Delivers quarterly results above
expectationsContinues progress toward key licensing renewals and
product deployments
Rovi Corporation (NASDAQ:ROVI) today reported financial results
for the first quarter ended March 31, 2015.
The Company reported first quarter revenue of $134.0 million, a
decrease of 6% compared to $142.5 million in the first quarter of
2014. As expected, revenues were lower than in the comparable
period in the prior year, which benefited from higher Consumer
Electronics revenues, in part due to having Toshiba under license,
and analog copy protection revenues. First quarter 2015 Loss from
continuing operations, net of tax, was $15.5 million, compared to
$1.7 million Income from continuing operations, net of tax, for the
first quarter of 2014. First quarter Diluted loss per share from
continuing operations was $0.18, compared to $0.02 Diluted earnings
per share from continuing operations in the first quarter of 2014.
After taking into consideration discontinued operations, the
Company reported a first quarter Net loss of $15.5 million,
compared to a Net loss of $54.3 million for the same quarter of
2014. First quarter Diluted loss per share was $0.18, compared to
$0.57 Diluted loss per share in the first quarter of 2014.
On a Non-GAAP basis, first quarter Non-GAAP Net Income was $34.7
million, compared to $42.1 million in the first quarter of 2014,
and first quarter Non-GAAP Diluted Income Per Share was $0.39,
compared to $0.45 in the first quarter of 2014.
Non-GAAP Net Income and Non-GAAP Diluted Income Per Share are
defined below in the section entitled “Non-GAAP Information.”
Reconciliations between GAAP and Non-GAAP results from operations
are provided in the tables below.
“Rovi delivered solid results during the first quarter,” said
Tom Carson, President and CEO of Rovi. “Additionally, our recently
announced IP and product agreement with Charter and conversational
search agreement with DISH affirm the health of Rovi’s licensing
business and validate our next-generation product strategy.”
The Company repurchased 3.3 million shares, against its
previously announced intent to repurchase five million shares in
2015, for $70 million in the first quarter. Subsequent to
quarter-end, Rovi’s board raised its existing share repurchase
authorization to $125 million.
Business Outlook
Rovi continues to anticipate fiscal year 2015 revenue of $535
million to $565 million, and fiscal year 2015 Non-GAAP Diluted
Income Per Share of $1.55 to $1.85.
“We continue to expect revenues in the second half of 2015 to
increase over the first half of the year as we see an increasing
contribution from our new products, including Advanced Search,
Analytics, Connected Guides and our cloud based platform
partnership program in the second half of the year,” said Peter
Halt, CFO of Rovi. “We also continue to expect investment in these
growth opportunities and spending ahead of our big-four renewals to
impact first-half costs in 2015 when compared to the second half of
2014.”
Conference Call Information
Rovi management will host a conference call today, April 30,
2015, at 1:30 p.m. PT/4:30 p.m. ET to discuss the financial
results. Investors and analysts interested in participating in the
conference are welcome to call 1-866-621-1214 (or international
+1-706-643-4013) and reference conference ID 23746774. The
conference call can also be accessed via live webcast in the
Investor Relations section of Rovi's website at
http://www.rovicorp.com/.
A telephonic replay of the conference call will be available
through May 4, 2015 and can be accessed by calling 1-800-585-8367
(or international +1-404-537-3406) and entering conference ID
23746774. A replay of the audio webcast will be available on Rovi
Corporation's website shortly after the live call ends and will
remain on Rovi Corporation's website until its next quarterly
earnings call.
Non-GAAP Information
Rovi Corporation provides Non-GAAP information to assist
investors in assessing its current and future operations in the way
that its management evaluates those operations. Non-GAAP Net
Income, Non-GAAP Diluted Income Per Share, Non-GAAP COGS, Non-GAAP
Research and Development Expenses, Non-GAAP Selling, General and
Administrative Expenses, Non-GAAP Total OpEx and Non-GAAP Total
COGS and OpEx are supplemental measures of the Company's
performance that are not required by, and are not presented in
accordance with GAAP. Non-GAAP information is not a substitute for
any performance measure derived in accordance with GAAP.
