Strong Third Quarter Including 8% Growth in our
IP Licensing Business Continued to Streamline the Business
Operations in Preparation for Spin Launched TiVo+
TiVo Corporation (NASDAQ: TIVO), the company that brings
entertainment together, today reported financial results for its
third quarter ended September 30, 2019.
“We are very focused on Company execution, and we delivered
solid financial results in the quarter, while accomplishing key
business milestones,” said Dave Shull, President and Chief
Executive Officer. “We continue to make progress with the
separation of our IP Licensing and Product businesses and are
targeting completion of the transaction in April 2020. Our IP
Licensing business expanded its customer base in the quarter and
reported 8% year-over-year revenue growth. We continue to
streamline the Product business for future success, and are pleased
with the launch of TiVo+ last month. We are excited about our
expanding pipeline of new and innovative products to fuel future
growth heading into 2020.”
TiVo Third Quarter 2019 Financial Highlights:
- The Company further streamlined the Product business in the
third quarter and expects to accelerate additional operating cost
improvements in the fourth quarter.
- Increased fiscal 2019 expectations for Adjusted EBITDA.
- Continuing progress with the separation and targeting
completion of the transaction by April 2020.
TiVo Third Quarter 2019 Business and Operating
Highlights:
Product Business
- Launched new innovative products, including TiVo+ in October,
which delivers live streaming channels and thousands of movies and
TV shows to viewers in an app-free environment, making them easy to
find, watch, and enjoy. TiVo+ provides free content for TiVo
customers and opportunities for advertisers to reach highly engaged
television audiences with targeted messages.
- TiVo continues to expand its Android TVTM-based IPTV version of
TiVo User Experience 4. We now have seven North American operators
who will deploy this solution, up from five last quarter, and we
continue to expand internationally. Liberty Latin America selected
TiVo’s Android TV-based platform to bring cutting-edge innovations
to its video customers in Puerto Rico, and they plan to launch this
platform in other markets across Latin America.
- TiVo’s Personalized Content Discovery solution continues to be
adopted by leading market players. As part of Vodafone Group’s new
TV service in Portugal, Vodafone is deploying its new “Intelligent
Voice Search” feature, which uses TiVo’s natural language voice
solution to enable users to find and enjoy entertainment content by
simply speaking into their remotes.
Intellectual Property Licensing Business
- The IP Licensing business continues to build on a strong,
diverse base of customers and in Q3 reported 8% year-over-year
revenue growth.
- The Company is seeing significant demand for our IP portfolio
in international markets. This quarter we licensed a number of
over-the-top and IPTV video streaming providers. We signed a new
deal with D’Live to license OTT services in Korea.
- Canada is also an area of future expansion for us. Towards that
endeavor, we signed a new, multi-year license agreement with
Canadian operator Eastlink.
2019 Full Year Outlook:
The Company updated its 2019 full-year outlook to1:
Current Expectations
Previous Expectations
(August 7, 2019)
Low
High
Low
High
Total revenue, net
$
655 million
$
665 million
$
650 million
$
665 million
GAAP loss before income taxes
$
198 million
$
203 million
$
69 million
$
77 million
Adjusted EBITDA
$
190 million
$
200 million
$
180 million
$
190 million
Non-GAAP Pre-tax Income
$
137 million
$
145 million
$
129 million
$
137 million
Cash Taxes
$
28 million
$
29 million
$
28 million
$
29 million
GAAP Diluted Weighted Average Shares
Outstanding
126 million
126 million
Non-GAAP Diluted Weighted Average Shares
Outstanding
127 million
127 million
1 Adjusted EBITDA, Non-GAAP Pre-tax Income,
Non-GAAP Diluted Weighted Average Shares Outstanding and Cash Taxes
are defined below in the section entitled “Non-GAAP Financial
Information.” Reconciliations between GAAP and Non-GAAP amounts are
provided in the tables below. In accordance with the SEC’s
interpretations on the use of Non-GAAP financial measures, TiVo
does not report net income or EPS on a non-GAAP basis; however,
TiVo provides financial metrics, including Non-GAAP Pre-tax Income,
Non-GAAP Diluted Weighted Average Shares Outstanding and Cash
Taxes, to assist those wanting to calculate such measures on a
Non-GAAP basis.
