TiVo Reports Results for the First Quarter Ended April 30, 2013
SAN JOSE, CA -- (MARKET WIRE) -- 05/20/2013 -- TiVo Inc. (NASDAQ: TIVO)
Adjusted EBITDA of $0.8 million, including impact of litigation expense, exceeding guidance
Net Loss of ($10.3) million, exceeding guidance
Service & Technology revenue of $61.8 million in the first quarter, an increase of 13% year-over-year, meeting the high-end of the guidance range
MSO revenue increased 98% year-over-year
Largest quarterly MSO subscription increase in over seven years; MSO subscription base increased by 277,000 subscriptions
Signed a distribution deal with Atlantic Broadband, the 12th largest U.S. MSO
Midcontinent and GCI recently launched TiVo offering; Mediacom expected to deploy in June
Launch of 'What to Watch' feature on the TiVo iPad app helps users easily find personalized program recommendations in real time without the need to surf channels or use a program guide
Enhanced TiVo Research & Analytics offering with merger of the TiVo Power||Watch ratings service with purchasing behavior insights
Repurchased $31 million of stock in the first quarter
Patent trial with Motorola set to begin on June 10th
TiVo Inc. (NASDAQ: TIVO), a leader in the advanced television entertainment market, today reported financial results for the first quarter ended April 30, 2013.
Tom Rogers, President and CEO of TiVo, said, "The solid financial results this quarter were the outcome of strong operational execution across our business. Our advanced television innovation is helping to drive the global adoption of TiVo as we increased our MSO subscription base by 277,000 subscriptions, our strongest quarter of MSO subscription additions in seven years. We delivered 13% year-over-year service and technology revenue growth and reported an Adjusted EBITDA profit, which significantly exceeded our guidance. As a result, we continue to believe that we should be Adjusted EBITDA profitable, even when including litigation spend, for Fiscal 2014."
For the first quarter, service and technology revenues were $61.8 million. This compared to guidance of $60 million to $62 million and $54.5 million for the same quarter last year. TiVo reported a net loss of $(10.3) million, compared to guidance of a net loss of $(16) million to $(19) million. This compared to a net loss of $(20.8) million in the same quarter last year. Adjusted EBITDA was $0.8 million, exceeding guidance of $(5) million to $(8) million and compared to a loss of $(10.0) million in the same quarter last year. Both net income and Adjusted EBITDA included $10.9 million of litigation expense, which compared to $5.4 million in the year-ago quarter. In addition, TiVo repurchased $31 million of stock in the first quarter through open market purchases and from tax withholdings on employee restricted share vesting. Since the time our board authorized the $100 million repurchase plan, the combination of these two repurchase strategies has retired a total of almost $57 million worth of our equity.
Rogers continued, "On the operator front, we are continuing to see impressive subscription growth. Our MSO subscription additions underscore that the TiVo offering is helping operators acquire customers, reduce churn and improve revenue per subscriber.
"More specifically, Virgin Media added 172,000 TiVo subscriptions in its fiscal first quarter, bringing the total to 1.5 million, or 40% of its entire base. Importantly, Virgin Media posted its sixth straight quarter of improving churn, exemplifying the stickiness of the TiVo offering. In Spain, ONO recently announced that its TiVo subscription base is now at 166,000, up 68% from three months ago. In the U.S., Suddenlink had another strong quarter of subscription additions, recently reporting that 80,000 TiVo devices were installed to date. In addition, Suddenlink has seen significant acceleration in the growth of its TiVo subscription base since it began installing our Whole-Home solutions, TiVo Mini and TiVo Stream.
"In addition to the success we have had with existing operator relationships, Midcontinent Communications and GCI recently began deploying TiVo. Additionally, we expect Mediacom to deploy in June and CableONE to follow thereafter. In Scandinavia, Com Hem is moving closer to launching their TiVo offering and recently started pre-registration. This new IPTV video delivery allows Com Hem to offer TiVo both in its traditional form and directly from the cloud to connected devices without the need for a set-top box. We believe this cloud implementation will further broaden the appeal of TiVo to pay-TV operators across the globe. Additionally, we signed a distribution deal with Atlantic Broadband, the 12th largest U.S. MSO, who has over 250,000 subscribers in seven states on the East Coast.
