TiVo Cable Partnership Pays Off
Capping off its best quarter yet in cable land, TiVo signed up a record-breaking 341,000 MSO subscribers in its fiscal 2015 first quarter, pushing its total customer count past 4.5 million for the first time.
TiVo Inc. (Nasdaq: TIVO), which has been on a roll with cable operators for the past couple of years, picked up paying subscribers across Europe and North America in the quarter that ended April 30 as both older and newer MSO partners contributed to its gains. As a result, it closed out the quarter with nearly 3.6 million MSO-owned subs, up 50% from a year earlier. (See TiVo Racks Up More Big Gains.)
On the downside, TiVo shed 9,000 retail subscribers after picking up 6,000 in the previous quarter, reducing its total there to 957,000. But the DVR pioneer and video software specialist still slashed its retail sub losses from a year earlier and boosted its overall sub count beyond 4.5 million, up 33% from a year earlier.
Thanks mainly to such strong subscriber gains, TiVo posted a profit for the fourth straight quarter after mostly registering losses for years. A year after posting a loss of $10.3 million, the company produced net income of $8.1 million, or 7 cents a share, beating Wall Street's consensus estimate and its own financial guidance.
TiVo also posted record revenue of almost $107.1 million. The Silicon Valley company has surpassed the $100 million revenue mark for four straight quarters.
In a very upbeat earnings call Thursday evening, TiVo executives boasted that they've only just begun to reap the rewards of the cable-first strategy. With deals now in place with 15 cable operators globally, including a dozen in the US, they expect the subscriber gains to continue to grow as the MSOs roll out TiVo's offerings to their entire video sub bases. "Many of these are fairly new relationships that are just getting started, so there's a lot of upside opportunity there," said CEO Tom Rogers.
In particular, both Rogers and CFO Naveen Chopra stressed that most of the company's rollouts with the 12 US cable operators had just gotten under way. Those 12 midsized and small operators serving a total of 5 million video subscribers, and the executives said just fewer than 250,000 homes, or slightly less than 5% of the operators' video subscribers, have activated TiVo's service so far. "So there's a lot of upside there," said Chopra, who's also senior vice president of corporate development and strategy for the company.
TiVo officials also say they can run the table with US Tier 2 operators and pick up most of the rest of the homes those operators serve, especially now that the providers see the potential of offering Netflix over advanced TiVo-equipped set-tops. In the UK, for example, Liberty Global Inc. (Nasdaq: LBTY)'s Virgin Media Inc. (Nasdaq: VMED) unit has signed up 2.1 million Netflix subs on its TiVo-outfitted set-tops, which enable the integration of online and broadcast video services. "We like the opportunities we see in front of us," Chopra said.
In the past month or so, four of TiVo's US cable partners -- Suddenlink Communications , RCN Corp. , Atlantic Broadband , and Grande Communications -- have struck pacts with Netflix Inc. (Nasdaq: NFLX) to offer the popular online service on their TiVo set-top boxes, joining Virgin Media and the Swedish MSO com hem AB . Noting cable's newfound "enthusiasm" for embracing Netflix as a content partner, Rogers said the four deals have generated a good deal of MSO "chatter" about TiVo in recent weeks. But TiVo had no new Netflix deals with cable customers to announce on the earnings call. (See Netflix Cracks Top 10 MSO and Netflix Streams Onto US Cable.)
TiVo also served up financial guidance for the quarter that will end July 31. The company said it expects to post a profit of $6 million to $9 million on $86 million to $88 million in service and technology revenue. The service and technology categories account for the bulk of the company's revenue, with hardware sales adding about $21 million.
— Alan Breznick, Cable/Video Practice Leader, Light Reading