Continuing Product Innovation with Launch of
TiVo BOLT OTA
Expects Sequential Revenue Growth in Q4
Strategic Alternatives Review Continues
TiVo Corporation (NASDAQ: TIVO) today reported financial results
for the third quarter ended September 30, 2018.
“We delivered solid third quarter results, achieving our
internal plan targets, while continuing to optimize our costs and
are focused on driving sequential revenue growth in the fourth
quarter. We also continue to expand our product portfolio and
recently launched TiVo BOLT OTA,” said Raghu Rau, Interim President
and Chief Executive Officer. “While the strategic review is still
in process, it has informed us of our growth strategy. Combined
with the TiVo Experience 4, we will bring together a broad
portfolio of video content from a variety of sources into a single
discovery experience with multiple advanced advertising
possibilities. I am excited about the prospects of the business and
the strategic initiatives we are undertaking, including moving to
more transactional models, to drive long-term profitable
growth.”
UPDATE ON STRATEGIC ALTERNATIVES TO MAXIMIZE VALUE FOR
SHAREHOLDERS
The Company continues to explore all possible strategic
alternatives to maximize value for our shareholders. As mentioned
on our prior call, we believe there is strategic value in each of
our product and IP businesses. We remain in various active
discussions, but due to the unique nature of our business, the
process is taking longer than we hoped. It is our intention to
complete the strategic review process by no later than our fourth
quarter and year-end 2018 earnings call. Significantly, the
strategic review process is informing our view of TiVo’s growth
strategy which we will discuss on our 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.
That said, TiVo is focusing on driving sequential growth
quarter-on-quarter. However, we also expect sequential quarter
growth in IP litigation spend given the fourth quarter timing of
the Comcast ITC trial.
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from Contracts with Customers, which superseded the previous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 third quarter of 2018, TiVo recognized
approximately $6.2 million less in revenue than it would have under
the previous requirements.
THIRD QUARTER 2018 FINANCIAL
HIGHLIGHTS
Quarterly Financial Information
(In thousands)
Three Months EndedSeptember
30,
2018 2017 % Change GAAP
Consolidated Results Total Revenues, net $ 164,709 $ 197,898
(17)
%
Total costs and expenses 172,390 199,450
(14)
%
Operating loss
(7,681 ) (1,552 ) 395 % Loss from continuing operations before
income taxes (18,223 ) (12,622 ) 44 % Loss from continuing
operations, net of tax (22,992 ) (16,963 ) 36 % GAAP Diluted
weighted average shares outstanding 123,459 120,935
Total
Revenues, net $ 164,709 $ 197,898
(17)
%
Legacy TiVo Solutions IP Licenses (2,795 ) (23,744 )
(88)
%
Hardware (3,926 ) (9,867 )
(60)
%
Other Products (1,614 ) (628 ) 157 %
Core Revenue (excludes
revenue from Legacy TiVo Solutions IP Licenses, Hardware and Other
Products) $ 156,374 $ 163,659
(4)
%
Total Revenues, net and Core Revenue include $3.8 million and
$7.1 million of revenue from out-of-license settlements in Q3 2018
and Q3 2017, respectively. Core Revenue decreased $2.9 million as a
result of adopting the amended revenue recognition guidance on
January 1, 2018. The reduction in Total costs and expenses is the
result of the Company’s continuing cost reduction efforts, a
planned transition away from the hardware business and lower
Amortization of intangible assets.