"On the TiVo-Owned front, we continue to efficiently manage the business as churn remained low and subscription acquisition costs were down approximately 20%. Driving this decrease were improved hardware margins, where nearly half of new sales were for our high end four-tuner products, which are typically hardware margin positive. Additionally, we are launching MLB.com tomorrow, adding to the millions of pieces of content available through the TiVo retail platform.
"From an innovation standpoint, this quarter we launched at retail TiVo Mini which answers the consumer demand for a simplified whole-home viewing experience and is a more cost-effective solution than adding an additional DVR or cable set-top box in another room. This is currently the only multi-room solution of its kind available at retail. A major thrust for TiVo going forward will be increasing the personalization of the television experience. Our newest offering on this path is our just-announced 'What to Watch Now' feature on our TiVo iPad App which brings together our mobile and personalization strategies. This feature personalizes the TV experience by combining TiVo Recommendations and the preferences of the TiVo user into a personal dashboard on the tablet that frames just what the viewer wants every time they turn on the TV.
"Looking ahead, we're continuing to focus on our vision of making consumption of television more personalized, with more programming choices customized according to user-defined preferences and accessible from the cloud enabling users to get those programming choices through TiVo on different devices regardless of location. Importantly, we are developing these innovative solutions while having reduced our R&D spend by 13% compared to the year-ago quarter's levels.
"Regarding our TiVo Research and Analytics business, our unique audience measurement research data continues to be a valuable tool for major brands, advertisers and networks that are looking for a more granular understanding of TV viewing behavior. This quarter, we enhanced our abilities further in two ways. First, we signed an agreement to ensure that Nielsen data is available alongside our single-source data solution. The ease and convenience of being able to access the Nielsen information along with the deeper analysis of the TiVo Research and Analytics product provides, creates the simplicity that our customers have been seeking. Second, to further foster ease and convenience for our client base, we merged the TiVo Power||Watch ratings service with the purchasing behavior insights from TiVo Research and Analytics. In doing this, we have further differentiated our offering; we are now able to provide marketers with insights to help them analyze the personal traits and attitudes of viewers while correlating this to their viewing behavior and purchase decisions.
"On the litigation front, our trial with Motorola in the Eastern District of Texas begins on June 10th. Similar to our past successes with EchoStar, AT&T, and Verizon, we remain confident in our position."
Rogers concluded, "It is clear from our results that our vision for the future of TV is playing out as we expected it to. We saw one of the best quarters ever in terms of subscription growth, driven by a number of our existing operator deals in the U.S. and abroad that are fully up and running. As a result, we delivered solid MSO revenue growth, which we expect will only continue as we roll out additional deployments. Furthermore, we believe we can drive additional value by continuing to offer some of the most innovative products available, build our audience measurement capabilities and defend our intellectual property in upcoming trials. Consequently, we continue to believe we should be Adjusted EBITDA profitable, including litigation spend, for Fiscal 2014."
Management Provides Financial Guidance
For the second quarter of Fiscal Year 2014, TiVo anticipates service and technology revenues in the range of $68 million to $70 million. Further, the company expects MSO deployments to drive sequential increases in both service revenue and technology revenue.
TiVo anticipates net loss in the range of ($13) million to ($16) million, and an Adjusted EBITDA of positive $1 million to ($2) million, which includes $9 million to $11 million of litigation spend. TiVo expects to be profitable on an Adjusted EBITDA basis excluding litigation spend.
For the full year Fiscal 2014, TiVo continues to anticipate that current business trends should drive Adjusted EBITDA profitability, including litigation spend.
This financial guidance is based on information available to management as of May 20, 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 second quarter ended April 30, 2013 financial and operating results and guidance outlook at 2:00 pm PT (5:00 pm ET), today, May 20, 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 68883943). The Webcast will be archived and available through May 27, 2013 at http://www.tivo.com/ir or by calling (404) 537-3406; and entering the conference ID number 68883943.