Company Reports Solid Fourth Quarter
Results
Declares First Quarter Cash Dividend of $0.18
per Share
Announces Plan To Explore All Alternatives To
Maximize Shareholder Value
TiVo Corporation (NASDAQ:TIVO) today reported financial results
for the fourth quarter and for the full year ended
December 31, 2017.
“I am pleased to report that we delivered strong performance in
Q4 across a number of financial and business fronts. We have strong
operating cash flows and once again declared a quarterly cash
dividend. We also made substantial progress towards our financial
integration goals and are now targeting achieving $110 million in
post-TiVo Solutions acquisition annual run-rate synergies as we
continue to integrate the legacy TiVo organization and operations.
In the quarter, we delivered TiVo Experience 4 by integrating
numerous company offerings into one product that displays the
advantages of our content discovery experience and software and
services. Further, we continued to strengthen our IP licensing
business by renewing Altice’s US Pay TV license and expanding our
licensing relationship with Google to include YouTube TV,” said
Enrique Rodriguez, President and CEO of TiVo.
Rodriguez added, “I expect 2018 to be a transformational year
for TiVo, a year where we will hone our focus on execution that
drives growth. We need to determine the optimal path to maximize
our value proposition, so we can best deliver shareholder value. I
am very confident in our ability to succeed because we have an
outstanding team to execute our next phase of growth.”
FISCAL 2017 FOURTH QUARTER FINANCIAL HIGHLIGHTS
Quarterly Financial Information (In thousands)
Three Months Ended December
31,
2017 2016 % Change GAAP
Financial Information Total Revenues, net $ 214,236 $ 252,343
(15.1 )% Legacy TiVo Solutions IP Licenses (25,847 ) (23,380 ) 10.6
%
Hardware (7,694 ) (13,867 ) (44.5 )% Other Products (689 ) (2,012 )
(65.8 )% Total Revenue excluding revenue from Legacy TiVo Solutions
IP Licenses, Hardware and Other Products $ 180,006 $ 213,084
(15.5 )% Total Revenues, net includes $19.6 million
of catch up revenue in Q4 2017 compared to $40.3 million of
catch-up revenue in Q4 2016 which was primarily attributable to the
Samsung license executed in Q4 2016. Operating income $
2,944 $ 19,901 (Loss) income from continuing operations before
income taxes $ (5,656 ) $ 23,010 Income from continuing operations,
net of tax $ 18,439 $ 9,870 Income from continuing
operations, net of tax, in Q4 2017 includes a non-cash benefit of
$26.6 million from the Tax Act of 2017. GAAP Diluted
weighted average shares outstanding 122,362 119,298
Non-GAAP Financial Information Adjusted EBITDA $ 74,567 $
104,887 Non-GAAP Pre-tax Income $ 60,309 $ 90,793 Non-GAAP
Diluted Weighted Average Shares Outstanding 122,362 119,298
Cash Taxes
$ 1,318 $ 8,740
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 does provide the
financial metrics, including Non-GAAP Pre-tax Income, Non-GAAP
Diluted Weighted Average Shares Outstanding and Cash Taxes, that
TiVo had used to calculate these financial measures on a non-GAAP
basis.
TIVO BUSINESS AND OPERATING HIGHLIGHTS
Product:
- Approximately 22 million subscriber
households around the world use TiVo's advanced television
experiences.
- TiVo integrated the two legacy
companies’ offerings into one product that displays the advantages
of our content discovery experience and software and services, and
our new TiVo Experience 4 was released in Q4 to the retail market.
TiVo Experience 4 is the first integrated UX for TiVo, and it
seamlessly combines OTT and linear TV into a rich video discovery
experience.
- TiVo has already secured a key win for
its Next-Gen Platform with Service Electric Cablevision Inc.
- Altice USA agreed to deploy
advanced search and discovery features powered by TiVo’s new
Personalized Content Discovery platform to enable personalized
recommendations on its newest, cloud-based connectivity platform,
Altice One.
- Com Hem, one of Sweden's leading
suppliers of television, high-speed broadband and fixed-telephony,
has also selected TiVo’s Personalized Content Discovery platform to
power their Pay TV and app-based OTT services.
- Samsung expanded its use of TiVo’s
Metadata to include our Sports package, powering sports discovery
in the European market on their Smart TVs.
