Company Continues to Advance Its Strategic
Growth Initiatives
Strategic Transaction Discussions Continue for
Product and IP Licensing Businesses
TiVo Corporation (NASDAQ: TIVO) today reported financial results
for the fourth quarter and for the full year ended
December 31, 2018.
“In the quarter, we continued to advance our strategic goals,
focusing on our five pillars for growth along with a continued
focus on profitability. Further, at CES, we demonstrated, to select
partners, a unique entertainment discovery experience for the
internet age and received very promising feedback. We plan to
launch this product in the second half of 2019. On the IP front, we
continue to expand our licensing, particularly in international
markets,” said Raghu Rau, Interim President and Chief Executive
Officer. “We are very excited about the prospects for our
long-term growth strategy.”
UPDATE ON STRATEGIC ALTERNATIVES TO MAXIMIZE VALUE FOR
SHAREHOLDERS
We continue to make progress with our review of strategic
alternatives and are still in ongoing discussions regarding
potential strategic options or transactions for each of our
Product and IP Licensing businesses. Due to the unique nature of
our Product and IP Licensing businesses, this process is taking
longer than we hoped.
We have proactively begun working internally on preparing for
the possible separation of the two businesses to help address some
of the complexities and potentially facilitate strategic
transactions. The Board and management team continue to be
thoughtful about the outcome that can best drive shareholder value
for TiVo. We look forward to providing additional information by
our first quarter earnings call.
BUSINESS OUTLOOK
TiVo’s management and Board are still conducting an in-depth
review of its businesses, cost structure and strategic options to
maximize shareholder value. Due to the broad range of potential
outcomes, the Company is not currently providing financial
estimates.
CAPITAL ALLOCATION
On February 21, 2019, TiVo’s Board of Directors declared a cash
dividend of $0.18 per common share, to be paid on March 26, 2019 to
stockholders of record as of the close of business on March 12,
2019.
CURRENT PERIOD FINANCIAL RESULTS
As discussed in detail during previous earnings calls, the
Company adopted Accounting Standards Update No. 2014-09, Revenue
from Contracts with Customers, which superseded the previous
revenue recognition requirements on January 1, 2018 using the
modified retrospective transition approach. The Company’s results
for 2017 are reported under the prior standard and results for 2018
are reported under the new standard. While there is no change in
either the nature of our business operations or our cash flows,
revenue recognition in 2018 is considerably different than in 2017.
For instance, in the fourth quarter of 2018, TiVo recognized
approximately $0.8 million less in revenue than it would have under
the previous requirements.
FOURTH QUARTER 2018 FINANCIAL
HIGHLIGHTS
Quarterly Financial Information (In thousands)
Three Months EndedDecember
31,
2018 2017 % Change GAAP
Consolidated Results Total Revenues, net $ 168,459 $ 214,236
(21 )% Goodwill impairment 269,000 — N/a Total costs and expenses
(including goodwill impairment) 441,943 211,292 109 % Operating
(loss) income (273,484 ) 2,944 (9,390 )% Loss from continuing
operations before income taxes (287,442 ) (5,656 ) 4,982 % (Loss)
income from continuing operations, net of tax (288,189 ) 18,439
(1,663 )% GAAP Diluted weighted average shares outstanding
123,802 122,362
Total Revenues, net $ 168,459 $
214,236 (21 )% Legacy TiVo Solutions IP Licenses — (25,847 ) (100
)% Hardware (3,824 ) (7,694 ) (50 )% Other Products (3,660 ) (689 )
431 %
Core Revenue (excludes revenue from Legacy TiVo Solutions
IP Licenses, Hardware and Other Products) $ 160,975 $
180,006 (11 )%
Total Revenues, net and Core Revenue include $7.3 million and
$19.6 million of revenue from out-of-license settlements in Q4 2018
and Q4 2017, respectively. Total Revenues, net and Core Revenue
decreased $0.8 million as a result of adopting the amended revenue
recognition guidance on January 1, 2018. The increase in Total
costs and expenses is the result of a $269.0 million Goodwill
impairment charge for our Product reporting unit, which was
partially offset by lower Amortization of intangible assets, the
Company’s continuing cost reduction efforts and a reduction in
hardware COGS as a result of the planned transition of our MSO
partners and retail customers to deploying the TiVo service on
third-party hardware.
