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TiVo Posts Results for the 2nd Quarter [Professional Services Close - Up](Professional Services Close - Up Via Acquire Media NewsEdge) TiVo reported financial results for the second quarter ended July 31. Tom Rogers, President and CEO of TiVo, said, "This was another solid quarter of execution and growth for TiVo. Adjusted EBITDA was $29.9 million, however excluding the impact of the litigation expense and proceeds it grew 73 percent year-over-year, and we delivered a 13 percent year-over-year increase in service and technology revenue. Our strong profitability this quarter was helped by the continued global adoption of TiVo's offerings, combined with our focus on driving an efficient cost structure and further reductions in R&D. Our unique product offerings and our leadership role in the advanced television marketplace continues to drive success as we increased our total subscriptions by 33 percent to 4.8 million. This subscription growth led to MSO service revenue increasing by 37 percent from a year ago." According to a release from the Company, for the second quarter, service and technology revenues were $86.6 million. This compared to guidance in the range of $86 million to $88 million, and $77.0 million for the same quarter last year. TiVo reported Adjusted EBITDA of $29.9 million, compared to Adjusted EBITDA guidance of $27 million to $30 million, and compared to Adjusted EBITDA of $115.4 million in the same quarter last year. Net income was $9.3 million, compared to guidance of $6 million to $9 million, and $268.9 million in the same quarter last year. In the second quarter of last year, both net income and Adjusted EBITDA included $108.1 million relating to past damages and $10.7 million of litigation expense. Additionally net income in the second quarter of last year included $752,000 in interest relating to past damages and $167.0 million from the recognition of deferred tax assets. Excluding the impact of litigation proceeds and expense, TiVo's Adjusted EBITDA grew 73 percent year-over-year. Rogers continued, "We continue to increase our operator distribution reach, recently announcing deals with Cogeco and EnTouch, and believe we have a robust pipeline of future distribution opportunities. "Cogeco, which chose TiVo over the prior IPTV solution that was in development, has over 800,000 television customers in Canada and over one million television customers when including Cogeco's U.S. subsidiary, Atlantic Broadband. Deployment is expected to begin early next year. The strong reception that TiVo continues to see with Atlantic Broadband led to the deal, and as a matter of fact, Atlantic Broadband's success with TiVo was recently highlighted in Cablefax Magazine, which recognized the deployment of Netflix via TiVo as the 'MSO Technology Launch of the Year.' "In discussing the rearrangement of their strategy during a recent earnings call, Louis Audet, Cogeco's President and CEO, said '[TiVo is] really a world-leading force in bringing futuristic television viewing options to cable customers and allowing content to be viewed, whether it's linear content, on-demand content, whether it's over-the-top content, can now be viewed on television, on the iPad, on the smartphone, and they have developed a platform that allows us to do that seamlessly.' "Beyond new deals, growth from our existing operator relationships is helping to drive our increasingly strong financial profile. We delivered 283,000 cable MSO subscription additions in the second quarter, which was about 20 percent better than the year ago quarter, in what is a typically seasonally slow period. "In Sweden, TiVo powered Com Hem to positive subscriber additions for the first time in two years, and they've reached 17 percent TiVo penetration in only nine months of deployment. Anders Nilsson, Chief Executive Officer of Com Hem, said during a recent earnings call that 'this very fast pickup is attributable to the fact that TiVo is the only true next-generation media service in the country with the widest TV channel offering and incorporating OTT services and on- demand products, making it the only one-stop shop for video entertainment in Sweden.' "We also continue to build out integration for operators of traditional video and next generation video into what is the only true advanced television bundle of all content from all sources. For example, Netflix continues to be integrated into the TiVo cable set- top box experience with U.S. operators, which now include Atlantic Broadband, Cable One, Grande Communications, Suddenlink Communications, RCN Corp., Midcontinent Communications, and GCI in addition to European operators Virgin and Com Hem. "In terms of Digitalsmiths, the search, discovery, and recommendation platform we acquired earlier this year aimed at improving the experience of non-TiVo user interfaces, existing deployments continue to scale both in the number of households where the company's core product, Seamless Discovery, is live as well as the number of transactions it processes. Additionally, DigitalSmiths continues to be recognized for its technology, and this January during the International Consumer Electronics Show will receive an Emmy in the Technology & Engineering category for their work in personalized recommendation engines for video discovery for multichannel video programming distributors. "On the TiVo-Owned front, in the second quarter we saw a 35 percent year-over-year increase in TiVo-Owned gross additions, with an approximate 30 percent decrease in total acquisition costs compared to the prior year. We believe