IP Licensing:
- Altice USA extended its Rovi IP
agreement and broadened that license
to include the legacy TiVo patents; both portfolios will
be used as part of its next-generation cloud-based
platform.
- Google expanded its multi-year patent
license agreement to expressly cover Google’s YouTube
TV, further validating our ability to license the developing
virtual Service Provider market on similar rates as Service
Providers.
- Renewed international licenses for
Asia with Sharp Corporation and Alticast Corporation.
EXPLORING ALL ALTERNATIVES TO MAXIMIZE VALUE FOR
SHAREHOLDERS
TiVo’s stock price is at a level that the Company and its Board
do not believe reflects the true value of the business given the
Company has a strong foundation, with leading technologies, and
solid cash flow from its long-term IP license agreements and guide
deployments. As such, TiVo has begun a process of evaluating a wide
range of strategic alternatives to realize long-term shareholder
value. These options range from transformative acquisitions that
would accelerate our growth, to combining our business with other
leading players, to becoming a private company. The Company engaged
LionTree Advisors to assist the Board and management in their
evaluation of alternatives.
UPCOMING REVENUE RECOGNITION CHANGE
Effective January 1, 2018, the Company is required to adopt
Accounting Standards Update No. 2014-09, Revenue from Contracts
with Customers, which supersedes the previous revenue recognition
requirements. As a result of adopting the new standard, we expect
we will recognize approximately $30 million less in revenue in
2018, than we would under the previous requirements. The impact is
primarily related to the legacy TiVo Time Warp intellectual
property licenses, which expire in mid-2018, for which we now
expect to recognize approximately $20 million in 2018, as opposed
to the $45.5 million we had previously expected.
IMPACT OF THE TAX CUTS AND JOBS ACT
The Tax Cuts and Jobs Act enacted on December 22, 2017 ("Tax Act
of 2017") provided a non-cash benefit of $26.6 million for the
three and twelve months ended December 31, 2017 primarily related
to the revaluation of deferred tax liabilities on indefinite-lived
intangible assets due to the reduced income tax rate. Going
forward, the impact of the Tax Act of 2017, including the new
alternative minimum taxes on foreign earnings, is not expected to
materially impact our Cash Taxes due to our large remaining federal
net operating losses.
CAPITAL ALLOCATION
On February 22, 2018, TiVo’s Board of Directors declared a cash
dividend of $0.18 per common share, to be paid on March 21, 2018 to
all stockholders of record as of the close of business on March 7,
2018. TiVo’s Board believes it can reward its stockholders with a
meaningful dividend, while maintaining ample capacity for the
Company to invest in the business, pursue long-term growth
aspirations, and consider additional capital allocation
alternatives. Based on our recent stock price, this equates to an
annualized dividend yield in excess of 5%.
BUSINESS OUTLOOK
TiVo will not be providing financial estimates for fiscal 2018
at this time. As mentioned above, the company is conducting an
in-depth review of its businesses, cost structure and options to
maximize shareholder value. Once this process is complete, we
anticipate providing our 2018 expectations.
CONFERENCE CALL INFORMATION
TiVo management will host a conference call today,
February 27, 2018, at 2:00 p.m. PT/5:00 p.m. ET to discuss the
financial and operational results. Investors and analysts
interested in participating in the conference are welcome to call
(866) 621-1214 (or international +1-706-643-4013) and reference
conference ID 4068257. The conference call may also be accessed via
live webcast in the Investor Relations section of TiVo’s website at
http://www.tivo.com/.
A replay of the audio webcast will be available on TiVo’s
website shortly after the live call ends, and we currently plan for
it to remain on TiVo’s website until the next quarterly earnings
call. Additionally, a telephonic replay of the call may be
accessible shortly after the live call ends through March 6, 2018
by dialing (855) 859-2056 (or international +1-404-537-3406) and
entering conference ID 4068257.