Separation Process Update:
The Company continues to believe that separating the IP
Licensing and Product businesses is the best strategy to maximize
shareholder value in today's rapidly evolving market landscape. As
stand-alone separate entities, unconstrained by each other, the two
businesses will be better positioned to pursue growth
opportunities.
TiVo has made excellent progress with the separation process.
The Company is actively interviewing candidates to fill out the
management teams of both companies, standing up separate systems,
and working with the IRS and the SEC to prepare for separation. The
Company is currently targeting completion of the transaction in
April 2020 and expects to provide further updates in the coming
months.
Capital Allocation:
With the planned separation only months away, we are working to
set up each business with the optimal capital structure to succeed
as independent entities. To that end, TiVo’s Board of Directors
decided not to declare a cash dividend this quarter while we stand
up two separate balance sheets. As the Company repays its remaining
2020 Convertible Notes by their maturity date, refinances its Term
Loan B and separates the businesses, it is critical to give each
business the capital needed to make future investments in strategic
initiatives to drive long-term growth.
Third Quarter 2019 Summary Financial Results:
Quarterly Financial Information
(In thousands)
Three Months Ended September
30,
2019
2018
% Change
GAAP Consolidated Results
Product Revenue
$
82,788
$
94,612
(12
)%
IP Licensing Revenue
75,736
70,097
8
%
Total Revenues, net
$
158,524
$
164,709
(4
)%
GAAP Total operating costs and
expenses
$
296,241
$
172,390
72
%
Total OpEx Excluding Goodwill
Impairment
$
158,788
$
172,390
(8
)%
Operating loss
$
(137,717
)
$
(7,681
)
1,693
%
Loss from continuing operations before
income taxes
$
(149,091
)
$
(18,223
)
718
%
Loss from continuing operations, net of
tax
$
(151,010
)
$
(22,992
)
557
%
GAAP Diluted weighted average shares
outstanding
126,081
123,459
Total Revenues, net
$
158,524
$
164,709
(4
)%
Legacy TiVo Solutions IP Licenses
—
(2,795
)
(100
)%
Hardware
(2,606
)
(3,926
)
(34
)%
Other Products
(934
)
(1,614
)
(42
)%
Core Revenue (excludes revenue from
Legacy TiVo Solutions IP Licenses, Hardware and Other
Products)
$
154,984
$
156,374
(1
)%
- Product revenues were down $11.8 million or 12% year-over-year.
Q3 2018 offers a hard compare for this past quarter, as that
quarter included a $3.3 million benefit from a Passport contract
renewal that included guaranteed minimums that were all recognized
in the year-ago quarter. There was also a reduction in revenues
recognized in the quarter of approximately $1.8 million related to
adjusted subscriber reporting from Latin American operators. We did
not have a similar adjustment a year ago, nor do we anticipate a
similar adjustment next quarter. Additionally, nonrecurring
engineering and consumer-related revenues contributed to the
year-on-year decline. These revenue declines were partially offset
by an increase in revenue from an international cable operator
exceeding its cumulative contractual minimums in 2019.
- IP Licensing revenues increased by $5.6 million, or 8%
year-over-year, driven by an increase in catch up payments and new
licenses in our New Media, International Pay TV Providers and Other
vertical. These increases were partially offset by the prior year
benefiting from $2.8 million of Legacy TiVo Solutions Time Warp
revenue.
- Total OpEx Excluding Goodwill Impairment decreased by $13.6
million, or 8% on a year-over-year basis, primarily due to a
reduction in compensation costs as a result of our cost saving
initiatives and lower Amortization of intangible assets, partially
offset by Separation and transformation costs.