(In thousands)
Three Months EndedSeptember
30,
2018 2017 % Change Non-GAAP
Consolidated Results Adjusted EBITDA $ 47,076 $ 66,497 (29 )%
Non-GAAP Pre-tax Income 32,893 54,088 (39 )% Cash Taxes 3,687 5,139
(28 )% Non-GAAP Diluted Weighted Average Shares Outstanding
124,130 121,855
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 EndedSeptember
30,
2018 2017 % Change Platform
Solutions $ 73,147 $ 82,244
(11)
%
Software and Services 19,851 20,718
(4)
%
Other 1,614 628
157
% Total Product Revenue, net 94,612 103,590
(9)
%
Adjusted Operating Expenses 79,347 91,307
(13)
%
Adjusted EBITDA $ 15,265 $ 12,283 24 % Adjusted
EBITDA Margin 16.1 % 11.9 % Total Product Revenue, net $
94,612 $ 103,590
(9)
%
Hardware (3,926 ) (9,867 )
(60)
%
Other Products (1,614 ) (628 )
157
% Core Product Revenue (excludes revenue from Hardware and Other
Products) $ 89,072 $ 93,095
(4)
%
The $9.1 million decrease in Platform Solutions revenue was
largely attributable to a $5.9 million decrease in Hardware revenue
due to a planned transition away from the hardware business and a
$4.5 million decrease in revenue from two international MSO
software customers as a result of adopting the amended revenue
recognition guidance on January 1, 2018. Hardware revenue is
expected to continue to decline due to the planned transition away
from the business and as MSO partners continue to shift to
deploying the TiVo service on third-party hardware resulting in a
decrease in the number of TiVo set-top boxes sold to MSO partners.
The reduction in revenue from these two international MSO customers
is expected to continue for the remainder of 2018.
The decrease in Adjusted Operating Expenses primarily relates to
a $5.7 million decrease in the Cost of hardware revenues and
benefits from cost savings initiatives.
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 away from the hardware business
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.
- TiVo introduced TiVo BOLT OTA™ for
antenna, a premium, 4K Ultra High Definition (UHD) capable set-top
box designed to work with HD antenna, equipped with an on-screen
user experience that looks and feels like a high-end cable box. The
launch of TiVo BOLT OTA generated a wide range of reviews across
consumer, business, financial and lifestyle publications
emphasizing the value to customers and many of the key product
benefits.
- A leading provider of integrated
telecommunications services in Latin America initiated the process
of upgrading customers with the new Passport guide in seven
countries.
- One of the largest suppliers of
integrated multimedia services in Eastern Europe selected TiVo’s
STB software solutions for use as part of its Ultra HD
service.
- Blue Ridge Communications signed a
renewal agreement which includes TiVo Experience 4, TiVo’s Next Gen
IPTV Cloud Solution, with services for mobile and streamers.
- Plex, a leading streaming platform for
personal media collections, over-the-air Live TV and DVR, web
shows, podcasts, and video news selected TiVo’s video and music
metadata for its supported platforms.
- Com Hem, a leading provider of
broadband, TV, play and telephony services in Sweden, has deployed
TiVo’s Personalized Content Discovery Platform on its TV and mobile
platforms, including both Android and Apple iOS.
- Frontier Communications has licensed
TiVo’s new Sponsored Discovery product, which makes in-guide
content advertising more relevant for audiences.
- Sky implemented TiVo’s Conversation
solution in German and Italian.
- Sky launched TiVo’s metadata solutions
to its Sky OTT video service in Spain.
- Foxtel, Australia’s leading
subscription-TV platform, has renewed its license to TiVo’s Search
and Recommendation services and will have access to TiVo’s
Personalized Content Discovery platform.
- Alphonso extended its agreement to use
TiVo’s TV Viewership Data for its data analytics services for
brands, networks and agencies.
- Discovery, Inc. expanded its multi-year
Target Audience Delivery and Audience Works for Marketing software
license agreements to include the recently acquired Scripps
Networks Interactive, making the company now the #2 in all of TV
including broadcast and premium pay.
- A major TV broadcasting company has
licensed TiVo’s Targeted Audience Discovery platform for advanced
analytics.
