Welcome!

Cloud Expo Authors: Scott Bampton, Anne Buff, Gilad Parann-Nissany, Elizabeth White, Pat Romanski

News Feed Item

TiVo Reports Results for the Third Quarter Ended October 31, 2012

SAN JOSE, CA -- (Marketwire) -- 11/28/12 -- TiVo Inc. (NASDAQ: TIVO)

  • Service & Technology revenue up 18% year-over-year to $61.0 million
  • Adjusted EBITDA was $71.9 million and Net Income was $59.0 million; both exceeding guidance
  • TiVo expects Adjusted EBITDA profitability next quarter, excluding litigation expense
  • TiVo's subscription base increased 44% year-over-year to almost three million subscriptions
  • MSO service revenue grew 84% year-over-year
  • $250 million Verizon settlement once again proves strength of TiVo's intellectual property; Total consideration and damages from intellectual property actions now more than $1 billion
  • Recent deals with Mediacom, Midcontinent, and Cable ONE highlight TiVo's leadership amongst U.S. mid-sized operators and continued distribution momentum
  • ONO and Suddenlink deliver strongest quarter of TiVo subscription net additions to date
  • Comcast expands TiVo XFINITY® ON Demand offering to 12 markets

TiVo Inc. (NASDAQ: TIVO), a leader in the advanced television entertainment market, today reported financial results for the third quarter ended October 31, 2012.

Tom Rogers, President and CEO of TiVo, said, "This was another strong quarter for TiVo marked by meaningful execution across all areas of our business. We delivered solid revenue growth and our Adjusted EBITDA and net income exceeded our guidance even when excluding the significant positive impact of our litigation settlement with Verizon. We also signed new operator partnerships and continued to build our data analytics business. As a result of the progress we have made toward our operational goals, we expect to be profitable next quarter on an Adjusted EBITDA basis excluding litigation spend.

"During the third quarter, overall subscriptions increased 44% year-over-year as our deals with pay-TV operators brought TiVo to more and more homes and our MSO service revenue grew 84% in the third quarter as compared to the year-ago quarter, significantly more than the second quarter year-over-year growth rate of 22%. We continued to sign on new operator partners as Mediacom, Midcontinent, and Cable ONE turned to TiVo for their advanced television offerings, securing our leadership position amongst mid-sized operators and setting the stage for continued growth in our MSO business. Finally, the value of our intellectual property was once again highlighted by another favorable patent settlement, this time with Verizon, bringing the total consideration from the enforcement of our intellectual property to more than $1 billion from three litigations, and we believe further bolstering our position with respect to our ongoing intellectual property enforcement actions."

For the third quarter, service and technology revenues increased 18% to $61.0 million. This compared to guidance of $57 million to $59 million and $51.8 million for the same quarter last year. TiVo reported net income of $59.0 million, compared to guidance of a net loss of $(27) million to $(29) million, and a net loss of $(24.5) million in the same quarter last year. Adjusted EBITDA was $71.9 million, compared to Adjusted EBITDA guidance of a loss of $(14) million to $(16) million, and to an Adjusted EBITDA loss of $(13.9) million in the same quarter last year. Included in this quarter's results were $2.4 million of ongoing licensing revenue and $78.4 million of litigation proceeds relating to past damages from the Verizon settlement.

Rogers continued, "This quarter we signed three new operator partnerships. The first is with Mediacom Communications, the eighth-largest cable operator in the U.S., which has chosen TiVo to deliver its next-generation, whole-home television experience to subscribers across its footprint. Additionally, Midcontinent Communications, a provider to approximately 300,000 customers, selected TiVo for its advanced television services. Finally, we announced a deal with Cable ONE, the 10th largest cable operator in the U.S. For Cable ONE, given its past experiences, it was critical for them to select a partner with a proven track record of execution. With these deals in place, we currently have relationships with 10 of the top 25 operators in the U.S.

"These deals increase the potential for TiVo to reach more homes and to drive further meaningful financial upside as we expect our existing R&D investment will be heavily leveraged, making it possible to implement a TiVo offering quickly with minimal incremental development cost. Additionally, these deployments are expected to utilize a six-tuner gateway set-top box that we are currently developing with Pace, which is expected to further reduce costs for operators.

"In terms of our existing deployments, we are continuing to see impressive subscription growth. In fact, several of our partners beyond Virgin Media have achieved a double-digit percentage TiVo penetration of their subscriber base as our product has become a key differentiator for their offering, which in addition to helping bolster customer acquisition is reducing churn rates and improving revenue per subscriber.

"In the U.K., Virgin Media continues to improve its pay television net additions, which are accelerating while its primary competitor is experiencing decelerating net additions. TiVo is now being enjoyed by more than one million Virgin Media subscribers, representing 30% of their base. Further, we recently announced Virgin Media is extending the TiVo experience beyond the set-top box by delivering video through an IP network from the cloud to a variety of devices. Virgin Media has recently introduced an app for iOS devices and a web portal that will give subscribers access to live program viewing, thousands of hours of on-demand content on tablets, smartphones, and computers, plus the ability to remotely manage their TiVo service.

"In Spain, despite a challenging economic environment, ONO had its best quarter of TiVo subscription growth to date, almost doubling its TiVo subscription base for the third straight quarter.