- During the quarter, the Company recorded a $137.5 million
non-cash Goodwill impairment charge driven by the sustained decline
in its stock price and a decrease in its long-term forecast for the
Product business.
(In thousands)
Three Months Ended September
30,
2019
2018
% Change
Non-GAAP Consolidated Results
Adjusted EBITDA
$
50,052
$
47,076
6
%
Non-GAAP Pre-tax Income
36,802
32,893
12
%
Cash Taxes
6,305
3,687
71
%
Non-GAAP Diluted Weighted Average Shares
Outstanding
126,858
124,130
Segment Results and Operating Highlights - Product:
(In thousands)
Three Months Ended September
30,
2019
2018
% Change
Platform Solutions
$
62,083
$
73,147
(15
)%
Software and Services
19,771
19,851
—
%
Other
934
1,614
(42
)%
Total Product Revenue, net
82,788
94,612
(12
)%
Adjusted Operating Expenses
69,386
79,347
(13
)%
Adjusted EBITDA
$
13,402
$
15,265
(12
)%
Adjusted EBITDA Margin
16.2
%
16.1
%
Total Product Revenue, net
$
82,788
$
94,612
(12
)%
Hardware
(2,606
)
(3,926
)
(34
)%
Other Products
(934
)
(1,614
)
(42
)%
Core Product Revenue (excludes revenue
from Hardware and Other Products)
$
79,248
$
89,072
(11
)%
Segment Results and Operating Highlights - IP
Licensing:
(In thousands)
Three Months Ended September
30,
2019
2018
% Change
US Pay TV Providers
$
41,896
$
44,474
(6
)%
CE Manufacturers
15,580
8,859
76
%
New Media, International Pay TV Providers
and Other
18,260
16,764
9
%
Total IP Licensing Revenue, net
75,736
70,097
8
%
Adjusted Operating Expenses
25,659
23,461
9
%
Adjusted EBITDA
$
50,077
$
46,636
7
%
Adjusted EBITDA Margin
66.1
%
66.5
%
Total IP Licensing Revenue, net
$
75,736
$
70,097
8
%
Legacy TiVo Solutions IP Licenses
—
(2,795
)
(100
)%
Core Intellectual Property Licensing
Revenue (excludes revenue from Legacy TiVo Solutions IP
Licenses)
$
75,736
$
67,302
13
%
Conference Call Information
TiVo management will host a conference call today, November 7,
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 call are welcome to call (866)
621-1214 (or international +1-706-643-4013) and reference
conference ID 5387119. 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 will be
accessible shortly after the live call ends through November 14,
2019 by dialing (855) 859-2056 (or international +404-537-3406) and
entering conference ID 5387119.
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, discounts on
convertible debt and mark-to-market adjustments for interest rate
swaps and interest on escheat liabilities; 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 goodwill impairment, restructuring and
asset impairment charges, separation and transformation costs,
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 escheat liabilities.
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 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, 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, separation and transformation costs,
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 and gain on settlement of acquired
receivable.
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.
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, separation and transformation costs, 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 and
additional depreciation resulting from facility rationalization
actions.
Non-GAAP Total COGS and OpEx is defined as GAAP Total Operating
costs and expenses, excluding depreciation, amortization of
intangible assets, goodwill impairment, restructuring and asset
impairment charges, equity-based compensation, separation and
transformation costs, 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 and gain on
settlement of acquired receivable.
Adjusted EBITDA is defined as GAAP operating income (loss)
excluding depreciation, amortization of intangible assets, goodwill
impairment, restructuring and asset impairment charges,
equity-based compensation, strategic review costs, separation and
transformation costs, 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 and gain on
settlement of acquired receivable.
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 escheat liability, 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 or dispose of
businesses on a predictable cycle, management excludes the
amortization of intangible assets, separation and transformation
costs, 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 goodwill impairment, 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 escheat liability. 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, mark-to-market adjustments for
interest rate swaps and interest on escheat liability 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) brings entertainment together, making it
easy to find, watch and enjoy. We serve up the best movies, shows
and videos from across live TV, on-demand, streaming services and
countless apps, helping people to watch on their terms. For
studios, networks and advertisers, TiVo delivers a passionate group
of watchers to increase viewership and engagement across all
screens. Go to tivo.com and enjoy watching.