Non-GAAP Net Income is defined as GAAP income (loss) from
continuing operations, net of tax, adding back non-cash items such
as equity-based compensation, amortization of intangibles,
amortization or write-off of note issuance costs, non-cash interest
expense recorded on convertible debt under Accounting Standards
Codification (“ASC”) 470-20 (formerly known as FSP APB 14-1),
mark-to-market fair value adjustments for interest rate swaps and
the reversals of discrete tax items including reserves; as well as
items which impact comparability that are required to be recorded
under GAAP, but that the Company believes are not indicative of its
core operating results such as changes in the fair value of
contingent consideration, gains from the release of Sonic payroll
tax withholding liabilities related to a stock option review,
transaction, transition and integration costs, contested proxy
election costs, restructuring and asset impairment charges,
payments to note holders and for expenses in connection with the
early redemption or modification of debt and gains on sale of
strategic investments. While depreciation expense is a non-cash
item, it is included in Non-GAAP Net Income as a reasonable proxy
for capital expenditures.
Non-GAAP Diluted Income Per Share is calculated using Non-GAAP
Net Income.
Non-GAAP COGS is defined as GAAP cost of revenues excluding
equity-based compensation and transition and integration
expenses.
Non-GAAP Research and Development Expenses is defined as GAAP
research and development expenses excluding equity-based
compensation and transition and integration expenses.
Non-GAAP Selling, General and Administrative Expenses is defined
as GAAP selling, general and administrative expenses excluding
equity-based compensation, contested proxy election costs, changes
in the fair value of contingent consideration, and transaction,
transition and integration expenses.
Non-GAAP Total OpEx is defined as the sum of GAAP research and
development and selling, general and administrative expenses,
depreciation and gain on sale of patents excluding equity-based
compensation, contested proxy election costs, changes in the fair
value of contingent consideration, and transaction, transition and
integration expenses.
Non-GAAP Total COGS and OpEx is defined as GAAP Total Operating
costs and expenses, excluding equity-based compensation, contested
proxy election costs, changes in the fair value of contingent
consideration, amortization of intangible assets, restructuring and
asset impairment charges, and transaction, transition and
integration expenses.
The Company's management has evaluated and made operating
decisions about its business operations primarily based upon
Non-GAAP Net Income and Non-GAAP Diluted Income Per Share.
Management uses Non-GAAP Income and Non-GAAP Diluted Income Per
Share as measures as they exclude items management does not
consider to be “core costs” or “core proceeds” when making business
decisions. Therefore, management presents these Non-GAAP financial
measures along with GAAP measures. For each such Non-GAAP financial
measure, the adjustment provides management with information about
the Company's underlying operating performance that enables a more
meaningful comparison of its financial results in different
reporting periods. For example, since Rovi Corporation does not
acquire businesses on a predictable cycle, management excludes
amortization of intangibles from acquisitions, transaction costs
and transition and integration costs in order to make more
consistent and meaningful evaluations of the Company's operating
expenses. Management also excludes the effect of restructuring and
asset impairment charges, expenses in connection with the early
redemption or modification of debt and gains on sale of strategic
investments. Management excludes the impact of equity-based
compensation to help it compare current period operating expenses
against the operating expenses for prior periods and to eliminate
the effects of this non-cash item, which, because it is based upon
estimates on the grant dates, may bear little resemblance to the
actual values realized upon the future exercise, expiration,
termination or forfeiture of the equity-based compensation, and
which, as it relates to stock options and stock purchase plan
shares, is required for GAAP purposes to be estimated under
valuation models, including the Black-Scholes model used by Rovi
Corporation. Management excludes non-cash interest expense recorded
on convertible debt under ASC 470-20, mark-to-market fair value
adjustments for interest rate swaps, caps, foreign currency
collars, and the reversals of discrete tax items including reserves
as they are non-cash items and not considered “core costs” or
meaningful when management evaluates the Company's operating
expenses. Management reclassifies the current period benefit or
cost of the interest rate swaps from gain or loss on interest rate
swaps and caps, net to interest expense in order for interest
expense to reflect the swap rates, as these instruments were
entered into to control the interest rate the Company effectively
pays on its debt.
Management is using these Non-GAAP measures to help it make
budgeting decisions, including decisions that affect operating
expenses and operating margin. Further, Non-GAAP financial
information helps management track actual performance relative to
financial targets. Making Non-GAAP financial information available
to investors, in addition to GAAP financial information, may also
help investors compare the Company's performance with the
performance of other companies in our industry, which may use
similar financial measures to supplement their GAAP financial
information.