(In thousands)
Three Months EndedDecember
31,
2018 2017 % Change Non-GAAP
Consolidated Results Adjusted EBITDA $ 42,141 $ 74,567 (43 )%
Non-GAAP Pre-tax Income 30,151 60,309 (50 )% Cash Taxes 3,519 1,318
167 % Non-GAAP Diluted Weighted Average Shares Outstanding
124,338 122,362
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.
SEGMENT RESULTS AND OPERATING
HIGHLIGHTS - PRODUCT
(In thousands)
Three Months EndedDecember
31,
2018 2017 % Change Platform Solutions $
74,519 $ 80,606 (8 )% Software and Services 18,300 19,225 (5 )%
Other 3,660 689 431 % Total Product Revenue, net
96,479 100,520 (4 )% Adjusted Operating Expenses 83,440
96,793 (14 )% Adjusted EBITDA $ 13,039 $ 3,727
250 % Adjusted EBITDA Margin 13.5 % 3.7 % Total Product
Revenue, net $ 96,479 $ 100,520 (4 )% Hardware (3,824 ) (7,694 )
(50 )% Other Products (3,660 ) (689 ) 431 % Core Product Revenue
(excludes revenue from Hardware and Other Products) $ 88,995
$ 92,137 (3 )%
The $6.1 million decrease in Platform Solutions revenue was
largely attributable to a $3.9 million decrease in Hardware
revenue, as a result of the planned transition of our MSO partners
and retail customers to deploying the TiVo service on third-party
hardware, a $2.2 million decrease in revenue from the Company's
classic guide products and a $1.3 million decrease in revenue as a
result of adopting the amended revenue recognition guidance on
January 1, 2018; partially offset by an increase in revenue from
TiVo MSO customers. Hardware revenue is expected to continue to
decline due to the planned transition to deploying the TiVo service
on third-party hardware. Revenues from classic guide products are
expected to decline in the future as a result of customer churn and
conversions to newer guide products, such as TiVo’s MSO guide
product. Other revenue primarily consists of ACP revenue, which,
while up in comparison to the same quarter a year ago, is expected
to continue its decline in the future.
The decrease in Adjusted Operating Expenses primarily relates to
a $5.6 million decrease in the Cost of hardware revenues and
benefits from cost savings initiatives, partially offset by an
increase in compensation costs.
The increase in Adjusted EBITDA Margin primarily relates to a
shift in the Product business mix toward higher margin products as
hardware becomes a smaller portion of the Product business as a
result of the planned transition of our MSO partners and retail
customers to deploying the TiVo service on third-party hardware and
benefits from cost savings initiatives, partially offset by the
effects of adopting the amended revenue recognition standard.
Product Segment Operating Highlights:
- Approximately 22 million subscriber
households around the world use TiVo's advanced television
experiences.
- izzi Telecom will expand deployment of
TiVo’s Passport Guide for set-top boxes to its operations in Mexico
City and Monterrey, and add TiVo Video metadata, which together
provide a high-quality and intuitive user experience.
- TiVo once again provided its retail
subscribers with the innovative solution to go back and re-watch
the Super Bowl, and to use their SKIP feature to skip the game and
jump straight to the commercials. Over 20% more customers recorded
the game this year compared to last year, the first year Game Skip
was offered.
- Minerva Networks, an IPTV industry
pioneer and the leading supplier of service management
infrastructure for the delivery of pay-TV services, will use TiVo
as the primary metadata provider for their new cloud service
delivery platform, Minerva YourTV Now.
- A leading social network signed a
2-year agreement to use TiVo’s video metadata including trending
scores and viewers ratings.
- TikiLIVE, an over-the-top (OTT) and
IPTV platform development and cloud hosting company that deploys
enterprise solutions, has extended its license agreements for TiVo
Video Metadata and standardized on TiVo as a one-stop-shop service
for all its metadata requirements.