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,
profitability and success of the Company’s Product and IP Licensing
businesses, the timing and completion of the Company’s debt
refinancing and repayment of the remaining 2020 convertible notes,
the success of the Company's plans to separate the Product and IP
Licensing businesses into two independent companies, the
realization of stockholder value resulting from separation of the
businesses, growth of certain markets for intellectual property
licensing, 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
spin-off process, delays in product development or deployments, any
impact of the separation of the businesses or the timing of the
separation on our existing credit facilities and convertible notes,
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 TiVo’s
Quarterly Report on Form 10-Q for the three months ended September
30, 2019 and 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.
Android TV is a trademark of Google LLC.
TIVO CORPORATION AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(In thousands, except per
share amounts)
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Revenues, net:
Licensing, services and software
$
155,918
$
160,783
$
486,575
$
516,495
Hardware
2,606
3,926
6,356
10,911
Total Revenues, net
158,524
164,709
492,931
527,406
Costs and expenses:
Cost of licensing, services and software
revenues, excluding depreciation and amortization of intangible
assets
39,263
40,749
114,482
126,547
Cost of hardware revenues, excluding
depreciation and amortization of intangible assets
4,289
4,220
14,150
14,260
Research and development
34,038
42,053
113,621
133,894
Selling, general and administrative
45,677
39,867
139,270
133,906
Depreciation
5,314
5,338
16,005
16,252
Amortization of intangible assets
28,212
37,242
84,574
119,463
Restructuring and asset impairment
charges
1,995
2,921
6,484
8,568
Goodwill impairment
137,453
—
137,453
—
Total costs and expenses
296,241
172,390
626,039
552,890
Operating loss
(137,717
)
(7,681
)
(133,108
)
(25,484
)
Interest expense
(11,844
)
(12,436
)
(36,480
)
(36,241
)
Interest income and other, net
860
861
4,150
2,971
(Loss) gain on interest rate swaps
(390
)
1,033
(5,475
)
7,185
Loss on debt extinguishment
—
—
(300
)
—
Loss from continuing operations before
income taxes
(149,091
)
(18,223
)
(171,213
)
(51,569
)
Income tax expense
1,919
4,769
15,981
13,305
Loss from continuing operations, net of
tax
(151,010
)
(22,992
)
(187,194
)
(64,874
)
(Loss) Income from discontinued
operations, net of tax
(379
)
143
(379
)
3,738
Net loss
$
(151,389
)
$
(22,849
)
$
(187,573
)
$
(61,136
)
Basic loss per share:
Continuing operations
$
(1.20
)
$
(0.19
)
$
(1.50
)
$
(0.53
)
Discontinued operations
—
—
—
0.03
Basic loss per share
$
(1.20
)
$
(0.19
)
$
(1.50
)
$
(0.50
)
Weighted average shares used in computing
basic per share amounts
126,081
123,459
125,160
122,756
Diluted loss per share:
Continuing operations
$
(1.20
)
$
(0.19
)
$
(1.50
)
$
(0.53
)
Discontinued operations
—
—
—
0.03
Diluted loss per share
$
(1.20
)
$
(0.19
)
$
(1.50
)
$
(0.50
)
Weighted average shares used in computing
diluted per share amounts
126,081
123,459
125,160
122,756
Dividends declared per share
$
0.08
$
0.18
$
0.34
$
0.54
See notes to the Condensed Consolidated
Financial Statements in our Quarterly Report on Form 10-Q.