SEGMENT RESULTS AND OPERATING
HIGHLIGHTS - IP LICENSING
(In thousands)
Three Months EndedSeptember
30,
2018 2017 % Change US Pay TV
Providers $ 44,474 $ 63,288
(30)
%
CE Manufacturers 8,859 15,479
(43)
%
New Media, International Pay TV Providers and Other 16,764
15,541
8
% Total IP Licensing Revenue, net 70,097 94,308
(26)
%
Adjusted Operating Expenses 23,461 24,243
(3)
%
Adjusted EBITDA $ 46,636 $ 70,065
(33)
%
Adjusted EBITDA Margin 66.5 % 74.3 % Total IP Licensing
Revenue, net $ 70,097 $ 94,308
(26)
%
Legacy TiVo Solutions IP Licenses (2,795 ) (23,744 )
(88)
%
Core Intellectual Property Licensing Revenue (excludes revenue from
Legacy TiVo Solutions IP Licenses) $ 67,302 $ 70,564
(5)
%
Intellectual Property Licensing revenue decreased 26% in the
third quarter. The $18.8 million decline in revenue from US Pay TV
Providers is primarily due to a $20.9 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
adopting the amended revenue recognition guidance on January 1,
2018 and contract expirations, partially offset by a $1.1 million
increase in revenue from catch-up payments intended to make us
whole for the pre-license period of use. The last of the Time Warp
patent agreements expired in July 2018 and, going forward, there
will no longer be any revenue recognized associated with these
agreements. The decrease in revenue from CE Manufacturers was
primarily attributable to a decrease in catch-up payments intended
to make us whole for the pre-license period and a customer being
out-of-license. We anticipate this customer will eventually execute
a new license.
The decrease in Adjusted Operating Expenses relates to benefits
from cost savings initiatives, partially offset by a $1.1 million
increase in patent litigation costs, which primarily relates to the
ongoing Comcast litigation.
The decrease in Adjusted EBITDA Margin for the third quarter is
primarily the result of a decrease in Intellectual Property
Licensing revenue and a $1.1 million increase in patent litigation
costs, partially offset by benefits from cost savings
initiatives.
Intellectual Property Licensing Segment Operating
Highlights:
- A large American broadcaster expanded
its multi-year patent license agreement to include additional
networks.
- 21st Century Fox signed a multi-year
patent license agreement.
CAPITAL ALLOCATION
On November 1, 2018, TiVo’s Board of Directors declared a cash
dividend of $0.18 per common share, to be paid on December 20, 2018
to stockholders of record as of the close of business on December
6, 2018.
CONFERENCE CALL INFORMATION
TiVo management will host a conference call today,
November 7, 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 8395802. 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 November 14,
2018 by dialing (855) 859-2056 (or international +1-404-537-3406)
and entering conference ID 8395802.
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 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 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, 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, 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, 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,
future revenues to be recognized following adoption of the amended
revenue recognition guidance, 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 TiVo’s Quarterly Report
on Form 10-Q for the three months ended September 30, 2018 and
Annual Report on Form 10-K for the 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
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(In thousands, except per share
amounts)(Unaudited)
Three Months Ended September
30,
Nine Months Ended September 30,
2018 2017 2018 2017
Revenues, net: Licensing, services and software $ 160,783 $ 188,031