- Sky Mexico, a leading provider of
subscription television services in Mexico, Central America
and the Dominican Republic, has signed a new metadata deal to use
TiVo as the primary metadata provider for its next-generation
platform.
- Verizon extended a multi-year agreement
to have access to the latest version of TiVo’s Personalized Content
Discovery Platform conversation, search and recommendations
services across set-top boxes, websites and popular streaming
devices, bringing forth a more personal entertainment experience
for its customers.
- Launched TiVo’s first campaign with a
major broadcaster using the new personalized advertising product,
Sponsored Discovery, delivering a 142% increase in tune-in to the
new show for those who saw the ad.
- TiVo’s unique voice users grew 54%,
from 2.4 million at the end of Q3 to 3.7 million unique users at
the end of Q4. Additionally, quarterly queries grew by 93%, from
123 million queries in Q3 to 238 million in Q4.
- TiVo’s Targeted Audience Delivery
(TAD), the platform that creates segments of TV viewers from its TV
return path data, had revenue growth of 117% compared to the
previous quarter.
- TiVo’s Targeted Audience Delivery (TAD)
was adopted by additional customers in the TV and digital
advertising industry:
- Cross Screen Media, a marketing
analytics and software company, licensed TAD data to optimize the
impact of campaigns across screens for its clients.
- TVSquared, the worldwide leader in TV
attribution, licensed TAD data to measure and optimize the impact
of campaigns across screens for its clients.
- Simulmedia, a data-driven TV
advertising company, licensed TAD data to improve the targeting and
performance of its TV campaigns.
SEGMENT RESULTS AND OPERATING
HIGHLIGHTS - IP LICENSING
(In thousands)
Three Months EndedDecember
31,
2018 2017 % Change US Pay TV
Providers $ 42,348 $ 83,608 (49 )% CE Manufacturers 8,890 12,923
(31 )% New Media, International Pay TV Providers and Other 20,742
17,185 21 % Total IP Licensing Revenue, net 71,980
113,716 (37 )% Adjusted Operating Expenses 25,742 27,812
(7 )% Adjusted EBITDA $ 46,238 $ 85,904 (46 )%
Adjusted EBITDA Margin 64.2 % 75.5 % Total IP Licensing
Revenue, net $ 71,980 $ 113,716 (37 )% Legacy TiVo Solutions IP
Licenses — (25,847 ) (100 )% Core Intellectual Property
Licensing Revenue (excludes revenue from Legacy TiVo Solutions IP
Licenses) $ 71,980 $ 87,869 (18 )%
Intellectual Property Licensing revenue decreased 37% in the
fourth quarter. The decline in revenue from US Pay TV Providers is
primarily due to a $25.8 million decrease in revenue from TiVo
Solutions agreements entered into prior to the TiVo Acquisition
Date (the Time Warp patent agreements) as a result of the
expiration of these contracts and a $17.1 million decrease in
revenue from catch-up payments intended to make us whole for the
pre-license period of use. The decrease in revenue from CE
Manufacturers was primarily attributable to a customer being
out-of-license in 2018 and a decrease in catch-up payments intended
to make us whole for the pre-license period. We anticipate this
customer will eventually execute a new license. The increase in
revenue from New Media, International Pay TV Providers and Other
was primarily attributable to a $5.7 million increase in catch-up
payments intended to make us whole for the pre-license period.
The decrease in Adjusted Operating Expenses relates to benefits
from cost savings initiatives.
The decrease in Adjusted EBITDA Margin is primarily the result
of a decrease in Intellectual Property Licensing revenue, partially
offset by benefits from cost savings initiatives.
Intellectual Property Licensing Segment Operating
Highlights:
- Samsung has renewed a global multi-year
patent license agreement for the use of Rovi’s video discovery
patents and technologies across Samsung’s smartphone and tablet
devices.
- Minerva Networks entered into a
multi-year intellectual property (IP) license renewal.
- TikiLIVE has extended its intellectual
property (IP) license agreement.