TIVO CORPORATION AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands)
September 30, 2019
December 31, 2018
ASSETS
(Unaudited)
Current assets:
Cash and cash equivalents
$
144,451
$
161,955
Short-term marketable securities
132,208
158,956
Accounts receivable, net
183,827
152,866
Inventory
3,056
7,449
Prepaid expenses and other current
assets
30,842
30,806
Total current assets
494,384
512,032
Long-term marketable securities
4,986
73,207
Property and equipment, net
50,361
53,586
Intangible assets, net
442,857
513,770
Goodwill
1,406,987
1,544,343
Right-of-use assets
63,064
—
Other long-term assets
59,953
63,365
Total assets
$
2,522,592
$
2,760,303
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable and accrued expenses
$
107,815
$
104,981
Unearned revenue
49,579
46,072
Current portion of long-term debt
289,284
373,361
Total current liabilities
446,678
524,414
Unearned revenue, less current portion
46,511
54,495
Long-term debt, less current portion
619,947
618,776
Deferred tax liabilities, net
39,921
45,030
Long-term lease liabilities
65,650
—
Other long-term liabilities
13,618
24,647
Total liabilities
1,232,325
1,267,362
Stockholders' equity:
Preferred stock
—
—
Common stock
129
126
Treasury stock
(37,516
)
(32,124
)
Additional paid-in capital
3,229,334
3,239,395
Accumulated other comprehensive loss
(3,520
)
(3,869
)
Accumulated deficit
(1,898,160
)
(1,710,587
)
Total stockholders’ equity
1,290,267
1,492,941
Total liabilities and stockholders’
equity
$
2,522,592
$
2,760,303
See notes to the Condensed Consolidated
Financial Statements in our Quarterly Report on Form 10-Q.
TIVO CORPORATION AND
SUBSIDIARIES
REVENUE AND SEGMENT
DETAILS
(In thousands)
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Total Revenues, net
$
158,524
$
164,709
$
492,931
$
527,406
Legacy TiVo Solutions IP Licenses
—
(2,795
)
—
(20,063
)
Hardware
(2,606
)
(3,926
)
(6,356
)
(10,911
)
Other Products
(934
)
(1,614
)
(1,531
)
(5,007
)
Core Revenue (excludes revenue from Legacy
TiVo Solutions IP Licenses, Hardware and Other Products)
$
154,984
$
156,374
$
485,044
$
491,425
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Product Revenue
Platform Solutions
$
62,083
$
73,147
$
198,851
$
241,295
Software and Services
19,771
19,851
58,915
57,949
Other
934
1,614
1,531
5,007
Total Product Revenue, net
82,788
94,612
259,297
304,251
IP Licensing Revenue
US Pay TV Providers
41,896
44,474
126,009
143,606
CE Manufacturers
15,580
8,859
31,928
26,754
New Media, International Pay TV Providers
and Other
18,260
16,764
75,697
52,795
Total IP Licensing Revenue, net
75,736
70,097
233,634
223,155
Total Revenues, net
$
158,524
$
164,709
$
492,931
$
527,406
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Total Product Revenue, net
$
82,788
$
94,612
$
259,297
$
304,251
Hardware
(2,606
)
(3,926
)
(6,356
)
(10,911
)
Other Products
(934
)
(1,614
)
(1,531
)
(5,007
)
Core Product Revenue (excludes revenue
from Hardware and Other Products)
$
79,248
$
89,072
$
251,410
$
288,333
Total IP Licensing Revenue, net
$
75,736
$
70,097
$
233,634
$
223,155
Legacy TiVo Solutions IP Licenses
—
(2,795
)
—
(20,063
)
Core Intellectual Property Licensing
Revenue (excludes revenue from Legacy TiVo Solutions IP
Licenses)
$
75,736
$
67,302
$
233,634
$
203,092
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Adjusted EBITDA:
Product
$
13,402
$
15,265
$
29,353
$
53,971
IP Licensing
50,077
46,636
164,809
149,365
Corporate
(13,427
)
(14,825
)
(44,048
)
(45,385
)
Adjusted EBITDA
$
50,052
$
47,076
$
150,114
$
157,951
TIVO CORPORATION AND
SUBSIDIARIES
RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL INFORMATION
(In thousands)
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
GAAP loss from continuing operations
before income taxes
$
(149,091
)
$
(18,223
)
$
(171,213
)
$
(51,569
)
Amortization of intangible assets
28,212
37,242
84,574
119,463
Restructuring and asset impairment
charges
1,995
2,921
6,484
8,568
Goodwill impairment
137,453
—
137,453
—
Equity-based compensation
5,148
9,471
22,459
28,226
Separation and transformation costs
9,458
—
13,905
—
Transition and integration costs
189
(148
)
1,342
9,303
Earnout amortization
—
—
—
1,494
CEO transition cash costs
—
—
1,000
(975
)
Remeasurement of contingent
consideration
—
(67
)
—
1,104
Gain on sale of strategic investments
—
(517
)
—
(517
)
Loss on debt extinguishment
—
—
300
—
Change in escheat liability
—
—
165
—
Accretion of contingent consideration
—
43
—
235
Amortization of note issuance costs
547
580
1,739
1,709
Amortization of convertible note
discount
2,983
3,331
9,791
9,877
Mark-to-market loss (income) related to
interest rate swaps
(92
)
(1,740
)
4,607
(10,213
)
Interest on escheat liability
—
—
(418
)
—
Non-GAAP Pre-tax Income
$
36,802
$
32,893
$
112,188
$
116,705
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
GAAP Diluted weighted average shares
outstanding
126,081
123,459
125,160
122,756
Dilutive effect of equity-based
compensation awards
777
671
675
588
Non-GAAP Diluted Weighted Average Shares
Outstanding
126,858
124,130
125,835
123,344
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
GAAP Cost of licensing, services and
software revenues, excluding depreciation and amortization of
intangible assets
$
39,263
$
40,749
$
114,482
$
126,547
Equity-based compensation
(590
)
(1,153
)
(2,242
)
(3,263
)
Transition and integration costs
(86
)
(3
)
(469
)
(58
)
Non-GAAP Cost of Licensing, Services and
Software Revenues
$
38,587
$
39,593
$
111,771
$
123,226
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
GAAP Cost of hardware revenues, excluding
depreciation and amortization of intangible assets
$
4,289
$
4,220
$
14,150
$
14,260
Equity-based compensation
(13
)
—
(70
)
—
Non-GAAP Cost of Hardware Revenues
$
4,276
$
4,220
$
14,080
$
14,260
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
GAAP Research and development expenses
$
34,038
$
42,053
$
113,621
$
133,894
Equity-based compensation
(1,021
)
(3,011
)
(5,333
)
(9,957
)
Transition and integration costs
(20
)
(15
)
(587
)
(1,435
)
Earnout amortization
—
—
—
(287
)
Non-GAAP Research and Development
Expenses
$
32,997
$
39,027
$
107,701
$
122,215
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
GAAP Selling, general and administrative
expenses
$
45,677
$
39,867
$
139,270
$
133,906
Equity-based compensation
(3,524
)
(5,307
)
(14,814
)
(15,006
)
Separation and transformation costs
(9,458
)
—
(13,905
)
—
Transition and integration costs
(83
)
166
(286
)
(7,810
)
Earnout amortization
—
—
—
(1,207
)
CEO transition cash costs
—
—
(1,000
)
975
Remeasurement of contingent
consideration
—
67
—
(1,104
)
Non-GAAP Selling, General and
Administrative Expenses
$
32,612
$
34,793
$
109,265
$
109,754
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
GAAP Total operating costs and
expenses
$
296,241
$
172,390
$
626,039
$
552,890
Depreciation
(5,314
)
(5,338
)
(16,005
)
(16,252
)
Amortization of intangible assets
(28,212
)
(37,242
)
(84,574
)
(119,463
)
Restructuring and asset impairment
charges
(1,995
)
(2,921
)
(6,484
)
(8,568
)
Goodwill impairment
(137,453
)
—
(137,453
)
—
Equity-based compensation