$ 516,495 $ 577,545 Hardware 3,926 9,867 10,911
34,675 Total Revenues, net 164,709 197,898 527,406
612,220 Costs and expenses: Cost of licensing, services and
software revenues, excluding depreciation and amortization of
intangible assets 40,749 42,811 126,547 124,398 Cost of hardware
revenues, excluding depreciation and amortization of intangible
assets 4,220 9,889 14,260 35,877 Research and development 42,053
48,872 133,894 144,386 Selling, general and administrative 39,867
47,431 133,906 147,121 Depreciation 5,338 5,015 16,252 15,869
Amortization of intangible assets 37,242 41,722 119,463 125,100
Restructuring and asset impairment charges 2,921 3,710
8,568 17,623 Total costs and expenses 172,390
199,450 552,890 610,374 Operating
(loss) income (7,681 ) (1,552 ) (25,484 ) 1,846 Interest expense
(12,436 ) (10,990 ) (36,241 ) (31,827 ) Interest income and other,
net 861 1,059 2,971 3,819 Gain (loss) on interest rate swaps 1,033
(39 ) 7,185 (1,374 ) TiVo Acquisition litigation — (1,100 ) —
(14,006 ) Loss on debt extinguishment — — — (108 ) Loss on debt
modification — — — (929 ) Loss from continuing
operations before income taxes (18,223 ) (12,622 ) (51,569 )
(42,579 ) Income tax expense 4,769 4,341 13,305
13,816 Loss from continuing operations, net of tax
(22,992 ) (16,963 ) (64,874 ) (56,395 ) Income from discontinued
operations, net of tax 143 — 3,738 —
Net loss $ (22,849 ) $ (16,963 ) $ (61,136 ) $ (56,395 )
Basic loss per share: Continuing operations $ (0.19 ) $ (0.14 ) $
(0.53 ) $ (0.47 ) Discontinued operations — — 0.03
— Basic loss per share $ (0.19 ) $ (0.14 ) $ (0.50 )
$ (0.47 ) Weighted average shares used in computing basic per share
amounts 123,459 120,935 122,756 119,994 Diluted loss per
share: Continuing operations $ (0.19 ) $ (0.14 ) $ (0.53 ) $ (0.47
) Discontinued operations — — 0.03 —
Diluted loss per share $ (0.19 ) $ (0.14 ) $ (0.50 ) $ (0.47 )
Weighted average shares used in computing diluted per share amounts
123,459 120,935 122,756 119,994 Dividends declared per share
$ 0.18 $ 0.18 $ 0.54 $ 0.54
See notes to the Condensed Consolidated
Financial Statements in our Quarterly Report on Form 10-Q.
TIVO CORPORATION AND
SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS(In
thousands)
September 30, 2018
December 31, 2017 ASSETS (Unaudited)
Current assets: Cash and cash equivalents
$
149,655
$
128,965
Short-term marketable securities 162,073 140,866 Accounts
receivable, net 173,749 180,768 Inventory 7,963 11,581 Prepaid
expenses and other current assets 36,012
40,719 Total current assets 529,452 502,899 Long-term
marketable securities 70,296 82,711 Property and equipment, net
50,689 55,244 Intangible assets, net 524,057 643,924 Goodwill
1,813,183 1,813,227 Other long-term assets
57,104
65,673
Total assets
$
3,044,781
$ 3,163,678
LIABILITIES AND STOCKHOLDERS’
EQUITY Current liabilities: Accounts payable and accrued
expenses $ 92,557 $ 135,852 Unearned revenue 49,667 55,393 Current
portion of long-term debt 7,000 7,000
Total current liabilities 149,224 198,245 Taxes payable, less
current portion 4,694 3,947 Unearned revenue, less current portion
50,356 58,283 Long-term debt, less current portion 982,801 976,095
Deferred tax liabilities, net 51,150 50,356 Other long-term
liabilities 14,982 23,736 Total
liabilities 1,253,207 1,310,662 Stockholders' equity: Preferred
stock — — Common stock 126 123 Treasury stock (31,495 ) (24,740 )
Additional paid-in capital 3,249,615 3,273,022 Accumulated other
comprehensive loss (4,297 ) (2,738 ) Accumulated deficit
(1,422,375 ) (1,392,651 ) Total stockholders’ equity
1,791,574 1,853,016 Total liabilities and
stockholders’ equity $ 3,044,781 $ 3,163,678
See notes to the Condensed Consolidated
Financial Statements in our Quarterly Report on Form 10-Q.
