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TiVo Cable Partnership Pays Off

Alan Breznick
5/23/2014
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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

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SachinEE
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SachinEE,
User Rank: Light Sabre
5/31/2014 | 1:57:37 PM
Re: Happy for TiVO :-)
It is such great news to know that the TIVO cable partnership has finally paid off. They finally reached their target and increased their number of subscribers in its fiscal 2015 first quarter. For the first time ever their customer count to over four point five point five million people which is a number that they have never crossed. There revenue has also significantly increased over the past quarter and they have passed their mark. This will also increase the number of their employees creating job opportunities.
kq4ym
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kq4ym,
User Rank: Light Sabre
5/28/2014 | 9:48:01 AM
Re: TiVo making us proud
For the first time that I can recall, Tivo is making lots of radio commercials for it's products hitting for the consumer's ears presumably. Whether the mass advertising is an afterthought or is actually bringing in business is not clear. I've always though Tivo could expand it's services by pitching to consumers as well as through the usual industry partnerships.
SachinEE
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SachinEE,
User Rank: Light Sabre
5/27/2014 | 1:36:43 PM
Re: TiVo making us proud
Many companies think that they can expand and make it on their own.  What really happens when they hit a snag? Most decide to form partnerships with other companies in order to make what they produce or their services better for their specific market group. It is advantageous and helps in making a company stronger and effective as it provides its services. For TiVo it resulted to increased subscribers and this meant increased profits. 
MikeP688
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MikeP688,
User Rank: Light Sabre
5/27/2014 | 12:56:56 PM
Re: Happy for TiVO :-)
If only some of the other leadings light were as forward looking--as epitomized by HP's shocking annoucement that it is laying off 16,000 people.
Carol Wilson
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Carol Wilson,
User Rank: Blogger
5/27/2014 | 12:15:41 PM
Re: Happy for TiVO :-)
This is a company that has been both innovative and resilient - they've done a good job of trying to stay on track with what consumers are wanting to do, and been willing to change it business model accordingly.
MikeP688
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50%
MikeP688,
User Rank: Light Sabre
5/23/2014 | 5:07:17 PM
Happy for TiVO :-)
It is always gratifying to see such pioneers continue to be trailblazers as they are in the changing landscape at hand.   This is especially crucial as the consolidation debated here within our community is a challenge for all providers on a go-forward basis.   The providers seem to understand that--hence the innovations needed. 

 

 
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