TiVo Inc. (TIVO)

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TiVo Inc. (TIVO)

F3Q10 (Qtr End 10/31/2009) Earnings Call

November 24, 2009 5:00 pm ET


Derrick Nueman - IR

Tom Rogers - CEO

Anna Brunelle - CFO

Naveen Chopra - VP of Business Development and Corporate Strategy


David Miller - Caris & Company

Bridget Weishaar - JPMorgan

Barton Crockett - Lazard Capital Market

Tony Wible - Janney Montgomery Scott

Mark Argento - Craig-Hallum Capital Markets

Brian Klein - Wedge Partners

Chris Grosso - Hudson Square Research

Tuna Amobi - Standard & Poor's



Welcome to the TiVo third quarter earnings results conference call. Mr. Nueman you may begin your conference.

Derrick Nueman

Thank you and good afternoon. I'm Derrick Nueman, TiVo's Head of Investor Relations. With me today are Tom Rogers, CEO, Anna Brunelle, CFO, Naveen Chopra, VP of Business Development and Corporate Strategy, and Matt Zinn, General Counsel.

We are here today to discuss TiVo's Q3 earnings, for the quarter ended October 31, 2009. We have just distributed a press release and 8-K detailing our financial results. We have also released a key metric summary, which is posted on our Investor Relations website.

Additionally, we will post a recording of this call later today on the Investor Relations website. The prepared remarks today will take about 30 minutes and will be followed by Q&A.

Our discussions today include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to, among other things, TiVo's future subscriptions, advertising and research business, profitability, operations and financial performance and guidance, distribution of the TiVo's service domestically with DIRECTV, RCN, Comcast and Cox, internationally with Virgin Media, UK, (7 HD) in Australia, New Zealand. TiVo's current and future service features and product releases, partner initiatives and TiVo's ongoing litigation with EchoStar, AT&T and Verizon.

You can identify these statements by the use of terminology such as guidance, believe, support, expect, will or similar forward-looking statements. We caution you not to put undue reliance on these forward-looking statements as they involve risks and uncertainties that may cause actual results to vary materially from the forward-looking statements.

Factors that may cause actual results to differ materially include delays in development and competitive service offerings and lack of market acceptance, as well as other factors described in our risk factors in our public filings and in our latest 10-K and 10-Qs. Any forward-looking statements made today reflect analysis that's made as of today and we have no plans or duty to update them.

Additionally, there are some metrics and financial information provided on today's call that are non-GAAP measures. Please see our third quarter fiscal year 2010 key metric trend sheet for reconciliation of these items.

With that, I will now turn over the call to Tom.

Tom Rogers

Thanks, Derrick. Good afternoon, everyone. Let me begin by saying that TiVo had another solid quarter as we recorded our ninth straight quarter of adjusted EBITDA profitability exceeding guidance.

This quarter we also made significant progress on a number of key business initiatives designed to further drive TiVo’s mass distribution efforts, both in the US and overseas. TiVo just announced strategic partnership with Virgin Media, our official launch earlier this month in New Zealand, and important preparations for domestic roll-outs with DIRECTV and RCN next year.

This is in addition to an expected acceleration in Comcast deployment of the TiVo service next year, and Best Buy’s 2010 marketing initiatives as part of our announced strategic relationship with them.

Our audience research continues to showcase TiVo's understanding of the future of television and remains a vital resource for the media industry, evidenced by our deal with Google we announced today.

Finally, this quarter the United States District Court for the Eastern District of Texas ruled to impose damages and contempt sanctions of approximately $200 million against EchoStar for its continued violation of a permanent injunction. Taking the total damages awarded to-date to approximately $400 million and further underlining the value of our intellectual property.

As you can see, we have laid an important foundation for growth with many of our efforts already beginning to bear fruit. Now, let me walk you through some detail.

To begin, as I said, we announced today a long-term strategic partnership with Virgin Media, one of the largest international cable operators and the UK's single largest cable system. Virgin serves nearly four million customers in the UK, and TiVo will know become the exclusive middleware and user interface provider on its next generation set-top-box platform.

When the new platform becomes available, Virgin subscribers will use the TiVo interface to access what we think will be the UK's most advanced television service package, including a variety of broadband to the TV features. In fact, our market leadership in the development of the seamlessly integrated broadband and linear TV experience was a critical factor in Virgin's decision to partner with TiVo.

Let me provide with you a little more detail about the Virgin relationship, which will give you further color on our enthusiasm for this deal.

First, similar to RCN, we will be the exclusive middleware and user interface on next generation boxes. Second, there are substantial minimum commitments associated with this deal. Third, TiVo will be supplying the complete software stack on the Virgin set-top-boxes, which we believe is a more efficient approach to development than some of the more cumbersome architectures used by other operators and keeps with our strategy to avoid engagements that could potentially tie us up in lengthy development projects without near-term deployment opportunity.

Lastly, this deal also marks the first time TiVo will be providing the interface, not just for DVR platforms, but for traditional, next generation set-top boxes without DVR capability as well. This expanded role further underscores the ongoing evolution of TiVo's technology from the best DVR interface, to the world's leading provider of software for advanced television services. Proceed to unified linear broadband and on-demand content.

Read the rest of this transcript for free on seekingalpha.com