CONFERENCE CALL INFORMATION
TiVo management will host a conference call today,
February 26, 2019, 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 8197906. The conference call may also be accessed via
live webcast in the Investor Relations section of TiVo’s website at
http://ir.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 5, 2019
by dialing (855) 859-2056 (or international +1-404-537-3406) and
entering conference ID 8197906.
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 Excluding
Goodwill Impairment, 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, goodwill impairment,
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 and changes in franchise tax reserves.
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.
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 and changes in franchise tax
reserves. Included in transition costs in the second quarter of
2018 was a $4.5 million loss associated with a legacy TiVo
Solutions legal matter for which a settlement was agreed to in the
third quarter of 2018.
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 Excluding Goodwill Impairment is defined as
GAAP Total Operating costs and expenses excluding goodwill
impairment.
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 and changes in franchise tax
reserves.
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, goodwill impairment,
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 and changes in
franchise tax reserves.
Adjusted EBITDA is defined as GAAP operating income (loss)
excluding depreciation, amortization of intangible assets,
restructuring and asset impairment charges, goodwill impairment,
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 and changes in franchise tax
reserves.
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 cash 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, goodwill impairment, 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, future growth and
success of the Company’s Product and IP Licensing businesses, the
timing of results and the Company’s exploration of strategic
alternatives, as well as future business strategies, future product
offerings and 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, whether inside or outside the Company’s control, in the
Company’s exploration of its strategic alternatives, delays in
development, the failure to deliver competitive service offerings
and lack of market acceptance of any offerings delivered, as well
as the other potential factors described under "Risk Factors"
included in Annual Report on Form 10-K for the year ended December
31, 2018 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,
2018 2017 2018 2017
Revenues, net: Licensing, services and software $ 164,635 $ 206,542
$ 681,130 $ 784,087 Hardware 3,824 7,694 14,735
42,369 Total Revenues, net 168,459 214,236 695,865
826,456 Costs and expenses: Cost of licensing, services and
software revenues, excluding depreciation and amortization of
intangible assets 42,602 43,314 169,149 167,712 Cost of hardware
revenues, excluding depreciation and amortization of intangible
assets 5,231 10,822 19,491 46,699 Research and development 43,391
49,996 177,285 194,382 Selling, general and administrative 47,141
57,903 181,047 205,024 Depreciation 5,212 6,275 21,464 22,144
Amortization of intangible assets 27,873 41,557 147,336 166,657
Restructuring and asset impairment charges 1,493 1,425 10,061
19,048 Goodwill impairment 269,000 — 269,000 —
Total costs and expenses 441,943 211,292
994,833 821,666 Operating (loss) income (273,484 )
2,944 (298,968 ) 4,790 Interest expense (12,909 ) (10,929 ) (49,150
