% |
|
|
|
|
|
|
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. Above is a table that
details the change in our subscription base during the three months
ended October 31, 2013 and October 31, 2012, respectively. The
TiVo-Owned lines refer to subscriptions sold directly or indirectly
by TiVo to consumers who have TiVo-enabled devices and for which
TiVo incurs acquisition costs. The MSO lines refer to subscriptions
sold to consumers by MSOs such as Virgin, ONO, RCN, Grande,
GCI, and Suddenlink, among others, and 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 as opposed to a one-time prepaid
product lifetime fee.
We define a "subscription" as a contract referencing a
TiVo-enabled device such as a DVR or TiVo mini for which (i) a
consumer has committed to pay for the TiVo service and (ii) service
is not canceled. Each TiVo-Owned or MSO subscription represents a
single TiVo-enabled device (as defined above) and therefore one or
more TiVo-Owned or MSO subscriptions may be present in a single
household. We currently do not report based on households. 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 TiVo-enabled device 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. Prior to
November 1, 2011 we amortized all product lifetime subscriptions
over a 60 month period. Effective November 1, 2011, we have
extended the period we use to recognize product lifetime
subscription revenues from 60 months to 66 months for product
lifetime subscriptions where we have not recognized all of the
related deferred revenue as of the reassessment date. 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 our MSOs
pay us are typically based upon a specific contracture definition
of a subscriber, subscription, or a TiVo-enabled device which may
not be consistent with how we define a subscription for our
reporting purposes nor be representative of how such subscription
fees are calculated and paid to us by our MSOs. Our MSOs
subscription data is based in part on reporting from our
third-party MSO partners.
|
TIVO INC. |
OTHER DATA - KEY BUSINESS METRICS |
|
|
|
Three Months Ended October 31, |
|
TiVo-Owned Churn
Rate |
|
2013 |
|
2013 |
|
|
|
(In thousands, except churn rate per month) |
|
Average TiVo-Owned subscriptions |
|
974 |
|
1,050 |
|
TiVo-Owned subscription cancellations |
|
(54 |
) |
(45 |
) |
TiVo-Owned Churn Rate per month |
|
(1.8 |
)% |
(1.4 |
)% |
|
|
|
|
|
|
The increase in the number of subscriptions that canceled
during the quarter ended October 31, 2013 was related to a one-time
non-recurring event of approximately 12,000 subscription
cancellations from one specific corporate customer, Healthcast.
Without the cancellations from this customer, our Churn Rate per
month would have remained flat. |
|
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, CableCARD™ installation
issues, and CableCARD™ technology limitations, 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, |
|
|
2013 |
|
|
2012 |
|
|
2013 |
|
|
2012 |
|
Subscription
Acquisition Costs |
(In thousands, except SAC) |
|
|
|
|
Sales and marketing, subscription acquisition
costs |
$ |
2,628 |
|
|
$ |
1,560 |
|
|
$ |
9,954 |
|
|
$ |
6,509 |
|
Hardware revenues |
|
(35,597 |
) |
|
|
(21,072 |
) |
|
|
(102,616 |
) |
|
|
(61,890 |
) |
Less: MSOs'-related hardware revenues |
|
25,759 |
|
|
|
13,051 |
|
|
|
78,698 |
|
|
|
40,656 |
|
Cost of hardware revenues |
|
33,017 |
|
|
|
23,434 |
|
|
|
95,317 |
|
|
|
76,704 |
|
Less: MSOs'-related cost of hardware revenues |
|
(20,530 |
) |
|
|
(11,841 |
) |
|
|
(58,029 |
) |
|
|
(36,811 |
) |
|
Total
Acquisition Costs |
|
5,277 |
|
|
|
5,132 |
|
|
|
23,324 |
|
|
|
25,168 |
|
|
TiVo-Owned Subscription Gross Additions |
|
33 |
|
|
|
30 |
|
|
|
112 |
|
|
|
114 |
|
|
Subscription Acquisition Costs (SAC) |
$ |
160 |
|
|
$ |
171 |
|
|
$ |
208 |
|
|
$ |
221 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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'
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' 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 |
2013 |
|
|
2012 |
|
|
(In thousands, except ARPU) |
|
|
|
|
Total
Service revenues |
$ |
33,526 |
|
|
$ |
35,228 |
|
Less:
MSOs'-related service revenues |
|
(8,550 |
) |
|
|
(7,719 |
) |
TiVo-Owned-related service revenues |
|
24,976 |
|
|
|
27,509 |
|
Average TiVo-Owned revenues per month |
|
8,325 |
|
|
|
9,170 |
|
Average TiVo-Owned subscriptions per month |
|
974 |
|
|
|
1,050 |
|
TiVo-Owned ARPU per month |
$ |
8.55 |
|
|
$ |
8.73 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended October 31, |
|
MSOs' Average Revenue per
Subscription |
2013 |
|
|
2012 |
|
|
(In thousands, except ARPU) |
|
|
|
|
Total
Service revenues |
$ |
33,526 |
|
|
$ |
35,228 |
|
Less:
TiVo-Owned-related service revenues |
|
(24,976 |
) |
|
|
(27,509 |
) |
MSOs'-related service revenues |
|
8,550 |
|
|
|
7,719 |
|
Average MSOs' revenues per month |
|
2,850 |
|
|
|
2,573 |
|
Average MSOs' subscriptions per month |
|
2,775 |
|
|
|
1,771 |
|
MSOs'
ARPU per month |
$ |
1.03 |
|
|
$ |
1.45 |
|
|
|
|
|
|
|
|
|
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 service fees, advertising, and
audience research measurement. 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. Furthermore, ARPU for our MSOs may not be directly
comparable to the service fees we may receive from these partners
on a per subscription basis as the fees that our MSOs pay us may be
based upon a specific contractual definition of a subscriber,
subscription or a TiVo-enabled device which may not be
consistent with how we define a subscription for our reporting
purposes or be representative of how such subscription fees are
calculated and paid to us by our MSOs. For example, an agreement
that includes contractual minimums may result in a higher than
expected MSOs' ARPU if such fixed minimum fee is spread over a
small number of subscriptions. Additionally, ARPU for our MSO
subscriptions may not be reflective of revenues received by TiVo as
in certain cases the cost of development for such MSO customer may
be deferred on our condensed consolidated balance sheets until
later when related revenues from service fees are received and are
first recognized as technology revenues by us until the previously
deferred costs of development are fully expensed. This recognition
of service fees as technology revenues will have the effect of
lowering ARPU for certain of our MSO subscriptions until such costs
of development are fully expensed. Additionally, the ARPU for
subscriptions generated from different MSOs may vary significantly
as a result of these factors and other factors such as the size of
such MSO's subscription base and the existence of financial
guarantees and exclusivity commitments from certain MSOs and how
subscriptions are defined in each such agreement.
We calculate ARPU per month for TiVo-Owned subscriptions by
subtracting MSOs'-related service revenues (which includes MSOs'
subscription service revenues and MSOs'-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
the resulting average service revenue 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' 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'-related service
revenues by the average MSOs' subscriptions for the period. The
above table shows this calculation.
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