NON-GAAP FINANCIAL INFORMATION
TiVo Corporation provides Non-GAAP information to assist
investors in assessing its operations in the way that its
management evaluates those operations. Non-GAAP Pre-Tax Income,
Non-GAAP Cost of Licensing, Services and Software Revenues,
Non-GAAP Cost of Hardware Revenues, Non-GAAP Research and
Development Expenses, Non-GAAP Selling, General and Administrative
Expenses, Non-GAAP Depreciation, Non-GAAP Total OpEx, Non-GAAP
Total COGS and OpEx, Adjusted EBITDA and Non-GAAP Interest Expense
are supplemental measures of the Company's performance that are not
required by, and are not determined in accordance with, GAAP.
Non-GAAP financial information is not a substitute for any
financial measure determined in accordance with GAAP.
Non-GAAP Pre-tax Income is defined as GAAP income (loss) from
continuing operations before income taxes, as adjusted for the
effects of items such as amortization of intangible assets,
equity-based compensation, accretion of contingent consideration,
amortization or write-off of note issuance costs and discounts on
convertible debt and mark-to-market adjustments for interest rate
swaps; 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
restructuring and asset impairment charges, transaction, transition
and integration costs, retention earn-outs payable to former
shareholders of acquired businesses, earn-out settlements, CEO
transition cash costs, remeasurement of contingent consideration,
TiVo acquisition litigation, expenses in connection with the
extinguishment or modification of debt, gain on settlement of
acquired receivable, additional depreciation resulting from
facility rationalization actions, other-than temporary impairment
losses on strategic investments, gains on the sale of strategic
investments, changes in franchise tax reserves and contested proxy
election costs.
Non-GAAP Cost of Licensing, Services and Software Revenues is
defined as GAAP Cost of licensing, services and software revenues,
excluding depreciation and amortization of intangible assets,
excluding equity-based compensation and transaction, transition and
integration expenses. Included in transaction, transition and
integration costs in the fourth quarter of 2016 was $10.0 million
in expenses for additional guaranteed license payments related to
the Company’s over-the-top licensing partnership with Intellectual
Ventures. These payments were expensed in the fourth quarter
of 2016 as the payments were triggered by the execution of a patent
license agreement during the quarter and are not expected to be
recoverable from the net direct revenue resulting from the patent
license agreement and the related TiVo product partnership.
This expense was included in transaction, transition and
integration costs as the patent license agreement was entered into
as part of continuing, and broadening, the product relationship
with TiVo.
Non-GAAP Cost of Hardware Revenues is defined as GAAP Cost of
hardware revenues, excluding depreciation and amortization of
intangible assets, excluding transition and integration
expenses.
Non-GAAP Research and Development Expenses is defined as GAAP
research and development expenses excluding equity-based
compensation, transition and integration expenses and retention
earn-outs payable to former shareholders of acquired
businesses.
Non-GAAP Selling, General and Administrative Expenses is defined
as GAAP selling, general and administrative expenses excluding
equity-based compensation, transaction, transition and integration
expenses, retention earn-outs payable to former shareholders of
acquired businesses, earn-out settlements, CEO transition cash
costs, remeasurement of contingent consideration, gain on
settlement of acquired receivable, changes in franchise tax
reserves and contested proxy election costs.
Non-GAAP Depreciation is defined as GAAP depreciation expenses
excluding the impact of additional depreciation resulting from
changes in the estimated useful lives of assets involved in
facility rationalization actions.
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, transaction, transition and integration expenses,
retention earn-outs payable to former shareholders of acquired
businesses, earnout settlements, CEO transition cash costs,
remeasurement of contingent consideration, gain on settlement of
acquired receivable, additional depreciation resulting from
facility rationalization actions, changes in franchise tax reserves
and contested proxy election costs.
Non-GAAP Total COGS and OpEx is defined as GAAP Total Operating
costs and expenses, excluding amortization of intangible assets,
restructuring and asset impairment charges, equity-based
compensation, transaction, transition and integration expenses,
retention earn-outs payable to former shareholders of acquired
businesses, earnout settlements, CEO transition cash costs,
remeasurement of contingent consideration, gain on settlement of
acquired receivable, depreciation, changes in franchise tax
reserves and contested proxy election costs.
Adjusted EBITDA is defined as GAAP operating income excluding
depreciation, amortization of intangible assets, restructuring and
asset impairment charges, equity-based compensation, transaction,
transition and integration costs, retention earn-outs payable to
former shareholders of acquired businesses, earn-out settlements,
CEO transition cash costs, remeasurement of contingent
consideration, gain on settlement of acquired receivable, changes
in franchise tax reserves and contested proxy election costs.
