) reported earnings of 5 cents per share in the fourth quarter of
fiscal 2014, which beat the Zacks Consensus Estimate by a penny.
Earnings improved from 13 cents loss reported in the year-ago
TiVo fourth quarter revenues jumped 19.7% year over year to
$106.3 million but were well below the Zacks Consensus Estimate
of $111.0 million.
The strong year-over-year growth was primarily driven by higher
service and technology revenues (79.1% of revenues), which rose
27.9% to $84.0 million and were higher than management's guided
range of $80.0 million to $82.0 million. Hardware revenues (21.0%
of revenues) declined 3.6% year over year to $22.3 million in the
Total subscriptions grew 34.0% on a year over year basis and now
stand at approximately $4.2 million. The quarter witnessed
positive TiVo-Owned net additions for the first time in six years
driven by 41% year-over-year growth in TiVo-Owned gross additions
and lowest absolute churn in almost eight years.
During the quarter, the company completed the acquisition of
cloud-based content discovery and recommendation service
provider, Digitalsmiths. This acquisition will enable TiVo to
sell its products and services to both operators who want to use
TiVo's user interface as well as to those who are on the lookout
to develop their own interfaces but require a strong content and
discovery service powering it.
TiVo's audience research & measurement business, TRA
delivered improved revenues in the fourth quarter compared to the
prior quarter, underscoring the recent efforts to secure and
expand customer relationships such as with
Proctor & Gamble
Gross margin expanded 830 basis points (bps) to 62.4% on a
Operating expenses declined 5.7% on a year-over-year basis to
$59.2 million. Research and Development (R&D), Sales and
Marketing (Sales and Marketing) and Structural Acquisitions Cost
(SAC) registered increases of 1.1%, 25.9% and 74.0%, respectively
whereas G&A declined 30.6% on a year-over-year basis.
Adjusted earnings before interest, taxes, depreciation and
amortization (EBITDA) were $19.6 million, which exceeded
management's guidance range of $16.0-$19.0 million.
Operating income was $7.3 million versus an operating loss of
$14.7 million in the year-ago quarter. Net income (excluding
litigation proceeds) was $5.5 million versus a loss of $15.8
million in the year-ago quarter.
At the end of the fourth quarter, cash, cash equivalents and
short-term investments were $1.00 billion compared with $1.03
billion in the prior quarter.
For the first quarter of fiscal 2015, TiVo expects Service and
Technology revenues in the range of $85.0 - $87.0 million (up
40.0% at the mid-point compared with $61.8 million in the
TiVo anticipates net income in the range of $5.0-$8.0 million and
an adjusted EBITDA of $22.0-$25.0 million. The year-over-year
increase is expected to come from improvements in overall gross
margin and lower operating expenses.
Owing to the gains from additional subscriptions, TiVo management
believes that it is on track to exceed adjusted EBITDA of $100.0
million on an annual basis in 2015.
The company believes that the highly efficient nature of
Digitalsmiths software will drive margins going forward as well
as contribute significantly to TiVo's overall adjusted EBITDA in
CABLEVISION SYS (CVC): Free Stock Analysis
DISH NETWORK CP (DISH): Free Stock Analysis
PROCTER & GAMBL (PG): Free Stock Analysis
TIVO INC (TIVO): Free Stock Analysis Report
To read this article on Zacks.com click here.
The company continues to innovate and its strong product pipeline
is a major positive going forward. TiVo's focus on forging deals
with mid-tier operators (who will not build their own offering)
is a prudent move in our view.
We believe that TiVo has significant growth opportunities in
Western Europe and Latin America, given its partnerships with
local providers. TiVo's strong balance sheet will also enable the
company to pursue strategic acquisitions and its aggressive share
buyback program will boost growth in the near term.
However, increasing competition from the likes of
Cablevision Systems Corporation
) seems to be the primary headwind in the near term.
Currently, TiVo has a Zacks Rank #3 (Hold).