TiVo released their third quarter fiscal 2008 results today:
- Adjusted EBITDA was $0.3 million, considerably ahead of guidance
- Net loss was ($8.2) million
- Goal of getting closer to Adjusted EBITDA breakeven for the year on track
- Announced relationship with NCTA and cable industry to enable cable operator installation and other support for TiVo standalone boxes
- Entered into strategic partnership with NBC to provide their advertisers with a comprehensive set of interactive advertising and audience research solutions
- Deal with Nero to bring the TiVo experience to the PC user
- Bolsters international presence with launch of TiVo service at retail in Canada
My business trip to Omaha got extended – instead of returning Monday night I’m here through Friday, perhaps longer – so I was at the customer site this afternoon and couldn’t listen in to the call live. I’ve just been able to listen to the recording back at my hotel. There are a few interesting items, aside from the previously announced SDV solution, NBC Universal deal, Carat deal, Nero partnership for PC software, and the move into the Canadian retail market.
In Tom Rogers’s presentation he stated that the Comcast up-charge for the TiVo software is $2.95/month, officially confirming what had been previously reported. And, as he said:“Our service on Comcast is now available in some non-employee subscriber homes, and full marketing efforts will begin shortly.” Comcast will also market the TiVo software through packaged bundles and ‘win back’ offers – which are specials designed to attract those who may have switched from cable to other services (FiOS, satellite, etc) back to cable. Rogers also touted Tivo’s deal with Windstream to market TiVo to their three million users.
He confirmed that the Nero deal will deliver TiVo’s “unique user interface” to PC users, which is a good sign. He also indicated that most of the sales for the PC product are expected to be outside the US.
TiVo seems to be confident that some resolution to the EchoStar lawsuit will be reached soon. Indications have been that EchoStar will seek a settlement ahead of the ruling on their appeal.“In terms of litigation, our case against EchoStar is moving closer to resolution. We were pleased with our presentation of oral arguments before the Court of Appeals and believe that our arguments were well presented on appeal.” The general feeling is that EchoStar will lose the appeal if it goes to a ruling, so they may wish to reach a more favorable settlement before their hand is forced.
Financially, TiVo blew away street estimates with a loss of only $.08 per share. Leading up to the report I’d seen estimates anywhere from $.11 to $.17 per share. TiVo added 69,000 gross TiVo-owned subscriptions in the quarter, with a net addition of 4,000 TiVo-owned subscriptions. TiVo lost 130,000 DirecTV subscribers in the quarter, which isn’t surprising as DirecTV has continued to roll-out their new MPEG4 HD channels, which require non-TiVo hardware. While the number of fully amortized lifetime subscribers continues to climb, to 190,000, so does the percentage of users paying recurring fees – now 60%. Total TiVo owned subscriptions now stand at 1.712 million, still slightly down from the peak of 1.727. And total subscriptions are 4.067 million, down from the peak of 4.444 million – though the Comcast roll-out should help slow, and perhaps reverse, that slide in the coming months. TiVo-owned subscriptions are worth much more to TiVo, with an Average Revenue Per User (ARPU) of $9.04, while non-TiVo-owned subs have an ARPU of $.91.
There is some hope that relations with DirecTV might continue to improve, possibly bringing TiVo back as their DVR vendor. A settlement with EchoStar could conceivably extend as far as TiVo becoming the DVR provider for Dish Network, but I think it is more likely that EchoStar would simply license the patents.
On the cable front, TiVo seems to be getting quite chummy with the NCTA. In addition to the SDV solution and their new attitude toward OCAP on TiVo hardware, the cable industry has agreed to be involved in TiVo installations for CableCARD and the SDV Tuning Resolver. One of the biggest headaches for users of the TiVo Series3 and TiVo HD has been the pain of the CableCARD install. If this agreement truly does result in better training of cable installers, and better support for TiVo users, that will be a good thing indeed.
During the Q&A at the end of the call Rogers mentioned that Boston is Comcast’s largest market, so they’re launching TiVo in their largest market right from the start, which is a big deal. It does sound like Comcast will be making a big push on the TiVo software when they do finally make the general launch in Boston.
Overall it seemed to be a good call, but not many surprises or things we weren’t already aware of.
