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| TIVO > SEC Filings for TIVO > Form 8-K on 27-May-2009 | All Recent SEC Filings |
27-May-2009
Other Events
On May 27, 2009, we announced financial results for our first quarter ended April 30, 2009. Net service revenues were $42.1 million in the first quarter of fiscal year 2010, a decrease from the $48.4 million in the same prior year period. Net technology revenues were $6.4 million for the first quarters ended April 30, 2009 and 2008, respectively. Included in the first quarter ended April 30, 2009, was recognition of Comcast development revenues of $4.8 million. The net loss for the quarter was ($4.1) million or ($0.04) per basic and diluted share, compared to a net income of $3.6 million or $0.04 per basic and diluted share, for the quarter ended April 30, 2008. We ended this quarter with approximately $215 million in cash and short term investments, compared to approximately $207 million in cash and short term investments in the prior quarter. Additionally, we continue to have no debt.
During the quarter, we continued to make progress on our distribution efforts as demonstrated by our recent agreements with Blockbuster, to deliver premium video content through the TiVo service and to sell TiVo DVRs in Blockbuster retail stores, and Evolution Broadband, to resell TiVo products and services to independent cable operators. As of April 30, 2009 our total subscriptions were approximately 3.2 million. TiVo-Owned subscription gross additions were 37,000 for the quarter, compared to 48,000 in the first quarter fiscal year 2009. TiVo-Owned net subscription losses were 30,000 compared to 17,000 in the first quarter of fiscal year 2009. Our monthly churn rate increased to 1.4% for the quarter ended April 30, 2009 as compared to 1.3% in the year ago period, but improved as the quarter progressed. The installed base of MSO/Broadcasters' TiVo subscriptions has declined to approximately 1.6 million from 2.1 million a year ago.
TIVO INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share and share amounts)
(unaudited)
Three Months Ended April 30,
2009 2008
Revenues
Service revenues $ 42,129 $ 48,443
Technology revenues 6,386 6,407
Hardware revenues 6,376 5,945
Net revenues 54,891 60,795
Cost of revenues
Cost of service revenues (1) 10,150 11,194
Cost of technology revenues (1) 4,483 3,920
Cost of hardware revenues 10,576 10,365
Total cost of revenues 25,209 25,479
Gross margin 29,682 35,316
Research and development (1) 15,066 14,748
Sales and marketing (1) 5,695 5,936
Sales and marketing, subscription acquisition costs 982 1,159
General and administrative (1) 12,242 10,336
Total operating expenses 33,985 32,179
Income (loss) from operations (4,303 ) 3,137
Interest income 190 579
Interest expense and other - (87 )
Income (loss) before income taxes (4,113 ) 3,629
Provision for income taxes (16 ) (13 )
Net income (loss) $ (4,129 ) $ 3,616
Net income (loss) per common share - basic $ (0.04 ) $ 0.04
Net income (loss) per common share - diluted $ (0.04 ) $ 0.04
Weighted average common shares used to calculate
basic net income (loss) per share 102,278,944 99,386,826
Weighted average common shares used to calculate
diluted net income (loss) per share 102,278,944 102,709,583
(1) Includes stock-based compensation expense as
follows:
Cost of service revenues $ 263 $ 191
Cost of technology revenues 557 606
Research and development 2,491 1,982
Sales and marketing 685 540
General and administrative 3,074 2,158
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April 30, 2009 January 31, 2009
(unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 150,167 $ 162,337
Short-term investments 65,010 44,991
Accounts receivable, net of allowance for
doubtful accounts of $875 and $770 11,645 14,283
Inventories 6,926 13,027
Prepaid expenses and other, current 3,577 4,896
Total current assets 237,325 239,534
LONG-TERM ASSETS
Property and equipment, net 10,220 10,285
Purchased technology, capitalized software, and
intangible assets, net 11,295 10,597
Prepaid expenses and other, long-term 1,515 1,268
Long-term investments 3,684 3,944
Total long-term assets 26,714 26,094
Total assets $ 264,039 $ 265,628