) (42,756 ) Interest income and other, net 2,711 (904 ) 5,682 2,915
(Loss) gain on interest rate swaps (3,760 ) 3,233 3,425 1,859 TiVo
Acquisition litigation — — — (14,006 ) Loss on debt extinguishment
— — — (108 ) Loss on debt modification — — —
(929 ) Loss from continuing operations before income taxes (287,442
) (5,656 ) (339,011 ) (48,235 ) Income tax expense (benefit) 747
(24,095 ) 14,052 (10,279 ) (Loss) income from
continuing operations, net of tax (288,189 ) 18,439 (353,063 )
(37,956 ) (Loss) income from discontinued operations, net of tax
(23 ) — 3,715 — Net (loss) income $ (288,212 )
$ 18,439 $ (349,348 ) $ (37,956 ) Basic (loss)
earnings per share: Continuing operations $ (2.33 ) $ 0.15 $ (2.87
) $ (0.32 ) Discontinued operations — — 0.03 —
Basic (loss) earnings per share
$ (2.33 ) $ 0.15 $ (2.84 ) $ (0.32 ) Weighted average shares
used in computing basic per share amounts 123,802 121,427 123,020
120,355 Diluted (loss) earnings per share: Continuing
operations $ (2.33 ) $ 0.15 $ (2.87 ) $ (0.32 ) Discontinued
operations — — 0.03 — Diluted (loss)
earnings per share $ (2.33 ) $ 0.15 $ (2.84 ) $ (0.32 )
Weighted average shares used in computing diluted per share amounts
123,802 122,362 123,020 120,355 Dividends declared per share
$ 0.18 $ 0.18 $ 0.72 $ 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)
December 31, 2018 December
31, 2017 ASSETS (Unaudited) Current assets: Cash
and cash equivalents $ 161,955 $ 128,965 Short-term marketable
securities 158,956 140,866 Accounts receivable, net 152,866 180,768
Inventory 7,449 11,581 Prepaid expenses and other current assets
30,806 34,751 Total current assets 512,032 496,931
Long-term marketable securities 73,207 82,711 Property and
equipment, net 53,586 55,244 Intangible assets, net 513,770 643,924
Goodwill 1,544,343 1,813,227 Other long-term assets 63,365
71,641 Total assets $ 2,760,303 $ 3,163,678
LIABILITIES AND STOCKHOLDERS’ EQUITY Current
liabilities: Accounts payable and accrued expenses $ 104,981 $
135,852 Unearned revenue 46,072 55,393 Current portion of long-term
debt 373,361 7,000 Total current liabilities 524,414
198,245 Taxes payable, less current portion 5,156 3,947 Unearned
revenue, less current portion 54,495 58,283 Long-term debt, less
current portion 618,776 976,095 Deferred tax liabilities, net
45,030 50,356 Other long-term liabilities 19,491 23,736
Total liabilities 1,267,362 1,310,662 Stockholders' equity:
Preferred stock — — Common stock 126 123 Treasury stock (32,124 )
(24,740 ) Additional paid-in capital 3,239,395 3,273,022
Accumulated other comprehensive loss (3,869 ) (2,738 ) Accumulated
deficit (1,710,587 ) (1,392,651 ) Total stockholders’ equity
1,492,941 1,853,016
Total liabilities and stockholders’
equity
$ 2,760,303 $ 3,163,678
See notes to the Consolidated Financial
Statements in our Annual Report on Form 10-K.
TIVO CORPORATION AND
SUBSIDIARIES
REVENUE AND SEGMENT DETAILS
(In thousands)
(Unaudited)
Three Months Ended December 31, Year Ended
December 31, 2018 2017 2018
2017 Total Revenues, net $ 168,459 $ 214,236 $ 695,865 $
826,456 Legacy TiVo Solutions IP Licenses — (25,847 ) (20,063 )
(97,136 ) Hardware (3,824 ) (7,694 ) (14,735 ) (42,369 ) Other
Products (3,660 ) (689 ) (8,667 ) (4,548 ) Core Revenue (excludes
revenue from Legacy TiVo Solutions IP Licenses, Hardware and Other
Products) $ 160,975 $ 180,006 $ 652,400 $
682,403
Three Months Ended December 31,
Year Ended December 31, 2018 2017 2018
2017 Product Revenue Platform Solutions $ 74,519 $ 80,606 $
315,814 $ 334,004 Software and Services 18,300 19,225 76,249 84,964
Other 3,660 689 8,667 4,548 Total
