TiVo Inc. (
reported loss of 13 cents per share, wider than the Zacks
Consensus Estimate of a loss of 12 cents. Results declined
significantly from earnings of 6 cents in the year-ago quarter
and were flat on a sequential basis.
Revenues surged 33.7% from the year-ago quarter and 8.3% from
the previous quarter to $88.9 million and was ahead of the Zacks
Consensus Estimate of $84.0 million.
The strong growth was primarily driven by higher service and
technology revenues (74% of total revenue), which jumped 31.3%
year over year and 7.8% sequentially to $65.7 million and
exceeded management's guided range of $63.0 million to $65.0
Moreover, hardware revenues (26.0% of total revenue) jumped
40.8% year over year and 9.8% quarter over quarter to $23.1
million in the last quarter.
Net addition to total subscriptions during the quarter was
209K, slightly lower than 234K in the year-ago quarter and 225K
in the previous quarter. Churn rate per month was a negative 1.5%
compared with negative 1.7% in the year-ago quarter and negative
1.4% in the previous quarter.
TiVo's total subscriber base jumped 38.2% from the year-ago
quarter and 7.1% from the previous quarter to 3.15 million.
Subscription acquisition costs ("SAC") decreased to $228.0 from
$234.0 in the year-ago quarter due to lower hardware subsidy.
Sequentially, SAC increased substantially from $171.0.
Gross margin expanded 460 basis points ("bps") from the
year-ago quarter and 340 bps from the previous quarter to 54.1%
in the reported quarter, primarily due to higher revenue base.
Adjusted earnings before interest, taxes, depreciation and
amortization (EBITDA) excluding litigation expenses and proceeds
were $7.76 million compared with a loss of $6.7 million in the
year-ago quarter and profit of $2.97 million in the previous
Operating results were primarily driven by lower research
& development ("R&D) expense and general &
administrative (G&A) expense. R&D declined 10.8% year
over year and 5.9% sequentially to $26.6 million. G&A plunged
37.9% year over year but increased 8.9% sequentially to $23.7
Operating expenses declined 17.2% year over year but increased
5.3% sequentially to $62.7 million in the last quarter. This led
TiVo to report an operating loss of $14.6 million, which was
significantly better than the loss of $42.8 million in the
year-ago quarter and $18.0 million in the previous quarter. TiVo
reported net loss of $15.8 million in the reported quarter.
TiVo exited the reported quarter with cash, cash equivalents
and short-term investments of $627.2 million versus $623.6
million in the previous quarter.
For the first quarter of 2014, TiVo expects service and
technology revenues in the range of $60 million to $62 million.
TiVo expects lower technology revenues in the first quarter due
to delayed revenue recognition from key multiple system operator
(MSO ). This will impact the first quarter negatively but is
expected to benefit second quarter technology revenues
TiVo anticipates net loss in the range of ($16) million to
($19) million and an adjusted EBITDA of ($5) million to ($8)
million, which includes $11 million to $12 million of litigation
spend. TiVo expects to be profitable on an adjusted EBITDA basis
excluding litigation spend.
For fiscal 2014, TiVo continues to anticipate that current
business trends should drive adjusted EBITDA profitability,
including litigation spending.
We believe that pending patent litigation issues with
and Motorola Mobility remains a major headwind in the near term.
Moreover, increasing competition from cable and satellite
providers such as
Dish Network (
could also hurt profitability going forward.
Nevertheless, we remain optimistic on TiVo's growth potential
owing to new partnerships, product launches and international
expansion opportunities. Moreover, the successful monetization of
patents also ensures a recurring revenue stream for the company
over the long term.
Currently, TiVo has a Zacks Rank #2 (Buy).
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