TIVO CORPORATION AND
SUBSIDIARIESREVENUE DETAILS(In
thousands)(Unaudited)
Three Months Ended September 30,
Nine Months Ended September 30, 2018
2017 2018 2017 Total Revenues, net $
164,709 $ 197,898 $ 527,406 $ 612,220 Legacy TiVo Solutions IP
Licenses (2,795 ) (23,744 ) (20,063 ) (71,289 ) Hardware (3,926 )
(9,867 ) (10,911 ) (34,675 ) Other Products (1,614 ) (628 ) (5,007
) (3,859 ) Core Revenue (excludes revenue from Legacy TiVo
Solutions IP Licenses, Hardware and Other Products) $ 156,374
$ 163,659 $ 491,425 $ 502,397
Three Months Ended September 30,
Nine Months Ended September 30, 2018
2017 2018 2017 Product Revenue Platform
Solutions $ 73,147 $ 82,244 $ 241,295 $ 253,398 Software and
Services 19,851 20,718 57,949 65,739 Other 1,614 628
5,007 3,859 Total Product Revenue, net 94,612 103,590
304,251 322,996 IP Licensing Revenue US Pay TV Providers
44,474 63,288 143,606 195,365 CE Manufacturers 8,859 15,479 26,754
38,296 New Media, International Pay TV Providers and Other 16,764
15,541 52,795 55,563 Total IP Licensing
Revenue, net 70,097 94,308 223,155 289,224
Total Revenues, net $ 164,709 $ 197,898 $
527,406 $ 612,220
Three Months Ended September 30, Nine Months Ended
September 30, 2018 2017 2018
2017 Total Product Revenue, net $ 94,612 $ 103,590 $ 304,251
$ 322,996 Hardware (3,926 ) (9,867 ) (10,911 ) (34,675 ) Other
Products (1,614 ) (628 ) (5,007 ) (3,859 ) Core Product Revenue
(excludes revenue from Hardware and Other Products) $ 89,072
$ 93,095 $ 288,333 $ 284,462 Total IP
Licensing Revenue, net $ 70,097 $ 94,308 $ 223,155 $ 289,224 Legacy
TiVo Solutions IP Licenses (2,795 ) (23,744 ) (20,063 ) (71,289 )
Core Intellectual Property Licensing Revenue (excludes revenue from
Legacy TiVo Solutions IP Licenses) $ 67,302 $ 70,564
$ 203,092 $ 217,935
TIVO CORPORATION AND
SUBSIDIARIESRECONCILIATION OF GAAP TO NON-GAAP FINANCIAL
INFORMATION(In thousands)(Unaudited)
Three Months Ended September 30,
Nine Months Ended September 30, 2018
2017 2018 2017 GAAP loss before income
taxes from continuing operations $ (18,223 ) $ (12,622 ) $ (51,569
) $ (42,579 ) Amortization of intangible assets 37,242 41,722
119,463 125,100 Restructuring and asset impairment charges 2,921
3,710 8,568 17,623 Equity-based compensation 9,471 13,007 28,226
38,781 Transaction, transition and integration costs (148 ) 3,394
9,303 15,701 Earnout amortization — 958 1,494 2,875 CEO transition
cash costs — — (975 ) — Remeasurement of contingent consideration
(67 ) 243 1,104 317 TiVo Acquisition litigation — 1,100 — 14,006
Loss on debt extinguishment — — — 108 Loss on debt modification — —
— 929 Gain on settlement of acquired receivable — — — (2,537 )
Accelerated depreciation — 639 — 852 Gain on sale of strategic
investments (517 ) — (517 ) (3,143 ) Accretion of contingent
consideration 43 143 235 511 Amortization of note issuance costs
580 538 1,709 1,588 Amortization of convertible note discount 3,331
3,179 9,877 9,428 Mark-to-market loss related to interest rate
swaps (1,740 ) (1,923 ) (10,213 ) (5,095 ) Non-GAAP Pre-tax Income
$ 32,893 $ 54,088 $ 116,705 $ 174,465
Three Months Ended September
30, Nine Months Ended September 30, 2018
2017 2018 2017 GAAP Diluted
weighted average shares outstanding 123,459 120,935 122,756 119,994
Dilutive effect of equity-based compensation awards 671 920 588
1,074 Non-GAAP Diluted Weighted Average Shares Outstanding 124,130
121,855 123,344 121,068
Three
Months Ended September 30, Nine Months Ended
September 30, 2018 2017 2018
2017 GAAP Cost of licensing, services and software revenues,
excluding depreciation and amortization of intangible assets $
40,749 $ 42,811 $ 126,547 $ 124,398 Equity-based compensation