Product Revenue, net 96,479 100,520 400,730 423,516 IP
Licensing Revenue US Pay TV Providers 42,348 83,608 185,954 278,973
CE Manufacturers 8,890 12,923 35,644 51,219 New Media,
International Pay TV Providers and Other 20,742 17,185
73,537 72,748 Total IP Licensing Revenue, net
71,980 113,716 295,135 402,940 Total
Revenues, net $ 168,459 $ 214,236 $ 695,865 $
826,456
Three Months Ended December 31,
Year Ended December 31, 2018 2017 2018
2017 Total Product Revenue, net $ 96,479 $ 100,520 $ 400,730
$ 423,516 Hardware (3,824 ) (7,694 ) (14,735 ) (42,369 ) Other
Products (3,660 ) (689 ) (8,667 ) (4,548 ) Core Product Revenue
(excludes revenue from Hardware and Other Products) $ 88,995
$ 92,137 $ 377,328 $ 376,599 Total IP
Licensing Revenue, net $ 71,980 $ 113,716 $ 295,135 $ 402,940
Legacy TiVo Solutions IP Licenses — (25,847 ) (20,063 )
(97,136 ) Core Intellectual Property Licensing Revenue (excludes
revenue from Legacy TiVo Solutions IP Licenses) $ 71,980 $
87,869 $ 275,072 $ 305,804
Three
Months Ended December 31, Year Ended December 31,
2018 2017 2018 2017 Adjusted EBITDA:
Product $ 13,039 $ 3,727 $ 67,010 $ 46,409 IP Licensing 46,238
85,904 195,603 305,881 Corporate (17,136 ) (15,064 ) (62,521 )
(62,148 ) Adjusted EBITDA $ 42,141 $ 74,567 $ 200,092
$ 290,142
TIVO CORPORATION AND
SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP
FINANCIAL INFORMATION
(In thousands) (Unaudited)
Three Months Ended December 31,
Year Ended December 31, 2018 2017
2018 2017
GAAP loss before income taxes from
continuing operations
$ (287,442 ) $ (5,656 ) $ (339,011 ) $ (48,235 ) Amortization of
intangible assets 27,873 41,557 147,336 166,657 Restructuring and
asset impairment charges 1,493 1,425 10,061 19,048 Goodwill
impairment 269,000 —
269,000
— Equity-based compensation 11,553 13,780 39,779 52,561
Transaction, transition and integration costs 494
4,663
9,797 20,364 Earnout amortization —
958
1,494 3,833 CEO transition cash costs — 4,305
(975
) 4,305 Remeasurement of contingent consideration — (1,340 ) 1,104
(1,023 ) 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 (145 ) —
(662
) (3,143 ) Accretion of contingent consideration — 123 235 634
Amortization of note issuance costs 591 548 2,300 2,136
Amortization of convertible note discount 3,369 3,217 13,246 12,645
Mark-to-market loss related to interest rate swaps 3,365
(5,120 ) (6,848 ) (10,215 ) Non-GAAP
Pre-tax Income $ 30,151 $ 60,309 $ 146,856 $
234,774
Three Months Ended December 31,
Year Ended December 31,
2018
2017
2018
2017 GAAP Diluted weighted average shares outstanding
123,802 122,362 123,020 120,355 Dilutive effect of equity-based
compensation awards 536 —
575
1,039 Non-GAAP Diluted Weighted Average Shares
Outstanding 124,338 122,362
123,595 121,394
Three Months Ended
December 31, Year Ended December 31, 2018
2017 2018 2017 GAAP Cost of licensing,
services and software revenues, excluding depreciation and
amortization of intangible assets $ 42,602 $ 43,314 $ 169,149 $
167,712 Equity-based compensation (1,295 ) (1,244 ) (4,558 ) (4,504
) Transaction, transition and integration costs (315 )
(163 ) (373 ) (530 ) Non-GAAP Cost of
Licensing, Services and Software Revenues $ 40,992 $ 41,907
$ 164,218 $ 162,678
Three Months
Ended December 31, Year Ended December 31, 2018
2017 2018 2017 GAAP Cost of hardware revenues,
excluding depreciation and amortization of intangible assets $
5,231 $ 10,822 $ 19,491 $ 46,699 Transaction, transition and
integration costs — — —
(1,021 ) Non-GAAP Cost of Hardware Revenues $ 5,231 $
10,822 $ 19,491 $ 45,678
Three
Months Ended December 31, Year Ended December 31,