Management recognizes that the use of Non-GAAP measures has
limitations, including the fact that management must exercise
judgment in determining which types of charges should be excluded
from the Non-GAAP financial information. Because other companies,
including companies similar to Rovi Corporation, may calculate
their non-GAAP financial measures differently than the Company
calculates its Non-GAAP measures, these Non-GAAP measures may have
limited usefulness in comparing companies. Management believes,
however, that providing Non-GAAP financial information, in addition
to GAAP financial information, facilitates consistent comparison of
the Company's financial performance over time. The Company provides
Non-GAAP financial information to the investment community, not as
an alternative, but as an important supplement to GAAP financial
information; to enable investors to evaluate the Company's core
operating performance in the same way that management does.
Reconciliations between historical and Non-GAAP results of
operations are provided in the tables below.
About Rovi Corporation
Rovi is leading the way to a more personalized entertainment
experience. The Company’s pioneering guides, data, and
recommendations continue to drive program search and navigation on
millions of devices on a global basis. With a new generation of
cloud-based discovery capabilities and emerging solutions for
interactive advertising and audience analytics, Rovi is enabling
premier brands worldwide to increase their reach, drive consumer
satisfaction and create a better entertainment experience across
multiple screens. The Company holds over 5,000 issued or pending
patents worldwide and is headquartered in Santa Clara, California.
Discover more about Rovi at Rovicorp.com.
Forward Looking Statements
All statements contained herein, including the quotations
attributed to Mr. Carson, that are not statements of historical
fact, including statements that use the words “will,” “believes,”
“anticipates,” “estimates,” “expects,” “intends” or similar words
that describe the Company's or its management's future plans,
objectives, or goals, are “forward-looking statements” and are made
pursuant to the Safe-Harbor provisions of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements
include, but are not limited to, the Company's estimates of future
revenues, earnings and expenses, business strategies, anticipated
contract signings, and stock repurchases.
Such forward-looking statements involve known and unknown risks,
uncertainties and other factors that could cause the actual results
of the Company to be materially different from the historical
results and/or from any future results or outcomes expressed or
implied by such forward-looking statements. Such factors include,
among others, the Company's ability to successfully execute on its
strategic plan and customer demand for and industry acceptance of
the Company's technologies and integrated solutions. Such factors
are further addressed in the Company's Annual Report on Form 10-Q
for the period ended March 31, 2015 and such other documents as are
filed with the Securities and Exchange Commission from time to time
(available at www.sec.gov). The Company assumes no obligation,
except as required by law, to update any forward-looking statements
in order to reflect events or circumstances that may arise after
the date of this release.
ROVI BUSINESS AND OPERATING
HIGHLIGHTS:
IP Licensing:
- Worldwide, approximately 179 million
subscription Pay-TV households either use a Rovi guide or use a
guide under a license from Rovi. Of that, approximately 19 million
subscription Pay-TV households use Rovi’s cable television set-top
box and digital terminal adapter (DTA) guide products. Excluding
pre-paid Pay-TV licensees, total Rovi Pay-TV subscribers were
approximately 129 million.
- Sharp, one of the largest Consumer
Electronics manufacturers in the world, renewed its IP and product
agreement with Rovi.
- CJ Hellovision, one of Korea’s largest
multi-systems operators licensed our interactive program guide
(IPG) patent portfolio.
- UULA, Japan’s leading VOD provider
licensed our IPG patent portfolio.
- NTT DOCOMO expanded its patent license
agreement with Rovi to include its Video-on-Demand service for
fiber-to-the-home, in addition to mobile services.
Discovery:
- DISH licensed Rovi’s Search and
Conversation Services, allowing for voice recognition inputs
- Mediacom, the 8th largest cable TV
provider in the U.S., licensed Rovi Operator Insights, Rovi Ad
Optimizer and Rovi Subscriber Analytics. Mediacom also renewed its
i-Guide license and extended their IP license to cover STBs in
addition to online and mobile devices.
- Entone joined Rovi’s Guide Partner
Program, and will be able to use the Rovi Cloud service for its
Reference Design Kit (RDK) home server platform next–generation
entertainment guide.
- Rovi’s Fan TV won Cablefax Tech Award
for Overall Tech Innovation.
- Grundig, a worldwide leading supplier
of entertainment electronics, renewed its licensing and product
agreement with Rovi and will use the latest release of Rovi Guide
CE to power enhanced search and recommendations in their LED TVs
manufactured in 2015 and distributed across Europe.