"In Scandinavia, we remain on track to launch our first IPTV implementation with Com Hem next year, which will allow Com Hem to offer TiVo both in its traditional form and directly from the cloud to connected devices without the need for a set-top box. We believe this cloud implementation will further increase the appeal of TiVo to pay-TV operators across the globe and will allow these operators to offer a superior television experience without the need to incur significant capex from set-top box purchases.

"In the U.S., our efforts with small and mid-sized cable operators continued to yield strong results as we delivered our strongest aggregate net subscription additions to date. With the announced launch of our non-DVR IP set-top box, TiVo Mini, that will create a whole home thin-client experience for our operators and TiVo Stream, which allows customers to stream as well as download content from their DVRs to their iPads and iPhones, as well as other planned products next year, we believe that we are well positioned to drive similar results across all of our domestic partnerships.

"On the TiVo-Owned front, we posted our best net subscription performance in almost four years and our lowest absolute churn rate in approximately six years. This quarter we also saw an increased percentage of sales of non-subsidized, higher end devices with larger hard drives and more tuners, which have significantly lower associated subscription acquisition costs. Looking ahead, we are planning on reallocating the subsidy dollars gained from this hardware mix shift to marketing programs which we believe will allow us to gain subscription additions while not significantly increasing acquisition costs from the levels we've seen over the last year.

"In addition, our Comcast TiVo offering continues to be well received and has been expanded from two to twelve markets. We've also expanded our retail distribution to Wal-Mart, the largest domestic retailer, which provides opportunity to drive incremental sales. With lower churn, better messaging, a mix shift to higher-end products, more distribution, as well as continued product innovation; we believe the prospects to drive stronger financial results for this business are as good as they've been in some time.

"Our efforts to take the TiVo experience beyond the living room took a significant step forward this quarter with the launch of our TiVo Stream offering. Early sales results in retail have been well above our forecasts and our MSO partners are excited to distribute the product, which has received significant accolades from media reviewers as well as our end-user customers.

"We also continue to build our data analytics business, with a focus on growing new revenue-enhancing opportunities and bolstering our ability to provide unique insights to an industry increasingly seeking alternative ways to measure audience behavior. We are quickly integrating the capabilities of TRA, now rebranded TiVo Research and Analytics (TRA), with our existing measurement services and are providing brands, advertisers, and networks with invaluable insights into not only what shows are being most watched, but also insights and analytics that link television viewing and purchase activity.

"This quarter our intellectual property was once again validated as we settled our patent litigation with Verizon for at least $250 million, bringing the total consideration from our intellectual property enforcement actions to more than $1 billion. We remain confident that the successes we've had defending our innovation, positions TiVo favorably in our ongoing enforcement actions, and believe the settlement with Verizon only further strengthens our hand."

Rogers concluded, "We believe this was a quarter marked by encouraging progress across the board for our business. Many of our operator deals are in full swing and are bringing the TiVo experience to hundreds of thousands of new homes. We signed important new distribution deals and secured a valuable litigation settlement with Verizon. We also continue to build a strategic position in the audience research and advertising arena. We believe that these trends will drive continued improvement of our financial results and support our plan to be profitable on an Adjusted EBITDA basis, excluding litigation expenses, in the fourth quarter."

Management Provides Financial Guidance

For the fourth quarter of Fiscal 2013, TiVo anticipates service and technology revenues in the range of $63 million to $65 million. TiVo anticipates net loss to be in the range of $(15) million to $(17) million and an Adjusted EBITDA loss to be in the range of $(2) million to $(4) million, including litigation expense.

Additionally, TiVo expects to be profitable on an Adjusted EBITDA basis excluding litigation spend in the fourth quarter of fiscal 2013 and for current operational trends to drive continued Adjusted EBITDA and net income improvement going forward.

This financial guidance is based on information available to management as of November 28, 2012. TiVo expressly disclaims any duty to update this guidance.

Management's guidance includes Adjusted EBITDA, a non-GAAP financial measure as defined in Regulation G. TiVo has provided a reconciliation of EBITDA and Adjusted EBITDA to net income (loss) in the attached schedules solely for the purpose of complying with Regulation G and not as an indication that EBITDA or Adjusted EBITDA is a substitute measure for net income (loss).

Conference Call and Webcast

TiVo will host a conference call and Webcast to discuss the third quarter financial and operating results and guidance outlook at 2:00 pm PT (5:00 pm ET), today, November 28, 2012. To listen to the discussion, please visit http://www.tivo.com/ir and click on the link provided for the Webcast or dial (877) 618-4505 (conference ID number is 64085149). The Webcast will be archived and available through December 5, 2012 at http://www.tivo.com/ir or by calling (404) 537-3406; and entering the conference ID number 64085149.

About TiVo Inc.

Founded in 1997, TiVo Inc. (NASDAQ: TIVO) developed the first commercially available digital video recorder (DVR). TiVo offers the TiVo service and TiVo DVRs directly to consumers online at www.tivo.com and through third-party retailers. TiVo also distributes its technology and services through solutions tailored for cable, satellite, and broadcasting companies. Since its founding, TiVo has evolved into the ultimate single solution media center by combining its patented DVR technologies and universal cable box capabilities with the ability to aggregate, search, and deliver millions of pieces of broadband, cable, and broadcast content directly to the television. An economical, one-stop-shop for in-home entertainment, TiVo's intuitive functionality and ease of use puts viewers in control by enabling them to effortlessly navigate the best digital entertainment content available through one box, with one remote, and one user interface, delivering the most dynamic user experience on the market today. TiVo also continues to weave itself into the fabric of the media industry by providing interactive advertising solutions and audience research and measurement ratings services to the television industry.