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LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
CURRENT LIABILITIES
Accounts payable $ 8,073 $ 9,844
Accrued liabilities 21,447 25,054
Deferred revenue, current 44,300 47,560
Total current liabilities 73,820 82,458
LONG-TERM LIABILITIES
Deferred revenue, long-term 26,965 28,557
Deferred rent and other long-term liabilities 126 126
Total long-term liabilities 27,091 28,683
Total liabilities 100,911 111,141
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 104,982,528 and 103,604,015,
respectively and outstanding shares are
104,479,782 and 103,370,523, respectively 105 104
Additional paid-in capital 844,299 829,273
Accumulated deficit (676,325 ) (672,196 )
Treasury stock, at cost - 502,746 shares and
233,492 shares, respectively (3,666 ) (1,659 )
Accumulated other comprehensive loss (1,285 ) (1,035 )
Total stockholders' equity 163,128 154,487
Total liabilities and stockholders' equity $ 264,039 $ 265,628
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TIVO INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
Three Months Ended April 30,
2009 2008
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (4,129 ) $ 3,616
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization of property and equipment
and intangibles 2,310 2,572
Stock-based compensation expense 7,070 5,477
Amortization of trade credits 11 -
Allowance for doubtful accounts 97 25
Changes in assets and liabilities:
Accounts receivable 2,541 9,567
Inventories 6,101 3,859
Prepaid expenses and other 1,061 66
Accounts payable (2,382 ) (15,649 )
Accrued liabilities (3,588 ) (5,557 )
Deferred revenue (4,852 ) (5,356 )
Deferred rent and other long-term liabilities - (82 )
Net cash provided by (used in) operating activities $ 4,240 $ (1,462 )
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of short-term and long-term investments (99,936 ) -
Sales of short-term investments 79,927 13,496
Acquisition of property and equipment (800 ) (1,649 )
Acquisition of intangibles (1,532 ) -
Net cash provided by (used in) investing activities $ (22,341 ) $ 11,847
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock related to
exercise of common stock options 7,957 4,057
Proceeds from issuance of common stock related to
employee stock purchase plan - -
Treasury Stock - repurchase of stock for tax
withholding (2,007 ) (454 )
Payment under capital lease obligation (19 ) -
Net cash provided by financing activities $ 5,931 $ 3,603
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS $ (12,170 ) $ 13,988
CASH AND CASH EQUIVALENTS:
Balance at beginning of period 162,337 78,812
Balance at end of period $ 150,167 $ 92,800
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TIVO INC.
OTHER DATA
Subscriptions
Three Months Ended April 30,
(Subscriptions in thousands) 2009 2008
TiVo-Owned Subscription Gross Additions 37 48
Subscription Net Additions/(Losses):
TiVo-Owned (30 ) (17 )
MSOs/Broadcasters (109 ) (128 )
Total Subscription Net Additions/(Losses) (139 ) (145 )
Cumulative Subscriptions:
TiVo-Owned 1,624 1,728
MSOs/Broadcasters 1,572 2,073
Total Cumulative Subscriptions 3,196 3,801
% of TiVo-Owned Cumulative Subscriptions paying
recurring fees 59 % 61 %
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Included in the 1,624,000 TiVo-Owned subscriptions are approximately 215,000 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. 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 MSOs/Broadcasters lines refer to subscriptions sold to consumers by MSOs/Broadcasters such as DIRECTV, Cablevision Mexico, Seven (Australia), and Comcast 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, including on a monthly and a prepaid one, two, or three year basis, 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. Effective November 1, 2008, we extended the period we use to recognize product lifetime subscription revenues from 54 months to 60 months for all product lifetime subscriptions acquired on or before October 31, 2007. We now amortize all product lifetime subscriptions over a 60 month period. 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 some of our MSOs/Broadcasters 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.