Metadata:
- Rovi’s metadata reached a new milestone
and now covers over 7.5 million programs, up from over 6.5 million
last quarter.
Analytics:
- A major broadcast network signed a paid
pilot agreement to use our analytics solutions.
- Announced Horizon Media paid pilot
agreement for Rovi’s Agency Ad Optimizer.
Executive Announcements:
- Steven Lucas, SAP’s global President of
Platform Solutions, appointed to Rovi’s Board of Directors.
- Dave Longaker hired as Chief Revenue
Officer.
Subsequent Events:
- Charter Communications signed a new
multi-year IP license and licensed i-Guide, Passport Guide, Rovi
Metadata, Rovi Advanced Search, Recommendation & Conversation
Service, and Rovi Analytics.
- Verizon licensed Rovi’s Advanced Search
technologies.
ROVI CORPORATION AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(In thousands, except per share
amounts)
(Unaudited)
Three Months Ended March 31, 2015
2014 Revenues $ 134,025 $ 142,450 Costs and
expenses: Cost of revenues, excluding amortization of intangible
assets 28,130 32,496 Research and development 28,125 25,557
Selling, general and administrative 38,360 34,910 Depreciation
4,370 4,401 Amortization of intangible assets 19,364 18,690
Restructuring and asset impairment charges 1,717 2,177
Total costs and expenses 120,066 118,231
Operating income from continuing operations 13,959 24,219 Interest
expense (12,358 ) (13,563 ) Interest income and other, net 686 238
Loss on interest rate swaps (9,718 ) (2,635 ) Loss on debt
extinguishment (100 ) — (Loss) income from continuing
operations before income taxes (7,531 ) 8,259 Income tax expense
7,939 6,576 (Loss) income from continuing operations,
net of tax (15,470 ) 1,683 Loss from discontinued operations, net
of tax — (55,948 ) Net loss $ (15,470 ) $ (54,265 ) Basic
(loss) earnings per share: Basic (loss) earnings per share from
continuing operations $ (0.18 ) $ 0.02 Basic loss per share from
discontinued operations — (0.60 ) Basic (loss) earnings per
share $ (0.18 ) $ (0.58 ) Shares used in computing basic (loss)
earnings per share 88,304 93,487 Diluted (loss)
earnings per share: Diluted (loss) earnings per share from
continuing operations $ (0.18 ) $ 0.02 Diluted loss per share from
discontinued operations — (0.59 ) Diluted (loss) earnings
per share $ (0.18 ) $ (0.57 ) Shares used in computing diluted
(loss) earnings per share 88,304 94,436
See notes to the Condensed Consolidated Financial Statements in
our Quarterly Report on Form 10-Q.
ROVI CORPORATION AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands)
March 31, 2015 December 31, 2014
ASSETS (unaudited) Current assets: Cash and cash equivalents
$ 216,954 $ 154,568 Short-term marketable securities 87,279 183,074
Accounts receivable, net 83,108 83,514 Deferred tax assets, net
8,816 18,553 Prepaid expenses and other current assets 14,153
12,851 Total current assets 410,310 452,560 Long-term
marketable securities 143,248 131,378 Property and equipment, net
35,907 37,227 Intangible assets, net 444,075 463,348 Goodwill
1,343,706 1,343,652 Other long-term assets 23,500 17,225
Total assets $ 2,400,746 $ 2,445,390
LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities:
Accounts payable and accrued expenses $ 80,953 $ 83,208 Deferred
revenue 17,131 18,399 Current portion of long-term debt 13,250
302,375 Total current liabilities 111,334 403,982
Taxes payable, less current portion 9,208 10,100 Deferred revenue,
less current portion 17,551 15,722 Long-term debt, less current
portion 1,088,645 804,557 Long-term deferred tax liabilities, net
74,103 80,751 Other long-term liabilities 32,427 24,014
Total liabilities 1,333,268 1,339,126 Stockholders' equity:
Common stock 131 131 Treasury stock (1,083,216 ) (1,013,218 )
Additional paid-in capital 2,386,207 2,339,817 Accumulated other
comprehensive loss (5,015 ) (5,307 ) Accumulated deficit (230,629 )
(215,159 ) Total stockholders’ equity 1,067,478 1,106,264
Total liabilities and stockholders’ equity $ 2,400,746
$ 2,445,390
See notes to the Condensed Consolidated Financial Statements in
our Quarterly Report on Form 10-Q.