TiVo and the TiVo Logo are trademarks or registered trademarks of TiVo Inc. or its subsidiaries worldwide. © 2012 TiVo Inc. All rights reserved. All other trademarks are the property of their respective owners.

This release contains 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 business and growth strategies including future distribution agreements and subscription growth from MSO customers (both domestically and internationally) and TiVo's ability to drive better financial performance from TiVo's retail business, TiVo's future marketing plans and spend, the future availability of TiVo offering with Com Hem next year, future revenue opportunities from TRA, future increases in MSO revenues, future decreases in TiVo R&D spending, TiVo's ability to leverage and minimize its research and development in the future between MSO customers and in retail, and the future strength and value of TiVo's intellectual property portfolio. Forward-looking statements generally can be identified by the use of forward-looking terminology such as, "believe," "expect," "may," "will," "intend," "estimate," "continue," or similar expressions or the negative of those terms or expressions. Such statements involve risks and uncertainties, which could cause actual results to vary materially from those expressed in or indicated by the forward-looking statements. Factors that may cause actual results to differ materially include delays in development, competitive service offerings and lack of market acceptance, as well as the other potential factors described under "Risk Factors" in the Company's public reports filed with the Securities and Exchange, including the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2012, our Quarterly Reports on Form 10-Q for the periods ended April 30, 2012 and July 31, 2012, and Current Reports on Form 8-K. The Company cautions you not to place undue reliance on forward-looking statements, which reflect an analysis only and speak only as of the date hereof. TiVo disclaims any obligation to update these forward-looking statements.



                                 TIVO INC.
              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
             (In thousands, except per share and share amounts)
                                (unaudited)

                     Three Months Ended October   Nine Months Ended October
                                 31,                         31,
                     --------------------------  --------------------------
                         2012          2011          2012          2011
                     ------------  ------------  ------------  ------------
Revenues
    Service revenues $     35,228  $     32,413  $     98,151  $     99,763
    Technology
     revenues              25,727        19,391        71,439        40,480
    Hardware
     revenues              21,072        12,970        45,462        31,465
                     ------------  ------------  ------------  ------------
Net revenues               82,027        64,774       215,052       171,708
Cost of revenues
    Cost of service
     revenues              11,238         9,265        28,488        27,154
    Cost of
     technology
     revenues               5,779         7,721        15,857        18,554
    Cost of hardware
     revenues              23,434        16,817        56,336        39,071
                     ------------  ------------  ------------  ------------
  Total cost of
   revenues                40,451        33,803       100,681        84,779
                     ------------  ------------  ------------  ------------
      Gross margin         41,576        30,971       114,371        86,929
                     ------------  ------------  ------------  ------------
    Research and
     development           28,277        27,272        88,489        80,542
    Sales and
     marketing              7,958         6,753        21,425        19,995
    Sales and
     marketing,
     subscription
     acquisition
     costs                  1,560         2,398         5,189         6,072
    General and
     administrative        21,772        18,032        63,367        58,310
    Litigation
     proceeds             (78,441)            -       (78,441)     (175,716)
                     ------------  ------------  ------------  ------------
      Total
       operating
       expenses           (18,874)       54,455       100,029       (10,797)
                     ------------  ------------  ------------  ------------
      Income (loss)
       from
       operations          60,450       (23,484)       14,342        97,726
    Interest income         1,383           759         3,143         4,600
    Interest expense
     and other
     income
     (expense), net        (1,958)       (2,015)       (5,906)       (6,604)
                     ------------  ------------  ------------  ------------
      Income (loss)
       before income
       taxes               59,875       (24,740)       11,579        95,722
      Benefit from
       (provision
       for) income
       taxes                 (848)          242        (1,067)         (746)
                     ------------  ------------  ------------  ------------
    Net income
     (loss)          $     59,027  $    (24,498) $     10,512  $     94,976
                     ============  ============  ============  ============

    Net income
     (loss) per
     common share
      Basic          $       0.49  $      (0.21) $       0.09  $       0.82
      Diluted        $       0.44  $      (0.21) $       0.09  $       0.74

    Income (loss)
     for purposes of
     computing net
     income (loss)
     per share:
      Basic                59,027       (24,498)       10,512        94,976
      Diluted              60,992       (24,498)       10,512        99,989

    Weighted average
     common and
     common
     equivalent
     shares:
      Basic           119,363,613   117,232,354   119,149,010   116,208,111
      Diluted         138,587,931   117,232,354   123,353,443   135,722,730




                                 TIVO INC.
                   CONDENSED CONSOLIDATED BALANCE SHEETS
             (In thousands, except per share and share amounts)
                                (unaudited)