(5,148
)
(9,471
)
(22,459
)
(28,226
)
Separation and transformation costs
(9,458
)
—
(13,905
)
—
Transition and integration costs
(189
)
148
(1,342
)
(9,303
)
Earnout amortization
—
—
—
(1,494
)
CEO transition cash costs
—
—
(1,000
)
975
Remeasurement of contingent
consideration
—
67
—
(1,104
)
Non-GAAP Total COGS and OpEx
$
108,472
$
117,633
$
342,817
$
369,455
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
GAAP Total operating costs and
expenses
$
296,241
$
172,390
$
626,039
$
552,890
Goodwill impairment
(137,453
)
—
(137,453
)
—
Total OpEx Excluding Goodwill
Impairment
$
158,788
$
172,390
$
488,586
$
552,890
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
GAAP Operating loss
$
(137,717
)
$
(7,681
)
$
(133,108
)
$
(25,484
)
Depreciation
5,314
5,338
16,005
16,252
Amortization of intangible assets
28,212
37,242
84,574
119,463
Restructuring and asset impairment
charges
1,995
2,921
6,484
8,568
Goodwill impairment
137,453
—
137,453
—
Equity-based compensation
5,148
9,471
22,459
28,226
Separation and transformation costs
9,458
—
13,905
—
Transition and integration costs
189
(148
)
1,342
9,303
Earnout amortization
—
—
—
1,494
CEO transition cash costs
—
—
1,000
(975
)
Remeasurement of contingent
consideration
—
(67
)
—
1,104
Adjusted EBITDA
$
50,052
$
47,076
$
150,114
$
157,951
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
GAAP Interest expense
$
(11,844
)
$
(12,436
)
$
(11,844
)
$
(36,241
)
Accretion of contingent consideration
—
43
—
235
Amortization of note issuance costs
547
581
1,739
1,709
Amortization of convertible note
discount
2,983
3,331
9,791
9,877
Reclassify current period cost of interest
rate swaps
(481
)
(706
)
(868
)
(3,027
)
Interest on escheat liability
—
—
(418
)
—
Non-GAAP Interest Expense
$
(8,795
)
$
(9,187
)
$
(26,236
)
$
(27,447
)
TIVO CORPORATION AND
SUBSIDIARIES
RECONCILIATION OF GAAP TO
NON-GAAP FORECAST FINANCIAL INFORMATION
(In millions)
(Unaudited)
FY 2019 Expectations
Low
High
GAAP loss from continuing operations
before income taxes
$
(198
)
$
(203
)
Amortization of intangible assets
113
113
Restructuring and asset impairment
charges
7
8
Goodwill impairment
137
137
Equity-based compensation
29
31
Separation and transformation costs
25
35
Transition and integration costs
2
2
CEO transition cash costs
1
1
Amortization of note issuance costs and
convertible note discount
16
16
Mark-to-market loss related to interest
rate swaps (1)
5
5
Non-GAAP Pre-tax Income (1)
$
137
$
145
Cash Taxes
$
28
$
29
(1) Due to their nature, changes in the mark-to-market of
interest rate swaps have only been included in the outlook to the
extent they have already occurred. Actual results may differ
materially from the outlook.
FY 2019 Expectations
Low
High
GAAP Operating loss
$
(147
)
$
(151
)
Depreciation
23
24
Amortization of intangible assets
113
113
Restructuring and asset impairment
charges
7
8
Goodwill impairment
137
137
Equity-based compensation
29
31
Separation and transformation costs
25
35
Transition and integration costs
2
2
CEO transition cash costs
1
1
Adjusted EBITDA
$
190
$
200
FY 2019 Expectations
GAAP Diluted Weighted Average Shares
Outstanding
126
Dilutive effect of equity-based
compensation awards
1
Non-GAAP Diluted Weighted Average Shares
Outstanding
127
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191107006044/en/
Investor Relations Nicole
Noutsios TiVo Corporation +1 510-315-1003 tivo@nmnadvisors.com
Press Relations Lerin
O'Neill TiVo Corporation +1 408-562-8455 lerin.oneill@tivo.com
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