Non-GAAP Interest Expense is defined as GAAP interest expense,
excluding accretion of contingent consideration, amortization or
write-off of issuance costs, discounts on convertible debt and
interest on franchise tax reserves, plus the reclassification of
the current period benefit (cost) of the interest rate swaps from
gain (loss) on interest rate swaps.
Cash Taxes are defined as GAAP current income tax expense
excluding changes in reserves for unrecognized tax benefits.
Non-GAAP Diluted Weighted Average Shares Outstanding is defined
as GAAP diluted weighted average shares outstanding except for
periods of a GAAP loss. In periods of a GAAP loss, GAAP diluted
weighted average shares outstanding are adjusted to include
dilutive common share equivalents outstanding that were excluded
from GAAP diluted weighted average shares outstanding because the
Company had a loss and therefore these shares would have been
anti-dilutive.
The Company's management evaluates and makes decisions about its
business operations primarily based on Non-GAAP financial
information. Management uses Non-GAAP financial measures as the
basis for decision-making as they exclude items management does not
consider to be “core costs” or “core proceeds”. For each Non-GAAP
financial measure, the adjustment provides management with
information about the Company's underlying operating performance
that enables a more meaningful comparison to its historical and
projected financial performance in different reporting periods. For
example, since the Company does not acquire businesses on a
predictable cycle, management excludes the amortization of
intangible assets, transaction, transition and integration costs,
retention earn-outs payable to former shareholders of acquired
businesses, earnout settlements, CEO transition cast costs,
remeasurement of contingent consideration, TiVo Acquisition
litigation, and gain on settlement of acquired receivables from its
Non-GAAP financial measures in order to make more consistent and
meaningful evaluations of the Company's operating expenses as these
items may be significantly impacted by the timing and magnitude of
acquisitions. Management also excludes the effect of restructuring
and asset impairment charges, expenses in connection with the
extinguishment or modification of debt, gain on the settlement of
acquired receivable, additional depreciation resulting from
facility rationalization actions, other-than-temporary impairment
losses on strategic investments, gains on the sale of strategic
investments and changes in franchise tax reserves. Management
excludes the impact of equity-based compensation to provide
meaningful supplemental information that allows investors greater
visibility to the underlying performance of our business
operations, facilitates comparison of our results with other
periods, and may facilitate comparison with the results of other
companies in our industry, as well as to provide the Company’s
management with an important tool for financial and operational
decision-making and for evaluating the Company’s performance over
different periods of time. Due to varying valuation techniques,
reliance on subjective assumptions and the variety of award types
and features that may be in use, we believe that providing Non-GAAP
financial measures excluding equity-based compensation allows
investors to make more meaningful comparisons between our operating
results and those of other companies. Management excludes the
accretion of contingent consideration, amortization or write-off of
note issuance costs and discounts on convertible debt and
mark-to-market adjustments for interest rate swaps when management
evaluates the Company's expenses. Management reclassifies the
current period benefit (cost) of the interest rate swaps from gain
(loss) on interest rate swaps to interest expense in order for
Non-GAAP Interest Expense to reflect the effects of the interest
rate swaps as these interest rate swaps were entered into to
control the effective interest rate the Company pays on its
debt.
Management uses these Non-GAAP financial measures to help it
make decisions, including decisions that affect operating expenses
and operating margin. Management believes that making Non-GAAP
financial information available to investors, in addition to GAAP
financial information, may facilitate more consistent comparisons
between the Company's performance over time with the performance of
other companies in our industry, which may use similar financial
measures to supplement their GAAP financial information.
Management recognizes that these Non-GAAP financial measures
have limitations as analytical tools, including the fact that
management must exercise judgment in determining which types of
items to exclude from the Non-GAAP financial information. In
addition, as other companies, including companies similar to TiVo
Corporation, may calculate their Non-GAAP financial measures
differently than the Company calculates its Non-GAAP financial
measures, these Non-GAAP financial measures may have limited
usefulness to investors when comparing financial performance among
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 for each
Non-GAAP financial measure to its most directly comparable GAAP
financial measure are provided in the tables below.
