TiVo Moves Toward Profitability
Reprinted from a TiVo press release:
SAN JOSE, Calif., May 31 /PRNewswire-FirstCall/ — TiVo Inc., the creator of and leader in television services for digital video recording, today announced financial results for its first quarter ended April 30, 2002. Revenues totaled $9.9 million, more than triple revenues of $3.2 million for the same period last year. TiVo’s net loss was $25.8 million, or ($0.55) per share, excluding non-recurring accounting items related to AOL’s June 2000 investment in TiVo (see below for details). This first quarter loss was approximately half the loss for the same period last year.
“This significant improvement in our financial results demonstrates continued progress in our drive to profitability,” said Mike Ramsay, CEO of TiVo. “Consumer demand for TiVo has never been stronger. And, our licensing and professional services business is taking off, demonstrating our technology leadership.”
Recurring revenues and expense management drive 76% improvement in operating cash usage
Revenues included approximately $8.2 million in recurring subscription revenues. Gross profit was a record $4.4 million, or 45% of revenues. Adjusted EBITDA, which approximates operating cash usage, was ($9.7) million, a 76% improvement over ($40.4) million in the first quarter of last year. See the attached table for detail of the Adjusted EBITDA calculations.
Strong consumer demand, expanded retail channel drive better than expected subscriber growth
TiVo added approximately 42,000 new subscribers in the first quarter, exceeding guidance and consensus Wall Street estimates in what has typically been its slowest quarter of the year. As of April 30, 2002, the total subscriber base exceeded 422,000. TiVo’s better-than-expected net subscriber growth was the result of higher consumer demand and the early launch of national retail distribution of the TiVo Series2 DVR. In addition, TiVo successfully implemented a monthly service fee increase in the quarter, while maintaining high customer satisfaction and continuing strong demand.
Licensing and professional services play increasing role
TiVo’s new focus on licensing and professional services generated $7.2 million in cash in the quarter. Recent key accomplishments included:
— In May, Sony shipped MyCast, a digital video recorder powered by
TiVo, in the Japanese market. This is an exciting new deployment of
a DVR platform based on licensed TiVo technology.
— During the first quarter, TiVo recognized $1.6 million in revenues
from professional services related to its recently announced
agreement to develop a next generation set-top box for DIRECTV, due
later this year.
— In April, TiVo announced a multi-million dollar commercial agreement
with AOL-Time Warner to deliver features of the AOL service on
TiVo’s Series2 DVR.
Effects of accounting items related to June 2000 AOL investment
In its first quarter results, TiVo has broken out one-time accounting items related to AOL’s June 2000 investment in TiVo, the terms of which were modified during the quarter, when TiVo signed a new development deal with AOL. This allows comparison with TiVo’s previously released guidance, research analyst estimates, and historical data. On a Generally Accepted Accounting Principles (GAAP) basis, TiVo’s net loss for the first quarter was $35.1 million, or ($0.74) per share. On an adjusted basis, TiVo’s net loss was $25.8 million, or ($0.55) per share, reflecting the exclusion of $13.1 million in non-cash charges and $3.9 million in cash interest income. See the attached table for detail of these calculations.
Continued improvements in operating profit expected in upcoming quarter; management revises guidance to reflect improved cash usage for the year
Management expects net subscriber additions will be in the range of 40,000 to 45,000 during the second quarter, consistent with the historical trend of flat subscriber growth between Q1 and Q2. Revenues in the second quarter are expected to be in the range of $10.5 to $12.0 million, with approximately $8.5 to $9.0 million in subscription revenues. Cost of revenues is expected to be in the range of $6.8 to $8.3 million. Operating expenses are expected to be in the range of $4.0 to $5.0 million for Research & Development, $6.1 to $7.0 million for Sales & Marketing, $5.0 to $5.5 million for Sales & Marketing - Related Parties, and $4.0 to $4.5 million for General & Administrative. Management believes operating loss will be in the range of $15 to $20 million in the second quarter. Based on better-than-expected Q1 results, management is upwardly revising Adjusted EBITDA guidance for the remainder of fiscal year 2003. Adjusted EBITDA loss is currently expected to be in the range of $5 to $20 million for the remaining three quarters of the year.