                                                  October 31,   January 31,
                                                     2012          2012
                                                 ------------  ------------
                     ASSETS
CURRENT ASSETS
  Cash and cash equivalents                      $    177,466  $    169,555
  Short-term investments                              446,084       449,244
  Accounts receivable, net of allowance for
   doubtful accounts of $396 and $370,
   respectively                                        28,388        24,665
  Inventories                                          17,380        18,925
  Deferred cost of technology revenues, current        11,725         4,400
  Prepaid expenses and other, current                  14,954        12,106
                                                 ------------  ------------
      Total current assets                            695,997       678,895
LONG-TERM ASSETS
    Property and equipment, net of accumulated
     depreciation of $49,566 and $47,170,
     respectively                                      10,059         9,191
    Intangible assets and capitalized software,
     net of accumulated amortization of $20,059
     and $17,797, respectively                         17,350         4,677
    Deferred cost of technology revenues, long-
     term                                              18,435        23,546
    Goodwill                                           12,281             -
    Prepaid expenses and other, long-term               3,165         3,501
                                                 ------------  ------------
      Total long-term assets                           61,290        40,915
                                                 ------------  ------------
        Total assets                             $    757,287  $    719,810
                                                 ============  ============
       LIABILITIES AND STOCKHOLDERS'EQUITY
LIABILITIES
      CURRENT LIABILITIES
      Accounts payable                           $     28,565  $     32,102
      Accrued liabilities                              42,592        45,341
      Deferred revenue, current                        95,688        74,986
                                                 ------------  ------------
        Total current liabilities                     166,845       152,429
      LONG-TERM LIABILITIES
      Deferred revenue, long-term                      81,837        81,336
      Convertible senior notes                        172,500       172,500
      Deferred rent and other long-term
       liabilities                                        539           518
                                                 ------------  ------------
        Total long-term liabilities                   254,876       254,354
                                                 ------------  ------------
          Total liabilities                           421,721       406,783
      COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
      Preferred stock, par value $0.001:
       Authorized shares are 10,000,000; Issued
       and outstanding shares - none                        -             -
      Common stock, par value $0.001: Authorized
       shares are 275,000,000; Issued shares are
       127,662,627 and 123,073,486,
       respectively, and outstanding shares are
       123,818,266 and 121,616,908, respectively          128           123
      Treasury stock, at cost: 3,844,361 shares
       and 1,456,578 shares, respectively             (36,915)      (13,788)
      Additional paid-in capital                    1,038,681     1,003,696
      Accumulated deficit                            (666,552)     (677,064)
      Accumulated other comprehensive income              224            60
                                                 ------------  ------------
          Total stockholders' equity                  335,566       313,027
                                                 ------------  ------------
          Total liabilities and stockholders'
           equity                                $    757,287  $    719,810
                                                 ============  ============




                                 TIVO INC.
              CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                               (In thousands)
                                (unaudited)

                                                         Nine Months Ended
                                                            October 31,
                                                       --------------------
                                                          2012       2011
                                                       ---------  ---------
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income                                           $  10,512  $  94,976
  Adjustments to reconcile net income to net cash
   provided by operating activities:
    Depreciation and amortization of property and
     equipment and intangibles                             6,622      6,682
    Stock-based compensation expense                      25,163     21,979
    Amortization of discounts and premiums on
     investments                                           4,097      2,483
    Non-cash loss on over allotment option and non-
     cash interest expense                                   721      2,192
    Utilization and write-down of trade credits                -        619
    Allowance for doubtful accounts                          196        322
  Changes in assets and liabilities, net of the
   effects of the acquisition:
    Accounts receivable                                   (3,124)    (3,311)
    Inventories                                            1,545     (2,271)
    Deferred cost of technology revenues                  (1,916)   (11,088)
    Prepaid expenses and other                            (1,947)      (653)
    Accounts payable                                      (6,377)    11,854
    Accrued liabilities                                   (3,619)     5,717
    Deferred revenue                                      20,122     95,988
    Deferred rent and other long-term liabilities             21        293
                                                       ---------  ---------
      Net cash provided by operating activities        $  52,016  $ 225,782
                                                       ---------  ---------
CASH FLOWS FROM INVESTING ACTIVITIES
  Purchases of short-term investments                   (429,262)  (640,300)
  Sales or maturities of long-term and short-term
   investments                                           427,925    256,990
  Acquisition of business, net of cash and cash
   equivalents acquired                                  (24,481)         -
  Acquisition of property and equipment                   (4,594)    (4,094)
  Acquisition of capitalized software and intangibles        (95)      (281)
                                                       ---------  ---------
      Net cash used in investing activities            $ (30,507) $(387,685)
                                                       ---------  ---------
CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from issuance of convertible senior notes,
   net of issuance costs of $6,391                             -    166,109
  Proceeds from issuance of common stock related to
   exercise of common stock options                        5,788      9,796
  Proceeds from issuance of common stock related to
   employee stock purchase plan                            3,741      3,284
  Treasury stock - repurchase of stock                   (23,127)    (4,566)
                                                       ---------  ---------
      Net cash provided by (used in) financing
       activities                                      $ (13,598) $ 174,623
                                                       ---------  ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS              $   7,911  $  12,720
                                                       ---------  ---------
CASH AND CASH EQUIVALENTS:
  Balance at beginning of period                         169,555     71,221
                                                       ---------  ---------
  Balance at end of period                             $ 177,466  $  83,941
                                                       =========  =========




