TiVo Boosts Financial Outlook
Things are looking up a bit for TiVo as it heads into the second half of the year with several new deals in hand and searches for a new CEO to replace retiring President Tom Carson under way.
In its second-quarter earnings release late last week, TiVo Inc. (Nasdaq: TIVO) reported that revenues surged to $208.6 million in the spring period, up 67% from $125.2 million a year ago. That comparison, though, is misleading because the revenue gain came entirely from last year's acquisition of TiVo Solutions by Rovi Corp., which has since adopted the TiVo name. The former TiVo Solutions generated $94.9 million in revenues for the combined company in the quarter, which means that the company would have actually posted lower revenues without it.
Nevertheless, the revenue surge enabled the new TiVo to trim its net losses for the spring quarter to $4.8 million, nearly 50% lower than its $9.4 million net loss a year earlier. Non-GAAP pre-tax income also showed significant improvement, jumping to $66.4 million from $36.9 million a year ago.
In another bright sign for the company, TiVo tightened its expected revenue range for the year to $810 million to $830 million, raising the midpoint of that range to $820 million. The company also raised its expectations for non-GAAP pre-tax income to $218 million to $232 million, increasing the midpoint by $12.5 million. Yet it still expects a GAAP loss before taxes of $70 million to $80 million for the full year.
On their earnings call, TiVo executives touted two major new contracts to integrate their video operating system into international pay-TV providers, notching deals with Australia's Foxtel and "one of the leading Canadian pay-TV operators." They also announced new or expanded service or technology integration deals with a number of other pay-TV providers, including Millicom throughout Latin America, Cable Onda in Panama, and Dish Network LLC (Nasdaq: DISH) and Service Electric in the US.
Also noteworthy is that TiVo is "making progress" in its ongoing patent litigation battle with Comcast Corp. (Nasdaq: CMCSA, CMCSK), according to Carson. In June, TiVo won a critical decision in the suit from the U.S. International Trade Commission (USITC) , which ruled that set-tops made by Arris Group Inc. (Nasdaq: ARRS) and Technicolor (Euronext Paris: TCH; NYSE: TCH) for Comcast violated several TiVo patents covering program guides and remote access. (See Tracking TiVo's Ups & Downs.)
"We are also pleased that as part of the initial determination, none of the six asserted patents was found invalid," Carson said, according to a Seeking Alpha transcript of the company's earnings call. "We expect a final determination to be rendered in October."
Despite TiVo's seemingly brighter prospects for the second half of the year, investors seemed generally unimpressed with the results. TiVo's stock price, which climbed as high as $19.10 a share on Friday morning after the earnings came out late Thursday, fell back to $18.20 a share late this morning. That's slightly below where the share price stood before the company released its report.
— Alan Breznick, Cable/Video Practice Leader, Light Reading