About TiVo Corporation
TiVo (NASDAQ: TIVO) is a global leader in entertainment
technology and audience insights. From the interactive program
guide to the DVR, TiVo delivers innovative products and licensable
technologies that revolutionize how people find content across a
changing media landscape. TiVo enables the world’s leading media
and entertainment providers to deliver the ultimate entertainment
experience. Explore the next generation of entertainment at
tivo.com, forward.tivo.com or follow us on Twitter @tivo or
@tivoforbusiness.
Forward Looking Statements
This release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
These statements relate to, among other things, the Company's
future growth and success and future estimated financial results,
including the amount of future revenues recognized due to the
adoption of new accounting standards on revenue recognition, the
expected impact of the Tax Act of 2017, future dividends, as well
as future business strategies and future product offerings,
deployments and technology and intellectual property licenses with
various customers. These forward-looking statements are based on
TiVo’s current expectations, estimates and projections about its
business and industry, management’s beliefs and certain assumptions
made by the company, all of which are subject to change.
Forward-looking statements generally can be identified by the use
of forward-looking terminology such as, “future”, "believe,"
"expect," "may," "will," "intend," "estimate," "continue," or
similar expressions or the negative of those terms or expressions.
Such statements involve risks and uncertainties, which could cause
actual results to vary materially from those expressed in or
indicated by the forward-looking statements. Factors that may cause
actual results to differ materially include delays and higher costs
in connection with the integration of TiVo Inc. (now known as TiVo
Solutions Inc.), delays in development, competitive service
offerings and lack of market acceptance, as well as the other
potential factors described under "Risk Factors" included in TiVo’s
Annual Report on Form 10-K for year ended December 31, 2017 and
other documents of TiVo Corporation on file with the Securities and
Exchange Commission (available at www.sec.gov). TiVo cautions you
not to place undue reliance on forward-looking statements, which
reflect an analysis only and speak only as of the date hereof. TiVo
assumes no obligation to update any forward-looking statements in
order to reflect events or circumstances that may arise after the
date of this release, except as required by law.
TIVO CORPORATION AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
OPERATIONS
(In thousands, except per share
amounts)
(Unaudited)
Three Months Ended December
31,
Year Ended December 31, 2017 2016
2017 2016 Revenues, net: Licensing, services
and software $ 206,542 $ 238,476 $ 784,087 $ 629,474 Hardware 7,694
13,867 42,369 19,619 Total Revenues,
net 214,236 252,343 826,456 649,093 Costs and expenses: Cost of
licensing, services and software revenues, excluding depreciation
and amortization of intangible assets 43,314 61,015 167,712 139,666
Cost of hardware revenues, excluding depreciation and amortization
of intangible assets 10,822 13,984 46,699 19,056 Research and
development 49,996 49,060 194,382 125,172 Selling, general and
administrative 57,903 58,292 205,024 192,755 Depreciation 6,275
5,517 22,144 18,698 Amortization of intangible assets 41,557 41,902
166,657 104,989 Restructuring and asset impairment charges 1,425
2,672 19,048 27,316 Total costs and
expenses 211,292 232,442 821,666 627,652
Operating income 2,944 19,901 4,790 21,441 Interest expense
(10,929 ) (11,270 ) (42,756 ) (43,681 ) Interest income and other,
net (904 ) 1,366 2,915 1,688 Income (loss) on interest rate swaps
3,233 13,013 1,859 (3,884 ) TiVo Acquisition litigation — — (14,006
) — Loss on debt extinguishment — — (108 ) — Loss on debt
modification — — (929 ) — (Loss) income from
continuing operations before income taxes (5,656 ) 23,010 (48,235 )
(24,436 ) Income tax (benefit) expense (24,095 ) 13,140
(10,279 ) (61,685 ) Income (loss) from continuing operations, net
of tax 18,439 9,870 (37,956 ) 37,249 Loss from discontinued
operations, net of tax — (71 ) — (4,588 ) Net income
(loss) $ 18,439 $ 9,799 $ (37,956 ) $ 32,661
Basic earnings (loss) per share: Continuing operations $
0.15 $ 0.08 $ (0.32 ) $ 0.40 Discontinued operations — —
— (0.05 ) Basic earnings (loss) per share: $ 0.15
$ 0.08 $ (0.32 ) $ 0.35 Weighted average
shares used in computing basic per share amounts 121,427 117,394
120,355 93,064 Diluted earnings (loss) per share: Continuing
operations $ 0.15 $ 0.08 $ (0.32 ) $ 0.40 Discontinued operations —
— — (0.05 ) Diluted earnings (loss) per share:
$ 0.15 $ 0.08 $ (0.32 ) $ 0.35 Weighted
average shares used in computing diluted per share amounts 122,362
119,298 120,355 94,262 Dividends declared per share $ 0.18 $
— $ 0.72 $ —
See notes to the Consolidated Financial
Statements in our Annual Report on Form 10-K.