2018 2017 2018 2017 GAAP Research and
development expenses $ 43,391 $ 49,996 $ 177,285 $ 194,382
Equity-based compensation (4,029 ) (3,912 ) (13,986 ) (16,771 )
Transaction, transition and integration costs (178 ) (1,029 )
(1,613 ) (4,474 ) Earnout amortization — (184
) (287 ) (736 ) GAAP Research and development
expenses $ 39,184 $ 44,871 $ 161,399 $ 172,401
Three Months Ended December 31, Year Ended
December 31, 2018 2017 2018 2017
GAAP Selling, general and administrative expenses $ 47,141 $ 57,903
$ 181,047 $ 205,024 Equity-based compensation (6,229 ) (8,624 )
(21,235 ) (31,286 ) Transaction, transition and integration costs
(1
) (3,471 ) (7,811 ) (14,339 ) Earnout amortization — (774 ) (1,207
) (3,097 ) CEO transition cash costs — (4,305 ) 975 (4,305 )
Remeasurement of contingent consideration — 1,340 (1,104 ) 1,023
Gain on settlement of acquired receivable — —
— 2,537 Non-GAAP Selling,
General and Administrative Expenses $ 40,911 $ 42,069
$ 150,665 $ 155,557
Three Months Ended
December 31, Year Ended December 31, 2018
2017 2018 2017 GAAP Total operating costs and
expenses $ 441,943 $ 211,292 $ 994,833 $ 821,666 Goodwill
impairment (269,000 ) — (269,000 )
— Non-GAAP Total OpEx Excluding Goodwill Impairment $
172,943 $ 211,292 $ 725,833 $ 821,666
Three Months Ended December 31, Year Ended
December 31, 2018 2017 2018 2017
GAAP Total operating costs and expenses $ 441,943 $ 211,292 $
994,833 $ 821,666 Depreciation (5,212 ) (6,275 ) (21,464 ) (22,144
) Amortization of intangible assets (27,873 ) (41,557 ) (147,336 )
(166,657 ) Restructuring and asset impairment charges (1,493 )
(1,425 ) (10,061 ) (19,048 ) Goodwill impairment (269,000 ) —
(269,000 ) — Equity-based compensation (11,553 ) (13,780 ) (39,779
) (52,561 ) Transaction, transition and integration costs (494 )
(4,663 ) (9,797 ) (20,364 ) Earnout amortization — (958 ) (1,494 )
(3,833 ) CEO transition cash costs — (4,305 ) 975 (4,305 )
Remeasurement of contingent consideration — 1,340 (1,104 ) 1,023
Gain on settlement of acquired receivable — —
— 2,537 Non-GAAP Total COGS and
OpEx $ 126,318 $ 139,669 $ 495,773 $ 536,314
Three Months Ended December 31, Year Ended December
31, 2018 2017 2018 2017 GAAP
Operating (loss) income $ (273,484 ) $ 2,944 $ (298,968 ) $ 4,790
Depreciation 5,212 6,275 21,464 22,144 Amortization of intangible
assets 27,873 41,557 147,336 166,657 Restructuring and asset
impairment charges 1,493 1,425 10,061 19,048 Goodwill impairment
269,000 — 269,000 — Equity-based compensation 11,553 13,780 39,779
52,561 Transaction, transition and integration costs 494 4,663
9,797 20,364 Earnout amortization — 958 1,494 3,833 CEO transition
cash costs — 4,305 (975 ) 4,305 Remeasurement of contingent
consideration — (1,340 ) 1,104 (1,023 ) Gain on settlement of
acquired receivable — — —
(2,537 ) Adjusted EBITDA $ 42,141 $ 74,567 $
200,092 $ 290,142
Three Months Ended
December 31, Year Ended December 31, 2018
2017 2018 2017 GAAP Interest expense $ (12,909
) $ (10,929 ) $ (49,150 ) $ (42,756 ) Accretion of contingent
consideration — 123 235 634 Amortization of note issuance costs 591
548 2,300 2,136 Amortization of convertible note discount 3,369
3,217 13,246 12,645 Reclassify current period cost of interest rate
swaps (396 ) (1,886 ) (3,423 ) (8,356 )
Non-GAAP Interest Expense $ (9,345 ) $ (8,927 ) $ (36,792 ) $
(35,697 )
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Investor RelationsDebi
PalmerTiVo Corporation+1 818-295-6651debi.palmer@tivo.com
Press RelationsLerin
O'NeillTiVo Corporation+1 408-562-8455lerin.oneill@tivo.com
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