TIVO INC.
OTHER DATA - KEY BUSINESS METRICS
Three Months Ended April 30,
TiVo-Owned Churn Rate 2009 2008
(In thousands, except churn rate per month)
Average TiVo-Owned subscriptions 1,639 1,737
TiVo-Owned subscription cancellations (67 ) (65 )
TiVo-Owned Churn Rate per month -1.4 % -1.3 %
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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 lowest cost product offerings, current economic conditions, and increased price sensitivity 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 April 30, Twelve Months Ended April 30,
Subscription Acquisition Costs 2009 2008 2009 2008
(In thousands, except SAC)
Sales and marketing, subscription acquisition
costs $ 982 $ 1,159 $ 5,861 $ 26,419
Hardware revenues (6,376 ) (5,945 ) (41,564 ) (45,450 )
Less: MSOs/Broadcasters-related hardware revenues (27 ) 698 8,608 698
Cost of hardware revenues 10,576 10,365 57,953 91,677
Less: MSOs/Broadcasters-related cost of hardware
revenues (6 ) (581 ) (8,015 ) (581 )
Total Acquisition Costs 5,149 5,696 22,843 72,763
TiVo-Owned Subscription Gross Additions 37 48 176 267
Subscription Acquisition Costs (SAC) $ 139 $ 119 $ 130 $ 273
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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/Broadcasters' 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
Three Months Ended April 30,
TiVo-Owned Average Revenue per Subscription 2009 2008
(In thousands, except ARPU)
Total Service revenues $ 42,129 $ 48,443
Less: MSOs/Broadcasters-related service revenues (4,522 ) (5,699 )
TiVo-Owned-related service revenues 37,607 42,744
Average TiVo-Owned revenues per month 12,536 14,248
Average TiVo-Owned per month subscriptions 1,639 1,737
TiVo-Owned ARPU per month $ 7.65 $ 8.20
Three Months Ended April 30,
MSOs/Broadcasters Average Revenue per Subscription 2009 2008
(In thousands, except ARPU)
Total Service revenues $ 42,129 $ 48,443
Less: TiVo-Owned-related service revenues (37,607 ) (42,744 )
MSOs/Broadcasters-related service revenues 4,522 5,699
Average MSOs/Broadcasters revenues per month 1,507 1,900
Average MSOs/Broadcasters per month subscriptions 1,625 2,136
MSOs/Broadcasters ARPU per month $ 0.93 $ 0.89
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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 subscription fees, advertising, and audience research measurement. ARPU does not include rebates, revenue share, and other payments to channel that reduce our GAAP revenues. As a result, 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.
We calculate ARPU per month for TiVo-Owned subscriptions by subtracting MSOs/Broadcaster-related service revenues (which includes MSOs/Broadcasters' subscription service revenues and MSOs/Broadcasters'-related advertising revenues) from our total reported net service revenues and dividing the result by the number of months in the period. We then divide 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/Broadcasters' subscriptions by first subtracting TiVo-Owned-related service revenues (which includes TiVo-Owned subscription service revenues and TiVo-Owned related advertising revenues) from our total reported service revenues. Then we divide average revenues per month for MSOs/Broadcasters'-related service revenues by the average MSOs/Broadcasters' subscriptions for the period.
This report 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 TiVo's mass distribution strategy and the timing of additional mass distribution deals, profitability and financial guidance, distribution of the TiVo service domestically with Comcast and Cox and internationally in Australia, New Zealand and other regions, growth and innovation in TiVo's advertising and audience research measurement business, the timing and availability of broadband content and service offerings, such as from Blockbuster, Amazon, SeaChange, Comcast and tru2way, future distribution of TiVo DVRs with Blockbuster, the results of TiVo's litigation with EchoStar, how TiVo intends to exploit its intellectual property, TiVo's future marketing spend and related activities, and financial performance. 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 Commission, including the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2009 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.
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