TIVO CORPORATION AND
SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share
amounts)
(Unaudited)
December 31, 2017 December 31,
2016 ASSETS Current assets: Cash and cash equivalents
$ 128,965 $ 192,627 Short-term marketable securities 140,866
117,084 Accounts receivable, net 180,768 147,142 Inventory 11,581
13,186 Prepaid expenses and other current assets 40,719
37,400 Total current assets 502,899 507,439 Long-term
marketable securities 82,711 128,929 Property and equipment, net
55,244 48,372 Intangible assets, net 643,924 806,838 Goodwill
1,813,227 1,812,118 Other long-term assets 65,673 17,147
Total assets $ 3,163,678 $ 3,320,843
LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities:
Accounts payable and accrued expenses $ 135,852 $ 226,451 Deferred
revenue 55,393 49,145 Current portion of long-term debt 7,000
7,000 Total current liabilities 198,245 282,596 Taxes
payable, less current portion 3,947 4,893 Deferred revenue, less
current portion 58,283 43,545 Long-term debt, less current portion
976,095 967,732 Deferred tax liabilities, net 50,356 77,454 Other
long-term liabilities 23,736 34,987 Total liabilities
1,310,662 1,411,207 Stockholders' equity: Preferred stock — —
Common stock 123 121 Treasury stock (24,740 ) (9,646 ) Additional
paid-in capital 3,273,022 3,280,905 Accumulated other comprehensive
loss (2,738 ) (7,049 ) Accumulated deficit (1,392,651 ) (1,354,695
) Total stockholders’ equity $ 1,853,016 $ 1,909,636
Total liabilities and stockholders’ equity $ 3,163,678 $
3,320,843
See notes to the Consolidated Financial
Statements in our Annual Report on Form 10-K.
TIVO CORPORATION AND
SUBSIDIARIES
REVENUE DETAILS
(In thousands)
(Unaudited)
Three Months Ended December
31,
Year Ended December 31, 2017 2016
2017 2016 Total Revenues, net $ 214,236 $
252,343 $ 826,456 $ 649,093 Legacy TiVo Solutions IP Licenses
(25,847 ) (23,380 ) (97,136 ) (29,342 ) Hardware (7,694 ) (13,867 )
(42,369 ) (19,619 ) Other Products (689 ) (2,012 ) (4,548 ) (12,470
) Total Revenue excluding revenue from Legacy TiVo Solutions IP
Licenses, Hardware and Other Products $ 180,006 $ 213,084
$ 682,403 $ 587,662
Three Months Ended December
31,
Year Ended December 31, 2017 2016 2017
2016 Product Revenues: Platform Solutions $ 80,606 $ 86,031
$ 334,004 $ 205,395 Software and Services 19,225 23,948 84,964
83,811 Other 689 2,012 4,548 12,470
Total Product Revenues 100,520 111,991 423,516 301,676
Intellectual Property Licensing Revenues: US Pay TV Providers
83,608 87,319 278,973 222,346 Consumer Electronics Manufacturers
12,923 11,789 51,219 46,145 New Media, International Pay TV
Providers and Other 17,185 41,244 72,748
78,926 Total Intellectual Property Licensing Revenues
113,716 140,352 402,940 347,417 Total
Revenues, net $ 214,236 $ 252,343 $ 826,456 $
649,093
Three Months Ended December
31,
Year Ended December 31, 2017 2016 2017
2016 Total Product Revenues $ 100,520 $ 111,991 $ 423,516 $
301,676 Hardware (7,694 ) (13,867 ) (42,369 ) (19,619 ) Other
Products (689 ) (2,012 ) (4,548 ) (12,470 ) Total Product Revenue
excluding revenue from Hardware and Other Products $ 92,137
$ 96,112 $ 376,599 $ 269,587 Total
Intellectual Property Licensing Revenues $ 113,716 $ 140,352 $
402,940 $ 347,417 Legacy TiVo Solutions IP Licenses (25,847 )