                                  TIVO INC.
                                 OTHER DATA

                                                                 Guidance
                                   Three Months Ended         Reconciliation
                                                              --------------
                                                               Three Months
                                       October 31,                Ending
                            --------------------------------
                                                                January 31,
                                  2012             2011            2013
                            ---------------  ---------------  --------------
                                     (In thousands)            (In millions)
Net loss                    $        59,027  $       (24,498)  $(15) - $(17)
Add back:
  Depreciation &
   amortization                       2,463            2,189      $3 - $2
  Interest income & expense             582            1,256        $1
  Provision for income tax              848             (242)       $0
                            ---------------  ---------------  --------------
  EBITDA                             62,920          (21,295)  $(11)- $(13)
  Stock-based compensation            9,018            7,420        $9
                            ---------------  ---------------  --------------
  Adjusted EBITDA           $        71,938  $       (13,875)   $(2) - $(4)
  Litigation expenses       $         9,473  $         8,167      $7 - $9
  Litigation proceeds (past
   damage awards)           $       (78,441) $            $0        $0
                            ---------------  ---------------  --------------
  Adjusted EBITDA excluding
   litigation expense and
   litigation proceeds
   (past damage awards)     $         2,970  $        (5,708)     $5 - $7
                            ===============  ===============  ==============


EBITDA and Adjusted EBITDA Results. TiVo's "EBITDA" means income before interest income and expense, provision for income taxes and depreciation and amortization. TiVo's "Adjusted EBITDA" is EBITDA less expense for stock-based compensation. EBITDA and Adjusted EBITDA are not measures of financial performance under generally accepted accounting principles, which we refer to as GAAP. We have presented EBITDA and Adjusted EBITDA solely as supplemental disclosure because we believe they allow for a more complete analysis of our results of operations and we believe that EBITDA and Adjusted EBITDA are useful to investors because EBITDA and Adjusted EBITDA are commonly used to analyze companies on the basis of operating performance. In addition, because of the variety of equity awards used by companies, the varying methodologies for determining stock-based compensation expense, and the subjective assumptions involved in those determinations, we believe excluding stock-based compensation enhances the ability of management and investors to evaluate our operating performance over multiple periods. Management does not use EBITDA or Adjusted EBITDA as a measure of liquidity because, among other things, they do not exclude the impact of deferred revenues associated with the amortization of product lifetime subscriptions. We do not use stock-based compensation expense in our internal measures. A limitation associated with these non-GAAP measures is that they do not include any stock-based compensation expense related to hiring, retaining, and incentivizing the Company's workforce. EBITDA and Adjusted EBITDA are not intended to represent, and should not be considered more meaningful than, or as an alternative to, measures of operating performance as determined in accordance with GAAP.



                                 TIVO INC.
                                 OTHER DATA

Subscriptions                                Three Months Ended October 31,
-------------------------------------------- ------------------------------
        (Subscriptions in thousands)              2012            2011
-------------------------------------------- --------------  --------------
TiVo-Owned Subscription Gross Additions:                 30              30
Subscription Net Additions/(Losses):
TiVo-Owned                                              (15)            (30)
MSOs                                                    240             147
                                             --------------  --------------
  Total Subscription Net Additions/(Losses)             225             117
Cumulative Subscriptions:
TiVo-Owned                                            1,042           1,135
MSOs                                                  1,898             910
                                             --------------  --------------
  Total Cumulative Subscriptions                      2,940           2,045
% of TiVo-Owned Cumulative Subscriptions
 paying recurring fees                                   54%             56%

Included in the 1,042,000 TiVo-Owned subscriptions are approximately 208,000 lifetime subscriptions that have reached the end of the period TiVo uses to recognize lifetime subscription revenue. These lifetime subscriptions no longer generate subscription revenue.

Subscriptions. Management reviews this metric, and believes it may be useful to investors, in order to evaluate our relative position in the marketplace and to forecast future potential service revenues. Above is a table that details the change in our subscription base during the last three months ended October 31, 2012 and October 31, 2011. The TiVo-Owned lines refer to subscriptions sold directly or indirectly by TiVo to consumers who have TiVo-enabled DVRs and for which TiVo incurs acquisition costs. The MSO lines refer to subscriptions sold to consumers by MSOs such as DIRECTV, Virgin Media, Cableuropa S.A.U. ("ONO"), RCN, Grande, and Suddenlink, among others, and for which TiVo expects to incur little or no acquisition costs. Additionally, we provide a breakdown of the percent of TiVo-Owned subscriptions for which consumers pay recurring fees as opposed to a one-time prepaid product lifetime fee.

We define a "subscription" as a contract referencing a TiVo-enabled DVR for which (i) a consumer has committed to pay for the TiVo service and (ii) service is not canceled. We count product lifetime subscriptions in our subscription base until both of the following conditions are met: (i) the period we use to recognize product lifetime subscription revenues ends; and (ii) the related DVR has not made contact to the TiVo service within the prior six month period. Product lifetime subscriptions past this period which have not called into the TiVo service for six months are not counted in this total. Prior to November 1, 2011 we amortized all product lifetime subscriptions over a 60 month period. Effective November 1, 2011, we have extended the period we use to recognize product lifetime subscription revenues from 60 months to 66 months for product lifetime subscriptions where we have not recognized all of the related deferred revenue as of the reassessment date. We are not aware of any uniform standards for defining subscriptions and caution that our presentation may not be consistent with that of other companies. Additionally, the subscription fees that our MSOs pay us are typically based upon a specific contractual definition of a subscriber or subscription which may not be consistent with how we define a subscription for our reporting purposes nor be representative of how such subscription fees are calculated and paid to us by our MSOs. Our MSOs subscription data is based in part on reporting from our third-party MSO partners.