our success is the direct result of our innovation and best-in-class product, a notion that continues to be reinforced by industry pundits. PC Magazine writer Sascha Segan in a June article wrote, 'the best DVR out there is the TiVo Roamio ... not only excellent reliability and a near-perfect program guide, but the holy trinity of Netflix, Hulu, and Amazon to make your viewing complete.' "Also on the TiVo-Owned front, Xfinity On Demand from Comcast for TiVo Premiere and TiVo Roamio retail customers is now available in all Comcast markets and we are generally seeing stronger sales in those markets. Further, building on our relationship with Comcast, we recently reached a significant agreement whereby Comcast will ensure that our CableCARD-enabled devices will continue to have access to all linear channels and Xfinity On Demand in all digital Comcast markets and that Comcast will work with TiVo on a future two- way non-CableCARD security solution that will enable TiVo retail devices to access the full-Comcast lineup of linear and VOD programming. We anticipate that, at some point, Comcast will transition its delivery of cable signals to IP and this agreement assures that future TiVo devices will be able to receive all cable channels when that IP transition occurs. We believe this agreement improves our position in the retail market going forward and increases potential upside. "We are confident that both our MSO and TiVo-Owned offerings will only get stronger as we continue to innovate, putting the pieces together to achieve the ultimate experience for the TV viewer. Our focus on mobilization, personalization, and organization is working as TiVo customers have more programming choices customized according to their user-defined preferences and accessible from the cloud across different devices regardless of location. In the next 12 months, we will show the fruits of our labor when we roll out some exciting product enhancements. In the meantime, this quarter, we made progress developing these innovative solutions, including implementing Haxe, the multiplatform programming language, which increased performance on our TiVo Premiere boxes by over 30 percent and should enable us to implement future multi-device innovations more easily. And we are doing all of this while reducing our R&D spend by 5 percent compared to last quarter's levels. "We also continue to build out our data capabilities to provide advertisers with unique ways to manage their television buying efforts. An example is our recent partnership with Datalogix, a company that helps online and digital advertiser's measure offline sales, where TiVo Research uses Datalogix's capabilities to bolster its television purchase data. This relationship as well as many of our other data efforts highlight the value of set-top data, especially in the fast-developing programmatic buying area where we are finding the role of advanced analytics to be critical to the way advertisers are navigating this fast-developing area of advertising. "On the capital allocation front, we have made meaningful progress in our efforts to deploy our significant cash resources to drive value. We are taking another step forward by announcing a new $350 million stock repurchase program over the next 2.5 years, with the intention to repurchase the first $100 million of stock during our current fiscal year. This new $350 million stock repurchase program will replace TiVo's prior authorization. This decision was a product of our thorough assessment of numerous capital deployment opportunities and the continued view that our business has significant upside potential as we continue to innovate and drive subscription growth. The new repurchase program upon completion is expected to bring our total repurchases to well over half a billion dollars and is expected to significantly reduced our shares outstanding. In parallel with this buyback plan, we will continue to evaluate additional ways to deploy cash to drive growth and value for shareholders, including continuing to explore smart M&A opportunities and to invest organically where appropriate." Rogers concluded, "This was another solid quarter for TiVo. We had strong execution, delivered improved financial results, and advanced our product offering, all of which is supported by the traction we're seeing from operators both domestically and internationally. With a robust pipeline of international and domestic opportunities, a continued push to drive innovation, further improve the efficiency of our cost structure, and smartly deploy our cash, we are confident TiVo will deliver strong future financial and operating performances in the quarters and years to come." For the third quarter of Fiscal Year 2015, TiVo anticipates service and technology revenues in the range of $86 million to $89 million. TiVo expects Adjusted EBITDA to be in the range of $25 million to $28 million and net income to be in the range of $6 million to $9 million. Included in the third quarter financial guidance is an expected increase in TiVo-Owned acquisition/marketing expenditure compared to the second quarter, when spend was limited due to seasonality. This increased expenditure is expected to yield additional gross subscriptions additions. Additionally, TiVo anticipates lower absolute hardware margin compared to the second quarter driven by volume constraints on MSO hardware sales and larger TiVo-Owned hardware margin loss. More information and complete details: www.TiVo.com ((Comments on this story may be sent to [email protected])) (c) 2014 ProQuest Information and Learning Company; All Rights Reserved. |