ROVI CORPORATION AND
SUBSIDIARIES
REVENUE BY SEGMENT
(In thousands)
(Unaudited)
Three Months Ended March 31, 2015
2014 Intellectual Property Licensing Revenues:
Service Provider $ 47,153 $ 50,080 Consumer Electronics 17,866
22,846 Total Intellectual Property Licensing Revenues 65,019
72,926 Product Revenues: Service Provider 51,025 48,521
Consumer Electronics 5,393 6,128 Other 12,588 14,875 Total
Product Revenues 69,006 69,524 Total Revenues $
134,025 $ 142,450
ROVI CORPORATION AND
SUBSIDIARIES
REVENUE BY SALES VERTICAL
(In thousands)
(Unaudited)
Three Months Ended March 31, 2015
2014 Service Provider $ 98,178 $ 98,601
Consumer Electronics 23,259 28,974 Other 12,588 14,875 Total
Revenues $ 134,025 $ 142,450
ROVI CORPORATION AND
SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP
FINANCIAL INFORMATION
(In thousands, except per share
amounts)
(Unaudited)
Three Months Ended March 31, 2015
2014 GAAP (Loss) income from continuing
operations, net of tax $ (15,470 ) $ 1,683 Amortization of
intangible assets 19,364 18,690 Restructuring and asset impairment
charges 1,717 2,177 Equity-based compensation 12,063 10,180
Contested proxy election costs 405 — Transaction, transition and
integration expenses — 629 Amortization of note issuance costs 647
970 Amortization of convertible note discount 2,812 3,389
Mark-to-market loss related to interest rate swaps 8,857 2,507 Loss
on debt extinguishment 100 — Income tax expense (1) 4,172
1,849 Non-GAAP Net Income $ 34,667 $ 42,074 GAAP
Diluted (loss) income per share from continuing operations $ (0.18
) $ 0.02 Non-GAAP Diluted Income Per Share (2) $ 0.39
$ 0.45
(1) Adjusts tax expense to the Non-GAAP cash tax rate.(2) Since
the Non-GAAP adjustments resulted in Non-GAAP Net earnings, 89,166
shares were used in computing Non-GAAP Diluted Income Per Share,
which includes the dilutive effect of common equivalent shares
outstanding for the three months ended March 31, 2015.
Three Months Ended March 31,
2015 2014 GAAP Total
Operating costs and expenses $ 120,066 $ 118,231 Amortization of
intangible assets (19,364 ) (18,690 ) Restructuring and asset
impairment charges (1,717 ) (2,177 ) Equity-based compensation
(12,063 ) (10,180 ) Contested proxy election costs (405 ) —
Transaction, transition and integration expenses — (629 )
Non-GAAP Total COGS and OpEx $ 86,517 $ 86,555
Three Months Ended March 31,
2015 2014 GAAP Cost of revenues,
excluding amortization of intangible assets $ 28,130 $ 32,496
Equity-based compensation (1,582 ) (1,472 ) Non-GAAP COGS $ 26,548
$ 31,024
Three
Months Ended March 31, 2015
2014 GAAP Research and development expenses $ 28,125 $
25,557 Equity-based compensation (2,093 ) (2,213 ) Transition and
integration expenses — (10 ) Non-GAAP Research and
Development Expenses $ 26,032 $ 23,334
Three Months Ended March 31,
2015 2014 GAAP Selling, general
and administrative expenses $ 38,360 $ 34,910 Equity-based
compensation (8,388 ) (6,495 ) Contested proxy election costs (405
) — Transaction, transition and integration expenses — (619
) Non-GAAP Selling, General and Administrative Expenses $ 29,567
$ 27,796
Year
Ended December 31, 2014 GAAP Research and development
expenses $ 108,746 Equity-based compensation (10,752 ) Transition
and integration expenses (530 ) Non-GAAP Research and Development
Expenses $ 97,464
Investor ContactsRovi CorporationPeter Halt, CFO, +1
818-295-6800orRovi CorporationPeter Ausnit, VP IR, +1
818-565-5200Peter.Ausnit@RoviCorp.com
TiVo (NASDAQ:TIVO)
Historical Stock Chart
From Sep 2024 to Oct 2024
TiVo (NASDAQ:TIVO)
Historical Stock Chart
From Oct 2023 to Oct 2024