6
Operating Performance
Rovis overall revenue and core
revenue growth has lagged
despite substantial investment
Criticizing Rovis recent revenue growth disregards key aspects of our
business Our product business is an increasingly important part of our
connected platform Engaged Capitals failure to understand our product
cycles should be concerning to stockholders as it demonstrates a lack
of understanding of the industry in which we operate. ISS and Glass Lewis
should also be held to a higher standard of that understanding in their
analysis ISS / Glass Lewis view
Rovi view
As
many
of
our
stockholders
and
Wall
Street
Analysts
understand,
we
expect
our
Big
4
license renewals to be a significant driver of revenue growth, and they are all
tied to renewal dates later this year and next
Product cycles in our industry are 18-24 months, and even longer when
considering deployment to scale timelines.
As a result, it is patently unreasonable to rely upon the simplistic view
that despite the companys heavy investments, the product
segment has not seen the kind of ramp-up that shareholders may have
expected Both the absolute revenue and share of revenue from our
product business has been increasing, and its strong profitability provides
incremental margin to our IP business Our product revenues are an
increasingly important piece of our business; with product revenues
increasing to 51% of revenues in Q115 from 45% in 2013. This is clear
evidence of our past investments in both IP and products producing results
despite the decline in our analog business revenues from $129 million in 2010 to
$30 million in 2014. Our product investment has supported core revenue that
is up ~$100 million since 2010, to offset the decline from our analog
business The significant synergies that exist between our product and
licensing businesses that we have highlighted before, as well as the
continued validation from marquee customers who utilize both our products
and IP, we believe, contradicts ISS and Glass Lewis' assertion of a
"failed" product investment strategy |