) reported earnings of 7 cents per share in the first quarter of
fiscal 2015, which beat the Zacks Consensus Estimate by a penny.
Reported earnings improved from 9 cents loss reported in the
TiVo's first-quarter revenues jumped 29.7% year over year to
$107.1 million but marginally missed the Zacks Consensus Estimate
of $108.0 million.
The strong year-over-year growth was primarily driven by higher
service and technology revenues (80.0% of revenues), which rose
39.2% to $86.0 million and were within management's guided range of
$85.0 to $87.0 million. Hardware revenues (20.0% of revenues)
increased 1.3% year over year to $21.1 million in the reported
Total subscriptions grew 33.4% year over year and now stand at
approximately $4.5 million primarily aided by MSO subscription
In Europe and North America, customers can connect to
) with TiVo set top boxes. The company also added Moviefone, Sharp
and Charter as customers.
Gross margin expanded 440 basis points (bps) to 64.4% on a
year-over-year basis. Operating expenses declined 8.7% year over
year to $53.5 million primarily due to year-over-year declines in
subscriber acquisition costs (down 19%), general and administrative
expenses (down 29.5%) and research and development expenses (down
0.4%) which more than offset the 21.3% increase in sales and
Moreover, as percentage of revenues, operating expenses were
down from 71% to 50.0% on a year-over-year basis. This resulted in
the company's positive operating performance. TiVo reported
operating income of $15.4 million compared to an operating loss of
$9.1 million reported in the year-ago quarter. Net income was $9.4
million or 7 cents compared to a net loss of $10.3 million or 9
TiVo exited the quarter with cash, cash equivalents and
short-term investments of $742.1 million compared with $1.00
billion in the previous quarter. During the quarter, the company
used $23.1 million cash in operations. The company repurchased
stocks worth $110.5 million during the quarter.
For the second quarter of fiscal 2015, TiVo expects Service and
Technology revenues in the range of $86.0-$88.0 million, up
sequentially. TiVo anticipates net income in the range of $6.0-$9.0
million and an adjusted EBITDA of $27.0-$30.0 million.
Management expects the Digitalsmiths acquisition to aid its top
line, and operating expenses to be down for the quarter.
TiVo continues to innovate and its strong product pipeline is a
major positive, going forward. The company'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 it to
pursue strategic acquisitions and aggressive share buyback program
will boost growth in the near term.
However, increasing competition from the likes of
Cablevision Systems Corp.
) seems to be the primary headwind in the near term.
Currently, TiVo has a Zacks Rank #3 (Hold).
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