                                 TIVO INC.
                     OTHER DATA - KEY BUSINESS METRICS

                                      Three Months Ended October 31,
                               -------------------------------------------
TiVo-Owned Churn Rate                  2012                   2011
                               --------------------   --------------------
                               (In thousands, except churn rate per month)
Average TiVo-Owned
 subscriptions                                1,050                  1,149
TiVo-Owned subscription
 cancellations                                  (45)                   (60)
                               --------------------   --------------------
     TiVo-Owned Churn Rate per
                         month                 (1.4)%                 (1.7)%
                               --------------------   --------------------

TiVo-Owned Churn Rate per Month. Management reviews this metric, and believes it may be useful to investors, in order to evaluate our ability to retain existing TiVo-Owned subscriptions (including both monthly and product lifetime subscriptions) by providing services that are competitive in the market. Management believes factors such as service enhancements, service commitments, higher customer satisfaction, and improved customer support may improve this metric. Conversely, management believes factors such as increased competition, lack of competitive service features such as high definition television recording capabilities in our older model DVRs or access to certain digital television channels or MSO Video On Demand services, as well as increased price sensitivity and installation and CableCARD™ technology limitations, may cause our TiVo-Owned Churn Rate per month to increase.

We define the TiVo-Owned Churn Rate per month as the total TiVo-Owned subscription cancellations in the period divided by the Average TiVo-Owned subscriptions for the period (including both monthly and product lifetime subscriptions), which then is divided by the number of months in the period. We calculate Average TiVo-Owned subscriptions for the period by adding the average TiVo-Owned subscriptions for each month and dividing by the number of months in the period. We calculate the average TiVo-Owned subscriptions for each month by adding the beginning and ending subscriptions for the month and dividing by two. We are not aware of any uniform standards for calculating churn and caution that our presentation may not be consistent with that of other companies.


                                  Three Months Ended    Twelve Months Ended
                                      October 31,           October 31,
                                 --------------------  --------------------
                                    2012       2011       2012       2011
                                 ---------  ---------  ---------  ---------
Subscription Acquisition Costs           (In thousands, except SAC)
Sales and marketing,
 subscription acquisition costs  $   1,560  $   2,398  $   6,509  $   8,286
Hardware revenues                  (21,072)   (12,970)   (61,890)   (45,901)
Less: MSOs'-related hardware
 revenues                           13,051      8,998     40,656     24,273
Cost of hardware revenues           23,434     16,817     76,704     63,773
Less: MSOs'-related cost of
 hardware revenues                 (11,841)    (6,351)   (36,811)   (17,463)
                                 ---------  ---------  ---------  ---------
  Total Acquisition Costs            5,132      8,892     25,168     32,968
                                 =========  =========  =========  =========
  TiVo-Owned Subscription Gross
   Additions                            30         30        114        142
  Subscription Acquisition Costs
   (SAC)                         $     171  $     296  $     221  $     232
                                 =========  =========  =========  =========

Subscription Acquisition Cost or SAC. Management reviews this metric, and believes it may be useful to investors, in order to evaluate trends in the efficiency of our marketing programs and subscription acquisition strategies. We define SAC as our total TiVo-Owned acquisition costs for a given period divided by TiVo-Owned subscription gross additions for the same period. We define total acquisition costs as sales and marketing, subscription acquisition costs less net TiVo-Owned related hardware revenues (defined as TiVo-Owned related gross hardware revenues less rebates, revenue share and market development funds paid to retailers) plus TiVo-Owned related cost of hardware revenues. The sales and marketing, subscription acquisition costs line item includes advertising expenses and promotion-related expenses directly related to subscription acquisition activities, but does not include expenses related to advertising sales. We do not include third-parties' subscription gross additions, such as MSOs' gross additions with TiVo subscriptions, in our calculation of SAC because we typically incur limited or no acquisition costs for these new subscriptions, and so we also do not include MSOs' sales and marketing, subscription acquisition costs, hardware revenues, or cost of hardware revenues in our calculation of TiVo-Owned SAC. We are not aware of any uniform standards for calculating total acquisition costs or SAC and caution that our presentation may not be consistent with that of other companies.



                                             Three Months Ended October 31,
                                             ------------------------------
TiVo-Owned Average Revenue per Subscription       2012            2011
                                             --------------  --------------
                                               (In thousands, except ARPU)
Total Service revenues                       $       35,228  $       32,413
Less: MSOs'-related service revenues                 (7,526)         (4,087)
                                             --------------  --------------
TiVo-Owned-related service revenues                  27,702          28,326
Average TiVo-Owned revenues per month                 9,234           9,442
Average TiVo-Owned subscriptions per month            1,050           1,149
                                             --------------  --------------
TiVo-Owned ARPU per month                    $         8.79  $         8.22
                                             ==============  ==============



                                             Three Months Ended October 31,
                                             ------------------------------
MSOs' Average Revenue per Subscription            2012            2011
                                             --------------  --------------
                                               (In thousands, except ARPU)
Total Service revenues                       $       35,228  $       32,413
Less: TiVo-Owned-related service revenues           (27,702)        (28,326)
                                             --------------  --------------
MSOs'-related service revenues                        7,526           4,087
Average MSOs' revenues per month                      2,509           1,362
Average MSOs' subscriptions per month                 1,771             828
                                             --------------  --------------
MSOs' ARPU per month                         $         1.42  $         1.65
                                             ==============  ==============