(1,153 ) (1,225 ) (3,263 ) (3,260 ) Transaction, transition and
integration costs (3 ) (94 ) (58 ) (367 ) Non-GAAP Cost of
Licensing, Services and Software Revenues $ 39,593 $ 41,492
$ 123,226 $ 120,771
Three Months Ended September 30,
Nine Months Ended September 30, 2018
2017 2018 2017 GAAP Cost of hardware
revenues, excluding depreciation and amortization of intangible
assets $ 4,220 $ 9,889 $ 14,260 $ 35,877 Transition and integration
costs — — — (1,021 ) Non-GAAP Cost of Hardware
Revenues $ 4,220 $ 9,889 $ 14,260 $ 34,856
Three Months Ended
September 30, Nine Months Ended September 30,
2018 2017 2018 2017 GAAP
Research and development expenses $ 42,053 $ 48,872 $ 133,894 $
144,386 Equity-based compensation (3,011 ) (4,803 ) (9,957 )
(12,859 ) Transaction, transition and integration costs (15 ) (670
) (1,435 ) (3,445 ) Earnout amortization — (184 ) (287 )
(552 ) GAAP Research and development expenses $ 39,027 $
43,215 $ 122,215 $ 127,530
Three Months Ended September 30,
Nine Months Ended September 30, 2018
2017 2018 2017 GAAP Selling, general
and administrative expenses $ 39,867 $ 47,431 $ 133,906 $ 147,121
Equity-based compensation (5,307 ) (6,979 ) (15,006 ) (22,662 )
Transaction, transition and integration costs 166 (2,630 ) (7,810 )
(10,868 ) Earnout amortization — (774 ) (1,207 ) (2,323 ) CEO
transition cash costs — — 975 — Remeasurement of contingent
consideration 67 (243 ) (1,104 ) (317 ) Gain on settlement of
acquired receivable — — — 2,537
Non-GAAP Selling, General and Administrative Expenses $ 34,793
$ 36,805 $ 109,754 $ 113,488
Three Months Ended September 30,
Nine Months Ended September 30, 2018
2017 2018 2017 GAAP Total operating
costs and expenses $ 172,390 $ 199,450 $ 552,890 $ 610,374
Depreciation (5,338 ) (5,015 ) (16,252 ) (15,869 ) Amortization of
intangible assets (37,242 ) (41,722 ) (119,463 ) (125,100 )
Restructuring and asset impairment charges (2,921 ) (3,710 ) (8,568
) (17,623 ) Equity-based compensation (9,471 ) (13,007 ) (28,226 )
(38,781 ) Transaction, transition and integration costs 148 (3,394
) (9,303 ) (15,701 ) Earnout amortization — (958 ) (1,494 ) (2,875
) CEO transition cash costs — — 975 — Remeasurement of contingent
consideration 67 (243 ) (1,104 ) (317 ) Gain on settlement of
acquired receivable — — — 2,537
Non-GAAP Total COGS and OpEx $ 117,633 $ 131,401 $
369,455 $ 396,645
Three Months Ended September 30, Nine Months Ended
September 30, 2018 2017 2018
2017 GAAP Operating (loss) income $ (7,681 ) $ (1,552 ) $
(25,484 ) $ 1,846 Depreciation 5,338 5,015 16,252 15,869
Amortization of intangible assets 37,242 41,722 119,463 125,100
Restructuring and asset impairment charges 2,921 3,710 8,568 17,623
Equity-based compensation 9,471 13,007 28,226 38,781 Transaction,
transition and integration costs (148 ) 3,394 9,303 15,701 Earnout
amortization — 958 1,494 2,875 CEO transition cash costs — — (975 )
— Remeasurement of contingent consideration (67 ) 243 1,104 317
Gain on settlement of acquired receivable — — —
(2,537 ) Adjusted EBITDA $ 47,076 $ 66,497 $
157,951 $ 215,575
Three Months Ended September 30, Nine Months Ended
September 30, 2018 2017 2018
2017 GAAP Interest expense $ (12,436 ) $ (10,990 ) $ (36,241
) $ (31,827 ) Accretion of contingent consideration 43 143 235 511
Amortization of note issuance costs 581 538 1,709 1,588
Amortization of convertible note discount 3,331 3,179 9,877 9,428
Reclassify current period cost of interest rate swaps (706 ) (1,962
) (3,027 ) (6,470 ) Non-GAAP Interest Expense $ (9,187 ) $ (9,092 )
$ (27,447 ) $ (26,770 )
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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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