(23,380 ) (97,136 ) (29,342 ) Total Intellectual Property Licensing
Revenue excluding revenue from Legacy TiVo Solutions IP Licenses $
87,869 $ 116,972 $ 305,804 $ 318,075
TIVO CORPORATION AND
SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP
FINANCIAL INFORMATION
(In thousands)
(Unaudited)
Three Months Ended December
31,
Year Ended December 31, 2017 2016
2017 2016 GAAP (loss) income before income
taxes $ (5,656 ) $ 23,010 $ (48,235 ) $ (24,436 ) Amortization of
intangible assets 41,557 41,902 166,657 104,989 Restructuring and
asset impairment charges 1,425 2,672 19,048 27,316 Equity-based
compensation 13,780 15,639 52,561 47,670 Transaction, transition
and integration costs 4,663 19,911 20,364 39,950 Earnout
amortization and settlement 958 959 3,833 2,467 CEO transition cash
costs 4,305 — 4,305 — Remeasurement of contingent consideration
(1,340 ) (1,614 ) (1,023 ) (1,614 ) TiVo Acquisition litigation — —
14,006 — Loss on debt extinguishment — — 108 — Loss on debt
modification — — 929 — Gain on settlement of acquired receivable —
— (2,537 ) — Accelerated depreciation 639 — 1,491 —
Other-than-temporary impairment of
strategic investment
1,210 — 1,210 — Gain on sale of strategic investments — — (3,143 )
— Change in franchise tax reserve — — — 154 Accretion of contingent
consideration 123 273 634 340 Amortization of note issuance costs
548 509 2,136 1,977 Amortization of convertible note discount 3,217
3,070 12,645 12,070 Mark-to-market loss (income) related to
interest rate swaps and caps (5,120 ) (15,538 ) (10,215 ) (5,836 )
Interest on franchise tax reserve — — — 280
Non-GAAP Pre-tax Income $ 60,309 $ 90,793 $
234,774 $ 205,327
Three Months Ended December
31,
Year Ended December 31, 2017 2016 2017
2016 GAAP Diluted weighted average shares outstanding
122,362 119,298 120,355 94,262 Dilutive effect of equity-based
compensation awards — — 1,039 —
Non-GAAP Diluted Weighted Average Shares Outstanding 122,362
119,298 121,394 94,262
Three Months Ended December
31,
Year Ended December 31, 2017 2016 2017
2016 GAAP Cost of licensing, services and software revenues,
excluding depreciation and amortization of intangible assets $
43,314 $ 61,015 $ 167,712 $ 139,666 Equity-based compensation
(1,244 ) (1,005 ) (4,504 ) (3,819 ) Transaction, transition and
integration costs (163 ) (10,216 ) (530 ) (10,352 ) Non-GAAP Cost
of Licensing, Services and Software Revenues $ 41,907 $
49,794 $ 162,678 $ 125,495
Three Months Ended December
31,
Year Ended December 31, 2017 2016 2017
2016 GAAP Cost of hardware revenues, excluding depreciation
and amortization of intangible assets $ 10,822 $ 13,984 $ 46,699 $
19,056 Transaction, transition and integration costs — —
(1,021 ) — Non-GAAP Cost of Hardware Revenues $
10,822 $ 13,984 $ 45,678 $ 19,056
Three Months Ended December
31,
Year Ended December 31, 2017 2016 2017
2016 GAAP Research and development expenses $ 49,996 $
49,060 $ 194,382 $ 125,172 Equity-based compensation (3,912 )
(4,784 ) (16,771 ) (10,970 ) Transaction, transition and
integration costs (1,029 ) (2,274 ) (4,474 ) (3,782 ) Earnout
amortization and settlement (184 ) (184 ) (736 ) (245 ) Non-GAAP
Research and Development Expenses $ 44,871 $ 41,818 $
172,401 $ 110,175
Three Months Ended December
31,
Year Ended December 31, 2017 2016 2017