Average Revenue Per Subscription or ARPU. Management reviews this metric, and believes it may be useful to investors, in order to evaluate the potential of our subscription base to generate revenues from a variety of sources, including service fees, advertising, and audience research measurement. You should not use ARPU as a substitute for measures of financial performance calculated in accordance with GAAP. Management believes it is useful to consider this metric excluding the costs associated with rebates, revenue share, and other payments to channel because of the discretionary and varying nature of these expenses and because management believes these expenses, which are included in hardware revenues, net, are more appropriately monitored as part of SAC. We are not aware of any uniform standards for calculating ARPU and caution that our presentation may not be consistent with that of other companies. Further, the inclusion of advertising and audience research measurement revenues in our service revenues has the effect of increasing ARPU above the amounts that are directly attributable to TiVo service subscription fees. With the acquisition of TRA in July 2012, future growth in our audience research measurement revenues will have the effect of further increasing this impact. Furthermore, ARPU for our MSOs may not be directly comparable to the service fees we may receive from these partners on a per subscription basis as the fees that our MSOs pay us may be based upon a specific contractual definition of a subscriber or subscription which may not be consistent with how we define a subscription for our reporting purposes or be representative of how such subscription fees are calculated and paid to us by our MSOs. For example, an agreement that includes contractual minimums may result in a higher than expected MSOs ARPU if such fixed minimum fee is spread over a small number of subscriptions. Additionally, ARPU for our MSO subscriptions may not be reflective of revenues received by TiVo as in certain cases the cost of development for such MSO customer may be deferred on our condensed consolidated balance sheet until later when related revenues from service fees are received and are first recognized as Technology revenues by us until the previously deferred costs of development are fully expensed. This recognition of service fees as Technology revenues will have the effect of lowering ARPU for certain of our MSO subscriptions until such costs of development are fully expensed.

We calculate ARPU per month for TiVo-Owned subscriptions by subtracting MSOs'-related service revenues (which includes MSOs' subscription service revenues and MSOs'-related advertising and audience research measurement revenues) from our total reported net service revenues and dividing the result by the number of months in the period. We then divide the resulting average service revenue by Average TiVo-Owned subscriptions for the period, calculated as described above for churn rate. The above table shows this calculation.

We calculate ARPU per month for MSOs' subscriptions by first subtracting TiVo-Owned-related service revenues (which includes TiVo-Owned subscription service revenues and TiVo-Owned related advertising and audience research measurement revenues) from our total reported service revenues. Then we divide average revenues per month for MSOs'-related service revenues by the average MSOs' subscriptions for the period. The above table shows this calculation.

