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TiVo Corporation Reports Third Quarter 2019 Financial Results

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Strong Third Quarter Including 8% Growth in our IP Licensing Business

Continued to Streamline the Business Operations in Preparation for Spin

Launched TiVo+

TiVo Corporation (NASDAQ:TIVO), the company that brings entertainment together, today reported financial results for its third quarter ended September 30, 2019.

"We are very focused on Company execution, and we delivered solid financial results in the quarter, while accomplishing key business milestones," said Dave Shull, President and Chief Executive Officer. "We continue to make progress with the separation of our IP Licensing and Product businesses and are targeting completion of the transaction in April 2020. Our IP Licensing business expanded its customer base in the quarter and reported 8% year-over-year revenue growth. We continue to streamline the Product business for future success, and are pleased with the launch of TiVo+ last month. We are excited about our expanding pipeline of new and innovative products to fuel future growth heading into 2020."

TiVo Third Quarter 2019 Financial Highlights:

  • The Company further streamlined the Product business in the third quarter and expects to accelerate additional operating cost improvements in the fourth quarter.
  • Increased fiscal 2019 expectations for Adjusted EBITDA.
  • Continuing progress with the separation and targeting completion of the transaction by April 2020.

TiVo Third Quarter 2019 Business and Operating Highlights:

Product Business

  • Launched new innovative products, including TiVo+ in October, which delivers live streaming channels and thousands of movies and TV shows to viewers in an app-free environment, making them easy to find, watch, and enjoy. TiVo+ provides free content for TiVo customers and opportunities for advertisers to reach highly engaged television audiences with targeted messages.
  • TiVo continues to expand its Android TVTM-based IPTV version of TiVo User Experience 4. We now have seven North American operators who will deploy this solution, up from five last quarter, and we continue to expand internationally. Liberty Latin America selected TiVo's Android TV-based platform to bring cutting-edge innovations to its video customers in Puerto Rico, and they plan to launch this platform in other markets across Latin America.
  • TiVo's Personalized Content Discovery solution continues to be adopted by leading market players. As part of Vodafone Group's new TV service in Portugal, Vodafone is deploying its new "Intelligent Voice Search" feature, which uses TiVo's natural language voice solution to enable users to find and enjoy entertainment content by simply speaking into their remotes.

Intellectual Property Licensing Business

  • The IP Licensing business continues to build on a strong, diverse base of customers and in Q3 reported 8% year-over-year revenue growth.
  • The Company is seeing significant demand for our IP portfolio in international markets. This quarter we licensed a number of over-the-top and IPTV video streaming providers. We signed a new deal with D'Live to license OTT services in Korea.
  • Canada is also an area of future expansion for us. Towards that endeavor, we signed a new, multi-year license agreement with Canadian operator Eastlink.

2019 Full Year Outlook:

The Company updated its 2019 full-year outlook to1:

 

Current Expectations

 

Previous Expectations

(August 7, 2019)

 

Low

 

High

 

Low

 

High

Total revenue, net

$

655 million

 

$

665 million

 

$

650 million

 

$

665 million

GAAP loss before income taxes

$

198 million

 

$

203 million

 

$

69 million

 

$

77 million

Adjusted EBITDA

$

190 million

 

$

200 million

 

$

180 million

 

$

190 million

Non-GAAP Pre-tax Income

$

137 million

 

$

145 million

 

$

129 million

 

$

137 million

Cash Taxes

$

28 million

 

$

29 million

 

$

28 million

 

$

29 million

 

 

 

 

 

 

 

 

GAAP Diluted Weighted Average Shares Outstanding

 

 

126 million

 

 

 

126 million

Non-GAAP Diluted Weighted Average Shares Outstanding

 

 

127 million

 

 

 

127 million

1 Adjusted EBITDA, Non-GAAP Pre-tax Income, Non-GAAP Diluted Weighted Average Shares Outstanding and Cash Taxes are defined below in the section entitled "Non-GAAP Financial Information." Reconciliations between GAAP and Non-GAAP amounts are provided in the tables below. In accordance with the SEC's interpretations on the use of Non-GAAP financial measures, TiVo does not report net income or EPS on a non-GAAP basis; however, TiVo provides financial metrics, including Non-GAAP Pre-tax Income, Non-GAAP Diluted Weighted Average Shares Outstanding and Cash Taxes, to assist those wanting to calculate such measures on a Non-GAAP basis.

Separation Process Update:

The Company continues to believe that separating the IP Licensing and Product businesses is the best strategy to maximize shareholder value in today's rapidly evolving market landscape. As stand-alone separate entities, unconstrained by each other, the two businesses will be better positioned to pursue growth opportunities.

TiVo has made excellent progress with the separation process. The Company is actively interviewing candidates to fill out the management teams of both companies, standing up separate systems, and working with the IRS and the SEC to prepare for separation. The Company is currently targeting completion of the transaction in April 2020 and expects to provide further updates in the coming months.

Capital Allocation:

With the planned separation only months away, we are working to set up each business with the optimal capital structure to succeed as independent entities. To that end, TiVo's Board of Directors decided not to declare a cash dividend this quarter while we stand up two separate balance sheets. As the Company repays its remaining 2020 Convertible Notes by their maturity date, refinances its Term Loan B and separates the businesses, it is critical to give each business the capital needed to make future investments in strategic initiatives to drive long-term growth.

Third Quarter 2019 Summary Financial Results:

Quarterly Financial Information

(In thousands)

 

 

 

Three Months Ended September 30,

 

 

 

2019

 

2018

 

% Change

GAAP Consolidated Results

 

 

 

 

 

Product Revenue

$

 

82,788

 

 

$

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