2016 GAAP Selling, general and administrative expenses $
57,903 $ 58,292 $ 205,024 $ 192,755 Equity-based compensation
(8,624 ) (9,850 ) (31,286 ) (32,881 ) Transaction, transition and
integration costs (3,471 ) (7,421 ) (14,339 ) (25,816 ) Earnout
amortization and settlement (774 ) (775 ) (3,097 ) (2,222 ) CEO
transition cash costs (4,305 ) — (4,305 ) — Remeasurement of
contingent consideration 1,340 1,614 1,023 1,614 Gain on settlement
of acquired receivable — — 2,537 — Change in franchise tax reserve
— — — (154 ) Non-GAAP Selling, General and
Administrative Expenses $ 42,069 $ 41,860 $ 155,557
$ 133,296
Three Months Ended December
31,
Year Ended December 31, 2017 2016 2017
2016 GAAP Depreciation $ 6,275 $ 5,517 $ 22,144 $ 18,698
Accelerated depreciation (639 ) — (1,491 ) — Non-GAAP
Depreciation $ 5,636 $ 5,517 $ 20,653 $ 18,698
Three Months Ended December
31,
Year Ended December 31, 2017 2016 2017
2016 GAAP Total operating costs and expenses $ 211,292 $
232,442 $ 821,666 $ 627,652 Depreciation (6,275 ) (5,517 ) (22,144
) (18,698 ) Amortization of intangible assets (41,557 ) (41,902 )
(166,657 ) (104,989 ) Restructuring and asset impairment charges
(1,425 ) (2,672 ) (19,048 ) (27,316 ) Equity-based compensation
(13,780 ) (15,639 ) (52,561 ) (47,670 ) Transaction, transition and
integration costs (4,663 ) (19,911 ) (20,364 ) (39,950 ) Earnout
amortization and settlement (958 ) (959 ) (3,833 ) (2,467 ) CEO
transition cash costs (4,305 ) — (4,305 ) — Remeasurement of
contingent consideration 1,340 1,614 1,023 1,614 Gain on settlement
of acquired receivable — — 2,537 — Change in franchise tax reserve
— — — (154 ) Non-GAAP Total COGS and OpEx $
139,669 $ 147,456 $ 536,314 $ 388,022
Three Months Ended December
31,
Year Ended December 31, 2017 2016 2017
2016 GAAP Operating income $ 2,944 $ 19,901 $ 4,790 $ 21,441
Depreciation 6,275 5,517 22,144 18,698 Amortization of intangible
assets 41,557 41,902 166,657 104,989 Restructuring and asset
impairment charges 1,425 2,672 19,048 27,316 Equity-based
compensation 13,780 15,639 52,561 47,670 Transaction, transition
and integration costs 4,663 19,911 20,364 39,950 Earnout
amortization and settlement 958 959 3,833 2,467 CEO transition cash
costs 4,305 — 4,305 — Remeasurement of contingent consideration
(1,340 ) (1,614 ) (1,023 ) (1,614 ) Gain on settlement of acquired
receivable — — (2,537 ) — Change in franchise tax reserve —
— — 154 Adjusted EBITDA $ 74,567 $
104,887 $ 290,142 $ 261,071
Three Months Ended December
31,
Year Ended December 31, 2017 2016 2017
2016 GAAP Interest expense $ (10,929 ) $ (11,270 ) $ (42,756
) $ (43,681 ) Accretion of contingent consideration 123 273 634 340
Amortization of note issuance costs 548 509 2,136 1,977
Amortization of convertible note discount 3,217 3,070 12,645 12,070
Reclassify current period cost of interest rate swaps (1,886 )
(2,525 ) (8,356 ) (9,720 ) Interest on franchise tax reserve —
— — 280 Non-GAAP Interest Expense $
(8,927 ) $ (9,943 ) $ (35,697 ) $ (38,734 )
View source
version on businesswire.com: http://www.businesswire.com/news/home/20180227006518/en/
Investor RelationsTiVo
CorporationDebi Palmer,
+1-818-295-6651debi.palmer@TiVo.comorPress
RelationsTiVo CorporationLerin O'Neill,
+1-408-562-8455lerin.oneill@TiVo.com
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