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

@CloudExpo Stories
When an enterprise builds a hybrid IaaS cloud connecting its data center to one or more public clouds, security is often a major topic along with the other challenges involved. Security is closely intertwined with the networking choices made for the hybrid cloud. Traditional networking approaches for building a hybrid cloud try to kludge together the enterprise infrastructure with the public cloud. Consequently this approach requires risky, deep "surgery" including changes to firewalls, subnets...
Ixia develops amazing products so its customers can connect the world. Ixia helps its customers provide an always-on user experience through fast, secure delivery of dynamic connected technologies and services. Through actionable insights that accelerate and secure application and service delivery, Ixia's customers benefit from faster time to market, optimized application performance and higher-quality deployments.
SYS-CON Events announced today that Stratogent will exhibit at SYS-CON's 15th International Cloud Expo®, which will take place on November 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA. Stratogent is a custom managed services organization based in San Mateo, California. We design, implement, and support mission critical infrastructure 24x7 on premises, in datacenters and in the Cloud. Since 2005, we have acted as an extension of internal IT teams, achieving a customer reten...
SYS-CON Events announced today that Harbinger Systems will exhibit at SYS-CON's 15th International Cloud Expo®, which will take place on November 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA. Harbinger Systems is a global company providing software technology services. Since 1990, Harbinger has developed a strong customer base worldwide. Its customers include software product companies ranging from hi-tech start-ups in Silicon Valley to leading product companies in the US a...
SYS-CON Events announces a new pavilion on the Cloud Expo floor where WebRTC converges with the Internet of Things. Pavilion will showcase WebRTC and the Internet of Things. The Internet of Things (IoT) is the most profound change in personal and enterprise IT since the creation of the Worldwide Web more than 20 years ago. All major researchers estimate there will be tens of billions devices--computers, smartphones, tablets, and sensors – connected to the Internet by 2020. This number will con...
The only place to be June 9-11 is Cloud Expo & @ThingsExpo 2015 East at the Javits Center in New York City. Join us there as delegates from all over the world come to listen to and engage with speakers & sponsors from the leading Cloud Computing, IoT & Big Data companies. Cloud Expo & @ThingsExpo are the leading events covering the booming market of Cloud Computing, IoT & Big Data for the enterprise. Speakers from all over the world will be hand-picked for their ability to explore the economic...
SYS-CON Events announced today that Cloudian, Inc., the leading provider of hybrid cloud storage solutions, has been named “Bronze Sponsor” of SYS-CON's 15th International Cloud Expo®, which will take place on November 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA. Cloudian is a Foster City, Calif.-based software company specializing in cloud storage. Cloudian HyperStore® is an S3-compatible cloud object storage platform that enables service providers and enterprises to bui...
SYS-CON Events announced today that Gridstore™, the leader in software-defined storage (SDS) purpose-built for Windows Servers and Hyper-V, will exhibit at SYS-CON's 15th International Cloud Expo®, which will take place on November 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA. Gridstore™ is the leader in software-defined storage purpose built for virtualization that is designed to accelerate applications in virtualized environments. Using its patented Server-Side Virtual C...
As the Internet of Things unfolds, mobile and wearable devices are blurring the line between physical and digital, integrating ever more closely with our interests, our routines, our daily lives. Contextual computing and smart, sensor-equipped spaces bring the potential to walk through a world that recognizes us and responds accordingly. We become continuous transmitters and receivers of data. In his session at Internet of @ThingsExpo, Andrew Bolwell, Director of Innovation for HP’s Printing a...
SAP is delivering break-through innovation combined with fantastic user experience powered by the market-leading in-memory technology, SAP HANA. In his General Session at 15th Cloud Expo, Thorsten Leiduck, VP ISVs & Digital Commerce, SAP, will discuss how SAP and partners provide cloud and hybrid cloud solutions as well as real-time Big Data offerings that help companies of all sizes and industries run better. SAP launched an application challenge to award the most innovative SAP HANA and SAP ...
The Internet of Things (IoT) promises to evolve the way the world does business; however, understanding how to apply it to your company can be a mystery. Most people struggle with understanding the potential business uses or tend to get caught up in the technology, resulting in solutions that fail to meet even minimum business goals. In his session at Internet of @ThingsExpo, Jesse Shiah, CEO / President / Co-Founder of AgilePoint Inc., will show what is needed to leverage the IoT to transform...
SYS-CON Events announced today that AIC, a leading provider of OEM/ODM server and storage solutions, will exhibit at SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. AIC is a leading provider of both standard OTS, off-the-shelf, and OEM/ODM server and storage solutions. With expert in-house design capabilities, validation, manufacturing and production, AIC's broad selection of products are highly flexible and are conf...
We are all here because we are sold on the transformative promise of The Cloud. But what good is all of this ephemeral, on-demand infrastructure if your usage doesn't actually improve the agility and speed of your business? How must Operations adapt in order to avoid stifling your Cloud initiative? In his session at DevOps Summit, Damon Edwards, co-founder and managing partner of the DTO Solutions, will highlight the successful organizational, process, and tooling patterns of high-performing c...
SYS-CON Events announced today that O'Reilly Media has been named “Media Sponsor” of SYS-CON's 15th International Cloud Expo®, which will take place on November 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA. O'Reilly Media spreads the knowledge of innovators through its books, online services, magazines, and conferences. Since 1978, O'Reilly Media has been a chronicler and catalyst of cutting-edge development, homing in on the technology trends that really matter and spurri...
SYS-CON Events announced today that Aria Systems, the recurring revenue expert, has been named "Bronze Sponsor" of SYS-CON's 15th International Cloud Expo®, which will take place on November 4-6, 2014, at the Santa Clara Convention Center in Santa Clara, CA. Aria Systems helps leading businesses connect their customers with the products and services they love. Industry leaders like Pitney Bowes, Experian, AAA NCNU, VMware, HootSuite and many others choose Aria to power their recurring revenue bu...
The Transparent Cloud-computing Consortium (abbreviation: T-Cloud Consortium) will conduct research activities into changes in the computing model as a result of collaboration between "device" and "cloud" and the creation of new value and markets through organic data processing High speed and high quality networks, and dramatic improvements in computer processing capabilities, have greatly changed the nature of applications and made the storing and processing of data on the network commonplace. ...
Seagate has a strong track record of collaborating with others to develop better cloud solutions. The Seagate Cloud Builder Alliance program, for example, leverages the company’s knowledge of storage and cloud-optimized solutions to give cloud service providers the customized, flexible and scalable server and storage solutions to meet the high levels of service their customers demand. Seagate also is a member of the OpenStack Foundation and Open Compute Project to help define and promote open-so...
The Internet of Things (IoT) is going to require a new way of thinking and of developing software for speed, security and innovation. This requires IT leaders to balance business as usual while anticipating for the next market and technology trends. Cloud provides the right IT asset portfolio to help today’s IT leaders manage the old and prepare for the new. Today the cloud conversation is evolving from private and public to hybrid. This session will provide use cases and insights to reinforce t...
What process has your provider undertaken to ensure that the cloud tenant will receive predictable performance and service? What was involved in the planning? Who owns and operates the data center? What technology is being used? How is it being supported? In his session at 14th Cloud Expo, Dave Weisbrot, Cloud Business Manager for QTS, will provide the attendees a look into what it takes to stand up and stand behind a highly available certified cloud IaaS.
I'll be hosting an SAP HANA Cloud webinar at 11am eastern time, Wednesday, October 29. You can sign up now. Featured speakers will be Allan Adler, Managing Partner, Channel Cloud Consulting, and Thorsten Leiduck, VP ISVs & Digital Commerce, SAP. Attendees will learn about • Cloud economics, hybrid cloud strategy, market size and opportunity • Introduction to SAP HANA Cloud Platform and how to: - Build new next-generation applications - Extend on-premise solutions non-disruptively throu...